Butterfield Reports 2015 Full Year Results

2015 core earnings(1) of $113.9 million, up $7.5 million (7.1%) over 2014
2015 net income of $77.7 million, down $30.5 million (28.1%) over 2014(3)
· Core cash return on average tangible common equity improves to 18.4%

Core cash earnings per share of $0.20, up $0.03 from $0.17 in 2014(2)
Diluted earnings per share of $0.12, down $0.04 from $0.16 in 2014(2)(3)
Board declares fourth interim dividend of $0.01 per common share

Hamilton, Bermuda─22 February 2016: The Bank of N.T. Butterfield & Son Limited (“Butterfield” or the “Bank”) today announced core earnings for 2015 of $113.9 million, an improvement of $7.5 million compared to $106.4 million earned in 2014. The core cash earnings per share increased $0.03 to $0.20 per share. The core cash return on average tangible common equity improved to 18.4% in 2015, compared to 15.1% in 2014. Reported net income for the year ended 31 December 2015 was $77.7 million ($0.12 per share on a fully diluted basis) compared to $108.2 million ($0.16 per share on a fully diluted basis) in 2014, down $30.5 million year over year.

Commenting on the Bank’s results, Michael Collins, Chief Executive Officer, said, “We are encouraged by improving economic conditions in all of our markets as evidenced by a 6% increase in deposits, core earnings of $113.9 million, and a core return on equity of 18.4%.

“Over the past few months, Butterfield implemented a number of changes that will position the Bank for stronger and increasingly predictable earnings going forward. We realised non-core charges, primarily in the fourth quarter, related to the exploration of a US stock exchange listing, management restructuring, US tax compliance remediation, and the planned wind down of our private banking business in the UK. Those items contributed to non-core charges of $36.2 million for the year, which significantly reduced our net income. Although there will be some additional non-core charges associated with these projects, our actions will deliver an improved core run rate throughout 2016 and beyond.

“We will focus resources on the markets in which we have a substantial presence and a long history of success. Building upon our recent acquisitions in Bermuda, Cayman, and Guernsey, we continue to strengthen our unique trust and wealth management platform. Our agreement to acquire the Private Banking Trust and Investment Management business of HSBC in Bermuda, a transaction which is expected to close in the second quarter of 2016, along with the planned wind down of our sub-scale private banking operation in London are manifestations of a strategy that will further contribute to improvements in the Bank’s run rate.

“The Board continues to evaluate the Bank’s capital allocation strategy with a view to maintaining conservative and prudent capital levels, whilst rewarding our shareholders for their investment in the Bank. In 2015, we were able to allocate significant capital to common and preference shareholders with dividends totalling $0.04 and $80 per share, respectively. We additionally repurchased $5 million of common shares for treasury and $120 million for cancellation from CIBC, a major shareholder, at a price of $1.50 per share. In order to preserve capital to enable the Bank to act upon beneficial opportunities, similar to the aforementioned acquisitions, the Board has decided to forego the declaration of a special dividend from 2015 earnings. However, over time, the integration of complementary, acquired businesses, the anticipated economic improvement in our core markets as well as implementing our capital financing strategy, should drive earnings growth that will enable us to progressively increase our cash dividend payments.

“Our leadership team is composed of financial professionals with extensive experience in community banking and wealth management. Barclay Simmons, a Bermudian who has served as a Director since 2011, assumed the Chairmanship of the Bank in October. Within the executive team, we welcomed Michael Schrum as CFO and Beth Bauman as Group Head of HR. Conor O’Dea, President and COO, will retire from his executive roles during the second quarter of 2016. He will become Chairman of the Board of our Cayman Bank, and will stand for election to the Butterfield Group Board at the AGM on 26 April 2016.

“Butterfield’s progress in 2015 was recognised through a number of industry accolades, including The Banker’s Bank of the Year awards in Bermuda and Cayman, and Private Bank of the Year in Bermuda. Butterfield Trust was named Trust Company of the Year at the prestigious STEP Private Client awards, underlining Butterfield’s leading position in the global trust industry. We were also proud to be named an Official Supplier and the Official Bermuda Bank of the 35th America’s Cup to be held in Bermuda in 2017.

