ES Bancshares, Inc. Announces Third Quarter Results; Continues Trend of Increasing Tangible Book Value Per Share While Accelerating Cost Savings Program
STATEN ISLAND, N.Y., Oct. 30, 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 third quarter of 2023. The Company’s net income was $133 thousand or $0.02 per diluted share for the third quarter of 2023, compared to net income of $655 thousand or $0.10 per diluted share for the second quarter of 2023.
| Key Financial Data | 3Q23 Highlights | ||||||||||
| Profitability Metrics | 3Q23 | 2Q23 | 3Q22 | • Net Revenues of $4.2 million including $4.0 million of net interest income and $256 thousand of non-interest income.
• Net Income of $133 thousand and earnings per diluted share of $0.02. • Average loans increased 1.4% quarter-over-quarter with average total deposits decreasing by 1.3% in linked quarters. • Net interest margin of 2.67% narrowed from 2.86% in linked quarters as increases to the rates paid on interest-bearing deposits outpaced the rise in yields of interest-earning assets • Credit quality remains strong with loan delinquencies relatively unchanged. • Accelerates cost cutting program |
|||||||
| Return on average assets (%) | 0.09 | % | 0.42 | % | 1.73 | % | |||||
| Return on average common equity (%) | 1.17 | % | 5.81 | % | 22.83 | % | |||||
| Return on tangible common equity (%) | 1.18 | % | 5.89 | % | 23.15 | % | |||||
| Net interest margin (%) | 2.67 | % | 2.86 | % | 3.34 | % | |||||
| Income Statement (a) | 3Q23 | 2Q23 | 3Q22 | ||||||||
| Net interest income | $ | 3,977 | $ | 4,297 | $ | 4,371 | |||||
| Non-interest income | $ | 256 | $ | 328 | $ | 2,043 | |||||
| Net income | $ | 133 | $ | 655 | $ | 2,354 | |||||
| Earnings per share- Basic | $ | 0.02 | $ | 0.10 | $ | 0.35 | |||||
| Earnings per share- Diluted | $ | 0.02 | $ | 0.10 | $ | 0.35 | |||||
| Balance Sheet (a) | 3Q23 | 2Q23 | 3Q22 | ||||||||
| Average total loans | $ | 555,919 | $ | 548,441 | $ | 423,431 | |||||
| Average total deposits | $ | 487,816 | $ | 494,137 | $ | 460,624 | |||||
| Book value per share | $ | 6.79 | $ | 6.77 | $ | 6.37 | |||||
| Tangible book value per share | $ | 6.71 | $ | 6.68 | $ | 6.28 | |||||
| (a) In thousands except for per share amounts |
Phil Guarnieri, the CEO and Director of ES Bancshares, Inc., shared thoughts on the quarter, saying, “Despite the challenges presented by the interest rate landscape, we maintained steady average deposits, while embracing a controlled deceleration in loan growth. Furthermore, we took proactive steps during the quarter to enhance our company-wide operating efficiency, targeting an annualized reduction in operating expenses of seven percent. This effort centers around enhancing our cost structure through measures such as trimming vendor expenditures, automating, and realigning our workforce.
Mr. Guarnieri concluded with, “Although our Company is not immune to the turbulence affecting financial markets and institutions, our core business remains robust, our capitalization is strong, and our asset quality ratios remain solid. We remain dedicated to serving the banking needs of our local communities.”
Selected Balance Sheet Information:
September 30, 2023 vs. December 31, 2022
As of September 30, 2023, total assets were $630.3 million, an increase of $42.4 million, or 7.2%, 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 and Federal Home Loan Bank (“FHLB”) borrowings during the first nine months of 2023.
Loans receivable, net of Allowance for Loan Credit Losses totaled $557.9 million, an increase of $51.1 million from December 31, 2022, due to loan originations. As of September 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 $1.7 million or 0.27% of total assets, as of September 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 0.27% and 0.28%, as of September 30, 2023, and December 31, 2022, respectively.
