ES Bancshares, Inc. reports a 45% increase in net income driven by loan growth for the first quarter 2017

NEWBURGH, N.Y., April 20, 2017 (GLOBE NEWSWIRE) — ES Bancshares, Inc. (OTC:ESBS) (the “Company”) the holding company for Empire State Bank, (the “Bank”) today announced a 44.7% increase in net income to $123 thousand, or $0.04 per common share for the quarter ended March 31, 2017, as compared to $85 thousand, or $0.03 per common share for the quarter ended March 31, 2016.  The improvement for the quarter was driven by a $310 thousand, or 16.0% increase in net interest income as a result of a $40.4 million, or 23.2% increase in loans receivable.  The increase in net interest income was partially offset by higher non-interest expenses of $167 thousand as well as a higher provision for loan losses of $57 thousand due to loan growth and higher income taxes.

Chief Executive Officer Philip Guarnieri stated, “We are pleased with the success the Bank has experienced in the past twelve months and in our First Quarter of 2017.  Our loan portfolio has grown by over $40 million in a year’s time, and in our most recent quarter, we have originated nearly $20 million of new loans.  This record breaking level for Empire Savings Bank shows our commitment to growth by serving our communities.”  He continued, “We are also encouraged by the improvement in earnings, and look forward to continued growth.”

President & Chief Operating Officer Thomas Sperzel commented, “…the sale of our New Paltz Branch was announced in January 2017.  That sale is progressing towards settlement in June 2017 and will contribute significantly to the Bank’s earnings and capital.  In addition we announced in March 2017 our plans to further expand our branch network into the Brooklyn and Staten Island, NY markets.  We are looking forward to taking advantage of the growth we have seen from the existing branches, and have already commenced with plans to open a loan production office in the second quarter of 2017.”

Financial Highlights

  • Net income of $123 thousand for the quarter ended March 31, 2017 compared to $85 thousand for the comparable period in 2016, representing an increase of $38 thousand, or 45%.
  • Net income before taxes of $287 thousand for the quarter ended March 31, 2017 compared to $218 thousand for the comparable period in 2016, representing an increase of $69 thousand, or 32%.
  • Net interest income of $2.02 million for the quarter ended March 31, 2017 compared to $1.71 million for the comparable period in 2016, representing an increase of $310 thousand, or 18%.
  • Net interest margin of 3.44% for the quarter ended March 31, 2017 compared to 3.59% for the comparable period in 2016, representing a decrease of 15 bps, or 4.2%
  • Loans, net of $214.3 million for the quarter ended March 31, 2017 compared to $173.9 million for the comparable period in 2016, representing an increase of $40.4 million, or 23%.
  • Total deposits of $214.3 million for the quarter ended March 31, 2017, compared to $169.9 million for the comparable period in 2016, representing an increase of $44.4 million, or 26%
  • Capital ratios of 8.6%, 10.4% and 11.7% for each of the Tier 1 Leverage ratio, Tier 1 Risk Based Capital ratio and Total risk Based Capital ratio, respectively.

Comparison of Financial Condition at March 31, 2017 and December 31, 2016

Total assets at March 31, 2017, amounted to $254.0 million, representing an increase of $17.1 million, or 7.2%, from $236.9 million at December 31, 2016.  The increase in assets consisted primarily of increases in total loans receivable, net of $15.0 million and in cash and cash equivalents of $2.0 million. This increase was offset by a decrease in total securities of $305 thousand.

Loans receivable, net, increased $15.0 million, or 7.5%, to $214.3 million at March 31, 2017 from $199.3 million at December 31, 2016. Commercial and multifamily real estate loans increased $13.4 million, or 11.3%, from $118.1 million to $131.4 million.  Residential real estate mortgage loans increased $2.4 million, or 6.2%, from $38.8 million to $41.2 million.  Commercial loans and commercial lines of credit decreased $1.5 million, or 4.1%, from $37.1 million to $35.6 million. Home equity and consumer loans decreased $368 thousand to $5.3 million at March 31, 2017. Management continues to emphasize the origination of high quality loans for retention in the loan portfolio.

Deposits increased by $8.7 million to $214.3 million at March 31, 2017 from $205.7 million at December 31, 2016. Non-interest bearing deposits increased $2.1 million and interest bearing deposits increased $6.5 million. Over this three month period the net deposit activity consisted mainly of increases in DDA and NOW accounts of $7.2 million, and in savings accounts of $2.0 million, partially offset by a decrease in money market accounts of $347 thousand and in certificates of deposit of $232 thousand.

Borrowings increased by $8.0 million to $20.3 million at March 31, 2017 from $12.3 million at December 31, 2016.

Stockholders’ equity increased by $115 thousand to $16.1 million at March 31, 2017, from $16.0 million at December 31, 2016. The increase was primarily attributable to a $123 thousand increase in retained earnings, partially offset by a decrease in other comprehensive income of $23 thousand. The ratio of stockholders’ equity to total assets decreased to 6.3% at March 31, 2017 from 6.8% at December 31, 2016.  Book value per share increased to $4.86 at March 31, 2017, from $4.82 at December 31, 2016.

