ESSA Bancorp, Inc. Announces Fiscal 2022 First Quarter Financial Results
ESSA Bancorp reported strong financial results for Q1 2022, with net income rising to $4.6 million, or $0.47 per share, a growth of 11.6% year-over-year. Key highlights include a net interest income of $13.6 million and a reduction in interest expense to $846,000, significantly enhancing profitability. The company's asset quality remains robust, with nonperforming assets at 1.02% of total assets. Total deposits amounted to $1.63 billion, showcasing solid core deposit growth. The Tier 1 leverage ratio exceeded regulatory requirements at 10.09%, reinforcing financial stability.
- Net income increased by 11.6% to $4.6 million.
- Net interest income rose to $13.6 million, up from $12.0 million.
- Interest expense significantly decreased to $846,000 from $2.0 million.
- Net interest margin improved to 3.03%, up from 2.84% year-over-year.
- Total deposits were $1.63 billion with a strong core deposit ratio of 87.8%.
- Tier 1 leverage ratio at 10.09%, surpassing regulatory standards.
- Total interest income decreased to $14.4 million from $14.9 million.
- Noninterest income declined to $2.3 million from $3.1 million.
- Residential mortgage sales impacting loan growth negatively.
- Commercial loans decreased to $56.5 million from $63.5 million.
STROUDSBURG, PA / ACCESSWIRE / January 26, 2022 / ESSA Bancorp, Inc. (the "Company") (NASDAQ:ESSA), the holding company for ESSA Bank & Trust (the "Bank"), a
Net income was
Gary S. Olson, President and CEO, commented: "The Company's positive financial performance and earnings growth in the fiscal first quarter of 2022 established a strong foundation for the coming year. Diligent interest expense and balance sheet management, high asset quality, and a focus on efficiency supported quality earnings, which were among the highest quarterly earnings in the Company's history.
"Commercial banking reflected a gradual but steady return to more normal conditions and activity, generating stable year-over-year interest income from commercial loans receivable. We continue to build the commercial loan pipeline, providing confidence that we will have growth opportunities in the coming quarters. Commercial real estate lending has been the strongest loan growth sector. Commercial & industrial lending has been stable, although it continues to reflect cautious attitudes among businesses and the fact that many are still drawing down on accumulated cash reserves to fund operations.
"Noninterest income, for the past several quarters, has been driven by exceptionally strong residential mortgage originations and subsequent gains on sale of mortgages to the secondary market. Rising rates, lack of housing inventory and longer construction periods suggest a slowing of residential lending activity. Nonetheless, we anticipate our superior service and digital capabilities will continue to support ESSA's leadership in residential mortgage lending and origination.
"Our bankers continued to efficiently serve customers through a variety of channels from digital delivery to safe personal interactions. We believe fiscal 2022 first quarter results affirmed our commitment to reimagining the future of banking that will incorporate increased digital capabilities, new ways of collaborating with customers, less reliance on physical facilities, and new ways to educate and communicate with customers.
"During the first quarter, the Paycheck Protection Program (PPP) continued to wind down as loans were forgiven. We recognized fees for making these loans in the first quarter and expect additional fee income in the second quarter as the program concludes. With pandemic-related risks and challenges lessening to some extent but still present, we continue to operate with the strictest commitment to protecting the health and safety of employees and customers.
"We continue to be mindful of economic conditions such as inflation, supply chain issues that may affect some of our business customers and anticipated Federal Reserve interest rate increases. Many of the Company's commercial loans are structured with adjustable rates. We anticipate this will mitigate market risks related to the anticipated rate increases.
"We are positioned to operate effectively and are optimistic about the opportunities to continue creating value."
