ES Bancshares, Inc. Reports March 31, 2021 Quarterly Earnings of $1.0 Million, or $0.15 per Common Share, as Compared to a Loss of $95 Thousand, or $0.01 per Common Share for the Quarter Ended March 31, 2020

NET INTERST MARGIN IMPROVES TO 3.48% FOR THE QUARTER ENDED MARCH 31, 2021 COMPARED TO 3.02% FOR THE COMPARABLE 2020 QUARTER.

RETURN ON AVERAGE ASSETS AND EQUITY OF 0.79% AND 11.43%, RESPECTIVELY FOR THE QUARTER ENDED MARCH 31, 2021 COMPARED TO (0.09%) AND (1.13%) FOR THE 2020 PERIOD.

NEWBURGH, N.Y., April 27, 2021 (GLOBE NEWSWIRE) -- ES Bancshares, Inc. (OTC: ESBS) (the “Company”) the holding company for Empire State Bank, (the “Bank”) today announced net income of $1.0 million, or $0.15 per common share for the quarter ended March 31, 2021, as compared to a net loss of $95 thousand, or $0.01 per common share for the quarter ended March 31, 2020. The increase was largely driven by a $1.3 million increase in net interest income and a $561 thousand decrease in loan loss provision compared to the 2020 period. The increase in net interest income was primarily impacted by a $612 thousand decrease in the cost of deposits and borrowings as the weighted average cost decreased to 0.68% for the quarter ended March 31, 2021 from 1.49% for the comparable 2020 quarter. This was further enhanced with a $666 thousand increase in interest income largely driven by the recognition of loan fees on Small Business Administration Paycheck Protection Program (SBA PPP) loans originated throughout 2020 and into 2021. In addition, the decrease in the provision for loan losses was primarily due to the encouraging performance of the Bank’s loan portfolio during the COVID-19 pandemic. The Bank experienced positive results from its loan forbearance program initiated under the CARES Act in early 2020 to assist borrowers to meet challenges created by the COVID-19 pandemic. The Bank had provided a total of $2.8 million for loan losses during 2020 due to the potential credit impact of the COVID-19 pandemic.

The increase in net interest income discussed above for the three month period ended March 31, 2021 resulted in an improvement to the net interest margin increasing to 3.48% from 3.02% for the comparable 2020 period. This increase resulted primarily from and $59.6 million increase in average non-interest bearing deposits coupled with a $1.5 million decrease in average interest bearing deposits together with a declining interest rate environment quarter over quarter.

Chief Executive Officer Philip Guarnieri stated, “We are very pleased with the results for the first quarter of 2021. Our successes with the SBA PPP loans have been tantamount to increasing deposit relationships that has helped the Bank to increase market share. To date the Bank has originated over $110 million of these loans and demand deposits have increased by $65 million in one year’s time. Further, additional relationships developed from local bank consolidation has further given us the ability to increase demand deposits, improve the Bank’s net interest margin and to generate a strong return on shareholders’ equity of 11.4%.”

President and Chief Operating Officer Thomas Sperzel stated, “The Bank’s core earnings have shown consistent improvement over the last four quarters.” Mr. Sperzel continued, “We feel the Bank has successfully navigated through the roughest period to date of the COVID-19 pandemic. Efforts taken early on to stress test the loan portfolio and develop an allowance for loan loss strategy to bolster reserves for the uncertainty created by the pandemic have paid off. Of the $124 million of loans originally placed on forbearance, only $6 million remain. The Bank has built loan loss reserves from the stress testing process and has maintained those levels while continuing to provide additional reserves in the normal course of business. The Bank is working closely with borrowers still feeling the impact of COVID-19 and continues to monitor the market as activities begin to return to pre-pandemic levels.”

