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: 39,554,431 (2025: 39,948,264)
396
399
Additional paid-in capital
844,947
851,223
Retained earnings
570,656
494,384
Accumulated other comprehensive income (loss)
(298,213)
(204,155)
Total shareholders’ equity
1,117,786
1,141,851
Total liabilities and shareholders’ equity
14,269,774
14,094,894
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, 2026
September 30, 2025
September 30, 2026
September 30, 2025
Non-interest income
Asset management
10,287
9,914
31,068
28,842
Banking
16,690
17,830
48,851
47,631
Foreign exchange revenue
13,860
13,224
41,734
38,857
Trust
19,462
16,236
55,300
48,235
Custody and other administration services
3,748
3,141
11,198
9,802
Other non-interest income
703
836
2,597
3,263
Total non-interest income
64,750
61,181
190,748
176,630
Interest income
Interest and fees on loans
65,000
70,267
193,348
210,748
Investments (none of the investment securities are intrinsically tax-exempt)
Available-for-sale
25,451
19,839
71,078
55,928
Held-to-maturity
15,935
17,387
49,155
53,600
Cash and cash equivalents, securities purchased under agreements to resell and short-term investments
32,640
31,911
94,699
100,052
Total interest income
139,026
139,404
408,280
420,328
Interest expense
Deposits
41,828
46,681
121,882
144,987
Long-term debt
—
—
—
3,681
Securities sold under agreements to repurchase
31
2
339
207
Total interest expense
41,859
46,683
122,221
148,875
Net interest income before provision for credit losses
97,167
92,721
286,059
271,453
Provision for credit (losses) recoveries
(241)
(564)
(3,308)
(394)
Net interest income after provision for credit losses
96,926
92,157
282,751
271,059
Net other gains (losses)
318
(61)
1,312
33
Total other gains (losses)
318
(61)
1,312
33
Total net revenue
161,994
153,277
474,811
447,722
Non-interest expense
Salaries and other employee benefits
48,729
46,604
140,975
137,573
Technology and communications
17,000
16,043
48,639
48,346
Professional and outside services
8,325
4,951
35,618
15,547
Property
8,100
8,199
23,781
25,706
Indirect taxes
5,617
5,512
17,977
17,855
Non-service employee benefits expense
1,049
1,292
3,148
3,920
Marketing
1,805
1,388
5,544
4,858
Amortization of intangible assets
2,562
1,970
6,911
5,844
Other expenses
6,160
4,809
17,105
16,088
Total non-interest expense
99,347
90,768
299,698
275,737
Net income before income taxes
62,647
62,509
175,113
171,985
Income tax benefit (expense)
(1,661)
(1,447)
(4,592)
(3,834)
Net income
60,986
61,062
170,521
168,151
Earnings per common share
Basic earnings per share
1.55
1.50
4.31
4.04
Diluted earnings per share
1.50
1.46
4.20
3.93
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, 2026
September 30, 2025
September 30, 2026
September 30, 2025
Net income
60,986
61,062
170,521
168,151
Other comprehensive income (loss), net of taxes
Unrealized net gains (losses) on translation of net investment in foreign operations
(56)
(422)
(3,424)
5,838
Net changes on investments transferred to held-to-maturity
2,030
2,137
5,734
5,896
Unrealized net gains (losses) on available-for-sale investments
(80,635)
18,485
(98,003)
61,847
Employee benefit plans adjustments
495
736
1,635
1,240
Other comprehensive income (loss), net of taxes
(78,166)
20,936
(94,058)
74,821
Total comprehensive income (loss)
(17,180)
81,998
76,463
242,972
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, 2026
September 30, 2025
September 30, 2026
September 30, 2025
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
39,326,687
393
41,724,081
417
39,948,264
399
43,537,979
435
Retirement of shares
—
—
(669,951)
(7)
(1,116,631)
(11)
(2,880,140)
(29)
Issuance of common shares
227,744
3
147,043
2
722,798
8
543,334
6
Balance at end of period
39,554,431
396
41,201,173
412
39,554,431
396
41,201,173
412
Additional paid-in capital
Balance at beginning of period
838,886
881,196
851,223
916,394
Share-based compensation
5,598
5,573
16,986
16,355
Share-based settlements
464
48
500
526
Retirement of shares
—
(14,149)
(23,755)
(60,603)
Issuance of common shares, net of underwriting discounts and commissions
(1)
(1)
(7)
(5)
Balance at end of period
844,947
872,667
844,947
872,667
Retained earnings
Balance at beginning of period
529,443
454,524
494,384
422,461
Net Income for the period
60,986
61,062
170,521
168,151
Common share cash dividends declared and paid, $0.50 and 1.50 per share (2025: $0.50 and $1.38 per share)
(19,773)
(20,453)
(59,465)
(57,577)
Retirement of shares
—
(14,547)
(34,784)
(52,449)
Balance at end of period
570,656
480,586
570,656
480,586
Treasury common shares
Balance at beginning of period
—
—
619,212
(25,468)
—
—
619,212
(23,063)
Purchase of treasury common shares
—
—
669,951
(30,350)
1,116,631
(58,550)
2,880,140
(117,133)
Retirement of shares
—
—
(669,951)
28,703
(1,116,631)
58,550
(2,880,140)
113,081
Balance at end of period
—
—
619,212
(27,115)
—
—
619,212
(27,115)
Accumulated other comprehensive income (loss)
Balance at beginning of period
(220,047)
(241,530)
(204,155)
(295,415)
Other comprehensive income (loss), net of taxes
(78,166)
20,936
(94,058)
74,821
Balance at end of period
(298,213)
(220,594)
(298,213)
(220,594)
Total shareholders' equity
1,117,786
1,105,956
1,117,786
1,105,956
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, 2026
September 30, 2025
Cash flows from operating activities
Net income
170,521
168,151
Adjustments to reconcile net income to operating cash flows
Depreciation, accretion and amortization
28,743
29,432
Provision for credit losses (recoveries)
3,308
394
Share-based payments and settlements
17,486
16,882
(Increase) decrease in carrying value of equity method investments
41
(190)
Dividends received from equity method investments
55
60
Changes in operating assets and liabilities
(Increase) decrease in accrued interest receivable and other assets
(31,863)
28,782
Increase (decrease) in employee benefit plans, accrued interest payable and other liabilities
(5,335)
(28,019)
Cash provided by (used in) operating activities
182,956
215,492
Cash flows from investing activities
(Increase) decrease in securities purchased under agreements to resell having original maturities of 3 months of less
(1,098,082)
436,761
Securities purchased under agreements to resell having original maturities of more than 3 months: purchases
(1,294,175)
(1,273,639)
Securities purchased under agreements to resell having original maturities of more than 3 months: proceeds from maturities
1,864,744
939,709
Short-term investments other than restricted cash: proceeds from maturities and sales
898,580
1,109,455
Short-term investments other than restricted cash: purchases
(1,099,537)
(1,338,460)
Available-for-sale investments: proceeds from maturities and pay downs
