MARLTON, N.J.--(BUSINESS WIRE)--Liberty Bell Bank (PINX:LBBB) today reported net income of $20,000 for the three months ended June 30, 2015, compared to a net loss of $493,000 for the same period in 2014, an improvement of $513,000. Net income for the six months ended June 30, 2015 was $24,000, an improvement of $966,000 as compared to a net loss of $942,000 for the same period in 2014. At June 30, 2015, the Bank is adequately capitalized by all regulatory measures.
For the quarter ended June 30, 2015, the Bank decreased its provision for loan losses by $57,000 from the same period in 2014. In addition, the Bank’s net interest income increased by $33,000, as compared to the three months ended June 30, 2014. This was due to an $18,000 increase in interest and dividend income and a $15,000 reduction in interest expense from decreased interest on deposits. The increase in interest and dividend income was due primarily to an increase of $37,000 in interest and fees from loans partially offset by a decrease of $19,000 in interest earned from investments.
The increase of $37,000 in interest and fees from loans was due primarily to a $4.0 million increase in the average loan balances outstanding for the three months ended June 30, 2015 as compared to the three months ended June 30, 2014. The interest yield from the loan portfolio declined from 5.02% for the second quarter of 2014 to 4.97% for the same time period in 2015.
The Bank’s losses from the sale of other real estate decreased by $214,000 and its non-interest expenses decreased by $205,000, both as compared to the second quarter of 2014. The $205,000 decrease in non-interest expense was due primarily to a $133,000 decrease in other operating expenses and a $36,000 decrease in compensation expense. In addition, decreases in expenses related to other real estate owned, occupancy, marketing and equipment of $12,000, $11,000, $7,000 and $6,000, respectively, contributed to lower non-interest expense. The $133,000 decrease in other operating expenses was due primarily to a $59,000 decrease in other professional fees primarily related to consent order compliance, legal expenses which decreased $28,000 and loan related expenses which decreased $20,000. Decreased miscellaneous expenses, director fees and printing and supply costs of $17,000, $12,000 and $8,000, respectively, contributed to lower other operating costs. Income tax expense also decreased $7,000. Partially offsetting these positive variances, audit expenses increased $6,000 while telephone, postage and correspondent bank fees also increased $5,000.
Net interest margin for the second quarter of 2015 was 3.61%, an increase of 0.23% from the 3.38% net interest margin for the second quarter of 2014. The improvement in the net interest margin resulted from an improvement of 0.21% yield from earning assets coupled with a reduction of 0.01% in the rate paid for interest bearing deposits and borrowings.
The improvement for the six months ended June 30, 2015 as compared to the six months ended June 30, 2014 can be primarily attributed to a reduction in the loss from the sale of other real estate owned, a lower provision for loan losses and a decrease in non-interest expenses of $392,000, $200,000 and $276,000, respectively. In addition, higher loan related fees of $101,000, primarily from an SBA loan sale and the sale of residential first mortgage loans, contributed to improved earnings as did lower income tax expenses of $16,000. A decline in net interest income of $14,000 partially reduced the impact of the favorable variances.
The decrease of $14,000 in net interest income was due to a $53,000 decrease in interest and dividend income, partially offset by a $39,000 reduction in interest expense, primarily resulting from a decrease of interest on deposits. The decrease in interest and dividend income was due primarily to a decrease of $15,000 in interest and fees from loans and a decrease of $38,000 in interest earned from investments.
The decrease of $15,000 in interest and fees from loans was due primarily to a 9 basis point reduction of the yield from the loan portfolio from 5.06% to 4.97%. Partially offsetting the impact of a 9 basis point reduction in the loan portfolio yield, the average loan balances outstanding for the six months ended June 30, 2015 as compared to the six months ended June 30, 2014 increased by $1.3 million. The decrease of $38,000 in interest earned from investments was due primarily to a $6.1 million decrease in the average investment balance outstanding, as the bank sold securities primarily to fund the growth in loans.
The $276,000 decrease in non-interest expense for the six months ended June 30, 2015 as compared to the six months ended June 30, 2014 was due primarily to a $86,000 decrease in legal expense related to the Bank’s ongoing troubled asset reduction plan, a $75,000 decrease in professional fees primarily related to regulatory compliance, a $38,000 decrease in miscellaneous expenses, a $30,000 decrease in expenses related to other real estate owned, a $36,000 decrease in occupancy and equipment expenses due to lower real estate taxes and reduced equipment maintenance costs and $21,000 decrease in insurance expense primarily due to lower deposit insurance premiums. In addition, director fees, loan related expenses, printing and supplies and marketing expenses declined $18,000, $12,000, $11,000 and $6,000, respectively. Partially offsetting these positive variances, compensation related expenses increased $13,000 primarily related to medical expense, accounting expenses increased $18,000 and communication related expenses increased $24,000 as the Bank improved its communications network.
