Bermuda Commercial Bank Ltd recorded substantial growth in earnings, interest income and customer deposits in its 2011 fiscal year.The bank’s total profit for the 12 months through September 30, 2011, was $12.6 million, BCB announced yesterday.Even after a $10 million one-off gain is stripped out, the $2.6 million underlying profit was more than double the $1.18 million posted in 2010.The bank, formerly chaired by John Deuss, was operating in limbo for some four years as it searched for a new owner. Since Permanent Investments Ltd (PIL) bought a controlling interest 19 months ago, it has been going through a period of rejuvenation under the leadership of chairman Michael Collier and chief operating officer Horst Finkbeiner.BCB said its $10.01 million one-off gain related to the acquisition of a 40.8 percent stake of West Hamilton Holdings Ltd (WHH) during the year.WHH is the property developer which is building the Belvedere Place office complex on the site of the old Bermuda Bakery on Pitts Bay Road. The project is stalled for the moment and the site is being used as a parking lot.BCB said the gain emanated from a fair value assessment of its investment, resulting in a large premium over cost, related primarily to the valuation of WHH’s land and property.The bank’s board of directors has decided to pay out a semi-annual dividend of 10 cents per share to be paid to shareholders of record as of November 30, 2011, following the previous half-year dividend of 10 cents paid out in May this year.“The board intends to adopt a progressive dividend policy in line with the bank’s earnings,” the statement added.Yesterday’s full-year results revealed that interest income almost tripled to $11.4 million from the $4.15 million achieved last year.“This increase was driven by the reallocation of a portion of the bank’s balance sheet out of cash products and into a diversified portfolio of higher yielding securities,” BCB stated.However, the bank is maintaining a conservative investment approach relative to the industry, with about half of its balance sheet in highly rated, short-term interbank deposits.The bank said customer deposits rose by 37 percent to $443.2 million during the 12 months.“We are building the leading Bermuda bank serving commercial banking and private wealth clients around the world,” Mr Collier said.“Our conservative approach to banking, along with our focus on service excellence, has shown results in stronger business and improved operating results.“The bank’s balance sheet, capital position and profitability continue to grow; driven by new deposits and strong increases in interest income.”Interest expenses increased to $1.86 million compared to $0.39 million a year earlier, reflecting the almost doubling of BCB’s customer term deposit balances.The Bank realised gains of $4.45 million following the sale of financial investments during the year. This compares to gains of $3.89 million in 2010. These gains were partially offset by impairment losses of $2.49 million on the bank’s investment portfolio.The bank also incurred hedging costs of $2.42 million in relation to the bank’s investment portfolio. This compares to a net hedging gain of $0.16 million in 2010. These costs, primarily foreign exchange and equity index hedging, are designed to reduce the risk associated with foreign currency and market price fluctuations.Total expenses increased by 8.4 percent from $9.25 million to $10.03 million. This increase was driven by a $0.82 million increase in payroll costs as staffing resources increased with the growth of the business.The bank also revealed unrealised losses of $7.61 million, stemming from a negative market to market valuation of the companies “available-for-sale” investments.“It is management’s judgment that such losses will reverse over time and ultimately will add value to the bank,” BCB stated. “Indeed, in the month following our September 2011 year end valuations, this loss was almost entirely eliminated.”BCB’s total equity improved from $74.95 million to $82.92 million during the year through September 30. The bank’s risk-weighted capital ratio, a key measure watched by financial regulator the Bermuda Monetary Authority, improved to 27.08 percent from 24.66 percent.The bank’s said its loans and advances portfolio was $35.34 million at September 30, up from $9.85 million a year earlier.“The bank is not yet active in the credit market, but we have provided a small number of loan facilities to high quality counterparties,” the statement added.BCB’s share price closed at $10.75 on the Bermuda Stock Exchange yesterday. Its basic book value at September 30 was $11.76 per share.