614,374
240,093
Available-for-sale investments: purchases
(790,408)
(527,821)
Held-to-maturity investments: proceeds from maturities and pay downs
182,317
187,215
Net (increase) decrease in loans
(25,909)
138,785
Additions to premises, equipment and computer software
(18,255)
(19,516)
Cash disbursed for business acquisition, net of cash acquired
(41,140)
—
Cash provided by (used in) investing activities
(807,491)
(107,418)
Cash flows from financing activities
Net increase (decrease) in deposits
281,699
(297,278)
Net increase (decrease) in securities sold under agreements to repurchase having original maturities of 3 months of less
(1,938)
(90,032)
Repayment of long-term debt
—
(100,000)
Common shares repurchased
(58,550)
(117,132)
Cash dividends paid on common shares
(59,465)
(57,577)
Cash provided by (used in) financing activities
161,746
(662,019)
Net effect of exchange rates on cash, cash equivalents and restricted cash
450
53,025
Net increase (decrease) in cash, cash equivalents and restricted cash
(462,339)
(500,920)
Cash, cash equivalents and restricted cash: beginning of period
1,776,683
2,088,542
Cash, cash equivalents and restricted cash: end of period
1,314,344
1,587,622
Components of cash, cash equivalents and restricted cash at end of period
Cash and cash equivalents
1,266,166
1,501,368
Restricted cash included in short-term investments on the consolidated balance sheets
48,178
86,254
Total cash, cash equivalents and restricted cash at end of period
1,314,344
1,587,622
Supplemental disclosure of non-cash items
Initial recognition of right-of-use assets and operating lease liabilities
1,587
4,580
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 ("NYSE") 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, 2025.
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. Certain prior year figures have been reclassified to agree to current period presentation.
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 and intangibles
•Employee benefit plans
Acquired Loans
Effective January 1, 2026, the Bank elected to early adopt ASU No. 2025-08. This standard introduces a single accounting framework for certain acquired loans, requiring entities to recognize an allowance for credit losses at acquisition which is added to the purchase price (the gross-up approach). In accordance with the transition provisions, the Bank will apply the amendments prospectively to all qualifying purchased seasoned loans acquired on or after the adoption date. The adoption of this guidance simplifies acquisition accounting by removing the 'Day 1 double count' of credit losses for these portfolios.
New Accounting Pronouncements
There were no accounting developments issued during the nine months ended September 30, 2026 or accounting standards pending adoption which impacted the Bank.
Note 3: Cash and cash equivalents
September 30, 2026
December 31, 2025
Non-interest bearing
Cash and demand deposits with banks
121,607
105,440
Interest bearing
Demand deposits with banks
184,915
171,201
Cash equivalents
959,644
1,432,295
Sub-total - Interest bearing
1,144,559
1,603,496
Total cash and cash equivalents
1,266,166
1,708,936
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 4: Short-term investments
September 30, 2026
December 31, 2025
Unrestricted
Maturing within three months
223,662
321,566
Maturing between three to six months
292,494
223,239
Maturing between six to twelve months
348,604
143,991
Total unrestricted short-term investments
864,760
688,796
Affected by drawing restrictions related to minimum reserve and derivative margin requirements
Interest earning demand and term deposits
48,178
67,747
Total restricted short-term investments
48,178
67,747
Total short-term investments
912,938
756,543
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, 2026
December 31, 2025
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
2,947,252
80
(185,922)
2,761,410
2,770,749
12,549
(100,827)
2,682,471
Residential mortgage-backed securities
13,191
—
(1,499)
11,692
14,859
—
(1,077)
13,782
Total available-for-sale
2,960,443
80
(187,421)
2,773,102
2,785,608
12,549
(101,904)
2,696,253
Held-to-maturity¹
US government and federal agencies
2,810,368
—
(591,634)
2,218,734
2,992,052
857
(426,439)
2,566,470
Total held-to-maturity
2,810,368
—
(591,634)
2,218,734
2,992,052
857
(426,439)
2,566,470
¹For the nine months ended September 30, 2026 and September 30, 2025, 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, 2026, comprising 225 securities representing 97.7% of the AFS portfolios' carrying value (December 31, 2025: 156 and 52.1%), represent credit losses. Total gross unrealized AFS losses were 6.9% of the fair value of the affected securities (December 31, 2025: 7.3%).
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, 2026, were comprised of 219 securities representing 100.0% of the HTM portfolios’ carrying value (December 31, 2025: 218 and 98.8%). Total gross unrealized HTM losses were 26.7% of the fair value of affected securities (December 31, 2025: 16.9%).
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.
Investments in Residential mortgage-backed securities relate to 13 US prime securities (December 31, 2025: 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 40.7% - 51.1%, 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, 2026
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
1,889,930
(58,639)
806,459
(127,283)
2,696,389
(185,922)
Residential mortgage-backed securities
—
—
11,693
(1,499)
11,693
(1,499)
Total available-for-sale securities with unrealized losses
1,889,930
(58,639)
818,152
(128,782)
2,708,082
(187,421)
Held-to-maturity securities with unrealized losses
US government and federal agencies
31,987
(1,647)
2,186,747
(589,987)
2,218,734
(591,634)
Less than 12 months
12 months or more
December 31, 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
94,588
(120)
1,296,411
(100,707)
1,390,999
(100,827)
Residential mortgage-backed securities
—
—
13,782
(1,077)
13,782
(1,077)
Total available-for-sale securities with unrealized losses
94,588
(120)
1,310,193
(101,784)
1,404,781
(101,904)
Held-to-maturity securities with unrealized losses
US government and federal agencies
—
—
2,530,638
(426,439)
2,530,638
(426,439)
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, 2026
Within 1 year
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
353,458
1,065,259
—
—
1,342,693
2,761,410
Residential mortgage-backed securities
—
—
—
—
11,692
11,692
Total available-for-sale
353,458
1,065,259
—
—
1,354,385
2,773,102
Held-to-maturity
US government and federal agencies
—
—
—
—
2,810,368
2,810,368
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.
