ESSA Bancorp, Inc.
Date: July 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 THIRD FISCAL QUARTER OF 2008
Stroudsburg, Pennsylvania, July 23, 2008 -- ESSA Bancorp, Inc. (the "Company")
NASDAQ Global MarketSM "ESSA" the holding company for ESSA Bank & Trust (the
"Bank") today announced its operating results for the three and nine months
ended June 30, 2008. The Company reported net income of $2.0 million, or $0.12
per diluted share, for the three months ended June 30, 2008, as compared to a
net loss of $9.0 million for the corresponding 2007 period. The net loss of $9.0
million for the three months ending June 30, 2007, was primarily due to a one
time allocation of $12.7 million made by the Company to the ESSA Bank & Trust
Foundation (the "Foundation"), in conjunction with the Company's stock offering
which was consummated on April 3, 2007.
For the nine months ended June 30, 2008, the Company reported net income of $5.3
million, or $0.33 per diluted share, as compared to a net loss of $6.8 million
for the comparable period in 2007. The primary reason for the increase in net
income for the nine month period was the Company's contribution to the
Foundation during the prior period. In addition, increases in average net
earning assets added to net income during the current period. Average net
earning assets increased $95.7 million, average loans outstanding increased
$76.3 million and average investments and mortgage-backed securities increased
$80.3 million for the nine months ended June 30, 2008, as compared to the
comparable period in 2007.
"It has been a successful and eventful quarter for the Company and our
stockholders," noted Gary S. Olson, President and Chief Executive Officer of the
Company. "In addition
to holding our first annual meeting of stockholders in May, our Board of
Directors, at its regularly scheduled May meeting, authorized the repurchase of
up to 15% of the Company's outstanding stock and declared a $.04 per share
dividend which was paid on June 30, 2008." Mr. Olson continued, "Our operating
results were strong as our net interest spread improved from the previous
quarter and we continued to grow our Company through prudent loan originations.
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 $548,000, or 8.7%, to $6.9 million for the three
months ended June 30, 2008, from $6.3 million for the comparable period in 2007.
The increase was primarily attributable to an increase in average net earning
assets of $15.4 million, offset in part by a one basis point decrease in the
Company's interest rate spread to 2.18% for the three months ended June 30,
2008, from 2.19% for the comparable period in 2007.
Net interest income increased $4.0 million, or 25.4%, to $19.5 million for the
nine months ended June 30, 2008, from $15.5 million for the comparable period in
2007. The increase was primarily attributable to an increase in average net
earning assets of $95.7 million to $204.8 million for the nine months ended June
30, 2008, from $109.1 million for the comparable period in 2007 and was offset
in part by a 20 basis point decrease in the Company's interest rate spread to
2.04% for the nine months ended June 30, 2008, from 2.24% for the comparable
period in 2007.
NonInterest Income:
Noninterest income was unchanged in the 2008 period compared to the 2007 period,
remaining at $1.4 million for the three months ended June 30, 2008 and 2007,
respectively.
Noninterest income increased $62,000, or 1.5%, to $4.2 million for the nine
months ended June 30, 2008, from $4.1 million for the comparable period in 2007.
Increases in service charges and fees on loans, trust and investment fees and
earnings on bank-
owned life insurance were offset, in part, by decreases in service fees on
deposit accounts, net gain on sale of loans and other income.
NonInterest Expense:
Noninterest expense decreased $12.3 million, or 69.7%, to $5.3 million for the
three months ended June 30, 2008, from $17.6 million for the comparable period
in 2007. The primary reason for the decrease was the Company's contribution of
$12.7 million to the Foundation in April 2007. Excluding the contribution,
noninterest expense increased $444,000 or 9.1%. The primary reasons for the
increase excluding the contribution were increases in compensation and employee
benefits of $341,000 and professional fees of $101,000. Compensation and
employee benefits increased primarily as a result of normal compensation
increases of $168,000 in addition to an expense of $191,000 related to the
Company's equity incentive plan. As previously announced, the Company's
stockholders approved the ESSA Bancorp, Inc. 2007 Equity Incentive Plan at the
2008 Annual Meeting of Stockholders on May 8, 2008. Awards granted under the
Equity Incentive Plan were made on May 23, 2008. Professional fees increased
primarily as a result of increased legal, accounting and regulatory fees
associated with being a public reporting company and included approximately
$72,000 related to the Company's compliance with section 404 of the
Sarbanes-Oxley Act.
