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Friday, July 21, 2006

Liberty Bell Bank (LBBB)

Izzy's idea.
website, chart, no sec filings, I have no idea how many shares are outstanding.
FDIC #57524

2099 Route 70
Cherry Hill, NJ 08003
(856) 489-8401

Q1 2006 results (from the FDIC database)
$97 million in assets, up from $77 million at Q1 2005. If assets grew that much, I'm guessing that they aren't yet (or weren't) fully leveraged. Looking at the capital ratios, I see this is correct. Equity capital to assets is 14.35% (actually higher than the year before, so did they infuse the business with equity?). Tier 1 risk-based capital ratio is over 20%. Total risk-based capital ratio is over 21%.

Going back to assets and liabilities, equity jumped to $14 million from $6.8 million in the prior year. Again, why? It ain't because of profits because they went deeper in the red since last year.

Back to assets: 32% securities, almost all US Gov obligations, about half of that is Fannie Mae/FHLMC and the other half is non-mortgage but still GSEs (no further breakdown). 57% net loans, mostly real estate, half of it commercial with a large amount of non-apartment building residential, also some commercial and industrial loans.

Ok then, let's look at their assets past due. 0.43%, which isn't horrible, down from 0.9% a year earlier. Looking at 2006, half of it is farm loans. Only 0.08% (all farm loans) past due 90+ days (none last year). No chargeoffs.

Ok, how about income and expense? Net interest income is 2.58% of assets, but non-interest expenses are high at 3.87% of assets (much of it salaries plus premesis and equipment). They're losing money but not as bad as last year. Net interest margin is only 2.82%.

If we compare this bank to all banks in New Jersey with less than $100 million assets, their net interest margin is 3.17% although their yield on earning assets is actually slightly lower. Looking at net income, the average small New Jersey bank lost money in Q1 2006. Ok, so let's check the full year 2005. They lost money there, too, but not as much as Liberty Bell (as a percentage of total assets).

Announced Q1 results
The press release says they issued 1.4 million shares in April 2005, which would explain the big increase in equity capital. Total shares outstanding at Q1 2006 were 2.7 million. 3 full-service offices. This is their third year, they're doing pretty good then.

The last stock trade was for $7.67 which would give them a market cap of $20.7 million. Total equity is $14 million.

So what is Liberty Bell worth? I have no idea. But just guessing, let's say they end up with around $120 million in assets which earn about 1% which would be around 40 cents per share. Slap a P/E of 15 onto that and you've got $6.67 per share which is a bit lower than the recent trade. So the real value will depend on how well they perform as a bank. Ideally they should scale the assets up to $200 million or more. Will they do that? I have no idea.

On April 27, 2005 the Bank completed a public offering of 1,300,000 shares of common stock that netted proceeds of approximately $8.1 million to the Bank. "We thank our underwriter, Janney Montgomery Scott LLC, and all of those who participated in our offering, for their support," said Kutcher. "The proceeds from the offering will allow the Bank to continue to grow at its current pace, and to pursue suitable expansion opportunities that may arise from time to time," he said.

so thats how the capital went up.- is that a good thing?

great post!
In the announced results, I had noted that "The press release says they issued 1.4 million shares in April 2005, which would explain the big increase in equity capital." The 100K share difference would probably be due to costs associated with the offering.

The offering is only good in the sense that it buys them some more time. It probably also added some dilution (but not a huge amount). I haven't checked the details.
if the original IPO was at $10 and secondary at $7, i'd say its fair to assume that $10 especially would be a psycological barrier to break, since thats where people are at break even...

which would explain why there is such low volume at these levels- no buyers, but no sellers either.
10,000 shares traded today. is that a positive or negative sign?

hope you dont mind but i am fascinated by thsi stock.

I want to buy the whole bank! or at least enough to get on the board.

with the bank at a 20MM market cap, how much stock would one need to get on the board?

you can email me @ eruv.tavshillin@gmail.com

It looks like only 100 shares to me? I don't know how much you'd need to buy to get on the board. It probably depends on whether you can convince them that you bring something unique to the table. It would be good to read The Bank Director's Handbook, if you haven't read it already. It's written specifically for non-banking people who get onto the board.

It also helps if you live and work in the same area that the bank is located. Small banks like that are very big on staying as "local" as possible.
thanks for the feedback.

most indicators say sell?

and I could have sworn google showed 10,000 shares traded- but just checked again and it says 100.


I'll go read the handbook. thanks for the tip.
up on no volume- i guess there are no buyers nor sellers- but any buying at all makes the price go up...
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