ESSA Bancorp, Inc. Announces Fiscal 2022 Fourth Quarter, Twelve Months Financial Results
ESSA Bancorp, Inc. reported record financial results for the fiscal year ending September 30, 2022, achieving net income of $20.1 million ($2.06 per diluted share), a 22.2% increase year-over-year. For Q4, net income rose to $5.8 million ($0.60 per diluted share), up 48.5% from the previous year. Key metrics include a 13% rise in net interest income and a 15% growth in commercial real estate loans. The return on average assets improved to 1.24%. The company also enhanced shareholder value through dividends and stock buybacks, despite challenges posed by rising interest rates.
- Record net income of $20.1 million for FY 2022, up 22.2% from previous year.
- Q4 net income increased by 48.5% to $5.8 million.
- Net interest income up 13% year-over-year to $17.0 million for Q4.
- Return on average assets improved to 1.24% for Q4.
- Commercial real estate loans grew 15% to $678.8 million.
- Total deposits decreased to $1.38 billion, down from $1.64 billion a year earlier.
- Nonperforming assets increased to 0.81% of total assets, up from 0.43% in the prior quarter.
STROUDSBURG, PA / ACCESSWIRE / October 26, 2022 / ESSA Bancorp, Inc. (the "Company") (NASDAQ:ESSA), the holding company for ESSA Bank & Trust (the "Bank"), a
Net income was
- Highest quarterly and annual earnings in Company history.
- Net income increased
48.5% over the same quarter last year and22.2% year over year. - Net interest income before provision for loan losses increased
13% year over year. - Return on average assets rose to
1.24% for the quarter and1.08% for the fiscal year. - Total net loans increased by
$95.0 million in 2022. - Commercial real estate loans, up
15% for the year, led loan growth. - Net interest margin and net interest spread expanded significantly in 2022.
- Efficiency ratio improved to
61.6% for the quarter compared to62.6% for the previous quarter. - Tangible book value rose to
$19.12 per share compared to$19.02 per share at June 30, 2022. - Balance sheet strategies mitigated the negative impact of rising interest rates and fair market valuation adjustments to the Company's accumulated other comprehensive (loss) income.
- Shareholder value was enhanced in 2022 by quarterly dividends, a dividend increase, and share buyback.
Gary S. Olson, President and CEO, commented: "The Company finished fiscal 2022 with the strongest financial performance in its history. Income contributions from commercial and retail banking operations combined with productivity and operational discipline drove record earnings and increased shareholder value. Our banking team continued its outstanding work to earn new business, serve and retain existing customers, and manage credit quality."
"Commercial real estate has consistently led loan growth. Our pipeline remains robust and credit quality is strong, however, higher interest rates along with economic uncertainty have begun to slow demand."
"Residential mortgages have also contributed to our asset growth even though interest rates have nearly doubled during the past two quarters. They provide a consistent source of revenue from origination and processing. We believe our strong reputation for mortgage processing/servicing will continue to position ESSA as a leader in residential lending."
"Our commitment to efficient operations throughout the organization has led to record measures of productivity and increased returns. Our disciplined response to rising interest rates has positioned us to promptly make rate adjustments on both loans and deposits to protect net interest margin."
"We have developed a responsive, efficient, smooth-functioning organization. We believe the Company's operational performance has never been better. This is the key to positioning the Company to effectively meet ongoing interest rate and other economic challenges as we enter the new fiscal year."
FISCAL FOURTH QUARTER AND TWELVE MONTHS 2022 HIGHLIGHTS
- For the three months ended September 30, 2022, the Company's return on average assets and return on average equity increased to
1.24% and10.70% , compared with0.85% and7.75% , respectively, for the comparable period of fiscal 2021. For the twelve months ended September 30, 2022, the Company's return on average assets and return on average equity increased to1.08% and9.47% , compared with0.87% and8.28% , respectively, for fiscal 2021. - Net interest income increased to
$17.0 million for the quarter ended September 30, 2022, compared with$13.8 million for the comparable period of fiscal 2021. Net interest income for the twelve months of 2022 increased to$59.8 million from$52.9 million a year earlier. Interest income for the fourth quarter of fiscal 2022 includes approximately$1.0 million of nonaccrual interest income that was recognized during the quarter due to the related loans being repaid. Interest income for the 2022 fiscal year includes approximately$2.1 million of nonaccrual interest income that was recognized during the year due to the related loans being repaid. - Asset repricing in a rising rate environment contributed to net interest margin increasing to
3.85% for the fourth quarter of 2022 compared with3.14% for the comparable period of fiscal 2021. The net interest rate spread improved to3.78% for the fourth quarter of 2022, compared with3.08% for the fourth quarter of 2021. - Lending activity was highlighted by
15.0% growth in commercial real estate loans to$678.8 million at September 30, 2022 from$591.1 million at September 30, 2021. During the same period, the residential mortgage portfolio increased to$623.4 million from$580.3 million . - Total net loans at September 30, 2022 were
$1.44 billion , up from$1.34 billion a year earlier. Growth in commercial and residential real estate loans was partially offset by sales of$13.6 million of lower-rate residential mortgage loans,$21.9 million in forgiveness of Paycheck Protection Program ("PPP") loans, ongoing reduction of indirect auto loans and a reduction in the tax-exempt government loan portfolio. - Asset quality remained strong, with a ratio of nonperforming assets to total assets of
0.81% at September 30, 2022 compared to0.43% at June 30, 2022 and0.88% at September 30, 2021. The increase from the prior quarter was primarily due to one customer relationship where the Bank has ample collateral protection. The allowance for loan losses to total loans was1.27% at September 30, 2022,1.31% at June 30, 2022 and1.33% at September 30, 2021, respectively. - Total deposits were
$1.38 billion at September 30, 2022, with lower-cost core deposits (demand, savings and money market accounts) comprising90% of total deposits at September 30, 2022. - The Bank continued to demonstrate financial strength, with a Tier 1 leverage ratio of
10.47% at September 30, 2022, exceeding regulatory standards for a well-capitalized institution. - Total stockholders' equity increased to
$212.3 million at September 30, 2022 compared with$201.8 million at September 30, 2021 and tangible book value per share at September 30, 2022 increased to$19.12 compared to$17.92 at September 30, 2021. - Unrealized losses due to rising interest rates in the Company's available for sale investment securities portfolio were partially offset by unrealized gains in the Company's derivative balance sheet hedges.
