Butterfield Reports Second Quarter 2026 Results

Second quarter 2026 highlights:

• Net income of $46.9 million, or $1.16 per share
• Core net income¹ of $63.9 million, or $1.58 per share
• Return on average common equity of 16.6% and core return on average tangible common equity¹ of 25.0%
• Net interest margin of 2.74%, cost of deposits of 1.25%
• Quarterly cash dividend of $0.50 per share for the quarter ended June 30, 2026
• Repurchases of 0.3 million shares at a total cost of $16.1 million
• Closed acquisition of R&H Guernsey with integration activities underway
• Entered into an agreement to acquire CIBC Caribbean with expected close in the first half of 2027

HAMILTON, Bermuda--(BUSINESS WIRE)--The Bank of N.T. Butterfield & Son Limited ("Butterfield" or the "Bank") (BSX: NTB.BH; NYSE: NTB) today announced financial results for the quarter ended June 30, 2026.

Net income for the second quarter of 2026 was $46.9 million, or $1.16 per diluted common share, compared to net income of $62.6 million, or $1.53 per diluted common share, for the previous quarter and $53.3 million, or $1.25 per diluted common share, for the second quarter of 2025. Core net income¹ for the second quarter of 2026 was $63.9 million, or $1.58 per diluted common share, compared to $63.2 million, or $1.55 per diluted common share, for the previous quarter and $53.7 million, or $1.26 per diluted common share, for the second quarter of 2025.

The return on average common equity for the second quarter of 2026 was 16.6% compared to 22.1% for the previous quarter and 20.3% for the second quarter of 2025. The core return on average tangible common equity¹ for the second quarter of 2026 was 25.0%, compared to 24.1% for the previous quarter and 22.3% for the second quarter of 2025. The efficiency ratio for the second quarter of 2026 was 67.6%, compared to 56.8% for the previous quarter and 61.3% for the second quarter of 2025. The core efficiency ratio¹ for the second quarter of 2026 was 57.0% compared with 56.4% in the previous quarter and 61.1% for the second quarter of 2025.

Michael Collins, Butterfield's Chairman and Chief Executive Officer, commented, “Our second quarter results reflect the continued strength of our core banking franchise. Core net income improved from the first quarter, supported by higher net interest income and the initial contribution of trust fees from our acquisition of Rawlinson & Hunter Guernsey. The net interest margin remained stable, while deposit costs were well managed despite the competitive operating environment.

"During the quarter, we announced the acquisition of CIBC Caribbean, a compelling opportunity that we expect will double our size and strengthen Butterfield's position as a leading independent financial services provider across the Caribbean and international financial centers. We have already completed our initial regulatory filings across the relevant jurisdictions and continue to expect closing to occur in the first half of 2027, adding scale and new growth opportunities for Butterfield. We look forward to serving our new island communities with the same commitment we have brought to clients across Bermuda, Cayman, Guernsey, and Jersey, building on a heritage that began with our founding in Bermuda in 1858.

"I am pleased with the strong underlying core performance of our business. We remain focused on serving our clients, maintaining our disciplined approach to risk management and capital allocation, and executing on the opportunities before us. The combination of resilient core earnings, a strong balance sheet, and the addition of the R&H Guernsey business positions us well to create long-term value for our shareholders.”

The reported net income for the second quarter of 2026 included $16.9 million of non-core, deal-related expenses, primarily associated with the acquisition of CIBC Caribbean and, to a lesser extent, integration-related costs for the R&H Guernsey business. Core net income¹ was up in the second quarter of 2026 compared to the prior quarter due to higher net interest income (“NII”), new trust income from R&H Guernsey and other gains from the sale of collateral, partially offset by higher core non-interest expenses.

NII for the second quarter of 2026 was $95.6 million, an increase compared to $93.3 million in the previous quarter and $6.2 million higher than $89.4 million in the second quarter of 2025. NII increased during the second quarter of 2026 compared to the prior quarter due to higher day count and growth in interest-earning asset volumes, partially offset by higher deposit costs associated with increased funding volumes. NII was higher during the second quarter of 2026 compared to the second quarter of 2025 due to lower cost of deposits following a reduction in market interest rates, increased investment yields with assets deployed into higher yielding available-for-sale investment securities and the redemption of subordinated debt in the second quarter of 2025, partially offset by lower loan and treasury yields.

Net interest margin (“NIM”) for the second quarter of 2026 was 2.74%, a decrease of 1 basis point from the previous quarter and compared favorably to 2.64% in the second quarter of 2025. NIM in the second quarter of 2026 remained relatively stable compared with the prior quarter. NIM in the second quarter of 2026 increased compared to the second quarter of 2025 due to lower cost of deposits and higher investment yields, partially offset by lower treasury and loan yields as central banks decreased market interest rates.