FISCAL FIRST QUARTER 2022 HIGHLIGHTS
- Net interest income after provision for loan losses increased to
$13.6 million in the quarter ended December 31, 2021, compared with$12.0 million in the comparable period of fiscal 2021, primarily reflecting the positive impact of sharply reduced interest expense and a significantly lower provision for loan losses. - Quarterly interest expense declined to
$846,000 from$2.0 million a year earlier, reflecting repriced deposits, reduced higher-cost borrowings, and active balance sheet management. The Company's cost of interest-bearing liabilities declined to0.24% in the fiscal first quarter of 2022 from0.55% a year earlier. - The net interest margin improved to
3.03% in the first quarter of 2022 compared with2.84% a year earlier, and the net interest rate spread increased to2.98% compared with2.74% a year earlier. - Lending activity was highlighted by
4.1% growth in commercial real estate loans to$615.6 million at December 31, 2021 from$591.2 million at September 30, 2021. - Total net loans at December 31, 2021 and September 30, 2021 were
$1.34 billion , respectively, primarily reflecting commercial real estate growth offset by sales of$12.8 million of residential mortgage loans during the fiscal quarter,$9.4 million in forgiveness of PPP loans,$3.5 million of continuing run-off of indirect auto loans as they are phased out and a decline of$18.4 million in loans to states and political subdivisions. - Asset quality remained strong, with a ratio of nonperforming assets to total assets of
1.02% at December 31, 2021. The allowance for loan losses to total loans was1.34% . - Total deposits were
$1.63 billion at December 31, 2021, with lower-cost core deposits (demand, savings and money market accounts) comprising87.8% of total deposits at December 31, 2021. - The Bank continued to demonstrate financial strength, with a Tier 1 leverage ratio of
10.09% at December 31, 2021, exceeding regulatory standards for a well-capitalized institution. - Total stockholders' equity increased to
$207.6 million at December 31, 2021 compared with$201.8 million at September 30, 2021 and tangible book value per share at December 31, 2021 increased to$18.43 , or2.8% compared to$17.92 at September 30, 2021 and$16.60 at December 31, 2020. - In January 2022, the Company enhanced its senior management structure, appointing Peter A. Gray Senior Executive Vice President and Chief Operating Officer. He most recently served as Executive Vice President and Chief Banking Officer. Executive Vice President Charles D. Hangen was named Chief Risk Officer. Joseph E. Bonsick, Regional President, Northern Region, was appointed Chief Banking Officer.
Fiscal First Quarter Income Statement Review
Total interest income was
Interest expense was
Net interest income for the three months ended December 31, 2021 was
Net interest income after provision for loan losses in the three months of fiscal 2022 reflected a significantly lower provision for loan losses, primarily due to improved credit quality and a net charge-off/(recovery) of (
Noninterest income was
Noninterest expense was
Balance Sheet, Asset Quality and Capital Adequacy Review
Total assets were
Total net loans were
Commercial real estate loans were
Loans remaining in forbearance at December 31, 2021 included
Total deposits were
Asset quality remained strong, with nonperforming assets of
For the three months ended December 31, 2021, the Company's return on average assets and return on average equity were
The Bank continued to demonstrate financial strength with a Tier 1 leverage ratio of
Total stockholders' equity increased
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
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, quarterly and current reports. In addition, the COVID-19 pandemic continues to have an adverse impact on the Company, its customers and the communities it serves. The adverse effect of the COVID-19 pandemic on the Company, its customers and the communities where it operates will continue to adversely affect the Company's business, results of operations and financial condition for an indefinite period of time.
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.
FINANCIAL TABLES FOLLOW
ESSA BANCORP, INC. AND SUBSIDIARY | ||||||||
| December 31, | September 30, | |||||||
| 2021 | 2021 | |||||||
| (dollars in thousands) | ||||||||
ASSETS | ||||||||
Cash and due from banks | $ | 187,601 | $ | 146,841 | ||||
Interest-bearing deposits with other institutions | 10,820 | 12,105 | ||||||
Total cash and cash equivalents | 198,421 | 158,946 | ||||||
Investment securities available for sale, at fair value | 172,154 | 240,581 | ||||||
