News Feed Item

VSB Bancorp, Inc. Second Quarter 2014 Results of Operations

STATEN ISLAND, NY -- (Marketwired) -- 07/09/14 -- VSB Bancorp, Inc. (OTCQB: VSBN) reported net income of $296,535 for the second quarter of 2014, an increase of $73,466, or 32.9%, from the second quarter of 2013. The following unaudited figures were released today. Pre-tax income was $546,643 in the second quarter of 2014, compared to $411,241 for the second quarter of 2013. Net income for the quarter was $296,535, or basic income of $0.17 per common share, compared to a net income of $223,069, or $0.13 basic income per common share, for the quarter ended June 30, 2013. Return on average assets increased from 0.26% in the second quarter of 2013 to 0.41% in the second quarter of 2014, while return on average equity increased from 2.64% to 4.21%.

VSB Bancorp, Inc. is implementing a strategy to increase interest income while not taking excessive interest rate risk in the event that market interest rates increase. This strategy comprises a number of components. We have redeployed a portion of our overnight and short term investments into higher yielding securities investments. We are also aggressively seeking to increase our loan portfolio through a combination of outreach efforts in our community, seeking prudent loans through high quality mortgage brokers, and contacting other banks to seek to acquire participating interests in loans that the other banks originate. Additionally, we are actively seeking to expand our business development department as we look to broaden our lending into the areas outside of Staten Island.

The $73,466 increase in net income was due to an increase in non-interest income of $20,892, and a decrease in non-interest expense of $128,734, partially offset by an increase in the provision for income taxes of $61,936 and an increase in the provision for loan loss of $15,000.

Net interest income was relatively flat for the second quarter of 2014 because our interest income decreased by $28,478, while our cost of funds decreased by $29,254. The decline in interest income resulted from a $234,565 decrease in interest income from loans principally due to a $6.5 million decrease in the average balance of loans and a 31 basis point decrease in yield from the second quarter of 2013 to the second quarter of 2014. This was partially offset by a $224,707 increase in income from investment securities due to a $41.4 million increase in average balance between the periods and a 2 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.

Interest income from other interest earning assets (principally overnight investments) decreased by $18,620 due to a $31.2 million decrease in average balance. Overall, average interest-earning assets increased by $3.7 million from the second quarter of 2013 to the second quarter of 2014.

The decrease in interest expense was principally due to a $43,072 decrease in interest on time accounts, as the average cost declined by 15 basis points and the average balance between periods decreased by $12.2 million. Average demand deposits, an interest free source of funds for us to invest, increased $11.2 million, or 12.6%, from the second quarter of 2013, representing approximately 39% of average total deposits for the second quarter of 2014. Average interest-bearing deposits decreased by $7.5 million, resulting in an overall $3.5 million increase in average total deposits from the second quarter of 2013 to the second quarter of 2014.

The average yield on earning assets increased by 2 basis points and the average cost of funds declined by 5 basis points, from the second quarter of 2013 to the second quarter of 2014. The decline in the cost of funds was driven principally by the decline in the rate we paid on time accounts and a decline in the balance of time accounts as a percentage of total interest-bearing deposits from 57.7% during the second quarter of 2013 to 42.7% during the second quarter of 2014. Time accounts are our highest cost deposit category. These factors that reduced our cost of funds were partially offset by the 8 basis point increase in the cost of saving account deposits. Our interest rate margin increased by 6 basis points from 2.66% to 2.72% when comparing the second quarter of 2014 to the same quarter in 2013, while our interest rate spread increased by 7 basis points from 2.46% to 2.53%. 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 complemented 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 $20,892 to $661,830 in the second quarter of 2014, from $640,938 in the same quarter in 2013. The most significant component of the increase was an $81,181 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 a $47,024 decrease in other income, due primarily to receipt of $36,394 on our business interruption claim related to Superstorm Sandy.