“I look forward to working with the Board and our senior management team as we continue to build upon the successes of 2015.”

Michael Schrum, Chief Financial Officer said, “Butterfield performed well in 2015, realising improvements in asset quality, non-interest income and operating efficiency. Non-interest income rose by $5.4 million year on year, due to the first full-year impact of the mid-2014 Legis acquisition in Guernsey, along with increased foreign exchange transaction volumes, and the receipt of placement fees earned from the rollout of a private equity investment product. Core expenses were down by $2.1 million reflecting strict cost discipline. The quality of the Bank’s loan portfolio continued to strengthen, with provisions for credit losses down to $5.7 million from $8.0 million in 2014.

“Net interest income before provision for credit losses was relatively flat on 2014 at $239 million, owing to a decrease in the size of the loan portfolio and associated interest income, offset by an increase in interest earned on our investment portfolio, which we grew during the year against a backdrop of low demand for loans.

“We restructured the investment portfolio during the year, weighting it more heavily in shorter duration securities, bringing our portfolio duration down to around 3.5 years. This enables us to improve performance during market volatility and the Bank will benefit from anticipated increases in interest rates in 2016 and beyond. That restructuring resulted in higher cash balances and lower yields on the portfolio in 2015, and a decrease in the Bank’s net interest margin by 0.26% versus 2014.

“The increase in December 2015 to the benchmark US dollar interest rate with possible further rate increases will benefit the Bank, and we are well positioned to improve net interest margins in a rising rate environment. We also expect increasing loan demand associated with continuing economic recovery in our key markets.”

Capital Management

Consistent with global banking industry reform, Bermuda banks began the implementation of the Basel III framework during 2016, which is improving the Bank’s loss absorption capabilities, introducing new regulatory liquidity rules and will continue to make the Bank stronger and more resilient.

As the Bank has exceptional organic capital generation and very high quality capital, the Bank is in a robust position and can continue to serve customers with new loans and other products, as well as meet emerging regulatory capital requirements.

The current total capital ratio as at 31 December 2015 was 19.0%, which is slightly lower than last year (2014: 22.2%) but remains significantly above regulatory requirements.

The Board remains committed to a balanced capital return policy and declared quarterly dividends of $20 per share on the Bank’s 8% non-cumulative perpetual voting preference shares, to be paid on 15 March 2016 to preference shareholders of record on 1 March 2016.

The Board also declared a fourth interim dividend of $0.01 per common share to be paid on 24 March 2016 to shareholders of record on 11 March 2016.

Share Repurchase Activity and Authorisations

On 27 April 2015, the Bank announced that it had reached an agreement with Canadian Imperial Bank of Commerce (“CIBC”) to repurchase for cancellation the majority of CIBC’s shareholding in Butterfield. CIBC owned 19% of Butterfield’s issued and outstanding common equity comprising 103,434,232 common shares. On 30 April 2015, Butterfield repurchased for cancellation 80,000,000 shares held by CIBC for $1.50 per share, for a total of $120 million.

The remaining CIBC shareholding in Butterfield (representing 23,434,232 shares) were taken up by Carlyle Global Financial Services, L.P. at $1.50 per share and subsequently sold to other investors.

On 13 August 2015, the Bank announced that it had repurchased for cancellation 4,000,000 common shares at $1.49 per share of the 23,434,232 shares which were taken up by Carlyle Global Financial Services, L.P.

Under the Bank’s share buy-back programmes, the total shares acquired or purchased for cancellation during the year ended 31 December 2015 amounted to 2.5 million common shares to be held as treasury shares at an average cost of $1.94 per share (total cost of $4.9 million) and 183 preference shares at an average cost of $1,152 per share (total cost of $0.2 million).

