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

Rhea-AI Summary

ES Bancshares, Inc. (OTCQX: ESBS) reported a net income of $158,000 or $0.02 per diluted common share for Q2 2024, compared to a net loss of $103,000 in Q1 2024. Key highlights include:

• 10% increase in retail deposits from December 31, 2023
• Net interest margin expansion to 2.21% from 2.12% in Q1 2024
• Replacement of $30 million high-cost wholesale funding with lower-cost organic deposits
• 7% increase in total revenues to $8.4 million compared to Q1 2024

The company's focus on realigning the deposit portfolio and bringing in core low-cost deposits has shown progress. Total assets increased by 2% to $651.7 million, while loans receivable decreased slightly by 0.7%. The Allowance for Credit Losses on Loans stood at 0.90% of gross loans.

Positive

• Net income improved from a loss of $103,000 in Q1 2024 to a profit of $158,000 in Q2 2024
• Retail deposits increased by 10% or $42 million from December 31, 2023
• Net interest margin expanded to 2.21% from 2.12% in Q1 2024
• Total revenues increased by 7% to $8.4 million compared to Q1 2024
• Nonperforming assets decreased to 0.19% of total assets from 0.22% at the end of 2023
• Operating expenses decreased by 4.8% for the six months ended June 30, 2024, compared to the same period in 2023

Negative

• Net income for the six months ended June 30, 2024 ($55,000) was significantly lower than the same period in 2023 ($1.2 million)
• Net interest income for the six months ended June 30, 2024 decreased by 21% compared to the same period in 2023
• Book value per share decreased to $6.74 from $6.83 at December 31, 2023
• Tangible book value per share decreased to $6.65 from $6.74 at December 31, 2023

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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										Six Months Ended
	June 30, 2024		March 31, 2024					June 30, 2023			June 30, 2024		June 30, 2023
	|--------------(unaudited)--------------|										|----(unaudited)----|
Interest income
Loans	$	7,345		$	7,208			$	6,505		$	14,553		$	12,569
Securities		121			115				112			236			225
Other interest-earning assets		561			263				454			824			821
Total Interest Income		8,027			7,586				7,071			15,613			13,615
Interest expense
Deposits		3,837			3,585				2,032			7,422			3,648
Borrowings		743			798				742			1,541			1,510
Total Interest Expense		4,580			4,383				2,774			8,963			5,158
Net Interest Income		3,447			3,203				4,297			6,650			8,457
Prov for Credit Losses		9			39				34			48			17
Net Interest Income after Prov for Credit Losses		3,438			3,164				4,263			6,602			8,440
Non-interest income
Service charges and fees		200			172				166			372			303
Gain on loan sales		-			1				126			1			126
Other		129			42				36			171			73
Total non-interest income		329			215				328			544			502
Non-interest expenses
Compensation and benefits		1,728			1,721				1,953			3,449			3,808
Occupancy and equipment		605			668				640			1,273			1,281
Data processing service fees		317			326				340			643			642
Professional fees		225			181				213			406			432
FDIC & NYS Banking Assessments		99			97				57			196			112
Advertising		85			75				99			160			198
Insurance		46			50				41			96			86
Other		401			337				397			738			753
Total non-interest expense		3,506			3,455				3,740			6,961			7,312
Income(loss) prior to tax expense		261			(76	)			851			185			1,630
Income taxes		103			27				195			130			375
Net Income(loss)	$	158		$	(103	)		$	656		$	55		$	1,255

