Butterfield Reports First Quarter 2024 Results
- Net interest income for the first quarter was relatively flat, with a slight decrease compared to the previous quarter and a more significant decrease compared to the first quarter of 2023.
- Non-interest income decreased in the first quarter of 2024 due to lower banking fees but was higher compared to the first quarter of 2023.
- Non-interest expenses decreased in the first quarter of 2024 compared to the previous quarter but were higher compared to the first quarter of 2023.
- Core non-interest expenses were lower compared to the previous quarter but higher compared to the first quarter of 2023, primarily due to increased costs associated with IT improvements.
- Period end deposit balances increased slightly in the first quarter of 2024, and tangible book value per share improved by 0.8%.
- Butterfield repurchased 1.2 million common shares under the share repurchase program during the first quarter of 2024.
- The bank maintained a balanced capital return policy and had a total regulatory capital ratio of 24.9% as of March 31, 2024.
- Assets under administration and assets under management showed slight changes compared to the previous quarter.
- Core earnings for the first quarter of 2024 were $55.0 million, with a core return on average tangible common equity of 24.5%.
- A conference call to discuss the results will be held on April 24, 2024, at 10:00 a.m. Eastern Time.
- None.
Insights
Examining the first quarter financial performance of Butterfield reveals several key metrics that are indicative of the bank's current health and future prospects. A slight decrease in net income from $53.5 million to $53.4 million suggests stability, albeit with a minimal decrease in profitability. This stability is further reflected in a consistent dividend payout of $0.44 per share, highlighting a reliable return to investors despite changes in market conditions.
Net interest margin contraction from 2.88% to 2.68% year-over-year is a concern, reflecting pressures from a competitive deposit market or potential shifts in loan quality. However, a strong core return on average tangible common equity of 24.5% showcases the bank’s ability to generate earnings from its tangible assets, which is a positive signal to investors evaluating the bank's efficiency in using capital.
From a balance sheet perspective, an increase in short-term investments signifies a conservative position likely taken in response to market uncertainty. For shareholders, the key takeaway is the bank's prudent capital management, as indicated by the regulatory capital ratio being conservatively above minimum Basel III requirements. Overall, these results suggest a cautious approach amidst a challenging interest rate environment.
In the broader banking sector, Butterfield's performance must be contextualized. The banking industry is navigating a dynamic environment characterized by fluctuating interest rates and regulatory demands. The reported loan portfolio composition, with a focus on residential mortgages and low exposure to commercial and hospitality real estate, can be seen as a risk-averse strategy that aligns closely with investor preferences for stability, particularly in Bermuda and the Cayman Islands where property markets have historically been robust.
Moreover, the decline in non-interest income due to seasonal variability is not uncommon in the industry. However, investors should monitor whether the increase in foreign exchange income and trust fees is sustainable or subject to market volatility. Additionally, non-interest expenses highlight ongoing investments in technology, potentially enhancing future operational efficiency.
Looking ahead, investors should consider the bank's liquidity position and capital return policy as indicators of its resilience to potential economic downturns and commitment to shareholder value, respectively. The bank's performance relative to its U.S. regional bank peers will be essential for evaluating its competitive positioning.
Financial highlights for the first quarter of 2024:
-
Net income of
$53.4 million $1.13 $55.0 million $1.17
-
Return on average common equity of
21.5% and core return on average tangible common equity1 of24.5%
-
Net interest margin of
2.68% , cost of deposits of1.78%
-
Board declares dividend for the quarter ended March 31, 2024 of
$0.44
Net income for the first quarter of 2024 was
The return on average common equity for the first quarter of 2024 was
Michael Collins, Butterfield's Chairman and Chief Executive Officer, commented, “The Bank’s first quarter results are a great start to the year and continue to demonstrate the strong profitability of Butterfield’s capital efficient non-interest earnings, well-structured balance sheet and thoughtful capital management. Since listing on the NYSE in 2016, the Bank has consistently maintained operating returns on tangible equity in the range of
Net income and core net income1 were flat compared to the prior quarter.
