ES Bancshares, Inc. Reports Loan Growth of 13% Funded by Deposit Growth of 14%, for the Quarter Ended September 30, 2022; Posts $0.13 Quarterly EPS Increasing Year-to-Date EPS to $0.66

Rhea-AI Summary

ES Bancshares, Inc. (OTCQX: ESBS) reported a net income of $872 thousand or $0.13 per diluted share for Q3 2022, a decline from $2.4 million in Q2 2022. Total net revenues reached $4.5 million, with net interest income of $4.2 million. Average loans increased by 8%, but average total deposits fell by 6% due to the closure of the Newburgh branch. The company's asset growth was 11.3%, with total assets at $561.8 million. Non-interest income dropped significantly to $266 thousand, primarily due to the prior branch sale. Despite challenges, ES Bancshares maintains strong asset quality and capital ratios.

Positive

• Net income of $872 thousand despite a decrease from previous quarter.
• Average loans increased by 8% quarter-over-quarter.
• Total assets grew by 8.9%, reaching $561.8 million.
• Non-interest expense decreased by 3% indicating cost control.
• Strong asset quality with nonperforming assets at 0.31% of total assets.

Negative

• Net income decreased by $1.5 million compared to the prior quarter.
• Non-interest income dropped significantly by $1.8 million.
• Net interest margin tightened to 3.27%, down from 3.34%.

STATEN ISLAND, N.Y., Oct. 31, 2022 (GLOBE NEWSWIRE) -- ES Bancshares, Inc. (OTCQX: ESBS) (the “Company”) the holding company for Empire State Bank, (the “Bank”) today announced net income of $872 thousand, or $0.13 per diluted common share for the quarter ended September 30, 2022. 

Key Financial Data										3Q22 Highlights
Profitability Metrics	3Q22			2Q22			3Q21
Return on average assets (%)		0.65	%		1.73	%		0.95	%	• Net Revenues of $4.5 million including $4.2 million of net interest income and $266 thousand of non-interest income
Return on average common equity (%)		8.12	%		22.83	%		12.98	%
Return on tangible common equity (%)		8.23	%		23.15	%		13.18	%	• Net Income of $872 thousand and diluted earnings per common share of $0.13
Net interest margin (%)		3.27	%		3.34	%		3.63	%
Income Statement (a)	3Q22			2Q22			3Q21			• Average loans increased 8% quarter-over-quarter with average total deposits decreasing of 6% since prior quarter. The decrease can be attributed to the sale of the Newburgh branch location that completed late during 2Q.
Net interest income	$	4,242		$	4,371		$	4,532
Non-interest income	$	266		$	2,043		$	478
Net income	$	872		$	2,354		$	1,217
Diluted earnings per common share	$	0.13		$	0.35		$	0.18
										• ES Bancshares reports 11.3% asset growth during the quarter.
Balance Sheet (a)	3Q22			2Q22			3Q21
Average total loans	$	456,085		$	423,431		$	439,967		• Core conversion was successfully completed during the 3Q
Average total deposits	$	431,600		$	460,624		$	425,553
Book value per common share	$	6.47		$	6.37		$	5.71
(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 organic growth we have demonstrated continues, producing another quarter of solid financial performance for ES Bancshares. The Company saw strong loan growth during the quarter while increasing the non-interest-bearing deposit relationships by 15% comparably. Further, I am proud of the results seen in our Brooklyn locations as we continue to enhance our franchise in an extremely competitive market. In addition, our commitment to the local marketplace and relationships with small businesses was supported by 27% quarter over quarter growth, within our attorney escrow deposit products.

With the rapidly changing environment we remain encouraged by our strong asset quality and our consistent underwriting principles. Both of which have been pillars of the Company driving solid performance the past years. These same principles will allow the organization to weather the uncertain economic times and any change in the business cycle.”

Tom Sperzel, President, Chief Operating Officer and Director of ES Bancshares, Inc. added, “We are pleased to be able to grow the balance sheet while preserving NIM and controlling overhead, thus maintaining a strong level of core earnings.”

Phil Guarnieri further stated, “We are excited for the strong momentum across our Company as we look to close out 2022 with record earnings and core growth.”

Selected Balance sheet Information
As of September 30, 2022, total assets were $561.8 million, an increase of $46.1 million, or 8.9%, as compared to total assets of $515.7 million on December 31, 2021. Loans receivable totaled $478.9 million, an increase of $50.8 million from December 31, 2021. The increase in loans receivable was attributable to higher loan originations fueled by organic deposit growth.

