Delmar to enter Philadelphia with purchase of oft-maligned bank

Delmar Bancorp in Salisbury, Md., will enter the Philadelphia suburbs with an agreement to buy Liberty Bell Bancorp in Marlton, N.J.

Delmar, the holding company for the $519 million-asset Bank of Delmarva, said in a press release Friday that it will pay $16 million in cash and stock for the $150 million-asset Liberty Bell. The deal, which is expected to close by early next year, priced Liberty Bell at 162% of its tangible book value.

Liberty Bell’s three branches are located just across the Delaware River from Philadelphia, in Camden and Burlington counties. Delmar said in its release that the median household income those counties is higher than each of the three counties where it operates.

“We are extremely excited about the proposed acquisition … and the transformative opportunities the combination creates for us,” Delmar CEO John Breda said in the release. “We are familiar with the market and believe that it provides substantial opportunities for growth of the combined bank.”

Liberty Bell, which was released from a three-year-old consent order in February, has struggled with performance and management issues throughout its history.

Founder Michael Kwasnik waged a debilitating, six-year struggle to regain control that ended when he was indicted on charges of bilking an elderly client in a case that didn’t involve the bank. Liberty Bell was also stung by an employee who stole more than $300,000 in corporate funds and a check-kiting scheme that cost it more than $2 million in 2013.

Delmar said it should take three years to earn back any dilution to its tangible book value. Liberty Bell will retain its brand, operating as a division of Bank of Delmarva after the deal closes.

Delmar and Liberty Bank both count Ken Lehman among their investors. Lehman, a former lawyer who buys large stakes in community banks, also serves on the boards of both banks.

Lehman did not respond to an email request for comment.

Liberty was advised by FIG Partners and Stevens & Lee. Delmar was advised by RP Financial and Buckley Sandler.

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