Bank of Butterfield Issues US$125 Million of Subordinated Capital Notes

The Bank of N.T. Butterfield & Son Limited announced today that it had issued US$125 million of Subordinated Lower Tier II capital notes. The notes were issued in two tranches, namely US$78 million in Series A notes due 2013 and US$47 million in Series B notes due 2018.

The notes issued under Series A will pay a fixed coupon until 27 May 2008 when they become redeemable in whole at the option of Bank of Butterfield. The Series B notes will pay a fixed coupon until 27 May 2013 when they also become redeemable in whole at the Bank's option. The Series A notes were priced at a spread of 1.25% over the 5-year US Treasury yield and the Series B notes were priced at a spread of 1.35% over the 10-year US Treasury yield. The exclusive placement agent for the transaction was Lehman Brothers. The notes have been rated A- by Fitch, Baa1 by Moody's and BBB+ by Standard & Poor's.

The issuance was by way of private placement with US institutional investors. No application has been or will be made to list the Notes in the US. The notes will be listed on The Bermuda Stock Exchange in the specialist debt securities category.

Commenting on the transaction Richard Ferrett, Executive Vice President & Chief Financial Officer said "we are extremely pleased with this transaction, the Bank's first such deal in the US private placement market, and believe its success is a reflection of investor's long-term confidence in Bank of Butterfield. Some of the proceeds of the issue will be used to repay the entire amount of our US$75 million outstanding subordinated notes redeemable in July 2003 with the balance being used for general corporate purposes."

Note to Editors:

Bank of Butterfield is a publicly traded corporation with its shares listed on the Bermuda and Cayman Islands stock exchanges. The Bank is a vital community bank in both Bermuda and Cayman and a specialist offshore financial services company. Established in 1858, Bank of Butterfield offers a full range of banking, credit, investment, treasury, trust and custody services through its headquarters in Bermuda, as well as offices in Barbados, Cayman Islands, Guernsey and the United Kingdom. The Bank's share price is published daily by The Bermuda Stock Exchange (www.bsx.com), The Royal Gazette, Bermuda (www.theroyalgazette.com) and Bloomberg Financial Markets (symbol: NTB.BH). Further details on the Bank can be obtained from our web site at: www.bankofbutterfield.com.

For further information contact:

Investor Relations:

Richard Ferrett

Chief Financial Officer

Phone:(441) 299-1643

Fax: (441) 295-1220

e-mail: richardferrett@bntb.bm

Media Relations:

Karla Lacey-Minors

Phone: (441) 298-6484

Fax: (441) 292-2073

e-mail: klacey@bntb.bm