UNITED STATESSECURITY AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20849

FORM 10-Q

|                                     |                                                                                         
|------------------------------------ | ----------------------------------------------------------------------------------------
|x                                    | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
 THE SECURITIES EXCHANGE ACT OF 1934
|FOR THE QUARTER ENDEDMarch 31,
 2009
|                                     |                                                                                         
|o                                    | TRANSITION REPORT PURSUANT TO SECTION 13 OF THE
 EXCHANGE ACT FOR THE TRANSITION PERIOD 

COMMISSION FILE
NUMBER 0-50237

|                                                               
|---------------------------------------------------------------
|VSB Bancorp, Inc.                                              
|                                                               
|(Exact name of
 registrant as specified in its charter)        
|                                                               
|New York                                                       
|                                                               
|(State or other
 jurisdiction of incorporation or organization)
|                                                               
|11 - 3680128                                                   
|                                                               
|(I. R. S. Employer
 Identification No.)                        
|                                                               
|4142 Hylan Boulevard, Staten
 Island, New York 10308           
|                                                               
|(Address of principal
 executive offices)                      
|                                                               
|(718) 979-1100                                                 
|                                                               
|Registrants telephone
 number                                 
|                                                               
|Common Stock                                                   
|                                                               
|(Title of Class)                                               

Indicate by check mark whether the registrant (1)
filed all reports required to be filed by Section 13 or 15(d) of the Exchange
Act during the past 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.      Yes x No o

Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes o No o


Indicate by check mark whether the registrant is a
large accelerated filer, a non-accelerated filer or a smaller reporting
company. See definition of large accelerated filer, accelerated filer and
smaller reporting company in Rule 12b-2 of the Exchange Act.

|                          |                     |                         |                            
|------------------------- | ------------------- | ----------------------- | ---------------------------
|Large Accelerated Filer o | Accelerated Filer o | Non-Accelerated Filer o | Smaller Reporting Company x

Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act): Yes o No x


Par Value: $0.0001 Class of
Common Stock

The Registrant had 1,829,241
common shares outstanding as of May 6, 2009.

---



CROSS REFERENCE INDEX

|                |                                                                                                                                                         |    |          
|--------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------- | -- | ---------
|                |                                                                                                                                                         |    | Page     
|                |                                                                                                                                                         |    |          
|                | PART
 I                                                                                                                                                 |    |          
|                |                                                                                                                                                         |    |          
|Item 1          | Consolidated Statements of Financial Condition as of
 March 31, 2009 and December 31, 2008 (unaudited)                                                  |    | 4        
|                | Consolidated Statements of Operations for the Three
 Months Ended March 31, 2009 and 2008 (unaudited)                                                   |    | 5        
|                | Consolidated Statements of Changes in
Stockholders Equity
 for the Three Months Ended March 31, 2009 and the Year Ended December 31,
 2008 (unaudited) |    | 6        
|                | Consolidated Statements of Cash Flows for the Three
 Months Ended March 31, 2009 and 2008 (unaudited)                                                   |    | 7        
|                | Notes to Consolidated Financial Statements for the
 Three Months Ended March 31, 2009 and 2008 (unaudited)                                              |    | 8
 to 15 
|                |                                                                                                                                                         |    |          
|Item 2          | Managements Discussion and Analysis of Financial
 Condition and Results of Operations                                                                  |    | 15
 to 21
|Item 3          | Control and Procedures                                                                                                                                  |    | 22       
|                |                                                                                                                                                         |    |          
|                | PART II                                                                                                                                                 |    |          
|                |                                                                                                                                                         |    |          
|Item 1          | Legal Proceedings                                                                                                                                       |    | 22
 to 23
|Item 4          | Submission of Matters to a Vote of Security
Holders                                                                                                     |    | 23       
|Item 5          | Other Information                                                                                                                                       |    | 24       
|                |                                                                                                                                                         |    |          
|Signature
 Page |                                                                                                                                                         | 25
|                |                                                                                                                                                         |   
|                | Exhibit 31.1, 31.2, 32.1,
 32.2                                                                                                                         |    | 26 to 29 

2

---



Forward-Looking
Statements

When
used in this periodic report, or in any written or oral statement made by us or
our officers, directors or employees, the words and phrases will result,
expect, will continue, anticipate, estimate, project, or similar
terms are intended to identify forward-looking statements. A variety of
factors could cause our actual results and experiences to differ materially
from the anticipated results or other expectations expressed in any
forward-looking statements. Some of the risks and uncertainties that may affect
our operations, performance, development and results, the interest rate
sensitivity of our assets and liabilities, and the adequacy of our loan loss
allowance, include, but are not limited to:

| |   |                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | deterioration in local, regional, national or global
 economic conditions which could result in, among other things, an increase in
 loan delinquencies, a decrease in property values, or a change in the real
 estate turnover rate;
| | · | changes in market interest rates or changes in the
 speed at which market interest rates change;                                                                                                                                      
| | · | changes in laws and regulations affecting the
 financial service industry;                                                                                                                                                            
| | · | changes in competition; and                                                                                                                                                                                                           
| | · | changes in consumer preferences by our customers or
 the customers of our business borrowers.                                                                                                                                         

Please
do not place undue reliance on any forward-looking statement, which speaks only
as of the date made. There are many factors, including those described above,
that could affect our future business activities or financial performance and
could cause our actual future results or circumstances to differ materially
from those we anticipate or project. We do not undertake any obligation to
update any forward-looking statement after it is made.

3

---



VSB Bancorp, Inc.Consolidated Statements of Financial Condition(unaudited)

|                                                                                                                                                                                            |  |                |             |                   |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ----------- | ----------------- | - | ----------- | -
|                                                                                                                                                                                            |  | March 31, 2009 |             | December 31, 2008 |  
|                                                                                                                                                                                            |  |                |             |                   |  
|                                                                                                                                                                                           
|Assets:                                                                                                                                                                                     |  |                |             |                   |   |             |  
|Cash and due from banks                                                                                                                                                                     |  | $              | 29,489,943  |                   | $ | 21,240,223  |  
|Investment securities, available for sale                                                                                                                                                   |  |                | 120,401,021 |                   |   | 120,288,588 |  
|Loans receivable                                                                                                                                                                            |  |                | 68,718,740  |                   |   | 66,246,652  |  
|Allowance for loan loss                                                                                                                                                                     |  |                | (926,583    | )                 |   | (987,876    | )
|                                                                                                                                                                                            |  |                |             |                   |   |             |  
|Loans receivable, net                                                                                                                                                                       |  |                | 67,792,157  |                   |   | 65,258,776  |  
|Bank premises and equipment, net                                                                                                                                                            |  |                | 3,584,229   |                   |   | 3,695,822   |  
|Accrued interest receivable                                                                                                                                                                 |  |                | 720,190     |                   |   | 723,473     |  
|Deferred taxes                                                                                                                                                                              |  |                |            |                   |   | 525,839     |  
|Other assets                                                                                                                                                                                |  |                | 684,857     |                   |   | 925,007     |  
|                                                                                                                                                                                            |  |                |             |                   |   |             |  
|Total assets                                                                                                                                                                                |  | $              | 222,672,397 |                   | $ | 212,657,728 |  
|                                                                                                                                                                                            |  |                |             |                   |   |             |  
|                                                                                                                                                                                            |  |                |             |                   |   |             |  
|Liabilities and stockholders equity:                                                                                                                                                       |  |                |             |                   |   |             |  
|Liabilities:                                                                                                                                                                                |  |                |             |                   |   |             |  
|Deposits:                                                                                                                                                                                   |  |                |             |                   |   |             |  
|Demand and checking                                                                                                                                                                         |  | $              | 60,174,572  |                   | $ | 58,598,579  |  
|NOW                                                                                                                                                                                         |  |                | 34,464,218  |                   |   | 17,636,154  |  
|Money market                                                                                                                                                                                |  |                | 23,805,412  |                   |   | 22,829,789  |  
|Savings                                                                                                                                                                                     |  |                | 13,646,234  |                   |   | 12,412,561  |  
|Time                                                                                                                                                                                        |  |                | 64,502,605  |                   |   | 76,323,494  |  
|                                                                                                                                                                                            |  |                |             |                   |   |             |  
|Total Deposits                                                                                                                                                                              |  |                | 196,593,041 |                   |   | 187,800,577 |  
|Escrow deposits                                                                                                                                                                             |  |                | 439,511     |                   |   | 308,872     |  
|Accounts payable and accrued expenses                                                                                                                                                       |  |                | 1,710,951   |                   |   | 1,344,512   |  
|                                                                                                                                                                                            |  |                |             |                   |   |             |  
|Total liabilities                                                                                                                                                                           |  |                | 198,743,503 |                   |   | 189,453,961 |  
|                                                                                                                                                                                            |  |                |             |                   |   |             |  
|                                                                                                                                                                                            |  |                |             |                   |   |             |  
|Stockholders equity:                                                                                                                                                                       |  |                |             |                   |   |             |  
|Common stock, ($.0001 par value, 3,000,000 shares
authorized,
 1,923,884 issued, 1,829,241 outstanding at March 31, 2009 and 1,923,884
 issued, 1,882,461 outstanding at December 31, 2008) |  |                | 192         |                   |   | 192         |  
|Additional paid in capital                                                                                                                                                                  |  |                | 9,177,764   |                   |   | 9,200,010   |  
|Retained earnings                                                                                                                                                                           |  |                | 14,980,327  |                   |   | 14,714,143  |  
|Treasury stock, at cost (94,643 shares at March 31,
2009 and 41,423
 shares at December 31, 2008)                                                                                           |  |                | (858,863    | )                 |   | (395,891    | )
|Unearned Employee Stock Ownership Plan
shares                                                                                                                                               |  |                | (859,480    | )                 |   | (901,750    | )
|Accumulated other comprehensive gain, net of taxes
of $1,255,662 and
 $488,735, respectively                                                                                                |  |                | 1,488,954   |                   |   | 587,063     |  
|                                                                                                                                                                                            |  |                |             |                   |   |             |  
|                                                                                                                                                                                           
|Total stockholders equity                                                                                                                                                                  |  |                | 23,928,894  |                   |   | 23,203,767  |  
|                                                                                                                                                                                            |  |                |             |                   |   |             |  
|                                                                                                                                                                                           
|Total liabilities and stockholders
equity                                                                                                                                                  |  | $              | 222,672,397 |                   | $ | 212,657,728 |  
|                                                                                                                                                                                            |  |                |             |                   |   |             |  

See notes to consolidated financial
statements.

