(In thousands of US dollars, except share and per share data)
As at
September 30, 2025
December 31, 2024
Assets
Cash and demand deposits with banks - Non-interest bearing
105,686
93,145
Demand deposits with banks - Interest bearing
162,214
165,741
Cash equivalents - Interest bearing
1,233,468
1,739,226
Cash and cash equivalents
1,501,368
1,998,112
Securities purchased under agreements to resell
1,155,950
1,205,373
Short-term investments
830,761
580,026
Investment in securities
Available-for-sale at fair value (including assets pledged that secured parties are permitted to sell or repledge: Nil (2024: $93,468) (amortized cost: $2,721,244 (2024: $2,435,752))
Commitments, contingencies and guarantees (Note 10)
Shareholders' equity
Common share capital (BMD 0.01 par; authorized voting ordinary shares 2,000,000,000 and
non-voting ordinary shares 6,000,000,000) issued and outstanding: 41,201,173 (2024: 43,537,979)
412
435
Additional paid-in capital
872,667
916,394
Retained earnings
480,586
422,461
Less: treasury common shares, at cost: 619,212 (2024: 619,212)
(27,115)
(23,063)
Accumulated other comprehensive income (loss)
(220,594)
(295,415)
Total shareholders’ equity
1,105,956
1,020,812
Total liabilities and shareholders’ equity
14,086,355
14,231,396
The accompanying notes are an integral part of these consolidated financial statements.
2
The Bank of N.T. Butterfield & Son Limited
Consolidated Statements of Operations (unaudited)
(In thousands of US dollars, except per share data)
Three months ended
Nine months ended
September 30, 2025
September 30, 2024
September 30, 2025
September 30, 2024
Non-interest income
Asset management
9,914
9,454
28,842
27,180
Banking
17,830
14,421
47,631
42,485
Foreign exchange revenue
13,224
12,226
38,857
38,000
Trust
16,236
15,773
48,235
46,254
Custody and other administration services
3,141
3,484
9,802
10,169
Other non-interest income
836
679
3,263
2,689
Total non-interest income
61,181
56,037
176,630
166,777
Interest income
Interest and fees on loans
70,267
76,445
210,748
230,023
Investments (none of the investment securities are intrinsically tax-exempt)
Available-for-sale
19,839
12,688
55,928
33,062
Held-to-maturity
17,387
18,852
53,600
56,997
Cash and cash equivalents, securities purchased under agreements to resell and short-term investments
31,911
41,989
100,052
120,185
Total interest income
139,404
149,974
420,328
440,267
Interest expense
Deposits
46,681
59,662
144,987
172,609
Long-term debt
—
1,371
3,681
4,114
Securities sold under agreements to repurchase
2
888
207
977
Total interest expense
46,683
61,921
148,875
177,700
Net interest income before provision for credit losses
92,721
88,053
271,453
262,567
Provision for credit (losses) recoveries
(564)
(1,316)
(394)
(1,390)
Net interest income after provision for credit losses
92,157
86,737
271,059
261,177
Net gains (losses) on other real estate owned
—
—
—
68
Net other gains (losses)
(61)
(52)
33
181
Total other gains (losses)
(61)
(52)
33
249
Total net revenue
153,277
142,722
447,722
428,203
Non-interest expense
Salaries and other employee benefits
46,604
43,703
137,573
130,331
Technology and communications
16,043
16,468
48,346
49,453
Professional and outside services
4,951
4,814
15,547
17,014
Property
8,199
8,551
25,706
25,506
Indirect taxes
5,512
5,467
17,855
17,358
Non-service employee benefits expense
1,292
982
3,920
2,947
Marketing
1,388
1,289
4,858
4,174
Amortization of intangible assets
1,970
1,942
5,844
5,762
Other expenses
4,809
5,550
16,088
15,895
Total non-interest expense
90,768
88,766
275,737
268,440
Net income before income taxes
62,509
53,956
171,985
159,763
Income tax benefit (expense)
(1,447)
(1,240)
(3,834)
(3,025)
Net income
61,062
52,716
168,151
156,738
Earnings per common share
Basic earnings per share
1.50
1.18
4.04
3.44
Diluted earnings per share
1.46
1.16
3.93
3.38
The accompanying notes are an integral part of these consolidated financial statements.
3
The Bank of N.T. Butterfield & Son Limited
Consolidated Statements of Comprehensive Income (unaudited)
(In thousands of US dollars)
Three months ended
Nine months ended
September 30, 2025
September 30, 2024
September 30, 2025
September 30, 2024
Net income
61,062
52,716
168,151
156,738
Other comprehensive income (loss), net of taxes
Unrealized net gains (losses) on translation of net investment in foreign operations
(422)
2,057
5,838
1,945
Net changes on investments transferred to held-to-maturity
2,137
2,007
5,896
6,206
Unrealized net gains (losses) on available-for-sale investments
18,485
59,666
61,847
46,827
Employee benefit plans adjustments
736
(174)
1,240
1,230
Other comprehensive income (loss), net of taxes
20,936
63,556
74,821
56,208
Total comprehensive income (loss)
81,998
116,272
242,972
212,946
The accompanying notes are an integral part of these consolidated financial statements.
4
The Bank of N.T. Butterfield & Son Limited
Consolidated Statements of Changes in Shareholders' Equity (unaudited)
Three months ended
Nine months ended
September 30, 2025
September 30, 2024
September 30, 2025
September 30, 2024
Number of shares
In thousands of US dollars
Number of shares
In thousands of US dollars
Number of shares
In thousands of US dollars
Number of shares
In thousands of US dollars
Common share capital issued and outstanding
Balance at beginning of period
41,724,081
417
45,782,082
458
43,537,979
435
47,529,045
475
Retirement of shares
(669,951)
(7)
(993,203)
(10)
(2,880,140)
(29)
(3,228,523)
(32)
Issuance of common shares
147,043
2
3,005
—
543,334
6
491,362
5
Balance at end of period
41,201,173
412
44,791,884
448
41,201,173
412
44,791,884
448
Additional paid-in capital
Balance at beginning of period
881,196
953,254
916,394
988,904
Share-based compensation
5,573
5,185
16,355
15,471
Share-based settlements
48
53
526
518
Retirement of shares
(14,149)
(20,679)
(60,603)
(67,075)
Issuance of common shares, net of underwriting discounts and commissions
(1)
—
(5)
(5)
Balance at end of period
872,667
937,813
872,667
937,813
Retained earnings
Balance at beginning of period
454,524
383,500
422,461
342,520
Net Income for the period
61,062
52,716
168,151
156,738
Common share cash dividends declared and paid, $0.50 and 1.38 per share (2024: $0.44 and $1.32 per share)
(20,453)
(19,718)
(57,577)
(60,348)
Retirement of shares
(14,547)
(14,128)
(52,449)
(36,540)
Balance at end of period
480,586
402,370
480,586
402,370
Treasury common shares
Balance at beginning of period
619,212
(25,468)
619,212
(20,552)
619,212
(23,063)
619,212
(18,104)
Purchase of treasury common shares
669,951
(30,350)
993,203
(36,752)
2,880,140
(117,133)
3,228,523
(108,030)
Retirement of shares
(669,951)
28,703
(993,203)
34,817
(2,880,140)
113,081
(3,228,523)
103,647
Balance at end of period
619,212
(27,115)
619,212
(22,487)
619,212
(27,115)
619,212
(22,487)
Accumulated other comprehensive income (loss)
Balance at beginning of period
(241,530)
(317,546)
(295,415)
(310,198)
Other comprehensive income (loss), net of taxes
20,936
63,556
74,821
56,208
Balance at end of period
(220,594)
(253,990)
(220,594)
(253,990)
Total shareholders' equity
1,105,956
1,064,154
1,105,956
1,064,154
The accompanying notes are an integral part of these consolidated financial statements.
5
The Bank of N.T. Butterfield & Son Limited
Consolidated Statements of Cash Flows (unaudited)
(In thousands of US dollars)
Nine months ended
September 30, 2025
September 30, 2024
Cash flows from operating activities
Net income
168,151
156,738
Adjustments to reconcile net income to operating cash flows
Depreciation, accretion and amortization
29,432
33,952
Provision for credit losses (recoveries)
394
1,390
Share-based payments and settlements
16,882
15,989
Net (gains) losses on other real estate owned
—
(68)
(Increase) decrease in carrying value of equity method investments
(190)
387
Dividends received from equity method investments
60
110
Changes in operating assets and liabilities
(Increase) decrease in accrued interest receivable and other assets
28,782
21,646
Increase (decrease) in employee benefit plans, accrued interest payable and other liabilities
(28,019)
(1,146)
Cash provided by (used in) operating activities
215,492
228,998
Cash flows from investing activities
Net (increase) decrease in securities purchased under agreements to resell
102,831
(955,524)
Short-term investments other than restricted cash: proceeds from maturities and sales
1,109,455
2,007,287
Short-term investments other than restricted cash: purchases
(1,338,460)
(1,581,580)
Available-for-sale investments: proceeds from maturities and pay downs
240,093
462,660
Available-for-sale investments: purchases
(527,821)
(663,513)
Held-to-maturity investments: proceeds from maturities and pay downs
187,215
197,357
Held-to-maturity investments: purchases
—
(37,712)
Net (increase) decrease in loans
138,785
187,635
Additions to premises, equipment and computer software
(19,516)
(12,909)
Proceeds from sale of other real estate owned
—
530
Purchase of intangible assets
—
(481)
Cash provided by (used in) investing activities
(107,418)
(396,250)
Cash flows from financing activities
Net increase (decrease) in deposits
(297,278)
590,610
Net increase (decrease) in securities sold under agreements to repurchase
(90,032)
96,049
Repayment of long-term debt
(100,000)
—
Common shares repurchased
(117,132)
(108,030)
Cash dividends paid on common shares
(57,577)
(60,348)
Cash provided by (used in) financing activities
(662,019)
518,281
Net effect of exchange rates on cash, cash equivalents and restricted cash
53,025
84,232
Net increase (decrease) in cash, cash equivalents and restricted cash
(500,920)
435,261
Cash, cash equivalents and restricted cash: beginning of period
2,088,542
1,672,260
Cash, cash equivalents and restricted cash: end of period
1,587,622
2,107,521
Components of cash, cash equivalents and restricted cash at end of period
Cash and cash equivalents
1,501,368
2,067,189
Restricted cash included in short-term investments on the consolidated balance sheets
86,254
40,332
Total cash, cash equivalents and restricted cash at end of period
1,587,622
2,107,521
Supplemental disclosure of non-cash items
Transfer to (out of) other real estate owned
—
87
Initial recognition of right-of-use assets and operating lease liabilities
4,580
1,262
The accompanying notes are an integral part of these consolidated financial statements.
6
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited)
(In thousands of US dollars, unless otherwise stated)
Note 1: Nature of business
The Bank of N.T. Butterfield & Son Limited (“Butterfield”, the “Bank” or the “Company”) is incorporated under the laws of Bermuda and has a banking license under the Banks and Deposit Companies Act, 1999 (“the Act”). Butterfield is regulated by the Bermuda Monetary Authority (“BMA”), which operates in accordance with Basel principles.
Butterfield is a full service bank and wealth manager headquartered in Hamilton, Bermuda. The Bank operates its business through three geographic segments: Bermuda, Cayman, and the Channel Islands and the UK, where its principal banking operations are located and where it offers specialized financial services. Butterfield offers banking services, comprised of retail and corporate banking, and wealth management, which consists of trust, private banking, and asset management. In the Bermuda, Cayman, and Channel Islands and the UK segments, Butterfield offers both banking and wealth management services. Butterfield also has operations in the jurisdictions of The Bahamas, Canada, Mauritius, Singapore and Switzerland, which are included in our Other segment.
The Bank's common shares trade on the New York Stock Exchange under the symbol "NTB" and on the Bermuda Stock Exchange ("BSX") under the symbol "NTB.BH".