The Bank also pledges certain 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 discloses 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, 2026 is 5.73% (December 31, 2025: 5.81%). The interest receivable on total loans as at September 30, 2026 is $10.6 million (December 31, 2025: $11.1 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 Group Credit Committee is also responsible for approving the allowance for expected credit losses 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, 2026
Pass
Special mention
Substandard
Non-accrual
Total amortized cost
Allowance for expected credit losses
Total net loans
Commercial loans
Government
276,492
—
—
—
276,492
(102)
276,390
Commercial and industrial
166,562
—
622
16,955
184,139
(17,376)
166,763
Commercial overdrafts
66,866
—
166
169
67,201
(37)
67,164
Total commercial loans
509,920
—
788
17,124
527,832
(17,515)
510,317
Commercial real estate loans
Commercial mortgage
430,660
1,947
1,858
2,750
437,215
(985)
436,230
Construction
70,920
—
—
—
70,920
—
70,920
Total commercial real estate loans
501,580
1,947
1,858
2,750
508,135
(985)
507,150
Consumer loans
Automobile financing
19,872
—
—
219
20,091
(34)
20,057
Credit card
101,258
—
738
—
101,996
(2,211)
99,785
Overdrafts
27,109
—
—
48
27,157
(227)
26,930
Other consumer1
48,358
—
794
829
49,981
(886)
49,095
Total consumer loans
196,597
—
1,532
1,096
199,225
(3,358)
195,867
Residential mortgage loans
2,932,925
7,854
127,931
98,640
3,167,350
(5,131)
3,162,219
Total
4,141,022
9,801
132,109
119,610
4,402,542
(26,989)
4,375,553
1 Other consumer loans’ amortized cost includes $6 million of cash and portfolio secured lending and $36 million of lending secured by buildings in construction or other collateral.
December 31, 2025
Pass
Special mention
Substandard
Non-accrual
Total amortized cost
Allowance for expected credit losses
Total net loans
Commercial loans
Government
276,815
—
—
—
276,815
(257)
276,558
Commercial and industrial
176,753
—
667
17,130
194,550
(12,030)
182,520
Commercial overdrafts
62,819
610
105
195
63,729
(70)
63,659
Total commercial loans
516,387
610
772
17,325
535,094
(12,357)
522,737
Commercial real estate loans
Commercial mortgage
481,978
184
2,062
3,434
487,658
(1,098)
486,560
Construction
77,573
—
—
—
77,573
—
77,573
Total commercial real estate loans
559,551
184
2,062
3,434
565,231
(1,098)
564,133
Consumer loans
Automobile financing
18,993
—
3
174
19,170
(27)
19,143
Credit card
98,398
—
680
—
99,078
(2,184)
96,894
Overdrafts
35,022
—
32
5
35,059
(350)
34,709
Other consumer1
40,605
—
812
829
42,246
(854)
41,392
Total consumer loans
193,018
—
1,527
1,008
195,553
(3,415)
192,138
Residential mortgage loans
2,916,341
3,769
122,239
69,560
3,111,909
(8,506)
3,103,403
Total
4,185,297
4,563
126,600
91,327
4,407,787
(25,376)
4,382,411
1 Other consumer loans’ amortized cost includes $6 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, 2026
Pass
Special mention
Substandard
Non-accrual
Total amortized cost
Loans by origination year
2026
563,314
—
1,462
—
564,776
2025
486,599
2,640
—
41
489,280
2024
376,380
—
2,515
22,949
401,844
2023
202,061
—
9,430
32
211,523
2022
652,945
1,276
4,314
29
658,564
Prior
1,662,877
5,885
113,484
96,342
1,878,588
Overdrafts and credit cards
196,846
—
904
217
197,967
Total amortized cost
4,141,022
9,801
132,109
119,610
4,402,542
December 31, 2025
Pass
Special mention
Substandard
Non-accrual
Total amortized cost
Loans by origination year
2025
514,608
—
—
—
514,608
2024
470,244
—
247
181
470,672
2023
283,923
—
1,039
54
285,016
2022
722,368
805
6,250
25
729,448
2021
350,808
—
—
257
351,065
Prior
1,643,350
3,148
118,246
90,610
1,855,354
Overdrafts and credit cards
199,996
610
818
200
201,624
Total amortized cost
4,185,297
4,563
126,600
91,327
4,407,787
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, 2026
30 - 59 days
60 - 89 days
90 days or more
Total past due loans
Total current
Total amortized cost
Commercial loans
Government
—
—
—
—
276,492
276,492
Commercial and industrial
—
607
16,955
17,562
166,577
184,139
Commercial overdrafts
—
—
169
169
67,032
67,201
Total commercial loans
—
607
17,124
17,731
510,101
527,832
Commercial real estate loans
Commercial mortgage
1,029
1,096
2,351
4,476
432,739
437,215
Construction
—
—
—
—
70,920
70,920
Total commercial real estate loans
1,029
1,096
2,351
4,476
503,659
508,135
Consumer loans
Automobile financing
31
87
193
311
19,780
20,091
Credit card
529
339
529
1,397
100,599
101,996
Overdrafts
10
—
48
58
27,099
27,157
Other consumer
104
712
676
1,492
48,489
49,981
Total consumer loans
674
1,138
1,446
3,258
195,967
199,225
Residential mortgage loans
18,251
13,764
132,871
164,886
3,002,464
3,167,350
Total amortized cost
19,954
16,605
153,792
190,351
4,212,191
4,402,542
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, 2025
30 - 59 days
60 - 89 days
90 days or more
Total past due loans
Total current
Total amortized cost
Commercial loans
Government
—
—
—
—
276,815
276,815
Commercial and industrial
—
—
17,130
17,130
177,420
194,550
Commercial overdrafts
—
—
300
300
63,429
63,729
Total commercial loans
—
—
17,430
17,430
517,664
535,094
Commercial real estate loans
Commercial mortgage
328
174
3,434
3,936
483,722
487,658
Construction
—
—
—
—
77,573
77,573
Total commercial real estate loans
328
174
3,434
3,936
561,295
565,231
Consumer loans
Automobile financing
99
14
160
273
18,897
19,170
Credit card
596
515
466
1,577
97,501
99,078
Overdrafts
—
—
37
37
35,022
35,059
Other consumer
270
17
675
962
41,284
42,246
Total consumer loans
965
546
1,338
2,849
192,704
195,553
Residential mortgage loans
13,863
33,158
90,727
137,748
2,974,161
3,111,909
Total amortized cost
15,156
33,878
112,929
161,963
4,245,824
4,407,787
Changes in Allowances For Credit Losses
The allowance for expected credit losses increased during the nine months ended September 30, 2026 compared to December 31, 2025 reflecting an additional specific provision on a legacy non-accrual Bermuda commercial facility. This was partially offset by the release of a provision related to a residential mortgage facility in the Channel Islands and UK segment upon partial repayment. As disclosed in Note 2 of the December 31, 2025 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, 2026
Commercial
Commercial real estate
Consumer
Residential mortgage
Total
Balance at the beginning of period
12,357
1,098
3,415
8,506
25,376
Provision increase (decrease)
6,336
(113)
422
(3,337)
3,308
Recoveries of previous charge-offs
—
—
1,321
132
1,453
Charge-offs, by origination year
2026
—
—
—
—
—
2025
—
—
—
—
—
2024
—
—
(52)
—
(52)
2023
—
—
(38)
—
(38)
2022
—
—
(33)
—
(33)
Prior
(1,157)
—
(77)
(167)
(1,401)
Overdrafts and credit cards
(12)
—
(1,597)
—
(1,609)
Other
(9)
—
(3)
(3)
(15)
Allowances for expected credit losses at end of period
17,515
985
3,358
5,131
26,989
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, 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
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, 2026, no interest was recognized on non-accrual loans. No credit deteriorated loans were purchased during the period.
