Liberty Bell Bank (fka LBBB)

[Enterprising Investor]

Liberty Bell Bank Announces Community Stock Offering and Signing of Stock Purchase Agreement with Kenneth R. Lehman (4/11/14)

Liberty Bell Bank (OTCQB:LBBB) today reported that it has entered into a stock purchase agreement with Kenneth R. Lehman, a private investor and current holder of approximately 16.85% of the Bank’s outstanding common stock. Pursuant to this stock purchase agreement, Mr. Lehman has agreed to purchase, simultaneously with the closing of the Bank’s pending stock offering, and subject to certain limitations, at the subscription price of $1.00 per share, up to 2,900,000 shares of the Bank’s common stock.

President and CEO Kevin Kutcher stated, “This Agreement with Ken Lehman is part our $5 million capital raise that we commenced today. We are also offering 2.1 million shares at $1.00 per share to our shareholders and the local community pursuant to an Offering Circular that is currently being distributed, and we anticipate a short offering period. We may close as soon as all available shares are subscribed, which we anticipate will be before May 12, 2014. The completion of this capital raise will allow us to be in compliance with all of the provisions of the Consent Orders issued to us by our regulators last fall.” He added, “We are very excited that we have the support of our largest shareholder Ken Lehman, a successful and well-respected community bank investor, as we continue positioning ourselves for a prosperous future. The net capital from these two transactions will go a long way toward helping us emerge from a difficult economy and challenging business climate. In addition to improving our capital ratios, we intend to use this net capital to accelerate the resolution of problem assets and to support future growth through the strengthening of our infrastructure. Also, we hope to add Mr. Lehman to our Board of Directors after the completion of these transactions. We believe his background and experience will be invaluable to our Board and management.”

Under the stock purchase agreement, the number of shares Mr. Lehman can purchase is limited so as to prevent an “ownership change” under Section 382 of the Internal Revenue Code of 1986. The number of shares that Mr. Lehman will purchase increases depending on the number of shares sold in the offering. If 2,100,000 shares are sold in the offering, Mr. Lehman would purchase 2,900,000 shares pursuant to his agreement. The agreement contains other provisions limiting the ability of Mr. Lehman and other large shareholders’ (holding 2% or more of the Bank’s common stock) to acquire additional shares over the next three years, in order to prevent such an “ownership change.” Such a change would adversely affect the Bank’s future ability to use its federal net-operating loss carry-forwards of $10.3 million.

The agreement contains standard representations, warranties and covenants by both parties. Mr. Lehman has also agreed to certain voting limitations with respect to shares of common stock he acquires after the closing of this transaction. In addition, the Bank is granting to Mr. Lehman preemptive rights with respect to any shares of common stock that may be issued by the Bank in the three-year period following the closing date, which will enable him to maintain his proportionate common stock-equivalent interest in the Bank. The agreement also provides that after the closing Mr. Lehman may identify problem assets with a carrying value of up to $9.0 million and the Bank is required to adopt an asset resolution plan, approved by Mr. Lehman, to accelerate its strategy with respect to such assets. This plan will provide for the disposition, work-out or other resolution of the problem assets within 18 months after the closing date, based upon the additional capital raised.

The issuance of the Bank’s common stock to Mr. Lehman and in the pending stock offering is subject to approval by the New Jersey Department of Banking and Insurance.

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 two locations in Burlington County, New Jersey and one location in Camden County, New Jersey.

http://www.reuters.com/article/2014/04/11/nj-liberty-bell-bank-idUSnBw115831a+100+BSW20140411