8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 28, 2010

ESSA Bancorp, Inc.

(Exact Name of Registrant as Specified in its Charter)

Pennsylvania	001-33384	20-8023072
(State or Other Jurisdiction of Incorporation)	(Commission File No.)	(I.R.S. Employer Identification No.)
200 Palmer Street, Stroudsburg, Pennsylvania		18360
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (570) 421-0531

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operation and Financial Condition.

On July 28, 2010, ESSA Bancorp, Inc. (the “Company”) issued a press release reporting its financial results for the third fiscal quarter of 2010.

A copy of the press release announcing the results is attached as Exhibit 99.1. The information in the preceding Item, as well as Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.

Item 9.01 Financial Statements and Exhibits

(a) Financial Statements of Businesses Acquired. Not applicable.

(b) Pro Forma Financial Information. Not applicable.

(c) Shell Company Transactions. Not applicable.

(d) Exhibits.

Exhibit No.	Description
99.1	Press release issued by the Company on July 28, 2010 announcing its financial results for the third fiscal quarter of 2010.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	ESSA BANCORP, INC.
DATE: July 30, 2010	By:	/s/ Gary S. Olson
		Gary S. Olson, President and Chief Executive Officer

EX-99.1

Exhibit 99.1

Date:	July 28, 2010
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 2010

Stroudsburg, Pennsylvania, July 28, 2010 — ESSA Bancorp, Inc. (the “Company”) (NASDAQ Global Market^SM “ESSA”) the holding company for ESSA Bank & Trust (the “Bank”) today announced its operating results for the three and nine months ended June 30, 2010. The Company reported net income of $1.1 million, or $0.09 per diluted share, for the three months ended June 30, 2010, as compared to net income of $1.7 million, or $0.13 per diluted share for the corresponding 2009 period. For the nine months ended June 30, 2010, the Company reported net income of $3.5 million or $0.27 per diluted share, as compared to net income of $5.1 million or $0.36 per diluted share for the corresponding 2009 period.

The decline in net income for the three months ended June 30, 2010 compared to the same period in 2009 was primarily the result of a decrease in net interest income due to declining loan demand and a decrease in the Company’s interest rate spread. Net income of $3.5 million for the nine months ending June 30, 2010, included a pre-tax write-down of $1.2 million in the value of the Company’s foreclosed real estate portfolio. The charge related to a single property in the Bank’s foreclosed real estate portfolio and was made during the first fiscal quarter of 2010 to reflect an updated appraisal. Net income for the nine months ended June 30, 2009, included a one-time tax benefit of $317,000 which was made during the first fiscal quarter of 2009. This benefit was related to the Company’s other than temporary impairment charge taken in the fourth fiscal quarter of 2008.

“The communities we serve, similar to other areas in the Country, continue to be negatively impacted by the ongoing economic difficulty. Persistent unemployment, historically low interest rates and a soft real estate market provide us with a challenging operating environment. One result has been that with declining loan balances and a continued low reinvestment rate, we are beginning to see a contraction of our net interest margin,” commented Gary S. Olson, President and Chief Executive Officer of the Company. “As long as interest rates remain at these unprecedented lows, we expect this pressure to continue. On the positive side, our credit quality improved from the prior quarter and remains above that of our peers. Also, we continue to have sufficient capital to weather the current economic conditions. We remain committed to meeting the financial needs of the communities in which we do business, including providing credit to qualified borrowers.”

Net Interest Income:

Net interest income decreased $772,000, or 10.4%, to $6.7 million for the three months ended June 30, 2010, compared to the same period in 2009. The decrease was attributable to a decrease of $8.0 million in the Company’s average net earning assets for the three months ended June 30, 2010 compared to the same period ended June 30, 2009, along with a decrease in the Company’s interest rate spread to 2.21% from 2.49% for the same comparative period.

Net interest income decreased $488,000, or 2.3%, to $21.2 million for the nine months ended June 30, 2010, from $21.6 million for the comparable period in 2009. The decrease was attributable to a decrease of $8.8 million in the Company’s average net earning assets for the nine months ended June 30, 2010 compared to the same period ended June 30, 2009. The Company’s interest rate spread for the nine months ended June 30, 2010 was 2.39%, unchanged from the comparable 2009 period.

Provision for Loan Losses and Net Charge-Offs:

The provision for loan losses increased $125,000, or 33.3%, to $500,000 for the three months ended June 30, 2010, from $375,000 for the comparable period in 2009. The provision for loan losses increased $525,000, or 46.7%, to $1.7 million for the nine months ended June 30, 2010, from $1.1 million for the comparable period in 2009. Net

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charge-offs decreased $18,000 for the three months ended June 30, 2010 to $72,000 compared to $90,000 for the three-month period ended June 30, 2009. Net charge-offs decreased $104,000 for the nine months ended June 30, 2010 to $443,000 compared to the same period in 2009.

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 increases in the provision for loan losses for both the three- and nine-month periods ended June 30, 2010, as compared to the comparable 2009 periods were in response to this evaluation.

