ES Bancshares, Inc. Announces Second Quarter Results; Continues Trend of Increasing Tangible Book Value Per Share While Seeing Continued Organic Growth and a Stabilized Margin


STATEN ISLAND, N.Y., July 25, 2023 (GLOBE NEWSWIRE) -- ES Bancshares, Inc. (OTCQX: ESBS) (the “Company”) the holding company for Empire State Bank, (the “Bank”) today announced financial results for the second quarter of 2023. The Company’s net income was $656 thousand or $0.10 per diluted share for the second quarter of 2023, compared to net income of $599 thousand or $0.09 per diluted share for the first quarter of 2023.

Key Financial Data          2Q23 Highlights   
Profitability Metrics 2Q23  1Q23  2Q22  • Net Revenues of $4.6 million including $4.3 million of net interest income and $328 thousand of non-interest income.

• Net Income of $656 thousand and earnings per common share of $0.10

• Average loans increased 3.7% quarter-over-quarter with average total deposits increasing by 6.1% since prior quarter.

• Estimated uninsured deposits were 18% of total deposits or $90 million, at the end of the second quarter. As of June 30, 2023, the Company had $103 million of borrowing capacity and $10 million of other unsecured lines of credit.

• Total assets grew $40.1 million or 7% from December 31 2022

• FHLB borrowings decreased $15.3 million or 24% from December 31, 2022.
Return on average assets (%) 0.42%  0.40%  1.73%  
Return on average common equity (%) 5.81%  5.40%  22.83%  
Return on tangible common equity (%) 5.89%  5.47%  23.15%  
Net interest margin (%) 2.86%  2.89%  3.34%  
       
Income Statement (a) 2Q23  1Q23  2Q22  
Net interest income$4,297 $4,159 $4,371  
Non-interest income$328 $174 $2,043  
Net income$656 $599 $2,354  
Earnings per share- Basic$0.10 $0.09 $0.35  
Earnings per share- Diluted$0.10 $0.09 $0.35  
       
Balance Sheet (a) 2Q23  1Q23  2Q22  
Average total loans$548,441 $529,041 $423,431  
Average total deposits$494,137 $465,809 $460,624  
Book value per share$6.77 $6.67 $6.37  
Tangible book value per share$6.68 $6.59 $6.28  
(a) In thousands except for per share amounts

 

Phil Guarnieri, Chief Executive Officer and Director of ES Bancshares, Inc. commented on the quarter stating, “I am pleased to report another productive quarter, marked by growth in our loan and deposit portfolio. Our unwavering commitment to customer-centric strategies has driven substantial increases in both loans and deposits, positioning us as a formidable player in the Staten Island and Brooklyn markets.

Our loan portfolio has experienced strong growth, a testament to the trust and confidence our customers place in us. The steady loan growth is a reflection of our team’s ability to identify opportunities and carefully manage risk.”

Tom Sperzel, President, Chief Operating Officer and Director of ES Bancshares, Inc. added, “Similarly our deposit base continues to grow, indicating the strength of our relationship with our valued depositors. We appreciate the trust they have placed in us to safeguard their funds and offer competitive returns. This growth in deposits is a result of our commitment to providing innovative products and exceptional service, catering to the diverse needs of our customers.”

Mr. Guarnieri concluded with “While the Company is pleased with the recent success surrounding our initiative to bring in new lower costing, escrow deposits, the Company also recognizes the importance of further enhancing our earnings performance. This is why I am excited about the launch of our residential program which occurred in late June. Fee income collected from selling these loans, will generate additional revenue for the organization, while balancing liquidity and capital.”

Selected Balance Sheet Information:

June 30, 2023 vs. December 31, 2022

As of June 30, 2023, total assets were $628.0 million, an increase of $40.1 million, or 6.8%, as compared to total assets of $587.9 million on December 31, 2022. The increase can be attributed to loan portfolio growth funded by deposit inflows during the first six months of 2023.

Loans receivable, net of Allowance for Loan Credit Losses totaled $546.3 million, an increase of $39.6 million from December 31, 2022, due to loan originations. As of June 30, 2023, the Allowance for Loan Credit Losses as a percentage of gross loans was 0.89%.

Nonperforming assets, which includes nonaccrual loans and foreclosed real estate were $1.6 million or 0.25% of total assets, as of June 30, 2023, increasing modestly from $1.5 million or 0.25% of total assets at December 31, 2022. The ratio of nonaccrual loans to loans receivable was 0.25% and 0.28%, as of June 30, 2023, and December 31, 2022, respectively.