Noninterest expense decreased $10.8 million, or 40.9%, to $15.5 million for the
nine months ended June 30, 2008, from $26.3 million for the comparable period in
2007. The primary reason for the nine-month decrease was the $12.7 million
contribution to the Foundation. Excluding the contribution, noninterest expense
increased $1.9 million or 14.2%. The primary reasons for the increase excluding
the contribution were increases in compensation and employee benefits of $1.2
million, occupancy and equipment of $157,000, professional fees of $481,000 and
other expenses of $142,000. Compensation and employee benefits increased
primarily as a result of normal compensation increases of $574,000, along with
an increase in the expense related to the Employee Stock Ownership Plan of
$264,000 and the additional expense of $191,000 related to the Equity Incentive
Plan. Occupancy and equipment costs increased primarily as a result of increases
in rental costs of $49,000, along with increases in depreciation expense of
$58,000. Professional fees increased primarily as a
result of increased legal, accounting and regulatory fees associated with being
a public reporting company, including approximately $216,000 related to the
Company's compliance with Section 404 of the Sarbanes-Oxley Act. Other expense
increased primarily due to increased loan processing costs related to increased
volume.
Balance Sheet
Total assets increased $74.5 million, or 8.2%, to $984.9 million at June 30,
2008, compared to $910.4 million at September 30, 2007. The primary reasons for
the increase in assets were increases in certificates of deposit of $3.8
million, net loans receivable of $66.8 million and an increase in cash and cash
equivalents of $3.1 million. The increase in net loans receivable included net
increases in residential loans of $53.8 million, commercial loans of $14.3
million and a decrease in consumer loans of $1.3 million.
Retail deposits decreased $5.0 million and brokered certificates of deposit
decreased $9.0 million at June 30, 2008, compared to September 30, 2007.
Borrowed funds increased during the same time period by $79.4 million.
Stockholders' equity increased $3.2 million to $207.9 million at June 30, 2008,
compared to $204.7 million at September 30, 2007.
Asset Quality:
Nonperforming assets totaled $1.1 million or 0.11% of total assets at June 30,
2008, 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 June 30, 2008, as compared to a provision
of $90,000 for the comparable three-month period in 2007. The Company made a
provision for loan losses of $450,000 for the nine months ended June 30, 2008,
as compared to a provision of $270,000 for the comparable nine month period in
2007. The allowance for loan losses was $4.5 million, or 0.65%, of loans
outstanding at June 30, 2008, compared to $4.2 million, or 0.67%, of loans
outstanding at September 30, 2007.
ESSA Bank & Trust, a wholly-owned subsidiary of ESSA Bancorp, Inc., has total
assets of over $919 million and is the leading service-oriented financial
institution
headquartered in the greater Pocono, Pennsylvania region. The Bank maintains its
corporate headquarters in downtown Stroudsburg, Pennsylvania and has 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 MarketSM 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.