September 30, 2026
December 31, 2025
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
16,955
—
—
16,955
17,130
—
—
17,130
Commercial overdrafts
169
—
—
169
195
—
105
300
Total commercial loans
17,124
—
—
17,124
17,325
—
105
17,430
Commercial real estate loans
Commercial mortgage
1,844
906
—
2,750
2,891
543
—
3,434
Total commercial real estate loans
1,844
906
—
2,750
2,891
543
—
3,434
Consumer loans
Automobile financing
71
148
—
219
99
75
—
174
Credit cards
—
—
529
529
—
—
466
466
Overdrafts
48
—
—
48
5
—
32
37
Other consumer
466
363
—
829
494
335
—
829
Total consumer loans
585
511
529
1,625
598
410
498
1,506
Residential mortgage loans
25,583
73,057
40,347
138,987
49,357
20,203
27,418
96,978
Total non-performing loans
45,136
74,474
40,876
160,486
70,171
21,156
28,021
119,348
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, 2026 and September 30, 2025 made to borrowers experiencing financial difficulty during the nine-months ended September 30, 2026 and September 30, 2025.
Amortized cost basis
Weighted average financial effects
September 30, 2026
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
Other consumer
—
44
—
—
0.1
%
3
0
—
%
Residential mortgage loans
3,502
—
18,874
1,623
0.8
%
0
15
3.7
%
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
%
0
6
3.1
%
Age analysis and subsequent default of modified loans.
As at September 30, 2026 and September 30, 2025, all loans for which a concession was granted during the preceding 12 months are current, except for the following:
Residential mortgage loans:
–$0.4 million (September 30, 2025: $5.4 million) of residential mortgage loans for which a term extension and reduction in interest rate was granted are 30 to 59 days past due;
–$6.9 million (September 30, 2025: Nil) of residential mortgages loans for which a term extension was granted are 60 to 89 days past due; and
–$1.2 million (September 30, 2025: $0.1 million) of residential mortgage loans for which a term extension and reduction in interest rate was granted 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, 2026
December 31, 2025
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
4,850
—
—
4,850
3,568
—
—
3,568
Bermuda
53,798
1,368,443
244,641
1,666,882
41,849
1,471,971
317,243
1,831,063
Canada
1,599,023
—
—
1,599,023
1,276,109
—
—
1,276,109
Cayman Islands
43,411
1,045,066
225,230
1,313,707
37,633
1,029,012
198,769
1,265,414
France
515,363
—
—
515,363
117,550
—
—
117,550
Germany
1,247
—
—
1,247
6,121
—
—
6,121
Guernsey
3,429
539,367
105,684
648,480
1
541,110
99,753
640,864
Ireland
14,698
—
—
14,698
26,027
—
—
26,027
Japan
85,305
—
—
85,305
102,407
—
—
102,407
Jersey
—
398,673
94,927
493,600
—
306,190
65,666
371,856
Mauritius
930
—
—
930
686
—
—
686
Norway
2,813
—
—
2,813
90,585
—
—
90,585
Switzerland
20,089
—
—
20,089
9,642
—
—
9,642
The Bahamas
110
1,177
—
1,287
186
2,895
—
3,081
United Kingdom
1,059,691
1,049,816
66,313
2,175,820
1,357,142
1,056,609
143,314
2,557,065
United States
366,807
—
—
366,807
490,782
—
—
490,782
Other
3,430
—
—
3,430
1,429
—
—
1,429
Total gross exposure
3,774,994
4,402,542
736,795
8,914,331
3,561,717
4,407,787
824,745
8,794,249
Note 8: Deposits
September 30, 2026
December 31, 2025
Non-interest bearing demand deposits
2,374,804
2,701,145
Interest bearing demand deposits
6,519,924
6,055,342
Interest bearing term deposits
4,003,230
3,941,581
Total deposits
12,897,958
12,698,068
September 30, 2026
As of September 30, 2026, the remaining maturities of interest-bearing term deposits in each of the 12-month periods ending September 30 were as follows:
2027
3,953,621
2028
23,141
2029
13,833
2030
7,078
2031
5,557
Total term deposits
4,003,230
¹The weighted-average interest rate on interest-bearing demand deposits as at September 30, 2026 is 0.77% (December 31, 2025: 0.74%).
Uninsured term deposits totaled $3.9 billion as at September 30, 2026 (December 31, 2025: $3.9 billion)
By Type and Segment
September 30, 2026
December 31, 2025
Payable on demand
Payable on a fixed date
Total
Payable on demand
Payable on a fixed date
Total
Bermuda
3,546,695
1,099,321
4,646,016
3,529,577
951,658
4,481,235
Cayman
2,917,594
948,163
3,865,757
2,980,600
1,085,168
4,065,768
Channel Islands and the UK
2,430,439
1,955,746
4,386,185
2,246,310
1,904,755
4,151,065
Total deposits
8,894,728
4,003,230
12,897,958
8,756,487
3,941,581
12,698,068
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)
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.
