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Liberty Bell Bank Reports 2012 Fourth Quarter and Annual Results of Operations



  Liberty Bell Bank Reports 2012 Fourth Quarter and Annual Results of
  Operations

Business Wire

MARLTON, N.J. -- March 21, 2013

Liberty Bell Bank (OTCQB:LBBB) today reported a net loss of $3.4 million or
$(1.12) per diluted share for the year ended December 31, 2012, compared to
net income of $74,000 or $0.02 per diluted share for 2011. The decreased
earnings are primarily the result of charges related to the Bank’s
non–performing loans. On December 31, 2012, members of the Board of Directors
paid in $702,000 of additional capital in connection with their purchases of
newly issued shares of common stock. At December 31, 2012, the Bank remains
well capitalized by all regulatory measures.

Earnings for the year ended December 31, 2012 decreased $3.5 million or $1.14
per diluted share. This decrease is predominantly the result of expenses and
charges related to resolving problem loans resulting in an increase in the
loan loss provision expense of $1.5 million and an increase in the loss on the
sale and write-down of other real estate owned and other assets of $1.3
million. Additionally, net interest income was $390,000 less when compared to
the year ended December 31, 2011 and non-interest expenses increased $204,000
as compared to the same period last year largely due to expenses related to
classified loans. In addition, there were no gains from the sale of securities
in 2012 as compared to $298,000 in gains from the sale of securities in 2011.
These decreases were partially offset by a $151,000 recovery in 2012 of a
fraud loss recorded in 2011 and an increase of $55,000 in fee income.

The decrease in net interest income was due primarily to the reversal of
interest earned on loans that were placed on non-accrual and a decrease in
average accruing loans of $2.7 million from $126.3 million for 2011 to $123.6
million for 2012. The increase in the provision for loan losses was due to the
Bank’s write-down of non-performing loans.

Net interest margin for 2012 was 3.61%, a decrease of 0.25% from the 3.86% for
2011. The margin decrease was mainly the result of a 0.41% lower yield from
interest-earning assets partially offset by a 0.19% reduction in the rate paid
for interest-bearing deposits.

For the three months ended December 31, 2012, the Bank had a net loss of $1.0
million compared to a loss of $164,000 for the three months ended December 31,
2011. This increased net loss is predominantly the result of expenses and
charges related to resolving problem loans resulting in an increase in the
loan loss provision expense of $140,000 and an increase in the loss on the
sale and write-down of other real estate owned of $506,000. Additionally, net
interest income was $161,000 less when compared to the fourth quarter of 2011.
There were no gains from the sale of securities in 2012 as compared to
$263,000 of securities gains in the fourth quarter of 2011. Fee income
decreased $14,000 in the fourth quarter of 2012 as compared to the fourth
quarter of 2011. Non-interest expenses in the fourth quarter of 2012 decreased
$215,000 as compared to the same period last year largely due to a fraud loss
of $301,000 recognized in the fourth quarter of 2011. Miscellaneous expenses
increased $76,000 while expenses for taxes decreased $57,000. Expenses related
to ORE increased $99,000.

Net interest margin for the fourth quarter of 2012 was 3.53%, a decrease of
0.31% from the 3.84% for the fourth quarter of 2011. The margin decrease was
mainly the result of a 0.52% lower yield from interest-earning assets
partially offset by a 0.27% reduction in the rate paid for interest-bearing
deposits.

Total assets at December 31, 2012 were $174.3 million, representing an
increase of $1.4 million from December 31, 2011. The increase was due
primarily to an increase in Fed funds sold and interest bearing cash deposits,
which increased $3.8 million and investments which increased $8.5 million.
Gross loans totaled $123.9 million at December 31, 2012, a decrease of $9.2
million from $133.1 million at December 31, 2011. The allowance for loan
losses at December 31, 2012 was $1.5 million, an increase of $157,000 from
$1.3 million at December 31, 2011. Other real estate owned at December 31,
2012 was $5.6 million, an increase of $1.1 million from $4.5 million at
December 31, 2011 and other assets decreased $240,000.