Net interest margin for the six months ended June 30, 2015 was 3.54%, an increase of 0.12% from the 3.42% net interest margin for the six months ended June 30, 2014. The improvement in the net interest margin resulted from an improvement of 0.09% in the yield generated from interest-earning assets coupled with a reduction of 0.02% in the rate paid for interest bearing deposits and borrowings.
Total assets at June 30, 2015 were $144.9 million, representing a decrease of $3.2 million from $148.1 million at December 31, 2014. The decrease was due primarily to a reduction in cash and cash equivalents of $9.0 million caused by a $3.1 million reduction in deposits discussed below and the need to fund the Bank’s $6.6 million increase in net loans from $101.7 million at December 31, 2014 to $108.3 at June 30, 2015. In addition, investment securities decreased $843,000 (also largely in order to fund loan growth), bank premises and equipment decreased $133,000 and other assets decreased $169,000.
The total deposits decrease of $3.1 million to $132.3 million at June 30, 2015 from $135.4 million at December 31, 2014, was primarily due to a $5.0 million decrease in non-interest bearing accounts, offset by a $1.9 million increase in interest bearing accounts.
The increase in interest-bearing deposit accounts of $1.9 million was due primarily to Interest bearing checking accounts, including money market accounts which increased $3.5 million and savings accounts which increased $1.3 million. Certificates of deposit, our highest cost deposits, decreased $2.9 million from $52.1 million at December 31, 2014 to $49.2 million at June 30, 2015.
At June 30, 2015, our criticized/classified loans totaled $7.1 million which represents a decrease of $539,000 since December 31, 2014. Other real estate owned totaled $4.5 million at June 30, 2015 and at December 31, 2014. In July 2015, the Bank sold one property of other real estate which was valued at $2.0 million. A loss of $150,000 was recognized from the sale. The Bank is actively pursuing recovery of the loss from the guarantor of the loan related to the property sold.
The Bank’s President and Chief Executive Officer, Benjamin Watts indicated, “We continue to execute our Troubled Asset Reduction Plan while we also focus on reducing operating expenses and growing our loan portfolio. In doing so, we are improving the earnings profile and asset quality. With our expenses stabilized, as we add to our loan portfolio our profits will increase. We also continue to develop our plans to increase our non-interest income.”
Set forth below is certain selected balance sheet and income statement data at June 30, 2015 and December 31, 2014 and for the three and six months ended June 30, 2015 and 2014.
|SELECTED BALANCE SHEET DATA|
|(Unaudited, in thousands)||June 30,||December 31,|
|Cash and cash equivalents||$||9,352||$||18,343|
|Net loans receivable||108,332||101,683|
|Common Equity Tier 1 Capital to Risk|
|Tier 1 Capital to Risk Weighted Assets||8.28||%||8.89||%|
|Total risk based capital||9.53||%||10.14||%|
|SELECTED INCOME STATEMENT DATA|
|(Unaudited, in thousands except per share data)|
Quarter ended June 30,
Six months ended June 30,
|Net interest income||$||1,237||$||1,204||$||2,419||$||2,433|
|Provision for loan losses||10||67||10||210|
|Gain on sale of securities||0||0||0||0|
|Other Non-interest income||134||138||308||213|
|Loss on write-down of ORE||0||214||1||394|
|Provision for income taxes||2||9||2||18|
|Earnings per share:|
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 two 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. Such statements are not historical facts and include expressions about management's confidence and strategies and management's current views and expectations about new and existing programs and products, relationships, opportunities, taxation, technology and market conditions. Actual results may differ materially from such forward-looking statements, and no undue reliance should be placed on any forward-looking statement. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to, unanticipated changes in the financial markets and the direction of interest rates; volatility in earnings due to certain financial assets and liabilities held at fair value; stronger competition from banks, other financial institutions and other companies; insufficient allowance for credit losses; a higher level of net loan charge-offs and delinquencies than anticipated; material adverse changes in the Bank’s operations or earnings; a decline in the economy in our primary market areas; changes in relationships with major customers; changes in effective income tax rates; higher or lower cash flow levels than anticipated; inability to hire or retain qualified employees; a decline in the levels of deposits or loss of alternate funding sources; a decrease in loan origination volume; changes in laws and regulations, including issues related to compliance with anti-money laundering and the bank secrecy act laws; adoption, interpretation and implementation of new or pre-existing accounting pronouncements; operational risks, including the risk of fraud by employees and customers; the inability to successfully implement our strategic plan as well as new lines of business or new products and services .and other factors, many of which are beyond the Bank's control. The words “may”, “could”, “should”, “would”, “will”, “project”, “continue”, “believe”, “anticipate”, “expect”, “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.