Exhibit 99.1
VSB Bancorp, Inc.
Fourth Quarter 2005 Results of Operations
Year End Income Up 12.9%
Contact Name:
Ralph M. Branca
Executive Vice President
(718) 979-1100
Staten Island, N. Y. -- January 11, 2006. VSB Bancorp, Inc. (NASDAQ OTCBB: VSBN)
reported quarterly net income of $645,602 for the fourth quarter of 2005, a 3.3%
decrease from the fourth quarter of 2004. The following unaudited figures were
released today. Pre-tax income was $1,208,360 in the fourth quarter of 2005 as
compared to $1,248,801 for the fourth quarter of 2004, a decrease of $40,441, or
3.2%. Net income was $645,602, or basic income of $0.45 per common share, as
compared to a net income of $667,259, or $0.47 basic income per common share,
for the quarter ended December 31, 2004.
The $21,657 decrease in net income was a result of an increase in non-interest
expense of $36,329, a decrease in non-interest income of $26,719 and an increase
in the provision for loan loss of $10,000, which were partially offset by an
increase in net interest income of $32,607 and a decrease in income tax expense
of $18,784. Total assets were $215.8 million at December 31, 2005, a decrease of
$19.9 million, or 8.5%, from December 31, 2004. Total deposits were $193.3
million at December 31, 2005, a decrease of $22.2 million, or 10.3%, during the
year ending 2005. The Bancorp's Tier 1 capital ratio of 9.40% includes, as Tier
1 capital, $5.0 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 were reduced
by $3.8 million and $9.8 million, respectively, from the fourth quarter of 2004
to the fourth quarter of 2005. Average demand deposits, an interest free source
of funds for the Bancorp to invest, were approximately 36% of average total
deposits for the fourth quarter of 2005, compared to 44% for the fourth quarter
of 2004. Average time deposits grew by $13.0 million from the fourth quarter of
2004. The Company's interest rate spread and interest rate margin were 3.94% and
4.61%, respectively, for the quarter ending December 31, 2005 as compared to
3.93% and 4.43%, respectively, for the quarter ended December 31, 2004.
Non-interest income decreased $26,719, to $468,367, in the fourth quarter of
2005. Non-interest expense totaled $1.7 million, an increase of $36,329 from the
fourth quarter of 2004. The growth in non-interest expense is directly
attributable to, increases in health insurance costs and legal fees, an increase
in other expenses due to increased costs of services. The legal fee increase
involves legal matters in which the Company's subsidiary is either a garnishee
or holder of extensive subpoenaed records.
Pre-tax income grew to $4,806,903 for the year ended of 2005, as compared to
$4,257,982 for 2004, an increase of $548,921, or 12.9%. Net income for the year
ended December 31, 2005 was $2,567,429, or basic income of $1.78 per common
share, as compared to a net income of $2,274,578, or basic income of $1.60 per
common share, for the year ended December 31, 2004. The $292,851 growth in net
income was
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attributable to an increase in net interest income of $790,809, a decrease in
the provision for loan loss of $210,000, and an increase in non-interest income
of $214,319, partially offset by an increase in non-interest expense of
$666,207. Income tax expense also increased $256,070 between the periods as
pre-tax income increased.
Merton Corn, President and CEO of VSB Bancorp, Inc., stated, "Year end earnings
were up over 12% from 2004, another strong year for our Company. The current
interest rate environment and the softening of the real estate market will pose
some challenges for us in the coming year. The branch application for our sixth
branch site in Great Kills has been approved and construction has begun." Mr.
Joseph J. LiBassi, VSB Bancorp, Inc.'s Chairman stated "Our earnings per share
were $0.45 for the fourth quarter of 2005, our Return on Assets was 1.15% and
our Return on Equity was 17.68% for this quarter. We look forward to opening our
fifth branch at 1065 Bay Street and our next branch in Great Kills. Increasing
our branches is another way of enhancing our position as 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 $14.5 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 and
for our sixth branch location in the Great Kills section of Staten Island.
FORWARD LOOKING STATEMENTS
This release contains forward-looking statements that are subject to risks
and uncertainties. Such risks and uncertainties may include but are not
necessarily limited to adverse changes in local, regional or national economic
conditions, fluctuations in market interest rates, changes in laws or government
regulations, changes in customer preferences, and changes in competition within
our market area. When used in this release or in any other written or oral
statements by the Company or its directors, officers or employees, words or
phrases such as "will result in," "management expects that," "will continue,"
"is anticipated," "estimate," "projected," or similar expressions, and other
terms used to describe future events, are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 ("PSLRA"). Readers should not place undue reliance on the
forward-looking statements, which reflect management's view only as of the date
of the statement. The Company undertakes no obligation to publicly revise these
forward-looking statements to reflect subsequent events or circumstances. This
statement is included for the express purpose of protecting the Company under
the PSLRA's safe harbor provisions.
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VSB Bancorp, Inc.