Note 2: Significant accounting policies
The accompanying unaudited interim consolidated financial statements of the Bank have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and should be read in conjunction with the Bank’s audited financial statements for the year ended December 31, 2024.
In the opinion of Management, these unaudited interim consolidated financial statements reflect all adjustments (consisting primarily of normal recurring accruals) considered necessary for a fair statement of the Bank’s financial position and results of operations as at the end of and for the periods presented. The Bank’s results for interim periods are not necessarily indicative of results for the full year.
The preparation of financial statements in conformity with GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited consolidated financial statements and the reported amounts of revenues and expenses during the reporting period, and actual results could differ from those estimates. Management believes that the most critical accounting estimates upon which the financial condition depends, and which involve the most complex or subjective decisions or assessments, are as follows:
•Allowance for credit losses
•Fair value of financial instruments
•Impairment of goodwill
•Employee benefit plans
New Accounting Pronouncements
There were no accounting developments issued during the nine months ended September 30, 2025 or accounting standards pending adoption which impacted the Bank.
Note 3: Cash and cash equivalents
September 30, 2025
December 31, 2024
Non-interest bearing
Cash and demand deposits with banks
105,686
93,145
Interest bearing
Demand deposits with banks
162,214
165,741
Cash equivalents
1,233,468
1,739,226
Sub-total - Interest bearing
1,395,682
1,904,967
Total cash and cash equivalents
1,501,368
1,998,112
Note 4: Short-term investments
September 30, 2025
December 31, 2024
Unrestricted
Maturing within three months
284,331
415,072
Maturing between three to six months
315,274
74,524
Maturing between six to twelve months
144,902
—
Total unrestricted short-term investments
744,507
489,596
Affected by drawing restrictions related to minimum reserve and derivative margin requirements
Interest earning demand and term deposits
86,254
90,430
Total restricted short-term investments
86,254
90,430
Total short-term investments
830,761
580,026
7
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
Note 5: Investment in securities
Amortized Cost, Carrying Amount and Fair Value
On the consolidated balance sheets, available-for-sale ("AFS") investments are carried at fair value and held-to-maturity ('HTM') investments are carried at amortized cost.
September 30, 2025
December 31, 2024
Amortized cost
Gross unrealized gains
Gross unrealized losses
Fair value
Amortized cost
Gross unrealized gains
Gross unrealized losses
Fair value
Available-for-sale
US government and federal agencies
2,705,907
10,859
(111,160)
2,605,606
2,324,841
1,451
(162,673)
2,163,619
Non-US governments debt securities
—
—
—
—
93,803
—
(335)
93,468
Asset-backed securities - Student loans
—
—
—
—
40
—
—
40
Residential mortgage-backed securities
15,337
—
(1,194)
14,143
17,068
—
(1,709)
15,359
Total available-for-sale
2,721,244
10,859
(112,354)
2,619,749
2,435,752
1,451
(164,717)
2,272,486
Held-to-maturity¹
US government and federal agencies
3,055,181
650
(450,204)
2,605,627
3,240,290
—
(569,250)
2,671,040
Total held-to-maturity
3,055,181
650
(450,204)
2,605,627
3,240,290
—
(569,250)
2,671,040
¹For the nine months ended September 30, 2025 and September 30, 2024, impairments recognized in other comprehensive income for HTM investments were Nil.
Investments with Unrealized Loss Positions
The Bank does not believe that the AFS debt securities that were in an unrealized loss position as of September 30, 2025, comprising 160 securities representing 56.6% of the AFS portfolios' carrying value (December 31, 2024: 184 and 87.7%), represent credit losses. Total gross unrealized AFS losses were 7.6% of the fair value of the affected securities (December 31, 2024: 8.3%).
The Bank’s HTM debt securities are comprised of US government and federal agencies securities and have a zero credit loss assumption under the Current Expected Credit Loss ("CECL") model. HTM debt securities that were in an unrealized loss position as of September 30, 2025, were comprised of 218 securities representing 98.9% of the HTM portfolios’ carrying value (December 31, 2024: 220 and 100%). Total gross unrealized HTM losses were 17.5% of the fair value of affected securities (December 31, 2024: 21.3%).
Management does not intend to sell and it is likely that management will not be required to sell the securities prior to the anticipated recovery of the cost of these securities. Unrealized losses were attributable primarily to changes in market interest rates, relative to when the investment securities were purchased, and not due to a decrease in the credit quality of the investment securities. The issuers continue to make timely principal and interest payments on the securities. The following describes the processes for identifying credit impairment in security types with the most significant unrealized losses as shown in the preceding tables.
Management believes that all the US government and federal agencies securities do not have any credit losses, given the explicit and implicit guarantees provided by the US federal government.
Management believes that all the Non-US governments debt securities, which have now matured, did not have any credit losses, given the explicit guarantee provided by the issuing government.
Investments in Asset-backed securities - Student loans were composed of securities collateralized by Federal Family Education Loan Program ("FFELP") loans. FFELP loans benefit from a US federal government guarantee of at least 97% of defaulted principal and accrued interest, with additional credit support provided in the form of over-collateralization, subordination and excess spread, which collectively total in excess of 100%.
Investments in Residential mortgage-backed securities relate to 13 securities (December 31, 2024: 13) which are rated AAA and may possess structural features of securitization, such as subordination, excess spread, over collateralization or other forms of credit enhancement. No credit losses were recognized on these securities as the weighted average credit support and the weighted average loan-to-value ratios range from 15.6% - 50.1% and 42.7% - 51.8%, respectively. Current credit support is significantly greater than any delinquencies experienced on the underlying mortgages.
In the following tables, debt securities with unrealized losses that are not deemed to be credit impaired and for which an allowance for credit losses has not been recorded are categorized as being in a loss position for "less than 12 months" or "12 months or more" based on the point in time that the fair value most recently declined below the amortized
cost basis.
8
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
Less than 12 months
12 months or more
September 30, 2025
Fair value
Gross unrealized losses
Fair value
Gross unrealized losses
Total fair value
Total gross unrealized losses
Available-for-sale securities with unrealized losses
US government and federal agencies
92,596
(270)
1,376,737
(110,890)
1,469,333
(111,160)
Residential mortgage-backed securities
—
—
14,144
(1,194)
14,144
(1,194)
Total available-for-sale securities with unrealized losses
92,596
(270)
1,390,881
(112,084)
1,483,477
(112,354)
Held-to-maturity securities with unrealized losses
US government and federal agencies
—
—
2,569,862
(450,204)
2,569,862
(450,204)
Less than 12 months
12 months or more
December 31, 2024
Fair value
Gross unrealized losses
Fair value
Gross unrealized losses
Total fair value
Total gross unrealized losses
Available-for-sale securities with unrealized losses
US government and federal agencies
696,835
(7,922)
1,187,094
(154,751)
1,883,929
(162,673)
Non-US governments debt securities
—
—
93,468
(335)
93,468
(335)
Asset-backed securities - Student loans
—
—
40
—
40
—
Residential mortgage-backed securities
—
—
15,359
(1,709)
15,359
(1,709)
Total available-for-sale securities with unrealized losses
696,835
(7,922)
1,295,961
(156,795)
1,992,796
(164,717)
Held-to-maturity securities with unrealized losses
US government and federal agencies
36,713
(476)
2,634,326
(568,774)
2,671,039
(569,250)
Investment Maturities
The following table presents the remaining term to contractual maturity of the Bank’s securities. The actual maturities may differ as certain securities offer prepayment options to the borrowers.
Remaining term to maturity
September 30, 2025
Within 3 months
3 to 12 months
1 to 5 years
5 to 10 years
Over 10 years
No specific or single maturity
Carrying amount
Available-for-sale
US government and federal agencies
—
444,361
833,539
—
—
1,327,706
2,605,606
Residential mortgage-backed securities
—
—
—
—
—
14,143
14,143
Total available-for-sale
—
444,361
833,539
—
—
1,341,849
2,619,749
Held-to-maturity
US government and federal agencies
—
—
—
—
—
3,055,181
3,055,181
Pledged Investments
The Bank pledges certain US government and federal agencies investment securities to further secure the Bank's issued customer deposit products. The secured party does not have the right to sell or repledge the collateral.
As at September 30, 2025, the Bank pledged Nil (December 31, 2024: $93.5 million) in non-US governments debt investment securities to secure the Bank's repurchase agreements. Where the secured party has the right to sell or repledge the collateral, the Bank disclosed such pledged financial assets separately in the accompanying consolidated balance sheets.
Taxability of Interest Income
None of the investments' interest income have received a specific preferential income tax treatment in any of the jurisdictions in which the Bank owns investments.
9
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
Note 6: Loans
The principal means of securing residential mortgages, personal, credit card and business loans are entitlements over assets and guarantees. Mortgage loans are generally repayable over periods of up to thirty years and personal and business loans are generally repayable over terms not exceeding five years. Government loans are repayable over a variety of terms which are individually negotiated. Amounts owing on credit cards are revolving and typically a minimum amount is due within 30 days from billing. The credit card portfolio is managed as a single portfolio and includes consumer and business cards. The effective yield on total loans as at September 30, 2025 is 5.94% (December 31, 2024: 6.29%). The interest receivable on total loans as at September 30, 2025 is $11.2 million (December 31, 2024: $8.0 million). The interest receivable is included in Accrued interest and other assets on the consolidated balance sheets and is excluded from all loan amounts disclosed in this note.
Loans' Credit Quality
The four credit quality classifications set out in the following tables are defined below and describe the credit quality of the Bank's lending portfolio. These classifications each encompass a range of more granular internal credit rating grades. Loans' internal credit ratings are assigned by the Bank's customer relationship managers as well as members of the Bank's jurisdictional and Group Credit Committees. The borrowers' financial condition is documented at loan origination and maintained periodically thereafter at a frequency which can be up to monthly for certain loans. The loans' performing status, as well as current economic trends, are continuously monitored. The Bank's jurisdictional and Group Credit Committees meet on a monthly basis. The Bank also has a Group Provisions and Impairments Committee which is responsible for approving significant provisions and other impairment charges.
A pass loan shall mean a loan that is expected to be repaid as agreed. A loan is classified as pass where the Bank is not expected to face repayment difficulties because the present and projected cash flows are sufficient to repay the debt and the repayment schedule as established by the agreement is being followed. Loans in this category are reviewed by the Bank’s management on at least an annual basis.
A special mention loan shall mean a loan under close monitoring by the Bank’s management on at least a quarterly basis. Loans in this category are currently still performing, but are potentially weak and present an undue credit risk exposure, but not to the point of justifying a classification of substandard.
A substandard loan shall mean a loan whose evident unreliability makes repayment doubtful and there is a threat of loss to the Bank unless the unreliability is averted. Loans in this category are under close monitoring by the Bank’s management on at least a quarterly basis.
A non-accrual loan shall mean either management is of the opinion full payment of principal or interest is in doubt or that the principal or interest is 90 days past due unless it is a residential mortgage loan which is well secured and collection efforts are reasonably expected to result in amounts due. Loans in this category are under close monitoring by the Bank’s management on at least a quarterly basis.
10
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
The amortized cost of loans by credit quality classification and allowance for expected credit losses by class of loans is as follows:
September 30, 2025
Pass
Special mention
Substandard
Non-accrual
Total amortized cost
Allowance for expected credit losses
Total net loans
Commercial loans
Government
299,474
—
—
—
299,474
(265)
299,209
Commercial and industrial
196,683
902
681
17,147
215,413
(12,093)
203,320
Commercial overdrafts
66,420
706
—
207
67,333
(70)
67,263
Total commercial loans
562,577
1,608
681
17,354
582,220
(12,428)
569,792
Commercial real estate loans
Commercial mortgage
492,992
355
2,116
2,976
498,439
(1,064)
497,375
Construction
71,196
—
—
—
71,196
—
71,196
Total commercial real estate loans
564,188
355
2,116
2,976
569,635
(1,064)
568,571
Consumer loans
Automobile financing
19,143
—
4
139
19,286
(36)
19,250
Credit card
94,380
—
288
—
94,668
(2,255)
92,413
Overdrafts
33,656
—
—
20
33,676
(263)
33,413
Other consumer1
40,140
18
819
837
41,814
(899)
40,915
Total consumer loans
187,319
18
1,111
996
189,444
(3,453)
185,991
Residential mortgage loans
2,943,053
1,888
136,669
70,405
3,152,015
(8,724)
3,143,291
Total
4,257,137
3,869
140,577
91,731
4,493,314
(25,669)
4,467,645
1 Other consumer loans’ amortized cost includes $9 million of cash and portfolio secured lending and $26 million of lending secured by buildings in construction or other collateral.