4

---



VSB Bancorp, Inc.Consolidated Statements of Operations
(unaudited)

|                                                  |  |                                     |           |                                     |   |           |  
|------------------------------------------------- |  | ----------------------------------- | --------- | ----------------------------------- | - | --------- | -
|                                                  |  | Three months
 ended
 March 31, 2009 |           | Three months
 ended
 March 31, 2008 |  
|                                                  |  |                                     |           |                                     |  
|Interest and dividend income:                     |  |                                     |           |                                     |   |           |  
|Loans receivable                                  |  | $                                   | 1,330,706 |                                     | $ | 1,244,491 |  
|Investment securities                             |  |                                     | 1,382,619 |                                     |   | 1,384,297 |  
|Other interest earning assets                     |  |                                     | 4,741     |                                     |   | 102,293   |  
|                                                  |  |                                     |           |                                     |   |           |  
|Total interest income                             |  |                                     | 2,718,066 |                                     |   | 2,731,081 |  
|                                                  |  |                                     |           |                                     |   |           |  
|Interest expense:                                 |  |                                     |           |                                     |   |           |  
|NOW                                               |  |                                     | 26,783    |                                     |   | 32,231    |  
|Money market                                      |  |                                     | 60,511    |                                     |   | 96,092    |  
|Savings                                           |  |                                     | 13,102    |                                     |   | 18,982    |  
|Subordinated debt                                 |  |                                     |          |                                     |   | 89,040    |  
|Time                                              |  |                                     | 310,552   |                                     |   | 519,447   |  
|                                                  |  |                                     |           |                                     |   |           |  
|Total interest expense                            |  |                                     | 410,948   |                                     |   | 755,792   |  
|                                                  |  |                                     |           |                                     |   |           |  
|Net interest income                               |  |                                     | 2,307,118 |                                     |   | 1,975,289 |  
|Provision for loan loss                           |  |                                     | 275,000   |                                     |   | 30,000    |  
|                                                  |  |                                     |           |                                     |   |           |  
|Net interest income after provision for loan
loss |  |                                     | 2,032,118 |                                     |   | 1,945,289 |  
|                                                  |  |                                     |           |                                     |   |           |  
|                                                  |  |                                     |           |                                     |   |           |  
|Non-interest income:                              |  |                                     |           |                                     |   |           |  
|Loan fees                                         |  |                                     | 25,751    |                                     |   | 22,223    |  
|Service charges on deposits                       |  |                                     | 545,862   |                                     |   | 479,615   |  
|Net rental income (loss)                          |  |                                     | 11,517    |                                     |   | (1,011    | )
|Other income                                      |  |                                     | 30,039    |                                     |   | 65,075    |  
|                                                  |  |                                     |           |                                     |   |           |  
|Total non-interest income                         |  |                                     | 613,169   |                                     |   | 565,902   |  
|                                                  |  |                                     |           |                                     |   |           |  
|                                                  |  |                                     |           |                                     |   |           |  
|Non-interest expenses:                            |  |                                     |           |                                     |   |           |  
|Salaries and benefits                             |  |                                     | 911,983   |                                     |   | 910,408   |  
|Occupancy expenses                                |  |                                     | 379,081   |                                     |   | 357,724   |  
|Legal expense                                     |  |                                     | 74,649    |                                     |   | 54,086    |  
|Professional fees                                 |  |                                     | 77,000    |                                     |   | 61,400    |  
|Computer expense                                  |  |                                     | 66,800    |                                     |   | 55,106    |  
|Directors fees                                   |  |                                     | 51,100    |                                     |   | 57,250    |  
|FDIC and NYSBD assessments                        |  |                                     | 75,500    |                                     |   | 46,500    |  
|Other expenses                                    |  |                                     | 316,350   |                                     |   | 295,676   |  
|                                                  |  |                                     |           |                                     |   |           |  
|Total non-interest expenses                       |  |                                     | 1,952,463 |                                     |   | 1,838,150 |  
|                                                  |  |                                     |           |                                     |   |           |  
|                                                  |  |                                     |           |                                     |   |           |  
|Income before income taxes                        |  |                                     | 692,824   |                                     |   | 673,041   |  
|                                                  |  |                                     |           |                                     |   |           |  
|Provision/(benefit) for income taxes:             |  |                                     |           |                                     |   |           |  
|Current                                           |  |                                     | 425,850   |                                     |   | 332,900   |  
|Deferred                                          |  |                                     | (106,077  | )                                   |   | (21,804   | )
|                                                  |  |                                     |           |                                     |   |           |  
|Total provision for income taxes                  |  |                                     | 319,773   |                                     |   | 311,096   |  
|                                                  |  |                                     |           |                                     |   |           |  
|                                                 
|Net income                                        |  | $                                   | 373,051   |                                     | $ | 361,945   |  
|                                                  |  |                                     |           |                                     |   |           |  
|                                                  |  |                                     |           |                                     |   |           |  
|Earnings per share:                               |  |                                     |           |                                     |   |           |  
|Basic                                             |  | $                                   | 0.21      |                                     | $ | 0.20      |  
|                                                  |  |                                     |           |                                     |   |           |  
|                                                 
|Diluted                                           |  | $                                   | 0.20      |                                     | $ | 0.19      |  
|                                                  |  |                                     |           |                                     |   |           |  
|                                                 
|Comprehensive income                              |  | $                                   | 1,274,942 |                                     | $ | 1,405,376 |  
|                                                  |  |                                     |           |                                     |   |           |  
|                                                 
|Book value per common share                       |  | $                                   | 13.08     |                                     | $ | 11.68     |  
|                                                  |  |                                     |           |                                     |   |           |  

See notes to consolidated financial
statements.

5

---



VSB Bancorp, Inc.Consolidated Statements of Changes in Stockholders Equity
Year Ended December 31, 2008 and Three Months Ended March 31, 2009
(unaudited)

|                                                                                |  |                           |           |               |   |                              |  |                    |           |                           |   |                        |   |                                                 |          |                              |   |            |   |   |           |   |   |            |  
|------------------------------------------------------------------------------- |  | ------------------------- | --------- | ------------- | - | ---------------------------- |  | ------------------ | --------- | ------------------------- | - | ---------------------- | - | ----------------------------------------------- | -------- | ---------------------------- | - | ---------- | - | - | --------- | - | - | ---------- | -
|                                                                                |  | Number of
 Common
 Shares |           | Common
 Stock |   | Additional
 Paid-In
 Capital |  | Retained
 Earnings |           | Treasury
 Stock,
 at cost |   | Unearned
 ESOP
 Shares |   | Accumulated
 Other
 Comprehensive
 Income(Loss) |          | Total
 Stockholders
 Equity |  
|                                                                                |  |                           |           |               |   |                              |  |                    |           |                           |   |                        |   |                                                 |          |                              |  
|                                                                                |  |                           |           |               |   |                              |  |                    |           |                           |   |                        |   |                                                 |          |                              |  
|Balance at January 1, 2008                                                      |  |                           | 1,900,509 |               | $ | 190                          |  | $                  | 9,107,119 |                           | $ | 13,226,395             |   | $                                               |         |                              | $ | (1,070,827 | ) | $ | (379,072  | ) | $ | 20,883,805 |  
|                                                                                |  |                           |           |               |   |                              |  |                    |           |                           |   |                        |   |                                                 |          |                              |   |            |   |   |           |   |   |            |  
|Exercise of stock option, including tax benefit                                 |  |                           | 23,375    |               |   | 2                            |  |                    | 164,857   |                           |   |                        |   |                                                 |          |                              |   |            |   |   |           |   |   | 164,859    |  
|Stock-based compensation                                                        |  |                           |           |               |   |                              |  |                    | 1,278     |                           |   |                        |   |                                                 |          |                              |   |            |   |   |           |   |   | 1,278      |  
|Amortization of earned portion of ESOP common stock                             |  |                           |           |               |   |                              |  |                    |           |                           |   |                        |   |                                                 |          |                              |   | 169,077    |   |   |           |   |   | 169,077    |  
|Amortization of cost over fair value - ESOP                                     |  |                           |           |               |   |                              |  |                    | (73,244   | )                         |   |                        |   |                                                 |          |                              |   |            |   |   |           |   |   | (73,244    | )
|Transfer from ESOP repurchase obligation                                        |  |                           |           |               |   |                              |  |                    |           |                           |   |                        |   |                                                 |          |                              |   |            |   |   |           |   |   |           |  
|Cash dividends declared ($0.24 per share)                                       |  |                           |           |               |   |                              |  |                    |           |                           |   | (443,996               | ) |                                                 |          |                              |   |            |   |   |           |   |   | (443,996   | )
|Purchase of treasury stock, at cost                                             |  |                           | (41,423   | )             |   |                              |  |                    |           |                           |   |                        |   |                                                 | (395,891 | )                            |   |            |   |   |           |   |   | (395,891   | )
|Comprehensive income:                                                           |  |                           |           |               |   |                              |  |                    |           |                           |   |                        |   |                                                 |          |                              |   |            |   |   |           |   |   |            |  
|Net income                                                                      |  |                           |           |               |   |                              |  |                    |           |                           |   | 1,931,744              |   |                                                 |          |                              |   |            |   |   |           |   |   | 1,931,744  |  
|Other comprehensive income, net:                                                |  |                           |           |               |   |                              |  |                    |           |                           |   |                        |   |                                                 |          |                              |   |            |   |   |           |   |   |            |  
|Change in unrealized loss on securities available
for sale, net of tax
 effects |  |                           |          |               |   |                             |  |                    |          |                           |   |                       |   |                                                 |         |                              |   |           |   |   | 966,135   |   |   | 966,135    |  
|                                                                                |  |                           |           |               |   |                              |  |                    |           |                           |   |                        |   |                                                 |          |                              |   |            |   |   |           |   |   |            |  
|Total comprehensive income                                                      |  |                           |           |               |   |                              |  |                    |           |                           |   |                        |   |                                                 |          |                              |   |            |   |   |           |   |   | 2,897,879  |  
|                                                                                |  |                           |           |               |   |                              |  |                    |           |                           |   |                        |   |                                                 |          |                              |   |            |   |   |           |   |   |            |  
|Balance at December 31, 2008                                                    |  |                           | 1,882,461 |               | $ | 192                          |  | $                  | 9,200,010 |                           | $ | 14,714,143             |   | $                                               | (395,891 | )                            | $ | (901,750   | ) | $ | 587,063   |   | $ | 23,203,767 |  
|                                                                                |  |                           |           |               |   |                              |  |                    |           |                           |   |                        |   |                                                 |          |                              |   |            |   |   |           |   |   |            |  
|                                                                                |  |                           |           |               |   |                              |  |                    |           |                           |   |                        |   |                                                 |          |                              |   |            |   |   |           |   |   |            |  
|Stock-based compensation                                                        |  |                           |           |               |   |                              |  |                    | 320       |                           |   |                        |   |                                                 |          |                              |   |            |   |   |           |   |   | 320        |  
|Amortization of earned portion of ESOP common stock                             |  |                           |           |               |   |                              |  |                    |           |                           |   |                        |   |                                                 |          |                              |   | 42,270     |   |   |           |   |   | 42,270     |  
|Amortization of cost over fair value - ESOP                                     |  |                           |           |               |   |                              |  |                    | (22,566   | )                         |   |                        |   |                                                 |          |                              |   |            |   |   |           |   |   | (22,566    | )
|Cash dividends declared ($0.06 per share)                                       |  |                           |           |               |   |                              |  |                    |           |                           |   | (106,867               | ) |                                                 |          |                              |   |            |   |   |           |   |   | (106,867   | )
|Purchase of treasury stock, at cost                                             |  |                           | (53,220   | )             |   |                              |  |                    |           |                           |   |                        |   |                                                 | (462,972 | )                            |   |            |   |   |           |   |   | (462,972   | )
|Comprehensive income:                                                           |  |                           |           |               |   |                              |  |                    |           |                           |   |                        |   |                                                 |          |                              |   |            |   |   |           |   |   |            |  
|Net income                                                                      |  |                           |           |               |   |                              |  |                    |           |                           |   | 373,051                |   |                                                 |          |                              |   |            |   |   |           |   |   | 373,051    |  
|Other comprehensive income, net:                                                |  |                           |           |               |   |                              |  |                    |           |                           |   |                        |   |                                                 |          |                              |   |            |   |   |           |   |   |            |  
|Change in unrealized gain on securities available
for sale, net of tax
 effects |  |                           |          |               |   |                             |  |                    |          |                           |   |                       |   |                                                 |         |                              |   |           |   |   | 901,891   |   |   | 901,891    |  
|                                                                                |  |                           |           |               |   |                              |  |                    |           |                           |   |                        |   |                                                 |          |                              |   |            |   |   |           |   |   |            |  
|Total comprehensive income                                                      |  |                           |           |               |   |                              |  |                    |           |                           |   |                        |   |                                                 |          |                              |   |            |   |   |           |   |   | 1,274,942  |  
|                                                                                |  |                           |           |               |   |                              |  |                    |           |                           |   |                        |   |                                                 |          |                              |   |            |   |   |           |   |   |            |  
|Balance at March 31, 2009                                                       |  |                           | 1,829,241 |               | $ | 192                          |  | $                  | 9,177,764 |                           | $ | 14,980,327             |   | $                                               | (858,863 | )                            | $ | (859,480   | ) | $ | 1,488,954 |   | $ | 23,928,894 |  
|                                                                                |  |                           |           |               |   |                              |  |                    |           |                           |   |                        |   |                                                 |          |                              |   |            |   |   |           |   |   |            |  

