ESSA Bancorp, Inc. Announces Fiscal 2022 Third Quarter, Nine Months Financial Results
ESSA Bancorp, Inc. (NASDAQ:ESSA) reported record net income of $5.0 million, or $0.51 per diluted share, for the fiscal third quarter ended June 30, 2022, an increase from $4.0 million, or $0.41 per share, year-over-year. For the nine months, net income reached $14.2 million, up from $12.5 million. Highlights include a 9% growth in commercial real estate loans, a return on average assets of 1.08%, and no provisions for loan losses due to strong asset quality, with nonperforming assets at 0.43%. Tangible book value rose to $19.02 per share, and a 25% increase in dividends was announced.
- Record net income of $5.0 million in Q3 2022, a 25% increase YoY.
- 9% growth in commercial real estate loans to $649.3 million.
- Return on average assets increased to 1.08% for Q3 2022.
- Tangible book value increased to $19.02 per share.
- No provisions for loan losses in Q3 2022 due to strong asset quality.
- Noninterest income declined to $2.1 million in Q3 2022 from $2.3 million YoY.
- Total deposits decreased to $1.37 billion as of June 30, 2022, from $1.64 billion at September 30, 2021.
STROUDSBURG, PA / ACCESSWIRE / July 27, 2022 / ESSA Bancorp, Inc. (the "Company") (NASDAQ:ESSA), the holding company for ESSA Bank & Trust (the "Bank"), a
Net income was
- Highest quarterly earnings in Company history, surpassing
$5 million for the first time. - Return on average assets of
1.08% for the quarter. - Commercial real estate loans up
9% year to date. - Lehigh Valley, suburban Philadelphia markets drive commercial banking activity.
- Asset quality remained strong. Nonperforming assets to total assets of
0.43% at June 30, 2022 compared to0.88% at September 30, 2021. - Cost of funds declined to
0.16% for the quarter. - Efficiency ratio of
62.6% for the quarter. - Balance sheet strategies support tangible book value increase to
$19.02 per share at June 30, 2022 from$17.92 per share at September 30, 2021. - Announced in June 2022 a dividend increase of
25% to$0.15 per share. - Announced in June 2022 authorization for a 500,000 common stock share buyback.
Gary S. Olson, President and CEO, commented: "The Company had a strong quarter, with revenue contributions from multiple commercial and retail banking sectors, increasing productivity and efficiency, and strong credit quality. Earnings reflected these strengths as third quarter 2022 net income rose
"As we transitioned from the pandemic-influenced operating conditions of the past two years, commercial real estate lending increased while commercial & industrial lending began returning to more normalized activity. Cash management services strengthened commercial banking relationships and generated fee income for the Company. Continuing growth of non-interest bearing demand deposits, also a key component of business banking relationships, contributed to core deposits reaching
"Residential mortgage originations continued at a good pace. While rate increases have, understandably, slowed residential mortgage lending, ESSA's reputation as a premier lender and mortgage processor helped support our market share.
"Credit quality enhanced financial performance. Loan quality improved during the quarter, with reduced levels of nonperforming loans and foreclosed real estate. Based on the quality of retained loans, the Company had no provision for loan losses in the third quarter of 2022 or in the first nine months of 2022.
"Finally, balance sheet management strategies implemented in prior quarters helped offset the fair value adjustments to the Company's investment portfolio due to rising interest rates. As a result, shareholder value was protected, reflected by significant growth in total shareholders' equity and tangible book value."
FISCAL THIRD QUARTER AND NINE MONTHS 2022 HIGHLIGHTS
- For the three months ended June 30, 2022, the Company's return on annualized average assets and return on annualized average equity increased to
1.08% and9.40% , compared with0.85% and8.07% , respectively, in the comparable period of fiscal 2021. For the nine months ended June 30, 2022, the Company's return on annualized average assets and return on annualized average equity were1.02% and9.04% , compared with0.87% and8.40% , respectively, in the comparable period of fiscal 2021. - Net interest income after provision for loan losses increased to
$15.0 million in the quarter ended June 30, 2022, compared with$12.6 million in the comparable period of fiscal 2021, primarily reflecting the positive impact of sharply reduced interest expense and no provision for loan losses. Net interest income after provision for loan losses in the nine months of 2022 increased to$42.7 million from$36.7 million a year earlier. - Quarterly interest expense declined to
