ES Bancshares, Inc. Reports a 70% Increase in Earnings to $414 Thousand, or $0.10 per Common Share for the Quarter Ended March 31, 2019

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

ES Bancshares, Inc. Reports a 70% Increase in Earnings to $414 Thousand, or $0.10 per Common Share for the Quarter Ended March 31, 2019, as Compared to $243 Thousand or $0.06 per Common Share for the Quarter Ended March 31, 2018

March 31, 2019 Tangible Book Value per Share Increases to $5.25 Representing a 5% Increase From the Comparable Period in 2018

NEWBURGH, N.Y., May 08, 2019 (GLOBE NEWSWIRE) -- ES Bancshares, Inc. (OTC: ESBS) (the “Company”) the holding company for Empire State Bank, (the “Bank”) today announced a $171 thousand increase in net income to $414 thousand, or $0.10 per common share for the quarter ended March 31, 2019, as compared to $243 thousand, or $0.06 per common share for the quarter ended March 31, 2018. The improvement was largely driven by a $542 thousand, or 23.1% increase in net interest income, and a $220 thousand decrease in the provision for loan losses, offset by a $497 thousand increase in operating expenses. The increase in net interest income was largely due to an $80.0 million or 28.7% increase in loans receivable to $359.1 million as of March 31, 2019 compared to $279.1 million as of March 31, 2018. 

Chief Executive Officer Philip Guarnieri stated that, “Under a new Executive Management Team in 2016 we initiated our new strategic plan. We have executed, and in the first quarter of 2019 we are seeing the results of our efforts.”

President and Chief Operating Officer Thomas Sperzel commented that, “The earnings growth reflects the positive impact that the Bank’s growth strategy has had on operating performance.”

FINANCIAL HIGHLIGHTS

  • Net income of $414 thousand for the quarter ended March 31, 2019 compared to $243 thousand for the comparable period in 2018, representing an increase of $171 thousand, or 70%.
  • Net income before taxes of $546 thousand for the quarter ended March 31, 2019 compared to $424 thousand for the comparable period in 2018, representing an increase of $122 thousand, or 29%.
  • Net interest income of $2.89 million for the quarter ended March 31, 2019 compared to $2.34 million for the comparable period in 2018, representing an increase of $542 thousand, or 23%
  • Net margin of 2.95% for the quarter ended March 31, 2019 compared to 3.25% for the comparable period in 2018, representing a decrease of 30 bps, or 9%
  • Loans, net of $355.7 million for the quarter ended March 31, 2019 compared to $275.8 million for the comparable period in 2018, representing an increase of $79.9 million, or 29%
  • Total deposits of $315.4 million for the quarter ended March 31, 2019, compared to $229.3 million for the comparable period in 2018, representing an increase of $86.1 million, or 38%

Comparison of Financial Condition at March 31, 2019 and December 31, 2018

Total assets at March 31, 2019, amounted to $417.0 million, representing an increase of $14.1 million, or 3.5%, from $402.9 million at December 31, 2018. The increase in assets consisted primarily of increases in cash and cash equivalents of $6.9 million and in total loans receivable, net of $5.7 million

Loans receivable, net, increased $5.7 million, or 1.6%, to $355.7 million at March 31, 2019 from $350.0 million at December 31, 2018. Residential real estate mortgage loans increased $19.5 million, or 14.8%, from $132.3 million to $151.8 million. Home equity and consumer loans increased $68 thousand to $3.7 million at March 31, 2019. Commercial loans, including taxi medallion and US government agency guaranteed loans, and commercial lines of credit decreased $1.1 million, or 4.6%, from $24.8 million to $23.7 million. Commercial and multifamily real estate loans decreased $12.8 million, or 6.7%, from $190.4 million to $177.6 million. This decrease was largely due to the sale of $19.2 million of commercial real estate loans during the quarter ended March 31, 2019. Management continues to emphasize the origination of high quality loans for retention in the loan portfolio.

