ES Bancshares, Inc Announces First Quarter Results Reporting $37 Million in Organic Deposit Growth and Overall Estimated Uninsured Deposits of 22%

STATEN ISLAND, N.Y., May 01, 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 first quarter of 2023. The Company’s net income was $599 thousand or $0.09 per diluted share for the first quarter of 2023, compared to net income of $843 thousand or $0.12 per diluted share for the fourth quarter of 2022.

Key Financial Data									1Q23 Highlights
Profitability Metrics	1Q23			4Q22			1Q22		• Net Revenues of $4.3 million including $4.2 million of net interest income and $174 thousand of non-interest income  • Net Income of $599 thousand and earnings per common share of $0.09  • Average loans increased 6.9% quarter-over-quarter with average total deposits increasing by 4.9% since prior quarter.  • Uninsured deposits were $108 million, or 22% of total deposits, at the end of the first quarter. As of March 31, 2023, the Company had $70 million of borrowing capacity.  • Total assets grew to $639 million an increase of $51 million.
Return on average assets (%)		0.40%			0.60%		0.90%
Return on average common equity (%)		5.40%			7.64%		11.78%
Return on tangible common equity (%)		5.47%			7.74%		11.96%
Net interest margin (%)		2.89%			3.26%		3.47%
Income Statement (a)	1Q23			4Q22			1Q22
Net interest income	$	4,159		$	4,404		4,361
Non-interest income	$	174		$	357		504
Net income	$	599		$	843		1,180
Earnings per share- Basic	$	0.09		$	0.13		0.18
Earnings per share- Diluted	$	0.09		$	0.12		0.17
Balance Sheet (a)	1Q23			4Q22			1Q22
Average total loans	$	529,041		$	494,728		414,336
Average total deposits	$	465,809		$	443,988		449,034
Book value per share	$	6.67		$	6.55		6.04
Tangible book value per share	$	6.59		$	6.47		5.96
(a) In thousands except for per share amounts

Phil Guarnieri, Chief Executive Officer and Director of ES Bancshares, Inc. commented on the quarter stating, “The first quarter of 2023 was a challenging environment for the financial sector with rates continuing to increase and market fears of a banking crisis. At the same time ESBS continued to demonstrate its strength as a Community Bank leaning on its relationship-oriented business model with loan growth of 6% and deposit inflows of 8%. Continuing strong results should allow for us to compound book value and build for long term success.

While we saw improved asset quality ratios and controlled expenses during the quarter, the strong core organic results were offset by higher-than-expected funding costs resulting in a net revenue decrease. As we progress through the year, we will look to continue to reduce high-cost funding only improving the positioning of the institution for uncertain headwinds.

Tom Sperzel, President, Chief Operating Officer and Director of ES Bancshares, Inc. added, “The conservative balance sheet and prudent risk management processes of the Company have allowed for continued execution of the Company’s strategic plan.”

Selected Balance Sheet Information:
As of March 31, 2023, total assets were $639.4 million, an increase of $51.5 million, or 9%, as compared to total assets of $587.9 million on December 31, 2022. The increase can be attributed to growth of the loan portfolio and an increased cash position which stemmed from deposit inflows and increased Federal Home Loan Bank (FHLB) borrowings.

Loans receivable, net of allowance for credit losses totaled $538.4 million, an increase of $31.7 million or 6% from December 31, 2022, due to loan originations. The Company adopted the CECL methodology for calculating credit losses effective January 1, 2023. The adoption resulted in an increase of $137 thousand to retained earnings. As of March 31, 2023, the Allowance for Credit Losses as a percentage of gross loans was 0.90%.

Nonperforming assets, which includes nonaccrual loans and repossessed assets were $1.2 million or 0.19% of total assets, as of March 31, 2023, improving from $1.3 million or 0.25% of total assets at December 31, 2022. The ratio of nonaccrual loans to loans receivable was 0.17% and 0.28%, as of March 31, 2023, and December 31, 2022, respectively.

Total liabilities increased $50.7 million to $594.6 from $543.9 million, due to an increase in funding across deposits and FHLB advances. Deposits increased $37.2 million, or 8% to $487.0 million as of March 31, 2023, when compared to December 31, 2022. The increase in deposits aided in reducing the loans-to-deposit ratio to 111.6%, down from 114.0%. FHLB advances increased $13.1 million to increase cash liquidity.

As of March 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 9.65%, 13.87%, 13.87% and 15.12%, respectively, all in excess of the ratios required to be deemed "well-capitalized." As of March 31, 2023, ES Bancshares return on average equity and return on tangible equity was 5.40% and 5.47% respectively compared to 7.71% and 7.82% for the quarter ending December 31, 2022. Goodwill was $581 thousand as of March 31, 2023, and December 31, 2022.

