STATEN ISLAND, NY--(Marketwired - Apr 13, 2016) - VSB Bancorp, Inc. (
The $298,051 increase in net income was due to an increase in net interest income of $367,487, a decrease in the provision for loan loss of $110,000 and an increase in non-interest income of $14,528, partially offset by an increase in non-interest expenses of $79,892, and an increase in the provision for income taxes of $114,072, due to an increase in pre-tax income.
The $367,487 increase in net interest income for the first quarter of 2016 occurred primarily because our interest income increased by $432,767, while our cost of funds increased by $65,280. The rise in interest income resulted from a $417,713 increase in income from loans, due to a $31.5 million increase in average balance between the periods, partially offset by a 21 basis point decrease in yield between the periods, as we booked new loans at lower rates due to a more competitive environment. The average balance of loans increased by 40.7% as we implemented our strategy to increase our loan portfolio to improve average asset yields. Income from investment securities decreased slightly by $6,934, as the $10.4 million decrease in the average balance was substantially offset by 10 basis point increase in the yield, as we looked to deploy lower yielding assets into loans.
Interest income from other interest earning assets (principally overnight investments) increased by $21,988 due to a $11.7 million increase in the average balance and a 25 basis point increase in the yield. Overall, average interest-earning assets increased by $32.9 million from the first quarter of 2015 to the first quarter of 2016.
The increase in interest expense was principally due to a $53,401 increase in the cost of money market accounts, due to a 24 basis point increase in average cost and a $11.5 million increase in the average balance, and a $21,242 increase in interest on time accounts, as the average balance between periods increased by $4.3 million and the average cost increased by 10 basis points. We also experienced a $3,579 increase in interest on NOW account accounts. These increases were partially offset by $12,172 drop in the cost of savings accounts, as the average balance between periods decreased by $3.0 million and the average cost decreased by 17 basis points. Our overall average cost of interest-bearing liabilities increased by 11 basis points as the Federal Reserve increased the benchmark federal funds rate by 25 basis points in December 2015, resulting in upward movement in other interest rate indicators, such as the prime rate, which also increased by 25 basis points at that time.
Average demand deposits, an interest free source of funds for us to invest, increased $16.7 million from the first quarter of 2015, representing approximately 38% of average total deposits for the first quarter of 2016. Average interest-bearing deposits increased by $15.8 million, resulting in an overall $32.7 million increase in average total deposits from the first quarter of 2015 to the first quarter of 2016.
The average yield on earning assets rose by 24 basis points while the average cost of funds rose by 11 basis points. The increase in the yield on assets was principally due to the change in asset mix as we redeployed lower yielding investments into loans. Our interest rate margin increased by 19 basis points from 2.90% to 3.09% when comparing the first quarter of 2016 to the same quarter in 2015, while our interest rate spread increased by 13 basis points from 2.73% to 2.86%. The spread and margin both increased because of a combination of two factors. Loans increased as a percentage of interest-earning assets from 28.3% in the first quarter of 2015 to 35.6% in the first quarter of 2016. In addition, the yield we were able to obtain on the average balance of our investment securities increased as the increase in the federal funds rate drove an increase in market yields available on such securities. These increases were restrained by corresponding rise in the cost of deposits as market expectations of additional increases in the federal funds rate this year increased competition for deposits at current rates before rates increase.
Non-interest income increased slightly to $641,626 in the first quarter of 2016, compared to $627,098 in the same quarter in 2015. The increase was achieved through the $14,178 increase in other income as we had additional ATM surcharges and other miscellaneous income. We also had a $9,715 increase in rental income as we collected all rents due in 2016. This was partially offset by an $11,565 reduction in service charges on deposits, which consist mainly of fees on items being presented for payment against insufficient funds, which are inherently volatile.
Comparing the first quarter of 2016 with the same quarter in 2015, non-interest expense increased by $79,892, totaling $2.1 million for the first quarter of 2016. Non-interest expense increased for various business reasons including: (i) a $99,129 increase in salary and benefit costs due to a higher level of staff (ii) a $37,663 increase in other expenses due to an increase in collection expenses (real estate taxes and insurance on non-performing loans) and loan servicing fees paid on participation loans; and (iii) a $8,250 increase in New York State and New York City franchise tax due to recent tax law changes. The increases were partially offset by a reduction of legal expenses of $39,472 due to lower legal fees on collection matters.
