Butterfield Bank saw its profit rise 9.8 percent to $21.8 million during the second quarter.

Butterfield, the Island's oldest bank, said net income during the quarter was up $1.9 million over what the company made during the same period a year ago.

And the bank reported it had seen significant growth in its private wealth management business after its purchase of London-based Leopold Joseph bank earlier in the year.

In total, client assets under management were up year on year by $1.5 billion, or 21.3 percent to $8 billion ? of that, the acquisition of Leopold Joseph was said to account for 45.1 percent of that growth.

Earnings per share for the quarter stood at $1.05, up 8 cents compared to the same period the previous year.

And for the first six months of 2004 net income of $47.9 million, a 32 percent gain year on year. Butterfield president and CEO Alan Thompson said in a Press statement: "These results demonstrate that our business model continues to be successful in a highly competitive environment. "The acquisition of Leopold Joseph during the quarter is entirely consistent with our stated group strategy of growing our business in the UK and Guernsey markets and its integration with our existing businesses is fully in line with expectations."

CFO Richard Ferrett added: "It is particularly pleasing to note that net income for the quarter from our Bermuda and Cayman businesses increased year on year by 14.3 percent and 17.6 percent respectively, reflecting strong growth across all business lines. In addition, for the fifth consecutive quarter the group's return on equity (ROE) exceeded 20 percent, at 20.9 percent."

Butterfield reported that net interest income before provisions for credit losses was up year on year by $7.1 million, or 24.5 percent to $36.2million. This was said to reflect growth in both customer deposits and loans resulting from the acquisitions in Barbados and the Bahamas in the second half of 2003 and the UK in the second quarter of 2004 as well as organic growth across the bank's established businesses.

The bank's improved bottom line also included growth in total fees and other income which was up 33.3 percent, or$10.3 million, to $41.3 million.

This growth was also attributed to the bank's bigger network after several acquisitions in the last year.

The quarter also benefited from strong revenue increases in the areas of investment and pension fund administration (+55.6 percent), trust and investment services (+41.9 percent), asset management (+40.5 percent), customer related foreign exchange income (+34.1 percent), and banking fees (+24.7 percent).

But alongside the growth in fees and revenue, the bank also paid out more with total operating expenses being $15.8 million higher during the period at $54.8 million.

Operating expenses for the acquired companies were said to account for $9.7 million, or a 61.7 percent year-on-year increase, but was said to be "in line with expectations".

The remainder of the increase primarily related to higher employee costs, reflecting higher staff numbers in Bermuda and Cayman due to business growth, as well as a surge in costs attributed to the "increasing cost of healthcare in Bermuda".

The group's total headcount was said to have increased year on year from 1,212 at 30 June 2003 to 1,575 at the end of the quarter, in part reflecting the addition of 285 employees through the acquisitions, the bank said. All of the bank's subsidiary business, with Butterfield doing business in Bermuda, throughout the Caribbean, in Guernsey and in London, posted growth during the quarter with the exception of in the UK where a post tax loss of $1.3 million was recorded.

"Of this amount, $0.6 million relates to the cost of servicing debt capital injected into Butterfield Private Bank by the parent to facilitate the acquisition of Leopold Joseph on 2 April 2004. The acquisition reflects the bank's commitment to the private banking and wealth management businesses in the UK and the process of amalgamating Butterfield's and Leopold Joseph's UK businesses is proceeding as planned," the bank said.It added that another recent acquisition, with this marking the second full quarter since it was purchased, Butterfield Bank in Barbados had seen total income increase by 14.4 percent to $2.2 million over the preceding quarter. Net income of $0.1 million was recorded. The group's Return on Equity for the second quarter was down slightly with it falling to 20.9 percentcompared to 22.7 percent at the same stage last year.Meanwhile, the bank's return on assets for the quarter was 1.1 percent, compared to 1.2 percent a year ago, the decrease reflecting the significant year on year growth in the balance sheet.

Total assets stood at $8.04 billion, up from $6.69 billion a year ago. Some 82.2 percent, or $1.11 billion, of the growth was due tothe acquisitions in The Bahamas ($60 million), Barbados ($154 million) and the United Kingdom and Guernsey re Leopold Joseph ($895 million). Customer deposits across the group were also higher year on year by $1.31 billion, or 23.1 percent, to $6.98 billion, in line with the growth in totalassets. Of that increase $0.97 billion, or 74.2 percent, was due to the acquisitions, with the remainder of the growth principally coming from the group's operation in the Cayman Islands. There was also growth in the total loans which grew to $576 million, of which$334 million, or 57.9 percent, was said to be from recent acquisitions.

Shareholders' equity increased year on year by 16.9 percent to $424.3 million, while the loan to the Stock Option Trust decreased by $5.8 million to $28.8 million, due to some stock options being exercised by directors and employees.Butterfield also announced a one-for-ten bonus share issue, which it said was equal to a ten percent stock dividend, effective 5 August 2004,in addition to maintaining the cash dividend at 38 cents per share.

The dividend is payable on 23 August 2004 to shareholders of record on 5 August 2004. The bonus shares will be eligible for dividends commencing in November, the bank said.