The Bank of N.T. Butterfield & Son Limited ($NTB)

Good morning, and welcome to the Bank of N.T. Butterfield & Son Limited Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the call over to Noah Fields, Head of Investor Relations at Butterfield. Please go ahead.

Thank you, operator, and good morning from Barbados. Thank you all for joining us this morning to discuss Butterfield's proposed acquisition of the controlling interest in CIBC Caribbean from CIBC. Today, I am joined by Michael Collins, Butterfield's Chairman and Chief Executive Officer; Michael Schrum, President and Chief Financial Officer; Bri Hidalgo, Chief Risk Officer; and Alex Twerdahl, Head of Strategy and Corporate Development. During today's call, we will make forward-looking statements, which are subject to risks and uncertainties that are intended to be covered by the safe harbor provisions of federal securities laws. For a list of factors that may cause actual results to differ materially from expectations, please refer to Slide 2 of the investor presentation as well as the disclosures contained within our SEC filings. I will now turn the call over to Michael Collins.

Thank you, Noah, and thanks to everyone joining the call today to discuss the exciting transaction we announced this morning. Butterfield's agreement to acquire CIBC's controlling interest in CIBC Caribbean brings together 2 market-leading international franchises that have long-standing success and history to become one regional champion to the benefit of all stakeholders. This is the type of strategic combination that we have been pursuing for a number of years, and I'm delighted to be able to share our vision for the combined businesses with you. This transaction is a defining step forward in Butterfield's strategy to become the leading bank and trust company in international financial centers and attractive Caribbean markets. Today, we'll be speaking more about that strategy, the financial details of the transaction, the comprehensive due diligence process we've undertaken and what it means for all stakeholders, including employees, customers, communities and shareholders. The transaction provides a step change in scale and presence and will result in Butterfield further expanding its banking and wealth offerings and improving customer experience across the combined footprint. We are pleased with the level of talent that will join Butterfield and the deep market knowledge that CIBC Caribbean possesses in both retail and corporate banking. We have committed to maintain full employment of CIBC Caribbean personnel at closing and will be the first to point out that the success of the deal does not hinge on significant cost savings. We will renew CIBC Caribbean's commitments to the communities in which it operates just as we do in our own markets with charitable contributions and enrichment programs. Finally, the transaction represents what we view as an extremely efficient use of capital, and we expect that it will immediately result in double-digit tangible book value accretion at closing and U.S. GAAP earnings accretion in the periods following the closing of the transaction. Following the closing of the transaction, Butterfield's ordinary shares will continue to be listed on the New York Stock Exchange and the Bermuda Stock Exchange, and we undertake additional secondary listings on several other exchanges in connection with the completion of the transaction. Turning now to Slide 4. Together, Butterfield and CIBC Caribbean will become the largest and most impactful banking and wealth management institution in the Atlantic and English-speaking Caribbean and leading international financial centers. On a pro forma basis, the combined group will have approximately $29 billion of assets, $25 billion of deposits, more than $400 million of run rate earnings and around $1.6 billion of tangible common equity. The only jurisdictional overlap in our respective operations is in Cayman, where the combined institution will be the clear market leader in a fast-growing and economically vibrant market. Cayman will become the pro forma company's largest market by assets and revenue. Additionally, both institutions have long-standing leadership in their respective markets and deep experience. The additional scale further positions us with local market leadership advantages and time-honored customer relationships in Barbados, the Bahamas, Turks and Caicos and of course, Bermuda. Our objective for the combined business is to provide exceptional services across financially attractive jurisdictions, which are all united by a common history, language and economic ties. Turning to Slide 5, we provide some of the headline benefits of the transaction. Butterfield and CIBC Caribbean are complementary institutions with similar cultures, synergistic balance sheets, but with minimal geographic overlap. Through the deal, we've gotten to know Mark S. Hill and many of the senior executives and have been encouraged by the cultural similarities of the institution, including a shared vision for serving clients and communities. Upon closing, Butterfield will gain a deep bench of talented bankers, including several we expect will join our executive committee. As we prepare to nearly double our size and enter new markets, we are approaching execution under our robust and effective risk and governance framework. The combination is underpinned by both organizations' strong regulatory track records and relationships. This transaction also is expected to deliver compelling returns for our shareholders by creating a more resilient balance sheet. We expect approximately 12% U.S. GAAP EPS accretion in 2028, the first full year of combined operations, assuming a closing in 2027 and approximately 10% tangible book value per share accretion at close, with the transaction expected to generate an IRR of over 20% and a return on invested capital of approximately 15%. Following close, Butterfield will have a stronger and more diversified balance sheet with a granular and sticky low-cost deposit base. We intend to maintain our currently quarterly dividend rate of $0.50 per share, which will be supported by a robust earnings stream. We will be pausing share repurchases following today's announcement and following closing, we'll continue this pause or potentially scale back relative to our repurchase activity while we evaluate growth prospects and build back capital organically. Turning to Slide 6, you will see that Butterfield has a proven model of growth through acquisitions of complementary banking and wealth management businesses. Since our IPO nearly 10 years ago, we have consistently delivered strong returns for our shareholders aided by M&A. Our M&A history and track record demonstrate our ability to integrate new businesses while continuing to deliver strong financial performance and garnering international recognition for customer service and value creation. Before I turn the call over to Michael Schrum, I would like to thank all of the Butterfield and CIBC Caribbean employees who have gotten us to this point, and I look forward to working with all of our important stakeholders through the next phases of the transaction. I would also like to express thanks to the CIBC team for their collaboration throughout the due diligence process and how much we are looking forward to our continued relationship. I will now turn the call over to Michael Schrum to walk through the transaction details and financial impact.

