Butterfield Bank 2014 Q2 Net Income: $27.5M
The Bank of N.T. Butterfield & Son Limited today announced net income for the second quarter ended 30 June 2014 of $27.5 million [$0.04 per share on a fully diluted basis] compared to $32.9 million [$0.05 per share on a fully diluted basis] in the same quarter a year ago.
Core earnings for the second quarter were $26.0 million, an improvement of $5.8 million or 28.7% over the second quarter of 2013, which drove an improvement in the core cash return on average tangible common equity ratio to 15.0% compared to 11.0% in the second quarter of 2013.
Year-to-date core earnings for the six months ended 30 June 2014 were $49.1 million [$0.07 per share on a fully diluted basis], up $13.6 million [38.3%] from $35.5 million for the six-month period ended 30 June 2013. Year-to-date net income increased by $4.5 million for the six months ended 30 June 2014 to $50.7 million, compared to a year-to-date net income of $46.2 million for the six-month period ended 30 June 2013.
Brendan McDonagh, Butterfield’s Chairman & Chief Executive Officer, said, “We are pleased to report that Butterfield’s quarterly and half-year core earnings showed good year-on-year growth in earnings of nearly 30%, which translates to an improvement in core returns to common shareholders to 15%, a key milestone in Butterfield’s strategic objective of delivering strong returns to our shareholders.
“Each successive profitable quarter serves to improve Butterfield’s already-strong capital position and provides the Bank with the opportunity to enhance shareholder value through investment in strategic businesses that will drive long-term growth, and more directly through share buy-backs and dividends.
“Our acquisition strategy seeks to minimise risk by investing in businesses in which we have expertise and a meaningful market presence, whilst delivering accretive earnings in excess of our cost of capital within our risk tolerance framework.
“During the quarter, we enhanced our trust and fiduciary services presence in Guernsey—a core market for Butterfield—with the completion of the acquisition of the Legis Group’s trust business.
“Subsequent to quarter-end, we also announced that we have reached an agreement to acquire parts of HSBC’s retail and corporate banking business in the Cayman Islands—our second largest market— which will enhance our Cayman business and see total assets grow from $2.2 billion to an anticipated $3.0 billion, strengthening our leading market position.
“Butterfield completed preparations for compliance with the US Foreign Account Tax Compliance Act [FATCA] by the 30 June deadline. FATCA imposes due diligence, information reporting and control obligations on non-US financial institutions for certain US persons who maintain relationships with these institutions.
“The Bank is now in the process of collecting documentation from customers with US connections in fulfillment of those obligations. We would like to thank those customers affected for complying with the requirements imposed by the new rules.”
John Maragliano, Butterfield’s Chief Financial Officer, said, “In the second quarter, the Bank’s net income and core earnings showed significant year-over-year improvement as a result of our continued approach to prudent balance sheet and expense management and execution of our capital management plan.
“Net interest income before provision for credit losses was up by $4.0 million on improved investment yields owing to our consistent asset and liability management strategy and the effect of the retirement of two tranches of subordinated debt earlier in the year, the latter reducing quarterly interest expenses by $1.4 million.
“Non-interest income increased by $3.9 million from the combination of increasing business volumes, new business generation and additional trust revenues from the consolidation of the Legis acquisition.
“As a result, total revenue before credit losses and other gains grew by $7.9 million, compared to an increase in core operating expenses of $3.2 million leading to the 280 basis point improvement in the Bank’s core efficiency ratio to 67.9%.”
The full release, with additional details, is here [PDF].