Comparing the second quarter of 2014 with the same quarter in 2013, non-interest expense decreased by $128,734, totaling $2.0 million for the second quarter of 2014. Non-interest expense decreased for various business reasons including a $44,273 decrease in salary and benefit costs due to acceleration of stock benefits due to a retirement and the accrual for severance expenses in the 2013 period, a $10,400 decrease in director fees due to a lower number of meetings and a $139,291 decrease in other non-interest expenses due to: (i) $59,972 writedown of OREO in the 2013 period; (ii) $21,434 in decreased costs of regulatory filings and associated costs, as we completed the deregistering of our Bancorp in 2014; (ii) $18,592 in reduced ATM Fees due to a switch in vendor and reduction of expenses; (iii) $17,862 in reduced OREO costs; and (iv) $16,379 in reduced advertising expenses. The reductions were partially offset by a $43,078 increase in legal fees due to due to costs of litigation for a potential branch site and a higher level of collection costs in 2014.

Total assets decreased to $285.4 million at June 30, 2014, a decrease of $11.8 million, or 4.0%, from December 31, 2013. The significant component of this decrease was a $19.5 million decrease in cash and other liquid assets, partially offset by a $10.0 million increase in investment securities. Our non-performing loans increased from $4.2 million at December 31, 2013 to $4.8 million at June 30, 2014, due primarily to a delinquent loan that is expected to be refinanced in the third quarter of 2014. Total deposits, including escrow deposits, decreased to $255.9 million, a decrease of $12.7 million, or 4.7%. The decrease was primarily attributable to large withdrawals from two customers that re-deployed their deposits into non-bank investments. We had decreases of $11.9 million in time deposits, $3.3 million in NOW accounts, and $892,817 in money market accounts, partially offset by increases of $2.7 million in savings deposits and $628,051 in demand and checking deposits from year end 2013. Our total stockholders' equity increased by $594,240 as the growth of retained earnings, the positive re-evaluation of our available for sale portfolio, and the amortization of our ESOP loan were partially offset by the increase in treasury shares due to the repurchase of 364 shares of common stock in our announced third stock repurchase program. The Bancorp's Tier 1 capital ratio was 9.53% at June 30, 2014.

For the first six months of 2014, pre-tax income increased to $997,739 from $798,114 for the first six months of 2013, a rise of $199,625, or 25.0%. Net income for the six months ended June 30, 2014 was $541,260, or basic net income of $0.30 per common share, as compared to a net income of $432,940, or basic net income of $0.24 per common share, for the six months ended June 30, 2013. The $108,320 increase in net income for the six months ended June 30, 2014 was attributable principally to a $100,335 increase in net interest income, a $95,847 reduction in non-interest expenses and a $38,443 increase in non-interest income, partially offset by a $35,000 increase in the provision for loan losses. The decrease in non-interest expense of $95,847 was due primarily to (i) $87,923 in costs of holding real estate acquired in foreclosure in the 2013 period compared to none in the first six months of 2014; (ii) a $57,571 decrease in employee salary and benefit costs due to the acceleration of stock benefits resulting from a retirement and employee termination expenses in the 2013 period; and (iii) a $36,262 in decreased costs of regulatory filings and associated costs. These decreases were partially offset by a $76,280 increase in legal fees due to ongoing litigation; collection costs and a 2013 recovery of a past due loan on which the legal fees had been expensed; a $44,284 increase in occupancy expenses due to higher costs of repairs and maintenance. Income tax expense increased $91,305 due to the $199,625 increase in pre-tax income. The net interest margin increased by 3 basis points to 2.75% for the six months ended June 30, 2014 from 2.72% in the same period in 2013, as the yield on our investment securities rose and we had a lower level of overnight deposits. Average interest earning assets, for the six months ended June 30, 2014, increased by $7.4 million, or 2.7%, from the same period in 2013.