On 26 February 2015, the Board approved, with effect from 1 April 2015, the 2015 common share buy-back programme, authorising the purchase for treasury of up to eight million common shares.

In addition, the Board approved, with effect from 5 May 2015, the 2015 preference share buy-back programme, authorising the purchase for cancellation of up to 5,000 preference shares.

On 19 February 2016, the Board approved, with effect from 1 April 2016, the 2016 common share buy-back programme, authorising the purchase for treasury of up to eight million common shares.

1 The Banks regulatory capital is determined in accordance with current Basel II guidelines issued by the Bermuda Monetary Authority (“BMA”). Effective 1 January 2015, the BMA adopted capital and liquidity regulatory requirements consistent with Basel III. The finalisation of the implementation is subject to ongoing consultation with the BMA regarding the implementation and interpretation of these new rules. The Bank is assessing the impact of the adoption of this guidance. The impact will likely increase capital requirements further and the Bank maintains adequate capital buffers to meet these requirements.

Reconciliation of US GAAP Results to Core Earnings

Transactions viewed by management to be outside the normal course of business and unusual in nature are excluded from core earnings as they obscure financial analysis. The table below shows the reconciliation of net income in accordance with US GAAP to core earnings.

COMMENTARY ON STATEMENT OF OPERATIONS FOR THE YEAR ENDED 31 DECEMBER 2015 COMPARED WITH THE YEAR ENDED 31 DECEMBER 2014

Net Income

Core earnings for the year ended 31 December 2015 were $113.9 million, up $7.5 million from $106.4 million in 2014, an improvement of 7.1%. After including non-core items outside the course of normal business of ($36.2) million in 2015 and $1.8 million in 2014, total net income for 2015 was $77.7 million, a decrease of $30.5 million compared to 2014 net income of $108.2 million.

The $7.5 million core earnings increase comprises mainly of the following:

· A $5.4 million increase in non-interest income, principally from higher asset management fees of $1.2 million driven by placement fees earned upon the launch of a new fund vehicle, higher foreign exchange revenue of $2.5 million, driven by volume increases, as well as a $2.0 million increase in trust fees due primarily to the full-year integration of the Legis acquisition, slightly offset by lower custody fees of $0.6 million;

· A $2.3 million reduction in provision for credit losses as a result of the improvement in non-accrual loans and improved recoveries. The improvement in the credit quality of the loan book results in lower provisioning levels;

· A $2.6 million decrease in other gains (losses) as a result of losses experienced on the sale of certain investment securities as part of a strategic repositioning of the investment portfolio, offset by losses experienced in the prior year as a result of the revaluation of certain properties; and

· A $2.1 million dollar reduction in core non-interest expenses as a result of lower property maintenance costs, lower electrical costs and lower professional service costs, offset by an increase in core salaries and benefits due to increased post-retirement medical costs.

The year-to-date net interest margin fell by 0.26% to 2.48% in 2015 due primarily to lower yields on the investment portfolio, driven by a correlation to overall lower yields on long-term treasury market rates throughout the year, as well as a decision to shorten duration of the investment portfolio, which will position the Bank favourably in a rising rate environment.

Net Interest Income before Provision for Credit Losses

Net interest income increased by $0.8 million to $239.3 million in 2015, compared to $238.5 million at the end of 2014, due primarily to the following:

· Interest income decreased by $2.5 million due to a $5.5 million decrease in loan interest income on lower loan volumes and increased prepayments, offset by a $1.8 million increase in investment income due to an increased portfolio size and a $1.2 million increase in interest earned on deposits with banks due to a growth in term deposits placed;

· Interest expense decreased by $3.3 million resulting from a $2.5 million decrease in interest expense on deposits due to lower rates in two jurisdictions, and lower volumes of interest-earning deposits, as well as a $0.8 million decrease in interest paid on long-term debt due to one tranche of long-term debt rolling over into a lower interest rate.

