ES Bancshares, Inc. reports robust loan and deposit growth for the nine months ended September 30, 2018.


Loans increased $64.8 million, or 25.2%, to $321.6 million at September 30, 2018 compared to $256.8 million at December 31, 2017.

Deposits increased $73.8 million, or 34.0% to $291.0 million at September 30, 2018 compared to $217.2 million at December 31, 2017.

Tangible book value per share increases to $5.07, or $0.13 per share, from December 31, 2017. 

NEWBURGH, N.Y., Nov. 20, 2018 (GLOBE NEWSWIRE) -- ES Bancshares, Inc. (OTC: ESBS) (the “Company”) the holding company for Empire State Bank, (the “Bank”) today announced net income of $171 thousand, or $0.04 per common share for the quarter ended September 30, 2018, as compared to $235 thousand, or $0.07 per common share for the quarter ended September 30, 2017.  The decrease in net income was primarily due to a $710 thousand provision for loan loss for the quarter ended September 30, 2018 compared to $172 thousand for the comparable 2017 period.  Further, increases in non-interest expense largely resulting from the addition of two new branches in 2018 also contributed to the decrease.

Net interest income increased $650 thousand, or 31.1% to $2.7 million quarter over quarter.  The increase in net interest income was largely due to a $80.3 million or 33.3% increase in loans receivable to $321.6 million as of September 30, 2018 compared to $241.3 million as of September 30, 2017.   

Net income for the nine months ended September 30, 2018 was $518 thousand, or $0.13 per share compared to $1.1 million thousand, or $0.33 per share for the period ended September 30, 2017.  The decrease in net income was primarily due to a one-time non-recurring $1.8 million gain on the sale of a branch in the nine month period ended September 30, 2017.  This was partially offset by changes in non-interest expense, largely resulting from the addition of two new branches in 2018, and income taxes.

Net interest income increased $1.2 million, or 18.8% to $7.5 million.  The increase in net interest income was largely due to a $80.3 million or 33.3% increase in loans receivable to $321.6 million as of September 30, 2018 compared to $241.3 million as of September 30, 2017.   

The Bank also reported strong deposit growth over the twelve month period ending September 30, 2018.  Total deposits have grown $84.4 million or 40.8% to $291.0 million at September 30, 2018.

Chief Executive Officer Philip Guarnieri stated that, “We are pleased with the growth that the Bank has experienced in the past year, and the improvement to net interest income despite higher deposit rates.”  Mr. Guarnieri also commented on the Bank’s two new branches that opened in the quarter.  He further stated that, “Management is now focused on deepening customer relationships within the Brooklyn and Staten Island markets.”  He continued by stating, “ ...that the two new branches have attracted over $20 million in new deposits, with over $7 million, or $37%, in non-interest bearing checking accounts.”

President and Chief Operating Officer Thomas Sperzel commented that “Management is excited about the opening of the new branches in Brooklyn and Staten Island, NY.”  He continued by stating that, “the Bank held grand opening celebrations in each community and received an excellent turnout from both our new and existing customers.”

FINANCIAL HIGHLIGHTS

  • Net income of $171 thousand for the quarter ended September 30, 2018 compared to $235 thousand for the comparable period in 2017, representing a decrease of $64 thousand, or 27%.
  • Net income of $518 thousand for the year to date ended September 30, 2018 compared to $1.1 million for the comparable period in 2017, representing a decrease of $582 thousand, or 53%.
  • Net income before taxes of $54 thousand for the quarter ended September 30, 2018 compared to $400 thousand for the comparable period in 2017, representing a decrease of $346 thousand, or 86%.
  • Net income before taxes of $718 thousand for the year to date ended September 30, 2018 compared to $1.87 million for the comparable period in 2017, representing a decrease of $1.15 million, or 61%.  The decrease in net income noted above was primarily due to a one-time non-recurring $1.8 million gain on the sale of a branch in the nine month period ended September 30, 2017.
  • Net interest income of $2.74 million for the quarter ended September 30, 2018 compared to $2.09 million for the comparable period in 2017, representing an increase of $650 thousand, or 31%.
  • Net margin of 3.22% for the quarter ended September 30, 2018 compared to 3.27% for the comparable period in 2017, representing a decrease of 5 bps, or 1.5%.