Net interest income (“NII”) for the first quarter of 2024 was
Net interest margin (“NIM”) for the first quarter of 2024 was
Non-interest income for the first 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 March 31, 2024 was
(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 FIRST QUARTER RESULTS |
|||||||||
Income statement |
|
Three months ended (Unaudited) |
|||||||
(in $ millions) |
|
March 31, 2024 |
|
December 31, 2023 |
|
March 31, 2023 |
|||
Non-interest income |
|
55.1 |
|
|
60.0 |
|
|
50.2 |
|
Net interest income before provision for credit losses |
|
87.1 |
|
|
86.9 |
|
|
97.4 |
|
Total net revenue before provision for credit losses and other gains (losses) |
|
142.2 |
|
|
146.9 |
|
|
147.5 |
|
Provision for credit (losses) recoveries |
|
0.4 |
|
|
(1.7 |
) |
|
(0.7 |
) |
Total other gains (losses) |
|
0.2 |
|
|
(0.3 |
) |
|
0.1 |
|
Total net revenue |
|
142.8 |
|
|
144.9 |
|
|
147.0 |
|
Non-interest expenses |
|
(88.5 |
) |
|
(92.2 |
) |
|
(84.1 |
) |
Total net income before taxes |
|
54.3 |
|
|
52.7 |
|
|
62.9 |
|
Income tax benefit (expense) |
|
(0.9 |
) |
|
0.8 |
|
|
(0.7 |
) |
Net income |
|
53.4 |
|
|
53.5 |
|
|
62.2 |
|
|
|
|
|
|
|
|
|||
Net earnings per share |
|
|
|
|
|
|
|||
Basic |
|
1.15 |
|
|
1.13 |
|
|
1.25 |
|
Diluted |
|
1.13 |
|
|
1.11 |
|
|
1.24 |
|
|
|
|
|
|
|
|
|||
Per diluted share impact of other non-core items 1 |
|
0.04 |
|
|
0.04 |
|
|
— |
|
Core earnings per share on a fully diluted basis 1 |
|
1.17 |
|
|
1.15 |
|
|
1.24 |
|
|
|
|
|
|
|
|
|||
Adjusted weighted average number of participating shares on a fully diluted basis (in thousands of shares) |
|
47,167 |
|
|
48,099 |
|
|
50,131 |
|
|
|
|
|
|
|
|
|||
Key financial ratios |
|
|
|
|
|
|
|||
Return on common equity |
|
21.5 |
% |
|
22.5 |
% |
|
28.0 |
% |
Core return on average tangible common equity 1 |
|
24.5 |
% |
|
25.4 |
% |
|
30.5 |
% |
Return on average assets |
|
1.6 |
% |
|
1.6 |
% |
|
1.8 |
% |
Net interest margin |
|
2.68 |
% |
|
2.73 |
% |
|
2.88 |
% |
Core efficiency ratio 1 |
|
59.8 |
% |
|
60.5 |
% |
|
56.0 |
% |
(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) |
|
March 31, 2024 |
|
December 31, 2023 |
||
Cash and cash equivalents |
|
1,746 |
|
|
1,647 |
|
Securities purchased under agreements to resell |
|
135 |
|
|
187 |
|
Short-term investments |
|
1,345 |
|
|
1,038 |
|
Investments in securities |
|
5,168 |
|
|
5,292 |
|
Loans, net of allowance for credit losses |
|
4,644 |
|
|
4,746 |
|
Premises, equipment and computer software, net |
|
150 |
|
|
154 |
|
Goodwill and intangibles, net |
|
96 |
|
|
99 |
|
Accrued interest and other assets |
|
243 |
|
|
211 |
|
Total assets |
|
13,528 |
|
|
13,374 |
|
|
|
|
|
|
||
Total deposits |
|
12,131 |
|
|
11,987 |
|
Accrued interest and other liabilities |
|
304 |
|
|
285 |
|
Long-term debt |
|
99 |
|
|
98 |
|
Total liabilities |
|
12,533 |
|
|
12,370 |
|
Common shareholders’ equity |
|
995 |
|
|
1,004 |
|
Total shareholders' equity |
|
995 |
|
|
1,004 |
|
Total liabilities and shareholders' equity |
|
13,528 |
|
|
13,374 |
|
|
|
|
|
|
||
Key Balance Sheet Ratios: |
|
March 31, 2024 |
|
December 31, 2023 |
||
Common equity tier 1 capital ratio2 |
|
22.6 |
% |
|
23.0 |
% |
Tier 1 capital ratio2 |
