ESSA BANCORP
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Date: January 23, 2008
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 FIRST FISCAL QUARTER
OF 2008
Stroudsburg, Pennsylvania, January 23, 2008 -- 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 December 31, 2007, as compared to net income of $861,000 for
the corresponding 2006 period. The Company's net average interest earning assets
for the three months ended December 31, 2007 increased $147.3 million, or 282.8%
compared to net average interest earning assets for the three months ended
December 31, 2006. This was the result of the Company's lending volume which
resulted in a $69.0 million increase in average loans outstanding from the
previous period together with the Bank's mutual-to-stock conversion and the
Company's subsequent stock offering.
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 ESSA Bank & Trust Foundation (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 were used to pay down short-term debt at the Bank.
"We are pleased to report a solid first quarter," said Gary S. Olson, President
and Chief Executive Officer of the Company. "Our results are particularly
gratifying in light of the difficult interest rate and competitive environment
financial institutions are operating in at this time. We continue to focus on
the growth of our loan portfolio which grew over 3.0 percent during the quarter.
At the same time, we continue to stress the avoidance of subprime loans and
other high risk assets. Our asset quality remains strong as evidenced by our low
ratio of non-performing assets to total assets."
Net Interest Income:
Net interest income increased $1.9 million, or 45.5%, to $6.2 million for the
three months ended December 31, 2007 from $4.3 million for the comparable period
in 2006. The increase was primarily attributable to the increase in net average
earning assets and was offset in part by a 27 basis point decrease in the
Company's interest rate spread to 1.93% for the three months ended December 31,
2007 from 2.20% for the comparable period in 2006.
Non-Interest Income:
Non-interest income was virtually unchanged in the 2007 period compared to the
2006 period, increasing $35,000 to $1.5 million for the three months ended
December 31, 2007 from $1.4 million for the comparable period in 2006. Increases
in service charges and fees on loans, trust and investment fees and earnings on
bank-owned life insurance were offset, in part, by a decrease in service fees on
deposit accounts.
Non-Interest Expense:
Non-interest expense increased $601,000 to $5.0 million for the three months
ended December 31, 2007 from $4.4 million for the comparable period in 2006. The
primary reasons for the increase were increases in compensation and employee
benefits of $422,000, occupancy and equipment of $67,000, professional fees of
$152,000 and data processing fees of $52,000. These increases were offset, in
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part, by decreases in advertising costs of $42,000 and other expenses of
$50,000. Compensation and employee benefits increased primarily as a result of
normal compensation and benefit increases of $266,000 along with an expense of
$171,000 related to the Employee Stock Ownership Plan which was implemented in
April, 2007. Occupancy and equipment costs increased primarily as a result of
increases in rental costs of $21,000 along with increases in depreciation
expense of $23,000. Professional fees increased primarily as a result of
increased legal, accounting, and regulatory fees. Data processing fees increased
due to increased volume and ongoing technology upgrades.
Balance Sheet
Total assets increased $20.2 million, or 2.2% to $930.6 million at December 31,
2007 compared to $910.4 million at September 30, 2007. The primary reasons for
the increase in assets were an increase in net loans receivable of $19.1 million
and an increase in cash and cash equivalents of $2.7 million. The increase in
loans receivable included increases in residential loans of $12.8 million,
consumer loans of $200,000, and commercial loans of $6.2 million.
Retail deposits decreased $6.2 million and brokered certificates of deposit
decreased $5.6 million at December 31, 2007 compared to September 30, 2007.
Borrowed funds increased during the same time period by $28.1 million.
Stockholders' equity increased $2.4 million to $207.1 million at December 31,
2007 compared to $204.7 million at September 30, 2007.
Asset Quality:
Asset quality remains strong. Nonperforming assets totaled $620,000 or 0.07% of
total assets at December 31, 2007 compared to $555,000 or 0.06% of total assets
at September 30, 2007. The Company, in response to continued loan growth, made a
provision for loan losses of $150,000 for the three months ended December 31,
2007 compared to a provision of $90,000 for the comparable three-month period in
2006. The allowance for loan losses was $4.4 million, or 0.68% of loans
outstanding at December 31, 2007 compared to $4.2 million or 0.67% of loans
outstanding at September 30, 2007.
