Butterfield Reports Third Quarter 2024 Results
Financial highlights for the third quarter of 2024:
-
Net income of
$52.7 million , or$1.16 per share, and core net income1 of$52.8 million , or$1.16 per share - Return on average common equity of 20.3% and core return on average tangible common equity1 of 22.5%
- Net interest margin of 2.61%, cost of deposits of 1.91%
-
Board declares dividend for the quarter ended
September 30, 2024 of$0.44 per share -
Repurchases of 1.0 million common shares at an average price of
$37.00 per share
Net income for the third quarter of 2024 was
The return on average common equity for the third quarter of 2024 was 20.3% compared to 20.7% for the previous quarter and 20.6% for the third quarter of 2023. The core return on average tangible common equity1 for the third quarter of 2024 was 22.5%, compared to 23.3% for the previous quarter and 26.1% for the third quarter of 2023. The efficiency ratio for the third quarter of 2024 was 60.3%, compared to 62.4% for the previous quarter and 64.1% for the third quarter of 2023. The core efficiency ratio1 for the third quarter of 2024 was 60.2% compared with 61.8% in the previous quarter and 58.3% for the third quarter of 2023.
Net income was up in the third quarter of 2024 versus the prior quarter primarily due to higher net interest income and lower non-interest expense, as well as a modest increase in non-interest income.
Net interest income (“NII”) for the third quarter of 2024 was
Net interest margin (“NIM”) for the third quarter of 2024 was 2.61%, a decrease of 3 basis points from 2.64% in the previous quarter and down 15 basis points from 2.76% in the third quarter of 2023. NIM in the third quarter of 2024 decreased compared to the prior quarter and third quarter of 2023 due to mix shift to term deposits and lower treasury yields, partially offset by increased yields on investments.
Non-interest income for the third quarter of 2024 was
Non-interest expenses were
Period end deposit balances were
Tangible book value per share improved by
The Bank maintained its balanced capital return policy. The Board again declared a quarterly dividend of
The current total regulatory capital ratio as at
(1) |
See table "Reconciliation of US GAAP Results to Core Earnings" below for reconciliation of US GAAP results to non-GAAP measures. |
|
ANALYSIS AND DISCUSSION OF THIRD QUARTER RESULTS |
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Income statement |
|
Three months ended (Unaudited) |
|||||||
(in $ millions) |
|
2024 |
|
2024 |
|
2023 |
|||
Non-interest income |
|
56.0 |
|
|
55.6 |
|
|
52.0 |
|
Net interest income before provision for credit losses |
|
88.1 |
|
|
87.4 |
|
|
90.2 |
|
Total net revenue before provision for credit losses and other gains (losses) |
|
144.1 |
|
|
143.1 |
|
|
142.2 |
|
Provision for credit (losses) recoveries |
|
(1.3 |
) |
|
(0.5 |
) |
|
(0.5 |
) |
Total other gains (losses) |
|
(0.1 |
) |
|
0.1 |
|
|
— |
|
Total net revenue |
|
142.7 |
|
|
142.7 |
|
|
141.7 |
|
Non-interest expenses |
|
(88.8 |
) |
|
(91.1 |
) |
|
(92.5 |
) |
Total net income before taxes |
|
54.0 |
|
|
51.5 |
|
|
49.1 |
|
Income tax benefit (expense) |
|
(1.2 |
) |
|
(0.9 |
) |
|
(0.4 |
) |
Net income |
|
52.7 |
|
|
50.6 |
|
|
48.7 |
|
|
|
|
|
|
|
|
|||
Net earnings per share |
|
|
|
|
|
|
|||
Basic |
|
1.18 |
|
|
1.11 |
|
|
1.00 |
|
Diluted |
|
1.16 |
|
|
1.09 |
|
|
0.99 |
|
|
|
|
|
|
|
|
|||
Per diluted share impact of other non-core items 1 |
|
— |
|
|
0.02 |
|
|
0.17 |
|
Core earnings per share on a fully diluted basis 1 |
|
1.16 |
|
|
1.11 |
|
|
1.16 |
|
|
|
|
|
|
|
|
|||
Adjusted weighted average number of participating shares on a fully diluted basis(in thousands of shares) |
|
45,557 |
|
|
46,298 |
|
|
49,140 |
|
|
|
|
|
|
|
|
|||
Key financial ratios |
|
|
|
|
|
|
|||
Return on common equity |
|
20.3 |
% |
|
20.7 |
% |
|
20.6 |
% |