December 31, 2024
Pass
Special mention
Substandard
Non-accrual
Total amortized cost
Allowance for expected credit losses
Total net loans
Commercial loans
Government
266,303
—
—
—
266,303
(462)
265,841
Commercial and industrial
210,911
347
778
18,026
230,062
(11,147)
218,915
Commercial overdrafts
115,558
1,896
—
1
117,455
(75)
117,380
Total commercial loans
592,772
2,243
778
18,027
613,820
(11,684)
602,136
Commercial real estate loans
Commercial mortgage
572,875
858
2,301
17,520
593,554
(3,267)
590,287
Construction
48,484
—
—
—
48,484
—
48,484
Total commercial real estate loans
621,359
858
2,301
17,520
642,038
(3,267)
638,771
Consumer loans
Automobile financing
18,010
—
6
164
18,180
(34)
18,146
Credit card
90,433
—
244
—
90,677
(1,919)
88,758
Overdrafts
37,110
—
—
38
37,148
(378)
36,770
Other consumer1
45,180
—
832
733
46,745
(923)
45,822
Total consumer loans
190,733
—
1,082
935
192,750
(3,254)
189,496
Residential mortgage loans
2,849,805
23,619
137,093
40,175
3,050,692
(7,504)
3,043,188
Total
4,254,669
26,720
141,254
76,657
4,499,300
(25,709)
4,473,591
1 Other consumer loans’ amortized cost includes $10 million of cash and portfolio secured lending and $27 million of lending secured by buildings in construction or other collateral.
11
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
Based on the most recent analysis performed, the amortized cost of loans by year of origination and credit quality classification is as follows:
September 30, 2025
Pass
Special mention
Substandard
Non-accrual
Total amortized cost
Loans by origination year
2025
422,141
920
—
—
423,061
2024
484,213
—
252
129
484,594
2023
295,416
—
14,990
40
310,446
2022
748,344
1,451
5,227
40
755,062
2021
375,808
437
—
264
376,509
Prior
1,732,340
355
119,820
91,031
1,943,546
Overdrafts and credit cards
198,875
706
288
227
200,096
Total amortized cost
4,257,137
3,869
140,577
91,731
4,493,314
December 31, 2024
Pass
Special mention
Substandard
Non-accrual
Total amortized cost
Loans by origination year
2024
497,053
—
267
—
497,320
2023
366,278
—
506
51
366,835
2022
759,398
888
750
4
761,040
2021
422,496
781
—
13
423,290
2020
270,060
451
32,733
7,503
310,747
Prior
1,690,525
22,704
106,754
69,047
1,889,030
Overdrafts and credit cards
248,859
1,896
244
39
251,038
Total amortized cost
4,254,669
26,720
141,254
76,657
4,499,300
Age Analysis of Past Due Loans (Including Non-Accrual Loans)
The following tables summarize the past due status of the loans. The aging of past due amounts are determined based on the contractual delinquency status of payments under the loan and this aging may be affected by the timing of the last business day at period end. Loans less than 30 days past due are included in current loans.
September 30, 2025
30 - 59 days
60 - 89 days
90 days or more
Total past due loans
Total current
Total amortized cost
Commercial loans
Government
—
—
—
—
299,474
299,474
Commercial and industrial
—
—
17,147
17,147
198,266
215,413
Commercial overdrafts
—
—
207
207
67,126
67,333
Total commercial loans
—
—
17,354
17,354
564,866
582,220
Commercial real estate loans
Commercial mortgage
332
—
2,976
3,308
495,131
498,439
Construction
—
—
—
—
71,196
71,196
Total commercial real estate loans
332
—
2,976
3,308
566,327
569,635
Consumer loans
Automobile financing
119
29
134
282
19,004
19,286
Credit card
424
188
288
900
93,768
94,668
Overdrafts
—
—
20
20
33,656
33,676
Other consumer
58
38
678
774
41,040
41,814
Total consumer loans
601
255
1,120
1,976
187,468
189,444
Residential mortgage loans
24,590
9,304
104,620
138,514
3,013,501
3,152,015
Total amortized cost
25,523
9,559
126,070
161,152
4,332,162
4,493,314
12
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
December 31, 2024
30 - 59 days
60 - 89 days
90 days or more
Total past due loans
Total current
Total amortized cost
Commercial loans
Government
—
—
—
—
266,303
266,303
Commercial and industrial
217
—
17,227
17,444
212,618
230,062
Commercial overdrafts
—
—
1
1
117,454
117,455
Total commercial loans
217
—
17,228
17,445
596,375
613,820
Commercial real estate loans
Commercial mortgage
346
—
17,520
17,866
575,688
593,554
Construction
—
—
—
—
48,484
48,484
Total commercial real estate loans
346
—
17,520
17,866
624,172
642,038
Consumer loans
Automobile financing
83
35
153
271
17,909
18,180
Credit card
514
280
244
1,038
89,639
90,677
Overdrafts
—
—
38
38
37,110
37,148
Other consumer
739
31
733
1,503
45,242
46,745
Total consumer loans
1,336
346
1,168
2,850
189,900
192,750
Residential mortgage loans
17,520
5,797
106,965
130,282
2,920,410
3,050,692
Total amortized cost
19,419
6,143
142,881
168,443
4,330,857
4,499,300
Changes in Allowances For Credit Losses
Allowance for expected credit losses remained relatively flat during the nine months ended September 30, 2025. As disclosed in Note 2 of the December 31, 2024 Audited Consolidated Financial Statements, the Bank continuously collects and maintains attributes related to financial instruments within the scope of CECL, including current conditions, and reasonable and supportable assumptions about future economic conditions.
Nine months ended September 30, 2025
Commercial
Commercial real estate
Consumer
Residential mortgage
Total
Balance at the beginning of period
11,684
3,267
3,254
7,504
25,709
Provision increase (decrease)
1,250
(2,119)
61
1,170
362
Recoveries of previous charge-offs
—
—
1,407
114
1,521
Charge-offs, by origination year
2025
—
—
—
—
—
2024
—
—
(7)
—
(7)
2023
—
—
—
(30)
(30)
2022
—
—
(2)
—
(2)
2021
—
—
(15)
—
(15)
Prior
(504)
(84)
(23)
(93)
(704)
Overdrafts and credit cards
(17)
—
(1,232)
—
(1,249)
Other
15
—
10
59
84
Allowances for expected credit losses at end of period
12,428
1,064
3,453
8,724
25,669
13
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
Nine months ended September 30, 2024
Commercial
Commercial real estate
Consumer
Residential mortgage
Total
Balance at the beginning of period
11,248
1,441
3,096
9,974
25,759
Provision increase (decrease)
318
2,849
518
(2,267)
1,418
Recoveries of previous charge-offs
—
—
895
191
1,086
Charge-offs, by origination year
2024
—
—
—
—
—
2023
—
—
(2)
—
(2)
2022
—
—
—
—
—
2021
—
(146)
—
—
(146)
2020
—
(146)
—
—
(146)
Prior
(261)
(27)
(101)
(531)
(920)
Overdrafts and credit cards
(5)
—
(1,278)
—
(1,283)
Other
1
—
5
19
25
Allowances for expected credit losses at end of period
11,301
3,971
3,133
7,386
25,791
Collateral-dependent loans
Management identified that the repayment of certain commercial and consumer mortgage loans is expected to be provided substantially through the operation or the sale of the collateral pledged to the Bank ("collateral-dependent loans"). The Bank believes that for the vast majority of loans identified as collateral-dependent, the sale of the collateral will be sufficient to fully reimburse the loan's carrying amount.
Non-Performing Loans
During the nine months ended September 30, 2025, no interest was recognized on non-accrual loans. No credit deteriorated loans were purchased during the period.
September 30, 2025
December 31, 2024
Non-accrual loans with an allowance
Non-accrual loans without an allowance
Past due 90 days or more and accruing
Total non- performing loans
Non-accrual loans with an allowance
Non-accrual loans without an allowance
Past due 90 days or more and accruing
Total non- performing loans
Commercial loans
Commercial and industrial
17,147
—
—
17,147
17,209
817
—
18,026
Commercial overdrafts
—
207
—
207
—
1
—
1
Total commercial loans
17,147
207
—
17,354
17,209
818
—
18,027
Commercial real estate loans
Commercial mortgage
2,891
85
—
2,976
17,410
110
—
17,520
Total commercial real estate loans
2,891
85
—
2,976
17,410
110
—
17,520
Consumer loans
Automobile financing
114
25
—
139
126
38
—
164
Credit card
—
—
288
288
—
—
244
244
Overdrafts
—
20
—
20
—
38
—
38
Other consumer
492
345
—
837
528
205
—
733
Total consumer loans
606
390
288
1,284
654
281
244
1,179
Residential mortgage loans
51,337
19,068
41,972
112,377
22,630
17,545
72,693
112,868
Total non-performing loans
71,981
19,750
42,260
133,991
57,903
18,754
72,937
149,594
14
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
Loan Modifications Made to Borrowers Experiencing Financial Difficulty
The following table summarizes the amortized cost basis of loan modifications as at September 30, 2025 and September 30, 2024 made to borrowers experiencing financial difficulty during the nine-months ended September 30, 2025 and September 30, 2024.
Amortized cost basis
Weighted average financial effects
September 30, 2025
Term extension and interest rate reduction
Payments delay in # of months
Term extension
Interest rate reduction
In % of the class of loans
Months of payment delay
Months of term extension
Interest rate reduction
Residential mortgage loans
2,196
—
30,763
5,061
1.2
%
—
6
3.1
%
Amortized cost basis
Weighted average financial effects
September 30, 2024
Term extension and interest rate reduction
Payments delay in # of months
Term extension
Interest rate reduction
In % of the class of loans
Months of payment delay
Months of term extension
Interest rate reduction
Commercial mortgage
—
—
—
642
0.1
%
—
0
3.0
%
Other consumer
—
—
59
787
1.6
%
—
34
4.0
%
Residential mortgage loans
20,868
—
1,592
5,264
0.9
%
—
28
1.9
%
Age analysis and subsequent default of modified loans.
As at September 30, 2025 and September 30, 2024, all loans for which a concession was granted during the preceding 12 months are current, except for the following:
Residential mortgage loans:
–$5.4 million (September 30, 2024: Nil) of residential mortgage loans for which a reduction in interest rate was granted are 30 to 59 days past due; and
–$0.1 million (September 30, 2024: Nil) of residential mortgage loans for which a reduction in interest rate was granted had a payment default and are 90 days or more past due.
Note 7: Credit risk concentrations
Concentrations of credit risk in the lending and off-balance sheet credit-related arrangements portfolios arise when a number of customers are engaged in similar business activities, are in the same geographic region, or when they have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. The Bank regularly monitors various segments of its credit risk portfolio to assess potential concentrations of risks and to obtain collateral when deemed necessary. In the Bank's commercial portfolio, risk concentrations are evaluated primarily by industry and by geographic region of loan origination. In the consumer portfolio, concentrations are evaluated primarily by products. Credit exposures include loans, guarantees and acceptances, letters of credit and commitments for undrawn lines of credit. Unconditionally cancellable credit cards and overdraft lines of credit are excluded from the tables below.
The following table summarizes the credit exposure of the Bank by geographic region. The exposure amounts disclosed below do not include accrued interest and are gross of allowances for credit losses and gross of collateral held.
