Butterfield maintains profit in second quarter

| 26/07/2011

(CNS):  Following a very tough 2010 things appear to be looking up for Butterfield Bank as it announced its results for the second quarter of 2010. Despite the continuing difficult economic conditions the bank reported a profit again on Tuesday in its second quarter net income of $11.8 million, compared to net income of $8.4 million in the first quarter of 2011 and net income of $0.2 million in the second quarter of 2010. Brad Kopp, Butterfield’s President and Chief Executive Officer, said the bank was pleased it had delivered a profit for a second consecutive quarter in what he said was still a challenging environment and noted that the bank was still making more cuts.

“Against a backdrop of economic slowdown in key Butterfield markets and continued low interest rates, the Bank’s profitability and year-on-year increases in net interest income are good indicators that we are doing the right things to maintain customer loyalty and effectively manage our balance sheet,” he added. “We continue the difficult work of reducing our cost base. Our deposits are stable and our loan portfolio continues to perform well, considering the economic situation. At this time, we have seen no significant increases in delinquencies and the residential mortgage book is holding up,” the bank boss said.

Brad Rowse, Chief Financial Officer said that during the second quarter, Butterfield benefitted from the lower risk investing such as select US government agencies.

“Combined with small adjustments to deposit rates during the quarter, addressing prevailing overseas rates and competitive factors locally, our investment strategy delivered an increase in our net interest margin. This drove an increase in net interest income before credit provisions of more than 23% over the same period last year,” Rowse added.

During the second quarter the bank said it had also achieved significant milestones in its programme to deliver new core banking technology and peripheral systems in its two largest jurisdictions. In late April, Cayman Islands operations were migrated to the new operating platform without significant business interruption. The Bank’s Bermuda operations remain on track for a conversion later this year.

It also stated that it had completed the sale of its equity interest in fund administrator Butterfield Fulcrum, contributing $3.2 million of quarterly net income. The completion of the sale will trigger a dividend of $0.42 per share to holders of Butterfield Contingent Value Convertible Preference Shares (“CVCP Shares”), payable on 16 August 2011 to shareholders of record on 26 July 2011.

Therefore, management’s belief is that there will be no further dividends or distributions made on the CVCP shares. In addition, management believes that it is highly unlikely that there will be any change in the conversion price of the CVCP shares. (The current conversion ratio is one CVCP share to one common share.) Holders of CVCP shares are eligible for downward adjustments of the conversion price contingent on the Bank realising certain recoveries on a pool of specified non-performing loans. The
possibility that such recoveries will occur is remote.

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 2011 to Preference shareholders of record on 1 September 2011. No common dividend was declared.

Shareholders’ equity increased during the first six months of fiscal 2011 by $32 million to $841 million. The ratio of total capital to risk weighted assets (also known as the “total capital ratio”) was 22.8% at Q2 2011 compared to 21.6% at year-end 2010. The ratio of tangible common equity to tangible assets was 6.2% reflecting the strength of the Bank’s balance sheet.

See full quarter report below

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  1. Anonymous says:

    HSBC is letting go 25,000 workers and shutting down 200 locations… Good Luck with your new bank.

  2. Kung Fu Iguana says:

    I moved to HSBC a week after they rolled out that ghastly new system.

  3. Anonymous says:

    They  outsourced their IT department  to India which they now probably regret due to the excessive costs and delays that occurred and the problems that their customers experienced 


  4. Anonymous says:

    Their new system stinks!  Don't try doing any online transfers with them and believe that it has been completed as is stated.  Their customers are fed up and their poor customer services clerks, cannot answer the questions of their customers as they are clueless!. 

    • Anon says:

      Strange. All of my online transactions have worked just fine – bill payments, transfers, standing orders, etc. I do like the features to see the debit & credit card transactions.

  5. Anonymous says:

    My favourite line in this article is 'In late April, Cayman Islands operations were migrated to the new operating platform without significant business interruption.'

    Wonder who they sourced that information from? Their marketing dept? Certainly wasn't their customers!




    • Jack N Meoph says:

      Probably no interruption to them, but from a small business owner's perspective it was completely cocked up and nothing but a pain.  The old saying "if it ain't broke…" – seriously, the old system had flaws, not the least of which was a lot of it was manual behind the scenes.  But the new system is a farcical comedy of overcomplication – surely the result of a room full of programmers putting together a website with absolutely NO IDEA what the businesses who use it need.

      In fact, I would wager they never even thought of the needs of businesses from the start….  What kind of system puts a series of security questions in place for online banking and uses questions personal in nature?  So when the person who sets up the initial account sets up their 10 questions, I guess they have to circulate a list of their answers to fellow employees… I can imagine it now…

      "Dear Colleagues:

      You will be delighted we have now set up our new, faster, easier, more efficient online banking account with Butterfield.  In order to make a transfer, order a draft, or do any other online banking, you need to know the following (please pass on to all future employees when I am gone)…

      My favorite colour is RED.

      I was married in 1996.

      My first cat's name was FLUPHY (with a 'PH').

      I was born in UZBEKISTAN.

      My first grade teacher was Miss Pat. (At least we think she was a Miss, but she did have a lot of facial hair.)

      My favorite sport is croquet.


      My favorite food is Cream of Sum Yungai."

      An mark of brilliance on the part of the developers of this wonderous portal – Bermuda residents, take note, they are about to roll it out in your area…

      Oh, and I forgot to mention this wonderfull computer interface was developed after they fired virtually their entire IT Department and outsourced the systems to….  You guessed, INDIA – for an unprecidented 10+ year contract…

      My faith in Butterfield is lost.  My clients seem to be the same as I have had less online payments in the last month and more "other bank" checks than ever before…  CNB, Scotia and RBC must be pi$$ing themselves as the defectors line up to open new accounts…

      I will be joining the line next month when I get our latest round of payables completed.


      • True Blue says:

        I totally agree with you. I was a loyal advocate for Butterfields old system. Frankly, the new one  "sucks". Pitiful.

        • Anonymous says:

          And it'll only cost you close to $7 to make an online transfer to another bank! What a deal…way to take technology and use it against us.

          I'd be embarrassed if I had to put this 'implementation' on my resume!



          • Anon says:

            I think your cost estimate is over by $1 but anyway you could always do it the old way. Go to the other Bank and stand in line to make your payment. I guess it depends what your time is worth.

      • Anon says:

        As I understand it, each user in your small business would have their own ID & set of security answers. So there would be no need to circulate anything. Each user could be established to view & transact  exactly as you allow them to. That is how it works for me. Maybe it is simply your understanding of a more complex application.

        BTW, many online applications use personal security questions. It is up to you to chose questions that only you know the answers to.