Total liabilities increased $40.8 million to $584.7 from $543.9 million, driven by deposit increases and by FHLB borrowing. Deposits increased $21.1 million, or 4.7% to $470.9 million as of September 30, 2023, when compared to December 31, 2022. The increase in deposits is driven by an increase in Interest-Bearing deposits. FHLB borrowings totaled $84.0 million at September 30, 2023 compared to $64.9 million at December 31, 2022 an increase of $19.1 million or 29.4%.
As of September 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 9.54%, 13.47%, 13.47% and 14.63%, respectively, all in excess of the ratios required to be deemed “well-capitalized.” Book value per common share was $6.79 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 $6.71 at September 30, 2023 compared to $6.47 at December 31, 2022.
Financial Performance Overview:
Three Months Ended September 30, 2023 vs. June 30, 2023
For the three months ended September 30, 2023, net income totaled $133 thousand compared to $655 thousand for the second quarter 2023. The decrease can be attributed to a softer margin and increased non-interest expenses quarter over quarter.
Net interest income for the three months ended September 30, 2023, decreased $320 thousand, to $4.0 million from $4.3 million at June 30, 2023. The Company’s net interest margin compacted, decreasing by nineteen basis points to 2.67% for the three months ended September 30, 2023, as compared to 2.86% for the three months ended June 30, 2023. The contraction can be attributed to increased pricing pressures for retail deposits seen across the Banking industry.
There was a net provision expense of $86 thousand for credit losses taken for the three months ended September 30, 2023, compared to $34 thousand provision entry for the three months ended June 30, 2023.
Non-interest income decreased $72 thousand, to $256 thousand for the three months ended September 30, 2023, compared with non-interest income of $328 thousand for the three months ended June 30, 2023. The decrease can be attributed to less revenue collected from the sale of loans quarter over quarter, partially offset by an increase in fee income earned from the Bank’s loan portfolio.
Non-interest expense totaled $4.0 million for the three months ended September 30, 2023, compared to $3.7 million for the three months ended June 30, 2023, or an increase of 6.3%. The fluctuation in non-interest expense can be attributed to accelerated depreciation costs associated with a now relocated administrative location. In addition, the Company negotiated buyouts and accelerations for certain software providers that were expensed in the third quarter as well.
Nine months ended September 30, 2023 vs. September 30, 2022
For the nine months ended September 30, 2023, net income totaled $1.4 million a decrease of $3.0 million in comparison to $4.4 million for the nine months ended September 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 nine months ended September 30, 2023, decreased 4.2% or $540 thousand, to $12.4 million from $13.0 million at September 30, 2022. The decrease aligns with the compression seen in the Net Interest Margin as the Fed Funds rate increased 54% from September 2022 to September 2023.
In addition, the Bank has seen a deposit composition shift with a 25% increase in interest-bearing deposits year over year. Recently the deposit composition shift has slowed with average non-interest-bearing deposits increasing quarter over quarter.
Provision for credit losses totaled $103 thousand for the nine months ended September 30, 2023, compared to a $178 thousand benefit for the nine months ended September 30, 2022.
Non-interest income totaled $758 thousand for the nine months ended September 30, 2023, compared with non-interest income of $2.1 million for the nine months ended September 30, 2022. The decrease can be attributed to the aforementioned branch sale.