15
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
September 30, 2025
December 31, 2024
Geographic region
Cash and cash equivalents, resell agreements and short-term investments
Loans
Off-balance sheet
Total credit exposure
Cash and cash equivalents, resell agreements and short-term investments
Loans
Off-balance sheet
Total credit exposure
Belgium
3,346
—
—
3,346
2,478
—
—
2,478
Bermuda
46,642
1,516,824
213,211
1,776,677
37,227
1,631,461
186,210
1,854,898
Canada
1,019,817
—
—
1,019,817
1,417,882
—
—
1,417,882
Cayman Islands
33,465
1,025,895
205,127
1,264,487
40,675
1,068,142
218,817
1,327,634
France
117,301
—
—
117,301
207,687
—
—
207,687
Germany
7,624
—
—
7,624
1,178
—
—
1,178
Guernsey
—
542,521
104,444
646,965
1
552,994
103,979
656,974
Ireland
10,600
—
—
10,600
8,672
—
—
8,672
Japan
133,512
—
—
133,512
121,862
—
—
121,862
Jersey
—
319,198
36,100
355,298
—
223,964
68,217
292,181
Mauritius
1,481
—
—
1,481
1,055
—
—
1,055
Norway
47,499
—
—
47,499
100,148
—
—
100,148
Switzerland
8,522
—
—
8,522
3,377
—
—
3,377
The Bahamas
89
3,022
—
3,111
184
3,791
—
3,975
United Kingdom
1,343,902
1,085,854
135,687
2,565,443
1,240,116
1,018,948
137,654
2,396,718
United States
712,603
—
—
712,603
599,264
—
—
599,264
Other
1,676
—
—
1,676
1,705
—
—
1,705
Total gross exposure
3,488,079
4,493,314
694,569
8,675,962
3,783,511
4,499,300
714,877
8,997,688
Note 8: Deposits
By Maturity
Demand
Total demand deposits
Term
Total term deposits
September 30, 2025
Non-interest bearing
Interest bearing
Within 3 months
3 to 6 months
6 to 12 months
After 12 months
Total deposits
Demand or less than $100k¹
2,581,924
6,191,334
8,773,258
53,547
20,184
21,618
10,066
105,415
8,878,673
Term - $100k or more
N/A
N/A
—
2,983,109
462,147
359,441
37,597
3,842,294
3,842,294
Total deposits
2,581,924
6,191,334
8,773,258
3,036,656
482,331
381,059
47,663
3,947,709
12,720,967
Demand
Total demand deposits
Term
Total term deposits
December 31, 2024
Non-interest bearing
Interest bearing
Within 3 months
3 to 6 months
6 to 12 months
After 12 months
Total deposits
Demand or less than $100k¹
2,687,877
5,579,775
8,267,652
51,608
18,035
19,912
10,395
99,950
8,367,602
Term - $100k or more
N/A
N/A
—
3,540,636
416,374
348,301
72,996
4,378,307
4,378,307
Total deposits
2,687,877
5,579,775
8,267,652
3,592,244
434,409
368,213
83,391
4,478,257
12,745,909
¹The weighted-average interest rate on interest-bearing demand deposits as at September 30, 2025 is 0.75% (December 31, 2024: 0.87%).
By Type and Segment
September 30, 2025
December 31, 2024
Payable on demand
Payable on a fixed date
Total
Payable on demand
Payable on a fixed date
Total
Bermuda
3,889,335
900,675
4,790,010
3,535,770
1,245,294
4,781,064
Cayman
2,791,287
976,675
3,767,962
2,793,194
1,177,909
3,971,103
Channel Islands and the UK
2,092,636
2,070,359
4,162,995
1,938,688
2,055,054
3,993,742
Total deposits
8,773,258
3,947,709
12,720,967
8,267,652
4,478,257
12,745,909
Note 9: Employee benefit plans
The Bank maintains trusteed pension plans including non-contributory defined benefit plans and a number of defined contribution plans, and provides post-retirement medical benefits to its qualifying retirees. The defined benefit provisions under the pension plans are generally based upon years of service and average salary during the relevant years of employment. The defined benefit and post-retirement medical plans are not open to new participants and are non-contributory and the funding required is provided by the Bank, based upon the advice of independent actuaries. The defined benefit pension plans are in the Bermuda, Guernsey and UK jurisdictions, and the defined benefit post-retirement medical plan is in Bermuda. The Bank has a residual obligation on top of its defined contribution plan in Mauritius.
16
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
The Bank included an estimate of the 2025 Bank contribution and estimated benefit payments for the next ten years under the pension and post-retirement plans in its audited financial statements for the year ended December 31, 2024. During the nine months ended September 30, 2025, there have been no material revisions to these estimates.
Three months ended
Nine months ended
Line item in the consolidated statements of operations
September 30, 2025
September 30, 2024
September 30, 2025
September 30, 2024
Defined benefit pension expense (income)
Interest cost
Non-service employee benefits expense
1,313
1,297
3,912
3,853
Expected return on plan assets
Non-service employee benefits expense
(1,700)
(1,576)
(5,028)
(4,683)
Amortization of net actuarial (gains) losses
Non-service employee benefits expense
586
591
1,756
1,769
Amortization of prior service (credit) cost
Non-service employee benefits expense
20
21
61
60
Total defined benefit pension expense (income)
219
333
701
999
Post-retirement medical benefit expense (income)
Service cost
Salaries and other employee benefits
10
14
32
41
Interest cost
Non-service employee benefits expense
1,092
1,096
3,277
3,289
Amortization of net actuarial (gains) losses
Non-service employee benefits expense
131
131
393
393
Amortization of prior service (credit) cost
Non-service employee benefits expense
(151)
(578)
(452)
(1,734)
Total post-retirement medical benefit expense (income)
1,082
663
3,250
1,989
The components of defined benefit pension expense (income) and post-retirement benefit expense (income) other than the service cost component are included in the line item non-service employee benefits expense in the consolidated statements of income.
Note 10: Credit related arrangements, repurchase agreements and commitments
Commitments
The Bank enters into contractual commitments to extend credit, normally with fixed expiration dates or termination clauses, at specified rates and for specific purposes. Substantially all of the Bank's commitments to extend credit are contingent upon customers maintaining specific credit standards at the time of loan funding. Management assesses the credit risk associated with certain commitments to extend credit in determining the level of the allowance for expected credit losses.
The Bank has a facility with one of its custodians, whereby the Bank may offer up to $200 million of standby letters of credit to its customers on a fully secured basis. Under the standard terms of the facility, the custodian has the right to set-off against securities held of 110% of the utilized facility. At September 30, 2025, $136.8 million (December 31, 2024: $138.4 million) of standby letters of credit were issued under this facility.
Outstanding unfunded commitments to extend credit
September 30, 2025
December 31, 2024
Commitments to extend credit
449,093
475,289
Documentary and commercial letters of credit
50
1,576
Total unfunded commitments to extend credit
449,143
476,865
Allowance for credit losses
(122)
(90)
Credit-Related Arrangements
Standby letters of credit and letters of guarantee are issued at the request of a Bank customer in order to secure the customer’s payment or performance obligations to a third party. These guarantees represent an irrevocable obligation of the Bank to pay the third party beneficiary upon presentation of the guarantee and satisfaction of the documentary requirements stipulated therein, without investigation as to the validity of the beneficiary’s claim against the customer. Generally, the term of the standby letters of credit does not exceed one year, while the term of the letters of guarantee does not exceed four years. The types and amounts of collateral security held by the Bank for these standby letters of credit and letters of guarantee are generally represented by deposits with the Bank or a charge over assets held in mutual funds.
The Bank considers the fees collected in connection with the issuance of standby letters of credit and letters of guarantee to be representative of the fair value of its obligation undertaken in issuing the guarantee. In accordance with applicable accounting standards related to guarantees, the Bank defers fees collected in connection with the issuance of standby letters of credit and letters of guarantee. The fees are then recognized in income proportionately over the life of the credit agreements. The following table presents the outstanding financial guarantees. Collateral is shown at estimated market value less selling cost. Where the collateral is cash, it is shown gross including accrued income.
September 30, 2025
December 31, 2024
Outstanding financial guarantees
Gross
Collateral
Net
Gross
Collateral
Net
Standby letters of credit
243,925
221,775
22,150
236,220
207,267
28,953
Letters of guarantee
1,501
1,465
36
1,792
1,756
36
Total
245,426
223,240
22,186
238,012
209,023
28,989
17
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
Repurchase agreements
The Bank utilizes repurchase agreements and resell agreements (reverse repurchase agreements) to manage liquidity. These agreements are carried at the amounts at which the securities will be subsequently sold or repurchased. The risks of these transactions include changes in the fair value of the securities posted or received as collateral and other credit related events. The Bank manages these risks by ensuring that the collateral involved is appropriate and by monitoring the value of the securities posted or received as collateral on a daily basis.
As at September 30, 2025, the Bank had 13 open positions (December 31, 2024: 15) in resell agreements with a remaining maturity of less than 365 days involving pools of mortgages issued by US federal agencies and Non-US government debt securities. The carrying value of these resell agreements is $1.2 billion (December 31, 2024: $1.2 billion) and are included in securities purchased under agreements to resell on the consolidated balance sheets. As at September 30, 2025, there were no positions (December 31, 2024: no positions) which were offset on the consolidated balance sheets to arrive at the carrying value, and there was no collateral amount which was available to offset against the future settlement amount.
As at September 30, 2025, the Bank had no open positions in a repurchase agreement. As at December 31, 2024, the Bank had one open position in a repurchase agreement with a remaining maturity of less than 30 days involving one Non-US government debt security, with the carrying value of the repurchase agreement being $92.6 million.
Legal Proceedings
There are actions and legal proceedings pending against the Bank and its subsidiaries which arose in the normal course of its business. Management, after reviewing all actions and proceedings pending against or involving the Bank and its subsidiaries, considers that the resolution of these matters would in the aggregate not be material to the consolidated financial position of the Bank, except as noted in the following paragraph.
As publicly announced, in November 2013, the US Attorney’s Office for the Southern District of New York applied for and secured the issuance of so-called John Doe Summonses to six US financial institutions with which the Bank had correspondent bank relationships in connection with a US cross border tax investigation. On August 3, 2021, the Bank announced it had reached a resolution with the United States Department of Justice concerning this inquiry. The resolution is in the form of a non-prosecution agreement with a three-year term which concluded in July 2024. The Bank paid $5.6 million in respect of Forfeiture and Tax Restitution Amounts which is consistent with that previously provisioned for.
18
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
Note 11: Leases
The Bank enters into operating lease agreements either as the lessee or the lessor, mostly for office and parking spaces as well as for small office equipment. The terms of the existing leases, including renewal options that are reasonably certain to be exercised, extend up to the year 2039. Certain lease payments will be adjusted during the related lease's term based on movements in the relevant consumer price index.
Three months ended
Nine months ended
September 30, 2025
September 30, 2024
September 30, 2025
September 30, 2024
Lease costs
Operating lease costs
1,576
1,927
5,361
4,700
Short-term lease costs
421
341
1,028
2,181
Sublease income
—
(8)
—
(580)
Total net lease cost
1,997
2,260
6,389
6,301
Operating lease income
97
333
295
1,027
Other information for the period
Right-of-use assets related to new operating lease liabilities
3,814
—
4,580
1,262
Operating cash flows from operating leases
1,280
1,619
4,254
5,467
Other information at end of period
September 30, 2025
December 31, 2024
Operating leases right-of-use assets (included in other assets on the balance sheets)
37,979
35,347
Operating lease liabilities (included in other liabilities on the balance sheets)
38,799
35,604
Weighted average remaining lease term for operating leases (in years)
11.69
11.87
Weighted average discount rate for operating leases
5.91
%
5.93
%
The following table summarizes the maturity analysis of the Bank's commitments for long-term leases as at December 31, 2024:
Year ending December 31
Operating Leases
2025
5,249
2026
4,910
2027
4,911
2028
4,909
2029
3,667
2030 & thereafter
16,746
Total commitments
40,392
Less: effect of discounting cash flows to their present value
(4,788)
Operating lease liabilities
35,604
Note 12: Segmented information
The Bank is managed by the Chairman & CEO, its Chief Operating Decision Maker ("CODM"), on a geographic basis. The Bank presents four reportable segments, three geographical and one other: Bermuda, Cayman, Channel Islands and the UK, and Other. The Other segment is composed of several non-reportable operating segments that have been aggregated in accordance with GAAP. The Bermuda, Cayman, and Channels Islands and UK segments has a managing director who reports to the Chairman & CEO. As its relates to the Other segment, each operating segment has a managing director that reports to the Group Head of Trust or Chief Operating Officer who ultimately reports to The Chairman & CEO. The Chairman & CEO and the segment managing director have final authority over resource allocation decisions and performance assessment.
