STATEN ISLAND, N.Y., Aug. 01, 2022 (GLOBE NEWSWIRE) — ES Bancshares, Inc. (OTCQX: ESBS) (the “Company”) the holding company for Empire State Bank, (the “Bank”) today announced net income of $2.3 million, or $0.35 per diluted common share for the quarter ended June 30, 2022.
Key Financial Data | 2Q22 Highlights | ||||||||||
Profitability Metrics | 2Q22 | 1Q22 | 2Q21 | ||||||||
Return on average assets (%) | 1.73% | 0.90% | 0.82% | • Net Revenues of $6.4 million including $4.4 million of net interest income and $2.0 million of non-interest income
• Net Income of $2.3 million and diluted earnings per common share of $0.35 • Return on average assets of 1.73% and return on average equity of 22.83%. Excluding Newburgh, NY branch sale, gain on sale of $1.8 million and tax effected, return on average assets of 0.94% and average equity of 12.92% • Average loans decreased 5% year-over-year but increased 4% since prior quarter. Average loans, net of PPP, grew 10% year-over-year and grew 6% since prior quarter. • Average total deposits growth of 12% year-over-year and 1% quarter over quarter. Adjusting for the Newburgh NY location average total deposits increased 17% year over year and 2% quarter over quarter. • Newburgh branch transaction included $68 million in deposits and $9.8 million in loans |
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Return on average common equity (%) | 22.83% | 11.78% | 11.61% | ||||||||
Return on tangible common equity (%) | 23.15% | 11.96% | 11.80% | ||||||||
Net interest margin (%) | 3.51% | 3.67% | 3.60% | ||||||||
Income Statement (a) | 2Q22 | 1Q22 | 2Q21 | ||||||||
Net interest income | $4,371 | $4,361 | $4,588 | ||||||||
Non-interest income | $2,043 | $504 | $209 | ||||||||
Net income | $2,354 | $1,180 | $1,232 | ||||||||
Diluted earnings per common share | $0.35 | $0.18 | $0.16 | ||||||||
Balance Sheet (a) | 2Q22 | 1Q22 | 2Q21 | ||||||||
Average total loans | $429,730 | $414,336 | $452,184 | ||||||||
Average total deposits | $453,644 | $449,034 | $405,920 | ||||||||
Book value per common share | $6.37 | $6.04 | $5.52 | ||||||||
(a) In thousands except for per share amounts |
Phil Guarnieri, Chief Executive Officer and Director of ES Bancshares, Inc. commented on the quarter stating, “In the second quarter, we attained record net revenue, supported by strong growth in loans and a gain-on-sale related to our Newburgh, NY branch sale. We posted diluted earnings per share of $0.35. Loan growth was robust with locally sourced deals which when annualized equate to more than 10% loan growth, displaying execution of our strategic plan. This quarter our return on tangible common equity was 13.11% excluding the gain-on-sale. Credit quality remains strong, and the Company continues to feel well positioned for the range of possible outcomes given our centralized footprint, capital ratios and our tactful lending strategy.”
Tom Sperzel, President, Chief Operating Officer and Director of ES Bancshares, Inc. added, “The Bank continues to focus its resources and expand its footprint in local markets through its full range of products. The locally sourced relationships and traditional loan growth have replaced income earned from the Paycheck Protection Program (“PPP”). Additionally, we are enthusiastic to announce that the Bank will be undergoing a core conversion in the third quarter which will bring further value to both customers and shareholders.”
Further Phil Guarnieri stated, “We remain focused on long-term shareholder value in the Company’s 18th year of business and are looking forward to the Company’s future.”
Financial Condition
As of June 30, 2022, total assets were $505 million, a decrease of $11 million, or 2.1%, as compared to total assets of $516 million on December 31, 2021. The decrease in assets resulted primarily from the sale of our Newburgh office, which consummated on June 24, 2022, and which included the sale of approximately $68 million of deposits and $9.8 million of loans.
