SOURCE: VSB Bancorp

July 10, 2007 14:07 ET

VSB Bancorp, Inc. Second Quarter 2007 Results of Operations

STATEN ISLAND, NY--(Marketwire - July 10, 2007) - VSB Bancorp, Inc. (NASDAQ: VSBN) reported net income of $508,021 for the second quarter of 2007, a 13.6% decrease from net income of $587,770 in the second quarter of 2006. The following unaudited figures were released today. Pre-tax income was $951,258 in the second quarter of 2007, as compared to $1,100,480 for the second quarter of 2006, a decrease of $149,222, or 13.6%. Basic net income per common share was $0.28, as compared to basic net income per common share of $0.32 for the quarter ended June 30, 2006. All per share data were adjusted for the 5-for-4 stock split, in the form of a 25% stock dividend, paid on May 18, 2006, to stockholders of record on May 3, 2006.

The $79,749 decrease in net income was attributable to a decrease in interest income of $152,181 and an increase in interest expense of $106,744, which combined to cause a $258,925 decrease in net interest income. The decrease in net interest income was partially offset by an increase in non-interest income of $56,721, a decrease in non-interest expense of $52,982, and a decrease in income tax expense of $69,473. The increase in interest expense was primarily caused by a $96,803 increase in the cost of time accounts, as the average rates we paid on time deposits increased since the second quarter of 2006. The decrease in interest income was due to a decrease of $256,792 in interest on loans as the average balance of loans decreased by $10.6 million from the second 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 $52,982 reduction in non-interest expense was directly attributable to a decrease in legal expenses of $119,607, due in part to the reimbursement from our insurance company of legal fees previously expensed. This reduction was partially offset by an increase in occupancy expenses of $62,160 due to the operation of the new main office at 4142 Hylan Boulevard in Great Kills and the operation of the Rosebank branch.

Total assets increased to $215.1 million at June 30, 2007, an increase of $3.3 million, or 1.5%, from December 31, 2006. Total deposits, including escrow deposits, increased to $189.7 million, an increase of $3.0 million, or 1.6%, during the first half 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 shown as "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 $6.6 million and $10.6 million, respectively, from the second quarter of 2006 to the second quarter of 2007. Average demand deposits, an interest free source of funds for the Bancorp to invest, were approximately 34% of average total deposits for the second quarter of 2007, compared to 36% for the second quarter of 2006. Average deposits decreased by $9.2 million from the second quarter of 2006 to the second quarter of 2007. The Company's interest rate spread and interest rate margin were 3.49% and 4.51%, respectively, for the quarter ending June 30, 2007 as compared to 4.07% and 4.93%, respectively, for the quarter ended June 30, 2006. Non-interest income increased $56,721 to $535,193 in the second quarter of 2007. Non-interest expense totaled $1.8 million in the second quarter of 2007.

Pre-tax income decreased to $1,943,100 for the first six months of 2007, as compared to $2,205,063 for 2006, a decrease of $261,963, or 11.9%. Net income for the six months ended June 30, 2007 was $1,037,792, or basic net income of $0.57 per common share, as compared to a net income of $1,177,681, or $0.65 per common share, for the six months ended June 30, 2006. The $139,889 reduction in net income for the six months ended June 30, 2007 was attributable to an increase in interest expense of $281,311 due to a 76 basis points increase in the cost of time deposits, coupled with a decrease in interest income of $166,286 due to the decrease in average loan balance of $10.3 million. The decrease in net income was partially offset by a decrease in the provision for loan loss of $55,000, and an increase in non-interest income of $114,535. Income tax expense also decreased $122,074 between the periods as pre-tax income decreased.

Merton Corn, VSB Bancorp, Inc.'s President and CEO, stated, "The slowdown in the home building market on Staten Island has a negative effect on our growth and our profitability. Our cost containment efforts have kept non-interest expenses in check." Joseph J. LiBassi, VSB Bancorp, Inc.'s Chairman, stated, "Our asset base increased by $6.7 million from the first quarter of 2007. Our book value per share increased to $9.84 at June 30, 2007, up $1.83 from the book value per share one year earlier. Our commitment to providing our customers with the highest quality personal service and the knowledge and dedication of our staff and directors are the key ingredients to maintaining our reputation as the Island's premier business bank."

