ES Bancshares, Inc. Announces Fourth Quarter and Full-Year 2023 Results; Strong Asset Quality Improves Further in Fourth Quarter

ES Bancshares, Inc.

STATEN ISLAND, N.Y., Jan. 30, 2024 (GLOBE NEWSWIRE) -- ES Bancshares, Inc. (OTCQX: ESBS) (the “Company”) the holding company for Empire State Bank, (the “Bank”) today announced financial results for the fourth quarter of 2023. The Company’s net income was $84 thousand or $0.01 per diluted share for the fourth quarter of 2023, compared to net income of $133 thousand or $0.02 per diluted share for the third quarter of 2023.

Key Quarterly Financial Data											2023 Annual Highlights
Profitability Metrics		4Q23			3Q23			4Q22
Return on average assets (%)		0.05	%		0.09	%		0.60	%		• Net Income of $1.5 million and earnings per diluted share of $0.22.
Return on average common equity (%)		0.73	%		1.17	%		7.71	%
Return on tangible common equity (%)		0.74	%		1.18	%		7.82	%
Net interest margin (%)		2.28	%		2.67	%		3.26	%		• Average loans increased 15.1% year-over-year with average total deposits increasing by 5.9% within the same period.
Income Statement (a)		4Q23			3Q23			4Q22
Net interest income	$	3,454		$	3,977		$	4,404			• Net interest margin of 2.67% narrowed from 3.34% year-over-year as increases to the rates paid on interest-bearing liabilities outpaced the rise in yields of interest-earning assets
Non-interest income	$	322		$	256		$	357
Net income	$	84		$	133		$	843
Earnings per share- Basic	$	0.01		$	0.02		$	0.13			• Non-Performing Loans / Total Loans and the Company’s ratio of Non-Performing Assets / Total Assets each improved to 0.22% at December 31, 2023
Earnings per share- Diluted	$	0.01		$	0.02		$	0.12
Balance Sheet (a)		4Q23			3Q23			4Q22
Average total loans	$	569,515		$	555,919		$	494,728
Average total deposits	$	470,394		$	487,816		$	43,988
Book value per share	$	6.83		$	6.79		$	6.55
Tangible book value per share	$	6.74		$	6.71		$	6.47
(a) In thousands except for per share amounts

“While our recent returns have been impacted by the current interest rate environment, we are dedicated to analyzing, adapting, and implementing strategies that will ensure a positive trajectory for our Company. We continue to be focused on providing increased value to shareholders in the future,” said Phil Guarnieri, Director and Chief Executive Officer of ES Bancshares.

Mr. Guarnieri also stated “Looking ahead I am optimistic about the Bank’s early success seen in the fourth quarter, regarding the reduction of operating expenses and the new customer relationship wins, since the launch of our low-cost deposit gathering program. These endeavors combined with the improvements seen in the fourth quarter asset quality ratios, present a promising future for ESBS.”

Selected Balance Sheet Information:

December 31, 2023 vs. December 31, 2022

As of December 31, 2023, total assets were $639.0 million, an increase of $51.1 million, or 8.7%, as compared to total assets of $587.9 million on December 31, 2022. The increase can be attributed to loan portfolio growth primarily, funded by deposit inflows.

Loans receivable, net of Allowance for Credit Losses on Loans totaled $563.9 million, an increase of $57.2 million from December 31, 2022. As of December 31, 2023, the Allowance for Credit Losses on Loans as a percentage of gross loans was 0.89%.

Nonperforming assets, which includes nonaccrual loans and foreclosed real estate were $1.4 million or 0.22% of total assets, as of December 31, 2023, decreasing from $1.5 million or 0.25% of total assets at December 31, 2022. The ratio of nonaccrual loans to loans receivable was 0.22% and 0.28%, as of December 31, 2023, and December 31, 2022, respectively.

Total liabilities increased $49.3 million to $593.1 from $543.8 million. The majority of the increase can be attributed to deposit inflows with overall deposits growing $44.3 million, or 9.9% to $494.1 million as of December 31, 2023, compared to $449.8 million at December 31, 2022. The growth in deposits was driven by an increase in Interest-bearing deposits. Federal Home Loan Bank (“FHLB”) borrowings increased by $5.9 million or 9.1% to $70.8 million at December 31, 2023. Borrowed funds represented 11.1% of total assets at December 31, 2023, an increase of 0.1% from December 31, 2022.