Non-Interest Income

Total non-interest income improved from $134.8 million in 2014 to $140.2 million. The increase is attributed to:

· Asset management revenue increased by $1.2 million due largely to a $0.9 million placement fee on the launch of a new fund vehicle;

· Foreign exchange revenue increased by $2.5 million due to an increase in the volume of transactions, as well as several large individual transactions;

· Trust services revenue increased $2.0 million due primarily to the full year integration of the Legis acquisition;

· Custody and other administrative fee revenue decreased $0.6 million due to certain account closures.

Provision for Credit Losses

The Bank’s net provision for credit losses in 2015 was $5.7 million compared to $8.0 million in 2014. Incremental provisions of $8.6 million were required principally for specific reserves pertaining to commercial, residential mortgages and other consumer loans, partially offset by recoveries of $2.9 million. This compares to 2014 when the Bank required incremental provisions relating to specific reserves of $10.4 million that were partially offset by recoveries of $2.3 million.

Other Gains (Losses)

Core losses of $3.7 million in 2015 were up $2.6 million from $1.1 million in 2014 due primarily to $4.4 million of losses on sales of available-for-sale investments due to a strategic repositioning of the investment portfolio offset by a $2.1 million increase in realised and unrealised losses due to revaluation losses booked in 2014 on certain properties. Non-core losses booked in 2015 were $5.7 million due to the impairment of fixed assets compared to a $7.0 million gain in 2014, which included a $8.7 million gain realised on the disposal of Avenir Pass-Through Note, a $1.1 million realised gain on private equity investment, $0.3 million of additional consideration received from a previously disposed entity, which was offset by the impairment of fixed assets of $2.0 million, and a fair value adjustment on the Legis contingent consideration of $1.1 million. Other items included in non-core gains (losses) were unrealised gains on certain investments, which were incorrectly classified in other comprehensive income in the prior year, resulting in non-core losses of $0.7 million in 2015 and gains of $9.9 million in 2014.

Operating Expenses

Core non-interest operating expenses decreased by $2.1 million from $257.0 million in 2014 to $254.9 million in 2015.

Core salaries and benefits costs were $126.2 million in 2015, up $2.1 million from an increase in post-retirement medical expense from an increase in underlying healthcare costs, and an increase in employment service costs due to an increase in temporary staff, slightly offset by a reduction in salaries. Headcount on a full-time equivalency basis at year-end was 1,141, down 23 compared to 1,164 a year ago.

Other notable core operating expense variances include:

· Property expenses decreased by $2.7 million due to lower electricity costs and lower property maintenance costs;

· Professional and outside services costs decreased by $0.9 million due to decreased consultancy fees; and

· Non-income taxes decreased by $0.4 million due to a $0.8 million decrease in value-added taxes paid in one jurisdiction offset by a $0.4 million increase on payroll tax regarding share-based compensation.

Non-core expenses increased by $14.4 million in 2015 from $16.2 million to $30.6 million due to:

· Expenses associated with the investigation of an international stock exchange listing of $10.1 million;

· Early retirement and severance expenses of $8.2 million associated primarily with the resignation of the former Executive Chairman, the retirement of the Chief Operating Officer and the early retirement of the former Head of Human Resources;

· Restructuring charges relating to the announcement to commence an orderly wind down of the deposit taking and investment management businesses of Butterfield Bank (UK) Limited, and related professional services fees of $2.2 million and $0.3 million, respectively;

· Impairment charges of $5.1 million relating to the core banking system utilised by our UK operations as a result of the orderly wind down;

· Expenses associated with an internal review and account remediation programme of US person account holders for potential violations of US laws regarding non-compliance with US tax law obligations amounting to $3.8 million;

· A provision of $4.8 million in connection with the aforementioned review and remediation programme; and,

· Business acquisition expenses of $1.0 million related to the announced acquisition in Bermuda of HSBC’s Private Banking Trust and Investment Management business.