6

---



VSB Bancorp, Inc.Consolidated Statements of Cash Flows
(unaudited)

|                                                                                  |  |                                     |            |                                     |   |            |  
|--------------------------------------------------------------------------------- |  | ----------------------------------- | ---------- | ----------------------------------- | - | ---------- | -
|                                                                                  |  | Three months
 ended
 March 31, 2009 |            | Three months
 ended
 March 31, 2008 |  
|                                                                                  |  |                                     |            |                                     |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                             |  |                                     |            |                                     |   |            |  
|Net income                                                                        |  | $                                   | 373,051    |                                     | $ | 361,945    |  
|Adjustments to reconcile net income to net cash
provided by operating
 activities |  |                                     |            |                                     |   |            |  
|Depreciation and amortization                                                     |  |                                     | 170,554    |                                     |   | 150,994    |  
|Accretion of income, net of amortization of
premium                               |  |                                     | (15,347    | )                                   |   | (53,399    | )
|ESOP compensation expense                                                         |  |                                     | 19,704     |                                     |   | 26,197     |  
|Stock-based compensation expense                                                  |  |                                     | 320        |                                     |   | 320        |  
|Provision for loan losses                                                         |  |                                     | 275,000    |                                     |   | 30,000     |  
|Decrease in prepaid and other assets                                              |  |                                     | 240,150    |                                     |   | 1,700      |  
|Decrease in accrued interest receivable                                           |  |                                     | 3,283      |                                     |   | 90,012     |  
|Increase in deferred income taxes                                                 |  |                                     | (241,086   | )                                   |   | (21,804    | )
|Increase/(decrease) in accrued expenses and other
liabilities                     |  |                                     | 366,439    |                                     |   | (216,515   | )
|                                                                                  |  |                                     |            |                                     |   |            |  
|Net cash provided by operating activities                                         |  |                                     | 1,192,068  |                                     |   | 369,450    |  
|                                                                                  |  |                                     |            |                                     |   |            |  
|                                                                                  |  |                                     |            |                                     |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                             |  |                                     |            |                                     |   |            |  
|Net (increase)/decrease in loan receivable                                        |  |                                     | (2,780,229 | )                                   |   | 1,031,224  |  
|Proceeds from repayment of investment securities,
available for sale              |  |                                     | 7,343,401  |                                     |   | 7,407,082  |  
|Purchases of investment securities, available for
sale                            |  |                                     | (5,799,823 | )                                   |   | (9,498,945 | )
|Purchases of premises and equipment                                               |  |                                     | (58,961    | )                                   |   | (43,526    | )
|                                                                                  |  |                                     |            |                                     |   |            |  
|Net cash used in investing activities                                             |  |                                     | (1,295,612 | )                                   |   | (1,104,165 | )
|                                                                                  |  |                                     |            |                                     |   |            |  
|                                                                                  |  |                                     |            |                                     |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                             |  |                                     |            |                                     |   |            |  
|Net increase in deposits                                                          |  |                                     | 8,923,103  |                                     |   | 5,314,421  |  
|Purchase of treasury stock, at cost                                               |  |                                     | (462,972   | )                                   |   |           |  
|Cash dividends paid                                                               |  |                                     | (106,867   | )                                   |   | (114,031   | )
|                                                                                  |  |                                     |            |                                     |   |            |  
|Net cash provided by financing activities                                         |  |                                     | 8,353,264  |                                     |   | 5,200,390  |  
|                                                                                  |  |                                     |            |                                     |   |            |  
|                                                                                  |  |                                     |            |                                     |   |            |  
|NET INCREASE IN CASH AND CASH EQUIVALENTS                                         |  |                                     | 8,249,720  |                                     |   | 4,465,675  |  
|                                                                                  |  |                                     |            |                                     |   |            |  
|                                                                                  |  |                                     |            |                                     |   |            |  
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                    |  |                                     | 21,240,223 |                                     |   | 17,696,879 |  
|                                                                                  |  |                                     |            |                                     |   |            |  
|                                                                                  |  |                                     |            |                                     |   |            |  
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                          |  | $                                   | 29,489,943 |                                     | $ | 22,162,554 |  
|                                                                                  |  |                                     |            |                                     |   |            |  
|                                                                                  |  |                                     |            |                                     |   |            |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                 |  |                                     |            |                                     |   |            |  
|Cash paid during the period for:                                                  |  |                                     |            |                                     |   |            |  
|Interest                                                                          |  | $                                   | 555,899    |                                     | $ | 1,061,869  |  
|                                                                                  |  |                                     |            |                                     |   |            |  
|Taxes                                                                             |  | $                                   | 68,850     |                                     | $ | 322,000    |  
|                                                                                  |  |                                     |            |                                     |   |            |  

See notes to consolidated financial
statements.

7

---



VSB BANCORP, INC.

|                                                                                               
|-----------------------------------------------------------------------------------------------
|NOTES TO
 CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2009
 AND 2008
|                                                                                               

|   |        
|-- | -------
|1. | GENERAL

VSB
Bancorp, Inc. (referred to using terms such as we, us, or the Company)
became the holding company for Victory State Bank (the Bank), a New York
chartered commercial bank, upon the completion of a reorganization of the Bank
into the holding company form of organization. The reorganization was effective
in May 2003. All the outstanding stock of Victory State Bank was exchanged for
stock of VSB Bancorp, Inc. on a three for two basis so that the stockholders of
Victory State Bank became the owners of VSB Bancorp, Inc. and VSB Bancorp, Inc.
owns all the stock of Victory State Bank. The common stock we issued in the
transaction qualifies as exempt securities under Section 3(a)(12) of the
Securities Act of 1933. Our primary business is owning all of the issued and
outstanding stock of the Bank. Our common stock is listed on the NASDAQ Global
Market, effective on August 4, 2008. We continue to trade under the symbol
VSBN.

Through
the Bank, the Company is primarily engaged in the business of commercial
banking, and to a lesser extent retail banking. The Bank gathers deposits from
individuals and businesses primarily in Staten Island, New York and makes loans
throughout that community. Therefore, the Companys exposure to credit risk is
significantly affected by changes in the local Staten Island economic and real
estate markets. The Bank invests funds that are not used for lending primarily
in government securities, mortgage backed securities and collateralized
mortgage obligations. Customer deposits are insured, up to the applicable
limit, by the Federal Deposit Insurance Corporation (FDIC). The Bank is
supervised by the New York State Banking Department and the FDIC.

|   |                                            
|-- | -------------------------------------------
|2. | SUMMARY
 OF SIGNIFICANT ACCOUNTING POLICIES

The
following is a description of the significant accounting and reporting policies
followed in preparing and presenting the accompanying consolidated financial
statements. These policies conform with accounting principles generally
accepted in the United States of America (GAAP).

Principles
of Consolidation
- The consolidated financial statements of the Company include the accounts of
the Company, including its subsidiary Victory State Bank. All significant
inter-company accounts and transactions between the Company and Bank have been
eliminated in consolidation.

Use
of Estimates -
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the amounts of revenues
and expenses during the reporting period. Actual results can differ from those
estimates. The allowance for loan losses, prepayment estimates on the
mortgage-backed securities and Collateralized Mortgage Obligation portfolios,
contingencies and fair values of financial instruments are particularly subject
to change.

Reclassifications
Some items in
the prior year financial statements were reclassified to conform to the current
presentation.

Cash
and Cash Equivalents
 Cash and cash equivalents consists of cash on hand, due from banks and
interest-bearing deposits. Net cash flows are reported for customer loan and
deposit transactions and interest-bearing deposits with original maturities of
90 days or less. Regulation D of the Board of Governors of the Federal Reserve
System requires that Victory State Bank maintain non-interest-bearing deposits
or cash on hand as reserves against its demand deposits. The amount of reserves
which Victory State Bank is required to maintain depends upon its level of
transaction accounts. During the fourteen day period from March 26, 2009
through April 8, 2009, Victory State Bank was required to maintain reserves,
after deducting vault cash, of $2,463,000. Reserves are required to be
maintained on a fourteen day basis, so, from time to time, Victory State Bank
may use available cash reserves on a day to day basis, so long as the fourteen
day average reserves satisfy Regulation D requirements. Victory State Bank is
required to report transaction account levels to the Federal Reserve on a
weekly basis.

8

---



Interest-bearing
bank balances Interest-bearing
bank balances mature overnight and are carried at cost.

Investment
Securities, Available for Sale - Investment securities, available for sale, are to be held for an
unspecified period of time and include securities that management intends to
use as part of its asset/liability strategy. These securities may be sold in
response to changes in interest rates, prepayments or other factors and are
carried at estimated fair value. Gains or losses on the sale of such securities
are determined by the specific identification method. Interest income includes
amortization of purchase premium and accretion of purchase discount. Premiums
and discounts are recognized in interest income using a method that
approximates the level yield method without anticipating prepayments, except
for mortgage-backed securities where prepayments are estimated. Unrealized
holding gains or losses, net of deferred income taxes, are excluded from
earnings and reported as other comprehensive income in a separate component of
stockholders equity until realized. Declines in the fair value of securities
below their cost that are other than temporary are reflected as realized
losses. In estimating other-than-temporary losses, management considers: (1)
the length of time and extent that fair value has been less than cost, (2) the
financial condition and near term prospects of the issuer, and (3) the
Companys ability and intent to hold the security for a period sufficient to
allow for any anticipated recovery in fair value.

The
Company invests primarily in agency Collateralized Mortgage-Backed Obligations
(CMOs) with estimated average lives primarily under 4.5 years and
Mortgage-Backed Securities. These securities are primarily issued by the
Federal National Mortgage Association (FNMA), the Government National Mortgage
Association (GNMA) or the Federal Home Loan Mortgage Corporation (FHLMC)
and are primarily comprised of mortgage pools guaranteed by FNMA, GNMA or
FHLMC. The Company also invests in whole loan CMOs, all of which are AAA rated.
These securities expose the Company to risks such as interest rate, prepayment
and credit risk and thus pay a higher rate of return than comparable treasury
issues.

Loans
Receivable - Loans
receivable, that management has the intent and ability to hold for the foreseeable
future or until maturity or payoff, are stated at unpaid principal balances,
adjusted for deferred net origination and commitment fees and the allowance for
loan losses. Interest income on loans is credited as earned.

It
is the policy of the Company to provide a valuation allowance for probable
incurred losses on loans based on the Companys past loan loss experience,
known and inherent risks in the portfolio, adverse situations which may affect
the borrowers ability to repay, estimated value of underlying collateral and
current economic conditions in the Companys lending area. The allowance is
increased by provisions for loan losses charged to earnings and is reduced by
charge-offs, net of recoveries. While management uses available information to
estimate losses on loans, future additions to the allowance may be necessary
based upon the expected growth of the loan portfolio and any changes in
economic conditions beyond managements control. In addition, various
regulatory agencies, as an integral part of their examination process,
periodically review the Banks allowance for loan losses. Such agencies may
require the Bank to recognize additions to the allowance based on judgments
different from those of management. Management believes, based upon all
relevant and available information, that the allowance for loan losses is
appropriate.