|
22.6 |
% |
|
23.0 |
% |
Total capital ratio2 |
|
24.9 |
% |
|
25.4 |
% |
Leverage ratio2 |
|
7.5 |
% |
|
7.6 |
% |
Risk-Weighted Assets (in $ millions) |
|
4,648 |
|
|
4,541 |
|
Risk-Weighted Assets / total assets |
|
34.4 |
% |
|
34.0 |
% |
Tangible common equity ratio |
|
6.7 |
% |
|
6.8 |
% |
Book value per common share (in $) |
|
21.53 |
|
|
21.39 |
|
Tangible book value per share (in $) |
|
19.45 |
|
|
19.29 |
|
Non-accrual loans/gross loans |
|
1.3 |
% |
|
1.3 |
% |
Non-performing assets/total assets |
|
1.2 |
% |
|
1.0 |
% |
Allowance for credit losses/total loans |
|
0.5 |
% |
|
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 January 1, 2020 Current Expected Credit Loss ("CECL") impact of |
QUARTER ENDED MARCH 31, 2024 COMPARED WITH THE QUARTER ENDED DECEMBER 31, 2023
Net Income
Net income for the quarter ended March 31, 2024 was
Movements within net income during the quarter ended March 31, 2024 compared to the previous quarter are attributable to following:
-
$4.9 million $4.3 million $1.0 million
-
$2.1 million Bermuda ;
-
$3.6 million $1.7 million $1.5 million $1.1 million $1.3 million
-
$1.7 million Singapore in the previous quarter.
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 MARCH 31, 2024 COMPARED WITH DECEMBER 31, 2023
Total Assets
Total assets of the Bank were
Loans Receivable
The loan portfolio totaled
The allowance for credit losses at March 31, 2024 totaled
The loan portfolio represented
As of March 31, 2024, the Bank had gross non-accrual loans of
Other real estate owned (“OREO”) remained flat at
Investment in Securities
The investment portfolio was
The investment portfolio is made up of high-quality assets with
Deposits
Average total deposit balances were
Average Balance Sheet2 |
||||||||||||||||||||||||||
|
For the three months ended |
|||||||||||||||||||||||||
|
March 31, 2024 |
|
December 31, 2023 |
|
March 31, 2023 |
|||||||||||||||||||||
(in $ millions) |
Average
|
Interest
|
Average
|
|
Average
|
Interest
|
Average
|
|
Average
|
Interest
|
Average
|
|||||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Cash and cash equivalents and short-term investments |
3,138.3 |
36.8 |
|
4.71 |
|
|
2,603.6 |
31.0 |
|
4.72 |
|
|
2,943.9 |
27.1 |
|
3.74 |
|
|||||||||
Investment in securities |
5,204.2 |
28.9 |
|
2.23 |
|
|
5,290.5 |
28.9 |
|
2.16 |
|
|
5,720.2 |
29.8 |
|
2.12 |
|
|||||||||
Available-for-sale |
1,766.3 |
9.6 |
|
2.17 |
|
|
1,798.8 |
9.1 |
|
2.01 |
|
|
2,005.6 |
8.9 |
|
1.80 |
|
|||||||||
Held-to-maturity |
3,437.9 |
19.3 |
|
2.25 |
|
|
3,491.7 |
19.7 |
|
2.24 |
|
|
3,714.6 |
20.9 |
|
2.28 |
|
|||||||||
Loans |
4,689.5 |
77.0 |
|
6.58 |
|
|
4,732.5 |
79.7 |
|
6.68 |
|
|
5,040.7 |
77.5 |
|
6.23 |
|
|||||||||
Commercial |
1,381.4 |
23.7 |
|
6.88 |
|
|
1,374.1 |
24.4 |
|
7.03 |
|
|
1,409.8 |
22.6 |
|
6.51 |
|
|||||||||
Consumer |
3,308.1 |
53.3 |
|
6.46 |
|
|
3,358.3 |
55.4 |
|
6.54 |
|
|
3,630.9 |
54.9 |
|
6.13 |
|
|||||||||
Interest earning assets |
13,031.9 |
142.7 |
|
4.39 |
|
|
12,626.6 |
139.6 |
|
4.39 |
|
|
13,704.7 |
134.5 |
|
3.98 |
|
|||||||||
Other assets |
412.0 |
|
|
|
421.6 |
|
|
|
395.9 |
|
|
|||||||||||||||
Total assets |
13,444.0 |
|
|
|
13,048.1 |
|
|
|
14,100.7 |
|
|
