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 30,2008 September 30,2007 (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 MonthsEnded June 30, For the Nine MonthsEnded 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.
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