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31 October 2006
Butterfield Bank Reports Third Quarter Net Income of $34.7 million, up 13.1% year on year.

The Bank of N.T. Butterfield & Son Limited (“Butterfield Bank”) today reported net income for the third quarter ended 30 September 2006 of $34.7 million, up 13.1% year on year. This brings the year to date net income to $101.6 million, a 19.5% increase year on year. Diluted earnings per share were $1.18, up 11 cents year on year and up 2 cents on the previous quarter.

Financial highlights of the quarter include:

 

  • Return on equity, at 24.5%, remains in excess of 20%
  • Net interest income of $55.1 million, up 15.7%
  • Non-interest income of $48.1 million, up 10.1%
  • Customer deposits of $9.2 billion, up 21.3%
  • Customer Loans at $3.5 billion, up 19.5%
  • Total Assets of $10.6 billion, up 19.5%
  • Assets under administration of $115.0 billion, up 19.2%

     

    The Board has approved a third quarter dividend of 44 cents per share. When taking into account the one-for-ten bonus share issue made in August 2006, this equates to a 10% increase in the quarterly dividend and will be payable on Wednesday 22 November 2006 to shareholders of record on Wednesday 8 November 2006.

    Alan Thompson, President & Chief Executive Officer, said: “In a challenging and highly competitive business environment, both in Bermuda and overseas, our tested strategy continues to deliver solid financial results and the Group’s core businesses continue to perform in line with expectations. During the quarter we announced Butterfield’s entry into the Swiss private banking market through the establishment of a wholly owned subsidiary, Butterfield Asset Management (Switzerland) Limited. This is in line with our strategy of increasing the Bank’s European Private Banking presence and is a logical extension to the service which we provide in London and Guernsey. Our Bermuda businesses continue to do well; in particular the Community Banking division has demonstrated significant growth. Strong performances were also seen from our Bahamas, Cayman and Guernsey businesses. These results reflect our dedication to providing excellent customer service and our continued commitment to being a strong community partner in the jurisdictions in which we operate.”

    Richard Ferrett, Executive Vice President & Chief Financial Officer, said: “It is pleasing to note that at the nine month stage this year net income now exceeds $100 million, at $101.6 million, compared to $109.4 million recorded for the whole of 2005. In addition, our return on equity continued to remain above 20% throughout 2006. Significant year on year increases were seen in the Group’s revenue generation, with net interest income increasing by 15.7%, reflecting strong growth in customer deposits particularly in Bermuda, and non-interest income increasing by 10.1%.“

    Financial highlights of the Quarter ending 30 September 2006 compared with the Quarter ending 30 September 2005:

    Group Results

  • Total non-interest income, at $48.1 million, was up 10.1% or $4.4 million year on year. This reflects strong growth in revenues from investment and pension fund administration, up 20.1%, banking services, up 13.6%, and customer-driven foreign exchange, up 9.3%
  • Net interest income before credit related provisions, at $55.7 million, was a record and is up year on year by $7.8 million, or 16.3%, reflecting balance sheet growth across all the Group’s operations. During the quarter the Group made provisions for credit losses of $0.6 million, reflecting growth in the Barbados, Bermuda, and Cayman loan portfolios, compared to $0.3 million a year ago. The net interest margin for the quarter was 2.2%, in line with last year, and average interest earning assets increased by 16.6% to $10.2 billion.
  • During the quarter ‘Other gains’ of $2.4 million were recorded, primarily made up of a gain of $1.5 million in respect of the sale of part of the Bank’s equity interest in a credit card company and an insurance recovery of $0.7 million in respect of business interruption suffered in Cayman in 2004 due to Hurricane Ivan.
  • Total revenue grew year on year by $14.6 million, or 15.9%, to $106.1 million, whereas total operating expenses increased year on year by $10.0 million, or 16.5%, to $70.4 million. As a result the efficiency ratio decreased marginally from 64.1% a year ago to 64.4% for the quarter. Personnel-related expenses increased by $5.3 million, up 14.3% year on year, reflecting an increase in the headcount, which has risen from 1,599 a year ago to 1,695 to support business growth, particularly in Bermuda, Cayman and The Bahamas.
  • Total assets of the Group as at 30 September 2006 were a record $10.6 billion, compared to $8.9 billion a year ago. The increase reflects solid growth in customer deposits, which have increased year on year by 21.3% to $9.2 billion. The return on assets for the quarter was 1.3%, in line with that a year ago.
  • The loan portfolio increased year on year by 19.5%, or $574 million, to $3.5 billion, reflecting increased loan demand, particularly in our Bermuda, Guernsey and United Kingdom based businesses. The loan portfolio represents 33.2% of total assets, the same percentage as last year. Non-accrual loans totalled $29.2 million at 30 September 2006. This represents 0.9% of total loans, the same percentage as a year ago.
  • The Group’s balance sheet remains highly liquid with a loan-to-customer-deposits ratio of 38.2%. Deposits with banks and Investments increased year on year by $1.1 billion, or 19.4%, to $6.7 billion, reflecting the increase in customer deposits, and represent 62.9% of total assets.
  • Client assets under administration across the Group increased year on year by 19.2% to $115.0 billion.
  • Shareholders’ equity increased year on year by 18.4% to $565.6 million. The loan to the Stock Option Trust at 30 September 2006 was $37.7 million, up from $26.4 million a year ago. The Group has financed the purchase for the Stock Option Trust of 5.5% of the total shares in issue to satisfy its obligations under the Executive Officers’ and Employee Stock Option Plans. During the quarter the Bank’s Stock Option Trust purchased 318,742 shares at a cost of $18.9 million, compared to the purchase of 299,755 shares at a cost of $12.9 million in the same quarter a year ago. There were no purchases made during the quarter under the Bank’s Share Buy-Back Plan, compared to the purchase and cancellation of 10,373 shares at a cost of $0.4 million in the same quarter last year. During the quarter the Bank’s Charitable Foundation bought 85,122 shares at a cost of $4.9 million; there were no purchases made by the Foundation in the like period in 2005.
  • Diluted earnings per share for the quarter were $1.18, up 11 cents or 10.3% year on year. Basic earnings per share for the quarter were $1.22, compared to $1.10 a year ago.