FINANCIAL HIGHLIGHTS

• Net interest margin of 3.48% for the quarter ended March 31, 2021 compared to 3.02% for the comparable period in 2020, representing an increase of 46 bps, or 15.2%
• Return on Average Assets and Equity of 0.79% and 11.43%, respectively for the quarter ended March 31, 2021 compared to (0.09%) and (1.13%) for the 2020 period.
• Net income of $1.0 million for the quarter ended March 31, 2021 compared to a loss of $95 thousand for the comparable period in 2020, representing an increase of $1.1 million.
• Net income before taxes of $1.3 million for the quarter ended March 31, 2021 compared to a loss of $106 thousand for the comparable period in 2020, representing an increase of $1.4 million.
• Net interest income of $4.4 million for the quarter ended March 31, 2021 compared to $3.1 million for the comparable period in 2020, representing an increase of $1.3 million, or 41.9%
• Origination of over $110 million of SBA Paycheck Protection Program loans generating over $3.7 million in net fees to the Bank.
• Loans, net of $458.6 million for the quarter ended March 31, 2021 compared to $368.9 million for the comparable period in 2020, representing an increase of $89.7 million, or 24.3%
• Provision for loan losses of $390 thousand for the quarter ended March 31, 2021, compared to $951 thousand for the comparable period in 2020
• Loan loss reserves as a percentage of total loans of 1.49% ⁽¹⁾ as of March 31, 2021 compared to 1.20% at March 31, 2020.
• Total deposits of $395.6 million for the quarter ended March 31, 2021, compared to $339.5 million for the comparable period in 2020, representing an increase of $56.1 million, or 16.5%
• Capital ratios of 9.7%, 15.7% 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 March 31, 2021 and December 31, 2010

Total assets at March 31, 2021, amounted to $528.0 million, representing an increase of $12.2 million, or 2.4%, from $515.8 million at December 31, 2020. The increase in assets consisted primarily of increase in total loans net of $29.6 million, partially offset by a decrease in cash and cash equivalents of $17.2 million.

Loans receivable, net, increased $29.6 million, or 6.9%, to $458.6 million at March 31, 2021 from $429.0 million at December 31, 2020. Commercial loans, including taxi medallion and US government agency guaranteed loans, and commercial lines of credit increased $22.0 million, or 30.3%, from $72.5 million to $94.5 million. This increase was largely due to the Bank’s participation in the SBA PPP loan program. The Bank originated $49.3 million of these loans during the quarter ended March 31, 2021, while $28.8 million of loans originated in 2020 were paid off through the SBA forgiveness program. $81.3 million of SBA PPP loans are included in loans receivable at March 31, 2021.   Commercial and multifamily real estate loans increased $7.1 million, or 3.9%, from $183.9 million to $191.0 million. Home equity and consumer loans decreased $116 thousand to $2.1 million at March 31, 2021. Residential real estate mortgage loans increased $2.1 million, or 1.2%, from $174.3 million to $176.4 million. Management continues to emphasize the origination of high quality loans for retention in the loan portfolio.

Deposits increased by $20.6 million to $395.6 million at March 31, 2021 from $375.0 million at December 31, 2020. Non-interest bearing deposits increased $38.0 million while interest bearing deposits decreased $17.4 million. Over this three month period the net deposit activity consisted mainly of increases in DDA and NOW accounts of $22.8 million, savings accounts of $5.0 million, money market accounts of $986 thousand, partially offset by decrease in certificates of deposit of $8.2 million, including brokered deposits of $3.1 million.

Borrowings decreased by $13.1 million to $77.5 million at March 31, 2021 from $90.7 million at December 31, 2020. Federal Reserve Bank PPPLF Advances decreased by $16.1 million while FHLB Advances increased by $3.0 million.

Stockholders’ equity increased by $980 thousand to $35.7 million at March 31, 2021, from $34.7 million at December 31, 2020. The increase was primarily attributable to an increase in retained earnings income of $1.0 million, partially offset by a decrease $35 thousand accumulated other comprehensive. The ratio of stockholders’ equity to total assets increased to 6.8% at March 31, 2021 from 6.7% at December 31, 2020. Book value per share increased to $5.37 at March 31, 2021, from $5.22 at December 31, 2020.

ES BANCSHARES, INC.
STATEMENTS OF CONDITION
(In Thousands)
(Unaudited)
	3/31/2021				12/31/2020				9/30/2020				6/30/2020
ASSETS
Cash and cash equivalents:	$	45,340			$	62,533			$	47,246			$	60,147
Securities - Available For Sale		5,589				6,464				7,156				7,776
Securities - Held To Maturity		-				-				-				-
Total Securities		5,589				6,464				7,156				7,776
Loans		464,291				434,417				431,770				434,556
Less: allowance for loan losses		(5,709	)			(5,453	)			(5,168	)			(5,069	)
Loans, net		458,582				428,964				426,602				429,487
Premises and equipment, net		5,144				4,432				4,426				4,437
Other assets		13,363				13,381				9,874				9,903
Total Assets	$	528,018			$	515,774			$	495,304			$	511,750
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand and NOW deposit accounts	$	159,009			$	136,227			$	123,567			$	134,623
Money market accounts		11,361				10,375				10,068				10,706
Savings accounts		142,958				137,964				128,447				124,473
Certificates of deposit		82,296				90,453				91,480				101,736
Total Deposits		395,624				375,019				353,562				371,538
Borrowings		77,538				90,659				98,042				98,042
Other Liabilities		19,171				15,391				9,298				8,369
Total Liabilities		492,333				481,069				460,902				477,949
Total Shareholders' Equity		35,685				34,705				34,402				33,801
Total Liabilities and Shareholders' Equity	$	528,018			$	515,774			$	495,304			$	511,750

