Butterfield Delivers Strong Third Quarter 2025 Performance, Supported by Higher Banking Revenues, Improved Net Interest Margin, and Continued Capital Strength
The Bank of N.T. Butterfield & Son Limited (“Butterfield” or the “Bank”) has released its financial results for the third quarter ended September 30, 2025, reporting another period of solid earnings growth, operational efficiency, and strategic balance sheet management. The quarter reflects the Bank’s continued focus on disciplined cost control, enhanced revenue generation, and shareholder value creation, even amid shifting interest rate conditions across global markets.
For the third quarter of 2025, Butterfield reported net income of $61.1 million, translating to $1.46 per diluted common share. This result marks a meaningful improvement compared to the previous quarter’s net income of $53.3 million, or $1.25 per diluted share, and the $52.7 million or $1.16 per diluted share reported in the same quarter of 2024. On a core basis — excluding certain items management considers non-recurring or not reflective of day-to-day operations — core net income totaled $63.3 million, or $1.51 per diluted share, compared to $53.7 million, or $1.26 per diluted share, last quarter.
The Bank’s profitability ratios further underscore its strong performance. Return on average common equity improved to 22.5% in the third quarter of 2025, up from 20.3% in both the previous quarter and the same quarter of the prior year. On a core basis, return on average tangible common equity rose to 25.5%, indicating efficient deployment of shareholder capital and continued earnings resilience.
One of the most notable operational improvements in the quarter was Butterfield’s efficiency ratio, which measures the relationship between operating costs and revenues. The Bank’s efficiency ratio improved to 57.7%, down from 61.3% last quarter, reflecting stronger income growth relative to expenses. On a core basis, the efficiency ratio declined to 56.2%, also representing a notable quarter-over-quarter improvement.
Executive Leadership Commentary
Michael Collins, Chairman and Chief Executive Officer of Butterfield, emphasized that the quarter’s results demonstrate the continued strength of Butterfield’s diversified business model and operational discipline.
Butterfield’s strong third quarter performance demonstrates the resilience of our business model as we improved efficiency across the organization,” said Collins. “We delivered higher banking and foreign exchange fees, while our net interest income and margin improved as a result of lower deposit costs and a conservative asset mix. Our proactive capital management continued to deliver strong shareholder returns through a quarterly cash dividend and share repurchases.”
Collins added that the Bank remains committed to building long-term, sustainable value for clients and shareholders through responsible lending, prudent balance sheet management, and measured deployment of capital.
Revenue Growth Supported by Improved Net Interest Income and Fee-Based Business
Total net interest income (“NII”) for the third quarter rose to $92.7 million, an increase of $3.3 million from the second quarter of 2025 and $4.7 million from the same period in 2024. The improvement reflects a lower cost of deposits, following rate reductions by central banks, combined with the benefits of Butterfield’s redemption of subordinated debt in the prior quarter. These savings helped to offset lower yields on loans and treasury securities.
Net interest margin (“NIM”), a key profitability measure for lending institutions, improved to 2.73%, up from 2.64% in the second quarter and 2.61% in the prior-year quarter.
Non-interest income — which includes banking fees, wealth management services, and foreign exchange revenue — also performed strongly, increasing to $61.2 million from $57.0 million in the prior quarter. Compared to the same quarter last year, non-interest income increased by $5.1 million, driven primarily by higher card transaction volumes, incentive-related fee revenue, and greater foreign exchange activity.
Expense Discipline and One-Time Personnel Costs
Non-interest expenses totaled $90.8 million, slightly lower than the previous quarter. On a core basis, non-interest expenses were $88.5 million, reflecting continued efficiency efforts across the organization. The Bank noted that expenses during the third quarter included $2.2 million in non-core costs, primarily tied to senior executive departures.
Lower property costs in the Channel Islands, reduced non-income tax expense, and lower marketing spend helped contribute to the quarter’s improved expense profile.
Stable Balance Sheet and Capital Strength
Butterfield ended the quarter with total assets of $14.1 billion, maintaining a highly liquid position. The Bank continues to emphasize balance sheet conservatism, with 65% of total assets invested in cash, deposits, and liquid investment securities.
Loans totaled $4.5 billion, consistent with levels at the end of 2024. Non-accrual loans increased slightly to 2.0% of total loans, mainly due to one mortgage facility in the Channel Islands and UK. The Bank’s allowance for credit losses remained steady.
The investment portfolio increased to $5.7 billion, composed entirely of securities rated A or better, reflecting Butterfield’s focus on credit quality and risk-adjusted return.
On the capital front, the Bank continues to exceed regulatory minimums by wide margins. The total regulatory capital ratio stood at 27.0% as of September 30, 2025 — up from 25.8% as of December 31, 2024 — following implementation of the Basel Committee’s revised standardized credit risk approach.
Shareholder Returns: Dividends and Buybacks
The Board of Directors declared a quarterly dividend of $0.50 per common share, payable November 25, 2025. During the quarter, the Bank also repurchased 0.7 million shares, demonstrating its continued commitment to disciplined capital allocation.
Tangible book value per share continued to strengthen, rising to $25.06, compared to $23.77 in the previous quarter and $21.70 at the end of 2024. The improvement reflects retained earnings growth and a reduction in unrealized losses as part of Other Comprehensive Income (OCI) recovery.
Assets Under Management and Administration
Butterfield also continues to maintain a meaningful presence in trust, custody, and wealth management services. As of September 30, 2025:
- Trust assets under administration: $135.9 billion
- Custody assets under administration: $29.2 billion
- Assets under management: $6.5 billion
These figures compare favorably to year-end 2024 levels and underscore Butterfield’s role as a global service provider in high-net-worth financial management.
Source Link: https://www.businesswire.com
