Butterfield Reports First Quarter 2024 Results
The Bank of N.T. Butterfield & Son Limited today announced financial results for the quarter ended March 31, 2024.
A spokesperson said, “Net income for the first quarter of 2024 was $53.4 million, or $1.13 per diluted common share, compared to net income of $53.5 million, or $1.11 per diluted common share, for the previous quarter and $62.2 million, or $1.24 per diluted common share, for the first quarter of 2023. Core net income1 for the first quarter of 2024 was $55.0 million, or $1.17 per diluted common share, compared to $55.3 million, or $1.15 per diluted common share, for the previous quarter and $62.2 million, or $1.24 per diluted common share, for the first quarter of 2023.
“The return on average common equity for the first quarter of 2024 was 21.5% compared to 22.5% for the previous quarter and 28.0% for the first quarter of 2023. The core return on average tangible common equity1 for the first quarter of 2024 was 24.5%, compared to 25.4% for the previous quarter and 30.5% for the first quarter of 2023. The efficiency ratio for the first quarter of 2024 was 60.9%, compared to 61.7% for the previous quarter and 56.0% for the first quarter of 2023. The core efficiency ratio1 for the first quarter of 2024 was 59.8% compared with 60.5% in the previous quarter and 56.0% for the first quarter of 2023.
Michael Collins, Butterfield’s Chairman and Chief Executive Officer, commented, “The Bank’s first quarter results are a great start to the year and continue to demonstrate the strong profitability of Butterfield’s capital efficient non-interest earnings, well-structured balance sheet and thoughtful capital management. Since listing on the NYSE in 2016, the Bank has consistently maintained operating returns on tangible equity in the range of 16% to 28%, and we expect these levels of profitability to continue across typical economic cycles. We are on track to deliver top quartile returns relative to US regional banks. The Bank remains highly liquid with strong capital levels and has a loan portfolio that is primarily comprised of well collateralized residential mortgages with limited commercial and hospitality real estate exposure in Bermuda and the Cayman Islands.”
The spokesperson said, “Net income and core net income were flat compared to the prior quarter.
“Net interest income [“NII”] for the first quarter of 2024 was $87.1 million, relatively flat compared with NII of $86.9 million in the previous quarter and down $10.3 million from $97.4 million in the first quarter of 2023. NII was flat during the first quarter of 2024 and decreased compared to the first quarter of 2023, primarily due to higher deposit costs and a decrease in the size of the Bank’s balance sheet.
“Net interest margin [“NIM”] for the first quarter of 2024 was 2.68%, a decrease of 5 basis points from 2.73% in the previous quarter and down 20 basis points from 2.88% in the first quarter of 2023. NIM in the first quarter of 2024 decreased compared to the prior quarter and first quarter of 2023 due to a lower volume of interest earning assets, continued mix-shift to higher yielding term deposit products and day-count.
“Non-interest income for the first quarter of 2024 was $55.1 million, a decrease of $4.9 million from $60.0 million in the previous quarter and $4.9 million higher than $50.2 million in the first quarter of 2023. The decrease in the first quarter of 2024 compared to the prior quarter was mainly due to lower banking fees due to seasonally higher fourth quarter banking revenues, which were partially offset by higher foreign exchange revenue. Non-interest income in the first quarter of 2024 was higher than the first quarter of 2023 primarily due to newly acquired trust fees and higher foreign exchange income.
“Non-interest expenses were $88.5 million in the first quarter of 2024, compared to $92.2 million in the previous quarter and $84.1 million in the first quarter of 2023. Core non-interest expenses1 of $86.9 million in the first quarter of 2024 were lower than the $90.4 million incurred in the previous quarter and higher than the $84.1 million incurred in the first quarter of 2023. Compared to the prior quarter, core non-interest expenses1 in the first quarter of 2024 were lower due to reduced head-count in the current quarter and higher bonus accruals in the previous quarter, lower technology cost from reduced IT project related travel and other expenses, partially offset by increases in non-income tax expenses related to the vesting of employee share awards. Core non-interest expenses1 were higher in the first quarter of 2024 compared to the first quarter of 2023 primarily due to increased costs associated with the implementation and depreciation of Butterfield’s upgraded cloud-based core banking system in Bermuda and Cayman and other physical and IT asset improvements.
“Period end deposit balances were $12.1 billion, an increase of 1.2% compared to $12.0 billion at December 31, 2023, primarily due to deposit increases in the Channel Islands. Average deposits were $12.2 billion in the quarter ended March 31, 2024, compared to $11.8 billion in the prior quarter.
“Tangible book value per share improved by $0.16 or 0.8% this quarter to $19.45 per share.
“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 21, 2024 to shareholders of record on May 7, 2024. During the first quarter of 2024, Butterfield repurchased 1.2 million common shares under the Bank’s share repurchase program.
“The current total regulatory capital ratio as at March 31, 2024 was 24.9% as calculated under Basel III, compared to 25.4% as at December 31, 2023. Both of these ratios remain conservatively above the minimum Basel III regulatory requirements applicable to the Bank.”
