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13 February 2007
Butterfield Bank Reports Record Full Year Earnings

(Hamilton, Bermuda – 13 February 2007) – The Bank of N.T. Butterfield & Son Limited (“Butterfield Bank Group” or “the Group”) today reported net income for the full year ended 31 December 2006 of $134.1 million, a record for the Group and up 22.6% year on year.  Diluted earnings per share were $4.60, up 75 cents or 19.5%, on 2005. Other financial highlights include:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • Record net interest income up 18.1% at $215.2 million

     

  • Record non-interest income up 12.5% at $193.7 million

     

  • Record total assets up 21.0% at $11.1 billion. 

     

  • Record assets under administration up 20.7% to $123.6 billion

     

  • Return on equity of 24.6%, up from 23.6%

     

  • Efficiency ratio improved to 64.8% from  66.4%

     

  • Net interest margin improved to 2.15% from 2.06%

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reflecting the Group’s continuing strong earnings performance and commitment to enhancing shareholder value, the Board has decided to increase the quarterly dividend by 4 cents to 48 cents per share.  The divided is payable on Wednesday 7 March 2007 to shareholders of record on Wednesday 21 February 2007.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alan Thompson, President & Chief Executive Officer, commented: “We are pleased with the strong growth in our financial performances across the Group in a challenging and competitive environment. In all our jurisdictions we have focused on the successful implementation of our business strategy. We continue to expand internationally, as evidenced by the establishment of an asset management business in Switzerland and planned expansion of our fund administration business into Canada. We remain committed to enhancing shareholder value, as evidenced by the ‘1 for 10’ stock dividend issued last August and the dividend increase of 4 cents. These results are testament to the creativity, commitment and enthusiasm of our employees.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Richard Ferrett, Executive Vice President & Chief Financial Officer, said, “Our financial results in 2006 continue to reflect the soundness of the Group’s business model. Revenues, earnings per share and return on equity all grew strongly and the return on equity, at 24.6%, remains above our target to achieve a return of over 20%. Significant increases were seen in the Group’s revenue generation, which increased by 16.9% to $415.1 million, and in customer deposits and loans. Particularly pleasing was the 15.6% growth in revenues from investment & pension fund administration services and a $21.2 billion increase in assets under administration to $123.6 billion.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial highlights for the Year ended 31 December 2006 compared with the Year ended 31 December 2005:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group Results

 

 

 

 

 

 

 

 

 

  • Total non-interest income, at $193.7 million, is up year on year by $21.6 million, or 12.5%. This reflects strong revenue growth from investment and pension fund administration (+15.6%), banking services (+13.4%), trust and investment services (+11.4%) and foreign exchange (+10.6%).

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • Net interest income before credit related provisions, at $218.2 million, was a record and is up year on year by $32.9 million, or 17.7%, reflecting strong balance sheet growth. During the year the Group made net provisions of $3.0 million in respect of credit losses, down from $3.2 million in 2005. 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • Total operating revenue grew year on year by $59.9 million, or 16.9%, to $415.1 million.

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • Total operating expenses increased year on year by $33.0 million, or 13.5%, to $277.2 million; a lower percentage increase than that seen for operating revenue. As a result the efficiency ratio improved from 66.4% in 2005 to 64.8% in 2006. Salaries and other employee benefits were up 12.6% year on year, to $162.5 million, primarily reflecting the expanding size of the Group. Total headcount at 31 December 2006 was 1,730 (2005: 1,597), including 845 in Bermuda, compared to 789 a year ago.

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • Corporation tax for the year was an expense of $3.8 million, which represents 2.8% of net income pre-tax, compared to $1.6 million in 2005; the increase reflecting the growth in taxable earnings in Guernsey and the U.K. The Group also expensed $13.0 million in non-income related taxes, up from $11.9 million the previous year, primarily reflecting an increase in employee-related payroll taxes.

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • Total assets of the Group as at 31 December 2006 were $11.1 billion, up from $9.2 billion a year ago. The increase reflects strong growth in customer deposits, which have increased year on year by 22.7% to $9.8 billion.

