Exhibit 99.1
VSB Bancorp, Inc.
Second Quarter 2005 Results of Operations
VSB Reports 27% Growth In Quarterly Earnings
Contact Name:
Ralph M. Branca
Executive Vice President
(718) 979-1100
Staten Island, N. Y.--July 12, 2005. VSB Bancorp, Inc. (NASDAQ OTCBB: VSBN)
reported quarterly net income of $621,461 for the second quarter of 2005, a
27.0% increase from the second quarter of 2004. The following unaudited figures
were released today. Pre-tax income was $1,163,592 in the second quarter of 2005
as compared to $916,273 for the second quarter of 2004, an increase of $247,319,
or 27.0%. Net income was $621,461, or $0.43 per common share, as compared to a
net income of $489,308, or $0.34 per common share, for the quarter ended June
30, 2004.
The $132,153 increase in net income was attributable to an increase in net
interest income of $236,893, an increase in non-interest income of $58,170 and a
decrease in the provision for loan loss of $95,000, which were partially offset
by an increase in non-interest expense of $142,744 and an increase in income tax
expense of $115,166. Total assets decreased to $218.7 million, a decrease of
$17.0 million, or 7.2%, from December 31, 2004. Total deposits decreased to
$196.9 million, a decrease of $18.5 million, or 8.6%, during the second quarter
of 2005. The Bancorp's Tier 1 capital ratio of 9.27% includes, as Tier 1
capital, $4.9 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 investment securities grew $23.5
million and $31.0 million, respectively, from the second quarter of 2004 to the
second quarter of 2005. Average demand deposits, an interest free source of
funds for the Bancorp to invest, were approximately 37% of average total
deposits for the second quarter of 2005, compared to 43% for the second quarter
of 2004. Average time deposits grew by $22.9 million from the second quarter of
2004. The Company's interest rate spread and interest rate margin were 3.90% and
4.44%, respectively, for the quarter ending June 30, 2005 as compared to 4.05%
and 4.50%, respectively, for the quarter ended June 30, 2004. Non-interest
income increased $58,170, to $514,177, in the second quarter of 2005.
Non-interest expense totaled $1.6 million, an increase of $142,744 from the
second 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 a rise in other expenses due to
increased costs of services.
Pre-tax income grew to $2,367,187 for the first six months of 2005, as compared
to $1,850,881 for 2004, an increase of $516,306, or 27.9%. Net income for the
six months ended June 30, 2005 was $1,264,253, or basic net income of $0.88 per
common share, as compared to a net income of $988,478, or $0.70 per common
share, for the six months ended June 30, 2004. The $275,775 growth in net income
was attributable to an increase in net interest income of $618,195, a decrease
in the provision for loan loss of $175,000, and an increase in non-interest
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income of $43,849, partially offset by an increase in non-interest expense of
$320,738. Income tax expense also increased $240,531 between the periods as
pre-tax income increase.
Merton Corn, President and CEO of VSB Bancorp, Inc., stated, "The rise in short
term interest rates and the growth in average time deposits has reduced our net
interest margin and spread this year. We had good growth in our loan portfolio
this quarter, which has helped to increase interest income. We received
regulatory approval to open our fifth branch in Rosebank and we expect
construction to begin in September." Mr. Joseph J. LiBassi, VSB Bancorp, Inc.'s
Chairman stated "Our earnings per share were $0.43 for the second quarter of
2005, 27% greater than the same quarter in 2004. Our Return on Assets was 1.17%
and our Return on Equity was 18.38% this quarter, as we continue to provide a
return for our stockholders. The opening of our fifth branch will give us
another outlet to deliver our personal service to the professional and business
people of 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 $14.3 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 second on Forest Avenue, the third on Hyatt Street and the
fourth branch on Hylan Boulevard. We received regulatory approval to open our
fifth branch at 1065 Bay Street, in the Rosebank section of Staten Island.
