Exhibit 99.1
VSB Bancorp, Inc.
Third Quarter 2006 Results of Operations
Contact Name:
Ralph M. Branca
Executive Vice President
(718) 979-1100
Staten Island, N. Y. --October 11, 2006. VSB Bancorp, Inc. (NASDAQ OTCBB: VSBN)
reported net income of $644,129 for the third quarter of 2006, a 2.0% decrease
from the third quarter of 2005. The following unaudited figures were released
today. Pre-tax income was $1,205,971 in the third quarter of 2006, as compared
to $1,231,356 for the third quarter of 2005, a decrease of $25,385, or 2.1%. Net
income for the third quarter of 2006 was $644,129, or basic income of $0.35 per
common share, as compared to a net income of $657,574, or $0.36 basic income per
common share, for the quarter ended September 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 $13,445 decrease in net income was attributable to a decrease in
non-interest income of $224,551, partially offset by a decrease in non-interest
expense of $12,870, a decrease in the provision for loan loss of $10,000, an
increase in net interest income of $176,296, and a decrease in income tax
expense of $11,940. The decrease in non-interest income was a direct result of a
lease buyout in 2005 of one of the Bank's subleases. The increase in net
interest income was due partially to the receipt of interest income of $56,044
on a non-accrual loan that was repaid in full. Total assets increased to $221.9
million at September 30, 2006, an increase of $6.1 million, or 2.8%, from
December 31, 2005. Total deposits increased to $197.4 million, an increase of
$4.1 million, or 2.1%, during the 3rd quarter 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 10.48%, 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 increased by
$2.1 million and $5.6 million, respectively, from the third quarter of 2005 to
the third quarter of 2006. Average demand deposits, an interest free source of
funds for the Bancorp to invest, were approximately 35% of average total
deposits for the third quarter of 2006, compared to 37% for the third quarter of
2005. Average time deposits grew by $13.5 million from the third quarter of 2005
to the third quarter of 2006. The Company's interest rate spread and interest
rate margin were 3.87% and 4.79%, respectively, for the quarter ended September
30, 2006 as compared to 3.92% and 4.52%, respectively, for the quarter ended
September 30, 2005. Non-interest income decreased $224,551 to $446,923 in the
third quarter of 2006. Non-interest expense totaled $1.8 million, a decrease of
$12,870 from the third quarter of 2005. The slight change in non-interest
expense was attributable to a combination of a decrease in salaries and benefits
expense, due to a reduction in compensation expense related to Stock
Appreciation Rights, higher legal expenses, higher director fees and an increase
in occupancy expenses primarily attributable to both the opening of our fifth
branch and the preparation for the opening of our sixth branch.
Pre-tax income decreased to $3,411,034 for the first nine months of 2006, as
compared to $3,598,543 for 2005, a decrease of $187,509, or 5.2%. Net income for
the nine months ended September 30, 2006 was $1,821,810, or basic net income of
$1.00 per common share, as compared to a net income of $1,921,827, or $1.07 per
common share, for the nine months ended September 30, 2005. The $100,017
reduction in net income was attributable to an increase in non-interest expense
of $416,946, an increase in the provision for loan loss of $90,000 and a
decrease in non-interest income of $240,329, partially offset by an increase in
net interest income of $559,766. Income tax expense also decreased $87,492
between the periods as pre-tax income decreased.
