Exhibit 99.1
VSB Bancorp, Inc.
Fourth Quarter 2004 Results of Operations
VSB Reports 30% Growth In Quarterly Earnings
Contact Name:
Ralph M. Branca
Executive Vice President
(718) 979-1100
Staten Island, N. Y. --January 12, 2005. VSB Bancorp, Inc. (NASDAQ OTCBB: VSBN)
reported quarterly net income of $667,259 for the fourth quarter of 2004, a
30.0% increase from the fourth quarter of 2003. The following unaudited figures
were released today. Pre-tax income was $1,248,801 in the fourth quarter of
2004, as compared to $961,881 for the fourth quarter of 2003, an increase of
$286,920, or 29.8%. Net income was $667,259, or $0.47 per common share, as
compared to a net income of $513,517, or $0.36 per common share, for the quarter
ended December 31, 2003. All share data has been adjusted for the Bancorp's
four-for-three stock split paid on March 9, 2004.
The increase in net income was attributable to an increase in net interest
income of $504,315, a decrease in the provision for loan loss of $65,000 and an
increase in non-interest income of $18,213, which were partially offset by the
increase in non-interest expense of $300,608 and an increase in income tax
expense of $133,178. Total assets increased to $236.2 million, an increase of
$51.2 million, or 27.7% from December 31, 2003. Total deposits increased to
$216.0 million, an increase of $48.3 million, or 28.8% during the year. The
increase in deposits was due, in part, to the $5 million New York City deposit
under the New York City Bank Development District subsidy program. The Bancorp's
Tier 1 capital ratio of 7.88% includes, as Tier 1 capital, $4.5 million (25% of
its Tier 1 capital) from the $5 million trust preferred securities that it
issued in August 2003.
Average interest-earning assets and average investment securities grew $44.7
million and $36.4 million, respectively, from the fourth quarter of 2003.
Average demand deposits (an interest free source of funds for the Bank to
invest) remained approximately 44% of average total deposits, despite the growth
in overall deposits. Average time deposits grew by $24.8 million from the fourth
quarter of 2003. The Bank's interest rate spread and interest rate margin were
3.94% and 4.44%, respectively, for the quarter ending December 31, 2004 as
compared to 4.01% and 4.46%, respectively, for the quarter ended December 31,
2003. Non-interest income grew to $491,818 in the fourth quarter of 2004, an
increase of $18,213 from the fourth quarter of 2003. Non-interest expense
totaled $1.6 million, an increase of $300,608 from the fourth quarter of 2003.
The growth in non-interest expense is directly attributable to increased
personnel expenses relating to the ESOP adopted on May 1, 2004, increases in
health insurance costs and increased professional fees relating to increased
regulatory oversight.
Net income for the year ended December 31, 2004 was $2.3 million, or $1.60 per
common share, a 49.6% increase over net income of $1.5 million, or $1.08 per
common share, for the year ended December 31, 2003. Pre-tax income rose to $4.3
5
million for 2004, as compared to $2.8 million for 2003, an increase of $1.4
million. The 49.6% increase in net income was attributable to an increase in net
interest income of $1.9 million, an increase in non-interest income of $249,000
and a decrease in the provision for loan loss of $55,000 partially offset by the
increase in non-interest expense of $763,524 and the increase in net income tax
expense of $656,991.
Merton Corn, President and CEO of VSB Bancorp, Inc., stated "We have ended 2004
strongly, posting a 30% growth in quarterly income. We have accomplished this in
the current rising interest rate environment, which has been compressing our
interest rate spread. Our Return on Equity for the year is 19.68% and our year
end earnings per share is $1.60, a testament to the continuing success of our
strategy of delivering the highest quality personal service." Mr. Joseph J.
LiBassi, VSB Bancorp, Inc.'s Chairman stated "Our earnings per share of $0.47
for the fourth quarter which is our best quarterly result yet. Our fourth
quarter Return on Assets and Return on Equity were 1.17% and 21.35%,
respectively, demonstrating our continued profitability. The dedication and
efforts of our staff and directors is the essential ingredient in making Victory
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, 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 $13.0 million since the Bank was formed. The Bank operates four
full service locations in Staten Island, the main office in the Oakwood Heights
Shopping Center, the third 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.
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VSB Bancorp, Inc.
