MARLTON, N.J.--(BUSINESS WIRE)--Liberty Bell Bank (OTC Pink: LBBB) today reported net income of $50,000 or $0.01 per diluted share for the three months ended March 31, 2016, compared to net income of $4,000 for the same period in 2015, an improvement of $46,000. At March 31, 2016, the Bank remains adequately capitalized by all regulatory measures.
The income of $50,000 in the first quarter of 2016 was due primarily to net interest income of $1.20 million, loan fees of $139,000, fees from deposits of $44,000 and $59,000 of gains from the sale of securities, exceeding its operating expenses of $1.37 million and income tax expense of $11,000. Operating expenses included compensation expense of $602,000 and other operating expenses of $508,000.
The Bank’s President, Benjamin Watts, indicated that “the Bank continues to be well situated to benefit from the diverse commercial and consumer base in its trade area. The growth in net income is the result of Management’s focus on reducing problem assets, expanding sources of fee income and controlling operating expenses. We anticipate continued growth as we execute our strategic plan for 2016.”
The $46,000 improvement from net income of $4,000 in the three months ended March 31, 2015 was due primarily to $59,000 of gains from the sale of securities available for sale. In addition, net interest income increased $21,000 and fees from loans increased $10,000. There were no losses from the write down or sale of other real estate owned during the first quarter of 2016 as compared to $1,500 for the first quarter of 2015. Partially offsetting these positive variances, the provision for loan losses was $15,000 for the first quarter of 2016 as compared to no provision for loan losses for the first quarter of 2015. In addition, non-interest expenses increased $19,000 and income tax expense increased $11,000.
The Bank reported that the increase of $21,000 in net interest income for the three months ended March 31, 2016 as compared to the three months ended March 31, 2015, was due to a $38,000 increase in interest and dividend income partially offset by a $17,000 increase in interest expense, primarily from interest paid on deposits. The increase in interest and dividend income was due primarily to an increase of $48,000 in interest from loans and a $15,000 increase in interest income from interest-bearing deposits with other banks, partially offset by a decrease of $25,000 in interest on securities available for sale.
The increase of $48,000 in interest from loans was due primarily to an increase in average total loans outstanding for the first three months of 2016 of $4.3 million, as compared to $104.7 million outstanding for the first three months of 2015. However, the yield from the loan portfolio decreased slightly from 4.97%, to 4.91%.
The $19,000 increase in non-interest expense for 2016 as compared to 2015 was due primarily to a $62,000 increase in information technology expense, as the Bank outsourced core processing functions and enhanced network functionality and security. In addition, the Bank experienced a $29,000 increase in miscellaneous expenses resulting from a non-recurring benefit recorded in 2015 associated with a restructuring initiative. Also, the Bank experienced an increase of $21,000 in director expense, an increase of $4,000 in insurance expenses and an increase of $3,000 in legal expenses and an increase of $2,000 in other professional fees. Partially offsetting these negative variances, compensation expense decreased $31,000 due to reductions in staffing, equipment expense decreased $26,000 primarily due to the Bank’s outsourcing of core processing functions, expenses related to other real estate decreased $23,000, loan related expenses decreased $7,000, occupancy expenses decreased $6,000, marketing and audit fees decreased by $3,000, and communications expense and printing costs declined $2,000 each.
Net interest margin for the first quarter of 2016 was 3.34% as compared to 3.47% for the first quarter of 2015, a reduction of 0.13%. The margin was impacted by a 0.13% lower yield from interest-earning assets. The interest rate paid for interest-bearing deposits was stable at 0.66%.
Total assets at March 31, 2016 were $153.4 million, representing an increase of $2.0 million from $151.4 million at December 31, 2015. The increase was due primarily to a $6.2 million increase in cash and cash equivalents primarily in the form of excess liquidity held in an interest-bearing account at the Federal Reserve Bank. This increase was partially offset by a $2.3 decrease in net loans and a $1.9 million decrease in securities available for sale.
Total deposits increased $1.9 million to $140.0 million at March 31, 2016 from $138.1 million at December 31, 2015. The increase was primarily due to a $2.4 million increase in interest-bearing deposit accounts. Partially offsetting this increase, non-interest bearing checking accounts decreased $527,000.
Total capital increased $148,000 from $9.5 million at December 31, 2015 to $9.7 million at March 31, 2016. Tangible capital increased $31,000 and the unrealized loss from securities available for sale decreased from $168,000 at December 31, 2015 to $51,000 at March 31, 2016.
Selected Financial Data
Set forth below are certain selected balance sheet and income statement data at March 31, 2016 and December 31, 2015 and for the three months ended March 31, 2016 and 2015.
|SELECTED BALANCE SHEET DATA|
|(Unaudited, in thousands)||March 31,||December 31,|
|Cash and cash equivalents||$||23,244||$||17,050|
|Net loans receivable||108,449||110,711|
|SELECTED INCOME STATEMENT DATA|
|(Unaudited, in thousands except per share data)|
|Quarter ended||Quarter ended|
|March 31,||March 31,|
|Net interest income||$||1,204||$||1,182|
|Provision for loan losses||15||0|
|Other non-interest income||183||175|
|Loss on sale/write-down of OREO||0||2|
|Gain on sale of securities available for sale||59||0|
|Provision for income taxes||11||0|
|Earnings per share:|
|Common Equity Tier 1 Capital to Risk Weighted Assets||9.12||%||8.24||%|
|Tier 1 Capital to Risk Weighted Assets||9.12||%||8.24||%|
|Total risk based capital||10.37||%||9.49||%|
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.