ES Bancshares, Inc. Reports Record Return On Average Assets And Equity Of 0.95% And 12.98%, Respectively, For The Quarter Ended September 30, 2021 Compared To 0.49% And 7.17% For The 2020 Period.

• NET INTERST MARGIN IMPROVES TO 3.63% FOR THE QUARTER ENDED SEPTEMBER 30, 2021 COMPARED TO 3.11% FOR THE COMPARABLE 2020 QUARTER.
  
  

• SEPTEMBER 30, 2021 QUARTERLY EARNINGS OF $1.2 MILLION, OR $0.18 PER SHARE, AS COMPARED TO $616 THOUSAND, OR $0.09 PER SHARE FOR THE QUARTER ENDED SEPTEMBER 30, 2020.
  
  

• SEPTEMBER 30, 2021 NINE MONTHS EARNINGS OF $3.3 MILLION, OR $0.49 PER SHARE, AS COMPARED TO $893 THOUSAND, OR $0.13 PER SHARE FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020.
  

NEWBURGH, N.Y., Oct. 28, 2021 (GLOBE NEWSWIRE) -- ES Bancshares, Inc. (OTCQX: ESBS) (the “Company”) the holding company for Empire State Bank, (the “Bank”) today announced net income of $1.2 million, or $0.18 per basic common share and $0.17 per diluted common share for the quarter ended September 30, 2021, as compared to a net income of $616 thousand, or $0.09 per common and diluted share for the quarter ended September 30, 2020. The increase was largely driven by a $735 thousand increase in net interest income and a $400 thousand decrease in loan loss provision compared to the 2020 period. The increase in net interest income was primarily impacted by a $368 thousand increase in interest income coupled with a $367 thousand decrease in the cost of deposits and borrowings. The weighted average cost of deposits and borrowings decreased to 0.72% for the quarter ended September 30, 2021 from 1.09% for the comparable 2020 quarter. The increase in net interest income resulted in an improvement to the net interest margin increasing to 3.63% from 3.11% for the comparable 2020 period.

Net income for the nine months ended September 30, 2021 was $3.3 million, or $0.49 per basic share and $0.47 per diluted share compared to $893 thousand, or $0.13 per basic and diluted share for the nine months ended September 30, 2020. The increase was largely driven by a $2.7 million increase in net interest income as the weighted average cost of deposits and borrowings decreased to 0.85% for the period ended September 30, 2021 from 1.41% for the comparable 2020 period. Further, a $1.6 million decrease in loan loss provision compared to the 2020 period also contributed.

Chief Executive Officer Philip Guarnieri stated, “We are very pleased with the third quarter results. Our plan and the execution of replacing PPP loans with traditional loans, and their respective interest income, are showing up in our third quarter earnings.” He continued, “The Banks core loan pipeline and closings have risen to pre-COVID levels and continue to show excellent strength.”

President and Chief Operating Officer Thomas Sperzel stated, “Our sixth banking center opened in September located at the Corporate Commons complex in Staten Island, NY. This will further expand our footprint and provide additional core liquidity to fund the loan origination pipeline.”

FINANCIAL HIGHLIGHTS

• Net interest margin of 3.63% for the quarter ended September 30, 2021 compared to 3.11% for the comparable period in 2020, representing an increase of 52 bps, or 16.7%

• Return on Average Assets and Equity of 0.95% and 12.98%, respectively for the quarter ended September 30, 2021 compared to 0.49% and 7.17% for the 2020 period.

• Net income of $1.2 million for the quarter ended September 30, 2021 compared to $616 thousand for the comparable period in 2020, representing an increase of $601 thousand, or 97.6%.

• Net income of $3.3 million for the nine months ended September 30, 2021 compared to $893 thousand for the comparable period in 2020.

• Net interest income of $4.53 million for the quarter ended September 30, 2021 compared to $3.80 million for the comparable period in 2020, representing an increase of $735 thousand, or 19.4%

• Net interest income of $13.19 million for the nine months ended September 30, 2021 compared to $10.48 million for the comparable period in 2020, representing an increase of $2.71 million, or 25.9%

• Loan loss reserves as a percentage of total loans of 1.48% ⁽¹⁾ as of September 30, 2021 compared to 1.40% at September 30, 2020.

