Butterfield Bank Report Q4 & Year End Results
The Bank of Butterfield today announced financial results for the fourth quarter and year ended December 31, 2018.
Net income for the year ended December 31, 2018 was $195.2 million or $3.50 per diluted common share, compared to $153.3 million, or $2.76 per diluted common share for the year ended December 31, 2017. Core net income for the year ended December 31, 2018 was $197.0 million, or $3.53 per diluted common share, compared to $158.9 million, or $2.86 per diluted common share for the year ended December 31, 2017.
The core return on average tangible common equity for the year ended December 31, 2018 was 25.6%, up from 22.4% for the year ended December 31, 2017. The return on average assets for the year ended December 31, 2018 was 1.8%, up from 1.4% for the year ended December 31, 2017. The core efficiency ratio for the year ended December 31, 2018 was 61.5% compared with 64.3% for the year ended December 31, 2017.
Michael Collins, Butterfield’s Chairman and Chief Executive Officer, said: “2018 was an important year for Butterfield as we completed two strategic and accretive acquisitions and continued to grow our residential loan portfolio in central London, while producing industry leading returns. We also reported another solid set of financial results in the fourth quarter, which contributed to Butterfield’s record profitability.
“Our strong risk-adjusted returns benefited from a profitable and highly rated investment portfolio, a conservatively underwritten loan book, diversified fee income and diligent management of expenses. We are well positioned for organic growth while continuing to seek out selective strategic acquisition opportunities in private trust and banking in existing markets.
“We are strongly capitalized and remain committed to an attractive investor return profile with an increased quarterly cash dividend, as well as a larger share repurchase program. As we enter 2019, Butterfield continues to focus on producing leading returns and shareholder value through our strong balance sheet, optimized capital management and a client-centered operating philosophy.”
Net income for the fourth quarter of 2018 was $50.9 million or $0.92 per diluted common share, compared to $50.4 million or $0.90 per common share for the third quarter of 2018 and $40.3 million, or $0.72 per common share in the fourth quarter of 2017. Fourth quarter core net income1 was $51.1 million, or $0.92 per diluted common share, compared to $49.1 million, or $0.88 per diluted common share in the previous quarter and $42.2 million, or $0.76 per diluted common share, for the fourth quarter of 2017.
Net interest income [“NII”] for the fourth quarter of 2018 was $87.4 million, a decrease of $0.9 million compared with NII of $88.3 million in the previous quarter and $76.1 million in the fourth quarter of 2017. The decrease in NII in the fourth quarter of 2018 compared to the prior quarter was due to slightly higher interest costs for term deposits, which was substantially offset by higher yields in both the investment and loan portfolios.
Net interest margin [“NIM”] for the fourth quarter of 2018 was 3.38%, an increase of one basis point from the NIM of 3.37% in the previous quarter and up 51 basis points from the NIM of 2.87% in the fourth quarter of 2017. NIM was flat in the fourth quarter of 2018 compared to the prior quarter as increased yields on investments and loans were counterbalanced by an increase in higher cost fixed-term deposits.
Non-interest income was $45.7 million for the fourth quarter of 2018, compared with $41.3 million in the previous quarter and $42.4 million in the fourth quarter of 2017. The increase over the prior quarter was due to seasonal benefit of higher credit card transaction volumes, while higher banking services fees drove the growth as compared to the fourth quarter of 2017.
Core non-interest expenses were $83.2 million in the fourth quarter of 2018, compared with $83.3 million in the previous quarter and $78.5 million in the fourth quarter of 2017. Included within core expenses were redundancy costs of $1.2 million.
Average customer deposit balances in the fourth quarter of 2018 of $9.1 billion were down from $9.4 billion in the third quarter of 2018 and $9.7 billion in the fourth quarter of 2017.