Comparison of Financial Condition at September 30, 2018 and December 31, 2017

Total assets at September 30, 2018, amounted to $366.0 million, representing an increase of $77.4 million, or 26.8%, from $288.6 million at December 31, 2017. This increase partially resulted from net increase in loans receivable, net, of $64.9 million and in total securities of $8.4 million.

Loans receivable, net, increased $65.0 million, or 25.6%, to $318.8 million at September 30, 2018 from $253.8 million at December 31, 2017. Commercial loans and commercial lines of credit decreased $2.2 million, or 7.8%, from $28.3 million to $26.1 million. Commercial and multifamily real estate loans increased $22.3 million, or 13.9%, from $159.7 million to $182.0 million. Home equity and consumer loans increased $262 thousand to $4.5 million at September 30, 2018. Residential real estate mortgage loans increased $43.8 million, or 70.4%, from $62.2 million to $106.0 million. Management continues to emphasize the origination of high quality loans for retention in the loan portfolio.

Deposits increased by $73.8 million to $291.0 million at September 30, 2018 from $217.2 million at December 31, 2017. Interest bearing deposits increased $61.4 million and non-interest bearing deposits increased $12.4 million. Over this nine month period the net deposit activity consisted mainly of increases in certificates of deposit of $46.4 million, DDA and NOW accounts of $12.5 million, savings accounts of $9.6 million, and money market accounts of $5.3 million.

Borrowings increased by $1.0 million to $49.5 million at September 30, 2018 from $48.52 million at December 31, 2017.

Stockholders’ equity increased by $491 thousand to $20.1 million at September 30, 2018, from $19.7 million at December 31, 2017. The increase was primarily attributable to a $557 thousand increase in retained earnings; partially offset by a decrease in accumulated other comprehensive income of $84 thousand. The ratio of stockholders’ equity to total assets decreased to 5.5% at September 30, 2018 from 6.8% at December 31, 2017. Book value per share increased to $5.22 at September 30, 2018, from $5.10 at December 31, 2017.

ES BANCSHARES, INC.       
STATEMENTS OF CONDITION      
(In Thousands)       
(Unaudited)       
        
        
 9/30/2018 6/30/2018 3/31/2018 12/31/2017
ASSETS       
Cash and cash equivalents:$17,903  $17,295  $14,591  $15,745 
        
Securities - Available For Sale 6,085   6,200   6,271   4,397 
Securities - Held To Maturity 11,895   12,416   4,881   5,146 
Total Securities 17,980   18,616   11,152   9,543 
        
Loans 321,596   297,018   279,090   256,819 
Less:  allowance for loan losses (2,833)  (3,561)  (3,268)  (2,982)
Loans, net 318,763   293,457   275,822   253,837 
        
Premises and equipment, net 4,154   3,157   3,017   2,963 
Other assets 7,205   7,018   7,188   6,532 
Total Assets$366,005  $339,543  $311,770  $288,620 
        
LIABILITIES AND SHAREHOLDERS' EQUITY    
Deposits:       
Demand and NOW deposit accounts$93,257  $92,957  $75,565  $80,725 
Money market accounts 26,009   12,223   14,022   16,446 
Savings accounts 70,937   69,938   62,510   65,625 
Certificates of deposit 100,855   92,798   77,183   54,422 
Total Deposits 291,058   267,916   229,280   217,218 
        
Borrowings 49,500   47,500   59,000   48,500 
Other Liabilities 5,264   4,130   3,597   3,210 
Total Liabilities 345,822   319,546   291,877   268,928 
        
Total Shareholders' Equity 20,183   19,997   19,893   19,692 
Total Liabilities and Shareholders' Equity$366,005  $339,543  $311,770  $288,620 
        

Results of Operations for the Quarters Ended September 30, 2018 and September 30, 2017

General.  For the quarter ended September 30, 2018, the Company recognized net income of $171 thousand, or $0.04 per basic and diluted share, as compared to net income of $235 thousand, or $0.07 per basic and diluted share, for the quarter ended September 30, 2017.

Interest Income.  Interest income increased to $3.81 million for the quarter ended September 30, 2018 compared to $2.69 million for the quarter ended September 30, 2017.