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • The loan portfolio increased year on year by 21.9%, or $675 million, to $3.8 billion. This increase reflects increased loan demand across all of our businesses, in particular in Bermuda, up 11.4%, Cayman, up 11.7%, Guernsey, up 109.9%, and the U.K., up 35.1%. The loan portfolio now represents 33.8% of total assets, compared to 33.5% a year ago. Non-performing loans totaled $29.1 million at 31 December 2006, representing 0.8% of total loans, compared to 0.9% last year. Loan provisions totaled $25.7 million at year-end, representing a coverage ratio of 88.5% of non-performing loans. 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • The Group’s balance sheet remains highly liquid with a loan to customer deposits ratio of 38.6%. Deposits with banks and investments increased year on year by 20.3% to $6.9 billion and represent 62.3% of total assets.

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • Assets under administration across the Group increased year on year by 20.7% to $123.6 billion. Assets under investment management now stand at $10.0 billion, up from $9.4 billion a year ago, including assets of $5.9 billion in the Butterfield Funds, an increase of 14.1%.

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • Shareholders’ equity increased year on year by 11.0% to $549.6 million. The loan to the Stock Option Trust increased by $11.5 million to $37.0 million, due to purchases of shares by the Trust to satisfy the Bank’s obligations with respect to current and future obligations under the Executive Officers’ and Employee Stock Option Plans. As at 31 December 2006 the Group had financed the purchase for the Stock Option Trust of 5.3% (2005: 5.9%) of the total shares in issue.  In 2006 purchases of Bank shares by the Stock Option trust totaled 431,132 shares at a cost of $25.1 million at an average price of $58.11. In addition, over the course of the year the Group bought back and cancelled 47,659 shares, at a cost of $2.7 million, under the Share Repurchase Programme at an average price of $55.82. Separate to the above, the Bank’s Charitable Foundation bought 192,899 shares at an average price of $56.71 and aggregate cost of $11.0 million. The Financial Accounting Standards Board new accounting standard, FASB 158 – ‘Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans’, took effect  for companies accounting under US GAAP for years ending 15 December 2006.  The impact of the Standard was to reduce ‘Accumulated other comprehensive income’ by $41.3 million. No restatement of prior periods is required by the Standard.

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • Diluted earnings per share increased by 19.5% to $4.60. Basic earnings per share, at $4.74, were up 20.0% on 2005.

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  • The increase in shareholder value for the year, defined as the increase in share price plus re-investment of dividends in the Group’s shares, was 36.8%, up from 31.4% in 2005.

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bermuda

 

 

 

 

 

 

 

 

 

  • In Bermuda, total revenue increased year on year by $27.1 million, or 13.6%, to $227.3 million. Net interest income from community banking was up 12.2% to $114.9 million, reflecting strong loan growth and a $394.2 million increase in total assets to $4.9 billion. Net income for the year was up 35.6% to $38.1 million. The wealth management & fiduciary services and investment & pension fund administration businesses achieved an 8.5% growth in net income to $33.6 million. This reflects solid growth in client assets under administration, up 11.3% to $50.3 billion, and increased fee generation from investment & pension fund administration, up $2.3 million year on year. The Real Estate operating segment, which represents property related costs in Bermuda, recorded a net expense of $6.5 million in 2006, up $0.3 million over 2005 reflecting reflects upgrades to the Bank’s premises during the year. Net income from the Bermuda based businesses was a record $65.3 million and represents 48.7% of Group net income in 2006, compared to 48.3% in 2005.

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Barbados

 

 

 

 

 

 

 

 

 

  • Barbados made net income of $1.0 million in 2006, down from $1.4 million the previous year, the decrease reflecting increased investment in the infrastructure of the operation to support business growth.  Total revenues increased by 10.0% to $12.3 million, whilst total assets increased year on year by 9.8% to $213 million. This reflects significant growth in both the loan portfolio, up 14.9% to $124 million, and customer deposits, up 6.3% to $170 million.

