The Bank of N.T. Butterfield & Son Limited yesterday reported profits of $16.4 million for its first quarter, ending March 31, 2003.

The Bank reported a "pleasing performance" in a "challenging environment" with net income increasing 5.1 percent over last year's levels for the same period. Earning per share for the quarter was 88 cents, up seven cents compared to the same period the previous year.

Total operating expenses for the quarter were also up, however by nine percent at $37.32 million compared to the same period last year. The company attributed this to increase mainly to higher employee costs.

The Bank's UK practice had a bad quarter with low interest rates contributing to a loss of $0.29 million, and their Guernsey business turned a small profit of $0.29 million. However the Cayman operation fared well with quarterly profits of $6.07 million up a whopping 59 percent. This increase was due to both higher interest income and fee income.

Total assets as of March 31, 2003 were a record $6.12 billion, up from $5.47 billion last year.

Richard Ferrett, Executive Vice President & Chief Financial Officer, commenting on the Bank's Financial performance, stated that: "It is pleasing to note that the Bank achieved a Return on Equity of 19.3 percent in this environment.

"Our asset/liability management strategies have performed well and in line with expectations. The Board has decided to maintain the quarterly dividend at 35 cents per share payable on Thursday, May 15, 2003 to shareholders of record on Tuesday April 29, 2003.

As a result the rolling 12-month dividend will increase from 137 cents per share to 140 cents per share. At today's closing share price of $33.50 this represents a dividend yield of 4.18 percent."