Butterfield Bank yesterday posted profit of $11.2 million for the third quarter as net interest income rose by 19 percent.The bank’s third successive quarterly profit compared to a net loss of $18.6 million in the same period of 2010 and means the bank’s net income for the first nine months of the year totals $31.4 million.CEO Brad Kopp was keen to stress that the higher returns from investments had not been gained through risky investments.“We are very carefully extending our maturities,” Mr Kopp told The Royal Gazette. “After the bank got into trouble with risky investments, everything was very short-term. Now we have put about $1 billion of our $5 billion in assets into two to three year investments.“This has helped us to achieve an extra return, which is going to our bottom line.“This is a difficult time to invest longer term, but we have some sticky, longer-term deposits so we are able to take that money and invest it longer term.”The changes in the investment portfolio allowed the bank to widen its net interest margin to 2.46 percent from 2.02 percent in the third quarter of 2010. The increase of 44 basis points helped the bank achieve net interest income of $55 million compared to $46.2 million in the same period of last year.Non-interest income, however, fell by $0.9 million, as the bank felt the effects of the struggling economy.“The state of the economy has impacted our volumes,” Mr Kopp said. “We’ve seen that in teller transactions, ATMs and card transactions. The economy affects banks.”However, Butterfield loan portfolio increased by $212.2 million to $4.3 billion at September 30, boosted by an increase in mortgages taken out by high net worth individuals at the bank’s Guernsey and UK operations. Allowance for credit losses increased by $5.8 million to $72.6 million. In Bermuda, new provisions for bad loans in the third quarter were $2.03 million.Overall, the quality of the bank’s loan book improved, with non-accrual loans representing 3.4 percent of total loans, compared to 3.9 percent at the end of 2010.“We want to send out the message that if you can pay your interest, then we are ready to make loans to you,” Mr Kopp said. “We have seen some activity in Bermuda with Government and for the Waterloo House project.“We’ve also seen some activity from small companies, with one of our clients borrowing $3 million to put up a new building.“We’re making progress with our non-performing loans. We’re working through solutions with the hotels. We want to work with people to keep them in their homes.”Efforts were ongoing to find a buyer for Newstead and the Pink Beach Club, he said, while The Reefs had seen some recent success in selling fractional units, helping it to pay back more of its loan to the bank.The bank recorded an annualised reduction of $4 million in salaries and benefits after it cut its headcount by 128 across all jurisdictions. The bank announced 25 job losses in Bermuda in March this year.Butterfield has maintained its charitable donations to the community, notably through the Butterfield Hope Award programme which gives $25,000 to a different charity every month. Nine awards have been given so far.Mr Kopp was confident that the trends were continuing to point in the right direction for the bank which was rocked by soured investments linked to the US property market during sub-prime mortgage crisis and the global financial crisis of 2008.The CEO said he’d had a few calls from investors about Butterfield’s exposure the European sovereign debt crisis.He said: “We have significantly reduced exposures to continental Europe, with no direct sovereign debt and exposure to the banking sector limited to deposits or government-guaranteed notes.”The bank is also in the course of implementing a new system, which will change the face of its online banking offering. It is already up and running in Cayman and it will be introduced in Bermuda next month.At September 30, Butterfield had a total capital ratio of 22.5 percent and a tier 1 capital ratio of 16.8 percent. Its ratio of tangible common equity to tangible assets was 6.5 percent.