Bermuda Commercial Bank Reports Net Profit of $1.18 Million for 2010

Hamilton, Bermuda – 15 November, 2010 – Bermuda Commercial Bank Limited (the “Company”; Ticker: BCB.BH) announces details of the financial results and operations for the financial year ending 30 September, 2010.

Chairman, Mr. Michael Collier stated that “the Bank has returned to profit in the second half of the year largely as a result of investing the Bank’s own capital in a portfolio of international bonds. The Bank’s profit for the year was $1.18 million, compared to an operating loss of $0.38 million for the prior year.”

In addition to increased interest income on the bonds the Bank also realized gains following the sale of a portion of the investments during the year. These gains offset the reduction in interest income on the remainder of the Bank’s assets, primarily cash and money market funds, which reduced in line with global interest rates.

During the year ended September 30^th, 2010, the Bank recorded a net unrealized loss of $1.86 million within other comprehensive income compared to a gain of $1.81 million for 2009. The 2010 loss resulted primarily from a reclassification for investment gains included in the income statement.

The Directors have approved a dividend of $0.10 per share, payable on November 30^th 2010. Dividends were last paid in 2008. The Board intends to adopt a progressive policy in regards to dividends and to introduce a dividend reinvestment plan for those shareholders who would prefer to receive their dividends in shares rather than paid in cash.  The Bank’s stock continues to trade below book value, currently at 89.7% of its book value of $10.87 per share.  

Capital Investment and Capital Adequacy Ratios

Given the well publicised problems that many banks have encountered recently Mr. Collier stated that he “was pleased to advise that BCB maintained an enviable financial position with 73% of the Bank’s assets consisting of cash and cash products. Besides not being burdened by owning stressed mortgage loans, problematic corporate debt or sub-prime lending instruments, the Bank’s Tier 1 capital adequacy ratio, which measures a banks liquidity and stability, was 26.6% at year end. This is more than double the Bank of International Settlements’ industry target of 12.0%. Indeed there are significantly sized banks across all jurisdictions that have capital adequacy ratios well below 12%.”

 Looking forward, Mr. Collier stated that “we anticipate a slight reduction in the Bank’s capital adequacy ratio as we gradually expand our investment program and the Board has set a target Tier 1 ratio of 20.0% for the Bank’s capital adequacy ratio for the next twelve months.”

Mr. Collier continued “Upon the successful sale of the Bank to the new investor group in April 2010, the new Board set in place broader investment guidelines incorporating a diversified mandate.  This broader mandate has been successfully implemented by management and is generating a stronger return on investment assets in the current environment of low interest rates. The Bank has returned to an operating profit position and has overcome the operating losses reported for the first half of the 2010 fiscal year.”

Deposit Base

With the adoption of the revised investment management program BCB is now better positioned to offer more competitive deposit rates and in this regard has launched a series of new longer term deposit products.  Mr. Collier noted “that this revitalized approach has generated renewed interest in the Bank from both our domestic & international clients and intermediaries. Total assets of the Bank as at September 30^th, 2010 were $409.66 million compared to $423.35 million at September 30^th, 2009. While gross assets have reduced year on year the Bank will target deposit growth as a result of the Bank’s improved profitability and revised investment strategy coupled with a revitalized marketing program.  This turnaround has already commenced with year end assets showing a $39.35 million increase over March 31^st, 2010 assets of $370.31 million.”

The Bank will seek to both broaden and lengthen the deposit base which will improve funding stability. This will enable the Bank to increase its investments and thereby enhance investment returns.  

Improved Banking Services

BCB anticipates that both the global and local business environment will continue to be challenging for the foreseeable future; indeed it is possible that economic conditions may worsen further before there is any material improvement in economic activity. Given this outlook and following the strategic meetings held during the year, the management team has mapped out a clear and sensible strategy going forward. Some of these initiatives are detailed below.

The Bank is on target to release a new and current day banking system in the first quarter of 2011. BCB has made a significant investment in its computing platform with an Internet and digitally driven architecture allowing the Bank to more easily tailor products to the needs of its clients, including securities handling, investment management, and other services.

To strengthen the institutional services offered by the Bank a strategic interest was taken in Westhouse Securities. BCB invested in a 5% convertible debt instrument, which if converted, would provide BCB with an economic interest in Westhouse in excess of 25%. Westhouse, listed and located in London, is an integrated corporate finance and broking house serving small to mid-cap companies. The business focuses on providing specialist corporate finance advice together with excellent research and trade execution through its institutional sales, sales trading and market making teams. Through this strategic interest BCB can now offer a broader set of services to its fund and corporate clients including UK listings, capital raising, and market making.

BCB will continue to fill out its product line by offering bespoke financial solutions to private wealth and institutional clients. These services will complement the Bank’s existing business units, including fund administration, custody and trusts. BCB will selectively increase market share locally and will continue to monitor new global opportunities as the Bank moves forward. Mr. Collier stated that “we will preserve the capital of the Bank initially by ensuring that we do not make lending decisions that we may later regret if economic conditions deteriorate further and instead we will focus the Bank’s strategy on customers who are asset orientated and complement the Bank’s suite of products.

Governance and Risk

Mr. Collier stated that he believed “BCB now has a board of directors with the required international experience, energy, and ability to meet both the challenges and opportunities that are expected to arise for the Bank.”  The directors’ profiles are summarized below;

The Board is overseeing the evolution and implementation of a revitalized and dynamic corporate strategy as well as the implementation of a number of internal initiatives to meet the challenges and opportunities of 2011 and the future. These include a reorganization of the Bank’s governance structure, an external review of risk management structures, and changing the Bank’s reporting standards from Canadian accounting standards to International Financial Reporting Standards (IFRS).  These initiatives continue the Bank’s traditional conservative, risk-sensitive approach to its business.

Employees

Mr. Collier stated that “BCB’s employees have been enthusiastic and fully committed to the refocus of the Bank, and we thank them for their loyalty and support through the year in review. We have recruited new staff in key positions to support the Bank’s planned expansion. In addition, the Bank is fortunate in being able to draw specialist support, where necessary, from within the investor group, in particular Resimac Limited, the largest Australian non-bank mortgage securitiser. This will ensure that we continue to deliver the style and level of services that our clients expect and require.”

BCB has a tradition of community and charity support, and has recently established the BCB Charitable Foundation. BCB staff will play an integral role in managing the work of the Foundation.

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

About Bermuda Commercial Bank

Bermuda Commercial Bank Limited (BCB) is one of Bermuda’s four licensed banks, established in 1969 and regulated by the Bermuda Monetary Authority.

Bermuda Commercial Bank is Bermuda’s only bank focused purely on corporate and private wealth clients, offering a range of bespoke financial solutions. Its subsidiaries include BCB Fund Services Limited, BCB Trust Company Limited, Bercom Nominees Limited and BCB (Mauritius) Limited. Bermuda Commercial Bank takes pride in ensuring clients’ assets are safely and professionally managed at our Hamilton based office. For more information please visit our website www.bcb.bm.

BCB is publicly traded and listed on the Bermuda Stock Exchange www.bsx.com (Ticker: BCB.BH). Our share price is available on the BSX and on Bloomberg and is published daily in the Royal Gazette.

For further information please contact:

Horst Finkbeiner, Chief Operating Officer

Bermuda Commercial Bank Limited

(441) 299-2873

hfinkbeiner@bcb.bm