Business & Finance
Business and Finance
Business and Finance
Wed, July 15, 2009
Tue, July 14, 2009 VSB Bancorp: VSB Bancorp, Inc. Second Quarter 2009 Results of Operations
STATEN ISLAND, NY--(Marketwire - July 14, 2009) - VSB Bancorp, Inc. (
The $33,022 increase in net income was attributable to an increase in net interest income of $224,621, due primarily to a decrease in interest expense of $259,903. The increase in net interest income was partially offset by an increase in non-interest expense of $110,496, an increase in the provision for loan losses of $45,000, and an increase in income tax expense of $26,952.
The $224,621 increase in net interest income for the second quarter of 2009 occurred primarily because our cost of funds declined more rapidly than our asset yields as market interest rates declined. We experienced a decrease in interest expense of $259,903, the most significant components of which were a $159,615 decrease in interest on time deposits and an $89,039 decrease in interest on subordinated debt because we repaid the subordinated debt on August 8, 2008. In contrast, interest income declined by only $35,282, as a $68,859 decline in interest income from other interest earning assets (principally overnight investments) and a decrease in investment income of $116,695 was partially offset by $150,272 increase in interest income from loans. The increase in interest income on loans included $47,793 representing interest owed for a prior period that was paid during the second quarter of 2009 on a non-accrual loan that was reinstated to accrual status. We also had an increase in the provision for loan losses of $45,000 due to continued economic weakness. We are aggressively collecting these charged-off loans in an effort to recover these amounts.
The average yield on loans declined 10 basis points from the second quarter of 2008 to the second quarter of 2009 but that decline was partially offset by a $7.9 million increase in average loan balances. The reductions in the prime rate have caused our prime based loans to reach their interest rate floors. These floors have helped to stabilize the interest income from the loan portfolio and were a significant contributor to moderating the decline in interest income. In contrast, the average yield on our investment securities portfolio declined 38 basis points and the average yield on overnight investments declined 195 basis points between the same periods. Non-interest income remained relatively stable, decreasing by $9,151 to $615,083 in the second quarter of 2009 when compared to the same quarter in 2008.
Comparing the second quarter of 2009 with the same quarter in 2008, non-interest expense increased by $110,496, totaling $2.0 million for the second quarter of 2009. The principal increase was an increase in FDIC and NYSBD assessments due to an increase in FDIC assessment rates and a special assessment by the FDIC. The FDIC increased its insurance premium rates to banks in 2009 due to losses to the FDIC insurance fund as a result of bank failures during 2008 and 2009, coupled with additional losses that the FDIC projects for the remainder of 2009 due to anticipated additional bank failures. Furthermore, the FDIC has imposed a 5 basis point special assessment, based on June 30, 2009 total assets net of Tier 1 capital, payable on September 30, 2009. This special assessment amounts to $100,000. The FDIC has also announced a probable second special assessment of 5 basis points coming in the second half of 2009. The other categories of non-interest expenses increased for various business reasons including increased salary and benefits due to additional staff and higher related benefit costs, increased utility costs. We also had increased costs of auditors due to our first year of compliance with Section 404 of the Sarbanes-Oxley Act, which requires management and the independent accountant to report on the company's internal control over financial reporting.
Total assets increased to $225.9 million at June 30, 2009, an increase of $13.3 million, or 6.2%, from December 31, 2008. Total deposits, including escrow deposits, increased to $199.8 million, an increase of $11.7 million, or 6.2%. The mix of our deposits also changed as NOW accounts increased by $17.0 million and time deposits decreased by $14.2 million from year end 2008. The Bancorp's Tier 1 capital ratio was 10.34% at June 30, 2009.
