Group 1 - The Bank of N.T. Butterfield & Son Limited (NYSE: NTB) is noted for having a unique name among the banks covered this year [1] - The financial markets are believed to be efficient, with most stocks reflecting their real current value [1] - Profitable opportunities in individual stocks are often found in those that are less widely followed or do not accurately reflect market opportunities [1]

Financial Data and Key Metrics Changes - The company reported net income of $53.3 million and core net income of $53.7 million for Q2 2025, with core earnings per share at $1.26 and a core return on average tangible common equity of 22.3% [6][20] - Net interest margin decreased to 2.64%, a decline of six basis points from the prior quarter, while the cost of deposits fell four basis points to 1.56% [6][11] - Total non-interest income was $57 million, a decline of $1.4 million linked quarter, primarily due to lower banking fees and foreign exchange revenue [14] Business Line Data and Key Metrics Changes - Net interest income before provision for credit losses increased to $89.4 million, driven by an increase in average interest-earning assets [11] - Non-interest expenses rose to $91.4 million from $90.3 million in the prior quarter, influenced by foreign exchange impacts and increased performance-based incentive accruals [15][16] Market Data and Key Metrics Changes - The bank's deposit balances increased to $12.8 billion from $12.6 billion, with a $260 million effect from the strengthening of the British Pound [17] - The average loan balances were slightly higher, but absent foreign exchange translation, loan volume decreased by $55 million due to the recovery of a legacy hospitality facility [12] Company Strategy and Development Direction - The company is focusing on sustainable profitability and shareholder value, with a 14% increase in the quarterly cash dividend rate to $0.50 per share and a new share repurchase authorization of 1.5 million shares [8][20] - The bank continues to evaluate potential acquisitions as part of its growth priorities, while maintaining a conservative credit posture [20][21] Management's Comments on Operating Environment and Future Outlook - Management noted encouraging signs of economic growth in their island jurisdictions, particularly in Bermuda and the Cayman Islands, with strong performance in tourism and real estate [21][22] - The company is actively monitoring inflation and foreign exchange fluctuations, with a focus on maintaining a healthy capital position while pursuing growth opportunities [16][54] Other Important Information - The bank completed the early redemption of $100 million subordinated debt, which had a one-time negative impact on net interest margin [7] - The tangible book value per share improved by 3.6% to $23.77 as unrealized losses on investments improved [20] Q&A Session Summary Question: Impact of treasury market on margin - Management discussed their bond investment strategy, focusing on reinvesting maturities into a mix of mortgage-backed securities and U.S. Treasury securities, while monitoring market movements [26][28] Question: Update on temporary deposits - Management indicated that some deposits are still expected to flow out, particularly from a fund in liquidation, but new deposits have also been coming in [31][32] Question: Capital return strategy - Management elaborated on their capital priorities, emphasizing dividends as a priority, followed by M&A and share buybacks, while maintaining a disciplined approach to pricing [36][38] Question: Level of capital - Management acknowledged the current capital level is higher than necessary, with plans to gradually reduce it while remaining open to M&A opportunities [48][50] Question: Ability to drive deposit costs lower - Management noted that they have been able to reduce deposit costs due to a shift in deposit duration and expect further reductions, albeit at a slower rate [57][59]

Financial Performance - The company's net income was $53.3 million, a 5.4% increase compared to Q2 2024[11] - Core net income reached $53.7 million, up 4.4% year-over-year[11] - Return on average common equity was 20.3%, while core return on average tangible common equity was 22.3%[14] - Net interest income increased marginally to $89.4 million[11, 17] - Non-interest income totaled $57.0 million, a decrease of $1.4 million compared to the previous quarter[11, 21] Balance Sheet - Total assets remained stable at $14.185 billion[28] - Total deposits increased to $12.8 billion[30] - The loan-to-deposit ratio was 36%[57] Capital & Dividends - The quarterly cash dividend rate increased by 14% to $0.50 per common share[14] - The company repurchased 1.1 million shares at an average price of $40.69 per share[14] - A new share repurchase authorization was approved for up to 1.5 million common shares[14]

[Index to Financial Statements](index=2&type=section&id=INDEX%20TO%20FINANCIAL%20STATEMENTS) [Consolidated Balance Sheets (Unaudited)](index=3&type=section&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheets present the Bank's financial position as of June 30, 2025, compared to December 31, 2024, detailing assets, liabilities, and shareholders' equity Consolidated Balance Sheets (Unaudited) | Metric | June 30, 2025 (in thousands of US dollars) | December 31, 2024 (in thousands of US dollars) | | :-------------------------------- | :--------------------------------------- | :---------------------------------------- | | Total assets | 14,185,002 | 14,231,396 | | Total liabilities | 13,115,863 | 13,210,584 | | Total shareholders' equity | 1,069,139 | 1,020,812 | | Cash and cash equivalents | 1,450,062 | 1,998,112 | | Total deposits | 12,837,842 | 12,745,909 | | Loans, net of allowance for credit losses | 4,577,519 | 4,473,591 | - Total assets decreased by **$46.4 million** from December 31, 2024, to June 30, 2025, while total liabilities decreased by **$94.7 million**, and total shareholders' equity increased by **$48.3 million**[5](index=5&type=chunk) [Consolidated Statements of Operations (Unaudited)](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) The Consolidated Statements of Operations present the Bank's revenues, expenses, and net income for the three and six months ended June 30, 2025, and 2024 Consolidated Statements of Operations (Unaudited) | Metric (in thousands of US dollars) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total non-interest income | 57,019 | 55,647 | 115,449 | 110,740 | | Total interest income | 140,912 | 147,581 | 280,924 | 290,293 | | Total interest expense | 51,507 | 60,145 | 102,192 | 115,779 | | Net interest income before provision for credit losses | 89,405 | 87,436 | 178,732 | 174,514 | | Net income | 53,325 | 50,591 | 107,089 | 104,022 | | Basic earnings per share | 1.28 | 1.11 | 2.55 | 2.26 | | Diluted earnings per share | 1.25 | 1.09 | 2.48 | 2.23 | - Net income increased by **$2.7 million (5.4%)** for the three months and by **$3.1 million (3.0%)** for the six months ended June 30, 2025, compared to the respective prior year periods, with basic EPS rising from **$1.11 to $1.28 (15.3%)** and from **$2.26 to $2.55 (12.8%)** respectively[8](index=8&type=chunk) [Consolidated Statements of Comprehensive Income (Unaudited)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) The Consolidated Statements of Comprehensive Income detail total comprehensive income, including net income and other comprehensive income (loss) components Consolidated Statements of Comprehensive Income (Unaudited) | Metric (in thousands of US dollars) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | 53,325 | 50,591 | 107,089 | 104,022 | | Other comprehensive income (loss), net of taxes | 15,905 | 3,741 | 53,885 | (7,348) | | Total comprehensive income (loss) | 69,230 | 54,332 | 160,974 | 96,674 | - Total comprehensive income significantly increased for the six months ended June 30, 2025, to **$160.97 million**, up from **$96.67 million** in the prior year, primarily driven by a substantial increase in unrealized net gains on available-for-sale investments (**$43.36 million** in 2025 vs. **-$12.84 million** in 2024)[11](index=11&type=chunk) [Consolidated Statements of Changes in Shareholders' Equity (Unaudited)](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) This statement outlines changes in each component of shareholders' equity for the three and six months ended June 30, 2025, and 2024 Consolidated Statements of Changes in Shareholders' Equity (Unaudited) | Metric (in thousands of US dollars) | June 30, 2025 (Six months) | June 30, 2024 (Six months) | | :---------------------------------- | :------------------------- | :------------------------- | | Total shareholders' equity (end of period) | 1,069,139 | 999,114 | | Net Income for the period | 107,089 | 104,022 | | Common share cash dividends declared and paid | (37,124) | (40,630) | | Retirement of shares (retained earnings impact) | (37,902) | (22,412) | | Other comprehensive income (loss), net of taxes | 53,885 | (7,348) | - Shareholders' equity increased to **$1.07 billion** as of June 30, 2025, from **$999.1 million** a year prior, primarily due to net income and positive other comprehensive income, despite cash dividends paid and share retirements[14](index=14&type=chunk) [Consolidated Statements of Cash Flows (Unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The Consolidated Statements of Cash Flows categorize cash movements into operating, investing, and financing activities for the six months ended June 30, 2025, and 2024 Consolidated Statements of Cash Flows (Unaudited) | Metric (in thousands of US dollars) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------------- | :----------------------------- | :----------------------------- | | Cash provided by (used in) operating activities | 163,555 | 116,258 | | Cash provided by (used in) investing activities | (181,286) | 134,819 | | Cash provided by (used in) financing activities | (583,609) | 495,156 | | Net increase (decrease) in cash, cash equivalents and restricted cash | (540,802) | 744,181 | | Cash, cash equivalents and restricted cash: end of period | 1,547,740 | 2,416,441 | - The Bank experienced a net decrease in cash, cash equivalents, and restricted cash of **$540.8 million** for the six months ended June 30, 2025, a significant shift from a net increase of **$744.2 million** in the prior year, largely driven by cash used in financing activities[17](index=17&type=chunk) [Notes to the Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements%20(unaudited)) [Note 1: Nature of Business](index=8&type=section&id=Note%201:%20Nature%20of%20business) This note describes The Bank of N.T. Butterfield & Son Limited's core business as a full-service bank and wealth manager, its headquarters, and geographic operating segments - Butterfield is a full-service bank and wealth manager headquartered in Hamilton, Bermuda, regulated by the Bermuda Monetary Authority (BMA) in accordance with Basel principles[20](index=20&type=chunk)[21](index=21&type=chunk) - The Bank operates through three primary geographic segments: Bermuda, Cayman, and the Channel Islands and the UK, offering both banking and wealth management services, with additional operations aggregated into the 'Other' segment[21](index=21&type=chunk) - The Bank's common shares trade on the New York Stock Exchange (NYSE: NTB) and the Bermuda Stock Exchange (BSX: NTB.BH)[22](index=22&type=chunk) [Note 2: Significant Accounting Policies](index=8&type=section&id=Note%202:%20Significant%20accounting%20policies) This note outlines the basis of preparation for the unaudited interim consolidated financial statements, adherence to US GAAP, and critical accounting estimates - The unaudited interim consolidated financial statements are prepared in accordance with US GAAP for interim financial information[23](index=23&type=chunk) - Management's critical accounting estimates include allowance for credit losses, fair value of financial instruments, impairment of goodwill, and employee benefit plans[25](index=25&type=chunk)[29](index=29&type=chunk) - There were no new accounting developments issued or pending adoption during the six months ended June 30, 2025, that impacted the Bank[26](index=26&type=chunk) [Note 3: Cash and Cash Equivalents](index=8&type=section&id=Note%203:%20Cash%20and%20cash%20equivalents) This note provides a detailed breakdown of the Bank's cash and cash equivalents, distinguishing between non-interest bearing and interest bearing components Cash and Cash Equivalents (Unaudited) | Category (in thousands of US dollars) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Non-interest bearing cash and demand deposits | 99,525 | 93,145 | | Interest bearing demand deposits | 160,754 | 165,741 | | Interest bearing cash equivalents | 1,189,783 | 1,739,226 | | Total cash and cash equivalents | 1,450,062 | 1,998,112 | - Total cash and cash equivalents decreased by **$548.05 million** from December 31, 2024, to June 30, 2025, primarily due to a reduction in interest-bearing cash equivalents[27](index=27&type=chunk) [Note 4: Short-Term Investments](index=8&type=section&id=Note%204:%20Short-term%20investments) This note details the composition of the Bank's short-term investments, categorizing them by maturity and drawing restrictions Short-Term Investments (Unaudited) | Category (in thousands of US dollars) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Total unrestricted short-term investments | 1,014,237 | 489,596 | | Total restricted short-term investments | 97,678 | 90,430 | | Total short-term investments | 1,111,915 | 580,026 | - Total short-term investments increased significantly by **$531.89 million** from December 31, 2024, to June 30, 2025, with unrestricted investments more than doubling[28](index=28&type=chunk) [Note 5: Investment in Securities](index=9&type=section&id=Note%205:%20Investment%20in%20securities) This note provides a comprehensive overview of the Bank's investment portfolio, including AFS and HTM securities, their fair value, and unrealized gains/losses [Amortized Cost, Carrying Amount and Fair Value](index=9&type=section&id=Amortized%20Cost,%20Carrying%20Amount%20and%20Fair%20Value) This section details the amortized cost, carrying amount, and fair value of the Bank's investment securities portfolio Investment in Securities (Fair Value) | Investment Type (in thousands of US dollars) | June 30, 2025 (Fair Value) | December 31, 2024 (Fair