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Bahamas

 

 

 

 

 

 

 

 

 

  • The Bahamian businesses achieved net income of $2.2 million up from $1.7 million a year ago.  Total revenues were up year on year by 33.7% to $9.1 million, reflecting strong growth in fees earned from fund administration and banking services. At year-end, total assets were $155 million compared to $97 million a year ago.

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cayman Islands

 

 

 

 

 

 

 

 

 

  • Cayman achieved record net income of $53.4 million, up year on year by $7.6 million, or 16.5%. Net interest income was up 21.4% on 2005, at $55.5 million, while non-interest income totaled $43.6 million, an increase of 19.5% on 2005, reflecting strong growth in revenues from banking services and investment & pension fund administration. Total assets increased year on year by 8.3% to $2.8 billion, whilst client assets under administration increased by 26.8% to $40.2 billion.  Assets under management at 31 December 2006 were $1.1 billion, in line with a year ago.

     

           

 

 

 

 

 

 

 

 

 

Guernsey

 

 

 

 

 

 

 

 

 

  • In Guernsey, net income increased by $3.5 million to $10.7 million. Total revenues grew year on year by 25.5% to $50.4 million, with revenues from investment & pension fund administration and trust and investment services up 29.6% and 28.6% respectively. Private client business, including deposit and loan volumes, demonstrated strong growth.  Total assets increased year on year by $315 million to $1.8 billion. Assets under management total $1.1 billion, up 28.9% year on year. Client assets under administration are now $28.1 billion, up 39.3%.

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United Kingdom

 

 

 

 

 

 

 

 

 

  • In the U.K., Butterfield Private Bank recorded significant progress in 2006, with net income of $0.7 million compared to a loss of $0.3 million in 2005. Total revenues were up 12.5% to $25.4 million.  Total assets increased by $780 million to $2.0 billion, reflecting strong growth in loans and customer deposits, up 35.1% and 75.4% respectively.  Assets under management totaled $0.3 billion at 31 December 2006.

     

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Note to Editors:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Group’s results, which are unaudited, are stated in accordance with US GAAP. Butterfield Bank, Bermuda’s first and largest independent bank, offers a full range of Community Banking services in Bermuda, Barbados and the Cayman Islands, encompassing retail and corporate banking and treasury activities. As a specialist offshore financial services group the Bank also provides Private Banking, Wealth Management & Fiduciary Services and Investment & Pension Fund Administration Services from its headquarters in Bermuda, and its subsidiary offices in the Cayman Islands, Guernsey, Switzerland, The Bahamas and the United Kingdom.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Butterfield Bank is a publicly traded corporation with its shares listed on the Bermuda and Cayman Islands stock exchanges. The Bank’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 web site: www.bsx.com. Certain statements in this press 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. Further details on  Butterfield Bank can be obtained from our web site at: www.butterfieldbank.com.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Relations:                                                                              

 

 

 

 

 

 

 

 

 

Richard Ferrett                                                              

 

 

 

 

 

 

 

 

 

Chief Financial Officer                                                    

 

 

 

 

 

 

 

 

 

Phone: (441) 299 1643                                                  

 

 

 

 

 

 

 

 

 

Fax:     (441) 295 1220                                                  

 

 

 

 

 

 

 

 

 

E-mail: richardferrett@bntb.bm

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Media Relations:

 

 

 

 

 

 

 

 

 

Mark Johnson

 

 

 

 

 

 

 

 

 

Marketing & Communications

 

 

 

 

 

 

 

 

 

Phone: (441) 299 1624

 

 

 

 

 

 

 

 

 

Fax: (441) 295 3878

 

 

 

 

 

 

 

 

 

E-mail: markjohnson@bntb.bm

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stuart Roberts

 

 

 

 

 

 

 

 

 

Marketing & Communications

 

 

 

 

 

 

 

 

 

Phone: (441) 298 4610

 

 

 

 

 

 

 

 

 

Fax: (441) 295 3878

 

 

 

 

 

 

 

 

 

E-mail: stuartroberts@bntb.bm

 

 

 

 

 

 

 

 

 

 

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