Butterfield Reports Second Quarter 2024 Results
The Bank of N.T. Butterfield & Son Limited today announced financial results for the quarter ended June 30, 2024.
A spokesperson said, “Net income for the second quarter of 2024 was $50.6 million, or $1.09 per diluted common share, compared to net income of $53.4 million, or $1.13 per diluted common share, for the previous quarter and $61.0 million, or $1.22 per diluted common share, for the second quarter of 2023. Core net income1 for the second quarter of 2024 was $51.4 million, or $1.11 per diluted common share, compared to $55.0 million, or $1.17 per diluted common share, for the previous quarter and $57.0 million, or $1.14 per diluted common share, for the second quarter of 2023.
“The return on average common equity for the second quarter of 2024 was 20.7% compared to 21.5% for the previous quarter and 25.9% for the second quarter of 2023. The core return on average tangible common equity1 for the second quarter of 2024 was 23.3%, compared to 24.5% for the previous quarter and 26.3% for the second quarter of 2023. The efficiency ratio for the second quarter of 2024 was 62.4%, compared to 60.9% for the previous quarter and 57.6% for the second quarter of 2023. The core efficiency ratio1 for the second quarter of 2024 was 61.8% compared with 59.8% in the previous quarter and 57.6% for the second quarter of 2023.
“The Bank also announced the appointment of a new Independent Director, Stephen E. Cummings, a highly qualified and experienced financial services industry expert.
Michael Collins, Chairman and Chief Executive Officer, commented, “During the second quarter of 2024, Butterfield continued to deliver strong returns with sustainable non-interest income, disciplined expense management, a stable balance sheet, and a conservative credit profile. Our capital management strategy produces consistent and attractive shareholder returns through quarterly cash dividends and active share repurchases, which now includes a new share repurchase authorization. Growth through M&A remains a priority but, in the absence of a near term acquisition, excess capital will be allocated to support organic growth, dividends, and share repurchases.
“I am excited that Stephen Cummings has joined our Board and that Butterfield continues to attract such high-quality directors. Stephen is an excellent addition as an Independent Director and will further strengthen our governance and financial expertise at the Board level. I welcome Stephen to Butterfield and look forward to working with him as we continue to create value for all of the Bank’s stakeholders.”
Net income was down in the second quarter of 2024 versus the prior quarter primarily due to higher non-interest expenses as a result of inflationary pressures, higher performance-based remuneration and benefits accruals and higher technology spend from the recently implemented core banking software.
“Net interest income [“NII”] for the second quarter of 2024 was $87.4 million, higher compared with NII of $87.1 million in the previous quarter and down $5.0 million from $92.5 million in the second quarter of 2023. NII was higher during the second quarter of 2024 compared to the first quarter of 2024, primarily due to larger balance volumes, which was partially offset by higher deposit costs. Compared to the second quarter of 2023, the decreased NII in the second quarter of 2024 was due to higher deposit costs, despite increased yields on interest earning assets and a larger balance sheet.
“Net interest margin [“NIM”] for the second quarter of 2024 was 2.64%, a decrease of 4 basis points from 2.68% in the previous quarter and down 19 basis points from 2.83% in the second quarter of 2023. NIM in the second quarter of 2024 decreased compared to the prior quarter and second quarter of 2023 due to higher deposit costs.
“Non-interest income for the second quarter of 2024 was $55.6 million, an increase of $0.6 million from $55.1 million in the previous quarter and $5.5 million higher than $50.2 million in the second quarter of 2023. The increase in the second quarter of 2024 compared to the prior quarter was due to an increase in equity pickup from a portfolio investment and higher unclaimed balances recognized in income. Non-interest income in the second quarter of 2024 was higher than the second quarter of 2023 primarily due to transaction volume-driven increases in banking and foreign exchange revenue, increased trust income from assets acquired from Credit Suisse, as well as an increase in equity pickup from a portfolio investment and higher unclaimed balances recognized in income.
“Non-interest expenses were $91.1 million in the second quarter of 2024, compared to $88.5 million in the previous quarter and $83.5 million in the second quarter of 2023. Core non-interest expenses1 of $90.3 million in the second quarter of 2024 were higher than the $86.9 million incurred in the previous quarter and higher than the $83.6 million incurred in the second quarter of 2023. Core non-interest expenses1 in the second quarter of 2024 were higher compared to the prior quarter and the second quarter of 2023 due to performance-based remuneration accruals and inflationary increases in staff healthcare costs; increased expense arising from the recently implemented core banking software and non-recurring outsourced consultancy and legal fees.
“Period end deposit balances were $12.5 billion, an increase of 4.7% compared to $12.0 billion at December 31, 2023, primarily due to deposit increases in the Channel Islands. Average deposits were $12.4 billion in the quarter ended June 30, 2024, compared to $12.2 billion in the prior quarter.
“Tangible book value per share improved by $0.58 or 3.0% this quarter to $20.03 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 August 19, 2024 to shareholders of record on August 5, 2024. During the second quarter of 2024, Butterfield repurchased 1.1 million common shares under the Bank’s existing share repurchase program. On July 22, 2024, the Board approved a new share repurchase program authorizing the purchase of up to 2.1 million common shares through to December 31, 2024.
“The current total regulatory capital ratio as at June 30, 2024 was 24.8% 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.”