Core return on average tangible common equity 1 |
|
22.5 |
% |
|
23.3 |
% |
|
26.1 |
% |
Return on average assets |
|
1.5 |
% |
|
1.5 |
% |
|
1.4 |
% |
Net interest margin |
|
2.61 |
% |
|
2.64 |
% |
|
2.76 |
% |
Core efficiency ratio 1 |
|
60.2 |
% |
|
61.8 |
% |
|
58.3 |
% |
(1) See table "Reconciliation of US GAAP Results to Core Earnings" below for reconciliation of US GAAP results to non-GAAP measures. |
Balance Sheet |
|
As at |
||||
(in $ millions) |
|
2024 |
|
2023 |
||
Cash and cash equivalents |
|
2,067 |
|
|
1,647 |
|
Securities purchased under agreements to resell |
|
1,143 |
|
|
187 |
|
Short-term investments |
|
607 |
|
|
1,038 |
|
Investments in securities |
|
5,468 |
|
|
5,292 |
|
Loans, net of allowance for credit losses |
|
4,648 |
|
|
4,746 |
|
Premises, equipment and computer software, net |
|
152 |
|
|
154 |
|
|
|
97 |
|
|
99 |
|
Accrued interest and other assets |
|
192 |
|
|
211 |
|
Total assets |
|
14,373 |
|
|
13,374 |
|
|
|
|
|
|
||
Total deposits |
|
12,738 |
|
|
11,987 |
|
Accrued interest and other liabilities |
|
472 |
|
|
285 |
|
Long-term debt |
|
99 |
|
|
98 |
|
Total liabilities |
|
13,309 |
|
|
12,370 |
|
Common shareholders’ equity |
|
1,064 |
|
|
1,004 |
|
Total shareholders' equity |
|
1,064 |
|
|
1,004 |
|
Total liabilities and shareholders' equity |
|
14,373 |
|
|
13,374 |
|
|
|
|
|
|
||
Key Balance Sheet Ratios: |
|
2024 |
|
2023 |
||
Common equity tier 1 capital ratio2 |
|
22.1 |
% |
|
23.0 |
% |
Tier 1 capital ratio2 |
|
22.1 |
% |
|
23.0 |
% |
Total capital ratio2 |
|
24.3 |
% |
|
25.4 |
% |
Leverage ratio2 |
|
7.1 |
% |
|
7.6 |
% |
Risk-Weighted Assets (in $ millions) |
|
4,776 |
|
|
4,541 |
|
Risk-Weighted Assets / total assets |
|
33.2 |
% |
|
34.0 |
% |
Tangible common equity ratio |
|
6.8 |
% |
|
6.8 |
% |
Book value per common share (in $) |
|
24.09 |
|
|
21.39 |
|
Tangible book value per share (in $) |
|
21.90 |
|
|
19.29 |
|
Non-accrual loans/gross loans |
|
1.9 |
% |
|
1.3 |
% |
Non-performing assets/total assets |
|
1.5 |
% |
|
1.0 |
% |
Allowance for credit losses/total loans |
|
0.6 |
% |
|
0.5 |
% |
(2) In accordance with regulatory capital guidance, the Bank has elected to make use of transitional arrangements which allow the deferral of the |
QUARTER ENDED
Net Income
Net income for the quarter ended
Movements in net income during the quarter ended
-
$0.4 million increase in non-interest income driven by (i)$0.6 million increase in banking fees due to one-off loan prepayment fees and increased card volumes; (ii)$0.6 million increase in asset management fees due to increases in asset valuations; (iii) offset by$0.9 million decrease in other non-interest income due to a decrease in unclaimed customer balances being recognized in revenue, and a$0.4 million decrease in foreign exchange revenue due to seasonality and lower volumes; -
$0.6 million increase in net interest income before provision for credit losses driven by an increased volume of interest earning assets, increased yields on new investment assets and additional day count. This was partially offset by decreased yields on treasury assets as market interest rates declined; -
$0.8 million increase in provision for credit losses driven by a commercial facility inBermuda ; -
$2.4 million decrease in non-interest expenses driven by (i)$1.9 million decrease in professional and outside services fees in the current quarter; and (ii)$0.4 million decrease in technology and communications from reduced depreciation on IT equipment and lower software maintenance costs; and -
$0.3 million increase in income tax expenses due to higher net income in theChannel Islands .
Non-Core Items1
Non-core items resulted in expenses, net of gains, of
Management does not believe that comparative period expenses, gains or losses identified as non-core are indicative of the results of operations of the Bank in the ordinary course of business.
