Date: ESSA Bancorp, Inc.
Contact: Gary S. Olson, President & CEO
Corporate Office: 200 Palmer Street
Stroudsburg, Pennsylvania 18360
Telephone: (570) 421-0531
ESSA BANCORP, INC. ANNOUNCES OPERATING RESULTS
FOR THE THIRD FISCAL QUARTER OF 2007
Stroudsburg, Pennsylvania, July 25, 2007 -- ESSA Bancorp, Inc., (the "Company")
[NASDAQ: "ESSA"] the holding company for ESSA Bank & Trust (the "Bank") today
announced its operating results for the third fiscal quarter of 2007. The
Company reported a net loss of $9.0 million for the three months ended June 30,
2007, stemming primarily from an anticipated one-time allocation of $12.7
million to the ESSA Bank & Trust Foundation (the "Foundation"), in conjunction
with the Company's stock offering. The reported net loss of $9.0 million for the
three months ended June 30, 2007 compared to net income of $1.0 million for the
three months ended June 30, 2006. For the nine months ended June 30, 2007 as
compared to the nine months ended June 30, 2006, the Company's results showed a
net loss of $6.8 million, compared to net income of $3.0 million.
The Bank underwent a mutual-to-stock conversion as part of the Company's stock
offering that was consummated April 4, 2007. The stock offering resulted in
gross proceeds of $158.7 million through the sale of 15,870,000 shares at a
price of $10.00 per share. The Company contributed 1,110,900 shares of its
common stock to the Foundation along with $1.6 million in cash. Net proceeds
from the stock offering prior to this contribution to the Foundation were $155.8
million. Concurrent with the conversion, the Company lent approximately $13.6
million to the Bank's Employee Stock Ownership Plan. The Company retained
approximately $64.3 million of the net proceeds prior to the contribution to the
Foundation and the remainder of the net proceeds was contributed to the Bank.
The stock offering proceeds have been invested in short-term, investment-
grade debt obligations and mortgage-backed securities debt issued by United
States government sponsored agencies or entities. Approximately $29.7 million of
the net proceeds of the stock offering was used to pay down short term debt at
the Bank.
"We were pleased with the final outcome of our conversion from a mutual to a
stock organization," said Gary S. Olson, President and Chief Executive Officer
of the Company.
Balance Sheet
Total assets increased $166.5 million, or 22.9% to $892.3 million at June 30,
2007 compared to $725.8 million at September 30, 2006. The primary reasons for
the increase in assets were an increase in net loans receivable of $43.0
million, increases in cash and cash equivalents of $8.4 million, and an increase
in investment securities of $112.0 million. The increase in loans receivable
included increases in residential loans of $33.1 million, consumer loans of $1.3
million and commercial loans of $8.8 million. The increases in cash and
investment securities were due primarily to the investment of the net proceeds
from the stock offering.
Retail deposits increased $1.9 million while brokered certificates of deposit
decreased $6.6 million at June 30, 2007 compared to September 30, 2006. Borrowed
funds increased during the same time period by $21.7 million.
Stockholders' equity increased $146.0 million to $204.4 million at June 30, 2007
compared to $58.3 million at September 30, 2006. The primary reason for the
increase was the Company's mutual to stock conversion and stock offering which
was consummated on April 4, 2007.
Asset Quality:
Asset quality remains strong. Nonperforming assets totaled $943,000 or 0.1% of
total assets at June 30, 2007 compared to $476,000 or 0.07% of total assets at
September 30, 2006. The Bank made a provision for loan losses of $90,000 for the
three months ended June 30, 2007 compared to a provision of $75,000 for the
comparable three-month period in 2006. The Bank made a provision for loan losses
of $270,000 for the nine months ended June 30, 2007 compared to a provision of
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$225,000 for the comparable nine-month period in 2006. The allowance for loan
losses was $4.1 million or 0.69% of loans outstanding at June 30, 2007 compared
to $3.9 million or 0.69% of loans outstanding at September 30, 2006.
