Butterfield’s earnings remain strong through pandemic

Butterfield recently announced that their second quarter earnings for 2021 remained strong, a testament to the bank’s sound business practices and also the weathering of the pandemic by the jurisdictions in which the bank operates, its Chief Executive Officer said.

For the second quarter 2021, net income was $39.6 million, or $0.79 per share, and core net income was $40.1 million, or $0.80 per share and the Board declared a dividend for the quarter of $0.44 per share, its Bermuda head office announced.

Michael Collins, Butterfield's Chairman and Chief Executive Officer, said Butterfield produced a solid second quarter of 2021 with a core return on average tangible common equity of 18.7 per cent, despite a sustained low interest rate environment.

“Our consistent high returns, even through the pandemic, are the product of a business model characterised by low credit risk, substantial liquidity, strong fee income, and favourable competitive dynamics,” he advised.

The bank was able to generate a recurring 15 per cent to 25 per cent core return on average tangible common equity throughout the interest rate cycle, while only lending in its home jurisdictions, where they had market knowledge, as well as investing excess deposits in US Government Treasuries and Agencies.

“In the second quarter, Butterfield generated higher non-interest income and steady net interest income. We remain committed to the thoughtful management of capital which we allocate to a sustainable quarterly dividend, modest organic growth, potential acquisitions, and share repurchases subject to market conditions,” he explained. “As our deposits continue to grow through deepening corporate, trust, and private banking relationships, we will monitor the duration of these liabilities to offer off-balance sheet investment products where appropriate.”

Mr Collins said all Butterfield’s operating jurisdictions fared relatively well during the pandemic as airports and sea borders closed, which he said was a testament to the indigenous wealth and strong domestic economies of small island nations.

“International business in Bermuda, Cayman, and the Channel Islands was largely unaffected due to the success of remote working models,” he advised. “As vaccinations rise, we are seeing improvements in tourism and business volumes across our markets, although offshore economies may regress somewhat if variants emerge during the winter months impacting flight capacity.”

Mr Collins said the bank continued to explore potential acquisition targets with an emphasis on private trust and in-market banking opportunities and would keep the market apprised of any developments as appropriate.