"The Bank of N.T. Butterfield & Son Limited reported record quarterly net income of $10.95 million for its fourth quarter ending 30 June 2000, up 16.5%, or $1.55 million, over that achieved at the same stage last year and an increase of 7.0% on the third quarter. This is the eighth successive quarter on quarter earnings increase. As a result, net income from the Bank's continuing operations for the full year were a record $54.89 million, up 50.8%, or $18.48 million, on the previous year. After taking into account losses from discontinued operations of $14.54 million reported by the Bank in the third quarter, net income for the year was $40.35 million, up 10.8% on the $36.41 million recorded in 1999.
Net Income per share for the fourth quarter was 62 cents per share, up 10.7% on the third quarter. For the full year net income per share increased by 15.6%, or 30 cents, to $2.22 cents per share. Return on Equity was 16.4%, up from 15.6% last year, and is the highest the Bank has achieved since 1987. Reflecting the Group's continuing strong earnings performances, and focus on enhancing shareholder value, the Board has decided to increase the quarterly dividend by 5 cents (+27.8%) to 23 cents per share.
"All the Group's objectives established for the financial year were met or surpassed", said Calum Johnston, President & Chief Executive Officer, "which is testament to the dedication and commitment of our employees across the Group. Income from all our core businesses was strong, with the result that the Group, for the second consecutive year, recorded the highest level of net profit in its long history. During the year there was further success in reducing non-performing loans and in cleaning up the book of discontinued loans remaining from the former London operations closed down in 1997 and in early 1998. This portfolio now totals only $10 million and is therefore no longer of a size to have any detrimental effect on the performance of the Bank going forward", said Mr. Johnston. "Our objective continues to be to deliver performance that will drive the valuation of the Group to levels that reflect the quality and strength of the Butterfield Group and its inherent potential."
Commenting on the performances of the Bank's continuing operations, Richard Ferrett, Executive Vice President & Chief Financial Officer said, "All our core businesses produced significantly increased contributions and all were at record levels. In Bermuda, we continue to see strong local loan growth, reflecting focused marketing, and this was a significant factor in the success achieved by our Community Banking business in increasing net income by 115.7% to $18.59 million. The Bermuda based Asset Management group of businesses, comprising Butterfield Trust, Butterfield Asset Management and Butterfield Corporate Services, increased net income by 34.2%, or $2.07 million, to $8.11 million. These businesses, which are international in scope, serving institutional and individual clients, including high net worth individuals and their families, generated increased fee revenues, particularly in the areas of trust, executorship, investment and corporate services activities," said Mr. Ferrett.
"Overseas, both our Cayman and Guernsey operations achieved record earnings. The Cayman operation had an outstanding year, with net income up 33.2%, to $21.36 million, marking the twelfth consecutive year of sustained growth. In Guernsey post-tax net income, at $2.93 million, was up 25.4%, or $0.60 million. This was the tenth consecutive year of net income growth by this business, " said Mr. Ferrett. "Our Hong Kong operation returned to profitability, achieving net income of $0.41 million, up $0.51 million on the preceding year. In June the Bank sold the Davenham Group of businesses, based in Manchester, England, at a small premium over net asset value. The decision to sell Davenham was for strategic reasons based on its businesses, principally the provision of specialised lending products to the UK corporate sector, no longer being considered part of the Group's core activities. Whilst a member of the Butterfield Group in fiscal 2000 the company achieved net income after tax of $2.01 million".