ESSA BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
June 30, September 30,
2008 2007
----------- ---------------
(dollars in thousands)
ASSETS
Cash and due from banks...................................................$ 9,126 $ 10,604
Interest-bearing deposits with other institutions......................... 10,782 6,175
----------- -------------
Total cash and cash equivalents..................................... 19,908 16,779
Certificates of deposit................................................... 3,836 --
Investment securities available for sale.................................. 209,345 205,267
Investment securities held to maturity (fair value of $12,358 and
$16,876)............................................................... 12,358 17,130
Loans receivable (net of allowance for loan losses of $4,464 and
$4,206)................................................................ 686,609 619,845
Federal Home Loan Bank stock.............................................. 18,430 16,453
Premises and equipment.................................................... 10,885 11,277
Bank-owned life insurance................................................. 14,370 13,941
Other assets.............................................................. 9,116 9,723
------------ -------------
TOTAL ASSETS........................................................$ 984,857 $ 910,415
=========== =============
LIABILITIES
Deposits..................................................................$ 370,677 $ 384,716
Short-term borrowings..................................................... 44,526 34,230
Other borrowings.......................................................... 348,847 279,697
Advances by borrowers for taxes and insurance............................. 6,278 1,423
Other liabilities......................................................... 6,626 5,657
------------ -------------
TOTAL LIABILITIES................................................... 776,954 705,723
------------ -------------
Commitment and contingencies.............................................. -- --
STOCKHOLDERS' EQUITY
Preferred Stock........................................................... -- --
Common stock.............................................................. 170 170
Additional paid in capital................................................ 164,577 166,782
Unallocated common stock held by the Employee Stock Ownership Plan........ (12,906) (13,283)
Retained earnings......................................................... 58,092 53,400
Accumulated other comprehensive loss...................................... (2,030) (2,377)
------------ --------------
TOTAL STOCKHOLDERS' EQUITY.......................................... 207,903 204,692
------------ --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..........................$ 984,857 $ 910,415
============ =============
ESSA BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
For the Three Months For the Nine Months
Ended June 30, Ended June 30,
----------------------- ------------------------
2008 2007 2008 2007
----------- -------- --------- --------
(dollars in thousands)
INTEREST INCOME
Loans receivable..........................................................$ 10,130 $ 9,041 $ 29,797 $ 26,426
Investment securities:
Taxable............................................................. 2,674 2,634 8,013 5,127
Exempt from federal income tax...................................... 83 74 249 221
Other investment income................................................... 217 424 825 1,209
------------ ----------- ----------- -----------
Total interest income............................................... 13,104 12,173 38,884 32,983
------------ ----------- ----------- -----------
INTEREST EXPENSE
Deposits.................................................................. 2,018 2,550 7,154 7,916
Short-term borrowings..................................................... 1,052 480 1,815 1,319
Other borrowings.......................................................... 3,164 2,821 10,470 8,238
------------ ----------- ----------- -----------
Total interest expense.............................................. 6,234 5,851 19,439 17,473
------------ ----------- ----------- -----------
NET INTEREST INCOME............................................................. 6,870 6,322 19,445 15,510
Provision for loan losses................................................. 150 90 450 270
------------ ----------- ----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES............................. 6,720 6,232 18,995 15,240
------------ ----------- ----------- -----------
NONINTEREST INCOME
Service fees on deposit accounts.......................................... 873 873 2,619 2,629
Services charges and fees on loans........................................ 174 178 472 434
Trust and investment fees................................................. 208 195 645 595
Gain on sale of loans, net................................................ -- -- -- 12
Earnings on Bank-owned life insurance..................................... 146 143 429 410
Other..................................................................... 9 22 33 56
------------ ----------- ----------- -----------
Total noninterest income............................................ 1,410 1,411 4,198 4,136
------------ ----------- ----------- -----------
NONINTEREST EXPENSE
Compensation and employee benefits........................................ 3,169 2,828 9,174 7,995
Occupancy and equipment................................................... 705 690 2,108 1,951
Professional fees......................................................... 379 278 1,067 586
Data processing........................................................... 443 475 1,400 1,358
Advertising............................................................... 155 178 447 514
Contribution to Charitable Foundation..................................... -- 12,693 -- 12,693
Other..................................................................... 464 422 1,344 1,202
------------ ----------- ----------- -----------
Total noninterest expense........................................... 5,315 17,564 15,540 26,299
------------ ----------- ----------- -----------
Income (loss ) before income taxes (benefit).................................... 2,815 (9,921) 7,653 (6,923)
Income taxes (benefit).......................................................... 849 (915) 2,336 (79)
------------ ----------- ----------- -----------
NET INCOME (LOSS)...............................................................$ 1,966 $ (9,006) $ 5,317 $ (6,844)
============ =========== =========== ===========
EARNINGS PER SHARE..............................................................
Basic $ 0.13 (0.58) 0.34 (0.58)
Diluted 0.12 (0.58) 0.33 (0.58)
Prior period earnings per share are calculated for the period beginning with the
date of conversion or April 3, 2007.