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. |
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| 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, 2023 | March 31, 2023 | June 30, 2022 | June 30, 2023 | June 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, 2023 | March 31, 2023 | December 31, 2022 | ||||||||||||||||
| Avg Bal | Interest | Average | Avg Bal | Interest | Average | Avg Bal | Interest | Average | ||||||||||
| Rolling | Rolling | Rolling | Rolling | Rolling | Rolling | |||||||||||||
| 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 | $ | 6,505 | 4.74 | % | $ | 529,041 | $ | 6,064 | 4.58 | % | $ | 494,728 | $ | 5,652 | 4.57 | % |
| Investment securities | 16,194 | 112 | 2.77 | % | 15,979 | 113 | 2.83 | % | 22,678 | 137 | 2.42 | % | ||||||
| Interest bearing deposits | 32,687 | 374 | 4.58 | % | 27,170 | 287 | 4.23 | % | 19,536 | 162 | 3.32 | % | ||||||
| Restricted investment in bank stock | 4,320 | 80 | 7.41 | % | 4,290 | 80 | 7.46 | % | 3,652 | 66 | 7.20 | % | ||||||
| Total interest-earning assets | 601,642 | 7,072 | 4.70 | % | 576,480 | 6,544 | 4.54 | % | 540,594 | 6,017 | 4.45 | % | ||||||
| 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 | $ | 26 | 0.38 | % | $ | 30,193 | $ | 34 | 0.46 | % | $ | 32,065 | $ | 35 | 0.44 | % |
| Money market accounts | 4,367 | 3 | 0.25 | % | 5,794 | 3 | 0.21 | % | 7,201 | 4 | 0.25 | % | ||||||
| Savings accounts | 133,996 | 446 | 1.33 | % | 110,995 | 320 | 1.17 | % | 108,170 | 221 | 0.81 | % | ||||||
| Certificates of deposit | 206,246 | 1,557 | 3.03 | % | 190,984 | 1,259 | 2.67 | % | 155,086 | 808 | 2.07 | % | ||||||
| Total interest-bearing deposits | 372,302 | 2,032 | 2.19 | % | 337,966 | 1,616 | 1.94 | % | 302,522 | 1,068 | 1.40 | % | ||||||
| Borrowings | 52,853 | 520 | 3.95 | % | 55,415 | 547 | 4.00 | % | 40,980 | 324 | 3.14 | % | ||||||
| Subordinated debenture | 13,681 | 221 | 6.48 | % | 13,672 | 221 | 6.56 | % | 13,663 | 221 | 6.42 | % | ||||||
| Total interest-bearing liabilities | 438,836 | 2,773 | 2.53 | % | 407,053 | 2,384 | 2.38 | % | 357,165 | 1,613 | 1.79 | % | ||||||
| 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 Highlights | Three Months Ended | |||||||||||||||
| June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 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 | ||||||||||||||||
