Liberty Bell Bank Reports First Quarter 2015 Results of Operations

MARLTON, N.J.--(BUSINESS WIRE)--

Liberty Bell Bank LBBB today reported net income of $4,000 for the three months ended March 31, 2015, compared to net loss of $449,000 for the same period in 2014, an improvement of $453,000. At March 31, 2015, the Bank remains adequately capitalized by all regulatory measures.

The income of $4,000 in the first quarter of 2015 was due primarily to net interest income of $1.18 million, loan fees of $130,000 and fees from deposits of $45,000, exceeding its operating expenses of $1.35 million. Operating expenses included compensation expense of $632,000 and a loss of $1,500 from the sale of other real estate. Total loans increased $6.8 million during the first quarter of 2015 as the Bank realized increased opportunities from its market area.

The Bank's President, Benjamin Watts, indicated that "the Bank is well situated to benefit from the diverse commercial and consumer base in its trade area. The growth in loans is the result of hard work by the employees of the Bank, and we anticipate continued growth as we continue to execute our strategic plan for 2015."

The $453,000 improvement from a loss of $449,000 in the three months ended March 31, 2014 to $4,000 of income for the three months ended March 31, 2015, was due primarily to a reduction of $143,000 in the provision for loan losses, a $100,000 increase in fees from loans including $54,000 of SBA loan fees, and a $79,000 decrease in non-interest expense. In addition, losses from the write down or sale of other real estate owned decreased $178,000 from $180,000 for the first quarter of 2014 to $1,500 for the first quarter of 2015. Partially offsetting these positive variances, net interest income decreased $47,000.

The Bank reported that the decrease of $47,000 in net interest income for the three months ended March 31, 2015 as compared to the three months ended March 31, 2014, was due to a $71,000 decrease in interest and dividend income partially offset by a $24,000 reduction in interest expense, primarily from a decrease of interest on deposits. The decrease in interest and dividend income was due primarily to a decrease of $51,000 in interest from loans and a decrease of $23,000 in interest on securities available for sale and interest-bearing deposits with other banks.

The decrease of $51,000 in interest from loans was due primarily to a 13 basis point reduction of the yield from the loan portfolio from 5.10% to 4.97%, which equated to a decrease of $28,000 in interest. In addition, average total loans outstanding for the first three months of 2015, as compared to the first three months of 2014, decreased by $1.4 million, which equated to a decrease of $23,000 in interest. The decrease of $23,000 in interest on securities available for sale and interest-bearing deposits with other banks was due primarily to a 10 basis-point reduction of the yield from 1.29% to 1.19%.

The $79,000 decrease in non-interest expense for 2015 as compared to 2014 was due primarily to a $58,000 decrease in legal expense associated with the attempt to recover losses associated with the check kite in 2013, a $25,000 decrease in miscellaneous expenses, and a decrease of $18,000 in expenses related to other real estate owned as the Bank continues to dispose of these properties. In addition, the Bank realized a $17,000 decrease in other professional fees, a $14,000 decrease in occupancy expense, a $10,000 decrease in FDIC insurance expense, a $9,000 decrease in the provision for income taxes, a $7,000 decrease in liability insurance expense, a $6,000 decrease in director fee expense, and a $4,000 decrease in equipment expense. Partially offsetting these favorable variances, compensation expense increased $49,000 due primarily to the hiring of a Senior Credit Officer to strengthen the credit administration function, audit fees increased $13,000 as the Bank engaged consultants to support its deferred tax asset calculations, and communications expense increased $21,000 as the Bank improved its communications and data security capabilities.

Net interest margin for the first quarter of 2015 and 2014 was 3.47%. The margin was impacted by a 0.04% lower yield from interest-earning assets offset by a 0.03% reduction in the rate paid for interest-bearing deposits.

Total assets at March 31, 2015 were $148.7 million, representing an increase of $545,000 from $148.1 million at December 31, 2014. The increase was due primarily to a $6.8 million increase in loans, a $53,000 increase in cash and cash equivalents and a $149,000 increase in other assets. These increases were partially offset by a $224,000 decrease in securities available for sale, and a $6.1 million decrease in deposits at other banks primarily in the form of excess liquidity held in an interest-bearing account at the Federal Reserve Bank. In addition, fixed assets decreased $75,000 from December 31, 2014.

Total deposits increased $456,000 to $135.9 million at March 31, 2015 from $135.4 million at December 31, 2014. The increase was primarily due to a $3.5 million increase in interest-bearing checking accounts, including money market accounts and a $1.5 million increase in savings accounts. Partially offsetting these increases, non-interest bearing checking accounts decreased $4.3 million and certificates of deposit decreased $297,000.

Total capital increased $236,000 from $8.9 million at December 31, 2014 to $9.1 million at March 31, 2015. Tangible capital increased $4,000 and the unrealized loss from securities available for sale decreased from $241,000 at December 31, 2014 to $9,000 at March 31, 2015.

At March 31, 2015, our criticized/classified loans totaled $7.5 million, a decrease of $154,000 from $7.7 million at December 31, 2014. At March 31, 2015, our allowance for loan losses was $1.5 million, which is 1.3% of our total loans. During the quarter, the Bank realized loan charge-offs of $46,000 and recoveries of $27,000 of loans that were previously charged-off.

Selected Financial Data

Set forth below are certain selected balance sheet and income statement data at March 31, 2015 and December 31, 2014 and for the three months ended March 31, 2015 and 2014.

SELECTED BALANCE SHEET DATA
(Unaudited, in thousands)		March 31,				December 31,
		2015				2014
Cash and cash equivalents		$	12,279			$	18,343
Investment securities			19,903				19,805
Net loans receivable			108,441				101,683
Total assets			148,686				148,141
Deposits			135,877				135,421
Shareholders' equity			9,141				8,904
SELECTED INCOME STATEMENT DATA
(Unaudited, in thousands except per share data)
		Quarter ended				Quarter ended
		March 31,				March 31,
		2015				2014
Net interest income		$	1,182			$	1,229
Provision for loan losses			0				143
Other non-interest income			175				75
Loss on sale/write-down of OREO			2				179
Other expenses			1,351				1,422
Provision for income taxes			0				9
Net income		$	4			$	(449	)
Earnings per share:
Basic		$	0.00			$	(0.13	)
Diluted		$	0.00			$	(0.13	)
Capital Ratios:
Common Equity Tier 1 Capital to Risk Weighted Assets			8.24	%			N/A
Leverage Capital			6.16	%			4.99	%
Tier 1 Capital to Risk Weighted Assets			8.24	%			6.89	%
Total risk based capital			9.49	%			8.14	%

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", "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.