Third Quarter 2023 The Bank of N.T. Butterfield & Son Limited Earnings Presentation October 25, 2023
2 Forward-Looking Statements Forward-Looking Statements: Certain of the statements made in this release are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions estimates, intentions, and future performance, including, without limitation, our intention to make share repurchases and our dividend payout target, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance, capital, ownership or achievements of Butterfield to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements due to a variety of factors, including worldwide economic conditions (including economic growth and general business conditions) and fluctuations of interest rates, inflation, a decline in Bermuda’s sovereign credit rating, the successful completion and integration of acquisitions (including our progress on subsequent closings of the acquisition of trust assets from Credit Suisse) or the realization of the anticipated benefits of such acquisitions in the expected time-frames or at all, success in business retention (including the retention of relationships associated with our Credit Suisse acquisition) and obtaining new business, the impact of the COVID-19 pandemic, the success of our updated systems and platforms and other factors. Forward-looking statements can be identified by words such as "anticipate," "assume," "believe," "estimate," "expect," "indicate," "intend," "may," "plan," "point to," "predict," "project," "seek," "target," "potential," "will," "would," "could," "should," "continue," "contemplate" and other similar expressions, although not all forward-looking statements contain these identifying words. All statements other than statements of historical fact are statements that could be forward-looking statements. All forward-looking statements in this disclosure are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in our Securities and Exchange Commission (“SEC”) reports and filings, including under the caption "Risk Factors" in our most recent Form 20-F. Such reports are available upon request from Butterfield, or from the SEC, including through the SEC’s website at https://www.sec.gov. Any forward-looking statements made by Butterfield are current views as at the date they are made. Except as otherwise required by law, Butterfield assumes no obligation and does not undertake to review, update, revise or correct any of the forward- looking statements included in this disclosure, whether as a result of new information, future events or other developments. You are cautioned not to place undue reliance on the forward-looking statements made by Butterfield in this disclosure. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, and should only be viewed as historical data. About Non-GAAP Financial Measures: This presentation contains non-GAAP financial measures including “core” net income and other financial measures presented on a “core” basis. We believe such measures provide useful information to investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, our non-GAAP financial measures have a number of limitations. As such, investors should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use. Reconciliations of these non-GAAP measures to corresponding GAAP financial measures are provided in the Appendix of this presentation.
3 Agenda and Overview Ten International Locations Butterfield Overview Michael Collins Chairman and Chief Executive Officer Craig Bridgewater Group Chief Financial Officer Michael Schrum President and Group Chief Risk Officer • Leading Bank in Attractive Markets • Strong Capital Generation and Return • Resilient, Capital Efficient, Diversified Fee Revenue Model • Efficient, Conservative Balance Sheet • Experienced Leadership Team • Overview • Third Quarter 2023 Financials • Q&A Presenters Agenda • Leading market positions in Bermuda & Cayman • Expanding loan and mortgage offerings in The Channel Islands • Well-secured lending in all markets • Award winning banking and wealth management offerings ESG Membership Awards