Noninterest Income:

Noninterest income decreased $128,000, or 7.3%, to $1.6 million for the three months ended June 30, 2010, from $1.7 million for the comparable period in 2009. The primary reason for the decrease was a decrease in the gains on loan sales of $331,000 for the three months ended June 30, 2010 compared to the comparable period in 2009, which was partially offset by an increase in the gains on investment sales of $157,000 for the same period.

Noninterest income increased $348,000, or 8.0%, to $4.7 million for the nine months ended June 30, 2010, from $4.3 million for the comparable period in 2009. The primary reasons for the increase were increases in gains on investment sales of $465,000 and service fees on deposit accounts of $34,000 for the nine months ended June 30, 2010 compared to the same period in 2009. These gains were partially offset by decreases in gains on loan sales of $136,000 and service charges and fees on loans of $99,000 for the same period.

Noninterest Expense:

Noninterest expense increased $48,000, or 0.8%, to $6.3 million for the three months ended June 30, 2010, from $6.3 million for the comparable period in 2009. The primary

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reasons for the increase were increases in compensation and employee benefits, occupancy and equipment, professional fees, and data processing of $95,000, $127,000, $67,000, and $58,000, respectively for the three months ended June 30, 2010 compared to the same period in 2009. These increases were partially offset by a decrease in FDIC insurance of $300,000 for the same period. FDIC premium expense declined as a result of an industry wide special assessment of $400,000 in the quarter ended June 30, 2009.

Noninterest expense increased $1.7 million, or 9.2%, to $19.6 million for the nine months ended June 30, 2010, from $18.0 million for the comparable period in 2009. The primary reasons for the increase were the write-down of foreclosed real estate of $1.2 million in the 2010 period, along with increases in compensation and employee benefits of $258,000 and professional fees of $108,000. These increases were offset, in part, a decrease in advertising expense of $71,000 for the same period.

Balance Sheet:

Total assets increased $25.0 million, or 2.4%, to $1,067.2 million at June 30, 2010, compared to $1,042.1 million at September 30, 2009. The primary reasons for the increase in assets were increases in interest-bearing deposits with other institutions of $3.6 million, investment securities available for sale of $13.2 million and investment securities held to maturity of $7.1 million. These increases were partially offset by a decrease in net loans receivable of $3.4 million. The Company sold $9.8 million of long-term fixed rate residential loans during the nine months ended June 30, 2010, as part of an overall interest rate risk management strategy.

Total deposits increased $107.0 million at June 30, 2010, compared to September 30, 2009, primarily as a result of an increase in certificates of deposit accounts of $86.0 million which included an increase of $42.5 million in brokered certificates of deposit and an increase of $43.5 million in traditional certificates of deposit. These increases were supplemented by an increase in noninterest-bearing demand accounts of $3.4 million, NOW accounts of $1.5 million, money market accounts of $11.5 million, and savings and club accounts of $4.6 million. Borrowed funds decreased during the same time period by $76.3 million primarily because brokered certificates of deposits were a less expensive funding source and because of the other deposit increases noted above.

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Stockholders’ equity decreased $8.8 million to $176.7 million at June 30, 2010, compared to $185.5 million at September 30, 2009, primarily as a result of a previously announced stock repurchase program the Company began in June 2008. 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. It was also announced that the Company’s Board of Directors authorized a second stock repurchase program to purchase up to an additional 10% of its outstanding shares. As of June 30, 2010, the Company had purchased an additional 1,081,400 shares at a weighted average cost of $12.61 per share under the second stock repurchase program including the repurchase of 326,871 shares at an average cost of $12.66 during the three months ended June 30, 2010.

Asset Quality:

Nonperforming assets totaled $11.3 million, or 1.05%, of total assets at June 30, 2010, compared to $7.7 million, or 0.74%, of total assets at September 30, 2009. The increase was due to increases of $3.8 million in nonperforming residential loans and $477,000 in commercial loans offset, in part, by decreases of $438,000 in foreclosed real estate and $334,000 in troubled debt restructures. Nonperforming commercial loans increased primarily as a result of the addition of one commercial real estate relationship in the quarter ended December 31, 2009. Foreclosed real estate declined primarily as a result of the write-down of $1.2 million in the value of one property in the quarter ended December 31, 2009. The Company, in response to these and other trends, made a provision for loan losses of $1.7 million for the nine months ended June 30, 2010, compared to a provision of $1.1 million for the comparable nine-month period in 2009. The allowance for loan losses was $7.0 million, or 0.95%, of loans outstanding at June 30, 2010, compared to $5.8 million, or 0.79%, of loans outstanding at September 30, 2009.

ESSA Bank & Trust is a wholly owned subsidiary of ESSA Bancorp, Inc. which has total assets of over $1 billion and is the leading service-oriented financial institution headquartered in the greater Pocono, Pennsylvania region. Corporate headquarters are located in downtown Stroudsburg, Pennsylvania. With the recent opening of the Mountainhome Office in Monroe County and the three new Lehigh Valley branches,

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ESSA Bank & Trust now has 17 community offices throughout the Pocono, Pennsylvania area and the Lehigh Valley. 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 Market^SM under the symbol “ESSA.”