"Across the Group, total income, before losses from discontinued operations, increased by 20.9% to $180.86 million. Notably, net interest income, at $97.49 million, was up 40.2% on the previous year, reflecting the significant continued progress made in reducing the size of non-accrual loans, from $52.11 million at 30 June 1999 to $18.78 million at 30 June 2000. In addition", said Mr. Ferrett, "we continue to see wider margins on our lending and investment portfolios as a result of the Group's asset and liability management strategies. Non interest income grew to $83.37 million, up 4.1% on the $80.05 million achieved the preceding year, reflecting the Group's continued strategy to increase non-interest related revenues. Expenses rose year on year by $12.80 million, due in part to a $7.55 million increase in employee salaries and benefits. This reflects increased investment in personnel to support business growth; particularly in Cayman and Guernsey. In addition, planned investment in the Bank's operating systems in Bermuda had a significant impact on the cost base, though such expenditure is necessary in order to achieve information systems and operating efficiencies throughout our Bermuda based businesses".
Other Financial Highlights of the fiscal year (after losses from discontinued operations) were:
· Return on equity was 16.4% for the year and 17.7% for the fourth quarter, compared to 15.6% for last year and 16.7% for the third quarter this fiscal year.
· Earnings per share increased year on year by 30 cents to $2.22, of which 62 cents was achieved in the fourth quarter.
· The efficiency (or cost income) ratio from continuing operations for the year was 69.7%, compared to 75.7% a year ago.
· The return on assets for the year improved by 0.1% to 0.9% from a year ago. The net interest margin widened from 1.6% to 2.2% year on year and the interest €˜spread' improved by 0.6% to 1.9%. This reflects the improved quality of, and margins emanating from, our loan portfolio, plus increased earnings from the investment portfolios.
· Total loans increased year on year by $61 million, reflecting the successful generation of new lending demand, particularly in our Community Banking business in Bermuda, and increased loan portfolios in both Grand Cayman and Guernsey, offset by the sale of the Davenham Group. The loan portfolio now represents 26.8% of balance sheet footings, compared to 27.1% last year.
· Total assets, as at 30 June 2000, were $4.79 billion compared to $4.51 billion a year ago; a 6.2% increase which primarily reflects the acquisition of the ANZ Bank (Guernsey) Limited in January this year, offset by the sale of Davenham.
· The Bank's liquidity position remains strong, with high quality liquid assets now accounting for 69.8% of total assets, compared to 69.3% at 30 June 1999. The Bank continues to enjoy a well diversified and stable deposit base.
· The Group continues to maintain a strong capital base. As at 30 June 2000 the risk weighted total capital base stood at 13.2%, compared to 13.0% a year ago.
· Shareholders' equity increased year on year by 3.8% to $250.20 million, reflecting the increase in retained earnings less share buybacks. The bank has now purchased for the Stock Option Trust 1,928,965 shares, representing 9.8% of its total issued shares, at a cost of $31.70 million, to satisfy obligations under an Employees Stock Option Plan. In addition, during the year under review, under the Bank's share buyback programme, 612,303 shares were purchased and cancelled at a cost of $10.14 million.
The Board has decided to increase the quarterly dividend by 5 cents to 23 cents per share payable on Friday 18 August 2000 to shareholders of record on Tuesday 15 August 2000. This brings the total dividend paid for the year under review to 75 cents per share, an increase of 11 cents, or 17.2%, per share over that paid in fiscal 1999.
Note to Editors:
The Bank's results, which are subject to audit, are stated in accordance with accounting principles generally accepted in Bermuda and Canada. The Bank of Butterfield Group is a vital community bank in both Bermuda and Cayman and a specialist offshore financial services company that has chosen its markets, knows them well, and uses its knowledge to benefit institutional and individual clients. The Bank, established in 1858, offers a full range of banking, credit, investment, treasury, trust and custody services through its headquarters in Bermuda, as well as offices in Cayman, Guernsey and Hong Kong.
Bank of Butterfield is a publicly traded corporation with its shares listed on the Bermuda and Cayman stock exchanges. The Bank's share price is published daily in the Royal Gazette and is also available on Bloomberg Financial Markets (symbol: NTB.BH) and The Bermuda Stock Exchange web site: www.bsx.com. Further details on the Bank can be obtained from its web site at: www.bankofbutterfield.com.