$541,000 from$1.3 million a year earlier, reflecting repriced deposits, lower-cost borrowings, and active balance sheet management. The Company's cost of interest-bearing liabilities declined to0.16% in the third quarter of 2022 from0.36% a year earlier. - Asset repricing in a rising rate environment contributed to net interest margin increasing to
3.40% in the third quarter of 2022 compared with2.91% for the comparable period of fiscal 2021. The net interest rate spread improved to3.36% in the third quarter of 2022, compared with2.83% in the third quarter of 2021. - Lending activity was highlighted by
9.3% growth in commercial real estate loans to$649.3 million at June 30, 2022 from$591.1 million at September 30, 2021. During the same period, the residential mortgage portfolio increased to$597.6 million from$580.3 million . - Total net loans at June 30, 2022 were
$1.38 billion . Growth in commercial and residential real estate loans was offset by sales of$13.6 million of lower-rate residential mortgage loans,$20.7 million in forgiveness of Payroll Protection Program ("PPP") loans reflecting a wind down of the program,$8.6 million of continuing decline 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
0.43% at June 30, 2022 compared to0.44% at March 31, 2022 and0.88% at September 30, 2021. The allowance for loan losses to total loans was1.31% at June 30, 2022,1.34% at March 31, 2022 and1.33% at September 30, 2021, respectively. - Total deposits were
$1.37 billion at June 30, 2022, with lower-cost core deposits (demand, savings and money market accounts) comprising89.5% of total deposits at June 30, 2022. - The Bank continued to demonstrate financial strength, with a Tier 1 leverage ratio of
10.18% at June 30, 2022, exceeding regulatory standards for a well-capitalized institution. - Total stockholders' equity increased to
$213.3 million at June 30, 2022 compared with$201.8 million at September 30, 2021 and tangible book value per share at June 30, 2022 increased to$19.02 compared to$17.92 at September 30, 2021. Unrealized losses due to rising interest rates in the Company's available for sale investment portfolio were more than offset by unrealized gains in the Company's derivative balance sheet hedges. - In June 2022 the Company announced a
25% increase to its quarterly cash dividend to$0.15 per share and authorized the repurchase of up to 500,000 common stock shares.
Fiscal Third Quarter and Nine Months Income Statement Review
Total interest income was
Total interest income was
Interest expense declined to
Net interest income after provision for loan losses for the three months ended June 30, 2022 was
Net interest income after provision for loan losses for the nine months ended June 30, 2022 was
Noninterest income was
Noninterest expense in the third 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
Loans remaining in forbearance at June 30, 2022 included
Total deposits were
Asset quality improved due to repayment of two commercial real estate credits. 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.
FINANCIAL TABLES FOLLOW
ESSA BANCORP, INC. AND SUBSIDIARY | ||||||||
| June 30, | September 30, | |||||||
| 2022 | 2021 | |||||||
| (dollars in thousands) | ||||||||
ASSETS | ||||||||
Cash and due from banks | $ | 67,553 | $ | 146,841 | ||||
Interest-bearing deposits with other institutions | 15,568 | 12,105 | ||||||
Total cash and cash equivalents | 83,121 | 158,946 | ||||||
Investment securities available for sale, at fair value | 200,882 | 240,581 | ||||||
Investment securities held to maturity, at amortized cost | 58,792 | 21,483 | ||||||
Loans receivable (net of allowance for loan losses | ||||||||
of | 1,380,164 | 1,340,853 | ||||||
Loans, held for sale | - | 381 | ||||||
Regulatory stock, at cost | 14,004 | 4,651 | ||||||
Premises and equipment, net | 13,211 | 13,605 | ||||||
Bank-owned life insurance | 38,048 | 37,481 | ||||||
Foreclosed real estate | 75 | 461 | ||||||
Intangible assets, net | 329 | 520 | ||||||
Goodwill | 13,801 | 13,801 | ||||||
Deferred income taxes | 2,355 | 4,613 | ||||||
Other assets | 41,607 | 24,060 | ||||||
TOTAL ASSETS | $ | 1,846,389 | $ | 1,861,436 | ||||
LIABILITIES | ||||||||
Deposits | $ | 1,371,325 | $ | 1,636,115 | ||||
Short-term borrowings | 225,000 | - | ||||||
Advances by borrowers for taxes and insurance | 14,308 | 4,949 | ||||||
Other liabilities | 22,493 | 18,550 | ||||||
TOTAL LIABILITIES | 1,633,126 | 1,659,614 | ||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock | 181 | 181 | ||||||
