On Friday, Wells Fargo maintained its Overweight rating on Bank of N.T. Butterfield (NYSE: NTB) and increased the shares target to $43.00, up from the previous $40.00. The adjustment comes following the bank's recent earnings report, which revealed operating earnings per share (EPS) of $1.09, exceeding estimates by $0.03. This beat was attributed to higher net interest income (NII) that counterbalanced an uptick in expenses.
The bank's net interest margin (NIM) was slightly impacted by rising funding costs. However, NII benefitted from temporary deposit inflows. Wells Fargo anticipates that a lower NIM run-rate will affect NII as deposit levels return to normal in the second half of 2024.
Consequently, the firm has revised its full-year 2024 and 2025 earnings per share (EPS) estimates for Bank of N.T. Butterfield to $4.43 and $4.30, respectively, from the previous forecasts of $4.41 and $4.60.
Despite a downward revision for the fiscal year 2025 EPS forecast, Wells Fargo has raised the price target. The new target reflects 177% of the bank's next twelve months' tangible book value (TBV), which is a slight discount to the current trading level of approximately 200% of TBV. The firm's commentary indicates a balance of factors influencing the revised price target, including the bank's performance and market valuation metrics.
In other recent news, The Bank of N.T. Butterfield & Son Limited announced strong financial results for the second quarter of 2024, with a net income of $50.6 million and core net income of $51.4 million. The bank reported core earnings per share of $1.11, and a net interest margin of 2.64%.
Butterfield's board welcomed Stephen E. Cummings as an independent director, while the bank maintained a strong balance sheet with increased deposit balances. A new share repurchase program for up to 2.1 million shares through the end of 2024 was initiated.
The bank's growth strategy focuses on organic growth, mergers, and acquisitions, and operating efficiency. Despite some uncertainties in the London market, the bank's underlying residential mortgages are performing well. These are the recent developments that have been reported.
InvestingPro Insights
As Bank of N.T. Butterfield (NYSE: NTB) garners attention with its recent earnings beat and Wells Fargo's updated price target, real-time data and insights from InvestingPro offer an additional layer of analysis. With a market capitalization of $1.72 billion and a P/E ratio of 8.82, NTB is trading at a low earnings multiple, which may signal an attractive valuation for investors. Additionally, the bank has demonstrated a strong commitment to shareholder returns, not only maintaining dividend payments for nine consecutive years but also showcasing a high shareholder yield.
InvestingPro Tips indicate that management's aggressive share buybacks and the upward revisions of earnings estimates by analysts for the upcoming period further bolster the investment case for NTB. Moreover, the company's profitability over the last twelve months and the anticipation of continued profitability this year provide a solid foundation for future growth. Investors interested in deeper insights can find additional tips on InvestingPro, with a total of 9 tips currently listed, offering a comprehensive view of NTB's financial health and market position.
To explore these insights and more, consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at InvestingPro. This could be an opportune moment to assess NTB's investment potential as it trades at 93.93% of its 52-week high, with a recent price of $38.09 and a dividend yield of 4.62% as of the last dividend ex-date on May 6, 2024.
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