Total liabilities increased $38.7 million to $582.5 from $543.8 million, driven mainly by deposit increases offset by Federal Home Loan Bank (FHLB) borrowing repayments. Deposits increased $51.3 million, or 11.4% to $501.1 million as of June 30, 2023, when compared to December 31, 2022. The increase in deposits aided in reducing the loans-to-deposit ratio to 110.02%. FHLB borrowings totaled $49.6 million at June 30, 2023 compared to $64.9 million at December 31, 2022 a decrease of $15.3 million or 24%.

As of June 30, 2023, the Bank's Tier 1 capital leverage ratio, common equity tier 1 capital ratio, Tier 1 capital ratio and total capital ratios were 9.40%, 13.67%, 13.67% and 14.92%, respectively, all in excess of the ratios required to be deemed "well-capitalized." As of June 30, 2023, ES Bancshares return on average equity and return on tangible equity was 5.81% and 5.89% respectively compared to 7.71% and 7.82% for the quarter ending December 31, 2022. Goodwill was $581 thousand as of June 30, 2023, and December 31, 2022.

Financial Performance Overview:

Three Months Ended June 30, 2023 vs. March 31, 2023

For the three months ended June 30, 2023, net income totaled $656 thousand, which reflects an increase of $57 thousand or 9.6%, in comparison to $599 thousand for the three months ended March 31, 2023. The increase can be attributed to an increase in non-interest income quarter over quarter.

Net interest income for the three months ended June 30, 2023, increased $137 thousand, to $4.3 million from $4.2 million at March 31, 2023. The Company’s net interest margin remained stable, decreasing by
three-basis points to 2.86% for the three months ended June 30, 2023, as compared to 2.89% for the three months ended March 31, 2023. The three-basis point decrease can be attributed to increased cost within the Bank’s interest-bearing deposits mostly offset by an increase in the yield earned on total interest-earning assets.

There was a $35 thousand provision for loan credit losses entry for the three months ended June 30, 2023, compared to $66 thousand provision entry for the three months ended March 31, 2023.

Non-interest income increased $154 thousand, to $328 thousand for the three months ended June 30, 2023, compared with non-interest income of $174 thousand for the three months ended March 31, 2023. The increase can be attributed to a gain collected from an SBA 7(a) loan sale.

Non-interest expense totaled $3.7 million for the three months ended June 30, 2023, compared to $3.6 million for the three months ended March 31, 2023, or an increase of 4.7%. The fluctuation in non-interest expense can be attributed to increased operating expenses.

Six months ended June 30, 2023 vs. June 30, 2022

For the six months ended June 30, 2023, net income totaled $1.3 million a decrease of $2.2 million in comparison to $3.5 million for the six months ended June 30, 2022. The decrease can mainly be attributed to a branch sale that occurred in the second quarter of 2022, that did not re-occur in 2023.

Net interest income for the six months ended June 30, 2023, decreased 3% or $275 thousand, to $8.5 million from $8.7 million at June 30, 2022. The Company’s net interest margin decreased to 2.86% for the six months ended June 30, 2023, as compared to 3.34% for the six months ended June 30, 2022. Average interest-earning assets increased by $78.1 million. The cost of average deposits increased to 1.65% from 0.30%.

Provision for credit losses totaled $17 thousand for the six months ended June 30, 2023, compared to a $178 thousand benefit for the six months ended June 30, 2022.

Non-interest income totaled $502 thousand for the six months ended June 30, 2023, compared with non-interest income of $2.6 million for the six months ended June 30, 2022. The decrease can be attributed to the aforementioned branch sale.

Non-interest expense totaled $7.3 million for the six months ended June 30, 2023, compared to $7.0 million for the six months ended June 30, 2022, or an increase of 5.1%. This fluctuation can be attributed to increased operating expenses.

About ES Bancshares Inc.
ES Bancshares, Inc. (the “Company”) is incorporated under Maryland law and serves as the holding company for Empire State Bank (the “Bank”). The Company is subject to regulation by the Board of Governors of the Federal Reserve System (the “FRB”) while the Bank is primarily subject to regulation and supervision by the New York State Department of Financial Services. Currently, the Company does not transact any material business other than through the Bank, its subsidiary.

The Bank was organized under federal law in 2004 as a national bank regulated by the Office of the Comptroller of the Currency (OCC). The Bank's deposits are insured up to legal limits by the FDIC. In March 2009, the Bank converted its charter to a New York State commercial bank charter. The Bank’s principal business is attracting commercial and retail deposits in New York and investing those deposits primarily in loans, consisting of commercial real estate loans, and other commercial loans including SBA and mortgage loans secured by one-to-four-family residences. In addition, the Bank invests in mortgage-backed securities (“MBS”), securities issued by the U.S. Government and agencies thereof, corporate securities and other investments permitted by applicable law and regulations.