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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. Except as required by law, 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.

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ESSA BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEET

(UNAUDITED)

	June 30, 2010			September 30, 2009
	(dollars in thousands)
ASSETS
Cash and due from banks	$	10,611		$	7,103
Interest-bearing deposits with other institutions		15,093			11,490
Total cash and cash equivalents		25,704			18,593
Certificates of deposit		1,996			5,355
Investment securities available for sale		230,728			217,566
Investment securities held to maturity (fair value of $14,266 and $6,923)		13,841			6,709
Loans receivable (net of allowance for loan losses of $7,022 and $5,815)		730,192			733,580
Federal Home Loan Bank stock		20,727			20,727
Premises and equipment		12,570			10,620
Bank-owned life insurance		15,482			15,072
Foreclosed real estate		2,141			2,579
Other assets		13,772			11,318
TOTAL ASSETS	$	1,067,153		$	1,042,119
LIABILITIES
Deposits	$	515,873		$	408,855
Short-term borrowings		—			48,091
Other borrowings		362,257			390,507
Advances by borrowers for taxes and insurance		6,224			1,377
Other liabilities		6,140			7,783
TOTAL LIABILITIES		890,494			856,613
Commitment and contingencies		—			—
STOCKHOLDERS’ EQUITY
Preferred Stock		—			—
Common Stock		170			170
Additional paid in capital		163,950			162,243
Unallocated common stock held by the Employee Stock Ownership Plan		(12,002	)		(12,339	)
Retained earnings		63,844			62,337
Treasury Stock, at cost		(40,295	)		(27,695	)
Accumulated other comprehensive income		992			790
TOTAL STOCKHOLDERS’ EQUITY		176,659			185,506
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,067,153		$	1,042,119

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ESSA BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)

	For the Three Months Ended June 30,					For the Nine Months Ended June 30,
	2010		2009			2010		2009
	(dollars in thousands)
INTEREST INCOME
Loans receivable	$	10,105	$	10,682		$	30,612	$	31,806
Investment securities:
Taxable		1,925		2,467			6,326		7,564
Exempt from federal income tax		78		83			238		248
Other investment income		3		1			5		121
Total interest income		12,111		13,233			37,181		39,739
INTEREST EXPENSE
Deposits		1,769		1,635			4,633		5,394
Short-term borrowings		1		70			85		343
Other borrowings		3,670		4,085			11,305		12,356
Total interest expense		5,440		5,790			16,023		18,093
NET INTEREST INCOME		6,671		7,443			21,158		21,646
Provision for loan losses		500		375			1,650		1,125
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		6,171		7,068			19,508		20,521
NONINTEREST INCOME
Service fees on deposit accounts		799		790			2,403		2,369
Services charges and fees on loans		126		158			351		450
Trust and investment fees		203		209			635		623
Impairment loss on securities		—		(68	)		—		(68	)
Gain on sale of investments, net		305		148			613		148
Gain on sale of loans, net		41		372			236		372
Earnings on Bank-owned life insurance		135		137			410		415
Other		10		1			34		25
Total noninterest income		1,619		1,747			4,682		4,334
NONINTEREST EXPENSE
Compensation and employee benefits		3,731		3,636			11,068		10,810
Occupancy and equipment		823		696			2,145		2,160
Professional fees		373		306			1,136		1,028
Data processing		524		466			1,441		1,402
Advertising		208		191			472		543
FDIC Premiums		157		457			638		542
Loss on foreclosed real estate		—		—			1,200		—
Other		519		535			1,511		1,468
Total noninterest expense		6,335		6,287			19,611		17,953
Income before income taxes		1,455		2,528			4,579		6,902
Income taxes		387		787			1,114		1,794
NET INCOME	$	1,068	$	1,741		$	3,465	$	5,108
EARNINGS PER SHARE
Basic	$	0.09	$	0.13		$	0.27	$	0.36
Diluted		0.09		0.13			0.27		0.36

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ESSA BANCORP, INC. AND SUBSIDIARY

OTHER FINANCIAL DATA

(UNAUDITED)

	For the Three  Months Ended June 30,				For the Nine Months Ended June 30,
	2010		2009		2010		2009
	(dollars in thousands, except per share data)
CONSOLIDATED AVERAGE BALANCES:
Total assets	$	1,063,651	$	1,041,657	$	1,044,164	$	1,025,536
Total interest-earning assets		1,017,625		996,752		1,000,423		983,027
Total interest-earning liabilities		845,004		816,123		823,896		797,740
Total stockholders’ equity		179,185		188,350		182,738		193,015
PER COMMON SHARE DATA:
Average shares outstanding - basic		12,520,193		13,450,852		12,837,046		14,033,648
Average shares outstanding - diluted		12,520,193		13,468,712		12,837,046		14,033,648
Book value shares		13,875,012		14,990,620		13,875,012		14,990,620

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