Safe and Sound

Liberty Bell Bank

Marlton, NJ
2
Star Rating
Started in 2003, Liberty Bell Bank is an FDIC-insured bank based in Marlton, NJ. Regulatory filings show the bank having equity of $10.0 million on assets of $152.5 million, as of December 31, 2017.

U.S. bank customers have $141.4 million on deposit at 3 offices in NJ run by 34 full-time employees. With that footprint, the bank currently holds loans and leases worth $123.6 million, including real estate loans of $110.7 million.

Overall, Bankrate believes that, as of December 31, 2017, Liberty Bell Bank exhibited a below-average condition, earning 2 out of 5 stars for safety and soundness. Here's a look at how the bank fared on the three major criteria Bankrate used to score American banks.

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THE INSTITUTION'S SCORE

Capital Score

Capital is a valuable measurement of an institution's financial resilience. It works as a bulwark against losses and as protection for depositors when a bank is experiencing financial trouble. From a safety and soundness perspective, the higher the capital, the better.

On our test to measure the adequacy of a bank's capital, Liberty Bell Bank received a score of 4 out of a possible 30 points, coming in below the national average of 13.13.

One essential measure of this buffer is a bank's Tier 1 capital ratio. Liberty Bell Bank's Tier 1 capital ratio was 9.33 percent, higher than the 6 percent level considered adequate by regulators, but below the national average of 25.65 percent. A higher capital ratio suggests the bank will be better able to weather economic challenges.

Overall, Liberty Bell Bank held equity amounting to 6.58 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

In this test, Bankrate tries to estimate the impact of problem assets, such as unpaid mortgages, on the bank's reserves set aside to cover loan losses, as well as overall capitalization.

Having large numbers of these kinds of assets suggests a bank could have to use capital to absorb losses, reducing its buffer of equity. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, resulting in reduced earnings and potentially more risk of a future failure.

Liberty Bell Bank scored 24 out of a possible 40 points on Bankrate's asset quality test, less than the national average of 37.49.

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of December 31, 2017, 1.59 percent of Liberty Bell Bank's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.01 percent.

Banks keep a reserve to handle troubled assets known as an "allowance for loan and lease losses." That reserve's size can be a widely used indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on Liberty Bell Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. A bank can retain its earnings, boosting its capital cushion, or put them to work addressing problematic loans, likely making the bank more resilient in times of trouble. Conversely, losses diminish a bank's ability to do those things.

Liberty Bell Bank scored 6 out of a possible 30 on Bankrate's test of earnings, below the national average of 15.12.

One key way to measure a bank's earnings is return on equity, or net income (essentially profit) divided by total equity. Liberty Bell Bank's most recent annualized quarterly return on equity was 2.75 percent, below the national average of 8.10 percent.

The bank earned net income of $273,000 on total equity of $10.0 million for the twelve months ended December 31, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.18 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.