4 Third Quarter 2023 Highlights Net Income (In US$ millions) Return on Equity (In US$ millions) vs. Q2 2023 vs. Q3 2022 Q3 2023 $ % $ % Net Interest Income $ 90.2 $ (2.3) $ (1.0) Non-Interest Income 52.0 1.8 2.1 Provision for Credit Losses (0.5) 1.0 0.3 Non-Interest Expenses* (92.9) (8.8) (10.0) Other Gains (Losses) — (4.0) (0.1) Net Income $ 48.7 $ (12.3) (20.1) % $ (8.7) (15.1) % Non-Core Items** 8.2 (12.2) 8.1 Core Net Income** $ 57.0 $ — (0.1) % $ (0.6) (1.1) % • Net income of $48.7 million, or $0.99 per share • Core net income** of $57.0 million, or $1.16 per share • Return on average common equity of 20.6%; core return on average tangible common equity** of 26.1% • Net Interest Margin of 2.76%, cost of deposits of 1.52% • Cash dividend rate of $0.44 per common share during the quarter • Additional closings of the acquisition of trust assets from Credit Suisse • Repurchases of 1.075 million shares at an average price of $29.20 per share * Includes income taxes ** See the Appendix for a reconciliation of the non-GAAP measure $57.4 $63.1 $62.2 $61.0 $48.7 $57.6 $63.2 $62.2 $57.0 $57.0 Net income Core Net Income** Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 28.5% 31.6% 28.0% 25.9% 20.6% 31.6% 34.9% 30.5% 26.3% 26.1% Return on Equity Core Return on Average Tangible Common Equity** Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023
Financials
6 Net Interest Income before Provision for Credit Losses -Trend (In US$ millions) $91.2 $92.5 $90.2 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Net Interest Margin & Yields Income Statement Net Interest Income • Net interest income (“NII”) decreased by $2.3 million versus the prior quarter primarily due to increased interest-bearing deposit costs across all jurisdictions, partially offset by increased loan and treasury yields and lower subordinated debt interest payments following the redemption of the Bank's $75 million 2018 series subordinated debt in the prior quarter • Net interest margin (“NIM”) decreased by 7 basis points to 2.76% as of a result of higher deposit costs, which were partially offset by increased loan and treasury yields • Average interest earning assets fell by $135.4 million due to depositor withdrawals. The change in investments was due to paydowns and maturities, the proceeds of which were invested in treasury assets. The decrease in loans was the result of net paydowns during the quarter (In US$ millions) Q3 2023 vs. Q2 2023 Avg. Balance Yield Avg. Balance Yield Cash, S/T Inv. & Repos $ 2,559.2 4.47 % $ 71.0 0.41 % Investments 5,494.9 2.06 % (119.8) (0.01) % Loans (net) 4,897.5 6.51 % (86.6) 0.09 % Interest Earning Assets 12,951.6 4.22 % (135.4) 0.12 % Interest Bearing Liabilities 9,438.8 (2.00) % (17.0) (0.24) % Net Interest Margin 2.76 % (0.07) %
7 Non-Interest Income Trend (In US$ millions)(In US$ millions) Q3 2023 vs. Q2 2023 Asset management $ 8.0 $ (0.2) Banking 14.1 1.5 Foreign exchange revenue 11.4 0.1 Trust 14.7 0.4 Custody and other 3.3 — Other 0.6 0.1 Total Non-Interest Income $ 52.0 $ 1.8 $49.9 $50.2 $52.0 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 • Total non-interest income was $1.8 million higher versus the prior quarter, primarily due to higher banking income and trust fees • Banking income benefited from increased card volumes in Bermuda and Cayman, as well as loan pre- payment fees • Trust fees increased in the quarter as a result of new clients onboarded following the previously announced acquisition of Credit Suisse trust assets, organic growth and an increase in activity-based fees • The fee income ratio was 36.7% in the third quarter of 2023 which compares favorably to the peer average* and the 35.5% in the prior quarter Income Statement Non-Interest Income * Includes US banks identified by management as a peer group. Please see the Appendix for a list of these banks. Q2 2023 comparative data is used as Q3 2023 peer information was not widely available at time of publication.
8 Core Non-Interest Expense* Trend (In US$ millions)Core Non-Interest Expenses* vs. Q2 2023 (In US$ millions) Q3 2023 $ % Salaries & Benefits** $ 43.4 $ 0.8 1.9 % Technology & Comm. 16.0 1.1 7.1 % Professional & O/S Services 4.3 (0.5) (9.9) % Property 7.7 0.2 3.2 % Indirect Taxes 5.1 (0.2) (2.9) % Marketing 1.5 (0.1) (8.6) % Intangible Amortization 1.4 — 0.1 % Other 4.8 (0.6) (10.8) %Total Core Non-Interest Expenses* $ 84.3 $ 0.8 0.9 % Non-Core Expenses* 8.2 8.2 100.0 % Non-Interest Expenses $ 92.5 $ 9.0 10.8 % $81.8 $83.6 $84.3 57.0% 57.6% 58.3% Core Efficiency Ratio* Core Non-Interest Expenses* Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 • Core non-interest expenses* were higher than the prior quarter primarily due to higher staff-related expenses, as well as higher technology and communications costs related to the Bank's upgraded IT infrastructure and core banking system in Bermuda • Core efficiency ratio* of 58.3% is higher than the prior quarter due to lower net revenues and increased expenses. Butterfield continues to target a through-cycle core efficiency ratio of 60% * See the Appendix for a reconciliation of the non-GAAP measure ** Includes Non-Service Employee Benefits Expense Income Statement Non-Interest Expenses
