ES Bancshares, Inc. Announces Third Quarter Results; Continues Trend of Increasing Tangible Book Value Per Share While Accelerating Cost Savings Program

Rhea-AI Summary

ES Bancshares, Inc. announced financial results for Q3 2023. Net income was $133k or $0.02 per diluted share, compared to $655k or $0.10 per diluted share in Q2 2023. Net interest income decreased to $3.98 million, non-interest income decreased to $256k, and non-interest expense increased to $4 million in Q3 2023. The bank's total assets increased to $630.3 million, loans receivable increased to $557.9 million, and deposits increased to $470.9 million as of September 30, 2023.

Positive

• ES Bancshares, Inc. reported a net income of $133k for Q3 2023, a decrease from $655k in Q2 2023.
• Net interest income decreased to $3.98 million in Q3 2023.
• Total assets increased to $630.3 million as of September 30, 2023.

Negative

• Non-interest income decreased to $256k in Q3 2023.
• Non-interest expense increased to $4 million in Q3 2023.

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

FAQ

What were the earnings per diluted share for ES Bancshares, Inc. in Q3 2023?

The earnings per diluted share for ES Bancshares, Inc. in Q3 2023 were $0.02.

What was the net interest income for ES Bancshares, Inc. in Q3 2023?

The net interest income for ES Bancshares, Inc. in Q3 2023 was $3.98 million.

What were the total assets of ES Bancshares, Inc. as of September 30, 2023?

The total assets of ES Bancshares, Inc. as of September 30, 2023 were $630.3 million.