The
Company has a policy that all loans 90 days past due are placed on non-accrual
status. It is the Companys policy to cease the accrual of interest on loans to
borrowers past due less than 90 days where a probable loss is estimated and to
reverse out of income all interest that is due. The Company applies payments
received on non-accrual loans to the outstanding principal balance due before
applying any amount to interest, until the loan is restored to an accruing
status. On a limited basis, the Company may apply a payment to interest on a
non-accrual loan if there is no impairment or no estimated loss on this asset.
The Company continues to accrue interest on construction loans that are 90 days
past contractual maturity date if the loan is expected to be paid in full in
the next 60 days and all interest is paid up to date.

9

---



Loan
origination fees and certain direct loan origination costs are deferred and the
net amount recognized over the contractual loan terms using the level-yield
method, adjusted for periodic prepayments in certain circumstances.

The
Company considers a loan to be impaired when, based on current information, it
is probable that the Company will be unable to collect all principal and
interest payments due according to the contractual terms of the loan agreement.
Loans that experience insignificant payment delays and payment shortfalls
generally are not classified as impaired. Impairment is measured on a loan by
loan basis for commercial and construction loans. Impaired loans are measured
based on the present value of expected future cash flows discounted at the
loans effective interest rate or, as a practical expedient, at the loans
observable market price or the fair value of the collateral. The fair value of
the collateral, as reduced by costs to sell, is utilized if a loan is
collateral dependent. Large groups of smaller balance homogeneous loans, such
as consumer loans and residential loans, are collectively evaluated for
impairment.

Long-Lived
Assets - The
Company periodically evaluates the recoverability of long-lived assets, such as
premises and equipment, to ensure the carrying value has not been impaired. In
performing the review for recoverability, the Company would estimate the future
cash flows expected to result from the use of the asset. If the sum of the
expected future cash flows is less than the carrying amount an impairment will
be recognized. The Company reports these assets at the lower of the carrying
value or fair value.

Subordinated
Debt - In August
of 2003, the Company formed VSB Capital Trust I (the Trust). The Trust is a
statutory business trust organized under Delaware law and the Company owns all
of its common securities. The Trust issued $5.0 million of Trust Preferred
Capital Securities to an independent investor and $155,000 of common securities
to the Company. The Company issued a $5.16 million subordinated debenture to
the Trust. The subordinated debenture was the sole asset of the Trust. On
August 8, 2008, the Company repaid the subordinated debenture in full at par,
received payment of $155,000 on account of its common securities of the Trust,
and all the outstanding Trust Preferred Capital Securities were likewise
redeemed, thereby ending the entire arrangement. The Trust is not consolidated
with the Company.

Premises
and Equipment - Premises,
leasehold improvements, and furniture and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation and amortization are
accumulated by the straight-line method over the estimated useful lives of the
respective assets, which range from three to fifteen years. Leasehold
improvements are amortized at the lesser of their useful life or the term of
the lease.

Federal
Home Loan Bank (FHLB) Stock - The Bank is a member of the FHLB system. Members are required to own a
certain amount of stock based on the level of borrowings and other factors, and
may invest in additional amounts. FHLB stock is carried at cost, classified as
a restricted security, and periodically evaluated for impairment. Because this
stock is viewed as a long term investment, impairment is based on ultimate recovery
of par value, which is the price the Bank pays for the FHLB Stock. Both cash
and stock dividends are reported as income.

Income
Taxes - The
Company utilizes the liability method to account for income taxes. Under this
method, deferred tax assets and liabilities are determined on differences
between financial reporting and the tax bases of assets and liabilities and are
measured using the enacted tax rates and laws expected to be in effect when the
differences are expected to reverse. As changes in tax laws or rates are
enacted, deferred tax assets and liabilities are adjusted through the provision
for income taxes.

The
Company adopted FASB Interpretation 48, Accounting
for Uncertainty in Income Taxes (FIN 48), as of January 1, 2007. A
tax position is recognized as a benefit only if it is more likely than not
that the tax position would be sustained in a tax examination, with a tax
examination being presumed to occur. The amount recognized is the largest
amount of tax benefit that is greater than 50% likely of being realized on
examination. For tax positions not meeting the more likely than not test, no
tax benefit is recorded. The adoption had no affect on the Companys financial
statements.

10

---



The
Company recognizes interest and/or penalties related to income tax matters in
income tax expense.

Financial
Instruments - In
the ordinary course of business, the Company has entered into off-balance sheet
financial instruments, primarily consisting of commitments to extend credit.

Basic
and Diluted Net Income Per Common Share - Basic net income per share of common stock
is based on 1,807,984 shares and 1,845,097 shares, the weighted average number
of common shares outstanding for the three months ended March 31, 2009 and
2008, respectively. Diluted net income per share of common stock is based on
1,830,651 and 1,893,420, the weighted average number of common shares and
potentially dilutive common shares outstanding for the three months ended March
31, 2009 and 2008, respectively. The weighted average number of potentially
dilutive common shares excluded in calculating diluted net income per common
share due to the anti-dilutive effect is 75,758 and 80,124 shares for the years
ended March 31, 2009 and 2008, respectively. Common stock equivalents were
calculated using the treasury stock method.

The
reconciliation of the numerators and the denominators of the basic and diluted
per share computations for the three months ended March 31, are as follows:

|                                            |  |                                     |         |                                     |  |                    |  |             |      |                           |   |                    |  |  |           |  |   |      | 
|------------------------------------------- |  | ----------------------------------- | ------- | ----------------------------------- |  | ------------------ |  | ----------- | ---- | ------------------------- | - | ------------------ |  |  | --------- |  | - | ---- | 
|                                            |  | Three
 months ended
 March 31, 2009 |         | Three
 months ended
 March 31, 2008 | 
|                                            |  |                                     |         |                                     | 
|Reconciliation of EPS                       |  | Net
 Income                         |         | Weighted
 Average
 Shares           |  | Per
 Share
 Amount |  | Net
 Income |      | Weighted
 Average
 Shares |   | Per
 Share
 Amount | 
|                                            |  |                                     |         |                                     |  |                    |  |             |      |                           |   |                    | 
|                                            |  |                                     |         |                                     |  |                    |  |             |      |                           |   |                    |  |  |           |  |   |      | 
|Basic earnings per common share             |  |                                     |         |                                     |  |                    |  |             |      |                           |   |                    |  |  |           |  |   |      | 
|                                            |  |                                     |         |                                     |  |                    |  |             |      |                           |   |                    |  |  |           |  |   |      | 
|Net income available to common stockholders |  | $                                   | 373,051 |                                     |  | 1,807,984          |  | $           | 0.21 |                           | $ | 361,945            |  |  | 1,845,097 |  | $ | 0.20 | 
|                                            |  |                                     |         |                                     |  |                    |  |             |      |                           |   |                    |  |  |           |  |   |      | 
|                                            |  |                                     |         |                                     |  |                    |  |             |      |                           |   |                    |  |  |           |  |   |      | 
|Effect of dilutive shares                   |  |                                     |         |                                     |  |                    |  |             |      |                           |   |                    |  |  |           |  |   |      | 
|                                            |  |                                     |         |                                     |  |                    |  |             |      |                           |   |                    |  |  |           |  |   |      | 
|Weighted average shares, if converted       |  |                                     |         |                                     |  | 22,667             |  |             |      |                           |   |                    |  |  | 48,323    |  |   |      | 
|                                            |  |                                     |         |                                     |  |                    |  |             |      |                           |   |                    |  |  |           |  |   |      | 
|                                            |  |                                     |         |                                     |  |                    |  |             |      |                           |   |                    |  |  |           |  |   |      | 
|Diluted earnings per common share           |  |                                     |         |                                     |  |                    |  |             |      |                           |   |                    |  |  |           |  |   |      | 
|                                            |  |                                     |         |                                     |  |                    |  |             |      |                           |   |                    |  |  |           |  |   |      | 
|Net income available to common stockholders |  | $                                   | 373,051 |                                     |  | 1,830,651          |  | $           | 0.20 |                           | $ | 361,945            |  |  | 1,893,420 |  | $ | 0.19 | 
|                                            |  |                                     |         |                                     |  |                    |  |             |      |                           |   |                    |  |  |           |  |   |      | 

Stock
Based Compensation
- FAS 123, Revised, requires companies to record compensation expense for stock
options provided to employees in return for employment service. The cost is
measured at the fair value of the options when granted, and this cost is
expensed over the employment service period, which is normally the vesting
period of the options. This applies to awards granted or modified in fiscal
years beginning in 2006.

Employee
Stock Ownership Plan (ESOP)- The cost of shares issued to the ESOP, but
not yet allocated to participants, is shown as a reduction of stockholders
equity. Compensation expense is based on the market price of shares as they are
committed to be released to participant accounts. Cash dividends on allocated
ESOP shares reduce retained earnings; cash dividends on unearned ESOP shares
reduce debt and accrued interest. As of August 4, 2008, the Company listed its
common stock on the NASDAQ Global Market. We are no longer required to
reclassify out of stockholders equity an amount equal to the put option of the
allocated ESOP shares and we re-classed the 2006 put option allocation in the
first quarter of 2007.

Stock
Repurchase ProgramOn September 8, 2008, the Company announced
that its Board of Directors had authorized a Rule 10b5-1 stock repurchase
program for the repurchase of up to 100,000 shares of the Companys common
stock. On April 21, 2009, Company announced that its Board of Directors had
authorized a second Rule 10b5-1 stock repurchase program for the repurchase of
up to an additional 100,000 shares of the Companys common stock and also
announced that the Company had repurchased 94,643 shares of its common stock
under the first stock repurchase program as of the date of the announcement.
Stock repurchases under the program have and will be accounted for using the
cost method, in which the Company will reflect the entire cost of repurchased
shares as a separate reduction of stockholders equity on its balance sheet.

11

---



Comprehensive
Income- Comprehensive income consists of net income
and other comprehensive income. Other comprehensive income includes unrealized
gains and losses, net of taxes, on securities available for sale which are also
recognized as separate components of equity.

Fair
Value Option and Fair Value Measurement - In September 2006, the FASB issued
Statement No. 157, Fair Value Measurements. This Statement
defines fair value, establishes a framework for measuring fair value and
expands disclosures about fair value measurements. This Statement establishes a
fair value hierarchy about the assumptions used to measure fair value and
clarifies assumptions about risk and the effect of a restriction on the sale or
use of an asset. The standard is effective for fiscal years beginning after
November 15, 2007. In February 2008, the FASB issued Staff Position (FSP)
157-2, Effective
Date of FASB Statement No. 157. This FSP delayed the effective date
of FAS 157 for all nonfinancial assets and nonfinancial liabilities, except
those that are recognized or disclosed at fair value on a recurring basis (at
least annually) until 2009. The impact of adoption was not material.

Statement 157 establishes a
fair value hierarchy which requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value.
The standard describes three levels of inputs that may be used to measure fair
value:

| |                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Level 1: Quoted prices
 (unadjusted) for identical assets or liabilities in active markets that the
 entity has the ability to access as of the measurement date.                                                                                                     
| |                                                                                                                                                                                                                                                                       
| | Level 2: Significant other
 observable inputs other than Level 1 prices such as quoted prices for similar
 assets or liabilities; quoted prices in markets that are not active; or other
 inputs that are observable or can be corroborated by observable market data.
| |                                                                                                                                                                                                                                                                       
| | Level 3: Significant
 unobservable inputs that reflect a reporting entitys own assumptions about
 the assumptions that market participants would use in pricing and asset or
 liability.                                                                             

The fair value of securities
available for sale are determined by obtaining quoted prices on nationally
recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a
mathematical technique widely used to in the industry to value debt securities
without relying exclusively on quoted prices for the specific securities but
rather by relying on the securities relationship to other benchmark quoted
securities (Level 2 inputs).