We operate from our five Banking Center locations, a Loan Production Office and our Corporate Headquarters located in Staten Island, New York. The Company’s website address is www.esbna.com. The Company’s annual report, quarterly earnings releases and all press releases are available free of charge through its website, as soon as reasonably practicable.

Forward-Looking Statements
This release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained in this release 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 ES Bancshares, Inc’s. control. The forward-looking statements included in this release are made only as of the date of this release. We have no intention, and do not assume any obligation, to update these forward-looking statements.

Investor Contact:
Peggy Edwards, Corporate Secretary
(845) 451-7825

  
ES Bancshares, Inc. 
Consolidated Statement of Financial Condition 
(in thousands) 
  June 30,December 31, June 30, 
2023 2022 2022  
  |--(unaudited)--|  |--(unaudited)--| 
Assets      
Cash and cash equivalents$39,264 38,115  27,221  
Securities 15,342 16,042  33,258  
Loans receivable, net:      
Real estate mortgage loans 532,517 494,064  400,502  
Commercial and Lines of Credit 13,982 14,110  16,725  
Construction Loans - -  600  
Home Equity and Consumer Loans 418 465  2,983  
Deferred costs 4,329 3,953  3,269  
Allowance for Loan Credit Losses (a)(4,917)(5,860) (5,756) 
Total loans receivable, net 546,330 506,732  418,323  
Investment in restricted stock, at cost 4,233 4,779  3,433  
Bank premises and equipment, net 5,801 6,209  5,628  
Accrued interest receivable 2,361 2,020  1,685  
Goodwill 581 581  581  
Repossessed assets 164 -  235  
Bank Owned Life Insurance 5,270 5,202  5,134  
Other Assets 8,605 8,175  8,867  
Total Assets$627,952 587,855  504,365  
       
Liabilities & Stockholders' Equity      
Non-Interest-Bearing Deposits 124,570 129,641  131,481  
Interest-Bearing Deposits 336,232 279,830  246,827  
Brokered Deposits 40,262 40,627  19,727  
Total Deposits 501,064 449,798  398,035  
Bond Issue, net of costs 13,689 13,666  13,648  
Borrowed Money 49,600 64,900  35,000  
Other Liabilities 18,159 15,490  15,229  
Total Liabilities 582,512 543,854  461,912  
Stockholders' equity 45,440 44,001  42,453  
Total liabilities and stockholders' equity$627,952 587,855  504,365  
(a) The Company adopted ASC 326- Current Expected Credit Losses (CECL) effective 1/1/2023 resulting in a recapture of reserve through Retained Earnings 
 
       

 

 ES Bancshares, Inc.
 Consolidated Statement of Income
 (in thousands)
 Three Months Ended Years Ended
 June 30, 2023March 31, 2023 June 30, 2022 June 30, 2023June 30, 2022
 |--------------(unaudited)--------------| |-----(unaudited)-----|
Interest income       
Loans$6,505$6,064  $4,672  $12,569$9,443 
Securities 112 113   163   225 254 
Other interest-earning assets 454 367   157   821 221 
Total Interest Income 7,071 6,544   4,992   13,615 9,918 
Interest expense       
Deposits 2,032 1,616   347   3,648 641 
Borrowings 742 768   274   1,510 545 
Total Interest Expense 2,774 2,384   621   5,158 1,186 
          Net Interest Income 4,297 4,160   4,371   8,457 8,732 
Prov(Benefit) for Credit Losses 34 (17)  (65)  17 (178)
          Net Interest Income after Prov(Benefit)for Credit Losses 4,263 4,177   4,436   8,440 8,910 
Non-interest income       
Deposit service charges 98 80   88   178 172 
Loan fee income 68 57   76   125 217 
Gain on Loan Sales 126 -   -   126 241 
Gain on Branch Sale - -   1,782   - 1,782 
Other 36 37   97   73 135 
Total non-interest income 328 174   2,043   502 2,547 
Non-interest expenses       
Compensation and benefits 1,953 1,855   1,839   3,808 3,560 
Occupancy and equipment 640 641   666   1,281 1,355 
Data processing service fees 340 302   262   642 522 
Marketing 99 99   100   198 208 
Professional fees 213 219   205   432 460 
NYS Banking & FDIC Assessments 57 55   73   112 155 
Printing & Office Supplies 39 57   29   96 73 
Insurance 41 45   32   86 70 
Other 358 299   280   657 555 
Total non-interest expense 3,740 3,572   3,486   7,312 6,958 
          Income prior to tax expense 851 778   2,993   1,630 4,498 
Income taxes 196 179   639   375 965 
          Net Income$656$599  $2,354  $1,255$3,534 
        


