NEWBURGH, N.Y., July 25, 2019 (GLOBE NEWSWIRE) -- ES Bancshares, Inc. (OTC: ESBS) (the “Company”) the holding company for Empire State Bank, (the “Bank”) today announced a $314 thousand increase in net income to $418 thousand, or $0.10 per common share for the quarter ended June 30, 2019, as compared to $104 thousand, or $0.03 per common share for the quarter ended June 30, 2018. The improvement was largely driven by a $396 thousand, or 16.5% increase in net interest income, and a $230 thousand decrease in the provision for loan losses, offset by a $314 thousand increase in operating expenses.
Net income for the six months ended June 30, 2019 increased $485 thousand to $832 thousand, or $0.20 per share as compared to $347 thousand, or $0.09 per common share for the six months ended June 30, 2018. The improvement was largely driven by a $938 thousand, or 19.8% increase in net interest income, and a $450 thousand decrease in the provision for loan losses, offset by a $811 thousand increase in operating expenses.
The increases in net interest income for the three and six months periods ended June 30, 2019 was largely due to a $67.0 million or 22.6% increase in loans receivable to $364.1 million as of June 30, 2019 compared to $297.0 million as of June 30, 2018.
Chief Executive Officer Philip Guarnieri stated that, “We are very pleased with the Bank’s success over the past year. The loan portfolio has performed well in terms of growth and asset quality.”
President and Chief Operating Officer Thomas Sperzel commented that, “The Bank’s net interest income mirrors the growth of the loan portfolio and the contribution of the two new branches opened in 2018.”
FINANCIAL HIGHLIGHTS
- Net income of $418 thousand for the quarter ended June 30, 2019 compared to $104 thousand for the comparable period in 2018, representing an increase of $314 thousand, or 302%.
- Net income of $832 thousand for the year to date ended June 30, 2019 compared to $347 thousand for the comparable period in 2018.
- Net income before taxes of $552 thousand for the quarter ended June 30, 2019 compared to $240 thousand for the comparable period in 2018, representing an increase of $312 thousand, or 130%.
- Net income before taxes of $1.1 million for the year to date ended June 30, 2019 compared to $664 thousand for the comparable period in 2018, representing an increase of $434 thousand, or 65%.
- Net interest income of $2.80 million for the quarter ended June 30, 2019 compared to $2.40 million for the comparable period in 2018, representing an increase of $396 thousand, or 17%
- Net margin of 2.90% for the quarter ended June 30, 2019 compared to 2.98% for the comparable period in 2018, representing a decrease of 8 bps, or 3%.
Comparison of Financial Condition at June 30, 2019 and December 31, 2018
Total assets at June 30, 2019, amounted to $418.8 million, representing an increase of $15.9 million, or 3.9%, from $402.9 million at December 31, 2018. The increase in assets consisted primarily of increases in total loans receivable, net of $10.5 million.
Loans receivable, net, increased $10.5 million, or 3.0%, to $360.5 million at June 30, 2019 from $350.0 million at December 31, 2018. Residential real estate mortgage loans increased $24.7 million, or 18.6%, from $132.2 million to $156.9 million. Home equity and consumer loans decreased $544 thousand to $3.0 million at June 30, 2019. Commercial loans and commercial lines of credit decreased $3.4 million, or 13.7%, from $24.8 million to $21.4 million. Commercial and multifamily real estate loans decreased $10.2 million, or 5.4%, from $190.4 million to $180.2 million. Management continues to emphasize the origination of high quality loans for retention in the loan portfolio.
Deposits increased by $23.7 million to $321.0 million at June 30, 2019 from $297.3 million at December 31, 2018. Interest bearing deposits increased $33.8 million and non-interest bearing deposits decreased $10.0 million. Over this six month period the net deposit activity consisted mainly of increases in certificates of deposit of $24.4 million, savings accounts of $7.7 million, and in money market accounts of $2.1 million partially offset by a decrease in DDA and NOW accounts of $10.5 million.
Borrowings decreased by $11.0 million to $66.5 million at June 30, 2019 from $77.5 million at December 31, 2018.