Non-interest income for the second quarter of 2026 was $63.4 million, an increase of $0.7 million from $62.6 million in the previous quarter and $6.3 million higher than the $57.0 million in the second quarter of 2025. The increase in the second quarter of 2026 compared to the prior quarter resulted from new trust revenue from the R&H Guernsey acquisition, partially offset by lower foreign exchange revenue due to decreased volume and lower banking fees. Non-interest income in the second quarter of 2026 was higher than the second quarter of 2025 due to higher trust revenue from the new R&H Guernsey business, higher foreign exchange revenue due to increased volume, higher banking fees due to credit card volume and timing of the incentive program, higher asset management fees from increased valuations and higher custody fees from additional business.

Non-interest expenses were $109.8 million in the second quarter of 2026, compared to $90.5 million in the previous quarter and $91.8 million in the second quarter of 2025, primarily attributable to acquisition-related, non-core expenses associated with CIBC Caribbean and R&H Guernsey. Core non-interest expenses¹ of $92.9 million in the second quarter of 2026 were higher compared to the $89.9 million incurred in the previous quarter and the $91.4 million in the second quarter of 2025. Excluding the additional expenses associated with the R&H Guernsey business, core non-interest expenses¹ in the second quarter of 2026 increased compared with the prior quarter, primarily driven by higher salaries and benefits, as well as technology and communications costs. Relative to the second quarter of 2025, core non-interest expenses¹, excluding the incremental costs of the R&H Guernsey business, were lower, mainly reflecting reduced property-related expenses. Approximately $1.9 million of the quarter-over-quarter increase in core expenses during the quarter was attributable to the integration of the R&H Guernsey business.

Period end deposit balances were higher at $12.9 billion compared to December 31, 2025. Average deposits were $13.1 billion in the quarter ended June 30, 2026, an increase from the prior quarter.

Tangible book value per share¹ at the end of the second quarter of 2026 was $26.19 per share, slightly lower than $26.56 per share at the end of the prior quarter. The tangible book value per share¹ decreased this quarter due to the recognition of goodwill and intangibles associated with the R&H Guernsey business.

The Board declared a quarterly cash dividend of $0.50 per common share to be paid on August 26, 2026 to shareholders of record on August 12, 2026. During the second quarter of 2026, Butterfield repurchased 0.3 million common shares under the Bank's existing share repurchase program. The program was paused following the May 28, 2026 announcement of Butterfield's agreement to buy CIBC Caribbean from CIBC.

The current total regulatory capital ratio as at June 30, 2026 was 27.5%, compared to 27.8% as at December 31, 2025. Both of these ratios remain conservatively above the minimum regulatory requirements applicable to the Bank.

QUARTER ENDED JUNE 30, 2026 COMPARED WITH THE QUARTER ENDED MARCH 31, 2026

Net Income

Net income for the quarter ended June 30, 2026 was $46.9 million, down from $62.6 million in the prior quarter.

The change in net income during the quarter ended June 30, 2026 compared to the previous quarter is attributable to the following:

• $2.3 million increase in net interest income driven by a higher day count and growth in interest-earning asset volumes, partially offset by higher deposit costs associated with increased funding volumes;
• $1.0 million increase in total gains (losses) due to the sale of collateral securing a loan that was carried at a nil value upon acquisition;
• $0.7 million increase in non-interest income driven by (i) $2.5 million increase in trust revenue attributable to the recent R&H Guernsey acquisition; partially offset by (ii) $1.3 million decrease in foreign exchange fees driven by lower transaction volumes; and (iii) $0.4 million decrease in banking fees; and
• $19.3 million increase in non-interest expenses mainly due to (i) $16.9 million of business acquisition-related costs; (ii) $2.2 million increase in salaries and benefits driven by headcount growth associated with the R&H Guernsey acquisition and prior quarter adjustments to performance-based incentive accruals; (iii) $0.8 million increase in technology and communication costs; partially offset by (iv) $1.5 million decrease in payroll taxes related to the annual vesting of share compensation recorded in the prior quarter.

Non-Core Items¹

Non-core items resulted in expenses, net of gains, of $16.9 million for the second quarter of 2026. Non-core items for the quarter are comprised principally of acquisition-related expenses.

Management does not believe that comparative period expenses, gains or losses identified as non-core are indicative of the results of operations of the Bank in the ordinary course of business.

BALANCE SHEET COMMENTARY AT JUNE 30, 2026 COMPARED WITH DECEMBER 31, 2025

Total Assets

Total assets of the Bank were $14.3 billion at June 30, 2026, an increase of $0.3 billion from December 31, 2025. The Bank maintained a highly liquid position at June 30, 2026, with $9.4 billion of cash, bank deposits, reverse repurchase agreements and liquid investments representing 65.5% of total assets, compared with 65.6% at December 31, 2025.