The geographic segments reflect this management structure and the manner in which financial information is currently evaluated by the Chairman & CEO in assessing operating
performance. Segment results are determined based on the Bank's management reporting system, which assigns balance sheet and statement of operations items to each of
the geographic segments. The process is designed around the Bank's organizational and management structure and, accordingly, the results derived are not necessarily
comparable with similar information published by other financial institutions. A description of each reportable segment and table of financial results is presented below.
Accounting policies of the reportable segments are the same as those described in Note 2 of the Bank's audited financial statements for the year ended December 31, 2024. Transactions between segments are accounted for on an accrual basis and are all eliminated upon consolidation. The Bank generally does not allocate assets, revenues and expenses among its business segments, with the exception of certain corporate overhead expenses and loan participation revenue and expenses. Loan participation revenue and expenses are allocated pro-rata based upon the percentage of the total loan funded by each jurisdiction participating in the loan. Other expenses are comprised of marketing, non-service employee benefits and other non-interest expenses.
19
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
The Bermuda segment provides a comprehensive range of retail, commercial and private banking services. Retail services are offered to individuals and small to medium-sized businesses through three branch locations and through internet banking, mobile banking, automated teller machines and debit cards. Retail services include deposit services,
consumer and mortgage lending, credit cards and personal insurance products. Commercial banking includes commercial lending and mortgages, cash management, payroll
services, remote banking and letters of credit. Treasury services include money market and foreign exchange activities. Bermuda’s wealth management offering consists of
Butterfield Asset Management Limited, which provides investment management, advisory and brokerage services and Butterfield Trust (Bermuda) Limited, which provides trust,
estate, company management and custody services. Bermuda is also the location of the Bank's head offices and accordingly, retains the unallocated corporate overhead
expenses.
The Cayman segment provides a comprehensive range of retail, commercial and private banking services. Retail services are offered to individuals and small to medium-sized businesses through three branch locations and through internet banking, mobile banking, ATMs and debit cards. Retail services include deposit services, consumer and
mortgage lending, credit cards and property/auto insurance. Commercial banking includes commercial lending and mortgages, cash management, payroll services, remote
banking and letters of credit. Treasury services include money market and foreign exchange activities. Cayman’s wealth management offering comprises investment
management, advisory and brokerage services and Butterfield Trust (Cayman) Limited, which provides trust, estate and company management.
The Channel Islands and the UK segment includes the jurisdictions of Guernsey and Jersey (Channel Islands), and the UK. In the Channel Islands, a broad range of services
are provided to individuals, private clients, trusts, financial institutions and funds including deposit services, mortgage lending, credit cards, private and corporate banking, treasury services, internet banking, wealth management and fiduciary services. The UK jurisdiction provides mortgage services for high-value residential properties.
The Other segment includes the jurisdictions of The Bahamas, Canada, Mauritius, Singapore and Switzerland. These operating segments individually and collectively do not
meet the quantitative threshold for segmented reporting and are therefore aggregated as non-reportable operating segments.
Total Assets by Segment
September 30, 2025
December 31, 2024
Bermuda
5,360,986
5,438,279
Cayman
4,143,817
4,337,829
Channel Islands and the UK
4,615,771
4,526,623
Other
72,096
62,682
Total assets before inter-segment eliminations
14,192,670
14,365,413
Less: inter-segment eliminations
(106,315)
(134,017)
Total
14,086,355
14,231,396
20
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
Three months ended September 30, 2025
Bermuda
Cayman
Channel Islands and the UK
Other
Total before eliminations
Inter-segment eliminations
Total
Interest income
Interest income
54,160
38,635
46,573
36
139,404
—
139,404
Interest income - Inter-segment
—
760
—
—
760
(760)
—
Interest income Total
54,160
39,395
46,573
36
140,164
(760)
139,404
Interest expense
Interest expense
9,295
9,328
28,060
—
46,683
—
46,683
Interest expense - Inter-segment
757
—
3
—
760
(760)
—
Interest expense Total
10,052
9,328
28,063
—
47,443
(760)
46,683
Net interest income
Net interest income
44,865
29,307
18,513
36
92,721
—
92,721
Net interest income - Inter-segment
(757)
760
(3)
—
—
—
—
Net interest income Total
44,108
30,067
18,510
36
92,721
—
92,721
Non-interest income
26,034
19,072
10,825
11,746
67,677
(6,496)
61,181
Allowance for credit losses
(472)
51
(143)
—
(564)
—
(564)
Net revenue before gains and losses
69,670
49,190
29,192
11,782
159,834
(6,496)
153,338
Gains and losses
1
—
(62)
—
(61)
—
(61)
Total net revenue
69,671
49,190
29,130
11,782
159,773
(6,496)
153,277
Expenses
Salaries and other employee benefits
20,844
6,898
11,562
7,300
46,604
—
46,604
Technology and communications
7,866
3,216
2,384
342
13,808
—
13,808
Non-income taxes
4,250
244
696
322
5,512
—
5,512
Professional and outside services
3,123
484
1,060
284
4,951
—
4,951
Property
2,270
726
1,494
659
5,149
—
5,149
Amortization of intangible assets
358
275
906
431
1,970
—
1,970
Depreciation
3,378
1,143
648
116
5,285
—
5,285
Income tax benefit (expense)
—
—
1,082
365
1,447
—
1,447
Other expenses
10,360
3,227
(517)
915
13,985
(6,496)
7,489
Expenses Total
52,449
16,213
19,315
10,734
98,711
(6,496)
92,215
Net income
17,222
32,977
9,815
1,048
61,062
—
61,062
21
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
Three months ended September 30, 2024
Bermuda
Cayman
Channel Islands and the UK
Other
Total before eliminations
Inter-segment eliminations
Total
Interest income
Interest income
55,518
39,742
54,651
63
149,974
—
149,974
Interest income - Inter-segment
1,965
1,165
139
—
3,269
(3,269)
—
Interest income Total
57,483
40,907
54,790
63
153,243
(3,269)
149,974
Interest expense
Interest expense
13,218
12,635
36,068
—
61,921
—
61,921
Interest expense - Inter-segment
1,281
—
1,988
—
3,269
(3,269)
—
Interest expense Total
14,499
12,635
38,056
—
65,190
(3,269)
61,921
Net interest income
Net interest income
42,300
27,107
18,583
63
88,053
—
88,053
Net interest income - Inter-segment
684
1,165
(1,849)
—
—
—
—
Net interest income Total
42,984
28,272
16,734
63
88,053
—
88,053
Non-interest income
23,145
16,581
11,345
10,756
61,827
(5,790)
56,037
Allowance for credit losses
(1,256)
(69)
9
—
(1,316)
—
(1,316)
Net revenue before gains and losses
64,873
44,784
28,088
10,819
148,564
(5,790)
142,774
Gains and losses
1
—
(53)
—
(52)
—
(52)
Total net revenue
64,874
44,784
28,035
10,819
148,512
(5,790)
142,722
Expenses
Salaries and other employee benefits
18,651
6,833
11,606
6,613
43,703
—
43,703
Technology and communications
7,764
3,593
2,531
317
14,205
—
14,205
Non-income taxes
4,084
548
555
280
5,467
—
5,467
Professional and outside services
2,993
414
1,177
230
4,814
—
4,814
Property
2,168
745
2,088
631
5,632
—
5,632
Amortization of intangible assets
358
276
885
423
1,942
—
1,942
Depreciation
3,262
1,109
664
147
5,182
—
5,182
Income tax benefit (expense)
—
—
1,003
237
1,240
—
1,240
Other expenses
9,485
3,495
(157)
788
13,611
(5,790)
7,821
Expenses Total
48,765
17,013
20,352
9,666
95,796
(5,790)
90,006
Net income
16,109
27,771
7,683
1,153
52,716
—
52,716
22
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
Nine months ended September 30, 2025
Bermuda
Cayman
Channel Islands and the UK
Other
Total before eliminations
Inter-segment eliminations
Total
Interest income
Interest income
161,877
118,583
139,759
109
420,328
—
420,328
Interest income - Inter-segment
278
2,521
35
—
2,834
(2,834)
—
Interest income Total
162,155
121,104
139,794
109
423,162
(2,834)
420,328
Interest expense
Interest expense
32,845
30,109
85,921
—
148,875
—
148,875
Interest expense - Inter-segment
2,543
—
291
—
2,834
(2,834)
—
Interest expense Total
35,388
30,109
86,212
—
151,709
(2,834)
148,875
Net interest income
Net interest income
129,032
88,474
53,838
109
271,453
—
271,453
Net interest income - Inter-segment
(2,265)
2,521
(256)
—
—
—
—
Net interest income Total
126,767
90,995
53,582
109
271,453
—
271,453
Non-interest income
73,264
56,065
32,312
33,839
195,480
(18,850)
176,630
Allowance for credit losses
2,481
(106)
(2,769)
—
(394)
—
(394)
Net revenue before gains and losses
202,512
146,954
83,125
33,948
466,539
(18,850)
447,689
Gains and losses
24
—
9
—
33
—
33
Total net revenue
202,536
146,954
83,134
33,948
466,572
(18,850)
447,722
Expenses
Salaries and other employee benefits
59,474
21,905
34,402
21,792
137,573
—
137,573
Technology and communications
23,672
10,223
6,758
1,037
41,690
—
41,690
Non-income taxes
13,557
1,236
1,938
1,124
17,855
—
17,855
Professional and outside services
9,862
1,456
3,474
755
15,547
—
15,547
Property
6,909
2,256
5,221
1,922
16,308
—
16,308
Amortization of intangible assets
1,072
826
2,673
1,273
5,844
—
5,844
Depreciation
10,233
3,367
2,084
370
16,054
—
16,054
Income tax benefit (expense)
—
—
2,944
890
3,834
—
3,834
Other expenses
31,208
10,409
(504)
2,603
43,716
(18,850)
24,866
Expenses Total
155,987
51,678
58,990
31,766
298,421
(18,850)
279,571
Net income
46,549
95,276
24,144
2,182
168,151
—
168,151
23
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
Nine months ended September 30, 2024
Bermuda
Cayman
Channel Islands and the UK
Other
Total before eliminations
Inter-segment eliminations
Total
Interest income
Interest income
166,633
120,931
152,518
185
440,267
—
440,267
Interest income - Inter-segment
6,112
4,224
1,050
—
11,386
(11,386)
—
Interest income Total
172,745
125,155
153,568
185
451,653
(11,386)
440,267
Interest expense
Interest expense
40,498
35,325
101,877
—
177,700
—
177,700
Interest expense - Inter-segment
5,225
29
6,132
—
11,386
(11,386)
—
Interest expense Total
45,723
35,354
108,009
—
189,086
(11,386)
177,700
Net interest income
Net interest income
126,135
85,606
50,641
185
262,567
—
262,567
Net interest income - Inter-segment
888
4,194
(5,082)
—
—
—
—
Net interest income Total
127,023
89,800
45,559
185
262,567
—
262,567
Non-interest income
67,877
50,454
33,440
31,638
183,409
(16,632)
166,777
Allowance for credit losses
(1,487)
136
(39)
—
(1,390)
—
(1,390)
Net revenue before gains and losses
193,413
140,390
78,960
31,823
444,586
(16,632)
427,954
Gains and losses
105
—
144
—
249
—
249
Total net revenue
193,518
140,390
79,104
31,823
444,835
(16,632)
428,203
Expenses
Salaries and other employee benefits
56,408
20,274
34,141
19,508
130,331
—
130,331
Technology and communications
22,879
10,605
7,372
1,010
41,866
—
41,866
Non-income taxes
13,116
1,544
1,702
996
17,358
—
17,358
Professional and outside services
10,332
1,697
4,241
744
17,014
—
17,014
Property
6,819
2,155
6,133
1,854
16,961
—
16,961
Amortization of intangible assets
1,072
826
2,591
1,273
5,762
—
5,762
Depreciation
9,826
3,445
2,413
448
16,132
—
16,132
Income tax benefit (expense)
—
—
2,368
657
3,025
—
3,025
Other expenses
27,862
9,771
(263)
2,278
39,648
(16,632)
23,016
Expenses Total
148,314
50,317
60,698
28,768
288,097
(16,632)
271,465
Net income
45,204
90,073
18,406
3,055
156,738
—
156,738
24
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
Note 13: Derivative instruments and risk management
The Bank uses derivatives for risk management purposes and to meet the needs of its customers. The Bank’s derivative contracts principally involve over-the-counter ("OTC") transactions that are negotiated privately between the Bank and the counterparty to the contract and include interest rate contracts and foreign exchange contracts.
