Bermuda Commercial Bank Announces Annual Financial Results

The Board of Directors approved maintaining the half-yearly dividend of $0.225, or $0.45 per share for the year, matching the dividend for the financial year ended September 30, 2003. The annual dividend of $0.45 per share represents an annual yield of 4.86%, an attractive yield considering the current low interest rate environment. The yield of 4.86% is based on the Bermuda Stock Exchange bid price of $9.25 for the Bank's stock as of September 30, 2004. The Bank's stock continues to trade below book value, currently at 83.11% of its September 30, 2004 book value of $11.13 per share.

Net interest income declined to $4.63 million from $4.80 million due to a lower interest rate environment. 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. The US Federal Reserve cut the Fed Funds Rate in November 2002 by 0.50% and again in June 2003 by 0.25% resulting in a year on year decrease in

interest earned by BCB on US Dollar deposits, despite higher average US Dollar balances. Encouragingly, the US Federal Reserve has recently reversed its direction with three 0.25% rate increases in June, August and September 2004 respectively.

Notwithstanding lower net interest income, total revenues increased to $10.42 million for the year ending September 30, 2004 compared to $10.19 million for the prior year, an increase of $230,000 or 2.26%. Offsetting the lower net interest income, other income - primarily fees, commissions, and foreign exchange gains - increased from $5.30 million at September 30, 2003 to $5.57 million at September 30, 2004, an increase of $270,000 or 5.09%. 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.

As the Bank holds no investments other than cash and cash equivalents, no investment income was reported for the year ended September 30, 2004 or 2003.

Total expenses for the year ended September 30, 2004 were $7.66 million compared to prior year expenses of $7.54, an increase of only 1.59%. As a result of continued efforts to control costs the Bank's Efficiency Ratio has improved to 73.52% from 74.05% at September 30, 2003. Mr. John Deuss, Chairman and CEO, noted that 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.

The following chart demonstrates BCB's commitment to control expenses whilst increasing revenues, before unusual items and discontinued operations since 1993:

Total Shareholders' Equity has increased from $47.00 million at September 30, 2003 to $48.17 million at September 30, 2004, an increase of $1.17 million, or 2.49%

President and Chief Operating Officer, Mr. Timothy W. Ulrich stated that "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, an increase of $103.41 million. Mr. Ulrich stated that the key note for fiscal year 2003/2004 is a 19.33% growth in average customer deposit balances over the prior year.

The following chart represents the growth in average customer deposit balances since fiscal year 1999/2000:

During the year BCB continued to enhance and upgrade its core banking application. The upgrade was completed in the summer months and has provided increased back office efficiencies, a more user friendly staff interface as well as greatly improved client service functionality.

Earlier in the year the Bank announced a new upgrade of its internet banking system, eBank and this upgrade has now been successfully rolled out to all the Bank's

eBanking customers. New Features include Global Clearing functionality, improved client payroll processing facilities and dual and tiered authorization for eInvest offerings.

eInvest provides eBanking customers the exclusive ability to subscribe and redeem into 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 launched a new share class offering that allows for same day liquidity in a US dollar money fund.

BCB continues to provide personal and flexible services as demonstrated through the continuous upgrade of its systems, products and services. The Bank's strategy remains focused on full automation, on-line delivery of services, and a highly liquid balance sheet.

The Board of Directors have 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. Consequently, meetings of both the Bank's warrant holders and common shareholders will be held to obtain approvals to further extend the expiry date.

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

Summary Financial Data

Statement of Operations for the year ended

September 30, 2004 September 30, 2003

Net interest income 4,634,302 4,759,099

Total revenues 10,418,098 10,186,910

Total expenses 7,659,478 7,543,301

Net income 2,758,620 2,643,609

Balance Sheet as at

September 30, 2004 September 30, 2003

Total assets 586,382,983 836,729,923

Cash and cash equivalents 581,133,044 830,591,565

Total customer deposits 534,283,798 785,939,005

Half yearly dividend 973,806 962,971

Shareholders' equity 48,174,915 47,001,596

Bermuda Commercial Bank Limited

November 10, 2004

For immediate release