Butterfield Bank yesterday announced that full-year net income more than tripled to $78.2 million in 2013.

Core earnings, which eliminate items “outside the course of normal business”, were up 39.5 percent to $76.6 million.

In its earnings statement today, the bank said the improvement in results was driven by cutting expenses and better returns from its investments.

The bank declared a quarterly dividend of one cent per share and, in addition, a special dividend of one cent per share.

Brendan McDonagh, Butterfield’s chairman and chief executive officer, said: “Our focus on improving shareholder value through disciplined management of capital and expenses while prudently investing in our core businesses to generate revenue growth and sustainable returns is showing results.

“By virtually all measures, Butterfield delivered enhanced value to shareholders. Building upon the significant improvements we achieved in 2013, we will continue to pursue business opportunities under this strategic course.

“The bank maintained strong capital ratios while actively managing and optimising its capital structure. In 2013, the Bank retired $53 million in subordinated capital, repurchased $20.3 million of common and preference shares and paid $38.5 million in common dividends to shareholders, declaring interim dividends each quarter.”

The bank managed to cut core, non-interest expenses by $18.1 million, or 6.7 percent.

Headcount throughout the Butterfield group fell in 2013 to 1,133 employees (on a full-time equivalency basis), a reduction of 98 from a year earlier.

The bank paid out $8.5 million of early retirement, redundancy, and other staff-related non-core costs last year. Excluding these costs, total salaries and benefits costs were down $12.7 million, or 9.4 percent. Technology and communications expenses decreased by $3.5 million to $54.2 million from expense control measures and IT infrastructure improvements.

However, the struggles of borrowers during the Island’s lingering, five-year recession were evident in the bank’s loan book. Non-performing loans past due by 90 days or more totalled $116.6 million at the end of last year. This was down by $25.1 million, mainly due to $15.4 million of charge-offs on commercial mortgages not considered recoverable and repayment of residential mortgages, resulting in a net decrease of $9.6 million in non-performing residential mortgages.

The bank’s net provision for credit losses in 2013 was $14.8 million in 2013, up from $14.2 million in 2012.

Butterfield’s total loan book grew by $132.3 million to $4.1 billion. Commercial loans grew by $84.9 million, while residential loans climbed $52.1 million, primarily in the bank’s European operations.

Net interest income increased by $12.1 million to $223.8 million in 2013, compared to $211.7 million at the end of 2012.

Total interest income increased by $8.4 million to $253.2 million, a result of $11.8 million higher revenues on investments, due to a 29 basis point increase in investment yields and higher balances.

This was partially offset by lower loan interest income of $3.7 million as higher yielding loans were replaced with new business volumes at lower yields. Customer deposits were up $331 million to $7.6 billion at the end of 2013 from $7.3 billion a year earlier.

The bank’s Bermuda operations booked net income of $33.8 million in 2013, an increase of nearly 35 percent, or $8.7 million compared to 2012. The increase in profit in Bermuda was achieved despite a $3.8 million fall in revenue, “due principally to cost management initiatives and higher income from our investment portfolio”.

Non-interest expenses totalled $152.3 million in Bermuda, down $12.5 million from 2012, “due to reduced headcount, a reduction in senior management compensation, savings from technology, and other expense management initiatives”, the bank said.

Chief financial officer John Maragliano said: “We are pleased with the continued progress our businesses are making in delivering improved core results. Year over year growth in net income and core earnings drove significant improvements in our key performance ratios, most notably the core cash return on average tangible common equity of 10.3 percent, core cash return on average assets of 0.9 percent, and the core efficiency ratio of 71.6 percent.

“The increase in core earnings in 2013 was driven primarily by two factors: lower expenses due to improved operating efficiency; and enhanced revenue performance in the investment portfolio.

“Butterfield ended the year with a very strong capital position, a highly liquid balance sheet and improved asset quality, which positions us well.”

The bank spent $5.6 million buying back four million common shares at an average cost of $1.39.

A further $14.7 million was spent on buying back for cancellation 11,972 preference shares, which give investors an eight percent annual yield.

On December 2, 2013, the Butterfield board increased the total number of shares authorised for repurchase from ten million to 15 million, and the number of preference shares from 15,000 to 26,600.