Thank you, Michael, and good morning, everyone. Turning to Slide 8. We provide a traditional summary of the transaction. The consideration to be paid by Butterfield will be based on an aggregate transaction value of USD 1.09 billion in cash and USD 703 million in Butterfield shares valued by reference to Butterfield's average share price over the past 10 days. This equates to a total purchase consideration of just below $1.8 billion. Under the terms of the agreement, which have been approved by the Boards of Directors of Butterfield and CIBC, Butterfield will acquire CIBC's 91.7% interest in CIBC Caribbean through the acquisition of CIBC's existing Cayman-based holding company. CIBC Caribbean's 8.3% shareholders will be offered equivalent economic terms to those obtained by CIBC. The current plan is that the minority shareholders can also have an option to elect to receive up to 100% of their consideration in Butterfield shares, providing them with the opportunity to maintain the entirety of their investment in the combined organization should they choose to do so. To the extent permissible under applicable law, Butterfield's plan is to ultimately seek full ownership of CIBC Caribbean with current minority shareholders becoming shareholders in the combined group. Assuming CIBC Caribbean's minority shareholders elect the same mix of cash and Butterfield shares at CIBC, the former CIBC Caribbean minority interest shareholders are expected to collectively own approximately 2% of the combined Butterfield enterprise following completion of the transaction. The purchase price reflects a multiple of approximately 1.06x CIBC Caribbean's tangible book value. In conjunction with the transaction, Butterfield plans to issue approximately $700 million worth of subordinated debt to target a 19% or greater total regulatory capital ratio at close for which we have obtained commitments. At closing, CIBC will hold approximately 22% of Butterfield shares and will have the right to nominate 2 directors to the Butterfield Board of Directors. The close of the transaction and shareholder agreement have been approved by Butterfield and CIBC Group Boards. We are confident that we can close the transaction in the first half of 2027, subject to required regulatory approvals, a Butterfield shareholder vote to approve the equity issuance of Butterfield shares to current CIBC Caribbean shareholders and other customary closing conditions. Butterfield will continue to be headquartered in Bermuda and regulated by the Bermuda Monetary Authority as its consolidated regulator. Barbados will continue to serve as a regional headquarters for the Barbados and broader Caribbean operations in light of the expansion into these markets. Our operating approach and financial projections have conservative and modest synergies built in at around $49 million annually, phased in fully over 4 years from closing. This represents approximately 5.6% of the combined pro forma 2027 expected cost base. The conservative investment case is consistent with our market approach, and there are many other products and market share expansion opportunities that we will pursue over time, but not currently included in our financial projections. Finally, this transaction will also likely mean that Butterfield Group will become subject to the global minimum tax framework under the Bermuda and OECD agreed frameworks with a minimum applicable corporate income tax rate of 15%. Additional work is ongoing to determine the impact of phase-in provisions at close, but the added annual tax has already been incorporated into our financial projections. On Slide 9, we provide a view of the added scale and diversification of this acquisition. We expect the addition of CIBC Caribbean to nearly double the deposit base while driving down our average cost of deposits to approximately 1.2% and maintaining a greater proportion of deposits pegged to the U.S. dollar. Our respective loan portfolios are synergistic. Butterfield has historically been a residential lender, while CIBC Caribbean's loans are skewed more towards corporate. Over time, we will seek to expand traditional residential lending in the Caribbean markets carrying lower risk density and lower regulatory capital requirements. The pro forma profile of the combined Butterfield will also be more diverse from a deposits and earnings mix perspective, which will enable a bigger footprint to grow stable and capital-efficient fee-based revenue streams. Turning to Slide 10. We provide a summary of the increased scale and entry into new markets, which present meaningful opportunities to drive earnings growth. Payment, which has become the driver of Butterfield's earnings over the past few years, will continue to be the largest earnings driver of the combined company. Butterfield's existing markets, which are now well known to our current investor base, will continue to comprise approximately 70% of pro forma earnings. New markets will both add to earnings and provide growth opportunities. The combination of having the leading market share and strong product offerings across our expanded footprint in key markets where Butterfield and CIBC Caribbean have a deep historical presence should strengthen our value proposition for new and existing customers. Following close, the combined Butterfield will be well positioned to extend our leadership in those markets with greater scale, operational flexibility and growth. Slide 11 shows the opportunity we have to expand our fee business. The enhanced size reinforces our long-term strategic approach for adding high-quality, diversified and recurring revenue streams to our business in terms of primarily private trust services. Our expanded presence in the Bahamas, Barbados and Cayman will add significantly to our fee profile through the combination of the client bases and earnings diversification. We continue to target a long-term fee to revenue composition ratio of 50%, and we see additional revenue opportunities from the introduction of our wealth management offerings. Turning now to our expected capital and profitability profile on Page 12. Butterfield expects to maintain a strong capital position and close on a consolidated basis with a CET1 ratio above 12%, a total capital ratio of 19% or greater and a tangible common equity to total asset ratio of approximately 6% or approximately 7%, excluding cash. Looking at anticipated profitability in 2028, the first full year following the expected close, we're anticipating approximately 12% U.S. GAAP earnings per share accretion and a return on average tangible common equity of around 20%. Finally, on capital generation, we expect approximately 10% tangible book value per share accretion, over $300 million in annual organic capital generation and a run rate annual capital generation of around 250 basis points. This strong capital accretion will maintain our flexibility to retain earnings, invest in our business and continue returning capital to shareholders in line with our strong track record. I'll now turn the call over to Bri for more on our due diligence process and credit composition.