9 Balance Sheet Total Assets (In US$ billions) • Changes in deposit volumes represent normal commercial movements • Period end deposit balances decreased by $0.3 billion to $11.9 billion compared to Q2 2023 due to client deposit activation • Average deposits decreased over the third quarter of 2023 by $0.1 billion from $12.2 billion to $12.1 billion at quarter end • Butterfield’s balance sheet remains low in risk density (risk weighted assets/total assets) at 34.3% vs Q4 2022 (In US$ millions) Q3 2023 Q4 2022 % Cash and cash equivalents $ 1,750 $ 2,101 (17) % Reverse Repos & S/T Investments 893 944 (5) % Investments 5,319 5,727 (7) % Loans (net) 4,750 5,096 (7) % Other Assets 468 437 7 % Total Assets $ 13,180 $ 14,306 (8) % Int. Bearing Deposits $ 9,292 $ 9,951 (7) % Non-Int. Bearing Deposits 2,569 3,040 (16) % Other Liabilities 396 450 (12) % Shareholders’ Equity 923 865 7 % Total Liab. & Equity $ 13,180 $ 14,306 (8) % $13.7 $13.5 $13.2 $5.8 $5.5 $5.3 $5.0 $5.0 $4.7 Total assets Investments Loans Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 $12.5 $12.2 $11.9 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Total Deposits (In US$ billions)
10 Group (US$ Billions) Bermuda (US$ Billions) Deposit Composition by Segment Cayman (US$ Billions) Channel Islands (US$ Billions) 24% 23% 24% 23% 22% 55% 53% 49% 49% 48% 21% 24% 27% 27% 30% $12.5 $13.0 $12.3 $12.2 $11.9 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 25% 28% 27% 25% 22% 61% 57% 56% 56% 52% 14% 15% 17% 19% 26% $4.3 $4.3 $4.2 $4.0 $3.8 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 42% 40% 42% 39% 37% 44% 45% 43% 44% 45% 14% 15% 15% 17% 18% $4.5 $4.5 $4.5 $4.6 $4.5 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 —% 1% 1% —% —% 61% 57% 48% 50% 49% 39% 42% 51% 50% 51% $3.7 $4.2 $3.7 $3.6 $3.5 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023
11 34% 32% 29% 29% 29% 18% 18% 21% 23% 23% 48% 49% 50% 49% 48% $3.2 $3.4 $3.6 $3.6 $3.3 Bermuda Cayman UK and Channel Islands 2019 2020 2021 2022 Q3 2023 32% 29% 26% 24% 23% 2% 5% 7% 9% 8% 22% 18% 18% 21% 22% 45% 49% 48% 46% 47% $1.7 $1.6 $1.4 $1.4 $1.3 Commercial and Industrial Commercial Overdrafts Government Commercial Real Estate 2019 2020 2021 2022 Q3 2023 Residential Mortgage Loans (US$ Billions) Commercial Loans (US$ Billions) Loans 44% 44% 39% 37% 37% 18% 18% 20% 24% 25% 38% 38% 41% 39% 38% $5.1 $5.2 $5.2 $5.1 $4.7 Bermuda Cayman UK and Channel Islands 2019 2020 2021 2022 Q3 2023 Loan Portfolio Composition by Originating Segment (US$ Billions) 22% 20% 19% 43% 50% 78% 80% 81% 57% 50% $5.1 $5.2 $5.2 $5.1 $4.7 Fixed Floating 2019 2020 2021 2022 Q3 2023 Fixed vs. Floating Rate Loans (US$ Billions)
12 Loan-to-Deposit Ratio Balance Sheet Asset Mix Liquidity: Cash & Cash Equivalents** to Total Assets 40% 39% 41% 41% 40% 62% 65% 67% 68% NTB US Peer Median* Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 18% 21% 19% 19% 20% 5% 4% 5% 4% NTB US Peer Median* Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 • Butterfield takes a conservative approach to managing the liquidity and funding risk profile of its balance sheet. This involves the retention of a significant liquidity holding of cash or cash equivalent balances, comprised of interbank deposits and short-dated sovereign Canadian, UK and US Treasury Bills as well as maintaining significant liquidity facilities with correspondent banks • Butterfield also maintains capital, liquidity and funding buffers conservatively in excess of regulatory requirements * Includes US banks identified by management as a peer group. Please see the Appendix for a list of these banks. Q3 2023 peer information was not widely available at time of publication and therefore not included. ** Includes securities purchased under agreements to resell and short-term investments.