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
June 30, 2005
(unaudited)
June 30, December 31,
2005 2004
------------- -------------
Assets:
Cash and cash equivalents $ 24,598,792 $ 35,659,073
Investment securities, available for sale 114,369,789 128,532,767
Loans receivable 76,232,249 68,046,885
Allowance for loan loss (1,410,640) (1,299,520)
------------- -------------
Loans receivable, net 74,821,609 66,747,365
Bank premises and equipment, net 1,611,597 1,817,284
Accrued interest receivable 743,127 745,368
Deferred taxes 1,523,524 1,462,940
Other assets 1,038,223 719,670
------------- -------------
Total assets $ 218,706,661 $ 235,684,467
============= =============
Liabilities and stockholders' equity:
Liabilities:
Deposits:
Demand and checking $ 73,825,298 $ 101,560,932
NOW 29,005,794 21,574,053
Money market 20,890,547 23,388,850
Savings 16,439,161 14,159,026
Time 56,496,039 54,470,507
------------- -------------
Total Deposits 196,656,839 215,153,368
Escrow deposits 282,011 270,105
Subordinated debt 5,155,000 5,155,000
Accounts payable and accrued expenses 2,354,109 2,149,548
------------- -------------
Total liabilities 204,447,959 222,728,021
------------- -------------
Employee Stock Ownership Plan Repurchase Obligation 122,550 126,825
Stockholders' equity:
Common stock, ($.0001 par value, 3,000,000
shares authorized, 1,508,822 issued and
outstanding at June 30, 2005 and 1,505,022 issued
and outstanding at December 31, 2004) 151 150
Additional paid in capital 8,866,361 8,818,313
Retained earnings 7,318,517 6,054,264
Unallocated ESOP shares (1,493,522) (1,578,061)
Accumulated other comprehensive loss, net
of taxes of $484,441 and $405,662,
respectively (555,355) (465,045)
------------- -------------
Total stockholders' equity 14,136,152 12,829,621
------------- -------------
Total liabilities and stockholders'
equity $ 218,706,661 $ 235,684,467
============= =============
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VSB Bancorp, Inc.
Consolidated Statements of Operations
June 30, 2005
(unaudited)
Three months Three months Six months Six months
ended ended ended ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
------------ ------------ ------------ ------------
Interest and dividend income:
Loans receivable $ 1,352,333 $ 1,303,760 $ 2,652,969 $ 2,617,500
Investment securities 1,235,763 897,417 2,555,248 1,741,064
Other interest earning assets 83,142 43,986 145,260 67,720
------------ ------------ ------------ ------------
Total interest income 2,671,238 2,245,163 5,353,477 4,426,284
Interest expense:
NOW 27,871 26,892 49,896 50,674
Money market 51,953 50,506 106,000 96,774
Savings 20,111 14,742 38,338 28,180
Subordinated debt / Trust preferred 89,039 89,039 178,079 178,079
Time 263,269 81,882 450,386 159,994
------------ ------------ ------------ ------------
Total interest expense 452,243 263,061 822,699 513,701
Net interest income 2,218,995 1,982,102 4,530,778 3,912,583
Provision (benefit) for loan loss (45,000) 50,000 (75,000) 100,000
------------ ------------ ------------ ------------
Net interest income
after provision for loan loss 2,263,995 1,932,102 4,605,778 3,812,583
Non-interest income:
Loan fees 33,635 18,674 57,094 34,197
Service charges on deposits 440,590 407,976 844,607 835,666
Net rental income 10,542 11,762 21,605 19,794
Other income 29,410 17,595 54,493 44,293
------------ ------------ ------------ ------------
Total non-interest income 514,177 456,007 977,799 933,950
Non-interest expenses:
Salaries and benefits 935,254 834,101 1,873,750 1,630,368
Occupancy expenses 239,982 228,150 486,742 459,477
Legal expense 23,451 53,423 33,375 84,298
Professional fees 51,000 49,527 126,000 95,777
Computer expense 60,138 70,532 114,950 135,226
Other expenses 304,755 236,103 581,573 490,506
------------ ------------ ------------ ------------
Total non-interest expenses 1,614,580 1,471,836 3,216,390 2,895,652
Income before income taxes 1,163,592 916,273 2,367,187 1,850,881
------------ ------------ ------------ ------------
Provision (benefit) for income taxes:
Current 526,438 516,217 1,084,740 994,130
Deferred 15,693 (89,252) 18,194 (131,727)
------------ ------------ ------------ ------------
Total provision for income taxes 542,131 426,965 1,102,934 862,403
Net income $ 621,461 $ 489,308 $ 1,264,253 $ 988,478
============ ============ ============ ============
Basic income per common share $ 0.43 $ 0.34 $ 0.88 $ 0.70
============ ============ ============ ============
Diluted net income per share $ 0.42 $ 0.33 $ 0.85 $ 0.67
============ ============ ============ ============
Book value per common share $ 9.45 $ 7.06 $ 9.45 $ 7.06
============ ============ ============ ============
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