The prominent mortgage and finance, travel and insurance company is typical of local companies that were founded in the 1950s, diversified through acquisitions and burgeoned under strong management to enjoy the real estate boom of the 1970s.

This week, the Bank of Bermuda and LPG astounded the local business community by announcing a merger to form the third highest capitalised local company -- one of the best kept secret in a rumour-rife community.

Mr. David Gutteridge, president of LPG and the majority shareholder, appears quietly jubilant about the transformation of LPG from a closely-held $85 million family business to what will be a publicly-held $470 million high profile operation, with 6,000 shareholders.

The sacrifice of LPG's autonomy is justified by the new strength of association with the Bank of Bermuda, and therefore deemed a wise business decision by local observers.

In the same breath, LPG has been called the first victim of the deregulatory process announced in the Budget.

The question that arises is whether the remaining non-bank aligned deposit taking companies, such as Bermuda Savings and Loan and Gibbons Deposit Company, become dinosaurs as they wrestle with competition in a complex new market.

The speed in which the merger was put together -- just seven weeks -- testifies to the open and frank tone of the negotiations, said Mr. Gutteridge.

"It was the right thing to do at this time,'' he said. "It is not a takeover by the Bank of Bermuda. It is a merger of two successful companies to build a new financial services company.'' He doesn't regret that he will no longer be the chief of a prominent local company.

"It is not an issue for me,'' he said.

However, his children, seven women and one man, are sorry to see the family name disappear, although they are supportive of the merger.

The two companies are convinced they have compatible philosophies, but insist it is still early days, and the finer details of policy and the structure of Bermuda Home, and the impact on surviving LPG business will be clarified in the months to come.

What is clear is that LPG's travel and insurance operations will continue under the current management. Mr. James (Mac) Mitchell is vice-president travel and Mr. Andrew Bickham is vice-president insurance. LPG is also a captive insurance manager through its association with the UK's Commercial Union.

There is no doubt that LPG had at its helm an astute, and refreshingly unassuming businessman. The momentous decision to merge cost him some sleepless nights: "It took me a little time to think it through and digest it to have a full understanding before I shared it with others. The approach from the Bank of Bermuda came as quite a surprise.'' The other LPG directors agreed with his conclusion that there were attractions to the merger.

"We could not lose sight of the fact that exchange control regulations were being abolished. We were a private company, but had the public's money. This was an opportunity to become part of a bigger financial institution that was being put together to serve the needs of Bermuda.

"At LPG, we have always said there should have been long term investments for the Country's savings so that the long term capital needs of the community could be met.

"Under the old system, there was basically short term savings for long term needs. In a protected environment with the exchange controls in place, and where capital did not have freedom of movement, we could survive. But the new arena is much bigger.'' In the past, investors did not have the opportunity to diversify their risk in response to political or economic changes, he said. "An investor had to keep his money in Bermuda, but following the relaxation of exchange control, the world is his oyster,'' said Mr. Gutteridge.

LPG, like the other deposit taking companies, would have had to restructure its liquidity to counter the possibility of an exodus of investments, he said.

L.P. Gutteridge Mortgage & Finance has always operated locally, and, unlike the bank, does not have foreign ties. "These would have been areas that we would have had to venture into and develop ties. We were large by Bermuda standards, but very small by New York standards.'' Currently on LPG's books is $87 million in deposits, which represent savings of in excess of 4,000 clients, and mortgages of $62 million.

L.P. Mortgage and Finance Ltd. formed in 1974, when the Deposit Companies Act came into force, but had been in operation since 1961 as part of whole group.

LPG has had longstanding connections with the bank, and Mr. Gutteridge is a director since the late 1980s.

His father, the late Lawrence Patrick, founded the company on April Fool's Day, 1953, aged 40, said Mr. Gutteridge with a flicker of amusement.

The company's first cheque is kept framed in the boardroom.

The late Speaker of the House of Assembly was "an acquisitions man'', but his son believes that "given the circumstance, he would have done the same thing''.

Another attraction of the merger is access to the bank's software facilities.

Deposit taking company must have computer software that will enable more complex transactions.

"We didn't have to have a sophisticated system, because business was all local,'' said Mr. Gutteridge. "With the new exposures, one has to be more sophisticated in management, and have more sophisticated tools to work with.

"Now, we can invest in this technology. This is one of the strengths that the bank brings to the venture in that it does have systems developed. We will examine our systems, and their systems to see which will be best suited to the company. We may find we need a whole new system.

"The Bank of Bermuda is firmly committed to supporting Bermuda Home. There are certain technical expertise that we will need, and the bank would be a likely resources for us to get that expertise.'' Ironically, Pat Gutteridge started out in a small office on the fourth floor of the old Bank of Bermuda Building. The real estate company, focusing on real estate sales and rentals, and property management, expanded, and eventually in March 1955, Mr. J.J. (Jack) Outerbridge joined the company as a salesman.

"Jack was a self-motivated man, driven to succeed like my father. That is why they were such a good fit,'' Mr. Gutteridge said. "He was energetic, enthusiastic, and had a positive approach. He was always alert to the needs of people, and this led to the growth of the company.'' Mr. Outerbridge had considered taking the company public in the past. "He is happy with the merger,'' said Mr. Gutteridge.

In the early years of the company, Mr. Gutteridge acquired the agency for Commercial Union, and branched into the insurance field.

In 1959, LPG moved to Par-la-Ville Road where it was housed until 1980 when the company moved into newly built headquarters on Bermudiana Road.

Mr. Pat Gutteridge's determination to succeed was the lynch pin of the company's increasing prosperity. He acquired some smaller agencies, including real estate agency M.A. Gibbons in 1961, and as part of the deal acquired the right to represent American Express, looking after the card operations in Bermuda.

Mr. David Gutteridge, himself, joined LPG in March 1, 1966, starting out in the accounting area, and moving into the mortgage operations in 1969, which has remained his area of concentration ever since.

A deeply private, family man, Mr. Gutteridge enjoys his pastime of boating, and in the past was involved with the Bermuda Swimming Association.

QUIETLY JUBILANT -- L.P. Gutteridge president Mr. David Gutteridge reflects on the creation of Bermuda Home through the merging of the deposit companies and real estate arms of LPG and the Bank of Bermuda.