|||||||||||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Deposits - interest bearing |
9,586.5 |
(54.2 |
) |
(2.27 |
) |
|
9,208.6 |
(51.2 |
) |
(2.21 |
) |
|
9,786.5 |
(34.7 |
) |
(1.44 |
) |
|||||||||
Securities sold under agreement to repurchase |
4.6 |
(0.1 |
) |
(4.69 |
) |
|
4.7 |
(0.1 |
) |
(5.64 |
) |
|
0.4 |
— |
|
(4.50 |
) |
|||||||||
Long-term debt |
98.5 |
(1.4 |
) |
(5.58 |
) |
|
98.5 |
(1.4 |
) |
(5.53 |
) |
|
172.3 |
(2.4 |
) |
(5.65 |
) |
|||||||||
Interest bearing liabilities |
9,689.7 |
(55.6 |
) |
(2.30 |
) |
|
9,311.7 |
(52.6 |
) |
(2.24 |
) |
|
9,959.2 |
(37.1 |
) |
(1.51 |
) |
|||||||||
Non-interest bearing current accounts |
2,603.5 |
|
|
|
2,618.5 |
|
|
|
2,993.5 |
|
|
|||||||||||||||
Other liabilities |
250.0 |
|
|
|
228.9 |
|
|
|
241.1 |
|
|
|||||||||||||||
Total liabilities |
12,543.2 |
|
|
|
12,159.2 |
|
|
|
13,193.7 |
|
|
|||||||||||||||
Shareholders’ equity |
900.8 |
|
|
|
889.0 |
|
|
|
906.9 |
|
|
|||||||||||||||
Total liabilities and shareholders’ equity |
13,444.0 |
|
|
|
13,048.1 |
|
|
|
14,100.7 |
|
|
|||||||||||||||
Non-interest bearing funds net of non-interest earning assets (free balance) |
3,342.3 |
|
|
|
3,314.9 |
|
|
|
3,745.6 |
|
|
|||||||||||||||
Net interest margin |
|
87.1 |
|
2.68 |
|
|
|
86.9 |
|
2.73 |
|
|
|
97.4 |
|
2.88 |
|
|||||||||
(2) |
Averages are based upon a daily averages for the periods indicated. |
Assets Under Administration and Assets Under Management
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) |
March 31, 2024 |
|
December 31, 2023 |
|
March 31, 2023 |
||||
Net income |
53.4 |
|
|
53.5 |
|
|
62.2 |
|
|
Non-core items |
|
|
|
|
|
||||
Non-core expenses |
|
|
|
|
|
||||
Early retirement program, voluntary separation, redundancies and other non-core compensation costs |
1.3 |
|
|
(0.3 |
) |
|
— |
|
|
Asset acquisition costs |
— |
|
|
1.9 |
|
|
— |
|
|
Restructuring charges and related professional service fees |
0.3 |
|
|
0.2 |
|
|
— |
|
|
Total non-core expenses |
1.6 |
|
|
1.8 |
|
|
— |
|
|
Total non-core items |
1.6 |
|
|
1.8 |
|
|
— |
|
|
Core net income |
55.0 |
|
|
55.3 |
|
|
62.2 |
|
|
|
|
|
|
|
|
||||
Average common equity |
996.1 |
|
|
943.0 |
|
|
902.5 |
|
|
Less: average goodwill and intangible assets |
(97.4 |
) |
|
(77.7 |
) |
|
(74.2 |
) |
|
Average tangible common equity |
898.7 |
|
|
865.2 |
|
|
828.3 |
|
|
Core earnings per share fully diluted |
1.17 |
|
|
1.15 |
|
|
1.24 |
|
|
Return on common equity |
21.5 |
% |
|
22.5 |
% |
|
28.0 |
% |
|
Core return on average tangible common equity |
24.5 |
% |
|
25.4 |
% |
|
30.5 |
% |
|
|
|
|
|
|
|
||||
Shareholders' equity |
995.1 |
|
|
1,003.6 |
|
|
936.9 |
|
|
Less: goodwill and intangible assets |
(96.3 |
) |
|
(98.9 |
) |
|
(74.1 |
) |
|
Tangible common equity |
898.8 |
|
|
904.7 |
|
|
862.8 |
|
|
Basic participating shares outstanding (in millions) |
46.2 |
|
|
46.9 |
|
|
49.8 |
|
|
Tangible book value per common share |
19.45 |
|
|
19.29 |
|
|
17.32 |
|
|
|
|
|
|
|
|
||||
Non-interest expenses |
88.5 |
|
|
92.2 |
|
|
84.1 |
|
|
Less: non-core expenses |
(1.6 |
) |
|
(1.8 |
) |
|
— |
|
|
Less: amortization of intangibles |
(1.9 |
) |
|
(1.4 |
) |
|
(1.4 |
) |
|
Core non-interest expenses before amortization of intangibles |
85.0 |
|
|