- During fiscal 2022, the Company repurchased 110,000 shares of common stock at an average price of approximately
$17.34 per share.
Fiscal Fourth Quarter and Twelve Months Income Statement Review
Total interest income was
Total interest income was
Interest expense was
Net interest income after provision for loan losses for the three months ended September 30, 2022 was
Net interest income after provision for loan losses for the twelve months ended September 30, 2022 was
Noninterest income was
Noninterest expense for the fourth quarter of 2022 was
Balance Sheet, Asset Quality and Capital Adequacy Review
Total assets were
Total net loans were
Commercial real estate loans increased to
Total deposits were
Nonperforming assets 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. 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 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.
Contact:
Gary S. Olson, President & CEO
Corporate Office: 200 Palmer Street
Stroudsburg, Pennsylvania 18360
Telephone: (570) 421-0531
ESSA BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
| September 30, | September 30, | |||||||
| 2022 | 2021 | |||||||
| (dollars in thousands) | ||||||||
ASSETS | ||||||||
Cash and due from banks | $ | 19,970 | $ | 146,841 | ||||
Interest-bearing deposits with other institutions | 7,967 | 12,105 | ||||||
Total cash and cash equivalents | 27,937 | 158,946 | ||||||
Investment securities available for sale, at fair value | 208,647 | 240,581 | ||||||
Investment securities held to maturity, at amortized cost | 57,285 | 21,483 | ||||||
Loans receivable (net of allowance for loan losses | ||||||||
of | 1,435,783 | 1,340,853 | ||||||
Loans, held for sale | - | 381 | ||||||
Regulatory stock, at cost | 14,393 | 4,651 | ||||||
Premises and equipment, net | 13,126 | 13,605 | ||||||
Bank-owned life insurance | 38,240 | 37,481 | ||||||
Foreclosed real estate | 29 | 461 | ||||||
Intangible assets, net | 281 | 520 | ||||||
Goodwill | 13,801 | 13,801 | ||||||
Deferred income taxes | 5,375 | 4,613 | ||||||
Derivative and hedging assets | 24,481 | 2,554 | ||||||
Other assets | 22,439 | 21,506 | ||||||
TOTAL ASSETS | $ | 1,861,817 | $ | 1,861,436 | ||||
LIABILITIES | ||||||||
Deposits | $ | 1,380,021 | $ | 1,636,115 | ||||
Short-term borrowings | 230,810 | - | ||||||
Advances by borrowers for taxes and insurance | 11,803 | 4,949 | ||||||
Derivative and hedging liabilities | 9,176 | 1,756 | ||||||
Other liabilities | 17,670 | 16,794 | ||||||
TOTAL LIABILITIES | 1,649,480 | 1,659,614 | ||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock | 181 | 181 | ||||||
Additional paid-in capital | 182,173 | 181,659 | ||||||
Unallocated common stock held by the | ||||||||
Employee Stock Ownership Plan ("ESOP") | (6,462 | ) | (6,915 | ) | ||||
Retained earnings | 139,139 | 124,342 | ||||||
Treasury stock, at cost | (99,800 | ) | (98,127 | ) | ||||
Accumulated other comprehensive (loss) income | (2,894 | ) | 682 | |||||
TOTAL STOCKHOLDERS' EQUITY | 212,337 | 201,822 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,861,817 | $ | 1,861,436 | ||||
ESSA BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
| Three Months Ended September 30, | Twelve Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||
INTEREST INCOME | ||||||||||||||||
Loans receivable, including fees | $ | 15,587 | $ | 13,651 | $ | 56,051 | $ | 54,459 | ||||||||
Investment securities: | ||||||||||||||||
Taxable | 1,886 | 911 | 5,608 | 3,684 | ||||||||||||
Exempt from federal income tax | 11 | 35 | 61 | 156 | ||||||||||||
Other investment income | 513 | 112 | 1,092 | 388 | ||||||||||||
Total interest income | 17,997 | 14,709 | 62,812 | 58,687 | ||||||||||||
