Butterfield Bank Loses $18.6 Million

The Bank of N.T. Butterfield & Son Limited today (Nov 3) announced a third quarter net loss of $18.6 million.

This compares to net income of $200,000 for the second quarter of 2010 and net income of $7 million in the third quarter of 2009.

After adjusting for preference share dividends, the net loss available to common shareholders was $23.1 million resulting in a fully diluted loss of $0.04 per share compared to a diluted loss of $0.01 in Q2 2010 and diluted earnings of $0.02 in Q3 2009.

At 30 September 2010, Butterfield had a tangible common equity ratio of 6.29%, total capital ratio of 21.6% and tier 1 capital ratio of 15.7%. Additionally, the Bank’s net book value per share was $1.16 per share at 30 September 2010.

Brad Kopp, Butterfield’s President & Chief Executive Officer said:

Butterfield remains focused on reducing risk, returning to profitability and delivering sustainable growth for our shareholders. That focus entails concentrating our financial and management resources in jurisdictions where we have a meaningful market presence and a depth of local market knowledge. Consistent with this strategy, the Bank sold its trust, wealth management and advisory businesses in Hong Kong and its trust operation in Malta in September with a resultant net loss of $7.4 million. Additionally, continued weakness over the summer months in the hospitality industry has led us to provide a further $14.2 million of specific allowances for related loan exposures. Although we are not happy to be taking additional provisions, we do believe that we are positioned to see the cycle through.

Brad Rowse, Executive Vice President & Chief Financial Officer added:

Although the financial markets have stabilised in 2010, Banks continue to face difficult conditions as the low interest rate environment continues, global economic stability remains uncertain, and regulators respond to the global financial crisis. Against this backdrop, Butterfield is reviewing all aspects of our business to ensure the right balance between current profitability and future growth. The Bank is well positioned with a strong capital base and remains focused on the two pillars of our business, community banking and wealth management.

Michael Collins, Senior Executive Vice President, Bermuda said:

Bermuda’s economy continues to reflect the weakness of tourism and international business still feeling the effects of an unprecedented global recession. We are well positioned for an economic recovery as transaction activity has actually increased over the past year and deposit volumes are stable. However, demand in the hotel and retail sectors has fallen considerably, and we have to accept that tourism is gradually transitioning to a more sustainable business model in order to recover the inherent value in Bermuda’s tourism product. In the first nine months of 2010, we have taken $19.7 million in credit provisions for our hotel loans and will continue to manage these exposures conservatively as we complete the de-risking of our balance sheet.

The full 8-page report is below, click `Fullscreen` for greater clarity:

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