Asset quality remains strong with the allowance for loan loss remaining relatively unchanged from prior quarter. The allowance for loan losses represented 1.20%, 1.37%, and 1.33% of loans receivable as of September 30, 2022, December 31, 2021, and September 30, 2021, respectively.

Nonperforming assets, which includes nonaccrual loans and repossessed assets were $1.7 million as of September 30, 2022, $1.9 million as of December 31, 2021, and $2.0 million as of September 30, 2021. Nonperforming assets as a percentage of total assets were 0.31% as of September 30, 2022, 0.38% as of December 31, 2021, and 0.39% as of September 30, 2021. The ratio of nonaccrual loans to loans receivable was 0.34%, 0.38% and 0.43%, as of September 30, 2022, December 31, 2021, and September 30, 2021, respectively.

Total deposits increased $54.9 million, or 13.8% to $452.9 million as of September 30, 2022, from $398.0 million on June 30, 2022, and $19.3 million or 4.4% from December 31, 2021. The increase quarter over quarter reflects strong adherence to management’s strategic plan seeing growth in deposits from the Bank’s retail locations supplemented, in part, by brokered deposits.

As of September 30, 2022, the Bank's Tier 1 capital leverage ratio, common equity tier 1 capital ratio, Tier 1 capital ratio and total capital ratios were 10.33%, 14.71%, 14.71% and 15.96%, respectively, all in excess of the ratios required to be deemed "well-capitalized." As of September 30, 2022, ES Bancshares, return on average equity and return on tangible equity was 8.12% and 8.23% respectively. Goodwill was $581 thousand as of September 30, 2022, and December 31, 2021.

Financial Performance Overview:
For the three months ended September 30, 2022, net income totaled $872 thousand, which reflects a decrease of $1.5 million, in comparison to $2.4 million for the three months ended June 30, 2022. During the second quarter on June 24, 2022, the Bank sold its Newburgh branch location resulting in one-time income of $1,782.

Net interest income for the three months ended September 30, 2022, decreased by $129 thousand to $4.24 million from $4.37 million at June 30, 2022. The Company’s net interest margin tightened by seven basis points, decreasing to 3.27% for the three months ended September 30, 2022, as compared to 3.34% for the three months ended June 30, 2022. The decrease can be attributed to increased cost of funds and less Paycheck Protection Program income earned. During the third quarter, PPP income was $83 thousand, a decrease of $156 thousand from $239 thousand collected in the second quarter of 2022.

There was a $4 thousand provision for loan losses for the three months ended September 30, 2022, compared to a benefit for loan losses of $65 thousand for the three months ended June 30, 2022. Net recoveries for the three months ended September 30, 2022 totaled $4 thousand.

Non-interest income decreased $1.8 million, to $266 thousand for the three months ended September 30, 2022, compared with non-interest income of $2.0 million for the three months ended June 30, 2022. The decrease is a result from the gain on sale associated with the abovementioned branch sale.

Non-interest expense totaled $3.38 million for the three months ended September 30, 2022, compared to $3.49 million for the three months ended June 30, 2022, or a decrease of 3%. The decrease in non-interest expense can be attributed to reduced operating costs and improved NYS Banking & FDIC assessment costs.

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 administrative headquarters in Staten Island, New York, and other administrative offices throughout the state along with business derived from our five Banking Center locations and two loan production offices. 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 report 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 report are made only as of the date of this report. 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, 2022			June 30, 2022			December 31, 2021
		(unaudited)			(unaudited)			(audited)
Assets
Cash and cash equivalents	$	30,481			27,221			59,078
Securities		32,622			33,258			11,192
Loans receivable, net:
Real estate mortgage loans		459,916			400,502			378,126
Commercial and Lines of Credit		14,484			16,725			41,879
Construction Loans		-			600			560
Home Equity and Consumer Loans		668			2,983			5,187
Deferred costs		3,828			3,269			2,353
Allowance for loan losses		(5,760	)		(5,756	)		(5,869	)
Total loans receivable, net		473,136			418,323			422,236
Investment in restricted stock, at cost		3,432			3,433			2,502
Bank premises and equipment, net		5,776			5,628			6,427
Accrued interest receivable		1,975			1,685			1,827
Goodwill		581			581			581
Repossessed assets		117			235			-
Bank Owned Life Insurance		5,168			5,134			5,067
Other Assets		8,474			9,219			6,781
Total Assets	$	561,762			504,717			515,691
Liabilities & Stockholders' Equity
Non-Interest-Bearing Deposits		150,677			131,481			149,769
Interest-Bearing Deposits		263,217			246,827			273,876
Brokered Deposits		39,051			19,727			10,040
Total Deposits		452,945			398,035			433,685
Bond Issue		14,000			14,000			14,000
Borrowed Money		35,000			35,000			15,169
Other Liabilities		16,665			15,229			13,590
Total Liabilities		518,610			462,264			476,444
Stockholders' equity		43,152			42,453			39,247
Total liabilities and stockholders' equity	$	561,762			504,717			515,691

