The Bank of N.T. Butterfield & Son Ltd. Q1 FY2026 earnings call

Good morning. Michael Collins mentioned the first quarter of 2026 is a strong start with solid financial performance and disciplined growth strategy. Announced the agreement to acquire Wallinson & Hunter in Guernsey. Demand across core businesses of banking, wealth management, and trust remained robust. Jody Feldman provided updates on Bermuda and Cayman markets. Bermuda's economic outlook is constructive but has structural challenges. Cayman Islands GDP growth expected to moderate, but tourism and financial services continue to grow. Michael Scrum detailed net interest income, net interest margin, non-interest income, core non-interest expenses, balance sheet, and asset quality.

The first quarter of 2026 represents a strong start. Net interest income benefited from lower costs with deposit volumes stable across all jurisdictions. Non-interest expenses were improved. Waterfield reported net income of $62.6 million and core net income of $63.2 million. Core earnings per share was $1.55, core return on average common equity was 24.1%. Net interest margin was 2.75% in the first quarter, an increase of six basis points from the prior quarter, with the cost of deposits falling 13 basis points.

Acquisitions remain a key driver of growth, will continue to pursue high-quality opportunities aligning with strategy. Net interest margin expected to be broadly stable with slight positive bias for remainder of year. Fee income expected to be impacted by acquisition with about 8 - 10 million pounds annualized added. Core non-interest expenses without deal expected to be in 90 - 92 million range per quarter.

Today's discussion refers to certain non-GAAP measures which have reconciliation requirements. Today's call and materials contain forward-looking statements subject to risks of actual results differing. London Prime and Super Prime markets' liquidity thinness may affect loan resolution. Regulatory changes may impact business operations.

Q: Evan Kwiatkowski asked about the Wallinson & Hunter deal progress, fee income growth expectations, and one-time costs from the transaction.

A: Michael Collins said client base is similar, it's closed and in integration. Michael Scrum said deal adds about 8 - 10 million pounds annualized fee income with integration and onboarding costs.

Q: Emily Lee asked about credit, NPLs, provision drivers and loan pipeline.

A: Michael Scrum said NPLs related to prime central London residential mortgages, expect normalization. Jody Feldman talked about loan pipeline in different markets.

Q: Robert Rutschow asked about deposits outlook and acquisition opportunities.

A: Michael Scrum said R&H deal may have little deposit inflow, monitoring deposit outflows and composition. Michael Collins talked about types of acquisition opportunities including founder-owned and bank-owned trust companies