MARLTON, N.J.--(BUSINESS WIRE)--Liberty Bell Bank (Other OTC: LBBB) today reported net income of $43,000 or $0.01 per diluted share for the three months ended December 31, 2015, compared to a net loss of $1.6 million or $(0.19) per diluted share for the same period in 2014, an improvement of $1.6 million or $0.18 per diluted share. Net income for the year ended December 31, 2015 was $143,000 or $0.02 per diluted share, an improvement of $4.1 million as compared to a net loss of $3.9 million or $(0.60) per diluted share for the same period in 2014. At December 31, 2015, the Bank is adequately capitalized by all regulatory measures.
“Our restructuring and capital enhancements undertaken in 2014 and 2015 have positioned Liberty Bell Bank to deliver continued improvements in earnings, asset quality and loan growth,” observed Board Chairman William Dunkelberg. The Bank's President and Chief Executive Officer, Benjamin Watts, noted that, "The Bank's dedicated Board and staff have been successful in generating new business throughout 2015, and we believe that customer fallout from several large bank mergers will continue to create new business opportunities for smaller community banks like us in our marketplace."
For the quarter ended December 31, 2015, the Bank had no provision for loan losses, representing a decrease of $620,000 from the same period in 2014. In addition, the Bank’s net interest income increased by $62,000, as compared to the three months ended December 31, 2014. This was due to a $79,000 increase in interest income partially offset by a $17,000 increase in interest expense on deposits. The increase in interest income was due primarily to an increase of $101,000 in interest and fees from loans partially offset by a decrease of $22,000 in interest earned from investments.
The increase of $101,000 in interest and fees from loans was due primarily to an $8.7 million increase in the average loan balances outstanding for the three months ended December 31, 2015 as compared to the three months ended December 31, 2014. The interest yield from the loan portfolio was relatively stable at 4.99% for the fourth quarter of 2014 and 4.96% for the same time period in 2015.
Non-interest income for the quarter ended December 31, 2015 decreased by $24,000 over the prior year’s fourth quarter. This decrease was due primarily to a decrease in fee income from loans, as income from the sale of residential first mortgage loans decreased $7,000 (from $21,000 for the three months ended December 31, 2014 to $14,000 for the three months ended December 30, 2015), and other loan fees decreased $14,000 from $69,000 to $55,000.
The Bank did not have any loss on the sale and write down of other real estate in the quarter ended December 31, 2015, as compared to a $76,000 loss in 2014, and the Bank recognized a $43,000 net increase in gains from the sale of investment securities in the quarter ended December 31, 2015 as compared to the same period in the prior year. In addition, in the quarter ended December 31, 2015, the Bank did not have an other real estate valuation provision expense, which was $540,000 in the fourth quarter of 2014.
Other non-interest expenses also decreased by $309,000 in the fourth quarter of 2015, as compared to the fourth quarter of 2014. The decrease was due primarily to a $145,000 decrease in other operating expenses and an $84,000 decrease in compensation expense due to staff reductions. In addition, decreases in expenses related to other real estate owned, marketing and equipment of $12,000, $16,000 and $28,000, respectively, contributed to lower non-interest expense. The $145,000 decrease in other operating expenses was due primarily to a decrease in legal expenses and loan collection expenses, both primarily related to troubled assets, of $82,000 and $68,000, respectively. Miscellaneous expense, primarily related to a Bank restructuring initiative, decreased $31,000 and miscellaneous operating losses decreased $9,000. The Bank also realized a $13,000 decrease in audit expense, while expenses for directors, telephone and supplies decreased $12,000, $6,000 and $2,000, respectively. Partially offsetting these positive variances, information technology expense increased $51,000 as the Bank outsourced core processing functions and enhanced network functionality and security. Income tax expense also increased $25,000.
Net interest margin for the fourth quarter of 2015 was 3.31%, a decrease of 0.06% from the 3.37% net interest margin for the fourth quarter of 2014. The decrease in the net interest margin resulted from a decrease of 0.05% on our yield from earning assets, primarily the loan portfolio, and an increase of 0.02% in the rate paid for interest bearing deposits and borrowings.
The net income improvement of $4.1 million for the year ended December 31, 2015 as compared to the year ended December 31, 2014 can be primarily attributed to a $1.7 million lower provision for loan losses, a $596,000 reduction in the loss from the sale and write down of other real estate owned, and a $1.4 million decrease in non-interest expenses (which includes the other real estate valuation provision expense). In addition, net interest income increased $180,000 while deposit account related fee income decreased $12,000. Higher loan related fees of $114,000, primarily from an SBA loan sale and the sale of residential first mortgage loans, also contributed to improved earnings. Miscellaneous fees also increased $96,000 primarily due to proceeds from the sale of other real estate owned.
