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Butterfield Bank reports $30.5m profit

Earnings news: Butterfield Bank’s third quarter net income was down about $12 million compared to the same period last year (File photograph).

Butterfield Bank made a profit of $30.5 million, or 61 cents per share, for the third quarter. This was down from the $42.4 million it achieved a year ago, and a decline of $3.8 million from the second quarter.

During the period it had a $8.9 million increase in staff-related and indirect costs, primarily due to staff exit costs associated with voluntary separation agreements and redundancies.

Michael Collins, Butterfield's chairman and chief executive officer said: "The bank performed well as we focused on managing our credit exposures and reducing costs to help offset the revenue impact from lower volumes and interest rates during the pandemic.

“We have enhanced our risk management and compliance capabilities through previously announced executive and board appointments, while decreasing the expense base through a cost reduction programme, which included voluntary separation and redundancy initiatives.”

Mr Collins said the cost reduction programme increased noncore exit costs this quarter, but is expected to lower expenses in 2021 and beyond. He added that the bank will continue to provide operational support roles in Butterfield’s service centre in Canada for non-client facing positions.

Butterfield achieved a return on average common equity of 12.3 per cent. Its total assets at the end of September were $13.5 billion, down $500 million since the start of the year.

Non-accrual loans totalled $74.8 million, representing 1.5 per cent of the bank’s total gross loans. This was up $24.4 million since the end of last year. The bank said the increase was driven by a commercial loan in collateral dispute litigation and a few residential mortgages in Bermuda.

Mr Collins said: "In recognition of the challenges created by the health crisis, we have been pleased to offer payment relief to qualifying mortgage clients in Bermuda and Cayman for up to six months. These programmes have come to an end, but we will continue to provide customers with individual assistance going forward.

“We are closely monitoring our loan book and proactively communicating with clients to assess their capacity to resume normal payments. We remain confident that our proven business model will continue to produce first quartile absolute and risk-adjusted returns throughout the pandemic and broader interest rate cycle.”

Net interest income for the third quarter was $75.3 million, a decrease of $3.8 million compared with the previous quarter, and down $11 million from the same period last year.

During the third quarter, Butterfield repurchased 700,000 common shares under the Bank's current 3.5 million common share repurchase plan authorisation.

Disclosure: the author owns shares in Butterfield Bank

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Published October 28, 2020 at 6:40 pm (Updated October 28, 2020 at 6:40 pm)

Butterfield Bank reports $30.5m profit

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