Value) | | :------------------------------------------- | :------------------------- | :----------------------------- | | Total available-for-sale | 2,336,118 | 2,272,486 | | Total held-to-maturity | 2,619,039 | 2,671,040 | | Total investment in securities (Balance Sheet) | 5,458,252 | 5,512,776 | - Gross unrealized losses on AFS securities were **$127.92 million (8.6% of fair value)** as of June 30, 2025, compared to **$164.72 million (8.3% of fair value)** as of December 31, 2024, which management does not believe represent credit losses[31](index=31&type=chunk)[32](index=32&type=chunk)[40](index=40&type=chunk) - Gross unrealized losses on HTM securities were **$503.28 million (19.5% of fair value)** as of June 30, 2025, compared to **$569.25 million (21.3% of fair value)** as of December 31, 2024, primarily due to changes in market interest rates, not credit quality[31](index=31&type=chunk)[33](index=33&type=chunk)[40](index=40&type=chunk) [Investments with Unrealized Loss Positions](index=9&type=section&id=Investments%20with%20Unrealized%20Loss%20Positions) This section identifies investment securities that are in an unrealized loss position and assesses whether these losses are credit-related [Investment Maturities](index=10&type=section&id=Investment%20Maturities) This section categorizes the Bank's investment securities by their contractual maturity dates [Pledged Investments](index=10&type=section&id=Pledged%20Investments) This section details investment securities that are pledged as collateral for various purposes Pledged Investments (Fair Value) | Pledged Investments (in thousands of US dollars) | June 30, 2025 (Fair Value) | December 31, 2024 (Fair Value) | | :----------------------------------------------- | :------------------------- | :----------------------------- | | Available-for-sale | 19,779 | 21,062 | | Held-to-maturity | 87,482 | 84,003 | [Taxability of Interest Income](index=10&type=section&id=Taxability%20of%20Interest%20Income) This section provides information on the taxability of interest income generated from the Bank's investment portfolio [Note 6: Loans](index=11&type=section&id=Note%206:%20Loans) This note provides extensive details on the Bank's loan portfolio, including credit quality, age analysis of past due loans, and changes in allowance for credit losses - The effective yield on total loans as at June 30, 2025, was **6.06%**, a decrease from **6.29%** at December 31, 2024[47](index=47&type=chunk) [Loans' Credit Quality](index=11&type=section&id=Loans'%20Credit%20Quality) This section categorizes the Bank's loans by credit quality, providing insights into the risk profile of the loan portfolio Loans' Credit Quality (Amortized Cost) | Loan Category (in thousands of US dollars) | June 30, 2025 (Amortized Cost) | December 31, 2024 (Amortized Cost) | | :----------------------------------------- | :----------------------------- | :--------------------------------- | | Total commercial loans | 640,397 | 613,820 | | Total commercial real estate loans | 566,977 | 642,038 | | Total consumer loans | 187,751 | 192,750 | | Residential mortgage loans | 3,208,063 | 3,050,692 | | Total loans | 4,603,188 | 4,499,300 | | Allowance for expected credit losses | (25,669) | (25,709) | | Total net loans | 4,577,519 | 4,473,591 | [Age Analysis of Past Due Loans (Including Non-Accrual Loans)](index=13&type=section&id=Age%20Analysis%20of%20Past%20Due%20Loans%20(Including%20Non-Accrual%20Loans)) This section provides an age analysis of the Bank's past due loans, including those on non-accrual status Age Analysis of Past Due Loans (Including Non-Accrual Loans) | Past Due Status (in thousands of US dollars) | June 30, 2025 (Total past due loans) | December 31, 2024 (Total past due loans) | | :------------------------------------------- | :----------------------------------- | :--------------------------------------- | | Commercial loans | 18,280 | 17,445 | | Commercial real estate loans | 3,332 | 17,866 | | Consumer loans | 1,907 | 2,850 | | Residential mortgage loans | 109,841 | 130,282 | | Total amortized cost (past due) | 133,360 | 168,443 | [Changes in Allowances For Credit Losses](index=14&type=section&id=Changes%20in%20Allowances%20For%20Credit%20Losses) This section details the movements in the allowance for credit losses, including provisions, charge-offs, and recoveries - Allowance for expected credit losses remained relatively flat, decreasing slightly from **$25.71 million** to **$25.67 million** during the six months ended June 30, 2025[62](index=62&type=chunk)[63](index=63&type=chunk) [Collateral-dependent loans](index=15&type=section&id=Collateral-dependent%20loans) This section provides information on loans for which repayment is expected to be provided solely by the underlying collateral [Non-Performing Loans](index=15&type=section&id=Non-Performing%20Loans) This section presents details on the Bank's non-performing loans, which are typically those on non-accrual status Non-Performing Loans | Non-Performing Loans (in thousands of US dollars) | June 30, 2025 | December 31, 2024 | | :------------------------------------------------ | :------------ | :---------------- | | Total non-performing loans | 119,043 | 149,594 | [Loan Modifications Made to Borrowers Experiencing Financial Difficulty](index=16&type=section&id=Loan%20Modifications%20Made%20to%20Borrowers%20Experiencing%20Financial%20Difficulty) This section describes modifications made to loans for borrowers experiencing financial difficulty, such as troubled debt restructurings [Note 7: Credit Risk Concentrations](index=16&type=section&id=Note%207:%20Credit%20risk%20concentrations) This note details the Bank's credit risk concentrations by geographic region, encompassing cash and cash equivalents, loans, and off-balance sheet exposures Credit Risk Concentrations by Geographic Region | Geographic Region (in thousands of US dollars) | June 30, 2025 (Total credit exposure) | December 31, 2024 (Total credit exposure) | | :--------------------------------------------- | :------------------------------------ | :---------------------------------------- | | Bermuda | 1,805,710 | 1,854,898 | | Cayman Islands | 1,282,416 | 1,327,634 | | Channel Islands and the UK (Guernsey, Jersey, UK) | 1,061,538 | 949,155 | | United Kingdom | 2,586,348 | 2,396,718 | | Total gross exposure | 8,999,192 | 8,997,688 | - The total gross credit exposure remained relatively stable at approximately **$9 billion**, with notable shifts in regional concentrations, including an increase in the UK and Channel Islands and a decrease in Bermuda and Cayman Islands[76](index=76&type=chunk) [Note 8: Deposits](index=17&type=section&id=Note%208:%20Deposits) This note provides a detailed breakdown of the Bank's deposit base, segmented by maturity (demand vs. term) and by geographic region and type [By Maturity](index=17&type=section&id=By%20Maturity) This section categorizes the Bank's deposits based on their maturity profiles, distinguishing between demand and term deposits Deposits by Maturity | Deposit Category (in thousands of US dollars) | June 30, 2025 | December 31, 2024 | | :-------------------------------------------- | :------------ | :---------------- | | Total demand deposits | 8,828,053 | 8,267,652 | | Total term deposits | 4,009,789 | 4,478,257 | | Total deposits | 12,837,842 | 12,745,909 | - Total deposits increased by **$91.93 million** from December 31, 2024, to June 30, 2025, driven by an increase in demand deposits, while term deposits decreased[77](index=77&type=chunk) - The weighted-average interest rate on interest-bearing demand deposits decreased from **0.87%** at December 31, 2024, to **0.79%** at June 30, 2025[77](index=77&type=chunk) [By Type and Segment](index=17&type=section&id=By%20Type%20and%20Segment) This section further breaks down deposits by their type and the geographic segment in which they are held Deposits by Segment | Deposits by Segment (in thousands of US dollars) | June 30, 2025 | December 31, 2024 | | :----------------------------------------------- | :------------ | :---------------- | | Bermuda | 4,485,504 | 4,781,064 | | Cayman | 4,044,459 | 3,971,103 | | Channel Islands and the UK | 4,307,879 | 3,993,742 | [Note 9: Employee Benefit Plans](index=17&type=section&id=Note%209:%20Employee%20benefit%20plans) This note describes the Bank's various employee benefit plans and presents the associated expenses recognized in the consolidated statements of operations - The Bank maintains trusteed pension plans (defined benefit and defined contribution) and provides post-retirement medical benefits to qualifying retirees, with defined benefit plans closed to new participants and non-contributory[79](index=79&type=chunk) Employee Benefit Expense | Benefit Expense (in thousands of US dollars) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------------- | :----------------------------- | :----------------------------- | | Total defined benefit pension expense (income) | 482 | 666 | | Total post-retirement medical benefit expense (income) | 2,168 | 1,326 | - Total defined benefit pension expense decreased, while total post-retirement medical benefit expense increased for the six months ended June 30, 2025, compared to the prior year[81](index=81&type=chunk) [Note 10: Credit-Related Arrangements, Repurchase Agreements, and Commitments](index=18&type=section&id=Note%2010:%20Credit%20related%20arrangements,%20repurchase%20agreements%20and%20commitments) This note details the Bank's off-balance sheet credit exposures, repurchase agreements, and provides an update on legal proceedings [Commitments](index=18&type=section&id=Commitments) This section outlines the Bank's various commitments, including commitments to extend credit and documentary letters of credit Commitments | Commitments (in thousands of US dollars) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Commitments to extend credit | 463,798 | 475,289 | | Documentary and commercial letters of credit | 1,006 | 1,576 | | Total unfunded commitments to extend credit | 464,804 | 476,865 | [Credit-Related Arrangements](index=18&type=section&id=Credit-Related%20Arrangements) This section describes the Bank's credit-related arrangements, such as standby letters of credit and letters of guarantee Financial Guarantees | Financial Guarantees (in thousands of US dollars) | June 30, 2025 (Gross) | December 31, 2024 (Gross) | | :------------------------------------------------ | :-------------------- | :------------------------ | | Standby letters of credit | 233,090 | 236,220 | | Letters of guarantee | 1,502 | 1,792 | | Total | 234,592 | 238,012 | [Repurchase agreements](index=19&type=section&id=Repurchase%20agreements) This section provides details on the Bank's repurchase and resell agreements, including their outstanding balances - As of June 30, 2025, the Bank had **$1.1 billion** in resell agreements (securities purchased under agreements to resell), down from **$1.2 billion** at December 31, 2024, with no open repurchase agreements compared to **$92.6 million** at December 31, 2024[90](index=90&type=chunk)[91](index=91&type=chunk) [Legal Proceedings](index=19&type=section&id=Legal%20Proceedings) This section provides an update on significant legal proceedings involving the Bank - The Bank reached a resolution with the US Department of Justice in August 2021 regarding a cross-border tax investigation, concluding a three-year non-prosecution agreement in July 2024 and paying **$5.6 million** in forfeiture and tax restitution[93](index=93&type=chunk) [Note 11: Leases](index=21&type=section&id=Note%2011:%20Leases) This note provides information on the Bank's operating lease agreements, including lease costs, income, right-of-use assets, and lease liabilities Lease Metrics | Lease Metric (in thousands of US dollars) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------------------- | :----------------------------- | :----------------------------- | | Total net lease cost | 4,392 | 5,185 | | Operating lease income | 198 | 694 | | Operating cash flows from operating leases | 2,974 | 3,848 | Lease Balances | Lease Balance (in thousands of US dollars) | June 30, 2025 | December 31, 2024 | | :----------------------------------------- | :------------ | :---------------- | | Operating leases right-of-use assets | 37,372 | 35,347 | | Operating lease liabilities | 38,236 | 35,604 | - The weighted average remaining lease term for operating leases was **11.91 years** at June 30, 2025, with a weighted average discount rate of **5.94%**[97](index=97&type=chunk) [Note 12: Segmented Information](index=21&type=section&id=Note%2012:%20Segmented%20information) This note presents the Bank's financial performance and assets segmented by geographic region: Bermuda, Cayman, Channel Islands and the UK, and Other - The Bank is managed and segmented on a geographic basis, with reportable segments including Bermuda, Cayman, and Channel Islands and the UK, plus an aggregated 'Other' segment[98](index=98&type=chunk)[99](index=99&type=chunk) [Bermuda Segment](index=22&type=section&id=Bermuda%20Segment) This section details the financial performance and assets attributable to the Bank's Bermuda geographic segment [Cayman Segment](index=22&type=section&id=Cayman%20Segment) This section details the financial performance and assets attributable to the Bank's Cayman geographic segment [Channel Islands and the UK segment](index=22&type=section&id=Channel%20Islands%20and%20the%20UK%20segment) This section details the financial performance and assets attributable to the Bank's Channel Islands and the UK geographic segment [Other segment](index=22&type=section&id=Other%20segment) This section details the financial performance and assets attributable to the Bank's aggregated 'Other' geographic segment [Total Assets by Segment](index=22&type=section&id=Total%20Assets%20by%20Segment) This section provides a breakdown of the Bank's total assets across its various geographic segments Total Assets by Segment | Segment (in thousands of US dollars) | June 30, 2025 (Total Assets) | December 31, 2024 (Total Assets) | | :----------------------------------- | :--------------------------- | :------------------------------- | | Bermuda | 5,043,216 | 5,438,279 | | Cayman | 4,409,304 | 4,337,829 | | Channel Islands and the UK | 4,773,869 | 4,526,623 | | Other | 70,292 | 62,682 | | Total assets before inter-segment eliminations | 14,296,681 | 14,365,413 | [Segment Financial Results (Three months ended June 30, 