ES Bancshares, Inc. Announces First Quarter 2024 Results; Reports Organic Deposit Inflows, Reduces Wholesale Funding

 | Source: ES Bancshares, Inc. ES Bancshares, Inc.

STATEN ISLAND, N.Y., April 30, 2024 (GLOBE NEWSWIRE) -- ES Bancshares, Inc. (OTCQX: ESBS) (the “Company”) the holding company for Empire State Bank, (the “Bank”) today reported a net loss of $103 thousand, or $0.02 per diluted common share, for the quarter ended March 31, 2024 compared to net income of $84 thousand or $0.01 per diluted common share for the quarter ended December 31, 2023.

              
Key Quarterly Financial Data 2024 Highlights
Performance Metrics1Q24  4Q23  1Q23  •Non-interest expenses decreased $295 thousand or 8% quarter over quarter.

•Average deposits grew 3.4%, while the Company’s average loan balance remained stable quarter over quarter.

• Net interest margin for the first quarter of 2.12% narrowed from 2.28% as increases to the rates paid on interest-bearing liabilities outpaced the rise in yields of interest-earning assets

•Non-Performing Loans / Total Loans and the Company’s ratio of Non-Performing Assets / Total Assets remains favorable at 0.24% and 0.21% respectively.
(Loss) return on average assets (%) (0.07)  0.05   0.09  
(Loss) return on average equity (%) (0.90)  0.73   1.17  
(Loss) return on average tangible equity (%) (0.91)  0.74   1.18  
Net interest margin (%) 2.12   2.28   2.67  
       
Income Statement (a)1Q24  4Q23  1Q23  
Net interest income$3,203  $3,454  $3,977  
Non-interest income$215  $322  $256  
Net (loss) income$(103) $84  $133  
(Loss) earnings per diluted common share$(0.02) $0.01  $0.02  
       
Balance Sheet (a)1Q24  4Q23  1Q23  
Average total loans$567,526  $569,515  $555,919  
Average total deposits$486,323  $470,394  $487,816  
Book value per share$6.75  $6.83  $6.79  
Tangible book value per share$6.67  $6.74  $6.71  
(a) In thousands except for per share amounts
 

“Despite the continued challenging interest environment, through the Bank’s core product offerings, the Company was able to grow average deposits during the first three months of 2024. The deposit inflows and asset amortization were partially utilized to repay wholesale funding, with borrowed money down 21% and brokered deposit funding down 8% from December 31, 2023. This funding management is expected to continue as the Company aggressively looks to reduce its cost of funds,” said Phil Guarnieri, Director, and Chief Executive Officer of ES Bancshares.

Mr. Guarnieri also stated, “In addition to maintaining strong capital and asset quality ratios quarter over quarter, the Company’s previously announced cost-cutting initiative has gotten off to a strong start, with expenses down $295 thousand in linked quarters. These cost savings helped offset some of the pressure seen during the quarter on net interest income. Further, during the quarter multiple directors exercised options expanding the internal ownership while supporting ESBS during this tenuous economic time.”

Selected Balance Sheet Information:

March 31, 2024 vs. December 31, 2023

As of March 31, 2024, total assets were $628.6 million, a decrease of $10.1 million, or 1.6%, as compared to total assets of $638.7 million on December 31, 2023. The decrease can be attributed to less cash held quarter over quarter, as during the first quarter of 2024 the funds were utilized to repay Federal Home Loan Bank (FHLB) borrowings.

Loans receivable, net of Allowance for Credit Losses on Loans totaled $560.4 million, a decrease of $3.5 million or 0.6% from December 31, 2023. As of March 31, 2024, the Allowance for Credit Losses on Loans as a percentage of gross loans was 0.89%.

Nonperforming assets, which includes nonaccrual loans and foreclosed real estate were $1.3 million or 0.21% of total assets, as of March 31, 2024, decreasing from $1.4 million or 0.22% of total assets at December 31, 2023. The ratio of nonaccrual loans to loans receivable was 0.24% and 0.22%, as of March 31, 2024, and December 31, 2023, respectively.

Total liabilities decreased $10.4 million to $582.5 from $592.9 million. The majority of the decrease can be attributed to a 21% decrease quarter over quarter in FHLB borrowings, partially offset by core deposit inflows. The growth in deposits was driven by an increase in interest-bearing non-maturity deposit accounts.

As of March 31, 2024, the Bank's Tier 1 capital leverage ratio, common equity tier 1 capital ratio, Tier 1 capital ratio and total capital ratios were 9.52%, 13.58%, 13.58% and 14.83%, respectively, all in excess of the ratios required to be deemed "well-capitalized." During the first quarter 2024 the Company did not repurchase shares under its stock repurchase program. Book value per common share was $6.75 at March 31, 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 $6.67 at March 31, 2024 compared to $6.74 at December 31, 2023. The majority of the decrease can be attributed to exercises of 120,000 options by multiple directors during the quarter.