13 Asset Quality Non-Accrual Loans (In US$ millions) $60.9 $58.1 $59.4 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Res Mtg 69.5% Consumer 3.8% Comm’l R/E 12.6% Other Comm’l 8.3% Government 5.8% Loan Distribution 0.08% 0.02% 0.04% Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 0.00% 0.05% 0.10% 0.15% 0.20% Net Charge-Off Ratio AAA 0.3% AA 99.3% A 0.4% $4.7 billion $5.3 billion Investment Portfolio Rating Distribution • Investment portfolio continues to be of very high credit quality with 99% comprised of AA rated securities, primarily US Government guaranteed mortgage backed securities and treasuries • Non-accrual loans remained at 1.2% of gross loans, consistent with the prior quarter • Allowance for credit losses at $26.0 million representing an ACL/Total loans of 0.5% • The net charge-off ratio continues to be low at 0.04% of total gross loans
14 Interest Rate Sensitivity Interest Rate SensitivityAverage Balance - Balance Sheet Average Balances (US$Mil) Weighted Average Life Q3 2023 vs. Q2 2023 Duration vs. Q2 2023 Cash & Reverse Repos & S/T Invest. $ 2,559.2 $ 71.0 0.3 0.1 N/A AFS 1,926.0 (44.7) 3.5 0.2 4.4 HTM** 3,568.9 (75.1) 6.7 0.2 9.2 Total $ 8,054.1 $ (48.8) (3.4)% 0.4% 0.9% (1.8)% 1.7% 3.0% NTB US Peer Median * -100bps +100bps +200bps • Total investment portfolio duration was at 5.5 years compared to the prior quarter of 5.3 years • Interest rate sensitivity decreased in the quarter due to a lower volume of call deposits (incl. non-interest bearing) and migrations to more sensitive fixed-term deposits • Unrealized losses on securities increased by $30.7 million during the quarter. As of September 30, 2023, the Bank had $238.0 million in net unrealized losses in the AFS portfolio, compared with net unrealized losses of $207.3 million as at the end of the second quarter of 2023 * Includes US banks identified by management as a peer group. Please see the Appendix for a list of these banks. Q2 2023 comparative data is used as Q3 2023 peer information was not widely available at time of publication. ** The HTM portfolio is comprised of securities with negative convexity which typically exhibit lower prepayment speeds when assuming higher future rates.
15 Capital Requirements and Dividend Return Leverage Capital • Regulatory capital levels remain conservatively above minimum requirements • Quarterly dividend rate continues at $0.44 per common share • TCE/TA ratio of 6.5% has remained consistent with last quarter • TCE/TA ex-cash and ex-OCI are 7.5% and 9.4%, respectively Regulatory Capital (Basel III) - Total Capital Ratio* 25.8% 13.5% 14.6% Butterfield Current BMA Minimum US Peer Median*** *** Includes US banks identified by management as a peer group. Please see the Appendix for a list of these banks. Q2 2023 comparative data is used as Q3 2023 peer information was not widely available at time of publication. 7.5% 7.8% 6.5% 7.7% 1.0% 0.1% TCE/TA TCE/TA Ex Cash Butterfield - Current US Peer Median*** 60.5% 53.7% 40.7% 37.8% 2020 2021 2022 Q3 2023 Dividend Payout Ratio** * In accordance with regulatory capital guidance, the Bank has elected to make use of transitional arrangements which allow the deferral of the January 1, 2020 CECL impact of $7.8 million on its regulatory capital over a period of 5 years. ** 2023 is based on year-to-date dividend and earnings per share
