Capital G Bank Ltd.'s earnings rose to $2.3 million for the 11-month period ending December 31, 2009, from $1.3 million for the full year ended January 31, 2009.

During the year, the bank changed its reporting date to December 31 from January 31 and its results reflected earnings for the 11 months from February 1 to December 31, 2009.

John Kephart, president and CEO of Capital G Ltd., said: "In spite of continued turbulent international markets and the general economic downturn in Bermuda, we continued to make progress in our core businesses and our loan portfolio remains strong.

"Although we did increase our allowance for credit losses by $1 million, reflecting our assessment of weakness in the resale market for consumer loan collateral including cars, bikes and boats, total past due loans over 90 days declined by four percent during the period ended December 31, 2009 and there has been a further decline of 17 percent since the year-end.

"We continue to have some exposure to the mortgage and asset backed securities market but this represents less than two percent of our total assets and we are managing this part of our portfolio aggressively, providing $500,000 in impairment charges during the period ending December 31, 2009."

The bank's total assets grew by $13.3 million or 1.3 percent, to $1,049 million, primarily due to continued growth in its loan portfolio, which reached $783.4 million at year-end.

Shareholder equity grew by $20.9 million or 31.3 percent to $87.4 million reflecting earnings of $2.3 million; the addition of $20 million in preference share capital during the year; and a reduction of $1.4 million in accumulated other comprehensive income as $3 million of net realised gains on securities sales was taken to earnings, partially offset by a $1.6 million increase in unrealised gains on our investment portfolio of available for sale securities

Because of the change in the bank's year-end, direct peBecause of the change in the bank's year-end, direct period-over-period comparisons were impacted, however non-interest income increased by $2.5 million, driven primarily by gains, on the sale of the bank's holdings of Visa Inc. shares and other securities in its investment portfolio.

"With the additional $20 million preference share capital during the year, the bank is extremely well capitalised with an equity to total assets ratio of 8.33 percent as at December 31, 2009," said Mr. Kephart.

"The bank continues to maintain regulatory capital ratios well in excess of the Bermuda Monetary Authority's prescribed minimums and the individual capital guidance set by the BMA, with a Tier 1 capital ratio of 17.61 percent and a total capital ratio of 16.21 percent. Our balance sheet continues to grow and we are diversifying our loan portfolio away from residential mortgages with the addition of a full service business banking unit during the year. While deposits dropped $8.5 million between January and December 2009, since then we have seen substantial growth and total customer deposits were over $970 million at the end of March 2010.

In spite of a sustained low interest rate environment, the bank's net interest margin increased and reached a record level for the bank of 3.24 percent at December 31, 2009, due to a focused effort on asset liability management and the maturity of certain deposit liabilities carrying high interest rates. This record level was maintained through March 31, 2010 and it anticipates further improvement during the rest of this year.

In addition, immediately following year-end the bank's investment company, Capital G Investments Ltd., completed the acquisition of Kast Investment Management Limited.

"In keeping with our traditional and strong commitment to Bermuda and its people during good times and bad, we have chosen to carry additional staff rather than pursue redundancies during this time of economic uncertainty and resulting pressure on earnings, as we believe the stability of our experienced staff is more important than short term profits," said Mr. Kephart.