ES Bancshares, Inc. Announces Third Quarter 2024 Results; Continues Trend of Net Interest Margin Expansion and Revenue Growth

Rhea-AI Summary

ES Bancshares reported Q3 2024 net income of $582,000 ($0.08 per diluted share), up from $158,000 ($0.02 per share) in Q2 2024. The company's net interest margin improved to 2.30% from 2.21% in Q2. Total revenues reached $8.6 million, marking eight consecutive quarters of growth. The company repurchased $2 million of sub-debt and replaced $56 million of higher-cost wholesale funding with lower-cost organic deposits. Total assets were $633.2 million, down 0.9% from December 2023. Nonperforming assets increased to $5.1 million (0.81% of total assets) from $1.4 million in December 2023.

Positive

• Net income increased significantly to $582,000 from $158,000 quarter-over-quarter
• Net interest margin expanded to 2.30% from 2.21%
• Cost of funds improved to 3.02% from 3.17%
• Eight consecutive quarters of revenue growth
• Successfully replaced $56M of higher-cost funding with lower-cost deposits
• Operating expenses decreased 8.1% year-over-year

Negative

• Total assets decreased by $5.5M (0.9%) from December 2023
• Nonperforming assets increased to $5.1M from $1.4M in December 2023
• Nine-month net income declined to $637,000 from $1.4M year-over-year
• Net interest income decreased 18% year-over-year for nine months

STATEN ISLAND, N.Y., Oct. 30, 2024 (GLOBE NEWSWIRE) -- ES Bancshares, Inc. (OTCQX: ESBS) (the “Company”) the holding company for Empire State Bank, (the “Bank”) today reported net income of $582 thousand, or $0.08 per diluted common share, for the quarter ended September 30, 2024, compared to a net income of $158 thousand or $0.02 per diluted common share for the quarter ended June 30, 2024.

Key Quarterly Financial Data					2024 Highlights
Performance Metrics	3Q24	2Q24	3Q23		• The Cost of Funds for the three months ended September 30, 2024, improved to 3.02% from 3.17% in the prior linked quarter. • For 3 months ended September 30, 2024, the Company’s net interest margin increased to 2.30% compared to 2.21% for the 3 months ended June 30, 2024. • The Company repurchased $2million of its sub-debt during the quarter, resulting in a gain on extinguishment. • The Company has replaced $56 million of higher-costing wholesale funding with lower cost organic deposits over the nine-months in 2024. • Total Revenues for the quarter ended September 30, 2024, totaled $8.6 million increasing for an eighth consecutive quarter.
Return on average assets (%)	0.36	0.10	0.09
Return on average equity (%)	4.98	1.37	1.17
Return on average tangible equity (%)	5.04	1.38	1.18
Net interest margin (%)	2.30	2.21	2.67
Income Statement (a)	3Q24	2Q24	3Q23
Net interest income	$       3,567	$       3,447	$        3,977
Non-interest income	$          609	$          329	$           256
Net income	$          582	$          158	$           133
Earnings per diluted common share	$         0.08	$         0.02	$          0.02
Balance Sheet (a)	3Q24	2Q24	3Q23
Average total loans	$   566,031	$   565,363	$     555,919
Average total deposits	$   512,119	$   510,050	$     487,816
Book value per share	$         6.85	$         6.74	$           6.79
Tangible book value per share	$         6.77	$         6.65	$           6.71
(a) In thousands except for per share amounts

Phil Guarnieri, Director, and Chief Executive Officer of ES Bancshares, said, “We are pleased to report solid progress this quarter, reflecting our commitment to enhancing the earnings profile of the organization and maintaining disciplined expense management. Despite a challenging and competitive landscape, the Company’s net interest margin increased by nine basis points for the second straight quarter. The Company’s balance sheet and capital position remain robust, and through the open market, we’ve partially paid down our subordinated debt, which will positively impact the margin going forward.”

Selected Balance Sheet Information:

September 30, 2024 vs. December 31, 2023

As of September 30, 2024, total assets were $633.2 million, a decrease of $5.5 million, or 0.9%, as compared to total assets of $638.7 million on December 31, 2023. The decrease can be attributed to a slightly smaller loan portfolio.

Loans receivable, net of Allowance for Credit Losses on Loans totaled $560.0 million, a decrease of 0.7% from December 31, 2023. As of September 30, 2024, the Allowance for Credit Losses on Loans as a percentage of gross loans was 0.90%.

