Date: October 24, 2007
Contact: Gary S. Olson, President & CEO
Corporate Office: 200 Palmer Street
Stroudsburg, Pennsylvania 18360
Telephone: (570) 421-0531
ESSA BANCORP, INC. ANNOUNCES FOURTH QUARTER AND
FULL-YEAR OPERATING RESULTS FOR 2007
Stroudsburg, Pennsylvania, October 24, 2007 -- ESSA Bancorp, Inc., (The
"Company") (NASDAQ: "ESSA") the holding company for ESSA Bank & Trust (The
"Bank") today reported net income of $1.7 million or $0.11 per share for the
three months ended September 30, 2007, as compared to net income of $1.0 million
for the corresponding 2006 period. The Company also reported a net loss of $5.1
million for the twelve months ended September 30, 2007, stemming primarily from
the one-time contribution of $12.7 million to the ESSA Bank & Trust Foundation
(the "Foundation"), made in conjunction with the Company's stock offering. The
reported net loss of $5.1 million for the twelve months ended September 30, 2007
compared to the net income of $4.0 million for the 2006 fiscal year.
The Bank underwent a mutual-to-stock conversion as part of the Company's stock
offering that was consummated on 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 were 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 were used to pay down short-term debt at the
Bank.
"We are pleased to report a strong fourth quarter," said Gary S. Olson,
President and Chief Executive Officer of the Company. "Total assets, income and
equity all showed significant growth in the fourth quarter. With the successful
conversion from a mutual to a stock company behind us, the Company is poised to
continue its growth."
Net Interest Income:
Net interest income increased $1.9 million, or 43.2% to $6.2 million for the
three months ended September 30, 2007 from $4.3 million for the comparable
period in 2006. The increase was primarily attributable to an increase in net
average earning assets of $148.8 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 29 basis point decrease in the
Bank's interest rate spread to 2.00% for the three months ended September 30,
2007 from 2.29% for the comparable period in 2006.
Net interest income increased $4.5 million, or 25.9% to $21.7 million for the
year ended September 30, 2007 from $17.2 million for the comparable period in
2006. The increase was primarily attributable to an increase in net average
earning assets of $83.7 million, offset in part by a 28 basis point decrease in
the Bank's interest rate spread to 2.18% for the year ended September 30, 2007
from 2.46% for the comparable period in 2006.
Non-Interest Income:
Non-interest income was virtually unchanged in the 2007 periods compared to the
2006 periods, remaining at $1.4 million for the three months ended September 30,
2007 and the three months ended September 30, 2006. Non-interest income for the
year ended September 30, 2007 was $5.5 million, unchanged from the prior fiscal
year. Increases in service charges and fees on loans, trust and investment fees,
and earnings on bank-owned life insurance were offset by a decrease in service
fees on deposit accounts.
Non-Interest Expense:
Non-interest expense increased $824,000 to $4.9 million for the three months
ended September 30, 2007 from $4.1 million for the comparable period in 2006.
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The primary reasons for the increase were increases in compensation and employee
benefits of $592,000, occupancy and equipment of $123,000, and professional fees
of $95,000. Compensation and employee benefits increased primarily as a result
of normal compensation and benefit increases of $232,000 along with an expense
of $164,000 related to the implementation of the Employee Stock Ownership Plan
in April, 2007. Occupancy and equipment costs increased primarily as a result of
increases in rental costs of $37,000 along with increases in depreciation
expense of $70,000. Professional fees increased primarily as a result of
increased legal, accounting, and regulatory fees.
For the year ended September 30, 2007, as compared to the comparable period in
2006, non-interest expense increased $14.5 million to $31.2 million from $16.7
million for the comparable period in 2006. The primary reason for the increase
was the Company's contribution to the ESSA Bank & Trust Foundation of $12.7
million made in conjunction with the Company's stock offering. Compensation and
employee benefits increased $1.6 million, occupancy and equipment increased
$255,000 and advertising fees increased $118,000. The primary reasons for these
increases are the same as those that affected the three-month comparison.
Advertising fees increased as a result of efforts to increase the Bank's
exposure in its primary market area.
Balance Sheet
Total assets increased $184.6 million, or 25.4% to $910.4 million at September
30, 2007 compared to $725.8 million at September 30, 2006. The primary reasons
for the increase in assets were an increase in investment securities of $113.6
million, an increase in net loans receivable of $63.2 million, and an increase
in cash and cash equivalents of $4.0 million. The increase in loans receivable
included increases in residential loans of $50.3 million, consumer loans of $0.6
million and commercial loans of $12.3 million. The increases in cash and
investment securities were due primarily to the investment of the net proceeds
from the stock offering.
Retail deposits decreased $9.1 million and brokered certificates of deposit
decreased $8.3 million at September 30, 2007 compared to September 30, 2006.
Borrowed funds increased during the same time period by $54.6 million.