Average interest-earning assets and average loans increased by $18.8 million and $7.9 million, respectively, from the second quarter of 2008 to the second quarter of 2009. Average demand deposits, an interest free source of funds for us to invest, increased by $915,074 from the second quarter of 2008, representing approximately 33% of average total deposits for the second quarter of 2009. Average interest-bearing deposits increased by $11.8 million, resulting in an overall $12.7 million increase in total deposits from the second quarter of 2008 to the second quarter of 2009. Average interest-bearing liabilities increased by $7.5 million, which included the decrease in liabilities caused by repaying $5.2 million in subordinated debt in August 2008. The Company's interest rate spread and interest rate margin were 3.82% and 4.21%, respectively, for the quarter ended June 30, 2009 as compared to 3.50% and 4.20%, respectively, for the quarter ended June 30, 2008. Our spread and margin were also helped by the effect of interest rate floors on our loans that helped maintain yields when our cost of funds was declining due to lower market interest rates.
Pre-tax income increased to $1,545,865 for the first six months of 2009, as compared to $1,466,108 for 2008, an increase of $79,757, or 5.4%. Net income for the six months ended June 30, 2009 was $832,348, or basic net income of $0.46 per common share, as compared to a net income of $788,220, or basic net income of $0.43 per common share, for the six months ended June 30, 2008. The $44,128 growth in net income for the six months ended June 30, 2009 was attributable principally to a $556,450 increase in net interest income as interest expense decreased by $604,747, due to a 115 basis point drop in the cost of time deposits and a $178,079 reduction in interest on subordinated debt due to the repayment in August 2008. Interest income decreased by only $48,297 as the decline in market rates had a lesser effect on interest income than our cost of funds due principally to the floors on our prime-based loans. We also had a $38,116 increase in non-interest income. The increase in net interest income was partially offset by an increase in the provision for loan losses of $290,000, due to weakness in the economy, and an increase in non-interest expense of $224,809, due primarily to an $84,000 increase in FDIC and NYSBD assessments. Income tax expense increased $35,629 due to the increase in pre-tax income.
Raffaele (Ralph) M. Branca, VSB Bancorp, Inc.'s President and CEO, stated, "The economy still does not show any real signs of strength but we have been able to increase our quarterly income despite higher loan loss provisions and the 5 basis point FDIC special assessment. Our assets climbed to $225.9 million and our total deposits reached $199.8 million at June 30, 2009, demonstrating strong growth from year end 2008." Joseph J. LiBassi, VSB Bancorp, Inc.'s Chairman, stated "Even in this poor economic climate, we paid our seventh consecutive dividend and we increased our capital base. Our strength coupled with our philosophy of delivering the highest quality personal service to the professionals and business owners on Staten Island are creating value for our stockholders."
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 $24.4 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).
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, weaknesses of other financial institutions, 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, 2009 (unaudited) June 30, December 31, 2009 2008 ------------- ------------- Assets: Cash and cash equivalents $ 37,386,551 $ 21,240,223 Investment securities, available for sale 115,350,244 120,288,588 Loans receivable 69,306,455 66,246,652 Allowance for loan loss (928,064) (987,876) ------------- ------------- Loans receivable, net 68,378,391 65,258,776 Bank premises and equipment, net 3,461,215 3,695,822 Accrued interest receivable 710,936 723,473 Deferred taxes - 525,839 Other assets 642,598 925,007 ------------- ------------- Total