Nonperforming assets, which includes nonaccrual loans and foreclosed real estate were $5.1 million or 0.81% of total assets, as of September 30, 2024, increasing from $1.4 million or 0.22% of total assets at December 31, 2023. The ratio of nonaccrual loans to loans receivable was 0.91%, as of September 30, 2024, and 0.22% for December 31, 2023. The increase from December 31, 2023, was primarily due to one Commercial Real Estate loan and one 1-4 family investor loan being placed on non-accrual status. Both loans are deemed to be well collateralized and in total amount to $4.0 million.

Total liabilities decreased $6.8 million to $586.1 at September 30, 2024 from $592.9 million at December 31, 2023. The decrease can be attributed to repayments of brokered deposits and Federal Home Loan (FHLB) borrowings partially offset by growth in core deposits. The growth in deposits was driven by an increase in interest-bearing, non-maturity deposit accounts.

As of September 30, 2024, the Bank's Tier 1 capital leverage ratio, common equity tier 1 capital ratio, Tier 1 capital ratio and total capital ratios were 9.18%, 13.67%, 13.67% and 14.92%, respectively, all in excess of the ratios required to be deemed "well-capitalized." During the third quarter 2024 the Company did not repurchase shares under its stock repurchase program. Book value per common share was $6.85 at September 30, 2024 compared to $6.83 at December 31, 2023. Tangible common book value per share (which represents common equity less goodwill, divided by the number of shares outstanding) was $6.77 at September 30, 2024 compared to $6.74 at December 31, 2023.

Financial Performance Overview:

Three Months Ended September 30, 2024, vs. June 30, 2024

For the three months ended September 30, 2024, the Company net income totaled $582 thousand compared to a net income of $158 thousand for the three months ended June 30, 2024. The improvement can be attributed to an expanded margin and increased non-interest income quarter over quarter.

Net interest income for the three months ended September 30, 2024, increased $120 thousand, to $3.6 million from $3.4 million at three months ended June 30, 2024. The Company’s net interest margin widened by nine basis points to 2.30% for the three months ended September 30, 2024, as compared to 2.21% for the three months ended June 30, 2024. The increase in margin can be attributed to a reduction in the Company’s average cost for its Interest-bearing liabilities.

There was a reversal for credit losses of $38 thousand for the three months ended September 30, 2024, compared to a $9 thousand provision for credit losses taken for the three months ended June 30, 2024.

Non-interest income increased $280 thousand, to $609 thousand for the three months ended September 30, 2024, compared with non-interest income of $329 thousand for the three months ended June 30, 2024. The majority of the increase can be attributed to a $245 thousand gain on extinguishment of the Company’s subordinated debt.

Non-interest expenses totaled $3.4 million for the three months ended September 30, 2024, compared to $3.5 million for the three months ended June 30, 2024. The largest fluctuations quarter over quarter pertain to a 31% reduction in Professional fees, which decreased $70 thousand to a more normalized level during the quarter ended September 30, 2024.

Nine months ended September 30, 2024 vs. September 30, 2023

For the nine months ended September 30, 2024, net income totaled $637 thousand in comparison to $1.4 million for the nine months ended September 30, 2023. The decrease can mainly be attributed to higher costs paid on deposits which increased $5.0 million.

Net interest income for the nine months ended September 30, 2024, decreased 18% or $2.2 million, to $10.2 million from $12.4 million at September 30, 2023. The decrease can be attributed to increased interest expense for deposits, partially offset by increased interest income earned on the loan portfolio.

Provision for credit losses totaled $10 thousand for the nine months ended September 30, 2024, compared to a $103 thousand provision for the nine months ended September 30, 2023.

Non-interest income totaled $1.2 million for the nine months ended September 30, 2024, compared with noninterest income of $758 thousand for the nine months ended September 30, 2023. The increase can be attributed to the gain recorded on extinguishment of sub-debt which is partially offset by a decrease in gains recorded from loan sales period over period.

Operating expenses totaled $10.4 million for the nine months ended September 30, 2024, compared to $11.3 million for the nine months ended September 30, 2023, or a decrease of 8.1%. The decrease in non-interest expense can be attributed to initiatives taking effect from the cost-cutting program launched in 2024.

