shot up 40 percent to $3,746,778, compared to the first half of 1994.

The satisfactory results were announced as the firm tightened its lending policies.

President and CEO, Mr. Arthur Haycock, reported to shareholders that net interest income was up almost 10 percent to $4,807,000, while fee income rose 18.7 percent to $2,170,000.

Mr. Haycock said, "The increase in fee income reflects both a higher level of mortgage closings during the first half of this financial year than we expect to achieve in the second half, and an increase in business generated by Bermuda Realty Company Ltd.'' Total operating expenses fell 3.5 percent, because last year's figures included one-off costs of the merger between Bermuda Home and L.P. Gutteridge Mortgage & Finance.

The company continued to strengthen its reserves, setting aside from income $1,090,000 in loan loss reserves during the reporting period.

Total assets at September 30 stood at $477,714,000, an increase of $6,482,000 over the total last year. Loans and mortgages outstanding were $354,679,000.

Cash and deposits with banks declined by more than $31 million to $103,250,000 due to an increase in loans and mortgages outstanding and the acquisition of the LPG building last year November.

Customer deposits on September 30 were $428,544,000, up from $423,671,000, and shareholders' equity increased 7.8 percent, up by $3.3 million to $44,931,000.

Mr. Haycock said that new mortgage lending during the first half of the year was considerably higher than the growth in deposits.

"As a result, we have established stricter criteria for approving new mortgage requests in order to manage our liquidity more effectively,'' he said.

"Our policy is to maintain cash reserves at a conservative level as protection for our depositors, and liquidity in the form of cash and deposits with banks at September 30 was 24 percent of deposit liabilities, well above the 15 percent minimum required by the Deposit Companies Act of 1974.