Investors in Bermuda Commercial Bank Ltd. (BCB) stand to earn a premium of more than 10 percent on yesterday's share price if the bank succeeds in finding a buyer.

That is one of the conclusions of an LOM equity research report that puts a one-year target of $8.50 on the bank's share price - a level at which LOM said takeover negotiations might start.

The bank's board supported a takeover bid in 2007, but it fell through after the then controlling shareholder First Curacao International Bank Ltd. pulled the plug on the deal.

LOM's equity research report on BCB, which was written by Jeremy Dyck, investment adviser at LOM Securities (Bahamas) Ltd. and released yesterday, applied a 30 percent discount to the bank's current book value of $12.20 for its $8.50 one-year target.

The share price remained unchanged at $7.70 in Bermuda Stock Exchange trading yesterday.

LOM said that, given a continuing low interest-rate environment, it forecast fiscal 2010 earnings of $750,000, or 12 cents per share, and expected BCB's future earnings to progressively increase over the next few years as the US Federal Reserve begins to raise rates and money market yields inch higher.

"Although the dividend has been suspended, BCB stock now trades at 30 percent discount to book value," the report read.

"Due to the secrecy and circumstances surrounding the sale of Bermuda Commercial Bank, we can only speculate about the timing and price level of a potential transaction."

Butterfield Bank had also expressed an interest in buying the BCB in October 2006, but later withdrew it.

LOM rates BCB shares as a 'hold'.