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 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. 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, 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)
		September 30,		December 31,			September 30,
		2024		2023			2023
		|----(unaudited)----|					|----(unaudited)----|
Assets
Cash and cash equivalents	$	25,436		32,728			29,439
Securities, net		22,595		15,220			15,143
Loans receivable, net:
Real estate mortgage loans		545,445		551,250			543,870
Commercial and Lines of Credit		14,729		12,823			13,950
Home Equity and Consumer Loans		709		700			704
Deferred costs		4,210		4,233			4,362
Allowance for Loan Credit Losses		(5,100	)	(5,086	)		(5,028	)
Total loans receivable, net		559,993		563,920			557,858
Accrued interest receivable		2,670		2,625			2,533
Investment in restricted stock, at cost		4,342		5,191			5,782
Goodwill		581		581			581
Bank premises and equipment, net		5,050		5,600			5,608
Repossessed assets		-		-			164
Right of use lease assets		6,109		6,415			6,625
Bank Owned Life Insurance		5,450		5,341			5,305
Other Assets		1,014		1,129			1,278
Total Assets	$	633,240		638,750			630,316
Liabilities & Stockholders' Equity
Non-Interest-Bearing Deposits		97,867		107,849			125,562
Interest-Bearing Deposits		389,340		329,695			302,509
Brokered Deposits		20,773		56,581			42,873
Total Deposits		507,980		494,125			470,944
Bond Issue, net of costs		11,780		13,708			13,701
Borrowed Money		50,267		70,805			83,980
Lease Liability		6,382		6,672			6,877
Other Liabilities		9,710		7,578			9,208
Total Liabilities		586,119		592,888			584,710
Stockholders' equity		47,121		45,862			45,606
Total liabilities and stockholders' equity	$	633,240		638,750			630,316

        

	ES Bancshares, Inc.
	Consolidated Statements of Income
	(in thousands)
	Three Months Ended									Nine Months Ended
	September 30, 2024			June 30, 2024			September 30, 2023			September 30, 2024		September 30, 2023
	|--------------(unaudited)--------------|									|----(unaudited)----|
Interest income
Loans	$	7,315		$	7,345		$	6,716		$	21,868	$	19,284
Securities		218			121			111			454		336
Other interest-earning assets		428			561			319			1,252		1,140
Total Interest Income		7,961			8,027			7,146			23,574		20,760
Interest expense
Deposits		3,674			3,837			2,459			11,096		6,107
Borrowings		720			743			710			2,261		2,220
Total Interest Expense		4,394			4,580			3,169			13,357		8,327
Net Interest Income		3,567			3,447			3,977			10,217		12,433
(Rev)Prov for Credit Losses		(38	)		9			86			10		103
Net Interest Income after (Rev)Prov for Credit Losses		3,605			3,438			3,891			10,207		12,330
Non-interest income
Service charges and fees		264			200			205			636		508
Gain on loan sales		-			-			12			1		138
Gain on extinguishment of Sub-debt		245			-			-			245		-
Other		100			129			39			271		112
Total non-interest income		609			329			256			1,153		758
Non-interest expenses
Compensation and benefits		1,719			1,728			1,856			5,168		5,664
Occupancy and equipment		618			605			729			1,891		2,010
Data processing service fees		315			317			397			958		1,039
Professional fees		155			225			315			561		747
FDIC & NYS Banking Assessments		100			99			71			296		183
Advertising		84			85			107			244		305
Insurance		55			46			54			151		140
Other		365			401			446			1,103		1,198
Total non-interest expense		3,411			3,506			3,975			10,372		11,286
Income prior to tax expense		803			261			172			988		1,802
Income taxes		221			103			39			351		414
Net Income	$	582		$	158		$	133		$	637	$	1,388

