ESSA Bancorp, Inc. Announces Fiscal Second Quarter and Fiscal First Half 2025 Financial Results

Rhea-AI Summary

ESSA Bancorp (NASDAQ:ESSA) reported fiscal Q2 2025 financial results with net income of $2.7 million ($0.29 per diluted share), down from $4.6 million ($0.48 per share) in Q2 2024. The quarter included $1.0 million in pre-tax merger-related costs from the pending CNB Financial merger.

Key financial metrics for Q2 2025:

• Total interest income: $25.6 million
• Net interest margin: 2.78% (vs 2.87% in Q2 2024)
• Total assets: $2.168 billion
• Total net loans: $1.76 billion
• Total deposits: $1.69 billion

The Bank maintained strong capital position with a Tier 1 capital ratio of 10.3%. Tangible book value per share increased to $21.93 from $21.40 in September 2024. Nonperforming assets were $11.7 million, representing 0.54% of total assets.

Positive

• Strong capital position with 10.3% Tier 1 capital ratio
• Total net loans increased to $1.76 billion from $1.74 billion
• Tangible book value per share improved to $21.93 from $21.40
• Core deposits represent 62% of total deposits
• Noninterest bearing demand accounts increased 3.2%

Negative

• Net income declined to $2.7M from $4.6M year-over-year in Q2
• EPS decreased to $0.29 from $0.48 year-over-year
• Net interest margin contracted to 2.78% from 2.87% year-over-year
• Return on average assets declined to 0.51% from 0.84%
• Return on average equity decreased to 4.70% from 8.23%

Insights

Financial Analyst

ESSA's Q2 earnings showed decreased profitability despite stable asset quality, with merger costs impacting results during transition to CNB acquisition.

ESSA Bancorp's Q2 2025 financial results reveal significant year-over-year declines in profitability metrics. Net income dropped to $2.7 million ($0.29 per share) from $4.6 million ($0.48 per share) in Q2 2024, representing a 41.3% decrease. However, these figures include $1.0 million in pre-tax merger-related costs associated with the pending CNB Financial merger. When excluding these one-time costs, adjusted earnings were $3.8 million ($0.40 per share), still showing a 17.4% year-over-year decline.

The bank's net interest margin contracted to 2.78% from 2.87% a year earlier, reflecting margin pressure as deposit costs rose faster than asset yields. Total interest expense increased 5.6% year-over-year despite a slight decrease in average interest-bearing liabilities, indicating intensified deposit pricing competition. This margin compression significantly impacted profitability metrics, with ROA declining to 0.51% (from 0.84%) and ROE falling to 4.70% (from 8.23%).

On the positive side, ESSA maintained balance sheet stability with total net loans increasing to $1.76 billion from $1.74 billion. Asset quality remained solid with nonperforming assets at just 0.54% of total assets (improved from 0.56%). The funding profile shifted toward more expensive sources, with certificates of deposit increasing 11.2%, including a $65.1 million increase in brokered CDs, while core deposits declined as a percentage of total deposits (from 64% to 62%).

Capital strength remains a highlight, with a Tier 1 capital ratio of 10.3%, comfortably exceeding regulatory standards. Tangible book value increased to $21.93 per share from $21.40 at fiscal year-end, providing shareholders with modest equity appreciation despite earnings pressure. The pending merger with CNB Financial has progressed with shareholder approval received on April 15, 2025, signaling a strategic transition period as the company prepares for integration.

STROUDSBURG, PA / ACCESS Newswire / April 23, 2025 / ESSA Bancorp, Inc. (the "Company") (NASDAQ:ESSA), the holding company for ESSA Bank & Trust (the "Bank"), a $2.2 billion asset financial institution providing full service commercial and retail banking, asset management and trust, and investment services in eastern Pennsylvania, today announced financial results for the fiscal second quarter and fiscal first half periods ended March 31, 2025.

Net income was $2.7 million, or $0.29 per diluted share, for the three months ended March 31, 2025, compared with $4.6 million, or $0.48 per diluted share, for the three months ended March 31, 2024. Results for the quarter ended March 31, 2025 include pre-tax merger-related costs of $1.0 million. As previously announced, the Company entered an Agreement and Plan of Merger with CNB Financial Corporation, dated January 9, 2025. Excluding after-tax merger costs, net income was $3.8 million, or $0.40 per diluted share for the three months ended March 31, 2025.

Net income was $6.7 million, or $0.70 per diluted share, for the six months ended March 31, 2025, compared with $8.9 million, or $0.93 per diluted share, for the six months ended March 31, 2024. Excluding after-tax merger costs, net income was $7.7 million, or $0.81 per diluted share for the six months ended March 31, 2025.

Gary S. Olson, President and CEO, commented: "In our fiscal second quarter 2025, the Company continued to generate strong, positive operational results as ESSA progressed toward the anticipated closing of its merger with CNB Financial Corporation. On April 15, 2025, at a special meeting of ESSA shareholders, the merger received formal approval from ESSA Bancorp, Inc.'s shareholders".

Fiscal Second Quarter and First Half of 2025 Income Statement Review

Total interest income was $25.6 million for the second quarter of fiscal 2025 compared with $25.7 million the year earlier period, reflecting a slight decrease in average interest earning assets, offset in part, by an increase in the total yield on average interest earning assets to 5.01% from 4.95%.