Financial Performance Overview:

Three Months Ended March 31, 2024 vs. December 31, 2023

For the three months ended March 31, 2024, the Company saw a net loss totaling $103 thousand compared to net income of $84 thousand for the three months ended December 31, 2023. The decrease can be attributed to a softer margin quarter over quarter.

Net interest income for the three months ended March 31, 2024, decreased $251 thousand, to $3.2 million from $3.5 million at three months ended December 31, 2023. The Company’s net interest margin compacted, decreasing by sixteen basis points to 2.12% for the three months ended March 31, 2024, as compared to 2.28% for the three months ended December 31, 2023. The contraction can be attributed to increased costs for the Bank’s retail deposits, mainly within Savings accounts and partially offset by the decrease in the average balance of FHLB borrowings.

There was a provision for credit losses of $39 thousand taken back in for the three months ended March 31, 2024, compared to $83 thousand reversal of credit losses for the three months ended December 31, 2023.

Non-interest income decreased $107 thousand, to $215 thousand for the three months ended March 31, 2024, compared with non-interest income of $322 thousand for the three months ended December 31, 2023. The decrease can be attributed to less loan charges and fees earned quarter over quarter.

Non-interest expenses totaled $3.5 million for the three months ended December 31, 2023, compared to $3.8 million for the three months ended December 31, 2023, or a decrease of 7.9%. The decrease in non-interest expense can be attributed to initiatives taking effect from the cost-cutting program previously announced.

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)
  March 31,December 31, March 31,
202420232023
  |----(unaudited)----|  |----(unaudited)----|
Assets     
Cash and cash equivalents$27,392 32,728  57,827 
Securities, net 13,013 15,220  15,629 
Loans receivable, net:     
Real estate mortgage loans 548,462 551,124  521,696 
Commercial and Lines of Credit 12,359 13,301  17,018 
Home Equity and Consumer Loans397 349  358 
Deferred costs 4,245 4,233  4,213 
Allowance for Loan Credit Losses(5,054)(5,086) (4,882)
Total loans receivable, net 560,410 563,920  538,403 
Accrued interest receivable 2,652 2,625  2,338 
Investment in restricted stock, at cost 4,509 5,191  5,368 
Goodwill 581 581  581 
Bank premises and equipment, net 5,381 5,600  6,037 
Repossessed assets - -  164 
Right of use lease assets 6,202 6,415  6,666 
Bank Owned Life Insurance 5,376 5,341  5,236 
Other Assets 3,118 1,129  1,178 
Total Assets$628,634 638,750  639,427 
      
Liabilities & Stockholders' Equity     
Non-Interest-Bearing Deposits 100,880 109,065  135,680 
Interest-Bearing Deposits 343,311 328,479  311,800 
Brokered Deposits 52,000 56,581  39,504 
Total Deposits 496,191 494,125  486,984 
Bond Issue, net of costs 13,720 13,708  13,678 
Borrowed Money 55,628 70,805  78,000 
Lease Liability 6,464 6,672  6,893 
Other Liabilities 16,942 7,578  9,061 
Total Liabilities 582,480 592,888  594,616 
Stockholders' equity 46,154 45,862  44,811 
Total liabilities and stockholders' equity$628,634 638,750  639,427 
         


  
 ES Bancshares, Inc.
 Consolidated Statements of Income
 (in thousands)
     
 Three Months Ended
 March 31, 2024December 31, 2023 March 31, 2023
 |--------------(unaudited)--------------|
Interest income    
Loans$7,208 $7,059  $6,064 
Securities 115  110   113 
Other interest-earning assets 263  278   367 
Total Interest Income 7,586  7,447   6,544 
Interest expense    
Deposits 3,585  2,945   1,616 
Borrowings 798  1,048   768 
Total Interest Expense 4,383  3,993   2,384 
Net Interest Income 3,203  3,454   4,160 
Prov for(Reversal of) Credit Losses 39  (83)  (17)
Net Interest Income after Prov for (Revrsl) Credit Losses 3,164  3,537   4,177 
Non-interest income    
Service charges and fees 172  254   137 
Gain on loan sales 1  30   - 
Other 42  38   37 
Total non-interest income 215  322   174 
Non-interest expenses    
Compensation and benefits 1,721  1,745   1,855 
Occupancy and equipment 668  646   641 
Data processing service fees 326  357   302 
Professional fees 181  357   219 
FDIC & NYS Banking Assessments 97  88   55 
Advertising 75  101   99 
Insurance 50  51   45 
Other 337  405   356 
Total non-interest expense 3,455  3,750   3,572 
(Loss) income prior to tax expense (76) 109   778 
Income taxes 27  25   179 
Net (Loss) income$(103)$84  $599 
     


