NEWBURGH, N.Y., May 05, 2020 (GLOBE NEWSWIRE) -- ES Bancshares, Inc. (OTC: ESBS) (the “Company”) the holding company for Empire State Bank, (the “Bank”) today announced a net loss of $95 thousand, or $0.01 per common share on 6.6 million shares outstanding for the quarter ended March 31, 2020, as compared to net income of $414 thousand, or $0.10 per common share on 4.1 million shares outstanding for the quarter ended March 31, 2019.  The decrease was largely driven by a $951 thousand provision for loan losses in the quarter ended March 31, 2020 compared to $85 thousand in the comparable 2019 period, and a $220 thousand increase in operating expenses quarter over quarter.  The additional reserve was provided for the potential credit impact of the COVID-19 pandemic.  This was partially offset by a $230 increase in non-interest income, a $204 thousand increase in net interest income and a $143 thousand decrease in income taxes.

The increase in net interest income for the three month period ended March 31, 2020 was largely driven by an improvement in the net interest margin to 3.02% for the three months ended March 31, 2020 from 2.95% for the comparable 2019 period.  This increase resulted primarily from a $26.4 million increase in non-interest bearing deposits coupled with a $2.4 million decrease in interest bearing deposits quarter over quarter.    

The increase in non-interest income was largely due to the sale of $6.5 million of securities resulting in a gain on sale of $194 thousand. 

Chief Executive Officer Philip Guarnieri stated, “The recent developments of the COVID-19 pandemic have impacted nearly every aspect of our community.”  Mr. Guarnieri also commented that, “We are working to minimize the impact to the Bank’s operations, and as part of the community in which we live and work, we understand the economic impact the COVID-19 pandemic has had on small businesses and individuals.”

President and Chief Operating Officer Thomas Sperzel stated, “The Bank is participating in every aspect of the Small Business Administration’s Paycheck Protection Program (PPP), and is committed to helping small businesses who have been severely impacted by COVID-19.” 

FINANCIAL HIGHLIGHTS

  • Net loss of $95 thousand for the quarter ended March 31, 2020 compared to net income of $414 thousand for the comparable period in 2019, representing a decrease of $509 thousand, or 536%.
  • Provision for loan losses of $951 thousand in an effort to reinforce reserves due to the potential credit impact of the COVID-19 pandemic.
  • Net loss before taxes of $106 thousand for the quarter ended March 31, 2020 compared to net income of $546 thousand for the comparable period in 2019, representing a decrease of $652 thousand, or 615%.
  • Net interest income of $3.09 million for the quarter ended March 31, 2020 compared to $2.89 million for the comparable period in 2019, representing an increase of $200 thousand, or 7%
  • Net margin of 3.02% for the quarter ended March 31, 2020 compared to 2.95% for the comparable period in 2019, representing an increase of 7 bps, or 2%
  • Loans, net of $368.9 million for the quarter ended March 31, 2020 compared to $355.7 million for the comparable period in 2019, representing an increase of $13.2 million, or 4%
  • Total deposits of $339.5 million for the quarter ended March 31, 2020, compared to $315.4 million for the comparable period in 2019, representing an increase of $24.1 million, or 8%
  • Capital ratios of 9.3%, 13.4% and 15.0% for each of the Tier 1 Leverage ratio, Tier 1 Risk Based Capital ratio and Total risk Based Capital ratios, respectively.

Comparison of Financial Condition at March 31, 2020 and December 31, 2019

Total assets at March 31, 2020, amounted to $429.3 million, representing an increase of $8.5 million, or 2.0%, from $420.8 million at December 31, 2019.  The increase in assets consisted primarily of increases in cash and cash equivalents of $12.8 million and loans receivable, net, of $3.3 million, partially offset by a decrease in total securities of $7.2 million.

