of December slumped 16.5 percent, when compared to the same period in 1993.

Net income for the period stood at $13.7 million, which is also below the 1992 profit. Net income from operations had stood at $14.6 million, down 10.8 percent from 1993, before a near $1,000,000 charge was taken to refocus the bank's London operations.

Butterfield Securities' private client stockbroking operations took a beating in securities trading and got out of the business at the end of November.

President, Mr. J. Michael Collier conceded yesterday, "Securities trading conditions remained poor during this (six month) period, and overshadowed the continued success of our principal areas of business.

"Although the global financial markets continue to be unsettled, the bank has now taken appropriate steps to rectify the poor operating results of Butterfield Securities, and we are therefore reasonably optimistic for the second half of our 1994/95 financial year.'' The bank's troubles with securities trading were reflective of conditions that prevailed throughout the world, but especially in the UK.

The million-dollar "refocussing'' of the bank's London operations represented redundancies and other costs such as accelerated write-off and loss on disposal of fixed assets. Deep cuts in UK office staff included a reduction to 50 from 120, a drop of almost 42 percent.

In a written statement, the bank said yesterday, "For the sake of clarity, these costs (which amounted to nearly $1,000,000) will be reflected separately in the bank's income statement. The decline in profitability from operations (i.e. the 10.8 percent decline before the one-off costs) was also largely due to the poor performance of Butterfield Securities.'' Apart from those difficulties the bank performed well. It moved away from private client stockbroking in London at Butterfield Securities, and toward more institutional business.

Stockbroking staff were freed up to join the two London firms that were taking on the private client stockbroking portfolios. It was decided to retain and further develop the capital markets, corporate finance, institutional stockbroking and investment management departments.

The bank said that Butterfield Securities is in a better position and more likely to be profitable in the future.

The bank's core operations here, in Grand Cayman, Hong Kong and Guernsey, continued to perform well during this period, with good business growth in the areas of banking, trusts, global custody and third party collective investment fund administration.

The balance sheet grew by a healthy 16.2 percent as money moved to deposits, encouraged by the rising interest rate environment and the recent uncertainty in sectors of the mutual fund industry.

Growth was observed in all sectors of the group, with total assets increasing in the last year from $3.63 billion to $4.22 billion. But as a result of the decline of profitability, returns on assets and equity declined from 0.93 percent and 14.6 percent to 0.67 percent and 11.2 percent respectively. Net income per share slumped from $0.82 to $0.68.

Net interest income was up positively 9.6 percent from $30.1 million to $33 million, reflecting the increase in the deposit base. Fee income was substantially affected by the London difficulties, rising only by 5.6 percent to $30.6 million. The increase in total income, as a consequence, was 7.7 percent to $63.6 million. Last year's increase was closer to 14 percent.

The bank said its expenses continued to be well contained. A general increase in staffing in most of the bank's overseas operations due to continued expansion activities, and the continuing implementation of new computer systems in the domestic banking areas, resulted in total operating expenses, before the million dollar UK charge, rising by 14.8 percent to $48.9 million.

In housekeeping matters, the bank noted it has paid $11.5 million so far for the Front Street extension for the head office. The second phase that will last for much of the year, is set to start soon.

The new work will entail extensive interior and exterior renovations to the existing buildings. The bank is expecting to benefit from more, and improved, office space and more rental income from shop units on Front Street in Butterfield Place.

Bank of Butterfield stock finished the year $12.625, down 5.3 percent in the six month period that included the October stock split of 2.4: 1. Dividends were unchanged at $0.12.5, once the stock split is factored in. The bank's stock closed yesterday at $12.25.