Total deposits increased $4.2 million to $154.8 million at December 31, 2012
from $150.6 million at December 31, 2011. The increase was primarily due to a
$1.8 million increase in non-interest bearing demand accounts and a $2.4
million increase in interest bearing accounts.

The Bank continues to increase non-interest bearing deposit accounts. Total
non-interest bearing deposit accounts at December 31, 2012 were $15.4 million
as compared to $13.6 million at December 31, 2011. Non-interest bearing
accounts were 10.0% of total deposits at December 31, 2012 as compared to 9.1%
of total deposits at December 31, 2011. The growth in deposits was from the
Bank’s local area market.

The increase in interest-bearing deposit accounts of $2.4 million was due
primarily to an increase in money market deposit accounts, which increased
$10.5 million from $46.7 million at December 31, 2011 to $57.2 million at
December 31, 2012. In addition, savings deposit accounts increased $831,000
from $12.5 million to $13.3 million at December 31, 2011 and 2012,
respectively. Certificates of deposit, our highest cost deposits, decreased
$8.9 million from $77.8 million to $68.8 million at December 31, 2011 and
2012, respectively.

At December 31, 2012, our criticized/classified assets totaled $8.5 million, a
$7.1 million decrease from $15.6 million at December 31, 2011 while other real
estate owned increased $1.1 million from $4.5 million to $5.6 million at
December 31, 2011 and 2012, respectively. Criticized/classified assets plus
other real estate owned totaled $20.2 million at December 31, 2011 as compared
to $14.2 million at December 31, 2012, a decrease of $6.0 million.

“We have made considerable progress in addressing and resolving problem
assets, which fortunately have been essentially stabilized since 2011,” said
CEO Kevin Kutcher, adding, “The legal processes of our foreclosure efforts and
the like has been excruciatingly slow in New Jersey. We are now seeing
opportunities for justifiable collateral liquidations and property sales. At
the same time we continue to advance another of our primary strategic
objectives – growing core non-interest bearing business based checking
accounts. This will pay significant dividends as the economy recovers and
interest rates eventually rise.”

CFO Ben Watts added, “Our Board and management group continue to diligently
address problem assets. Our goal is to remain well capitalized while resolving
these remaining problem assets as rapidly as possible and, with other cost
containment and revenue enhancements, to restore profitability for 2013. Our
Board of Directors purchase of additional shares of newly issued common stock
at year end 2012 greatly assists in this effort.”

Set forth below is certain selected balance sheet and income statement data at
and for the years ended December 31, 2012 and 2011.

                                                             
SELECTED BALANCE SHEET DATA
(Unaudited, in thousands)                      December 31,   December 31,
                                               2012           2011
 
Fed funds sold and interest bearing cash       $19,319        $15,551
Investment securities                          21,655         13,176
Net loans receivable                           122,508        131,861
Total assets                                   174,328        172,905
Deposits                                       154,811        150,574
Shareholders’ equity                           11,572         14,113
                                                               

 
SELECTED INCOME STATEMENT DATA
(Unaudited, in thousands except per share data)
 
 
                  Quarter           Quarter          YTD              YTD
                  ended             ended
                  December          December         December         December
                  31,               31,              31,              31,
                  2012              2011             2012             2011
 
Net interest      $1,315            $1,476           $5,531           $5,920
income
Provision for     270               130              1,850            390
loan losses
Non-interest      73                349              582              674
income
Loss on sale      685               178              1,528            180
of ORE
Other             1,490             1,648            6,120            5,915
expenses
Provision for     (24      )        33               2                35
income taxes
Net income        $(1,033  )        $(164   )        $(3,387  )       74
 
Earnings per
share:
Basic             $(0.34   )        $(0.05  )        $(1.12   )       $0.02
Diluted           $(0.34   )        $(0.05  )        $(1.12   )       $0.02
 
Capital
Ratios:
Leverage          6.42     %        8.16    %
Capital
Total risk        10.03    %        11.10   %
based capital
                                                                       

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.

Contact:

Liberty Bell Bank
Benjamin F. Watts, 856-830-1135
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