Exhibit 99.1
VSB Bancorp, Inc.
Second Quarter 2007 Results of Operations
Contact Name:
Ralph M. Branca
Executive Vice President
(718) 979-1100
Staten Island, N. Y. --July 10, 2007. VSB Bancorp, Inc. (NASDAQ CM: VSBN)
reported net income of $508,021 for the second quarter of 2007, a 13.6% decrease
from net income of $587,770 in the second quarter of 2006. The following
unaudited figures were released today. Pre-tax income was $951,258 in the second
quarter of 2007, as compared to $1,100,480 for the second quarter of 2006, a
decrease of $149,222, or 13.6%. Basic net income per common share was $0.28, as
compared to basic net income per common share of $0.32 for the quarter ended
June 30, 2006. All per share data were 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 $79,749 decrease in net income was attributable to a decrease in interest
income of $152,181 and an increase in interest expense of $106,744, which
combined to cause a $258,925 decrease in net interest income. The decrease in
net interest income was partially offset by an increase in non-interest income
of $56,721, a decrease in non-interest expense of $52,982, and a decrease in
income tax expense of $69,473. The increase in interest expense was primarily
caused by a $96,803 increase in the cost of time accounts, as the average rates
we paid on time deposits increased since the second quarter of 2006. The
decrease in interest income was due to a decrease of $256,792 in interest on
loans as the average balance of loans decreased by $10.6 million from the second
quarter of 2006, which was partially offset by an increase in interest income
from money market investments as yields and average balances increased over the
same period. The $52,982 reduction in non-interest expense was directly
attributable to a decrease in legal expenses of $119,607, due in part to the
reimbursement from our insurance company of legal fees previously expensed. This
reduction was partially offset by an increase in occupancy expenses of $62,160
due to the operation of the new main office at 4142 Hylan Boulevard in Great
Kills and the operation of the Rosebank branch.
Total assets increased to $215.1 million at June 30, 2007, an increase of $3.3
million, or 1.5%, from December 31, 2006. Total deposits, including escrow
deposits, increased to $189.7 million, an increase of $3.0 million, or 1.6%,
during the first half of 2007. Other assets decreased $2.0 million as we opened
our new main office in Great Kills, which resulted in the transfer of
construction in progress, previously shown as "other assets," to bank premises
and equipment. The Bancorp's Tier 1 capital ratio of 12.20% includes the effect,
as Tier 1 capital, of $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 loans decreased by $6.6 million and
$10.6 million, respectively, from the second quarter of 2006 to the second
quarter of 2007. Average demand deposits, an interest free source of funds for
the Bancorp to invest, were approximately 34% of average total deposits for the
second quarter of 2007, compared to 36% for the second quarter of 2006. Average
deposits decreased by $9.2 million from the second quarter of 2006 to the second
quarter of 2007. The Company's interest rate spread and interest rate margin
were 3.49% and 4.51%, respectively, for the quarter ending June 30, 2007 as
compared to 4.07% and 4.93%, respectively, for the quarter ended June 30, 2006.
Non-interest income increased $56,721 to $535,193 in the second quarter of 2007.
Non-interest expense totaled $1.8 million in the second quarter of 2007.
Pre-tax income decreased to $1,943,100 for the first six months of 2007, as
compared to $2,205,063 for 2006, a decrease of $261,963, or 11.9%. Net income
for the six months ended June 30, 2007 was $1,037,792, or basic net income of
$0.57 per common share, as compared to a net income of $1,177,681, or $0.65 per
common share, for the six months ended June 30, 2006. The $139,889 reduction in
net income for the six months ended June 30, 2007 was attributable to an
increase in interest expense of $281,311 due to a 76 basis points increase in
the cost of time deposits, coupled with a decrease in interest income of
$166,286 due to the decrease in average loan balance of $10.3 million. The
decrease in net income was partially offset by a decrease in the provision for
loan loss of $55,000, and an increase in non-interest income of $114,535. Income
tax expense also decreased $122,074 between the periods as pre-tax income
decreased.
Merton Corn, VSB Bancorp, Inc.'s President and CEO, stated, "The slowdown in the
home building market on Staten Island has a negative effect on our growth and
our profitability. Our cost containment efforts have kept non-interest expenses
in check." Joseph J. LiBassi, VSB Bancorp, Inc.'s Chairman, stated "Our asset
base increased by $6.7 million from the first quarter of 2007. Our book value
per share increased to $9.84 at June 30, 2007, up $1.83 from the book value per
share one year earlier. Our commitment to providing our customers with the
highest quality personal service and the knowledge and dedication of our staff
and directors are the key ingredients to maintaining our reputation 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, which 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 $18.6 million, primarily through the retention of
earnings. The Bank operates five full service locations in Staten Island: the
main office in Great Kills, and branches on Forest Avenue (West Brighton), Hyatt
Street (St. George), Hylan Boulevard (Dongan Hills) and on Bay Street
(Rosebank). In February 2007, we opened our new main office 4142 Hylan Boulevard
in the Great Kills section of Staten Island. We simultaneously closed our former
main office in the Oakwood Heights Shopping Center as the lease expired at that
location.
