The Bank of N.T. Butterfield & Son Limited (“Butterfield Bank”) today reported 2007 third quarter net income of $39.6 million, a record for the Group and up 14.4% year on year. Pre-tax net income was $41.6 million, up 16.3% on a year ago. Diluted earnings per share were $0.46, up 7 cents year on year and up 5 cents on the previous quarter. Other financial highlights of the quarter compared to the same period a year ago include:
• Return on equity of 27.1%, up from 24.5%
• Net interest income of $63.8 million, up 15.9%
• Non-interest income of $55.4 million, up 15.1%
• Total revenue of $121.0 million, up 14.1%
• Efficiency ratio of 64.6%, improved from 66.4%
• Customer deposits of $10.7 billion, up 16.4%
• Customer Loans at $4.0 billion, up 13.6%
• Total Assets of $12.1 billion, up 14.4%
• Assets under administration of $141 billion, up 22.7%
The Board has approved a third quarter dividend of 16 cents per share, which remains unchanged from the previous quarter when taking into account the impact of the stock split in August when shareholders received two additional shares for each one held prior to the record date. The dividend is payable on Wednesday 21 November 2007 to shareholders of record on Wednesday 7 November 2007.
Alan Thompson, President & Chief Executive Officer, said: “Against the background of challenging and indeed uncertain global market conditions, our focused business strategy and diversified business lines continue to deliver solid financial results and the performance of Group’s core businesses remains in line with expectations. Our Bermuda businesses continue to do well; in particular the Community Banking division has demonstrated significant asset and revenue growth as we strive to attract new customers whilst retaining existing ones. Strong performances were also seen from our Bahamas, Cayman, Guernsey and UK businesses. These results reflect our dedication to providing excellent customer service and our continuing commitment to being a strong community partner in the jurisdictions in which we operate. We are also pleased to report the successful expansion of our wealth management business through the acquisition on 26 October of Bentley Reid Group, with offices in Hong Kong, London and Malta. This is a well established and prestigious international wealth management company and the transaction increases our existing private client business and enables us to expand into new international markets.”
Richard Ferrett, Executive Vice President & Chief Financial Officer, said: “It is pleasing to note that our balance sheet remains strong and highly liquid with customer deposits up $1.5 billion year on year to $10.7 billion. The return on equity for the quarter, at 27.1%, was the highest seen for over a decade and now stands at 26.0% for 2007 year to date. We are pleased with the significant year on year increase seen in the Group’s revenue generation, with total revenue up 14.1% to $121.0 million, and the improvement in the Group’s efficiency ratio.“
Financial highlights of the Quarter ending 30 September 2007 compared with the Quarter ending 30 September 2006:
• Total non-interest income was a record $55.4 million and up 15.1% or $7.3 million year on year. This reflects strong growth in revenues from trust and custody, up 26.3%,
customer-driven foreign exchange, up 25.1%, asset management, up 13.8% and investment and pension fund administration, up 11.9%.
• Net interest income before credit related provisions, at $63.8 million, was also a record and is up year on year by $8.7 million, or 15.9%, reflecting balance sheet growth across all the Group’s operations. During the quarter the Group had a net release of credit provisions of $0.1 million, compared with a provision for credit losses of $0.6 million the prior year, reflecting the quality of the Bermuda loan portfolios. The net interest margin for the quarter was 2.2%, in line with last year, and average interest earning assets increased by 15.7% to $11.6 billion.
• During the quarter ‘Other gains’ of $1.2 million were recorded, reflecting gains in respect of the sale of the Bank’s equity interest in a fund services company and part of its interest in a credit card company, offset by the write down of an equity interest in a financial services company.
• Total revenue grew year on year by $14.9 million, or 14.1%, to $121.0 million, whereas total operating expenses increased year on year by $9.1 million, or 12.9%, to $79.5 million. As a result the efficiency ratio improved from 66.4% a year ago to 64.6% for the quarter. Personnel-related expenses increased by $4.7 million, up 11.0% year on year, reflecting an increase in the headcount, which has risen by 91 over the past year to 1,786 to support business growth, particularly in Bermuda, Canada, Cayman and The Bahamas.