assets $ 225,929,935 $ 212,657,728 ============= ============= Liabilities and stockholders' equity: Liabilities: Deposits: Demand and checking $ 65,288,402 $ 58,598,579 NOW 34,622,620 17,636,154 Money market 23,909,746 22,829,789 Savings 13,534,421 12,412,561 Time 62,106,445 76,323,494 ------------- ------------- Total Deposits 199,461,634 187,800,577 Escrow deposits 361,965 308,872 Accounts payable and accrued expenses 1,681,182 1,344,512 ------------- ------------- Total liabilities 201,504,781 189,453,961 ------------- ------------- Stockholders' equity: Common stock, ($.0001 par value, 3,000,000 shares authorized, 1,945,134 issued, 1,850,491 outstanding at June 30, 2009 and 1,923,884 issued, 1,882,461 outstanding December 31, 2008) 195 192 Additional paid in capital 9,276,908 9,200,010 Retained earnings 15,331,339 14,714,143 Treasury stock, at cost (94,643 shares at June 30, 2009 and 41,423 shares at December 31, 2008) (858,863) (395,891) Unearned ESOP shares (817,211) (901,750) Accumulated other comprehensive gain, net of taxes of $1,258,894 and $488,735, respectively 1,492,786 587,063 ------------- ------------- Total stockholders' equity 24,425,154 23,203,767 ------------- ------------- Total liabilities and stockholders' equity $ 225,929,935 $ 212,657,728 ============= ============= VSB Bancorp, Inc. Consolidated Statements of Operations June 30, 2009 (unaudited) Three Three months months Six months Six months ended ended ended ended June 30, June 30, June 30, June 30, 2009 2008 2009 2008 ----------- ----------- ----------- ----------- Interest and dividend income: Loans receivable $ 1,323,189 $ 1,172,917 $ 2,653,895 $ 2,417,408 Investment securities 1,314,667 1,431,362 2,697,286 2,815,659 Other interest earning assets 5,693 74,552 10,434 176,845 ----------- ----------- ----------- ----------- Total interest income 2,643,549 2,678,831 5,361,615 5,409,912 Interest expense: NOW 35,990 32,702 62,773 64,933 Money market 62,944 72,509 123,455 168,601 Savings 13,219 18,191 26,321 37,173 Subordinated debt - 89,039 - 178,079 Time 220,765 380,380 531,317 899,827 ----------- ----------- ----------- ----------- Total interest expense 332,918 592,821 743,866 1,348,613 Net interest income 2,310,631 2,086,010 4,617,749 4,061,299 Provision for loan loss 100,000 55,000 375,000 85,000 ----------- ----------- ----------- ----------- Net interest income after provision for loan loss 2,210,631 2,031,010 4,242,749 3,976,299 Non-interest income: Loan fees 24,773 21,285 50,524 43,508 Service charges on deposits 538,187 545,902 1,084,049 1,025,517 Net rental income 12,567 11,103 24,084 10,092 Other income 39,556 45,944 69,595 111,019 ----------- ----------- ----------- ----------- Total non-interest income 615,083 624,234 1,228,252 1,190,136 Non-interest expenses: Salaries and benefits 911,745 868,263 1,823,728 1,778,671 Occupancy expenses 373,242 358,466 752,323 716,190 Legal expense 59,847 65,700 134,496 119,786 Professional fees 75,500 62,100 152,500 123,500 Computer expense 70,896 57,198 137,696 112,304 Director fees 60,675 57,700 111,775 114,950 FDIC and NYSBD assessments 101,500 46,500 177,000 93,000 Other expenses 319,268 346,250 635,618 641,926 ----------- ----------- ----------- ----------- Total non-interest expenses 1,972,673 1,862,177 3,925,136 3,700,327 Income before income taxes 853,041 793,067 1,545,865 1,466,108 ----------- ----------- ----------- ----------- Provision (benefit) for income taxes: Current 450,353 400,690 876,203 733,590 Deferred (56,609) (33,898) (162,686) (55,702) ----------- ----------- ----------- ----------- Total provision for income taxes 393,744 366,792 713,517 677,888 Net income $ 459,297 $ 426,275 $ 832,348 $ 788,220 =========== =========== =========== =========== Basic income per common share $ 0.26 $ 0.23 $ 0.46 $ 0.43 =========== =========== =========== =========== Diluted net income per share $ 0.25 $ 0.23 $ 0.46 $ 0.42 =========== =========== =========== =========== Book value per common share $ 13.20 $ 11.31 $ 13.20 $ 11.31 =========== =========== =========== ===========