Appendix
17 Balance Sheet Movements Deposit Composition by Currency (US$ billions)Deposit Movements (US$ millions) $(330) $(1,130) Change vs Q2 2023 Change vs Q4 2022 Loan Movements (US$ millions) Loan Composition by Currency (US$ billions) -220 -110 $(250) $(345) Change vs Q2 2023 Change vs Q4 2022 Volume FX Translation 76% 75% 75% 19% 19% 19% 5% 6% 6% $12.5 $12.2 $11.9 USD / USD Pegged GBP Other Total deposits Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 63% 60% 62% 36% 39% 37% 1% 1% 1% $5.0 $5.0 $4.7 USD / USD Pegged GBP Other Total loans Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 -1,140 +10 -180 -70 -365 +20
18 (in millions of US Dollars, unless otherwise indicated) 2023 2022 2021 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Assets Cash and cash equivalents $ 1,750 $ 1,795 $ 1,345 $ 2,101 $ 1,485 $ 1,340 $ 2,103 $ 2,180 $ 2,310 Reverse Repos & S/T Investments 893 729 1,263 944 995 1,516 1,601 1,295 1,446 Investments 5,319 5,546 5,665 5,727 5,805 5,970 6,111 6,237 5,984 Loans, Net 4,750 5,003 5,022 5,096 4,992 5,139 5,068 5,241 5,204 Other Assets 468 435 438 437 422 386 383 382 389 Total Assets $ 13,180 $ 13,510 $ 13,733 $ 14,306 $ 13,699 $ 14,350 $ 15,266 $ 15,335 $ 15,332 Liabilities and Equity Total Deposits $ 11,861 $ 12,192 $ 12,348 $ 12,991 $ 12,461 $ 13,075 $ 13,933 $ 13,870 $ 13,861 Long-Term Debt 98 98 172 172 172 172 172 172 172 Other Liabilities 297 269 275 278 311 300 319 316 325 Total Liabilities $ 12,257 $ 12,559 $ 12,796 $ 13,441 $ 12,944 $ 13,547 $ 14,424 $ 14,358 $ 14,358 Common Equity $ 923 $ 950 $ 937 $ 865 $ 755 $ 802 $ 842 $ 977 $ 974 Total Equity $ 923 $ 950 $ 937 $ 865 $ 755 $ 802 $ 842 $ 977 $ 974 Total Liabilities and Equity $ 13,180 $ 13,510 $ 13,733 $ 14,306 $ 13,699 $ 14,350 $ 15,266 $ 15,335 $ 15,332 Key Metrics CET 1 Ratio 23.4 % 22.7 % 22.2 % 20.3 % 18.9 % 17.7 % 17.3 % 17.6 % 16.9 % Total Tier 1 Capital Ratio 23.4 % 22.7 % 22.2 % 20.3 % 18.9 % 17.7 % 17.3 % 17.6 % 16.9 % Total Capital Ratio 25.8 % 25.1 % 26.2 % 24.1 % 22.7 % 21.4 % 20.9 % 21.2 % 20.4 % Leverage ratio 7.8 % 7.6 % 7.2 % 6.7 % 6.4 % 5.8 % 5.5 % 5.6 % 5.5 % Risk-Weighted Assets (in $ millions) 4,522 4,628 4,604 4,843 4,780 4,854 5,043 5,101 5,185 Risk-Weighted Assets / total assets 34.3 % 34.3 % 33.5 % 33.9 % 34.9 % 33.8 % 33.0 % 33.3 % 33.8 % Tangible common equity ratio 6.5 % 6.5 % 6.3 % 5.6 % 5.0 % 5.1 % 5.0 % 5.8 % 5.8 % Book value per common share (in $) 19.20 19.34 18.80 17.42 15.21 16.17 16.97 19.83 19.68 Tangible book value per share (in $) 17.73 17.83 17.32 15.92 13.76 14.61 15.30 18.08 17.92 Non-accrual loans/gross loans 1.2 % 1.2 % 1.1 % 1.2 % 1.2 % 1.2 % 1.2 % 1.2 % 1.2 % Non-performing assets/total assets 0.8 % 0.7 % 0.6 % 0.5 % 0.5 % 0.5 % 0.5 % 0.5 % 0.5 % Allowance for credit losses/total loans 0.5 % 0.5 % 0.5 % 0.5 % 0.5 % 0.5 % 0.5 % 0.5 % 0.5 % Balance Sheet Trends
