STATEN ISLAND, NY--(Marketwire - January 12, 2011) - VSB Bancorp, Inc. (
The $36,290 decrease in net income for the fourth quarter of 2010 was due to a decrease in net interest income of $75,447, an increase in non-interest expense of $54,531 and an increase in income tax expense of $34,654, partially offset by a decrease in the provision for loan loss of $95,000, and an increase in non-interest income of $33,342. Although the provision for loan loss declined, our allowance for loan losses represented 1.56% of total loans at December 31, 2010, compared to 1.35% at December 31, 2009.
The $75,447 decrease in net interest income for the fourth quarter of 2010 occurred primarily because our interest income decreased by $147,917, while our cost of funds decreased by $72,470. The decline in interest income resulted from a $174,079 decrease in income from investment securities, due to a 54 basis point decrease in yield, coupled with a $1.9 million decrease in average balance between the periods. The decrease in interest income from investment securities was partially offset by a $16,054 increase in interest income from loans. The increase in interest income on loans was due to a $1.1 million increase in the average balance of loans, partially offset by a 6 basis point decrease in average yield from the fourth quarter of 2009 to the fourth quarter of 2010. Our non-performing loans increased by $4.7 million from year end 2009 to year end 2010, contributing to the decrease in our average loan yield. We have entered into modified repayment arrangements with two borrowers whose loans comprise 72% of our non-performing loan balance and those borrowers have been paying in accordance with the modified arrangements for more than six consecutive months. We recognize interest income on those loans only when interest is actually paid.
Interest income from other interest earning assets (principally overnight investments) increased by $10,108 due to a $6.3 million increase in average balance and a 7 basis point increase in average yield. Overall, average interest-earning assets increased by $5.5 million from the fourth quarter of 2009 to the fourth quarter of 2010.
The most significant component of the decrease in interest expense was a $64,453 decrease in interest on time deposits as the average cost of time deposits declined by 42 basis points due to a continuation of low market interest rates, which have allowed us to renew or replace maturing time deposits at lower costs. Average demand deposits, an interest free source of funds for us to invest, increased by $228,916 from the fourth quarter of 2009, and they represented approximately 33% of average total deposits for the fourth quarter of 2010. Average interest-bearing deposits increased by $3.3 million, resulting in an overall $3.5 million increase in average total deposits from the fourth quarter of 2009 to the fourth quarter of 2010.
The average yield on our interest-earning assets declined by 37 basis points, and our average cost of funds declined by 22 basis points. The reduction in the yield on assets was principally due to the 54 basis point drop in the yield on investment securities, as new securities were purchased at market rates significantly below the rates on securities repaid or matured. The decline in the cost of funds was driven principally by the 42 basis point drop in the cost of time deposits.
Our interest rate margin decreased by 24 basis points to 3.85% from 4.09% when comparing the fourth quarter of 2010 to the same quarter in 2009, while our interest rate spread decreased by 15 basis points to 3.60% from 3.75%. Our interest rate spread decreased because the drop in the yield on our interest earning assets was greater than the reduction in the cost of funds, due primarily to the $1.9 million decrease in our investment securities coupled with the associated 54 basis point decrease in average yield. The margin decreased because it reflects the effect of non-interest bearing funding sources such as checking accounts and capital, which are less valuable in lower interest rate environments because they fund interest-earning assets with lower average yields. Non-interest bearing deposits also represented a smaller share of total deposits during the fourth quarter of 2010 compared to the fourth quarter of 2009. The interest rate floors on our loans have helped to stabilize interest income from the loan portfolio, but these floors also have the effect of limiting increases in our income as market rates increase until the prime rate rises above 6%. Non-interest income increased by $33,342 to $626,863 in the fourth quarter of 2010 compared to the same quarter in 2009.
Comparing the fourth quarter of 2010 with the same quarter in 2009, non-interest expense increased by $54,531. This increase was due to a $64,793 increase in salaries and benefits as a result of new hires, higher benefit costs and normal raises for existing employees and an $18,304 increase in other expenses and a $9,650 increase in director fees. This increase was partially offset by a $19,600 decrease in professional fees, due to the exemption from complying with section 404b of the Sarbanes Oxley Act, and an $18,000 decrease in FDIC and NYSBD assessments due to a lower assessment base.
