The Bank of N.T. Butterfield & Son Limited (“Butterfield Bank”) today reported 2007 second quarter net income of $35.9 million, a record for the Group and up 6.1% year on year. Pre-tax net income was $37.5 million, up 7.6% on a year ago. Diluted earnings per share were $1.24, up 8 cents year on year. Other financial highlights of the quarter compared to the same period a year ago include:
· Net interest income of $61.6 million, up 15.1%
· Non-interest income of $53.5 million, up 8.5%
· Customer deposits of $10.6 billion, up 19.8%
· Total assets of $12.0 billion, up 17.9%
· Assets under administration of $137 billion, up 26.3%
· Assets under management of $11.7 billion, up 24.0%
The Board has decided to maintain the quarterly dividend at 48 cents per share, payable on Friday 17 August to shareholders of record on Wednesday 1 August 2007. In addition, the Board announced a stock split whereby all shareholders of record at the close of business on Friday 17 August 2007 will receive two additional shares for each share held on that date. This means, for example, that a shareholder owning 100 shares on the record date will see their shareholding increase to 300 shares, i.e., by three times, following the split. The additional shares will be distributed on Friday 31 August 2007 and the Bank’s shares will commence trading on a split-adjusted basis on Wednesday 15 August 2007.
Alan Thompson, President & Chief Executive Officer, said, “It is pleasing to note the continued progress of the Group in the second quarter against a background of volatile market conditions and increased competition across all our business lines. We are pleased with the progress made in the establishment of our Fund Services operation in Halifax, Canada and the record contribution from our Guernsey business. Also noteworthy is that we were named ’Best Bank in Bermuda’ for a second straight year by Euromoney, one of the world’s leading financial publications.”
Richard Ferrett, Executive Vice President & Chief Financial Officer, said, “The balance sheet continues to grow, reflecting strong increases in customer deposits and loans, up $1.7 billion and $0.6 billion respectively year on year. Our return on equity continues to remain strong and above our target of 20%, at 25.1%. Significant increases were seen year on year in our revenue generation, with net interest income increasing by 15.1% and non-interest income by 8.5% year on year. Of particular note was the increase in the Group’s revenues from trust and custody services, up 15.0% to $9.0 million.”
Financial highlights of the Quarter ending 30 June 2007 compared with the Quarter ending 30 June 2006:
· Total non-interest income, at $53.5 million, was a record and is up 8.5%, or $4.2 million, year on year. This reflects strong growth in revenues from investment and pension fund administration, up 8.2%, customer-driven foreign exchange, up 14.4%, and trust and custody, up 15.0%.
· Net interest income of $61.8 million before credit related provisions was also a record and is up year on year by $7.6 million, or 14.1%, reflecting balance sheet growth across all the Group’s operations. Average interest earning assets increased year on year by $1.5 billion, or 14.3%, to $12.2 billion. During the quarter the Group made provisions for credit losses of $0.2 million, compared to a provision of $0.6 million a year ago. The net interest margin for the quarter was 2.11% compared to 2.10% a year ago.
· Total non-interest expense grew by $8.8 million, or 12.6%, to $78.5 million. Personnel-related expenses increased by $5.4 million, up 13.2% year on year, reflecting an increase in the headcount, which has risen from 1,666 a year ago to 1,800 to support business growth. Of the increase of 134 employees, 47 were in respect of our businesses in Bermuda and 87 in respect of overseas businesses. The Group’s efficiency ratio for the quarter was 66.1%, compared to 64.8% a year ago.
· Total assets of the Group as at 30 June 2007 were $12.0 billion, compared to $10.2 billion a year ago. The increase reflects solid growth in customer deposits, which have increased year on year by $1.7 billion, or 19.8%, to $10.6 billion.
· The loan portfolio increased year on year by 17.0%, or $571 million, to $3.9 billion, reflecting increased loan demand, particularly in our Bermuda, Guernsey and U.K. based businesses, and represents 32.7% of total assets, compared to 32.9% a year ago. Non-accrual loans totalled $34.2 million at 30 June 2007, which represents 0.9% of total loans, in line with a year ago.
· Deposits with banks and investments were $7.6 billion at 30 June 2007, up from $6.4 billion a year earlier, and represent 63.4% of total assets.
· Assets under administration across the Group increased year on year by $28.6 billion, or 26.3%, to $137 billion, reflecting the growth in administration services to mutual and hedge funds. Assets under investment management stood at $11.7 billion at 30 June 2007, with significant growth seen in assets invested in Butterfield Funds, up year on year by 16.2% to $6.6 billion.