19 (in millions of US Dollars, unless otherwise indicated) Q3 2023 Q2 2023 Q3 2022 Assets Average balance ($) Interest ($) Average rate (%) Average balance ($) Interest ($) Average rate (%) Average balance ($) Interest ($) Average rate (%) Cash and cash equivalents, reverse repurchase agreements and short-term investments $ 2,559.2 $ 28.8 4.47 % $ 2,488.2 $ 25.2 4.06 % $ 2,818.4 $ 10.0 1.40 % Investment in securities 5,494.9 28.5 2.06 % 5,614.7 28.9 2.07 % 6,007.3 29.4 1.94 % AFS 1,926.0 8.8 1.81 % 1,970.7 8.8 1.78 % 2,140.1 8.5 1.58 % HTM 3,568.9 19.7 2.19 % 3,644.0 20.2 2.22 % 3,867.3 20.9 2.14 % Loans 4,897.5 80.4 6.51 % 4,984.1 79.8 6.42 % 5,123.1 65.3 5.05 % Commercial 1,394.9 23.2 6.60 % 1,396.7 23.0 6.59 % 1,523.3 20.8 5.41 % Consumer 3,502.6 57.2 6.47 % 3,587.4 56.8 6.35 % 3,599.8 44.5 4.90 % Total interest earning assets 12,951.6 137.7 4.22 % 13,087.0 133.9 4.10 % 13,948.9 104.6 2.98 % Other assets 416.7 402.0 369.1 Total assets $ 13,368.3 $ 13,489.0 $ 14,317.9 Liabilities Deposits - interest bearing $ 9,340.4 $ (46.1) (1.96) % $ 9,308.0 $ (38.5) (1.66) % $ 9,939.5 $ (11.1) (0.44) % Securities sold under agreement to repurchase — — — % 0.4 — (5.45) % — — — % Long-term debt 98.4 (1.4) (5.53) % 147.4 (2.9) (8.02) % 172.1 (2.4) (5.53) % Interest bearing liabilities 9,438.8 (47.5) (2.00) % 9,455.8 (41.4) (1.76) % 10,111.7 (13.5) (0.53) % Non-interest bearing customer deposits 2,739.3 2,863.2 3,074.6 Other liabilities 279.3 243.6 256.2 Total liabilities $ 12,457.4 $ 12,562.6 $ 13,442.4 Shareholders’ equity 910.9 926.4 875.5 Total liabilities and shareholders’ equity $ 13,368.3 $ 13,489.0 $ 14,317.9 Non-interest bearing funds net of non- interest earning assets (free balance) $ 3,512.8 $ 3,631.2 $ 3,837.2 Net interest margin $ 90.2 2.76 % $ 92.5 2.83 % $ 91.2 2.59 % Average Balance Sheet Trends
20 (in millions of US Dollars, unless otherwise indicated) 2023 2022 2021 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Net Interest Income $ 90.2 $ 92.5 $ 97.4 $ 94.6 $ 91.2 $ 82.0 $ 75.9 $ 74.5 $ 75.7 Non-Interest Income 52.0 50.2 50.2 54.9 49.9 51.8 49.9 52.7 49.0 Prov. for Credit (Losses) Recovery (0.5) (1.5) (0.7) (1.6) (0.8) (0.7) 0.7 0.6 — Non-Interest Expenses* 92.9 84.1 84.8 85.4 82.9 84.0 82.9 84.6 85.2 Other Gains (Losses) — 4.0 0.1 0.6 0.1 0.1 0.8 (1.6) 0.3 Net Income $ 48.7 $ 61.0 $ 62.2 $ 63.1 $ 57.4 $ 49.1 $ 44.4 $ 41.7 $ 39.8 Non-Core Items** $ 8.2 $ (4.0) $ — $ 0.1 $ 0.2 $ 1.1 $ 0.3 $ 0.1 $ 0.2 Core Net Income** $ 57.0 $ 57.0 $ 62.2 $ 63.2 $ 57.6 $ 50.2 $ 44.7 $ 41.7 $ 40.0 Key Metrics Loan Yield 6.51 % 6.42 % 6.23 % 5.79 % 5.05 % 4.48 % 4.26 % 4.18 % 4.22 % Securities Yield 2.06 2.07 2.12 2.03 1.94 1.89 1.79 1.65 1.77 Cost of Deposits 1.52 1.27 1.10 0.78 0.34 0.16 0.12 0.12 0.11 Net Interest Margin 2.76 2.83 2.88 2.79 2.59 2.26 2.03 2.00 1.97 Core Efficiency Ratio** 58.3 57.6 56.0 55.6 57.0 60.2 63.7 64.7 66.3 Core ROATCE** 26.1 26.3 30.5 34.9 31.6 27.8 21.9 18.8 17.9 Fee Income Ratio 36.7 35.5 34.2 37.1 35.6 38.9 39.5 41.2 39.3 Fully Diluted Share Count (in millions of common shares) 49.1 49.9 50.1 50.0 49.8 49.8 49.8 49.8 49.9 * Includes income taxes ** See the reconciliation of non-GAAP measures on pages 23-24 Income Statement Trends
