STROUDSBURG, PA--(Marketwired - Jan 27, 2016) - ESSA Bancorp, Inc. (the "Company") (NASDAQ: ESSA) today reported net income of $2.0 million, or $0.19 per diluted share, for the quarter ended December 31, 2015, compared with net income of $2.6 million, or $0.25 per diluted share, for the same quarter last year. Results for the quarter ended December 31, 2015, include the acquisition of Eagle National Bank ("ENB"), which was completed on December 4, 2015. Non-recurring merger related charges were $245,000, or $0.01 per share (after-tax), for the recently-completed quarter. 

The Company is the holding company for ESSA Bank & Trust, a $1.8 billion asset institution, which provides full service retail and commercial banking, financial, and investment services from 30 locations in eastern Pennsylvania. 


  • Strong loan growth. Total loans at December 31, 2015 increased $126.2 million, or 11.4% (not annualized), on a sequential quarter basis from September 30, 2015. Loan growth was driven primarily by the acquisition of ENB. 
  • Stable net interest income. Net interest income was $11.1 million and the net interest margin was 2.84% for the quarter ended December 31, 2015, which were steady compared with both the quarter ended September 30, 2015 and the prior year quarter.
  • Asset quality remained strong. Net charge-offs as a percent of total average loans were 0.02% for the three months ending December 31, 2015. Non-performing assets were $25.4 million, or 1.44% of total assets, as of December 31, 2015. Non-performing assets were $22.7 million, or 1.41% of total assets at September 30, 2015.
  • Capital management. The Company remains well-capitalized. ESSA paid a quarterly cash dividend of $0.09 per share on December 31, 2015 and repurchased 22,700 shares at an average price of $13.24 during its first fiscal quarter. Tangible book value per share decreased to $13.52 at December 31, 2015, from $13.72 at December 31, 2014 as expected due to merger related adjustments.

Gary S. Olson, President and CEO, stated: "Much of our focus during the first quarter was toward our goals of closing the Eagle National Bank acquisition and converting their banking systems to ours. We are very pleased to have successfully accomplished both these goals as of December 4, 2015. The successful addition of Eagle was another step in our continuing transition to a more commercially-oriented bank, serving customers throughout eastern Pennsylvania. In addition, we also achieved progress on our goals of maintaining strong asset quality metrics, controlling operating costs and prudently managing capital."

Income Statement Review

For the fiscal first quarter of 2016, the Company's return on average assets and return on average equity were 0.47% and 4.50%, compared with 0.66% and 6.06%, respectively, in the corresponding period of fiscal 2015.

Net interest income increased $42,000, or 0.4%, to $11.1 million for the three months ended December 31, 2015, from $11.1 million for the comparable period in 2014. 

Interest expense increased $65,000 for the quarter ended December 31, 2015 compared to the comparable period in 2014, while interest income increased $107,000.

The net interest margin for the first quarter of 2016 was 2.84%, compared with 2.85% for the previous quarter, and 2.99% for the first quarter of fiscal 2015. Growth in net interest-earning assets and stability in the cost of interest bearing liabilities for the 2015 fiscal first quarter compared to the 2014 first quarter were more than offset by declines in the yields on interest earning assets. 

The Company's provision for loan losses increased to $600,000 for the three months ended December 31, 2015, compared with $450,000 for the three months ended December 31, 2014. Net loan charge-offs in fiscal first quarter 2016 were $262,000 compared to $568,000 in fiscal first quarter 2015. Nonperforming assets totaled $25.4 million at December 31, 2015 compared to $25.2 million at December 31, 2014.

Noninterest income increased $3,000 or 0.2%, to $1.8 million for the three months ended December 31, 2015, compared with $1.8 million for the three months ended December 31, 2014.

Noninterest expense increased $820,000 or 9.2%, to $9.8 million for the three months ended December 31, 2015 compared with $9.0 million for the comparable period in 2014. The primary reasons for the increase in the 2015 period compared to the 2014 period include increases in compensation and employee benefits of $464,000, occupancy and equipment of $128.000 and data processing of $109,000. Also, as previously mentioned, noninterest expense for the first quarter of 2016, includes merger-related expenses of $245,000 and the costs of the larger, combined bank for December, 2015.

Balance Sheet, Asset Quality and Capital Adequacy Review

Total assets grew $156.9 million to $1.76 billion at December 31, 2015, from $1.61 billion at September 30, 2015. This increase was primarily due to the merger with ENB. Total net loans were $1.23 billion at December 31, 2015 compared with $1.10 billion at September 30, 2015. 

Total deposits increased $143.4 million, or 13.1%, to $1.24 billion at December 31, 2015, from $1.10 billion at September 30, 2015. The merger with ENB was the primary reason for the increase in deposit accounts. During the same period, borrowings increased $12.7 million, reflecting the Company's ability to obtain borrowed funds at what management believes represent attractive rates. 

Nonperforming assets increased $2.7 million to $25.4 million, or 1.44%, of total assets at December 31, 2015, from $22.7 million, or 1.41%, of total assets at September 30, 2015 due primarily to the addition of ENB's nonperforming assets.

Net charge-offs as a percent of total average loans were only 0.02% for the three months ending December 31, 2015 and 0.05% for the three months ended December 31, 2014, which reflects the Company's disciplined credit and underwriting standards. The allowance for loan losses was $9.3 million, or 0.75% of loans outstanding, at December 31, 2015, compared to $8.9 million, or 0.80% of loans outstanding at September 30, 2015 reflecting the purchase of loans from ENB. Purchased loans are initially recorded at fair market value at acquisition and therefore do not require an allowance when first recorded.