The Bank may pursue opportunities to reduce its exposure to credit losses on derivatives by entering into International Swaps and Derivatives Associations ("ISDAs"). Depending on the nature of the derivative transaction, bilateral collateral arrangements may be used, as well. When the Bank is engaged in more than one outstanding derivative transaction with the same counterparty, and also has a legally enforceable master netting agreement with that counterparty, the net marked-to-market exposure represents the netting of the positive and negative exposures with that counterparty. When there is a net negative exposure, the Bank regards its credit exposure to the counterparty as being zero. The net marked-to-market position with a particular counterparty represents a reasonable measure of credit risk when there is a legally enforceable master netting agreement between the Bank and that counterparty.
Certain of these agreements contain credit risk-related contingent features in which the counterparty has the option to accelerate cash settlement of the Bank's net derivative liabilities with the counterparty in the event the Bank's credit rating falls below specified levels or the liabilities reach certain levels.
All derivative financial instruments, whether designated as hedges or not, are recorded on the consolidated balance sheets at fair value within other assets or other liabilities. These amounts include the effect of netting. The accounting for changes in the fair value of a derivative in the consolidated statements of operations depends on whether the contract has been designated as a hedge and qualifies for hedge accounting.
Notional Amounts
The notional amounts are not recorded as assets or liabilities on the consolidated balance sheets as they represent the face amount of the contract to which a rate or price is applied to determine the amount of cash flows to be exchanged. Notional amounts represent the volume of outstanding transactions and do not represent the potential gain or loss associated with market risk or credit risk of such instruments. Credit risk is limited to the positive fair value of the derivative instrument, which is significantly less than the notional amount.
Fair Value
Derivative instruments, in the absence of any compensating up-front cash payments, generally have no market value at inception. They obtain value, positive or negative, as relevant interest rates, exchange rates, equity or commodity prices or indices change. The potential for derivatives to increase or decrease in value as a result of the foregoing factors is generally referred to as market risk. Market risk is managed within clearly defined parameters as prescribed by senior management of the Bank. The fair value is defined as the profit or loss associated with replacing the derivative contracts at prevailing market prices.
Risk Management Derivatives
The Bank enters into interest derivative contracts as part of its overall interest rate risk management strategy to minimize significant unplanned fluctuations in earnings that are caused by interest rate volatility. The Bank’s goal is to manage interest rate sensitivity by modifying the repricing or maturity characteristics of certain consolidated balance sheet assets and liabilities so that movements in interest rates do not adversely affect the net interest margin. Derivative instruments that are used as part of the Bank’s risk management strategy include interest rate swap contracts that have indices related to the pricing of specific consolidated balance sheet assets and liabilities. Interest rate swaps generally involve the exchange of fixed and variable-rate interest payments between two parties, based on a common notional principal amount and maturity date. The Bank uses foreign currency derivative instruments to hedge its exposure to foreign currency risk. Certain hedging relationships are formally designated and qualify for hedge accounting as fair value or net investment hedges. Risk management derivatives comprise fair value hedges, net investment hedges and derivatives not formally designated as hedges as described below.
Fair value hedges include designated currency swaps that are used to minimize the Bank's exposure to variability in the fair value of AFS investments due to movements in foreign exchange rates. The effective portion of changes in the fair value of the hedged items attributable to foreign exchange rates is recognized in current year earnings consistent with the related change in fair value of the hedging instrument. For fair value hedges, hedging effectiveness of the hedged item and the hedging instrument are assessed and managed at inception and on an ongoing basis using a partial-term method.
Net investment hedges include designated currency swaps and qualifying non-derivative instruments and are used to minimize the Bank’s exposure to variability in the foreign
currency translation of net investments in foreign operations. The effective portion of changes in the fair value of the hedging instrument is recognized in Accumulated other comprehensive income (loss) ("AOCIL") consistent with the related translation gains and losses of the hedged net investment. For net investment hedges, all critical terms of the hedged item and the hedging instrument are matched at inception and on an ongoing basis to minimize the risk of hedge ineffectiveness.
For derivatives designated as net investment hedges, the Bank follows the method based on changes in spot exchange rates. Accordingly:
- The change in the fair value of the derivative instrument that is reported in AOCIL (i.e., the effective portion) is determined by the changes in spot exchange rates.
- The change in the fair value of the derivative instrument attributable to changes in the difference between the forward rate and spot rate are excluded from the measure
of the hedge ineffectiveness and that difference is reported directly in the consolidated statements of operations under foreign exchange revenue.
Amounts recorded in AOCIL are reclassified to earnings only upon the sale or substantial liquidation of an investment in a foreign subsidiary.
For foreign-currency-denominated financial instruments that are designated as hedges of net investments in foreign operations, the translation gain or loss that is recorded in AOCIL is based on the spot exchange rate between the reporting currency of the Bank and the functional currency of the respective subsidiary. See Note 20: Accumulated other comprehensive income (loss) for details on the amount recognized into AOCIL during the current period from translation gain or loss.
Derivatives not formally designated as hedges are entered into to manage the foreign exchange risk of the Bank's exposure. Changes in the fair value of derivative instruments not formally designated as hedges are recognized in foreign exchange revenue.
Client service derivatives
The Bank enters into foreign exchange contracts primarily to meet the foreign exchange needs of its customers. Foreign exchange contracts are agreements to exchange specific amounts of currencies at a future date at a specified rate of exchange. Changes in the fair value of client services derivative instruments are recognized in foreign exchange revenue.
The following table shows the aggregate notional amounts of derivative contracts outstanding listed by type and respective gross positive or negative fair values and classified by those used for risk management (sub-classified as hedging and those that do not qualify for hedge accounting), client services and credit derivatives. Fair value of derivatives is
25
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
recorded in the consolidated balance sheets in other assets and other liabilities. Gross positive fair values are recorded in other assets and gross negative fair values are recorded in other liabilities, subject to netting when master netting agreements are in place.
September 30, 2025
Derivative instrument
Number of contracts
Notional amounts
Gross positive fair value
Gross negative fair value
Net fair value
Risk management derivatives
Net investment hedges
Currency swaps
3
121,419
65
(468)
(403)
Fair value hedges
Currency swaps
2
130,955
815
—
815
Derivatives not formally designated as hedging instruments
Currency swaps
65
1,273,777
10,989
(3,145)
7,844
Subtotal risk management derivatives
1,526,151
11,869
(3,613)
8,256
Client services derivatives
Spot and forward foreign exchange
120
207,154
916
(744)
172
Total derivative instruments
1,733,305
12,785
(4,357)
8,428
December 31, 2024
Derivative instrument
Number of contracts
Notional amounts
Gross positive fair value
Gross negative fair value
Net fair value
Risk management derivatives
Net investment hedges
Currency swaps
1
23,235
986
—
986
Fair value hedges
Currency swaps
3
139,512
—
(4,496)
(4,496)
Derivatives not formally designated as hedging instruments
Currency swaps
54
2,008,630
44,038
(7,181)
36,857
Subtotal risk management derivatives
2,171,377
45,024
(11,677)
33,347
Client services derivatives
Spot and forward foreign exchange
145
217,490
1,681
(1,589)
92
Total derivative instruments
2,388,867
46,705
(13,266)
33,439
In addition to the above, as at September 30, 2025 foreign denominated deposits of £206.3 million (December 31, 2024: £277.1 million); SGD1.6 million (December 31, 2024: SGD1.5 million) and CHF0.4 million (December 31, 2024: CHF0.4 million) were designated as a hedge of foreign exchange risk associated with the net investment in foreign operations.
The Bank manages derivative exposure by monitoring the credit risk associated with each counterparty using counterparty specific credit risk limits, using master netting arrangements where appropriate and obtaining collateral. The Bank elected to offset in the consolidated balance sheets certain gross derivative assets and liabilities subject to netting agreements.
The Bank also elected not to offset certain derivative assets or liabilities and all collateral received or paid that the Bank or the counterparties could legally offset in the event of default. In the tables below, these positions are deducted from the net fair value presented in the consolidated balance sheets in order to present the net exposures. The collateral values presented in the following table are limited to the related net derivative asset or liability balance and, accordingly, do not include excess collateral received or paid.
Gross fair value recognized
Less: offset applied under master netting agreements
Net fair value presented in the consolidated balance sheets
Less: positions not offset in the consolidated balance sheets
September 30, 2025
Gross fair value of derivatives
Cash collateral received / paid
Net exposures
Derivative assets
Spot and forward foreign exchange and currency swaps
12,785
(3,252)
9,533
—
—
9,533
Derivative liabilities
Spot and forward foreign exchange and currency swaps
4,357
(3,252)
1,105
—
—
1,105
Net positive fair value
8,428
Gross fair value recognized
Less: offset applied under master netting agreements
Net fair value presented in the consolidated balance sheets
Less: positions not offset in the consolidated balance sheets
December 31, 2024
Gross fair value of derivatives
Cash collateral received / paid
Net exposures
Derivative assets
Spot and forward foreign exchange and currency swaps
46,705
(11,227)
35,478
—
(250)
35,228
Derivative liabilities
Spot and forward foreign exchange and currency swaps
13,266
(11,227)
2,039
—
(682)
1,357
Net positive fair value
33,439
26
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
The following tables show the location and amount of gains (losses) recorded in either the consolidated statements of operations or consolidated statements of comprehensive income on derivative instruments outstanding.
Three months ended
Nine months ended
Derivative instrument
Consolidated statements of operations line item
September 30, 2025
September 30, 2024
September 30, 2025
September 30, 2024
Spot and forward foreign exchange
Foreign exchange revenue
79
83
80
72
Currency swaps, not designated as hedge
Foreign exchange revenue
30,350
(27,642)
(29,013)
(3,951)
Currency swaps - fair value hedges
Foreign exchange revenue
(4,223)
5,243
5,311
(231)
Total net gains (losses) recognized in net income
26,206
(22,316)
(23,622)
(4,110)
Three months ended
Nine months ended
Derivative instrument
Consolidated statements of comprehensive income line item
September 30, 2025
September 30, 2024
September 30, 2025
September 30, 2024
Currency swaps - net investment hedge
Unrealized net gains (losses) on translation of net investment in foreign operations
251
(6,442)
(1,389)
(6,251)
Total net gains (losses) recognized in comprehensive income
251
(6,442)
(1,389)
(6,251)
Note 14: Fair value measurements
The following table presents the financial assets and liabilities that are measured at fair value on a recurring basis. Management classifies these items based on the type of inputs used in their respective fair value determination as described in Note 2 of the Bank's audited financial statements for the year ended December 31, 2024.