Loans receivable, net, increased $3.3 million, or 0.9%, to $368.9 million at March 31, 2020 from $365.6 million at December 31, 2019. Residential real estate mortgage loans increased $3.7 million, or 2.2%, from $166.1 million to $169.8 million. Commercial and multifamily real estate loans increased $1.7 million, or 0.9%, from $176.6 million to $178.3 million.  Commercial loans, including taxi medallion, US government agency guaranteed loans, and commercial lines of credit decreased $1.0 million, or 4.9%, from $20.8 million to $19.8 million. Home equity and consumer loans decreased $164 thousand to $3.0 million at March 31, 2020. Management continues to emphasize the origination of high quality loans for retention in the loan portfolio.

Deposits increased by $11.6 million to $339.5 million at March 31, 2020 from $327.9 million at December 31, 2019. Non-interest bearing deposits increased $19.9 million while interest bearing deposits decreased $8.3 million. Over this three month period the net deposit activity consisted mainly of increases in DDA and NOW accounts of $14.6 million, savings accounts of $4.4 million, and money market accounts of $73 thousand, partially offset by a decrease in certificates of deposit of $7.4 million.

Borrowings decreased by $2.0 million to $49.5 million at March 31, 2020 from $51.5 million at December 31, 2019.

Stockholders’ equity increased by $153 thousand to $33.4 million at March 31, 2020, from $33.2 million at December 31, 2019. The increase was primarily attributable to an increase of accumulated other comprehensive income of $244 thousand, partially offset by a decrease of $95 thousand in retained earnings. The increase in other comprehensive income resulted primarily from the reclassification of securities from Held to Maturity to Available for Sale.  The ratio of stockholders’ equity to total assets decreased to 7.8% at March 31, 2020 from 7.9% at December 31, 2019. Book value per share increased to $5.02 at March 31, 2020, from $5.00 at December 31, 2019.

 ES BANCSHARES, INC.       
 STATEMENTS OF CONDITION       
 (In Thousands)       
 (Unaudited)       
         
         
  3/31/2020 12/31/2019 9/30/2019 6/30/2019
 ASSETS       
 Cash and cash equivalents:$38,043  $25,275  $24,722  $25,823 
         
 Securities - Available For Sale 8,386   3,304   3,435   3,627 
 Securities - Held To Maturity -   12,265   12,188   13,011 
 Total Securities 8,386   15,569   15,623   16,638 
         
 Loans 373,411   369,194   369,450   364,052 
 Less:  allowance for loan losses (4,491)  (3,539)  (3,643)  (3,538)
 Loans, net 368,920   365,655   365,807   360,514 
         
 Premises and equipment, net 4,488   4,606   4,706   4,764 
 Other assets 9,453   9,718   10,929   11,038 
 Total Assets$429,290  $420,823  $421,787  $418,777 
         
 LIABILITIES AND SHAREHOLDERS' EQUITY    
 Deposits:       
 Demand and NOW deposit accounts$95,358  $80,789  $79,559  $73,043 
 Money market accounts 9,697   9,624   8,424   13,504 
 Savings accounts 122,386   118,000   110,173   88,485 
 Certificates of deposit 112,031   119,449   128,203   145,939 
 Total Deposits 339,472   327,862   326,359   320,971 
         
 Borrowings 49,500   51,500   63,500   66,500 
 Other Liabilities 6,939   8,235   8,880   8,635 
 Total Liabilities 395,911   387,597   398,739   396,106 
         
 Total Shareholders' Equity 33,379   33,226   23,048   22,671 
 Total Liabilities and Shareholders' Equity$429,290  $420,823  $421,787  $418,777 
         

Results of Operations for the Quarters Ended March 31, 2020 and March 31, 2019

General.  For the quarter ended March 31, 2020, the Company recognized a net loss of $95 thousand, or $0.01 per basic and diluted share, as compared to net income of $414 thousand, or $0.10 per basic and diluted share, for the quarter ended March 31, 2019.

Interest Income.  Interest income increased to $4.51 million for the quarter ended March 31, 2020 compared from $4.43 million for the quarter ended March 31, 2019. This increase was primarily attributable to a $115 thousand increase in loan interest income and partially offset by a decrease in interest income from securities of $61 thousand.