Deposits increased by $18.2 million to $315.4 million at March 31, 2019 from $297.2 million at December 31, 2018. Interest bearing deposits increased $28.5 million while non-interest bearing deposits decreased $10.4 million. Over this three month period the net deposit activity consisted mainly of increase in certificates of deposit of $17.6 million, savings accounts of $13.5 million, and in money market accounts of $35 thousand, partially offset by decreases in DDA and NOW accounts of $13.0 million.

Borrowings decreased by $8.0 million to $69.5 million at March 31, 2019 from $77.5 million at December 31, 2018.

Stockholders’ equity increased by $372 thousand to $22.2 million at March 31, 2019, from $21.8 million at December 31, 2018. The increase was primarily attributable to a $414 thousand increase in retained earnings, partially offset by a decrease additional paid in capital of $72 thousand. The ratio of stockholders’ equity to total assets decreased to 5.3% at March 31, 2019 from 5.4% at December 31, 2018. Book value per share increased to $5.39 at March 31, 2019, from $5.30 at December 31, 2018.



ES BANCSHARES, INC.           
STATEMENTS OF CONDITION          
(In Thousands)           
(Unaudited)           
            
            
 3/31/2019  12/31/2018  9/30/2018  6/30/2018 
ASSETS           
Cash and cash equivalents:$  26,796  $  19,924  $  17,903  $  17,295 
            
Securities - Available For Sale  5,796    5,833    6,085    6,200 
Securities - Held To Maturity  13,769    14,337    11,895    12,416 
Total Securities  19,565    20,170    17,980    18,616 
            
Loans  359,098    353,362    321,596    297,018 
Less:  allowance for loan losses  (3,443)   (3,358)   (2,833)   (3,561)
Loans, net   355,655    350,004    318,763    293,457 
            
Premises and equipment, net  4,670    4,549    4,154    3,157 
Other assets  10,351    8,259    7,205    7,018 
Total Assets$  417,037  $  402,906  $  366,005  $  339,543 
            
LIABILITIES AND SHAREHOLDERS' EQUITY        
Deposits:           
Demand and NOW deposit accounts$  70,566  $  83,516  $  93,257  $  92,957 
Money market accounts  11,424    11,389    26,009    12,223 
Savings accounts  94,285    80,832    70,937    69,938 
Certificates of deposit  139,161    121,524    100,855    92,798 
Total Deposits  315,436    297,261    291,058    267,916 
            
Borrowings  69,500    77,500    49,500    47,500 
Other Liabilities  9,882    6,298    5,264    4,130 
Total Liabilities  394,818    381,059    345,822    319,546 
            
Total Shareholders' Equity  22,219    21,847    20,183    19,997 
Total Liabilities and Shareholders' Equity$  417,037  $  402,906  $  366,005  $  339,543 


Results of Operations for the Quarters Ended March 31, 2019 and March 31, 2018

General. For the quarter ended March 31, 2019, the Company recognized net income of $414 thousand, or $0.10 per basic and diluted share, as compared to a net income of $243 thousand, or $0.06 per basic and diluted share, for the quarter ended March 31, 2018.

Interest Income. Interest income increased to $4.43 million for the quarter ended March 31, 2019 compared to $3.12 million for the quarter ended March 31, 2018. An increase of $1.31 million was primarily attributable to a $1.22 thousand increase in loan interest income and partially offset by a decrease in interest income from securities of $15 thousand.

The average balance of the loan portfolio increased to $363.1 million for the three months ended March 31, 2019 from $266.9 million for the three months ended March 31, 2018 while the average yield increased from 4.43% for the quarter ended March 31, 2018 to 4.60% for the quarter ended March 31, 2019. The average balance and yield of the Bank’s investment securities for the quarter ended March 31, 2019 was $20.0 million and 3.19%, respectively, as compared to an average balance of $10.4 million and a yield of 3.01% for the comparable quarter ended one-year earlier.

