Bermuda Commercial Bank Limited posted an 87 percent increase in earnings for the financial year ending September 30, 2005 of $5.17 million compared with $2.76 million in the year earlier.

Earnings per share were $1.04, compared to 54 cents at September 30, 2004.

BCB?s assets rose 46.5 percent to $858.82 million, compared to $586.38 million in the prior year. Net interest income increased 77.8 percent to $8.23 million this year compared with $4.63 million in 2004 as a result of increases in US interest rates over the last year.

?The US economy continues to perform strongly and in an effort to control inflation the Federal Reserve Board increased interest rates eight times during BCB?s reporting period resulting in a strong year on year increase in interest earned on the Bank?s core US Dollar deposit portfolio,? the bank said.

Total revenues increased 35.7 percent to $14.14 million for the year ending September 30, 2005 compared to $10.42 million for the prior year. Other income in the form of fees, commissions, and foreign exchange gains, rose 2.2 percent from $5.78 million at September 30, 2004 to $5.91 million at September 30, 2005.

The increase in fees and commissions is attributable to a combination of new business and strong performances from BCB?s asset management and fund administration departments, the bank said.

Expenses for the year ended September 30, 2005 were $8.97 million compared to prior year expenses of $7.66 million. The Bank?s Efficiency Ratio has improved to 63.9 percent from 73.5 percent last year as a result of continued efforts to control costs.

John Deuss, chairman and CEO, said: ?BCB has always been committed to strong cost discipline. In the recent era of falling interest rates, this commitment enabled us to continuously report solid annual earnings.

?Now, with interest rates rebounding, we have begun to reap the rewards of this discipline with increases in income far outstripping our cost increases.?

Shareholders? Equity increased 6.5 percent from $48.17 million at September 30, 2004 to $51.32 million at September 30, 2005.

The half-year dividend will be increased to 25 cents per share bringing the dividend for the year to 47.5 cents per share. This represents an annual yield of 5.6 percent. based on the Bermuda Stock Exchange bid price of $8.50 for the Bank?s stock as of September 30, 2005.

?Strengthening income and shareholder value is the cornerstone of any business and Bermuda Commercial Bank is no exception,? said president and COO Timothy Ulrich.

?Our management team is focused on steadily building our book of business and by consistently fortifying our balance sheet we have built a strong base of shareholder value.?

He added that the bank?s commitment to maintaining a ten-year-old policy of pursuing a low risk, highly liquid balance sheet meant that at year end, cash and cash equivalents represented over 99 percent of the Bank?s total assets.

With interest rates returning to more normal levels, this low risk policy is translating directly to our income statement in the form of increased earnings and shareholder value,? he said.

A small number of large customers were responsible for driving customer deposits to $803.08 million at September 30, 2005 compared to the 2004 year end balance of $534.28 million, BCB said.

The bank views the significant fluctuations in deposits as part of normal business dictated by client cash flow requirements. A more significant driver of profitability, which is average customer deposit balances, remained at levels similar to the strong averages recorded in the prior financial year.

BCB continues to refine its Internet banking system and has also undertaken a full review of its policies, procedures and risk management systems which resulted in the establishment of a dedicated compliance department and upgrading of the bank?s compliance software systems.

The bank is also poised to launch a more aggressive marketing campaign to advertise its portfolio of market-oriented services to the local and global marketplaces.