Consolidated Statements of Financial Condition
December 31, 2004
(unaudited)
December 31, December 31,
2004 2003
------------- -------------
Assets:
Cash and due from banks $ 36,192,020 $ 30,787,097
Investment securities, available for sale 128,532,767 83,171,547
Loans receivable 68,046,885 67,981,461
Allowance for loan loss (1,299,520) (1,162,776)
------------- -------------
Loans receivable, net 66,747,365 66,818,685
Bank premises and equipment, net 1,817,284 2,132,154
Accrued interest receivable 699,984 588,232
Deferred taxes 1,462,940 934,710
Other assets 765,054 542,545
------------- -------------
Total assets $ 236,217,414 $ 184,974,970
============= =============
Liabilities and stockholders' equity:
Liabilities:
Deposits:
Demand and checking $ 101,562,889 $ 77,416,339
NOW 21,574,053 23,627,653
Money market 23,919,840 23,709,155
Savings 14,159,026 10,394,955
Time 54,470,507 32,287,215
------------- -------------
Total Deposits 215,686,315 167,435,317
Escrow deposits 270,105 267,484
Subordinated debt / Trust preferred 5,155,000 5,000,000
Accounts payable and accrued expenses 2,149,548 1,585,557
------------- -------------
Total liabilities 223,260,968 174,288,358
Stockholders' equity:
Common stock, ($.0001 par value, 3,000,000 shares
authorized, 1,505,022 issued and outstanding at
December 31, 2004; 1,055,998 outstanding
at December 31, 2003) 150 106
Additional paid in capital 8,945,138 7,076,486
Retained earnings 6,054,264 3,779,686
Unallocated ESOP shares (1,578,061) --
Accumulated other comprehensive loss, net
of taxes of $405,663 and $148,001,
respectively (465,045) (169,666)
------------- -------------
Total stockholders' equity 12,956,446 10,686,612
------------- -------------
Total liabilities and stockholders'
equity $ 236,217,414 $ 184,974,970
============= =============
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VSB Bancorp, Inc.
Consolidated Statements of Operations
December 31, 2004
(unaudited)
Three months Three months Year Year
ended ended ended ended
Dec. 31, 2004 Dec. 31, 2003 Dec. 31, 2004 Dec. 31, 2003
-------------- -------------- -------------- --------------
Interest and dividend income:
Loans receivable $ 1,387,290 $ 1,353,677 $ 5,340,281 $ 5,120,215
Investment securities 1,236,737 772,519 4,051,983 2,239,139
Other interest earning assets 139,295 37,376 299,788 213,410
-------------- -------------- -------------- --------------
Total interest income 2,763,322 2,163,572 9,692,052 7,572,764
Interest expense:
NOW 24,773 27,216 100,941 123,457
Money market 50,717 54,810 201,593 264,283
Savings 18,040 12,893 63,130 57,543
Subordinated debt / Trust preferred 97,072 86,363 356,159 118,029
Time 165,754 79,639 433,374 343,317
-------------- -------------- -------------- --------------
Total interest expense 356,356 260,921 1,155,197 906,629
Net interest income 2,406,966 1,902,651 8,536,855 6,666,135
Provision for loan loss 20,000 85,000 150,000 205,000
-------------- -------------- -------------- --------------
Net interest income
after provision for loan loss 2,386,966 1,817,651 8,386,855 6,461,135
Non-interest income:
Loan fees 20,418 24,888 77,724 116,459
Service charges on deposits 445,534 416,795 1,709,787 1,427,616
Net rental income/(loss) 4,219 16,708 27,812 35,463
Other income 21,647 15,214 74,495 61,280
-------------- -------------- -------------- --------------
Total non-interest income 491,818 473,605 1,889,818 1,640,818
Non-interest expenses:
Salaries and benefits 935,393 725,507 3,418,905 2,788,946
Occupancy expenses 240,358 225,298 947,954 940,930
Legal expense 13,183 29,029 134,371 119,252
Professional fees 89,450 44,250 235,041 158,155
Computer expense 59,210 60,303 255,350 277,540
Other expenses 292,389 244,988 1,027,070 970,344
-------------- -------------- -------------- --------------
Total non-interest expenses 1,629,983 1,329,375 6,018,691 5,255,167
Income before income taxes 1,248,801 961,881 4,257,982 2,846,786
-------------- -------------- -------------- --------------
Provision (benefit) for income taxes:
Current 670,408 536,892 2,253,972 1,468,861
Deferred (88,866) (88,528) (270,568) (142,448)
-------------- -------------- -------------- --------------
Total provision for income taxes 581,542 448,364 1,983,404 1,326,413
Net income $ 667,259 $ 513,517 $ 2,274,578 $ 1,520,373
============== ============== ============== ==============
Basic income per common share $ 0.47 $ 0.36 $ 1.60 $ 1.08
============== ============== ============== ==============
Diluted net income per share $ 0.45 $ 0.35 $ 1.54 $ 1.04
============== ============== ============== ==============
Book value per common share $ 8.61 $ 7.59 $ 8.61 $ 7.59
============== ============== ============== ==============
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