Non-interest expense totaled $11.3 million for the nine months ended September 30, 2023, compared to $10.3 million for the nine months ended September 30, 2022, or an increase of $948 thousand or 9.2%. The ratio of non-interest expense to average assets was 1.85% for the nine months of 2023, compared to 1.94% for the nine months ended September 30 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 Statement of Financial Condition | ||||||||
| (in thousands) | ||||||||
| September 30, | December 31, | September 30, | ||||||
| 2023 | 2022 | 2022 | ||||||
| |–(unaudited)–| | |–(unaudited)–| | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 29,439 | 38,115 | 30,481 | ||||
| Securities | 15,143 | 16,042 | 32,622 | |||||
| Loans receivable, net: | ||||||||
| Real estate mortgage loans | 543,852 | 494,064 | 459,916 | |||||
| Commercial and Lines of Credit | 14,322 | 14,110 | 14,484 | |||||
| Home Equity and Consumer Loans | 348.029 | 465 | 668 | |||||
| Deferred costs | 4,362 | 3,953 | 3,828 | |||||
| Allowance for Loan Credit Losses (a) | (5,028 | ) | (5,860 | ) | (5,760 | ) | ||
| Total loans receivable, net | 557,858 | 506,732 | 473,136 | |||||
| Investment in restricted stock, at cost | 5,782 | 4,779 | 3,432 | |||||
| Bank premises and equipment, net | 5,608 | 6,209 | 5,776 | |||||
| Accrued interest receivable | 2,533 | 2,020 | 1,975 | |||||
| Goodwill | 581 | 581 | 581 | |||||
| Repossessed assets | 164 | – | 117 | |||||
| Bank Owned Life Insurance | 5,305 | 5,202 | 5,168 | |||||
| Other Assets | 7,904 | 8,175 | 8,132 | |||||
| Total Assets | $ | 630,316 | 587,855 | 561,420 | ||||
| Liabilities & Stockholders’ Equity | ||||||||
| Non-Interest-Bearing Deposits | 125,562 | 129,641 | 150,677 | |||||
| Interest-Bearing Deposits | 302,509 | 279,830 | 263,217 | |||||
| Brokered Deposits | 42,873 | 40,627 | 39,051 | |||||
| Total Deposits | 470,944 | 449,798 | 452,945 | |||||
| Bond Issue, net of costs | 13,701 | 13,666 | 13,658 | |||||
| Borrowed Money | 83,980 | 64,900 | 35,000 | |||||
| Other Liabilities | 16,086 | 15,490 | 16,665 | |||||
| Total Liabilities | 584,710 | 543,854 | 518,268 | |||||
| Stockholders’ equity | 45,606 | 44,001 | 43,152 | |||||
| Total liabilities and stockholders’ equity | $ | 630,316 | 587,855 | 561,420 | ||||
| (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 | Nine Months Ended | |||||||||||||
| September 30, 2023 |
June 30, 2023 |
September 30, 2022 |
September 30, 2023 |
September 30, 2022 |
||||||||||
| |————–(unaudited)————–| | |—–(unaudited)—–| | |||||||||||||
| Interest income | ||||||||||||||
| Loans | $ | 6,715 | $ | 6,505 | $ | 4,943 | $ | 19,284 | $ | 14,386 | ||||
| Securities | 111 | 112 | 172 | 336 | 426 | |||||||||
| Other interest-earning assets | 319 | 454 | 164 | 1,140 | 385 | |||||||||
| Total Interest Income | 7,145 | 7,071 | 5,279 | 20,760 | 15,197 | |||||||||
| Interest expense | ||||||||||||||
| Deposits | 2,459 | 2,032 | 643 | 6,107 | 1,284 | |||||||||
| Borrowings | 710 | 742 | 394 | 2,220 | 939 | |||||||||
| Total Interest Expense | 3,169 | 2,774 | 1,037 | 8,327 | 2,223 | |||||||||
| Net Interest Income | 3,977 | 4,297 | 4,242 | 12,434 | 12,974 | |||||||||
