EX-99 2 form8k_0707prsrls.txt PRESS RELEASE Date: ESSA Bancorp, Inc. 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 2007 Stroudsburg, Pennsylvania, July 25, 2007 -- ESSA Bancorp, Inc., (the "Company") [NASDAQ: "ESSA"] the holding company for ESSA Bank & Trust (the "Bank") today announced its operating results for the third fiscal quarter of 2007. The Company reported a net loss of $9.0 million for the three months ended June 30, 2007, stemming primarily from an anticipated one-time allocation of $12.7 million to the ESSA Bank & Trust Foundation (the "Foundation"), in conjunction with the Company's stock offering. The reported net loss of $9.0 million for the three months ended June 30, 2007 compared to net income of $1.0 million for the three months ended June 30, 2006. For the nine months ended June 30, 2007 as compared to the nine months ended June 30, 2006, the Company's results showed a net loss of $6.8 million, compared to net income of $3.0 million. The Bank underwent a mutual-to-stock conversion as part of the Company's stock offering that was consummated 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 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 was used to pay down short term debt at the Bank. "We were pleased with the final outcome of our conversion from a mutual to a stock organization," said Gary S. Olson, President and Chief Executive Officer of the Company. Balance Sheet Total assets increased $166.5 million, or 22.9% to $892.3 million at June 30, 2007 compared to $725.8 million at September 30, 2006. The primary reasons for the increase in assets were an increase in net loans receivable of $43.0 million, increases in cash and cash equivalents of $8.4 million, and an increase in investment securities of $112.0 million. The increase in loans receivable included increases in residential loans of $33.1 million, consumer loans of $1.3 million and commercial loans of $8.8 million. The increases in cash and investment securities were due primarily to the investment of the net proceeds from the stock offering. Retail deposits increased $1.9 million while brokered certificates of deposit decreased $6.6 million at June 30, 2007 compared to September 30, 2006. Borrowed funds increased during the same time period by $21.7 million. Stockholders' equity increased $146.0 million to $204.4 million at June 30, 2007 compared to $58.3 million at September 30, 2006. The primary reason for the increase was the Company's mutual to stock conversion and stock offering which was consummated on April 4, 2007. Asset Quality: Asset quality remains strong. Nonperforming assets totaled $943,000 or 0.1% of total assets at June 30, 2007 compared to $476,000 or 0.07% of total assets at September 30, 2006. The Bank made a provision for loan losses of $90,000 for the three months ended June 30, 2007 compared to a provision of $75,000 for the comparable three-month period in 2006. The Bank made a provision for loan losses of $270,000 for the nine months ended June 30, 2007 compared to a provision of 2 $225,000 for the comparable nine-month period in 2006. The allowance for loan losses was $4.1 million or 0.69% of loans outstanding at June 30, 2007 compared to $3.9 million or 0.69% of loans outstanding at September 30, 2006. Net Interest Income: Net interest income increased $1.9 million, or 43.4% to $6.3 million for the three months ended June 30, 2007 from $4.4 million for the comparable period in 2006. The increase was primarily attributable to an increase in net average earning assets of $187.6 million resulting primarily from loan and investment growth combined with the investment of the proceeds from the Company's stock offering, offset in part by a 31 basis point decrease in the Bank's interest rate spread to 2.19% for the three months ended June 30, 2007 from 2.50% for the comparable period in 2006. Net interest income increased $2.6 million, or 20.2% to $15.5 million for the nine months ended June 30, 2007 from $12.9 million for the comparable period in 2006. The increase was primarily attributable to an increase in net average earning assets of $120.9 million, offset in part by a 27 basis point decrease in the Bank's interest rate spread to 2.24% for the nine months ended June 30, 2007 from 2.51% for the comparable period in 2006. Non-Interest Expense: Non-interest expense increased $13.3 million to $17.6 million for the three months ended June 30, 2007 from $4.3 million for the comparable period in 2006. The primary reason for the increase was the one-time increase in contribution to charitable foundation of $12.6 million for the three months ended June 30, 2007 compared to the comparable period in 2006. Excluding the contribution, non-interest expense increased $620,000 or 14.6% for the three months ended June 30, 2007 compared to the comparable period in 2006. Increases in compensation and employee benefits, occupancy and equipment and professional fees were the primary reasons for the increase in non-interest expense. For the nine months ended June 30, 2007, as compared to the comparable period in 2006, non-interest expense increased $13.7 million to $26.3 from $12.6 million. The primary reason for the increase was the one-time increase in contribution to charitable foundation of $12.4 million. Excluding the contribution, non-interest 3 expense increased $980,000, or 7.8%, for the nine months ended June 30, 2007 compared to the comparable period in 2006. Increases in compensation and employee benefits, occupancy and equipment and advertising fees were the primary reasons for the increase. "We have been pleased with the volume of our loan activity, especially mortgages," commented Mr. Olson. "Actually, our loan growth has surpassed expectations so far this year. Even though our net interest margin is challenged by the current interest rate environment, our asset quality, our growth in loans and our non-interest income positions us well." ESSA Bank & Trust, a wholly-owned subsidiary of ESSA Bancorp, Inc., has total assets of over $800 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 offers a full range of retail and commercial financial services. ESSA Bancorp stock trades on The NASDAQ Global Market 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. 4 ESSA BANCORP, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEET (UNAUDITED)