The average balance of the loan portfolio increased to $371.8 million for the three months ended March 31, 2020 from $363.1 million for the three months ended March 31, 2019 while the average yield increased from 4.60% for the quarter ended March 31, 2019 to 4.62% for the quarter ended March 31, 2020. The average balance and yield of the Bank’s investment securities for the quarter ended March 31, 2020 was $14.0 million and 2.80%, respectively, as compared to an average balance of $20.0 million and a yield of 3.19% for the comparable quarter ended one-year earlier.

Interest Expense.  Total interest expense for the quarter ended March 31, 2020 decreased by $123 thousand to $1.42 million from $1.54 million for the prior year period. Average balances of total interest-bearing liabilities increased $1.43 million to $308.2 million for the quarter ended March 31, 2020, from $306.8 million for the quarter ended March 31, 2019. The average cost for those liabilities decreased to 1.85% from 2.04% for the same respective period one year earlier reflecting lower market interest rates and a higher level of non-interest bearing deposits.

The average balances of the Bank’s certificates of deposit portfolio decreased to $116.8 million at an average cost of 2.14% over the quarter ended March 31, 2020, from $122.3 million at an average cost of 2.16% over the same quarter ended one-year earlier.  Regular savings account average balances increased to $120.8 million, or $35.9 million, from $84.9 million for the quarter ended March 31, 2019. These had an average cost of 1.55% for the quarter ended March 31, 2020 and a cost of 1.66% for the quarter ended March 31, 2019.  

Average money market account balances decreased $2.7 million to $8.8 million at an average cost of 0.55% for the quarter ended March 31, 2020, from $11.5 million at an average cost of 0.47% for the quarter ended March 31, 2019. 

For the quarter ended March 31, 2020 the average balance of the Company’s borrowed funds was $46.91 million with an average cost of 2.59%, as compared to $75.1 million and an average cost of 2.77% for the quarter ended March 31, 2019.

Net Interest Income.  Net interest income was approximately $3.09 million for the quarter ended March 31, 2020, as compared to $2.89 million for the same quarter in the prior year.  The average interest rate spread increased to 2.55% for the quarter ended March 31, 2020, from 2.48% for the quarter ended March 31, 2019, while the net interest margin increased to 3.02% from 2.95%, over the same respective periods. These changes were primarily attributable to increased levels of non-interest bearing deposits and a generally lower level of market interest rates. 
           
Provision for Loan Losses.  For the three months ended March 31, 2020, management recorded $951 thousand provision for loan losses. Management records loan loss provisions based on historical loss experience and other qualitative factors. Comparatively, management recorded a provision for loan losses for the quarter ended March 31, 2019 of $85 thousand. The increase in the provision was primarily due to the potential credit impact of the COVID-19 pandemic. 

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 quarter ended March 31, 2020 increased $230 thousand to $382 thousand as compared to $152 thousand for the quarter ended March 31, 2019. The increase was primarily attributable to a net gain on security sales of $194 thousand.

Non-Interest Expense.  Non-interest expense for the quarter ended March 31, 2020 increased $220 thousand when compared to the same quarter in 2019. The increase is primarily attributable to a net increase in other expenses of $179 thousand, which was due to accruals for expenses related to staffing, professional, additional computer hardware and office maintenance/cleaning related to the COVID-19 pandemic. 

Income Tax Expense.  Due to a pre-tax loss, an income tax benefit of $11 thousand was recognized for the quarter ended March 31, 2020 as compared to $132 thousand expense for the quarter ended March 31, 2019.