Stockholders’ equity increased by $824 thousand to $22.7 million at June 30, 2019, from $21.8 million at December 31, 2018. The increase was primarily attributable to a $832 thousand increase in retained earnings, partially offset by a decrease in additional paid in capital of $62 thousand. The ratio of stockholders’ equity to total assets decreased to 5.41% at June 30, 2019 from 5.42% at December 31, 2018. Book value per share increased to $5.50 at June 30, 2019, from $5.30 at December 31, 2018.
| ES BANCSHARES, INC. | |||||||||||||||
| STATEMENTS OF CONDITION | |||||||||||||||
| (In Thousands) | |||||||||||||||
| (Unaudited) | |||||||||||||||
| 6/30/2019 | 3/31/2019 | 12/31/2018 | 9/30/2018 | ||||||||||||
| ASSETS | |||||||||||||||
| Cash and cash equivalents: | $ | 25,823 | $ | 26,796 | $ | 19,924 | $ | 17,903 | |||||||
| Securities - Available For Sale | 3,627 | 5,796 | 5,833 | 6,085 | |||||||||||
| Securities - Held To Maturity | 13,011 | 13,769 | 14,337 | 11,895 | |||||||||||
| Total Securities | 16,638 | 19,565 | 20,170 | 17,980 | |||||||||||
| Loans | 364,052 | 359,098 | 353,362 | 321,596 | |||||||||||
| Less: allowance for loan losses | (3,538 | ) | (3,443 | ) | (3,358 | ) | (2,833 | ) | |||||||
| Loans, net | 360,514 | 355,655 | 350,004 | 318,763 | |||||||||||
| Premises and equipment, net | 4,764 | 4,670 | 4,549 | 4,154 | |||||||||||
| Other assets | 11,038 | 10,351 | 8,259 | 7,205 | |||||||||||
| Total Assets | $ | 418,777 | $ | 417,037 | $ | 402,906 | $ | 366,005 | |||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||
| Deposits: | |||||||||||||||
| Demand and NOW deposit accounts | $ | 73,043 | $ | 70,566 | $ | 83,516 | $ | 93,257 | |||||||
| Money market accounts | 13,504 | 11,424 | 11,389 | 26,009 | |||||||||||
| Savings accounts | 88,485 | 94,285 | 80,832 | 70,937 | |||||||||||
| Certificates of deposit | 145,939 | 139,161 | 121,524 | 100,855 | |||||||||||
| Total Deposits | 320,971 | 315,436 | 297,261 | 291,058 | |||||||||||
| Borrowings | 66,500 | 69,500 | 77,500 | 49,500 | |||||||||||
| Other Liabilities | 8,635 | 9,882 | 6,298 | 5,264 | |||||||||||
| Total Liabilities | 396,106 | 394,818 | 381,059 | 345,822 | |||||||||||
| Total Shareholders' Equity | 22,671 | 22,219 | 21,847 | 20,183 | |||||||||||
| Total Liabilities and Shareholders' Equity | $ | 418,777 | $ | 417,037 | $ | 402,906 | $ | 366,005 | |||||||
Results of Operations for the Quarters Ended June 30, 2019 and June 30, 2018
General. For the quarter ended June 30, 2019, the Company recognized net income of $418 thousand, or $0.10 per basic and diluted share, as compared to net income of $104 thousand, or $0.03 per basic and diluted share, for the quarter ended June 30, 2018.
Interest Income. Interest income increased to $4.41 million for the quarter ended June 30, 2019 compared to $3.41 million for the quarter ended June 30, 2018. This increase of $1.00 million or 29.4% was primarily attributable to an increase in loan interest income.
The average balance of the loan portfolio increased to $360.1 million for the quarter ended June 30, 2019 from $285.3 million for the quarter ended June 30, 2018 while the average yield increased to 4.67% for the quarter ended June 30, 2019 from 4.44% for the quarter ended June 30, 2018. The average balance and yield of the Bank’s investment securities for the quarter ended June 30, 2019 was $17.7 million and 2.97%, respectively, as compared to an average balance of $15.0 million and a yield of 3.10% for the comparable quarter ended one-year earlier.