Interest Expense. Total interest expense for the quarter ended March 31, 2019 increased by $769 thousand to $1.54 million from $771 thousand for the prior year period. Average balances of total interest-bearing liabilities increased $101.5 million to $306.8 million for the quarter ended March 31, 2019, from $205.3 million for the quarter ended March 31, 2018. The average cost for those liabilities increased to 2.04% from 1.52% for the same respective period one year earlier reflecting higher market interest rates in the current period.

The average balances of the Bank’s certificates of deposit portfolio increased to $122.3 million at an average cost of 2.16% over the quarter ended March 31, 2019, from $65.2 million at an average cost of 1.65% over the same quarter ended one-year earlier. Regular savings account average balances increased to $84.9 million, or $18.9 million, from $66.0 million for the quarter ended March 31, 2018. These had an average cost of 1.66% for the quarter ended March 31, 2019 and a cost of 1.12% for the quarter ended March 31, 2018. Increases in rates paid on savings and certificates of deposit resulted from increases in market rates during the period.

Average money market account balances decreased $2.7 million to $11.5 million at an average cost of 0.47% for the quarter ended March 31, 2019, from $14.1 million at an average cost of 0.41% for the quarter ended March 31, 2018. 

For the quarter ended March 31, 2019, the average balance of the Company’s borrowed funds was $75.1 million with an average cost of 2.77%, as compared to $48.2 million and an average cost of 2.48% for the quarter ended March 31, 2018.  The Bank has utilized Federal Home Loan Bank Advances for liquidity needs in the current period.

Net Interest Income. Net interest income was approximately $2.89 million for the quarter ended March 31, 2019, as compared to $2.34 million for the same quarter in the prior year. Our average interest rate spread decreased to 2.48% for the quarter ended March 31, 2019, from 2.79% for the quarter ended March 31, 2018, while our net interest margin decreased to 2.95% from 3.25%, over the same respective periods. These decreases were primarily attributable to the increased cost of savings and certificate of deposit accounts, and the overall increased balance of interest bearing liabilities.

Provision for Loan Losses. For the three months ended March 31, 2019, management recorded $85 thousand provision for loan losses. Management records loan loss provisions based on historical loss experience and other qualitative factors. Comparatively, management recorded a provision for loan losses for the quarter ended March 31, 2018 of $305 thousand. The decrease in the provision for loan losses was largely attributable to the reduced need for additional reserves on the taxi medallion loan portfolio.

Management records loan loss provision to reflect the overall growth in the portfolio as well as the evaluated risk in the portfolio. The provision recorded during the period was done so in conjunction with the Bank’s allowance for loan loss methodology. It is calculated using a historical charge-off basis as well as other qualitative factors which reflect management’s overall perceived risk in the portfolio.

Non-Interest Income. Non-interest income for the quarter ended March 31, 2019 decreased $143 thousand to $152 thousand as compared to $295 thousand for the quarter ended March 31, 2018. The decrease was primarily attributable to the net gain on loan sales of $130 thousand in the 2018 period that did not occur in the 2019 period.

Non-Interest Expense. Non-interest expense for the quarter ended March 31, 2019 increased $497 thousand when compared to the same quarter in 2018. The increases are primarily attributable to net increases in compensation and benefits of $284 thousand and in occupancy and equipment of $124 thousand associated with the opening of two new branch offices in the third quarter of 2018.

Income Tax Expense. Income tax expense was $132 thousand for the quarter ended March 31, 2019 as compared to $181 thousand for the quarter ended March 31, 2018. The decrease was largely due to the income tax consequences of a larger provision for loan losses in 2018.


