ESSA Bank & Trust ESSA Investment Services ESSA Asset Management & Trust ESSA Advisory Services SANDLER O’NEILL + PARTNERS INVESTOR MEETING Gary S. Olson, President & CEO Allan A. Muto, EVP & Chief Financial Officer Peter A. Gray, EVP & Chief Banking Officer June 12, 2019 Exhibit 99.1
Forward Looking Statements and Safe Harbor Certain statements contained herein are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “estimate,” “anticipate,” “continue,” or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those related to the economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including compliance costs and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity, and the Risk Factors disclosed in our annual and quarterly reports. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake and specifically declines any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
At-A-Glance ESSA Bancorp, Inc., is a Pennsylvania-chartered holding company for ESSA Bank & Trust. The Bank operates 22 community offices throughout the Greater Pocono, Lehigh Valley, Scranton/Wilkes-Barre and suburban Philadelphia markets, in Pennsylvania. The bank provides banking, insurance, investments and trust services to individuals and businesses in Eastern Pennsylvania. At March 31, 2019, ESSA Bancorp had consolidated assets of $1.84 billion, loans of $1.34 billion, consolidated deposits of $1.29 billion and consolidated stockholders' equity of $183.6 million. Our corporate headquarters are located at 200 Palmer Street, Stroudsburg, PA 18360. ESSA helps its customers reach their financial goals through superior service and empowering employees and customers to bank their way. ESSA Key Numbers * Assets………………….$1.84 billion Loans…………………..$1.34 billion Deposits……………….$1.29 billion Employees…………………………252 ATMs……………………………………23 Branches………………………………22 * As of March 31, 2019 Capital Strength ESSA has a strong common equity tier 1 capital ratio, a key measure of a bank’s strength and capital adequacy. ESSA capital ratios exceed regulatory minimums for well-capitalized. Key Commercial Banking Products and Services Commercial Real Estate Banking Commercial and Industrial Banking Small Business Banking Government Banking Not-For-Profit Banking Interest Rate Risk Management Treasury Solutions Cash Management Commercial Cards Merchant Services Wealth Management Investment Services Asset Management & Trust Employee Benefits March 31, 2019 Regulatory well-capitalized minimum Common equity tier 1 Total capital ratio 8.96% 13.32% 6.5% 10.0% Key Consumer Banking Products and Services Checking Savings Money Market Accounts Certificates of Deposit IRAs ATM Network Online Banking Mobile Banking Debit Cards Bank @ Work Borrowing Options Mortgages Home Equity Credit Cards Personal Loans
ESSA BACKGROUND & SITUATION Management has transformed the company from a $771 million thrift in 2007 to a $1.84 billion community commercial bank. Attracted and invested in new personnel to achieve balance sheet transition. Key strategic initiatives have been implemented to enhance franchise value. Reorganized delivery model to regional structure December 2017. Taking advantage of market disruption from recent M&A activity to add customers and personnel. Challenging interest rate environment will continue to be a headwind to enhancing earnings. Interest rate cut will improve net interest income.
KEY TAKE AWAYS:LAST 18 MONTHS Total revenue reached all-time high of $72.3 million in fiscal 2018. Record closed loans of $434 million, with 28% commercial loan growth in fiscal 2018. Record deposits of $1.34 billion, core deposits increased by $47.6 million to 61% of deposits at September 30, 2018. Non-interest expense decreased by $1.59 million (3.8%) in 2018 on implementation of cost efficiencies. Net interest margin of 2.85% in 2018 versus 2.77% the prior year. Asset quality remains strong. Exited Indirect Auto Lending Business July 2018. Closed three in-store branches and repositioned two others. Increased dividend 11.1% 1Q 2019. Executed share repurchase of 405,384 shares 2Q 2019.
KEY BALANCE SHEET STATISTICS ($ in 000’s)
Total Loan Growth: $281M CRE & Multifamily Growth: $268M ESSA HISTORICAL LOAN COMPOSITION $1.07B Total Loans $1.35B Total Loans Year Ended Quarter Ended ($000's) 9/30/2014 9/30/2015 9/30/2016 9/30/2017 9/30/2018 3/31/2019 1-4 Family $654,152 $610,582 $596,645 $586,708 $580,561 $595,116 Construction & Development 1,367 878 1,733 3,097 3,920 6,399 CRE & Multifamily 190,536 200,004 288,447 318,323 416,573 458,292 C&I 74,984 94,134 96,901 102,202 122,841 129,269 Consumer, Home Equity & Other 145,862 205,439 244,543 235,710 192,864 158,510 Total Loans $1,066,901 $1,111,037 $1,228,269 $1,246,040 $1,316,759 $1,347,586
RETAIL DEPOSIT MIX & FUNDING COSTS ($ in 000’s) TOTAL DEPOSITS $1,135,125 COST OF FUNDS .61% TOTAL DEPOSITS $1,168,161 COST OF FUNDS .80%
RETAIL DEPOSIT MIX & FUNDING COSTS ($ in 000’s) TOTAL DEPOSITS $1,135,455 COST OF FUNDS .92% TOTAL DEPOSITS $1,071,395 COST OF FUNDS .66% TOTAL DEPOSITS $1,038,892 COST OF FUNDS .59%
CONSOLIDTED FINANCIAL HIGHLIGHTS * During the first quarter of fiscal 2018, the Company recorded a one-time charge to income tax expense. of $3.7 million related to the reduction in the carrying value of the Company’s deferred tax assets, which resulted from the reduction in the Federal corporate income tax rate under the Tax Cuts and Jobs Act of 2017. ^The 2018 adjusted column presents net income, earnings per share and tangible book value adjusted to exclude this charge.
SOLID ASSET QUALITY
MANAGEMENT FOCUSED ON EFFICIENT OPERATIONS
STRATEGIC OBJECTIVES Continue to transform the balance sheet by changing loan and deposit mix to improve net interest margin. Build digital strategy with Fiserv to improve customer adoption and supplement retail banking model. Accelerate growth in non-interest income lines of business to strengthen and diversify earnings. Continue disciplined expense management. Expand franchise through selective accretive acquisitions or banking team “lift outs.” Maintain strong enterprise wide risk management appetite.
Focus on integrating business to drive responsible growth… ESSA’s Regional Presidents cover three distinct markets driving business integration to ensure lines of business work together seamlessly. Connecting clients across the Company. Commercial Banking - Lending Solutions - Treasury Services - Deposits Consumer Banking - Deposits - Mortgage/HELOC - Card - Technology Wealth Management - Investment Services - Asset Management & Trust - Employee Benefits
Market Overview ESSA Branch Locations Additional Counties Where ESSA Conducts Commercial Lending
ESSA Bank & Trust ESSA Investment Services ESSA Asset Management & Trust ESSA Advisory Services