Thank you, Michael, and good morning, everyone. On Slide 14, we outlined the comprehensive due diligence process undertaken to support this transaction. Consistent with Butterfield's disciplined approach and strong track record in credit assessment, our review covered all aspects of CIBC Caribbean's business with particular rigor applied to evaluating the credit portfolio. Our review was led by senior management and supported by external specialists, including detailed data-driven balance sheet and deposit analysis as well as an independent credit review covering approximately 80% of CIBC Caribbean's performing corporate credit portfolio on a loan-by-loan basis. Within CIBC Caribbean's loan portfolio, we observed strong collateral coverage across sectors and solid cash flow performance, while the securities portfolio is high quality and predominantly investment grade. Additionally, we conducted site visits and held in-person meetings with senior leadership from both organizations and assess key regulatory and compliance areas, including AML, ATF, DSA framework as well as funding and liquidity structures, which indicated strong governance and oversight. To ensure continuity of key services during the post-closing period, a transition services agreement will be formalized from signing through close. On Slide 15, we outlined CIBC Caribbean's loan portfolio composition. As shown on the left of the page, CIBC Caribbean brings a well-diversified risk-aligned loan portfolio with a stable mix, supported by consistent near-term performance and meaningful exposure to well-regulated and sovereign-linked assets. Portfolio performance has strengthened as pandemic-related pressures have normalized with nonperforming loans of approximately 3.1%, reflecting improving asset quality and post-COVID decline. NCOs remain very low and stable, supported by disciplined underwriting, low loss experience, and ongoing portfolio monitoring and control. Against that backdrop, we have taken a credit mark of 1.58x CIBC Caribbean's current closing reserves, reflecting a conservative view and providing meaningful balance sheet protection at close. The increase versus the existing credit loss allowances primarily reflects the transition from IFRS to U.S. GAAP, moving from 12-month probability of default to a lifetime expected loss framework. This approach establishes a prudent opening position and provides balance sheet flexibility as we move forward. Overall, the loan composition enhances diversification while aligning well with Butterfield's target risk profile, and we believe CIBC Caribbean's credit assets are consistent with Butterfield's risk appetite and disciplined underwriting standards. Turning to deposits. We like the diversification, granularity and stability of CIBC Caribbean's deposit base. Deposits are well balanced across segments with approximately 50% corporate, 40% retail and 10% sovereign or government-related accounts. From a currency perspective, approximately 80% of deposits are U.S. dollar and U.S. dollar-linked, with the remainder diversified across local jurisdictions. Overall funding costs remain competitive with current cost of deposits of approximately 85 basis points. The combination of CIBC Caribbean's local expertise in credit underwriting and risk management, along with its balance sheet capacity enhances Butterfield's position as a leading participant in the development of the island economy. I'll now turn it over to Michael Collins for concluding remarks.