2025)](index=23&type=section&id=Segment%20Financial%20Results%20(Three%20months%20ended%20June%2030,%202025)) This section presents the financial results for each geographic segment for the three months ended June 30, 2025 [Segment Financial Results (Three months ended June 30, 2024)](index=24&type=section&id=Segment%20Financial%20Results%20(Three%20months%20ended%20June%2030,%202024)) This section presents the financial results for each geographic segment for the three months ended June 30, 2024 [Segment Financial Results (Six months ended June 30, 2025)](index=25&type=section&id=Segment%20Financial%20Results%20(Six%20months%20ended%20June%2030,%202025)) This section presents the financial results for each geographic segment for the six months ended June 30, 2025 [Segment Financial Results (Six months ended June 30, 2024)](index=26&type=section&id=Segment%20Financial%20Results%20(Six%20months%20ended%20June%2030,%202024)) This section presents the financial results for each geographic segment for the six months ended June 30, 2024 Segment Net Income | Segment Net Income (in thousands of US dollars) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Bermuda | 13,510 | 13,969 | 29,328 | 29,095 | | Cayman | 30,480 | 30,014 | 62,301 | 62,303 | | Channel Islands and the UK | 8,888 | 5,469 | 14,326 | 10,724 | | Other | 447 | 1,139 | 1,134 | 1,900 | | Total Net Income | 53,325 | 50,591 | 107,089 | 104,022 | [Note 13: Derivative Instruments and Risk Management](index=27&type=section&id=Note%2013:%20Derivative%20instruments%20and%20risk%20management) This note details the Bank's use of derivative instruments for risk management and client services, outlining their notional amounts and fair values - The Bank uses derivatives, primarily OTC interest rate and foreign exchange contracts, for risk management (fair value hedges, net investment hedges, and undesignated derivatives) and to meet client needs[117](index=117&type=chunk)[123](index=123&type=chunk)[129](index=129&type=chunk) [Notional Amounts](index=27&type=section&id=Notional%20Amounts) This section presents the notional amounts of the Bank's derivative instruments, categorized by type and purpose Derivative Notional Amounts | Derivative Type (in thousands of US dollars) | June 30, 2025 (Notional amounts) | December 31, 2024 (Notional amounts) | | :------------------------------------------- | :------------------------------- | :----------------------------------- | | Risk management derivatives | 1,868,319 | 2,171,377 | | Client services derivatives | 222,816 | 217,490 | | Total derivative instruments | 2,091,135 | 2,388,867 | [Fair Value](index=27&type=section&id=Fair%20Value) This section provides the fair values of the Bank's derivative instruments, categorized by their balance sheet presentation Derivative Fair Value | Derivative Fair Value (in thousands of US dollars) | June 30, 2025 (Net fair value) | December 31, 2024 (Net fair value) | | :------------------------------------------------- | :----------------------------- | :--------------------------------- | | Total derivative instruments | (18,029) | 33,439 | [Risk Management Derivatives](index=27&type=section&id=Risk%20Management%20Derivatives) This section describes the Bank's use of derivatives for hedging purposes, including fair value hedges and net investment hedges [Client service derivatives](index=27&type=section&id=Client%20service%20derivatives) This section details the Bank's use of derivatives to facilitate client transactions and services Net Gains (Losses) Recognized | Net Gains (Losses) Recognized (in thousands of US dollars) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------------------------------- | :----------------------------- | :----------------------------- | | Total net gains (losses) recognized in net income | (49,829) | 18,207 | | Total net gains (losses) recognized in comprehensive income | (1,639) | 190 | [Note 14: Fair Value Measurements](index=29&type=section&id=Note%2014:%20Fair%20value%20measurements) This note presents financial assets and liabilities measured at fair value on a recurring basis, categorized by valuation input levels, and fair value information for other items [Items that are recognized at fair value on a recurring basis](index=29&type=section&id=Items%20that%20are%20recognized%20at%20fair%20value%20on%20a%20recurring%20basis) This section details financial instruments that are measured at fair value on an ongoing basis, categorized by valuation input levels Fair Value Measurements (Recurring Basis) | Item (in thousands of US dollars) | June 30, 2025 (Total carrying amount / fair value) | December 31, 2024 (Total carrying amount / fair value) | | :-------------------------------- | :------------------------------------------------- | :----------------------------------------------------- | | Total available-for-sale investments | 2,336,118 | 2,272,486 | | Other assets - Derivatives | 4,888 | 35,478 | | Other liabilities - Derivatives | 22,917 | 2,039 | - Financial instruments in Level 1 include US and UK Government Treasury notes, while Level 2 includes government debt securities, mortgage-backed securities, other asset-backed securities, forward foreign exchange contracts, and securities sold under agreements to repurchase[142](index=142&type=chunk) - There were no Level 3 investments and no transfers between Level 1, Level 2, or Level 3 during the six months ended June 30, 2025, and the year ended December 31, 2024[143](index=143&type=chunk)[144](index=144&type=chunk) [Items Other Than Those Recognized at Fair Value on a Recurring Basis](index=30&type=section&id=Items%20Other%20Than%20Those%20Recognized%20at%20Fair%20Value%20on%20a%20Recurring%20Basis) This section provides fair value information for financial instruments not measured at fair value on a recurring basis Fair Value Measurements (Non-Recurring Basis) | Item (in thousands of US dollars) | June 30, 2025 (Carrying amount) | June 30, 2025 (Fair value) | December 31, 2024 (Carrying amount) | December 31, 2024 (Fair value) | | :-------------------------------- | :------------------------------ | :------------------------- | :---------------------------------- | :----------------------------- | | Investments held-to-maturity | 3,122,134 | 2,619,039 | 3,240,290 | 2,671,040 | | Loans, net of allowance for credit losses | 4,577,519 | 4,561,169 | 4,473,591 | 4,433,872 | | Term deposits | 4,009,789 | 4,018,174 | 4,478,257 | 4,482,978 | [Note 15: Interest Rate Risk](index=31&type=section&id=Note%2015:%20Interest%20rate%20risk) This note analyzes the Bank's interest rate risk by presenting the interest rate sensitivity gap, showing repricing or contractual maturity of assets and liabilities Interest Rate Sensitivity Gap | Interest Rate Sensitivity Gap (in millions of US dollars) | June 30, 2025 | December 31, 2024 | | :-------------------------------------------- | :------------ | :---------------- | | Within 3 months | (4,083) | (3,223) | | 3 to 6 months | 112 | (284) | | 6 to 12 months | 603 | (117) | | 1 to 5 years | 2,196 | 2,421 | | After 5 years | 4,503 | 4,577 | | Non-interest bearing funds | (3,331) | (3,374) | | Total | — | — | - The cumulative interest rate sensitivity gap shifted from a negative **$3.62 billion** for maturities up to 12 