Net loans receivable decreased $4.0 million, or 0.93%, to $418.2 million as of June 30, 2022, as compared to $422.2 million as of December 31, 2021. The decrease in net loans receivable was driven by PPP loan forgiveness and repayment of $21.9million, $9.8 million in loan sales associated with the branch sale, non-PPP loan repayments and payoffs totaling $29.9 million offset by strong non-PPP loan growth of $57.6 million. The allowance for loan losses was $5.8 million on June 30, 2022, and March 31, 2022, or 1.37 % and 1.38% of total loans, respectively.
Total deposits decreased $35.7 million, or 8.2% to $398.0 million as of June 30, 2022, from $433.7 million at December 31, 2021. The decrease in deposits reflects $68 million of deposits sold in the branch sale offset, in part, by brokered deposits increases of $9.7 million and organic deposit growth of $22.3 million.
As of June 30, 2022, the Bank’s Tier 1 capital leverage ratio, common equity tier 1 capital ratio, Tier 1 capital ratio and total capital ratios were 9.94%, 15.77%, 15.77% and 17.03%, respectively, all in excess of the ratios required to be deemed "well-capitalized." As of June 30, 2022, the return on average common equity and return on tangible common equity was 22.83% and 23.15% respectively. Goodwill was $581 thousand as of June 30, 2022, and December 31, 2021.
Financial Performance Overview:
Comparison of Financial Results for the Quarter Ended June 30, 2022, and March 31, 2022
For the three months ended June 30, 2022, net income totaled $2.3 million, which reflects an increase of $1.1 million, in comparison to $1.2 million for the three months ended March 31, 2022. The increase quarter over quarter resulted primarily from the branch sale which resulted in $1.8 million income, net of costs and fees of the transaction.
Net interest income for the three months ended June 30, 2022, was relatively unchanged at $4.37 million compared to $4.36 million for March 31, 2022. For the three months ending June 30, 2022, PPP income was $239 thousand, a decrease of $198 thousand from $437 thousand collected in the first quarter of 2022.
There was no provision for loan losses for the three months ended June 30, 2022, compared to a benefit for loan losses of $113 thousand for the three months ended March 31, 2022. Net recoveries for the three months ended June 30, 2022, totaled $65 thousand. The benefit for the first quarter was attributed to improved asset quality, which resulted in a lower reserve required.
Non-interest income increased $1.5 million, to $2.0 million for the three months ended June 30, 2022, compared with non-interest income of $504 thousand for the three months ended March 31, 2022. This increase resulted primarily from net gain on sale associated with the abovementioned branch sale.
Non-interest expense totaled $3.49 million for the three months ended June 30, 2022, compared to $3.47 million the three months ended March 31, 2022, or an increase of 0.40%. The increase can be attributed to compensation expense netted against reduced professional fees and occupancy and equipment costs.
Comparison of Results of Operations for the Six Months Ended June 30, 2022, and June 30, 2021
For the six months ended June 30, 2022, the Company recorded net income of $3.5 million, which reflects an increase of $1.4 million, in comparison to net income of $2.1 million for the six months ended June 30, 2021.
Net interest income for the six months ended June 30, 2022, increased $75 thousand to $8.73 million, as compared to $8.66 million for the six months ended June 30, 2021. For six months ending June 30, 2022, PPP income was $676 thousand, a decrease of $478 thousand, from $1.15 million in the same period in 2021.
For the six months ended June 30, 2022, the Company recorded a benefit for loan loss in the amount of $178 thousand, as compared to a provision for loan loss of $510 thousand for the six months ended June 30, 2021. The benefit for the first six months of 2022 was attributed to improved asset quality, which resulted in a lower reserve required along with the Bank being in a net recovery position.
Non-interest income increased $2.2 million, to $2.5 million for the six months ended June 30, 2022, compared with non-interest income of $377 thousand for the six months ended June 30, 2021. This increase is attributed to a net gain on sale on the branch of $1.8 million and loan sales that totaled $241 thousand.
Non-interest expense increased by $1.1 million, or 18%, to $7.0 million for the six months ended June 30, 2022, as compared to $5.9 million for the six months ended June 30, 2021. The increased expense is attributed to increased compensation and benefits expense, professional fees and occupancy and equipment expense.
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 administrative headquarters in Staten Island, New York, and other administrative offices throughout the state along with business derived from our five Banking Center locations and two loan production offices. 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 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 ES Bancshares, Inc’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.