Interest Expense. Total interest expense for the quarter ended June 30, 2019 increased by $606 thousand to $1.6 million from $1.0 million for the prior year period. Average balances of total interest-bearing liabilities increased $76.9 million to $306.8 million for the quarter ended June 30, 2019, from $229.9 million for the quarter ended June 30, 2018. The average cost for those liabilities increased to 2.11% from 1.76% for the same respective period one year earlier.
The average balances of the Bank’s certificates of deposit portfolio increased to $142.0 million at an average cost of 2.30% over the quarter ended June 30, 2018, from $86.4 million at an average cost of 1.88% over the same quarter ended one-year earlier. Regular savings account average balances increased to $93.4 million, from $66.9 million for the quarter ended June 30, 2019. These had an average cost of 1.87% for the quarter ended June 30, 2019 compared to an average cost of 1.51% for the quarter ended June 30, 2018.
Average money market account balances decreased $2.3 million to $10.0 million at an average cost of 0.64% for the quarter ended June 30, 2019, from $12.3 million at an average cost of 0.42% for the quarter ended June 30, 2018.
For the quarter ended June 30, 2019, the average balance of the Company’s borrowed funds was $47.4 million with an average cost of 2.82%, as compared to $51.7 million and an average cost of 2.51% for the quarter ended June 30, 2018.
Net Interest Income. Net interest income was approximately $2.8 million for the quarter ended June 30, 2019, as compared to $2.4 million for the same quarter in the prior year. The average interest rate spread decreased to 2.46% for the quarter ended June 30, 2019, from 2.47% for the quarter ended June 30, 2018, while the net interest margin decreased to 2.90%, from 2.98% over the same respective periods.
Provision for Loan Losses. For the quarter ended June 30, 2019, management recorded a $95 thousand provision for loan losses. Comparatively, there was a $325 thousand provision for loan loss for the quarter ended June 30, 2018. The Bank in 2018 completed the revaluation of the taxi medallion loan portfolio resulting in a higher provision for loan loss. 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 June 30, 2018 was $299 thousand as compared to $299 thousand for the quarter ended June 30, 2018.
Non-Interest Expense. Non-interest expense for the quarter ended June 30, 2019 increased $314 thousand when compared to the same quarter in 2018, primarily resulting from net increases of $132 in occupancy and equipment expense, $119 thousand in compensation expense and $53 thousand in data processing costs. The increase was largely due to the addition of two new branch offices in the third quarter of 2018.
Income Tax Expense. Income tax expense was $134 thousand for the quarter ended June 30, 2019 as compared to $136 thousand for the quarter ended June 30, 2018. The decrease was largely due to the income tax consequences of a larger provision for loan losses in 2018.
Results of Operations for the Six Months Ended June 30, 2019 and June 30, 2018
General. For the six months ended June 30, 2019, the Company recognized net income of $832 thousand, or $0.20 per basic and diluted share, as compared to net gain of $347 thousand, or $0.09 per basic and diluted share, for the six months ended June 30, 2018.
Interest Income. Interest income increased by $2.3 million, from $6.5 million to $8.8 million, for the six months ended June 30, 2019 compared to the six months ended June 30, 2018. This increase was primarily attributable to increase in interest income from loans of $2.3 million.
The average balance of the loan portfolio increased to $361.6 million for the six months ended June 30, 2019 from $276.1 million for the six months ended June 30, 2018, and the average yield increased from 4.44% for the six months ended June 30, 2018 to 4.63% for the six ended June 30, 2019. The average balance and yield of the Bank’s investment securities for the six months ended June 30, 2019, was $18.8 million and 3.08%, respectively, as compared to an average balance of $12.7 million and a yield of 3.06% for the comparable six month period one-year earlier.
Interest Expense. Total interest expense for the six months ended June 30, 2019, increased by $1.4 million, from $1.8 million to $3.2 million, when compared to the prior year period. Average balances of total interest-bearing liabilities increased $89.2 million to $306.8 million for the six months ended June 30, 2019, from $217.6 million for the six months ended June 30, 2018. The average cost for those liabilities increased to 2.08% from 1.65% for the same respective period one year earlier.