June 30, September 30, 2007 2006 ------------ ----------- (dollars in thousands) ASSETS Cash and due from banks.................................................$ 15,033 $ 11,677 Interest-bearing deposits with other institutions....................... 6,074 1,053 ------------- --------- Total cash and cash equivalents................................... 21,107 12,730 Investment securities available for sale................................ 203,185 89,122 Investment securities held to maturity (market value of $17,249 and $19,193)............................................................. 17,657 19,715 Loans receivable (net of allowance for loan losses of $4,116 and $3,855) 599,656 556,677 Federal Home Loan Bank stock............................................ 15,231 13,675 Premises and equipment.................................................. 11,391 11,447 Bank-owned life insurance............................................... 13,786 13,376 Other assets............................................................ 10,242 9,054 ------------- --------- TOTAL ASSETS......................................................$ 892,255 $ 725,796 ============= =========== LIABILITIES Deposits................................................................$ 397,480 $ 402,153 Short-term borrowings................................................... 33,031 35,299 Other borrowings........................................................ 248,000 224,000 Advances by borrowers for taxes and insurance........................... 5,156 2,198 Other liabilities....................................................... 4,216 3,809 ------------- ----------- TOTAL LIABILITIES................................................. 687,883 667,459 ------------- ----------- 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 -- Additional paid in capital.............................................. 166,769 -- Unallocated common stock held by the Employee Stock Ownership Plan (1,343,379 shares)................................................... (13,434) -- Retained earnings....................................................... 51,682 58,526 Accumulated other comprehensive loss.................................... (815) (189) ------------- ------------ TOTAL STOCKHOLDERS' EQUITY........................................ 204,372 58,337 ------------- ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........................$ 892,255 $ 725,796 =============== ============
5 ESSA BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENT OF INCOME (LOSS) (UNAUDITED)
For the Three Months For the Nine Months Ended June 30, Ended June 30, ----------------------- -------------------------- 2007 2006 2007 2006 ------------ ---------- ------------ ----------- (dollars in thousands) INTEREST INCOME Loans receivable...........................................................$ 9,041 $ 8,051 $ 26,426 $ 23,399 Investment securities:..................................................... Taxable.............................................................. 2,634 954 5,127 2,490 Exempt from federal income tax....................................... 74 71 221 204 Other investment income.................................................... 424 228 1209 641 ------------ ----------- ----------- ---------- Total interest income................................................ 12,173 9,304 32,983 26,734 ----------- ----------- ----------- ---------- INTEREST EXPENSE Deposits................................................................... 2,546 2,340 7,912 6,443 Short-term borrowings...................................................... 480 23 1,319 433 Other borrowings........................................................... 2,821 2,530 8,238 6,947 ------------ ----------- ----------- ---------- Total interest expense............................................... 5,847 4,893 17,469 13,823 ------------ ----------- ----------- ---------- NET INTEREST INCOME.............................................................. 6,326 4,411 15,514 12,911 Provision for loan losses.................................................. 90 75 270 225 ------------ ----------- ----------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES.............................. 6,236 4,336 15,244 12,686 ------------ ----------- ----------- ---------- NONINTEREST INCOME Service fees on deposit accounts........................................... 873 933 2,629 2,853 Services charges and fees on loans......................................... 178 120 434 355 Trust and investment fees.................................................. 195 179 595 498 Gain on sale of loans, net................................................. -- 7 12 7 Earnings on Bank-owned life insurance...................................... 143 131 410 381 Other...................................................................... 22 25 56 73 ------------ ----------- ----------- --------- Total noninterest income............................................. 1,411 1,395 4,136 4,167 ------------ ----------- ----------- --------- NONINTEREST EXPENSE Compensation and employee benefits......................................... 2,828 2,381 7,995 6,952 Occupancy and equipment.................................................... 690 606 1,951 1,819 Professional fees.......................................................... 278 206 586 602 Data processing............................................................ 475 433 1,358 1,341 Advertising................................................................ 178 135 514 446 Contribution to charitable foundation...................................... 12,693 97 12,693 303 Other...................................................................... 426 394 1,206 1,164 ------------ ----------- ----------- ---------- Total noninterest expense............................................ 17,568 4,252 26,303 12,627 ------------ ----------- ----------- ---------- Income (loss) before income taxes................................................ (9,921) 1,479 (6,923) 4,226 Income taxes..................................................................... (915) 457 (79) 1,276 ------------ ----------- ----------- ---------- $ (9,006) $ 1,022 $(6,844) $ 2,950 NET INCOME (LOSS)................................................................============ ============ =========== ==========
Due to the completion of the Company's initial public offering on April 4, 2007, earnings per share for the periods shown is not considered meaningful. 6