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FAIRPORT, NY–(Marketwire – Apr 28, 2011) – FSB Community Bankshares, Inc. (the “Company”) (OTCBB: FSBC), the mid-tier stock holding company of Fairport Savings Bank (the “Bank”), reported a net loss of $46,000 for the quarter ended March 31, 2011 compared to net income of $33,000 for the quarter ended March 31, 2010. Net loss per basic and diluted share was $(0.03) for the quarter ended March 31, 2011 compared to net income per basic and diluted share of $0.02 for the quarter ended March 31, 2010. The Company’s net interest margin for the quarter ended March 31, 2011 increased 31 basis points to 2.59% from 2.28% for the quarter ended March 31, 2010, due to a decrease in the cost of our interest bearing liabilities of 74 basis points from 2.32% to 1.58%, which was partially offset by a decrease in the yield on our interest earning assets of 37 basis points from 4.40% to 4.03%.
The $79,000 decrease in net income for the first quarter of 2011 compared to the first quarter of 2010 resulted from an increase in other expense of $294,000, an increase in provision for loan losses of $5,000, partially offset by an increase in net interest income of $138,000, an increase in other income of $49,000, and an increase in tax benefit of $33,000. The $294,000 increase in other expense was primarily attributable to our increased investment in our loan origination division with increased salaries and employee benefits, additional occupancy and equipment expenses, and miscellaneous other operating expenses related to the three mortgage origination offices that we opened in January 2010 and have expanded throughout 2010 and the first quarter of 2011. Loan demand was weak in the first quarter and continues to be slow-moving at the beginning of the second quarter of 2011, although we are starting to see renewed demand from creditworthy borrowers. We believe that we are well positioned for future growth and profitability with high liquidity and capacity for more loans and we will continue to be a strong competitive force in the mortgage markets in which we serve. The $138,000 increase in net interest income is reflective of the Company’s ability to reduce the deposit and borrowing costs in a low interest rate environment in addition to an increased average volume of higher yielding interest earning assets in the first quarter of 2011 compared to the first quarter of 2010. The $49,000 increase in other income was the result of additional gain on sale of loans and mortgage fee income in the first quarter of 2011 compared to the same period in 2010.
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