Exhibit 99.1
VSB Bancorp, Inc.
Fourth Quarter 2007 Results of Operations
Contact Name:
Ralph M. Branca
President & CEO
(718) 979-1100
Staten Island, N. Y. --January 10, 2008. VSB Bancorp, Inc. (NASDAQ CM: VSBN)
reported net income of $453,155 for the fourth quarter of 2007, a $270,628, or
37.4%, decrease from net income of $723,783 in the fourth quarter of 2006. The
following unaudited figures were released today. Pre-tax income was $848,669 in
the fourth quarter of 2007, as compared to $1,354,833 for the fourth quarter of
2006, a decrease of $506,164, or 37.4%. Basic net income per common share was
$0.25, as compared to basic net income per common share of $0.40 for the quarter
ended December 31, 2006. Three unusual items represented $111,400 of the
difference in pre-tax net income. The December 2006 quarter pre-tax income was
benefited by a $65,000 credit to the provision for loan losses, which was the
most significant of these items.
The $270,628 decrease in net income was attributable to a decrease in interest
income of $334,217 and a decrease in interest expense of $44,657, which combined
to cause a $289,560 decrease in net interest income. The decrease in interest
income was due to a decrease of $277,099 in interest on loans as the average
balance of loans decreased by $4.0 million and the average yield decreased by
105 basis points from the fourth quarter of 2006. Interest income from money
market investments declined by $107,747 as yields and average balances decreased
over the same period. The decrease in interest income from loans was partially
offset by $50,629 increase in interest from investment securities due primarily
to a 19 basis point increase in yield.
The Company also had an increase in the provision for loan losses of $105,000
and an increase in non-interest expense of $136,589. The decrease in net
interest income was partially offset by an increase in non-interest income of
$24,985, to $557,199, and a decrease in income tax expense of $235,536.
The decrease in interest expense was primarily caused by an $80,338 decrease in
the cost of time deposits, partially offset by an increase of $30,039 in the
cost of money market deposit accounts. The average rate that the Company paid on
money market deposits increased by 16 basis points and average money market
deposits increased by $4.4 million since the fourth quarter of 2006. The average
balance of time deposits decreased $7.0 million over the same period while the
average rate paid on time deposits decreased by 10 basis points.
The $136,589 increase in non-interest expense was directly attributable to an
increase in occupancy expenses of $34,164, due to the operation of a new main
office at 4142 Hylan Boulevard in Great Kills and the operation of the Rosebank
branch, an increase in legal expenses of $25,816, an increase in professional
fees of $29,200, and an increase in other expenses of $57,514 representing
increased costs associated with implementing real time on line processing for
existing ATM products, debit cards and online bill pay.
Total assets decreased to $203.7 million at December 31, 2007, a decrease of
$8.2 million, or 3.9%, from December 31, 2006. Total deposits, including escrow
deposits, decreased to $176.3 million, a decrease of $10.3 million, or 5.5%,
during the year ended 2007. The Bancorp's Tier 1 capital ratio of 12.60%
includes the effect, as Tier 1 capital, of $5.0 million from the proceeds of a
$5 million trust preferred securities issuance in August 2003.
Average interest-earning assets and average loans decreased by $10.6 million and
$4.0 million, respectively, from the fourth quarter of 2006 to the fourth
quarter of 2007. Average demand deposits, an interest free source of funds for
the Bancorp to invest, were approximately 35% of average total deposits for the
fourth quarter of 2007, compared to 36% for the fourth quarter of 2006. Average
deposits decreased by $13.6 million from the fourth quarter of 2006 to the
fourth quarter of 2007. The Company's interest rate spread and interest rate
margin were 3.36% and 4.36%, respectively, for the quarter ending December 31,
2007 as compared to 3.68% and 4.67%, respectively, for the quarter ended
December 31, 2006.
Pre-tax income decreased to $3,720,737 for the year ended of 2007, as compared
to $4,765,867 for 2006, a decrease of $1.0 million, or 21.9%. Net income for the
year ended December 31, 2007 was $1,987,226, or basic net income of $1.09 per
common share, as compared to net income of $2,545,593, or $1.40 per common
share, for the year ended December 31, 2006. The principal cause of the $558,367
reduction in net income for the year ended December 31, 2007 was a $795,599 year
to year decline in interest income, primarily because the average loan volume
declined by $8.6 million and the average loan yield declined by 23 basis points.
Although a $2.0 million decrease in the average balance of investment securities
also contributed to the decline in net income, this was partially offset by a 17
basis point increase in the yield on those securities as well as a $1.5 million
increase in other earning assets and an 8 basis point increase in the average
yield on those other assets.
In addition, the Company experienced a $256,240 increase in interest expense due
to higher average deposit costs, as the average rates paid increased 24 basis
points on money market deposits, 18 basis points on NOW accounts and 40 basis
points on time deposits. Also contributing to the decrease in net income was an
increase in the provision for loan loss of $60,000 and an increase of $165,525
in non-interest expenses, which were partially offset by an increase in
non-interest income of $232,234, due primarily to the increase in deposit
service charges. Income tax expense also decreased $486,763 between the periods
as pre-tax income decreased.
Raffaele (Ralph) M. Branca, VSB Bancorp, Inc.'s President and CEO, stated, "The
slow real estate market and the local economic downturn have hampered our
earnings, including a reduction in our loan production. While we have no
exposure to subprime mortgages, we are still affected by the repercussions to
the home building industry on Staten Island, as it is the major industry on the
Island. Our fourth quarter interest rate margin continues to remain strong
compared to our peer group." Joseph J. LiBassi, VSB Bancorp, Inc.'s Chairman,
stated "In 2007, our earnings were $2.0 million and our book value per share
rose to $10.96 at December 31, 2007, up $1.58 from the book value per share one
year earlier. We deliver the highest personal customer service and our
reputation as the "Bank that fits your business" allows for more opportunities
in the future. We are also pleased that during the fourth quarter of 2007, we
declared our first quarterly cash dividend of $0.06 per share which, was paid on
January 2, 2008."