ES BANCSHARES, INC.       
STATEMENTS OF INCOME       
(In Thousands)       
(Unaudited)       
 Quarter to Date Quarter to Date Year to Date Year to Date
 3/31/2019 3/31/2018 3/31/2019 3/31/2018
        
Total interest income$  4,426 $  3,115 $  4,426 $  3,115
Total interest expense  1,540   771   1,540   771
Net interest income2,886 2,344 2,886 2,344
Provision for loan losses85 305 85 305
        
Net interest income after       
provision for loan loss2,801 2,039 2,801 2,039
        
Total non-interest income152 295 152 295
        
Compensation and benefits1,323 1,039 1,323 1,039
Occupancy and equipment384 260 384 260
Professional fees148 133 148 133
Data processing service fees148 100 148 100
NYS Banking & FDIC Assessment102 55 102 55
Other operating expenses302 323 302 323
Total non-interest expense2,407 1,910 2,407 1,910
        
Net Income Before Taxes546 424 546 424
        
Provision for income taxes132 181 132 181
Net income414 243 414 243

 


 Quarter Ended Quarter Ended Quarter Ended Quarter Ended
 3/31/2019 12/31/2018 9/30/2018 6/30/2018
        
Total interest income$  4,426 $  4,426 $  3,808 $  3,411
Total interest expense  1,540   1,270   1,073   1,011
Net interest income2,886 3,156 2,735 2,400
Provision for loan losses85 525 710 325
        
Net interest income after       
provision for loan loss2,801 2,631 2,025 2,075
        
Other non-interest income152 338 258 299
        
Compensation and benefits1,323 1,400 1,280 1,178
Occupancy and equipment384 343 311 280
Professional fees148 92 47 130
Data processing service fees148 138 118 103
NYS Banking & FDIC Assessment102 96 91 64
Other operating expenses302 467 382 379
Total non-interest expense2,407 2,536 2,229 2,134
        
Net Income Before Taxes546 433 54 240
        
Provision for income taxes132 72 (117
)136
Net income414 361 171 104
        
Basic Earnings per Share$  0.10 $  0.11 $  0.03 $  0.03

 


ES BANCSHARES, INC.           
OTHER FINANCIAL MEASURES          
(In Thousands)           
(Unaudited)           
 Quarter Ended  Quarter Ended  Quarter Ended  Quarter Ended 
 3/31/2019  12/31/2018  9/30/2018  6/30/2018 
Asset Quality           
Allowance for Loan Losses$  3,443  $  3,358  $  2,833  $  3,561 
Nonperforming Loans / Total Loans0.7% 0.7% 1.0% 0.9%
Nonperforming Assets / Total Assets0.6% 0.7% 1.0% 0.9%
ALLL / Nonperforming Loans144.1% 143.3% 84.7% 137.8%
ALLL / Loans, Gross1.0% 1.0% 0.9% 1.2%
            
Capital           
Shares Issue - Basic4,120,613  4,120,613  3,868,084  3,868,084 
Book Value per Share$  5.39  $  5.30  $  5.22  $  5.17 
Tangible Book Value per Share$  5.25  $  5.15  $  5.07  $  5.02 
Tier 1 Capital Ratio7.33% 7.59% 7.83% 8.21%
Tier 1 Risk Based Capital Ratio10.29% 9.99% 10.24% 10.84%
Total Risk Based Capital Ratio11.50% 11.16% 11.31% 12.09%
            
            
 Quarter Ended  Quarter Ended  Quarter Ended  Quarter Ended 
 3/31/2019  12/31/2018  9/30/2018  6/30/2018 
Profitability           
Yield on Average Earning Assets4.52% 4.78% 4.49% 4.24%
Cost of Avg. Interest Bearing Liabilities2.04% 1.84% 1.79% 1.76%
Net Spread2.48% 2.94% 2.70% 2.47%
Net Margin2.95% 3.41% 3.22% 2.98%

    

This release may contain certain forward-looking statements within the 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 Empire State Bank’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.

Contacts:
Philip Guarnieri, CEO
Thomas Sperzel, President & COO
Frank J. Gleeson, SVP & CFO
(845) 451-7800