MARLTON, N.J.--(BUSINESS WIRE)--Liberty Bell Bank (OTCQB:LBBB) today reported net income of $202,000 or $0.06 per diluted share for the three months ended March 31, 2013, compared to net income of $35,000 or $0.01 per diluted share for the same period in 2012, an increase of $167,000 or $0.05 per diluted share. The increased earnings are primarily the result of gains on the sale of securities available for sale of $156,000. At March 31, 2013, the Bank remains well capitalized by all regulatory measures.
In addition to gains on the sale of securities available for sale, the increase in earnings also was due to a $67,000 decrease in total non-interest expense, a $51,000 decrease in the provision for loan losses, a $12,000 decrease in write-downs on other real estate owned and a $3,000 decrease in income tax expense. These positive variances were partially offset by reduced net interest income of $94,000 and a decrease in service charges on deposit accounts and other income of $28,000.
The decrease of $94,000 in net interest income for the three months ended March 31, 2013 as compared to the three months ended March 31, 2012, was due to a $219,000 decrease in interest and dividend income partially offset by a $125,000 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 $271,000 in interest and fees from loans, offset partially by an increase of $54,000 in interest on securities available for sale.
The decrease of $271,000 in interest and fees from loans was due primarily to a 46 basis point reduction of the yield from the loan portfolio from 5.77% to 5.31%. In addition, the average loan balance outstanding for the first three months of 2013 as compared to the first three months of 2012 decreased by $8.5 million. The increase of $54,000 in interest on securities available for sale was due primarily to an increase in the average balance outstanding from $13.3 million to $26.3 million.
Net interest margin for the first quarter of 2013 was 3.51%, a decrease of 0.26% from the 3.77% net interest margin for the first quarter of 2012. The margin decrease was mainly the result of a 0.59% lower yield from interest-earning assets partially offset by a 0.35% reduction in the rate paid for interest-bearing deposits.
Total assets at March 31, 2013 were $172.2 million, representing a decrease of $2.1 million from $174.3 million at December 31, 2012. The decrease was due primarily to cash and cash equivalents, which decreased $6.9 million and net loans which decreased $2.6 million from December 31, 2012. These decreases were partially offset by investments which increased $6.9 million and other assets which increased $297,000. Other real estate owned increased $272,000 from $5.6 million at December 31, 2012 to $5.9 million at March 31, 2013.
Total deposits decreased $2.1 million to $152.7 million at March 31, 2013 from $154.8 million at December 31, 2012. The decrease was primarily due to a $2.4 million decrease in interest-bearing accounts offset by a $374,000 increase in non-interest bearing accounts.
The Bank continues to increase non-interest bearing deposit accounts. Total non-interest bearing deposit accounts at March 31, 2013 were $15.8 million as compared to $15.4 million at December 31, 2012. The growth in non-interest bearing deposits was from the Bank’s local area market.
The decrease in interest-bearing deposit accounts of $2.4 million was due primarily to a decrease in certificates of deposit, our highest cost deposits, which decreased $3.0 million from $68.8 million at December 31, 2012 to $65.8 million at March 31, 2013.
At March 31, 2013, our criticized/classified assets totaled $8.6 million, substantially the same as at December 31, 2012, but a $7.0 million decrease from $15.6 million at December 31, 2011. Other real estate owned increased $272,000 from $5.6 million at December 31, 2012 to $5.9 million at March 31, 2013. Criticized/classified assets plus other real estate owned totaled $14.5 million at March 31, 2013 as compared to $14.2 million at December 31, 2012, and $20.2 million at December 31, 2011.
“We’re seeing positive activity that is giving us reasonable and justifiable optimism that we will see further reducing of problem loans and assets in 2013,” said CEO Kevin Kutcher, adding, “While we believe that our current valuations reflect market values, we may realize justifiable losses as we resolve remaining problem assets. At the same time we’re seeing signs of increased loan demand that should translate favorably in 2013. We’re continuing to improve our deposit mix by increasing our lower and non-interest bearing checking based accounts. Three years ago at this time non-interest checking represented approximately 5%, or $8 million, of total deposits, where today that has doubled to 10% of total deposits and is growing.”
CFO Ben Watts added, “The continuing low interest rate environment impacts our overall loan portfolio yield. Fortunately we do not generally make fixed rate long term loans. Even though new loan rates are lower than the rates on some loans paying off and while some of our variable rate loans come up for re-pricing while rates are low, when market rates begin to increase overtime, we will see the loan portfolio yield also rise. Not making long term fixed rate loans and increasing our core lower cost funding through improved deposit mix will translate favorable as rates eventually rise, as will continuing decreases in our problem loans and assets.”
Separately, the bank announced that it is not renewing the lease of its Mount Laurel office. “After carefully considering all relevant factors, we elected to not renew the lease of our Mount Laurel office and have announced its closure effective June 15, 2013,” said CEO Kevin Kutcher, who added, “We notified all affected Mount Laurel customers in early March and, as we anticipated, we’ve had minimal negative response. While we’ve done very well growing that office since signing the lease in 2008, the economic realities of the recent recession, advances in electronic banking access and the close proximity of our headquarters office led us to this determination. We anticipate little depositor/customer loss.” The bank also projects that it will realize meaningful cost efficiencies and favorable bottom line results related to the branch closure. In conclusion CEO Kutcher said, “We are already talking about where the new fourth office will be.”
Set forth below is certain selected balance sheet and income statement data at March 31, 2013 and December 31, 2012 and for the three months ended March 31, 2013 and 2012.
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SELECTED BALANCE SHEET DATA |
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(Unaudited, in thousands) |
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March 31, |
December 31, |
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|
2013 |
2012 |
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| Cash and cash equivalents | $12,405 | $19,319 | ||||
| Investment securities | 28,573 | 21,655 | ||||
| Net loans receivable | 119,923 | 122,508 | ||||
| Total assets | 172,173 | 174,328 | ||||
| Deposits | 152,735 | 154,811 | ||||
| Shareholders’ equity | 11,482 | 11,572 | ||||
| SELECTED INCOME STATEMENT DATA | ||||||
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(Unaudited, in thousands except per share data) |
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|
Quarter ended |
Quarter ended |
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|
March 31, |
March 31, |
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|
2013 |
2012 |
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| Net interest income |
$1,360 |
$1,454 |
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| Provision for loan losses |
9 |
60 | ||||
| Gain on sale of securities | 156 |
0 |
||||
| Other Non-interest income | 88 | 116 | ||||
| Loss on write-down of ORE |
1 |
13 | ||||
| Other expenses | 1,386 | 1,453 | ||||
| Provision for income taxes |
6 |
9 |
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| Net income |
$202 |
$35 |
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| Earnings per share: | ||||||
| Basic |
$0.06 |
$0.01 |
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| Diluted |
$0.06 |
$0.01 |
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| Capital Ratios: | ||||||
| Leverage Capital | 6.65% | 8.05% | ||||
| Total risk based capital | 10.26% | 11.31% | ||||
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 three 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 or outsiders; the inability to successfully implement 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”, “estimate”, “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.