Thank you, Bri. As I think about this transaction, we expect to deliver value and benefits for all stakeholders of the combined Butterfield. For clients and customers, our combination will deliver a comprehensive array of complementary services in more locations and provide us with greater scale to drive investments in technology. Our increase in scale will enhance overall financial connectivity for customers traveling between each of the combined company's 19 jurisdictions and beyond, both through a larger network of unified branches and, over time, through better access to larger clients benefiting from our larger bank balance sheet, improved capital position, and cross-border network. For our employees, the transaction unites 2 organizations with similar cultures and adds opportunities for career development and advancement through integration. Butterfield expects to maintain and where feasible, expand local employment to support operational and customer needs. The deal also benefits from the strength and knowledge of both organizations with respect to facilitating economic development in the key industries that are central to our economies and communities, including retail customers, local business, tourism and development and on the public side, infrastructure and public services. We believe Butterfield's access to public debt and equity markets adds financial flexibility for future investment across the enlarged business. Both organizations have long-standing commitments to supporting the communities in which they operate. CIBC Caribbean has built one of the region's leading corporate responsibility platform, including its commitment to contribute 1% of post-tax profits through its charitable foundation and its long-standing partnership with the University of the West Indies, supporting scholarships across the Caribbean. At Butterfield, we are similarly focused on long-term investment in our jurisdictions through financial education, community partnerships and sustainability initiatives that support economic resilience and opportunity, including through our membership in the United Nations Global Compact and our long-standing scholarship program, which has supported students pursuing higher education since 1978. We believe there is a natural alignment between these approaches and meaningful opportunity to build on them. More broadly, we also believe strong banks have an important role to play in supporting long-term economic growth and thriving healthy communities. The combined organization will continue to support internationally recognized partnerships that elevate the profile of our jurisdictions and deliver meaningful economic impact, including the Butterfield Bermuda Championship on the PGA Tour, which contributes significantly to Bermuda's tourism economy. For our shareholders, the transaction is expected to be accretive to cash earnings following close, and we believe it will continue to drive execution on Butterfield's strategy of market penetration and fortification in attractive economically linked communities and international financial centers. It will also add new growth avenues due to size and new markets, which will continue to drive shareholder value. We are approaching 10 years since our initial public offering in September. And in that time, we've accomplished a great deal as a company and for our investors. Looking ahead, this transaction puts us on the right path to continue that trajectory, and I look forward to updating you all as we move towards close and head towards Butterfield's exciting future. I'll now turn it back to Noah.

Thank you, Michael. More detail on the pro forma financial profile of the potential combined Butterfield and market-specific information can be found in the remaining slides, which have also been published on our SEC disclosures. We may return to those slides during Q&A. Operator, do we have any questions?

[Operator Instructions] And our first question comes from Tim Switzer from KBW.

Congratulations on the deal. To start off, could you maybe talk about the background of how this deal came about? I assume it's been a long conversation with CIBC over the years, but was this an auction process or negotiated? And was there ever any consideration on your end to take certain pieces or jurisdictions of the bank rather than the whole thing?