The average balance of the loan portfolio increased to $306.8 million for the quarter ended September 30, 2018 from $253.3 million for the quarter ended September 30, 2017 while the average yield increased to 4.64% for the quarter ended September 30, 2018 from 4.35% for the quarter ended September 30, 2017. The average balance and yield of the Bank’s investment securities for the quarter ended September 30, 2018 was $18.4 million and 3.15%, respectively, as compared to an average balance of $10.1 million and a yield of 3.01% for the comparable quarter ended one-year earlier. 

Interest Expense.  Total interest expense for the quarter ended September 30, 2018, increased by $463 thousand to $1.07 million from $607 thousand for the prior year periodAverage balances of total interest-bearing liabilities increased $58.5 million to $238.6 million for the quarter ended September 30, 2018, from $180.1 million for the quarter ended September 30, 2017. The average cost for those liabilities increased to 1.79% from 1.34% for the same respective period one year earlier.

The average balances of the Bank’s certificates of deposit portfolio increased to $42.4 million at an average cost of 1.96% over the quarter ended September 30, 2018, from $53.7 million at an average cost of 1.39% over the same quarter ended one-year earlier. Regular savings account average balances increased to $75.3 million, from $57.7 million for the quarter ended September 30, 2017. These had an average cost of 1.49% for the quarter ended September 30, 2018 compared to an average cost of 1.07% for the quarter ended September 30, 2017.  

Average money market account balances decreased $7.1 million to $11.7 million at an average cost of 0.41% for the quarter ended September 30, 2018, from $18.8 million at an average cost of 0.42% for the quarter ended September 30, 2017. 

For the quarter ended September 30, 2018, the average balance of the Company’s borrowed funds was $42.3 million with an average cost of 2.72%, as compared to $36.3 million and an average cost of 2.50% for the quarter ended September 30, 2017.

Net Interest Income.  Net interest income increased $650 thousand from $2.09 million for the quarter ended September 30, 2017, to $2.74 million for the quarter ended September 30, 2018Our average interest rate spread decreased to 2.70% for the quarter ended September 30, 2018, from 2.88% for the quarter ended September 30, 2017, while our net interest margin decreased to 3.22% from 3.27%, over the same respective periods.

Provision for Loan Losses.  For the quarter ended September 30, 2018, management recorded a $710 thousand provision for loan losses.  Comparatively, there was $173 thousand provision for loan loss for the quarter ended September 30, 2017. The Bank charged-off $1.4 million of taxi medallion loans during the quarter and provided additional reserves to replenish the allowance for loan losses.

The Bank continues to evaluate the collateral values of the taxi medallion loan portfolio.   Recent medallion transfer prices and a discounted cash flow model valuation output further supported by recent industry valuation trends were weighted to derive an estimated fair value of $250,000 as of September 30, 2018.     

As of September 30, 2018, the Taxi Medallion portfolio equaled $3.1 million, representing 1.0% of the Bank’s total loan portfolio. 

Non-Interest Income.  Non-interest income for the quarter ended September 30, 2018 increased $55 thousand to $258 thousand as compared to $203 thousand for the quarter ended September 30, 2017. This increase primarily resulted in deposit account service charges increased $46 thousand.

Non-Interest Expense.  Non-interest expense for the quarter ended September 30, 2018 increased $514 thousand when compared to the same quarter in 2017. This increase primarily results from net increases of $310 thousand in compensation and benefits, other expenses of $98 thousand and $80 thousand in occupancy and equipment.

Income Tax Expense.  Income tax expense was had a credit balance of $117 thousand for the quarter ended September 30, 2018 as compared to $165 thousand for the quarter ended September 30, 2017.  This was largely due to the income tax adjustment created by the charge-off of taxi medallion loans.

Results of Operations for the Nine Months Ended September 30, 2018 and September 30, 2017

General.  For the nine months ended September 30, 2018, the Company recognized net income of $518 thousand, or $0.13 per basic and diluted share, as compared to net income of $1.10 million, or $0.33 per basic and diluted share, for the nine months ended September 30, 2017. 

Interest Income.  Interest income increased by $2.43 million, from $7.87 million to $10.3 million, for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016.  This increase was primarily attributable to a net increase in loans of $2.2 million.