Investor Contact:
Philip Guarnieri, CEO
(845) 451-7800
ES Bancshares, Inc. Consolidated Statement of Financial Condition (in thousands) (unaudited) |
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June 30, 2022 |
December 31, 2021 |
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Assets | ||||||
Cash and cash equivalents | $ | 27,221 | $ | 59,078 | ||
Securities | 33,258 | 11,192 | ||||
Loans receivable, net: | ||||||
Real estate mortgage loans | 400,502 | 378,126 | ||||
Commercial and Lines of Credit | 16,725 | 41,879 | ||||
Construction Loans | 600 | 560 | ||||
Home Equity and Consumer Loans | 2,983 | 5,187 | ||||
Deferred fee (income) cost | 3,269 | 2,353 | ||||
Allowance for loan losses | (5,756 | ) | (5,869 | ) | ||
Total loans receivable, net | 418,323 | 422,236 | ||||
Investment in restricted stock, at cost | 3,433 | 2,502 | ||||
Bank premises and equipment, net | 5,628 | 6,427 | ||||
Accrued interest receivable | 1,685 | 1,827 | ||||
Goodwill | 581 | 581 | ||||
Repossessed assets | 235 | – | ||||
Bank Owned Life Insurance | 5,134 | 5,067 | ||||
Other Assets | 9,219 | 6,781 | ||||
Total Assets | $ | 504,717 | $ | 515,691 | ||
Liabilities & Stockholders’ Equity | ||||||
Non-Interest-Bearing Deposits | 131,481 | 149,769 | ||||
Interest-Bearing Deposits | 246,827 | 273,876 | ||||
Brokered Deposits | 19,727 | 10,040 | ||||
Total Deposits | 398,035 | 433,685 | ||||
Bond Issue | 14,104 | 12,136 | ||||
Borrowed Money | 49,000 | 29,169 | ||||
Other Liabilities | 1,125 | 1,454 | ||||
Total Liabilities | 462,264 | 476,444 | ||||
Stockholders’ equity | 42,453 | 39,247 | ||||
Total liabilities and stockholders’ equity | $ | 504,717 | $ | 515,691 |
ES Bancshares, Inc. Consolidated Statement of Income (in thousands) (unaudited) |
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Three Months Ended | Six Months Ended | ||||||||||
6/30/2022 | 3/31/2022 | 6/30/2022 | 6/30/2021 | ||||||||
Interest income | |||||||||||
Loans | $ | 4,672 | $ | 4,771 | $ | 9,443 | $ | 9,978 | |||
Securities | 163 | 91 | 254 | 57 | |||||||
Other interest-earning assets | 157 | 64 | 221 | 137 | |||||||
Total Interest Income | 4,992 | 4,926 | 9,918 | 10,172 | |||||||
Interest expense | |||||||||||
Deposits | 347 | 294 | 641 | 776 | |||||||
Borrowings | 274 | 271 | 545 | 739 | |||||||
Total Interest Expense | 621 | 565 | 1,186 | 1,515 | |||||||
Net Interest Income | 4,371 | 4,361 | 8,732 | 8,657 | |||||||
(Benefit)/Prov for Loan Losses | (65 | ) | (113 | ) | (178 | ) | 510 | ||||
Net Interest Income after | 4,436 | 4,474 | 8,910 | 8,147 | |||||||
(Benefit)/Prov for Loan Losses | |||||||||||
Non-interest income | |||||||||||
Deposit account service charges | 88 | 84 | 172 | 222 | |||||||
Loan fee income | 76 | 141 | 217 | 145 | |||||||
Gain on Loan Sales | – | 241 | 241 | – | |||||||
Gain on Branch Sale | 1,782 | – | 1,782 | – | |||||||
Other | 97 | 38 | 135 | 10 | |||||||
Total non-interest income | 2,043 | 504 | 2,547 | 377 | |||||||
