Butterfield Bank Reports 2012 Full Year Results

February 26, 2013

The Bank of N.T. Butterfield & Son Limited today announced core earnings for the full year ended 31 December 2012 of $54.9 million [$0.07 per share on a fully diluted basis], up 45.2% compared to $37.8 million a year ago.

Net income for the year was $25.6 million, including one-time items that generated a net loss of $29.3 million, compared to net income of $40.5 million in 2011. Tangible book value per share grew 10.5% to end the year at $1.16 per share, compared to $1.05 per Share last year. The core cash return on tangible common equity increased from 3.8% in 2011 to 6.6% in 2012.

Brendan McDonagh, Butterfield’s Chairman & Chief Executive Officer, said, “Butterfield’s strategy is centered on deploying capital efficiently to grow both sustainable profits and shareholder returns.

“In 2012, the Bank made solid progress, selling non-core holdings, streamlining and coordinating operations across jurisdictions, focusing on effective expense management and instituting a Share Buy-Back Programme.

“Core earnings improved, as a result, by $17.1 million to $54.9 million building on our very strong capital position with total and tier 1 capital ratios of 24.2% and 18.5% respectively. The Board continues to monitor capital levels, maintaining a conservative capital management philosophy such that Butterfield remains well capitalised.

“To further enhance Common Shareholder returns, the Board has declared a special dividend of $0.04 per Share. On a going-forward basis, the Board will continue to assess capital planning options and declare dividends as warranted subject to regulatory approval.”

Mr. McDonagh continued, “The 6.6% core cash return on tangible common equity achieved in 2012 represents an improvement over 2011, but remains below acceptable levels. This is partially a reflection of the continuing economic challenges in our largest markets.”

The full report highlighting Butterfield’s 2012 results is here [PDF].

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Comments (11)

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  1. Loquatz says:

    They reveal that their pool of 90 day delinquent mortgages are growing fast, but don’t say how many of them have been written off (ie a foreclosure either in reality or in effect). That’s the big secret across all the local banks.

    • wow the bank of butterfield made a profit??does not superise me with all the extra charges they take from there customers!! I suggest before there share holders get there part of the money, should they not start paying back the 200 million loan the previous goverment loaned them??? just saying , since the present government needs money in the worse way??

      • Who knows it feels it! says:

        Govt a guarantor…please understand the facts…

      • Limey says:

        The difference between you and stewie griffin is that stewie isn’t a dumba$$. The 200 million preference shares are backed by a guarantor, in this case the bermuda govt. I.e. if butterfield bank goes belly up and doesnt pay out the 8% to the investors then the govt steps in and pays out! the govt as of yet have NOT PAID A PENNY, and it looks like they will never have to

        Il put it in laymans/simpletons terms, when you rent a house from a landlord for a year, you will need sometimes a guarantour! So when you stewie griffin fail to pay your rent, the landlord will by law get the missed rent payments from your guarantour!! A guarantour might be your mum or dad or a friend.

        Also preference shares are different to common shares, which this article refers to when mentioning a dividend payment of 4 cents.

        Please think or know the facts before you type! It’s better to be assumed an idiot than open your mouth and remove all doubt!

  2. gracious says:

    @Stewie Griffin you need to get your facts straight and not jump on the bandwagon like everyone else. There was NO 200 million loan from the government. The bank got a guarantee in backing IN THE EVENT THAT THE PREFERENCE SHARE OFFERING FAILED…which last time I checked it had not. so before you come on here and spout propaganda passed on to you, understand what you are talking about.

  3. Limey says:

    Read this if you want to understand more about the banks preference shares!
    http://www.butterfieldgroup.com/About/Investor_relations/Pages/Preference-Share-Information.aspx

    In June 2009, the Bank offered 200,000 of 8.00% Non-Cumulative Perpetual Limited Voting Preference Shares (the “preference shares”), liquidation preference of US $1,000 per share and $200,000,000 in the aggregate. The preference shares are fully and unconditionally guaranteed, with the full faith and credit of the Government of Bermuda (the “Guarantor”), as to payment of dividends for up to ten years and as to payment of the liquidation preference on, or in certain circumstances prior to, the ten-year anniversary of the date of issuance (the “Guarantee”).

    Dividends on the preference shares are payable quarterly on a non-cumulative basis, only when, as and if declared by our Board of Directors, on 15 March, 15 June, 15 September and 15 December of each year at a fixed rate equal to 8.00% per annum on the liquidation preference, commencing on 15 September 2009. In the event that, during the ten-year term of the Guarantee, the Bank does not pay full dividends in respect of any quarterly dividend period on any preference shares that are then issued and outstanding, the Guarantor has agreed to pay to holders of the preference shares an amount equal to such unpaid dividends pursuant to the Guarantee. The Bank may redeem the preference shares at its option, subject to approval of the BMA, in whole or in part, on the tenth day prior to the ten-year anniversary of the date of issuance (the “Bank Redemption Date”), at a redemption price equal to 100% of the liquidation preference thereof plus any unpaid dividends for the then-current dividend period to the Guarantee end date, regardless of whether any dividends are actually declared for such dividend period. In addition, the Bank may redeem the preference shares prior to the Bank Redemption Date, at its option, subject to approval of the BMA, in whole or in part, at any time and from time to time, at a redemption price equal to the Make-Whole Redemption Price. Unless previously redeemed, the Guarantor has agreed to purchase from the holders thereof, and such holders will be required to transfer to the Guarantor, on the ten-year anniversary of the date of issuance, all preference shares then issued and outstanding, at a price per preference share equal to the liquidation preference thereof plus any unpaid dividends for the then-current dividend period to the date of such purchase, regardless of whether any dividends are actually declared for such dividend period. In addition, upon the occurrence of a Liquidation Event at any time prior to the ten-year anniversary of the date of issuance of the preference shares, the Guarantor has agreed to purchase from the holders thereof, and such holders will be required to transfer to the Guarantor, all preference shares then issued and outstanding, at a price per preference share equal to the liquidation preference thereof plus any unpaid dividends for the then current dividend period to the date of payment, regardless of whether any dividends are actually declared for such dividend period.

    • Thanks Limey, i guess i hit a few nerves out there!! and maybe a few share holders up still up at night ??

      • Who knows it feels it! says:

        No nerves hit…just proved to be an idiot that ran off at the mouth and didn’t have a clue!

  4. Politically Incorrect says:

    Thus in reality there isn’t $25.6mm available to be retained or paid out to common shareholders as the bank has to pay out $18mm every year to the pref shareholders and the government for the guarantee. So in reality they only made $7.6mm for use in the business or to be paid to common shareholders.

    • Family Man says:

      The new shareholders aren’t stupid. They’re stripping the money out as fast as they can because they know Bermuda’s economy is not coming back.