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

ES Bancshares, Inc.

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, 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