BALANCE SHEET COMMENTARY AT 31 December 2015 COMPARED WITH 31 DECEMBER 2014

Total Assets

Total assets of the Bank were $10.3 billion at 31 December 2015, up $0.4 billion from 31 December 2014. The Bank maintained a highly liquid position at 31 December 2015 with $5.2 billion of cash and demand deposits with banks plus short and long-term investments, excluding held-to-maturity investments, representing 50.8% of total assets, compared with 51.8% at 31 December 2014.

Loans Receivable

The loan portfolio totalled $4.0 billion at the end of the year, down $19.0 million from year-end 2014. The movement, due primarily to prepayments in the commercial and consumer portfolio and foreign exchange volatility, was offset somewhat by strong sovereign and public sector lending in the Bermuda portfolio. As at 31 December 2015, gross loans written totalled $767.3 million, offset by net pay downs of $734.8 million.

Allowance for credit losses at 31 December 2015 totalled $49.3 million, an increase of $1.8 million from year-end 2014. The movement was due mainly to an increase in the general allowance across the jurisdictions as the Bank remains prudent in its portfolio management.

The loan portfolio represented 38.9% of total assets at 31 December 2015 (31 December 2014: 40.8%), whilst loans as a percentage of customer deposits decreased from 46.6% at year-end 2014 to 43.6% at year-end 2015.

As at 31 December 2015, the Bank had gross non-accrual loans of $65.3 million, representing 1.6% of total gross loans, a decrease from the $71.8 million, or 1.8%, of total loans at year-end 2014. The decrease reflects the Bank’s maintenance and steady reduction in the level of non-accrual loans at year-end whilst working closely with clients prior to having difficulty servicing their debts. Net non-accrual loans were $46.1 million, equivalent to 1.2 % of net loans, after specific provisions of $19.1 million, resulting in a specific provision coverage ratio of 29.3% compared to 26.2% at 31 December 2014.

Non-performing loans, which include gross non-accrual loans and accruing loans past due by 90 days or more, totalled $79.5 million as at 31 December 2015, down from $97.5 million at year-end 2014. This is a result of maintaining the non-performing portfolio at existing levels by continued, proactive engagement with our clients.

Investment in Securities

The investment portfolio was $3.2 billion at 31 December 2015, compared to $3.0 billion at 31 December 2014. The increased portfolio size was funded by increased deposits, which were used to purchase liquid US government and federal agency securities, as well as highly rated corporate fixed income securities. During the fourth quarter of 2015, the investment portfolio underwent a strategic repositioning, with an additional $341.0 million being added to the held-to-maturity portfolio, primarily by way of transfer from the available-for-sale portfolio. Additionally, a number of lower-yielding US government and federal agency fixed income securities within the available-for-sale portfolio were sold with the proceeds used to acquire higher yielding, highly rated corporate fixed income securities.

This resulted in the fair value of US government and federal agency securities held for trading and available-for-sale decreasing by $249.9 million, with offsetting increases to the fair value of corporate debt available-for-sale securities of $170.9 million and increases of $363.1 million to the amortised cost US government and federal agency securities in the held-to-maturity portfolio.

The investment portfolio was made up of high quality assets with 93.1% invested in A-or-better-rated securities. The investment yield decreased year over year by 19 basis points to 2.16% in 2015. Total net unrealised gains were $0.5 million, compared to an unrealised gain of $9.9 million at year-end 2014.

Deposits

Average customer deposits increased by $1.0 billion to $8.9 billion in 2015 from $7.9 billion in 2014. On a year-end basis, customer deposits increased by $0.6 billion to $9.2 billion from $8.6 billion at year-end 2014.

REVIEW OF RESULTS OF MAJOR OPERATIONS

Bermuda (Including Group Head Office)

Net income before gains and losses was $43.0 million at 31 December 2015,down $10.3 million from $53.3 million in the prior year, due to increased operating expense partially offset by lower provisions for credit losses. Net other losses of $2.5 million during the year were unfavourable by $9.4 million, compared to net gains of $6.9 million in 2014, due primarily to a one-off gain on investments in 2014 upon the sale of a pass-through note, partially offset by decreased valuation allowances taken on foreclosed properties. Net income after gains and losses was $40.5 million, a decrease of $19.7 million from $60.2 million in the prior year.