The average balances of the Bank’s certificates of deposit portfolio increased to $132.2 million at an average cost of 2.22% over the six months ended June 30, 2019, from $75.8 million at an average cost of 1.77% over the same period one-year earlier. Regular savings account average balances increased by $22.7 million to $89.1 million. These had an average cost of 1.75% for the six months ended June 30, 2019 compared to an average cost of 1.31% for the six months ended June 30, 2018.
Average money market account balances decreased $2.5 million to $10.7 million at an average cost of 0.56% for the six months ended June 30, 2019, from $13.2 million at an average cost of 0.41% for the six months ended June 30, 2018.
For the six months ended June 30, 2019, the average balance of the Company’s borrowed funds was $61.3 million and its average cost was 2.77%, as compared to $49.9 million and an average cost of 2.50% for the six months ended June 30, 2018.
Net Interest Income. Net interest income was approximately $5.7 million for the six months ended June 30, 2019, as compared to $4.7 million for the same period in the prior year. The interest rate spread decreased to 2.43% for the six months ended June 30, 2019, from 2.58% for the six months ended June 30, 2018, while our net interest margin decreased to 2.90% from 3.08%, over the same respective periods.
Provision for Loan Losses. For the six months ended June 30, 2019 the Company recorded a $180 thousand provision for loan losses. Comparatively, the provision was $630 thousand for the six months ended June 30, 2018. The Bank in 2018 completed the revaluation of the taxi medallion loan portfolio resulting in a higher provision for loan loss. 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 six months ended June 30, 2019 decreased $143 thousand to approximately $451 thousand as compared to $594 thousand for the six months ended June 30, 2018. This decrease was primarily the result of a net decrease in gain on loan sales of $177 thousand, partially offset by an increase in gain on loan fee income of $56 thousand.
Non-Interest Expense. Non-interest expense for the six months ended June 30, 2019 increased $811 thousand when compared to the same period in 2018.This increase was primarily the result of net increases in compensation and benefits of $403 thousand, occupancy and equipment of $256 thousand, and in data processing service fees of $101 thousand. The increase was largely due to the addition of two new branch offices in the third quarter of 2018.
Income Tax Expense. Income tax expense was $266 thousand for the six months ended June 30, 2019 as compared to $317 for the six months ended June 30, 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 | ||||||||||||
| 6/30/2019 | 6/30/2018 | 6/30/2019 | 6/30/2018 | ||||||||||||
| Total interest income | $ | 4,413 | $ | 3,411 | $ | 8,839 | $ | 6,526 | |||||||
| Total interest expense | 1,617 | 1,011 | 3,157 | 1,782 | |||||||||||
| Net interest income | 2,796 | 2,400 | 5,682 | 4,744 | |||||||||||
| Provision for loan losses | 95 | 325 | 180 | 630 | |||||||||||
| Net interest income after | |||||||||||||||
| provision for loan loss | 2,701 | 2,075 | 5,502 | 4,114 | |||||||||||
| Total non-interest income | 299 | 299 | 451 | 594 | |||||||||||
| Compensation and benefits | 1,297 | 1,178 | 2,620 | 2,217 | |||||||||||
| Occupancy and equipment | 412 | 280 | 796 | 540 | |||||||||||
| Professional fees | 104 | 130 | 252 | 263 | |||||||||||
| Data processing service fees | 156 | 103 | 304 | 203 | |||||||||||
| NYS Banking & FDIC Assessment | 97 | 64 | 199 | 119 | |||||||||||
