The Bank of Butterfield reported increased second quarter earnings yesterday of $20.0 million. This represents an increase of $1.4 million, or 7.4 percent, over that achieved for the same period last year and is up $2.5 million, or 14.5 percent, on the previous quarter.

As a result, net income for the six months ending 31 December 2002 was $37.4 million, up 4.6 percent on the like period a year ago.

Earnings per share for the quarter was $1.08, up 11 cents compared to the same period a year ago and up 17 cents on the previous quarter.

Total revenue for the quarter was $56.7 million made up of net interest income before credit related provisions of $28.3 million, minus $0.4 million for the loan portfolio plus total fees and other income of $29.7 million.

Total expenses rose sharply by $3.6 million reflecting increased expenditure on systems and communications.

Richard Ferrett, chief financial officer stated that: “The bank's strong earnings performance is reflected in the return achieved on shareholders' equity, which was 23.6 percent in the second quarter, up from 20.6% the previous quarter.”

The bank announced a quarterly dividend at 35 cents per share, payable on Friday 21 February 2003 to shareholders of record on Tuesday 11 February 2003.

The bank's Cayman operation recorded net income of $5.9 million, up year on year by $1.3 million, or 29.4 percent.

Net interest income was up 4.4 percent year on year, to $5.0 million, reflecting our asset/liability management strategies, and non-interest income rose 37.7 percent to $6.8 million.

Earnings in both the Guernsey and UK businesses were down however.

Guernsey net income was $0.8 million. The UK business recorded a small loss of $26,000 after corporation tax compared to a profit of $47,000 a year ago.

The company attributed these results to low interest rate environment in the UK.

Total assets as at 31 December 2002 were $6.0 billion compared to $5.5 billion a year ago and in line with that reported last quarter.

Total loans increased year on year by $157 million, (9.8 percent), reflecting increased loan demand in the Community Banking businesses.

The loan portfolio, at $1.8 billion, represents 29.4 percent of total assets, compared to 29.2 percent a year ago. Total investments increased year on year by $423 million (25.7 percent) to $2.1 billion, which represents 34.5 percent of total assets.

This reflects the bank's asset/liability management strategy of investing in high quality investment grade securities as an alternative to the inter-bank deposit market.

Customer deposits have increased year on year by $291 million, or 6.0 percent, to $5.2 billion, reflecting growth in the deposit base of our Community Banking businesses.

In respect of discontinued operations, there was a net loss of $0.4 million

Recoveries of $0.1 million in respect of loans made by our former businesses were offset by a $0.5 million increase in the provision in respect of obligations under the leasehold agreements for our former London branch. These will expire in September 2005.

In addition, during the quarter under review the bank bought back and cancelled 523,500 shares, at a cost of $16.3 million, under the Share Repurchase Programme.