months at December 31, 2024, to a negative **$3.37 billion** at June 30, 2025, indicating a slight improvement in short-term interest rate sensitivity[150](index=150&type=chunk) [Note 16: Long-Term Debt](index=32&type=section&id=Note%2016:%20Long-term%20debt) This note details the Bank's long-term debt, specifically the redemption of US $100 million Subordinated Lower Tier II capital notes in June 2025 - The Bank redeemed **US $100 million** of Subordinated Lower Tier II capital notes at face value in June 2025, which were issued in June 2020 with a fixed coupon of **5.25%** and became redeemable on June 15, 2025[152](index=152&type=chunk) - Unamortized issuance costs related to these notes were fully recognized in the Consolidated Statements of Operations as part of interest expense upon redemption[152](index=152&type=chunk) [Note 17: Earnings Per Share](index=32&type=section&id=Note%2017:%20Earnings%20per%20share) This note explains the calculation of basic and diluted earnings per share, including the weighted average number of common shares outstanding and dilutive effects Earnings Per Share | EPS Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (in thousands of US dollars) | 53,325 | 50,591 | 107,089 | 104,022 | | Basic Earnings Per Share | 1.28 | 1.11 | 2.55 | 2.26 | | Diluted Earnings Per Share | 1.25 | 1.09 | 2.48 | 2.23 | | Weighted average number of common shares (in thousands) | 41,636 | 45,642 | 42,078 | 46,068 | | Weighted average number of diluted common shares (in thousands) | 42,653 | 46,298 | 43,113 | 46,730 | - Basic EPS increased by **$0.17 (15.3%)** for the three months and **$0.29 (12.8%)** for the six months ended June 30, 2025, compared to the prior year, with similar increases in diluted EPS[157](index=157&type=chunk) - The dilutive effect of share-based compensation plans resulted in an additional **1.02 million** diluted common shares for the three months and **1.04 million** for the six months ended June 30, 2025[155](index=155&type=chunk)[157](index=157&type=chunk) [Note 18: Share-Based Payments](index=32&type=section&id=Note%2018:%20Share-based%20payments) This note details the Bank's various share-based compensation programs, associated costs, and unrecognized expenses [Stock Option Awards](index=32&type=section&id=Stock%20Option%20Awards) This section provides information on the Bank's stock option awards, including grants, exercises, and outstanding options - The Board approved an Amended and Restated 2020 Omnibus Share Incentive Plan in February 2025, making an additional **5.0 million shares** available for grant, with no stock options outstanding as of June 30, 2025, or December 31, 2024[159](index=159&type=chunk)[161](index=161&type=chunk) [Share-Based Incentive Programs](index=32&type=section&id=Share-Based%20Incentive%20Programs) This section describes the Bank's share-based incentive programs, including the EDIP and ELTIP [Employee Deferred Incentive Program](index=33&type=section&id=Employee%20Deferred%20Incentive%20Program) This section details the Employee Deferred Incentive Program (EDIP), including shares granted, vested, and outstanding [Employee Long-Term Incentive Share Program](index=33&type=section&id=Employee%20Long-Term%20Incentive%20Share%20Program) This section details the Employee Long-Term Incentive Share Program (ELTIP), including shares granted, vested, and outstanding Share-based Awards (EDIP and ELTIP) | Share-based Awards (in thousands of shares) | Six months ended June 30, 2025 (EDIP) | Six months ended June 30, 2025 (ELTIP) | Six months ended June 30, 2024 (EDIP) | Six months ended June 30, 2024 (ELTIP) | | :------------------------------------------ | :------------------------------------ | :------------------------------------- | :------------------------------------ | :------------------------------------- | | Outstanding at beginning of period | 628 | 1,151 | 665 | 915 | | Granted | 124 | 332 | 91 | 545 | | Vested | (116) | (268) | (137) | (334) | | Outstanding at end of period | 636 | 1,214 | 616 | 1,124 | [Employee Share Purchase Plan](index=33&type=section&id=Employee%20Share%20Purchase%20Plan) This section describes the Employee Share Purchase Plan (ESPP), including employee contributions and share purchases [Share-based Compensation Cost Recognized in the Financial Statements](index=33&type=section&id=Share-based%20Compensation%20Cost%20Recognized%20in%20the%20Financial%20Statements) This section details the share-based compensation cost recognized in the Bank's consolidated financial statements [Unrecognized Share-based Compensation Cost](index=33&type=section&id=Unrecognized%20Share-based%20Compensation%20Cost) This section provides information on the total unrecognized share-based compensation cost and its expected recognition period Share-based Compensation Cost | Share-based Compensation Cost (in thousands of US dollars) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------------------------------- | :----------------------------- | :----------------------------- | | EDIP and ELTIP | 10,701 | 10,099 | | ESPP | 292 | 305 | | Share-based Compensation Cost Recognized in Net Income | 10,993 | 10,404 | | Unrecognized Share-based Compensation Cost (June 30, 2025) | 31,337 | N/A | [Note 19: Share Repurchase Programs](index=34&type=section&id=Note%2019:%20Share%20repurchase%20programs) This note outlines the Bank's common share repurchase programs, including recent board approvals and the number of shares repurchased and retired - The Board approved new common share repurchase programs on December 5, 2023 (up to **3.5 million shares**), July 22, 2024 (up to **2.1 million shares**), December 9, 2024 (up to **2.7 million shares**), and July 28, 2025 (up to **1.5 million shares**), all through to December 31, 2025[174](index=174&type=chunk)[175](index=175&type=chunk) Common Share Repurchases | Common Share Repurchases | Six months ended June 30, 2025 | | :----------------------- | :----------------------------- | | Acquired number of shares | 2,210,189 | | Average cost per common share | 39.26 | | Total cost (in US dollars) | 86,782,848 | - In the six months ended June 30, 2025, the Bank repurchased and retired **2,210,189 shares** at an average cost of **$39.26 per share**, totaling **$86.78 million**[176](index=176&type=chunk)[177](index=177&type=chunk) [Note 20: Accumulated Other Comprehensive Income (Loss)](index=34&type=section&id=Note%2020:%20Accumulated%20other%20comprehensive%20income%20(loss)) This note provides a detailed breakdown of the components of Accumulated Other Comprehensive Income (AOCI), along with their net changes Accumulated Other Comprehensive Income (Loss) | AOCI Component (in thousands of US dollars) | June 30, 2025 (Balance at end of period) | December 31, 2024 (Balance at beginning of period) | | :------------------------------------------ | :--------------------------------------- | :----------------------------------------------- | | Unrealized net gains (losses) on translation of net investment in foreign operations | (19,931) | (26,191) | | Unrealized net gains (losses) on HTM investments | (70,160) | (73,919) | | Unrealized net gains (losses) on AFS investments | (118,913) | (162,275) | | Employee benefit plans adjustments | (32,526) | (33,030) | | Total AOCIL | (241,530) | (295,415) | - Total AOCI improved significantly from a loss of **$295.42 million** at the beginning of the period to a loss of **$241.53 million** at June 30, 2025, primarily due to substantial unrealized net gains on AFS investments (**$43.36 million**) and positive foreign currency translation adjustments (**$6.26 million**)[178](index=178&type=chunk)[180](index=180&type=chunk) [Note 21: Capital Structure](index=35&type=section&id=Note%2021:%20Capital%20structure) This note details the Bank's authorized capital, dividends declared, and regulatory capital adequacy, confirming compliance with Basel guidelines [Authorized Capital](index=35&type=section&id=Authorized%20Capital) This section outlines the Bank's authorized share capital, including common, non-voting ordinary, and preference shares - The Bank's authorized share capital includes **2 billion common shares**, **6 billion non-voting ordinary shares** (both BM$0.01 par), and preference shares[181](index=181&type=chunk) [Dividends Declared](index=35&type=section&id=Dividends%20Declared) This section provides information on dividends declared and paid by the Bank during the reporting period - During the six months ended June 30, 2025, the Bank declared and paid cash dividends of **$0.88 per common share**, with an interim dividend of **$0.50 per common share** declared on July 28, 2025, payable on August 25, 2025[182](index=182&type=chunk)[193](index=193&type=chunk) [Regulatory Capital](index=35&type=section&id=Regulatory%20Capital) This section presents the Bank's regulatory capital adequacy, including key capital ratios and compliance with Basel guidelines Regulatory Capital Ratios | Capital Ratio (%) | June 30, 2025 (Actual) | December 31, 2024 (Actual) | Regulatory minimum | | :---------------- | :--------------------- | :------------------------- | :----------------- | | CET 1 capital | 26.0 % | 23.5 % | 10.0 % | | Tier 1 capital | 26.0 % | 23.5 % | 11.5 % | | Total capital | 26.2 % | 25.8 % | 13.5 % | | Leverage ratio | 7.3 % | 7.3 % | 5.0 % | - The Bank is fully compliant with all regulatory capital requirements and maintains capital ratios significantly in excess of regulatory minimums as of June 30, 2025, and December 31, 2024[185](index=185&type=chunk) [Note 22: Related Party Transactions](index=36&type=section&id=Note%2022:%20Related%20party%20transactions) This note discloses financing transactions and investments with related parties, detailing loan and deposit balances, as well as interest and non-interest income/expense [Financing Transactions](index=36&type=section&id=Financing%20Transactions) This section details financing transactions with related parties, including loans and deposits involving directors, executives, and affiliates Related Party Financing Transactions | Related Party Transactions (in thousands of US dollars) | June 30, 2025 | December 31, 2024 | | :------------------------------------------------------ | :------------ | :---------------- | | Loans with directors and executives | 19,369 | 19,637 | | Deposits from directors and executives | 75,464 | 92,182 | | Loans with affiliates | 8,877 | 9,056 | | Deposits from affiliates | 392 | 811 | | Deposits from Butterfield mutual funds | 9,793 | 9,441 | Related Party Income/Expense | Related Party Income/Expense (in thousands of US dollars) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------------------------------- | :----------------------------- | :----------------------------- | | Interest and fees on loans (directors/executives) | 587 | 632 | | Total non-interest expense (directors/executives) | 214 | 115 | | Asset management revenue (Butterfield mutual funds) | 5,773 | 5,257 | | Custody and other administration services revenue (Butterfield mutual funds) | 726 | 662 | - Loans to directors and executives were made in the ordinary course of business at normal credit terms and were considered performing, with executives potentially eligible for preferential rates[188](index=188&type=chunk) [Investments](index=37&type=section&id=Investments) This section provides information on investments held by the Bank that involve related parties [Note 23: Subsequent Events](index=37&type=section&id=Note%2023:%20Subsequent%20events) This note reports significant events that occurred after the reporting period but before the financial statements were issued - On July 28, 2025, the Board of Directors declared an interim dividend of **$0.50 per common share**, payable on August 25, 2025, to shareholders of record on August 11, 2025[193](index=193&type=chunk)

Core Viewpoint - The market anticipates Bank of NT Butterfield & Son (NTB) to report a year-over-year earnings increase despite lower revenues in the upcoming quarter ending June 2025, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - The consensus estimate for quarterly earnings is $1.15 per share, reflecting a year-over-year increase of +3.6%, while revenues are projected at $142.6 million, a decrease of 0.3% from the previous year [3]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analyst assessments [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that the Most Accurate Estimate aligns with the Zacks Consensus Estimate, resulting in an Earnings ESP of 0%, suggesting no recent differing analyst views [12]. Historical Performance - In the last reported quarter, the company exceeded the expected earnings of $1.03 per share by delivering $1.30, resulting in a surprise of +26.21%. The company has beaten consensus EPS estimates in all of the last four quarters [14][15]. Zacks Rank and Predictive Power - The stock currently holds a Zacks Rank of 4, which complicates the prediction of an earnings beat, as a positive Earnings ESP is a strong indicator of potential earnings surprises, particularly when combined with a higher Zacks Rank [10][12].

Core Viewpoint - Bank of NT Butterfield & Son (NTB) is positioned as a strong investment opportunity due to its improving earnings outlook and analysts' increasing earnings estimates [1][2]. Earnings Estimates - Analysts' optimism regarding the earnings prospects of Bank of NT Butterfield & Son is leading to higher earnings estimates, which is expected to positively impact the stock price [2]. - The current quarter's earnings estimate is projected at $1.19 per share, reflecting a year-over-year increase of +7.21% [7]. - For the full year, the earnings estimate stands at $4.95 per share, indicating a year-over-year change of +3.77% [8]. Estimate Revisions - Over the past 30 days, the Zacks Consensus Estimate for the current quarter has risen by 13.33%, with one estimate moving higher and no negative revisions [7]. - The consensus estimate for the current year has also improved, with a 12.5% increase and one estimate moving higher compared to no negative revisions [9]. Zacks Rank - Bank of NT Butterfield & Son currently holds a Zacks Rank 1 (Strong Buy), indicating strong agreement among analysts in revising earnings estimates upward [10]. - Stocks with a Zacks Rank 1 and 2 have historically outperformed the S&P 500 [10]. Stock Performance - The stock has gained 9.6% over the past four weeks, driven by solid estimate revisions, suggesting potential for further growth [11].

