Butterfield Reports First Quarter 2023 Results
The Bank of Butterfield today announced financial results for the quarter ended March 31, 2023.
A spokesperson said, “Net income for the first quarter of 2023 was $62.2 million, or $1.24 per diluted common share, compared to net income of $63.1 million, or $1.26 per diluted common share, for the previous quarter and $44.4 million, or $0.89 per diluted common share, for the first quarter of 2022. Core net income1 for the first quarter of 2023 was $62.2 million, or $1.24 per diluted common share, compared to $63.2 million, or $1.27 per diluted common share, for the previous quarter and $44.7 million, or $0.90 per diluted common share, for the first quarter of 2022.
“The return on average common equity for the first quarter of 2023 was 28.0% compared to 31.6% for the previous quarter and 19.7% for the first quarter of 2022. The core return on average tangible common equity1 for the first quarter of 2023 was 30.5%, compared to 34.9% for the previous quarter and 21.9% for the first quarter of 2022. The efficiency ratio for the first quarter of 2023 was 56.0%, compared to 55.7% for the previous quarter and 64.0% for the first quarter of 2022. The core efficiency ratio1 for the first quarter of 2023 was 56.0% compared with 55.6% in the previous quarter and 63.7% for the first quarter of 2022.
Michael Collins, Butterfield’s Chairman and Chief Executive Officer, commented, “The first quarter of 2023 was a strong start to the year. Butterfield continues to have a highly liquid and well-funded balance sheet with a diverse client base across multiple jurisdictions, sectors, and currencies. We are thoughtful and strategic in our management of the balance sheet and maintain a conservative liquidity and capital posture. With regards to M&A, we are pleased to report the completion of the first closing of the acquisition of trust assets from Credit Suisse, which strengthens our presence in the Singapore market. In this first tranche, we acquired 180 high quality, long-term client relationships. We continue to make progress on closing The Bahamas and the second tranche of Singapore clients, followed by Guernsey in the coming quarters.”
“Net income was down in the first quarter of 2023 versus the prior quarter primarily due to expected lower non-interest income driven by seasonally higher fees in the previous quarter, coupled with increased interest expenses offset by improved interest income as a result of higher market interest rates.
“Net interest income [“NII”] for the first quarter of 2023 was $97.4 million, an increase of $2.8 million, compared with NII of $94.6 million in the previous quarter and up $21.5 million from $75.9 million in the first quarter of 2022. NII continued to increase during the first quarter of 2023 compared to the prior quarter, primarily due to higher margins on loans and treasury assets, which were partially offset by increased deposit costs, particularly in the more competitive Channel Islands markets. Compared to the first quarter of 2022, NII similarly improved due to higher yields on assets, which was partially offset by higher deposit costs.
“Net interest margin [“NIM”] for the first quarter of 2023 was 2.88%, an increase of 9 basis points from 2.79% in the previous quarter and up 85 basis points from 2.03% in the first quarter of 2022. NIM in the first quarter of 2023 was higher than the prior quarter and first quarter of 2022 primarily due to improved yields on treasury assets and loans partly offset by increasing deposit costs.
“Non-interest income for the first quarter of 2023 of $50.2 million was $4.8 million lower than the $54.9 million earned in the previous quarter and $0.3 million higher than $49.9 million in the first quarter of 2022. Non-interest income during the first quarter of 2023 decreased compared to the prior quarter principally as a result of normalized card services fees relative to seasonal credit and debit card transaction activity in the previous quarter. Non-interest income in the first quarter of 2023 was higher than the first quarter of 2022 due to higher banking and asset management fees, partially offset by lower foreign exchange revenues.
“Non-interest expenses were $84.1 million in the first quarter of 2023, compared to $84.7 million in the previous quarter and $82.0 million in the first quarter of 2022. Core non-interest expenses1 of $84.1 million in the first quarter of 2023 were lower than the $84.5 million incurred in the previous quarter, primarily due to lower staff-related expenses from non-recurring severance costs in the prior quarter. Core non-interest expenses1 in the first quarter of 2023 were higher than the $81.6 million incurred in the first quarter of 2022 due to inflationary increases in salaries and benefits.
“Period end deposit balances were $12.3 billion, a decrease of 4.6% compared to $13.0 billion at December 31, 2022, primarily due to deposit outflows in the Channel Islands driven by client activation of funds for investment purposes. Average deposits were $12.8 billion in the quarter ended March 31, 2023, compared to $12.5 billion in the fourth quarter of 2022.
“The Bank maintained its balanced capital return policy. The Board again declared a quarterly dividend of $0.44 per common share to be paid on May 22, 2023 to shareholders of record on May 8, 2023. The Bank also recommenced the repurchase of common shares at a modest level, repurchasing 144,929 shares during the quarter.
“The current total regulatory capital ratio as at March 31, 2023 was 26.2% as calculated under Basel III, compared to 24.1% as at December 31, 2022. Both of these ratios remain significantly above the minimum Basel III regulatory requirements applicable to the Bank.”