The Bank included an estimate of the 2026 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, 2025. During the nine months ended September 30, 2026, 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, 2026
September 30, 2025
September 30, 2026
September 30, 2025
Defined benefit pension expense (income)
Interest cost
Non-service employee benefits expense
1,212
1,313
3,637
3,912
Expected return on plan assets
Non-service employee benefits expense
(1,673)
(1,700)
(5,020)
(5,028)
Amortization of net actuarial (gains) losses
Non-service employee benefits expense
509
586
1,528
1,756
Amortization of prior service (credit) cost
Non-service employee benefits expense
20
20
62
61
Total defined benefit pension expense (income)
68
219
207
701
Post-retirement medical benefit expense (income)
Service cost
Salaries and other employee benefits
2
10
8
32
Interest cost
Non-service employee benefits expense
1,009
1,092
3,026
3,277
Amortization of net actuarial (gains) losses
Non-service employee benefits expense
(159)
131
(478)
393
Amortization of prior service (credit) cost
Non-service employee benefits expense
131
(151)
393
(452)
Total post-retirement medical benefit expense (income)
983
1,082
2,949
3,250
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, 2026, $120.6 million (December 31, 2025: $125.0 million) of standby letters of credit were issued under this facility.
Outstanding unfunded commitments to extend credit
September 30, 2026
December 31, 2025
Commitments to extend credit
510,665
577,370
Documentary and commercial letters of credit
1,142
859
Total unfunded commitments to extend credit
511,807
578,229
Allowance for credit losses
(130)
(131)
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.
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)
September 30, 2026
December 31, 2025
Outstanding financial guarantees
Gross
Collateral
Net
Gross
Collateral
Net
Standby letters of credit
223,927
207,477
16,450
245,398
223,245
22,153
Letters of guarantee
1,061
1,026
35
1,118
1,081
37
Total
224,988
208,503
16,485
246,516
224,326
22,190
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, 2026, the Bank had 20 open positions (December 31, 2025: 13) in resell agreements with a remaining maturity of less than 365 days involving pools of mortgages issued by Non-US government debt securities. The carrying value of these resell agreements is $1.6 billion (December 31, 2025: $1.1 billion) and are included in securities purchased under agreements to resell on the consolidated balance sheets.
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.
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, 2026
September 30, 2025
September 30, 2026
September 30, 2025
Lease costs
Operating lease costs
1,667
1,576
4,804
5,361
Short-term lease costs
490
421
1,224
1,028
Total net lease cost
2,157
1,997
6,028
6,389
Operating lease income
382
97
1,180
295
Other information for the period
Right-of-use assets related to new operating lease liabilities
250
3,814
1,587
4,580
Operating cash flows from operating leases
1,393
1,280
4,074
4,254
Other information at end of period
September 30, 2026
December 31, 2025
Operating leases right-of-use assets (included in other assets on the balance sheets)
38,001
38,079
Operating lease liabilities (included in other liabilities on the balance sheets)
38,609
38,725
Weighted average remaining lease term for operating leases (in years)
10.89
11.53
Weighted average discount rate for operating leases
5.88
%
5.90
%
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)
The following table summarizes the maturity analysis of the Bank's commitments for long-term leases as at December 31, 2025:
Year ending December 31
Operating Leases
2026
5,248
2027
5,408
2028
5,332
2029
4,691
2030
4,195
2031 & thereafter
17,106
Total commitments
41,980
Less: effect of discounting cash flows to their present value
(3,255)
Operating lease liabilities
38,725
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 Channel Islands and UK segments have a managing director who reports to the Chairman & CEO. Within 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, 2025. 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.
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, 2026
December 31, 2025
Bermuda
5,357,623
5,111,127
Cayman
4,114,941
4,425,113
Channel Islands and the UK
4,888,164
4,599,096
Other
74,398
70,731
Total assets before inter-segment eliminations
14,435,126
14,206,067
Less: inter-segment eliminations
(165,352)
(111,173)
Total
14,269,774
14,094,894
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)
Three months ended September 30, 2026
Bermuda
Cayman
Channel Islands and the UK
Other
Total before eliminations
Inter-segment eliminations
Total
Interest income
Interest income
56,168
37,222
45,597
39
139,026
—
139,026
Interest income - Inter-segment
179
692
—
—
871
(871)
—
Interest income Total
56,347
37,914
45,597
39
139,897
(871)
139,026
Interest expense
Interest expense
9,725
7,081
25,053
—
41,859
—
41,859
Interest expense - Inter-segment
593
—
278
—
871
(871)
—
Interest expense Total
10,318
7,081
25,331
—
42,730
(871)
41,859
Net interest income
Net interest income
46,443
30,141
20,544
39
97,167
—
97,167
Net interest income - Inter-segment
(414)
692
(278)
—
—
—
—
Net interest income Total
46,029
30,833
20,266
39
97,167
—
97,167
Non-interest income
26,627
19,040
13,294
12,907
71,868
(7,118)
64,750
Allowance for credit losses
(198)
(48)
5
—
(241)
—
(241)
Net revenue before gains and losses
72,458
49,825
33,565
12,946
168,794
(7,118)
161,676
Gains and losses
—
—
318
—
318
—
318
Total net revenue
72,458
49,825
33,883
12,946
169,112
(7,118)
161,994
Expenses
Salaries and other employee benefits
19,188
7,443
14,088
8,010
48,729
—
48,729
Technology and communications
8,720
3,152
2,721
385
14,978
—
14,978
Non-income taxes
4,197
503
591
326
5,617
—
5,617
Professional and outside services
6,219
626
1,153
327
8,325
—
8,325
Property
2,117
762
1,278
734
4,891
—
4,891
Amortization of intangible assets
358
275
1,495
434
2,562
—
2,562
Depreciation
3,300
1,156
659
116
5,231
—
5,231
Income tax benefit (expense)
—
—
1,299
362
1,661
—
1,661
Other expenses
11,747
3,804
(639)
1,220
16,132
(7,118)
9,014
Expenses Total
55,846
17,721
22,645
11,914
108,126
(7,118)
101,008
Net income
16,612
32,104
11,238
1,032
60,986
—
60,986
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)
Nine months ended September 30, 2026
Bermuda
Cayman
Channel Islands and the UK
Other
Total before eliminations
Inter-segment eliminations
Total
Interest income
Interest income
160,804
112,022
135,359
95
408,280
—
408,280
Interest income - Inter-segment
328
2,557
—
—
2,885
(2,885)
—
Interest income Total
161,132
114,579
135,359
95
411,165
(2,885)
408,280
Interest expense
Interest expense
26,760
21,576
73,885
—
122,221
—
122,221
Interest expense - Inter-segment
