An analyst who follows Butterfield Bank says its $550 million capital injection this week "clears the way to forge a new path forward".

In his updated report on the bank, Jeremy Dyck, an investment adviser with LOM Securities (Bahamas) Ltd., said that while management's decision to raise the new equity and suspend the dividend would have been two difficult pills for shareholders to swallow, they were required to shore up the bank's troubled balance sheet.

Shadow Finance Minister E.T. (Bob) Richards believes the bank has finally "turned the page" on its problems with exposure to toxic assets following the much-needed capital injection.

Mr. Dyck said in his report that the capital raise would be massively dilutive to Butterfield's future earnings. He said that the bank's announced normalised earnings from banking and wealth management activities in 2009 of $21 million, or 22 cents per share, pre-financing, would, on a pro-forma, post-equity infusion basis, be reduced to just four cents per share.

"The transparent, 'no-nonsense' approach adopted by NTB's new management strikes us as progressive, albeit a harsh dose of reality for many shareholders," he said.

"Their rapid-fire plan to 'de-risk' the balance sheet and remove uncertainty clears the way to forge a new path forward, with emphasis on th bank's core competencies in community banking and global asset management. The 'new' Butterfield will have a long road ahead, both in restoring investor confidence and towards building shareholder value.

"With the ongoing uncertainty surrounding NTB stock in particular, the massive share dilution of this equity issue and the significant investment write-downs to be taken in early 2010 LOM refrains from issuing an investment recommendation at this time."

Mr. Richards, who stated that his wife is a director of the bank, said that Butterfield did the right thing in recognising its exposures and writing them off using the new investment.

He described the bank's decision to seek an exemption from the BSX to avoid having to go to a shareholder vote in a bid to push through the transaction as a necessary measure in order to keep itself afloat.

"I think that we have finally turned the page on this problem," Mr. Richards said.

"Butterfield Bank, like many banks in the world, have these so-called toxic assets and they have finally recognised them and written them off basically.

"But to do that they needed new capital and they brought in some first-class investors to recapitalise the bank.

"The Carlyle Group are the kind of group that will give you confidence going forward because these guys have a tremendous reputation globally.

"I think this is the least bad thing of a number of bad alternatives they have changed the management and I think now the bank is in a clean position where it can now move forward."

Mr. Richards said that it was impossible to conclude a deal of this nature on the spot while having to call and then wait for the results of a shareholder vote.

"It is just not practical," he said. "With a bank it is a very delicate matter and by doing this the bank is kept afloat.

"The deal to secure $200 million backing from Government last year was handled badly last year with word getting out on the street before the announcement was made, so they wanted to make sure they got it right this time."