Bank of N.T. Butterfield & Son (NYSE:NTB) executives highlighted improved profitability, resilient credit performance, and continued capital returns during the company’s fourth-quarter and full-year 2025 earnings conference call.
Full-year results: core EPS up 17.4%, tangible book value rises
Chairman and CEO Michael Collins said Butterfield delivered “strong financial results through disciplined execution” in 2025, pointing to higher net income versus the prior year and a 17.4% year-over-year increase in core net income per share to $5.60.
Collins also noted tangible book value per common share grew 21.7% in 2025, ending the year at $26.41. Net interest margin increased 5 basis points year over year to 2.69%, and the average cost of deposits fell to 150 basis points from 183 basis points in 2024.
Fourth quarter: $63.8 million in net income, NIM pressured by rate cuts
President and CFO Michael Schrum said Butterfield reported fourth-quarter net income and core net income of $63.8 million, with earnings per share of $1.54 and a core ROTCE of 24.6%.
Net interest income before provision for credit losses was $92.6 million, roughly in line with the prior quarter, while net interest margin declined 4 basis points to 2.69% from 2.73%. Schrum attributed the margin decline to “lower treasury and loan yields following further cuts by central banks.”
Schrum said average investment volumes increased as the bank deployed assets into “high-yielding available-for-sale investments,” lifting the average investment yield to 2.72% from 2.67% in the third quarter. Average loan balances moderated quarter over quarter, which management said was “predominantly due to lower originations relative to amortization on existing loans.” Average interest-earning assets increased $199.4 million to $13.7 billion, while treasury and loan yields fell 20 and 23 basis points, respectively.
Management reiterated a conservative reinvestment approach, describing a mix of U.S. agency mortgage-backed securities and medium-term U.S. Treasuries.
Non-interest income rises; expense run-rate guided to $90–$92 million
Butterfield posted fourth-quarter non-interest income of $66.3 million, up $5.1 million from the prior quarter. Schrum said the increase was driven by higher banking fees from seasonal growth in card volumes and incentive programs, higher foreign exchange revenue due to increased volumes, and higher asset management revenues tied to improved asset valuations.
The company’s fee income ratio increased to 41.7% versus the prior quarter, which management said continued to compare favorably to historical peer averages.
Core non-interest expenses increased from the prior quarter, which Schrum said reflected external services fees, higher incentive accruals, and increased event and sponsorship marketing costs. He added that several costs during the quarter were not expected to repeat and guided to quarterly core expenses of about $90 million to $92 million over the next few quarters. In response to an analyst question, Schrum said first-quarter expenses typically run somewhat lower than fourth-quarter levels due to seasonality, but he did not indicate significant additional infrastructure spending.
During the Q&A, management provided additional detail on fee drivers:
- Asset management fees: Schrum said results were supported by improved underlying valuations in the fourth quarter and through 2025, and by additional volume in Butterfield’s Triple-A rated money fund.
- Banking fees: Management described seasonality in the third and fourth quarters tied to card programs and volume incentives, which Schrum said likely would not repeat in the first and second quarters. He also cited transaction volume fees and periodic fees (including account and statementing fees).
- Foreign exchange: Schrum called FX a “real source of strength” and said new functionality—such as allowing clients access to credit lines for FX—has helped drive volumes.
- Trust: Management said trust performance benefited from the Credit Suisse asset acquisition, which it said is now fully integrated, and from fee changes following the expiration of a standstill on that contract.
Balance sheet and credit: stable metrics, no net charge-offs
Chief Risk Officer Brie Hidalgo said Butterfield’s balance sheet remained “liquid and conservatively positioned.” Period-end deposit balances were consistent with prior quarters, though she noted actual deposit outflows of $360 million were offset by $310 million of foreign exchange translation gains when compared to the fourth quarter of 2024.
Hidalgo said asset quality remained “very strong.” The investment portfolio consisted entirely of Double-A or higher-rated U.S. Treasuries and government-guaranteed agency securities. She reported stable credit performance during the quarter, including no net charge-offs, non-accrual loans “held at around 2%,” and an allowance for credit losses that remained at 0.6%.
She also described the loan book as 71% full recourse residential mortgages, with nearly 80% carrying loan-to-value ratios below 70%, and said Butterfield continued to focus on “high-quality residential lending” across Bermuda, the Cayman Islands, the U.K., and the Channel Islands.
On interest rate sensitivity and the securities portfolio, Hidalgo said net unrealized losses in the available-for-sale portfolio included in OCI were $89.4 million at quarter end, improving $12.1 million from the prior quarter. She said interest rate sensitivity increased versus the prior quarter due to updated deposit beta assumptions, and the bank continued to expect OCI improvement, citing anticipated “burndown” of 28% over the next 12 months.
In response to a question on nonperforming assets, Schrum said the company was not seeing systemic shifts in NPA or past-due migration. He characterized recent movement as related to “a few commercial accounts” and pointed to credit improvements in 2025 tied to the liquidation of the Elbow Beach Hotel and the completion of commercial litigation.
Capital returns, repurchases, and strategic priorities
Butterfield reiterated its capital return posture. The company announced a quarterly cash dividend of $0.50 per share. Schrum said Butterfield repurchased and canceled 600,000 shares in the fourth quarter at a cost of $29.6 million.
For the full year, Collins said Butterfield repurchased 3.5 million shares totaling $146.7 million and described a 2025 combined payout ratio of 97% when including dividends and repurchases. Schrum also said the board approved a new 2026 share repurchase authorization of up to 3 million common shares, or $140 million.
Management reiterated its acquisition strategy, with Collins saying the bank remains in active dialogue with potential targets and is committed to pursuing trust and bank acquisitions to improve the quality of earnings for its asset-sensitive franchise. In the Q&A, Collins said Butterfield generally focuses acquisition efforts on its existing trust jurisdictions—Guernsey, Bermuda, Cayman, Switzerland, and Singapore—and cited the Singapore office as being “in sort of a growth mode,” noting Butterfield is a top-five private trust company in Singapore. He also said organic trust growth tends to be modest, with natural attrition over time, making acquisitions an important driver of expansion.
Collins added that Butterfield’s core jurisdictions—Bermuda, Cayman, and the Channel Islands—continued to perform well, providing “stable non-interest income with solid core deposits and franchise level market shares.”
About Bank of N.T. Butterfield & Son (NYSE:NTB)
Bank of N.T. Butterfield & Son Limited, commonly known as Butterfield, is a Bermuda-based provider of banking and wealth management services. Founded in 1858, the firm has grown from a local colonial bank into an international financial institution. With a focus on personalized client service, Butterfield offers a comprehensive suite of banking and fiduciary solutions to private individuals, families, and corporate clients.
The bank’s core activities include private banking, retail and commercial lending, trust and corporate administration, and fund services.