So just to put it in context, it goes back 16 years. So it was a lot younger. So it really honestly goes back to CIBC and Carlyle's participation in Butterfield's recapitalization in 2010. So they each own 23%. And at the time, CIBC owned First Caribbean as it was called. So our view, I think most people thought that at some point, we would probably merge with First Caribbean. I mean, makes obvious sense in terms of the platform. That didn't happen. And just fast-forward to this period, I think it makes so much sense in terms of how it developed. And I would just say the rapport and cultural fit with both CIBC and CIBC Caribbean was really what drove the combination. I mean we're an island bank. We understand when you go into island with governments and regulators, you have to come in respectfully and then employees and clients are always sacrosanct. And so we modeled the transaction based on that thought process, and I think that's kind of how we got here. So it's been a long time coming. I think we've tried to message the market over time that our first focus is always to trust acquisitions because we're trying to get fee income we're at 41% income ratio now. We're trying to get it to 50% of the time. But I think we always message that if there were a transformational opportunity in the Caribbean, whether it's Scotia or RBC or a CIBC, then we would be very interested. So we've been talking for some time. So this hasn't -- this new round hasn't happened suddenly. And again, I think the combination of the culture is really what got us here. And now we're going to be the largest bank in the Atlantic and Caribbean -- English-speaking Caribbean, and that will give us a great platform. And really from our perspective, with no lender of last resort, it actually diversifies our deposit base. So each island is very different. They react differently. But the one thing that really stands out is how sticky the deposit bases are, and that's going to be good for us.

Yes, Michael Schrum. Just in terms of your questions about piecemeal, I think this business combination that we're doing here is really both an opportunity to deploy capital effectively, but also provide CIBC with execution certainty by keeping the perimeter intact here. Obviously, some of the smaller islands have growth potential, and we need to look a lot more at that. But obviously, overall, we're still very pleased that Cayman and Bermuda and the existing markets is still 70% of the franchise. So this really gives us a market share sort of opportunity.

Okay. Great. And you mentioned the cultural alignment is very similar. Could you discuss more broadly the integration process, just given the size of this deal and the involvement of, I think it's about 10 countries -- what are the challenges here? And what are the areas that could help, like the cultural stuff? I think you guys also mentioned similar IT systems. If you could provide more color on all that.

Yes. I mean we've obviously had some interaction with governments and regulators. So we have a sense of how it's going to play out. We're going to take our time. So this is not going to be sudden. We are going to get our filings in for regulatory approval very quickly and give each government and regulator time to really understand this and understand how it's going to play out. So it's going to take some time. We've got a good plan on both sides, and we're completely aligned in terms of what needs to happen first and what the priorities are. But I'll hand it over to Alex Twerdahl to give more detail.

Tim, so I think the key for the integration is really that it's going to be very slow. We're not -- and I'll just point out that the deal is really not based on meaningful synergies. The synergies that we modeled in are about 10% for CIBC Caribbean, 5.5% for the combined institution. So -- and that phases in over 4 years. So in our modeling, we're really looking for sort of very little synergies early on. So we'll take our time. The -- I think one of the things that we were surprised and happy about is that most of the systems are actually contained in the Caribbean. There's not a lot of dependency on Toronto. We will have a transitional service agreement for some of the services that are actually dependent on Toronto, and that will phase out over an appropriate period of time. And certainly, having CIBC as a partner during that period will make that a very core to our relationship. So the integration, we've -- as we've gotten to know the people at CIBC Caribbean, we've been very impressed with what we found, they've got a deep, very qualified bench in really all the jurisdictions that we've been to. So it's going to be slow. The systems conversion probably will take a little bit longer than you'd see in a traditional bank merger in the U.S., for example, we are on different systems, and we'll certainly evaluate sort of going forward, which is the best one to ultimately combine the institution on.

Okay. Got it. Very helpful, Alex. And then the last one for me. Could you guys talk a little bit more about your plans to remix the earning asset composition? You mentioned wanting to put a little bit more [ Residential ] mortgage in the legacy CIBC markets. we look at the pro forma slide you guys provided. what other actions we assume are taken? Does this look a little bit more like legacy NTB, whether in terms of more cash and securities on the balance sheet, less commercial loan exposure? And like are there any targets or time lines you can provide on this?