• Total deposits of $415.2 million for the quarter ended September 30, 2021, compared to $353.6 million for the comparable period in 2020, representing an increase of $61.6 million, or 17.4%

• Capital ratios of 9.6%, 15.6% and 16.9% for each of the Tier 1 Leverage ratio, Tier 1 Risk Based Capital ratio and Total risk Based Capital ratio, respectively.
  

(1) Not including SBA PPP loans and other government guaranteed loans

Comparison of Financial Condition at September 30, 2021 and December 31, 2020

Total assets at September 30, 2021, amounted to $504.3 million, representing an decrease of $11.5 million, or 2.2%, from $515.8 million as of December 31, 2020. The decrease in assets consisted primarily of decreases in cash and cash equivalents of $16.4 million, partially offset by increases in other assets of $3.8 million and premises and equipment of $1.7 million.

Loans receivable, net, remained unchanged at $429.0 million. Commercial and multifamily real estate loans increased $18.5 million, or 10.0 %, from $183.9 million to $202.4 million. Commercial loans and commercial lines of credit decreased $17.6 million, or 24.3%, from $72.5 million to $54.9 million. This decrease was largely due to the Bank’s participation in the SBA PPP loan program, and the forgiveness of $15.6 million of these loans by the SBA. $42.5 million of SBA PPP loans are included in loans receivable at September 30, 2021. Residential real estate mortgage loans decreased $452 thousand, or 0.26%, from $174.2 million to $173.8 million. Home equity and consumer loans decreased $192 thousand to $2.0 million at September 30, 2021. Management continues to emphasize the origination of high-quality loans for retention in the loan portfolio.

Deposits increased by $40.2 million to $415.2 million at September 30, 2021 from $375.0 million at December 31, 2020. Non-interest bearing deposits increased $28.8 million and interest bearing deposits increased $11.4 million. Over this nine month period the net deposit activity consisted mainly of increases in DDA and NOW accounts of $34.3 million and savings accounts of $28.7 million, partially offset by decreases in certificates of deposit of $22.3 million, and in money market accounts of $478 thousand.

Borrowings decreased by $56.3.million to $34.3 million at September 30, 2021 from $90.7 million as of December 31, 2020.

Stockholders’ equity increased by $3.2 million to $37.9 million at September 30, 2021, from $34.7 million as of December 31, 2020. The increase was primarily attributable to a $3.3 million increase in retained earnings. The ratio of stockholders’ equity to total assets increased to 7.52% at September 30, 2021 from 6.73% at December 31, 2020. Book value per share increased to $5.71 at September 30, 2021, from $5.22 at December 31, 2020.

	ES BANCSHARES, INC.
	STATEMENTS OF CONDITION
	(In Thousands)
	(Unaudited)
		9/30/2021				6/30/2021				3/31/2021				12/31/2020
	ASSETS
	Cash and cash equivalents:	$	46,108			$	45,379			$	45,340			$	62,533
	Securities - Available For Sale		4,365				4,873				5,589				6,464
	Securities - Held To Maturity		1,500				-				-				-
	Total Securities		5,865				4,873				5,589				6,464
	Loans		434,831				449,148				464,291				434,417
	Less: allowance for loan losses		(5,791	)			(5,709	)			(5,709	)			(5,453	)
	Loans, net		429,040				443,439				458,582				428,964
	Premises and equipment, net		6,107				5,526				5,144				4,432
	Other assets		17,159				17,516				13,363				13,381
	Total Assets	$	504,279			$	516,733			$	528,018			$	515,774
	LIABILITIES AND SHAREHOLDERS' EQUITY
	Deposits:
	Demand and NOW deposit accounts	$	170,533			$	156,945			$	159,009			$	136,227
	Money market accounts		9,897				10,361				11,361				10,375
	Savings accounts		166,643				179,637				142,958				137,964
	Certificates of deposit		68,128				73,008				82,296				90,453
	Total Deposits		415,201				419,951				395,624				375,019
	Borrowings		34,316				42,917				77,538				90,659
	Other Liabilities		16,831				17,140				19,171				15,391
	Total Liabilities		466,348				480,008				492,333				481,069
	Total Shareholders' Equity		37,931				36,725				35,685				34,705
	Total Liabilities and Shareholders' Equity	$	504,279			$	516,733			$	528,018			$	515,774

Results of Operations for the Quarters Ended September 30, 2021 and September 30, 2020

General. For the quarter ended September 30, 2021, the Company recognized net income of $1.2 million, or $0.18 per basic and $0.17 per diluted share, as compared to net income of $616 thousand, or $0.09 per basic and diluted share, for the quarter ended September 30, 2020.

