/EINPresswire.com/ -- STROUDSBURG, PA -- (Marketwired) -- 10/28/15 -- ESSA Bancorp, Inc. (the "Company") (NASDAQ: ESSA) today reported net income of $2.3 million, or $0.22 per diluted share, for the quarter ended September 30, 2015, compared with net income of $2.4 million, or $0.22 per diluted share, for the same quarter last year. Net income for the fiscal year ended September 30, 2015, increased to $9.8 million, or $0.93 per diluted share, compared with net income of $8.5 million, or $0.79 per diluted share, for the year ended September 30, 2014. Year-over-year comparisons reflect the acquisition of Franklin Security Bancorp in April 2014.

The Company is the holding company for ESSA Bank & Trust, a $1.6 billion asset institution, which provides full service retail and commercial banking, financial, and investment services from 26 locations in eastern Pennsylvania.

FOURTH QUARTER HIGHLIGHTS

• Disciplined loan growth. Total loans at September 30, 2015 increased 0.9% (not annualized) on a sequential quarter basis, and 4.1% for the fiscal year ended September 30, 2015. Loan growth was driven primarily by commercial and indirect auto loan increases.
• Net interest income and net interest margin. Net interest income was $10.7 million for the quarter ended September 30, 2015 compared to $11.0 million for the quarter ended June 30, 2015 and $10.6 million for the quarter ended September 30, 2014. The net interest margin was 2.85% for the quarter ended September 30, 2015 compared to 2.96% for the quarter ended June 30, 2015 and 2.90% for the quarter ended September 30, 2014.
• Asset quality remained strong. Non-performing assets decreased to $22.7 million, or 1.41% of total assets, as of September 30, 2015 from $23.4 million, or 1.46% of total assets as of June 30, 2015.
• Capital management. The Company remains well-capitalized. ESSA paid a quarterly cash dividend of $0.09 per share on September 30, 2015 and repurchased 68,700 shares at an average price of $12.97 during its fourth quarter. Tangible book value per share increased to $14.03 at September 30, 2015, from $13.34 at September 30, 2014.
• Announced acquisition. On July 29, 2015, the Company announced a definitive agreement to purchase Eagle National Bancorp ("ENB") in an all-cash transaction. ENB had total assets of $175.7 million, total loans of $125.1 million, and total deposits of $148.7 million as of June 30, 2015.

Gary S. Olson, President and CEO, commented: "Solid fourth quarter results reflect our disciplined lending approach, conservative underwriting standards, and tight expense controls. We remain excited about the bright future at ESSA."

Income Statement Review

Net income for the three months ended September 30, 2015 was $2.3 million, or $0.22 per diluted share, compared with net income of $2.4 million, or $0.22 per share, for the prior year period. Net income for the three months ending September 30, 2015 includes non-recurring merger-related costs of $285,000, or $0.02 per share (after-tax), associated with the pending merger with ENB. Net income for the fiscal year ended September 30, 2015 was $9.8 million, or $0.93 per diluted share, compared to $8.5 million, or $0.79 per diluted share, for the prior year period. Net income for fiscal 2014 includes merger-related costs of $522,000, or $0.03 per share (after-tax), associated with the acquisition of Franklin Security Bancorp, Inc. on April 4, 2014.

For the fiscal fourth quarter of 2015, the Company's return on average assets and return on average equity were 0.57% and 5.27%, compared with 0.61% and 5.54%,respectively, in the corresponding period of fiscal 2014. For the year ended September 30, 2015, the Company's return on average assets and return on average equity were 0.62% and 5.68%, compared with 0.59% and 5.01%, respectively, in the year ended September 30, 2014.

Net interest income increased $103,000, or 1.0%, to $10.7 million for the three months ended September 30, 2015, from $10.6 million for the comparable period in 2014. Net interest income increased $3.6 million, or 9.0%, to $43.8 million for the fiscal year ended September 30, 2015, from $40.1 million for the comparable period in 2014, primarily reflecting the previously noted increase in the Company's loan portfolio.