The average balance of the loan portfolio increased to $286.3 million for the nine months ended September 30, 2018 from $225.4 million for the nine months ended September 30, 2017, while the average yield increased to 4.51% from 4.42% for the nine months ended September 30, 2018 and September 30, 2017. The average balance and yield of the Bank’s investment securities for the nine months ended September 30, 2018, was $14.6 million and 3.09%, respectively, as compared to an average balance of $10.6 million and a yield of 3.10% for the comparable nine month period one-year earlier. 

Interest Expense.  Total interest expense for the nine months ended September 30, 2018, increased by $1.3 million, from $1.6 million to $2.9 million, when compared to the prior year period. Average balances of total interest-bearing liabilities increased $52.6 million to $224.6 million for the nine months ended September 30, 2018, from $172.0 million for the nine months ended September 30, 2017. The average cost for those liabilities increased to 1.52% from 1.22% for the same respective period one year earlier reflecting.

The average balances of the Bank’s certificates of deposit portfolio increased to $82.6 million at an average cost of 1.85% over the nine months ended September 30, 2018, from $55.3 million at an average cost of 1.32% over the same period one-year earlier. Regular savings account average balances increased by $18.1 million to $69.4 million. These had an average cost of 1.38% for the nine months ended September 30, 2018 compared to an average cost of 1.01% for the nine months ended September 30, 2017.

Money market account average balances decreased by $12.2 million to $12.7 million. These had an average cost of 0.41% for the nine months ended September 30, 2018 compared to an average cost of 0.45% for the nine months ended September 30, 2017.  
For the nine months ended September 30, 2018, the average balance of the Company’s borrowed funds was $47.4 million and its average cost was 1.72%, as compared to $23.9 million and an average cost of 2.81% for the nine months ended September 30, 2017.

Net Interest Income.  Net interest income was approximately $7.5 million for the nine months ended September 30, 2018, as compared to $6.3 million for the same period in the prior year.  Our interest rate spread decreased to 2.75% for the nine months ended September 30, 2018, from 3.03% for the nine months ended September 30, 2017, while our net interest margin decreased to 3.22% from 3.40%, over the same respective periods.

Provision for Loan Losses.  For the nine months ended September 30, 2018, management recorded a $1.3 million provision for loan losses. Comparatively, the provision was $1.5 million for the nine months ended September 30, 2017. The Bank charged-off $1.4 million of taxi medallion loans during the quarter and provided additional reserves to replenish the allowance for loan losses.

The Bank continues to evaluate the collateral values of the taxi medallion loan portfolio.   Recent medallion transfer prices and a discounted cash flow model valuation output further supported by recent industry valuation trends were weighted to derive an estimated fair value of $250,000 as of September 30, 2018.     

As of September 30, 2018, the Taxi Medallion portfolio equaled $3.1 million, representing 1.0% of the Bank’s total loan portfolio. 

Management records loan loss provision to reflect the overall growth in the portfolio as well as the evaluated risk in the portfolio. The provision recorded during the period was done so in conjunction with the Bank’s allowance for loan loss methodology. It is calculated using a historical charge-off basis as well as other qualitative factors which reflect management’s overall perceived risk in the portfolio.

Non-Interest Income.  Non-interest income for the nine months ended September 30, 2018 decreased $1.7 million to approximately $852 thousand as compared to $2.6 million for the nine months ended September 30, 2017. This decrease was primarily the result of a net decrease in gain on branch sale of $1.7 million, partially offset by a net increase in deposit account service charges of $78 thousand.

Non-Interest Expense.  Non-interest expense for the nine months ended September 30, 2018 increased $784 thousand when compared to the same period in 2018. This net increase was primarily attributable to net increases in compensation and benefits expense of $529 thousand, and other expense of $200 thousand.

Income Tax Expense.  Income tax expense was $200 thousand for the nine months ended September 30, 2018 as compared to $765 thousand for the nine months ended September 30, 2017.

