STATEN ISLAND, NY--(Marketwire - October 10, 2007) - VSB Bancorp, Inc. (
The $147,850 decrease in net income was attributable to a decrease in interest income of $295,096 and an increase in interest expense of $19,586, which combined to cause a $314,682 decrease in net interest income, a decrease in the credit to the allowance for loan losses of $10,000 and an increase in non-interest expense of $45,035. The decrease in net interest income was partially offset by an increase in non-interest income of $92,714, and a decrease in income tax expense of $129,153.
The increase in interest expense was primarily caused by a $52,495 increase in the cost of money market deposit accounts partially offset by a decrease in the cost of time deposits of $42,794. The average rate that we paid on money market deposits increased by 41 basis points and average money market deposits increased by $5.8 million since the third quarter of 2006. The average balance of time deposits decreased $9.1 million over the same period while the average rate paid on time deposits increased by 22 basis points. The decrease in interest income was due to a decrease of $294,756 in interest on loans as the average balance of loans decreased by $9.9 million from the third quarter of 2006, which was partially offset by an increase in interest income from money market investments as yields and average balances increased over the same period. The $45,035 increase in non-interest expense was directly attributable to an increase in occupancy expenses of $76,973, due to the operation of our new main office at 4142 Hylan Boulevard in Great Kills and the operation of the Rosebank branch; and an increase in salary and benefits of $27,595, which were partially offset by a decrease in legal expenses of $64,874.
Total assets decreased to $208.0 million at September 30, 2007, a decrease of $3.9 million, or 1.8%, from December 31, 2006. Total deposits, including escrow deposits, decreased to $181.1 million, a decrease of $5.6 million, or 3.0%, during the nine months of 2007. Other assets decreased $2.0 million as we opened our new main office in Great Kills, which resulted in the transfer of construction in progress, previously combined with other assets, to bank premises and equipment. The Bancorp's Tier 1 capital ratio of 12.20% includes the effect, as Tier 1 capital, of $5.0 million (25% of its Tier 1 capital) from the proceeds of a $5 million trust preferred securities issuance in August 2003.
Average interest-earning assets and average loans decreased by $13.5 million and $9.9 million, respectively, from the third quarter of 2006 to the third quarter of 2007. Average demand deposits, an interest free source of funds for the Bancorp to invest, were approximately 33% of average total deposits for the third quarter of 2007, compared to 35% for the third quarter of 2006. Average deposits decreased by $15.9 million from the third quarter of 2006 to the third quarter of 2007. The Company's interest rate spread and interest rate margin were 3.46% and 4.45%, respectively, for the quarter ending September 30, 2007 as compared to 3.87% and 4.79%, respectively, for the quarter ended September 30, 2006. Non-interest income increased $92,714 to $539,637 in the third quarter of 2007. Non-interest expense totaled $1.8 million in the third quarter of 2007.
Pre-tax income decreased to $2,872,068 for the first nine months of 2007, as compared to $3,411,034 for 2006, a decrease of $538,966, or 15.8%. Net income for the nine months ended September 30, 2007 was $1,534,071, or basic net income of $0.84 per common share, as compared to a net income of $1,821,810, or $1.00 per common share, for the nine months ended September 30, 2006. The $287,739 reduction in net income for the nine months ended September 30, 2007 was attributable to an increase in interest expense of $300,897, due to a 57 basis point increase in the cost of time deposits, and a 26 basis point increase in money market deposits. The decrease in net income was also due to the reduction of interest income of $461,382 due to the decrease in average loan balance of $10.2 million, partially offset by the increase of $4.6 million in other interest earning assets, coupled with an increase of 33 basis points in the yield on other interest earning assets. The decrease in net income was partially offset by a decrease in the provision for loan loss of $45,000, and an increase in non-interest income of $207,249, due primarily to the increase in deposit service charges. Income tax expense also decreased $251,813 between the periods as pre-tax income decreased.
Merton Corn, VSB Bancorp, Inc.'s President and CEO, stated, "The general downturn in the real estate market has limited our loan production. While we have kept non-interest expenses in check, we have still have seen our net interest income decrease." Joseph J. LiBassi, VSB Bancorp, Inc.'s Chairman, stated, "The current economic climate has dampened our earnings but we still increased our book value per share to $10.52 at September 30, 2007, up $1.64 from the book value per share one year earlier. Our strategy of delivering the highest customer service and our reputation as the Island's premier business bank, have helped us to mitigate some of the pressure on our earnings."
VSB Bancorp, Inc. is the one-bank holding company for Victory State Bank. Victory State Bank, a Staten Island-based commercial bank, which commenced operations on November 17, 1997. The Bank's initial capitalization of $7.0 million was primarily raised in the Staten Island community. The Bancorp's total equity has increased to $19.9 million, primarily through the retention of earnings. The Bank operates five full service locations in Staten Island: the main office in Great Kills, and branches on Forest Avenue (West Brighton), Hyatt Street (St. George), Hylan Boulevard (Dongan Hills) and on Bay Street (Rosebank). In February 2007, we opened our new main office 4142 Hylan Boulevard in the Great Kills section of Staten Island. We simultaneously closed our former main office in the Oakwood Heights Shopping Center as the lease expired at that location.
FORWARD-LOOKING STATEMENTS
This release contains forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties may include but are not necessarily limited to adverse changes in local, regional or national economic conditions, fluctuations in market interest rates, changes in laws or government regulations, changes in customer preferences, and changes in competition within our market area. When used in this release or in any other written or oral statements by the Company or its directors, officers or employees, words or phrases such as "will result in," "management expects that," "will continue," "is anticipated," "estimate," "projected," or similar expressions, and other terms used to describe future events, are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"). Readers should not place undue reliance on the forward-looking statements, which reflect management's view only as of the date of the statement. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances. This statement is included for the express purpose of protecting the Company under the PSLRA's safe harbor provisions.
