Butterfield Reports First Quarter 2020 Results

May 1, 2020 | 1 Comment

The Bank of N.T. Butterfield & Son Limited announced financial results for the first quarter ended March 31, 2020.

Net income for the three months ended March 31, 2020 was $40.3 million, or $0.77 per diluted common share, compared to $52.1 million, or $0.96 per diluted common share, for the period ended March 31, 2019. Core net income for the three months ended March 31, 2020 was $40.8 million, or $0.78 per diluted common share, compared to $51.7 million, or $0.95 per diluted common share, for the period ended March 31, 2019.

The core return on average tangible common equity1 for the three months ended March 31, 2020 was 18.6%, compared to 25.6% for the period ended March 31, 2019. The core efficiency ratio1 for the three months ended March 31, 2020 was 63.8%, compared with 60.1% for the period ended March 31, 2019.

Michael Collins, Butterfield’s Chairman and Chief Executive Officer commented, “Our first quarter financial results were relatively strong despite the early headwinds that we experienced from the global COVID-19 health crisis. As an essential service provider, Butterfield continues to offer financial services for our customers, while maintaining social distancing and taking necessary steps to reduce the spread of the virus.

“We are acutely aware of the personal and financial challenges being experienced throughout the communities in which we operate. We have taken appropriate measures, such as temporarily deferring mortgage payments, reducing fees, safeguarding our colleagues and customers in retail banking, and operating remotely where possible. We have also significantly increased our contributions to community programs for people in the greatest need.

“We are working closely with our regulators and government officials. Our capital and liquidity profile remains strong. We continue to stress test our risk positions and believe that our historically conservative underwriting criteria now places the Bank in a strong position to manage through this crisis, and we are beginning to plan for possible economic recovery scenarios.

“It is important to note that the impacts to Butterfield from this health crisis will vary depending on a variety of factors, including the length and severity of the economic downturn, the interest rate environment and the time it takes for tourism in Bermuda and Cayman to recover. We are monitoring the changing operating environment closely while preparing for a challenging economic base case and continue to take appropriate actions to balance the interests of all stakeholders.”

The company noted, “Net income decreased in the first quarter of 2020 versus the prior quarter due principally to lower fee income and a $5.2 million reserve build for future expected credit losses under CECL, which were partially offset by lower non- interest expenses and higher net interest income.

“Net interest income [“NII”] for the first quarter of 2020 was $87.6 million, an increase of $1.4 million compared with NII of $86.2 million in the previous quarter and $88.0 million in the first quarter of 2019.

“Net interest margin [“NIM”] for the first quarter of 2020 was 2.63%, an increase of 4 basis points from 2.59% in the previous quarter and down 68 basis points from 3.31% in the first quarter of 2019. NIM increased in the first quarter of 2020 compared to the prior quarter due to lower fixed rate deposit costs that were partially offset by lower asset yields driven by a lower global interest rate environment.

“Non-interest income decreased to $47.6 million for the first quarter of 2020, compared with $49.7 million in the previous quarter and $43.4 million in the first quarter of 2019. The decrease versus the prior quarter was mostly due to lower banking fees, particularly card services, which benefited from seasonal increases in the fourth quarter of 2019 and was partly offset by increased foreign exchange commissions.

“Non-interest expenses were $88.1 million in the first quarter of 2020, compared to $93.9 million in the previous quarter and $80.9 million in the first quarter of 2019. Core non-interest expenses1 were $87.6 million in the first quarter of 2020, compared with $91.6 million in the previous quarter and $80.3 million in the first quarter of 2019. Non-interest expenses were lower in the first quarter of 2020 compared to the prior quarter due to re-sequencing the Bank’s re-branding initiative, as well as lower travel expenses and client event costs.

“The Bank adheres to a disciplined and balanced capital return policy. The Board declared a quarterly dividend of $0.44 per common share to be paid on May 28, 2020 to shareholders of record on May 14, 2020. During the first quarter of 2020, Butterfield repurchased 1.3 million common shares under the Bank’s current 3.5 million common share repurchase plan authorization.

“The current total regulatory capital ratio as at March 31, 2020 was 19.8% as calculated under Basel III, compared to 19.4% as at December 31, 2019. Both of these ratios are significantly above regulatory requirements applicable to the Bank.”

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  1. Jack Archer says:

    I would love to know how mortgages performed as well as whether people are paying down their credit cards more.

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