Liberty Bell Bank Reports Profit from Operations

Liberty Bell Bank (OTC: LBBB) today announced earnings of $151 thousand for the third quarter 2011, an increase of 50% as compared to $101 thousand for the comparable prior year period. On a year to date basis, net income is $238 thousand for the nine months ended September 30, 2011 as compared to $202 thousand for the same period last year. Exclusive of year-to-date securities gains in 2010 and 2011 of $184 thousand and $35 thousand respectively, net income of $203 thousand year to date 2011 compares to $17 thousand for the same period last year, an increase of $186 thousand or nearly twelve-fold.

Highlights for the third quarter of 2011 include:

• Net interest income, our core revenue, for the third quarter 2011 increased by $79 thousand or 6% from the third quarter 2010, due largely to decreased interest expense of $176 thousand mostly ($132 thousand) from lower market rates for interest bearing deposits. The decreased interest expense was partly offset by $98 thousand less interest revenue mostly from a reduction in Commercial Mortgage Loan balances of approximately $8 million. Net interest income has been trending favorably every quarter since 2008.
• Net interest margin increased to 3.96% for the third quarter 2011 as compared to 3.54 % for the third quarter 2010 mostly due to reductions in average cost of funds. The average rate paid on total interest bearing deposits reduced 43 basis points, from a combination of lower CD rates and improving mix of deposits, to 1.08% for the third quarter 2011 as compared to 1.51% for the same period last year. Average non-interest demand deposit balances for the third quarter 2011 were $11.8 million, an increase of 9% or $977 thousand for the same period last year, and an increase to 8.1% of total deposits in the third quarter 2011 from 7.1% of total deposits in the third quarter of last year. The average yield on total interest bearing assets increased slightly to 5.20% for the third quarter 2011 as compared to 5.16% for the comparable period last year.
• Total non-interest income of $95 thousand for the third quarter 2011 increased $32 thousand or 51% over the third quarter of 2010 due mostly to increased service fee revenue from deposit accounts related to more accounts and new fee structures. The approximate current level of service fee revenue is anticipated to continue.
• Non-interest expense for the third quarter 2011 of $1.4 million increased $67 thousand or 5% over the same period last year due principally to increased legal/loan related expenses (up $28 thousand) that together accounted for 42% of the total increase in non-interest operating expenses. Excluding FDIC insurance premium expense and legal/loan related expense, total non-interest operating expenses, inclusive of compensation, occupancy and all other expenses, increased less than 4% for the nine months ended September 30, 2011 as compared to the same period last year.
• Non-accrual loans, inclusive of loan related OREO, at September 30, 2011 were $11.1 million as compared to $9.4 million at December 31, 2010, largely due to the addition during the first quarter of 2011 of one loan relationship we had previously identified among our troubled loan relationships, which relationship we believe remains adequately addressed in our loan loss reserve adequacy analysis.
• Total deposits decreased $5.9 million or 4% as compared to December 31, 2010, largely by design, as interest bearing deposits, mostly CDs, decreased while concentrated efforts to attract core non interest demand deposits resulted in an increase of nearly 6% in non interest demand deposits to $11.8 million.

"Our trend of quarterly profits that began in the fourth quarter 2009 continues. These earnings are largely the result of positive trends in our net interest income that fortunately have offset the impact of revenue loss related to our stable level of problem loans.” said President and CEO Kevin Kutcher. He added, "We continue to closely monitor expenses. Aside FDIC insurance expense and elevated expenses associated with problem loan resolutions our non-interest expense year over year has increased less than 4%.”

"We have enjoyed a fair amount of recent and continuing progress with respect to our problem loans such that we are now in position of significant control on five of the largest of our problem loans that comprise nearly 80% of the total of our non-accrual loans and ORE properties,” said SVP and senior loan officer John Herring. He added, "While we remain reasonably confident that we are generally well collateralized based upon independent appraisals and re-appraisals, with our improved positioning we can more appropriately evaluate selectively negotiating justifiable discounts if it accelerates situations sufficiently to avoid associated carrying and legal costs. This would improve various financial ratios by reducing levels of classified non-accrual loans more quickly and, in turn, have a net positive bottom line impact.”

All disclosure contained in this press release is qualified in its entirety by the more complete information contained in the Bank’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, which was filed with the FDIC on November 14, 2011. The Bank will furnish a copy of the 10-Q to any person requesting same upon written request made to Mr. Dennis Costa, Vice President/Finance, at the Bank’s offices located at 145 North Maple Ave., Marlton, New Jersey 08053.

Liberty Bell Bank is a New Jersey chartered commercial bank that maintains offices in Cherry Hill, Marlton, Moorestown, and Mt. Laurel, New Jersey. Some discussions in this press release may contain forward-looking statements. These forward-looking statements, include statements of the Bank’s plans, objectives, expectations, estimates and intentions, involve risks and uncertainties and are subject to change based on various important factors (some of which are beyond the Bank’s control). The following factors, among others, could cause the Bank’s financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: the strength of the United States economy in general and the strength of the local economies in which the Bank conducts operations; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, inflation, interest rate, market and monetary fluctuations; the perceived overall value of the Bank’s products and services by users, including the features, pricing and service compared to competitors’ products and services; the impact of changes in financial services’ laws and regulations; increased deposit insurance assessments; increased shareholder activism; technological changes; acquisitions; changes in consumer spending and saving habits; and the success of the Bank at managing the risks involved in the foregoing.