Raffaele (Ralph) M. Branca, VSB Bancorp, Inc.'s President and CEO, stated, "The expansion of our investment portfolio and our expense control have led to greater earnings in this quarter. We are employing different venues to generate additional loan production as well as looking for additional loan participations." Joseph J. LiBassi, VSB Bancorp, Inc.'s Chairman, stated, "We reported a 33% increase in net income from the 2013 period. We paid our twenty-seventh consecutive dividend to our stockholders, continued buying back our shares, and now our book value per share stands at $15.08. We are always looking for additional opportunities to increase stockholder value and to provide the best in personal service to our customers."

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 $28.1 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).


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, 2014

                                                  June 30,     December 31,
                                                    2014           2013
                                               -------------  -------------


Cash and cash equivalents                      $  46,034,891  $  65,562,635
Investment securities, available for sale         66,853,770     57,517,211
Investment securities, held to maturity           97,827,284     97,146,039
Loans receivable                                  71,177,411     73,081,310
 Allowance for loan loss                          (1,015,584)    (1,093,788)
                                               -------------  -------------
   Loans receivable, net                          70,161,827     71,987,522
Bank premises and equipment, net                   1,981,423      1,992,527
Accrued interest receivable                          592,806        539,092
Other assets                                       1,904,721      2,391,082
                                               -------------  -------------
    Total assets                               $ 285,356,722  $ 297,136,108
                                               =============  =============

Liabilities and stockholders' equity:

  Demand and checking                          $  97,268,620  $  96,640,569
  NOW                                             29,707,033     32,989,791
  Money market                                    41,182,484     42,075,301
  Savings                                         26,764,420     24,075,184
  Time                                            60,684,080     72,538,100
                                               -------------  -------------
    Total Deposits                               255,606,637    268,318,945
Escrow deposits                                      260,658        235,633
Accounts payable and accrued expenses              1,362,439      1,048,782
                                               -------------  -------------
    Total liabilities                            257,229,734    269,603,360
                                               -------------  -------------

Stockholders' equity:
Common stock, ($.0001 par value, 10,000,000
 shares authorized, 2,078,509 issued, 1,865,345
 outstanding at June 30, 2014 and 1,780,109 at
 December 31, 2013)                                      208            199
Additional paid in capital                        10,407,107      9,364,950
Retained earnings                                 20,288,564     19,960,933
Treasury stock, at cost (213,164 shares at June
 30, 2014 and 209,400 at December 31, 2013)       (2,164,432)    (2,123,546)
Unearned ESOP shares                                (984,563)       (56,360)
Accumulated other comprehensive gain, net of
 taxes of $489,212 and $326,003, respectively        580,104        386,572
                                               -------------  -------------

    Total stockholders' equity                    28,126,988     27,532,748
                                               -------------  -------------

    Total liabilities and stockholders' equity $ 285,356,722  $ 297,136,108
                                               =============  =============

                             VSB Bancorp, Inc.
                   Consolidated Statements of Operations
                               June 30, 2014

                                 Three       Three
                                months      months    Six months  Six months
                                 ended       ended       ended       ended
                               June 30,    June 30,    June 30,    June 30,
                                 2014        2013        2014        2013
                              ----------  ----------  ----------  ----------
Interest and dividend income:
  Loans receivable            $1,191,991  $1,426,556  $2,454,831  $2,825,697
  Investment securities          870,847     646,140   1,721,799   1,276,051
  Other interest earning
   assets                         24,914      43,534      55,357      84,059
                              ----------  ----------  ----------  ----------
    Total interest income      2,087,752   2,116,230   4,231,987   4,185,807

Interest expense:
  NOW                             12,538      16,870      26,306      32,193
  Money market                    59,596      49,519     115,993     100,115
  Savings                         27,502      19,429      53,578      37,933
  Time                            74,160     117,232     166,032     245,823
                              ----------  ----------  ----------  ----------
    Total interest expense       173,796     203,050     361,909     416,064

