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 six months
ended March 31, 2011. The Company reported net income of $1.2
million, or $0.10 per diluted share, for the three months ended
March 31, 2011, as compared to net income of $1.6 million, or $0.12
per diluted share, for the corresponding 2010 period. For the six
months ended March 31, 2011, the Company reported net income of
$2.2 million, or $0.19 per diluted share as compared to net income
of $2.4 million, or $0.18 per diluted share for the corresponding
2010 period.
“Recognizing that our local economy is still under pressure, our
second quarter and year-to-date results are in line with our
expectations,” noted Gary S. Olson, President and Chief Executive
Officer of the Company. “Persistently high unemployment rates and a
soft real estate market will continue to impact our results through
decreased loan demand. Our total nonperforming assets grew slightly
during this quarter compared to last quarter but the rate of growth
slowed considerably. Our overall credit quality and capital
positions remain strong. We are determined to continue to produce
positive results during these difficult times.”
Net Interest Income:
Net interest income increased $138,000, or 1.9%, to $7.3 million
for the three months ended March 31, 2011, from $7.2 million for
the comparable period in 2010. The increase was primarily
attributable to an increase in the Company’s interest rate spread
to 2.54% for the three months ended March 31, 2011, from 2.50% for
the comparable period in 2010, offset in part by a decrease of
$15.7 million in the Company’s average net earning assets.
Net interest income decreased $15,000, or 0.1%, to $14.5 million
for the six months ended March 31, 2011. The decrease was primarily
attributable to a decrease in the Company’s average net earning
assets of $16.1 million, offset in part by a slight increase in the
Company’s interest rate spread to 2.49% for the six months ended
March 31, 2011 from 2.48% for the comparable period in 2010.
Provision for Loan Losses:
The provision for loan losses was unchanged at $650,000 for the
three months ended March 31, 2011, as compared to the three month
period ending March 31, 2010. Net charge-offs were unchanged at
$259,000 for the three months ended March 31, 2011 compared to the
three-month period ended March 31, 2010. The provision for loan
losses decreased $20,000, or 1.7%, to $1.1 million for the six
months ended March 31, 2011 from $1.2 million for the comparable
period in 2010. Net charge-offs increased $79,000 for the six
months ended March 31, 2011 to $449,000 compared to $370,000 for
the six month period ended March 31, 2010.
Nonperforming assets increased to 1.41% of total assets at March
31, 2011 compared to 1.20% of total assets at September 30, 2010.
Nonperforming assets were 1.36% of total assets at December 31,
2010. The allowance for loan losses was $8.1 million, or 1.08% of
loans outstanding at March 31, 2011, compared to $7.4 million, or
1.01% of loans outstanding at September 30, 2010.
In evaluating the level of the allowance for loan losses,
management considers historical loss experience, the types of loans
and the amount of loans in the loan portfolio, adverse situations
that may affect a borrower’s ability to repay, the estimated value
of any underlying collateral, peer group information, and
prevailing economic conditions. This evaluation is inherently
subjective, as it requires estimates that are subject to
interpretation and revision as more information becomes available
or as future events occur. The provision for loan losses was in
response to this evaluation.
Noninterest Income:
Noninterest income decreased $284,000, or 17.7%, to $1.3 million
for the three months ended March 31, 2011, from $1.6 million for
the comparable period in 2010. The primary reason for the decrease
was a decline in gains on the sale of investments of $193,000
during the 2011 period. The Company recorded gains of sales of
investment securities of $308,000 for the three months ended March
31, 2010 as compared to $115,000 for the three months ended March
31, 2011.
Noninterest income decreased $405,000, or 13.2%, to $2.7 million
for the six months ended March 31, 2011, from $3.1 million for the
comparable period in 2010. The primary reasons for the decrease
were declines in both the gains on sales of investment securities
of $193,000 and the gains on sales of loans of $192,000. The
Company recorded gains of sales of investment securities of
$308,000 and gains on sales of loans of $195,000 for the six months
ended March 31, 2010 as compared to $115,000 and $3,000,
respectively, for the six months ended March 31, 2011.
Noninterest Expense:
Noninterest expense increased $410,000, or 6.8%, to $6.5 million
for the three months ended March 31, 2011, from $6.0 million for
the comparable period in 2010. The primary reasons for the increase
were increases in FDIC premiums of $99,000 and compensation and
employee benefits of $332,000. The Company opened one new branch
office in the second quarter of 2010 and three new branch offices
in the third quarter of 2010 which contributed to the comparative
increase in compensation and employee benefits.
