STATEN ISLAND, NY -- (MARKET WIRE) -- April 12, 2007 -- VSB Bancorp, Inc. (
The $60,140 decrease in net income was attributable to a decrease in net interest income of $188,672, due primarily to an increase in interest expense of $174,567, and an increase of non-interest expense of $36,883. The decrease in net income was partially offset by an increase in non-interest income of $57,814, a decrease in the provision for loan loss of $55,000, and a decrease in income tax expense of $52,601. The increase in interest expense was primarily caused by a $161,253 increase in the cost of time accounts, as the average rates we paid on time deposits increased from the first quarter of 2006. The $36,883 growth in non-interest expense is directly attributable to an increase in occupancy expenses of $78,515 due to the operation of the new main office at 4142 Hylan Boulevard in Great Kills, the operation of the Rosebank branch and the final occupancy expenses associated with our former main office. The increase in non-interest expenses was partially offset by the reduction in legal fees of $44,348 and the decrease in salaries and benefits expense of $14,747.
Total assets decreased to $208.4 million at March 31, 2007, a decrease of $3.5 million, or 1.6%, from December 31, 2006. Total deposits decreased to $182.6 million, a decrease of $4.1 million, or 2.2%, during the first quarter of 2007. Other assets decreased $2.1 million as we opened our new main office in Great Kills, which resulted in the transfer of construction in progress to bank premises and equipment. The Bancorp's Tier 1 capital ratio of 11.67% 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 $4.4 million and $9.9 million, respectively, from the first quarter of 2006 to the first quarter of 2007. Average demand deposits, an interest free source of funds for the Bancorp to invest, were approximately 37% of average total deposits for the first quarter of 2007, compared to 36% for the first quarter of 2006. Average deposits decreased by $4.9 million from the first quarter of 2006 to the first quarter of 2007. The Company's interest rate spread and interest rate margin were 3.68% and 4.72%, respectively, for the quarter ending March 31, 2007 as compared to 4.13% and 4.90%, respectively, for the quarter ended March 31, 2006. Non-interest income increased $57,814 to $541,363 in the first quarter of 2007. Non-interest expense totaled $1.9 million in the first quarter of 2007.
Merton Corn, VSB Bancorp, Inc.'s President and CEO, stated, "The current economic environment has made it more difficult for us to expand our loan portfolio and deposits. The lack of growth and the increased occupancy expenses due to our new locations have hampered our earnings for the quarter." Joseph J. LiBassi, VSB Bancorp, Inc.'s Chairman, stated "Our earnings per share were $0.29 for the first quarter of 2007, our Return on Assets was 1.01% and our Return on Equity was 11.75% for this quarter. The first quarter marked some firsts for our Company. Our common stock is now listed on the Nasdaq Capital Markets and we opened our new main office in Great Kills, which is equipped with a natural gas powered generator to service our customers in the event of a power blackout. These are some of the ways that we, the Island's premier business bank, continually insure our ability to deliver the highest quality service to our customers."
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
March 31, 2007
(unaudited)
March 31, December 31,
2007 2006
------------- -------------
Assets:
Cash and cash equivalents $ 31,501,641 $ 25,363,069
Investment securities, available for sale 108,729,992 113,770,611
Loans receivable 61,433,260 66,410,677
Allowance for loan loss (1,014,951) (1,128,824)
------------- -------------
Loans receivable, net 60,418,309 65,281,853
Bank premises and equipment, net 4,237,101 1,554,363
Accrued interest receivable 808,387 805,681
Deferred taxes 1,721,300 2,030,647
Other assets 983,350 3,078,535
------------- -------------
Total assets $ 208,400,080 $ 211,884,759
============= =============
Liabilities and stockholders' equity:
Liabilities:
Deposits:
Demand and checking $ 64,010,794 $ 67,371,582
NOW 20,286,959 19,935,769
Money market 18,163,332 18,359,007
Savings 12,422,987 12,526,485
Time 67,326,258 68,229,244
------------- -------------
Total Deposits 182,210,330 186,422,087
Escrow deposits 394,197 261,063
Subordinated debt 5,155,000 5,155,000
Accounts payable and accrued expenses 2,001,494 2,306,312
------------- -------------
Total liabilities 189,761,021 194,144,462
------------- -------------
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 March 31, 2007 and
December 31, 2006) 189 189
Additional paid in capital 9,060,955 8,667,665
Retained earnings 11,822,971 11,293,200
Unallocated ESOP shares (1,197,636) (1,239,905)
Accumulated other comprehensive loss, net
of taxes of $913,673 and $1,203,679,
respectively (1,047,420) (1,379,878)
------------- -------------
Total stockholders' equity 18,639,059 17,341,271
------------- -------------
Total liabilities and stockholders'
equity $ 208,400,080 $ 211,884,759
============= =============
VSB Bancorp, Inc.
Consolidated Statements of Operations
March 31, 2007
(unaudited)
Three months Three months
ended ended
March 31, March 31,
2007 2006
------------- -------------
Interest and dividend income:
Loans receivable $ 1,572,353 $ 1,748,773
Investment securities 1,300,460 1,205,762
Other interest earning assets 247,065 179,448
------------- -------------
Total interest income 3,119,878 3,133,983
Interest expense:
NOW 28,789 23,203
Money market 85,850 84,216
Savings 24,428 18,334
Subordinated debt 89,040 89,040
Time 615,136 453,883
------------- -------------
Total interest expense 843,243 668,676
Net interest income 2,276,635 2,465,307
Provision (benefit) for loan loss (30,000) 25,000
------------- -------------
Net interest income after provision
for loan loss 2,306,635 2,440,307
Non-interest income:
Loan fees 27,468 22,767
Service charges on deposits 416,908 389,756
Net rental income 14,813 3,375
Other income 82,174 67,651
------------- -------------
Total non-interest income 541,363 483,549
Non-interest expenses:
Salaries and benefits 1,017,330 1,032,077
Occupancy expenses 337,975 259,460
Legal expense 14,526 58,874
Professional fees 51,600 48,000
Computer expense 67,216 60,528
Directors fees 52,150 55,900
Other expenses 315,359 304,434
------------- -------------
Total non-interest expenses 1,856,156 1,819,273
Income before income taxes 991,842 1,104,583
------------- -------------
Provision (benefit) for income taxes:
Current 442,730 519,974
Deferred 19,341 (5,302)
------------- -------------
Total provision for income taxes 462,071 514,672
Net income $ 529,771 $ 589,911
============= =============
Basic income per common share $ 0.29 $ 0.33
============= =============
Diluted net income per share $ 0.28 $ 0.32
============= =============
Book value per common share $ 9.85 $ 7.91
============= =============
Contact Information: Contact Name: Ralph M. Branca Executive Vice President (718) 979-1100