Non-interest expenses | |||||||||||
Compensation and benefits | 1,839 | 1,721 | 3,560 | 3,033 | |||||||
Occupancy and equipment | 666 | 689 | 1,355 | 1,187 | |||||||
Data processing service fees | 262 | 260 | 522 | 459 | |||||||
Marketing | 100 | 108 | 208 | 131 | |||||||
Professional fees | 205 | 255 | 460 | 269 | |||||||
NYS Banking & FDIC Assessments | 73 | 82 | 155 | 154 | |||||||
Printing & Office Supplies | 29 | 44 | 73 | 75 | |||||||
Insurance | 32 | 38 | 70 | 63 | |||||||
Other | 280 | 275 | 555 | 510 | |||||||
Total non-interest expense | 3,486 | 3,472 | 6,958 | 5,881 | |||||||
Income prior to tax expense | 2,993 | 1,506 | 4,499 | 2,643 | |||||||
Income taxes | 639 | 326 | 965 | 574 | |||||||
Net Income | $ | 2,354 | $ | 1,180 | $ | 3,534 | $ | 2,069 |
Five Quarter Performance Ratio Highlights |
Three Months Ended | |||||||||||||||
June 30, 2022 |
March 31, 2022 |
December 31, 2021 |
September 30, 2021 |
June 30, 2021 |
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Income Statement | ||||||||||||||||
Return on Average Assets | 1.73 | % | 0.90 | % | 1.04 | % | 0.95 | % | 0.82 | % | ||||||
Return on Average Equity | 22.83 | % | 11.78 | % | 13.82 | % | 12.98 | % | 11.61 | % | ||||||
Efficiency Ratio | 52.56 | % | 68.27 | % | 62.17 | % | 64.53 | % | 63.84 | % | ||||||
Yields / Costs | ||||||||||||||||
Average Yield – Interest Earning Assets | 3.82 | % | 3.95 | % | 4.29 | % | 4.15 | % | 3.99 | % | ||||||
Average Cost of Funds | 0.34 | % | 0.31 | % | 0.31 | % | 0.33 | % | 0.44 | % | ||||||
Net Interest Margin | 3.51 | % | 3.67 | % | 4.01 | % | 3.84 | % | 3.60 | % | ||||||
Capital Ratios | ||||||||||||||||
Equity / Assets | 7.85 | % | 7.43 | % | 7.61 | % | 7.52 | % | 7.11 | % | ||||||
Tangible Equity / Assets | 7.75 | % | 7.33 | % | 7.51 | % | 7.42 | % | 7.00 | % | ||||||
Tier I leverage ratio(a) | 9.9 | % | 10.0 | % | 9.9 | % | 9.6 | % | 9.6 | % | ||||||
Common equity Tier I capital ratio(a) | 15.8 | % | 15.5 | % | 15.5 | % | 15.6 | % | 15.7 | % | ||||||
Tier 1 Risk-based capital ratio(a) | 15.8 | % | 15.5 | % | 15.5 | % | 15.6 | % | 15.7 | % | ||||||
Total Risk-based capital ratio(a) | 17.0 | % | 16.8 | % | 16.7 | % | 16.9 | % | 16.9 | % | ||||||
Stock Valuation | ||||||||||||||||
Book Value | $ | 6.37 | $ | 6.04 | $ | 5.90 | $ | 5.71 | $ | 5.52 | ||||||
Tangible Book Value | $ | 6.28 | $ | 5.96 | $ | 5.82 | $ | 5.62 | $ | 5.44 | ||||||
Diluted EPS | $ | 0.35 | $ | 0.18 | $ | 0.20 | $ | 0.18 | $ | 0.16 | ||||||
Shares Outstanding(b) | 6,663 | 6,663 | 6,648 | 6,648 | 6,648 | |||||||||||
Asset Quality | ||||||||||||||||
ALLL / Total Loans | 1.37 | % | 1.38 | % | 1.37 | % | 1.33 | % | 1.27 | % | ||||||
Non-Performing Loans / Total Loans | 0.38 | % | 0.42 | % | 0.45 | % | 0.43 | % | 0.39 | % | ||||||
Non-Performing Assets / Total Assets | 0.37 | % | 0.39 | % | 0.38 | % | 0.39 | % | 0.36 | % | ||||||
(a) Ratios at the Bank level (b) Shares outstanding presented in thousands