Total assets increased to $327.4 million at March 31, 2016, an increase of $21.0 million, or 6.8%, from December 31, 2015. The significant component of this increase was a $9.7 million increase in loans and a $17.1 million increase in cash and other liquid assets, which was partially offset by a $5.6 million decrease in investment securities. Our non-performing loans decreased from $1.9 million at December 31, 2015 to $1.2 million at March 31, 2016, due primarily to the payoff of $662,384 of non-performing loans, in the first quarter of 2016. Total OREO stood at $570,000 at March 31, 2016. Total deposits, including escrow deposits, increased to $296.4 million, an increase of $20.1 million, or 7.3% during 2016. The increase was primarily attributable to increases of $17.3 million in demand and checking deposits, and $1.2 million in saving accounts, $1.2 million in NOW accounts, a $787,463 in money market accounts, partially offset by a $737,856 decrease in time deposits.
Our total stockholders' equity increased by $676,894, principally due to $428,021 in retained earnings, $164,453 in other comprehensive income, $102,788 in additional paid in capital (due to option exercises) and $25,031 of amortization of our ESOP loan. These increases were partially offset as we repurchased 3,500 shares of common stock during 2016, resulting in an increase in treasury stock of $43,410. We are currently in our fourth stock repurchase program. VSB Bancorp's Tier 1 capital ratio was 9.18% at March 31, 2016. Book value per common share increased from $16.00 at year end 2015 to $16.34 at March 31, 2016.
Raffaele (Ralph) M. Branca, VSB Bancorp, Inc.'s President and CEO, stated, "During the past year, our strategy of increasing our loan portfolio has produced our strong quarter over quarter growth. By prudently expanding our geographic footprint, we have taken advantage of new loan opportunities." Joseph J. LiBassi, VSB Bancorp, Inc.'s Chairman, stated, "The shifting of our asset mix toward loans has generated more net income and allowed us to increase our cash dividend. Our book value per share rose to $16.34, an all-time high. The cornerstone of our success is providing the best in customer service."
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 $29.5 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 | ||||||||||||
| March 31, 2016 | ||||||||||||
| (unaudited) | ||||||||||||
| March 31, | December 31, | |||||||||||
| 2016 | 2015 | |||||||||||
| Assets: | ||||||||||||
| Cash and cash equivalents | $ | 31,939,868 | $ | 14,845,096 | ||||||||
| Investment securities, available for sale | 55,944,952 | 58,096,583 | ||||||||||
| Investment securities, held to maturity | 117,171,029 | 120,585,784 | ||||||||||
| Loans receivable | 114,058,404 | 104,341,670 | ||||||||||
| Allowance for loan loss | (1,328,071 | ) | (1,290,563 | ) | ||||||||
| Loans receivable, net | 112,730,333 | 103,051,107 | ||||||||||
| Bank premises and equipment, net | 1,462,418 | 1,528,914 | ||||||||||
| Accrued interest receivable | 744,622 | 743,375 | ||||||||||
| Bank owned life insurance | 5,225,026 | 5,194,945 | ||||||||||
| Other assets | 2,143,972 | 2,361,325 | ||||||||||
| Total assets | $ | 327,362,220 | $ | 306,407,129 | ||||||||
| Liabilities and stockholders' equity: | ||||||||||||
| Liabilities: | ||||||||||||
| Deposits: | ||||||||||||
| Demand and checking | $ | 118,951,223 | $ | 101,659,731 | ||||||||
| NOW | 32,615,357 | 31,428,768 | ||||||||||
| Money market | 61,700,238 | 60,912,775 | ||||||||||
| Savings | 22,310,598 | 21,136,015 | ||||||||||
