Butterfield Bank yesterday reported record quarterly net income of $35.9 million and announced a three-for-one share split to take place next month.

Profits were up 6.1 percent for the three months from April through June compared to the same period last year, as the Bank showed improvements across the board.

All shareholders of record at the close of business on Friday, August 17, 2007 will receive two additional shares for each share held on that date. That means someone holding 100 of the Bank's shares will see their shareholding triple to 300. The extra shares will be distributed on August 31 and will be traded on a split-adjusted basis — that is the share price will be reduced accordingly so that the company's market capitalisation remains the same.

The Bank's share price on the BSX rose 50 cents (0.8 percent) to $61.50 yesterday. The stock split will increase the liquidity of the shares, as a lower price per share encourages more buying and selling.

Butterfield Bank directors decided to maintain the quarterly dividend at 48 cents per share, payable on August 17 to shareholders of record as of August 1.

All of the group's operations, at home and overseas showed an improvement on last year.

The group's customer deposits rose 19.8 percent to $10.6 billion, while assets under management rocketed 24 percent to $11.7bn. Assets under administration shot up 26.3 percent to $137 billion.

Alan Thompson, president and chief executive officer, said: "It is pleasing to note the continued progress of the group in the second quarter against a background of volatile market conditions and increased competition across all our business lines.

"We are pleased with the progress made in the establishment of our Fund Services operation in Halifax, Canada and the record contribution from our Guernsey business.

"Also noteworthy is that we were named 'Best Bank in Bermuda' for a second straight year by Euromoney, one of the world's leading financial publications."

Richard Ferrett, executive vice-president and chief financial officer, said: "The balance sheet continues to grow, reflecting strong increases in customer deposits and loans, up $1.7bn and $0.6bn respectively year on year.

"Our return on equity continues to remain strong and above our target of 20 percent, at 25.1 percent. Significant increases were seen year on year in our revenue generation, with net interest income increasing by 15.1 percent and non-interest income by 8.5 percent year on year.

"Of particular note was the increase in the group's revenues from trust and custody services, up 15 percent to $9.0m."

During the quarter the group made provisions for credit losses of $0.2m, compared to a provision of $0.6m a year ago.

Personnel-related expenses increased by $5.4 million, up 13.2 percent year on year, reflecting an increase in the headcount, which has risen from 1,666 a year ago to 1,800 to support business growth.

Of the increase of 134 employees, 47 were in respect of the Bank's Bermuda-based businesses and 87 overseas.

The group's efficiency ratio for the quarter was 66.1 percent, compared to 64.8 percent a year ago. Total assets of the Group as at 30 June 2007 were $12.0 billion, compared to $10.2 billion a year ago.

Meanwhile, the Bank's loan portfolio increased year on year by 17 percent, or $571m, to $3.9bn, reflecting increased loan demand, particularly in our Bermuda, Guernsey and UK based businesses.

Shareholders' equity increased year on year by three percent to $571.9m. Diluted earnings per share for the quarter were $1.24, up 8 cents year on year.

The increase in shareholder value for the quarter, defined as the increase in share price plus re-investment of dividends in the Bank's shares, was 2.5 percent.

Net income from the the Bermuda businesses, at $16.7 million, was up 2.7 percent on the previous year.

While profits from the Bank's Barbados operation were in line with last year, the Cayman unit recorded net income of $14.2 million, up year on year by 3.9 percent.

Profits in Guernsey rose 24.3 percent, while Bahamas profits matched those of 2006.

The Bank's Zurich office, which opened in November last year, now has assets under investment of $42m, up from $16m the previous quarter. And the UK operation made net income of $0.6 million, compared to $0.2 million a year ago.