Butterfield Bank’s second-quarter net income fell 11 per cent year over year to $34.3 million as economic activity slowed and interest rates dipped with the onset of the pandemic.The profit broke down to 67 cents per share and compared with net income of $38.6 million in the April-to-June period in 2019.Butterfield offered borrowers automatic loan and mortgage repayment deferrals during the three months, which included the shelter-in-place period in April that brought wide swaths of the economy to a halt.Michael Collins, the bank’s chairman and chief executive officer, said: “We continue to be in regular communication with customers and are closely monitoring our loan book for signs of credit deterioration, and we have seen a slight increase in non-performing loans this quarter.” He added the bank had set aside more to cover potential soured loans.“Our latest credit performance estimate is reflected in the second-quarter reserve build, bringing our total credit reserves to 79 basis points of total loans,” Mr Collins said.“I am also pleased to confirm that the bank’s balance sheet and capital ratios improved and remain strong.”Butterfield’s board declared a quarterly dividend of 44 cents per share to be paid on August 19, 2020 to shareholders of record on August 5, 2020. The bank said non-interest income fell to $41.7 million for the quarter of 2020, compared to $44.2 million in the second quarter of 2019.It attributed the decrease to “much lower economic activity resulting from Covid-19 related ‘shelter-in-place’ government mandates across all of Butterfield’s operating jurisdictions, primarily during the months of April and May”.The slowdown of business activity also reduced Butterfield’s costs during the quarter, with lower spending on travel, client entertainment, marketing activities and consultants, the bank said. Butterfield’s largest businesses are in Bermuda and the Cayman Islands. Net interest income for the quarter was $79.1 million, a fall of $6.1 million from the second quarter of 2019.The bank said the decrease was “due to the impact of lower market rates across the yield curve, which was partially offset by lower deposit costs”.Mr Collins said: “We have also started adjusting to the potential long-term implications of the changing economic landscape, and the associated extended period of low interest rates. “As we work to further mitigate the impact of lower yields, we anticipate a greater emphasis on our stable fee businesses and focus on costs to improve operating efficiencies.”The bank said its capital position remained strong.The current total regulatory capital ratio as at June 30 was 21.2 per cent as calculated under Basel III, compared to 19.4 per cent as at December 31, 2019.During the second quarter of 2020, Butterfield bought back 1.2 million of its own common shares under its 3.5 million-share repurchase plan authorisation.Mr Collins said the bank had recorded “solid earnings” and had met the challenges posed by the pandemic. He said: “During the temporary government-mandated closures in our home markets, we were able to provide essential banking services to our customers both in person and electronically.“I am proud that Butterfield was able to help support local economies and offer relief to borrowers in Bermuda and Cayman through loan deferrals and other community-based support programmes.”