Question: I read your column this past Saturday and would like to know if you can please go into detail about your comment on "the only bright notes are the wonderful news about Bank of Bermuda''. I have heard buzzings about the bank's stock and would like to know if, in your opinion, this is a good time to buy.

There was actually more to this request, but it has been omitted to protect reader privacy.

This is a loaded question! And since we know nothing about this reader's individual criteria or risk profile, we have to start with some basic questions.

What are your investment objectives? For instance, are you a buy and hold investor trundling along nicely; a dip-and-flip bargain hunter interested in some short-term profits, or a totally aggressive, day-trader mentality type ready to move stock, puts, calls at a moment's notice? Do you have other savings (short-term emergency money) or is this the only money you have to invest? Do you need current income and cash flow besides your pay cheque? Under the Bermuda Business Investment Act 1998 (implemented this year) every financial advisor must practice due diligence in knowing the client, and recommending investments that are appropriate for the client's understanding and risk tolerance level.

Let's talk about the Bank of Bermuda (BOB) and the persistent rumours swirling about an impending listing on the United States National Association of Securities Dealers. This has been neither denied nor confirmed by any bank spokesperson, at this point. Never the less when considering purchasing this stock, you would certainly want to look at its future prospects. After all, the listing of a Bermudian bank on a United States stock exchange is a rather amazing feat and a first! Taking a quick snapshot of the Bank of Bermuda's stock off Bloomberg today August 8, 2000, we see quite a bit of information. Bloomberg Professional, for readers unfamiliar with this term, is the premier real-time global stock markets information service. Every major financial institution subscribes to this service. Mr. Michael Bloomberg (the CEO) loves Bermuda (well, since I don't know him, I can't say he personally told me that) and maintains a home here. He also donated and had installed a Bloomberg terminal in the Washinton Lane Mall, free for use to anyone strolling by. Since the cost to a financial service provider (including BOB) runs thousands of dollars per month, this was a very generous gift.

Blooomberg lists "BOB as an offshore banking group servicing corporate, institutional and private clients through a global network of 15 offices. Bank of Bermuda specialises in offshore mutual funds, international private trusts and captive insurance.'' Statistics - on the stock itself 52 wk high as of August 7, 2000 40.00 BMD 52 wk low as of Sept 13, 1999 24.90 BMD Total one year return 43.33% Shares outstanding 20,237,000 (meaning owned by shareholders, both large and small), quite a lot considering the size of the population of Bermuda.

Market capitalization of BOB is $809.48 million per Bloomberg (Tuesday's Royal Gazette said $957m). For comparison, many small cap companies (already listed) are very thinly capitalised and have no earnings record at all. BOB is probably very close to being categorised as a mid cap, rather than small cap stock.

The BOB p/e ratio of 10.62 is still relatively low when compared to NASDAQ listed banks. Price earnings ratios are calculated by taking the stock price $40 and dividing it by the reported earnings per share (40/3.766). Dividends have been distributed in a steady stream for a number of years as well, both cash and stock (even in 1992 stock split 2.4 for 1). Note that these statistics are based upon 1999 numbers computed against the August 8 stock valuation, and have not factored in the June 30, 2000 financial results, or the one for seven stock split. There is plenty of room for appreciation and growth, but it is also to be noted that listing on the NASDAQ may subject BOB's stock to more market swings than we currently see in the less liquid Bermuda market.

In many companies, executives, staff, and directors may hold significant share positions; so all of these individuals have a vested interest in the continued success of the company. Listing on a stock exchange subjects companies to more scrutiny, with rules primarily designed to protect the investing public. One of those disclosure rules is the tracking of the movement of shares owned by insiders, categorised as those working at or having significant knowledge of the bank's internal statistics.

You would also want to have a good look at BOB's Balance Sheet and Cash Flow.

Most everyone is aware of the record net earnings for fiscal year 2000. How are their financial ratios? Equity to debt, current and future cash flow, long-term liabilities and so on. Did they receive a clean bill of health on their last audited financials? Their auditors by the way are KPMG Bermuda, another Bermudian business with extremely astute leadership that has grown exponentially.

There are any number of investment books and websites that explain in great depth how to read financial statements. And finally, if you have further interest or questions, call the company. Shareholders in the United States (and perhaps, elsewhere) have created websites where they pool information on company stock they own. It is always important to remember that when you purchase stock in a company, you do own a piece of it, however small.

It is entirely possible (and I am sure a hoped for result) that financial analysts and investment managers will take a look at BOB as a portal to the offshore world. Adding another layer of diversification (in the form of a global bank) to their portfolio might be desirable. If this happens, we will all benefit, including any other Bermuda institutions that wish to list later on.

A financial advisor may, after careful assessment of the impact of this stock upon your overall portfolio and consideration as to whether owning this "piece of a successful Bermuda Business'' fits with your investment objectives, discuss his/her findings with you and make a recommendation.

It is suggested that you do as much research as you can yourself; certainly, listen to what your advisor recommends; discuss your findings with members of your investment club. Financial advisors can be right (and they can be wrong), but at the end of the day, it is still your decision and your money! Under no circumstances does the information in this column represent a recommendation to buy or sell stocks or any other investments. Readers needing specific assistance should seek professional advice from their financial advisor.

Martha Myron CPA is a Bermudian, a Comprehensive Financial Planner, a NASD Series 7 licensed investment broker and a U.S. tax practitioner. She is Programming Chair for the Financial Planners Association.

Questions regarding this article may be sent to her at 234-0290 or Email: marthamyron y northrock.bm Rising stock: The Bank of Bermuda has seen its stock rise as aresult of speculation that it will list on the Nasdaq Stock Exchange.