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ESSA Bank & Trust, a wholly-owned subsidiary of ESSA Bancorp, Inc., has total
assets of over $850 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 Bank & Trust offers a full range of
retail and commercial financial services. ESSA Bancorp, Inc. 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
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)
December 31, September 30,
2007 2007
-------------- ---------------
(dollars in thousands)
ASSETS
Cash and due from banks................................................ $ 10,745 $ 10,604
Interest-bearing deposits with other institutions...................... 8,716 6,175
-------------- ---------------
Total cash and cash equivalents.................................. 19,461 16,779
Investment securities available for sale............................... 206,728 205,267
Investment securities held to maturity (fair value of $14,770 and
$16,876)............................................................ 14,862 17,130
Loans receivable (net of allowance for loan losses of $4,357 and
$4,206)............................................................. 638,959 619,845
Federal Home Loan Bank stock........................................... 16,488 16,453
Premises and equipment................................................. 11,165 11,277
Bank-owned life insurance.............................................. 14,084 13,941
Other assets........................................................... 8,889 9,723
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TOTAL ASSETS..................................................... $ 930,636 $ 910,415
============== ===============
LIABILITIES
Deposits............................................................... $372,894 $384,716
Short-term borrowings.................................................. 32,339 34,230
Other borrowings....................................................... 309,697 279,697
Advances by borrowers for taxes and insurance.......................... 3,055 1,423
Other liabilities...................................................... 5,554 5,657
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TOTAL LIABILITIES................................................ 723,539 705,723
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Commitment and contingencies........................................... -- --
STOCKHOLDERS' EQUITY
Preferred stock ($.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)...................................... 170 170
Additional paid in capital............................................. 166,803 166,782
Unallocated common stock held by the Employee Stock Ownership Plan..... (13,132) (13,283)
Retained earnings...................................................... 55,096 53,400
Accumulated other comprehensive loss................................... (1,840) (2,377)
-------------- --------------
TOTAL STOCKHOLDERS' EQUITY....................................... 207,097 204,692
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY....................... $ 930,636 $ 910,415
============== ==============
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ESSA BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
For the Three Months
Ended December 31,
------------------------
2007 2008
------------ -----------
(dollars in thousands)
INTEREST INCOME
Loans receivable.......................................................... $ 9,783 $ 8,623
Investment securities:
Taxable............................................................. 2,702 1,214
Exempt from federal income tax...................................... 83 73
Other investment income................................................... 321 184
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Total interest income............................................... 12,889 10,094
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INTEREST EXPENSE
Deposits.................................................................. 2,689 2,667
Short-term borrowings..................................................... 438 480
Other borrowings.......................................................... 3,563 2,687
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Total interest expense............................................... 6,690 5,834
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NET INTEREST INCOME............................................................. 6,199 4,260
Provision for loan losses................................................. 150 90
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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES............................. 6,049 4,170
------------ ----------
NONINTEREST INCOME
Service fees on deposit accounts.......................................... 906 919
Services charges and fees on loans........................................ 152 134
Trust and investment fees................................................. 246 211
Gain on sale of loans, net................................................ -- 11
Earnings on Bank-owned life insurance..................................... 146 135
Other..................................................................... 13 18
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Total noninterest income............................................. 1,463 1,428
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NONINTEREST EXPENSE
Compensation and employee benefits......................................... 2,995 2,573
Occupancy and equipment.................................................... 684 617
Professional fees.......................................................... 289 137
Data processing............................................................ 479 427
Advertising................................................................ 145 187
Other...................................................................... 440 490
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Total noninterest expense............................................ 5,032 4,431
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INCOME BEFORE INCOME TAXES....................................................... 2,480 1,167
INCOME TAXES..................................................................... 783 306
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$ 1,697 861
NET INCOME....................................................................... ============ ============
BASIC AND DILUTED INCOME PER COMMON SHARE $ 0.11 N/A
Due to the completion of the Company's initial public offering on April 4, 2007,
there were no earnings per share for the three months ended December 31, 2006.
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