ES Bancshares, Inc. Announces Second Quarter 2024 Results; Reports Double Digit Percent Organic Deposit Growth, Sees Net Interest Margin Expansion

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STATEN ISLAND, N.Y., July 30, 2024 (GLOBE NEWSWIRE) — ES Bancshares, Inc. (OTCQX:ESBS) (the “Company”) the holding company for Empire State Bank, (the “Bank”) today reported net income of $158 thousand, or $0.02 per diluted common share, for the quarter ended June 30, 2024, compared to a net loss of $103 thousand or ($0.02) per diluted common share for the quarter ended March 31, 2024.

Key Quarterly Financial Data
 
2024 Highlights

Performance Metrics
2Q24
1Q24
2Q23
 
 

Return(loss) on average assets (%)
0.10
         (0.07)
0.42
 
• Retail Deposits increased $42 million or 10% from December 31, 2023

Return(loss) on average equity (%)
1.37
(0.09)
5.81
 

Return(loss) on average tangible equity (%)
1.38
         (0.91)
5.89
 
• For 3 months ended June 30, 2024 the Company’s net interest margin increased to 2.21% compared to the 2.12% for the 3 months ended March 31 2024. Over the same period asset yields increased 13 basis points while cost of funds increased 4 basis points.

Net interest margin (%)
2.21
2.12
2.86
 

 
 
 
 
 

Income Statement (a)
2Q24
1Q24
2Q23
 

Net interest income
$
3,447
$
3,203
$
4,297
 

Non-interest income
$
329
$
215
$
328
 

Net income(loss) 
$
158
$
        (103)
$
656
 
 

Earnings(loss) per diluted common share
$
0.02
$
       (0.02)
$
0.10
 
• The Company has replaced $30 million of higher-costing wholesale funding with lower cost organic deposits over the six-months in 2024. 

 
 
 
 
 

Balance Sheet (a)
2Q24
1Q24
2Q23
 

Average total loans
$
565,363
$
567,526
$
548,441
 
• Total Revenues for the quarter ended June 30, 2024 totaled $8.4 million or a 7% increased from the prior quarter total revenues of $7.8 million.

Average total deposits
$
510,050
$
486,323
$
494,137
 

Book value per share
$
6.74
$
6.75
$
6.77
 

Tangible book value per share
$
6.65
$
6.67
$
6.68
 
 

(a) In thousands except for per share amounts
 

Phil Guarnieri, Director, and Chief Executive Officer of ES Bancshares said “ESBS delivered improved results in the second quarter, featuring increased revenue, a widening net interest margin and well controlled expenses. We continue to focus on the realigning of the deposit portfolio, bringing in core low-cost deposits. While additional progress is necessary, 10% overall core deposit growth six months into the year sets a strong tone for the back half of 2024, while of course further strengthening liquidity.”

Selected Balance Sheet Information:

June 30, 2024 vs. December 31, 2023

As of June 30, 2024, total assets were $651.7 million, an increase of $13.0 million, or 2.0%, as compared to total assets of $638.7 million on December 31, 2023. The increase can be attributed to a larger cash and cash equivalents position stemming from deposit growth, partially offset by repayments made towards borrowed funds.

Loans receivable, net of Allowance for Credit Losses on Loans totaled $560.1 million, a decrease of 0.7% from December 31, 2023. As of June 30, 2024, the Allowance for Credit Losses on Loans as a percentage of gross loans was 0.90%.

Nonperforming assets, which includes nonaccrual loans and foreclosed real estate were $1.2 million or 0.19% of total assets, as of June 30, 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 0.22%, as of June 30, 2024, and December 31, 2023.

Total liabilities increased $12.4 million to $605.3 at June 30, 2024 from $592.9 million at December 31, 2023. The majority of the increase can be attributed to growth in core deposits, partially offset by repayments of brokered deposits and Federal Home Loan (FHLB) borrowings. The growth in deposits was driven by an increase in interest-bearing, non-maturity deposit accounts substantially lower than market rates.

As of June 30, 2024, the Bank’s Tier 1 capital leverage ratio, common equity tier 1 capital ratio, Tier 1 capital ratio and total capital ratios were 9.30%, 13.81%, 13.81% and 15.06%, respectively, all in excess of the ratios required to be deemed “well-capitalized.” During the second quarter 2024 the Company did not repurchase shares under its stock repurchase program. Book value per common share was $6.74 at June 30, 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 $6.65 at June 30, 2024 compared to $6.74 at December 31, 2023. The majority of the decrease can be attributed to equity awards exercised or made during 2024.

Financial Performance Overview:

Three Months Ended June 30, 2024 vs. March 31, 2024

For the three months ended June 30, 2024, the Company net income totaled $158 thousand compared to a net loss of $103 thousand for the three months ended March 31, 2024. The improvement can be attributed to an expanded margin quarter over quarter.

Net interest income for the three months ended June 30, 2024, increased $244 thousand, to $3.4 million from $3.2 million at three months ended March 31, 2024. The Company’s net interest margin widened by nine basis points to 2.21% for the three months ended June 30, 2024, as compared to 2.12% for the three months ended March 31, 2024. The increase in margin can be attributed to increased yields earned on assets.