INTEREST EXPENSE | ||||||||||||||||
Deposits | 607 | 910 | 2,652 | 5,522 | ||||||||||||
Short-term borrowings | 354 | - | 389 | 209 | ||||||||||||
Other borrowings | - | - | - | 62 | ||||||||||||
Total interest expense | 961 | 910 | 3,041 | 5,793 | ||||||||||||
NET INTEREST INCOME | 17,036 | 13,799 | 59,771 | 52,894 | ||||||||||||
Provision for loan losses | - | 300 | - | 2,700 | ||||||||||||
NET INTEREST INCOME AFTER PROVISION | ||||||||||||||||
FOR LOAN LOSSES | 17,036 | 13,499 | 59,771 | 50,194 | ||||||||||||
NONINTEREST INCOME | ||||||||||||||||
Service fees on deposit accounts | 793 | 783 | 3,094 | 3,088 | ||||||||||||
Services charges and fees on loans | 431 | 498 | 1,830 | 1,865 | ||||||||||||
Loan swap fees | 104 | 30 | 311 | 652 | ||||||||||||
Unrealized (loss) gains on equity securities | (1 | ) | - | 4 | 15 | |||||||||||
Trust and investment fees | 403 | 456 | 1,635 | 1,530 | ||||||||||||
Gain on sale of investments, net | - | 1 | - | 460 | ||||||||||||
Gain on sale of loans, net | - | 437 | 239 | 2,174 | ||||||||||||
Earnings on bank-owned life insurance | 192 | 129 | 759 | 854 | ||||||||||||
Insurance commissions | 140 | 151 | 573 | 643 | ||||||||||||
Other | 22 | 65 | 65 | 212 | ||||||||||||
Total noninterest income | 2,084 | 2,550 | 8,510 | 11,493 | ||||||||||||
NONINTEREST EXPENSE | ||||||||||||||||
Compensation and employee benefits | 7,138 | 6,820 | 26,233 | 25,903 | ||||||||||||
Occupancy and equipment | 1,192 | 1,155 | 4,573 | 4,412 | ||||||||||||
Professional fees | 1,313 | 544 | 3,512 | 2,127 | ||||||||||||
Data processing | 1,039 | 1,046 | 4,577 | 4,436 | ||||||||||||
Advertising | 140 | 165 | 767 | 636 | ||||||||||||
Federal Deposit Insurance Corporation ("FDIC") | ||||||||||||||||
premiums | 141 | 250 | 573 | 1,084 | ||||||||||||
Gain on foreclosed real estate | (46 | ) | (53 | ) | (226 | ) | (692 | ) | ||||||||
Amortization of intangible assets | 48 | 67 | 239 | 271 | ||||||||||||
Prepayment penalty on FHLB advances | - | - | - | 254 | ||||||||||||
Other | 851 | 1,165 | 3,029 | 3,359 | ||||||||||||
Total noninterest expense | 11,816 | 11,159 | 43,277 | 41,790 | ||||||||||||
Income before income taxes | 7,304 | 4,890 | 25,004 | 19,897 | ||||||||||||
Income taxes | 1,478 | 967 | 4,934 | 3,473 | ||||||||||||
NET INCOME | $ | 5,826 | $ | 3,923 | $ | 20,070 | $ | 16,424 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.60 | $ | 0.40 | $ | 2.06 | $ | 1.65 | ||||||||
Diluted | $ | 0.60 | $ | 0.40 | $ | 2.06 | $ | 1.65 | ||||||||
Dividends per share | $ | 0.15 | $ | 0.12 | $ | 0.54 | $ | 0.47 | ||||||||
| For the Three Months | For the Twelve Months | |||||||||||||||
| Ended September 30, | Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||
CONSOLIDATED AVERAGE BALANCES: | ||||||||||||||||
Total assets | $ | 1,856,992 | $ | 1,831,798 | $ | 1,863,880 | $ | 1,885,708 | ||||||||
Total interest-earning assets | 1,753,758 | 1,743,440 | 1,767,206 | 1,788,361 | ||||||||||||
Total interest-bearing liabilities | 1,327,393 | 1,328,624 | 1,344,079 | 1,392,587 | ||||||||||||
Total stockholders' equity | 216,013 | 200,893 | 211,919 | 198,275 | ||||||||||||
PER COMMON SHARE DATA: | ||||||||||||||||
Average shares outstanding - basic | 9,712,603 | 9,737,685 | 9,761,546 | 9,945,528 | ||||||||||||
Average shares outstanding - diluted | 9,715,943 | 9,738,696 | 9,765,266 | 9,947,504 | ||||||||||||
Book value shares | 10,371,022 | 10,461,443 | 10,371,022 | 10,461,443 | ||||||||||||
Net interest rate spread: | 3.78 | % | 3.08 | % | 3.33 | % | 2.86 | % | ||||||||
Net interest margin: | 3.85 | % | 3.14 | % | 3.38 | % | 2.96 | % | ||||||||
SOURCE: ESSA Bancorp Inc.
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