Results of Operations for the Quarters Ended March 31, 2021 and March 31, 2020

General. For the quarter ended March 31, 2021, the Company recognized net income of $1.0 million, or $0.15 per basic and diluted share, as compared to a net loss of $95 thousand, or $0.01 per basic and diluted share, for the quarter ended March 31, 2020.

Interest Income. Interest income increased to $5.2 million for the quarter ended March 31, 2021 compared to $4.5 million for the quarter ended March 31, 2020. This increase was primarily attributable to a $780 thousand increase in loan interest income and partially offset by a decrease in interest income from securities of $68 thousand. The increase in loan interest income is largely due to the recognition of SBA PPP fee income.

The average balance of the loan portfolio increased to $452.1 million for the three months ended March 31, 2021 from $371.8 million for the three months ended March 31, 2020 while the average yield decreased from 4.62% for the quarter ended March 31, 2020 to 4.49% for the quarter ended March 31, 2021. The average balance and yield of the Bank’s investment securities for the quarter ended March 31, 2021 was $5.7 million and 2.10%, respectively, as compared to an average balance of $14.0 million and a yield of 2.80% for the comparable quarter ended one-year earlier.

Interest Expense. Total interest expense for the quarter ended March 31, 2021 decreased by $612 thousand to $805 thousand from $1.4 million for the prior year period. Average balances of total interest-bearing liabilities increased $34.4 million to $342.6 million for the quarter ended March 31, 2021, from $308.2 million for the quarter ended March 31, 2020. This increase was primarily due to increases in Federal Reserve Bank PPPLF Advances to fund SBA PPP loans. The average cost for those liabilities decreased to 0.95% from 1.85% for the same respective period one year earlier reflecting lower market interest rates.

The average balances of the Bank’s certificates of deposit portfolio decreased to $85.9 million at an average cost of 1.16% over the quarter ended March 31, 2021, from $116.8 million at an average cost of 2.14% over the same quarter ended one-year earlier. Regular savings account average balances increased to $138.0 million, or $17.3 million, from $120.7 million for the quarter ended March 31, 2020. These had an average cost of 0.43% for the quarter ended March 31, 2021 and a cost of 1.55% for the quarter ended March 31, 2020.

Average money market account balances increased $2.2 million to $11.0 million at an average cost of 0.18% for the quarter ended March 31, 2021, from $8.8 million at an average cost of 0.55% for the quarter ended March 31, 2020.

For the quarter ended March 31, 2021 the average balance of the Company’s borrowed funds was $82.8 million with an average cost of 1.86%, as compared to $46.9 million and an average cost of 2.59% for the quarter ended March 31, 2020.

Net Interest Income. Net interest income was approximately $4.4 million for the quarter ended March 31, 2021, as compared to $3.1 million for the same quarter in the prior year. Our average interest rate spread increased to 3.17% for the quarter ended March 31, 2021, from 2.55% for the quarter ended March 31, 2020, while our net interest margin increased to 3.48% from 3.02%, over the same respective periods. These increases were primarily attributable to the decreased costs of deposits, and increased interest income on loans largely through SBA PPP fee recognition.
        
Provision for Loan Losses. For the three months ended March 31, 2021, management recorded $390 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, 2020 of $951 thousand. The decrease in loan loss provision quarter over quarter is primarily due to higher provisions in the quarter ended March 31, 2020 resulting from the potential credit impact of the COVID-19 pandemic.

Non-Interest Income. Non-interest income for the quarter ended March 31, 2021 decreased $173 thousand to $209 thousand as compared to $382 thousand for the quarter ended March 31, 2020. The decrease was primarily attributable to a net decrease in gain on security sales of $194 thousand partially offset by an increase in loan fee income of $62 thousand.

Non-Interest Expense. Non-interest expense for the quarter ended March 31, 2021 increased $267 thousand when compared to the same quarter in 2020. The increases are primarily attributable to net increase in occupancy and equipment expense of $169 thousand, and compensation and benefits expense of $106 thousand.

Income Tax Expense. Income tax expense was $281 thousand for the quarter ended March 31, 2021 as compared to $(11) thousand for the quarter ended March 31, 2020.

