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VSB Bancorp Inc. Reports Operating Results (10-Q)

August 10, 2010 | About:
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10qk

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VSB Bancorp Inc. (VSBN) filed Quarterly Report for the period ended 2010-06-30.

Vsb Bancorp Inc. has a market cap of $19.95 million; its shares were traded at around $10.75 with a P/E ratio of 10.14 and P/S ratio of 1.53. The dividend yield of Vsb Bancorp Inc. stocks is 2.23%.

Highlight of Business Operations:

Our deposits (including escrow deposits) were $226,080,517 at June 30, 2010, an increase of $15,094,431 or 7.15%, from December 31, 2009. The increase in deposits resulted from increases of $10,675,750 in NOW accounts, $1,834,307 in non-interest demand deposits, $1,205,544 time deposits, $1,019,900 in savings accounts and $413,890 in money market accounts, partially offset by a decrease of $54,960 in escrow deposits.

Total stockholders equity was $25,921,867 at June 30, 2010, an increase of $1,437,918 from December 31, 2009. The increase reflected: (i) $681,935 net increase in retained earnings due to net income of $894,598 for the six months ended June 30, 2010 partially offset by $212,663 of dividends paid in 2010; (ii) an increase in the net unrealized gain on securities available for sale of $405,237 reflecting the positive effect of low market interest rates on the fair value of our securities portfolio; (iii) a $292,207 increase due to the exercise by officers and directors of options to purchase 44,375 shares of common stock; and (iv) a reduction of $84,539 in Unearned ESOP shares reflecting the gradual payment of the loan we made to fund the ESOP s purchase of our stock. The initial implementation of the RRP resulted in a $395,580 reduction in additional paid in capital and a corresponding reduction in Treasury shares, with no net change in stockholders equity. Additionally, there was a $16,346 increase in Treasury shares representing the cost of 1,366 shares of common stock we repurchased in the second quarter of 2010 under our Company s previously announced stock repurchase plans.

Interest Income. Interest income was $2,588,906 for the quarter ended June 30, 2010, compared to $2,643,549 for the quarter ended June 30, 2009, a decrease of $54,643, or 2.1%. There were two principal reasons for the decline. First, a $6.8 million decrease in average balance in investment securities between the periods coupled with a decline in market interest rates, were the principal causes of a $190,635 decline in interest income on investment securities. Second, an 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 $128,002 as the average balance of loans and the associated yield increased between the periods.

Provision for Loan Losses. We took a provision for loan losses of $20,000 for the quarter ended June 30, 2010 compared to a provision for loan losses of $100,000 for the quarter ended June 30, 2009. The $80,000 decrease in the provision was due to our evaluation of our loan portfolio. A number of factors justified the reduction. Although we experienced an increase in non-performing loans from $2,005,654 at June 30, 2009 to $6,071,916 at June 30, 2010, we individually evaluated the secured non-performing loans based primarily upon updated appraisals and we determined that the level of our allowance was appropriate to address inherent losses. In addition, there were no charge-offs for the quarter ended June 30, 2010 as compared to $116,871 in the same period in 2009. We also had recoveries (which are added back to the allowance for loan losses) of $32,625 in the second quarter of 2010, compared to recoveries of $18,352 in the second quarter of 2009. We are aggressively collecting charged-off loans in an effort to recover the amounts charged off whenever we believe that collection efforts are likely to be fruitful. Overall, our allowance for loan losses increased from $928,064 at June 30, 2009 to $1,214,187 at June 30, 2010.

Interest Income. Interest income was $5,150,631 for the six months ended June 30, 2010, compared to $5,361,615 for the six months ended June 30, 2009, a decrease of $210,984, or 3.9%. There were two principal reasons for the decline. First, a $6.6 million decrease in average balance in investment securities between the periods coupled with a decline in market interest rates, were the principal causes of a $411,032 decline in interest income on investment securities. Second, an 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 $187,592 as the average balance of loans increased between the periods due to our efforts to increase our loan portfolio.

Provision for Loan Losses. We took a provision for loan losses of $110,000 for the six month ended June 30, 2010 compared to a provision for loan losses of $375,000 for the six months ended June 30, 2009. The $265,000 decrease in the provision was due to our evaluation of our loan portfolio. Although we experienced an increase in non-performing loans from $2,005,654 at June 30, 2009 to $6,071,916 at June 30, 2010, we individually evaluated the secured non-performing loans based primarily upon updated appraisals and we determined that the level of our allowance was appropriate to address inherent losses. In addition, charge-offs totaled $16,286 for the six months ended June 30, 2010 as compared to $466,893 in the same period in 2009 while we had recoveries of $57,019 in the first six months of 2010 compared to recoveries of $ 32,081 during the first six months of 2009. We are aggressively collecting charged-off loans in an effort to recover the amounts charged off whenever we believe that collection efforts are likely to be fruitful. Overall, our allowance for loan losses increased from $928,064 at June 30, 2009 to $1,214,187 at June 30, 2010.

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