Assets and Liabilities
Measured on a Recurring Basis

Assets and liabilities measured at fair value
on a recurring basis are summarized below:

|                               |  |                                                  |             |                                                                    |   |                                                   |  |                                              |             |  |   |   | 
|------------------------------ |  | ------------------------------------------------ | ----------- | ------------------------------------------------------------------ | - | ------------------------------------------------- |  | -------------------------------------------- | ----------- |  | - | - | 
|                               |  | Fair
 Value Measurements at March 31, 2009 Using |            
|                               |  |                                                  |            
|                               |  | March
 31,
 2009                                 |             | Quoted
 Prices in
 Active Markets for
 Identical Assets
 (Level 1) |   | Significant
 Other
 Observable
 Inputs
 (Level 2) |  | Significant
 Unobservable
 Inputs
 (Level 3) |            
|                               |  |                                                  |             |                                                                    |   |                                                   |  |                                              |            
|Assets:                        |  |                                                  |             |                                                                    |   |                                                   |  |                                              |             |  |   |   | 
|Available for sale
 securities |  | $                                                | 120,401,021 |                                                                    | $ |                                                  |  | $                                            | 120,401,021 |  | $ |  | 

12

---



|                               |  |                                                     |             |                                                                    |   |                                                   |  |                                              |             |  |   |   | 
|------------------------------ |  | --------------------------------------------------- | ----------- | ------------------------------------------------------------------ | - | ------------------------------------------------- |  | -------------------------------------------- | ----------- |  | - | - | 
|                               |  | Fair
 Value Measurements at December 31, 2008 Using |            
|                               |  |                                                     |            
|                               |  | December
 31,
 2008                                 |             | Quoted
 Prices in
 Active Markets for
 Identical Assets
 (Level 1) |   | Significant
 Other
 Observable
 Inputs
 (Level 2) |  | Significant
 Unobservable
 Inputs
 (Level 3) |            
|                               |  |                                                     |             |                                                                    |   |                                                   |  |                                              |            
|Assets:                        |  |                                                     |             |                                                                    |   |                                                   |  |                                              |             |  |   |   | 
|Available for sale
 securities |  | $                                                   | 120,288,588 |                                                                    | $ |                                                  |  | $                                            | 120,288,588 |  | $ |  | 

Impaired loans are reported
at the fair value of the underlying collateral if repayment is expected solely
from the collateral. Collateral values are estimated using Level 3 inputs based
on internally customized discounting criteria. As of March 31, 2009, we did not
have any impaired loans that were collateral dependent.

Assets and Liabilities
Measured on a Non-Recurring Basis

Assets and liabilities
measured at fair value on a non-recurring basis are summarized below:

|               |  |                                                     |        |                                                                    |  |                                                   |  |                                              |   |  |   |        | 
|-------------- |  | --------------------------------------------------- | ------ | ------------------------------------------------------------------ |  | ------------------------------------------------- |  | -------------------------------------------- | - |  | - | ------ | 
|               |  | Fair
 Value Measurements at December 31, 2008 Using |       
|               |  |                                                     |       
|               |  | December
 31,
 2008                                 |        | Quoted
 Prices in
 Active Markets for
 Identical Assets
 (Level 1) |  | Significant
 Other
 Observable
 Inputs
 (Level 2) |  | Significant
 Unobservable
 Inputs
 (Level 3) |  
|               |  |                                                     |        |                                                                    |  |                                                   |  |                                              |  
|Assets:        |  |                                                     |        |                                                                    |  |                                                   |  |                                              |   |  |   |        | 
|Impaired loans |  | $                                                   | 85,000 |                                                                    |  |                                                  |  |                                              |  |  | $ | 85,000 | 

As
of December 31, 2008, we had one impaired loan that was collateral dependent. Collateral dependent impaired loans, which are measured
for impairment using the fair value of the collateral, had a carrying amount of $85,000, with a valuation allowance of $60,241,
resulting in an additional provision for loan losses of $40,000 for the period.

Certain
financial assets and financial liabilities are measured at fair value on a
nonrecurring basis, that is, the instruments are not measured at fair value on
an ongoing basis but are subject to fair value adjustments in certain
circumstances (for example, when there is evidence of impairment). Financial
assets and financial liabilities measured at fair value on a non-recurring
basis were not significant at March 31, 2009.

Recently-Adopted
Accounting Standards
- SFAS No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities-Including an amendment of
FASB Statement No. 115. SFAS 159 permitted
entities to choose to measure eligible items at fair value at specified
election dates. Unrealized gains and losses on items for which the fair value
option has been elected are reported in earnings at each subsequent reporting
date. The fair value option (i) may be applied instrument by instrument, with
certain exceptions, (ii) is irrevocable (unless a new election date occurs) and
(iii) is applied only to entire instruments and not to portions of instruments.
SFAS 159 is effective for the Company on January 1, 2008. The Company chose not
to exercise the fair value option permitted it under SFAS 159.

In
December 2007, the FASB issued FAS No. 141 (revised 2007), Business
Combinations (FAS 141(R)), which establishes principles and requirements for
how an acquirer recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any non-controlling
interest in an acquiree, including the recognition and measurement of goodwill
acquired in a business combination. FAS No. 141(R) is effective for fiscal
years beginning on or after December 15, 2008. Earlier adoption is prohibited.
The adoption of this standard did not have a material effect on the
Corporations results of operations or financial position.

13

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In
December 2007, the FASB issued SFAS No. 160,Noncontrolling Interest in Consolidated Financial Statements, an amendment of
ARB No. 51 (SFAS No. 160), which will change the accounting and
reporting for minority interests, which will be recharacterized as
non-controlling interests and classified as a component of equity within the
consolidated balance sheets. FAS No. 160 is effective as of the beginning of
the first fiscal year beginning on or after December 15, 2008. Earlier adoption
is prohibited. The adoption of FAS No. 160 did not have a significant impact on
the results of operations or financial position.

In
March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities, an amendment of SFAS No. 133. FAS No. 161
amends and expands the disclosure requirements of SFAS No. 133 for derivative
instruments and hedging activities. FAS No. 161 requires qualitative disclosure
about objectives and strategies for using derivative and hedging instruments,
quantitative disclosures about fair value amounts of the instruments and gains
and losses on such instruments, as well as disclosures about credit-risk
features in derivative agreements. FAS No. 161 is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008, with early application encouraged. The adoption of this standard did
not have a material effect on the Corporations results of operations or
financial position.

Recently-Issued
Accounting Standards - In April 2009, the FASB
issued Staff Position (FSP) No. 115-2 and No. 124-2, Recognition and Presentation of Other-Than-Temporary Impairments,which
amends existing guidance for determining whether impairment is
other-than-temporary for debt securities. The FSP requires an entity to assess
whether it intends to sell, or it is more likely than not that it will be
required to sell a security in an unrealized loss position before recovery of
its amortized cost basis. If either of these criteria is met, the entire
difference between amortized cost and fair value is recognized in earnings. For
securities that do not meet the aforementioned criteria, the amount of
impairment recognized in earnings is limited to the amount related to credit
losses, while impairment related to other factors is recognized in other
comprehensive income. Additionally, the FSP expands and increases the frequency
of existing disclosures about other-than-temporary impairments for debt and
equity securities. This FSP is effective for interim and annual reporting
periods ending after June 15, 2009, with early adoption permitted for periods
ending after March 15, 2009. The Company plans to adopt this FSP in the second
quarter, however, does not expect the adoption to have a material effect on the
results of operations or financial position.

In
April 2009, the FASB issued Staff Position (FSP) No. 157-4, Determining Fair Value When the Volume and Level of
Activity for the Asset and Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly. This FSP emphasizes
that even if there has been a significant decrease in the volume and level of
activity, the objective of a fair value measurement remains the same. Fair
value is the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction (that is, not a forced liquidation or
distressed sale) between market participants. The FSP provides a number of
factors to consider when evaluating whether there has been a significant
decrease in the volume and level of activity for an asset or liability in
relation to normal market activity. In addition, when transactions or quoted
prices are not considered orderly, adjustments to those prices based on the
weight of available information may be needed to determine the appropriate fair
value. The FSP also requires increased disclosures. This FSP is effective for
interim and annual reporting periods ending after June 15, 2009, and shall be
applied prospectively. Early adoption is permitted for periods ending after
March 15, 2009. The Company plans to adopt this FSP in the second quarter,
however, does not expect the adoption to have a material effect on the results
of operations or financial position.

In
April 2009, the FASB issued Staff Position (FSP) No. 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial
Instruments. This FSP amends FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments,
to require disclosures about fair value of financial instruments for interim
reporting periods of publicly traded companies that were previously only
required in annual financial statements. This FSP is effective for interim
reporting periods ending after June 15, 2009, with early adoption permitted for
periods ending after March 15, 2009. The Company plans to adopt this FSP in the
second quarter of 2009.

14

---



In June 2008, the FASB issued Staff Position (FSP)
EITF 03-6-1, Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities.
This FSP addresses whether instruments granted in share-based payment
transactions are participating securities prior to vesting and, therefore, need
to be included in the earnings allocation in computing earnings per share (EPS)
under the two-class method described in paragraphs 60 and 61 of FASB Statement
No. 128, Earnings per Share.FSP
EITF 03-6-1 is effective for years beginning after December 15, 2008 and
interim periods within those years. Adoption of this FSP in 2009 did not have a
material impact to the Companys financial statements or earnings per share
calculation.

Item 2
Managements Discussion and Analysis of Financial Condition and Results of
Operations

Financial Condition at March 31, 2009

Total assets were
$222,672,397 at March 31, 2009, an increase of $10,014,669 or, 4.7%, from
December 31, 2008. The increase resulted from the investment of funds
available to us as the result of an increase in deposits. The deposit increase
was caused generally by our efforts to grow our franchise and specifically by
the deposit increases at our branch offices. We invested these funds primarily
in cash and cash equivalents and in loans. The net increase in assets can be summarized as follows:

|  |                                                            
|- | -----------------------------------------------------------
|· | A $8,249,720 net increase
 in cash and cash equivalents and
|· | A $2,533,381 net increase
 in net loans receivable.        

In
addition, we also experienced changes in other asset categories due to normal
fluctuations in operations.

Our
deposits (including escrow deposits) were $197,032,552 at March 31, 2009, an
increase of $8,923,103 or 4.7%, from December 31, 2008. The increase in
deposits resulted from increases of $16,828,064 in NOW accounts, $1,706,632 in
non-interest demand deposits, $1,233,673 in savings accounts and $975,623 in
money market accounts, partially offset by a decrease of $11,820,889 in time
deposits. The decrease in time deposits was primarily due to the transfer of a
$10 million jumbo CD to the NOW accounts class, consisting of a deposit made in
conjunction with the Bank Development District program.

Total
stockholders equity was $23,928,894 at March 31, 2009, an increase of $725,127
from December 31, 2008. The increase reflected (i) net income of $373,051 for
the three months ended March 31, 2009, (ii) an increase in the net unrealized gain on securities
available for sale of $901,891 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 $106,867
of dividends paid, representing the first $0.06 per share quarterly cash
dividends in 2009, and $462,972 representing the cost of 53,220 shares repurchased
in the first quarter of 2009 under the Companys previously announced stock
repurchase plan.

The
unrealized gain on securities available for sale is excluded from the
calculation of regulatory capital. Management does not anticipate selling
securities in this portfolio, but changes in market interest rates or in the
demand for funds may change managements plans with respect to the securities
portfolio. If there is a material increase in interest rates, the market value
of the available for sale portfolio may decline. Management believes that the
principal and interest payments on this portfolio, combined with the existing
liquidity, will be sufficient to fund loan growth and potential deposit
outflow.

