Shareholders of Bermuda Commercial Bank Ltd. (BCB) will either view the $9.88 per share tender bid from Permanent Investments Ltd. to acquire all of the bank's outstanding stock as an opportunity to get a reasonable return on their investment or to realise the potential for greater gains further down the line.

That is according to Jeremy Dyck, an investment adviser with LOM Securities (Bahamas) Ltd., who said in his equity research report that after three years of engaging possible suitors, BCB's outlook had changed considerably following the takeover announcement.

Mr. Dyck said that LOM was maintaining its rating on BCB shares at 'hold' and had raised its price target from $8.50 to $11, based on a five percent premium to its tangible book value per share estimate of $10.45.

"We assume that most minority shareholders will view this offer as an opportunity to exit their investment at a reasonable price," the report said.

"For those who decline the $9.88 tender bid, there is adequate potential for greater gains down the road - whether it be a turnaround sale, merger, or an organic recovery in BCB's banking operations. However, there are also inherent risks - primarily, a severe lack of liquidity and no dividend yield."

Earlier this month, BCB announced the sale of its controlling interest to Bermuda-based exempted company Permanent Investments, which bought 3.46 million shares from the First Curacao International Bank (FCIB), giving it a 54 percent stake in the bank.

The new owners, who are owned and managed by a group of four investment funds and financial companies associated with newly-appointed board members including former president and CEO of Butterfield Bank and current chairman of The Ascendant Group Michael Collier, Warren McLeland and Eric Stobart, also bought all of the outstanding warrants in BCB.

LOM's report said that while the share purchase announcement was welcome news for many long-term shareholders, representing a 27 percent premium to the most recent trading price, its analysis indicated the $9.88 price tag does not quite represent full value for BCB's stock.

It added that two years ago, despite being pre financial crisis and the subsequent downturn in the bank's earnings, the prospect of a buyout under $10 per share was doubtful, while the value of a spurned takeover bid in December 2007 was likely to be higher than the current offer.

"BCB has maintained a clean balance sheet, despite the mild loss of fiscal 2009 and a gradual decline in their asset base," the report said.

"The bank has no 'hard assets' (land, buildings) to speak of, however the value of its Bermudian banking licence is considerable, if difficult to appraise.

"We estimate BCB's current tangible common equity to be $10.45 per share. We would note that this figure includes $10.8 million in Butterfield Bank preference shares purchased at last year's initial offering."