21 (in millions of US Dollars, unless otherwise indicated) 2023 2022 2021 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Non-Interest Income Asset Management $ 8.0 $ 8.2 $ 7.9 $ 7.4 $ 7.4 $ 7.4 $ 7.5 $ 7.6 $ 7.4 Banking 14.1 12.6 13.6 17.5 14.1 12.9 12.7 15.4 12.6 FX Revenue 11.4 11.3 10.7 11.5 11.8 12.0 12.4 10.9 10.8 Trust 14.7 14.3 12.8 13.7 12.6 13.3 12.7 14.2 12.9 Custody & Other Admin. 3.3 3.3 3.3 3.4 3.3 3.3 3.6 3.9 3.7 Other 0.6 0.5 1.8 1.4 0.7 2.8 1.0 0.8 1.5 Total Non-Interest Income $ 52.0 $ 50.2 $ 50.2 $ 54.9 $ 49.9 $ 51.8 $ 49.9 $ 52.7 $ 49.0 Non-Interest Expense Salaries & Benefits* $ 51.3 $ 42.6 $ 43.7 $ 44.7 $ 42.0 $ 42.3 $ 41.0 $ 41.1 $ 42.0 Technology & Comm. 16.0 14.9 13.9 14.3 14.3 14.0 14.1 15.7 16.3 Professional & O/S Services 4.3 4.8 5.0 4.3 4.8 5.4 5.1 5.6 5.7 Property 7.7 7.5 7.4 8.0 7.9 7.6 7.9 8.0 7.8 Indirect Taxes 5.4 5.3 5.7 5.4 5.2 5.5 5.9 5.5 5.4 Marketing 1.5 1.7 1.5 1.8 1.5 1.6 1.5 1.2 0.9 Intangible Amortization 1.4 1.4 1.4 1.4 1.4 1.4 1.5 1.5 1.5 Other 4.8 5.4 5.3 4.7 4.9 5.2 5.0 5.2 4.8 Total Non-Interest Expense $ 92.5 $ 83.5 $ 84.1 $ 84.7 $ 82.0 $ 83.0 $ 82.0 $ 83.8 $ 84.4 Income Taxes 0.4 0.5 0.7 0.7 0.9 1.1 1.0 0.8 0.8 Total Expense incld. Taxes $ 92.9 $ 84.1 $ 84.8 $ 85.4 $ 82.9 $ 84.0 $ 82.9 $ 84.6 $ 85.2 *Includes non-service employee benefits Non-Interest Income & Expense Trends
22 (in millions of US Dollars, unless otherwise indicated) 2023 2022 2021 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Salaries & Benefits** $ 43.4 $ 42.6 $ 43.7 $ 44.7 $ 42.0 $ 41.2 $ 41.0 $ 41.1 $ 42.0 Technology & Comm. 16.0 14.9 13.9 14.3 14.3 14.0 14.1 15.7 16.3 Professional & O/S Services 7.7 4.7 5.0 4.2 4.7 5.4 4.9 5.5 5.6 Property 4.3 7.5 7.4 8.0 7.9 7.6 7.9 8.0 7.8 Indirect Taxes 5.1 5.3 5.7 5.4 5.2 5.5 5.9 5.5 5.4 Marketing 1.4 1.7 1.5 1.8 1.5 1.6 1.5 1.2 0.9 Intangible Amortization 1.5 1.4 1.4 1.4 1.4 1.4 1.5 1.5 1.5 Other 4.8 5.4 5.3 4.7 4.9 5.2 4.8 5.2 4.7 Total Core Non-Interest Expense* $ 84.3 $ 83.6 $ 84.1 $ 84.5 $ 81.8 $ 81.9 $ 81.6 $ 83.7 $ 84.2 Income Taxes 0.4 0.5 0.7 0.7 0.9 1.1 1.0 0.8 0.8 Total Core Expense incld. Taxes* $ 84.7 $ 84.1 $ 84.8 $ 85.3 $ 82.8 $ 83.0 $ 82.6 $ 84.5 $ 84.9 * See the reconciliation of non-GAAP measures on pages 23-24 ** Includes non-service employee benefits Core Non-Interest Expense* Trends
23 (in millions of US Dollars, unless otherwise indicated) 2023 2022 Q3 Q2 Q1 Q4 Q3 Net income A $ 48.7 $ 61.0 $ 62.2 $ 63.1 $ 57.4 Non-core (gains), losses and expenses Non-core (gains) losses Liquidation settlement from an investment previously written-off — (4.0) — — — Total non-core (gains) losses B $ — $ (4.0) $ — $ — $ — Non-core expenses Early retirement program, voluntary separation, redundancies and other non-core compensation costs 8.2 — — — — Tax compliance review costs — — — 0.1 0.2 Total non-core expenses C $ 8.2 $ — $ — $ 0.1 $ 0.2 Total non-core (gains), losses and expenses D=B+C 8.2 (4.0) — 0.1 0.2 Core net income to common shareholders E=A+D $ 57.0 $ 57.0 $ 62.2 $ 63.2 $ 57.6 Average shareholders' equity 940.2 943.3 902.5 791.2 799.0 Average common equity F 940.2 943.3 902.5 791.2 799.0 Less: average goodwill and intangible assets (72.9) (74.0) (74.2) (73.4) (75.1) Average tangible common equity G 867.2 869.3 828.3 717.8 723.9 Return on equity A/F 20.6 % 25.9 % 28.0 % 31.6 % 