Butterfield Bank Reports Second Quarter Results

July 24, 2018 | 1 Comment

The Bank of N.T. Butterfield & Son Limited today announced financial results for the quarter ended June 30, 2018.

Second quarter core net income was $51.7 million, or $0.93 per diluted common share, compared to $45.0 million, or $0.81 per diluted common share in the previous quarter and $37.5 million, or $0.67 per diluted common share, for the second quarter of 2017.

The core return on average tangible common equity for the second quarter of 2018 was 27.6%, up from 24.3% in the previous quarter and 21.6% in the second quarter of 2017. The return on average assets for the second quarter of 2018 was 1.8%, up from 1.6% in the previous quarter and 1.3% in the second quarter of 2017. The core efficiency ratio for the second quarter of 2018 was 59.0% compared with 62.3% in the previous quarter and 66.1% in the second quarter of 2017.

Bank Butterfield Bermuda TC July 24 2018

Commenting on the results, Michael Collins, Butterfield’s Chairman and Chief Executive Officer said: “The Bank continues to benefit from its well positioned balance sheet, capital efficient non-interest income and strategic asset deployment through its loan and investment portfolios.

“The Deutsche Bank trust and banking acquisitions are progressing nicely and add to our track record of executing well on acquisitions and managing operational risks. The costs related to the integration and closing of the Deutsche Bank deals have developed as we expected.

“I remain confident in our ability to maximize shareholder value through our businesses in core geographies, while continuing to seek out accretive acquisitions in the trust and banking segments.

“I am particularly pleased that we reported a core cost to income ratio of 59.0% this quarter, which is now in line with our longer-term expectations for the Bank. This underlines our commitment to a strong focus on cost discipline as the Bank continues to grow and achieve its full potential.”

The company said, “Net interest income [“NII”] for the second quarter of 2018 was $87.9 million, an increase of $6.1 million compared with NII of $81.8 million in the previous quarter and $70.9 million in the second quarter of 2017.

“Increased NII in the second quarter of 2018 was due to improved interest income from the investment and loan portfolios. Increased rates following the U.S. Fed funds rate rise benefited lending results overall with corporate lending seeing slightly higher volume. Average customer deposit balances of $10.1 billion were elevated during much of the second quarter due to an inflow of transitory customer deposits.

“As expected, these deposits started to decrease towards the end of the quarter as period end deposit balances returned to more normal levels at $9.7 billion as at June 30, 2018, and contributed to the large sequential NII increase.

“Net interest margin [“NIM”] for the second quarter of 2018 was 3.20%, up 15 basis points from the NIM of 3.05% in the previous quarter and up 54 basis points from the NIM of 2.66% in the second quarter of 2017. This NIM expansion is in line with expectations, and the Bank was able to deploy additional liquidity into higher rates in May 2018.

Non-interest income was $41.9 million for the second quarter of 2018, compared with $39.8 million in the previous quarter and $38.7 million in the second quarter of 2017. This increase was due principally to the inclusion of revenue from the newly acquired and integrated Deutsche Bank trust business.

“Non-interest expenses were $78.2 million in the second quarter of 2018, compared with $77.4 million in the previous quarter and $75.3 million in the second quarter of 2017. Non-interest expenses increased relative to the previous quarter as a result of higher salaries and other employee benefits due principally to the addition of the new trust teams.

“This was partially offset by a decrease in professional and outside services expense relating to business acquisitions [non-core], as well as normalizing the cost profile of the Sarbanes-Oxley compliance program.

“Results for the second quarter of 2018 included a release of provision for credit losses of $0.5 million compared with a release for credit losses of $1.9 million in the previous quarter and a provision for credit losses of $0.5 million in the second quarter of 2017.”

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  1. Kathy Cervino says:

    Yet, I continue to earn 0% interest income on my USD savings account and practically nothing on my BDA savings account! Sigh!

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