Net interest income before provision for credit losses increased by $0.4 million to $145.1 million in 2015, due to higher investment income, higher deposit interest, lower interest expense on deposits and long-term debt, offset by lower loan interest on loans, all primarily volume-driven.

Provision for credit losses was $3.6 million in 2015, down $2.8 million from the prior year when provision for credit losses was $6.4 million.

Non-interest income increased $0.4 million to $61.0 million for the year ended 31 December 2015 due to higher asset management and banking revenues partially offset by lower foreign exchange, trust, custody and rental income revenues.

Operating expenses increased by $13.8 million to $159.5 million in 2015, due primarily to project-related professional service costs, increased severance costs in 2015 and provisions for regulatory settlements.

Total assets as at 31 December 2015 were $5.1 billion, up $0.3 billion from year-end 2014. Customer deposits ended the year at $4.3 billion, up $0.4 billion from year-end 2014. Customer loan balances ended the year at $2.2 billion, up $0.1 billion from year-end 2014.

Client assets under administration for the trust and custody businesses were $32.1 billion and $29.4 billion, respectively, whilst assets under management were $2.1 billion. This compares with $33.7 billion, $29.8 billion and $2.3 billion, respectively, at 31 December 2014.

Cayman Islands

Net income before gains and losses was $47.9 million at 31 December 2015, up $14.4 million from $33.5 million in 2014. Net income growth was due primarily to increases in interest income on loans and investments and non-interest income led by volume-driven foreign exchange income, banking, trust and asset management fees, partially offset by increased amortisation of intangible assets.

Net interest income before provision for credit losses was $66.9 million in 2015, an improvement of $7.6 million compared to 2014. The increase was driven primarily by an improvement in loan income of $4.3 million as average loan balances increased by $104.0 million from 2014, attributable largely to the HSBC Cayman transaction. Investment income was up $3.5 million resulting from an average increase of $204.3 million in fixed-rate securities and $217.5 million in floating-rate notes. Average customer deposits grew $785.8 million with only a marginal upward impact on deposit liability costs.

Provision for credit losses of $0.5 million in 2015 was $0.1 million lower than provision for credit losses in 2014.

Non-interest income was $39.5 million, up $6.0 million from 2014. The increase was due primarily to volume-driven growth in foreign exchange, banking fees and commissions driven by wire transfer, card services and account transaction service fees, along with trust and asset management fees.

Operating expenses decreased $0.7 million to $58.1 million in 2015, driven primarily by acquisition integration and other project costs incurred in 2014, along with lower technology and communications costs in the current year, which were partially offset by increased amortisation of intangible assets following the acquisition of loans and deposits from HSBC Cayman in the fourth quarter of 2014.

Total assets at 31 December 2015 were $3.3 billion, up $0.4 billion from year-end 2014, reflecting higher client deposit levels. Net loans of $1.1 billion were flat from year-end 2014 levels following several large commercial loan repayments partially offset by growth in consumer loans and residential mortgages. The available-for-sale investments of $1.0 billion were up $0.2 billion from year-end 2014.

Client assets under administration for the trust and custody businesses were $3.5 billion and $2.0 billion, respectively, whilst assets under management were $0.9 billion at 31 December 2015. This compares with $3.4 billion, $1.5 billion and $0.8 billion, respectively at 31 December 2014.

Guernsey

Guernsey posted net income before gains and losses of $2.8 million in 2015, compared to $5.1 million in 2014. The year-on-year reduction is due primarily to increased expenses, primarily salaries and benefits as a result of increased headcounts from the Legis transaction in the prior year, as well as adverse exchange rate movements affecting revenues.

Net interest income before provision for credit losses decreased by $1.5 million to $16.6 million in 2015, compared to $18.1 million in 2014, due primarily to lower interest income earned on investments from lower yields, as well as adverse exchange rate movements.

