The Bermuda Commercial Bank saw its net income plunge by $1 million, latest figures show.

Net income for the financial year ended September 30, 2002 was $5.3 million - compared to $6.3 million in 2001.

The low interest rate environment over the past year contributed to lower earnings for BCB according to chairman and chief executive John Deuss.

Mr. Deuss said: "In view of the current low interest rate environment, a yield of 7.2 percent combined with the liquid, low risk nature of the Bank's balance sheet, represents an attractive return to investors."

The annual yield figure is based on the current market value of $6.25 for the Bank's common stock.

President and chief operating officer, Mr. Timothy W. Ulrich said that the bank had continued with its strategy of " full automation, digital delivery of services and a liquid balance sheetl combined with low, almost no risk fee income."

As part of its liquidity drive, BCB divested its shareholdings in real estate, selling its holding in both the building it used to occupy and also a residential real estate property. It is also getting rid of it s mortgage portfolio with mortgage loans declining to $4.1 million from $6.6 million at September 30, 2001.

Earnings per share on a diluted basis were $1.16 per share, compared with $1.31 for the year ended September, 2001.

Total Assets increased to $582.7 million from $492.3 million as of the end of September 2001

Total Expenses for the year ended September 30, 2002 were $7.3 million compared to $7.2 million at September 30, 2001.

Net interest income declined to $5.4 million from $6.6 million.

A flat share price contributed to BCB's decision to extend the exercise period for their warrants, through May 31, 2005.

The directors determined that a further extension was in the best interests of BCB's shareholders. It also allows the bank to raise further capital.

The board also recommended a further extension of the bank's outstanding options.

A special meeting of the bank's warrant holders will be held on December 11, 2002 to approve the extension of outstanding options.

The fallout due to the unauthorised transactions of a former BCB employee who absconded with amounts estimated by management to be $2.4 million have been averted by successful insurance recoveries.

Net recoveries of $2.4 million were recorded during 2002, including recovery of expenses incurred in pursuing this matter.

BCB announced that as a result of the fraud, it has reviewed its "operating functionalities." Corporate treasury and global custody departments will now be conducted through a single operations department called "banking and custodial services."

BCB's continuing strategy is based on full automation, digital delivery of services and a liquid balance sheet.

A low, almost no risk, fee income driven profile will be maintained.

Mr. Ulrick stressed that: "The bank will continue to provide personal, flexible service,as both the bricks and mortar bank, and the e commerce platform are continually upgraded, to offer and increasingly enhanced service to the banks expanding client base."