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26 April 2006
Butterfield Bank Reports First Quarter Net Income of $33.1 million, up 36.0% year on year

Hamilton, Bermuda – 26 April 2006:The Bank of N.T. Butterfield & Son Limited (“Butterfield Bank”) today reported 2006 first quarter net income of $33.1 million, up 36.0% year on year. Diluted earnings per share were $1.26, up 31 cents year on year. Other financial highlights of the quarter compared to last year include: 

  • Return on equity of 26.3%, up from 22.7%
  • Return on assets of 1.4%, up from 1.1%
  • Efficiency ratio of 63.3%, improved from 66.9%
  • Net interest income of $48.9 million, up 19.6%
  • Non-interest income of $47.1 million, up 12.4%
  • Total assets of $9.7 billion, up 5.3%
  • Assets under administration of $107 billion, up 18.6%

The Board has decided to maintain the quarterly dividend at 44 cents per share, payable on Monday 17 May to shareholders of record on Thursday 4 May 2006.

 

Alan Thompson, President & Chief Executive Officer said: “It is pleasing to note the strong year on year growth across the Group’s core businesses, both in Bermuda and overseas.  Our Bermuda businesses continue to do well; in particular the Community Banking division has demonstrated significant growth in a highly competitive environment. Strong performances were also seen from our Bahamas, Cayman and Guernsey businesses.”

 

Richard Ferrett, Executive Vice President & Chief Financial Officer, said: “We continue to be pleased with the improvement in the Group’s efficiency ratio, at 63.3% for the quarter compared to 66.9% for the same period a year ago. Our return on equity continues to remain above our target of 20%, at 26.3% for the quarter, compared to 22.0% for the same quarter a year ago. Significant increases were seen also year on year in the Group’s revenue generation with net interest income increasing by 19.6% and non-interest income increasing by 12.4%. We are also pleased to note that Standard & Poor’s has this week revised its ratings outlook on Butterfield Bank from ‘Stable’ to ’Positive’ citing our ’sound business profile, solid positions in the Bermuda and Cayman Islands commercial banking markets and reputation in asset management and funds servicing’.” 

 

Butterfield Bank also announced that the Board of Directors has appointed Mr. Brian Duperreault, a director since 1996, as Co-Vice Chairman alongside existing Vice Chairman Mr. Robert Stewart. Mr. Duperreault, aged 58, is Chairman of ACE Limited and well known both in Bermuda and in global insurance circles.

 

Dr. James King, the Chairman of the Board, said: “As both Bob Stewart and I approach age 70 in a couple of years, the Board felt it wise to start involving a younger experienced director in managing the affairs of the Board.”

 

Financial highlights of the Quarter ending 31 March 2006 compared with the Quarter ending 31 March 2005:

 

