Consolidated Statement of Cash FlowsFor the year ended October 31, 2009(Expressed in thousands of Bahamian dollars)Notes 2009 2008Cash flows from operating activitiesNet income $ 78,637 $ 83,904Adjustments to reconcile net income to net cash provided byoperating activities:Loan loss impairment 9 18,519 23,350Depreciation of property and equipment 10 3,470 3,584Loss (gain) on disposal/write-off of property and equipment 19 116 (236)Net gains on sale and redemption of investment securities 18 (4,493) (2,109)Interest income on investment securities 17 (40,502) (42,410)Interest expense on other borrowed funds 17 8,361 3,582(Gain) loss from change in fair value and unamortized premium 8 (10,065) 6,363Cash flows from net income before changes in operating assetsand liabilities 54,043 76,028Changes in operating assets and liabilities:-net increase in due from banks– greater than 90 days (37,451) (99,514)-net decrease in mandatory reserves with The Central <strong>Bank</strong> 2,694 1,610-net decrease in financial assets at fair value throughprofit or loss 304,936 487,371-net increase in loans and advances to customers (21,203) (146,442)-net decrease in other assets 27,905 8,883-net decrease in customer deposits (459,046) (216,396)-net increase (decrease) in other liabilities 22,359 (17,758)Net cash (used in) provided by operating activities (105,763) 93,782Cash flows from investing activitiesPurchases of property and equipment 10 (3,754) (3,120)Proceeds from sale of property, plant and equipment 10 72 813Purchases of investment securities 8 (162,629) (349,016)Interest paid on other borrowed funds 17 (8,361) (8,829)Interest income received on investment securities 8,17 45,079 39,414Proceeds from sale and redemption of investment securities 8 394,095 436,656Net cash provided by investing activities 264,502 115,918Cash flows from financing activitiesSettlement of other borrowed funds – (273,544)Settlement of debt securities – (20,000)Dividends paid 21 (42,076) (54,097)Net cash used in financing activities (42,076) (347,641)Net (decrease) increase in cash and cash equivalents 116,663 (137,941)Cash and cash equivalents, beginning of year 3 98,763 236,704Cash and cash equivalents, end of year (note 3) $ 215,426 $ 98,763See accompanying notes.20
Notes to Consolidated Financial StatementsYear ended October 31, 2009(Expressed in thousands of Bahamian dollars)1. General Information<strong>FirstCaribbean</strong> <strong>International</strong> <strong>Bank</strong> (<strong>Bahamas</strong>) <strong>Limited</strong> (the “<strong>Bank</strong>”) was formerly named CIBC <strong>Bahamas</strong> <strong>Limited</strong> (“CIBC<strong>Bahamas</strong>”) and was controlled by Canadian Imperial <strong>Bank</strong> of Commerce (CIBC), a company incorporated in Canada.The <strong>Bank</strong> changed its name to <strong>FirstCaribbean</strong> <strong>International</strong> <strong>Bank</strong> (<strong>Bahamas</strong>) <strong>Limited</strong> on October 11, 2002, following thecombination of the retail, corporate and offshore banking operations of Barclays <strong>Bank</strong> PLC in The <strong>Bahamas</strong> and the Turks& Caicos Islands (“Barclays <strong>Bahamas</strong>”) and CIBC <strong>Bahamas</strong>.The <strong>Bank</strong> is a subsidiary of <strong>FirstCaribbean</strong> <strong>International</strong> <strong>Bank</strong> <strong>Limited</strong>, formerly CIBC West Indies Holdings <strong>Limited</strong> (the“Parent” or “FCIB”), a company incorporated in Barbados, which owns 95.2% of the <strong>Bank</strong>. The Parent and its subsidiaries(collectively, the “Parent Group”) is owned by CIBC. From October 11, 2002, the major shareholders of <strong>FirstCaribbean</strong><strong>International</strong> <strong>Bank</strong> (<strong>Bahamas</strong>) <strong>Limited</strong> were jointly CIBC and Barclays <strong>Bank</strong> PLC, (“Barclays”), a company incorporated inEngland. On December 22, 2006, CIBC acquired Barclays’s interest in the Parent and now owns 91.4% of the shares of<strong>FirstCaribbean</strong> <strong>International</strong> <strong>Bank</strong> <strong>Limited</strong>.The registered office of the <strong>Bank</strong> is located at the <strong>FirstCaribbean</strong> Financial Centre, 2nd Floor, Shirley Street, Nassau, <strong>Bahamas</strong>.2. Accounting PoliciesThe principal accounting policies applied in the preparation of these consolidated financial statements are set out below.2.1 Basis of presentationThe consolidated financial statements have been prepared on a historical cost basis, except for available-for-salesecurities, derivative financial instruments and financial assets and financial liabilities held at fair value through profitor loss, that have been measured at fair value. The carrying values of recognized assets and liabilities that are hedgeditems in fair value hedges, and otherwise carried at cost, are adjusted to record changes in fair value attributable to therisks that are being hedged. The consolidated financial statements are presented in Bahamian dollars, and all valuesare rounded to the nearest thousand, except when otherwise indicated.Statement of complianceThe consolidated financial statements of the <strong>Bank</strong> have been prepared in accordance with <strong>International</strong> FinancialReporting Standards (“IFRS”).Basis of consolidationSubsidiary undertakings, which are those companies in which the <strong>Bank</strong> directly or indirectly has an interest of morethan one half of the voting rights or otherwise has power to exercise control over the operations, have been fullyconsolidated. The principal subsidiary undertakings are disclosed in Note 29. Subsidiaries are consolidated from thedate on which the effective control is transferred to the <strong>Bank</strong>. They are de-consolidated from the date that controlceases.All inter-company transactions, balances and unrealized surpluses and deficits on transactions and balances have beeneliminated. Where necessary, the accounting policies used by subsidiaries have been changed to ensure consistencywith the policies adopted by the <strong>Bank</strong>. The financial statements of the subsidiaries are prepared for the same reportingyear as the <strong>Bank</strong>.The purchase method of accounting is used to account for the acquisition of subsidiaries by the <strong>Bank</strong>. The cost ofan acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred orassumed at the date of the exchange, plus costs directly attributable to the acquisition. Identifiable assets acquiredand liabilities and contingent liabilities assumed in a business combination are measured initially at their fair valuesat the date of acquisition, irrespective of the extent of any minority interest. The excess of the cost of acquisitionover the fair value of the <strong>Bank</strong>’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of theacquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly inthe consolidated statement of income.21