          
 ES Bancshares, Inc.
 Average Balance Sheet Data
 For the Three Months Ended (dollars in thousands)
 March 31, 2024December 31, 2023March 31, 2023
 Avg BalInterestAverageAvg BalInterestAverageAvg BalInterestAverage
 RollingRollingRollingRollingRollingRolling
Assets3 Mos.3 Mos.Yield/Cost3 Mos.3 Mos.Yield/Cost3 Mos.3 Mos.Yield/Cost
Interest-earning assets:         
Loans receivable$567,526 $7,208 5.08%$569,515 $7,059 4.96%$529,041 $6,064 4.58%
Investment securities 15,814  115 2.90% 15,957  110 2.75% 15,979  113 2.83%
Other interest-earning assets 19,828  263 5.25% 20,128  278 5.40% 31,460  367 4.67%
Total interest-earning assets 603,168  7,586 5.03% 605,600  7,447 4.92% 576,480  6,544 4.54%
Non-interest earning assets 16,812    16,840    17,355   
Total assets$619,980   $622,440   $593,835   
Liabilities and Stockholders' Equity         
Interest-bearing liabilities:         
Interest-bearing checking$30,943 $26 0.34%$25,368 $23 0.36%$30,193 $34 0.46%
Savings accounts 153,609  1,413 3.69% 123,641  884 2.84% 116,789  323 1.12%
Certificates of deposit 201,926  2,146 4.26% 207,091  2,037 3.90% 190,984  1,259 2.67%
Total interest-bearing deposits 386,479  3,585 3.72% 356,101  2,945 3.28% 337,966  1,616 1.94%
Borrowings 59,541  576 3.88% 76,844  827 4.27% 55,415  547 4.00%
Subordinated debenture 13,714  221 6.47% 13,705  221 6.40% 13,672  221 6.56%
Total interest-bearing liabilities 459,734  4,383 3.82% 446,649  3,993 3.55% 407,053  2,384 2.38%
Non-interest-bearing demand deposits 99,844    114,293    127,843   
Other liabilities 14,396    15,803    14,617   
Total non-interest-bearing liabilities 114,240    130,096    142,460   
Stockholders' equity 46,005    45,695    44,322   
Total liabilities and stockholders' equity$619,980   $622,440   $593,835   
Net interest income $3,203   $3,454   $4,160  
Average interest rate spread  1.21%  1.37%  2.17%
Net interest margin  2.12%  2.28%  2.89%
          
          


       
Five Quarter Performance Ratio HighlightsThree Months Ended
March 31, 2024December 31, 2023September 30, 2023June 30, 2023March 31, 2023
Income Statement (%)     
 (Loss) return on Average Assets  (0.07) 0.05  0.09  0.42  0.40 
 (Loss) return on Average Equity  (0.90) 0.73  1.17  5.81  5.40 
 (Loss) return on Average Tangible Equity  (0.91) 0.74  1.18  5.89  5.47 
 Efficiency Ratio 101.08  99.31  93.89  80.86  82.42 
Yields / Costs (%)     
 Average Yield - Interest Earning Assets 5.03  4.92  4.79  4.70  4.54 
 Cost of Funds 3.82  3.55  2.93  2.53  2.38 
 Net Interest Margin 2.12  2.28  2.67  2.86  2.89 
Capital Ratios (%)     
 Equity / Assets 7.34  7.18  7.24  7.24  7.01 
 Tangible Equity / Assets 7.26  7.09  7.15  7.15  6.92 
 Tier I leverage ratio (a) 9.52  9.45  9.54  9.40  9.65 
 Common equity Tier I capital ratio (a) 13.63  13.60  13.47  13.67  13.87 
 Tier 1 Risk-based capital ratio (a) 13.63  13.60  13.47  13.67  13.87 
 Total Risk-based capital ratio (a) 14.88  14.85  14.63  14.92  15.12 
Stock Valuation     
 Book Value$6.75 $6.83 $6.79 $6.77 $6.67 
 Tangible Book Value$6.67 $6.74 $6.71 $6.68 $6.59 
 Shares Outstanding (b) 6,834  6,714  6,714  6,714  6,714 
Asset Quality (%)     
 ACL / Total Loans 0.89  0.89  0.89  0.89  0.90 
 Non Performing Loans / Total Loans 0.24  0.22  0.25  0.25  0.17 
 Non Performing Assets / Total Assets 0.21  0.22  0.25  0.25  0.19 
       
 (a) Ratios at Bank level    (b) Shares information presented in thousands