The increase of $180,000 in net interest income was due to a $229,000 increase in interest and fees from loans and a $27,000 decrease in interest expense, primarily resulting from a decrease of interest expense on deposits. These positive results were partially offset by a $76,000 reduction in interest earned from investments.
The increase of $229,000 in interest and fees from loans was due primarily to a $4.5 million increase in the average loan balances outstanding for the year ended December 31, 2015 as compared to the year ended December 31, 2014. The yield from the loan portfolio was stable at 4.96% as compared to 4.95%. The decrease of $27,000 in interest expense was due primarily to a $3.9 million decrease in our average interest-bearing deposit balances outstanding for the year ended December 31, 2015 as compared to the year ended December 31, 2014. The decrease 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 $1.4 million decrease in non-interest expense for the year ended December 31, 2015 as compared to the year ended December 31, 2014 was due primarily to two factors. First, in 2015, the Bank did not have an other real estate valuation provision expense, which was $540,000 in 2014. Second, other operating expenses decreased $818,000 from 2014 to 2015, consisting of a $176,000 reduction in compensation expense, a $60,000 decrease in equipment expenses, a $57,000 decrease in expenses related to other real estate owned, a $31,000 decrease in occupancy expense due to lower real estate taxes, a $15,000 reduction in marketing expenses, a $424,000 decrease in expenses related to the Bank’s troubled asset reduction plan (legal expenses decreased by $240,000, collection expenses decreased by $101,000, and consulting expenses decreased by $83,000), a $10,000 decrease in loan related expenses, a $13,000 decrease in FDIC deposit insurance expense, and a $14,000 decrease in other bank insurance expense due to a reduction in insurance premiums. In addition, miscellaneous expenses, director fees, correspondent bank expense, and printing and supplies expenses declined $76,000, $42,000, $6,000, and $18,000, respectively. Partially offsetting these positive variances, information technology expense increased $86,000 as the Bank outsourced some data processing functions, communication related expenses increased $23,000 as the Bank improved its communications network, and auditing expenses increased $8,000.
Net interest margin for the year ended December 31, 2015 was 3.48%, an increase of 0.15% from the 3.33% net interest margin for the year ended December 31, 2014. The improvement in the net interest margin resulted from an improvement of 0.15% in the yield generated from interest-earning assets. The rate paid for interest bearing deposits and borrowings remained stable at 0.71%.
Total assets at December 31, 2015 were $151.4 million, representing an increase of $3.3 million from $148.1 million at December 31, 2014. The increase in total assets was due primarily to loans, which increased $9.0 million. Accrued interest receivable and other assets also increased by $123,000. The Bank’s $9.0 million increase in net loans from $101.7 million at December 31, 2014 to $110.7 million at December 31, 2015 was funded primarily by a $2.4 million decrease in investment securities, a $1.3 million decrease in cash and cash equivalents and a $2.7 million increase in deposits. In addition, other real estate owned decreased $1.9 million and bank premises and equipment decreased $290,000.
The total deposits increase of $2.7 million to $138.1 million at December 31, 2015 from $135.4 million at December 31, 2014, was primarily due to a $7.7 million increase in interest bearing accounts offset in part by a $5.0 million decrease in non-interest bearing accounts.
The increase in interest-bearing deposit accounts of $7.7 million was due primarily to interest bearing checking accounts, including money market accounts, which increased $4.6 million. Certificates of deposit also increased $2.5 million from $52.1 million at December 31, 2014 to $54.6 million at December 31, 2015, and savings accounts increased $659,000.
Set forth below is certain selected balance sheet and income statement data at December 31, 2015 and December 31, 2014 and for the three months and years ended December 31, 2015 and 2014.
|SELECTED BALANCE SHEET DATA|
|(Unaudited, in thousands)||December 31,||December 31,|
|Cash and cash equivalents||$||17,050||$||18,343|
|Net loans receivable||110,711||101,683|
Common Equity Tier 1 Capital to Risk Weighted Assets
|Tier 1 Capital to Risk Weighted Assets||8.85||%||8.89||%|
|Total risk based capital||10.10||%||10.14||%|
|SELECTED INCOME STATEMENT DATA|
|(Unaudited, in thousands except per share data)|
Quarter ended December 31,
Year ended December 31,
|Net interest income||$||1,196||$||1,134||$||4,824||$||4,644|
|Provision for loan losses||0||620||40||1,757|
|Other Non-interest income||116||140||667||469|
|Loss on sale and write-down of ORE||0||76||40||636|
|Gain (loss) on sale of investment securities||29||(14||)||29||(14||)|
|ORE valuation provision||0||540||0||540|
|Other non-interest expenses||1,298||1,607||5,295||6,113|
|Provision (credit) for income taxes||0||(25||)||2||2|
|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; the inability to increase our loan portfolio; the inability to increase our capital to sustain our growth and meet regulatory requirements; 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.