Exhibit 99.1
VSB Bancorp, Inc.
Third Quarter 2004 Results of Operations
VSB Reports 59% Growth In Quarterly Earnings
Contact Name:
Ralph M. Branca
Executive Vice President
(718) 979-1100
Staten Island, N. Y. --October 13, 2004. VSB Bancorp, Inc. (NASDAQ OTCBB: VSBN)
reported quarterly net income of $618,841 for the third quarter of 2004, a 59.4%
increase from the third quarter of 2003. The following unaudited figures were
released today. Pre-tax income was $1,158,300 in the third quarter of 2004, as
compared to $726,738 for the third quarter of 2003, an increase of $431,562, or
59.4%. Net income was $618,841, or basic income of $0.43 per common share, as
compared to a net income of $388,320, or basic income per common share of $0.28,
for the quarter ended September 30, 2003. The increase in net income was
attributable to an increase in net interest income of $527,330, an increase in
non-interest income of $63,283 and a decrease in the provision for loan loss of
$20,000 which were partially offset by an increase in non-interest expense of
$179,051 and an increase in income tax expense of $201,041. Total assets
increased to $233.6 million, an increase of $48.7 million from December 31,
2003. Total deposits stood at $214.3 million, an increase of $46.6 million, or
27.8%, for the same period. The increase in deposits includes a $5 million
deposit from the City of New York, into the St. George branch of the company's
subsidiary, Victory State Bank, under the City's new Bank Development District
deposit program. The company's Tier 1 capital ratio of 8.14% includes, as Tier 1
capital, $4.2 million (25% of its regulatory capital) from the $5 million trust
preferred securities that we issued in August 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.
Average interest-earning assets grew $32.5 million from the third quarter of
2003 to the third quarter of 2004. Average investment securities and other
interest earning assets increased $35.5 million between those same periods.
Average demand deposits (an interest free source of funds for investment)
remained approximately 44% of average total deposits. The company's interest
rate spread and interest rate margin were 4.09% and 4.55%, respectively, for the
quarter ending September 30, 2004 as compared to 3.78% and 4.16%, respectively,
for the quarter ended September 30, 2003. Non-interest income grew to $471,065
in the third quarter of 2004, an increase of $63,283 from the third quarter of
2003. Non-interest expense totaled $1.5 million, an increase of $179,051 from
the third 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 nine months ended September 30, 2004 was $1.6 million, or
basic income of $1.13 per common share, as compared to a net income of $1.0
million, or $0.72 per share for the nine months ended September 30, 2003. This
represented a 59.6% increase in net income. Pre-tax income grew to $3.0 million
for the first nine months of 2004, as compared to $1.9 million for 2003, an
increase of $1.1 million, or 59.7%. The growth in net income was attributable to
an increase in net interest income of $1.4 million and an increase in
non-interest income of $230,787 partially offset by an increase in non-interest
expense of $462,916, an increase in the provision for loan loss of $10,000 and
an increase in income tax expense of $523,813. In the nine months ended
September 30, 2004, our unrealized loss in available for sale securities
increased by $388,695. The increase was the result of increases in market
interest rates, 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 "We had a strong
third quarter, as the growth of the company offset the moderate increases in
interest rates. Our net margin improved as we were able to invest the cash from
our growth into higher yielding securities. Our quarterly earnings of $618,841
is a record." Mr. Joseph J. LiBassi, VSB Bancorp, Inc.'s Chairman stated "Our
earnings per share stood at a record $0.43 per common share. Our third quarter
2004 return on assets and return on equity were 1.19% and 22.40%, our best
quarterly results. Our success in delivering the highest quality personal
service is a direct result of our highly motivated and dedicated staff."