Yes, I'll start and then hand it over to Bri. So it's pretty exciting that the balance sheets are quite complementary. So they're -- CIBC Caribbean 70% corporate lending. we're 70% residential mortgages. And if you remember, we used to be 70% corporate. And as you know, our risk profile is very focused on the fact we don't have a central bank. So we have to have a really pristine balance sheet, which we will continue to focus on over time. So I think we will -- if you look at -- they are like 70% lend, we're like 35% lend, but you sort of come out with 50% loan-to-deposits. So it all comes together quite well. And I think we will -- we run the bank based on return on regulatory capital and risk-weighted assets. And we're at 28% risk-weighted assets today. So incredibly low risk profile relative to U.S. regional banks. That will come up a bit. So we'll find the right balance, but we will lean a little bit more towards residential going forward.

Yes. Great. Thank you. I'd also add that we're looking closely at the investment portfolio. It's a shorter duration investment portfolio, about 2 years. So we'll have the opportunity to roll those assets over into additional treasuries, consistent with our existing investment team. And from a credit perspective, I mean, CIBC Caribbean's credit portfolio is very strong. It's aligned to our risk appetite, albeit more focused on the corporate type lending. So we'll be evaluating both portfolios upon close to understand where we can maximize to Michael's point, RWAs as well as opportunities to deploy capital in an efficient manner.

Our next question comes from Evan Kwiatkowski from Raymond James.

I just wanted to start on the funding base. It seems to be very complementary to your own. But I'm just kind of curious if you could provide more detail on the nature of those deposits in terms of noninterest-bearing composition, the general stability of those and then maybe the geographic concentration of those as well.

Yes. Great. Thank you for the question. This is Bri. So it's a very stable diversified deposit base with low cost of funds, as we mentioned earlier. The primary exposure to USD and USD-linked deposits is around 80%. Demand is about $6.2 billion, notice is about $3 billion and term deposits around $2.8 billion. So a good asset mix from a deposit perspective on funding sources, match assets and liability mixes, and we're not overly reliant on volatile funding. So really good deposit diversity and stable and sticky.

That's great. And then maybe if I could switch over to the $700 million in sub debt issuance. I'm just kind of curious about rate and terms for that and then what impact it will have on the margin trajectory going forward?

Yes. Sorry. Yes, that's a great question. So we do have commitments on behalf of the issuers that in terms of volume, we do not see have a guarantee on pricing. We're thinking that we are going to go to market sometime probably late this year. There's obviously a cost to carry, et cetera. And obviously, the ratings agencies we've spoken to are pretty optimistic about this deal and the earnings profile of this deal. Obviously, Butterfield has a long history as well of returning capital and accreting capital organically by reducing our subordinated debt in the market earlier last year. And over time, just increasing the quality of the capital. So this will be introducing some additional leverage, which we think is appropriate. It still has a TCE of 6%. So it's still in our target range. And it manages those pieces between the consideration and the ROE together with the -- with hopefully a decent rate on the subordinated debt when we go to issue it. So I think everybody has been very supportive of the structure. It's a little bit more levered than what we usually do, but I think it's appropriate given the earnings profile and the capital accretion. So our aim here is to obviously get back to sort of the low 20s in terms of regulatory capital and then sort of think about then how do we gradually restart the share repurchases on a much bigger platform. But I'll see if Alex has any other comments on that.

Yes. Thanks, Michael. And I think you summed it up quite well for the sub debt issuance. I think the important things are that because of the commitment, we don't have to be in a rush to actually go to market. There are a number of considerations in sort of in the timing. There's some complications, as I'm sure you've noticed, with the transaction with respect to the accounting, just there on a slightly different fiscal year-end, there's a conversion from the IFRS to the U.S. GAAP system, which we've undertaken most of that or almost all of it at this point, but there are some considerations around that and just certain windows and things like that for the issuance. So we will go to market when we feel it's appropriate. We have the commitments for the volume, and we'd be happy to continue discussing it at further time.

That's very helpful. Last one for me. I'm also just curious about the expected time line for the mandatory takeover bid and if that presents any risk of delay for closing or regulatory approval in any way?