Group Results

  • Total non-interest income, at $47.1 million, was a record and is up 12.4% or $5.2 million year on year. This reflects strong growth in revenues from banking services, up 18.5%, customer-driven foreign exchange, up 14.2%, and investment and pension fund administration, up 12.7%.
  • Net interest income of $49.7 million before credit related provisions, was also a record and is up year on year by $7.8 million, or 18.6%, reflecting balance sheet growth across all the Group’s operations. Average interest earning assets increased year on year by $957.3 million to $9.6 billion. During the quarter the Group made provisions for credit losses of $0.8 million, reflecting growth in the Bermuda loan portfolio, compared to a provision of $1.0 million a year ago. The net interest margin for the quarter was 2.1% compared to 2.0% a year ago.
  • Total operating revenue grew year on year by $14.3 million, or 17.3%, to $97.1 million, whereas total operating expenses increased at a lower rate, up year on year by $5.5 million or 9.5%, to $63.5 million. As a result the efficiency ratio improved from 66.9% a year ago to 63.3% for the quarter. Personnel-related expenses increased by $4.4 million, up 12.9% year on year, reflecting an increase in the headcount, which has risen from 1,567 a year ago to 1,619, to support business growth, and an incremental expense of $0.5 million relating to the adoption of SFAS 123R regarding ‘Share Based Payments’.
  • Total assets of the Group as at 31 March 2006 were $9.7 billion, compared to $9.2 billion a year ago. The increase reflects solid growth in customer deposits, which have increased year on year by $458 million, or 5.7%, to $8.5 billion.    The return on assets for the quarter was 1.4%, compared to 1.1% for the same quarter in 2005.
  • The loan portfolio increased year on year by 17.6%, or $482 million, to $3.2 billion reflecting increased loan demand, particularly in our Bermuda and UK-based businesses and represents 33.0% of total assets, compared to 29.6% a year ago. Non-accrual loans totalled $30.3 million at 31 March 2006, which represents 0.9% of total loans compared to 0.8% a year ago.
  • The Group’s balance sheet remains highly liquid with a loan-to-customer-deposits ratio of 37.8%. Deposits with banks and investments were $6.1 billion at 31 March 2006 and represent 63.2% of total assets.
  • Client assets under administration across the Group increased year on year by $16.8 billion, or 18.6%, to $107.0 billion, reflecting the growth in administration services to mutual and hedge funds. Client assets under investment management stood at $9.5 billion at 31 March 2006, with significant growth seen in client assets invested in Butterfield Funds, up year on year by 8.8% to $5.6 billion.
  • Shareholders’ equity increased year on year by 19.0% to $522.3 million. The loan to the Stock Option Trust at 31 March 2006 was $24.4 million; down from $24.9 million a year ago, reflecting the exercise of employee stock options. The Group has financed the purchase for the Stock Option Trust of 5.2% of the total shares in issue to satisfy its obligations under the Directors’ and Executive Officers’ and Employee Stock Option Plans. During the quarter under review the Bank’s Stock Option Trust purchased 103,459 shares at a cost of $5.7 million. No such purchases were made in the corresponding 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 18,146 shares at a cost of $0.7 million in the first quarter of 2005.
  • Diluted earnings per share for the quarter were $1.26, up 31 cents or 32.6% year on year. Basic earnings per share for the quarter were $1.30, compared to 97 cents 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 21.1%.

Bermuda 

  • Net income from Community Banking was $10.2 million, up from $6.1 million a year ago, reflecting a 20.0% increase in total revenues to $36.2 million. The loan portfolio increased year on year by 17.5% to $2.1 billion. The Wealth Management, Fiduciary Services and Investment and Pension Fund Administration businesses achieved a 12.2% year on year growth in total revenues to $18.3 million, reflecting the increase in client assets under administration, which now stand at $45.1 billion compared to $37.9 billion a year ago.

Barbados

  • In total revenues at $2.7 million were in line with that last year, whilst net income at $0.2 million was down from $0.5 million a year ago, reflecting increased investment to support future business growth. The loan portfolio increased year on year by 24.6% and total assets now stand at $192 million, up 11.0% year on year.

Cayman Islands

  • Cayman recorded net income of $12.8 million, up year on year by $3.5 million, or 37.3%; the increase reflecting strong business growth. Total income, at $23.1 million, was up 32.3%, reflecting growth in revenues from investment and pension fund administration and banking activities. Total assets now stand at $2.7 billion, up 9.9%, and the loan portfolio increased year on year by 7.1%. Client assets under administration now stand at $34.5 billion, up 16.5% on the previous year, reflecting growth in investment and pension fund administration services.

Guernsey

  • Guernsey's net income was a record $2.6 million, up 74.9% year on year, primarily reflecting strong revenue growth across all business lines, with total revenue rising by 15.7% to $11.4 million.  Organic growth in custody services, fund administration, and investment management, together with high activity levels in foreign exchange and securities dealing, were particular factors underlying the increase in revenues. The loan portfolio increased by 43.2% year on year to $247 millions. Client assets under administration increased by 28.2% to $22.2 billion, whilst assets under investment management increased by 4.6% to $0.8 billion.

The Bahamas

  • The Bahamas achieved net income of $0.5 million on total revenues of $2.1 million; up from $0.4 million and $1.6 million respectively a year ago, reflecting growth in net interest income and fees from fund administration.

United Kingdom

  • In the UK total revenues increased year on year by 6.1% to $5.6 million. A net loss of $0.2 million was recorded, compared to a loss of $0.5 million a year ago. Total assets at 31 March 2006 stood at $1.2 billion, up 7.6% year on year reflecting a 12.6% increase in the loan portfolio to $453.1 million.

 

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, 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:
Richard Ferrett
Chief Financial Officer
Phone: (441) 299-1643
Fax: (441) 295-1220
e-mail: richardferrett@bntb.bm

 

Media Relations:
Dianne Brewer
Vice President,
Marketing & Communications
Phone: (441) 299-3979
Fax: (441) 295-3878
e-mail: diannebrewer@bntb.bm

 

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