|By Marketwired .||
|April 9, 2014 04:15 PM EDT||
STATEN ISLAND, NY -- (Marketwired) -- 04/09/14 -- VSB Bancorp, Inc. (OTCQB: VSBN) reported net income of $244,725 for the first quarter of 2014, an increase of $34,854, or 16.6%, from the first quarter of 2013. The following unaudited figures were released today. Pre-tax income was $451,096 in the first quarter of 2014, compared to $386,873 for the first quarter of 2013. Net income for the quarter was $244,725, or basic income of $0.14 per common share, compared to a net income of $209,871, or $0.12 basic income per common share, for the quarter ended March 31, 2013. Return on average assets increased from 0.29% in the first quarter of 2013 to 0.31% in the first quarter of 2014, while return on average equity increased from 2.84% to 3.23%.
The $34,854 increase in net income was due to an increase in net interest income of $99,559, and an increase in non-interest income of $17,551, partially offset by an increase in non-interest expense of $32,887, an increase in the provision for income taxes of $29,369, and an increase in the provision for loan loss of $20,000.
The $99,559 increase in net interest income for the first quarter of 2014 occurred primarily because our interest income increased by $74,658, while our cost of funds decreased by $24,901. The rise in interest income resulted from a $221,041 increase in income from investment securities, due to a $38.0 million increase in average balance between the periods and a 5 basis point increase in yield, as new securities were purchased at market rates at or above the rates on securities repaid or matured, between the periods. The increase in interest income was partially offset by a $136,301 decrease in interest income from loans principally due to a $8.7 million decrease in the average balance of loans and a 3 basis point decrease in yield from the first quarter of 2013 to the first quarter of 2014.
Interest income from other interest earning assets (principally overnight investments) decreased by $10,082 due to an $18.2 million decrease in average balance. Overall, average interest-earning assets increased by $11.0 million from the first quarter of 2013 to the first quarter of 2014.
The decrease in interest expense was principally due to a $36,719 decrease in interest on time accounts, as the average cost declined by 15 basis points and the average balance between periods decreased by $7.3 million. This decrease was partially offset by a $7,572 increase in the cost of savings account deposits, due to a 8 basis point increase in the cost and a $3.1 million increase in the average balance and a $5,801 increase in interest on money market accounts, as the average balance between periods increased by $8.4 million, but was partially offset by the 8 basis point drop in the average cost. Average demand deposits, an interest free source of funds for us to invest, increased $7.9 million, or 9.2%, from the first quarter of 2013, representing approximately 36% of average total deposits for the first quarter of 2014. Average interest-bearing deposits increased by $4.2 million, resulting in an overall $11.9 million increase in average total deposits from the first quarter of 2013 to the first quarter of 2014.
The average yield on earning assets declined by 4 basis points while the average cost of funds declined by 7 basis points. The reduction in the yield on assets was principally due to the 3 basis point drop in the yield on loans, partially offset by a 5 basis point increase in the yield on investment securities. The decline in the cost of funds was driven principally by the 15 basis point drop in the cost of time account deposits, and the 8 basis point drop in the cost of money market deposits partially offset by the 8 basis point increase in the cost of saving account deposits. Our interest rate margin increased by 1 basis point from 2.74% to 2.75% when comparing the first quarter of 2014 to the same quarter in 2013, while our interest rate spread increased by 3 basis points from 2.53% to 2.56%. The spread and margin both increased because of the combined effect of the rise in earnings we were able to obtain on our investments securities, the decreased average balance of low yielding other interest-earning assets partially offset by the adverse effect of the non-receipt of interest received on non-performing loans. These increases were complimented by corresponding declines in the cost of deposits because the rates we paid on deposits were low due to low markets rates.
Non-interest income increased by $17,551 to $628,152 in the first quarter of 2014, from $610,601 in the same quarter in 2013. The most significant component of the increase was a $44,155 rise in service charges on deposits, which consist mainly of insufficient fund fees that are inherently volatile, and are based upon the number of items being presented for payment against insufficient funds. This increase was partially offset by $24,977 decrease in other income, due primarily to a $17,571 gain on the sale of other fixed assets recognized in the first quarter of 2013.
Comparing the first quarter of 2014 with the same quarter in 2013, non-interest expense increased by $32,887, totaling $2.0 million for the first quarter of 2014. Non-interest expense increased for various business reasons including (i) a $33,202 increase in legal fees due to due to costs of removing our common stock from SEC registration in 2014 and a higher level of collection costs; (ii) a $32,570 increase in occupancy expenses due to an insurance payout in the first quarter of 2013 on monies expensed in the remediation of our Dongan Hills branch; (iii) a $12,445 increase in professional fees due to due to higher costs and the hiring of a consultant; (iv) a $8,950 increase in director fees due to a greater number of meetings; and (v) a $7,500 increase in FDIC and NYSBD assessments due to a larger assessment base (generally average assets minus tangible capital) in 2014. These increases were partially offset by a $13,298 decrease in salary and benefit costs due to reduced staff, and a $52,863 decrease in other non-interest expenses due to reduced OREO costs, and decreased costs of regulatory filings, as we completed the deregistering of our Company on March 31, 2014.
