Butterfield Bank last announced a net loss for 2009 of $213.4 million, driven by writedowns of mortgage-backed securities and commercial loan loss provisions.

And the bank warned it was likely to take another loss of between $150 million and $175 million in the first quarter of this year in order to sell off the riskiest of the investments that have plagued the bank over the past two years.

Writedowns of assets in the held to maturity portfolio totalled $132 million for 2009 and $91 million for the fourth quarter alone.

The bank has operations in nine jurisdictions, but its Bermuda segment bore the brunt of a bad year with a net loss of $208.4 million.

Included in the loss were credit provisions of $94.3 million in 2009, compared to $1.9 million in 2008, primarily related to provisions in respect of tourism-related loans.

With the injection of $550 million of new capital from a group of mainly overseas investors announced yesterday, the bank's capital position will strengthen markedly. When the impact of the new capital, as well as the anticipated first-quarter loss, is built in to the balance sheet as of the end of 2009, Butterfield's ratio of Tier 1 capital — or easily available capital — would be 13.5 percent.

Regulator the Bermuda Monetary Authority requires that the Island's banks should have a Tier 1 capital ratio of at least six percent, after the impact of severe losses from a sharp economic downturn. Without the new money factored in, the Tier 1 ratio had fallen to 7.2 percent by December 31 last year.

Normalised earnings from banking and wealth management activities were $21 million last year, compared to $105.3 million in 2008, including the $9.5 million paid in respect of the preference shares. Butterfield said the decline was primarily due to the impact of the continuing historically low interest-rate environment, and the decline in customer balances from the abnormally high levels seen in prior years.

"If interest rates increase as implied by long-dated securities, we expect to benefit as margins return to normal levels," the bank stated.

Total revenue before gains and losses, revenues from pension fund administration, and provisions for credit losses for 2009 was $338.8 million, down $93 million or 21.6 percent, from $431.8 million in the prior year.

Total non-interest income excluding revenues from investment and pension fund administration was down $25.6 million from $177.3 million in 2008 to $151.7 million in 2009. Butterfield attributed the bulk of the decrease to progressively lower foreign exchange volumes through 2009 from hedge fund clients, who experienced unprecedented redemption requests in the wake of the financial crisis.

Assets under management at year end declined by 12.3 percent versus 2008 to $8 billion, reflecting declines in the value of some Butterfield investment funds, in step with ongoing dislocation in international securities markets during 2009. Assets under administration the end of last year were $60.7 billion, up from $57.5 billion in 2008.

In addition to new CEO Bradford Kopp being added to the board, Carlyle nominees James Burr, the managing director of Carlyle's Global Financial Services Group, and Wolf Schoellkopf, managing partner at Lykos Capital Management, a private equity management company, will become new directors.

CIBC will also nominate two individuals for appointment to the board.