Provision for credit losses was $0.1 million, compared to $0.2 million in 2014.

Non-interest income decreased $0.6 million to $26.2 million in 2015, attributable to lower banking revenue and adverse exchange rate movements, offset by increased trust revenues as a result of new business growth and the impact of the Legis transaction in the prior year.

Operating expenses at $39.9 million were $0.3 million higher than 2014 due to higher staff expenses from headcount increases, offset by favourable exchange rate movements and lower amortisation.

Total assets of $1.4 billion as at 31 December 2015 were down from $1.6 billion at year-end 2014.

Client assets under administration for the trust and custody businesses were $31.3 billion and $6.3 billion, respectively, whilst assets under management were $0.4 billion at 31 December 2015. This compares with $41.0 billion, $9.2 billion and $0.4 billion, respectively, at 31 December 2014.

United Kingdom

The United Kingdom recorded a net loss of $12.0 million in 2015, down $17.2 million from net income of $5.2 million in 2014. Lower net interest income accounts for the majority of the decrease, primarily attributable to lower loan balances, as well as impairment charges and restructuring expenses as a result of the orderly wind down.

Net interest income before provision for credit losses of $10.5 million was down $5.7 million from $16.2 million in 2014. The decrease was due primarily to reduced loan interest income, which resulted from the combination of a reduction in commercial loan balances with a corresponding decrease in average interest rates earned on loans, as well as adverse exchange rate movements.

Provision for credit losses were $1.5 million in 2015 compared to $0.9 million in 2014. Additional provisions of $1.7 million were raised on two commercial loan facilities and were offset by a $0.2 million recovery on a commercial facility that was written off in 2014.

Operating expenses at $22.3 million in 2015 were $0.1 million higher than in 2014 due primarily to an increase in external professional services and the aforementioned restructuring expenses. The core banking system was fully impaired as a result of this restructuring, resulting in other losses of $5.1 million.

Total assets at year-end 2015 were consistent with year-end 2014 at $0.8 billion. Loan balances and customer deposit balances both remained flat from the year-end 2014 position at $0.4 billion and $0.6 billion, respectively.

Custody client assets under administration at the end of 2015 amounted to $1.6 billion, down from $1.9 billion at 31 December 2014. Assets under management were $0.2 billion at 31 December 2015, down from $0.3 billion at 31 December 2014.

Notes:

Certain statements in this Release may be deemed to include “forward-looking statements” and are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors including worldwide economic conditions, success in business retention and obtaining new business and other factors.

This Release does not constitute an offer to sell securities, or a solicitation of an offer to buy securities, in any jurisdiction, including without limitation the United States of America. Securities may not be offered or sold in the United States of America absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. A public offering of securities in the United States, if any such offering is made, will be made by means of a prospectus that may be obtained from The Bank of N.T. Butterfield & Son Limited ( “Butterfield”) containing detailed information about Butterfield and management, as well as financial statements.

Butterfield is specialist provider of international financial services. The Butterfield Group offers a full range of community banking services in Bermuda, and the Cayman Islands, encompassing retail and corporate banking and treasury activities. In the wealth management area, the Group provides private banking, asset management, investment advisory and personal trust services from its headquarters in Bermuda and subsidiary offices in The Bahamas, the Cayman Islands, Guernsey, Switzerland and the United Kingdom. Butterfield also provides services to corporate and institutional clients from offices in Bermuda, The Bahamas, the Cayman Islands and Guernsey, which include asset management and trust services.

Butterfield is publicly traded in Bermuda, and its shares are listed on the Bermuda Stock Exchange. Butterfield’s share price is published daily in The Royal Gazette (www.theroyalgazette.com) and is also available on Bloomberg Financial Markets (symbol: NTB BH) and the Bermuda Stock Exchange website (www.bsx.com). Further details on the Butterfield Group can be obtained from our website at: www.butterfieldgroup.com.