| Prov(Benefit) for Credit Losses | 86 | 34 | – | 103 | (178 | ) | ||||||||
| Net Interest Income after Prov(Benefit)for Credit Losses | 3,891 | 4,263 | 4,242 | 12,331 | 13,152 | |||||||||
| Non-interest income | ||||||||||||||
| Deposit service charges | 106 | 98 | 84 | 284 | 256 | |||||||||
| Loan fee income | 99 | 68 | 83 | 224 | 300 | |||||||||
| Gain on Loan Sales | 12 | 126 | – | 138 | 241 | |||||||||
| Gain on Branch Sale | – | – | – | – | 1,782 | |||||||||
| Other | 39 | 36 | 99 | 112 | 234 | |||||||||
| Total non-interest income | 256 | 328 | 266 | 758 | 2,813 | |||||||||
| Non-interest expenses | ||||||||||||||
| Compensation and benefits | 1,856 | 1,953 | 1,826 | 5,664 | 5,386 | |||||||||
| Occupancy and equipment | 729 | 640 | 722 | 2,010 | 2,077 | |||||||||
| Data processing service fees | 397 | 340 | 345 | 1,039 | 867 | |||||||||
| Marketing | 107 | 99 | (35 | ) | 305 | 173 | ||||||||
| Professional fees | 315 | 213 | 194 | 747 | 654 | |||||||||
| NYS Banking & FDIC Assessments | 71 | 57 | 14 | 183 | 169 | |||||||||
| Printing & Office Supplies | 31 | 39 | 45 | 127 | 118 | |||||||||
| Insurance | 54 | 41 | 53 | 140 | 123 | |||||||||
| Other | 415 | 358 | 217 | 1,071 | 772 | |||||||||
| Total non-interest expense | 3,975 | 3,740 | 3,381 | 11,287 | 10,339 | |||||||||
| Income prior to tax expense | 172 | 851 | 1,127 | 1,802 | 5,626 | |||||||||
| Income taxes | 39 | 196 | 255 | 414 | 1,220 | |||||||||
| Net Income | $ | 133 | $ | 655 | $ | 872 | $ | 1,388 | $ | 4,406 | ||||
| For the Three Months Ended (dollars in thousands) | ||||||||||||||||||
| September 30, 2023 | June 30, 2023 | September 30, 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 | $ | 555,919 | $ | 6,715 | 4.83 | % | $ | 548,441 | $ | 6,505 | 4.74 | % | $ | 456,085 | $ | 4,943 | 4.33 | % |
| Investment securities | 16,151 | 111 | 2.75 | % | 16,194 | 112 | 2.77 | % | 33,194 | 172 | 2.07 | % | ||||||
| Interest bearing deposits | 20,260 | 231 | 4.56 | % | 32,687 | 374 | 4.58 | % | 27,240 | 114 | 1.68 | % | ||||||
| Restricted investment in bank stock | 4,273 | 88 | 8.24 | % | 4,320 | 80 | 7.41 | % | 1,691 | 50 | 11.78 | % | ||||||
| Total interest-earning assets | 596,602 | 7,145 | 4.79 | % | 601,642 | 7,072 | 4.70 | % | 518,210 | 5,279 | 4.07 | % | ||||||
| Non-interest earning assets | 17,371 | 17,924 | 19,798 | |||||||||||||||
| Total assets | $ | 613,973 | $ | 619,566 | $ | 538,008 | ||||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||
| Interest-bearing checking | $ | 29,162 | $ | 28 | 0.38 | % | $ | 27,694 | $ | 26 | 0.38 | % | $ | 32,736 | $ | 34 | 0.41 | % |
| Money market accounts | 4,060 | 4 | 0.42 | % | 4,367 | 3 | 0.25 | % | 6,589 | 3 | 0.20 | % | ||||||
| Savings accounts | 117,790 | 532 | 1.79 | % | 133,996 | 446 | 1.33 | % | 134,132 | 180 | 0.53 | % | ||||||
| Certificates of deposit | 212,094 | 1,895 | 3.54 | % | 206,246 | 1,557 | 3.03 | % | 117,679 | 426 | 1.44 | % | ||||||
| Total interest-bearing deposits | 363,105 | 2,459 | 2.69 | % | 372,302 | 2,032 | 2.19 | % | 291,136 | 643 | 0.88 | % | ||||||
| Borrowings | 51,557 | 488 | 3.76 | % | 52,853 | 520 | 3.95 | % | 35,000 | 173 | 1.96 | % | ||||||