There was a provision for credit losses of $9 thousand expensed for the three months ended June 30, 2024, compared to a $39 thousand provision for credit losses taken for the three months ended March 31, 2024.

Non-interest income increased $114 thousand, to $329 thousand for the three months ended June 30, 2024, compared with non-interest income of $215 thousand for the three months ended March 31, 2024. The majority of the increase can be attributed to a $60 thousand recapture of previously unrecognized income.

Non-interest expenses remained relatively unchanged totaling $3.5 million for the three months ended June 30, 2024, and for the three months ended March 31, 2024. The largest fluctuations quarter over quarter pertain to occupancy and equipment expenses, which decreased $63 thousand to a more normalized level during the quarter ended June 30, 2024, and professional fees which increased by $44 thousand or 24% quarter over quarter. The increased professional fees mainly relate to legal expenses which are not expected to recur.

Six months ended June 30, 2024 vs. June 30, 2023

For the six months ended June 30, 2024, net income totaled $55 thousand in comparison to $1.2 million for the six months ended June 30, 2023. The decrease can mainly be attributed to higher costs paid on deposit which increased $3.8 million year over year.

Net interest income for the six months ended June 30, 2024, decreased 21% or $1.8 million, to $6.7 million from $8.5 million at June 30, 2023. The decrease can be attributed to increased interest expense for deposits, partially offset by increased interest income earned on the loan portfolio.

Provision for credit losses totaled $48 thousand for the six months ended June 30, 2024, compared to a $17 thousand provision for the six months ended June 30, 2023.

Non-interest income totaled $544 thousand for the six months ended June 30, 2024, compared with noninterest income of $502 thousand for the six months ended June 30, 2023. The increase can be attributed to increased charges and fees collected alongside the aforementioned $60 thousand write-off partially offset by decreased in gain on sale of loans period over period.

Operating expenses totaled $7.0 million for the six months ended June 30, 2024, compared to $7.3 million for the six months ended June 30, 2023, or a decrease of 4.8%. The decrease in non-interest expense can be attributed to initiatives taking effect from the cost-cutting program launched in 2024.

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)
 

 
 
June 30,
December 31,
 
June 30,
 

2024
 
2023
 
2023
 
 

 
 
  |—-(unaudited)—-|
 
 
|—-(unaudited)—-|
 

Assets
 
 
 
 
 
 

Cash and cash equivalents
$
50,951
 
32,728
 
 
39,264
 
 

Securities, net
 
14,725
 
15,220
 
 
15,342
 
 

Loans receivable, net:
 
 
 
 
 
 

     Real estate mortgage loans
 
547,581
 
551,250
 
 
532,309
 
 

     Commercial and Lines of Credit
 
12,701
 
12,823
 
 
13,841
 
 

     Home Equity and Consumer Loans
693
 
700
 
 
768
 
 

     Deferred costs
 
4,201
 
4,233
 
 
4,329
 
 

     Allowance for Loan Credit Losses
(5,094
)
(5,086
)
 
(4,917
)
 

          Total loans receivable, net
 
560,082
 
563,920
 
 
546,330
 
 

Accrued interest receivable
 
2,645
 
2,625
 
 
2,361
 
 

Investment in restricted stock, at cost
 
4,573
 
5,191
 
 
4,233
 
 

Goodwill
 
581
 
581
 
 
581
 
 

Bank premises and equipment, net
 
5,256
 
5,600
 
 
5,801
 
 

Repossessed assets
 

 

 
 
164
 
 

Right of use lease assets
 
6,322
 
6,415
 
 
6,459
 
 

Bank Owned Life Insurance
 
5,412
 
5,341
 
 
5,270
 
 

Other Assets
 
1,158
 
1,129
 
 
2,147
 
 

     Total Assets
$
651,705
 
638,750
 
 
627,952
 
 

 
 
 
 
 
 
 

Liabilities & Stockholders’ Equity
 
 
 
 
 
 

Non-Interest-Bearing Deposits
 
106,262
 
107,849
 
 
124,570
 
 

Interest-Bearing Deposits
 
373,618
 
329,695
 
 
336,232
 
 

Brokered Deposits
 
40,929
 
56,581
 
 
40,262
 
 

     Total Deposits
 
520,809
 
494,125
 
 
501,064
 
 

Bond Issue, net of costs
 
13,731
 
13,708
 
 
13,689
 
 

Borrowed Money
 
55,448
 
70,805
 
 
49,600
 
 

Lease Liability
 
6,590
 
6,672
 
 
6,691
 
 

Other Liabilities
 
8,750
 
7,578
 
 
11,468
 
 

     Total Liabilities
 
605,328
 
592,888
 
 
582,512
 
 

Stockholders’ equity
 
46,377
 
45,862
 
 
45,440
 
 

     Total liabilities and stockholders’ equity
$
651,705
 
638,750
 
 
627,952
 
 

 
 

        

 
ES Bancshares, Inc.

 
Consolidated Statements of Income

 
(in thousands)

 
 
 
 
 
 
 
 

 
Three Months Ended