VSB Bancorp is the holding company for Victory State Bank, a New York State chartered commercial bank. The Bank's main business is attracting commercial deposits from mainly the general public and investing those deposits, together with funds generated from operations and repayments on existing investments, in loans for business purposes and investment securities. It targets small to medium sized business, and professionals such as lawyers, doctors and accountants for commercial business loans in its market area. The Bank originates commercial real estate loans that are generally secured by properties used for business purposes such as retail stores, other mixed-use properties, restaurants, light industrial and small office buildings located in its main market area. Its construction loans mainly have been made to builders and developers to finance the construction of one- to four-family residential properties and, to a lesser extent, multi-family residential real estate properties. Deposits are the main source of its funds for use in lending, investing and for other general purposes. In addition to deposits, the Bank obtains funds from main repayments and prepayments on loans and securities. It offers a number of deposit accounts having a range of interest rates and terms. Its deposits consist of non-interest bearing checking accounts, money market accounts, time deposit accounts, statement savings and NOW accounts. The Company's competition for loans comes principally from commercial banks, savings banks and insurance companies. Its direct competition for deposits has come from commercial banks and savings banks. In addition, it faces competition for deposits from non-bank institutions such as brokerage firms and insurance companies in such areas as short-term money market funds, corporate and government securities funds, mutual funds and annuities. The Company is subject to and governed by the New York Business Corporation Law. It is a bank holding company and thus is subject to regulation, supervision, and examination by the Federal Reserve.