Management reviews the price of each security monthly, comparing market values to expectations and to the prior month’s price. Management's expectations are based upon knowledge of prevailing market conditions and developments relating to specific issuers and/or asset classes held in the investment portfolio. Where there are unusual or significant price movements, or where a certain asset class has performed out-of-line with expectations, the matter is reviewed by management.
Financial instruments in Level 1 include US and UK Government Treasury notes.
Financial instruments in Level 2 include government debt securities, mortgage-backed securities, other asset-backed securities, forward foreign exchange contracts and securities sold under agreements to repurchase.
There were no Level 3 investments as at September 30, 2025 and December 31, 2024.
There were no transfers between Level 1 and Level 2 or Level 2 and Level 3 during the nine months ended September 30, 2025 and the year ended December 31, 2024.
September 30, 2025
December 31, 2024
Fair value
Total carrying amount / fair value
Fair value
Total carrying amount / fair value
Level 1
Level 2
Level 1
Level 2
Items that are recognized at fair value on a recurring basis:
Available-for-sale investments
US government and federal agencies
1,277,899
1,327,707
2,605,606
991,357
1,172,262
2,163,619
Non-US governments debt securities
—
—
—
93,468
—
93,468
Asset-backed securities - Student loans
—
—
—
—
40
40
Residential mortgage-backed securities
—
14,143
14,143
—
15,359
15,359
Total available-for-sale
1,277,899
1,341,850
2,619,749
1,084,825
1,187,661
2,272,486
Other assets - Derivatives
—
9,533
9,533
—
35,478
35,478
Financial liabilities
Other liabilities - Derivatives
—
1,105
1,105
—
2,039
2,039
27
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
Items Other Than Those Recognized at Fair Value on a Recurring Basis:
September 30, 2025
December 31, 2024
Level
Carrying amount
Fair value
Appreciation / (depreciation)
Carrying amount
Fair value
Appreciation / (depreciation)
Financial assets
Cash and cash equivalents
Level 1
1,501,368
1,501,368
—
1,998,112
1,998,112
—
Securities purchased under agreements to resell
Level 2
1,155,950
1,155,950
—
1,205,373
1,205,373
—
Short-term investments
Level 1
830,761
830,761
—
580,026
580,026
—
Investments held-to-maturity
Level 2
3,055,181
2,605,627
(449,554)
3,240,290
2,671,040
(569,250)
Loans, net of allowance for credit losses
Level 2
4,467,645
4,452,883
(14,762)
4,473,591
4,433,872
(39,719)
Financial liabilities
Term deposits
Level 2
3,947,709
3,951,844
(4,135)
4,478,257
4,482,978
(4,721)
Securities sold under agreements to repurchase
Level 2
—
—
—
92,562
92,562
—
Long-term debt
Level 2
—
—
—
98,725
98,361
364
28
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
Note 15: Interest rate risk
The following tables set out the assets, liabilities and shareholders' equity on the date of the earlier of contractual maturity, expected maturity or repricing date. Use of these tables to derive information about the Bank’s interest rate risk position is limited by the fact that customers may choose to terminate their financial instruments at a date earlier than the contractual maturity or repricing date. Examples of this include fixed-rate mortgages, which are shown at contractual maturity but which may be subject to early prepayment, and certain term deposits, which are shown at contractual maturity but which may be withdrawn before their contractual maturity subject to prepayment penalties. Investments are shown based on remaining contractual maturities. The remaining contractual principal maturities for mortgage-backed securities (primarily US government agencies) do not consider prepayments. Remaining expected maturities will differ from contractual maturities because borrowers may have the right to prepay obligations before the underlying mortgages mature.
September 30, 2025
Earlier of contractual maturity or repricing date
(in $ millions)
Within 3 months
3 to 6 months
6 to 12 months
1 to 5 years
After 5 years
Non-interest bearing funds
Total
Assets
Cash and cash equivalents
1,396
—
—
—
—
105
1,501
Securities purchased under agreements to resell
451
252
453
—
—
—
1,156
Short-term investments
363
323
145
—
—
—
831
Investments
1
82
372
933
4,287
—
5,675
Loans
2,466
202
211
1,252
270
67
4,468
Other assets
—
—
—
—
—
455
455
Total assets
4,677
859
1,181
2,185
4,557
627
14,086
Liabilities and shareholders' equity
Shareholders’ equity
—
—
—
—
—
1,106
1,106
Demand deposits
6,191
—
—
—
—
2,582
8,773
Term deposits
3,037
482
381
48
—
—
3,948
Other liabilities
—
—
—
—
—
259
259
Total liabilities and shareholders' equity
9,228
482
381
48
—
3,947
14,086
Interest rate sensitivity gap
(4,551)
377
800
2,137
4,557
(3,320)
—
Cumulative interest rate sensitivity gap
(4,551)
(4,174)
(3,374)
(1,237)
3,320
—
—
December 31, 2024
Earlier of contractual maturity or repricing date
(in $ millions)
Within 3 months
3 to 6 months
6 to 12 months
1 to 5 years
After 5 years
Non-interest bearing funds
Total
Assets
Cash and cash equivalents
1,905
—
—
—
—
93
1,998
Securities purchased under agreements to resell
1,142
63
—
—
—
—
1,205
Short-term investments
505
75
—
—
—
—
580
Investments
93
6
22
1,097
4,294
—
5,512
Loans
2,398
104
229
1,407
283
53
4,474
Other assets
—
—
—
—
—
462
462
Total assets
6,043
248
251
2,504
4,577
608
14,231
Liabilities and shareholders' equity
Shareholders’ equity
—
—
—
—
—
1,021
1,021
Demand deposits
5,580
—
—
—
—
2,688
8,268
Term deposits
3,593
434
368
83
—
—
4,478
Securities sold under agreements to repurchase
93
—
—
—
—
—
93
Other liabilities
—
—
—
—
—
273
273
Long-term debt
—
98
—
—
—
—
98
Total liabilities and shareholders' equity
9,266
532
368
83
—
3,982
14,231
Interest rate sensitivity gap
(3,223)
(284)
(117)
2,421
4,577
(3,374)
—
Cumulative interest rate sensitivity gap
(3,223)
(3,507)
(3,624)
(1,203)
3,374
—
—
29
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
Note 16: Long-term debt
On June 11, 2020, the Bank issued US $100 million of Subordinated Lower Tier II capital notes. The notes were issued at par and due on June 15, 2030. The issuance was by way of a registered offering with US institutional investors. The notes were listed on the BSX in the specialist debt securities category. The proceeds of the issue were used, among others, to repay the entire amount of the US $45 million outstanding subordinated notes Series 2005-B which matured on July 2, 2020. The notes issued paid a fixed coupon of 5.25% until June 15, 2025 when they became redeemable in whole at the option of the Bank. The notes were priced at a spread of 4.43% over the 10-year US Treasury yield. The Bank incurred $2.3 million of costs directly related to the issuance of these capital notes which were capitalized directly against the carrying value of these notes on the balance sheet and amortized over the life of the notes. These notes were redeemed at face value in June 2025 at which time, unamortized issuance costs were fully recognized in the Consolidated Statements of Operations as part of interest expense.
No interest was capitalized during the nine months ended September 30, 2025, and the year ended December 31, 2024.
Note 17: Earnings per share
Earnings per share have been calculated using the weighted average number of common shares outstanding during the period after deduction of the shares held as treasury stock. The dilutive effect of share-based compensation plans was calculated using the treasury stock method, whereby the proceeds received from the exercise of share-based awards are assumed to be used to repurchase outstanding shares, using the average market price of the Bank’s shares for the period. Numbers of shares are expressed in thousands.
During the nine months ended September 30, 2025, the average number of outstanding awards of unvested common shares was 1.8 million (September 30, 2024: 1.6 million). Only awards for which the sum of 1) the expense that will be recognized in the future (i.e., the unrecognized expense) and 2) its exercise price, if any, was lower than the average market price of the Bank‘s common shares were considered dilutive and, therefore, included in the computation of diluted earnings per share.
An award's unrecognized expense is also considered to be the proceeds the employees would need to pay to purchase accelerated vesting of the awards. For the purposes of calculating dilution, such proceeds are assumed to be used by the Bank to buy back common shares at the average market price. The weighted-average number of outstanding awards, net of the assumed weighted-average number of common shares bought back, is included in the number of diluted participating shares.
Three months ended
Nine months ended
September 30, 2025
September 30, 2024
September 30, 2025
September 30, 2024
Net income
61,062
52,716
168,151
156,738
Basic Earnings Per Share
Weighted average number of common shares issued
41,435
45,288
42,290
46,218
Weighted average number of common shares held as treasury stock
(619)
(619)
(619)
(619)
Weighted average number of common shares (in thousands)
40,816
44,669
41,671
45,599
Basic Earnings Per Share
1.50
1.18
4.04
3.44
Diluted Earnings Per Share
Weighted average number of common shares
40,816
44,669
41,671
45,599
Net dilution impact related to awards of unvested common shares
1,128
888
1,066
743
Weighted average number of diluted common shares (in thousands)
41,944
45,557
42,737
46,342
Diluted Earnings Per Share
1.46
1.16
3.93
3.38
Note 18: Share-based payments
The common shares transferred to employees under all share-based payments are either taken from the Bank's common treasury shares or from newly issued shares. All share-based payments are settled by the ultimate parent company which, pursuant to Bermuda law, is not taxed on income. There are no income tax benefits in relation to the issue of such shares as a form of compensation.
In May 2020, the Board of Directors approved the 2020 Omnibus Plan (the "2020 Plan"). Under the 2020 Plan, 3.0 million shares are initially available for grant to employees in the form of stock options or unvested share awards. In February 2025, the Board of Directors approved the Amended and Restated 2020 Omnibus Share Incentive Plan with 5.0 million additional shares available for grant to employees in the form of stock options or unvested share awards. Both types of awards are detailed below.
Stock Option Awards
2020 Plans
Under the 2020 Plan, options can be awarded to Bank employees and executive management, based on predetermined vesting conditions that entitle the holder to purchase one common share at a subscription price no less than the price of the most recently traded common share when granted and have a maximum term of 10 years.
There were no stock options outstanding as at September 30, 2025 and December 31, 2024.
Share-Based Incentive Programs
Recipients of unvested share awards are entitled to the related common shares at no cost, at the time the award vests. Recipients of unvested shares may be entitled to receive additional unvested shares having a value equal to the cash dividends that would have been paid had the unvested shares been issued and vested. Such additional unvested shares granted as dividend equivalents are subject to the same vesting schedule and conditions as the underlying unvested shares.
30
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
Unvested shares subject only to the time vesting condition generally vest upon retirement, death, disability or upon termination, by the Bank, of the holder’s employment unless if in connection with the holder’s misconduct. Unvested shares subject to both time vesting and performance vesting conditions remain outstanding and unvested upon retirement and will vest only if the performance conditions are met. Unvested shares can also vest in limited circumstances and if specifically approved by the Board, as stipulated in the holder’s employment contract. In all other circumstances, unvested shares are generally forfeited when employment ends.
The grant date weighted average fair value (which equals the actual trading price prevailing on grant date) of unvested share awards granted in the nine months ended September 30, 2025 was $37.50 per share (December 31, 2024: $30.11 per share). The Bank expects to settle these awards by issuing new shares.
Employee Deferred Incentive Program
Under the Bank’s EDIP, shares are awarded to Bank employees and executive management based on the time vesting condition, which states that the shares will vest equally over a three-year period from the effective grant date.
Employee Long-Term Incentive Share Program
Under the Bank’s ELTIP, performance shares as well as time-vesting shares were awarded to employees and executive management. The performance shares will generally vest upon the achievement of certain performance targets in the three-year period from the effective grant date. The time-vesting shares will generally vest over the three-year period from the effective grant date.