The Bank continued to demonstrate financial strength, with a Tier 1 leverage ratio of 9.44%, exceeding accepted regulatory standards for a well-capitalized institution. The Company maintained a tangible equity to total assets ratio of 8.68%.

Stockholders' equity decreased $1.3 million to $170.0 million at December 31, 2015, from $171.3 million at September 30, 2015. During the three months ended December 31, 2015, the Company repurchased 22,700 shares at an average cost of $13.24 per share. Tangible book value per share at December 31, 2015 decreased to $13.52, compared with $14.03 at September 30, 2015 as expected due to the acquisition of ENB.

About the Company: ESSA Bancorp, Inc. is the holding company for its wholly-owned subsidiary, ESSA Bank & Trust, which was formed in 1916. Headquartered in Stroudsburg, Pennsylvania, the Company has total assets of $1.8 billion and has 30 community offices throughout the Greater Pocono, Lehigh Valley, Scranton/Wilkes-Barre, and suburban Philadelphia areas. ESSA Bank & Trust offers a full range of commercial and retail financial services, financial advisory and asset management capabilities. 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 compliance costs 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, and the Risk Factors disclosed in our annual and quarterly reports.

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, that 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.


  December 31,
    September 30,
  (dollars in thousands)  
  Cash and due from banks $ 21,448     $ 15,905  
  Interest-bearing deposits with other institutions   4,280       2,853  
    Total cash and cash equivalents   25,728       18,758  
  Certificates of deposit   1,500       1,750  
  Investment securities available for sale   393,572       379,407  
  Loans receivable (net of allowance for loan losses of $9,257 and $8,919)   1,228,007       1,102,118  
  Regulatory stock, at cost   14,679       13,831  
  Premises and equipment, net   17,524       16,553  
  Bank-owned life insurance   30,885       30,655  
  Foreclosed real estate   2,704       2,480  
  Intangible assets, net   3,076       1,759  
  Goodwill   13,801       10,259  
  Deferred income taxes   13,095       11,149  
  Other assets   18,842       17,825  
    TOTAL ASSETS $ 1,763,413     $ 1,606,544  
  Deposits $ 1,240,170     $ 1,096,754  
  Short-term borrowings   84,052       91,339  
  Other borrowings   249,101       229,101  
  Advances by borrowers for taxes and insurance   6,992       4,273  
  Other liabilities   13,070       13,797  
    TOTAL LIABILITIES   1,593,385       1,435,264  
  Common stock   181       181  
  Additional paid in capital   182,371       182,295  
  Unallocated common stock held by the Employee Stock Ownership Plan   (9,513 )     (9,627 )
  Retained earnings   84,684       83,658  
  Treasury stock, at cost   (83,133 )     (82,832 )
  Accumulated other comprehensive loss   (4,562 )     (2,395 )
    TOTAL STOCKHOLDERS' EQUITY   170,028       171,280  
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,763,413     $ 1,606,544  
  For the Three Months
Ended December 31,
  2015     2014  
  (dollars in thousands)  
INTEREST INCOME              
  Loans receivable $ 11,574     $ 11,449  
  Investment securities:              
    Taxable   1,818       1,889  
    Exempt from federal income tax   244       234  
  Other investment income   179       136  
    Total interest income   13,815       13,708  
INTEREST EXPENSE              
  Deposits   1,845       1,965  
  Short-term borrowings   94       103  
  Other borrowings   784       590  
    Total interest expense   2,723       2,658  
NET INTEREST INCOME   11,092       11,050  
  Provision for loan losses   600       450  
  Service fees on deposit accounts   863       827  
  Services charges and fees on loans   280       315  
  Trust and investment fees   213       238  
  Gain on sale of investments, net   3       -  
  Earnings on Bank-owned life insurance   230       239  
  Insurance commissions   199       182  
  Other   29       13  
    Total noninterest income   1,817       1,814  
  Compensation and employee benefits   5,578       5,114  
  Occupancy and equipment   1,109       981  
  Professional fees   453       514  
  Data processing   919       813  
  Advertising   87       128  
  Federal Deposit Insurance Corporation Premiums   278       292  
  Gain on foreclosed real estate   (10 )     (38 )
  Merger related costs   245       -  
  Amortization of intangible assets   174       166  
  Other   953       996  
    Total noninterest expense   9,786       8,966  
Income before income taxes   2,523       3,448  
  Income taxes   566       852  
Net Income $ 1,957     $ 2,596  
Earnings per share:              
  Basic $ 0.19     $ 0.25  
  Diluted $ 0.19     $ 0.25  
  For the Three Months
Ended December 31,
  2015     2014  
  (dollars in thousands)  
    Total assets $ 1,650,206     $ 1,570,393  
    Total interest-earning assets   1,547,741       1,466,915  
    Total interest-bearing liabilities   1,347,925       1,317,154  
    Total stockholders' equity   172,642       169,926  
  PER COMMON SHARE DATA:              
    Average shares outstanding - basic   10,364,425       10,516,097  
    Average shares outstanding - diluted   10,535.574       10,516,097  
    Book value shares   11,330,544       11,444,378  
  Net interest rate spread   2.77 %     2.94 %
  Net interest margin   2.84 %     2.99 %