Financial Performance Overview:
For the three months ended March 31, 2023, net income totaled $599 thousand, which reflects a decrease of $244 thousand, in comparison to $843 thousand for the three months ended December 31, 2022. The decrease can be attributed to increased cost of funding.

Net interest income for the three months ended March 31, 2023, decreased $245 thousand, to $4.2 million from $4.4 million at December 31, 2022. The Company’s net interest margin decreased by 37 basis points to 2.89% for the three months ended March 31, 2023, as compared to 3.26% for the three months ended December 31, 2022. The decrease can be attributed to increased cost of funds as a result of higher levels of FHLB advances and interest-bearing deposits, in a rising rate environment.

There was a $17 thousand benefit for loan credit losses entry for the three months ended March 31, 2023, compared to $99 thousand provision entry for the three months ended December 31, 2022. Net charge offs for the three months ended March 31, 2023, totaled $239 thousand.

Non-interest income decreased $183 thousand, to $174 thousand for the three months ended March 31, 2023, compared with non-interest income of $357 thousand for the three months ended December 31, 2022. The decrease can be attributed to less loan fees collected and a fourth quarter 2022 sale of a repossessed asset which did not reoccur in the first quarter of 2023.

Non-interest expense totaled $3.6 million for the three months ended March 31, 2023, compared to $3.5 million for the three months ended December 31, 2022, or an increase of 2.3%. The increase in non-interest expense can be attributed to increased occupancy and equipment expenses and increased professional fees offset by decreased data processing service fees.

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, two Loan Production offices 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)
		March 31, 2023		December 31, 2022			March 31, 2022
		(unaudited)		(unaudited)			(Audited)
Assets
Cash and cash equivalents	$	57,827		38,115			87,394
Securities		15,629		16,042			17,064
Loans receivable, net:
Real estate mortgage loans		521,696		494,064			382,333
Commercial and Lines of Credit		17,018		14,110			28,701
Construction Loans		-		-			600
Home Equity and Consumer Loans		358		465			3,600
Deferred costs		4,213		3,953			2,811
Allowance for Loan Credit Losses		(4,882	)	(5,860	)		(5,758	)
Total loans receivable, net		538,403		506,732			412,287
Investment in restricted stock, at cost		5,368		4,779			2,505
Bank premises and equipment, net		6,037		6,209			6,763
Accrued interest receivable		2,338		2,020			1,755
Goodwill		581		581			581
Repossessed assets		164		-			352
Bank Owned Life Insurance		5,236		5,202			5,101
Other Assets		7,844		8,175			8,286
Total Assets	$	639,427		587,855			542,088
Liabilities & Stockholders' Equity
Non-Interest-Bearing Deposits		135,680		132,997			143,004
Interest-Bearing Deposits		311,800		276,174			294,074
Brokered Deposits		39,504		40,627			19,749
Total Deposits		486,984		449,798			456,827
Bond Issue, net of costs		13,678		13,666			13,637
Borrowed Money		78,000		64,900			15,000
Other Liabilities		15,954		15,490			16,346
Total Liabilities		594,616		543,854			501,810
Stockholders' equity		44,811		44,001			40,278
Total liabilities and stockholders' equity	$	639,427		587,855			542,088

	ES Bancshares, Inc. Consolidated Statement of Income (in thousands)
	Three Months Ended
	March 31, 2023			December 31, 2022			March 31, 2022
	(unaudited)			(unaudited)			(unaudited)
Interest income
Loans	$	6,064		$	5,652		$	4,771
Securities		113			137			91
Other interest-earning assets		367			228			64
Total Interest Income		6,544			6,017			4,926
Interest expense
Deposits		1,616			1,068			294
Borrowings		768			545			271
Total Interest Expense		2,384			1,613			565
Net Interest Income		4,160			4,404			4,361
(Benefit)/Provision for Loan Credit Losses		(17	)		99			(113	)
Net Interest Income after (Benefit)/Pro for Loan Losses		4,177			4,305			4,474
Non-interest income
Deposit service charges		80			91			84
Loan fee income		57			146			141
Gain on Loan Sales		-			-			241
Other		37			120			38
Total non-interest income		174			357			504
Non-interest expenses
Compensation and benefits		1,855			1,881			1,721
Occupancy and equipment		641			554			689
Data processing service fees		302			386			260
Marketing		99			77			108
Professional fees		219			179			255
NYS Banking & FDIC Assessments		55			56			82
Printing & Office Supplies		57			68			44
Insurance		45			53			38
Other		299			238			275
Total non-interest expense		3,572			3,492			3,472
Income prior to tax expense		778			1,170			1,506
Income taxes		179			327			326
Net Income	$	599		$	843		$	1,180

