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

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 Metrics	1Q24				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,
		2024		2023			2023
		|----(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 Loans		397		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, 2024			December 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, 2024								December 31, 2023								March 31, 2023
	Avg Bal			Interest			Average		Avg Bal			Interest			Average		Avg Bal			Interest			Average
	Rolling			Rolling					Rolling			Rolling					Rolling			Rolling
Assets	3 Mos.			3 Mos.			Yield/Cost		3 Mos.			3 Mos.			Yield/Cost		3 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 Highlights		Three Months Ended
		March 31, 2024			December 31, 2023			September 30, 2023			June 30, 2023			March 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