Company Overview - Bank of NT Butterfield & Son (NTB) currently holds a Momentum Style Score of A, indicating strong momentum potential [3] - The company has a Zacks Rank of 1 (Strong Buy), which is associated with a historical outperformance in the market [4] Price Performance - NTB shares have increased by 5.07% over the past week, outperforming the Zacks Banks - Foreign industry, which rose by 3.61% during the same period [6] - Over the last quarter, NTB shares have gained 7.09%, and over the past year, they have increased by 19%, while the S&P 500 has seen declines of -7.64% and gains of only 10.16% respectively [7] Trading Volume - The average 20-day trading volume for NTB is 186,561 shares, which serves as a bullish indicator when combined with rising stock prices [8] Earnings Outlook - In the past two months, one earnings estimate for NTB has been revised upwards, while none have been lowered, leading to an increase in the consensus estimate from $4.40 to $4.95 [10] - For the next fiscal year, one estimate has also moved upwards with no downward revisions, indicating positive earnings momentum [10] Conclusion - Given the strong price performance, positive earnings outlook, and high momentum score, NTB is positioned as a promising investment opportunity [12]

Financial Data and Key Metrics Changes - Butterfield reported net income of $53.8 million and core net income of $56.7 million for Q1 2025, with core earnings per share at $1.30 and a core return on average tangible common equity of 24.2% [10] - The net interest margin increased to 2.7%, up nine basis points from the prior quarter, while the cost of deposits fell 13 basis points to 1.60% [11] - Total core noninterest expenses were $90.3 million, slightly lower than $90.6 million in the prior quarter [17] Business Line Data and Key Metrics Changes - Net interest income before provision for credit losses was $89.3 million, benefiting from a lower cost of deposits and a positive mix shift towards demand deposits [13][14] - Noninterest income totaled $58.4 million, a decrease from the previous quarter, primarily due to lower transaction volume and incentive fees, although there was an increase in FX revenue and asset management fees [16] - The bank maintained a conservative strategy of reinvesting maturities into a mix of U.S. Agency MBS securities and medium-term U.S. Treasuries [15] Market Data and Key Metrics Changes - Average interest-earning assets remained flat at $13.4 billion compared to the prior quarter, despite anticipated client outflows [15] - Period-end deposit balances decreased to $12.6 billion from $12.7 billion, with expected average deposits settling in a range of $11.5 billion to $12 billion [20][21] - The bank's loan portfolio remains predominantly full recourse residential mortgages, with 68% of loans having loan-to-values below 70% [22] Company Strategy and Development Direction - The company is focused on expanding its retail presence in the Channel Islands and integrating Credit Suisse in Singapore, with a goal to mirror its success in Bermuda and Cayman [44][46] - Butterfield's capital management strategy emphasizes delivering a sustainable quarterly cash dividend while supporting organic growth and potential acquisitions [28] - The bank is cautious about M&A opportunities, focusing on fee businesses and private trust businesses while maintaining strict standards regarding AML and fiduciary risk [47][49] Management's Comments on Operating Environment and Future Outlook - Management noted that recent U.S. trade discussions have created uncertainty but do not expect significant direct impacts on Butterfield's business [27] - Early indications suggest robust hospitality bookings for Q2 2025 in Bermuda and Cayman, supporting a positive outlook [28] - The company remains committed to managing expenses and maintaining a strong balance sheet amid potential economic challenges [96] Other Important Information - The bank's tangible book value per share increased by 5.7% to $22.94 as unrealized losses on investments declined [26] - The resolution of a legacy loan for a hospitality facility in Bermuda is expected to positively impact future financial results [23] Q&A Session Summary Question: Credit side concerns regarding residential mortgage book - Management indicated that pressure is primarily seen in Bermuda and Prime Central London, with a focus on low LTV and DSR issues [35][36] Question: Retail presence growth in Channel Islands and Singapore - Management reported success in growing the mortgage loan book and credit card product in the Channel Islands, with positive integration in Singapore [44][46] Question: Impact of market volatility on securities investment strategy - Management acknowledged stabilization in rates and indicated a shift towards medium-term U.S. Treasuries for more certainty in yields [55][56] Question: M&A discussions amid trade uncertainties - Management noted that trade situations create uncertainty but may also motivate sellers to finalize deals [63][64] Question: Economic downturn strategies for expense management - Management highlighted the successful implementation of a voluntary early retirement program and ongoing cost management strategies [96][98]

Financial Performance - The company reported net income of $538 million, or $123 per share[9, 12] - Core net income reached $567 million, equivalent to $130 per share[9, 12] - Return on average common equity was 209%, while core return on average tangible common equity was 242%[10, 12] Income Statement Analysis - Net interest income increased to $893 million[9, 14] - Non-interest income totaled $584 million, a decrease of $48 million compared to the previous quarter[9, 17, 20] - Non-interest expenses amounted to $944 million[9] Balance Sheet Review - Total assets stood at $1402 billion, a decrease of 2% from the previous quarter[25] - Total deposits reached $126 billion[25, 27] - The company's balance sheet maintained a low risk density of 300%[27] Asset Quality - Non-accrual loans increased to 23% of gross loans[29] - Allowance for credit losses was $253 million, representing an ACL/Total loans ratio of 06%[29] Capital and Dividends - The company's regulatory capital levels remained above minimum requirements[35] - The quarterly dividend rate remained at $044 per common share[12, 35] - The combined payout ratio was 112%[35]

Financial Data and Key Metrics Changes - The company reported net income of $53.8 million and core net income of $56.7 million for Q1 2025, with core earnings per share at $1.3 and a core return on average tangible common equity of 24.2% [8][19] - The net interest margin increased by nine basis points to 2.7%, while the cost of deposits fell by 13 basis points to 1.60% [8][10] - Total core noninterest expenses were $90.3 million, slightly lower than the previous quarter's $90.6 million [13] Business Line Data and Key Metrics Changes - Net interest income before provision for credit losses was $89.3 million, benefiting from a lower cost of deposits and a positive mix shift in deposits [10] - Noninterest income totaled $58.4 million, a decrease from the previous quarter, primarily due to lower transaction volume and incentive fees, although FX revenue and asset management fees increased [12] Market Data and Key Metrics Changes - Average interest-earning assets remained flat at $13.4 billion compared to the prior quarter [10] - Deposit balances decreased to $12.6 billion from $12.7 billion, with expected average deposits settling between $11.5 billion and $12.0 billion [15] Company Strategy and Development Direction - The company is focused on maintaining a conservative and highly liquid balance sheet, supporting low credit risk investments and disciplined loan books [6] - There is a strategic emphasis on growing retail presence in the Channel Islands and expanding into Singapore, with successful integration of Credit Suisse noted [31][34] - The capital management strategy aims to deliver sustainable quarterly cash dividends while supporting organic growth and potential acquisitions [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong balance sheet and ongoing profitability, despite uncertainties from U.S. trade discussions [20] - Early indications show robust hospitality bookings for the 2025 season in Bermuda and Cayman, contributing to a positive outlook [20] Other Important Information - The company implemented a voluntary early retirement program, which is expected to reduce future expense loads [6][13] - The transition to Basel IV rules improved the regulatory capital ratio by 1.9% for the quarter [18] Q&A Session Summary Question: Credit side concerns regarding residential mortgage book - Management noted pressure in Bermuda and Prime Central London markets, with a focus on low LTV and DSR issues [25][26] Question: Retail presence in Channel Islands and expansion into Singapore - The company reported good growth in the Channel Islands and successful integration in Singapore, with over $10 billion in assets under trust [31][34] Question: Impact of market volatility on securities investment strategy - Management indicated a shift towards medium-term U.S. Treasuries for stability in yields amid market volatility [41][42] Question: M&A discussions in light of trade war - Management stated that trade discussions create uncertainty but do not significantly impact M&A conversations [49][50] Question: Economic downturn and expense management - The company has tactical cost reduction strategies in place, including a successful early retirement program and building operations in a less expensive jurisdiction [72][73]