Butterfield Reports Q4 & Full Year 2021 Results
The Bank of N.T. Butterfield & Son Limited today announced financial results for the fourth quarter and year ended December 31, 2021.
A spokesperson said, “Net income for the year ended December 31, 2021 was $162.7 million, or $3.26 per diluted common share, compared to $147.2 million, or $2.90 per diluted common share, for the year ended December 31, 2020. Core net income for the year ended December 31, 2021 was $163.6 million, or $3.28 per diluted common share, compared to $154.5 million, or $3.04 per diluted common share, for the year ended December 31, 2020.
“The core return on average tangible common equity for the year ended December 31, 2021 was 18.7%, compared to 17.3% for the year ended December 31, 2020. The efficiency ratio for the year ended December 31, 2021 was 65.9% compared with 67.6% for the year ended December 31, 2020. The core efficiency ratio for the year ended December 31, 2021 was 65.5% compared with 66.0% for the year ended December 31, 2020.”
Michael Collins, Butterfield’s Chairman and Chief Executive Officer, commented, “Butterfield has performed well throughout the past year, as we embraced new opportunities and managed the health and safety challenges of the pandemic. We continued to navigate the very low interest rate environment by improving efficiencies, leveraging technology and enhancing the client experience.
“With an improved interest rate outlook for 2022, we are well positioned with Butterfield’s historically asset sensitive balance sheet. I look forward to continuing Butterfield’s growth with our strong balance sheet, leading market positions, solid infrastructure, efficient operations and customer centric culture. I would like to thank our staff, clients, the board of directors and all of the stakeholders that continue to contribute to Butterfield’s success.”
A spokesperson added, “Net income and core net income for the fourth quarter of 2021 was $41.7 million, or $0.84 per diluted common share, compared to net income of $39.8 million, or $0.80 per diluted common share, for the previous quarter and $42.1 million, or $0.84 per diluted common share, for the fourth quarter of 2020 and core net income for the third quarter of 2021 of $40.0 million, or $0.80 per diluted common share, and $42.9 million, or $0.86 per diluted common share, for the fourth quarter of 2020.
“The core return on average tangible common equity for the fourth quarter of 2021 was 18.8%, compared to 17.9% for the previous quarter and 19.0% for the fourth quarter of 2020. The efficiency ratio for the fourth quarter of 2021 was 64.7%, compared to 66.5% for the previous quarter and 66.3% for the fourth quarter of 2020 and compared to a core efficiency ratio for the third quarter of 2021 of 66.3% and 65.6% for the fourth quarter of 2020.
“Net interest income [“NII”] for the fourth quarter of 2021 was $74.5 million, a decrease of $1.2 million, compared with NII of $75.7 million in the previous quarter and down $1.1 million from $75.6 million in the fourth quarter of 2020. NII was lower during the fourth quarter of 2021 compared to the prior quarter due to lower average volume of interest earning assets, which was partially offset by an improved asset mix with higher average yields. Compared to the fourth quarter of 2020, NII was lower due to a decrease in average yields, offset by a higher average volume of interest earning assets.
“Net interest margin [“NIM”] for the fourth quarter of 2021 was 2.00%, an increase of 3 basis points from 1.97% in the previous quarter and down 25 basis points from 2.25% in the fourth quarter of 2020. NIM in the fourth quarter of 2021 was slightly higher than the prior quarter due to lower deposits decreasing the balance sheet size, and deployment of cash into higher yielding assets. Compared to the fourth quarter of 2020, NIM was lower due to margin declines across interest earning assets, driven by lower US Dollar interest rates.
“Non-interest income for the fourth quarter of 2021 of $52.7 million was $3.7 million higher than the $49.0 million earned in the previous quarter and $4.9 million higher than $47.8 million in the fourth quarter of 2020. Non-interest income during the fourth quarter of 2021 increased compared to the prior quarter due to higher revenue across all business lines, with growth in trust, due to new business onboarded and higher activity-based fees, and increased banking revenues from increased card services fees. Compared to the fourth quarter of 2020, non-interest income was up due to increased banking fees due to improved economic activity.
“There was a net credit reserve release of $0.6 million for the fourth quarter of 2021, compared to a negligible release in the previous quarter and a release of $2.4 million during the fourth quarter of 2020. The credit release was driven by an improved economic outlook and continuing stable loan performance.
“Non-interest expenses were $83.8 million in the fourth quarter of 2021, compared to $84.4 million in the previous quarter and $83.2 million in the fourth quarter of 2020. Core non-interest expenses1 decreased to $83.7 million in the fourth quarter of 2021, compared to $84.2 million the previous quarter and higher than the $82.4 million incurred in the fourth quarter of 2020. Non-interest expenses were lower in the fourth quarter versus the third quarter of 2021 due to lower benefit costs from staff-related restructuring programs, resulting in reduced headcount, and lower sequential spend on technology costs and consulting expenses.
“Period end deposit balances increased to $13.9 billion from $13.3 billion as at December 31, 2020. Deposits remained elevated across all jurisdictions. Deposit balances decreased slightly compared to the prior quarter as economies continue to re-open and customers activate their savings.
“The Bank continued its balanced capital return policy. The Board again declared a quarterly dividend of $0.44 per common share to be paid on March 14, 2022 to shareholders of record on February 28, 2022. During the fourth quarter of 2021, Butterfield repurchased 0.2 million common shares under the Bank’s expiring share repurchase plan authorization. The Board approved a new replacement share repurchase program on February 14, 2022, authorizing the purchase of up to 2.0 million common shares through to February 28, 2023. The share repurchase program will take effect on March 1, 2022.
“The current total regulatory capital ratio as at December 31, 2021 was 21.2% as calculated under Basel III, compared to 19.8% as at December 31, 2020. Both of these ratios remain significantly above the Basel III regulatory requirements applicable to the Bank.”