As of December 31, 2023, the Bank's Tier 1 capital leverage ratio, common equity tier 1 capital ratio, Tier 1 capital ratio and total capital ratios were 9.45%, 13.60%, 13.60% and 14.85%, respectively, all in excess of the ratios required to be deemed "well-capitalized." During 2023 the Company did not repurchase shares under its stock repurchase program. Book value per common share was $6.83 at December 31, 2023 compared to $6.55 at December 31, 2022. Tangible common book value per share (which represents common equity less goodwill, divided by the number of shares outstanding) was $6.74 at December 31, 2023 compared to $6.47 at December 31, 2022.

Financial Performance Overview:

Three Months Ended December 31, 2023 vs. September 30, 2023

For the three months ended December 31, 2023, net income totaled $84 thousand compared to $133 thousand for the three months ended September 30, 2023. The decrease can be attributed to a softer margin quarter over quarter.

Net interest income for the three months ended December 30, 2023, decreased $524 thousand, to $3.5 million from $4.0 million at three months ended September 30, 2023. The Company’s net interest margin compacted, decreasing by thirty-nine basis points to 2.28% for the three months ended December 31, 2023, as compared to 2.67% for the three months ended September 30, 2023. The contraction can be attributed to increased pricing pressures for retail deposits and increased average balance associated with FHLB borrowings.

There was a reversal of credit losses of $83 thousand taken back in for the three months ended December 31, 2023, compared to $86 thousand provision for credit losses entry for the three months ended September 30, 2023.

Non-interest income increased $66 thousand, to $322 thousand for the three months ended December 31, 2023, compared with non-interest income of $256 thousand for the three months ended September 30, 2023. The increase is a result from increased loan charges and fees earned quarter over quarter.

Non-interest expense totaled $3.8 million for the three months ended December 30, 2023, compared to $4.0 million for the three months ended September 30, 2023, or a decrease of 5.7%. The decrease in non-interest expense can be attributed to cost cutting initiatives. In addition, certain expenses associated with negotiated buyouts and accelerations for certain software providers that were expensed in the third quarter did not re-occur in the fourth quarter of 2023.

Year ended December 31, 2023 vs. December 31, 2022

For the year ended December 31, 2023, net income totaled $1.5 million a decrease of $3.8 million in comparison to $5.3 million for the year ended December 31, 2022. The decrease can mainly be attributed increased interest expense costs and a branch sale that occurred in the second quarter of 2022, that did not re-occur in 2023.

Net interest income for the year ended December 31, 2023, decreased $1.5 million, to $15.9 million from $17.4 million at December 31, 2022. The decrease aligns with the compression seen in the net interest margin driven by an unfavorable deposit composition shift and increased average borrowings year over year.

The Company recorded an $20 thousand provision for credit losses for the year ended December 31, 2023, compared to a $79 thousand reversal for the year ended December 31, 2022.

Non-interest income totaled $1.1 million for the year ended December 31, 2023, compared with non-interest income of $3.2 million for the year ended December 31, 2022. The decrease can be attributed to the aforementioned branch sale.

Non-interest expense totaled $15.0 million for the year ended months ended December 31, 2023, compared to $13.8 million for the year ended December 31, 2022, or an increase of $1.2 million or 8.7%. The ratio of non-interest expense to average assets was 2.43% for the year ended December 31, 2023, compared to 2.54% for the year ended December 31, 2022.