1,980
—
905
—
2,885
(2,885)
—
Interest expense Total
28,740
21,576
74,790
—
125,106
(2,885)
122,221
Net interest income
Net interest income
134,044
90,446
61,474
95
286,059
—
286,059
Net interest income - Inter-segment
(1,652)
2,557
(905)
—
—
—
—
Net interest income Total
132,392
93,003
60,569
95
286,059
—
286,059
Non-interest income
79,037
57,047
37,347
38,515
211,946
(21,198)
190,748
Allowance for credit losses
(5,365)
43
2,014
—
(3,308)
—
(3,308)
Net revenue before gains and losses
206,064
150,093
99,930
38,610
494,697
(21,198)
473,499
Gains and losses
3
—
1,309
—
1,312
—
1,312
Total net revenue
206,067
150,093
101,239
38,610
496,009
(21,198)
474,811
Expenses
Salaries and other employee benefits
56,470
21,266
39,658
23,581
140,975
—
140,975
Technology and communications
24,322
9,382
7,647
1,154
42,505
—
42,505
Non-income taxes
13,438
1,463
1,869
1,207
17,977
—
17,977
Professional and outside services
29,617
1,689
3,325
987
35,618
—
35,618
Property
5,564
2,180
4,337
2,136
14,217
—
14,217
Amortization of intangible assets
1,072
826
3,707
1,306
6,911
—
6,911
Depreciation
9,969
3,406
1,977
346
15,698
—
15,698
Income tax benefit (expense)
—
—
3,575
1,017
4,592
—
4,592
Other expenses
33,512
11,251
(1,272)
3,504
46,995
(21,198)
25,797
Expenses Total
173,964
51,463
64,823
35,238
325,488
(21,198)
304,290
Net income
32,103
98,630
36,416
3,372
170,521
—
170,521
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
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") agreements. 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.
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)
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 19: 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 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.
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)
September 30, 2026
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
2
77,790
447
(23)
424
Fair value hedges
Currency swaps
2
119,984
—
(1,256)
(1,256)
Derivatives not formally designated as hedging instruments
Currency swaps
72
1,714,131
32,260
(4,257)
28,003
Subtotal risk management derivatives
1,911,905
32,707
(5,536)
27,171
Client services derivatives
Spot and forward foreign exchange
73
141,582
848
(710)
138
Total derivative instruments
2,053,487
33,555
(6,246)
27,309
December 31, 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
124,435
—
(923)
(923)
Fair value hedges
Currency swaps
2
127,685
339
(157)
182
Derivatives not formally designated as hedging instruments
Currency swaps
59
1,434,912
4,891
(8,551)
(3,660)
Subtotal risk management derivatives
1,687,032
5,230
(9,631)
(4,401)
Client services derivatives
Spot and forward foreign exchange
70
189,594
984
(786)
198
Total derivative instruments
1,876,626
6,214
(10,417)
(4,203)
The nominal amount of derivatives designated as fair value hedging instruments equals the amortized cost of the AFS securities that are designated as being hedged for changes in foreign exchange rates.
In addition to the above, as at September 30, 2026 foreign denominated deposits of £247.1 million (December 31, 2025: £211.2 million); SGD0.1 million (December 31, 2025: SGD0.1 million) and Nil (December 31, 2025: 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, 2026
Gross fair value of derivatives
Cash collateral received / paid
Net exposures
Derivative assets
Spot and forward foreign exchange and currency swaps
33,555
(5,630)
27,925
—
(244)
27,681
Derivative liabilities
Spot and forward foreign exchange and currency swaps
6,246
(5,630)
616
—
(60)
556
Net positive fair value
27,309
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, 2025
Gross fair value of derivatives
Cash collateral received / paid
Net exposures
Derivative assets
Spot and forward foreign exchange and currency swaps
6,214
(5,150)
1,064
—
(326)
738
Derivative liabilities
Spot and forward foreign exchange and currency swaps
10,417
(5,150)
5,267
—
(3,356)
1,911
Net negative fair value
(4,203)
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)
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, 2026
September 30, 2025
September 30, 2026
September 30, 2025
Spot and forward foreign exchange
Foreign exchange revenue
59
79
(60)
80
Currency swaps, not designated as hedge
Foreign exchange revenue
(3,832)
30,350
31,664
(29,013)
Currency swaps - fair value hedges
Foreign exchange revenue
(58)
(4,223)
(1,439)
5,311
Total net gains (losses) recognized in net income
(3,831)
26,206
30,165
(23,622)
Three months ended
Nine months ended
Derivative instrument
Consolidated statements of comprehensive income line item
September 30, 2026
September 30, 2025
September 30, 2026
September 30, 2025
Currency swaps - net investment hedge
Unrealized net gains (losses) on translation of net investment in foreign operations
68
251
1,347
(1,389)
Total net gains (losses) recognized in comprehensive income
68
251
1,347
(1,389)
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, 2025.
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 Government Treasury notes.
Financial instruments in Level 2 include government debt securities, mortgage-backed securities, forward foreign exchange contracts and securities sold under agreements to repurchase.
There were no Level 3 investments as at September 30, 2026 and December 31, 2025.
There were no transfers between Level 1 and Level 2 or Level 2 and Level 3 during the nine months ended September 30, 2026 and the year ended December 31, 2025.
September 30, 2026
December 31, 2025
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
1,418,717
1,342,693
2,761,410
1,342,083
1,340,388
2,682,471
Residential mortgage-backed securities
—
11,692
11,692
—
13,782
13,782
Total available-for-sale
1,418,717
1,354,385
2,773,102
1,342,083
1,354,170
2,696,253
Other assets - Derivatives
—
27,925
27,925
—
1,064
1,064
Financial liabilities
Other liabilities - Derivatives
—
616
616
—
5,267
5,267
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)
Items Other Than Those Recognized at Fair Value on a Recurring Basis:
September 30, 2026
December 31, 2025
Level
Carrying amount
Fair value
Appreciation / (depreciation)
Carrying amount
Fair value
Appreciation / (depreciation)
Financial assets
Cash and cash equivalents
Level 1
1,266,166
1,266,166
—
1,708,936
1,708,936
—
Securities purchased under agreements to resell
Level 2
1,595,890
1,595,890
—
1,096,238
1,096,238
—
Short-term investments
Level 1
912,938
912,938
—
756,543
756,543
—
Investments held-to-maturity
Level 2
2,810,368
2,218,734
(591,634)
2,992,052
2,566,470
(425,582)
Loans, net of allowance for credit losses
Level 2
4,375,553
4,340,348
(35,205)
4,382,411
4,367,439
(14,972)
Financial liabilities
Term deposits
Level 2
4,003,230
4,005,982
(2,752)
3,941,581
3,944,728
(3,147)
Note 15: 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 the expense.
