Exhibit 99.1
VSB Bancorp, Inc.
Second Quarter 2004 Results of Operations
VSB Reports 39% Growth In Quarterly Earnings
Contact Name:
Ralph M. Branca
Executive Vice President
(718) 979-1100
Staten Island, N. Y. --July 13, 2004. VSB Bancorp, Inc. (NASDAQ OTCBB: VSBN)
reported quarterly net income of $489,308 for the second quarter of 2004, a
38.8% increase from the second quarter of 2003. All per share data have been
adjusted for the 4 for 3 stock split, in the form of a 33 1/3 stock dividend,
paid on March 8, 2004. The following unaudited figures were released today.
Pre-tax income was $916,273 in the second quarter of 2004, as compared to
$657,740 for the second quarter of 2003, an increase of $258,533, or 39.3%. Net
income was $489,308, or basic income of $0.34 per common share, as compared to a
net income of $352,450, or basic income per common share of $0.25, for the
quarter ended June 30 2003. The increase in net income was attributable to the
increase in net interest income of $374,098 and an increase in non-interest
income of $78,048, which were partially offset by an increase in non-interest
expense of $173,613 and an increase in the provision for loan loss of $20,000.
Total assets increased to $208.6 million, an increase of $23.6 million from
December 31, 2003. Total deposits stood at $190.4 million, an increase of $22.7
million, or 13.5%, for the same period. The increase in deposits includes a $5
million deposit from the City of New York, into our St. George branch, under the
City's new Bank Development District deposit program. The Bancorp's Tier 1
capital ratio of 8.47% includes, as Tier 1 capital, $4.0 million (25% of its
regulatory capital) from the $5 million trust preferred securities that we
issued in August 2003.
Average interest-earning assets and average loans grew $29.3 million and $3.2
million, respectively, from the second quarter of 2003 to the second quarter of
2004. Average investment securities and other interest earning assets increased
$25.5 million between those same periods. Average demand deposits (an interest
free source of funds for us to invest) remained approximately 42% of average
total deposits. Our interest rate spread and interest rate margin were 4.05% and
4.49%, respectively, for the quarter ending June 30 2004 as compared to 3.98%
and 4.36%, respectively, for the quarter ended June 30 2003. Non-interest income
grew to $453,153 in the second quarter of 2004, an increase of $78,048 from the
second quarter of 2003. Non-interest expense totaled $1.5 million, an increase
of $173,613 from the second quarter of 2003. The growth in non-interest expense
is directly attributable to increased personnel expenses relating to new staff,
due to our increase in size, increases in health insurance costs and other
benefits, compensation costs associated with the newly established ESOP plan and
increased occupancy expenses.
Net income for the six months ended June 30, 2004 was $988,478, or basic income
of $0.70 per common share, as compared to a net income of $618,536, or a net
income per common share of $0.44, for the six months ended June 30, 2003.
Pre-tax income grew to $1,850,881 for the first six months of 2004, as compared
to $1,158,167 for 2003, an increase of $692,714, or 59.8%. The growth in net
income was attributable to an increase in net interest income of $839,075 and an
increase in non-interest income of $167,504 partially offset by an increase in
non-interest expense of $283,865, an increase in the provision for loan loss of
$30,000 and an increase in income tax expense of $322,772. In the six months
ended June 30, 2004, our unrealized loss in available for sale securities
increased by $1.2 million. The increase was the result of increases in market
interest rate conditions, which caused downward pressure on the value of our
securities portfolio. The unrealized loss, although it reduces GAAP capital,
does not reduce capital for bank regulatory purposes at either the bank or the
holding company level.
Merton Corn, President and CEO of VSB Bancorp, Inc., stated "Our quarter and six
month numbers compare favorably with the previous year's numbers, but with
interest rates rising and the subsequent negative effect on our net interest
margin, the possibility for a drop in net income from this quarter exists. Our
announcement of the fifth branch location in the Rosebank section of Staten
Island will fill a banking void currently experienced by the business community
in that area." Mr. Joseph J. LiBassi, VSB Bancorp, Inc.'s Chairman stated "Our
second quarter 2004 return on assets and return on equity were 1.04% and 16.68%,
respectively, despite the $0.01 decline in earnings per share from the March
2004 quarter. Our fifth branch location gives us another outlet to deliver our
unique brand of high quality personal service, a philosophy that has made
Victory the success that it is today."
VSB Bancorp, Inc. is the one-bank holding company for Victory State Bank.
Victory State Bank, a Staten Island based commercial bank, 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 $10.6 million since its inception. The Bank operates four full
service locations in Staten Island, the main office in the Oakwood Heights
Shopping Center, the second on Forest Avenue, the third on Hyatt Street and the
fourth branch on Hylan Boulevard. Our fifth branch will be located at 1071 Bay
Street, in the Rosebank section of Staten Island, subject to regulatory
approval.