    Bermuda

  • Net income from the Group’s Bermuda based businesses was $17.7 million, up 9.3%, or $1.5 million, year on year, reflecting an 8.5% increase in total revenues to $58.6 million. The Community Banking loan portfolio increased year on year by 10.0% to $2.2 billion, whilst customer deposits increased by 15.4% to $3.6 billion. The Wealth Management, Fiduciary Services and investment and pension fund administration businesses achieved a 14.8% year on year growth in total revenues to $19.2 million, and net income increased by 13.5%, to $9.2 million, reflecting strong growth in our fund administration and asset management businesses. Client assets under management and administration grew by 10.1% and 10.0% to $7.5 billion and $48.1 billion respectively.

    Barbados

  • In Barbados total revenues at $3.0 million were in line with that seen a year ago, whilst net income, at $0.1 million, was down from $0.5 million recorded a year ago reflecting increased investment to support business growth. Total assets now stand at $228 million, up 21.9% year on year.

    Cayman Islands

  • Cayman recorded net income of $13.7 million, up year on year by $2.3 million, or 20.1%, reflecting continued strong business growth and the contribution from the Bank’s equity interest in Island Heritage Insurance. Total revenue, at $25.2 million, was up 23.9%, reflecting strong growth in revenues from investment and pension fund administration and banking activities. The quarter saw credit provisions of $0.3 million compared to recoveries of $0.3 million last year. Total assets increased year on year by 12.0% to $2.5 billion and client assets under administration increased by 17.8% to $36.8 billion.

    Guernsey

  • Guernsey's net income, at $2.5 million, is up $0.6 million, or 32.0%, year on year, reflecting strong revenue growth in net interest income and fees from investment and pension fund administration and banking activities. Total revenue increased by 24.5% to $12.5 million. Customer deposits increased by 22.8% to $1.8 billion and the loan portfolio grew by 108.3% to $389 million. Client assets under administration increased by $8.9 billion to $25.4 billion, whilst assets under investment management increased by 9.6% to $0.8 billion.

    The Bahamas

  • The Bahamas achieved net income of $0.5 million on total revenues of $2.3 million, up from $0.4 million and $1.7 million respectively a year ago, reflecting growth in fees from trust and fund administration services and a 122.6% increase in net interest income. Total assets were up by 55.5% to $125 million as a result of increased customer deposits, which now total $110.2 million, and the loan portfolio, which grew by 126.0% to $12.2 million.

    United Kingdom

  • In the UK total revenues increased year on year by 4.8% to $5.9 million, reflecting growth in net interest income. A small post tax loss of $0.038 million was recorded for the quarter compared to net income of $0.139 million a year ago. Total assets at 30 September 2006 were $1.7 billion compared to $1.2 billion at the same stage a year earlier. The loan portfolio has increased year on year by 24.6% to $514 million and customer deposits rose by 24.2% to $1.4 billion, reflecting solid growth in the customer base.

    Note to Editors:

    The Group’s results, which are unaudited, are stated in accordance with US GAAP. The Butterfield Bank Group, Bermuda’s first and largest indigenous 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 provider the Group also provides private banking, wealth management, fiduciary services, and investment and 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.

    The Butterfield Bank Group is a publicly traded corporation with its shares listed on the Bermuda and Cayman Islands stock exchanges. The Group’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 Contact:
    Richard Ferret
    Chief Financial Officer
    Phone: (441) 299-1643
    Fax: (441) 295-1220
    Email: richardferret@bntb.bm

    Media Contact:
    Mark Johnson
    Marketing & Communications
    Phone: (441) 299-1624
    Fax: (441) 295-3878
    Email: markjohnson@bntb.bm

     

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