Butterfield Bank has been affirmed a long-term credit rating of A- and a short-term customer deposit rating of A-2 by ratings agency Standard & Poor’s (S&P).S&P also increased the rating of the bank’s preferred shares to BBB.Brad Kopp, Butterfield’s president and CEO, said: “We are pleased that S&P has affirmed our short-term and long-term deposit ratings in its latest update. That report highlights the strengths of the bank’s balance sheet and views favourably the bank’s risk-averse strategy.“During a time when we have seen some of the largest banks in the world downgraded on increasingly stringent ratings criteria, we believe S&P’s report helps validate that we are continuing to do the right things to strengthen the franchise and manage customer relationships during times of economic uncertainty.”In affirming the bank’s ratings, S&P cited Butterfield’s strong capital and earnings and above-average funding, relative to other banks in Bermuda.At September 30, 2011, Butterfield’s total capital ratio was 22.5 percent, its tier one capital ratio was 16.8 percent and its tangible common equity ratio stood at 6.5 percent. The bank reported profits of $31.4 million for the first nine months of 2011.Commenting on the strength of Butterfield’s balance sheet, the S&P update said that Butterfield’s “loan performance has improved in recent quarters, notably in the hospitality loan portfolio, despite a weakening local economy”.S&P also cited Butterfield’s maintenance of a large proportion of core deposits, which more than fully funds the loan portfolio, and highly liquid investment securities as factors in assessing the bank as having “above average” funding and “adequate” liquidity relative to the average bank on the Island.S&P also commented on the stability of Butterfield’s deposit base: “Gathered largely through its community banking businesses, customer deposits constitute the majority of the bank’s funding, which we view as stable and with low customer concentration.”The December 13 update said that S&P expected Butterfield to remain profitable in 2012 and 2013, based on its forecasts of low loan loss provisions, gradually improving net interest margins, growth in fee-based revenue and additional expense reductions.