ES BANCSHARES, INC.
STATEMENTS OF INCOME
(In Thousands)
(Unaudited)
		Quarter to Date				Quarter to Date				Year to Date				Year to Date
		3/31/2021				3/31/2020				3/31/2021				3/31/2020
Total interest income		$	5,173			$	4,507			$	5,173			$	4,507
Total interest expense			805				1,417				805				1,417
Net interest income			4,368				3,090				4,368				3,090
Provision for loan losses			390				951				390				951
Net interest income after
provision for loan loss			3,978				2,139				3,978				2,139
Total non-interest income			209				382				209				382
Compensation and benefits			1,458				1,352				1,458				1,352
Occupancy and equipment			583				414				583				414
Professional fees			173				154				173				154
Data processing service fees			204				176				204				176
NYS Banking & FDIC Assessment			78				79				78				79
Other operating expenses			398				452				398				452
Total non-interest expense			2,894				2,627				2,894				2,627
Net Income (Loss) Before Taxes			1,293				(106	)			1,293				(106	)
Provision for income taxes			281				(11	)			281				(11	)
Net income (loss)			1,012				(95	)			1,012				(95	)

		Quarter Ended				Quarter Ended				Quarter Ended				Quarter Ended
		3/31/2021				12/31/2020				9/30/2020				6/30/2020
Total interest income		$	5,173			$	4,783			$	4,762			$	4,736
Total interest expense			805				901				965				1,147
Net interest income			4,368				3,882				3,797				3,589
Provision for loan losses			390				600				480				750
Net interest income after
provision for loan loss			3,978				3,282				3,317				2,839
Other non-interest income			209				159				144				100
Compensation and benefits			1,458				1,441				1,306				1,237
Occupancy and equipment			583				531				459				457
Professional fees			173				192				165				149
Data processing service fees			204				189				189				180
NYS Banking & FDIC Assessment			78				72				73				48
Other operating expenses			398				610				478				385
Total non-interest expense			2,894				3,035				2,670				2,456
Net Income Before Taxes			1,293				406				791				483
Provision for income taxes			281				94				175				111
Net income			1,012				312				616				372
Basic Earnings per Share		$	0.15			$	0.05			$	0.09			$	0.06
Diluted Earnings per Share		$	0.15			$	0.04			$	0.09			$	0.05

ES BANCSHARES, INC.
OTHER FINANCIAL MEASURES
(In Thousands)
(Unaudited)
		Quarter Ended				Quarter Ended				Quarter Ended				Quarter Ended
		3/31/2021				12/31/2020				9/30/2020				6/30/2020
Asset Quality
Allowance for Loan Losses		$	5,709			$	5,453			$	5,168			$	5,069
Nonperforming Loans / Total Loans			0.40	%			0.46	%			0.50	%			0.42	%
Nonperforming Assets / Total Assets			0.38	%			0.42	%			0.48	%			0.40	%
ALLL / Nonperforming Loans			305.29	%			273.20	%			237.06	%			279.44	%
ALLL / Loans, Gross			1.23	%			1.26	%			1.20	%			1.17	%
ALLL / Loans, Gross (excl SBA PPP loans)			1.49	%			1.45	%			1.40	%			1.36	%
Capital
Shares Issue - Basic			6,648,320				6,648,320				6,648,320				6,648,320
Book Value per Share		$	5.37			$	5.22			$	5.17			$	5.08
Tangible Book Value per Share		$	5.28			$	5.13			$	5.09			$	5.00
Tier 1 Capital Ratio			9.67	%			9.70	%			9.07	%			8.59	%
Tier 1 Risk Based Capital Ratio			15.67	%			15.47	%			14.23	%			13.87	%
Total Risk Based Capital Ratio			16.92	%			16.73	%			15.49	%			15.12	%
		Quarter Ended				Quarter Ended				Quarter Ended				Quarter Ended
		3/31/2021				12/31/2020				9/30/2020				6/30/2020
Profitability
Yield on Average Earning Assets			4.12	%			3.80	%			3.90	%			3.88	%
Cost of Avg. Interest Bearing Liabilities			0.95	%			0.99	%			1.09	%			1.34	%
Net Spread			3.17	%			2.81	%			2.80	%			2.54	%
Net Margin			3.48	%			3.08	%			3.11	%			2.94	%
Return on Average Assets			0.79	%			0.24	%			0.49	%			0.30	%
Return on Average Equity			11.43	%			3.57	%			7.17	%			4.39	%

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 ES Bancshares’, Inc. 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
[phone]