Liberty Bell Bank Reports Third Quarter and Year to Date Earnings

MARLTON, N.J.--()--Liberty Bell Bank (OTCBB:LBBB) today reported third quarter 2012 net loss of $1.6 million or $(0.53) per diluted share, compared to net income of $151,000 or $0.05 per diluted share for the third quarter of 2011. The net loss for the nine month period ended September 30, 2012 was $2.4 million or $(0.78) per diluted share compared to net income of $238,000 or $0.08 per diluted share for the comparable prior year period. The decreased earnings are primarily the result of charges related to the Bank’s non–performing loans. At September 30, 2012, the Bank remains well capitalized by all regulatory measures.

Earnings for the third quarter 2012 as compared to the third quarter of 2011 decreased $1.7 million or $0.58 per diluted share. This decrease is predominantly the result of expenses and charges related to resolving problem loans resulting in an increase in the loan loss provision expense of $780,000 and the loss on the sale of other real estate owned of $617,000. Additionally, net interest income was $137,000 less when compared to the third quarter of 2011 and non interest expenses increased $187,000 as compared to the same period last year largely due to expenses related to classified loans. These decreases were partially offset by an increase of $18,000 in fee income and a gain on sale of securities of $35,000.

Earnings for the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011 decreased $2.6 million or $0.86 per diluted share. This decrease is predominantly the result of expenses and charges related to resolving problem loans resulting in an increase in the loan loss provision expense of $1.3 million and the loss on the sale of other real estate owned of $843,000. Additionally, net interest income was $229,000 less when compared to the nine months ended September 30, 2011 and non-interest expenses increased $362,000 as compared to the same period last year largely due to expenses related to classified loans. These decreases were partially offset by a $151,000 recovery of a fraud loss recorded in 2011, an increase of $69,000 in fee income and a gain on sale of securities of $35,000.

The decrease in net interest income for both the three and nine month periods was due primarily to the reversal of interest earned on loans that were placed on non-accrual. The increase in the provision for loan losses was due to the Bank’s write-down of non-performing loans. In addition, specific reserves were established for several loan relationships.

Net interest margin for the nine months ended September 30, 2012 was 3.64%, a decrease of 0.22% from 3.86% for the nine months ended September 30, 2011. The margin decrease was mainly the result of a 0.37% lower yield from interest-earning assets partially offset by a 0.16% reduction in the rate paid for interest-bearing deposits.

Total assets at September 30, 2012 were $184.7 million, representing an increase of $11.8 million from December 31, 2011. The increase was due primarily to an increase in cash and cash equivalents which increased $11.6 million while investments increased $7.7 million. Gross loans, totaled $125.1 million at September 30, 2012, a decrease of $8.1 million from $133.2 million at December 31, 2011. The allowance for loan losses at September 30, 2012 was $1.9 million, an increase of $567,000 from $1.3 million at December 31, 2011. Other real estate owned at September 30, 2012 was $6.0 million, an increase of $1.5 million from $4.5 million at December 31, 2011.

Total deposits increased $14.1 million to $164.7 million at September 30, 2012 from $150.6 million at December 31, 2011. The increase was primarily due to an $8.2 million increase in non-interest bearing demand accounts and a $5.9 million increase in interest bearing accounts. The increase in interest bearing accounts was primarily money market deposit accounts which increased $12.3 million from $26.6 million at December 31, 2011 to $38.9 million at September 30, 2012. Certificates of deposit and brokered deposits, our highest cost deposits, decreased $6.2 million and $1.2 million, respectively, from December 31, 2011 to September 30, 2012.

The Bank continues to increase non-interest bearing deposit accounts. The total non-interest bearing deposit accounts at September 30, 2012 was $21.8 million as compared to $13.6 million at December 30, 2011. Non-interest bearing accounts were 9.1% of total deposits at December 31, 2011 and 13.3% of total deposits at September 30, 2012. The growth in deposits was primarily from the Bank’s local area market.

At September 30, 2012, our criticized/classified assets totaled $10.9 million, a $4.7 million decrease from $15.6 million at December 31, 2011.

“We have made considerable progress in addressing and resolving problem loans which fortunately have also been essentially stabilized since 2011,” said CEO Kevin Kutcher, adding “The process unfortunately entails recognizing some losses and the burden of increased expenses related to these problems that include elevated legal expenses and other costs related to carrying and resolving this group of problem loans. Concurrent with enjoying some success on a primary objective of reducing problem loans we continue to advance another of our primary strategic objectives – growing core non-interest bearing business based checking accounts. This will pay significant dividends as the economy recovers and interest rates eventually rise.”

CFO Ben Watts added, “Our Board and management group have been diligently addressing these problem loans. Our goal is to remain well capitalized while resolving these remaining problem loans as rapidly as possible and, with other cost containment and revenue enhancements, to restore profitability for 2013.”

       
SELECTED BALANCE SHEET DATA
(Unaudited, in thousands) September 30, December 31,
2012 2011
 
Fed funds sold and interest bearing cash $ 21,004 $ 15,551
Investment securities 20,846 13,176
Net loans receivable 123,206 131,861
Total assets 184,722 172,905
Deposits 164,679 150,574
Shareholders’ equity 11,957 14,113
       
SELECTED INCOME STATEMENT DATA
(Unaudited, in thousands except per share data)
 
Quarter ended Quarter ended YTD YTD
September 30, September 30, September 30, September 30,
  2012     2011     2012   2011
 
Net interest income $ 1,354 $ 1,491 $ 4,216 $ 4,445
Provision for loan losses 840 60 1,580 260
Non-interest income 114 131 509 324
Loss on sale of ORE 617

0

844

 

1

Other expenses 1,596 1,409 4,629 4,268
Provision for income taxes 8 2 26 2
Net income (1,593 ) 151 (2,354 ) 238
 
Earnings per share:
Basic $ (0.53 ) $ 0.05 $ (0.78 ) $ 0.08
Diluted $ (0.53 ) $ 0.05 $ (0.78 ) $ 0.08
 
Capital Ratios:
Leverage Capital 6.65 % 8.42 %
Total risk based capital 10.07 % 11.38 %
 

Liberty Bell Bank is a full-service, state-chartered commercial bank, whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC).

The Bank provides diversified financial products through three locations in Burlington County, New Jersey and one location in Camden County, New Jersey.

The Bank may from time to time make written or oral “forward-looking statements”, including statements contained in this release. These forward-looking statements include statements with respect to the Bank's beliefs, plans, objectives, goals, expectations, anticipations, estimates, and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors, many of which are beyond the Bank's control. The words “may”, “could”, “should”, “would”, “believe”, “anticipate”, “estimate”, “expect”, “projects”, “intend”, “plan”, and similar expressions are intended to identify forward-looking statements. All such statements are made in good faith by the Bank pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The Bank does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Bank.

Contacts

Liberty Bell Bank
Benjamin F. Watts, CFO
856-830-1135

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Contacts

Liberty Bell Bank
Benjamin F. Watts, CFO
856-830-1135