Net income exceeds $54m By Adam Cooper The Bank of N.T. Butterfield & Son, who just a few years ago was forced to write off substantial losses when it closed down sectors of its business, announced record annual results for the second year running yesterday.

For the year ending June 30, the Bank said its earnings were $40.35 million, or $2.22 per share, up 10.8 percent over the $36.1 million reported last year.

The figure includes $14.54 million in losses from discontinued operations.

Now the outstanding portfolio from the bank's former London operations, closed down in 1997 and early 1998, has been reduced to $10 million -- and "no longer of a size to have any detrimental effect'', according to the bank's president and CEO Calum Johnston.

"All the Group's objectives established for the financial year were met or surpassed'', Mr. Johnston said in a statement.

"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.'' The bank's stock price seems to have remained tied to the $16 mark on the Bermuda Stock Exchange for months -- yesterday shares traded up 40 cents to close at $16.40, bringing the company's market capitalisation to just over $333.11 million. During the year, the bank bought back and cancelled 612,303 shares at a cost of $10.14 million in an attempt to raise the share price.

But nonetheless, this seems to be a time of records for the bank, if not for the share price.

Net income from the Bank's continuing operations for the full year -- which excludes realised losses of $14.54 million -- were a record $54.89 million, up 50.8 percent, or $18.48 million, on the previous year.

And for the quarter ended June 30, the bank reported record quarterly net income of $10.95 million, an increase of 16.5 percent, or $1.55 million, over that achieved at the same time last year and an increase of seven percent on the third quarter.

According to a Press release, this quarter's figures make it the eighth successive quarter on quarter earnings increase. And return on equity for the quarter was 16.4 percent, the highest since 1987, according to the bank.

"In Bermuda, we continue to see strong local loan growth... and this was a significant factor in the success achieved by our Community Banking business in increasing net income by 115.7 percent to $18.59 million,'' said Richard Ferret, executive vice president and chief financial officer.

Bank of Butterfield's record "The bank's Bermuda-based Asset Management group of businesses increased net income by 34.2 percent, or $2.07 million, to $8.11 million. Overseas, both our Cayman and Guernsey operations achieved record earnings.'' The bank maintains a substantial presence in the Cayman Islands, where income was up 33.2 percent, to $21.36 million -- making this the twelfth consecutive year of sustained growth. The bank's operations in Guernsey entered its tenth year of consecutive income growth with post-tax net income of at $2.93 million -- up 25.4 percent, or $0.60 million.

Butterfield's Hong Kong operations returned to profitability during the year, netting $410,000 in profits compared to a $100,000 loss last year. In June, the bank sold the Davenham Group of businesses, based in Manchester, England.

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 percent to $180.86 million. Net interest income, at $97.49 million, was up 40.2 percent on the previous year, from $52.11 million at 30 June 1999 to $18.78 million at 30 June 2000. Non-interest income grew to $83.37 million, up 4.1 percent on the $80.05 million achieved the preceding year.

Expenses rose year on year by $12.80 million, due in part to a $7.55 million increase in employee salaries and benefits.

Butterfield's total assets, as of June 30, stood at $4.79 billion, compared to $4.51 billion a year ago. According the bank, the 6.2 percent increase primarily reflects the acquisition of the ANZ Bank (Guernsey) Ltd. in January, offset by the sale of Davenham. Butterfield will increase the quarterly dividend by five cents to 23 cents per share, payable on August 18 to shareholders of record on August 15.

Graphic designed by Hope Robbins Earnings rebound: The Bank of Butterfield posted record earnings for the second year running. Results in 1997 and 1998 were hit hard by the closure of the bank's UK operations.

Calum Johnston