Yes, great question. So there's a couple of moving parts. As you noticed, there's a minority that listed on the Barbados Stock Exchange. Ultimately, we would love to be 100% shareholder decomplicates the structure and the reporting going forward, certainly. So I think the aim here would be to first have a chat with the stock exchange here in Barbados and see how we can kind of achieve that conversion from existing shareholders that are minority shareholders in CIBC Caribbean into kind of the combined CIBC Butterfield Group. And then we obviously have to do a whole bunch of filings in all the different islands on -- then you can also see a snapshot of that on Page 22 of the deck. And then we have obviously shareholder vote, which will be -- we haven't determined an exact timing of that, but obviously, the pro formas need to, kind of, be ready and go into those filings and then the debt issuance and then sort of run down towards the closing process. So likely, all of that will take a bit of time and probably put us into a 2027 first half time frame. So I think it's realistic, but also considering that the number of filings that we have to do and talk to each regulator and stock exchanges, et cetera. So we've given ourselves a good time frame to get this done. But those are the sort of steps that are involved. Obviously, we then have to also get shareholder approval to issue the stock to existing CIBC shareholders.

Evan, it's Alex here. I can just add a little bit more on the takeover. So all the regulatory approvals will happen first. And then the way it's written right now is that the deal for the 91.7% will close. And within 7 days, we'll launch a mandatory takeover bid for the remainder. What's important is that our intention is to list on the exchanges that are currently listed on, which is Barbados, Trinidad and Tobago and Bahamas. -- we ultimately want to own 100%, and we intend to provide the minorities with the same consideration mix, equal economics to CIBC. They will have the option should they choose to take 100% shares if they want to just roll all their shares over into Butterfield shares. But ultimately, we'd like to have just one class of shares, which is what we do today, the New York Stock Exchange will be the primary exchange. But as we do right now, we maintain a listing on the Bermuda Stock Exchange, and we intend to have equivalent listings on the other exchanges I just mentioned.

[Operator Instructions] And our next question comes from Robert Rutschow from Wells Fargo.

I just wanted to follow up on the deposit question. Can you give us any sense of how much of the deposit base is corporate versus retail? And are some of those corporate deposits like transaction accounts where you're doing treasury management or other functions? And is there any -- are there any capabilities you'll need to add to service those corporate clients?

Yes, I'll start. This is Bri. So about 59% of the deposit exposure is to corporate. And there are, in fact, services -- treasury services and other attributes that are provided to those clients. We have the ability to undertake that capability clearly. But there are some services that the parent CIBC from a wholesale markets perspective, wholesale markets activity will likely partner with to refer back to the parent company to execute those types of activities.

Yes. And I think -- sorry, it's Michael Schrum. Just to add to that. Obviously, CIBC is going to continue to be a strong supporter of the franchise and a big shareholder. And so those partnership opportunities could extend to certain products that we don't currently offer or maybe have the capabilities to offer, but we want to make sure the clients can continue to execute on the platform. So those are some of the sensitivities involved in the integration work that we're thinking about right now.

Okay. I guess one other question. It looks like the CIBC franchise had a little bit higher net interest income growth than NTB over the last few years. What accounts for that? And would you expect that to continue? Or will the NII growth rate sort of converge over time?

Yes. Sorry, it's Michael Schrum again. Yes. So absolutely correct, obviously, driven by some of the components of the income, principally low-cost deposits and corporate lending. I think that is obviously a growth avenue for us, but also want to make sure that the return on risk-weighted assets is appropriate, and we don't introduce volatility in the earnings streams going forward. So I think the match is quite good. And then we will continue to focus on return on risk-weighted assets going forward, which probably means a little bit of more of a push into the residential lending, which should not materially change the return profile overall.

Okay. And then just last question on that. The corporate loan growth or corporate loans, would we expect those to continue growing? Or is that going to be deemphasized and maybe decline over time, like 5- or 10-year time frame?

Yes. Sorry, it's Michael Schrum again. So I think we'll probably see less big corporate, I mean, we're basically a mid-market corporate bank. So we sort of bank customers that have cash flow needs and trade needs like LOCs and -- but we're not really big enough to play in the wholesale corporate banking space. And so I think where there are opportunities in these markets, we will partner with CIBC and figure out a way, obviously, because we have a smaller balance sheet, we're also going to be having some LCB constraints that maybe CIBC doesn't have in terms of participation and syndication opportunities. So all that to say, I think over the next 5, 10 years, you'll probably see corporate slowing down and retail speeding up. And then obviously, we layer on top of those the wealth management opportunities to the earnings footprint and the market share gains. But we'll keep you updated, but that would be my sort of initial thoughts.

That concludes our question-and-answer session. I would like to turn the call back to Noah Fields for closing remarks.

Thank you all for joining us today. If you have any follow-up questions, please feel free to reach out. We look forward to speaking with you again during our July second quarter earnings call. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.