The Minister also approved First Curaçao International Bank N.V. ("FCIB") acting alone or in combination with one of its affiliates becoming 50% shareholder controllers of BCB.
Mr. John Deuss, Chairman and Chief Executive Officer of the Bank, commented that "BCB's shares, currently trading at BD$7.00 per share or at 66% of their book value of BD$10.62 per share, are undervalued. Based on the experience of the other two banks, BCB's share price may benefit from the lifting of the ownership restrictions".
Foreign ownership of BCB has been at the 40% limit for some time now, effectively rendering the BCB shares unavailable for non-Bermudian investors.
This may explain in part why BCB's shares are undervalued when compared to the share prices of the two other Bermudian banks, which trade at greater than 200% of book value having already benefited from the recently obtained waivers from the 60/40 ownership restrictions.
BCB's profits for the six months ending 31st March 2001 are BD$2,672,330 (compared to BD$2,828,604 for the six months of the previous year) not counting the one-time gain of BD$5,157,920 on the merger of its subsidiary Bermuda Provident Properties Ltd. ("BPP"), the owner of the building the Bank presently occupies.
By December of this year BCB plans to move to new premises, presently under construction, on the corner of Parliament Street and Victoria Street. As a tenant, the Bank will initially occupy two floors of the new building, which will be named the "Bermuda Commercial Bank Building". BCB expects that its global electronic distribution of financial services could lead to further office space requirements, and accordingly it has the right to occupy additional space in the new building.
A few weeks ago BCB's E-Banking platform went live to select customers and gradually will be made available to global customers over the months to come following satisfactory performance testing.
In 1995 BCB issued 1,625,036 common share purchase Warrants entitling the Warrant Holders to purchase, at a price of BD$7.50, at any time during the period 30th May 1997 to 31st May 2001, one common share of BCB for each Warrant held. Considering that BCB's shares on the Bermuda Stock Exchange ("BSX") last traded at BD$7.00, which is below the exercise price of BD$7.50 of the Warrants, and that none of the Warrant Holders have exercised their Rights, the Board of Directors of BCB has determined it to be in the best interest of the Bank and the Warrant Holders to extend the expiry date of the Warrants to 31st May 2002 in order for Warrant Holders to realize the full economic benefit of the lifting of the non-Bermudian ownership restrictions. Consequently, a meeting of both the Bank's Warrant Holders and its common Shareholders will be held on 30th May 2001 to consider, and if thought fit, approve the extension of the expiry date applicable to the Warrants from 31st May 2001 to 31st May 2002. The meetings will be held at the Fairmont Hamilton Princess on 30th May 2001 at 5:30pm.
The Directors of BCB are pleased to announce the results of the Bank for the six months ending 31st March 2001. BCB returned steady financial results for the six months ended 31st March 2001 with net income before one-time gains of BD$2.67 million compared to BD$2.83 million for the six months ended 31st March 2000. Net income including the gain on the merger of BPP was BD$7.83 million for the six months ended 31st March 2001. The Board of Directors has resolved that a dividend of BD22.5 cents per share will be paid to shareholders, an increase of 12.5% from the BD20 cents per share dividend at 31st March 2000 and the same amount as the per share dividend at 30th September 2000.
Performance ratios, before the one-time gain, of the Bank continue moving towards their targeted levels. Basic and fully diluted earnings per share before the one-time gain are BD$0.63 (2000: BD$0.66) and BD$0.49 (2000: BD$0.56) and after the one-time gain are BD$1.83 (2000: BD$0.66) and BD$1.19 (2000: BD$0.56), respectively. The Efficiency Ratio at 58.42% continues to approach the 50% mark despite the slight increase from 31st March 2000 when it was 57.49%. Return on Assets are reported at .55% for the six month period as compared to .48% in the prior year's first six months with return on equity being 7.11% compared to 7.88%. It should be noted that the continuing return of solid financial results from BCB and the current dividend rate offer an annualized yield of 6.43% based on the BD$7 per share.
BCB reported total revenues before the one-time gain of BD$6.43 million compared to BD$6.65 million for the six months ending 31st March 2001 and 2000, respectively. Net interest income remains solid with an increase to BD$3.47 million from BD$3.42 million despite the continuing pressure from low interest rates caused by three U.S. Federal Reserve Bank interest rate reductions from 30th September 2000 to 31st March 2001. The first six months of the Bank's financial year showed a decline in total expenses of 1.83% to BD$3.75 million from BD$3.82 million.
During the first six months of the financial year, BCB focused on administrative tasks to benefit clients and shareholders. One of the most notable aspects is the merger of BPP, the owner of the Bermuda Commercial Bank Building. The recorded gain on the merger is BD$5.16 million, which will be reduced slightly over the next six months for the write off of existing leasehold improvements. When combined with the run-off of Somers Mortgage and Finance Limited, the merger is another step towards improving the liquidity of the Bank. The risk profile of the Bank remains very conservative. The strength and quality of the Bank's balance sheet was further augmented by the sale of the Bank's shares in the Bermuda Stock Exchange resulting in a net gain of BD$179,000. Total cash and balances with other banks of BD$489.09 million represent 96.9% of the total assets of the Bank at 31st March 2001 compared to BD$538.88 million, or 95.3% of total assets, at 30th September 2000 and BD$685.62 million, or 95.81% of total assets, at 31st March 2000. BCB strives to achieve and maintain a highly liquid, low risk balance sheet.
Effective January 1, 2001, the United States Internal Revenue Service ("IRS") imposed new rules in respect to withholding taxes imposed on income from US securities and US bank deposits. For intermediaries like BCB, which hold assets in custody and receive income thereon for clients, the new rules presented three basic choices. BCB elected the status of being a Non Qualified Intermediary. As a Non Qualified Intermediary, the Bank requests that its clients complete (and authorize BCB to distribute to paying agents in the US) the appropriate tax withholding forms in order to avoid punitive withholding taxes being imposed.
Mr. John Deuss emphasized that BCB remains committed to providing superior client service through the use of top-quality systems and maintaining a high quality, low risk balance sheet. The aim of the Bank is to provide bullet proof banking to our customers while maximizing shareholder returns.