• Total assets of the Group as at 30 September 2007 were a record $12.1 billion, compared to $10.6 billion a year ago. The increase reflects solid growth in customer deposits, which have increased year on year by 16.4% to $10.7 billion. The Group’s balance sheet remains highly liquid with a loan-to-customer-deposits ratio of 37.3%. 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 13.6%, or $477 million, to $4.0 billion, reflecting increased loan demand, particularly in our Bermuda, Guernsey and United Kingdom based businesses. The loan portfolio represents 33.0% of total assets, compared to 33.2% last year. Non-accrual loans totalled $38.9 million at 30 September 2007. This represents 1.0% of total loans, compared to 0.9% a year ago.
• Client assets under administration across the Group increased year on year by 22.7% to
• Shareholders’ equity increased year on year by $19.9 million to $585.5 million. The loan to the Stock Option Trust at 30 September 2007 was $43.5 million, up from $37.7 million a year ago. The Group has financed the purchase for the Stock Option Trust of 4.5% 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 844,913 shares at a cost of $17.7 million, compared to the purchase of 318,742 shares (pre the ‘3 for 1’ stock split) at a cost of $18.9 million in the same quarter a year ago. Purchases made during the quarter under the Bank’s Share Buy-Back Plan and held as treasury stock totalled 251,189 shares at a cost of $5.1 million, compared to nil for the same quarter last year. There were no purchases of Bank shares during the quarter by the Bank’s Charitable Foundation, compared to 85,122 shares purchased by the Foundation in the like period in 2006.
• Diluted earnings per share for the quarter were $0.46, up 7 cents or 18.0% year on year. Basic earnings per share for the quarter were $0.47, compared to $0.41 a year ago.
• Net income from the Group’s Bermuda based businesses was a record at $19.1 million, up 6.5% year on year, reflecting an 8.6% increase in total revenues to $63.9 million. The Community Banking loan portfolio increased year on year by 13.4% to $2.4 billion, whilst customer deposits increased by 6.8% to $3.9 billion. The Wealth Management, Fiduciary Services and Investment and Pension Fund Administration businesses achieved an 8.4% year on year growth in total revenues to $20.8 million. Client assets under management and administration grew by 19.5% and 7.8% to $9.0 billion and $51.9 billion respectively.
• In Barbados total revenues at $2.7 million were down 11.4% from a year ago, reflecting narrower margins from credit card and lending activities, and resulted in a loss for the quarter of $0.187 million. Total assets now stand at $264 million, up 16.0% year on year reflecting growth in customer deposits.
• Cayman recorded record net income of $14.9 million, up year on year by $1.2 million, or 8.8%, reflecting continued strong business growth. Total revenue, at $29.2 million, was up 15.5%, due to strong growth in revenues from investment and pension fund administration, asset management and banking activities. Total assets increased year on year by 17.8% to $3.0 billion, reflecting strong growth in customer deposits, up 22.6% to $2.6 billion. Client assets under investment management and administration grew by 23.4% and 38.6% to $1 billion and
$50.9 billion respectively.
• Guernsey's net income, at $4.0 million, was a record and is up $1.5 million, or 59.5%, year on year, reflecting strong growth in net interest income and fees from investment and pension fund administration, custody and asset management activities. Total revenue increased by 33.4% to $16.7 million. Total assets increased year on year by 17.0% to $2.3 billion, due to strong growth in customer deposits and loans, up 12.7% and 22.0% to $2.0 billion and
$474 million respectively. Client assets under administration increased by $5.8 billion to
$31.1 billion, whilst client assets under investment management increased by 13.0% to
• The Bahamas achieved record net income of $0.9 million on total revenues of $3.2 million, up from $0.5 million and $2.3 million respectively a year ago, reflecting growth in fees from trust and banking activities. Total assets were up by 21.8% to $152 million as a result of solid growth in customer deposits and loans. Client assets under administration increased year on year by 50.9% to $5.6 billion.
• The Zurich asset management office, which opened in November last year, has now has generated client assets under investment management of $48 million, up 14.3% on the previous quarter.
• In the UK net income was a record at $0.9 million, compared to a loss of $0.1 million a year ago. Total revenues increased year on year by 40.8% to $8.4 million, reflecting growth in net interest income and customer driven foreign exchange. Total assets at 30 September 2007 were $2.1 billion compared to $1.7 billion at the same stage a year earlier. The loan portfolio has increased year on year by 24.4% to $639 million and customer deposits rose by 37.0% to $1.8 billion.
Note to Editors:
The Group’s results, which are unaudited, are stated in accordance with US GAAP.
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.
Butterfield Bank is Bermuda’s first and largest independent bank, and a specialist provider of international 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, Hong Kong, Malta, 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. Further details on Butterfield Bank can be obtained from our website 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