the last 12 months better reflects the Bank's position, according to its president, Mr. Donald Lines.

In the Bank's latest newsletter to shareholders, Mr. Lines harked back to the darker days of April, 1990, when the company's share price was languishing at $33 after a high of $44 at the end of 1987.

This decline had come about "despite the Bank's consistent level of earnings and continued growth'', said Mr. Lines.

But there has been a steady improvement since then, culminating in the shares trading for $44 again earlier this year, although they have now dropped back to $41.50.

Mr. Lines added: "We pointed out in 1990 that this decline in market value was not justified based on Bank fundamentals and it was, in our opinion, largely attributable to a Bermuda dollar liquidity squeeze which had forced investors to sell shares to meet other commitments.

"It is pleasing to note that this trend has now reversed and the Bank's common shares have appreciated from a low of $32.50 last year to their recent value of $43.50 based on higher reported earnings and an increase in Bermuda dollar liquidity which has eased the upward pressure on local interest rates.

"Examination of the Combined Bermuda Dollar position of banks and deposit companies during the past five years supports the view that Bermuda dollar liquidity has a dramatic effect on the price of our shares.

"We note that during the period from December, 1987, to March, 1991, the Bermuda dollar float steadily declined from a positive $87 million to a negative $66 million by March, 1990, and the value of our Bank's shares fell in lock step with this decline in liquidity to a low of $31.50 at March 31, 1991.

"The Bermuda dollar liquidity squeeze then started to improve and the `Bermuda dollar float' steadily increased to $125 million by September, 1992.

"The value of our shares followed this reversal rising in price to $43.50 in February, 1993.

"Looking to the immediate future, we expect these trends to continue, despite a modest seasonal decline in liquidity over the winter, for it has been our experience that it takes some time following a recession before investors gain confidence in the outlook for the future and decide to commit capital and earnings to major projects and consumption.

"Based on trends which are now emerging, we are satisfied there will be an improvement in earnings from tourism and international business over this summer and we are confident this will be reflected in continued growth of Bermuda dollar liquidity.'' MR. DONALD LINES -- Bank of Bermuda president.