Butterfield Reports Third Quarter 2018 Results

October 23, 2018

The Bank of  Butterfield today announced financial results for the quarter ended September 30, 2018.

Third quarter core net income was $49.1 million, or $0.88 per diluted common share, compared to $51.7 million, or $0.93 per diluted common share in the previous quarter and $40.7 million, or $0.73 per diluted common share, for the third quarter of 2017.

Core non-interest expenses were $82.2 million in the third quarter of 2018, compared with $78.2 million in the previous quarter and $73.6 million in the third quarter of 2017. The sequential increase in expenses was primarily due to severance costs of $2.4 million following an announced management restructuring during the third quarter of 2018. In addition, during the third quarter Butterfield had expenses of approximately $0.7 million associated with the set up a new bank in Jersey.

The core return on average tangible common equity1 for the third quarter of 2018 was 24.9%, down from 27.6% in the previous quarter and up from 22.2% in the third quarter of 2017. The return on average assets for the third quarter of 2018 was 1.9%, up from 1.8% in the previous quarter and 1.5% in the third quarter of 2017. The core efficiency ratio1 for the third quarter of 2018 was 63.2% compared with 59.0% in the previous quarter and 62.8% in the third quarter of 2017.

David Zwiener, who has served as a Director since August 2016 and as Lead Independent Director since July 2017, has decided to retire from Butterfield’s Board. James “Jim” Burr, who has served as a Director since June 2016, was appointed Lead Independent Director effective today.

Commenting on the results, Michael Collins, Butterfield’s Chairman and Chief Executive Officer, said: “During the third quarter, we continued to generate strong results from our core businesses, capital efficient non-interest income and higher loan balances.

“Expense management is a priority for us, particularly as we integrate the previously announced acquisitions. Our strategy continues to generate industry leading returns with an attractive risk profile. We remain focused on pursuing additional growth through accretive acquisitions of trust businesses and banking in existing jurisdictions.”

With regard to the change in Lead Independent Director, Michael Collins said, “I would like to thank David for his guidance and dedication to the interests of Butterfield’s Board and shareholders over the last two years. We all wish David the very best in his future endeavors.

“I am pleased that Jim Burr has agreed to serve as Lead Independent Director. Jim has a longstanding relationship with the Bank, and his financial expertise has made him a valuable member of Butterfield’s Board.”

Net interest income [“NII”] for the third quarter of 2018 was $88.3 million, an increase of $0.9 million compared with NII of $87.4 million in the previous quarter and $74.3 million in the third quarter of 2017. Increased NII in the third quarter of 2018 was due to favorable loan repricing and investment yields.

Net interest margin [“NIM”] for the third quarter of 2018 continued to expand to 3.37%, up 17 basis points from the NIM of 3.20% in the previous quarter and up 56 basis points from the NIM of 2.81% in the third quarter of 2017. NIM improved further in the third quarter of 2018 as rising interest rates benefited assets with continued low costs of deposits.

Non-interest income was $41.3 million for the third quarter of 2018, compared with $41.9 million in the previous quarter and $38.2 million in the third quarter of 2017. The year-over-year increase resulted from new fee revenues earned following the acquisition of Deutsche Bank’s trust business.

Average customer deposit balances of $9.4 billion were down from $9.7 billion in the third quarter of 2017 and $10.1 billion in the second quarter of 2018.

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