Exhibit 99.1
VSB Bancorp, Inc.
First Quarter 2005 Results of Operations
VSB Reports 29% Growth In Quarterly Earnings
Contact Name:
Ralph M. Branca
Executive Vice President
(718) 979-1100
Staten Island, N. Y. -- April 13, 2005. VSB Bancorp, Inc. (NASDAQ OTCBB: VSBN)
reported quarterly net income of $642,792 for the first quarter of 2005, a 28.8%
increase from the first quarter of 2004. The following unaudited figures were
released today. Pre-tax income was $1,203,595 in the first quarter of 2005, as
compared to $934,608 for the first quarter of 2004, an increase of $268,987, or
28.8%. Net income was $642,792, or $0.45 per common share, as compared to a net
income of $499,170, or $0.35 per common share, for the quarter ended March 31,
2004.
The increase in net income was attributable to an increase in net interest
income of $381,328 and a decrease in the provision for loan loss of $80,000,
which were partially offset by the increase in non-interest expense of $177,994,
a decrease in non-interest income of $14,347 and an increase in income tax
expense of $125,365. Total assets decreased to $224.1 million, a decrease of
$11.6 million, or 4.9% from December 31, 2004. Total deposits decreased to
$203.7 million, a decrease of $11.7 million, or 5.5% during the first quarter of
2005. The Bancorp's Tier 1 capital ratio of 8.72% includes, as Tier 1 capital,
$4.7 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 $40.8
million and $43.8 million, respectively, from the first quarter of 2004. Average
demand deposits (an interest free source of funds for the Bank to invest)
remained approximately 43% of average total deposits, despite the growth in
overall deposits. Average time deposits grew by $20.3 million from the first
quarter of 2004. The Bank's interest rate spread and interest rate margin were
4.03% and 4.59%, respectively, for the quarter ending March 31, 2005 as compared
to 4.30% and 4.78%, respectively, for the quarter ended March 31, 2004.
Non-interest income decreased modestly to $459,435 in the first quarter of 2005,
Non-interest expense totaled $1.6 million, an increase of $177,994 from the
first quarter of 2004. 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.
Merton Corn, President and CEO of VSB Bancorp, Inc., stated "We posted strong
earnings in the first quarter of 2005. The increase in interest rates in 2005
and the growth in average time deposits has had a negative effect on our net
interest margin and spread. The continued rise in interest rates coupled with
the reduction in total assets may dampen future earnings. We believe that our
strategy of delivering the highest quality personal service will have a
continued positive effect on the growth of the Company." Mr. Joseph J. LiBassi,
3
VSB Bancorp, Inc.'s Chairman stated "Our earnings per share was $0.45 for the
first quarter of 2005 despite the rising rate environment. Our first quarter
Return on Assets and Return on Equity were 1.18% and 19.23%, respectively,
demonstrating our ability to balance profitability with the personal service
that can't be matched on Staten Island."
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 $12.8 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
first branch on Hylan Boulevard. Our fifth branch will be located at 1065 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.
4
VSB Bancorp, Inc.
Consolidated Statements of Financial Condition
March 31, 2005
(unaudited)
March 31, December 31,
2005 2004
------------- -------------
Assets:
Cash and cash equivalents $ 33,601,497 $ 35,659,073
Investment securities, available for sale 119,700,039 128,532,767
Loans receivable 66,624,126 68,046,885
Allowance for loan loss (1,453,607) (1,299,520)
------------- -------------
Loans receivable, net 65,170,519 66,747,365
Bank premises and equipment, net 1,710,765 1,817,284
Accrued interest receivable 721,832 745,368
Deferred taxes 2,236,953 1,462,940
Other assets 940,576 719,670
------------- -------------
Total assets $ 224,082,181 $ 235,684,467
============= =============
Liabilities and stockholders' equity:
Liabilities:
Deposits:
Demand and checking $ 85,832,911 $ 101,560,932
NOW 24,895,033 21,574,053
Money market 22,104,105 23,388,850
Savings 16,451,955 14,159,026
Time 53,968,374 54,470,507
------------- -------------
Total Deposits 203,252,378 215,153,368
Escrow deposits 426,343 270,105
Subordinated debt 5,155,000 5,155,000
Accounts payable and accrued expenses 2,496,227 2,149,548
------------- -------------
Total liabilities 211,329,948 222,728,021
------------- -------------
Employee Stock Ownership Plan Repurchase Obligation 142,500 126,825
Stockholders' equity:
Common stock, ($.0001 par value, 3,000,000
shares authorized, 1,505,022 issued and
outstanding at March 31, 2005 and at
December 31, 2004) 150 150
Additional paid in capital 8,803,548 8,818,313
Retained earnings 6,697,056 6,054,264
Unallocated ESOP shares (1,535,792) (1,578,061)
Accumulated other comprehensive loss, net
of taxes of $1,182,177 and $405,662,
respectively (1,355,229) (465,045)
------------- -------------
Total stockholders' equity 12,609,733 12,829,621
------------- -------------
Total liabilities and stockholders'
equity $ 224,082,181 $ 235,684,467
============= =============
5
VSB Bancorp, Inc.
Consolidated Statements of Operations
March 31, 2005
(unaudited)
Three months Three months
ended ended
March 31, 2005 March 31, 2004
-------------- --------------
Interest and dividend income:
Loans receivable $ 1,300,636 $ 1,313,740
Investment securities 1,319,485 843,624
Other interest earning assets 66,305 31,577
-------------- --------------
Total interest income 2,686,426 2,188,941
Interest expense:
NOW 22,025 23,782
Money market 54,047 46,268
Savings 18,227 13,438
Subordinated debt / Trust preferred 89,040 92,699
Time 187,117 78,112
-------------- --------------
Total interest expense 370,456 254,299
Net interest income 2,315,970 1,934,642
Provision (benefit) for loan loss (30,000) 50,000
-------------- --------------
Net interest income
after provision for loan loss 2,345,970 1,884,642
Non-interest income:
Loan fees 23,459 15,523
Service charges on deposits 404,017 427,690
Net rental income 11,063 8,032
Other income 20,896 22,537
-------------- --------------
Total non-interest income 459,435 473,782
Non-interest expenses:
Salaries and benefits 938,496 796,267
Occupancy expenses 246,760 231,327
Legal expense 9,924 30,875
Professional fees 75,000 46,250
Computer expense 54,812 64,694
Other expenses 276,818 254,403
-------------- --------------
Total non-interest expenses 1,601,810 1,423,816
Income before income taxes 1,203,595 934,608
-------------- --------------
Provision (benefit) for income taxes:
Current 558,302 477,913
Deferred 2,501 (42,475)
-------------- --------------
Total provision for income taxes 560,803 435,438
Net income $ 642,792 $ 499,170
============== ==============
Basic income per common share $ 0.45 $ 0.35
============== ==============
Diluted net income per share $ 0.43 $ 0.34
============== ==============
Book value per common share $ 8.47 $ 8.13
============== ==============
6