Butterfield’s mixed results

(CNS): According to a release from Butterfield, the bank is reporting mixed results for its second quarter 2009. Compared to the group’s overall losses of $16.5 million in Q2 2008, it reports a net income of $10.3million for Q2 2009. Butterfield Bank (Cayman) Limited, a wholly-owned subsidiary of The Bank, recorded a net income, before group service charges of $3.4 million, down $4.6 million from the $8.0 million achieved a year ago, partially reflecting the sale of the Fund Services business in September 2008 the bank said.

The current situation for the group as a whole brings both basic and diluted earnings per share to $0.11 in Q2 2009 compared to negative $0.18 and negative $0.17 respectively in Q2 2008.  Butterfield said its Board of Directors has approved a second quarter dividend of $0.08 per share, comprised of $0.04 in cash and $0.04 in common shares, payable on 24 August 2009 to shareholders of record on 7 August 2009.  Both the amount and composition of the dividend are unchanged from the prior quarter.

Alan Thompson, President & Chief Executive Officer said it was pleasing to report that Butterfield made a profit in the current economic climate, given the ongoing recession in many of the jurisdictions in which it operates as well as the impact of interest rates.  “It is also pleasing to report that the difference between book value and market value in the Bank’s held to maturity portfolio continued to improve in the quarter by $52 million. In June, we successfully completed the issuance of US$200 million of preference shares, with the vast majority of investors coming from Bermuda.  As a result our balance sheet and capital positions have been significantly strengthened. Despite the challenging economic conditions we have confidence that, when market conditions improve, we will be well positioned to generate attractive returns for our shareholders,” he added.

Richard Ferrett, Executive Vice President & Chief Financial Officer said the group’s capital ratios are now the strongest they have been for some considerable time. He explained that the successful preference share raise, with a Tier 1 capital ratio as at 30 June of 11.0%, up from 7.7% at end March 2009 had helped.

“There were no write-downs of investment securities and a net realised gain of $1.9 million was achieved in the quarter, primarily reflecting the sale of a previously impaired security. The quarter also saw a significant year on year decrease of 14.9% in the Bank’s operating expense base, reflecting our focus on achieving operating efficiencies. Also noteworthy was a $1.2 billion increase in assets under administration, reflecting growth across our trust and custody business lines, the second successive quarter in which our AUAs have risen,” Ferrett added.

Meanwhile in Cayman net interest income before credit provisions was down $2.7 million (24.1%) reflecting the low interest rate environment. Total assets now stand at $2.5 billion compared to $3.3 billion at 2008 year-end, reflecting lower level of short-term deposits from hedge fund clients. Assets under administration, at $4.5 billion, were down $0.9 billion from the position at year end 2008, whilst assets under management remained unchanged at $1.3 billion.

Conor O’Dea, Managing Director, Butterfield Bank (Cayman) Limited, said however he though the Q2 results were encouraging considering current market conditions. “Our business remains strong as evidenced by a year-on-year loan growth of51%. We continue to maintain strong stand-alone capital ratios and our balance sheet remains conservative by industry standards. These results are totally due to our loyal customers and our committed team, locally and globally, who continue to help us achieve positive outcomes in a challenging environment,” O’Dea added.