Exhibit 99.1
VSB Bancorp, Inc.
Second Quarter 2006 Results of Operations
Contact Name:
Ralph M. Branca
Executive Vice President
(718) 979-1100
Staten Island, N. Y. --July 11, 2006. VSB Bancorp, Inc. (NASDAQ OTCBB: VSBN)
reported net income of $587,770 for the second quarter of 2006, a 5.4% decrease
from the second quarter of 2005. The following unaudited figures were released
today. Pre-tax income was $1,100,480 in the second quarter of 2006, as compared
to $1,163,592 for the second quarter of 2005, a decrease of $63,112, or 5.4%.
Net income for the second quarter of 2006 was $587,770, or basic income of $0.32
per common share, as compared to a net income of $621,461, or $0.35 basic income
per common share, for the quarter ended June 30, 2005. All per share data have
been adjusted for the 5-for-4 stock split, in the form of a 25% stock dividend,
paid on May 18, 2006, to stockholders of record on May 3, 2006.
The $33,691 decrease in net income was attributable to an increase in
non-interest expense of $212,353, a decrease in non-interest income of $39,892
and an increase in the provision for loan loss of $45,000, partially offset by
an increase in net interest income of $234,133, and a decrease in income tax
expense of $29,421. Total assets increased to $223.7 million at June 30, 2006,
an increase of $7.9 million, or 3.7%, from December 31, 2005. Total deposits
increased to $201.2 million, an increase of $8.0 million, or 4.1%, during the
first half of 2006. The increase in deposits was due, in part, to a $10 million
New York State jumbo CD deposit and a $10 million New York City jumbo CD deposit
made in connection with the opening of our Rosebank branch under the state's and
city's Bank Development District programs. The Bancorp's Tier 1 regulatory
capital ratio was 10.59%, and includes as Tier 1 capital, the proceeds of a $5
million trust preferred securities issuance in August 2003.
Average interest-earning assets and average investment securities decreased by
$1.8 million and $2.0 million, respectively, from the second quarter of 2005 to
the second quarter of 2006. Average demand deposits, an interest free source of
funds for the Bancorp to invest, were approximately 36% of average total
deposits for the second quarter of 2006, compared to 37% for the second quarter
of 2005. Average time deposits grew by $8.7 million from the second quarter of
2005 to the second quarter of 2006. The Company's interest rate spread and
interest rate margin were 4.07% and 4.93%, respectively, for the quarter ended
June 30, 2006 as compared to 3.90% and 4.44%, respectively, for the quarter
ended June 30, 2005. Non-interest income decreased $39,892 to $478,472 in the
second quarter of 2006. Non-interest expense totaled $1.8 million, an increase
of $212,353 from the second quarter of 2005. The growth in non-interest expense
was directly attributable to increases in salaries and benefits expense due to
new hires and an increase in health insurance costs, higher legal expense, and
an increase in other expenses primarily attributable to the opening of our fifth
branch and the preparation for the opening of our sixth branch.
Pre-tax income decreased to $2,205,063 for the first six months of 2006, as
compared to $2,367,187 for 2005, a decrease of $162,124, or 6.9%. Net income for
the six months ended June 30, 2006 was $1,177,681, or basic net income of $0.65
per common share, as compared to a net income of $1,264,253, or $0.70 per common
share, for the six months ended June 30, 2005. The $86,572 reduction in net
income was attributable to an increase in non-interest expense of $429,816, an
increase in the provision for loan loss of $100,000 and a decrease in
non-interest income of $15,778, partially offset by an increase in net interest
income of $383,470. Income tax expense also decreased $75,552 between the
periods as pre-tax income decreased.
Merton Corn, President and CEO of VSB Bancorp, Inc., stated, "We have opened our
fifth branch in the second quarter of 2006, and we have incurred additional
expenses in establishing this branch. We have been able to show some improvement
in our net interest margin and net interest rate spread in 2006 despite the
increasing interest rate environment. The construction on our sixth branch in
Great Kills is underway and we expect to open that branch in early 2007." Mr.
Joseph J. LiBassi, VSB Bancorp, Inc.'s Chairman stated "Our earnings per share
were $0.32 for the second quarter of 2006, our Return on Assets was 1.10% and
our Return on Equity was 15.53% for this quarter. We have posted these numbers
in a tough economic climate. We are excited about our fifth branch in Rosebank
and we look forward to the opening our sixth branch in Great Kills. We continue
to look for new opportunities to deliver the highest quality personal service
that distinguishes us 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 $14.8 million since the Bank was formed. The Bank operates five
full service locations in Staten Island: the main office in the Oakwood Heights
Shopping Center, and branches on Forest Avenue, Hyatt Street, Hylan Boulevard
and now on Bay Street. We have received regulatory approval 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.
