Butterfield Earnings Increase To $29 Million

April 27, 2015

The Bank of N.T. Butterfield & Son Limited today [April 27] announced core earnings for the first quarter ended 31 March 2015 of $29.0 million, an improvement of $5.8 million compared to $23.2 million earned in the same quarter a year ago.

The core cash return on average tangible common equity for the first quarter improved to 16.7% in 2015, compared to 12.9% in the first quarter of 2014. Reported net income for the first quarter was $26.8 million [$0.04 per share on a fully diluted basis] compared to $23.2 million [$0.03 per share on a fully diluted basis] in the same quarter a year ago, up $3.6 million.

Brendan McDonagh, Butterfield’s Chairman and Chief Executive Officer, said, “The expansion of our core businesses in 2014 under a well-defined strategy for building sustainable value in the Butterfield franchise contributed significantly to our strong first quarter 2015 results that saw core earnings improve by 25% year over year.

“The acquisition last year of the Legis trust and fiduciary services business in Guernsey was the primary driver of growth in Group trust revenues of $2.3 million. Our acquisition of select community banking business from HSBC Cayman late last year similarly augmented the growth in net-interest and non-interest income in the Cayman Islands totalling $2.7 million and $1.3 million, respectively, contributing to overall increases at the Group level.

“The combined effect of expansion of our revenue-generating client base through acquisitions, careful expense management and continued improvement in asset quality will continue to drive organic growth of capital. We will continue to deploy excess capital to enhance shareholder value through the repurchase of shares, issuance of common dividends and accretive acquisitions that bolster our core businesses. Once again, the Board has declared a common dividend of $0.01 per share based on the Bank’s strong first quarter results.

“I am pleased to note that the Bank’s progress has been recognised by Global Finance magazine, which recently conferred upon Butterfield the award for Best Developed Market Bank 2015 – Bermuda. This accolade follows awards for private client and trust services in Cayman and Guernsey from Euromoney, and Bank of the Year awards in Bermuda and Cayman from The Banker.”

Financial highlights of the quarter ended 31 March 2015 [with comparisons to the first quarter of 2014]:

  • Net income of $26.8 million, up $3.6 million [15.8%] from $23.2 million
  • Core earnings of $29.0 million, up $5.8 million from $23.2 million
  • Total net revenue of $92.5 million, up $4.8 million, or 5.6%
  • Core cash return on average tangible common equity of 16.7%, up from 12.9%
  • Core cash return on average tangible assets of 1.2%, up from 1.0%
  • Core efficiency ratio of 66.8%, improved from 69.5%

John Maragliano, Butterfield’s Chief Financial Officer, said, “We are pleased to report another quarter of double-digit earnings growth and a solid core cash return on equity of nearly 17% in the quarter. The $5.8 million year over year improvement in core earnings was largely driven by improved credit provisions and growth in the contribution from our Global Trust business; the latter largely a result of the acquisition of Legis in the second quarter of 2014.

“The improvement in credit provisions was a result of collections on non-accrual loans releasing allowances of $0.6 million, which outpaced our specific provisions of $0.5 million during the quarter compared to $3.5 million of net provisions required last year.

“With the exception of Cayman, where we assumed a sizeable portfolio of personal and corporate loans through the HSBC transaction, the size of the loan book in our major jurisdictions declined from repayments exceeding new loans written. Overall the size of the consolidated loan portfolio remained relatively flat year over year at $4 billion.

“However, we continue to see the quality of the portfolio improve, with the non-performing asset ratio now down to 1.0% of total assets. Improving asset quality, a low loan-to-deposit ratio of 46% and high capital ratios gives us the flexibility to take advantage of new opportunities to grow earnings per common share moving forward.

“The Bank continues to make progress in managing core operating expenses, with the core efficiency ratio improving by 270 basis points year over year to 66.8%.”

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  1. Commodore JB of BBIRYC says:

    Is this amateur hour or something? I make that in interest on my wealth every day.