For the year ended 2010, pre-tax income increased to $3,466,764 compared to $3,312,040 for the year 2009, an increase of $154,724, or 4.7%. Net income for the year ended December 31, 2010 was $1,880,629, or basic net income of $1.06 per common share, as compared to net income of $1,822,277, or basic net income of $1.02 per common share, for the year ended December 31, 2009. The $58,352 growth in net income for the year ended December 31, 2010 was attributable principally to a $420,000 reduction in the provision for loan losses, partially offset by a $291,662 increase in non-interest expenses. The increase in non-interest expense was due primarily to a $293,350 increase in salaries and benefits as a result of new hires, higher benefit costs and normal raises and a $49,095 increase in legal expenses due to higher collection costs. This increase was partially offset by a $55,250 decrease in professional fees, due to the exemption from complying with section 404b of the Sarbanes Oxley Act, and a $36,762 decrease in occupancy expenses due to the retirement of certain fixed assets. Income tax expense increased $96,372 due to the $154,724 increase in pre-tax income. The net interest margin decreased by 29 basis points to 3.98% for the year ended December 31, 2010 from 4.27% in the same period in 2009. Average interest earning assets for the year ended December 31, 2010, increased $14.8 million, or 6.8%, from the same period in 2009.
Total assets decreased to $235.3 million at December 31, 2010, a decrease of $1.7 million, or 0.7%, from December 31, 2009. The significant component of this decrease was an $11.0 million decrease in cash and other liquid assets, partially offset by a $7.4 million increase in investment securities and a $2.7 million increase in loans receivable. Total deposits, including escrow deposits, decreased to $207.4 million, a decrease of $3.6 million, or 1.7%. We had a $4.0 million decrease in demand and checking, a $1.5 million decrease jumbo time deposits and a $1.1 million decrease in money market deposits from year end 2009. These decreases were partially offset by increases of $2.6 million in NOW accounts and $495,592 in time deposits. The Bancorp's Tier 1 capital ratio was 10.19% at December 31, 2010.
Raffaele (Ralph) M. Branca, VSB Bancorp, Inc.'s President and CEO, stated, "We were able to increase our net income from the prior year in a challenging economy. The low interest rate environment and our decision to increase our liquidity position continue to limit our investment options as well as hamper our earnings. We continue to shift our balance sheet to help mitigate the future rise in interest rates as we expect to see some margin compression when interest rates begin to rise." Joseph J. LiBassi, VSB Bancorp, Inc.'s Chairman, stated, "We increased our earnings per common share to $1.06 this year and our book value per share to $14.27. Our ability to generate earnings in these difficult times gave us the flexibility of paying our thirteenth consecutive dividend to our stockholders. Our ROA of 0.78% and our ROE of 7.09% for the fourth quarter of 2010 compares favorably to our peers. We continue to strengthen and increase our customer relationships by delivering the highest quality personal service to the professionals and business owners on Staten Island."
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 $26.0 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).