· Shareholders’ equity increased year on year by 3.0% to $571.9 million. The loan to the Stock Option Trust at 30 June 2007 was $58.1 million; up from $21.0 million a year ago. The Group has financed the purchase for the Stock Option Trust of 4.2% of the total shares in issue to satisfy its obligations under the Executive Officers’ and Employee Stock Option Plans. During the quarter under review, the Bank’s Stock Option Trust purchased 54,647 shares at a cost of $3.3 million, compared to the purchase of 2,543 shares at a cost of $0.1 million for the like quarter a year ago. Under the Bank’s Share Buy-Back Plan 68,683 shares were purchased and cancelled at a cost of $4.1 million and 470,000 shares were purchased to be held as treasury stock at a cost of $28.2 million. No purchases by the Buy-Back Plan were made in the corresponding quarter in 2006.
· Diluted earnings per share for the quarter were $1.24, up 8 cents year on year. Basic earnings per share for the quarter were $1.27, compared to $1.19 a year ago.
· The increase in shareholder value for the quarter, defined as the increase in share price plus re-investment of dividends in the Bank’s shares, was 2.5%.
· Total revenue from the Bermuda businesses increased by $3.1 million to $61.2 million. Community Banking’s net income was up year on year by $2.6 million, or 34.8%, to $10.0 million reflecting the growth in customer deposits and loans, up 7.7% and 11.5% to $3.4 billion and $2.4 billion respectively. The Wealth Management, Fiduciary Services and Investment and Pension Fund Administration businesses saw a 1.5% year on year growth in total revenues to $20.0 million. Assets under administration now stand at $52.6 billion compared to $44.8 billion a year ago. Assets under investment management were up 21.7% to $9.0 billion. Net income from the Bermuda businesses, at $16.7 million, was up 2.7% on the previous year.
· In Barbados total revenues, at $3.4 million, were in line with that a year ago, as was net income at $0.5 million. The loan portfolio increased year on year by 19.6%, whilst customer deposits were up 32.6%. Total assets now stand at $267 million, up 30.4% year on year.
· Cayman recorded net income of $14.2 million, up year on year by $0.5 million, or 3.9%; the increase reflecting continued strong business growth and the contribution from the Bank’s investment in Island Heritage Insurance Company Ltd. Total income, at $28.1 million, was up 15.0%, reflecting growth in revenues from investment and pension fund administration and banking activities. Total assets were $3.0 billion, up 22.2%. Assets under administration now stand at $46.1 billion, up 30.3% on the previous year, reflecting strong growth in investment and pension fund administration services.
· Guernsey's net income was a record $3.4 million, up 24.3% year on year, primarily reflecting strong revenue growth across all business lines, with total revenue rising by 24.0% to $15.4 million. Net interest income was up 30.4% year on year reflecting growth in customer deposits and loans, up $239 million and $186 million to $1.8 billion and $0.5 billion respectively. Organic growth in fund administration, trust and custody and banking were particular factors underlying the increase in non-interest income, up 24.2% year on year. Assets under administration increased by 36.1% to $31.8 billion, whilst assets under investment management increased by 24.0% to $1.1 billion.
· The Bahamas achieved net income of $0.5 million, in line with that achieved a year ago. Total revenues at $2.8 million were up 32.0%; reflecting strong growth in net interest income, with loans increasing by 203.0% to $35.0 million, and fees from trust and custody. Operating expenses grew by 41.9%, reflecting growth in the employee base to support business growth. Assets under administration increased by 36.6% to $5.4 billion.
· The Zurich office, which opened in November last year, now has assets under investment of $42 million, up from $16 million the previous quarter.
· The U.K. made net income of $0.6 million, compared to $0.2 million a year ago, with total revenues increasing by 25.5% to $8.1 million. Total assets at 30 June 2007 stood at a record
$2.2 billion, up 40.3% year on year, reflecting a 47.9% increase in customer deposits to $1.8 billion and a 25.9% increase in the loan portfolio to $0.6 billion.
Note to Editors:
The Group’s results, which are unaudited, are stated in accordance with US GAAP.
Butterfield Bank is Bermuda’s first and largest independent bank, and a specialist provider of offshore financial services. The Butterfield Bank Group offers a full range of community banking services in Bermuda, Barbados and the Cayman Islands, encompassing retail and corporate banking and treasury activities. In the wealth management area, the Group provides private banking, asset management and personal trust services from its headquarters in Bermuda and subsidiary offices in The Bahamas, the Cayman Islands, Guernsey, Switzerland and the United Kingdom. The Group provides services to corporate and institutional clients from offices in Bermuda, The Bahamas, Canada, the Cayman Islands and Guernsey, which include investment and pension fund administration, asset management and corporate trust services.
Butterfield Bank is a publicly traded corporation with 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 website: 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.
Chief Financial Officer
The Bank of N.T. Butterfield & Son Limited
Phone: (441) 299 1643
Fax: (441) 295 1220
Assistant Vice President
The Bank of N.T. Butterfield & Son Limited
Phone: (441) 299 1624
Fax: (441) 295 3878
Senior Communications Specialist
The Bank of N.T. Butterfield & Son Limited
Phone: (441) 298 4610
Fax: (441) 295 3878