Noninterest expense decreased $183,000, or 1.4%, to $13.1
million for the six months ended March 31, 2011, from $13.3 million
for the comparable period in 2010. The primary reason for the
decrease was the write-down of foreclosed real estate of $1.2
million in the 2010 period. This decrease was offset, in part, by
increases in compensation and employee benefits expense of $476,000
and occupancy and equipment expense of $251,000 primarily related
to the new branches opened during the second and third quarters of
2010.
Balance Sheet:
Total assets increased $21.9 million, or 2.04%, to $1,093.9
million at March 31, 2011, compared to $1,072.0 million at
September 30, 2010. The primary reason for the increase in assets
was an increase in net loans receivable of $13.3 million. The
increase in net loans receivable included increases in commercial
real estate loans of $18.9 million which were partially offset by
declines in commercial loans, home equity loans and lines of
credit, residential loans, construction loans, and other loans of
$1.4 million, $1.8 million, $1.1 million, $398,000 and $419,000
respectively.
Total deposits increased $91.8 million, or 17.0%, to $632.2
million at March 31, 2011, from $540.4 million at September 30,
2010. The primary reason for the increase was an increase in
certificate of deposit accounts of $92.2 million including an
increase of $54.0 million in brokered certificates. This increase
was partially offset by decreases in noninterest bearing demand
accounts of $1.7 million, NOW accounts of $2.8 million and money
market accounts of $546,000. Borrowed funds decreased during the
same time period by $63.4 million.
Stockholders’ equity decreased $9.1 million, or 5.3%, to $162.6
million at March 31, 2011, from $171.6 million at September 30,
2010, primarily as a result of a previously announced stock
repurchase program, and an increase in the Company’s accumulated
other comprehensive loss. The accumulated other comprehensive loss
increased by $3.0 million at March 31, 2011 compared to September
30, 2010 primarily due to a decrease in the unrealized gain, net of
taxes on the Company’s investment securities available for sale.
The unrealized gain decreased due to changes in interest rates. In
June 2009, the Company announced that it had completed its first
stock repurchase program having purchased 2,547,135 shares at a
weighted average cost of $13.14. On October 6, 2010 the Company
announced that it had completed its second stock repurchase program
having purchased 1,499,100 shares at a weighted average cost of
$12.36. It was also announced that the Company’s Board of Directors
authorized a third repurchase program to purchase up to an
additional 5% of its outstanding shares. During the quarter ended
March 31, 2011, the Company purchased an additional 361,619 shares
at a weighted average cost of $12.81 per share under its third
stock repurchase program. In April 2011, the Company announced that
it completed the third repurchase program having purchased 679,900
shares at a weighted average cost of $12.82.
Asset Quality:
Nonperforming assets totaled $15.5 million, or 1.41%, of total
assets at March 31, 2011, compared to $12.9 million, or 1.20%, of
total assets at September 30, 2010. The increase was due to
increases of $820,000 in nonperforming residential loans, $813,000
in nonperforming commercial loans and $1.1 million in foreclosed
real estate offset, in part, by a decrease of $177,000 in
nonperforming consumer loans. Commercial nonperforming loans
increased primarily as a result of the addition of two commercial
real estate relationships. Nonperforming residential loans
increased due to an increase in the average per loan balance of
nonperforming residential loans to $180,000 at March 31, 2011
compared to $167,000 at September 30, 2010. The number of
non-performing residential loans at March 31, 2011 increased by one
loan to 51 compared to 50 at September 30, 2010. The Company, in
response to these and other trends, made a provision for loan
losses of $1.1 million for the six months ended March 31, 2011,
compared to a provision of $1.2 million for the comparable
six-month period in 2010. The allowance for loan losses was $8.1
million, or 1.08%, of loans outstanding at March 31, 2011, compared
to $7.4 million, or 1.01%, of loans outstanding at September 30,
2010.