| Subordinated debenture | 13,695 | 222 | 6.42 | % | 13,681 | 221 | 6.48 | % | 13,655 | 221 | 6.42 | % | ||||||
| Total interest-bearing liabilities | 428,357 | 3,168 | 2.93 | % | 438,836 | 2,773 | 2.53 | % | 339,791 | 1,037 | 1.21 | % | ||||||
| Non-interest-bearing demand deposits | 124,711 | 121,835 | 140,464 | |||||||||||||||
| Other liabilities | 15,348 | 13,975 | 14,803 | |||||||||||||||
| Total non-interest-bearing liabilities | 140,059 | 135,810 | 155,267 | |||||||||||||||
| Stockholders’ equity | 45,557 | 44,921 | 42,950 | |||||||||||||||
| Total liabilities and stockholders’ equity | $ | 613,973 | $ | 619,566 | $ | 538,008 | ||||||||||||
| Net interest income | $ | 3,977 | $ | 4,299 | $ | 4,242 | ||||||||||||
| Average interest rate spread | 1.86 | % | 2.17 | % | 2.86 | % | ||||||||||||
| Net interest margin | 2.67 | % | 2.86 | % | 3.27 | % | ||||||||||||
| Five Quarter Performance Ratio Highlights |
Three Months Ended | |||||||||||||||
| September 30, 2023 |
June 30, 2023 |
March 31, 2023 |
December 31, 2022 |
September 30, 2022 |
||||||||||||
| Income Statement | ||||||||||||||||
| Return on Average Assets | 0.09 | % | 0.42 | % | 0.40 | % | 0.60 | % | 0.65 | % | ||||||
| Return on Average Equity | 1.17 | % | 5.81 | % | 5.40 | % | 7.71 | % | 8.12 | % | ||||||
| Return on Average Tangible Equity | 1.18 | % | 5.89 | % | 5.47 | % | 7.82 | % | 8.23 | % | ||||||
| Efficiency Ratio | 93.89 | % | 80.86 | % | 82.42 | % | 75.03 | % | 60.97 | % | ||||||
| Yields / Costs | ||||||||||||||||
| Average Yield – Interest Earning Assets | 4.79 | % | 4.70 | % | 4.54 | % | 4.45 | % | 4.07 | % | ||||||
| Cost of Funds | 2.93 | % | 2.53 | % | 2.38 | % | 1.79 | % | 1.21 | % | ||||||
| Net Interest Margin | 2.67 | % | 2.86 | % | 2.89 | % | 3.26 | % | 3.27 | % | ||||||
| Capital Ratios | ||||||||||||||||
| Equity / Assets | 7.24 | % | 7.24 | % | 7.01 | % | 7.48 | % | 7.68 | % | ||||||
| Tangible Equity / Assets | 7.15 | % | 7.15 | % | 6.92 | % | 7.39 | % | 7.59 | % | ||||||
| Tier I leverage ratio (a) | 9.54 | % | 9.40 | % | 9.65 | % | 10.1 | % | 10.3 | % | ||||||
| Common equity Tier I capital ratio (a) | 13.47 | % | 13.67 | % | 13.87 | % | 14.3 | % | 14.7 | % | ||||||
| Tier 1 Risk-based capital ratio (a) | 13.47 | % | 13.67 | % | 13.87 | % | 14.3 | % | 14.7 | % | ||||||
| Total Risk-based capital ratio (a) | 14.63 | % | 14.92 | % | 15.12 | % | 15.5 | % | 16.0 | % | ||||||
| Stock Valuation | ||||||||||||||||
| Book Value | $ | 6.79 | $ | 6.77 | $ | 6.67 | $ | 6.55 | $ | 6.47 | ||||||
| Tangible Book Value | $ | 6.71 | $ | 6.68 | $ | 6.59 | $ | 6.47 | $ | 6.39 | ||||||
| Shares Outstanding (b) | 6,714 | 6,714 | 6,714 | 6,714 | 6,666 | |||||||||||
| Asset Quality | ||||||||||||||||
| CECL / Total Loans | 0.89 | % | 0.89 | % | 0.90 | % | 1.14 | % | 1.20 | % | ||||||
| Non Performing Loans / Total Loans | 0.27 | % | 0.25 | % | 0.17 | % | 0.28 | % | 0.34 | % | ||||||
| Non Performing Assets / Total Assets | 0.27 | % | 0.25 | % | 0.19 | % | 0.25 | % | 0.31 | % | ||||||
| (a) Ratios at Bank level (b) Shares information presented in thousands | ||||||||||||||||