Loans Receivable

The loan portfolio totaled $4.4 billion at June 30, 2026, relatively flat compared to December 31, 2025.

The allowance for credit losses at June 30, 2026 totaled $27.8 million, an increase of $2.3 million compared to $25.4 million at December 31, 2025. The increase was driven by a net increase in provisioned non-accrual loans.

The loan portfolio represented 30.7% of total assets at June 30, 2026 (December 31, 2025: 31.1%), while loans as a percentage of total deposits was 34.1% at June 30, 2026 (December 31, 2025: 34.5%). Both ratios remain relatively stable at June 30, 2026 compared to December 31, 2025.

As at June 30, 2026, the Bank had gross non-accrual loans of $96.0 million, representing 2.2% of total gross loans, an increase of $4.7 million from $91.3 million, or 2.1% of total loans, at December 31, 2025. The increase in non-accrual loans was driven by a well-secured residential mortgage facility in the Channel Islands & UK segment, with the impact partially offset by the repayment of a separate facility within the same segment.

Investment in Securities

The investment portfolio was $5.7 billion at June 30, 2026, which remains relatively flat compared to December 31, 2025 balances.

The investment portfolio is made up of high-quality assets with 100% invested in AA-or-better-rated securities. The investment book yield was 2.78% during the quarter ended June 30, 2026 compared with 2.78% during the previous quarter. Total net unrealized losses on the available-for-sale portfolio increased to $106.7 million, compared with total net unrealized losses of $89.4 million at December 31, 2025, as a result of rising long-term US dollar interest rates.

Deposits

Average total deposit balances were $13.1 billion for the quarter ended June 30, 2026, which is higher compared to the quarter ended December 31, 2025. Period end balances as at June 30, 2026 were $12.9 billion, higher compared to $12.7 billion in December 31, 2025.

Assets Under Administration and Assets Under Management

Total assets under administration for the trust and custody businesses were $147.3 billion and $31.8 billion, respectively, at June 30, 2026, while assets under management were $6.9 billion at June 30, 2026. This compares with $134.7 billion, $32.3 billion and $6.9 billion, respectively, at December 31, 2025.

Reconciliation of US GAAP Results to Core Earnings

The table below shows the reconciliation of net income in accordance with US GAAP to core earnings, a non-GAAP measure, which excludes certain significant items that are included in our US GAAP results of operations. We focus on core net income, which we calculate by adjusting net income to exclude certain income or expense items that are not representative of our business operations, or “non-core”. Core net income includes revenue, gains, losses and expense items incurred in the normal course of business. We also present certain other non-GAAP financial measures, including tangible common equity and related tangible equity measures. We believe that these non-GAAP financial measures provide a meaningful base for period-to-period comparisons, which management believes will assist investors in analyzing the operating results of the Bank and predicting future performance. We believe that presentation of these non-GAAP financial measures will permit investors to assess the performance of the Bank on the same basis as management.

Conference Call Information:
Butterfield will host a conference call to discuss the Bank’s results on Tuesday, July 28, 2026 at 10:00 a.m. Eastern Time. Callers may access the conference call by dialing +1 (844) 855-9501 (toll-free) or +1 (412) 858-4603 (international) ten minutes prior to the start of the call and referencing the Conference ID: Butterfield Group. A live webcast of the conference call, including a slide presentation, will be available in the investor relations section of Butterfield’s website at www.butterfieldgroup.com. A replay of the call will be archived on the Butterfield website for 12 months.

About Non-GAAP Financial Measures:
This release contains non-GAAP financial measures, including core net income and other financial measures presented on a core basis and tangible common equity and related tangible equity measures. We believe such measures provide useful information to investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with US GAAP; however, our non-GAAP financial measures have a number of limitations. As such, investors should not view these disclosures as a substitute for results determined in accordance with US GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use. See "Reconciliation of US GAAP Results to Core Earnings" for additional information.

Forward-Looking Statements:
Certain of the statements made in this release are forward-looking statements within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts and include statements with respect to, among other things, our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, including, without limitation, statements regarding the proposed acquisition of CIBC Caribbean by Bank of N.

Investor Relations Contact:
Noah Fields
Investor Relations
The Bank of N.T. Butterfield & Son Limited
Phone: (441) 299 3816
E-mail: noah.fields@butterfieldgroup.com

Media Relations Contact:
Emily Edwards
Group Communications Manager
The Bank of N.T. Butterfield & Son Limited
Phone: (441) 299 1624
E-mail: emily.edwards@butterfieldgroup.com