		ES Bancshares, Inc. Consolidated Statement of Income (in thousands)
		Three Months Ended									Nine Months Ended
		September 30, 2022			June 30, 2022			March 31, 2022			September 30, 2022			September 30, 2021
		(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
Interest income
Loans	$	4,943			4,672			4,771		$	14,386			15,012
Securities		172			163			91			426			88
Other interest-earning assets		164			157			64			385			202
Total Interest Income		5,279			4,992			4,926			15,197			15,302
Interest expense
Deposits		643			347			294			1,284			1,072
Borrowings		394			274			271			939			1,041
Total Interest Expense		1,037			621			565			2,223			2,113
Net Interest Income		4,242			4,371			4,361			12,974			13,189
(Benefit)/Prov for Loan Losses		-			(65	)		(113	)		(178	)		590
Net Interest Income after (Benefit)/Prov for Loan Losses		4,242			4,436			4,474			13,152			12,599
Non-interest income
Deposit service charges		84			88			84			256			338
Loan fee income		83			76			141			300			221
Gain on Loan Sales		-			-			241			241			248
Gain on Branch Sale		-			1,782			-			1,782			-
Other		99			97			38			234			48
Total non-interest income		266			2,043			504			2,813			855
Non-interest expenses
Compensation and benefits		1,826			1,839			1,721			5,386			4,838
Occupancy and equipment		722			666			689			2,077			1,807
Data processing service fees		345			262			260			867			625
Marketing		(35	)		100			108			173			205
Professional fees		194			205			255			654			498
NYS & FDIC Assessments		14			73			82			169			227
Printing & Office Supplies		45			29			44			118			112
Insurance		53			32			38			123			100
Other		217			280			275			772			844
Total non-interest expense		3,381			3,486			3,472			10,339			9,256
Income prior to tax expense		1,127			2,993			1,506			5,626			4,198
Income taxes		255			639			326			1,220			912
Net Income	$	872			2,354			1,180		$	4,406			3,286

	For the Three Months Ended (dollars in thousands)
	September 30, 2022						June 30, 2022						September 30, 2021
	Avg Bal		Interest		Average Yield/ Cost		Avg Bal		Interest		Average Yield/Cost		Avg Bal		Interest		Average Yield/Cost
	Rolling 3 Mos.		Rolling 3 Mos.				Rolling 3 Mos.		Rolling 3 Mos.				Rolling 3 Mos.		Rolling 3 Mos.
Assets
Interest-earning assets:
Loans receivable	$	456,085	$	4,943	4.33	%	$	423,431	$	4,672	4.41	%	$	439,967	$	5,034	4.58	%
Investment securities		33,194		172	2.07	%		30,733		163	2.12	%		4,688		31	2.64	%
FF sold & interest-bearing deposits		27,240		114	1.68	%		66,337		122	0.73	%		47,495		29	0.24	%
Restricted investment in bank stock		1,691		50	11.78	%		2,512		35	5.61	%		2,676		35	5.22	%
Total interest-earning assets		518,209		5,279	4.07	%		523,014		4,992	3.82	%		494,826		5,129	4.15	%
Non-interest earning assets		19,798						22,566						17,595
Total assets	$	538,007					$	545,580					$	512,421
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest-bearing checking	$	32,736	$	34	0.41	%	$	33,728	$	34	0.40	%	$	27,577	$	30	0.43	%
Money market accounts		6,589		3	0.20	%		8,539		4	0.19	%		10,226		5	0.19	%
Savings accounts		134,132		180	0.53	%		171,387		133	0.31	%		179,428		143	0.32	%
Certificates of deposit		117,679		426	1.44	%		98,101		176	0.72	%		71,674		117	0.65	%
Total interest-bearing deposits		291,136		643	0.88	%		311,755		347	0.45	%		288,905		295	0.41	%
Borrowings		35,000		173	1.96	%		15,667		53	1.38	%		24,624		81	1.31	%
Subordinated debenture		13,655		221	6.42	%		13,644		221	6.41	%		13,613		221	6.43	%
Total interest-bearing liabilities		339,791		1,037	1.21	%		341,066		621	0.73	%		327,142		597	0.72	%
Non-interest-bearing demand deposits		140,464						148,869						136,648
Other liabilities		14,803						14,395						11,127
Total non-interest-bearing liabilities		155,267						163,264						147,775
Stockholders' equity		42,950						41,250						37,504
Total liabilities and stockholders' equity	$	538,007					$	545,580					$	512,421
Net interest income			$	4,242					$	4,371					$	4,532
Average interest rate spread					2.86	%					3.09	%					3.43	%
Net interest margin					3.27	%					3.34	%					3.63	%
Ratio of average interest-earning assets to average interest-bearing liabilities					152.51	%					153.35	%					151.26	%