Net Interest Income:
Net interest income increased $1.9 million, or 43.4% to $6.3 million for the
three months ended June 30, 2007 from $4.4 million for the comparable period in
2006. The increase was primarily attributable to an increase in net average
earning assets of $187.6 million resulting primarily from loan and investment
growth combined with the investment of the proceeds from the Company's stock
offering, offset in part by a 31 basis point decrease in the Bank's interest
rate spread to 2.19% for the three months ended June 30, 2007 from 2.50% for the
comparable period in 2006.
Net interest income increased $2.6 million, or 20.2% to $15.5 million for the
nine months ended June 30, 2007 from $12.9 million for the comparable period in
2006. The increase was primarily attributable to an increase in net average
earning assets of $120.9 million, offset in part by a 27 basis point decrease in
the Bank's interest rate spread to 2.24% for the nine months ended June 30, 2007
from 2.51% for the comparable period in 2006.
Non-Interest Expense:
Non-interest expense increased $13.3 million to $17.6 million for the three
months ended June 30, 2007 from $4.3 million for the comparable period in 2006.
The primary reason for the increase was the one-time increase in contribution to
charitable foundation of $12.6 million for the three months ended June 30, 2007
compared to the comparable period in 2006. Excluding the contribution,
non-interest expense increased $620,000 or 14.6% for the three months ended June
30, 2007 compared to the comparable period in 2006. Increases in compensation
and employee benefits, occupancy and equipment and professional fees were the
primary reasons for the increase in non-interest expense.
For the nine months ended June 30, 2007, as compared to the comparable period in
2006, non-interest expense increased $13.7 million to $26.3 from $12.6 million.
The primary reason for the increase was the one-time increase in contribution to
charitable foundation of $12.4 million. Excluding the contribution, non-interest
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expense increased $980,000, or 7.8%, for the nine months ended June 30, 2007
compared to the comparable period in 2006. Increases in compensation and
employee benefits, occupancy and equipment and advertising fees were the primary
reasons for the increase.
"We have been pleased with the volume of our loan activity, especially
mortgages," commented Mr. Olson. "Actually, our loan growth has surpassed
expectations so far this year. Even though our net interest margin is challenged
by the current interest rate environment, our asset quality, our growth in loans
and our non-interest income positions us well."
ESSA Bank & Trust, a wholly-owned subsidiary of ESSA Bancorp, Inc., has total
assets of over $800 million and is the leading service-oriented financial
institution in the greater Pocono, Pennsylvania region. The Bank maintains its
corporate headquarters in downtown Stroudsburg, Pennsylvania and 13 community
offices throughout the Pocono, Pennsylvania area. In addition to being one of
the region's largest mortgage lenders, ESSA offers a full range of retail and
commercial financial services. ESSA Bancorp stock trades on The NASDAQ Global
Market under the symbol "ESSA."
###
Forward Looking Statements
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 regulatory fees 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.
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, which 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.