	For the Three Months Ended (dollars in thousands)
	March 31, 2023								December 31, 2022							March 31, 2022
	Avg Bal Rolling 3 Mos.		Interest Rolling 3 Mos.				Average Yield/Cost		Avg Bal Rolling 3 Mos.		Interest Rolling 3 Mos.			Average Yield/Cost		Avg Bal Rolling 3 Mos.		Interest Rolling 3 Mos.		Average Yield/Cost
Assets
Interest-earning assets:
Loans receivable	$	529,041	$	6,064			4.58	%	$	494,728	$	5,652		4.57	%	$	417,386	$	4,771	4.57	%
Investment securities		15,979		113			2.83	%		22,678		137		2.42	%		12,574		91	2.90	%
Interest-bearing deposits		27,170		287			4.23	%		19,536		162		3.32	%		66,837		32	0.19	%
Restricted investment in bank stock		4,290		80			7.46	%		3,652		66		7.20	%		2,452		32	5.26	%
Total interest-earning assets		576,480		6,544			4.54	%		540,594		6,017		4.45	%		499,250		4,926	3.95	%
Non-interest earning assets		17,355								17,871							19,334
Total assets	$	593,835							$	558,465						$	518,584
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest-bearing checking	$	30,193	$	34			0.46	%	$	32,065	$	35		0.44	%	$	31,583	$	30	0.39	%
Money market accounts		5,794		3			0.21	%		7,201		4		0.25	%		9,415		4	0.19	%
Savings accounts		110,995		320			1.17	%		108,170		221		0.81	%		167,118		118	0.29	%
Certificates of deposit		190,984		1,259			2.67	%		155,086		808		2.07	%		88,816		142	0.65	%
Total interest-bearing deposits		337,966		1,616			1.94	%		302,522		1,068		1.40	%		296,932		294	0.40	%
Borrowings		55,415		547			4.00	%		40,980		324		3.14	%		15,116		50	1.35	%
Subordinated debenture		13,672		221			6.56	%		13,663		221		6.42	%		13,632		221	6.56	%
Total interest-bearing liabilities		407,053		2,384			2.38	%		357,165		1,613		1.79	%		325,680		565	0.70	%
Non-interest-bearing demand deposits		127,843								141,466							139,583
Other liabilities		14,617								16,121							15,235
Total non-interest-bearing liabilities		142,460								157,587							154,818
Stockholders' equity		44,322								43,713							38,086
Total liabilities and stockholders' equity	$	593,835							$	558,465						$	518,584
Net interest income			$	4,160							$	4,404						$	4,361
Average interest rate spread							2.17	%						2.66	%					3.24	%
Net interest margin							2.89	%						3.26	%					3.49	%

Five Quarter Performance Ratio Highlights		Three Months Ended
		March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022
Income Statement
	Return on Average Assets		0.40	%		0.60	%		0.65	%		1.73	%		0.90	%
	Return on Average Equity		5.40	%		7.71	%		8.12	%		22.83	%		11.78	%
	Return on Average Tangible Equity		5.47	%		7.82	%		8.23	%		23.15	%		11.96	%
	Efficiency Ratio		53.18	%		54.78	%		60.97	%		52.56	%		68.27	%
Yields / Costs
	Average Yield - Interest Earning Assets		4.54	%		4.45	%		4.07	%		3.82	%		3.95	%
	Cost of Funds		2.38	%		1.79	%		1.21	%		0.73	%		0.69	%
	Net Interest Margin		2.89	%		3.26	%		3.27	%		3.34	%		3.47	%
Capital Ratios
	Equity / Assets		7.01	%		7.48	%		7.68	%		7.85	%		7.43	%
	Tangible Equity / Assets		6.92	%		7.39	%		7.59	%		7.75	%		7.33	%
	Tier 1 leverage ratio (a)		9.65	%		10.11	%		10.3	%		9.9	%		10.0	%
	Common equity Tier I capital ratio (a)		13.87	%		14.26	%		14.7	%		15.8	%		15.5	%
	Tier 1 Risk-based capital ratio (a)		13.87	%		14.26	%		14.7	%		15.8	%		15.5	%
	Total Risk-based capital ratio (a)		15.12	%		15.51	%		16.0	%		17.0	%		16.8	%
Stock Valuation
	Book Value	$	6.67		$	6.55		$	6.47		$	6.37		$	6.04
	Tangible Book Value	$	6.59		$	6.47		$	6.39		$	6.28		$	5.96
	Shares Outstanding (b)		6,714			6,714			6,666			6,663			6,663
Asset Quality
	ALLL / Total Loans		0.90	%		1.14	%		1.20	%		1.37	%		1.38	%
	Non-Performing Loans / Total Loans		0.17	%		0.28	%		0.34	%		0.38	%		0.42	%
	Non-Performing Assets / Total Assets		0.19	%		0.25	%		0.31	%		0.37	%		0.39	%
	(a) Ratios at Bank level                   (b) Shares outstanding presented in thousands