Net interest income            1,913,956   1,913,180   3,870,078   3,769,743
Provision for loan loss           30,000      15,000     170,000     135,000
                              ----------  ----------  ----------  ----------
    Net interest income after
     provision for loan loss   1,883,956   1,898,180   3,700,078   3,634,743

Non-interest income:
  Loan fees                         (942)     11,276      16,432      23,733
  Service charges on deposits    593,061     511,880   1,145,967   1,020,631
  Net rental income               17,203      18,250      27,645      35,236
  Other income                    52,508      99,532      99,938     171,939
                              ----------  ----------  ----------  ----------
    Total non-interest income    661,830     640,938   1,289,982   1,251,539

Non-interest expenses:
  Salaries and benefits          957,448   1,001,721   1,893,513   1,951,084
  Occupancy expenses             338,316     326,602     698,629     654,345
  Legal expense                   94,376      51,298     189,440     113,160
  Professional fees               79,419      82,200     180,636     170,972
  Computer expense                92,267      79,048     170,423     152,823
  Director fees                   57,500      67,900     122,800     124,250
  FDIC and NYSBD assessments      58,000      58,000     122,500     115,000
  Other expenses                 321,817     461,108     614,380     806,534
                              ----------  ----------  ----------  ----------
    Total non-interest
     expenses                  1,999,143   2,127,877   3,992,321   4,088,168

      Income before income
       taxes                     546,643     411,241     997,739     798,114
                              ----------  ----------  ----------  ----------

Provision (benefit) for income
  Current                        253,513      99,330     498,442     101,623
  Deferred                        (3,405)     88,842     (41,963)    263,551
                              ----------  ----------  ----------  ----------
    Total provision for income
     taxes                       250,108     188,172     456,479     365,174

        Net income            $  296,535  $  223,069  $  541,260  $  432,940
                              ==========  ==========  ==========  ==========

Basic net income per common
 share                        $     0.17  $     0.13  $     0.30  $     0.24
                              ==========  ==========  ==========  ==========

Diluted net income per share  $     0.17  $     0.13  $     0.30  $     0.24
                              ==========  ==========  ==========  ==========

Book value per common share   $    15.08  $    15.29  $    15.08  $    15.29
                              ==========  ==========  ==========  ==========