89.0 |
|
|
82.7 |
|
|
Core revenue before other gains and losses and provision for credit losses |
142.2 |
|
|
146.9 |
|
|
147.5 |
|
|
Core efficiency ratio |
59.8 |
% |
|
60.5 |
% |
|
56.0 |
% |
|
Conference Call Information:
Butterfield will host a conference call to discuss the Bank’s results on Wednesday, April 24, 2024 at 10:00 a.m. Eastern Time. Callers may access the conference call by dialing +1 (844) 855-9501 (toll-free) or +1 (412) 858-4603 (international) ten minutes prior to the start of the call and referencing the Conference ID: Butterfield Group. A live webcast of the conference call, including a slide presentation, will be available in the investor relations section of Butterfield’s website at www.butterfieldgroup.com. A replay of the call will be archived on the Butterfield website for 12 months.
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 SEC reports and filings, including under the caption "Risk Factors" in our most recent Form 20-F. Such reports are available upon request from Butterfield, or from the Securities and Exchange Commission ("SEC"), including through the SEC’s website at https://www.sec.gov. Any forward-looking statements made by Butterfield are current views as at the date they are made. Except as otherwise required by law, Butterfield assumes no obligation and does not undertake to review, update, revise or correct any of the forward-looking statements included in this disclosure, whether as a result of new information, future events or other developments. You are cautioned not to place undue reliance on the forward-looking statements made by Butterfield in this disclosure. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, and should only be viewed as historical data. BF-All
About Butterfield:
Butterfield is a full-service bank and wealth manager headquartered in
View source version on businesswire.com: https://www.businesswire.com/news/home/20240423386505/en/
Investor Relations Contact:
Noah Fields
Investor Relations
The Bank of N.T. Butterfield & Son Limited
Phone: (441) 299 3816
E-mail: noah.fields@butterfieldgroup.com
Media Relations Contact:
Nicky Stevens
Group Strategic Marketing & Communications
The Bank of N.T. Butterfield & Son Limited
Phone: (441) 299 1624
E-mail: nicky.stevens@butterfieldgroup.com
Source: Bank of N.T. Butterfield & Son Limited
FAQ
What was Butterfield's net income for the first quarter of 2024?
What was the core net income for Butterfield in the first quarter of 2024?
What was the return on average common equity for Butterfield in the first quarter of 2024?
What was the core return on average tangible common equity for Butterfield in the first quarter of 2024?
What was Butterfield's net interest margin for the first quarter of 2024?
Did Butterfield declare a dividend for the first quarter of 2024?
What was the efficiency ratio for Butterfield in the first quarter of 2024?
How did Butterfield's non-interest income change in the first quarter of 2024 compared to the previous quarter?
What was the change in Butterfield's non-interest expenses in the first quarter of 2024 compared to the previous quarter?
What was the total regulatory capital ratio for Butterfield as of March 31, 2024?
