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VSB Bancorp, Inc.
Fourth Quarter 2009 and Full Year 2009 Results of Operations
Ralph M. Branca
President & CEO
Staten Island, N. Y. January 13, 2010. VSB Bancorp, Inc. (NASDAQ GM: VSBN) reported net income of $515,460 for the fourth quarter of 2009, a 14.2% decrease from the fourth quarter of 2008. The following unaudited figures were released today. Pre-tax income was $884,953 in the fourth quarter of 2009, compared to $972,481 for the fourth quarter of 2008, a decrease of $87,528, or 9.0%. Net income for the quarter was $515,460, or basic income of $0.29 per common share, compared to a net income of $600,820, or $0.32 basic income per common share, for the quarter ended December 31, 2008.
The $85,360 decrease in net income was due to an increase in non-interest expense of $151,309 and a decrease in non-interest income of $13,293. These expense increases were partially offset by an increase in net interest income of $27,074 and a decrease in provision for loan loss of $50,000.
The $27,074 increase in net interest income for the fourth quarter of 2009 occurred primarily because our cost of funds decreased by $171,123 while our interest income decreased by $144,049. The most significant component of the decrease in interest expense was a $157,451 decrease in interest on time deposits. The decline in interest income resulted from a $209,199 decrease in income from investment securities, due to a 61 basis point decrease in yield, coupled with a $3.1 million decrease in average balance between the periods. The decrease in interest income from investment securities was partially offset by a $66,064 increase in interest income from loans. Interest income from other interest earning assets (principally overnight investments) was relatively stable as an 11 basis point reduction in yield was offset by a $15.9 million increase in average balance
The increase in interest income on loans was due to a $10.1 million increase in the average balance of loans, partially offset by a 25 basis point decrease in yield from the fourth quarter of 2008 to the fourth quarter of 2009. Reductions in the prime rate during 2008 caused our prime based loans to reach their interest rate floors. These floors helped to stabilize 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 61 basis points, as new securities were purchased at market rates significantly below the rates on securities repaid or matured. Non-interest income decreased by $13,293 to $593,521 in the fourth quarter of 2009 compared to the same quarter in 2008.
Comparing the fourth quarter of 2009 with the same quarter in 2008, non-interest expense increased by $151,309, totaling $2.0 million for the fourth quarter of 2009. One of the principal increases was an increase in FDIC and NYSBD assessments due to an increase in FDIC regular assessment rates effective April 1, 2009. 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 projected for the future due to anticipated additional bank failures. 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, and higher reported legal expenses because in the fourth quarter of 2008 we recovered legal fees previously expensed in collecting non-accrual loans.
Total assets increased to $237.0 million at December 31, 2009, an increase of $24.3 million, or 11.4%, from December 31, 2008. The significant components of this increase were a $12.5 million increase in loans, net and an $18.5 million increase in cash and other liquid assets, partially offset by a $6.4 million decline in investment securities. Other assets increased by $748,549 primarily due to the required prospective three-year prepayment of our FDIC assessments. Total deposits, including escrow deposits, increased to $211.0 million, an increase of $22.9 million, or 12.2%. The mix of our deposits also changed as we had increases of $14.9 million in NOW accounts, $11.8 million in demand and checking accounts and $5.3 million increase in money market deposits. The increase in total deposits was partially offset by a decrease in time deposits of $11.7 million from year end 2008. The Bancorps Tier 1 capital ratio was 9.67% at December 31, 2009.
The following information was filed by Vsb Bancorp Inc (VSBN) on Thursday, January 14, 2010 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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