	ES Bancshares, Inc.
	Average Balance Sheet Data
	For the Three Months Ended (dollars in thousands)
	September 30, 2024						June 30, 2024						September 30, 2023
	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	$	566,031	$	7,315	5.17	%	$	565,363	$	7,345	5.20	%	$	555,919	$	6,716	4.83	%
Investment securities		22,480		218	3.87	%		15,513		121	3.13	%		16,151		111	2.75	%
Other interest-earning assets		31,656		428	5.29	%		41,652		561	5.33	%		24,532		319	5.12	%
Total interest-earning assets		620,167		7,961	5.13	%		622,528		8,027	5.16	%		596,602		7,146	4.79	%
Non-interest earning assets		17,919						16,398						17,371
Total assets	$	638,086					$	638,926					$	613,973
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest-bearing checking	$	33,512	$	55	0.65	%	$	36,692	$	71	0.77	%	$	29,162	$	28	0.38	%
Savings accounts		200,248		1,728	3.42	%		175,686		1,629	3.72	%		121,849		536	1.75	%
Certificates of deposit		173,577		1,891	4.32	%		194,806		2,137	4.40	%		212,094		1,895	3.54	%
Total interest-bearing deposits		407,337		3,674	3.58	%		407,184		3,837	3.78	%		363,105		2,459	2.69	%
Borrowings		52,984		519	3.89	%		55,510		522	3.77	%		51,557		488	3.76	%
Subordinated debenture		12,388		201	6.44	%		13,726		221	6.46	%		13,695		222	6.41	%
Total interest-bearing liabilities		472,709		4,394	3.69	%		476,420		4,580	3.86	%		428,357		3,169	2.93	%
Non-interest-bearing demand deposits		104,782						102,866						124,711
Other liabilities		13,842						13,429						15,348
Total non-interest-bearing liabilities		118,624						116,295						140,059
Stockholders' equity		46,753						46,211						45,557
Total liabilities and stockholders' equity	$	638,086					$	638,926					$	613,973
Net interest income			$	3,567					$	3,447					$	3,977
Average interest rate spread					1.45	%					1.30	%					1.86	%
Net interest margin					2.30	%					2.21	%					2.67	%

Five Quarter Performance Ratio Highlights		Three Months Ended
		September 30, 2024		June 30, 2024		March 31, 2024			December 31, 2023		September 30, 2023
Performance Ratios (%) - annualized
	Return(loss) on Average Assets		0.36		0.10		(0.07	)		0.05		0.09
	Return(loss) on Average Equity		4.98		1.37		(0.90	)		0.73		1.17
	Return(loss) on Average Tangible Equity		5.04		1.38		(0.91	)		0.74		1.18
	Efficiency Ratio		81.70		92.86		101.08			99.31		93.89
Yields / Costs (%)
	Average Yield - Interest Earning Assets		5.13		5.16		5.03			4.92		4.79
	Average Cost - Interest-bearing Liabilities		3.69		3.86		3.82			3.55		2.93
	Net Interest Margin		2.30		2.21		2.12			2.28		2.67
Capital Ratios (%)
	Equity / Assets		7.44		7.12		7.34			7.18		7.24
	Tangible Equity / Assets		7.36		7.03		7.26			7.09		7.15
	Tier I leverage ratio (a)		9.18		9.30		9.52			9.45		9.54
	Common equity Tier I capital ratio (a)		13.67		13.81		13.63			13.60		13.47
	Tier 1 Risk-based capital ratio (a)		13.67		13.81		13.63			13.60		13.47
	Total Risk-based capital ratio (a)		14.92		15.06		14.88			14.85		14.63
Stock Valuation
	Book Value	$	6.85	$	6.74	$	6.75		$	6.83	$	6.79
	Tangible Book Value	$	6.77	$	6.65	$	6.67		$	6.74	$	6.71
	Shares Outstanding (b)		6,878		6,884		6,834			6,714		6,714
Asset Quality (%)
	ACL / Total Loans		0.90		0.90		0.89			0.89		0.89
	Non Performing Loans / Total Loans		0.91		0.22		0.24			0.22		0.25
	Non Performing Assets / Total Assets		0.81		0.19		0.21			0.22		0.25
	(a) Ratios at Bank level             (b) Shares information presented in thousands

FAQ

What was ES Bancshares (ESBS) Q3 2024 earnings per share?

ES Bancshares reported earnings of $0.08 per diluted share for Q3 2024.

How much did ES Bancshares (ESBS) nonperforming assets increase in Q3 2024?

Nonperforming assets increased to $5.1 million (0.81% of total assets) as of September 30, 2024, up from $1.4 million (0.22% of total assets) in December 2023.

What was ES Bancshares (ESBS) net interest margin in Q3 2024?

ES Bancshares' net interest margin was 2.30% in Q3 2024, up from 2.21% in Q2 2024.