Employee Share Purchase Plan
The Bank's ESPP was approved in July 2021 and registered in November 2021. The first offering period started in May 2022. Under the Bank's ESPP, eligible employees may elect to contribute up to 15% of their regular compensation toward the purchase of the Bank's shares at a 10% discount from market price on the closing date of each offering period. The ESPP specifies two consecutive six month offering periods per year. In the case of termination of employment or voluntary partial or full withdrawal from the plan, the related current offering period ESPP contributions are refunded to the employee and thus cannot be used to purchase shares under the ESPP. During the nine months ended September 30, 2025, 7,186 shares (December 31, 2024: 16,762 shares) were issued under the ESPP.
Changes in Outstanding ELTIP and EDIP awards (in thousands of shares transferable upon vesting)
Nine months ended
September 30, 2025
September 30, 2024
EDIP
ELTIP
EDIP
ELTIP
Outstanding at beginning of period
628
1,151
665
915
Granted
130
348
98
558
Vested (fair value in 2025: $22.1 million, 2024: $14.2 million, )
Share-based Compensation Cost Recognized in the Financial Statements
Nine months ended
September 30, 2025
September 30, 2024
EDIP and ELTIP
16,275
15,285
ESPP
292
305
Share-based Compensation Cost Recognized in Net Income
16,567
15,590
Deduct: Fair value of awards withheld for employees' payroll tax purposes
(211)
(119)
Share-based Compensation Cost Recognized in Additional Paid-in Capital
16,356
15,471
Unrecognized Share-based Compensation Cost
September 30, 2025
December 31, 2024
Unrecognized cost
Weighted average years over which it is expected to be recognized
Unrecognized cost
Weighted average years over which it is expected to be recognized
EDIP
8,080
1.68
8,829
1.88
ELTIP
Time vesting shares
23
0.37
66
1.12
Performance vesting shares
18,315
1.80
15,877
1.79
Total unrecognized expense
26,418
24,772
31
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
Note 19: Share repurchase programs
From time to time, the Bank may seek to repurchase and retire equity securities of the Bank, through cash purchase, privately negotiated transactions, or otherwise. Such transactions, if any, depend on prevailing market conditions, liquidity and capital requirements, contractual restrictions, and other factors.
Common Share Repurchase Program
On February 14, 2022, the Board approved a new common share repurchase program, authorizing the purchase of up to 2.0 million common shares through to February 28, 2023.
On February 13, 2023, the Board approved a new common share repurchase program, authorizing the purchase of up to 3.0 million common shares through to February 29, 2024.
On December 5, 2023, the Board approved a new common share repurchase program, authorizing the purchase of up to 3.5 million common shares through to December 31, 2024.
On July 22, 2024, the Board approved a new common share repurchase program, authorizing the purchase of up to 2.1 million common shares through to December 31, 2024.
On December 9, 2024, the Board approved a new common share repurchase program, authorizing the purchase of up to 2.7 million common shares through to December 31,
2025.
On July 28, 2025, the Board approved a new common share repurchase program, authorizing the purchase of up to 1.5 million common shares through to December 31, 2025.
In the nine months ended September 30, 2025, the Bank repurchased and retired 2,880,140 shares.
Nine months ended
Year ended December 31
Common share repurchases
September 30, 2025
2024
2023
Acquired number of shares (to the nearest 1)
2,880,140
4,490,940
3,133,717
Average cost per common share
40.67
34.58
28.27
Total cost (in US dollars)
117,132,449
155,305,756
88,590,240
Note 20: Accumulated other comprehensive income (loss)
Unrealized net gains (losses) on translation of net investment in foreign operations
Unrealized net gains (losses) on HTM investments
Unrealized net gains (losses) on AFS investments
Employee benefit plans adjustments
Nine months ended September 30, 2025
Pension
Post-retirement healthcare
Subtotal - employee benefits plans
Total AOCIL
Balance at beginning of period
(26,191)
(73,919)
(162,275)
(49,282)
16,252
(33,030)
(295,415)
Other comprehensive income (loss), net of taxes
5,838
5,896
61,847
1,299
(59)
1,240
74,821
Balance at end of period
(20,353)
(68,023)
(100,428)
(47,983)
16,193
(31,790)
(220,594)
Unrealized net gains (losses) on translation of net investment in foreign operations
Unrealized net gains (losses) on HTM investments
Unrealized net gains (losses) on AFS investments
Employee benefit plans adjustments
Nine months ended September 30, 2024
Pension
Post- retirement healthcare
Subtotal - employee benefits plans
Total AOCIL
Balance at beginning of period
(25,478)
(82,067)
(162,910)
(51,563)
11,820
(39,743)
(310,198)
Other comprehensive income (loss), net of taxes
1,945
6,206
46,827
2,571
(1,341)
1,230
56,208
Balance at end of period
(23,533)
(75,861)
(116,083)
(48,992)
10,479
(38,513)
(253,990)
32
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
Net Change of AOCIL Components
Three months ended
Nine months ended
Line item in the consolidated statements of operations, if any
September 30, 2025
September 30, 2024
September 30, 2025
September 30, 2024
Net unrealized gains (losses) on translation of net investment in foreign operations adjustments
Foreign currency translation adjustments
N/A
(8,533)
25,571
32,268
21,587
Gains (losses) on net investment hedge
N/A
8,111
(23,514)
(26,430)
(19,642)
Net change
(422)
2,057
5,838
1,945
Held-to-maturity investment adjustments
Amortization of net gains (losses) to net income
Interest income on investments
2,137
2,007
5,896
6,206
Net change
2,137
2,007
5,896
6,206
Available-for-sale investment adjustments
Gross unrealized gains (losses)
N/A
17,956
61,462
64,093
48,424
Foreign currency translation adjustments of related balances
N/A
529
(1,796)
(2,246)
(1,597)
Net change
18,485
59,666
61,847
46,827
Employee benefit plans adjustments
Defined benefit pension plan
Net actuarial gain (loss)
N/A
—
—
—
1,029
Amortization of net actuarial (gains) losses
Non-service employee benefits expense
586
591
1,756
1,769
Amortization of prior service (credit) cost
Non-service employee benefits expense
20
21
61
60
Foreign currency translation adjustments of related balances
N/A
150
(339)
(518)
(287)
Net change
756
273
1,299
2,571
Post-retirement healthcare plan
Amortization of net actuarial (gains) losses
Non-service employee benefits expense
131
131
393
393
Amortization of prior service (credit) cost
Non-service employee benefits expense
(151)
(578)
(452)
(1,734)
Net change
(20)
(447)
(59)
(1,341)
Other comprehensive income (loss), net of taxes
20,936
63,556
74,821
56,208
Note 21: Capital structure
Authorized Capital
The par value of each issued common share and each authorized but unissued common share is BM$0.01 and the authorized share capital of the Bank comprises 2,000,000,000 common shares of par value BM$0.01 each, 6,000,000,000 non‑voting ordinary shares of par value BM$0.01 each, 110,200,001 preference shares of par value US$0.01 each and 50,000,000 preference shares of par value £0.01 each.
Dividends Declared
During the nine months ended September 30, 2025, the Bank declared and paid cash dividends of $1.38 (September 30, 2024: $1.32) for each common share as of the related record dates. On October 28, 2025, the Board of Directors declared an interim dividend of $0.50 per common share to be paid on November 25, 2025 to shareholders of record on November 11, 2025.
The Bank is required to comply with Section 54 of the Companies Act 1981 issued by the Government of Bermuda (the “Companies Act”) each time a dividend is declared or paid by the Bank and also obtain a letter of no objection from the BMA pursuant to the Banks and Deposit Companies Act 1999 for any dividends declared. The Bank has complied with Section 54 and has obtained the BMA's letter of no objection for all dividends declared during the periods presented.
33
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
Regulatory Capital
Effective January 1, 2025, the Bank has adopted the Basel Committee on Banking Supervision's revised standardized approach for credit risk framework as required by the BMA. Comparatives were prepared under the prior credit risk framework.
The Bank’s regulatory capital is determined in accordance with current Basel guidelines as issued by the BMA. The Bank is fully compliant with all regulatory capital requirements to which it is subject, and it maintains capital ratios in excess of regulatory minimums as at September 30, 2025 and December 31, 2024. The following table sets forth the Bank's capital adequacy in accordance with the relevant Basel framework:
September 30, 2025
December 31, 2024
Actual
Regulatory minimum
Actual
Regulatory minimum
Capital
CET 1 capital
1,078,048
N/A
1,066,058
N/A
Tier 1 capital
1,078,048
N/A
1,066,058
N/A
Tier 2 capital
6,223
N/A
107,061
N/A
Total capital
1,084,271
N/A
1,173,119
N/A
Risk Weighted Assets
4,013,895
N/A
4,539,376
N/A
Leverage Ratio Exposure Measure
14,464,850
N/A
14,679,662
N/A
Capital Ratios (%)
CET 1 capital
26.9
%
10.0
%
23.5
%
10.0
%
Tier 1 capital
26.9
%
11.5
%
23.5
%
11.5
%
Total capital
27.0
%
13.5
%
25.8
%
13.5
%
Leverage ratio
7.5
%
5.0
%
7.3
%
5.0
%
Note 22: Related party transactions
Financing Transactions
Certain directors and executives of the Bank, companies in which they are principal owners and/or members of the board, and trusts in which they are involved, have deposits with the Bank, have loans and/or are guarantors for loans with the Bank. Loans to directors were made in the ordinary course of business at normal credit terms, including interest rate and collateral requirements. Loans to executives may be eligible for preferential rates. All of these loans were considered performing loans as at September 30, 2025 and December 31, 2024. Loan balances with directors and executives of the Bank, companies in which they are principal owners and/or members of the board, and trusts in which they are involved were as follows:
Balance at December 31, 2023
19,735
Net loans issued (repaid) during the year
(1,081)
Effect of changes in the composition of related parties
983
Balance at December 31, 2024
19,637
Net loans issued (repaid) during period
(288)
Effect of changes in the composition of related parties
(15,163)
Balance at September 30, 2025
4,186
Consolidated balance sheets
September 30, 2025
December 31, 2024
Deposits
55,846
92,182
Three months ended
Nine months ended
Consolidated statement of operations
September 30, 2025
September 30, 2024
September 30, 2025
September 30, 2024
Interest and fees on loans
190
326
777
958
Total non-interest expense
81
33
295
149
Other non-interest income
43
58
196
182
34
The Bank of N.T. Butterfield & Son Limited
Notes to the Consolidated Financial Statements (unaudited) (continued)
(In thousands of US dollars, unless otherwise stated)
Certain affiliates of the Bank have loans and deposits with the Bank which were made and are maintained in the ordinary course of business on normal commercial terms. Balances with these parties were as follows:
Consolidated balance sheets
September 30, 2025
December 31, 2024
Loans
8,791
9,056
Deposits
402
811
Accrued interest and other liabilities
160
167
Three months ended
Nine months ended
Consolidated statement of operations
September 30, 2025
September 30, 2024
September 30, 2025
September 30, 2024
Interest and fees on loans
176
196
533
597
Total non-interest expense
987
329
1,426
1,148
Other non-interest income
63
61
188
184
Investments
As at September 30, 2025, several Butterfield mutual funds which are managed by a wholly owned subsidiary of the Bank, had loan balances and deposit balances held with the Bank. The Bank also earned asset management revenue and custody and other administration services revenue from funds managed by a wholly-owned subsidiary of the Bank and from directors and executives, companies in which they are principal owners and/or members of the board and trusts in which they are involved, as well as other income from other related parties.
Consolidated balance sheets
September 30, 2025
December 31, 2024
Deposits
15,056
9,441
Accrued interest and other assets
368
—
Three months ended
Nine months ended
Consolidated statement of operations
September 30, 2025
September 30, 2024
September 30, 2025
September 30, 2024
Asset management
3,080
2,846
8,853
8,103
Custody and other administration services
389
358
1,115
1,019
Other non-interest income
167
—
467
—
Note 23: Subsequent events
On October 28, 2025, the Board of Directors declared an interim dividend of $0.50 per common share to be paid on November 25, 2025 to shareholders of record on November 11, 2025.
