The Bank of N.T. Butterfield's top executive Calum Johnston yesterday took a bow as he announced annual "all-time high'' earnings of $36.4 million.

A year ago, after only six months at the bank's helm, Mr. Johnston heralded in dismal annual earnings of just $2.5 million after loss-making operations put a $26.3 million dent in earnings.

The massive profit, in the 1999 financial year ended June 30, was achieved after casting aside the shackles of those operations.

And shares in the bank gained 75 cents on the back of the positive results to close at $16.75 on the Bermuda Stock Exchange yesterday -- just 25 cents off their 52-week-high.

Scottish-born Mr. Johnston, who considers himself Canadian after years of living there, yesterday revealed one tactic he employed to motivate all staff to lift their game -- and the bank's earnings.

Under his stewardship every employee was granted stock options so it was in their interest for the bank's shares to soar.

And staff members were given an incentive to "perform satisfactorily or better'' since those who did could expect a tidy bonus this month.

Last September he lamented the "rough, tough year'' the bank had endured. At the time he vowed to achieve record results and projected a net income between $36 and $37 million for the fiscal year ended June 30.

Yesterday he delivered.

"We are pleased that our strategies to build and improve on the profitability of each of our business lines and address the high cost base in Bermuda are now succeeding in terms of improved earnings,'' he said.

"Indeed, the bank is now achieving the highest return on shareholders' equity, at 15.6 percent, since 1987.

"This is testament to the hard work and dedication of the management team and all our employees throughout the group, and the bank's continual commitment to running efficient profitable businesses that place emphasis on providing service to customers.'' He also said the Bank of Butterfield was confident it was "ready to operate normally on the first business day in 2000'' after thorough programmes to iron out possible computer glitches caused by the Y2K bug.

But Mr. Johnston and his management team remained vigilant to "clouds'' that could dampen future financial results, although yesterday he could not see any on the horizon.

"We always have to watch the economy and worry about what's going to happen because that's what we get paid for, to work our way through these things,'' he explained.

"I think Bermuda's prospects still look very good as far into the future as we can predict, and that's not very far, a year or two.

"The North American economy is still going strong. There's no sign of it really turning down yet. It's been a long bull market.'' Fourth quarter net income for the bank, at $9.4 million, was two percent up on the third quarter, 4.4 percent up on the second quarter and 6.6 percent higher than the first, demonstrating "consistent earnings growth'', he said.

The bank's Grand Cayman, Guernsey and Davenham subsidiaries all reported record earnings.

Earnings per share for the fourth quarter was 50 cents, bringing the full year total to $1.92 which is a record performance.

Return on equity was 15.8 percent in the final quarter and the year's 15.6 percent was the highest ever achieved since the heady days of 1987.

Total income for the year was up on the previous twelve months from $148.2 million to $149.6 million while total expenses were down $6.3 million to $113.2 million.

The bank is to maintain the quarterly dividend at 16 cents per share payable on August 16 to shareholders of record on August 5.

CHART It's up and away! The chart show the Bank of Butterfield's rollercoaster ride over the last five years.