No interest was capitalized during the nine months ended September 30, 2026, and the year ended December 31, 2025.
Note 16: 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, 2026, the average number of outstanding awards of unvested common shares was 1.8 million (September 30, 2025: 1.8 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, 2026
September 30, 2025
September 30, 2026
September 30, 2025
Net income
60,986
61,062
170,521
168,151
Basic Earnings Per Share
Weighted average number of common shares issued
39,439
41,435
39,567
42,290
Weighted average number of common shares held as treasury stock
—
(619)
—
(619)
Weighted average number of common shares (in thousands)
39,439
40,816
39,567
41,671
Basic Earnings Per Share
1.55
1.50
4.31
4.04
Diluted Earnings Per Share
Weighted average number of common shares
39,439
40,816
39,567
41,671
Net dilution impact related to awards of unvested common shares
1,084
1,128
1,078
1,066
Weighted average number of diluted common shares (in thousands)
40,523
41,944
40,645
42,737
Diluted Earnings Per Share
1.50
1.46
4.20
3.93
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)
Note 17: 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
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, 2026 and December 31, 2025.
Unvested Share Awards
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.
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, 2026 was $52.54 per share (December 31, 2025: $37.50 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, 2026, 5,128 shares (December 31, 2025: 13,022 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, 2026
September 30, 2025
EDIP
ELTIP
EDIP
ELTIP
Outstanding at beginning of period
500
1,236
628
1,151
Granted
446
240
130
348
Vested (fair value in 2026: $39.8 million, 2025: $22.1 million )
Share-based Compensation Cost Recognized in the Financial Statements
Nine months ended
September 30, 2026
September 30, 2025
EDIP and ELTIP
17,004
16,275
ESPP (employee contributions and value of discount from market price)
285
292
Share-based Compensation Cost Recognized in Net Income
17,289
16,567
Deduct: Fair value of awards withheld for employees' payroll tax purposes
(303)
(211)
Share-based Compensation Cost Recognized in Additional Paid-in Capital
16,986
16,356
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)
Unrecognized Share-based Compensation Cost
September 30, 2026
December 31, 2025
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
23,341
4.83
6,573
1.52
ELTIP
Time vesting shares
—
0.00
8
0.12
Performance vesting shares
16,530
1.78
15,053
1.65
Total unrecognized expense
39,871
21,634
Note 18: 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 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.
On December 8, 2025, the Board approved a new common share repurchase program, authorizing the purchase of up to 3.0 million common shares through to December 31, 2026. The program has been paused subsequent to the CIBC Caribbean acquisition announcement in May 2026.
The table below presents information about common stock repurchases:
Three months ended
Nine Months Ended
Common share repurchases
September 30, 2026
September 30, 2025
September 30, 2026
September 30, 2025
Acquired number of shares (to the nearest 1)
—
669,951
1,116,631
2,880,140
Average cost per common share
—
45.30
52.43
40.67
Total cost (in US dollars)
—
30,349,601
58,550,005
117,132,449
Note 19: 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, 2026
Pension
Post-retirement healthcare
Subtotal - employee benefits plans
Total AOCIL
Balance at beginning of period
(19,772)
(66,024)
(88,287)
(47,117)
17,045
(30,072)
(204,155)
Other comprehensive income (loss), net of taxes
(3,424)
5,734
(98,003)
1,720
(85)
1,635
(94,058)
Balance at end of period
(23,196)
(60,290)
(186,290)
(45,397)
16,960
(28,437)
(298,213)
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)
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)
Net Change of AOCIL Components
Three months ended
Nine months ended
Line item in the consolidated statements of operations, if any
September 30, 2026
September 30, 2025
September 30, 2026
September 30, 2025
Net unrealized gains (losses) on translation of net investment in foreign operations adjustments
Foreign currency translation adjustments
N/A
430
(8,533)
(9,879)
32,268
Gains (losses) on net investment hedge
N/A
(486)
8,111
6,455
(26,430)
Net change
(56)
(422)
(3,424)
5,838
Held-to-maturity investment adjustments
Amortization of net gains (losses) to net income
Interest income on investments
2,030
2,137
5,734
5,896
Net change
2,030
2,137
5,734
5,896
Available-for-sale investment adjustments
Gross unrealized gains (losses)
N/A
(80,640)
17,956
(98,318)
64,093
Foreign currency translation adjustments of related balances
N/A
5
529
315
(2,246)
Net change
(80,635)
18,485
(98,003)
61,847
Employee benefit plans adjustments
Defined benefit pension plan
Amortization of net actuarial (gains) losses
Non-service employee benefits expense
509
586
1,528
1,756
Amortization of prior service (credit) cost
Non-service employee benefits expense
20
20
62
61
Foreign currency translation adjustments of related balances
N/A
(6)
150
130
(518)
Net change
523
756
1,720
1,299
Post-retirement healthcare plan
Amortization of net actuarial (gains) losses
Non-service employee benefits expense
(159)
131
(478)
393
Amortization of prior service (credit) cost
Non-service employee benefits expense
131
(151)
393
(452)
Net change
(28)
(20)
(85)
(59)
Other comprehensive income (loss), net of taxes
(78,166)
20,936
(94,058)
74,821
Note 20: 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, 2026, the Bank declared and paid cash dividends of $1.50 (September 30, 2025: $1.38) for each common share as of the related record dates.
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.
Regulatory Capital
Effective January 1, 2025, the Bank adopted the Basel Committee on Banking Supervision's revised standardized approach for credit risk framework as required by the BMA.