Interest Income. Interest income increased to $5.1 million for the quarter ended September 30, 2021 compared to $4.8 million for the quarter ended September 30, 2020.

The average balance of the loan portfolio increased to $440.0 million for the quarter ended September 30, 2021 from $433.9 million for the quarter ended September 30, 2020 while the average yield increased to 4.58% for the quarter ended September 30, 2021 from 4.27% for the quarter ended September 30, 2020. The average balance and yield of the Bank’s investment securities for the quarter ended September 30, 2021 was $4.7 million and 2.64%, respectively, as compared to an average balance of $7.2 million and a yield of 2.62% for the comparable quarter ended one-year earlier.

Interest Expense. Total interest expense for the quarter ended September 30, 2021 decreased by $367 thousand to $598 thousand from $965 thousand for the prior year period. Average balances of total interest-bearing liabilities decreased $22.5 million to $327.5 million for the quarter ended September 30, 2021, from $350.0 million for the quarter ended September 30, 2020. The average cost for those liabilities decreased to 0.72% from 1.09% for the same respective period one year earlier.

The average balances of the Bank’s certificates of deposit portfolio decreased to $71.7 million at an average cost of 0.65% over the quarter ended September 30, 2021, from $97.0 million at an average cost of 1.66% over the same quarter ended one-year earlier. Regular savings account average balances increased to $179.4 million for the quarter ended September 30, 2021, from $127.4 million for the quarter ended September 30, 2020. These had an average cost of 0.32% for the quarter ended September 30, 2021 compared to an average cost of 0.67% for the quarter ended September 30, 2020.

Average money market account balances decreased $129 thousand to $10.2 million at an average cost of 0.19% for the quarter ended September 30, 2021, from $10.4 million at an average cost of 0.27% for the quarter ended September 30, 2020.

For the quarter ended September 30, 2021, the average balance of the Company’s borrowed funds was $38.6 million with an average cost of 3.10%, as compared to $98.0 million and an average cost of 1.29% for the quarter ended September 30, 2020. This average cost increased largely due to the declining use of the Federal Reserve Bank Paycheck Protection Program Liquidity Facility for funding of SBA PPP loans, in addition to the issuance of Subordinated Notes in October 2020.

Net Interest Income. Net interest income was approximately $4.5 million for the quarter ended September 30, 2021, as compared to $3.8 million for the same quarter in the prior year. The average interest rate spread increased to 3.43% for the quarter ended September 30, 2021, from 2.80% for the quarter ended September 30, 2020, while the net interest margin increased to 3.63%, from 3.11% over the same respective periods.

Provision for Loan Losses. For the quarter ended September 30, 2021, management recorded a $80 thousand provision for loan losses. Comparatively, there was a $480 thousand provision for loan loss for the quarter ended September 30, 2020. 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. The decrease in loan loss provision is primarily due to higher provisions in the quarter ended September 30, 2020 resulting from the potential credit impact of the COVID-19 pandemic.

Non-Interest Income. Non-interest income for the quarter ended September 30, 2021 was $478 thousand as compared to $144 thousand for the quarter ended September 30, 2020.The Bank recorded a $248 thousand gain on sale of an SBA loan in the 2021 quarter.

Non-Interest Expense. Non-interest expense for the quarter ended September 30, 2021 increased $705 thousand when compared to the same quarter in 2020. This increase primary resulted in an increase of $499 thousand in compensation and benefits and in occupancy and equipment of $161 thousand. These increases result from additional staffing and occupancy costs for branch expansion.

Income Tax Expense. Income tax expense was $338 thousand for the quarter ended September 30, 2021 as compared to $175 thousand for the quarter ended September 30, 2020.