15

---



For
financial statement reporting purposes, we record the compensation expense
related to the ESOP when shares are committed to be released from the security
interest for the loan. The amount of the compensation expense is based upon the
fair market value of the shares at that time, not the original purchase price.
The initial sale of shares to the ESOP did not increase our capital by the
amount of the purchase price because the purchase price was paid by the loan we
made to the ESOP. Instead, capital increases as the shares are allocated or
committed to be allocated to employee accounts (i.e., as the ESOP loan is
gradually repaid), based upon the fair market value of the shares at that time.
When we calculate earnings per share, only shares allocated or committed to be
allocated to employee accounts are considered to be outstanding. However, all
shares that the ESOP owns are legally outstanding, so they have voting rights
and, if we pay dividends, dividends will be paid on all ESOP shares.

The Current
Economic Turmoil

The economy in the United States, including the
economy in Staten Island, is in a recession and there is substantial stress on
many financial institutions and financial products. The federal government has
intervened by making hundreds of billions of dollars in capital contributions
to the banking industry. We draw a substantial portion of our customer base
from local businesses, especially those in the building trades and related
industries. Our customers are already being adversely affected by the economic
downturn, and if the recession continues, it will become more difficult for us
to conduct prudent and profitable business in our community.

Making permanent residential mortgage loans is not a
material part of our business, and our investments in mortgage-backed
securities and collateralized mortgage obligations have been made with a view
towards avoiding the types of securities that are backed by low quality
mortgage-related assets. However, one of the primary focuses of our local
business is receiving deposits from, and making loans to, businesses involved
in the construction and building trades industry on Staten Island. Construction
loans represented a significant component of our loan portfolio, reaching 39.8%
of total loans at year end 2005. As we monitored the economy and the strength of
the local construction industry, we elected to reduce our portfolio of
construction loans. However, developers and builders provide not only a source
of loans, but they also provide us with deposits and other business. If the
weakness in the economy continues or worsens, then that could have a
substantial adverse effect on our customers and potential customers, making it
more difficult for us to find satisfactory loan opportunities and low-cost
deposits. This could compel us to invest in lower yielding securities instead
of higher-yielding loans and could also reduce low cost funding sources such as
checking accounts and require that we replace them with higher cost deposits
such as time deposits. Either or both of those shifts could reduce our net
income.

Changes in
FDIC Assessment Rates

In the past year, there have
been many failures and near-failures among financial institutions. The number
of FDIC-insured banks that have failed has increased, and the FDIC insurance
fund reserve ratio, representing the ratio of the fund to the level of insured
deposits, has declined due to losses caused by bank failures. As a result, the
FDIC has increased its deposit insurance premiums on remaining institutions,
including well-capitalized institutions like Victory State Bank, in order to
replenish the insurance fund. If bank failures continue to occur, and more so
if the level of failures increases, the FDIC insurance fund will further
decline, and the FDIC is likely to continue to impose higher premiums on
healthy banks. Thus, despite the prudent steps we may take to avoid the
mistakes made by other banks, our costs of operations may increase as a result
of those mistakes by others.

Our FDIC insurance premium was
$122,869 in 2008. In 2009, the FDIC has already announced an increase in
deposit insurance premiums so institutions like our Bank, even though we are in
the lowest regulatory risk category, will be subject to an assessment rate
between seven (7) and twelve (12) basis points per annum, which is higher than
the assessment rate in 2008 of from five (5) to seven (7) basis points.
Additionally, the FDIC has proposed a special 20 basis point assessment,
payable on September 30, 2009, in order to continue the process of replenishing
the insurance fund, and the FDIC has also stated that they are considering an
additional 10 basis point special assessment at each quarter end thereafter,
depending on the viability of the insurance fund. These assessments will
significantly increase our deposit insurance expense in 2009. We estimate that
if our deposits remain constant, our FDIC insurance assessment in 2009 will be
at least $260,000 and, if the 20 basis point special assessment is imposed,
that will increase to $600,000.

16

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Results of Operations for the Three Months Ended March 31,
2009 and March 31, 2008

Our results of operations depend
primarily on net interest income, which is the difference between the income we
earn on our loan and investment portfolios and our cost of funds, consisting
primarily of interest we pay on customer deposits. Our operating expenses
principally consist of employee compensation and benefits, occupancy expenses,
professional fees, advertising and marketing expenses and other general and
administrative expenses. Our results of operations are significantly affected
by general economic and competitive conditions, particularly changes in market
interest rates, government policies and actions of regulatory authorities.

General.
We had net income of $373,051 for the quarter ended March 31, 2009, compared to
net income of $361,945 for the comparable quarter in 2008. The principal
categories which make up the 2009 net income are:

| |   |                                                   
| | - | --------------------------------------------------
| | · | Interest income of $2,718,066                     
| | · | Reduced by interest expense of $410,948           
| | · | Reduced by a provision for loan losses of $275,000
| | · | Increased by non-interest income of $613,169      
| | · | Reduced by non-interest expense of $1,952,463     
| | · | Reduced by $319,773 in income tax expense         

We
discuss each of these categories individually and the reasons for the
differences between the quarters ended March 31, 2009 and 2008 in the following
paragraphs. In general, the principal reason for the increase in net income
when comparing the first quarter of 2009 with the same quarter in 2008 was an
improvement in our interest rate spread and margin.

Interest
Income.Interest
income was $2,718,066 for the quarter ended March 31, 2009, compared to
$2,731,081 for the quarter ended March 31, 2008, a decrease of $13,015, or
0.5%. Interest income from other interest earning assets decreased by $97,552,
which was partially offset by an increase in interest income on loans of
$86,215, due primarily to the reinstatement of a loan that was previously
classified as non-accrual. The Bank received $88,805 of interest on that loan
during the first quarter of 2009 which was due but unpaid, and not accrued, in
2008. The principal reason for the decrease in interest income on other
interest earning assets was a 289 basis point decrease in the yield on those
assets (principally overnight investments) due to lower market interest rates.
Without the benefit of the non-accrual loan reinstatement, interest income on
loans remained stable. The 33 basis point decrease in yield, due to the decline
of the prime rate, was partially offset by the $4.9 million increase in the
average loan balances for the first quarter of 2009. The decline in yields on
loans was less than the decline in yields on overnight investments because we
have introduced interest rate floors on most of our loans that limit the
decrease in yield when market interest rates are declining. We also used the
growth in deposits to fund the purchase of investment securities.

We
also experienced a 14 basis point decrease in the average yield on our
investment securities portfolio, from 4.75% to 4.61%, due to the purchase of
new investment securities at lower market rates than the yields on the
principal paydowns we received. However, many of these investment securities
were purchased prior to the fourth quarter of 2008 when the yields being
offered on investment securities were higher than the more recent yields
available on similar securities. The average balance of our investment
portfolio increased by $4,397,796, or 3.75%, between the periods. The increase
in volume and the decrease in yield resulted in an overall $1,678 decrease in interest
income from investment securities. The investment securities portfolio
represented 86.8% of average non-loan interest earning assets in the 2009
period compared to 89.5% in the 2008 period.

17

---



Interest
Expense. Interest expense was $410,948 for the quarter ended
March 31, 2009, compared to $755,792 for the quarter ended March 31, 2008, a
decrease of 45.6%. The decrease was primarily the result of a decrease in the rates we paid on deposits,
principally on time deposits (a 152 basis point decrease) and money market
accounts (a 72 basis point decrease), combined with the reduction in interest
expense caused by our repayment of the subordinated debt in August 2008. Our
average cost of funds, excluding the effect of interest-free demand deposits,
decreased to 1.28% from 2.51% between the periods due to the decline in market
interest rates.

Net
Interest Income Before Provision for Loan Losses. Net interest income before the provision for
loan losses was $2,307,118 for the quarter ended March 31, 2009, an increase of
$331,829, or 16.8% over the $1,975,289 in the comparable 2008 quarter. Our
interest rate spread increased to 3.89% in the first quarter of 2009 from 3.13%
in the first quarter of 2008. We were able to increase the spread due
principally to the combined effect of the interest rate floors on most of our
loans and our purchases of investment securities during 2008 prior to the most
recent series of market rate declines that began in the fourth quarter of 2008.
Our net interest margin increased to 4.37% in the first quarter of 2009 from
4.07% in the first quarter of 2008. The margin is higher than the spread
because it takes into account the effect of interest free demand deposits and
capital, but the improvement in margin is less than the improvement in spread
because those interest-free funding sources are less valuable during periods of
lower market interest rates.

Provision
for Loan Losses.We
took a provision for loan losses of $275,000 for the quarter ended March 31,
2009 compared to a provision for loan losses of $30,000 for the quarter ended
March 31, 2008. The $245,000 increase in the provision was due to a higher
level of charge-offs, $350,023 for the 2009 quarter as compared to $93,730 in
the same period in 2008, and continuing deterioration of the real estate market
and local economy. We are aggressively collecting these charged-off loans in an
effort to recover the amounts charged off. The provision for loan losses in any
period depends upon the amount necessary to bring the allowance for loan losses
to the level management believes is appropriate, after taking into account
charge offs and recoveries. Our allowance for loan losses is based on
managements evaluation of the risks inherent in our loan portfolio and the
general economy. Management periodically evaluates both broad categories of
performing loans and problem loans individually to assess the appropriate level
of the allowance.

Although
management uses available information to assess the appropriateness of the
allowance on a quarterly basis in consultation with outside advisors and the
board of directors, changes in national or local economic conditions, the
circumstances of individual borrowers, or other factors, may change, increasing
the level of problem loans and requiring an increase in the level of the
allowance. The allowance for loan losses represented 1.35% of total loans at
March 31, 2009. There can be no assurance that a higher level, or a higher
provision for loan losses, will not be necessary in the future.

Non-interest
Income.Non-interest income was $613,169 for the three months
ended March 31, 2009, compared to
$565,902 during the same period last year. The $47,267, or 8.4%, increase in
non-interest income was a direct result of a $66,247 increase in service
charges on deposits and an increase in net rental income of $12,528, partially
offset by a decrease of $35,036 in other income. Service fees on deposit
accounts, principally non-sufficient funds fees, increased from 2008 to 2009
due to an increase in the number of non-sufficient fund transactions coupled
with our decision to increase per item charges for both insufficient fund and
bounced check fees and other deposit fees in March of 2008. The increase in net
rental income was because the Bank was able to sublease a portion of a leased
property that was previously vacant. The decrease in other income was a result
of the loss of a check cashing customer and the fee income associated with that
business in the first quarter of 2008.

Non-interest
Expense. Non-interest expense was $1,952,463 for the quarter
ended March 31, 2009, compared to $1,838,150 for the quarter ended March 31,
2008. The shifts in the individual categories were:

| |   |                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------
| | · | $21,357 increase in
 occupancy expenses due to higher utility bills;                                                                      
| | · | $20,563 increase in legal expenses primarily due to increased
 collection costs                                                           
| | · | $20,674 increase in other
 expenses due to an increase in advertising expenses in connection with the
 Banks new advertising campaign and
| | · | $29,000 increase in FDIC and NYSBD assessments due to an increase in FDIC assessment rates.                                               

18

---



Income
Tax Expense. Income tax expense was $319,773 for the quarter
ended March 31, 2009, compared to income tax expense of $311,096 for the
quarter ended March 31, 2008. The increase in income tax expense was due to the
$19,783 increase in income before income taxes in the 2009 quarter. Our
effective tax rate for the quarter ended March 31, 2009 was 46.2%, the same as
for the quarter ended March 31, 2008.