(1) |
See table "Reconciliation of US GAAP Results to Core Earnings" below for reconciliation of US GAAP results to non-GAAP measures. |
BALANCE SHEET COMMENTARY AT
Total Assets
Total assets of the Bank were
Loans Receivable
The loan portfolio totaled
The allowance for credit losses at
The loan portfolio represented 32.3% of total assets at
As at
Other real estate owned (“OREO”) decreased by
Investment in Securities
The investment portfolio was
The investment portfolio is made up of high-quality assets with 100% invested in A-or-better-rated securities. The investment book yield was 2.39% during the quarter ended
Deposits
Average total deposit balances were consistent with the prior quarter at
Average Balance Sheet2 |
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For the three months ended |
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|
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|
||||||||||||
(in $ millions) |
Average balance ($) |
Interest ($) |
Average rate (%) |
|
Average balance ($) |
Interest ($) |
Average rate (%) |
|
Average balance ($) |
Interest ($) |
Average rate (%) |
||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash and cash equivalents and short-term investments |
3,572.7 |
42.0 |
|
4.66 |
|
|
3,468.8 |
41.4 |
|
4.78 |
|
|
2,559.2 |
28.8 |
|
4.47 |
|
Investment in securities |
5,239.2 |
31.5 |
|
2.39 |
|
|
5,172.6 |
29.6 |
|
2.30 |
|
|
5,494.9 |
28.5 |
|
2.06 |
|
Available-for-sale |
1,907.3 |
12.7 |
|
2.64 |
|
|
1,797.1 |
10.8 |
|
2.41 |
|
|
1,926.0 |
8.8 |
|
1.81 |
|
Held-to-maturity |
3,331.9 |
18.9 |
|
2.24 |
|
|
3,375.4 |
18.8 |
|
2.24 |
|
|
3,568.9 |
19.7 |
|
2.19 |
|
Loans |
4,566.2 |
76.4 |
|
6.64 |
|
|
4,622.7 |
76.6 |
|
6.65 |
|
|
4,897.5 |
80.4 |
|
6.51 |
|
Commercial |
1,298.9 |
21.6 |
|
6.61 |
|
|
1,342.8 |
21.7 |
|
6.50 |
|
|
1,394.9 |
23.2 |
|
6.60 |
|
Consumer |
3,267.3 |
54.8 |
|
6.66 |
|
|
3,279.9 |
54.8 |
|
6.71 |
|
|
3,502.6 |
57.2 |
|
6.47 |
|
Interest earning assets |
13,378.1 |
150.0 |
|
4.45 |
|
|
13,264.1 |
147.6 |
|
4.46 |
|
|
12,951.6 |
137.7 |
|
4.22 |
|
Other assets |
421.5 |
|
|
|
430.4 |
|
|
|
416.7 |
|
|
||||||
Total assets |
13,799.6 |
|
|
|
13,694.5 |
|
|
|
13,368.3 |
|
|
||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
||||||
Deposits - interest bearing |
9,805.8 |
(59.7 |
) |
(2.41 |
) |
|
9,807.6 |
(58.7 |
) |
(2.40 |
) |
|
9,340.4 |
(46.1 |
) |
(1.96 |
) |
Securities sold under agreement to repurchase |
81.9 |
(0.9 |
) |
(4.30 |
) |
|
2.9 |
— |
|
(4.83 |
) |
|
— |
— |
|
— |
|
Long-term debt |
98.6 |
(1.4 |
) |
(5.52 |
) |
|
98.6 |
(1.4 |
) |
(5.58 |
) |
|
98.4 |
(1.4 |
) |
(5.53 |
) |
Interest bearing liabilities |
9,986.3 |
(61.9 |
) |
(2.46 |
) |
|
9,909.1 |
(60.1 |
) |
(2.43 |
) |
|
9,438.8 |
(47.5 |
) |
(2.00 |
) |
Non-interest bearing current accounts |
2,561.9 |
|
|
|
2,636.8 |
|
|
|
2,739.3 |
|
|
||||||
Other liabilities |
249.6 |
|
|
|
243.8 |
|
|
|
279.3 |
|
|
||||||
Total liabilities |
12,797.8 |
|
|
|
12,789.6 |
|
|
|
12,457.4 |
|
|
||||||
Shareholders’ equity |
1,001.9 |
|
|
|
904.9 |
|
|
|
910.9 |
|
|
||||||
Total liabilities and shareholders’ equity |
13,799.6 |
|
|
|
13,694.5 |
|
|
|
13,368.3 |
|
|
||||||
Non-interest bearing funds net of non-interest earning assets (free balance) |
3,391.8 |
|
|
|
3,355.0 |
|
|
|
3,512.8 |
|
|
||||||
Net interest margin |
|
88.1 |
|
2.61 |
|
|
|
87.4 |
|
2.64 |
|
|
|
90.2 |
|
2.76 |
|
(2) Averages are based upon a daily averages for the periods indicated. |
Total assets under administration for the trust and custody businesses were
Reconciliation of US GAAP Results to Core Earnings
The table below shows the reconciliation of net income in accordance with US GAAP to core earnings, a non-GAAP measure, which excludes certain significant items that are included in our US GAAP results of operations. We focus on core net income, which we calculate by adjusting net income to exclude certain income or expense items that are not representative of our business operations, or “non-core”. Core net income includes revenue, gains, losses and expense items incurred in the normal course of business. We believe that expressing earnings and certain other financial measures excluding these non-core items provides a meaningful base for period-to-period comparisons, which management believes will assist investors in analyzing the operating results of the Bank and predicting future performance. We believe that presentation of these non-GAAP financial measures will permit investors to assess the performance of the Bank on the same basis as management.