| Other operating expenses | 382 | 379 | 684 | 702 | |||||||||||
| Total non-interest expense | 2,448 | 2,134 | 4,855 | 4,044 | |||||||||||
| Net Income Before Taxes | 552 | 240 | 1,098 | 664 | |||||||||||
| Provision for income taxes | 134 | 136 | 266 | 317 | |||||||||||
| Net income | 418 | 104 | 832 | 347 | |||||||||||
| Quarter Ended | Quarter Ended | Quarter Ended | Quarter Ended | ||||||||||||
| 6/30/2019 | 3/31/2019 | 12/31/2018 | 9/30/2018 | ||||||||||||
| Total interest income | $ | 4,413 | $ | 4,426 | $ | 4,426 | $ | 3,808 | |||||||
| Total interest expense | 1,617 | 1,540 | 1,270 | 1,073 | |||||||||||
| Net interest income | 2,796 | 2,886 | 3,156 | 2,735 | |||||||||||
| Provision for loan losses | 95 | 85 | 525 | 710 | |||||||||||
| Net interest income after | |||||||||||||||
| provision for loan loss | 2,701 | 2,801 | 2,631 | 2,025 | |||||||||||
| Other non-interest income | 299 | 152 | 338 | 258 | |||||||||||
| Compensation and benefits | 1,297 | 1,323 | 1,400 | 1,280 | |||||||||||
| Occupancy and equipment | 412 | 384 | 343 | 311 | |||||||||||
| Professional fees | 104 | 148 | 92 | 47 | |||||||||||
| Data processing service fees | 156 | 148 | 138 | 118 | |||||||||||
| NYS Banking & FDIC Assessment | 97 | 102 | 96 | 91 | |||||||||||
| Other operating expenses | 382 | 302 | 467 | 382 | |||||||||||
| Total non-interest expense | 2,448 | 2,407 | 2,536 | 2,229 | |||||||||||
| Net Income Before Taxes | 552 | 546 | 433 | 54 | |||||||||||
| Provision for income taxes | 134 | 132 | 72 | (117 | ) | ||||||||||
| Net income | 418 | 414 | 361 | 171 | |||||||||||
| Basic Earnings per Share | $ | 0.10 | $ | 0.10 | $ | 0.09 | $ | 0.03 | |||||||
| Diluted Earnings per Share | $ | 0.10 | $ | 0.10 | $ | 0.09 | $ | 0.03 | |||||||
| ES BANCSHARES, INC. | |||||||||||||||
| OTHER FINANCIAL MEASURES | |||||||||||||||
| (In Thousands) | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Quarter Ended | Quarter Ended | Quarter Ended | Quarter Ended | ||||||||||||
| 6/30/2019 | 3/31/2019 | 12/31/2018 | 9/30/2018 | ||||||||||||
| Asset Quality | |||||||||||||||
| Allowance for Loan Losses | $ | 3,538 | $ | 3,443 | $ | 3,358 | $ | 2,833 | |||||||
| Nonperforming Loans / Total Loans | 0.8 | % | 0.7 | % | 0.7 | % | 1.0 | % | |||||||
| Nonperforming Assets / Total Assets | 0.8 | % | 0.6 | % | 0.7 | % | 1.0 | % | |||||||
| ALLL / Nonperforming Loans | 127.7 | % | 144.1 | % | 143.3 | % | 84.7 | % | |||||||
| ALLL / Loans, Gross | 1.0 | % | 1.0 | % | 1.0 | % | 0.9 | % | |||||||
| Capital | |||||||||||||||
| Shares Issue - Basic | 4,120,613 | 4,120,613 | 4,120,613 | 3,868,084 | |||||||||||
| Book Value per Share | $ | 5.50 | $ | 5.39 | $ | 5.30 | $ | 5.22 | |||||||
| Tangible Book Value per Share | $ | 5.36 | $ | 5.25 | $ | 5.15 | $ | 5.07 | |||||||
| Tier 1 Capital Ratio | 7.50 | % | 7.33 | % | 7.59 | % | 7.83 | % | |||||||
| Tier 1 Risk Based Capital Ratio | 10.26 | % | 10.29 | % | 9.99 | % | 10.24 | % | |||||||
| Total Risk Based Capital Ratio | 11.48 | % | 11.50 | % | 11.16 | % | 11.31 | % | |||||||
| Quarter Ended | Quarter Ended | Quarter Ended | Quarter Ended | ||||||||||||
| 6/30/2019 | 3/31/2019 | 12/31/2018 | 9/30/2018 | ||||||||||||
| Profitability | |||||||||||||||
| Yield on Average Earning Assets | 4.57 | % | 4.52 | % | 4.78 | % | 4.49 | % | |||||||
| Cost of Avg. Interest Bearing Liabilities | 2.11 | % | 2.04 | % | 1.84 | % | 1.79 | % | |||||||
| Net Spread | 2.46 | % | 2.48 | % | 2.94 | % | 2.70 | % | |||||||
| Net Margin | 2.90 | % | 2.95 | % | 3.41 | % | 3.22 | % | |||||||
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