Bank of N.T Butterfield (NYSE:NTB) held its first-quarter earnings conference call on Wednesday. Below is the complete transcript from the call.
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Summary
Bank of N.T Butterfield reported a strong start to 2026 with net income of $62.6 million, core net income of $63.2 million, and a net interest margin of 2.75%.
The company completed the acquisition of Rawlinson Hunter in Guernsey, enhancing its private trust business and increasing assets under administration to $146 billion.
Management highlighted ongoing strategic initiatives in acquisitions, aiming to drive growth in island banking and trust sectors, while maintaining disciplined cost management and capital allocation.
Full Transcript
Bailey (Conference Operator)
Good morning, my name is Bailey and I will be your conference operator today. At this time I would like to welcome everyone to the first quarter 2026 earnings call for the Bank of N.T Butterfield & Son Limited. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key, then zero on your telephone keypad. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the call over to Noah Fields, Butterfield’s Head of Investor Relations. Please go ahead.
Noah Fields (Head of Investor Relations)
Thank you. Good morning everyone and thank you for joining us. Today we will be reviewing Butterfield’s first quarter 2026 financial results. On the call I am joined by Michael Collins, Butterfield’s Chairman and Chief Executive Officer, Michael Scrum, President and Chief Financial Officer and Jody Feldman, Managing Director of Bermuda. Following their prepared remarks, we will open the call up for a question and answer session. Yesterday afternoon we issued a press Release announcing our first quarter 2026 results. The press release and financial statements, along with a slide presentation that we will refer to during our remarks on this call are available on the Investor Relations section of our website at www.butterfieldgroup.com. before I turn the call over to Michael Collins, I would like to remind everyone that today’s discussion will refer to certain non GAAP measures which we believe are important in evaluating the company’s performance. For a reconciliation of these measures to US GAAP, please refer to the earnings press release and slide presentation. Today’s call and associated materials may also contain certain forward looking statements which are subject to risks, uncertainties and other factors that may cause actual results to differ materially from those contemplated by these statements. Additional information regarding these risks can be found in our SEC filings. I will now turn the call over to Michael Collins.
Michael Collins (Chairman and Chief Executive Officer)
Thank you Noah and thanks to everyone joining the call today. The first quarter of 2026 represents a strong start to the year with solid financial performance and continued execution of our disciplined growth strategy. We were pleased to announce the agreement to acquire Rawlinson Hunter in Guernsey, reinforcing our commitment to build scale in key markets. Demand across our core businesses of banking, wealth management and trust remained robust and reflecting the strength of our client relationships and the resilience of our franchise. Net interest income benefited from lower costs while deposit volumes remained stable across all jurisdictions. At the same time, we improved non interest expenses, demonstrating our ability to manage costs effectively in a low rate, more volatile environment. I am also pleased to report that following our announcement in February, the acquisition of Rawlinson Hunter in Guernsey has now closed. This is a strategically important transaction that enhances the scale and capability of our private trust business in Guernsey and further our position as a leading international provider of trust services with group assets under administration of $146 billion. Looking ahead, acquisitions remain a key driver of our growth. We will continue to pursue high quality opportunities in island banking and trust that align with our strategy and deliver long term value for our stakeholders. Butterfield is a leading offshore bank and wealth manager with strong leading market positions in Bermuda and the Cayman Islands and an expanding retail presence in the Channel Islands. Across markets we deliver a broad range of services including trust, private banking, asset management and custody which are designed around the needs of our clients. We also support international private trust clients in the Bahamas, Switzerland and Singapore and originate high net worth residential mortgages for prime London properties through our London office. I will now turn to the first quarter highlights on page 5. Butterfield reported net income of $62.6 million and core net income of $63.2 million. We reported core earnings per share of $1.55 with a core return on average common equity of 24.1% in the first quarter. The net interest margin was 2.75% in the first quarter, an increase of 6 basis points from the prior quarter. With the cost of deposits falling 13 basis points to 124 basis points from the prior quarter. We again are announcing a quarterly cash dividend of $0.50 per share during the first quarter. We continued to repurchase shares with a total of 800,000 shares at a cost of $42.4 million. We continue our active capital management and plan to continue to return excess capital that we do not require to support the business and growth initiatives. I will now turn the call over to Jody for an update on Bermuda and Cayman markets and businesses.