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 $20.8 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.
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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, 2007
(unaudited)
December 31, December 31,
2007 2006
------------- -------------
Assets:
Cash and cash equivalents $ 17,696,879 $ 25,363,069
Investment securities, available for sale 117,814,117 113,770,611
Loans receivable 62,373,078 66,410,677
Allowance for loan loss (927,161) (1,128,824)
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Loans receivable, net 61,445,917 65,281,853
Bank premises and equipment, net 3,931,679 1,554,363
Accrued interest receivable 799,249 805,681
Deferred taxes 991,297 2,030,647
Other assets 1,054,431 3,078,535
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Total assets $ 203,733,569 $ 211,884,759
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Liabilities and stockholders' equity:
Liabilities:
Deposits:
Demand and checking $ 62,525,053 $ 67,371,582
NOW 16,931,113 19,935,769
Money market 20,534,721 18,359,007
Savings 11,349,111 12,526,485
Time 64,738,564 68,229,244
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Total Deposits 176,078,562 186,422,087
Escrow deposits 255,881 261,063
Subordinated debt 5,155,000 5,155,000
Accounts payable and accrued expenses 1,420,321 2,306,312
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Total liabilities 182,909,764 194,144,462
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Employee Stock Ownership Plan Repurchase Obligation -- 399,026
Stockholders' equity:
Common stock, ($.0001 par value, 3,000,000
shares authorized, 1,900,509 issued and
outstanding at December 31, 2007 and 1,891,759
issued and outstanding at December 31, 2006) 190 189
Additional paid in capital 9,107,119 8,667,665
Retained earnings 13,166,395 11,293,200
Unearned ESOP shares (1,070,827) (1,239,905)
Accumulated other comprehensive loss, net
of taxes of $330,668 and $1,203,679,
respectively (379,072) (1,379,878)
------------- -------------
Total stockholders' equity 20,823,805 17,341,271
------------- -------------
Total liabilities and stockholders'
equity $ 203,733,569 $ 211,884,759
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VSB Bancorp, Inc.
Consolidated Statements of Operations
December 31, 2007
(unaudited)
Three months Three months Year ended Year ended
ended ended ended ended
December 31, 2007 December 31, 2006 December 31, 2007 December 31, 2006
----------------- ----------------- ----------------- -----------------
Interest and dividend income:
Loans receivable $ 1,406,313 $ 1,683,412 $ 5,980,133 $ 6,985,200
Investment securities 1,389,200 1,338,571 5,303,886 5,201,089
Other interest earning assets 185,240 292,987 994,334 887,663
----------------- ----------------- ----------------- -----------------
Total interest income 2,980,753 3,314,970 12,278,353 13,073,952
Interest expense:
NOW 34,945 30,461 131,634 107,973
Money market 118,086 88,047 439,236 352,956
Savings 23,586 22,428 97,900 85,413
Subordinated debt 89,040 89,040 356,159 356,159
Other interest expense -- -- -- 1,112
Time 573,703 654,041 2,436,688 2,301,764
----------------- ----------------- ----------------- -----------------
Total interest expense 839,360 884,017 3,461,617 3,205,377
Net interest income 2,141,393 2,430,953 8,816,736 9,868,575
Provision (benefit) for loan loss 40,000 (65,000) (5,000) (65,000)
----------------- ----------------- ----------------- -----------------
Net interest income
after provision for loan loss 2,101,393 2,495,953 8,821,736 9,933,575
Non-interest income:
Loan fees 20,945 19,754 84,603 77,027
Service charges on deposits 475,277 441,683 1,794,699 1,585,127
Net rental income / (loss) (14,172) 9,138 (15,048) 16,970
Other income 75,149 61,639 309,138 262,034
----------------- ----------------- ----------------- -----------------
Total non-interest income 557,199 532,214 2,173,392 1,941,158
Non-interest expenses:
Salaries and benefits 908,733 909,538 3,800,954 3,820,566
Occupancy expenses 321,614 287,450 1,353,636 1,101,824
Legal expense 51,570 25,754 102,320 305,333
Professional fees 54,200 25,000 207,200 161,000
Computer expense 56,906 67,356 258,881 259,592
Director fees 55,700 54,550 216,150 221,950
Other expenses 361,200 303,686 1,335,250 1,238,601
----------------- ----------------- ----------------- -----------------
Total non-interest expenses 1,809,923 1,673,334 7,274,391 7,108,866
Income before income taxes 848,669 1,354,833 3,720,737 4,765,867
----------------- ----------------- ----------------- -----------------
Provision for income taxes:
Current 363,719 556,412 1,593,554 2,101,161
Deferred 31,795 74,638 139,957 119,113
----------------- ----------------- ----------------- -----------------
Total provision for income taxes 395,514 631,050 1,733,511 2,220,274
Net income $ 453,155 $ 723,783 $ 1,987,226 $ 2,545,593
================= ================= ================= =================
Basic income per common share $ 0.25 $ 0.40 $ 1.09 $ 1.40
================= ================= ================= =================
Diluted net income per share $ 0.24 $ 0.38 $ 1.06 $ 1.36
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Book value per common share $ 10.96 $ 9.38 $ 10.96 $ 9.38
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