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 $12.1 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. The Bank plans to open its fifth branch 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
September 30, 2004
(unaudited)
September 30, December 31,
2004 2003
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Assets:
Cash and due from banks $ 50,764,203 $ 30,187,741
Money market investments, held to maturity 585,742 599,356
Investment securities, available for sale 109,973,728 83,171,547
Loans receivable 68,872,304 67,981,461
Allowance for loan loss (1,237,048) (1,162,776)
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Loans receivable, net 67,635,256 66,818,685
Bank premises and equipment, net 1,894,453 2,132,154
Accrued interest receivable 664,062 588,232
Deferred taxes 1,455,474 934,710
Other assets 673,750 542,545
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Total assets $ 233,646,668 $ 184,974,970
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Liabilities and stockholders' equity:
Liabilities:
Deposits:
Demand and checking $ 103,735,325 $ 77,416,339
NOW 22,545,445 23,627,653
Money market 23,084,095 23,709,155
Savings 13,202,516 10,394,955
Time 51,329,237 32,287,215
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Total Deposits 213,896,618 167,435,317
Escrow deposits 440,116 267,484
Trust preferred securities 5,000,000 5,000,000
Accounts payable and accrued
expenses 2,201,029 1,630,544
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Total liabilities 221,537,763 174,333,345
Stockholders' equity:
Common stock, ($.0001 par value, 3,000,000
shares authorized, 1,505,022 and 1,407,997
issued and outstanding, respectively) 150 106
Additional paid in capital 8,900,442 7,031,499
Retained earnings 5,387,005 3,779,686
Unallocated ESOP Shares (1,620,331) --
Accumulated other comprehensive loss,
net of taxes of $487,063 and $148,001,
respectively (558,361) (169,666)
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Total stockholders' equity 12,108,905 10,641,625
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Total liabilities and stockholders'
equity $ 233,646,668 $ 184,974,970
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VSB Bancorp, Inc.
Consolidated Statements of Operations
September 30, 2004
(unaudited)
Three months Three months Nine months Nine months
ended ended ended ended
Sep. 30, 2004 Sep. 30, 2003 Sep. 30, 2004 Sep. 30, 2003
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Interest and dividend income:
Loans receivable $ 1,335,491 $ 1,349,614 $ 3,952,991 $ 3,766,538
Investment securities 1,074,268 495,576 2,815,246 1,466,620
Other interest earning assets 87,848 54,542 160,493 176,034
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Total interest income 2,497,607 1,899,732 6,928,730 5,409,192
Interest expense:
NOW 25,494 30,199 76,168 96,241
Money market 50,924 57,946 150,876 209,473
Savings 16,910 13,228 45,090 44,650
Trust preferred 86,362 31,666 259,087 31,666
Time 107,626 83,732 267,620 263,678
------------- ------------- ------------- -------------
Total interest expense 287,316 216,771 798,841 645,708
Net interest income 2,210,291 1,682,961 6,129,889 4,763,484
Provision for loan loss 30,000 50,000 130,000 120,000
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Net interest income
after provision for loan loss 2,180,291 1,632,961 5,999,889 4,643,484
Non-interest income:
Loan fees 23,109 27,262 57,306 91,571
Service charges on deposits 428,587 354,889 1,264,253 1,010,821
Net rental income/(loss) 3,799 9,792 23,593 18,755
Other income 15,570 15,839 52,848 46,066
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Total non-interest income 471,065 407,782 1,398,000 1,167,213
Non-interest expenses:
Salaries and benefits 853,144 706,875 2,483,512 2,063,439
Occupancy expenses 248,119 230,309 707,596 715,632
Legal expense 36,890 36,545 121,188 90,223
Professional fees 49,814 37,880 145,591 113,905
Computer expense 60,914 74,539 196,140 217,237
Other expenses 244,175 227,857 734,681 725,356
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Total non-interest expenses 1,493,056 1,314,005 4,388,708 3,925,792
Income before income taxes 1,158,300 726,738 3,009,181 1,884,905
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Provision (benefit) for income taxes:
Current 589,434 372,959 1,583,564 945,959
Deferred (49,975) (34,541) (181,702) (67,910)
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Total provision for income taxes 539,459 338,418 1,401,862 878,049
Net income $ 618,841 $ 388,320 $ 1,607,319 $ 1,006,856
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Basic income per common share $ 0.43 $ 0.28 $ 1.13 $ 0.72
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Fully diluted net income per share $ 0.41 $ 0.26 $ 1.08 $ 0.69
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Book value per common share $ 8.05 $ 7.42 $ 8.05 $ 7.42
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