 ES BANCSHARES, INC.       
 STATEMENTS OF INCOME       
 (In Thousands)       
 (Unaudited)       
         
  Quarter to
Date
 Quarter to
Date
 Year to
Date
 Year to
Date
  3/31/2020 3/31/2019 3/31/2020 3/31/2019
         
 Total interest income$4,507  $4,426 $4,507  $4,426
 Total interest expense 1,417   1,540  1,417   1,540
 Net interest income 3,090   2,886  3,090   2,886
 Provision for loan losses 951   85  951   85
         
 Net interest income after       
 provision for loan loss 2,139   2,801  2,139   2,801
         
 Total non-interest income 382   152  382   152
         
 Compensation and benefits 1,352   1,323  1,352   1,323
 Occupancy and equipment 414   384  414   384
 Professional fees 154   148  154   148
 Data processing service fees 176   148  176   148
 NYS Banking & FDIC Assessment 79   102  79   102
 Other operating expenses 452   302  452   302
 Total non-interest expense 2,627   2,407  2,627   2,407
         
 Net Income Before Taxes (106)  546  (106)  546
         
 Provision for income taxes (11)  132  (11)  132
 Net income (95)  414  (95)  414
         
         
         
  Quarter
Ended
 Quarter
Ended
 Quarter
Ended
 Quarter
Ended
  3/31/2020 12/31/2019 9/30/2019 6/30/2019
         
 Total interest income$4,507  $4,497 $4,570  $4,413
 Total interest expense 1,417   1,664  1,683   1,617
 Net interest income 3,090   2,833  2,887   2,796
 Provision for loan losses 951   40  105   95
         
 Net interest income after       
 provision for loan loss 2,139   2,793  2,782   2,701
         
 Other non-interest income 382   314  230   299
         
 Compensation and benefits 1,352   1,339  1,324   1,297
 Occupancy and equipment 414   437  445   412
 Professional fees 154   138  145   104
 Data processing service fees 176   153  159   156
 NYS Banking & FDIC Assessment 79   61  41   97
 Other operating expenses 452   468  400   382
 Total non-interest expense 2,627   2,596  2,514   2,448
         
 Net Income Before Taxes (106)  511  498   552
         
 Provision for income taxes (11)  124  122   134
 Net income (95)  387  376   418
         
 Basic Earnings per Share$(0.02) $0.06 $0.09  $0.10
         
 Diluted Earnings per Share$(0.01) $0.06 $0.09  $0.09


 ES BANCSHARES, INC.       
 OTHER FINANCIAL MEASURES      
 (In Thousands)       
 (Unaudited)       
  Quarter
Ended
 Quarter
Ended
 Quarter
Ended
 Quarter
Ended
  3/31/2020 12/31/2019 9/30/2019 6/30/2019
 Asset Quality       
 Allowance for Loan Losses$4,491  $3,539  $3,643  $3,538 
 Nonperforming Loans / Total Loans 0.48%   0.46%   0.40%   0.76% 
 Nonperforming Assets / Total Assets 0.47%   0.46%   0.52%   0.84% 
 ALLL / Nonperforming Loans 251.46%   206.72%   248.67%   127.73% 
 ALLL / Loans, Gross 1.20%   0.96%   0.99%   0.97% 
         
 Capital       
 Shares Issue - Basic 6,648,320   6,648,320   4,120,613   4,120,613 
 Book Value per Share$5.02  $5.00  $5.59  $5.50 
 Tangible Book Value per Share$4.93  $4.91  $5.45  $5.36 
 Tier 1 Capital Ratio 9.28%   9.26%   7.41%   7.50% 
 Tier 1 Risk Based Capital Ratio 13.73%   13.62%   10.38%   10.26% 
 Total Risk Based Capital Ratio 14.98%   14.86%   11.63%   11.48% 
         
         
  Quarter
Ended
 Quarter
Ended
 Quarter
Ended
 Quarter
Ended
  3/31/2020 12/31/2019 9/30/2019 6/30/2019
 Profitability       
 Yield on Average Earning Assets 4.40%   4.39%   4.61%   4.57% 
 Cost of Avg. Interest Bearing Liabilities 1.85%   2.12%   2.12%   2.11% 
 Net Spread 2.55%   2.26%   2.49%   2.46% 
 Net Margin 3.02%   2.74%   2.92%   2.90% 
         

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 Empire State Bank’s control. 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.

Contacts:
Philip Guarnieri, CEO
Thomas Sperzel, President & COO
Frank J. Gleeson, SVP & CFO
(845) 451-7800