Interest expense decreased $66,000 for the quarter ended September 30, 2015 compared to the comparable period in 2014, while interest income increased $37,000. Interest expense decreased $237,000 for the year ended September 30, 2015 compared to the comparable period in 2014, while interest income increased $3.4 million on growing loan volume. Increases in interest income from indirect auto loans, commercial loans and investment securities helped offset a decrease in interest income from mortgage loans.

The net interest margin for the fourth quarter of 2015 was 2.85%, down from 2.96% for the previous quarter, and down from 2.90% for the fourth quarter of fiscal 2014. The net interest margin was stable at 2.96% for the fiscal year ended September 30, 2015 compared to 2.97% for the 2014 fiscal year, despite continued pressure due to the low-interest rate environment and pricing competition for quality lending business.

The Company's provision for loan losses increased to $575,000 for the three months ended September 30, 2015, compared with $350,000 for the three months ended September 30, 2014. The Company's provision for loan losses decreased to $2.1 million for the year ended September 30, 2015, compared with $2.4 million for the year ended September 30, 2014. Net loan charge-offs in fiscal fourth quarter 2015 were $423,000 compared to $552,000 in fiscal fourth quarter 2014. Net loan charge-offs for the years ended September 30, 2015 and 2014 were $1.8 million.

Noninterest income increased $305,000 or 15.8%, to $2.2 million for the three months ended September 30, 2015, compared with $1.9 million for the three months ended September 30, 2014 due principally to increased trust and investment fees, and gain on sale of investments. Noninterest income increased $489,000 or 6.6%, to $7.9 million for the year ended September 30, 2015, compared with $7.4 million for the year ended September 30, 2014. The increase was due primarily to increases in service fees and charges related to loans and gain on sale of investments offset in part by declines in gain on acquisition and insurance commissions.

Noninterest expense increased $358,000 or 3.9%, to $9.4 million for the three months ended September 30, 2015 compared with $9.1 million for the comparable period in 2014. As previously mentioned, noninterest expense for the fourth quarter of 2015 included merger-related expenses of $285,000. Noninterest expense increased $3.1 million or 9.0% to $36.9 million for the year ended September 30, 2015 compared with $33.8 million for the comparable period in 2014. Increases in year-over-year noninterest expenses primarily reflect additional facilities and costs related to the Franklin Security Bank acquisition and the anticipated merger with Eagle National Bank.

Balance Sheet, Asset Quality and Capital Adequacy Review

Total assets grew $31.7 million to $1.60 billion at September 30, 2015, from $1.57 billion at September 30, 2014. This increase was primarily due to total loan growth (principally indirect auto and commercial) of $44.1 million, or 4.1%. Total net loans were $1.10 billion at September 30, 2015 vs. $1.06 billion at September 30, 2014. Loan growth, however, was partially offset by declines of investment securities and cash and cash equivalents.

Total deposits decreased $37.1 million, or 3.3%, to $1.10 billion at September 30, 2015, from $1.13 billion at September 30, 2014. Decreases in interest bearing demand deposits, money market and certificate of deposit accounts were partially offset by increases in non-interest bearing demand and savings and club accounts. During the same period, borrowings increased $61.1 million, reflecting the Company's ability to obtain borrowed funds at what management believes represent attractive rates.

Nonperforming assets declined to $22.7 million, or 1.41%, of total assets at September 30, 2015, compared with $25.0 million, or 1.59%, of total assets at September 30, 2014. The decrease in nonperforming assets of $2.3 million at September 30, 2015 compared to September 30, 2014 was due primarily to decreases in non-performing commercial mortgages and foreclosed real estate.

Net charge-offs as a percent of total average loans were only 0.04% for the three months ending September 30, 2015 and 0.05% for the three months ended September 30, 2014, which reflects the Company's disciplined credit and underwriting standards. The allowance for loan losses was $8.9 million, or 0.80%, of loans outstanding at September 30, 2015, compared to $8.6 million, or 0.81%, of loans outstanding at September 30, 2014.