Jody Feldman (Managing Director of Bermuda)
Thank you Michael Starting with Bermuda, the economic outlook remains constructive, underpinned by steady growth and a thriving international business sector anchored by reinsurance. Real GDP growth is estimated at 3% for 2025, reflecting continued economic momentum. Bermuda’s fiscal position has improved markedly, with the government projecting a record surplus of 472 million for the 2027 fiscal year, largely driven by revenues from the new corporate income tax. While economic growth is positive, Bermuda continues to navigate structural challenges including a high cost of living and doing business, an aging population and limited availability of affordable housing. These factors remain important considerations as the island Plans for sustainable long Term growth the hospitality sector is benefiting from renewed investment with $182 million of capital spent. Plan for infrastructure and tourism revitalization the partial reopening of the Fairmont Southampton in late 2026 followed by a full reopening in 2027 is expected to bring hotel room inventory above pre pandemic levels. We are also encouraged by plans for the redevelopment of Elbow Beach Resort, which is expected to commence later this year. Finally, Bermuda continues to reinforce its global profile as a premier destination for international sporting events including the PGA Tour Butterfield Bermuda Championship, the Newport to Bermuda Sailing Race and Sail GP Events not only support tourism and international visibility, but also reinforce Bermuda’s position as a high quality jurisdiction for business visitors and residents alike. Now turning to the Cayman Islands, GDP forecasts suggest that growth is expected to moderate in 2026 to around 2% for the year, which is a steadier and more stable pace of development following the past few years a 4 to 6% GDP growth. Unlike Bermuda, Cayman has seen significant population increases which are forecasted to grow to the low 90,000 over the next couple of years. Tourism and financial services continue to grow. January and February saw record stayover arrivals consisting primarily of US Tourists. Financial services in Cayman continue to grow with reinsurance a growing industry and the international fund services business remaining a cornerstone. The Cayman government continues to be fiscally disciplined with 202627 budget expectations of a modest surplus, suggesting Cayman is entering a slower growth phase following rapid expansion. I will now turn the call over to Michael Scrum for more detail on the quarter.
Michael Scrum (President and Chief Financial Officer)
Michael thank you Jody and good morning. On slide six we report summary of net interest income and net interest margin in the first quarter we reported net interest income before provision for credit losses of $93.3 million, an increase of $700,000 from the prior quarter. Net interest margin increased six basis points to 2.75% compared to 2.669% in the prior quarter. This increase is largely due to lower deposit costs and increased investment yields, partially offset by treasury and loan yields as central banks cut market interest rates as well as a lower day count in the first quarter of 2026. We expect for them to be broadly stable with a slight positive bias for the remainder of this year. Average investment volumes increased as assets were deployed into higher yielding available for sale investment securities, helping to increase the average investment yield by six basis points to 2.78%. Average loan balances were stable compared to the prior quarter. Net Loan volumes actually increased during the quarter in Jersey and Cayman. However, the impact of exchange translation from the weakening of the pound sterling against the US Dollar masked this uptick. During the quarter, the bank continued to pursue its conservative strategy of reinvesting the paydowns and investment maturities into a mix of US agency, MBS securities and medium term US treasuries. Slide 7 provides a summary of non interest income which totaled $62.6 million, a decrease of $3.7 million over last quarter. This was due to expected decrease in seasonally higher comparative fourth quarter banking fees. Cost fees were also down due to lower time based and special fees compared to the prior quarter. Exchange fees …
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