BCB reports net income increase of 26% and total assets growth of 25%

Despite the lowest US dollar interest rate environment experienced since the late 1950s, 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 continues to invest customer deposits in the interbank market and money market funds; cash and cash equivalents as a percentage of total assets were 99.5%, 99.3%, and 99.1% at March 31, 2004, September 30, 2003, and March 31, 2003, respectively.

Customer deposit balances at March 31, 2004 increased to $990.84 million compared to $785.94 million at financial year-end September 30, 2003 and $788.53 million one year ago. President and Chief Operating Officer, Mr. Timothy W. Ulrich, stated that he is especially pleased with the strong growth in customer deposits, taking into consideration the impact of the exceptionally low US dollar interest rate environment. However, significant fluctuations in deposit balances must be viewed as part of the Bank's normal business operations and are due to client cash flow requirements, emphasizing the fact that the size of the balance sheet is strongly driven by changes in client activity over time.

While BCB's investment policy creates an extremely liquid, low risk balance sheet for its clients and shareholders, it also subjects the Bank's net income to the vulnerability of interest rate changes. Net interest income declined from $2.47 million at March 31, 2003 to $2.24 million at March 31, 2004, a decrease of $230,000 or 9.3%. The US Federal Reserve cut the Fed Funds Rate in November 2002 by 0.50% and in June 2003 by 0.25%, thereby resulting in a year on year decrease in interest earned by BCB on US Dollar deposits, despite the higher average US Dollar balances.

Notwithstanding a decline in net interest income, total revenues increased from $5.07 million at March 31, 2003, to $5.16 million at March 31, 2004, an increase of $90,000 or 1.8%. Offsetting the decline in net interest income, other income - primarily fees, commissions, and foreign exchange gains - increased from $2.60 million at March 31, 2003 to $2.92 million at March 31, 2004, an increase of $320,000 or 12.3%.

The increase in fees and commissions is attributable to an increase in fee-based activity generated by clients utilizing our traditional banking and custodial services, together with new and existing clients availing themselves of our on-line services; new business in the Bank's wholly-owned fund services subsidiary, International Corporate Management of Bermuda Limited; and a reflection of the February 2003 updated fee structure, employed throughout the entire six month period ended March 31, 2004.

As the Bank holds no investments other than cash and cash equivalents, no investment income was reported for the six months ended March 31, 2004 or 2003.

Total expenses decreased from $3.87 million at March 31, 2003 to $3.65 million at March 31, 2004, a decrease of $220,000 or 5.7%. The majority of this decrease is attributable to a net recovery on mortgages within the Bank's declining loan portfolio. Excluding mortgage recoveries and reserves, total expenses remained relatively constant

with a $12,000, or 0.31%, increase. Bank Management is therefore pleased to report that costs have been effectively contained for the six months ended March 31, 2004. The Bank's efficiency ratio is 70.8% at March 31, 2004, compared to 76.3% at March 31, 2003, reflecting a positive improvement of 7.2% in this difficult economic environment.

Basic earnings per share increased to $0.35 per share for the six months ended March 31, 2004 compared to $0.28 per share one year ago while diluted earnings per share rose to $0.30 per share compared to $0.27 per share.

Mr. John Deuss, Chairman and Chief Executive Officer of the Bank, announced that the Bank will maintain the half-yearly dividend of $0.225 per share to be paid on May 26, 2004, to shareholders of record as of May 19, 2004, representing 64.3% of earnings for the six months ending March 31, 2004. He added that based on the Bermuda Stock Exchange bid price of $8.00 for the Bank's common stock at March 31, 2004, this semiannual dividend generates an annualized yield of 5.6% to the Bank's shareholders. This bid price of $8.00 represents a 27.9% discount to the Bank's book value of $11.10 per share at March 31, 2004. Mr. Deuss further advised that BCB shares traded between $6.30 and $11.50 during the first six months of the financial year, and that warrant holders exercised 11,922 warrants during the same period, resulting in additional in Shareholders' Equity of approximately $89,000.

The Bank's Senior Vice President, Mrs. Dominique Smith, advised that BCB began an additional, planned upgrade to its core banking application that will be completed within the next quarter. This upgrade will provide a more user-friendly staff interface, leading to greater efficiencies, improved client service, and greatly increased staff functionality.

Mrs. Smith added that the next eBanking upgrade, due out in the summer of 2004, would include Global Clearing functionality, improved client payroll processing facilities, online

dual and tiered authorization for eInvest offerings, and further enhancements to back office functionalities utilized by the Bank's staff. Global Clearing will improve client operational efficiency by offering clients the capability to prepare transactions off-line for subsequent uploading and batch processing on eBanking.

Mrs. Smith advised that eInvest allows clients to process online subscriptions and redemptions into the BCB Offshore Investment Fund Limited share classes. These share classes invest directly into Barclays Global Investors' AAA rated money market, global equity index, and fixed income funds. In November 2003, eInvest began offering a new share class that allows for same day liquidity in a US dollar money fund.

Mr. Deuss confirmed that BCB's strategy continues to emphasize full automation, on-line delivery of services, and a liquid balance sheet. A low, almost no-risk, fee income driven profile will be maintained. The Bank will continue to provide personal, flexible service, as both the Bank and the eBanking platform are continually upgraded, to offer increasingly enhanced products and services to the Bank's expanding client base.

The following table depicts selected financial data to accompany the preceding narrative.

Summary Financial Data

Statement of Operations for the six months ended

March 31, 2004 (Unaudited) March 31, 2003 (Unaudited)

Net interest income $2,236,844 $2,473,424

Total revenues $5,156,344 $5,071,463

Total expenses $3,649,750 $3,871,424

Net income $1,506,594 $1,200,039

Balance Sheet as at

March 31, 2004 (Unaudited) September 30, 2003 (Audited) March 31, 2003 (Unaudited)

Total assets $1,043,622,681 $836,729,923 $838,303,368

Cash and cash equivalents $1,037,875,642 $830,591,565 $830,943,288

Total customer deposits $990,842,087 $785,939,005 $788,527,887

Half yearly dividend $965,653 $962,971 $962,971

Shareholders' equity $47,631,952 $47,001,596 $46,520,997

Bermuda Commercial Bank Limited

May 12, 2004