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 $18.6 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
                              June 30, 2007
                               (unaudited)

                                                June 30,     December 31,
                                                  2007           2006
                                              -------------  -------------
Assets:

 Cash and cash equivalents                    $  34,983,022  $  25,363,069
 Investment securities, available for sale      112,098,277    113,770,611
 Loans receivable                                60,890,255     66,410,677
 Allowance for loan loss                         (1,023,205)    (1,128,824)
                                              -------------  -------------
    Loans receivable, net                        59,867,050     65,281,853
 Bank premises and equipment, net                 4,144,342      1,554,363
 Accrued interest receivable                        795,325        805,681
 Deferred taxes                                   2,150,208      2,030,647
 Other assets                                     1,111,310      3,078,535
                                              -------------  -------------
     Total assets                             $ 215,149,534  $ 211,884,759
                                              =============  =============

Liabilities and stockholders' equity:

Liabilities:
 Deposits:
    Demand and checking                       $  64,287,827  $  67,371,582
    NOW                                          20,810,121     19,935,769
    Money market                                 23,703,782     18,359,007
    Savings                                      11,762,026     12,526,485
    Time                                         68,942,839     68,229,244
                                              -------------  -------------
     Total Deposits                             189,506,595    186,422,087
 Escrow deposits                                    219,844        261,063
 Subordinated debt                                5,155,000      5,155,000
 Accounts payable and accrued expenses            1,650,851      2,306,312
                                              -------------  -------------
     Total liabilities                          196,532,290    194,144,462
                                              -------------  -------------

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 June 30, 2007 and
  December 31, 2006)                                    189            189
 Additional paid in capital                       9,053,691      8,667,665
 Retained earnings                               12,330,992     11,293,200
 Unallocated ESOP shares                         (1,155,366)    (1,239,905)
 Accumulated other comprehensive loss, net
  of taxes of $1,406,390 and $1,203,679,
  respectively                                   (1,612,262)    (1,379,878)
                                              -------------  -------------
    Total stockholders' equity                   18,617,244     17,341,271
                                              -------------  -------------
     Total liabilities and stockholders'
        equity                                $ 215,149,534  $ 211,884,759
                                              =============  =============




                            VSB Bancorp, Inc.
                  Consolidated Statements of Operations
                              June 30, 2007
                                (unaudited)

                       Three months Three months  Six months   Six months
                           ended        ended        ended        ended
                          June 30,     June 30,     June 30,     June 30,
                            2007         2006         2007         2006
                        -----------  ------------ -----------  -----------
Interest and dividend
 income:
 Loans receivable       $ 1,501,344  $  1,758,136 $ 3,073,697  $ 3,506,909
 Investment securities    1,293,698     1,320,669   2,594,158    2,526,431
 Other interest earning
  assets                    264,761       133,179     511,826      312,627
                        -----------  ------------ -----------  -----------
    Total interest
     income               3,059,803     3,211,984   6,179,681    6,345,967

Interest expense:
 NOW                         29,960        26,442      58,749       49,645
 Money market                97,559        95,447     183,409      179,663
 Savings                     25,355        21,044      49,783       39,378
 Subordinated debt           89,039        89,039     178,079      178,079
 Time                       627,874       531,071   1,243,010      984,954
                        -----------  ------------ -----------  -----------
    Total interest
     expense                869,787       763,043   1,713,030    1,431,719
Net interest income       2,190,016     2,448,941   4,466,651    4,914,248
Provision (benefit) for
 loan loss                        -             -     (30,000)      25,000
                        -----------  ------------ -----------  -----------
    Net interest income
     after provision
     for loan loss        2,190,016     2,448,941   4,496,651    4,889,248

Non-interest income:
 Loan fees                   20,532        17,533      48,000       40,300
 Service charges on
  deposits                  445,491       386,972     862,399      776,728
 Net rental income /
  (loss)                    (13,121)        3,374       1,692        6,749
 Other income                82,291        70,593     164,465      138,244
                        -----------  ------------ -----------  -----------
    Total non-interest
     income                 535,193       478,472   1,076,556      962,021

Non-interest expenses:
 Salaries and benefits      937,988       969,643   1,955,318    2,001,720
 Occupancy expenses         341,750       279,590     679,725      539,050
 Legal expense /
  (recovery)                (16,160)      103,447      (1,634)     162,321
 Professional fees           44,700        42,000      96,300       90,000
 Computer expense            70,155        62,097     137,371      122,625
 Director fees               55,700        57,550     107,850      113,450
 Other expenses             339,818       312,606     655,177      617,040
                        -----------  ------------ -----------  -----------
    Total non-interest
     expenses             1,773,951     1,826,933   3,630,107    3,646,206

     Income before
      income taxes          951,258     1,100,480   1,943,100    2,205,063
                        -----------  ------------ -----------  -----------
Provision (benefit) for
 income taxes:
 Current                    405,809       509,513     848,539    1,029,487
 Deferred                    37,428         3,197      56,769       (2,105)
                        -----------  ------------ -----------  -----------
    Total provision
     for income taxes       443,237       512,710     905,308    1,027,382

        Net income      $   508,021  $    587,770 $ 1,037,792  $ 1,177,681
                        ===========  ============ ===========  ===========

Basic income per common
 share                  $      0.28  $       0.32 $      0.57  $      0.65
                        ===========  ============ ===========  ===========

Diluted net income per
 share                  $      0.27  $       0.31 $      0.55  $      0.63
                        ===========  ============ ===========  ===========
Book value per common
 share                  $      9.84  $       8.01 $      9.84  $      8.01
                        ===========  ============ ===========  ===========

Contact Information

  • Contact Name:
    Ralph M. Branca
    Executive Vice President
    (718) 979-1100