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VSB Bancorp Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 11, 2010 04:17PM
VSB Bancorp Inc. (VSBN) filed Quarterly Report for the period ended 2010-03-31.
Highlight of Business Operations:
Our deposits (including escrow deposits) were $212,650,818 at March 31, 2010, an increase of $1,664,732 or 0.79%, from December 31, 2009. The increase in deposits resulted from increases of $1,032,292 in money market accounts, $882,528 in NOW accounts, $193,394 in time deposits, $67,083 in escrow deposits and $39,593 in savings accounts, partially offset by a decrease of $550,158 in non-interest demand deposits.
Total stockholders equity was $25,063,007 at March 31, 2010, an increase of $579,058 from December 31, 2009. The increase reflected (i) net income of $432,222 for the three months ended March 31, 2010, (ii) an increase in the net unrealized gain on securities available for sale of $222,746 reflecting the positive effect of low market interest rates on the fair value of our securities portfolio and (iii) a reduction of $42,270 in Unearned ESOP shares reflecting the gradual payment of the loan we made to fund the ESOP s purchase of our stock. These increases were partially offset by $103,542 of dividends paid, representing a $0.06 per share cash dividend for the first quarter of 2010.
Interest Income. Interest income was $2,561,725 for the quarter ended March 31, 2010, compared to $2,718,066 for the quarter ended March 31, 2009, a decrease of $156,341, or 5.8%. There were two principal reasons for the decline. First, a $6.4 million decrease in average balance in investment securities between the periods coupled with a decline in market interest rates, was the primary cause of $220,397 decline in interest income on investment securities. Second, the increase in the average balance of other interest-earning assets shifted our asset mix toward our lowest interest-earning asset category due to our decision to become more liquid to provide increased flexibility in the event of an interest rate increase. On the positive side, interest income on loans increased by $59,590.
Interest Expense. Interest expense was $273,315 for the quarter ended March 31, 2010, compared to $410,948 for the quarter ended March 31, 2009, a decrease of $137,633 or 33.5%. The decrease was primarily the result of a reduction in the rates we paid on deposits, principally on time deposits, reflecting a 67 basis point decrease in the cost of time deposits between the periods, due to a general decline in market interest rates. As a result, our average cost of funds, excluding the effect of interest-free demand deposits, decreased to 0.79% from 1.28% between the periods.
Provision for Loan Losses. We took a provision for loan losses of $90,000 for the quarter ended March 31, 2010 compared to a provision for loan losses of $275,000 for the quarter ended March 31, 2009. The $185,000 decrease in the provision was due to a lower level of charge-offs in the 2010 period, which totaled $16,286 for the quarter ended March 31, 2010 as compared to $350,023 in the same period in 2009. We are aggressively collecting these charged-off loans in an effort to recover the amounts charged off whenever we believe that collection efforts are likely to be fruitful.
Income Tax Expense. Income tax expense was $364,486 for the quarter ended March 31, 2010, compared to income tax expense of $319,773 for the same period ended 2009. The increase in income tax expense was due to the $103,884 increase in income before income taxes in the 2010 period. Our effective tax rate for the quarter ended March 31, 2010 was 45.7% and for the quarter ended March 31, 2009 was 46.2%.