Butterfield’s new executive chairman Brendan McDonagh wants to develop a strategic direction that clearly sets out what the bank will look like in the next three to four years.Mr McDonagh, who sees himself as a full-time “extra pair of hands” to steer Butterfield in it continued turnaround, pointed out the bank announced last year the sale of its trust, wealth management and advisory businesses in Hong Kong and its trust operation in Malta.And last month Butterfield sold a 27.76 percent interest in Cayman insurer Island Heritage Holdings to BF&M Ltd, resulting in an initial gain of $3.7 million in the second quarter, with a potential further gain of about $1 million. Island Heritage was majority owned by Flagstone Reinsurance Holdings and BF&M bought it for around $68 million.“Now we need to see what other businesses we should be in, or not be in,” Mr McDonagh said. “And we need to be sure the ones we stay in have the right business models and customer service is the best that it can be.”For example, he said “the provision of wealth management services is considered a core Butterfield competency and area of ongoing growth”.Mr McDonagh said it was not possible for the bank to offer comments regarding any specific transactions it may be considering, but: “In the interest of maximising shareholder value over the long term, the bank continually assesses the performance and growth potential of all of its businesses and uses such analyses in evaluating strategic alternatives.”Having retired from a 30-year banking career at HSBC, Mr McDonagh said he was attracted to the “challenge of Butterfield” and decided to get back in the game, moving to Bermuda to take up the post of executive chairman. He said having lived all over the world while with HSBC, most recently between Chicago and New York as CEO of HSBC North America Holdings, will help him settle into life in yet another new location.“Butterfield is still on the road to recovery,” he said. “There is a lot of work to be done to rebuild it, and reestablish shareholder value. The board felt at this period in time it would help tremendously to have somebody as executive chairman who was much more involved in the day-to-day operations in terms of setting strategy.”The bank just reported its fifth successive profitable quarter from net losses of more than $200 million in both 2009 and 2010, driven by soured investments linked to US mortgages.Mr McDonagh gave us his initial views on some of Butterfield’s major segments.Retail/community bankingMr McDonagh said Butterfield remains committed to retail, and he would look at broadening product range and improving wealth management, ie, helping people with investments and planning for the future and retirement.“It’s not just about servicing the very wealthy clients,” he stressed.He said despite the housing market downturn, mortgages were still a significant part of retail banking and will continue to be.“We originate mortgages every day of the week,” he said.Suspended dividend payments“I am sure there will come a time when Butterfield will pay a dividend again,” he said, noting a sizeable dividend is still paid out to preference shareholders.But for now he said focus must be on “rebuilding the Butterfield franchise and shareholder value” and part of that value comes from the share price, not just having a dividend.Loan portfoliosHe said bank’s hospitality and commercial loan portfolios are now “stable”.As for the residential loans portfolio, “delinquency rates are considerably lower compared to other jurisdictions and the actual number of foreclosures is small”.But he acknowledged there are issues with people perhaps falling behind and the portfolio is “under pressure but not cause for any major concern”.Mr McDonagh, along with Olivier Sarkozy, were also elected to the Butterfield board of directors at the bank’s AGM on Tuesday by a majority vote.The bank’s previous (non-executive) chairman Robert Mulderig retired at the close of the AGM, along with vice-chairman Robert Steinhoff.In addition, Butterfield said, director James Burr’s term expired and he did not stand for re-election.Mr Sarkozy, half-brother of French President Nicolas Sarkozy, replaces Mr Burr as one of the Carlyle Group’s two nominees on Butterfield’s board.