28.5 % Core return on average tangible common equity E/G 26.1 % 26.3 % 30.5 % 34.9 % 31.6 % Core earnings per common share fully diluted Adjusted weighted average number of diluted common shares (in thousands) H 49.1 49.9 50.1 50.0 49.8 Earnings per common share fully diluted A/H 0.99 1.22 1.24 1.26 1.15 Non-core items per share D/H 0.17 (0.08) — 0.01 0.01 Core earnings per common share fully diluted E/H 1.16 1.14 1.24 1.27 1.16 Core return on average tangible assets Total average assets I $ 13,349.0 $ 13,660.8 $ 14,115.6 $ 13,863.7 $ 14,160.1 Less: average goodwill and intangible assets (72.9) (74.0) (74.2) (73.4) (75.1) Average tangible assets J $ 13,276.0 $ 13,586.8 $ 14,041.4 $ 13,790.3 $ 14,085.0 Return on average assets A/I 1.4 % 1.8 % 1.8 % 1.8 % 1.6 % Core return on average tangible assets E/J 1.7 % 1.7 % 1.8 % 1.8 % 1.6 % Non-GAAP Reconciliation
24 (in millions of US Dollars, unless otherwise indicated) 2023 2022 Q3 Q2 Q1 Q4 Q3 Tangible equity to tangible assets Shareholders' equity K $ 922.9 $ 950.3 $ 936.9 $ 864.8 $ 754.9 Less: goodwill and intangible assets (70.6) (74.0) (74.1) (74.4) (71.9) Tangible common equity L 852.3 876.3 862.8 790.4 683.0 Total assets M 13,179.5 13,509.5 13,732.7 14,306.1 13,699.3 Less: goodwill and intangible assets (70.6) (74.0) (74.1) (74.4) (71.9) Tangible assets N $ 13,108.9 $ 13,435.5 $ 13,658.6 $ 14,231.7 $ 13,627.5 Tangible common equity to tangible assets L/N 6.5 % 6.5 % 6.3 % 5.6 % 5.0 % Tangible book value per share Basic participating shares outstanding (in millions) O 48.1 49.1 49.8 49.7 49.6 Tangible book value per common share L/O 17.73 17.83 17.32 15.92 13.76 Efficiency ratio Non-interest expenses $ 92.5 $ 83.5 $ 84.1 $ 84.7 $ 82.0 Less: Amortization of intangibles (1.4) (1.4) (1.4) (1.4) (1.4) Non-interest expenses before amortization of intangibles P 91.1 82.1 82.7 83.3 80.6 Non-interest income 52.0 50.2 50.2 54.9 49.9 Net interest income before provision for credit losses 90.2 92.5 97.4 94.6 91.2 Net revenue before provision for credit losses and other gains/losses Q $ 142.2 $ 142.6 $ 147.5 $ 149.5 $ 141.1 Efficiency ratio P/Q 64.1 % 57.6 % 56.0 % 55.7 % 57.1 % Core efficiency ratio Non-interest expenses $ 92.5 $ 83.5 $ 84.1 $ 84.7 $ 82.0 Less: non-core expenses (C) (8.2) — — (0.1) (0.2) Less: amortization of intangibles (1.4) (1.4) (1.4) (1.4) (1.4) Core non-interest expenses before amortization of intangibles R 82.9 82.1 82.7 83.1 80.4 Net revenue before provision for credit losses and other gains/losses Q 142.2 142.6 147.5 149.5 141.1 Core efficiency ratio R/Q 58.3 % 57.6 % 56.0 % 55.6 % 57.0 % Non-GAAP Reconciliation (continued)
25 Our peer group includes the following banks, noted by their ticker symbols: Peer Group • First Hawaiian, Inc. (FHB) • Bank of Hawaii Corporation (BOH) • East West Bancorp, Inc. (EWBC) • Cullen/Frost Bankers, Inc. (CFR) • Associated Banc-Corp (ASB) • Wintrust Financial Corporation (WTFC) • Commerce Bancshares, Inc. (CBSH) • Trustmark Corporation (TRMK) • International Bancshares Corporation (IBOC) • Community Bank System, Inc. (CBU) • First Financial Bankshares, Inc. (FFIN) • Westamerica Bancorporation (WABC) • UMB Financial Corporation (UMBF)