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, weaknesses of other financial institutions, 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
December 31, 2010
(unaudited)
December 31, December 31,
2010 2009
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Assets:
Cash and cash equivalents $ 28,764,987 $ 39,716,919
Investment securities, available for sale 121,307,907 113,912,404
Loans receivable 81,538,224 78,834,156
Allowance for loan loss (1,277,220) (1,063,454)
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Loans receivable, net 80,261,004 77,770,702
Bank premises and equipment, net 2,732,229 3,204,063
Accrued interest receivable 673,967 722,228
Other assets 1,513,605 1,673,556
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Total assets $ 235,253,699 $ 236,999,872
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Liabilities and stockholders' equity:
Liabilities:
Deposits:
Demand and checking $ 66,407,225 $ 70,372,448
NOW 35,138,867 32,501,930
Money market 27,057,632 28,124,315
Savings 14,938,440 15,001,936
Time 63,644,963 64,669,128
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Total Deposits 207,187,127 210,669,757
Escrow deposits 219,530 316,329
Accounts payable and accrued expenses 1,802,186 1,529,837
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Total liabilities 209,208,843 212,515,923
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Stockholders' equity:
Common stock, ($.0001 par value, 3,000,000
shares authorized, 1,989,509 issued,
1,825,009 outstanding at December 31, 2010
and 1,945,134 issued, 1,762,191 outstanding
at December 31, 2009) 199 195
Additional paid in capital 9,249,600 9,317,719
Retained earnings 17,563,435 16,112,741
Treasury stock, at cost (164,500 shares at
December 31, 2010 and 182,943 at
December 31, 2009) (1,643,797) (1,840,249)
Unearned ESOP shares (563,594) (732,672)
Accumulated other comprehensive gain, net
of taxes of $1,213,545 and $1,371,416,
respectively 1,439,013 1,626,215
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Total stockholders' equity 26,044,856 24,483,949
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Total liabilities and stockholders'
equity $ 235,253,699 $ 236,999,872
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VSB Bancorp, Inc.
Consolidated Statements of Operations
December 31, 2010
(unaudited)
Three months Three months Year Year
ended ended ended ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2010 2009 2010 2009
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Interest and dividend
income:
Loans receivable $ 1,466,998 $ 1,450,944 $ 5,800,691 $ 5,465,368
Investment securities 1,026,192 1,200,271 4,401,547 5,149,770
Other interest earning
assets 21,525 11,417 61,124 33,050
----------- ------------ ----------- ------------
Total interest
income 2,514,715 2,662,632 10,263,362 10,648,188
Interest expense:
NOW 37,350 41,947 160,865 142,405
Money market 56,707 60,367 240,461 246,866
Savings 11,878 11,638 47,445 50,145
Time 127,949 192,402 572,292 925,793
----------- ------------ ----------- ------------
Total interest
expense 233,884 306,354 1,021,063 1,365,209
Net interest income 2,280,831 2,356,278 9,242,299 9,282,979
Provision for loan loss 15,000 110,000 140,000 560,000
----------- ------------ ----------- ------------
Net interest income
after provision
for loan loss 2,265,831 2,246,278 9,102,299 8,722,979
Non-interest income:
Loan fees 17,255 24,196 54,493 94,079
Service charges on
deposits 538,949 525,424 2,190,397 2,137,676
Net rental income 14,791 12,061 55,990 50,110
Other income 55,868 31,840 185,043 136,992
----------- ------------ ----------- ------------
Total non-interest
income 626,863 593,521 2,485,923 2,418,857
Non-interest expenses:
Salaries and benefits 995,736 930,943 3,968,499 3,675,149
Occupancy expenses 361,424 357,012 1,445,538 1,482,300
Legal expense 44,043 43,512 274,267 225,172
Professional fees 58,000 77,600 252,850 308,100
Computer expense 65,851 71,410 264,423 279,152
Director fees 60,600 50,950 239,600 218,225
FDIC and NYSBD
assessments 95,000 113,000 399,000 392,000
Other expenses 328,723 310,419 1,277,281 1,249,698
----------- ------------ ----------- ------------
Total non-interest
expenses 2,009,377 1,954,846 8,121,458 7,829,796
Income before
income taxes 883,317 884,953 3,466,764 3,312,040
----------- ------------ ----------- ------------
Provision (benefit) for
income taxes:
Current 429,167 89,386 1,670,259 1,373,021
Deferred (25,020) 280,107 (84,124) 116,742
----------- ------------ ----------- ------------
Total provision
for income taxes 404,147 369,493 1,586,135 1,489,763
Net income $ 479,170 $ 515,460 $ 1,880,629 $ 1,822,277
=========== ============ =========== ============
Basic income per common
share $ 0.27 $ 0.29 $ 1.06 $ 1.02
=========== ============ =========== ============
Diluted net income per
share $ 0.27 $ 0.29 $ 1.06 $ 1.01
=========== ============ =========== ============
Book value per common
share $ 14.27 $ 13.89 $ 14.27 $ 13.89
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Contact Information: Contact Name: Ralph M. Branca President & CEO (718) 979-1100