VSB Bancorp, Inc.
Consolidated Average Balance Sheets
(unaudited)

|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|----------------------------------------------------------------- |  | ----------------------------------- | ----------- | ----------------------------------- | - | ------------ |  | ---------------- | ---- | -------- | - | ------------ | - | - | --------- |  |  | ---- | -
|                                                                  |  | Three
 Months Ended
 March 31, 2009 |             | Three
 Months Ended
 March 31, 2008 |  
|                                                                  |  |                                     |             |                                     |  
|                                                                  |  | Average
 Balance                    |             | Interest                            |   | Yield/
 Cost |  | Average
 Balance |      | Interest |   | Yield/
 Cost |  
|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |  
|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|Assets:                                                           |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|Interest-earning assets:                                          |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|Loans receivable                                                  |  | $                                   | 67,850,861  |                                     | $ | 1,330,706    |  |                  | 7.55 | %        | $ | 62,991,593   |   | $ | 1,244,491 |  |  | 7.88 | %
|Investment securities, afs                                        |  |                                     | 121,701,423 |                                     |   | 1,382,619    |  |                  | 4.61 |          |   | 117,303,627  |   |   | 1,384,297 |  |  | 4.75 |  
|Other interest-earning assets                                     |  |                                     | 18,523,892  |                                     |   | 4,741        |  |                  | 0.10 |          |   | 13,742,193   |   |   | 102,293   |  |  | 2.99 |  
|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|Total interest-earning assets                                     |  |                                     | 208,076,176 |                                     |   | 2,718,066    |  |                  | 5.17 |          |   | 194,037,413  |   |   | 2,731,081 |  |  | 5.64 |  
|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|Non-interest earning assets                                       |  |                                     | 5,518,760   |                                     |   |              |  |                  |      |          |   | 13,159,112   |   |   |           |  |  |      |  
|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|Total assets                                                      |  | $                                   | 213,594,936 |                                     |   |              |  |                  |      |          | $ | 207,196,525  |   |   |           |  |  |      |  
|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|Liabilities and equity:                                           |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|Interest-bearing liabilities:                                     |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|Savings accounts                                                  |  | $                                   | 12,717,607  |                                     |   | 13,102       |  |                  | 0.42 |          | $ | 10,993,663   |   |   | 18,982    |  |  | 0.69 |  
|Time accounts                                                     |  |                                     | 75,067,561  |                                     |   | 310,552      |  |                  | 1.68 |          |   | 65,193,032   |   |   | 519,447   |  |  | 3.20 |  
|Money market accounts                                             |  |                                     | 23,432,674  |                                     |   | 60,511       |  |                  | 1.05 |          |   | 21,853,581   |   |   | 96,092    |  |  | 1.77 |  
|Now accounts                                                      |  |                                     | 18,498,973  |                                     |   | 26,783       |  |                  | 0.59 |          |   | 17,877,491   |   |   | 32,231    |  |  | 0.73 |  
|Subordinated debt                                                 |  |                                     |            |                                     |   |             |  |                  |     |          |   | 5,155,000    |   |   | 89,040    |  |  | 6.91 |  
|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|Total interest-bearing liabilities                                |  |                                     | 129,716,815 |                                     |   | 410,948      |  |                  | 1.28 |          |   | 121,072,767  |   |   | 755,792   |  |  | 2.51 |  
|Checking accounts                                                 |  |                                     | 59,234,376  |                                     |   |              |  |                  |      |          |   | 63,047,901   |   |   |           |  |  |      |  
|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|Total deposits and subordinated debt                              |  |                                     | 188,951,191 |                                     |   |              |  |                  |      |          |   | 184,120,668  |   |   |           |  |  |      |  
|Other liabilities                                                 |  |                                     | 1,281,238   |                                     |   |              |  |                  |      |          |   | 1,355,991    |   |   |           |  |  |      |  
|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|Total liabilities                                                 |  |                                     | 190,232,429 |                                     |   |              |  |                  |      |          |   | 185,476,659  |   |   |           |  |  |      |  
|Equity                                                            |  |                                     | 23,362,507  |                                     |   |              |  |                  |      |          |   | 21,719,866   |   |   |           |  |  |      |  
|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|Total liabilities and equity                                      |  | $                                   | 213,594,936 |                                     |   |              |  |                  |      |          | $ | 207,196,525  |   |   |           |  |  |      |  
|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|Net interest income/net interest rate spread                      |  |                                     |             |                                     | $ | 2,307,118    |  |                  | 3.89 | %        |   |              |   | $ | 1,975,289 |  |  | 3.13 | %
|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|Net interest earning assets/net interest margin                   |  | $                                   | 78,359,361  |                                     |   |              |  |                  | 4.37 | %        | $ | 72,964,646   |   |   |           |  |  | 4.07 | %
|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|Ratio of interest-earning assets to interest-bearing
 liabilities |  |                                     | 1.60        | x                                   |   |              |  |                  |      |          |   | 1.60         | x |   |           |  |  |      |  
|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|Return on Average Assets (1)                                      |  |                                     | 0.64        | %                                   |   |              |  |                  |      |          |   | 0.69         | % |   |           |  |  |      |  
|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|Return on Average Equity (1)                                      |  |                                     | 5.85        | %                                   |   |              |  |                  |      |          |   | 6.59         | % |   |           |  |  |      |  
|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  
|Tangible Equity to Total Assets                                   |  |                                     | 10.75       | %                                   |   |              |  |                  |      |          |   | 10.56        | % |   |           |  |  |      |  
|                                                                  |  |                                     |             |                                     |   |              |  |                  |      |          |   |              |   |   |           |  |  |      |  

(1) Ratios have been annualized.

19

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Liquidity and Capital Resources

Our
primary sources of funds are increases in deposits, proceeds from the repayment
of investment securities, and the repayment of loans. We use these funds to
purchase new investment securities and to fund new and renewing loans in our
loan portfolio. Remaining funds are invested in short-term liquid assets such
as overnight federal
funds loans and bank deposits.

During
the three months ended March 31, 2009, we had a net increase in total deposits
of $8,923,103 due to increases of $16,828,064 in NOW accounts,
$1,706,632 in non-interest demand deposits, $1,233,673 in savings accounts and
$975,623 in money market accounts, partially offset by a decrease of
$11,820,889 in time deposits. We
also received proceeds from repayment of investment securities of $7,343,401.
We used $5,799,823 of available funds to purchase new investment securities and
we had a net loan increase of $2,780,229. These changes resulted in an overall
increase in cash and cash equivalents of $8,249,720.

In
contrast, during the three months ended March 31, 2008, we had a net increase in total deposits of
$5,314,421 due to increases of $2,922,381 in money market, $1,814,127 in
NOW accounts, $676,271 in non-interest demand deposits and $193,610 in time
deposits. This was partially offset by a decrease of $291,968 in savings accounts. We received proceeds from
repayment of investment securities of $7,407,082 and we had a reduction in net
loans of $1,031,224. We used $9,498,945 of available funds to purchase new
investment securities. These changes resulted in an overall increase in cash
and cash equivalents of $4,465,675.

At
quarter end 2009, cash and cash equivalents represented 13% of total assets. We
anticipate, based upon historical experience that these funds, combined with
cash inflows we anticipate from payments on our loan and investment securities
portfolios, will be sufficient to fund loan growth and unanticipated deposit
outflows. As a secondary source of liquidity, at quarter end 2009 we had in
excess of $120 million of investment securities classified available for sale.
The disposition of these securities prior to maturity is an option available to
us in the event, which we believe is unlikely, that our primary sources of
liquidity and expected cash flows are insufficient to meet our need for funds.
Additionally, we have access to borrow funds at the Federal Home Loan Bank of
New York using securities in our investment portfolio as collateral if the need
arises. We do not anticipate a need for additional capital resources and do not
expect to raise funds through a stock offering in the near future. As a result,
of our strong capital resources and available liquidity, we did not participate
in the Treasury Departments TARP Capital Purchase Program. We have sufficient
resources to allow us to continue to make loans as appropriate opportunities
arise without having to rely on government funds to support our lending
activities.

Victory
State Bank satisfied all capital ratio requirements of the Federal Deposit
Insurance Corporation at March 31, 2009, with a Tier I Leverage Capital ratio
of 10.29%, a ratio of Tier I Capital to Risk-Weighted Assets ratio of 23.83%,
and a Total Capital to Risk-Weighted Assets ratio of 24.83%.

VSB
Bancorp, Inc. satisfied all capital ratio requirements of the Federal Reserve
at March 31, 2009, with a Tier I Leverage Capital ratio of 10.51%, a ratio of
Tier I Capital to Risk-Weighted Assets ratio of 23.93%, and a Total Capital to
Risk-Weighted Assets ratio of 24.92%.

20

---



The
following table sets forth our contractual obligations and commitments for
future lease payments, time deposit maturities and loan commitments.

Contractual
Obligations and Commitments at March 31, 2009

|                                                                      |  |                       |            |                     |   |                     |  |                   |           |                          |   |           |  |   |            | 
|--------------------------------------------------------------------- |  | --------------------- | ---------- | ------------------- | - | ------------------- |  | ----------------- | --------- | ------------------------ | - | --------- |  | - | ---------- | 
|Contractual Obligations                                               |  | Payment due by Period |           
|                                                                      |  |                       |           
|                                                                      |  | Less than
 One Year   |            | One to three
 years |   | Four to five
 years |  | After
 five years |           | Total Amounts
 committed |  
|                                                                      |  |                       |            |                     |   |                     |  |                   |           |                          |  
|                                                                      |  |                       |            |                     |   |                     |  |                   |           |                          |   |           |  |   |            | 
|Minimum annual rental payments under non-cancelable
 operating leases |  | $                     | 400,042    |                     | $ | 821,832             |  | $                 | 839,084   |                          | $ | 1,694,062 |  | $ | 3,755,020  | 
|Remaining contractual maturities of time deposits                     |  |                       | 61,164,905 |                     |   | 959,779             |  |                   | 2,377,921 |                          |   |          |  |   | 64,502,605 | 
|                                                                      |  |                       |            |                     |   |                     |  |                   |           |                          |   |           |  |   |            | 
|Total contractual cash obligations                                    |  | $                     | 61,564,947 |                     | $ | 1,781,611           |  | $                 | 3,217,005 |                          | $ | 1,694,062 |  | $ | 68,257,625 | 
|                                                                      |  |                       |            |                     |   |                     |  |                   |           |                          |   |           |  |   |            | 

|                  |  |                                            |            |                     |   |                     |  |                   |   |                          |   |   |  |   |            | 
|----------------- |  | ------------------------------------------ | ---------- | ------------------- | - | ------------------- |  | ----------------- | - | ------------------------ | - | - |  | - | ---------- | 
|Other commitments |  | Amount of commitment
 Expiration by Period |           
|                  |  |                                            |           
|                  |  | Less than
 One Year                        |            | One to three
 years |   | Four to five
 years |  | After
 five years |   | Total Amounts
 committed |  
|                  |  |                                            |            |                     |   |                     |  |                   |   |                          |  
|                  |  |                                            |            |                     |   |                     |  |                   |   |                          |   |   |  |   |            | 
|                  |  |                                            |            |                     |   |                     |  |                   |   |                          |   |   |  |   |            | 
|Loan commitments  |  | $                                          | 33,662,394 |                     | $ | 5,078,228           |  | $                 |  |                          | $ |  |  | $ | 38,740,622 | 
|                  |  |                                            |            |                     |   |                     |  |                   |   |                          |   |   |  |   |            | 

Our
loan commitments shown in the above table represent both commitments to make
new loans and obligations to make additional advances on existing loans, such
as construction loans in process and lines of credit. Substantially all of
these commitments involve loans with fluctuating interest rates, so the
outstanding commitments do not expose us to interest rate risk upon fluctuation
in market rates.

