LBBB (Liberty Bell Bank) is a full-service, state-chartered commercial bank and provides diversified financial products through three locations in Burlington County, New Jersey and one location in Camden County, New Jersey. On April 16, 2013, it announced its earnings for the first quarter of 2013. The reported net income was $202,000, a $167,000 increase from net income for the same period of last year ($35,000). The report explains that one primary reason for this substantial climb in net income is the gains on the sale of available-for-sale (AFS) securities ($156,000).
As we have learnt, this sale would have following impact on the financial statement of LBBB:
1. It decreased the “investment securities” under current assets on balance sheet.
2. It brought down the unrealized gain under Shareholder’s equity on balance sheet.
3. It increased the realized gain on income statement.
In addition, the report also disclosed that interest income for AFS securities increased $54,000 in the first quarter. This interest income, same as dividend from AFS securities, was recognized on income statement immediately. Unlike revaluation of AFS securities, unrealized gain/loss is recorded under shareholders’ equity on balance sheet and the realized gain/loss is ONLY recognized on income statement when the securities are sold.
For more information, please see the article: http://eon.businesswire.com/news/eon/20130416006787/en.