Results of Operations for the Nine Months Ended September 30, 2021 and September 30, 2020

General. For the nine months ended September 30, 2021, the Company recognized net income of $3.3 million, or $0.49 per basic and $0.47 per diluted share, as compared to net gain of $893 thousand, or $0.13 per basic and diluted share, for the nine months ended September 30, 2020.

Interest Income. Interest income increased by $1.3 million, from $14.0 million to $15.3 million, for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. This increase was primarily attributable to increase in interest income from loans of $1.5 million partially offset by a decrease in securities of $109 thousand.

The average balance of the loan portfolio increased to $449.8 million for the nine months ended September 30, 2021 from $407.6 million for the nine months ended September 30, 2020, while the average yield increased from 4.43% for the nine months ended September 30, 2020 to 4.45% for the nine months ended September 30, 2021. The average balance and yield of the Bank’s investment securities for the nine months ended September 30, 2021, was $5.1 million and 2.29%, respectively, as compared to an average balance of $9.7 million and a yield of 2.72% for the comparable nine month period one-year earlier.

Interest Expense. Total interest expense for the nine months ended September 30, 2021, decreased by $1.4 million, from $3.5 million to $2.1 million, when compared to the prior year period. Average balances of total interest-bearing liabilities decreased $165 thousand to $334.2 million for the nine months ended September 30, 2021, from $334.1 million for the nine months ended September 30, 2020. The average cost for those liabilities decreased to 0.85% from 1.41% for the same respective period one year earlier.

The average balances of the Bank’s certificates of deposit portfolio decreased to $78.2 million at an average cost of 0.89% over the nine months ended September 30, 2021, from $106.4 million at an average cost of 1.95% over the same period one-year earlier. Regular savings account average balances increased by $32.4 million to $157.3 million. These had an average cost of 0.38% for the nine months ended September 30, 2021 compared to an average cost of 1.02% for the nine months ended September 30, 2020.

Average money market account balances increased $1.1 million to $11.1 million at an average cost of 0.20% for the nine months ended September 30, 2021, from $10.0 million at an average cost of 0.36% for the nine months ended September 30, 2020.

For the nine months ended September 30, 2021, the average balance of the Company’s borrowed funds was $61.4 million, and its average cost was 2.27%, as compared to $76.7 million and an average cost of 1.64% for the nine months ended September 30, 2020.

Net Interest Income. Net interest income was approximately $13.2 million for the nine months ended September 30, 2021, as compared to $10.5 million for the same period in the prior year. The interest rate spread increased to 3.24% for the nine months ended September 30, 2021, from 2.57% for the nine months ended September 30, 2020, while the net interest margin increased to 3.53% from 2.98%, over the same respective periods.

Provision for Loan Losses. For the nine months ended September 30, 2021 the Company recorded a $590 thousand provision for loan losses. Comparatively, the provision was $2.2 million for the nine months ended September 30, 2020. 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. The decrease in loan loss provision is primarily due to higher provisions in the nine months ended September 30, 2020 resulting from the potential credit impact of the COVID-19 pandemic.

Non-Interest Income. Non-interest income for the nine months ended September 30, 2021 increased $229 thousand to approximately $855 thousand as compared to $626 thousand for the nine months ended September 30, 2020. The increase was primarily the result of a $248 thousand gain on sale of SBA loans, and, to a lesser extent higher loan and deposit services charges in the 2021 quarter. This was partially offset by net decreases in the gain on securities sales of $194 thousand.

Non-Interest Expense. Non-interest expense for the nine months ended September 30, 2021 increased $1.5 million when compared to the same period in 2020. This increase was primarily the result of net increases in compensation and benefits of $943 thousand and in occupancy and equipment of $477 thousand. These increases result from additional staffing and occupancy costs for branch expansion.

Income Tax Expense. Income tax expense was $912 thousand for the nine months ended September 30, 2021 as compared to $275 for the nine months ended September 30, 2020.

