Given unprecedented events in world financial markets, in recent days we have received numerous queries from shareholders, customers and members of the public about the strength and stability of Butterfield Bank. I want to assure all of our stakeholders that Butterfield Bank continues to be well capitalised and in sound financial condition. We continue to have a strong balance sheet, an excellent business franchise and outstanding employees.
As a retail bank, Butterfield does not rely on inter-bank borrowing to fund our operations (unlike certain high profile US banks that have recently failed.) Our liquidity positions remain strong with a coverage ratio of loans by customer deposits of 2.74 times -- among the most conservative of any bank in the world. Our loan portfolio is of very high quality.
By design, our operations – which now span nine countries – are functionally and geographically diversified, providing a level of protection from potential economic declines in individual markets or business sectors. Our core operations are profitable. Our held-to-maturity investment portfolio is well diversified and investments therein that have exposure to the US residential mortgage market are performing as expected.
Our investment grade ratings were re-confirmed by Moody’s in August 2008 for bank deposits at Aa3/Stable/P1, with Moody's citing our: "solid financial fundamentals, good after tax profitability and asset quality, healthy liquidity and comfortable capital ratios.” Since the Moody’s report was released, our capital position has been further enhanced with a gain of USD115 million, realised through the completion of a long-planned strategic merger of our Fund Administration businesses with those of the Fulcrum Group to form the new company, Butterfield Fulcrum Group.
The Butterfield Money Market Fund retains its AAAm rating from Standard & Poor’s. The Fund managers invest in high quality short-term paper and have maintained a very large percentage of the Fund in investments with counter-parties that have the strongest short-term rating from Standard & Poor’s (A-1+) and Moody’s (P1).
We believe the recent decreases in the price of Butterfield Bank shares are due largely to the effects of the current dislocation in global financial markets, particularly in the US. Despite a backdrop of unsettling events in international financial markets, Butterfield Bank remains strong and well positioned for continued growth and success.