ESSA Bank & Trust, a wholly-owned subsidiary of ESSA
Bancorp, Inc., has total assets of over $1.0 billion 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 17 community offices throughout the Greater Pocono and Lehigh
Valley areas in Pennsylvania. 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)
March 31,2011 September 30,2010
(dollars in thousands) ASSETS Cash and due from banks $
8,054 $ 7,454 Interest-bearing deposits with other institutions
12,155 3,436 Total cash and cash
equivalents
20.209
10,890 Investment securities available for sale 251,862 252,341
Investment securities held to maturity (fair value of $10,179 and
$13,254) 9,971 12,795 Loans receivable (net of allowance for loan
losses of $8,129 and $7,448) 744,108 730,842 Federal Home Loan Bank
stock 18,706 20,727 Premises and equipment 11,858 12,189 Bank-owned
life insurance 17,886 15,618
Foreclosed real estate
3,160 2,034 Other assets 16,112 14,561
TOTAL ASSETS $ 1,093,872 $ 1,071,997
LIABILITIES Deposits $ 632,213 $ 540,410 Short-term borrowings -
14,719 Other borrowings 286,657 335,357 Advances by borrowers for
taxes and insurance 4,416 1,465 Other liabilities 8,018
8,423 TOTAL LIABILITIES 931,304
900,374 Commitment and contingencies — —
STOCKHOLDERS’ EQUITY Preferred Stock — — Common Stock 170 170
Additional paid in capital 165,652 164,494 Unallocated common stock
held by the Employee Stock Ownership Plan (11,664 ) (11,891 )
Retained earnings 65,309 64,272 Treasury Stock, at cost (53,346 )
(44,870 ) Accumulated other comprehensive loss (3,553 )
(552 ) TOTAL STOCKHOLDERS’ EQUITY 162,568
171,623 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $
1,093,872 $ 1,071,997
ESSA BANCORP, INC, AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
For the Three MonthsEnded March 31, For the
Six MonthsEnded March 31, 2011 2010
2011 2010 (dollars in thousands) INTEREST
INCOME Loans receivable $ 9,795 $ 10,166 $ 19,639 $ 20,507
Investment securities: Taxable 2,016 2,164 3,938 4,401 Exempt from
federal income tax 75 77 153 160 Other investment income 1
1 1 2 Total interest income
11,887 12,408 23,731 25,070
INTEREST EXPENSE Deposits 1,795 1,458 3,491 2,864 Short-term
borrowings 23 35 45 84 Other borrowings 2,727
3,711 5,723 7,635 Total interest expense 4,545
5,204 9,259 10,583 NET INTEREST
INCOME 7,342 7,204 14,472 14,487 Provision for loan losses
650 650 1,130 1,150 NET INTEREST
INCOME AFTER PROVISION FOR LOAN LOSSES 6,692
6,554 13,342 13,337 NONINTEREST INCOME Service
fees on deposit accounts 729 777 1,491 1,604 Services charges and
fees on loans 145 124 355 225 Trust and investment fees 195 212 406
432 Gain on sale of investments, net 115 308 115 308 Gain on sale
of loans, net - 40 3 195 Earnings on Bank-owned life insurance 131
135 268 275 Other 8 11 20 24
Total noninterest income 1,323 1,607
2,658 3,063 NONINTEREST EXPENSE Compensation
and employee benefits 3,933 3,601 7,813 7,337 Occupancy and
equipment 796 763 1,573 1,322 Professional fees 420 386 849 763
Data processing 481 467 930 917 Advertising 183 166 369 264 Federal
Deposit Insurance Corporation (FDIC) premiums 222 123 406 481
(Gain)/loss on foreclosed real estate (94 ) - 12 1,200 Other
514 539 1,141 992 Total noninterest
expense 6,455 6,045 13,093
13,276 Income before income taxes 1,560 2,116 2,907 3,124 Income
taxes 345 513 680 727 NET
INCOME $ 1,215 $ 1,603 $ 2,227 $ 2,397 EARNINGS PER
SHARE Basic $ 0.10 $ 0.12 $ 0.19 $ 0.18 Diluted 0.10 0.12 0.19 0.18
ESSA BANCORP, INC, AND SUBSIDIARY
OTHER FINANCIAL DATA
(UNAUDITED)
For the Three MonthsEnded March 31,
For the Six MonthsEnded March
31, 2011 2010
2011
2010 (dollars in thousands) CONSOLIDATED
AVERAGE BALANCES: Total assets $ 1,090,493 $ 1,037,882 $ 1,079,374
$ 1,034,474 Total interest-earning assets 1,043,835 994,175
1,032,583 991,822 Total interest-earning liabilities 882,815
817,484 870,236 813,345 Total stockholders’ equity 167,227 183,219
169,217 184,514 PER COMMON SHARE DATA: Average shares
outstanding - basic 11,688,690 12,880,729 11,778,932 12,984,905
Average shares outstanding - diluted 11,698,380 12,880,729
11,785,205 12,984,905 Book value shares 12,819,971 14,234,491
12,819,971 14,234,491
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