VSB Bancorp, Inc.
Fourth Quarter and Year End 2011 Results of Operations
Increases Capital $1.1 Million in 2011
Announces Its Sixth Branch Location
Ralph M. Branca
Staten Island, N. Y. —January 11, 2012. VSB Bancorp, Inc. (NASDAQ GM: VSBN) reported net income of $162,668 for the fourth quarter of 2011, a decrease of $316,502, or 66.1%, from the fourth quarter of 2010. The following unaudited figures were released today. Pre-tax income was $265,668 in the fourth quarter of 2011, compared to $883,317, a decrease of $617,649, or 69.9%, from the fourth quarter of 2010. Net income for the quarter was $162,668, or basic income of $0.09 per common share, compared to net income of $479,170, or $0.27 basic income per common share, for the quarter ended December 31, 2010.
The $316,502 decrease in net income for the fourth quarter of 2011 was due to an increase in the provision for loan loss of $435,000 and a decrease in net interest income of $288,522, partially offset by a decrease in income tax expense of $301,147, a decrease in non-interest expense of $94,159 and an increase in non-interest income of $11,714. The increase in the provision for loan losses was due to increased charge-offs, and write downs in the quarter, due to the reduction in collateral values on some of the non-performing loans. The increase in the provision for loan losses led to an increase in our allowance for loan losses, which reached 1.64% of total loans at December 31, 2011, compared to 1.56% at December 31, 2010.
The $288,522 decrease in net interest income for the fourth quarter of 2011 was primarily caused by a decline in our average yield on investment securities due to the continuation of low market interest rates and an increase in loans in default on which the borrower ceased paying interest. Our interest income decreased by $317,139, while our cost of funds decreased by only $28,617. We experienced a $178,832, or 17.4%, decrease in income from investment securities, due to a 54 basis point decrease in average yield and a $3.2 million, or 2.8%, decrease in average balance between the periods. Interest income from loans decreased by $141,516, or 9.6%, due to a 95 basis point decrease in average yield from the fourth quarter of 2010 to the fourth quarter of 2011 and the reversal of $67,095 of accrued but uncollected interest income on loans that we initially categorized as non-accrual in the fourth quarter.
The decrease in the yield on loans was partially offset by a $3.0 million, or 3.8%, increase in the average balance of loans and by the collection of $59,409 of interest received on non-accrual loans. The average balance of non-accrual loans increased by $1.2 million, from $5.9 million the fourth quarter of 2010 to $7.2 million during the fourth quarter of 2011, while the balance of non-accrual loans for which we received interest and recognized it on a cash basis decreased by $2.4 million in that period. This shift in non-accrual loans was the principal cause of the 95 basis point drop in our average loan yield. Substantially all of the new non-accrual loans are secured by mortgages on real estate located on Staten Island.
Interest income from other interest earning assets (principally overnight investments) increased $3,209 due to a $3.3 million increase in average balance and a 1 basis point increase in yield. Overall, average interest-earning assets increased by $3.1 million, or 1.3%, from the fourth quarter of 2010 to the fourth quarter of 2011.
The most significant component of the decrease in interest expense was a $15,826 decrease in interest on NOW accounts as the average cost declined by 13 basis points due to a continuation of low market interest rates. Average demand deposits, an interest free source of funds for us to invest, increased by $6.0 million, from $69.9 million, or 32.9% of total deposits in the fourth quarter of 2010, to $75.9 million, or 35.3% of total deposits in the fourth quarter of 2011. Average interest-bearing deposits decreased by $3.8 million, resulting in an overall $2.2 million increase in average total deposits from the fourth quarter of 2010 to the fourth quarter of 2011.
The following information was filed by Vsb Bancorp Inc (VSBN) on Thursday, January 12, 2012 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.