                 
  ES BANCSHARES, INC.              
  STATEMENTS OF CONDITION            
  (In Thousands)              
  (Unaudited)              
                 
                 
    3/31/2017   12/31/2016   9/30/2016   6/30/2016
  ASSETS              
  Cash and cash equivalents: $   12,773     $   10,768     $   24,872     $   21,151  
                 
  Securities – Available For Sale     5,052         5,024         5,200         5,308  
  Securities – Held To Maturity     6,069         6,402         6,831         7,290  
  Total Securities     11,121         11,426         12,031         12,598  
                 
  Loans held for sale     6,659         6,592         –         –  
                 
  Loans     217,177         202,055         203,459         186,079  
  Less:  allowance for loan losses     (2,881 )       (2,685 )       (2,497 )       (2,443 )
  Loans, net      214,296         199,370         200,962         183,636  
                 
  Premises and equipment, net     3,084         3,151         3,214         3,264  
  Other assets     6,051         5,552         5,946         6,094  
  Total Assets $   253,984     $   236,859     $   247,025     $   226,743  
                 
  LIABILITIES AND SHAREHOLDERS’ EQUITY        
  Deposits:              
    Demand and NOW deposit accounts $   82,137     $   74,915     $   77,328     $   68,411  
    Money market accounts     28,774         29,121         29,840         24,019  
    Savings accounts     47,877         45,865         47,911         35,634  
    Certificates of deposit     55,535         55,767         58,761         57,536  
    Total Deposits     214,323         205,668         213,840         185,600  
                 
  Borrowings     20,250         12,250         13,250         23,000  
  Other Liabilities     3,313         2,958         4,260         2,607  
  Total Liabilities     237,886         220,876         231,350         211,207  
                 
  Total Shareholders’ Equity     16,098         15,983         15,675         15,536  
  Total Liabilities and Shareholders’ Equity   $   253,984     $   236,859     $   247,025     $   226,743  
                                 

Results of Operations for the Quarters Ended March 31, 2017 and March 31, 2016

General.  For the quarter ended March 31, 2017, the Company recognized net income of $123 thousand, or $0.04 per basic and diluted share, as compared to net income of $85 thousand, or $0.03 per basic and diluted share, for the quarter ended March 31, 2016.

Interest Income.  Interest income increased to $2.47 million for the quarter ended March 31, 2017 compared to $2.04 million for the quarter ended March 31, 2016. An increase of $434 thousand was primarily attributable to a $453 thousand increase in loan interest income and partially offset by a decrease in interest income from securities of $32 thousand.

The average balance of the loan portfolio increased to $212.5 million for the three months ended March 31, 2017 from $169.1 million for the three months ended March 31, 2016 while the average yield decreased from 4.47% for the quarter ended March 31, 2016 to 4.41% for the quarter ended March 31, 2017. The average balance and yield of the Bank’s investment securities for the quarter ended March 31, 2017 was $11.2 million and 3.25%, respectively, as compared to an average balance of $15.2 million and a yield of 3.23% for the comparable quarter ended one-year earlier.

Interest Expense.  Total interest expense for the quarter ended March 31, 2017 increased by $125 thousand to $448 thousand from $323 thousand for the prior year period.  Average balances of total interest-bearing liabilities increased $27.9 million to $161.4 million for the quarter ended March 31, 2017, from $133.5 million for the quarter ended March 31, 2016. The average cost for those liabilities increased to 1.13% from 0.98% for the same respective period one year earlier reflecting higher market interest rates.

The average balances of the Bank’s certificates of deposit portfolio increased to $55.3 million at an average cost of 1.24% over the quarter ended March 31, 2017, from $52.6 million at an average cost of 1.29% over the same quarter ended one-year earlier.  Regular savings account average balances increased to $46.5 million, or $22.5 million, from $24.0 million for the quarter ended March 31, 2016. These had an average cost of 0.98% for the quarter ended March 31, 2017 and a cost of 0.74% for the quarter ended March 31, 2016.  

Average money market account balances increased $5.5 million to $29.8 million at an average cost of 0.45% for the quarter ended March 31, 2017, from $24.3 million at an average cost of 0.43% for the quarter ended March 31, 2016. 

For the quarter ended March 31, 2017, the average balance of the Company’s borrowed funds was $12.4 million with an average cost of 3.76%, as compared to $19.7 million and an average cost of 1.42% for the quarter ended March 31, 2016.  The increase was largely due to the borrowing facility utilized by the Company to provide additional capital to the Bank.

Net Interest Income.  Net interest income was approximately $2.02 million for the quarter ended March 31, 2017, as compared to $1.71 million for the same quarter in the prior year.  Our average interest rate spread decreased to 3.08% for the quarter ended March 31, 2017, from 3.30% for the quarter ended March 31, 2016, while our net interest margin decreased to 3.44% from 3.59%, over the same respective periods. These decreases were primarily attributable to an increased cost of borrowings, and to a lesser extent, a lower yield on loans.   

