Delmar Bancorp and Liberty Bell Bank Announce Merger Agreement

SALISBURY, MD and MARLTON, NJ--(Marketwired - Jul 21, 2017) - On July 20, 2017, Delmar Bancorp ("Delmar") (OTCQB: DBCP), the parent company of The Bank of Delmarva, Seaford, Delaware ("Delmarva"), and Liberty Bell Bank, Marlton, New Jersey ("Liberty") (OTCQB: LBBB) entered into a definitive agreement (the "Agreement") pursuant to which Liberty will be acquired by Delmar through the merger of Liberty into Delmarva, with Delmarva being the surviving institution.

Under the Agreement, each Liberty shareholder will be entitled to elect to receive either 0.2857 shares of Delmar common stock, or $1.70 in cash, for each share of Liberty common stock they own, provided that in the aggregate 70% of the shares of Liberty common stock must be converted into Delmar common stock and 30% of the shares of Liberty common stock must be converted into cash. Options and other warrants to acquire Liberty common stock will be assumed by Delmar and converted into options and rights to acquire shares of Delmar common stock.

Based on the average closing price of Delmar common stock during the 90 days ended July 14, 2017 of $6.58, the aggregate value of the transaction would be approximately $16 million, or approximately 162% of Liberty's tangible book value per common share as of March 31, 2017 and 54 times Liberty's projected 2017 earnings available to common shareholders, each as of March 31, 2017. Delmar expects to recover at closing of the transaction $6.1 million of Liberty's $6.8 million valuation reserve on its deferred tax asset, due to the significant common ownership of Delmar and Liberty (they share the same largest shareholder), providing a unique opportunity for Delmar and Liberty shareholders. With this valuation reserve recovery, the aggregate value of the transaction represents approximately 100% of Liberty's tangible book value. Approximately $4.5 million of the aggregate consideration will be payable in cash. Delmar expects that the transaction will be accretive to Delmar's earnings within twelve months following the closing of the merger, and will result in modest dilution to tangible book value, which is expected to be earned back in approximately three years.

The acquisition of Liberty, with three branches in Burlington and Camden Counties, will be Delmar's initial entry into the Southern New Jersey/Suburban Philadelphia market. The merger will enable Delmar to enhance its growth opportunities by leveraging its larger capital base and legal lending limit with Liberty's customer base.

At March 31, 2017, Liberty had approximately $149.9 million in assets, $121.2 million in loans and $136.5 million in deposits. On a pro forma basis at March 31, 2017, the combined company would have $668.6 million of assets, $556.1 million in loans and $575.0 million in deposits.

 Kenneth R. Lehman currently serves on the Board of Directors of both Liberty and Delmar. In connection with the merger, two additional members of the Board of Directors of Liberty will join the Board of Directors of Delmar and Delmarva. Liberty will continue to operate under the name "Liberty Bell Bank, a division of The Bank of Delmarva".

 The merger is expected to close in the fourth quarter of 2017 or first quarter of 2018. The Agreement has been unanimously approved by the boards of directors of both Delmar and Liberty and is subject to the approval by the shareholders of Liberty, the approval of the applicable bank regulatory authorities, and the satisfaction or waiver of the conditions to closing and covenants of each party contained in the Agreement.

 John W. Breda, President and CEO of Delmar and Delmarva said, "We are extremely excited about the proposed acquisition of Liberty and the transformative opportunities the combination creates for us. We are familiar with the market and believe that it provides substantial opportunities for growth of the combined bank. We look forward to serving Liberty's customers with our portfolio of deposit, cash management, and loan products for businesses and consumers. We plan to work very closely with the Liberty team to provide a seamless transition, and make Liberty's customers feel that nothing has changed, except our capacity to serve them. Having just assumed the role of President and CEO of Delmar, I am very proud and eager to lead it into a new market and new opportunities."

Benjamin F. Watts, President and CEO of Liberty said, "We are thrilled to have found such a strong and high caliber institution as Delmar Bancorp to merge with. This partnership will serve our shareholders, our employees, our customers and our community well."

