The Bank of Butterfield last night reported profits of $25.7 million for the third quarter of this year.

Net income at the bank was up $2.9 million compared to the $22.8 million recorded in the third quarter of 2014.

The news came as Brendan McDonagh, the former chairman and CEO at the bank, announced he would step down as executive chairman with immediate effect.

Bank CEO Michael Collins said: “Our third-quarter results are strong and with core earnings up 8.1 per cent year on year and we have a growing customer deposit base in both Cayman and Bermuda.

“We will continue to explore prudent acquisitions in markets where we have significant market share and business expertise, building upon the successful acquisitions we completed in 2014.”

He added: “The high degree of liquidity within the bank’s investment portfolio and our conservative balance sheet position, with loans representing 38.9 per cent of total assets, supports our ability to continue to pursue compelling acquisition opportunities going forward.

“It is also our intention to continue to return value more directly to shareholders via share repurchases and common dividend payments.”

The bank declared an interim dividend of one cent per share from third-quarter earnings and bought back $0.6 million worth of shares to support trading liquidity.

Chief financial officer Michael Schrum said that third quarter earnings were driven by improved credit provisions on a loan portfolio “that continues to return value” along with higher fees earned on banking services and foreign exchange.

He added: “Complementing those developments were decreased core expenses associated with lower property and professional services costs.”

And Mr Schrum said: “Net interest income before credit provisions was down by 1.1 per cent year over year due to lower credit demand and our net interest margin that fell slightly to 2.48 per cent on lower investment yields.

“The bank, however, remains well-positioned to benefit from any future increases in interest rates.”

The bank also bought back 400,000 common shares in the quarter at a total cost of $0.6 million, an average cost of $1.73 per share.

Barclay Simmons, formerly vice-chairman of the bank and now non-executive chairman, paid tribute to Mr McDonagh’s contribution to the bank since he joined in 2012.

Mr Simmons said: “Brendan’s experience and leadership over the last several years have played a critically important role in improving the bank’s performance and generating improved shareholder returns.

“Brendan focused on improving the bank’s operational focus as well as investing in growth and managing risks and expenses. We appreciate Brendan’s many contributions and wish him continued success in his future endeavours.”

Mr McDonagh added: “I am proud of what we have achieved as a team and am confident that I am leaving Butterfield poised to succeed through the next period of growth and prosperity.”

Under Mr McDonagh, the bank bought Legis Group Holdings’ Guernsey-based trust and corporate services business and HSBC’s corporate and retail banking arm in the Caymans.