Statements contained in this press release, which are not historical facts, are
forward -looking statements, as defined in the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements are subject to risks and
uncertainties, which could cause actual results to materially differ from those
currently, anticipated. Those risks and uncertainties include, among other
things, possible future changes in (i) the local, regional or national economy,
(ii) market interest rates, (iii) customer preferences; (iv) competition or (v)
federal or state laws.
VSB Bancorp, Inc.
Consolidated Statements of Financial Condition
June 30, 2004
(Unaudited)
June 30, December 31,
2004 2003
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Assets:
Cash and due from banks $ 38,314,729 $ 30,187,741
Investment securities, available for sale 95,088,554 83,770,903
Loans receivable 71,101,485 67,981,461
Allowance for loan loss (1,210,005) (1,162,776)
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Loans receivable, net 69,891,480 66,818,685
Bank premises and equipment, net 1,931,053 2,132,154
Accrued interest receivable 595,144 588,232
Deferred taxes 2,117,617 934,710
Other assets 626,672 542,545
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Total assets $ 208,565,249 $ 184,974,970
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Liabilities and stockholders' equity:
Liabilities:
Deposits:
Demand and checking $ 87,217,521 $ 77,416,339
NOW 27,367,217 23,627,653
Money market 23,482,798 23,709,155
Savings 13,154,148 10,394,955
Time 38,882,201 32,287,215
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Total Deposits 190,103,885 167,435,317
Escrow deposits 288,609 267,484
Trust preferred securities 5,000,000 5,000,000
Accounts payable and accrued
expenses 2,551,663 1,630,544
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Total liabilities 197,944,157 174,333,345
Stockholders' equity:
Common stock, ($.0001 par value, 3,000,000
shares authorized, 1,503,462 and 1,407,997
issued and outstanding, respectively) 150 106
Additional paid in capital 8,890,099 7,031,499
Retained earnings 4,768,164 3,779,686
Unallocated ESOP shares (1,662,600) --
Accumulated other comprehensive loss,
net of taxes of $1,199,181 and $148,001,
respectively (1,374,721) (169,666)
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Total stockholders' equity 10,621,092 10,641,625
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Total liabilities and stockholders'
equity $ 208,565,249 $ 184,974,970
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VSB Bancorp, Inc.
Consolidated Statements of Operations
June 30, 2004
(unaudited)
Three months Three months Six months Six months
ended ended ended ended
June 30, 2004 June 30, 2003 June 30, 2004 June 30, 2003
------------- ------------- ------------- -------------
Interest and dividend income:
Loans receivable $ 1,303,760 $ 1,253,241 $ 2,617,500 $ 2,416,924
Investment securities 899,053 498,444 1,744,242 971,044
Other interest earning assets 44,163 69,780 69,381 121,492
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Total interest income 2,246,976 1,821,465 4,431,123 3,509,460
Interest expense:
NOW 26,892 35,396 50,674 66,042
Money market 52,142 69,716 99,952 151,527
Savings 14,742 16,840 28,180 31,422
Trust preferred 86,362 -- 172,725 --
Time 81,882 88,655 159,994 179,946
------------- ------------- ------------- -------------
Total interest expense 262,020 210,607 511,525 428,937
Net interest income 1,984,956 1,610,858 3,919,598 3,080,523
Provision for loan loss 50,000 30,000 100,000 70,000
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Net interest income
after provision for loan loss 1,934,956 1,580,858 3,819,598 3,010,523
Non-interest income:
Loan fees 18,674 23,481 34,197 64,309
Service charges on deposits 407,976 318,883 835,666 655,932
Net rental income/(loss) 11,762 13,138 19,794 8,963
Other income 14,741 19,603 37,278 30,227
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Total non-interest income 453,153 375,105 926,935 759,431
Non-interest expenses:
Salaries and benefits 834,101 681,783 1,630,368 1,356,564
Occupancy expenses 228,150 235,003 459,477 485,323
Legal expense 49,527 25,028 84,298 53,678
Professional fees 53,423 41,525 95,777 76,025
Computer expense 70,532 69,333 135,226 142,698
Other expenses 236,103 245,551 490,506 497,499
------------- ------------- ------------- -------------
Total non-interest expenses 1,471,836 1,298,223 2,895,652 2,611,787
Income before income taxes 916,273 657,740 1,850,881 1,158,167
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Provision (benefit) for income taxes:
Current 516,217 323,599 994,130 573,000
Deferred (89,252) (18,309) (131,727) (33,369)
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Total provision for income taxes 426,965 305,290 862,403 539,631
Net income $ 489,308 $ 352,450 $ 988,478 $ 618,536
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Basic income per common share $ 0.34 $ 0.25 $ 0.70 $ 0.44
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Fully diluted net income per share $ 0.33 $ 0.24 $ 0.67 $ 0.42
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Book value per common share $ 7.06 $ 7.18 $ 7.06 $ 7.18
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