Stockholders' equity increased $146.4 million to $204.7 million at September 30,
2007 compared to $58.3 million at September 30, 2006. The primary reason for the
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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 $555,000 or 0.06% of
total assets at September 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 September 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 $360,000 for the year ended September 30, 2007 compared to a provision
of $300,000 for the comparable period in 2006 in response to continued loan
growth. The allowance for loan losses was $4.2 million or 0.67% of loans
outstanding at September 30, 2007 compared to $3.9 million or 0.69% of loans
outstanding at September 30, 2006.
ESSA Bank & Trust, a wholly-owned subsidiary of ESSA Bancorp, Inc., has total
assets of over $900 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 (SM) 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
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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)
September 30, September 30,
2007 2006
-------------- ---------------
(dollars in thousands)
ASSETS
Cash and due from banks.................................................$ 10,604 $ 11,677
Interest-bearing deposits with other institutions....................... 6,175 1,053
-------------- --------------
Total cash and cash equivalents................................... 16,779 12,730
Investment securities available for sale................................ 205,267 89,122
Investment securities held to maturity (market value of $16,876 and
$19,193)............................................................. 17,130 19,715
Loans receivable (net of allowance for loan losses of $4,206 and $3,855) 619,845 556,677
Federal Home Loan Bank stock............................................ 16,453 13,675
Premises and equipment.................................................. 11,277 11,447
Bank-owned life insurance............................................... 13,941 13,376
Other assets............................................................ 9,723 9,054
-------------- --------------
TOTAL ASSETS......................................................$ 910,415 $ 725,796
============== ==============
LIABILITIES
Deposits................................................................$ 384,716 $ 402,153
Short-term borrowings................................................... 34,230 35,299
Other borrowings........................................................ 279,697 224,000
Advances by borrowers for taxes and insurance........................... 1,423 2,198
Other liabilities....................................................... 5,657 3,809
-------------- --------------
TOTAL LIABILITIES................................................. 705,723 667,459
-------------- --------------
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.............................................. 166,782 --
Unallocated common stock held by the Employee Stock Ownership Plan
(1,328,286 shares)................................................... (13,283) --
Retained earnings....................................................... 53,400 58,526
Accumulated other comprehensive loss.................................... (2,377) (189)
-------------- -------------
TOTAL STOCKHOLDERS' EQUITY........................................ 204,692 58,337
-------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........................$ 910,415 $ 725,796
============== =============
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ESSA BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME (LOSS)
(UNAUDITED)
For the Three Months For the Twelve Months
Ended September 30, September 30,
- ------------------------- -----------------------
2007 2006 2007 2006
------------- ------------ ------------- ----------
(dollars in thousands)
INTEREST INCOME
Loans receivable.......................................................... $ 9,440 $ 8,345 $ 35,866 $ 31,744
Investment securities:
Taxable............................................................. 2,700 1,089 7,827 3,579
Exempt from federal income tax...................................... 81 74 302 278
Other investment income................................................... 306 209 1,515 850
----------- ---------- ---------- ----------
Total interest income............................................... 12,527 9,717 45,510 36,451
------------ ---------- ---------- ----------
INTEREST EXPENSE
Deposits.................................................................. 2,728 2,569 10,640 9,012
Short-term borrowings..................................................... 450 648 1,769 1,081
Other borrowings.......................................................... 3,158 2,177 11,396 9,124
------------ --------- ---------- ----------
Total interest expense............................................. 6,336 5,394 23,805 19,217
------------ --------- ---------- ----------
NET INTEREST INCOME............................................................. 6,191 4,323 21,705 17,234
Provision for loan losses................................................. 90 75 360 300
------------ --------- ---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES............................ 6,101 4,248 21,345 16,934
------------ --------- ---------- ----------
NONINTEREST INCOME
Service fees on deposit accounts.......................................... 863 972 3,492 3,825
Services charges and fees on loans........................................ 153 136 587 491
Trust and investment fees................................................. 169 144 764 642
Gain on sale of loans, net................................................ -- -- 12 7
Earnings on Bank-owned life insurance..................................... 155 131 565 512
Other..................................................................... 20 (32) 76 41
------------ --------- ---------- ---------
Total noninterest income............................................ 1,360 1,351 5,496 5,518
------------ --------- ---------- ---------
NONINTEREST EXPENSE
Compensation and employee benefits........................................ 2,834 2,242 10,829 9,194
Occupancy and equipment................................................... 699 576 2,650 2,395
Professional fees......................................................... 229 134 815 736
Data processing........................................................... 479 478 1,837 1,819
Advertising............................................................... 181 131 695 577
Contribution to charitable foundation..................................... -- 120 12,693 423
Other..................................................................... 460 377 1,666 1,541
------------ --------- ---------- --------
Total noninterest expense........................................... 4,882 4,058 31,185 16,685
------------ --------- ---------- --------
INCOME (LOSS) BEFORE INCOME TAXES............................................... 2,579 1,541 (4,344) 5,767
INCOME TAXES.................................................................... 861 537 782 1,813
------------ --------- --------- --------
NET INCOME (LOSS)............................................................... $ 1,718 $ 1,004 $ (5,126) $ 3,954
============ ========= ========= ========
BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE $ 0.11 N/A $ (0.50) N/A
============ ========= ========= ========
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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