The Bank of NT Butterfield & Son Ltd has declared net income for the second quarter ended 30 June of $27.5 million, down from $32.9 million in the same quarter a year ago.

The six-month net income was $50.7 million, up from $46.2 million for last year’s first six months.

Core earnings for the second quarter were $26.0 million, up $5.8 million or 28.7 percent, which drove an improvement in the core cash return on average tangible common equity ratio to 15 percent compared to 11 percent in the period last year.

Year-to-date core earnings for the six months ended 30 June 2014 were $49.1 million, up $13.6 million (38.3 percent) from $35.5 million for the six-month period ended 30 June 2013.

Butterfield’s chairman and chief executive officer Brendan McDonagh said: “We are pleased to report that Butterfield’s quarterly and half-year core earnings showed good year-on-year growth in earnings of nearly 30 percent, which translates to an improvement in core returns to common shareholders to 15 percent, a key milestone in Butterfield’s strategic objective of delivering strong returns to our shareholders.

“Each successive profitable quarter serves to improve Butterfield’s already-strong capital position and provides the bank with the opportunity to enhance shareholder value through investment in strategic businesses that will drive long-term growth, and more directly through share buy-backs and dividends.

“Our acquisition strategy seeks to minimise risk by investing in businesses in which we have expertise and a meaningful market presence, whilst delivering accretive earnings in excess of our cost of capital within our risk tolerance framework.

“During the quarter, we enhanced our trust and fiduciary services presence in Guernsey — a core market for Butterfield — with the completion of the acquisition of the Legis Group’s trust business.

“Subsequent to quarter end, we also announced that we have reached an agreement to acquire parts of HSBC’s retail and corporate banking business in the Cayman Islands — our second largest market — which will enhance our Cayman business and see total assets grow from $2.2 billion to an anticipated $3.0 billion, strengthening our leading market position.”

John Maragliano, Butterfield’s chief financial officer, said: “In the second quarter, the bank’s net income and core earnings showed significant year-over-year improvement as a result of our continued approach to prudent balance sheet and expense management and execution of our capital management plan.

“Net interest income before provision for credit losses was up by $4 million on improved investment yields owing to our consistent asset and liability management strategy and the effect of the retirement of two tranches of subordinated debt earlier in the year, the latter reducing quarterly interest expenses by $1.4 million.”

For the bank’s Bermuda operations, quarterly net income after gains and losses was $19.2 million, a decrease of $4.8 million from $24.0 million.

The bank acquired or purchased 1.6 million common shares to be held as treasury shares at an average cost of $1.99 per share (total cost of $3.2 million) and 175 preference shares at an average cost of $1,181 per share (total cost of $0.2 million).

The board declared an interim dividend of one cent per common and contingent value convertible preference share to be paid on August 29, 2014 to shareholders of record on August 15, 2014.