Butterfield Bank’s profit for the first three months of the year was $26.8 million, down $1.2 million year-on-year.

However, the bank’s core earnings — which strips out one-off items — were $36 million, an improvement of $7 million compared with the same period in 2015.

Releasing its earnings report, the bank announced an interim dividend of 1 cent per common share and a $20 per share quarterly dividend on preference shares, to be paid in June.

The bank repurchased $300,000-worth of its shares during the quarter, and this appears set to continue with the board authorising the buy-back of up to eight million common shares in its 2016 programme.

The first quarter was described as a “strong financial performance” for the bank by Michael Collins, Butterfield’s chief executive officer.

“We continue to generate steadily growing and predictable earnings through wealth management acquisitions, deposit growth in community banking, and cost reductions across the group,” he said, pointing to the bank’s focus on revenue growth and expense management.

Mr Collins said the demand for loans remains subdued across major markets, although there has been an increase in the Caymans.

The bank saw net interest income grow, partly as a result of higher revenue from its corporate loan portfolio, which came from higher rates and increased volume in Bermuda.

Interest expenses decreased by $1.7 million, mostly due to lower rates on deposits in several jurisdictions.

The bank also made a saving of $1.7 million in non-interest expenses, principally due to lower salary costs as it reduced its global workforce, on a full-time equivalency basis, by 26 to 1,114. There were workforce reductions in Britain and Guernsey.

The bank incurred significant non-core expenses late last year due to the wind-down of the London bank and management restructuring. There were some additional charges associated with these projects during the first three months of this year.

Looking ahead, Mr Collins said that in the absence of sustained loan growth, the bank will alternatively deploy capital in wealth management acquisitions and its investment portfolio.

He added: “During the first quarter, we restructured our management team in an effort to improve decision making and communication across the bank. We will continue to rationalise our business model, focusing on expansion in key international financial centres where we have expertise and scale.

“We are in the process of winding down our sub-scale deposit taking and investment management business in the UK, a project which will be completed in the third quarter.

“At the same time, we are increasing our wealth management market share in Bermuda with the planned acquisition of HSBC’s Private Banking Trust and Investment Management businesses which is expected to close shortly. This wealth management acquisition will substantially increase Butterfield’s deposits, assets under administration, and assets under management.”

Michael Schrum, chief financial officer said: “Overall, Butterfield’s balance sheet is stable and highly liquid. Paydowns within the consumer loan portfolio were largely offset by new sovereign and public-sector lending on the institutional side.”

He said loan quality continued to improve, with non-performing loans, including those that are past due by 90 days or more, “broadly stable” during the quarter.

Mr Schrum said the bank benefited from the US Federal Reserve increasing the benchmark dollar rate in December. That led to better returns on the bank’s investment portfolio and a beneficial impact on associated rate adjustments in its corporate lending portfolio.

He added: “The realisation of non-core expenses and provisions during the quarter — associated with the continued wind-down of our UK bank, costs related to the pending acquisition of HSBC’s wealth management businesses in Bermuda, and severance and retirement charges associated with the management restructuring project effected during the quarter — led to a reduction of net income by $1.2 million versus the first quarter of 2015.”

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