Consolidated Statements of Financial Condition
December 31, 2005
(unaudited)
December 31, December 31,
2005 2004
------------- -------------
Assets:
Cash and cash equivalents $ 31,324,147 $ 35,659,073
Investment securities, available for sale 106,023,293 128,532,767
Loans receivable 73,944,105 68,046,885
Allowance for loan loss (1,153,298) (1,299,520)
------------- -------------
Loans receivable, net 72,790,807 66,747,365
Bank premises and equipment, net 1,441,087 1,817,284
Accrued interest receivable 728,627 745,368
Deferred taxes 2,298,195 1,462,940
Other assets 1,169,556 719,670
------------- -------------
Total assets $ 215,775,712 $ 235,684,467
============= =============
Liabilities and stockholders' equity:
Liabilities:
Deposits:
Demand and checking $ 66,692,436 $ 101,560,932
NOW 23,574,056 21,574,053
Money market 20,177,240 23,388,850
Savings 14,809,010 14,159,026
Time 67,731,273 54,470,507
------------- -------------
Total Deposits 192,984,015 215,153,368
Escrow deposits 267,144 270,105
Subordinated debt 5,155,000 5,155,000
Accounts payable and accrued expenses 2,553,208 2,149,548
------------- -------------
Total liabilities 200,959,367 222,728,021
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Employee Stock Ownership Plan Repurchase Obligation 284,938 126,825
Stockholders' equity:
Common stock, ($.0001 par value, 3,000,000
shares authorized, 1,509,822 issued and
outstanding at Dec. 31, 2005 and 1,505,022 issued
and outstanding at December 31, 2004) 151 150
Additional paid in capital 8,742,673 8,818,313
Retained earnings 8,621,693 6,054,264
Unallocated ESOP shares (1,408,983) (1,578,061)
Accumulated other comprehensive loss, net
of taxes of $1,242,278 and $405,662,
respectively (1,424,127) (465,045)
------------- -------------
Total stockholders' equity 14,531,407 12,829,621
------------- -------------
Total liabilities and stockholders'
equity $ 215,775,712 $ 235,684,467
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VSB Bancorp, Inc.
Consolidated Statements of Operations
December 31, 2005
(unaudited)
Three months Three months Year Year
ended ended ended ended
Dec. 31, 2005 Dec. 31, 2004 Dec. 31, 2005 Dec. 31, 2004
------------- ------------- ------------- -------------
Interest and dividend income:
Loans receivable $ 1,634,396 $ 1,387,290 $ 5,828,338 $ 5,340,281
Investment securities 1,155,234 1,236,737 4,870,635 4,052,186
Other interest earning assets 269,223 126,478 585,512 279,758
------------ ------------ ------------ ------------
Total interest income 3,058,853 2,750,505 11,284,485 9,672,225
Interest expense:
NOW 26,269 24,773 104,620 100,941
Money market 68,138 49,200 229,906 195,269
Savings 19,838 18,040 79,073 63,130
Subordinated debt 89,040 89,040 356,159 356,159
Time 419,263 165,754 1,200,566 433,374
------------ ------------ ------------ ------------
Total interest expense 622,548 346,807 1,970,324 1,148,873
Net interest income 2,436,305 2,403,698 9,314,161 8,523,352
Provision (benefit) for loan loss 30,000 20,000 (60,000) 150,000
------------ ------------ ------------ ------------
Net interest income
after provision for loan loss 2,406,305 2,383,698 9,374,161 8,373,352
Non-interest income:
Loan fees 12,523 20,418 92,531 77,724
Service charges on deposits 390,419 445,534 1,685,198 1,709,787
Net rental income 7,229 4,219 177,963 27,812
Other income 58,196 24,915 161,948 87,998
------------ ------------ ------------ ------------
Total non-interest income 468,367 495,086 2,117,640 1,903,321
Non-interest expenses:
Salaries and benefits 948,404 935,393 3,780,485 3,418,905
Occupancy expenses 251,912 240,358 976,949 947,954
Legal expense 55,746 13,183 173,178 134,371
Professional fees 45,000 89,450 222,000 235,041
Computer expense 64,401 59,210 241,396 255,350
Other expenses 300,849 292,389 1,290,890 1,027,070
------------ ------------ ------------ ------------
Total non-interest expenses 1,666,312 1,629,983 6,684,898 6,018,691
Income before income taxes 1,208,360 1,248,801 4,806,903 4,257,982
------------ ------------ ------------ ------------
Provision (benefit) for income taxes:
Current 573,274 670,408 2,238,114 2,253,972
Deferred (10,516) (88,866) 1,360 (270,568)
------------ ------------ ------------ ------------
Total provision for income taxes 562,758 581,542 2,239,474 1,983,404
Net income $ 645,602 $ 667,259 $ 2,567,429 $ 2,274,578
============ ============ ============ ============
Basic income per common share $ 0.45 $ 0.47 $ 1.78 $ 1.60
============ ============ ============ ============
Diluted net income per share $ 0.43 $ 0.45 $ 1.73 $ 1.54
============ ============ ============ ============
Book value per common share $ 9.81 $ 8.61 $ 9.81 $ 8.61
============ ============ ============ ============
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