WEDNESDAY, AUGUST 1: The Bank of NT Butterfield reported its sixth straight quarter of profits. The bank reported a second quarter net income of $16.2 million, which is up 37.7 per cent over the same quarter last year and up $1.5 million over the $14.7 million recorded in the first quarter of 2012.
Cash earnings (before amortisation of intangibles) for the period totalled $17.6 million compared to $16.1 million in the prior quarter and $13.2 million for the same quarter of the prior year.
Year-to-date net income for the first six months was $30.9 million compared to a year-to-date net income of $20.2 million for the six-month period in 2011.
Year-to-date earnings per Share totalled $0.04 on a fully diluted basis, versus a $0.01 year-to-date earnings per Share for the quarter ended 30 June 2011.
During the quarter, Butterfield announced that it had reached an agreement to sell its wholly-owned Barbados subsidiary, Butterfield Bank (Barbados) Limited to Trinidad and Tobago-based First Citizens Bank Limited.
The sale is expected to be completed during the third quarter of 2012, pending regulatory approval.
Bradford Kopp, Butterfield’s president and CEO, said: “Our second quarter results represent our sixth consecutive quarter of profit, and are improved year-on-year; the increase owed mainly to improvements in net interest income.
“Amidst ongoing economic weakness in our major markets and continued low interest rates, the results reflect the quality of our credit portfolios and the resiliency of our revenue model, with a good balance of interest and non-interest earnings.”
“I stated last quarter that improving shareholder value would be a major driver of our business strategy, and consistent with that objective, the bank made important changes during the quarter to rationalise our business and focus capital in core markets and competencies where we see greater potential.
“In this regard, Butterfield finalised an agreement to sell the bank’s wholly owned Barbados subsidiary to Trinidad-based First Citizens Group for gross proceeds of $45 million (with the transaction expected to close in the third quarter), terminated our relationship with Bentley Reid at a net loss of $0.5 million, and sold our interests in Cayman-based insurer, Island Heritage for a net gain of $4.3 million.
“As a result of these changes, we continued to improve the quality of our balance sheet and capital strength, ending the quarter with a very strong tangible common equity ratio of 7.4 per cent, up 94 basis points from the prior year before restatement for discontinued operations.”
Bradley Rowse, executive vice president and CFO said: “Although our various business lines generally performed well during the second quarter, our earnings growth was driven primarily by the performance of our loan and investment portfolios.
“Net interest income was up over eight per cent versus the same quarter last year.
“The Bank’s loan portfolio increased by more than $200 million over the year, with our loan to deposit ratio rising to 57.5 per cent. Loan loss provisions increased to $4.9 million during the quarter.
“The majority of the credit provision in the quarter related to a legacy commercial loan facility in our United Kingdom operation. This level of provisioning, relative to our $4.1 billion loan book, reflects the good quality of our credit portfolio.”
The Bank introduced a share buyback programme on May 1 as a means to improve shareholder liquidity and facilitate growth in share value. Under this programme, up to six million common shares and 2,000 preference shares may be repurchased.
In the second quarter of 2012, over 530,000 Shares were purchased by the Bank at an average price of $ 1.24 per Share.
The Board declared $4.0 million of dividends on the Bank’s 8% Non-Cumulative Perpetual Voting Preference Shares to be paid on 15 September 2012 to Preference Shareholders of record on 1 September 2012. No Common dividend was declared.
Editor’s note: In the interest of full disclosure, Don Burgess is a shareholder in Butterfield Bank.