VSB Bancorp, Inc.
Consolidated Statements of Financial Condition
September 30, 2007
(unaudited)
September 30, December 31,
2007 2006
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Assets:
Cash and cash equivalents $ 32,251,699 $ 25,363,069
Investment securities, available for sale 109,947,323 113,770,611
Loans receivable 59,473,650 66,410,677
Allowance for loan loss (965,641) (1,128,824)
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Loans receivable, net 58,508,009 65,281,853
Bank premises and equipment, net 4,020,292 1,554,363
Accrued interest receivable 805,338 805,681
Deferred taxes 1,431,393 2,030,647
Other assets 1,032,845 3,078,535
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Total assets $ 207,996,899 $ 211,884,759
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Liabilities and stockholders' equity:
Liabilities:
Deposits:
Demand and checking $ 62,409,088 $ 67,371,582
NOW 19,960,831 19,935,769
Money market 23,585,125 18,359,007
Savings 11,109,695 12,526,485
Time 63,607,910 68,229,244
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Total Deposits 180,672,649 186,422,087
Escrow deposits 399,145 261,063
Subordinated debt 5,155,000 5,155,000
Accounts payable and accrued expenses 1,860,339 2,306,312
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Total liabilities 188,087,133 194,144,462
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Employee Stock Ownership Plan Repurchase
Obligation - 399,026
Stockholders' equity:
Common stock, ($.0001 par value, 3,000,000
shares authorized, 1,891,759 issued and
outstanding at September 30, 2007 and
December 31, 2006) 189 189
Additional paid in capital 9,042,545 8,667,665
Retained earnings 12,827,271 11,293,200
Unallocated ESOP shares (1,113,097) (1,239,905)
Accumulated other comprehensive loss, net
of taxes of $738,969 and $1,203,679,
respectively (847,142) (1,379,878)
------------- -------------
Total stockholders' equity 19,909,766 17,341,271
------------- -------------
Total liabilities and stockholders'
equity $ 207,996,899 $ 211,884,759
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VSB Bancorp, Inc.
Consolidated Statements of Operations
September 30, 2007
(unaudited)
Three Three
months months Nine months Nine months
ended ended ended ended
September September September September
30, 2007 30, 2006 30, 2007 30, 2006
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Interest and dividend income:
Loans receivable $ 1,500,123 $ 1,794,879 $ 4,573,820 $ 5,301,788
Investment securities 1,320,528 1,336,087 3,914,686 3,862,518
Other interest earning
assets 297,268 282,049 809,094 594,676
----------- ----------- ----------- ------------
Total interest income 3,117,919 3,413,015 9,297,600 9,758,982
Interest expense:
NOW 37,940 27,867 96,689 77,512
Money market 137,741 85,246 321,150 264,909
Savings 24,531 23,607 74,314 62,985
Subordinated debt 89,040 89,040 267,119 267,119
Other interest expense - 1,112 - 1,112
Time 619,975 662,769 1,862,985 1,647,723
----------- ----------- ----------- ------------
Total interest expense 909,227 889,641 2,622,257 2,321,360
Net interest income 2,208,692 2,523,374 6,675,343 7,437,622
Provision (benefit) for
loan loss (15,000) (25,000) (45,000) -
----------- ----------- ----------- ------------
Net interest income
after provision for
loan loss 2,223,692 2,548,374 6,720,343 7,437,622
Non-interest income:
Loan fees 15,658 16,973 63,658 57,273
Service charges on
deposits 457,023 366,716 1,319,422 1,143,444
Net rental income /
(loss) (2,568) 1,083 (876) 7,832
Other income 69,524 62,151 233,989 200,395
----------- ----------- ----------- ------------
Total non-interest
income 539,637 446,923 1,616,193 1,408,944
Non-interest expenses:
Salaries and benefits 936,903 909,308 2,892,221 2,911,028
Occupancy expenses 352,297 275,324 1,032,022 814,374
Legal expense 52,384 117,258 50,750 279,579
Professional fees 56,700 46,000 153,000 136,000
Computer expense 64,604 69,611 201,975 192,236
Director fees 52,600 53,950 160,450 167,400
Other expenses 318,873 317,875 974,050 934,915
----------- ----------- ----------- ------------
Total non-interest
expenses 1,834,361 1,789,326 5,464,468 5,435,532
Income before income
taxes 928,968 1,205,971 2,872,068 3,411,034
----------- ----------- ----------- ------------
Provision (benefit) for
income taxes:
Current 381,296 515,262 1,229,835 1,544,749
Deferred 51,393 46,580 108,162 44,475
----------- ----------- ----------- ------------
Total provision for
income taxes 432,689 561,842 1,337,997 1,589,224
Net income $ 496,279 $ 644,129 $ 1,534,071 $ 1,821,810
=========== =========== =========== ============
Basic income per common
share $ 0.27 $ 0.35 $ 0.84 $ 1.00
=========== =========== =========== ============
Diluted net income per
share $ 0.26 $ 0.34 $ 0.82 $ 0.98
=========== =========== =========== ============
Book value per common
share $ 10.52 $ 8.88 $ 10.52 $ 8.88
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Contact Information: Contact Name: Ralph M. Branca Executive Vice President (718) 979-1100