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
June 30, 2007
(unaudited)
June 30, December 31,
2007 2006
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Assets:
Cash and cash equivalents $ 34,983,022 $ 25,363,069
Investment securities, available for sale 112,098,277 113,770,611
Loans receivable 60,890,255 66,410,677
Allowance for loan loss (1,023,205) (1,128,824)
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Loans receivable, net 59,867,050 65,281,853
Bank premises and equipment, net 4,144,342 1,554,363
Accrued interest receivable 795,325 805,681
Deferred taxes 2,150,208 2,030,647
Other assets 1,111,310 3,078,535
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Total assets $ 215,149,534 $ 211,884,759
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Liabilities and stockholders' equity:
Liabilities:
Deposits:
Demand and checking $ 64,287,827 $ 67,371,582
NOW 20,810,121 19,935,769
Money market 23,703,782 18,359,007
Savings 11,762,026 12,526,485
Time 68,942,839 68,229,244
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Total Deposits 189,506,595 186,422,087
Escrow deposits 219,844 261,063
Subordinated debt 5,155,000 5,155,000
Accounts payable and accrued expenses 1,650,851 2,306,312
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Total liabilities 196,532,290 194,144,462
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Employee Stock Ownership Plan Repurchase Obligation -- 399,026
Stockholders' equity:
Common stock, ($.0001 par value, 3,000,000
shares authorized, 1,891,759 issued
and outstanding at June 30, 2007 and
December 31, 2006) 189 189
Additional paid in capital 9,053,691 8,667,665
Retained earnings 12,330,992 11,293,200
Unallocated ESOP shares (1,155,366) (1,239,905)
Accumulated other comprehensive loss, net
of taxes of $1,406,390 and $1,203,679,
respectively (1,612,262) (1,379,878)
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Total stockholders' equity 18,617,244 17,341,271
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Total liabilities and stockholders'
equity $ 215,149,534 $ 211,884,759
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VSB Bancorp, Inc.
Consolidated Statements of Operations
June 30, 2007
(unaudited)
Three months Three months Six months Six months
ended ended ended ended
June 30, 2007 June 30, 2006 June 30, 2007 June 30, 2006
------------- ------------- ------------- -------------
Interest and dividend income:
Loans receivable $ 1,501,344 $ 1,758,136 $ 3,073,697 $ 3,506,909
Investment securities 1,293,698 1,320,669 2,594,158 2,526,431
Other interest earning assets 264,761 133,179 511,826 312,627
------------- ------------- ------------- -------------
Total interest income 3,059,803 3,211,984 6,179,681 6,345,967
Interest expense:
NOW 29,960 26,442 58,749 49,645
Money market 97,559 95,447 183,409 179,663
Savings 25,355 21,044 49,783 39,378
Subordinated debt 89,039 89,039 178,079 178,079
Time 627,874 531,071 1,243,010 984,954
------------- ------------- ------------- -------------
Total interest expense 869,787 763,043 1,713,030 1,431,719
Net interest income 2,190,016 2,448,941 4,466,651 4,914,248
Provision (benefit) for loan loss -- -- (30,000) 25,000
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Net interest income
after provision for loan loss 2,190,016 2,448,941 4,496,651 4,889,248
Non-interest income:
Loan fees 20,532 17,533 48,000 40,300
Service charges on deposits 445,491 386,972 862,399 776,728
Net rental income / (loss) (13,121) 3,374 1,692 6,749
Other income 82,291 70,593 164,465 138,244
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Total non-interest income 535,193 478,472 1,076,556 962,021
Non-interest expenses:
Salaries and benefits 937,988 969,643 1,955,318 2,001,720
Occupancy expenses 341,750 279,590 679,725 539,050
Legal expense / (recovery) (16,160) 103,447 (1,634) 162,321
Professional fees 44,700 42,000 96,300 90,000
Computer expense 70,155 62,097 137,371 122,625
Director fees 55,700 57,550 107,850 113,450
Other expenses 339,818 312,606 655,177 617,040
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Total non-interest expenses 1,773,951 1,826,933 3,630,107 3,646,206
Income before income taxes 951,258 1,100,480 1,943,100 2,205,063
------------- ------------- ------------- -------------
Provision (benefit) for income taxes:
Current 405,809 509,513 848,539 1,029,487
Deferred 37,428 3,197 56,769 (2,105)
------------- ------------- ------------- -------------
Total provision for income taxes 443,237 512,710 905,308 1,027,382
Net income $ 508,021 $ 587,770 $ 1,037,792 $ 1,177,681
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Basic income per common share $ 0.28 $ 0.32 $ 0.57 $ 0.65
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Diluted net income per share $ 0.27 $ 0.31 $ 0.55 $ 0.63
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Book value per common share $ 9.84 $ 8.01 $ 9.84 $ 8.01
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