Total assets decreased to $287.6 million at March 31, 2014, a decrease of $9.5 million, or 3.2%, from December 31, 2013. The significant component of this decrease was a $18.2 million decrease in cash and other liquid assets, partially offset by a $9.3 million increase in investment securities. Our non-performing loans increased from $4.2 million at December 31, 2013 to $4.5 million at March 31, 2014, due primarily to a past maturity loan that is expected to be renewed in the second quarter of 2014. Total deposits, including escrow deposits, decreased to $258.1 million, a decrease of $10.5 million, or 3.9%. The decrease was primarily attributable to two large withdrawals from two customers that re-deployed the deposits into non-bank investments. We had increases in demand and checking deposits of $1.5 million, and a $1.7 million increase in savings deposits, partially offset by a decrease of $9.3 million in in time deposits, $3.0 million in NOW accounts, and a $1.6 million in money market accounts and from year end 2013. Our total stockholders' equity increased by $162,746 as the growth of retained earnings and the amortization of our ESOP loan were partially offset by the increase in treasury shares due to the repurchase of 3,400 shares of common stock in our announced third stock repurchase program. The Bancorp's Tier 1 capital ratio was 9.44% at March 31, 2014.
Raffaele (Ralph) M. Branca, VSB Bancorp, Inc.'s President and CEO, stated, "We have generated more net interest income, more non-interest income and we have controlled our non-interest expenses in 2014. While our total deposits decreased in the first quarter of 2014, those decreases were primarily concentrated in our highest costing liabilities, which we funded with our excess cash." Joseph J. LiBassi, VSB Bancorp, Inc.'s Chairman, stated, "We posted a 17% increase in net income from the 2013 period. As we look to different opportunities to generate income, we are confident that we will be able generate a higher return than last year. We paid our twenty-sixth consecutive dividend to our stockholders and our book value per share rose to $15.59. Our commitment to providing the utmost in customer service has driven our growth and has led to increased stockholder value."
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 $27.7 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 March 31, 2014 (unaudited) March 31, December 31, 2014 2013 -------------- -------------- Assets: Cash and cash equivalents $ 47,315,331 $ 65,562,635 Investment securities, available for sale 63,278,866 57,517,211 Investment securities, held to maturity 100,726,292 97,146,039 Loans receivable 72,709,735 73,081,310 Allowance for loan loss (1,016,364) (1,093,788) -------------- -------------- Loans receivable, net 71,693,371 71,987,522 Bank premises and equipment, net 1,988,737 1,992,527 Accrued interest receivable 555,790 539,092 Other assets 2,060,319 2,391,082 -------------- -------------- Total assets $ 287,618,706 $ 297,136,108 ============== ============== Liabilities and stockholders' equity: Liabilities: Deposits: Demand and checking $ 98,122,213 $ 96,640,569 NOW 30,034,380 32,989,791 Money market 40,473,675 42,075,301 Savings 25,745,971 24,075,184 Time 63,246,820 72,538,100 -------------- -------------- Total Deposits 257,623,059 268,318,945 Escrow deposits 438,702 235,633 Accounts payable and accrued expenses 1,861,451 1,048,782 -------------- -------------- Total liabilities 259,923,212 269,603,360 -------------- -------------- Stockholders' equity: Common stock, ($.0001 par value, 10,000,000 shares authorized 1,989,509 issued, 1,776,709 outstanding at March 31, 2014 and 1,780,109 at December 31, 2013) 199 199 Additional paid in capital 9,375,784 9,364,950 Retained earnings 20,098,910 19,960,933 Treasury stock, at cost (212,800 shares at March 31, 2014 and 209,400 at December 31, 2013) (2,160,275) (2,123,546) Unearned ESOP shares (14,090) (56,360) Accumulated other comprehensive gain, net of taxes of $330,082 and $326,003, respectively 394,966 386,572 -------------- -------------- Total stockholders' equity 27,695,494 27,532,748 -------------- -------------- Total liabilities and stockholders' equity $ 287,618,706 $ 297,136,108 ============== ============== VSB Bancorp, Inc. Consolidated Statements of Operations March 31, 2014 (unaudited) Three months Three months ended ended March 31, March 31, 2014 2013 ------------- ------------- Interest and dividend income: Loans receivable $ 1,262,840 $ 1,399,141 Investment securities 850,952 629,911 Other interest earning assets 30,443 40,525 ------------- ------------- Total interest income 2,144,235 2,069,577 Interest expense: NOW 13,768 15,323 Money market 56,397 50,596 Savings 26,076 18,504 Time 91,872 128,591 ------------- ------------- Total interest expense 188,113 213,014 Net interest income 1,956,122 1,856,563 Provision for loan loss 140,000 120,000 ------------- ------------- Net interest income after provision for loan loss 1,816,122 1,736,563 Non-interest income: Loan fees 17,374 12,457 Service charges on deposits 552,906 508,751 Net rental income 10,442 16,986 Other income 47,430 72,407 ------------- ------------- Total non-interest income 628,152 610,601 Non-interest expenses: Salaries and benefits 936,065 949,363 Occupancy expenses 360,313 327,743 Professional fees 101,217 88,772 Legal expenses 95,064 61,862 Computer expense 78,156 73,775 Director fees 65,300 56,350 FDIC and NYSBD assessments 64,500 57,000 Other expenses 292,563 345,426 ------------- ------------- Total non-interest expenses 1,993,178 1,960,291 Income before income taxes 451,096 386,873 ------------- ------------- Provision (benefit) for income taxes: Current 244,929 2,293 Deferred (38,558) 174,709 ------------- ------------- Total provision for income taxes 206,371 177,002 Net income $ 244,725 $ 209,871 ============= ============= Basic income per common share $ 0.14 $ 0.12 ============= ============= Diluted net income per share $ 0.14 $ 0.12 ============= ============= Book value per common share $ 15.59 $ 15.53 ============= =============
Ralph M. Branca
President & CEO
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