	ES Bancshares, Inc.
	Average Balance Sheet Data
	For the Three Months Ended (dollars in thousands)
	June 30, 2024						March 31, 2024						June 30, 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	$	565,363	$	7,345	5.20	%	$	567,526	$	7,208	5.08	%	$	548,441	$	6,505	4.74	%
Investment securities		15,513		121	3.13	%		15,814		115	2.90	%		16,194		112	2.77	%
Other interest-earning assets		41,652		561	5.33	%		19,828		263	5.25	%		37,007		454	4.80	%
Total interest-earning assets		622,528		8,027	5.16	%		603,168		7,586	5.03	%		601,642		7,071	4.70	%
Non-interest earning assets		16,398						16,812						17,924
Total assets	$	638,926					$	619,980					$	619,566
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest-bearing checking	$	36,692	$	71	0.77	%	$	30,943	$	26	0.34	%	$	27,694	$	26	0.37	%
Savings accounts		175,686		1,629	3.72	%		153,609		1,413	3.69	%		138,362		449	1.29	%
Certificates of deposit		194,806		2,137	4.40	%		201,926		2,146	4.26	%		206,246		1,557	3.03	%
Total interest-bearing deposits		407,184		3,837	3.78	%		386,479		3,585	3.72	%		372,302		2,032	2.19	%
Borrowings		55,510		522	3.77	%		59,541		577	3.88	%		52,853		521	3.95	%
Subordinated debenture		13,726		221	6.46	%		13,714		221	6.47	%		13,681		221	6.48	%
Total interest-bearing liabilities		476,420		4,580	3.86	%		459,734		4,383	3.82	%		438,836		2,774	2.53	%
Non-interest-bearing demand deposits		102,866						99,844						121,834
Other liabilities		13,429						14,396						13,975
Total non-interest-bearing liabilities		116,295						114,240						135,810
Stockholders' equity		46,211						46,005						44,921
Total liabilities and stockholders' equity	$	638,926					$	619,980					$	619,566
Net interest income			$	3,447					$	3,203					$	4,297
Average interest rate spread					1.30	%					1.21	%					2.17	%
Net interest margin					2.21	%					2.12	%					2.86	%

Five Quarter Performance Ratio Highlights		Three Months Ended
		June 30, 2024		March 31, 2024			December 31, 2023		September 30, 2023		June 30, 2023
Performance Ratios (%) - annualized
	Return(loss) on Average Assets		0.10		(0.07	)		0.05		0.09		0.42
	Return(loss) on Average Equity		1.37		(0.90	)		0.73		1.17		5.81
	Return(loss) on Average Tangible Equity		1.38		(0.91	)		0.74		1.18		5.89
	Efficiency Ratio		92.86		101.08			99.31		93.89		80.86
Yields / Costs (%)
	Average Yield - Interest Earning Assets		5.16		5.03			4.92		4.79		4.70
	Cost of Funds		3.86		3.82			3.55		2.93		2.53
	Net Interest Margin		2.21		2.12			2.28		2.67		2.86
Capital Ratios (%)
	Equity / Assets		7.12		7.34			7.18		7.24		7.24
	Tangible Equity / Assets		7.03		7.26			7.09		7.15		7.15
	Tier I leverage ratio (a)		9.30		9.52			9.45		9.54		9.40
	Common equity Tier I capital ratio (a)		13.81		13.63			13.60		13.47		13.67
	Tier 1 Risk-based capital ratio (a)		13.81		13.63			13.60		13.47		13.67
	Total Risk-based capital ratio (a)		15.06		14.88			14.85		14.63		14.92
Stock Valuation
	Book Value	$	6.74	$	6.75		$	6.83	$	6.79	$	6.77
	Tangible Book Value	$	6.65	$	6.67		$	6.74	$	6.71	$	6.68
	Shares Outstanding (b)		6,884		6,834			6,714		6,714		6,714
Asset Quality (%)
	ACL / Total Loans		0.90		0.89			0.89		0.89		0.89
	Non Performing Loans / Total Loans		0.22		0.24			0.22		0.25		0.25
	Non Performing Assets / Total Assets		0.19		0.21			0.22		0.25		0.25
	(a) Ratios at Bank level (b) Shares information presented in thousands

FAQ

What was ES Bancshares' (ESBS) net income for Q2 2024?

ES Bancshares (ESBS) reported a net income of $158,000 or $0.02 per diluted common share for Q2 2024.

How much did ES Bancshares' (ESBS) retail deposits increase in the first half of 2024?

ES Bancshares' (ESBS) retail deposits increased by $42 million or 10% from December 31, 2023 to June 30, 2024.

What was ES Bancshares' (ESBS) net interest margin in Q2 2024?

ES Bancshares' (ESBS) net interest margin expanded to 2.21% in Q2 2024, up from 2.12% in Q1 2024.

How did ES Bancshares' (ESBS) total revenues change in Q2 2024 compared to Q1 2024?

ES Bancshares' (ESBS) total revenues increased by 7% to $8.4 million in Q2 2024 compared to $7.8 million in Q1 2024.