Merton Corn, President and CEO of VSB Bancorp, Inc., stated, "We are in the
process of constructing our next bank building in Great Kills and we look
forward to opening that branch in early 2007. The recent increases in the Prime
Rate have helped to defray the increased costs of deposits. The Staten Island
market has become more competitive and the Island's main industry, homebuilding,
has been slowing recently, which has affected our deposit growth and loan
originations." Mr. Joseph J. LiBassi, VSB Bancorp, Inc.'s Chairman stated "Our
earnings per share were $0.35 for the third quarter of 2006, our Return on
Assets was 1.14% and our Return on Equity was 15.87% for this quarter. These are
improvements from the June 2006 quarter. The highest quality personal service
that we deliver sets us apart from our competitors and is the reason that we are
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 $16.5 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
September 30, 2006
(unaudited)
September 30, December 31,
2006 2005
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Assets:
Cash and cash equivalents $ 36,054,385 $ 31,324,147
Investment securities, available for sale 113,888,922 106,023,293
Loans receivable 66,171,876 73,944,105
Allowance for loan loss (1,193,024) (1,153,298)
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Loans receivable, net 64,978,852 72,790,807
Bank premises and equipment, net 1,641,558 1,441,087
Accrued interest receivable 821,129 728,627
Deferred taxes 2,268,664 2,298,195
Other assets 2,219,179 1,169,556
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Total assets $ 221,872,689 $ 215,775,712
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Liabilities and stockholders' equity:
Liabilities:
Deposits:
Demand and checking $ 72,944,352 $ 66,692,436
NOW 20,433,030 23,574,056
Money market 16,743,027 20,177,240
Savings 13,208,697 14,809,010
Time 73,690,729 67,731,273
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Total Deposits 197,019,835 192,984,015
Escrow deposits 371,654 267,144
Subordinated debt 5,155,000 5,155,000
Accounts payable and accrued expenses 2,533,909 2,553,208
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Total liabilities 205,080,398 200,959,367
Employee Stock Ownership Plan Repurchase Obligation 259,532 284,411
Stockholders' equity:
Common stock, ($.0001 par value, 3,000,000
shares authorized, 1,891,759 issued and
outstanding at September 30, 2006 and 1,509,822 issued
and outstanding at December 31, 2005) 189 151
Additional paid in capital 8,812,500 8,743,200
Retained earnings 10,443,503 8,621,693
Unallocated ESOP shares (1,282,175) (1,408,983)
Accumulated other comprehensive loss, net
of taxes of $1,257,222 and $1,242,278,
respectively (1,441,258) (1,424,127)
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Total stockholders' equity 16,532,759 14,531,934
------------- -------------
Total liabilities and stockholders'
equity $ 221,872,689 $ 215,775,712
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VSB Bancorp, Inc.
Consolidated Statements of Operations
September 30, 2006
(unaudited)
Three months Three months Nine months Nine months
ended ended ended ended
Sept. 30, 2006 Sept. 30, 2005 Sept. 30, 2006 Sept. 30, 2005
-------------- -------------- -------------- --------------
Interest and dividend income:
Loans receivable $ 1,794,879 $ 1,540,973 $ 5,301,788 $ 4,193,942
Investment securities 1,336,087 1,160,153 3,862,518 3,715,401
Other interest earning assets 282,049 171,029 594,676 316,289
-------------- -------------- -------------- --------------
Total interest income 3,413,015 2,872,155 9,758,982 8,225,632
Interest expense:
NOW 27,867 28,455 77,512 78,351
Money market 85,246 55,768 264,909 161,768
Savings 23,607 20,897 62,985 59,235
Subordinated debt 89,040 89,040 267,119 267,119
Time 662,769 330,917 1,647,723 781,303
Other interest expense 1,112 -- 1,112 --
-------------- -------------- -------------- --------------
Total interest expense 889,641 525,077 2,321,360 1,347,776
Net interest income 2,523,374 2,347,078 7,437,622 6,877,856
Provision (benefit) for loan loss (25,000) (15,000) -- (90,000)
-------------- -------------- -------------- --------------
Net interest income
after provision for loan loss 2,548,374 2,362,078 7,437,622 6,967,856
Non-interest income:
Loan fees 16,973 22,914 57,273 80,008
Service charges on deposits 366,716 450,172 1,143,444 1,294,779
Net rental income 1,083 149,129 7,832 170,734
Other income 62,151 49,259 200,395 103,752
-------------- -------------- -------------- --------------
Total non-interest income 446,923 671,474 1,408,944 1,649,273
Non-interest expenses:
Salaries and benefits 909,308 958,331 2,911,028 2,832,081
Occupancy expenses 275,324 238,295 814,374 725,037
Legal expense 117,258 84,057 279,579 117,432
Professional fees 46,000 51,000 136,000 177,000
Computer expense 69,611 62,045 192,236 176,995
Director fees 53,950 39,900 167,400 126,825
Other expenses 317,875 368,568 934,915 863,216
-------------- -------------- -------------- --------------
Total non-interest expenses 1,789,326 1,802,196 5,435,532 5,018,586
Income before income taxes 1,205,971 1,231,356 3,411,034 3,598,543
-------------- -------------- -------------- --------------
Provision (benefit) for income taxes:
Current 515,262 580,100 1,544,749 1,664,840
Deferred 46,580 (6,318) 44,475 11,876
-------------- -------------- -------------- --------------
Total provision for income taxes 561,842 573,782 1,589,224 1,676,716
Net income $ 644,129 $ 657,574 $ 1,821,810 $ 1,921,827
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Basic income per common share $ 0.35 $ 0.36 $ 1.00 $ 1.07
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Diluted net income per share $ 0.34 $ 0.35 $ 0.98 $ 1.03
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Book value per common share $ 8.88 $ 7.63 $ 8.88 $ 7.63
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