Additional paid-in capital | 181,984 | 181,659 | ||||||
Unallocated common stock held by the | ||||||||
Employee Stock Ownership Plan ("ESOP") | (6,575 | ) | (6,915 | ) | ||||
Retained earnings | 134,767 | 124,342 | ||||||
Treasury stock, at cost | (98,071 | ) | (98,127 | ) | ||||
Accumulated other comprehensive income | 977 | 682 | ||||||
TOTAL STOCKHOLDERS' EQUITY | 213,263 | 201,822 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,846,389 | $ | 1,861,436 | ||||
ESSA BANCORP, INC. AND SUBSIDIARY | ||||||||||||||||
| Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||
INTEREST INCOME | ||||||||||||||||
Loans receivable, including fees | $ | 13,615 | $ | 13,378 | $ | 40,464 | $ | 40,808 | ||||||||
Investment securities: | ||||||||||||||||
Taxable | 1,542 | 894 | 3,722 | 2,773 | ||||||||||||
Exempt from federal income tax | 12 | 40 | 50 | 121 | ||||||||||||
Other investment income | 330 | 91 | 579 | 276 | ||||||||||||
Total interest income | 15,499 | 14,403 | 44,815 | 43,978 | ||||||||||||
INTEREST EXPENSE | ||||||||||||||||
Deposits | 506 | 1,251 | 2,045 | 4,612 | ||||||||||||
Short-term borrowings | 35 | - | 35 | 209 | ||||||||||||
Other borrowings | - | - | - | 62 | ||||||||||||
Total interest expense | 541 | 1,251 | 2,080 | 4,883 | ||||||||||||
NET INTEREST INCOME | 14,958 | 13,152 | 42,735 | 39,095 | ||||||||||||
Provision for loan losses | - | 600 | - | 2,400 | ||||||||||||
NET INTEREST INCOME AFTER PROVISION | ||||||||||||||||
FOR LOAN LOSSES | 14,958 | 12,552 | 42,735 | 36,695 | ||||||||||||
NONINTEREST INCOME | ||||||||||||||||
Service fees on deposit accounts | 783 | 781 | 2,301 | 2,305 | ||||||||||||
Services charges and fees on loans | 571 | 450 | 1,399 | 1,367 | ||||||||||||
Loan swap fees | 58 | 1 | 207 | 622 | ||||||||||||
Unrealized gains on equity securities | 4 | 4 | 5 | 15 | ||||||||||||
Trust and investment fees | 386 | 398 | 1,232 | 1,074 | ||||||||||||
Gain on sale of investments, net | - | 42 | - | 459 | ||||||||||||
Gain on sale of loans, net | - | 250 | 239 | 1,737 | ||||||||||||
Earnings on bank-owned life insurance | 187 | 191 | 567 | 725 | ||||||||||||
Insurance commissions | 145 | 158 | 433 | 492 | ||||||||||||
Other | 12 | 18 | 43 | 147 | ||||||||||||
Total noninterest income | 2,146 | 2,293 | 6,426 | 8,943 | ||||||||||||
NONINTEREST EXPENSE | ||||||||||||||||
Compensation and employee benefits | 6,456 | 6,315 | 19,095 | 19,083 | ||||||||||||
Occupancy and equipment | 1,113 | 1,060 | 3,381 | 3,257 | ||||||||||||
Professional fees | 759 | 526 | 2,199 | 1,583 | ||||||||||||
Data processing | 1,207 | 1,169 | 3,538 | 3,390 | ||||||||||||
Advertising | 254 | 218 | 627 | 471 | ||||||||||||
Federal Deposit Insurance Corporation ("FDIC") | ||||||||||||||||
premiums | 148 | 280 | 432 | 834 | ||||||||||||
Gain on foreclosed real estate | (60 | ) | (534 | ) | (180 | ) | (639 | ) | ||||||||
Amortization of intangible assets | 59 | 69 | 191 | 204 | ||||||||||||
Other | 823 | 915 | 2,178 | 2,448 | ||||||||||||
Total noninterest expense | 10,759 | 10,018 | 31,461 | 30,631 | ||||||||||||
Income before income taxes | 6,345 | 4,827 | 17,700 | 15,007 | ||||||||||||
Income taxes | 1,306 | 801 | 3,456 | 2,506 | ||||||||||||
NET INCOME | $ | 5,039 | $ | 4,026 | $ | 14,244 | $ | 12,501 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.51 | $ | 0.41 | $ | 1.46 | $ | 1.25 | ||||||||
Diluted | $ | 0.51 | $ | 0.41 | $ | 1.46 | $ | 1.25 | ||||||||
Dividends per share | $ | 0.15 | $ | 0.12 | $ | 0.39 | $ | 0.35 | ||||||||
| For the Three Months | For the Nine Months | |||||||||||||||
| Ended June 30, | Ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||
CONSOLIDATED AVERAGE BALANCES: | ||||||||||||||||
Total assets | $ | 1,867,124 | $ | 1,907,294 | $ | 1,866,176 | $ | 1,903,806 | ||||||||
Total interest-earning assets | 1,766,197 | 1,814,203 | 1,768,970 | 1,802,703 | ||||||||||||
Total interest-bearing liabilities | 1,334,134 | 1,398,762 | 1,349,640 | 1,413,908 | ||||||||||||
Total stockholders??? equity | 214,978 | 200,092 | 210,554 | 197,403 | ||||||||||||
PER COMMON SHARE DATA: | ||||||||||||||||
Average shares outstanding - basic | 9,788,244 | 9,905,725 | 9,776,108 | 10,006,041 | ||||||||||||
Average shares outstanding - diluted | 9,790,209 | 9,907,788 | 9,778,158 | 10,008,729 | ||||||||||||
Book value shares | 10,470,741 | 10,570,536 | 10,470,741 | 10,570,536 | ||||||||||||
Net interest rate spread: | 3.36 | % | 2.83 | % | 3.17 | % | 2.79 | % | ||||||||
Net interest margin: | 3.40 | % | 2.91 | % | 3.22 | % | 2.89 | % | ||||||||
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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