Butterfield Bank announced first-quarter earnings of $36.3 million on Friday — an increase of 1.8 percent compared to the same period last year.

Alan Thompson, the Bank's president and chief executive officer, said he was pleased with the performance "against a backdrop of ongoing instability in financial markets".

Tha Bank's board declared an unchanged quarterly dividend of 16 cents per share, payable on May 19 to shareholders of record as of May 5.

During the January to March period, the Bank achieved a record net interest income of $67.3 million, up 13.6 percent on the first quarter of 2007.

Customer loans hit record heights, climbing 11 percent to $4.2 billion, and the Bank's total assets figure of $12.8 billion, up 13 percent, was also a record.

Assets under administration soared nearly 15 percent to $143.3 billion and assets under management rose five percent to $11.3 billion.

The return on equity for the quarter was 22.9 percent, exceeding its target of 20 percent.

The 150-year-old Bermuda-based bank has expanded substantially in recent years and now it also has operations in the Cayman Islands, Barbados, Guernsey, Switzerland, the Bahamas and the UK. Its acquisition of the Bentley Reid Group in the last quarter of last year added Malta and Hong Kong to the list of jurisdictions in which the bank operates.

The Group's employee head count rose to 1,892, compared to 1,784 in the first quarter of last year. Salaries and other employee benefits went up 13.4 percent year on year, to $49.6 million. Total operating expenses rose 21.4 percent to $89.3 million.

In its earnings statement, the Bank also referred to unrealised losses on trading securities of $1.1 million, compared to a profit of $0.8 million in 2007 "reflecting the difficult market conditions across most asset classes".

CEO Mr. Thompson said: "Against a backdrop of ongoing instability in financial markets, we continue to be pleased with the Group's performance.

"There were certainly economic challenges in many international markets during the quarter, involving decreasing interest rates and a general widening of credit spreads across most industry sectors, but Butterfield Bank Group's core businesses generated satisfactory results.

"We saw solid increases in loans and deposits, and good revenue growth in our asset management, fund administration, and trust and custody businesses.

"We also made good progress integrating the Bentley Reid Group businesses into the Butterfield Bank Group operating model.

"Although greenfield expansion into established markets is often difficult, we continue to be pleased with the business development efforts of our Swiss wealth management offices."

Richard Ferrett, executive vice-president and chief financial officer, said: "We are pleased to report that, despite the impact of declining markets, the value of assets administered by the Group actually rose by nearly 15 percent year on year, primarily reflecting business growth in our trust and fund administration businesses.

"This contributed to strong growth in non-interest income, up some 16.4 percent. Interest income during the quarter was a record $67.5 million, thanks in part to good growth in the loan book and a five basis point widening in our net interest margin.

"As we look ahead to what promises to be a challenging remainder of 2008, we do so with a strong and highly liquid balance sheet."