Five Quarter Performance Ratio Highlights		Three Months Ended
		September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021
Income Statement
	Return on Average Assets		0.65	%		1.73	%		0.90	%		1.04	%		0.95	%
	Return on Average Equity		8.12	%		22.83	%		11.78	%		13.82	%		12.98	%
	Return on Average Tangible Equity		8.23	%		23.15	%		11.96	%		14.03	%		13.18	%
	Efficiency Ratio		60.97	%		52.56	%		68.27	%		62.17	%		64.53	%
Yields / Costs
	Average Yield - Interest Earning Assets		4.07	%		3.82	%		3.95	%		4.29	%		4.15	%
	Cost of Funds		1.21	%		0.73	%		0.69	%		0.71	%		0.72	%
	Net Interest Margin		3.27	%		3.34	%		3.47	%		3.80	%		3.63	%
Capital Ratios
	Equity / Assets		7.68	%		7.85	%		7.43	%		7.61	%		7.52	%
	Tangible Equity / Assets		7.59	%		7.75	%		7.33	%		7.51	%		7.42	%
	Tier I leverage ratio (a)		10.3	%		9.9	%		10.0	%		9.9	%		9.6	%
	Common equity Tier I capital ratio (a)		14.7	%		15.8	%		15.5	%		15.5	%		15.6	%
	Tier 1 Risk-based capital ratio (a)		14.7	%		15.8	%		15.5	%		15.5	%		15.6	%
	Total Risk-based capital ratio (a)		16.0	%		17.0	%		16.8	%		16.7	%		16.9	%
Stock Valuation
	Book Value	$	6.40		$	6.37		$	6.04		$	5.90		$	5.71
	Tangible Book Value	$	6.32		$	6.28		$	5.96		$	5.82		$	5.62
	Diluted EPS	$	0.13		$	0.35		$	0.18		$	0.20		$	0.18
	Shares Outstanding (b)		6,666			6,663			6,663			6,648			6,648
Key Ratios
	ALLL / Total Loans		1.20	%		1.37	%		1.38	%		1.37	%		1.33	%
	Non-Performing Loans / Total Loans		0.34	%		0.38	%		0.42	%		0.45	%		0.43	%
	Non-Performing Assets / Total Assets		0.31	%		0.37	%		0.39	%		0.38	%		0.39	%
	(a) Ratios at Bank level (b) Shares outstanding presented in thousands

 

FAQ

What were the financial results of ES Bancshares for Q3 2022?

In Q3 2022, ES Bancshares reported a net income of $872 thousand, or $0.13 per diluted share.

How did ES Bancshares' net interest income perform in Q3 2022?

Net interest income for Q3 2022 was $4.2 million, down from $4.37 million in Q2 2022.

What was the asset growth reported by ES Bancshares in Q3 2022?

ES Bancshares reported an asset growth of 11.3%, with total assets reaching $561.8 million.

What impact did the Newburgh branch sale have on ES Bancshares' financials?

The sale of the Newburgh branch contributed to a significant drop in non-interest income, which fell to $266 thousand.

What is the return on average equity for ES Bancshares in Q3 2022?

The return on average equity for Q3 2022 was 8.12%.