VSB Bancorp, Inc.
Consolidated Statements of Financial Condition
June 30, 2006
(unaudited)
June 30, December 31,
2006 2005
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Assets:
Cash and cash equivalents $ 27,828,917 $ 31,324,147
Investment securities, available for sale 117,998,456 106,023,293
Loans receivable 71,935,506 73,944,105
Allowance for loan loss (1,240,851) (1,153,298)
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Loans receivable, net 70,694,655 72,790,807
Bank premises and equipment, net 1,712,873 1,441,087
Accrued interest receivable 830,467 728,627
Deferred taxes 3,154,451 2,298,195
Other assets 1,497,103 1,169,556
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Total assets $ 223,716,922 $ 215,775,712
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Liabilities and stockholders' equity:
Liabilities:
Deposits:
Demand and checking $ 69,349,228 $ 66,692,436
NOW 24,783,295 23,574,056
Money market 18,562,940 20,177,240
Savings 12,730,971 14,809,010
Time 75,524,560 67,731,273
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Total Deposits 200,950,994 192,984,015
Escrow deposits 274,772 267,144
Subordinated debt 5,155,000 5,155,000
Accounts payable and accrued expenses 2,195,454 2,553,208
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Total liabilities 208,576,220 200,959,367
Employee Stock Ownership Plan Repurchase Obligation 315,845 284,411
Stockholders' equity:
Common stock, ($.0001 par value, 3,000,000
shares authorized, 1,891,009 issued and
outstanding at June 30, 2006 and 1,509,822 issued
and outstanding at December 31, 2005) 189 151
Additional paid in capital 8,753,050 8,743,200
Retained earnings 9,799,374 8,621,693
Unallocated ESOP shares (1,324,444) (1,408,983)
Accumulated other comprehensive loss, net
of taxes of $2,096,429 and $1,242,278,
respectively (2,403,312) (1,424,127)
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Total stockholders' equity 14,824,857 14,531,934
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Total liabilities and stockholders'
equity $ 223,716,922 $ 215,775,712
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VSB Bancorp, Inc.
Consolidated Statements of Operations
June 30, 2006
(unaudited)
Three months Three months Six months Six months
ended ended ended ended
June 30, 2006 June 30, 2005 June 30, 2006 June 30, 2005
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Interest and dividend income:
Loans receivable $ 1,758,136 $ 1,352,333 $ 3,506,909 $ 2,652,969
Investment securities 1,320,669 1,235,763 2,526,431 2,555,248
Other interest earning assets 133,179 78,955 312,627 145,260
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Total interest income 3,211,984 2,667,051 6,345,967 5,353,477
Interest expense:
NOW 26,442 27,871 49,645 49,896
Money market 95,447 51,953 179,663 106,000
Savings 21,044 20,111 39,378 38,338
Subordinated debt 89,039 89,039 178,079 178,079
Time 531,071 263,269 984,954 450,386
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Total interest expense 763,043 452,243 1,431,719 822,699
Net interest income 2,448,941 2,214,808 4,914,248 4,530,778
Provision (benefit) for loan loss -- (45,000) 25,000 (75,000)
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Net interest income
after provision for loan loss 2,448,941 2,259,808 4,889,248 4,605,778
Non-interest income:
Loan fees 17,533 33,635 40,300 57,094
Service charges on deposits 386,972 440,590 776,728 844,607
Net rental income 3,374 10,542 6,749 21,605
Other income 70,593 33,597 138,244 54,493
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Total non-interest income 478,472 518,364 962,021 977,799
Non-interest expenses:
Salaries and benefits 969,643 935,254 2,001,720 1,873,750
Occupancy expenses 279,590 239,982 539,050 486,742
Legal expense 103,447 23,451 162,321 33,375
Professional fees 42,000 51,000 90,000 126,000
Computer expense 62,097 60,138 122,625 114,950
Director fees 57,550 43,750 113,450 86,925
Other expenses 312,606 261,005 617,040 494,648
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Total non-interest expenses 1,826,933 1,614,580 3,646,206 3,216,390
Income before income taxes 1,100,480 1,163,592 2,205,063 2,367,187
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Provision (benefit) for income taxes:
Current 509,513 526,438 1,029,487 1,084,740
Deferred 3,197 15,693 (2,105) 18,194
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Total provision for income taxes 512,710 542,131 1,027,382 1,102,934
Net income $ 587,770 $ 621,461 $ 1,177,681 $ 1,264,253
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Basic income per common share $ 0.32 $ 0.35 $ 0.65 $ 0.70
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Diluted net income per share $ 0.31 $ 0.33 $ 0.63 $ 0.68
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Book value per common share $ 8.01 $ 7.56 $ 8.01 $ 7.56
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