Bermuda Commercial Bank Limited saw net income for the year ended September 30, 2004 rise over four percent over the previous year.

In its earnings statement released late last Wednesday, BCB reported that net income for 2004 increased 4.55 percent to $2.76 million from $2.64 million. Basic and diluted earnings per share at year end were 64 cents and 54 cents respectively, compared to 62 cents and 58 cents in 2003.

Net interest income declined to $4.63 million from $4.80 million due to a lower interest rate environment. The bank said: "This decline is a direct result of the exceptionally low level of interest rates experienced in the United States and the significant impact low interest rates have on the bank's income as a result of its low risk, high liquidity philosophy."

BCB is encouraged by the US Federal Reserve's recent reversal on rate cuts with recent rate increases.

Total revenues for 2004 increased 2.26 percent to $10.42 million compared with $10.19 million for the prior year.

Offsetting the lower net interest income, other income ? primarily fees, commissions, and foreign exchange gains ? increased 5.09 percent from $5.30 million at September 30, 2003 to $5.57 million at September 30, 2004.

The bank said: "The increase in fees and commissions is attributable to an increase in fee-based activity generated by clients utilising our traditional banking and custodial services together with new and existing clients availing themselves of our on-line services."

Total expenses increased 1.59 percent in 2004 to $7.66 million compared to prior year expenses of $7.54. Continued efforts to control costs saw BCB's Efficiency Ratio improve to 73.52% from 74.05% in 2003.

John Deuss, chairman and CEO said: "Although the pressures of low interest rates have a direct impact on our profitability, we continue to contain our costs and improve our year on year performance.."

Total Shareholders' Equity has increased from $47 million at year-end 2003 to $48.17 million at in 2004.

President and chief operating officer, Timothy W. Ulrich said: "Despite the continued low US dollar interest rate environment, BCB has not deviated from its policy to preserve a highly liquid balance sheet, whilst maintaining a low risk, fee income driven profile.

"Specifically, BCB invests customer deposits in the interbank market and money market funds to maintain cash and cash equivalents of approximately ninety-nine percent of total assets."

Average balances for Fiscal Year 2003/2004 were $638.41 million versus $535.00 million for 2002/2003.

Mr. Ulrich said that the key note for fiscal year 2003/2004 is a 19.33 percent growth in average customer deposit balances over the prior year.

The bank's board has also resolved to recommend to shareholders, warrant and option holders that the exercise period for the bank's warrants be extended for three years through May 31, 2008, given the current interest rate environment, and continued flat equity markets.

The board approved maintaining the half-yearly dividend of 22.5 cents, or 45 cents per share for the year, matching the dividend for the prior financial year.