Bank Of Butterfield Reports Third Quarter Profit
The Bank of N.T. Butterfield & Son Limited today [Oct 30] reported core earnings for the third quarter ended 30 September 2013 of $24.5 million [$0.04 per Share on a fully diluted basis], an improvement of $13.0 million over the $11.5 million earned in the same quarter a year ago.
Net income for the quarter was $21.6 million, including non-core net items of $2.9 million, up $2.8 million compared to net income of $18.8 million in the third quarter of 2012.
The core cash return on average tangible common equity improved to 14.34% in the third quarter of 2013 compared to 5.01% in the third quarter of 2012, reflecting measures taken to achieve strategic goals, particularly expense and capital management initiatives.
Year-to-date core earnings for the nine months ended 30 September 2013 were $60.0 million [$0.09 per Share on a fully diluted basis], up 58% from $37.9 million for the nine-month period ended 30 September 2012, due primarily to improved non-interest expenses.
Year-to-date net income increased by $18.0 million for the nine months ended 30 September 2013 to $67.8 million, compared to a year-to-date net income of $49.8 million for the nine-month period ended 30 September 2012.
Brendan McDonagh, Butterfield’s Chairman & Chief Executive Officer, said, “Butterfield continues to improve its profitability by focusing our strategy on delivering efficient wealth management and community banking services to our customers.
“We are pleased that this strategy has delivered another quarter of double-digit cash return on tangible common equity at 14.34%, almost three times the 5% achieved a year ago.
Our deposit base is stable, and we continue to identify new quality lending opportunities in our markets. However, we continue to remain cautious on the global economic outlook.”
Financial highlights of the third quarter ended 30 September 2013 [with comparisons to the third quarter of 2012]:
- Core earnings of $24.5 million, up $13.0 million
- Net interest margin at 2.72%, up from 2.59%
- Core non-interest expenses improved by $7.3 million or 11%
- Core cash return on average tangible common equity of 14.34%, up from 5.01%
- Core return on average assets of 1.07%, up from 0.53%
- Core efficiency ratio of 67.77%, improved from 80.37%
John Maragliano, Butterfield’s Interim Chief Financial Officer, said, “This was a solid quarter for Butterfield, which saw expense reductions and improving net interest income fuel the improvement in the core efficiency ratio—to levels more comparable with our peers— at 68% from 80% a year ago.
“Core operating expense reductions of over $7 million, year over year, has been achieved largely through leveraging technology and organisational realignments to reflect changing business volumes and customer behaviours.
“Complementing the cost reductions are continued increases in net interest income, up 13% year over year, driven by improving yields in our investment portfolio achieved through disciplined asset and liability management practices.
“The thirteen basis point improvement in our net interest margin to 2.72% was enhanced further by the repayment of $53 million of subordinated debt capital in the second quarter of 2013.”
Mr. McDonagh added, “Effective expense management and continued growth in profits enables us to deliver acceptable returns to our shareholders and allows us to grow capital organically.
“Butterfield—with a total capital ratio of 22.55%—enjoys a strong capital position, which permits us to focus on enhancing shareholders’ returns through the payment of dividends and ongoing Share buy-backs. The Board has, once again, declared a $0.01 interim Common dividend.”
During the second quarter of 2013, the Bank implemented a new programme for the purchase of up to
10 million Common Shares and implemented a new Preference Share Buy-back Programme to replace the previous Programme [under which the Bank was authorised to purchase for cancellation up to 8,000 Preference Shares], authorising the purchase and cancellation of up to 15,000 Preference Shares in total.
Under the Bank’s Share Buy-back Programmes, the total Shares acquired or purchased for cancellation during the quarter ended 30 September 2013 amounted to 0.7 million Common Shares to be held as Treasury Shares at an average cost of $1.39 per Share (total cost of $1.0 million), and 514 Preference Shares purchased for cancellation at a cost of $0.6 million.
The Board declared quarterly dividends of $20 per Share on the Bank’s 8% Non-Cumulative Perpetual Voting Preference Shares, to be paid on 16 December 2013 to Preference Shareholders of record on 1 December 2013.
The Board also declared a third interim Common dividend of $0.01 per Common and Contingent Value Convertible Preference Share to be paid on 22 November 2013 to Shareholders of record on 8 November 2013.