          
 For the Three Months Ended (dollars in thousands)
 June 30, 2023March 31, 2023December 31, 2022
 Avg BalInterestAverageAvg BalInterestAverageAvg BalInterestAverage
 RollingRollingRollingRollingRollingRolling
Assets 3 Mos. 3 Mos.Yield/Cost 3 Mos. 3 Mos.Yield/Cost 3 Mos. 3 Mos.Yield/Cost
Interest-earning assets:         
Loans receivable$548,441$6,5054.74%$529,041$6,0644.58%$494,728$5,6524.57%
Investment securities 16,194 1122.77% 15,979 1132.83% 22,678 1372.42%
Interest bearing deposits 32,687 3744.58% 27,170 2874.23% 19,536 1623.32%
Restricted investment in bank stock 4,320 807.41% 4,290 807.46% 3,652 667.20%
Total interest-earning assets 601,642 7,0724.70% 576,480 6,5444.54% 540,594 6,0174.45%
Non-interest earning assets 17,924   17,355   17,871  
Total assets$619,566  $593,835  $558,465  
Liabilities and Stockholders' Equity         
Interest-bearing liabilities:         
Interest-bearing checking$27,694$260.38%$30,193$340.46%$32,065$350.44%
Money market accounts 4,367 30.25% 5,794 30.21% 7,201 40.25%
Savings accounts 133,996 4461.33% 110,995 3201.17% 108,170 2210.81%
Certificates of deposit 206,246 1,5573.03% 190,984 1,2592.67% 155,086 8082.07%
Total interest-bearing deposits 372,302 2,0322.19% 337,966 1,6161.94% 302,522 1,0681.40%
Borrowings 52,853 5203.95% 55,415 5474.00% 40,980 3243.14%
Subordinated debenture 13,681 2216.48% 13,672 2216.56% 13,663 2216.42%
Total interest-bearing liabilities 438,836 2,7732.53% 407,053 2,3842.38% 357,165 1,6131.79%
Non-interest-bearing demand deposits 121,835   127,843   141,466  
Other liabilities 13,975   14,617   16,121  
Total non-interest-bearing liabilities 135,810   142,460   157,587  
Stockholders' equity 44,921   44,322   43,713  
Total liabilities and stockholders' equity$619,566  $593,835  $558,465  
Net interest income $4,299  $4,160  $4,404 
Average interest rate spread  2.17%  2.17%  2.66%
Net interest margin  2.86%  2.89%  3.26%
          
          


       
Five Quarter Performance Ratio HighlightsThree Months Ended
June 30, 2023March 31, 2023December 31, 2022September 30, 2022June 30, 2022
Income Statement     
 Return on Average Assets 0.42% 0.40% 0.60% 0.65% 1.73%
 Return on Average Equity 5.81% 5.40% 7.71% 8.12% 22.83%
 Return on Average Tangible Equity 5.89% 5.47% 7.82% 8.23% 23.15%
 Efficiency Ratio 50.55% 53.18% 54.78% 60.97% 52.56%
Yields / Costs     
 Average Yield - Interest Earning Assets 4.70% 4.54% 4.45% 4.07% 3.82%
 Cost of Funds 2.53% 2.38% 1.79% 1.21% 0.73%
 Net Interest Margin 2.86% 2.89% 3.26% 3.27% 3.34%
Capital Ratios     
 Equity / Assets 7.24% 7.01% 7.48% 7.68% 7.85%
 Tangible Equity / Assets 7.15% 6.92% 7.39% 7.59% 7.75%
 Tier I leverage ratio (a) 9.40% 9.65% 10.11% 10.3% 9.9%
 Common equity Tier I capital ratio (a) 13.67% 13.87% 14.26% 14.7% 15.8%
 Tier 1 Risk-based capital ratio (a) 13.67% 13.87% 14.26% 14.7% 15.8%
 Total Risk-based capital ratio (a) 14.92% 15.12% 15.51% 16.0% 17.0%
Stock Valuation     
 Book Value$6.77 $6.67 $6.55 $6.47 $6.37 
 Tangible Book Value$6.68 $6.59 $6.47 $6.39 $6.28 
 Shares Outstanding (b) 6,714  6,714  6,714  6,666  6,663 
Asset Quality     
 CECL / Total Loans 0.89% 0.90% 1.14% 1.20% 1.37%
 Non Performing Loans / Total Loans 0.25% 0.17% 0.28% 0.34% 0.38%
 Non Performing Assets / Total Assets 0.25% 0.19% 0.25% 0.31% 0.37%
       
 (a) Ratios at Bank level   (b) Shares information presented in thousands