Liberty Bell Bank Reports Third Quarter 2013 Results of Operations

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

Liberty Bell Bank (LBBB) today reported net income of $39,000 or $0.01 per diluted share for the three months ended September 30, 2013, compared to a net loss of $1.6 million or $(0.53) per diluted share for the same period in 2012, an improvement of $1.6 million. For the nine months ended September 30, 2013, the Bank had a $2.3 million net loss, or $(0.70) per diluted share, compared to a net loss of $2.4 million or $(0.78) per diluted share for the same period in 2012. At September 30, 2013, the Bank is adequately capitalized by all regulatory measures.

The improvement in the Banks quarterly earnings of $1.6 million as compared to the three months ended September 30, 2012 was due primarily to a decrease in the provision for loan losses of $831,000 and a reduction of losses on the sale of other real estate owned of $610,000 from $617,000 in 2012 to $7,000 in 2013. In addition, non-interest expense decreased $236,000 from $1.6 million for the three months ended September 30, 2012 to $1.4 million for the three months ended September 30, 2013. The provision for income taxes also decreased $18,000. These positive variances were partially offset by a decrease in net interest income of $23,000 and a decrease in fee income of $38,000.

The decrease in the provision for loan losses from $840,000 to $9,000 reflects our constrained loan growth and the lack of any material deterioration in our loan portfolio, coupled with the sale of some problem assets since September 30, 2012.

The decrease of $23,000 in net interest income for the three months ended September 30, 2013 as compared to the three months ended September 30, 2012 was due to a $134,000 decrease in interest income partially offset by an $111,000 reduction in interest expense, primarily from a decrease in interest expense on deposits. The decrease in interest income was due primarily to a decrease of $179,000 in interest from loans offset by an increase of $44,000 in interest earned from investments.

The decrease of $179,000 in interest from loans was due primarily to a 39 basis point reduction of the yield from the loan portfolio from 5.52% to 5.13%. In addition, the average loan balances outstanding for the three months ended September 30, 2013 as compared to the three months ended September 30, 2012 decreased by $5.1 million. The reduction in average loan balances was due primarily to pay-downs and pay-offs of commercial loans. The increase of $44,000 in interest on investments was due primarily to an increase in the average balance outstanding of $10.8 million from $32.2 million to $43.1 million.

The $236,000 decrease in non-interest expense was due primarily to a $141,000 reduction in compensation expense, a $38,000 reduction in other operating expense, a $29,000 reduction in expenses related to other real estate owned and a $14,000 reduction in equipment expense. The reduction in compensation expense was due primarily to a decrease in personnel due to the Mt. Laurel branch closing and the resignation of two senior officers. The reduction in other operating expenses was due primarily to a reduction in expenses related to the loan portfolio.

Net interest margin for the third quarter of 2013 was 3.33%, a decrease of 0.19% from the 3.52% net interest margin for the third quarter of 2012. The margin decrease was mainly the result of a 0.51% lower yield from interest-earning assets partially offset by a 0.30% reduction in the rate paid for interest-bearing deposits.

The loss for the nine months ended September 30, 2013 was primarily due to the Bank being a victim of a check kiting scheme by one of its commercial deposit and loan customers. As a result of this check kiting activity, the Bank recognized approximately $2.1 million ($.62 per diluted share) as a loan charge-off. In addition, the Bank has $2.8 million of loans secured by leases originated through this customer. The Bank continues to take steps it deems necessary to ensure the payment of the related lease payment receivables.

The Banks net loss of $2.3 million for the nine months ended September 30, 2013 was $14,000 less than the loss over the same period in 2012. The provision for loan losses for the nine months ended September 30, 2013 was $2.6 million, an increase of $980,000 as compared to $1.6 million for the nine months ended September 30, 2012. Net interest income decreased by $199,000 from $4.2 million to $4.0 million for the nine months ended September 30, 2012 and 2013, respectively. These negative variances were offset by an increase of $686,000 in non-interest income, a decrease of $482,000 in non-interest expense and a $24,000 reduction in our provision for income taxes.

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Liberty Bell Bank Reports Third Quarter 2013 Results of Operations