ES BANCSHARES, INC.       
STATEMENTS OF INCOME       
(In Thousands)       
(Unaudited)       
        
 Quarter to
Date
 Quarter to
Date
 Year to
Date
 Year to
Date
 9/30/2018 9//30/2017 9/30/2018 9/30/2017
        
Total interest income$3,808  $2,692 $10,334 $7,868 
Total interest expense 1,073   607  2,855  1,574 
Net interest income 2,735   2,085  7,479  6,294 
Provision for loan losses 710   173  1,340  1,493 
        
Net interest income after       
provision for loan loss 2,025   1,912  6,139  4,801 
        
Total non-interest income 258   203  852  2,555 
        
Compensation and benefits 1,280   970  3,497  2,968 
Occupancy and equipment 311   231  851  747 
Professional fees 47   103  310  439 
Data processing service fees 118   108  321  328 
NYS Banking & FDIC Assessment 91   49  210  165 
Other operating expenses 382   254  1,084  842 
Total non-interest expense 2,229   1,715  6,273  5,489 
        
Net Income Before Taxes 54   400  718  1,867 
        
Provision for income taxes (117)  165  200  765 
Net income 171   235  518  1,102 
        


 Quarter
Ended
 Quarter
Ended
 Quarter
Ended
 Quarter
Ended
 9/30/2018 6/30/2018 3/31/2018 12/31/2017
        
Total interest income$3,808  $3,411 $3,115 $2,884 
Total interest expense 1,073   1,011  771  639 
Net interest income 2,735   2,400  2,344  2,245 
Provision for loan losses 710   325  305  490 
        
Net interest income after       
provision for loan loss 2,025   2,075  2,039  1,755 
        
Total non-interest income 258   299  295  383 
        
Compensation and benefits 1,280   1,178  1,039  969 
Occupancy and equipment 311   280  260  240 
Professional fees 47   130  133  80 
Data processing service fees 118   103  100  99 
NYS Banking & FDIC Assessment 91   64  55  51 
Other operating expenses 382   379  323  294 
Total non-interest expense 2,229   2,134  1,910  1,733 
        
Net Income Before Taxes 54   240  424  405 
        
Provision for income taxes (117)  136  181  521 
Net income 171   104  243  (116)
        
Basic Earnings per Share$0.04  $0.03 $0.06 $(0.03)
        


ES BANCSHARES, INC.       
OTHER FINANCIAL MEASURES      
(In Thousands)       
(Unaudited)       
 Quarter
Ended
 Quarter
Ended
 Quarter
Ended
 Quarter
Ended
 9/30/2018 6/30/2018 3/31/2018 12/31/2017
Asset Quality       
Allowance for Loan Losses$2,833  $3,561  $3,268  $2,982 
Nonperforming Loans / Total Loans 1.0%   0.9%   1.1%   1.2% 
Nonperforming Assets / Total Assets 1.0%   0.9%   1.1%   1.2% 
ALLL / Nonperforming Loans 84.7%   137.8%   110.0%   101.0% 
ALLL / Loans, Gross 0.9%   1.2%   1.2%   1.2% 
        
Capital       
Shares Issue - Basic 3,868,084   3,868,084   3,868,084   3,864,888 
Book Value per Share$5.22  $5.17  $5.14  $5.10 
Tangible Book Value per Share$5.07  $5.02  $4.99  $4.94 
Tier 1 Capital Ratio 7.83%   8.21%   9.05%   9.45% 
Tier 1 Risk Based Capital Ratio 10.24%   10.84%   11.40%   11.90% 
Total Risk Based Capital Ratio 11.49%   12.09%   12.65%   13.15% 
        
        
 Quarter
Ended
 Quarter
Ended
 Quarter
Ended
 Quarter
Ended
 9/30/2018 6/30/2018 3/31/2018 12/31/2017
Profitability       
Yield on Average Earning Assets 4.49%   4.24%   4.31%   4.27% 
Cost of Avg. Interest Bearing Liabilities 1.79%   1.76%   1.52%   1.35% 
Net Spread 2.70%   2.47%   2.79%   2.91% 
Net Margin 3.22%   2.98%   3.25%   3.32% 
        

This release may contain certain forward-looking statements within the within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose any statements contained in this report that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may”, “will”, “expect”, “believe”, “anticipate”, “estimate” or “continue” or comparable terminology, are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within the control of ES Bancshares, Inc. The forward looking statements included in this report are made only as of the date of this report. We have no intention, and do not assume any obligation, to update these forward-looking statements.


            

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