Core Earnings |
Three months ended |
|||||||
(in $ millions except per share amounts) |
2024 |
|
2024 |
|
2023 |
|||
Net income |
52.7 |
|
|
50.6 |
|
|
48.7 |
|
Non-core items |
|
|
|
|
|
|||
Non-core expenses |
|
|
|
|
|
|||
Early retirement program, voluntary separation, redundancies and other non-core compensation costs |
— |
|
|
0.2 |
|
|
8.2 |
|
Restructuring charges and related professional service fees |
0.1 |
|
|
0.6 |
|
|
— |
|
Total non-core expenses |
0.1 |
|
|
0.8 |
|
|
8.2 |
|
Total non-core items |
0.1 |
|
|
0.8 |
|
|
8.2 |
|
Core net income |
52.8 |
|
|
51.4 |
|
|
57.0 |
|
|
|
|
|
|
|
|||
Average common equity |
1,029.2 |
|
|
979.4 |
|
|
940.2 |
|
Less: average goodwill and intangible assets |
(95.5 |
) |
|
(95.3 |
) |
|
(72.9 |
) |
Average tangible common equity |
933.7 |
|
|
884.1 |
|
|
867.2 |
|
Core earnings per share fully diluted |
1.16 |
|
|
1.11 |
|
|
1.16 |
|
Return on common equity |
20.3 |
% |
|
20.7 |
% |
|
20.6 |
% |
Core return on average tangible common equity |
22.5 |
% |
|
23.3 |
% |
|
26.1 |
% |
|
|
|
|
|
|
|||
Shareholders' equity |
1,064.2 |
|
|
999.1 |
|
|
922.9 |
|
Less: goodwill and intangible assets |
(96.7 |
) |
|
(94.4 |
) |
|
(70.6 |
) |
Tangible common equity |
967.5 |
|
|
904.7 |
|
|
852.3 |
|
Basic participating shares outstanding (in millions) |
44.2 |
|
|
45.2 |
|
|
48.1 |
|
Tangible book value per common share |
21.90 |
|
|
20.03 |
|
|
17.73 |
|
|
|
|
|
|
|
|||
Non-interest expenses |
88.8 |
|
|
91.1 |
|
|
92.5 |
|
Less: non-core expenses |
(0.1 |
) |
|
(0.8 |
) |
|
(8.2 |
) |
Less: amortization of intangibles |
(1.9 |
) |
|
(1.9 |
) |
|
(1.4 |
) |
Core non-interest expenses before amortization of intangibles |
86.7 |
|
|
88.4 |
|
|
82.9 |
|
Core revenue before other gains and losses and provision for credit losses |
144.1 |
|
|
143.1 |
|
|
142.2 |
|
Core efficiency ratio |
60.2 |
% |
|
61.8 |
% |
|
58.3 |
% |
Conference Call Information:
Butterfield will host a conference call to discuss the Bank’s results on
About Non-GAAP Financial Measures:
Certain statements in this release involve the use of non-GAAP financial measures. We believe such measures provide useful information to investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with US GAAP; however, our non-GAAP financial measures have a number of limitations. As such, investors should not view these disclosures as a substitute for results determined in accordance with US GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use. See "Reconciliation of US GAAP Results to Core Earnings" for additional information.
Forward-Looking Statements:
Certain of the statements made in this release are forward-looking statements within the meaning of the
All forward-looking statements in this disclosure are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in our
Presentation of Financial Information:
Certain monetary amounts, percentages and other figures included in this report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them.
About Butterfield:
Butterfield is a full-service bank and wealth manager headquartered in
BF-All
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Investor Relations Contact:
Investor Relations
Phone: (441) 299 3816
E-mail: noah.fields@butterfieldgroup.com
Media Relations Contact:
Phone: (441) 299 1624
E-mail: nicky.stevens@butterfieldgroup.com
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