FirstCaribbean International Bank (Bahamas) Limited

Management’s Discussion and Analysis (continued)Foreign exchange earnings fell by $3.5 million or 26% yearover year primarily as a result of a decline in transactionvolumes; partially offset by lower translation losses. Fee andcommission income remained flat year over year.Operating expensesOperating expenses increased by $6.7 million, or 10% overthe previous year, primarily due to higher staff costs andother operating expenses. The increases in staff costs weredriven mainly by rising pension and health costs, while theincrease in other operating expenses was primarily due to anincrease in bank licensing fees and management fees paid tothe parent company.200,000Total operating income and expensesCash and due from banksCash and due from banks increased $151.4 million, primarilydue to sale of securities and offset by payment of deposits.SecuritiesAs of October 31, 2009, the securities portfolio was comprisedsolely of available-for-sale investments. Total securitiesdecreased by $501.6 million or 46%, from the previous yeardue mainly to a $304.9 million decrease in the trading portfolio– formally described as financial assets at fair value throughprofit or loss. The year over year $192 million decrease in thenon-trading investment portfolio reflects disposals of $390million for gains of $4.5 million , net of gains from changes infair values totaling $34.1 million, compared to $34.1 millionin losses in the prior year, and new purchases.150,000100,00050,00004,0003,000Loans and advances and deposits (B$millions)and loans to deposits ratio (%)2006 2007 2008 2009Total operating incomeOperating expensesLoan loss expenses were down $4.8 million or 21%, year overyear. In Fiscal 2008, provisions were increased to reflect theimpact of the economic downturn and the heightened levelof uncertainty about the economic outlook.Review of Consolidated BAlANCE SHEETTotal assets were $3.763 billion, a decrease of $375 millionor 9% from last year. The net reduction is reflected primarilyin securities, partially offset by an increase in cash resources.Deposits and othr liabilities decreased by $437 million or13%, from prior year primarily due to a reduction in customerdeposits.Summary Balance SheetB$(000) 2009 2008AssetsCash and due from baks 411,371 259,951Securities 580,259 1,081,872Loans 2,541,756 2,539,072Other assets 229,286 257,0953,762,672 4,137,990Liabilities and equityDeposits 2,985,964 3,445,010Other liabilities 69,527 47,168Equity 707,181 645,8123,762,672 4,137,9902,0001,00002006 2007 2008 20092006 2007 2008 2009Loans to deposits 69% 66% 74% 85%LoansDepositsLoans and AdvancesNet loans and advances to customers were $2.542 billioncompared to $2.539 billion in the prior year. Mortgages,which account for 46% of the portfolio, increased 1.5%year over year. Business and government and personal loans,which account for 43% and 11%, respectively, were also flatto the prior year.Productive loans were $2.301 billion, down $109 million or5%, from the prior year. This decrease primarily reflects theshift of loans from productive to non-productive (impaired)classifications, which increased by $124 million or 62%.Customer depositsCustomer deposits decreased by $459 million or 13%, fromthe previous year, primarily driven by international depositmovements. Bank deposits decreased by $275 million, or35% primarily due to related party balances. Individual andbusiness and government deposits decreased 5% and 8%,respectively.11