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ESSA BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
June 30, September 30,
2007 2006
------------ -----------
(dollars in thousands)
ASSETS
Cash and due from banks.................................................$ 15,033 $ 11,677
Interest-bearing deposits with other institutions....................... 6,074 1,053
------------- ---------
Total cash and cash equivalents................................... 21,107 12,730
Investment securities available for sale................................ 203,185 89,122
Investment securities held to maturity (market value of $17,249 and
$19,193)............................................................. 17,657 19,715
Loans receivable (net of allowance for loan losses of $4,116 and $3,855) 599,656 556,677
Federal Home Loan Bank stock............................................ 15,231 13,675
Premises and equipment.................................................. 11,391 11,447
Bank-owned life insurance............................................... 13,786 13,376
Other assets............................................................ 10,242 9,054
------------- ---------
TOTAL ASSETS......................................................$ 892,255 $ 725,796
============= ===========
LIABILITIES
Deposits................................................................$ 397,480 $ 402,153
Short-term borrowings................................................... 33,031 35,299
Other borrowings........................................................ 248,000 224,000
Advances by borrowers for taxes and insurance........................... 5,156 2,198
Other liabilities....................................................... 4,216 3,809
------------- -----------
TOTAL LIABILITIES................................................. 687,883 667,459
------------- -----------
Commitment and contingencies............................................ -- --
STOCKHOLDERS' EQUITY
Preferred stock ($.01 par value: 10,000,000 shares authorized, none
issued).............................................................. -- --
Common stock ($.01 par value; 40,000,000 shares authorized, 16,980,900
shares issued and outstanding)....................................... 170 --
Additional paid in capital.............................................. 166,769 --
Unallocated common stock held by the Employee Stock Ownership Plan
(1,343,379 shares)................................................... (13,434) --
Retained earnings....................................................... 51,682 58,526
Accumulated other comprehensive loss.................................... (815) (189)
------------- ------------
TOTAL STOCKHOLDERS' EQUITY........................................ 204,372 58,337
------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........................$ 892,255 $ 725,796
=============== ============
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ESSA BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME (LOSS)
(UNAUDITED)
For the Three Months For the Nine Months
Ended June 30, Ended June 30,
----------------------- --------------------------
2007 2006 2007 2006
------------ ---------- ------------ -----------
(dollars in thousands)
INTEREST INCOME
Loans receivable...........................................................$ 9,041 $ 8,051 $ 26,426 $ 23,399
Investment securities:.....................................................
Taxable.............................................................. 2,634 954 5,127 2,490
Exempt from federal income tax....................................... 74 71 221 204
Other investment income.................................................... 424 228 1209 641
------------ ----------- ----------- ----------
Total interest income................................................ 12,173 9,304 32,983 26,734
----------- ----------- ----------- ----------
INTEREST EXPENSE
Deposits................................................................... 2,546 2,340 7,912 6,443
Short-term borrowings...................................................... 480 23 1,319 433
Other borrowings........................................................... 2,821 2,530 8,238 6,947
------------ ----------- ----------- ----------
Total interest expense............................................... 5,847 4,893 17,469 13,823
------------ ----------- ----------- ----------
NET INTEREST INCOME.............................................................. 6,326 4,411 15,514 12,911
Provision for loan losses.................................................. 90 75 270 225
------------ ----------- ----------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES.............................. 6,236 4,336 15,244 12,686
------------ ----------- ----------- ----------
NONINTEREST INCOME
Service fees on deposit accounts........................................... 873 933 2,629 2,853
Services charges and fees on loans......................................... 178 120 434 355
Trust and investment fees.................................................. 195 179 595 498
Gain on sale of loans, net................................................. -- 7 12 7
Earnings on Bank-owned life insurance...................................... 143 131 410 381
Other...................................................................... 22 25 56 73
------------ ----------- ----------- ---------
Total noninterest income............................................. 1,411 1,395 4,136 4,167
------------ ----------- ----------- ---------
NONINTEREST EXPENSE
Compensation and employee benefits......................................... 2,828 2,381 7,995 6,952
Occupancy and equipment.................................................... 690 606 1,951 1,819
Professional fees.......................................................... 278 206 586 602
Data processing............................................................ 475 433 1,358 1,341
Advertising................................................................ 178 135 514 446
Contribution to charitable foundation...................................... 12,693 97 12,693 303
Other...................................................................... 426 394 1,206 1,164
------------ ----------- ----------- ----------
Total noninterest expense............................................ 17,568 4,252 26,303 12,627
------------ ----------- ----------- ----------
Income (loss) before income taxes................................................ (9,921) 1,479 (6,923) 4,226
Income taxes..................................................................... (915) 457 (79) 1,276
------------ ----------- ----------- ----------
$ (9,006) $ 1,022 $(6,844) $ 2,950
NET INCOME (LOSS)................................................................============ ============ =========== ==========
Due to the completion of the Company's initial public offering on April 4,
2007, earnings per share for the periods shown is not considered
meaningful.
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