Butterfield Reports Fourth Quarter 2023 Results
The Bank of N.T. Butterfield & Son Limited today announced financial results for the quarter and year ended December 31, 2023.
A spokesperson said, “Net income for the year ended December 31, 2023 was $225.5 million, or $4.58 per diluted common share, compared to $214.0 million, or $4.29 per diluted common share, for the year ended December 31, 2022. Core net income1 for the year ended December 31, 2023 was $231.5 million, or $4.70 per diluted common share, compared to $215.7 million, or $4.33 per diluted common share, for the year ended December 31, 2022.
“The return on average common equity for the year ended December 31, 2023 was 24.2% compared to 25.7% for the year ended December 31, 2022. The core return on average tangible common equity1 for the year ended December 31, 2023 was 27.0%, compared to 28.6% for the year ended December 31, 2022. The efficiency ratio for the year ended December 31, 2023 was 59.8% compared with 59.2% for the year ended December 31, 2022. The core efficiency ratio1 for the year ended December 31, 2023 was 58.1% compared with 58.9% for the year ended December 31, 2022.
Michael Collins, Butterfield’s Chairman and Chief Executive Officer, commented, “Butterfield’s strong performance in 2023 was driven by active balance sheet management and an enhanced focus on long-term client relationships. Our conservative and profitable business model, characterized by limited credit risk, a high fee income ratio, and strong cash liquidity, was validated during the systemic challenges faced by U.S. regional banks last year. Butterfield also benefited from a resilient deposit base diversified across jurisdictions, sectors, and currencies.
“During the fourth quarter, we upgraded our core banking system in the Cayman Islands, which was well received, and completed onboarding the final tranche of the Credit Suisse trust clients. In December, we announced the approval of a new share repurchase program for 2024, with an authorization to purchase up to 3.5 million common shares. After a successful year, Butterfield is well positioned to continue generating strong risk adjusted returns and excess capital while providing market leading products and financial services.”
A spokesperson added, “Net income for the fourth quarter of 2023 was $53.5 million, or $1.11 per diluted common share, compared to net income of $48.7 million, or $0.99 per diluted common share, for the previous quarter and $63.1 million, or $1.26 per diluted common share, for the fourth quarter of 2022. Core net income1 for the fourth quarter of 2023 was $55.3 million, or $1.15 per diluted common share, compared to $57.0 million, or $1.16 per diluted common share, for the previous quarter and $63.2 million, or $1.27 per diluted common share, for the fourth quarter of 2022.
“The return on average common equity for the fourth quarter of 2023 was 22.5% compared to 20.6% for the previous quarter and 31.6% for the fourth quarter of 2022. The core return on average tangible common equity1 for the fourth quarter of 2023 was 25.4%, compared to 26.1% for the previous quarter and 34.9% for the fourth quarter of 2022. The efficiency ratio for the fourth quarter of 2023 was 61.7%, compared to 64.1% for the previous quarter and 55.7% for the fourth quarter of 2022. The core efficiency ratio1 for the fourth quarter of 2023 was 60.5% compared with 58.3% in the previous quarter and 55.6% for the fourth quarter of 2022.
“Core net income decreased in the fourth quarter of 2023 versus the prior quarter primarily due to lower net interest income, higher core non-interest expenses1 and higher provisions for credit losses, which were partially offset by higher non-interest income and the recognition of a deferred tax asset in Singapore.
“Net interest income [“NII”] for the fourth quarter of 2023 was $86.9 million, a decrease of $3.3 million, compared with NII of $90.2 million in the previous quarter and down $7.7 million from $94.6 million in the fourth quarter of 2022. NII decreased during the fourth quarter of 2023 compared to the prior quarter and fourth quarter of 2022, primarily due to higher deposit costs and a decrease in the size of the Bank’s balance sheet.
“Net interest margin [“NIM”] for the fourth quarter of 2023 was 2.73%, a decrease of 3 basis points from 2.76% in the previous quarter and down 6 basis points from 2.79% in the fourth quarter of 2022. NIM in the fourth quarter of 2023 was lower than the prior quarter and lower compared to the fourth quarter of 2022 due to increased deposit costs, which were partially offset by improved yields on interest earning assets.
“Non-interest income for the fourth quarter of 2023 was $60.0 million, an increase of $8.0 million from $52.0 million in the previous quarter and $5.1 million higher than $54.9 million in the fourth quarter of 2022. The increase in the fourth quarter of 2023 compared to the prior quarter was mainly due to higher banking fees, which benefited from seasonal increases in credit card and debit card transaction fees, higher trust fees from the Credit Suisse acquisition and higher foreign exchange revenue. Non-interest income in the fourth quarter of 2023 was higher than the fourth quarter of 2022 primarily due to new trust business and increased activity-based trust fees, as well as higher banking, asset management and foreign exchange income.
“Non-interest expenses were $92.2 million in the fourth quarter of 2023, compared to $92.5 million in the previous quarter and $84.7 million in the fourth quarter of 2022. Core non-interest expenses1 of $90.4 million in the fourth quarter of 2023 were higher than the $84.3 million incurred in the previous quarter and $84.5 million in the fourth quarter of 2022, primarily due to discretionary performance-based accrual increases and the impact of completing the IT upgrade on staff-related expenses, higher technology and communications costs related to the Bank’s upgraded IT infrastructure and core banking system, as well as increased property costs.
“Period end deposit balances were $12.0 billion, a decrease of 7.7% compared to $13.0 billion at December 31, 2022, primarily due to deposit declines across all banking jurisdictions, as normal commercial movements saw customers activate their funds and seek higher yielding products. Average deposits were $11.8 billion in the quarter ended December 31, 2023, compared to $12.1 billion in the prior quarter.
“Tangible book value per share improved by $1.56 or 8.8% this quarter to $19.29 per share. This reflects an increase of $3.37 per share, or 21.2% from the end 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 March 11, 2024 to shareholders of record on February 26, 2024. During the fourth quarter of 2023, Butterfield repurchased 1.2 million common shares under the Bank’s share repurchase program. The Board approved a new share repurchase program on December 5, 2023 to replace its expiring program, authorizing the purchase of up to 3.5 million common shares through to December 31, 2024. The new share repurchase authorization took effect on December 15, 2023.
“The current total regulatory capital ratio as at December 31, 2023 was 25.4% as calculated under Basel III, compared to 24.1% as at December 31, 2022. Both of these ratios remain conservatively above the minimum Basel III regulatory requirements applicable to the Bank.”