Provision for Loan Losses.  For the three months ended March 31, 2017, management recorded $195 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, 2016 of $138 thousand.

Non-Interest Income.  Non-interest income for the quarter ended March 31, 2017 decreased $16 thousand to $305 thousand as compared to $321 thousand for the quarter ended March 31, 2016. The decrease was primarily attributable to a net decrease in gain on sale of securities of $26 thousand, partially offset by net increases in gain on sale of loans of $9 thousand and in other income of $6 thousand.

Non-Interest Expense.  Non-interest expense for the quarter ended March 31, 2017 increased $167 thousand when compared to the same quarter in 2016. The increases are primarily attributable to net increases in professional fees of $55 thousand, compensation and benefits of $51 thousand, data processing service fees of $29 thousand, and other expense of $19 thousand.

Income Tax Expense.  Income tax expense was $164 thousand for the quarter ended March 31, 2017 as compared to $133 thousand for the quarter ended March 31, 2016.

         
  ES BANCSHARES, INC.      
  STATEMENTS OF INCOME      
  (In Thousands)      
  (Unaudited)      
         
    Quarter to Date   Quarter to Date
    3/31/2017   3/31/2016
         
  Total interest income $   2,471   $   2,037
  Total interest expense     448       323
  Net interest income   2,023     1,714
  Provision for loan losses   195     138
         
  Net interest income after      
  provision for loan loss   1,828     1,576
         
  Total non-interest income   305     321
         
  Compensation and benefits   1,019     968
  Occupancy and equipment   271     256
  Professional fees   150     95
  Data processing service fees   109     80
  NYS Banking & FDIC Assessment   60     52
  Other operating expenses   237     228
  Total non-interest expense   1,846     1,679
         
  Net Income Before Taxes   287     218
         
  Provision for income taxes   164     133
  Net income   123     85
         

                 
    Quarter Ended   Quarter Ended   Quarter Ended   Quarter Ended
    3/31/2017   12/31/2016   9//30/2016   6//30/2016
                 
  Total interest income $   2,471     $   2,405     $   2,271     $   2,110  
  Total interest expense     448         458         424         346  
  Net interest income   2,023       1,947       1,847       1,764  
  Provision for loan losses   195       185       100       150  
                 
  Net interest income after              
  provision for loan loss   1,828       1,762       1,747       1,614  
                 
  Total non-interest income   305       495       247       353  
                 
  Compensation and benefits   1,019       1,049       957       923  
  Occupancy and equipment   271       262       259       248  
  Professional fees   150       99       125       128  
  Data processing service fees   109       104       96       96  
  NYS Banking & FDIC Assessment   60       61       54       56  
  Other operating expenses   237       277       248       254  
  Total non-interest expense   1,846       1,852       1,739       1,705  
                 
  Net Income Before Taxes   287       405       255       262  
                 
  Provision for income taxes   164       72       130       133  
  Net income   123       333       125       129  
                 
  Basic Earnings per Share $   0.04     $   0.10     $   0.04     $   0.04  
                 
  Diluted Earnings per Share $   0.04     $   0.10     $   0.04     $   0.04  
                 
             
  ES BANCSHARES, INC.            
  OTHER FINANCIAL MEASURES            
  (In Thousands)            
  (Unaudited)              
    Quarter Ended   Quarter Ended   Quarter Ended   Quarter Ended
    3/31/2017   12/31/2016   9/30/2016   6/30/2016
  Asset Quality              
    Allowance for Loan Losses $   2,881     $   2,685     $   2,497     $   2,443  
    Nonperforming Loans / Total Loans   0.9 %     1.0 %     1.0 %     1.6 %
    Nonperforming Assets / Total Assets   0.9 %     1.0 %     1.0 %     1.3 %
    ALLL / Nonperforming Loans   136.9 %     127.6 %     118.7 %     83.4 %
    ALLL / Loans, Gross   1.29 %     1.29 %     1.23 %     1.32 %
                 
  Capital              
    Shares Issue – Basic   3,312,867       3,312,867       3,312,867       3,312,867  
    Book Value per Share $   4.86     $   4.82     $   4.73     $   4.69  
    Tier 1 Capital Ratio   8.59 %     8.41 %     8.59 %     8.70 %
    Tier 1 Risk Based Capital Ratio   10.44 %     11.04 %     10.96 %     10.82 %
    Total Risk Based Capital Ratio   11.70 %     12.29 %     12.21 %     12.07 %
                 
                 
    Quarter Ended   Quarter Ended   Quarter Ended   Quarter Ended
    3/31/2017   12/31/2016   9/30/2016   6/30/2016
  Profitability              
    Yield on Average Earning Assets   4.20 %     4.08 %     4.09 %     4.15 %
    Cost of Avg. Interest Bearing Liabilities   1.13 %     1.09 %     1.07 %     0.97 %
    Net Spread   3.08 %     2.99 %     3.02 %     3.18 %
    Net Margin   3.44 %     3.31 %     3.32 %     3.47 %
                                 

Forward Looking Statements

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.

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