Butterfield Bank's $130 million rights offering was oversubscribed, the company announced yesterday.

The success of the biggest common share offering in Bermuda's history increases the proportion of the bank that is locally owned.

And it indicates that local investors still have a healthy appetite for investing in the 152-year-old bank despite the 95-percent fall in its share price over the past two-and-a-half years.

It is the second time in a year the bank has managed an oversubscribed offering to the local capital market, following the $200 million preference share issue in June 2009.

The rights gave legacy shareholders the rights to buy common shares of the bank at $1.21 — the same price as a group of mainly overseas investors paid in March when they ploughed more than half a billion dollars into the bank.

Butterfield chief executive officer Bradford Kopp hailed the result of the offering as a vote of confidence from local investors.

"Butterfield's legacy shareholders and other investors have expressed confidence in the Bank and its future by taking up all of the available rights shares," Mr. Kopp said.

"This is particularly encouraging following a difficult two-year period during which shareholders have seen the value of their investments in the bank decline significantly."

The $1.21 price rights subscribers paid, gave a seven percent premium over the $1.30 at which Butterfield shares closed yesterday in BSX trading.

"On behalf of the board and all of us at Butterfield, we would like to thank our shareholders for their ongoing loyalty," Mr. Kopp said.

"Our task is to reward that loyalty by returning the bank to profitability and rebuilding sustainable value in the Butterfield franchise. With a de-risked balance sheet, strong capital position, sound operating structure and a great team of dedicated employees, we are very confident in our ability to achieve that goal."

The bank has suffered losses in the hundreds of millions of dollars through its investments in securities linked to US mortgages, which plunged in value when house prices fell and loan defaults soared.

Last month the bank announced a first-quarter loss of $176 million, mostly as a result of selling off $820 million of the troubled assets at a loss to clean up its balance sheet.

On March 2, Butterfield announced the $550 million investment by investors led by private-equity giant the Carlyle Group and the Canadian Imperial Bank of Commerce.

That reduced legacy shareholders' ownership stake to 17.5 percent. The rights offering allowed subscribers to claw back some of the equity sold to the new investors and the full take-up meant that legacy shareholders and those who purchased the rights on the BSX now own 37 percent of the bank's common shares.

Butterfield said the rights shares will be converted into 99.3 million common shares and 8.3 million contingent value convertible preference shares.