Non-Performing Loans

Management
closely monitors non-performing loans and other assets with potential problems
on a regular basis. We had nine non-performing loans, totaling $1,654,783, at
March 31, 2009, compared to thirteen non-performing loans, totaling $2,279,067,
at December 31, 2008. The following is information about the four largest
non-performing loans, totaling $1,436,627 in outstanding principal balance.
Management believes it has taken appropriate steps with a view towards
maximizing recovery and minimizing loss on these loans.

|  |                                                                                                                                                                                                                                                                                                                                                                                                                            
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|· | $859,968 in three loans to
 a builder secured and cross-collateralized by first mortgage liens on three
 lots in Staten Island on which single family houses are being built. The
 loans are past maturity and we have commenced foreclosure actions. A motion
 to appoint a referee was submitted and we are awaiting the courts decision.                                                                               
|· | $516,659 in a loan to a
 local business. The loan is in arrears but the borrower continues to make
 partial payments. The loan is secured by a first mortgage on a commercial
 building, a third mortgage on the borrowers personal residence, a security
 interest in the business, and the personal guaranties of the principals. The
 commercial property is listed for sale at a price in excess of all amounts
 owed.

Critical Accounting Policies and Judgments

We
are required to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements and the amounts of revenues and
expenses during the reporting period. The allowance for loan losses, prepayment
estimates on the mortgage-backed securities and Collateralized Mortgage
Obligation portfolios, contingencies and fair values of financial instruments
are particularly subject to change and to managements estimates. Actual
results can differ from those estimates and may have an impact on our financial
statements.

21

---



Item 4
Controls and Procedures

Evaluation
of Disclosure Controls and Procedures: As of March 31, 2009, we undertook
an evaluation of our disclosure controls and procedures under the supervision
and with the participation of Raffaele M. Branca, President, CEO and CFO and
Ronald Giampaolo, Vice President and Controller. Disclosure controls are the
systems and procedures we use that are designed to ensure that information we
are required to disclose in the reports we file or submit under the Securities
Exchange Act of 1934 (such as annual reports on Form 10-K and quarterly
periodic reports on Form 10-Q) is recorded, processed, summarized and reported,
in a manner which will allow senior management to make timely decisions on the
public disclosure of that information. Mr. Branca concluded that our current
disclosure controls and procedures are effective in ensuring that such
information is (i) collected and communicated to senior management in a timely
manner, and (ii) recorded, processed, summarized and reported within the time
periods specified in the SECs rules and forms. Since our last evaluation of
our disclosure controls, we have not made any significant changes in, or taken
corrective actions regarding, either our internal controls or other factors
that could significantly affect those controls.

We
intend to continually review and evaluate the design and effectiveness of our
disclosure controls and procedures and to correct any deficiencies that we may
discover. Our goal is to ensure that senior management has timely access to all
material financial and non-financial information concerning our business so
that they can evaluate that information and make determinations as to the
nature and timing of disclosure of that information. While we believe the
present design of our disclosure controls and procedures is effective to
achieve this goal, future events may cause us to modify our disclosure controls
and procedures.

Part II

Item 1 
Legal Proceedings

The
Bank is a defendant in an action pending in Supreme Court, Richmond County,
commenced by IndyMac Bank, F.S.B. against the Bank, LaMattina & Associates,
Inc. (LAI) and various individuals and entities alleged to be officers,
directors or otherwise to have relationships with LAI. LAI was a deposit
customer of the Bank engaged in the business of providing real estate
settlement services to lenders making residential mortgage loans. The plaintiff
alleges that it was such a lender and that it had provided funds to LAI by
wiring those funds to an account of LAI at the Bank to use to fund mortgage
loans to be made by the plaintiff, only to have LAI not use those funds for
their intended purpose. The action was commenced in August 2005. In November
2005, the plaintiff amended its complaint to add the Bank as a defendant. The
plaintiff amended its complaint again and the Bank moved to dismiss the claims.
In February 2007, the court dismissed two of the claims against the Bank but
allowed the Plaintiff to proceed and conduct discovery with respect to two
claims, one for negligence and the other for conversion. The parties are in the
process of conducting discovery regarding the claims asserted in the case.

The
amended complaint requests monetary damages against the Bank of $1,817,041 plus
recovery of attorneys fees. The Bank intends to defend aggressively the
amended claims and has referred the litigation to its insurance carrier, which
has indicated that at least some of the claims asserted against the Bank are
covered by insurance. The Bank has also asserted cross-claims against various
former customers, principals of those customers, and other related persons on
the grounds that if the Bank is held liable to the plaintiff, then the
liability is the result of the misdeeds or negligence of those other parties.

IndyMac
Bank, F.S.B. (Old IndyMac), was closed by the Office of Thrift Supervision
(OTS) and the Federal Deposit Insurance Corporation (FDIC) was appointed as
its conservator in July 2008. The OTS then created a new bank (New IndyMac)
and many of the assets of Old IndyMac were transferred to New IndyMac. The Bank
has been advised by opposing legal counsel that the claim in the litigation is
owned by Old IndyMac, which is being liquidated by the FDIC. The Bank has been
advised that the holder of the claim against the Bank intends to continue to
pursue its claim against the Bank. The Bank intends to diligently defend the
litigation. The litigation is in the discovery phase and depositions of former
officers and employees of Old IndyMac, the first depositions in the case, began
in April 2009, but have not concluded.

22

---



VSB
Bancorp, Inc. is not involved in any pending legal proceedings. The Bank, from
time to time, is involved in routine
collection proceedings in the ordinary course of business on loans in default.
Management believes that such other routine legal proceedings in the aggregate
are immaterial to our financial condition or results of operations.

Item 4  Submission of Matters to a
Vote of Security Holders

No
matters were submitted to security holders for a vote during the period from
January 1, 2009 through March 31, 2009. VSB Bancorp, Inc. held its sixth Annual
Meeting of Stockholders on April 28, 2009 at its principal office, 4142 Hylan
Boulevard, Staten Island, New York 10308 at 5:00 P.M. At that meeting,
1,672,784 shares of the capital stock of the Company were represented in person
or by proxy, being 90.8% of all outstanding shares of the capital stock of the
Company, with a quorum being present. The Annual Meeting was held for the
purpose of voting on three proposals, with the results of the voting as
follows:

| |    |                                                       
| | -- | ------------------------------------------------------
| | 1. | The election of three
 directors for three-year terms:

|                  |  |            |           |                             |      |                 |  |                             |        |  |     |   | 
|----------------- |  | ---------- | --------- | --------------------------- | ---- | --------------- |  | --------------------------- | ------ |  | --- | - | 
|Director
 Elected |  | Votes
 For |           | Percentage
 of shares voted |      | Votes
 Withheld |  | Percentage
 of shares voted |       
|                  |  |            |           |                             |      |                 |  |                             |       
|                  |  |            |           |                             |      |                 |  |                             |        |  |     |   | 
|Alfred C. Johnsen |  |            | 1,596,675 |                             | 95.5 | %               |  |                             | 76,109 |  | 4.5 | % | 
|Carlos Perez MD   |  |            | 1,596,564 |                             | 95.4 | %               |  |                             | 76,220 |  | 4.6 | % | 
|Bruno Savo        |  |            | 1,596,564 |                             | 95.4 | %               |  |                             | 76,220 |  | 4.6 | % | 

No other persons received any votes.

The following directors continued as directors of the
Company: Joseph J. LiBassi, Joan Nerlino Caddell, Raffaele M. Branca, Robert S.
Cutrona, Sr. and Chaim Farkas.

| |    |                                                                                                                                               
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------
| | 2. | The ratification of the appointment of Crowe Horwath
 LLP as our independent public accountants for the fiscal year ending December
 31, 2009.

|           |  |                             |   |                |  |                             |  |                           |   |  |  |        | 
|---------- |  | --------------------------- | - | -------------- |  | --------------------------- |  | ------------------------- | - |  |  | ------ | 
|Votes
 For |  | Percentage
 of shares voted |   | Votes
 Against |  | Percentage
 of shares voted |  | Proxies
 marked Abstained |  
|           |  |                             |   |                |  |                             |  |                           |  
|           |  |                             |   |                |  |                             |  |                           |   |  |  |        | 
|1,643,235  |  | 99.2                        | % |                |  | 13,439                      |  | 0.8                       | % |  |  | 15,910 | 

| |    |                                                                                                                                                    
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------
| | 3. | The stockholder proposal
 requesting the Board to eliminate the classification of the Board and to
 require that all directors be elected annually.

|           |  |                             |   |                |  |                             |  |                           |   |  |  |        | 
|---------- |  | --------------------------- | - | -------------- |  | --------------------------- |  | ------------------------- | - |  |  | ------ | 
|Votes
 For |  | Percentage
 of shares voted |   | Votes
 Against |  | Percentage
 of shares voted |  | Proxies
 marked Abstained |  
|           |  |                             |   |                |  |                             |  |                           |  
|           |  |                             |   |                |  |                             |  |                           |   |  |  |        | 
|324,341    |  | 29.8                        | % |                |  | 762,302                     |  | 70.2                      | % |  |  | 25,110 | 

There were 561,031 broker non-votes.

23

---



Item 5  Other Information

On May 12, 2009, VSB
Bancorp, Inc. (NASDAQ: VSBN) and Victory State Bank announced that Robert P.
Moore has been elected to their Boards of Directors. Mr. Moore is a prominent
executive board member of the Staten Island Economic Development Corporation
(SIEDC) and retired Vice President of Marketing & Sales at Keyspan (now
National Grid).

Mr. Moore, 60, is the Executive
Vice Chairman of the SIEDC Board, the premier economic development advocate
serving the business community of Staten Island. Mr. Moore, in his former
position as VP of Marketing and Sales at Keyspan, assisted developers and
builders to access the natural gas services and energy solutions of Keyspan.

Mr. Moore graduated with a
Bachelor of Science Degree in Business Management from St. Francis College and
a Master in Business Administration Degree in Finance from Long Island
University in 1975. He formerly served on the board of directors of American
Gas Association, Junior Achievement of New York and on the Council of Regents
for Saint Francis College. Mr. Moore resides in Grymes Hill with his wife
Patrice.

There are no arrangements or
understandings between the new director and other persons, pursuant to which
such director was selected as a director.

Mr. Moore will serve on the
Loan Committee of Victory State Bank.

There are no related person
transactions with Mr. Moore, for which Mr. Moore has a direct or indirect
material interest.

There are no material plan,
contract or arrangement (whether or not written) to which the director is a
party or in which he participates, which was adopted or amended in connection
with his election as a director or in which he has received a grant or an
award.

24

---



Signature
Page

In
accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.

|                    |  |                                          
|------------------- |  | -----------------------------------------
|                    |  | VSB Bancorp, Inc.                        
|                    |  |                                          
|Date:
 May 12, 2009 |  | /s/
 Raffaele M. Branca                  
|                    |  |                                          
|                    |  | Raffaele
 M. Branca, President & CEO     
|                    |  | Principal
 Executive Officer and         
|                    |  |                                          
|Date:
 May 12, 2009 |  | /s/
 Ronald Giampaolo                    
|                    |  |                                          
|                    |  | Ronald
 Giampaolo,                       
|                    |  | Vice
 President, Controller and Principal
|                    |  | Accounting
 Officer                      

EXHIBIT
INDEX

|              |  |                                                                           
|------------- |  | --------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                    
|              |  |                                                                           
|31.1          |  | Rule 13A-14(a)/15D-14(a)
 Certification of Chief Executive Officer        
|31.2          |  | Rule 13A-14(a)/15D-14(a)
 Certification of Principal Accounting Officer   
|32.1          |  | Certification by CEO
 pursuant to 18 U.S.C. 1350.                         
|32.2          |  | Certification by Principal
 Accounting Officer pursuant to 18 U.S.C. 1350.

---

Item 6 -
Exhibits

|              |  |                                                                           
|------------- |  | --------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                    
|              |  |                                                                           
|31.1          |  | Rule 13A-14(a)/15D-14(a)
 Certification of Chief Executive Officer        
|31.2          |  | Rule 13A-14(a)/15D-14(a)
 Certification of Principal Accounting Officer   
|32.1          |  | Certification by CEO
 pursuant to 18 U.S.C. 1350.                         
|32.2          |  | Certification by Principal
 Accounting Officer pursuant to 18 U.S.C. 1350.

25

---