Liberty was advised by FIG Partners, L.P. as financial advisor, and Stevens & Lee as legal counsel. RP Financial LC. served as financial advisor, and Buckley Sandler LLP served as legal counsel, to Delmar.

About the Companies: Delmar Bancorp is the holding company for The Bank of Delmarva, which commenced operations in 1896. Delmarva's main office is in Seaford, Delaware, and it conducts full service commercial banking through 10 offices, soon to be 11, located in Wicomico and Worcester Counties in Maryland, and Sussex County in Delaware. Delmarva focuses on serving its local communities, knowing its customers and providing superior customer service. 

Liberty Bell Bank is headquartered in Marlton, New Jersey, and has two additional full service offices in Moorestown and Cherry Hill, New Jersey.

Additional Information About the Merger and Where to Find It

In connection with the proposed transaction, Delmar intends to file with the Securities and Exchange Commission (the "SEC") an Offering Statement on Form 1-A (the "Offering Statement") to qualify the shares of Delmar common stock to be issued to shareholders of Liberty in connection with the transaction. The Offering Statement will include a Proxy Statement of Liberty (the "Proxy Statement") and an Offering Circular of Delmar, as well as other relevant materials regarding the proposed transaction involving Delmar and Liberty. A definitive Proxy Statement/Offering Circular will be mailed to shareholders of Liberty. SECURITY HOLDERS OF LIBERTY ARE ADVISED TO READ THE PROXY STATEMENT/OFFERING CIRCULAR WHEN IT BECOMES AVAILABLE AND ANY OTHER DOCUMENTS INCORPORATED BY REFERENCE IN THE PROXY STATEMENT/OFFERING CIRCULAR BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION REGARDING DELMAR AND LIBERTY AND THE PROPOSED TRANSACTION. Security holders may obtain free copies of these documents, once they are filed, and other documents filed with the SEC on the SEC's website at http://www.sec.gov. This release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or proxy in favor of the merger, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. Any such solicitations or offers will be made through the Proxy Statement/Offering Circular following the qualification of the Offering Statement with the SEC and under any state securities law requirement. Any proxy or offer to sell or buy any securities provided in response to this release will not be accepted.

Forward-looking Statements: This press release contains forward-looking statements within the meaning of the Securities and Exchange Act of 1934, as amended, including statements of goals, intentions, and expectations as to future trends, plans, events or results of Delmar's operations and policies and regarding general economic conditions. These forward-looking statements include, but are not limited to, statements about (i) the benefits of the merger between Delmarva and Liberty and (ii) Delmar's and Liberty's plans, obligations, expectations and intentions. In some cases, forward-looking statements can be identified by use of words such as "may," "will," "anticipates," "believe," "expects," "plan," "estimates," "potential," "continue," "should," and similar words or phrases. These statements are based upon the beliefs of the respective managements of Delmar and Liberty as to the expected outcome of future events, current and anticipated economic conditions, nationally and in the parties' market, and their impact on the operations and assets of the parties, interest rates and interest rate policy, competitive factors, judgments about the ability of the parties to successfully consummate the merger and to integrate the operations of the two companies, the expected growth opportunities or cost savings resulting from the merger, which may not be fully realized or take longer than expected to realize; the ability of the two companies to avoid customer dislocation or runoff, and employee attrition, during the period leading up to and following the merger, the timing of and any conditions to required regulatory approvals, the ability of Delmar to recover Liberty's valuation reserve on its deferred tax asset, and other conditions which by their nature, are not susceptible to accurate forecast and are subject to significant uncertainty. Factors that could cause results and outcomes to differ materially include, among others, the ability to obtain required regulatory and shareholder approvals; the ability to complete the merger as expected and within the expected timeframe; and the possibility that one or more of the conditions to the completion of the merger may not be satisfied. Because of these uncertainties and the assumptions on which this discussion and the forward-looking statements are based, actual future operations and results in the future may differ materially from those indicated herein. Readers are cautioned against placing undue reliance on such forward-looking statements. Past results are not necessarily indicative of future performance. Delmar and Liberty assume no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release.