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 Statements of Financial Condition
(in thousands)
		December 31,		September 30,			December 31,
		2023		2023			2022
		|----(unaudited)----|
Assets
Cash and cash equivalents	$	32,728		29,439			38,115
Securities		15,220		15,143			16,042
Loans receivable, net:
Real estate mortgage loans		551,124		543,852			493,768
Commercial and Lines of Credit		13,107		14,322			14,344
Home Equity and Consumer Loans		349		348			718
Deferred costs		4,427		4,362			3,762
Allowance for Loan Credit Losses (a)		(5,086	)	(5,028	)		(5,860	)
Total loans receivable, net		563,921		557,856			506,732
Investment in restricted stock, at cost		5,191		5,782			4,779
Bank premises and equipment, net		5,600		5,608			6,209
Accrued interest receivable		2,625		2,533			2,020
Goodwill		581		581			581
Repossessed assets		-		164			-
Bank Owned Life Insurance		5,341		5,305			5,202
Other Assets		7,780		7,905			8,175
Total Assets	$	638,987		630,316			587,855
Liabilities & Stockholders' Equity
Non-Interest-Bearing Deposits		109,065		125,562			129,641
Interest-Bearing Deposits		328,479		302,509			279,530
Brokered Deposits		56,581		42,873			40,627
Total Deposits		494,125		470,944			449,798
Borrowed Money		70,805		83,980			64,900
Bond Issue, net of costs		13,708		13,701			13,666
Other Liabilities		14,487		16,085			15,490
Total Liabilities		593,125		584,710			543,854
Stockholders' equity		45,862		45,606			44,001
Total liabilities and stockholders' equity	$	638,987		630,316			587,855
(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 Statements of Income
	(in thousands)
	Three Months Ended											Years Ended
	December 31, 2023			September 30, 2023				December 31, 2022				December 31, 2023			December 31, 2022
	|--------------(unaudited)--------------|											|---(unaudited)---|
Interest income
Loans	$	7,059		$	6,715			$	5,652			$	26,343		$	20,038
Securities		110			111				137				446			563
Other interest-earning assets		278			319				228				1,418			613
Total Interest Income		7,447			7,145				6,017				28,207			21,214
Interest expense
Deposits		2,945			2,459				1,068				9,052			2,352
Borrowings		1,048			710				545				3,268			1,484
Total Interest Expense		3,993			3,169				1,613				12,320			3,836
Net Interest Income		3,454			3,977				4,404				15,887			17,378
(Reversal of)Prov for Credit Losses		(83	)		86				99				20			(79	)
Net Interest Income after (Revrsl)Prov for Credit Losses		3,537			3,891				4,305				15,867			17,457
Non-interest income
Service charges and fees		254			205				237				762			793
Gain on loan sales		30			12				-				168			241
Gain on sale of repossessed assets		-			-				-				-			206
Gain on sale of banking center		-			-				-				-			1,782
Other		38			39				120				149			148
Total non-interest income		322			256				357				1,080			3,170
Non-interest expenses
Compensation and benefits		1,745			1,856				1,881				7,408			7,267
Occupancy and equipment		646			729				554				2,656			2,631
Data processing service fees		357			397				386				1,396			1,181
Professional fees		357			315				179				1,104			833
FDIC & NYS Banking Assessments		88			71				56				272			225
Advertising		101			107				77				406			250
Insurance		51			54				53				190			176
Printing & Office Supplies		27			31				68				154			186
Other		378			415				238				1,449			1,082
Total non-interest expense		3,750			3,975				3,492				15,035			13,831
Income prior to tax expense		109			172				1,170				1,912			6,796
Income taxes		25			39				327				440			1,547
Net Income	$	84		$	133			$	843			$	1,472		$	5,249