The Bank continued to demonstrate financial strength, with a Tier 1 leverage ratio of 9.93%, exceeding accepted regulatory standards for a well-capitalized institution. The Company maintained a tangible equity to total assets ratio of 9.74%.

Stockholders' equity increased $4.0 million to $171.3 million at September 30, 2015, from $167.3 million at September 30, 2014. During the three months ended September 30, 2015, the Company repurchased 68,700 shares at an average cost of $12.97 per share. Tangible book value per share at September 30, 2015 increased to $14.03, compared with $13.34 at September 30, 2014.

Gary Olson added, "We look forward to completing our recently announced merger with ENB in the fourth calendar quarter of 2015, and to work with their retail and lending teams to establish a commercial presence in an attractive suburban Philadelphia market."

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 $1.6 billion and has 26 community offices throughout the Greater Pocono, Lehigh Valley, and Scranton/Wilkes-Barre markets in Pennsylvania. 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.

                     ESSA BANCORP, INC. AND SUBSIDIARY
                         CONSOLIDATED BALANCE SHEET
                                (UNAUDITED)

                                             September 30,   September 30,
                                                  2015            2014
                                             --------------  --------------
                                                 (dollars in thousands)
ASSETS
  Cash and due from banks                    $       15,905  $       20,884
  Interest-bearing deposits with other
   institutions                                       2,853           1,417
                                             --------------  --------------

    Total cash and cash equivalents                  18,758          22,301
  Certificates of deposit                             1,750           1,767
  Investment securities available for sale          379,407         383,078
  Loans receivable (net of allowance for
   loan losses of $8,919 and $8,634)              1,102,118       1,058,267
  Regulatory stock, at cost                          13,831          14,284
  Premises and equipment, net                        16,553          16,957
  Bank-owned life insurance                          30,655          29,720
  Foreclosed real estate                              2,480           2,759
  Intangible assets, net                              1,759           2,396
  Goodwill                                           10,259          10,259
  Deferred income taxes                              11,149          12,027
  Other assets                                       17,825          21,000
                                             --------------  --------------

    TOTAL ASSETS                             $    1,606,544  $    1,574,815
                                             ==============  ==============


LIABILITIES
  Deposits                                   $    1,096,754  $    1,133,889
  Short-term borrowings                              91,339         108,020
  Other borrowings                                  229,101         151,300
  Advances by borrowers for taxes and
   insurance                                          4,273           4,093
  Other liabilities                                  13,797          10,204
                                             --------------  --------------

    TOTAL LIABILITIES                             1,435,264       1,407,506
                                             --------------  --------------


STOCKHOLDERS' EQUITY
  Common stock                                          181             181
  Additional paid in capital                        182,295         182,486
  Unallocated common stock held by the
   Employee Stock Ownership Plan                     (9,627)        (10,079)
  Retained earnings                                  83,658          77,413
  Treasury stock, at cost                           (82,832)        (80,113)
  Accumulated other comprehensive loss               (2,395)         (2,579)
                                             --------------  --------------

    TOTAL STOCKHOLDERS' EQUITY                      171,280         167,309
                                             --------------  --------------

    TOTAL LIABILITIES AND STOCKHOLDERS'
     EQUITY                                  $    1,606,544  $    1,574,815
                                             ==============  ==============


                     ESSA BANCORP, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENT OF INCOME
                                (UNAUDITED)

                            For the Three Months         For the Year
                            Ended September 30,       Ended September 30,
                          -----------------------  ------------------------
                              2015        2014         2015         2014
                          ----------- -----------  -----------  -----------
                                        (dollars in thousands)
INTEREST INCOME
  Loans receivable        $    11,120 $    11,209  $    45,067  $    43,382
  Investment securities:
    Taxable                     1,770       1,703        7,199        6,385
    Exempt from federal
     income tax                   244         232          965          550
  Other investment income         189         142          948          459
                          ----------- -----------  -----------  -----------
    Total interest income      13,323      13,286       54,179       50,776
                          ----------- -----------  -----------  -----------


