Bank Of Butterfield Reports Third Quarter Profit
The Bank of N.T. Butterfield & Son Limited announced core earnings for the third quarter ended 30 September 2015 of $29.3 million, an improvement of $2.2 million compared to $27.1 million earned in the same quarter a year ago.
The return on average common equity for the third quarter improved to 15.0% in 2015, compared to 10.9% in the third quarter of 2014.
Reported net income for the third quarter was $25.7 million [$0.05 per share on a fully diluted basis] compared to $22.8 million [$0.03 per share on a fully diluted basis] in the same quarter a year ago, up $2.9 million.
Commenting on the events of the quarter, Michael Collins, Chief Executive Officer said, “Our third quarter results are strong, and with core earnings up by 8.1% year on year, and a growing customer deposit base in both Cayman and Bermuda. We will continue to explore prudent acquisitions in markets where we have significant market share and business expertise, building upon the successful acquisitions we completed in 2014.
“The high degree of liquidity within the Bank’s investment portfolio and our conservative balance sheet position [with loans representing 38.9% of total assets] supports our ability to continue to pursue compelling acquisition opportunities going forward.
“It’s also our intention to continue to return value more directly to shareholders via share repurchases and common dividend payments. Butterfield again declared an interim dividend of $0.01 per common share from Q3 earnings, and repurchased $0.6 million worth of common shares to support trading liquidity.”
Michael Schrum, Chief Financial Officer said, “The $2.2 million year-over-year increase in Q3 core earnings was driven by improved credit provisions on a loan portfolio that continues to return value, along with higher fees earned on banking services and foreign exchange. Complementing those developments were decreased core expenses associated with lower property and professional services costs.
“Net interest income before credit provisions was down by 1.1% year over year due to lower credit demand and our net interest margin that fell slightly to 2.48% on lower investment yields. The Bank, however, remains well positioned to benefit from any future increases in interest rates.”
Capital Management
On 26 February 2015, the Board approved, with effect from 1 April 2015, the 2015 common share buy-back programme, authorising the purchase for treasury of up to eight million common shares.
In addition, the Board approved, with effect from 5 May 2015, the 2015 preference share buy-back programme, authorising the purchase and cancellation of up to 5,000 preference shares.
Under the Bank’s share buy-back programmes, the total shares acquired or purchased for cancellation during the quarter ended 30 September 2015 amounted to 0.4 million common shares to be held as treasury shares at an average cost of $1.73 per share [total cost of $0.6 million] and nil preference shares.
The Board declared quarterly dividends of $20 per share on the Bank’s 8% non-cumulative perpetual voting preference shares, to be paid on 15 December 2015 to preference shareholders of record on 1 December 2015.
The Board also declared an interim dividend of $0.01 per common share to be paid on 27 November 2015 to shareholders of record on 13 November 2015.
CIBC Share Repurchase
On 27 April 2015, the Bank announced that it had reached an agreement with Canadian Imperial Bank of Commerce [“CIBC”] to repurchase for cancellation the majority of CIBC’s shareholding in Butterfield. CIBC owned 19% of Butterfield’s issued and outstanding common equity comprising 103,434,232 common shares. On 30 April 2015, Butterfield repurchased for cancellation 80,000,000 shares held by CIBC for $1.50 per share, for a total of $120 million.
The remaining CIBC shareholding in Butterfield [representing 23,434,232 shares] were taken up by Carlyle Global Financial Services, L.P. at $1.50 per share and subsequently sold to other investors.
On 13 August 2015, the Bank announced that it had repurchased for cancellation 4,000,000 common shares at $1.49 per share of the 23,434,232 shares which were taken up by Carlyle Global Financial Services, L.P. and subsequently sold to other investors.