ES BANCSHARES, INC.
STATEMENTS OF INCOME
(In Thousands)
(Unaudited)
	Quarter to Date			Quarter to Date			Year to Date			Year to Date
	9/30/2021			9/30/2020			9/30/2021			9/30/2020
Total interest income	$	5,130		$	4,762		$	15,302		$	14,005
Total interest expense		598			965			2,113			3,529
Net interest income		4,532			3,797			13,189			10,476
Provision for loan losses		80			480			590			2,181
Net interest income after
provision for loan loss		4,452			3,317			12,599			8,295
Total non-interest income		478			144			855			626
Compensation and benefits		1,805			1,306			4,838			3,895
Occupancy and equipment		620			459			1,807			1,330
Professional fees		229			165			498			468
Data processing service fees		206			189			625			545
NYS Banking & FDIC Assessment		73			73			227			200
Other operating expenses		442			478			1,261			1,315
Total non-interest expense		3,375			2,670			9,256			7,753
Net Income (Loss) Before Taxes		1,555			791			4,198			1,168
Provision for income taxes		338			175			912			275
Net income (loss)		1,217			616			3,286			893
	Quarter Ended			Quarter Ended			Quarter Ended			Quarter Ended
	9/30/2021			6/30/2021			3/31/2021			12/31/2020
Total interest income	$	5,130		$	4,999		$	5,173		$	4,783
Total interest expense		598			710			805			901
Net interest income		4,532			4,289			4,368			3,882
Provision for loan losses		80			120			390			600
Net interest income after
provision for loan loss		4,452			4,169			3,978			3,282
Other non-interest income		478			168			209			159
Compensation and benefits		1,805			1,575			1,458			1,441
Occupancy and equipment		620			604			583			531
Professional fees		229			96			173			192
Data processing service fees		206			215			204			189
NYS Banking & FDIC Assessment		73			76			78			72
Other operating expenses		442			421			398			610
Total non-interest expense		3,375			2,987			2,894			3,035
Net Income Before Taxes		1,555			1,350			1,293			406
Provision for income taxes		338			293			281			94
Net income		1,217			1,057			1,012			312
Basic Earnings per Share	$	0.18		$	0.16		$	0.15		$	0.05
Diluted Earnings per Share	$	0.17		$	0.15		$	0.15		$	0.04

ES BANCSHARES, INC.
OTHER FINANCIAL MEASURES
($ in Thousands)
(Unaudited)
	Quarter Ended				Quarter Ended				Quarter Ended				Quarter Ended
	9/30/2021				6/30/2021				3/31/2021				12/31/2020
Asset Quality
Allowance for Loan Losses	$	5,791			$	5,709			$	5,709			$	5,453
Nonperforming Loans / Total Loans		0.43%				0.39%				0.40%				0.46%
Nonperforming Assets / Total Assets		0.39%				0.36%				0.38%				0.42%
ALLL / Nonperforming Loans		311.85%				327.35%				305.29%				273.20%
ALLL / Loans, Gross		1.33%				1.27%				1.23%				1.26%
ALLL / Loans, Gross (excl SBA PPP loans)		1.48%				1.49%				1.49%				1.45%
Capital
Shares Issue - Basic		6,648,320				6,648,320				6,648,320				6,648,320
Book Value per Share	$	5.71			$	5.52			$	5.37			$	5.22
Tangible Book Value per Share	$	5.62			$	5.44			$	5.28			$	5.13
Tier 1 Capital Ratio		9.58%				9.58%				9.67%				9.70%
Tier 1 Risk Based Capital Ratio		15.64%				15.66%				15.67%				15.47%
Total Risk Based Capital Ratio		16.90%				16.92%				16.92%				16.73%
	Quarter Ended				Quarter Ended				Quarter Ended				Quarter Ended
	9/30/2021				6/30/2021				3/31/2021				12/31/2020
Profitability
Yield on Average Earning Assets		4.15%				3.99%				4.12%				3.80%
Cost of Avg. Interest Bearing Liabilities		0.72%				0.86%				0.95%				0.99%
Net Spread		3.43%				3.14%				3.17%				2.81%
Net Margin		3.63%				3.43%				3.48%				3.08%
Return on Average Assets		0.95%				0.82%				0.79%				0.24%
Return on Average Equity		12.98%				11.59%				11.43%				3.57%

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 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 ES Bancshares, Inc’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