INTEREST EXPENSE
  Deposits                      1,782       1,998        7,425        7,907
  Short-term borrowings           107          76          431          180
  Other borrowings                708         589        2,534        2,540
                          ----------- -----------  -----------  -----------
    Total interest
     expense                    2,597       2,663       10,390       10,627
                          ----------- -----------  -----------  -----------


NET INTEREST INCOME            10,726      10,623       43,789       40,149
  Provision for loan
   losses                         575         350        2,075        2,350
                          ----------- -----------  -----------  -----------


NET INTEREST INCOME AFTER
 PROVISION FOR LOAN
 LOSSES                        10,151      10,273       41,714       37,799

                          ----------- -----------  -----------  -----------
NONINTEREST INCOME
  Service fees on deposit
   accounts                       845         843        3,271        3,185
  Services charges and
   fees on loans                  289         293        1,152          865
  Trust and investment
   fees                           241         205          901          906
  Gain (loss) on sale of
   investments, net               388         107          786          333
  Earnings on Bank-owned
   life insurance                 234         236          935          923
  Insurance commissions           208         216          790          841
  Gain on acquisition               -           -            -          241
  Other                            28          28           61          113
                          ----------- -----------  -----------  -----------
    Total noninterest
     income                     2,233       1,928        7,896        7,407

                          ----------- -----------  -----------  -----------
NONINTEREST EXPENSE
  Compensation and
   employee benefits            5,047       5,343       20,606       18,920
  Occupancy and equipment       1,039       1,016        4,150        4,050
  Professional fees               545         535        1,983        1,883
  Data processing                 883         844        3,449        3,270
  Advertising                     249         170          974          633
  Federal Deposit
   Insurance Corporation
   Premiums                       275         272        1,125        1,002
  Loss (Gain) on
   foreclosed real estate          19        (350)        (148)        (466)
  Merger related costs            285           -          285          522
  Amortization of
   intangible assets              151         203          637          959
  Other                           949       1,051        3,804        3,038
                          ----------- -----------  -----------  -----------
    Total noninterest
     expense                    9,442       9,084       36,865       33,811

                          ----------- -----------  -----------  -----------
Income before income
 taxes                          2,942       3,117       12,745       11,395
  Income taxes                    636         745        2,954        2,891

                          ----------- -----------  -----------  -----------

Net Income                $     2,306 $     2,372  $     9,791  $     8,504
                          =========== ===========  ===========  ===========

Earnings per share:
  Basic                   $      0.22 $      0.22  $      0.94  $      0.79
  Diluted                 $      0.22 $      0.22  $      0.93  $      0.79


                           For the Three Months          For the Year
                            Ended September 30,       Ended September 30,
                         ------------------------  ------------------------
                             2015         2014         2015         2014
                         -----------  -----------  -----------  -----------
                          (dollars in thousands)    (dollars in thousands)
CONSOLIDATED AVERAGE
 BALANCES:
  Total assets           $ 1,593,301  $ 1,555,617  $ 1,580,889  $ 1,454,280
  Total interest-earning
   assets                  1,495,455    1,451,002    1,481,428    1,353,074
  Total interest-bearing
   liabilities             1,299,855    1,296,114    1,301,650    1,204,262
  Total stockholders'
   equity                    173,443      171,378      172,290      169,668

PER COMMON SHARE DATA:
  Average shares
   outstanding - basic    10,426,195   10,672,848   10,454,455   10,817,429
  Average shares
   outstanding - diluted  10,550,898   10,687,163   10,543,245   10,820,914
  Book value shares       11,353,244   11,590,378   11,353,244   11,590,378

Net interest rate spread        2.78%        2.85%        2.89%        2.89%
Net interest margin             2.85%        2.90%        2.96%        2.97%

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