Investment securities held to maturity, at amortized cost | 55,747 | 21,483 | ||||||
Loans receivable (net of allowance for loan losses | ||||||||
of | 1,339,301 | 1,340,853 | ||||||
Loans, held for sale | 388 | 381 | ||||||
Regulatory stock, at cost | 5,059 | 4,651 | ||||||
Premises and equipment, net | 13,543 | 13,605 | ||||||
Bank-owned life insurance | 37,674 | 37,481 | ||||||
Foreclosed real estate | 193 | 461 | ||||||
Intangible assets, net | 454 | 520 | ||||||
Goodwill | 13,801 | 13,801 | ||||||
Deferred income taxes | 4,066 | 4,613 | ||||||
Other assets | 27,545 | 24,060 | ||||||
TOTAL ASSETS | $ | 1,868,346 | $ | 1,861,436 | ||||
LIABILITIES | ||||||||
Deposits | $ | 1,634,734 | $ | 1,636,115 | ||||
Advances by borrowers for taxes and insurance | 8,781 | 4,949 | ||||||
Other liabilities | 17,212 | 18,550 | ||||||
TOTAL LIABILITIES | 1,660,727 | 1,659,614 | ||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock | 181 | 181 | ||||||
Additional paid-in capital | 181,634 | 181,659 | ||||||
Unallocated common stock held by the | ||||||||
Employee Stock Ownership Plan ("ESOP") | (6,802 | ) | (6,915 | ) | ||||
Retained earnings | 127,784 | 124,342 | ||||||
Treasury stock, at cost | (97,767 | ) | (98,127 | ) | ||||
Accumulated other comprehensive income | 2,589 | 682 | ||||||
TOTAL STOCKHOLDERS' EQUITY | 207,619 | 201,822 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,868,346 | $ | 1,861,436 | ||||
ESSA BANCORP, INC. AND SUBSIDIARY | ||||||||
| (UNAUDITED) | ||||||||
| Three months Ended December 31, | ||||||||
| 2021 | 2020 | |||||||
| (dollars in thousands, except per share data) | ||||||||
INTEREST INCOME | ||||||||
Loans receivable, including fees | $ | 13,259 | $ | 13,760 | ||||
Investment securities: | ||||||||
Taxable | 1,011 | 997 | ||||||
Exempt from federal income tax | 19 | 40 | ||||||
Other investment income | 119 | 115 | ||||||
Total interest income | 14,408 | 14,912 | ||||||
INTEREST EXPENSE | ||||||||
Deposits | 846 | 1,772 | ||||||
Short-term borrowings | - | 189 | ||||||
Other borrowings | - | 39 | ||||||
Total interest expense | 846 | 2,000 | ||||||
NET INTEREST INCOME | 13,562 | 12,912 | ||||||
Provision for loan losses | - | 900 | ||||||
NET INTEREST INCOME AFTER PROVISION | ||||||||
FOR LOAN LOSSES | 13,562 | 12,012 | ||||||
NONINTEREST INCOME | ||||||||
Service fees on deposit accounts | 783 | 789 | ||||||
Services charges and fees on loans | 417 | 425 | ||||||
Loan swap fees | 147 | 211 | ||||||
Unrealized gains on equity securities | 1 | 7 | ||||||
Trust and investment fees | 426 | 331 | ||||||
Gain on sale of loans, net | 219 | 818 | ||||||
Earnings on bank-owned life insurance | 193 | 343 | ||||||
Insurance commissions | 147 | 168 | ||||||
Other | (5 | ) | 43 | |||||
Total noninterest income | 2,328 | 3,135 | ||||||
NONINTEREST EXPENSE | ||||||||
Compensation and employee benefits | 6,334 | 6,396 | ||||||
Occupancy and equipment | 1,094 | 1,067 | ||||||
Professional fees | 695 | 533 | ||||||
Data processing | 1,180 | 1,082 | ||||||
Advertising | 93 | 101 | ||||||
Federal Deposit Insurance Corporation ("FDIC") | ||||||||
premiums | 164 | 273 | ||||||
(Gain) loss on foreclosed real estate | (31 | ) | (19 | ) | ||||
Amortization of intangible assets | 67 | 68 | ||||||
Other | 708 | 677 | ||||||
Total noninterest expense | 10,304 | 10,178 | ||||||
Income before income taxes | 5,586 | 4,969 | ||||||
Income taxes | 973 | 834 | ||||||
NET INCOME | $ | 4,613 | $ | 4,135 | ||||
Earnings per share: | ||||||||
Basic | $ | 0.47 | $ | 0.41 | ||||
Diluted | $ | 0.47 | $ | 0.41 | ||||
Dividends per share | $ | 0.12 | $ | 0.11 | ||||
| For the Three Months | ||||||||
| Ended December 31, | ||||||||
| 2021 | 2020 | |||||||
| (dollars in thousands, except per share data) | ||||||||
CONSOLIDATED AVERAGE BALANCES: | ||||||||
Total assets | $ | 1,871,218 | $ | 1,909,423 | ||||
Total interest-earning assets | 1,778,273 | 1,806,116 | ||||||
Total interest-bearing liabilities | 1,370,327 | 1,437,704 | ||||||
Total stockholders??? equity | 205,528 | 194,105 | ||||||
PER COMMON SHARE DATA: | ||||||||
Average shares outstanding - basic | 9,759,249 | 10,071,087 | ||||||
Average shares outstanding - diluted | 9,761,457 | 10,073,907 | ||||||
Book value shares | 10,489,391 | 10,820,816 | ||||||
Net interest rate spread: | 2.98 | % | 2.74 | % | ||||
Net interest margin: | 3.03 | % | 2.84 | % | ||||
Contact: Gary S. Olson, President & CEO
Corporate Office: 200 Palmer Street
Stroudsburg, Pennsylvania 18360
Telephone: (570) 421-0531
SOURCE: ESSA Bancorp Inc.
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FAQ
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