Butterfield Bank earnings up

The Bank of N.T. Butterfield & Son Ltd. reported third-quarter net income of $22.8 million compared to $21.6 million in the same quarter a year ago. Core earnings for the quarter, including exceptional one-time items totaling $2.6 million, were $27.1 million, about $2.6 million or 10.6 percent higher than in the same quarter last year. 

Brendan McDonagh, Butterfield’s chairman and chief executive officer, said the results are evidence of the efficacy of Butterfield’s approach of managing costs and acquiring businesses in jurisdictions where the bank has a significant presence. 

In July, Butterfield announced the acquisition of parts of the corporate and retail banking business of HSBC Bank in the Cayman Islands, worth about US$800 million. It followed the expansion of Butterfield’s trust and fiduciary services presence in Guernsey in 2013 with the acquisition of Legis Group’s trust business, which was completed this year. 

“The impact of our second quarter acquisition of the Legis Group’s trust and fiduciary services business in Guernsey on our core results serves as a solid proof of concept; that business having an accretive impact to core cash earnings per share of nearly 5 percent,” Mr. McDonagh said in an official statement. 

“Similarly, our acquisition of parts of HSBC’s retail and corporate banking business in the Cayman Islands, which will be completed in the fourth quarter, will enhance our deposit base, providing us with expanded lending and investment opportunities to drive revenue growth, without a marked increase in associated operating costs.” 

Mr. McDonagh said acquisitions like these, together with improvements in the bank’s loan book, result in incremental improvements of quarterly earnings, despite low economic growth and low interest rates in Butterfield’s major markets. 

“With each subsequent quarter of growth, our capital position is further strengthened, providing us with the means to continue to enhance shareholder returns through dividend payments and share buy-backs,” he added. 

The group’s core cash return on tangible common equity in the third quarter improved to 15.4 percent compared to 14.3 percent in the third quarter of 2013.  

Year-to-date core earnings for the nine months ended Sept. 30 were at $76.2 million, up $16.2 million or 27 percent over the same period last year. 

Net income during the first three quarters increased by $5.7 million to $73.5 million year-on-year. 

Cayman Islands 

Third-quarter net income before gains and losses in the Cayman Islands increased $0.8 million to $8.1 million compared to the same period in 2013, driven by higher interest income on loans and investments. The results were offset by the costs of the integration of HSBC’s corporate business and other projects. 

The bank grew its loan and investment balances to $49 million and $149 million, respectively. At the same time, credit loss provisions dropped from $1.3 million in the third quarter last year to $0.5 million. 

Non-interest income improved by $100,000 to $8 million year-on-year as a result of increased banking fees and commissions on higher debit and credit card volumes. 

Total assets of $2.2 billion were down by $0.1 billion from the end of 2013, and customer deposits were also $0.1 billion lower at $1.9 billion. Butterfield Cayman’s client assets under administration stood at $3.3 billion for the trust and corporate services business and at $1.4 billion for the custody business, while the bank had $0.6 billion in assets under management.