Contact Name:
Ralph M. Branca
President & CEO
(718) 979-1100

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
In his session at @ThingsExpo, Eric Lachapelle, CEO of the Professional Evaluation and Certification Board (PECB), provided an overview of various initiatives to certify the security of connected devices and future trends in ensuring public trust of IoT. Eric Lachapelle is the Chief Executive Officer of the Professional Evaluation and Certification Board (PECB), an international certification body. His role is to help companies and individuals to achieve professional, accredited and worldwide re...
Both SaaS vendors and SaaS buyers are going “all-in” to hyperscale IaaS platforms such as AWS, which is disrupting the SaaS value proposition. Why should the enterprise SaaS consumer pay for the SaaS service if their data is resident in adjacent AWS S3 buckets? If both SaaS sellers and buyers are using the same cloud tools, automation and pay-per-transaction model offered by IaaS platforms, then why not host the “shrink-wrapped” software in the customers’ cloud? Further, serverless computing, cl...
You know you need the cloud, but you’re hesitant to simply dump everything at Amazon since you know that not all workloads are suitable for cloud. You know that you want the kind of ease of use and scalability that you get with public cloud, but your applications are architected in a way that makes the public cloud a non-starter. You’re looking at private cloud solutions based on hyperconverged infrastructure, but you’re concerned with the limits inherent in those technologies.
Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more business becomes digital the more stakeholders are interested in this data including how it relates to business. Some of these people have never used a monitoring tool before. They have a question on their mind like “How is my application doing” but no id...
Join us at Cloud Expo June 6-8 to find out how to securely connect your cloud app to any cloud or on-premises data source – without complex firewall changes. More users are demanding access to on-premises data from their cloud applications. It’s no longer a “nice-to-have” but an important differentiator that drives competitive advantages. It’s the new “must have” in the hybrid era. Users want capabilities that give them a unified view of the data to get closer to customers and grow business. The...
The current age of digital transformation means that IT organizations must adapt their toolset to cover all digital experiences, beyond just the end users’. Today’s businesses can no longer focus solely on the digital interactions they manage with employees or customers; they must now contend with non-traditional factors. Whether it's the power of brand to make or break a company, the need to monitor across all locations 24/7, or the ability to proactively resolve issues, companies must adapt to...
It is ironic, but perhaps not unexpected, that many organizations who want the benefits of using an Agile approach to deliver software use a waterfall approach to adopting Agile practices: they form plans, they set milestones, and they measure progress by how many teams they have engaged. Old habits die hard, but like most waterfall software projects, most waterfall-style Agile adoption efforts fail to produce the results desired. The problem is that to get the results they want, they have to ch...
IoT solutions exploit operational data generated by Internet-connected smart “things” for the purpose of gaining operational insight and producing “better outcomes” (for example, create new business models, eliminate unscheduled maintenance, etc.). The explosive proliferation of IoT solutions will result in an exponential growth in the volume of IoT data, precipitating significant Information Governance issues: who owns the IoT data, what are the rights/duties of IoT solutions adopters towards t...
Wooed by the promise of faster innovation, lower TCO, and greater agility, businesses of every shape and size have embraced the cloud at every layer of the IT stack – from apps to file sharing to infrastructure. The typical organization currently uses more than a dozen sanctioned cloud apps and will shift more than half of all workloads to the cloud by 2018. Such cloud investments have delivered measurable benefits. But they’ve also resulted in some unintended side-effects: complexity and risk. ...
With the introduction of IoT and Smart Living in every aspect of our lives, one question has become relevant: What are the security implications? To answer this, first we have to look and explore the security models of the technologies that IoT is founded upon. In his session at @ThingsExpo, Nevi Kaja, a Research Engineer at Ford Motor Company, discussed some of the security challenges of the IoT infrastructure and related how these aspects impact Smart Living. The material was delivered interac...
The taxi industry never saw Uber coming. Startups are a threat to incumbents like never before, and a major enabler for startups is that they are instantly “cloud ready.” If innovation moves at the pace of IT, then your company is in trouble. Why? Because your data center will not keep up with frenetic pace AWS, Microsoft and Google are rolling out new capabilities. In his session at 20th Cloud Expo, Don Browning, VP of Cloud Architecture at Turner, posited that disruption is inevitable for comp...
In 2014, Amazon announced a new form of compute called Lambda. We didn't know it at the time, but this represented a fundamental shift in what we expect from cloud computing. Now, all of the major cloud computing vendors want to take part in this disruptive technology. In his session at 20th Cloud Expo, Doug Vanderweide, an instructor at Linux Academy, discussed why major players like AWS, Microsoft Azure, IBM Bluemix, and Google Cloud Platform are all trying to sidestep VMs and containers wit...
While DevOps most critically and famously fosters collaboration, communication, and integration through cultural change, culture is more of an output than an input. In order to actively drive cultural evolution, organizations must make substantial organizational and process changes, and adopt new technologies, to encourage a DevOps culture. Moderated by Andi Mann, panelists discussed how to balance these three pillars of DevOps, where to focus attention (and resources), where organizations might...
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend 21st Cloud Expo October 31 - November 2, 2017, at the Santa Clara Convention Center, CA, and June 12-14, 2018, at the Javits Center in New York City, NY, and learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
No hype cycles or predictions of zillions of things here. IoT is big. You get it. You know your business and have great ideas for a business transformation strategy. What comes next? Time to make it happen. In his session at @ThingsExpo, Jay Mason, Associate Partner at M&S Consulting, presented a step-by-step plan to develop your technology implementation strategy. He discussed the evaluation of communication standards and IoT messaging protocols, data analytics considerations, edge-to-cloud tec...