Butterfield Bank made a loss of $207.6 million in 2010, due mainly to selling off troubled assets at a loss early in the year.After another painful year following 2009's $213.4 million loss the bank believes it is in a position to return to profitability.Another driver of the loss was the $31.8 million Butterfield took out in respect to large hospitality loans.The bank moved to put the Pink Beach Club into receivership last year and did the same with Newstead Belmont Hills Golf Resort last month.As a result of its actions on the hotel loans, the bank has reduced its percentage of non-accrual loans, on which repayments are more than 90 days behind, to 3.75 percent of the loan portfolio, down from 5.37 percent a year ago.At the end of 2010, non-accrual loans totalled $160 million, down from more than $230 million a year earlier, and equivalent to 3.9 percent of the total loan portfolio.The $207.6 million loss for the year does not include the $16 million paid out to holders of preference shares, nor the $2 million paid to Government for the guarantee on those shares.The net loss attributable to common shareholders was therefore $225.6 million.On a normalised basis, without the one-off items, Butterfield made net income of $14.8 million in 2010, compared to $21 million in 2009.The bank ended the year with 1,519 employees across its operations in seven jurisdictions, 87 fewer than at the end of 2009.“We're happy to put a very difficult year behind us,” Butterfield chief executive officer Brad Kopp (pictured) told The Royal Gazette last night.“The message we want to get out there is that we've cleaned house. It's been a year of restructuring and cleaning up and now we're in great shape to earn some money.”The year was notable for the $550 million ploughed into the bank by a group of mainly overseas investors, including the Carlyle Group and the Canadian Imperial Bank of Commerce, last March. This gave the bank the means to sell off the remaining asset-backed securities, linked to US mortgages, that drove the bank to huge losses over the past three years.In the first quarter of 2010, Butterfield recorded realised losses of $113.8 million on the sale of these assets, as well as other-than-temporary impairments of $60.5 million on structured investment vehicles (SIVs) another form of financial instrument that plummeted in value during the credit crisis.The other notable expense during the year was a restructuring cost of $12.4 million, relating to the bank's sell-off of its Hong Kong and Malta businesses, part of a broader effort to simplify the business and focus on core banking activities.Revenues from operations (before provisions for credit losses) were down slightly from $332.1 million in 2009 to $321.3 million at year-end 2010.Net interest income (before provisions for credit losses) was down four percent year on year to $178.9 million, owing to compressed margins in the low interest rate environment and limited loan demand.Non-interest income declined by 1.9 percent, from $145.2 million in 2009 to $142.4 million.Expenses before one-time items declined from $300.5 million in 2009 to $294.8 million in 2010, despite expenditures on technology, asset-liability management and liquidity support.Olivier Sarkozy, who led the Carlyle Group's investment in the bank, was quoted in Butterfield's earnings release.“While unfortunate, the losses realised over the course of the past fiscal year represent the culmination of the balance sheet restructuring that was necessary to put the bank back on a path of prudent risk management and sustainable growth, as was envisioned at the time of the recapitalisation,” Mr Sarkozy said.“We are pleased with the progress the bank has made in this regard and happy that the bank's results are consistent with, if not slightly better than, our original projections.”Mr Kopp said the bank was working with receivers to keep the two hospitality businesses running, in an effort to sell them as going concerns.He said potential buyers, both from Bermuda and overseas, had already expressed interest in the two properties. Pink Beach Club is closed for the winter period, but is set to reopen in the spring.“We're optimistic than we can attract new capital to the Island and find a buyer for these properties,” Mr Kopp said.“We've taken our hits so we can afford to sell at a price that makes sense to buyers.”At the end of last year, Butterfield had tier one capital ratio, a measure of core financial strength from a regulator's point of view, of 15.7 percent, more than double the regulatory minimum requirement.The bank's net book value per share was $1.09 at December 31, 2010. Before the results were released, Butterfield's share price rose one cent to $1.22 in Bermuda Stock Exchange trading yesterday.Butterfield intend to introduce new banking systems in Bermuda and the Cayman Islands in 2011, after making good progress on the implementation of its upgraded technology platform.Chief financial officer Brad Rowse said: “We continued to face pressures from historically low interest rates throughout much of 2010, which constrained our net interest margin on lower deposit volumes.“Our strong liquidity has allowed us to invest more of our asset base in high quality government-backed securities which yielded improved margins in the fourth quarter and, combined with the relative stability of our fee income, positions us well for 2011.”Asked for his views on the local economy, Mr Kopp said: “The Premier is doing a great job, but the economy is losing jobs and that's a concern. But we have not seen any dramatic declines in our credit card business or in residential mortgages.”Butterfield's residential mortgage book was valued at $1.34 billion at the end of 2010.Customer deposits totalled $8.23 billion at the end of 2010, compared to $8.7 billion a year earlier.The bank's total assets were $9.62 billion, up from $9.59 billion 12 months earlier.A webcast on Butterfield's financial results is available at www.butterfieldgroup.com