		ES Bancshares, Inc.
		Average Balance Sheet Data
		For the Three Months Ended (dollars in thousands)
		December 31, 2023									September 30, 2023									December 31, 2022
		Avg Bal			Interest						Avg Bal			Interest						Avg Bal			Interest
		Rolling			Rolling			Average			Rolling			Rolling			Average			Rolling			Rolling			Average
Assets		3 Mos.			3 Mos.			Yield/Cost			3 Mos.			3 Mos.			Yield/Cost			3 Mos.			3 Mos.			Yield/Cost
Interest-earning assets:
Loans receivable		$	569,515		$	7,059			4.96	%	$	555,919		$	6,715			4.83	%	$	494,728		$	5,652			4.57	%
Investment securities			15,957			110			2.75	%		16,151			111			2.75	%		22,678			137			2.42	%
Interest bearing deposits			14,716			154			4.09	%		20,260			231			4.56	%		19,536			162			3.32	%
Restricted investment in bank stock			5,412			124			9.18	%		4,273			88			8.24	%		3,652			66			7.20	%
Total interest-earning assets			605,600			7,447			4.92	%		596,602			7,145			4.79	%		540,594			6,017			4.45	%
Non-interest earning assets			16,840									17,371									17,871
Total assets		$	622,440								$	613,973								$	558,465
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest-bearing checking		$	25,368		$	23			0.36	%	$	29,162		$	28			0.38	%	$	32,065		$	35			0.44	%
Money market accounts			2,651			3			0.38	%		4,060			4			0.42	%		7,201			4			0.25	%
Savings accounts			120,990			881			2.89	%		117,790			532			1.79	%		108,170			221			0.81	%
Certificates of deposit			207,091			2,037			3.90	%		212,094			1,895			3.54	%		155,086			808			2.07	%
Total interest-bearing deposits			356,101			2,945			3.28	%		363,105			2,459			2.69	%		302,522			1,068			1.40	%
Borrowings			76,844			827			4.27	%		51,557			488			3.76	%		40,980			324			3.14	%
Subordinated debenture			13,705			221			6.40	%		13,695			222			6.41	%		13,663			221			6.42	%
Total interest-bearing liabilities			446,649			3,993			3.55	%		428,357			3,168			2.93	%		357,165			1,613			1.79	%
Non-interest-bearing demand deposits			114,293									124,711									141,466
Other liabilities			15,803									15,348									16,121
Total non-interest-bearing liabilities			130,096									140,059									157,587
Stockholders' equity			45,695									45,557									43,713
Total liabilities and stockholders' equity		$	622,440								$	613,973								$	558,465
Net interest income					$	3,454								$	3,977								$	4,404
Average interest rate spread									1.37	%								1.86	%								2.66	%
Net interest margin									2.28	%								2.67	%								3.26	%

Five Quarter Performance Ratio Highlights	Three Months Ended
	December 31, 2023			September 30, 2023			June 30, 2023			March 31, 2023			December 31, 2022
Income Statement
Return on Average Assets		0.05	%		0.09	%		0.42	%		0.40	%		0.60	%
Return on Average Equity		0.73	%		1.17	%		5.81	%		5.40	%		7.71	%
Return on Average Tangible Equity		0.74	%		1.18	%		5.89	%		5.47	%		7.82	%
Efficiency Ratio		99.31	%		93.89	%		80.86	%		82.42	%		75.03	%
Yields / Costs
Average Yield - Interest Earning Assets		4.92	%		4.79	%		4.70	%		4.54	%		4.45	%
Cost of Funds		3.55	%		2.93	%		2.53	%		2.38	%		1.79	%
Net Interest Margin		2.28	%		2.67	%		2.86	%		2.89	%		3.26	%
Capital Ratios
Equity / Assets		7.18	%		7.24	%		7.24	%		7.01	%		7.48	%
Tangible Equity / Assets		7.09	%		7.15	%		7.15	%		6.92	%		7.39	%
Tier I leverage ratio (a)		9.45	%		9.54	%		9.40	%		9.65	%		10.11	%
Common equity Tier I capital ratio (a)		13.60	%		13.47	%		13.67	%		13.87	%		14.26	%
Tier 1 Risk-based capital ratio (a)		13.60	%		13.47	%		13.67	%		13.87	%		14.26	%
Total Risk-based capital ratio (a)		14.85	%		14.63	%		14.92	%		15.12	%		15.51	%
Stock Valuation
Book Value	$	6.83		$	6.79		$	6.77		$	6.67		$	6.55
Tangible Book Value	$	6.74		$	6.71		$	6.68		$	6.59		$	6.47
Shares Outstanding (b)		6,714			6,714			6,714			6,714			6,714
Asset Quality
ACL / Total Loans		0.89	%		0.89	%		0.89	%		0.90	%		1.14	%
Non Performing Loans / Total Loans		0.22	%		0.25	%		0.25	%		0.17	%		0.28	%
Non Performing Assets / Total Assets		0.22	%		0.25	%		0.25	%		0.19	%		0.25	%
(a) Ratios at Bank level      (b) Shares information presented in thousands