| Time | 60,372,518 | 61,110,374 | ||||||||||
| Total Deposits | 295,949,934 | 276,247,663 | ||||||||||
| Escrow deposits | 434,311 | 56,600 | ||||||||||
| Accounts payable and accrued expenses | 1,501,790 | 1,303,575 | ||||||||||
| Total liabilities | 297,886,035 | 277,607,838 | ||||||||||
| Stockholders' equity: | ||||||||||||
| Common stock, ($.0001 par value, 10,000,000 shares authorized 2,086,509 issued, 1,803,898 outstanding at March 31, 2016 and 2,078,509 issued, 1,799,398 outstanding at December 31, 2015) | 209 | 208 | ||||||||||
| Additional paid in capital | 10,614,839 | 10,512,041 | ||||||||||
| Retained earnings | 22,449,028 | 22,021,007 | ||||||||||
| Treasury stock, at cost (282,611 shares at March 31, 2016 and 279,111 at December 31, 2015) | (3,019,585 | ) | (2,976,175 | ) | ||||||||
| Unearned ESOP shares | (809,344 | ) | (834,375 | ) | ||||||||
| Accumulated other comprehensive gain, net of taxes of $129,790 and $41,238, respectively | 241,038 | 76,585 | ||||||||||
| Total stockholders' equity | 29,476,185 | 28,799,291 | ||||||||||
| Total liabilities and stockholders' equity | $ | 327,362,220 | $ | 306,407,129 | ||||||||
| VSB Bancorp, Inc. | ||||||||||||
| Consolidated Statements of Operations | ||||||||||||
| March 31, 2016 | ||||||||||||
| (unaudited) | ||||||||||||
| Three months | Three months | |||||||||||
| ended | ended | |||||||||||
| March 31, 2016 | March 31, 2015 | |||||||||||
| Interest and dividend income: | ||||||||||||
| Loans receivable | $ | 1,697,595 | $ | 1,279,882 | ||||||||
| Investment securities | 899,186 | 906,120 | ||||||||||
| Other interest earning assets | 29,361 | 7,373 | ||||||||||
| Total interest income | 2,626,142 | 2,193,375 | ||||||||||
| Interest expense: | ||||||||||||
| NOW | 14,055 | 10,476 | ||||||||||
| Money market | 124,673 | 71,272 | ||||||||||
| Savings | 11,541 | 23,713 | ||||||||||
| Time | 86,388 | 65,916 | ||||||||||
| Total interest expense | 236,657 | 171,377 | ||||||||||
| Net interest income | 2,389,485 | 2,021,998 | ||||||||||
| Provision for loan loss | 50,000 | 160,000 | ||||||||||
| Net interest income after provision for loan loss | 2,339,485 | 1,861,998 | ||||||||||
| Non-interest income: | ||||||||||||
| Loan fees | 12,866 | 10,666 | ||||||||||
| Service charges on deposits | 516,956 | 528,521 | ||||||||||
| Net rental income | 13,554 | 3,839 | ||||||||||
| Other income | 98,250 | 84,072 | ||||||||||
| Total non-interest income | 641,626 | 627,098 | ||||||||||
| Non-interest expenses: | ||||||||||||
| Salaries and benefits | 1,123,631 | 1,024,502 | ||||||||||
| Occupancy expenses | 335,816 | 342,956 | ||||||||||
| Professional fees | 42,287 | 81,759 | ||||||||||
| Legal expenses | 88,331 | 94,328 | ||||||||||
| Computer expense | 95,452 | 94,842 | ||||||||||
| Director fees | 57,450 | 62,475 | ||||||||||
| FDIC and NYSBD assessments | 42,000 | 66,000 | ||||||||||
| Other expenses | 350,882 | 289,095 | ||||||||||
| Total non-interest expenses | 2,135,849 | 2,055,957 | ||||||||||
| Income before income taxes | 845,262 | 433,139 | ||||||||||
| Provision (benefit) for income taxes: | ||||||||||||
| Current | 342,486 | 249,586 | ||||||||||
| Deferred | (46,620 | ) | (67,792 | ) | ||||||||
| Total provision for income taxes | 295,866 | 181,794 | ||||||||||
| Net income | $ | 549,396 | $ | 251,345 | ||||||||
| Basic income per common share | $ | 0.32 | $ | 0.14 | ||||||||
| Diluted net income per share | $ | 0.32 | $ | 0.14 | ||||||||
| Book value per common share | $ | 16.34 | $ | 15.54 | ||||||||
Contact Information:
Contact Name:
Ralph M. Branca
President & CEO
(718) 979-1100