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)
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, 2026 and December 31, 2025. The following table sets forth the Bank's capital adequacy in accordance with the relevant Basel framework:
September 30, 2026
December 31, 2025
Actual
Regulatory minimum
Actual
Regulatory minimum
Capital
CET 1 capital
1,145,485
N/A
1,102,302
N/A
Tier 1 capital
1,145,485
N/A
1,102,302
N/A
Tier 2 capital
5,913
N/A
6,189
N/A
Total capital
1,151,399
N/A
1,108,492
N/A
Risk Weighted Assets
3,889,701
N/A
3,991,389
N/A
Leverage Ratio Exposure Measure
14,658,776
N/A
14,520,704
N/A
Capital Ratios (%)
CET 1 capital
29.4
%
10.0
%
27.6
%
10.0
%
Tier 1 capital
29.4
%
11.5
%
27.6
%
11.5
%
Total capital
29.6
%
13.5
%
27.8
%
13.5
%
Leverage ratio
7.8
%
5.0
%
7.6
%
5.0
%
Note 21: Business combinations
Rawlinson & Hunter Guernsey Limited Acquisition
On February 19, 2026, the Bank announced that it had entered into an agreement to acquire Rawlinson & Hunter Limited (“R&H Guernsey”), the independently owned Guernsey member firm of the Rawlinson & Hunter International Network (“R&H”).
On April 15, 2026, the transaction completed as planned and the aggregate purchase price of $42.8 million (£31.7 million) was paid in cash. During 2026 and 2027, it is expected that R&H Guernsey's business and employees will be integrated with the existing Butterfield operations in Guernsey and operate under the Butterfield name, Butterfield Fidicuary Administrators (Guernsey) Limited.
The fair value of the net assets acquired and allocation of purchase price is summarized as follows:
As at April 15, 2026
Total consideration transferred
42,761
Assets acquired
Cash and cash equivalents
1,622
Intangible assets - Customer relationships
35,349
Other assets
5,428
Total assets acquired
42,399
Liabilities assumed
Other liabilities
(1,946)
Total liabilities assumed
(1,946)
Excess purchase price - Goodwill
2,308
The acquired customer relationships intangible assets have an estimated finite useful life of 15 years.
The Bank incurred legal and professional transaction expenses related to this acquisition amounting to $1.2 million, all of which has been expensed and presented in the Consolidated Statements of Operations during the nine months ended September 30, 2026.
For the period beginning on April 15, 2026 (i.e. acquisition date) to September 30, 2026, the amount of revenues and net income relating to the acquired R&H Guernsey operations that were not inextricably merged into the Bank’s operations were $5.0 million and a net income of $0.4 million, respectively.
The following selected unaudited pro forma financial information has been provided to present a summary of the combined results of the Bank and the acquired R&H Guernsey operations, assuming the transaction had been effective on January 1, 2025. The unaudited pro forma data is for informational purposes only and does not necessarily represent results that would have occurred if the transaction had taken place on the basis assumed above. The pro forma financial information has been prepared based on the actual results realized by R&H Guernsey from January 1, 2025 to September 30, 2025 and from January 1, 2026 to September 30, 2026.
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)
Nine months ended
Unaudited pro forma financial information
September 30, 2026
September 30, 2025
Total net revenue
478,724
457,004
Total non-interest operating (expense)
(305,352)
(283,502)
Pro forma net income post business combination
173,372
173,502
CIBC Caribbean Acquisition
On May 28, 2026, the Bank announced that it has entered into an agreement to acquire Canadian Imperial Bank of Commerce's ("CIBC") 91.7% interest in CIBC Caribbean Bank Limited (“CIBC Caribbean”). The combined entity would have approximately $29 billion in assets.
The total consideration to be paid for 100% of CIBC Caribbean's shares (i.e. shares held by CIBC and shares held by minority shareholders on the acquisition date, if any) will be comprised of $1,091 million in cash and $703 million in Butterfield shares valued by reference to Butterfield’s 10-day NYSE volume-weighted average price of $55.66 as of May 27, 2026, for an aggregate purchase price of $1,794 million, or $1.14 per CIBC Caribbean share.
In connection with the transaction, Butterfield has obtained commitments for $700 million of Tier 2 capital-qualifying subordinated debt financing which is expected to be raised prior to closing.
The transaction is expected to close in the first half of 2027, subject to receipt of Butterfield shareholder and regulatory approvals and the satisfaction of customary closing conditions. Following the transaction, Butterfield’s ordinary shares will continue to be listed on the NYSE and the BSX, and Butterfield intends to undertake additional secondary share listings on the Barbados Stock Exchange, the Bahamas International Securities Exchange, and the Trinidad & Tobago Stock Exchange, subject to local listing and regulatory requirements.
Following completion of the transaction, CIBC will own an approximately 22% stake in the combined entity. Under the terms of Butterfield and CIBC’s shareholder agreement, CIBC will then initially have the right to appoint two directors to Butterfield’s Board. The shareholder agreement will also provide for certain lockup restrictions with respect to CIBC’s stake in Butterfield, and include customary standstill obligations and registration rights.
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, 2026 and December 31, 2025. 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, 2024
19,637
Net loans issued (repaid) during the year
(256)
Effect of changes in the composition of related parties
(15,163)
Balance at December 31, 2025
4,218
Net loans issued (repaid) during period
3,121
Balance at September 30, 2026
7,339
Consolidated balance sheets
September 30, 2026
December 31, 2025
Deposits
24,993
92,182
Three months ended
Nine months ended
Consolidated statements of operations
September 30, 2026
September 30, 2025
September 30, 2026
September 30, 2025
Interest and fees on loans
24
190
82
777
Total non-interest expense
104
81
247
295
Other non-interest income
14
43
114
196
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, 2026
December 31, 2025
Loans
8,194
8,884
Deposits
545
545
Accrued interest and other liabilities
312
175
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)
Three months ended
Nine months ended
Consolidated statements of operations
September 30, 2026
September 30, 2025
September 30, 2026
September 30, 2025
Interest and fees on loans
163
176
495
533
Total non-interest expense
471
987
1,455
1,426
Other non-interest income
64
63
192
188
Investments
As at September 30, 2026, 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, 2026
December 31, 2025
Loans
336
—
Deposits
26,981
9,365
Accrued interest and other assets
634
461
Three months ended
Nine months ended
Consolidated statements of operations
September 30, 2026
September 30, 2025
September 30, 2026
September 30, 2025
Asset management
3,469
3,080
10,317
8,853
Custody and other administration services
546
389
1,466
1,115
Other non-interest income
198
167
561
467
Interest and fees on loans
82
—
620
—
Note 23: Subsequent events
On October 27, 2026, the Board of Directors declared an interim dividend of $0.50 per common share to be paid on November 25, 2026 to shareholders of record on November 10, 2026.
