The Bank of NT Butterfield and Son (Butterfield) reported lower second-quarter profit after acquisition costs reduced reported earnings, although underlying core results improved.
Net income for the quarter ended 30 June was US$46.9 million, or $1.16 per diluted common share.
That was down from $62.6m, or $1.53 per diluted common share, in the previous quarter and $53.3m, or $1.25 per diluted common share, in the second quarter of 2025.
The decline reflected $16.9m in non-core expenses, mainly related to Butterfield’s planned acquisition of CIBC Caribbean and, to a lesser extent, integration costs following its purchase of Rawlinson and Hunter Guernsey.
Excluding those items, core net income increased to $63.9m, or $1.58 per diluted common share.
That compared with $63.2m, or $1.55 per diluted common share, in the first quarter and $53.7m, or $1.26 per diluted common share, a year earlier.
The bank said higher net interest income, trust fees from the Rawlinson and Hunter Guernsey business and gains from the sale of collateral supported the quarter’s core performance, although these were partly offset by higher core operating expenses.
Chairman and chief executive officer Michael Collins said in a press release on 27 July that the acquisition of CIBC Caribbean remains on track for completion in the first half of 2027 after the bank submitted its initial regulatory filings.
“Our second quarter results reflect the continued strength of our core banking franchise,” he said.
“Core net income improved from the first quarter, supported by higher net interest income and the initial contribution of trust fees from our acquisition of Rawlinson and Hunter Guernsey.”
He said the net interest margin remained stable, while deposit costs were well managed despite the competitive operating environment.
“During the quarter, we announced the acquisition of CIBC Caribbean, a compelling opportunity that we expect will double our size and strengthen Butterfield’s position as a leading independent financial services provider across the Caribbean and international financial centres,” Collins continued.
“We look forward to serving our new island communities with the same commitment we have brought to clients across Bermuda, Cayman, Guernsey, and Jersey, building on a heritage that began with our founding in Bermuda in 1858.
“The combination of resilient core earnings, a strong balance sheet, and the addition of the R&H Guernsey business positions us well to create long-term value for our shareholders.”
Net interest income increased to $95.6m from $93.3m in the previous quarter and $89.4m a year earlier.
Net interest margin was 2.74%, down one basis point from the first quarter but higher than 2.64% in the second quarter of 2025.
Non-interest income rose to $63.4m from $62.6m in the previous quarter and $57m a year earlier.
The bank attributed the increase mainly to trust revenue from Rawlinson and Hunter Guernsey, as well as higher foreign exchange, banking, asset management and custody fees compared with the same period last year.
Non-interest expenses climbed to $109.8m from $90.5m in the first quarter, largely because of acquisition-related costs linked to CIBC Caribbean and Rawlinson and Hunter Guernsey.
Core non-interest expenses totalled $92.9m, compared with $89.9m in the previous quarter, reflecting higher salaries, employee benefits, technology and communications costs, including about $1.9m tied to integrating the Guernsey business.
Average deposits increased to $13.1 billion during the quarter, while period-end deposits stood at $12.9bn, higher than at the end of 2025.
Butterfield’s board declared a quarterly cash dividend of $0.50 per common share, payable on 26 August to shareholders of record on 12 August.
The bank also repurchased 0.3 million common shares before pausing its buyback programme following the announcement of the CIBC Caribbean transaction.
The bank’s total regulatory capital ratio was 27.5% at 30 June compared with 27.8% at the end of 2025.