Total interest income increased to $52.0 million for the six months ended March 31, 2025, compared with $51.7 million for the year earlier period, reflecting an increase in the total yield on average interest earning assets to 5.01% from 4.92%, offset in part, by a decrease in average interest earning assets.

Interest expense was $11.4 million for the second quarter of 2025, compared with $10.8 million for the same period in 2024, reflecting increased interest rates on deposits partially offset by declines in interest rates on short-term borrowings and in average interest-bearing liabilities. The Company's cost of interest-bearing liabilities was 2.80% in the second quarter of 2025 compared with 2.58% for the same quarter in 2024.

Interest expense was $23.7 million for the six months ended March 31, 2025, compared with $22.0 million for the same period in 2024, reflecting increased interest rates on deposits partially offset by declines in interest rates on short term borrowings and in average interest-bearing liabilities. The Company's cost of interest-bearing liabilities was 2.85% in the six months ended March 31, 2025, compared with 2.59% for the same period in 2024.

Net interest income before release of credit losses was $14.2 million in the second quarter of 2025 compared with $14.9 million in the second quarter of 2024. Net interest income before release of credit losses was $28.4 million in the first half of 2025 compared with $29.7 million in the first half of 2024.

The net interest margin for the second quarter of 2025 was 2.78% compared with 2.87% for the comparable period of fiscal 2024. For the three months ended March 31, 2025, including merger-related costs, the Company's return on average assets and return on average equity were 0.51% and 4.70%, compared with 0.84% and 8.23%, respectively, for the comparable period of fiscal 2024.

The net interest margin for the six months ended March 31, 2025, was 2.73% compared with 2.82% for the comparable period of fiscal 2024. For the six months ended March 31, 2025, including merger-related costs, the Company's return on average assets and return on average equity were 0.61% and 5.71%, compared with 0.80% and 8.04%, respectively, for the comparable period of fiscal 2024.

The release of credit losses decreased to $42,000 for the second quarter of fiscal 2025 compared to a release of $496,000 for the same fiscal quarter of 2024. The release of credit losses decreased to $649,000 for the six months ended March 31, 2025, compared to a release of $893,000 for the same period of 2024.

Noninterest income was $2.0 million for the second quarter of 2025 and 2024, respectively. The three-month year-over-year comparison reflected increases in service fees on loans, gain on sale of loans, net and trust and investment fees offset by decreases in loan swap fees and other noninterest income.

Noninterest income was $4.1 million for the six months ended March 31, 2025, compared with $4.0 million a year earlier. The six-month year-over-year comparison reflected increases in loan swap fees, earnings on bank owned life insurance and trust and investment fees, offset, in part, by decreases in service fees on loans, gain on sale of loans, net and other noninterest income.

Noninterest expense for the three months ended March 31, 2025 was $12.8 million compared to $11.7 million a year earlier. Noninterest expense for the three months ended March 31, 2025, excluding the $1.0 million in merger-related costs, was $11.8 million compared to $11.7 million for the year earlier period. Increases in compensation and employee benefits were partially offset by declines in advertising, FDIC insurance and other noninterest expenses.

Noninterest expense for the six months ended March 31, 2025, was $24.7 million compared to $23.6 million a year earlier. Noninterest expense for the six months ended March 31, 2025, excluding the $1.0 million in merger-related costs, was $23.7 million compared to $23.6 million for the year earlier period. Increases in compensation and employee benefits were partially offset by declines in advertising, FDIC insurance, foreclosed real estate and other noninterest expenses.

Balance Sheet, Asset Quality and Capital Adequacy Review

Total assets were $2.168 billion at March 31, 2025, compared to $2.188 billion at September 30, 2024. Growth in total net loans outstanding was more than offset by decreases in cash and cash equivalents, investment securities, regulatory stock and other assets.

Total net loans were $1.76 billion at March 31, 2025, up from $1.74 billion at September 30, 2024. Residential real estate loans were $734.8 million at March 31, 2025, compared with $721.5 million at September 30, 2024. Commercial real estate loans decreased to $870.8 million at March 31, 2025, compared with $884.6 million at September 30, 2024. Commercial loans (primarily commercial and industrial) were $48.6 million compared with $36.8 million at September 30, 2024. Loans to states and political subdivisions were $48.3 million at March 31, 2025, compared to $48.6 million at September 30, 2024. Consumer loans were $52.5 million at March 31, 2025, compared to $51.3 million at September 30, 2024.

Nonperforming assets were $11.7 million, or 0.54% of total assets at March 31, 2025, compared to $12.2 million, or 0.56% at September 30, 2024. The allowance for credit losses to total loans was 0.84% at March 31, 2025, compared to 0.87% at September 30, 2024. Foreclosed real estate was $3.7 million at March 31, 2025, and $3.2 million at September 30, 2024, reflecting two commercial properties the Company is actively marketing.

Total deposits were $1.69 billion at March 31, 2025, compared with $1.63 billion at September 30, 2024. Core deposits were $1.04 billion, or 62% of total deposits, at March 31, 2025, compared to $1.05 billion, or 64% of total deposits at September 30, 2024.

Noninterest bearing demand accounts at March 31, 2025, were $264.8 million, up 3.2% from September 30, 2024. Interest bearing demand accounts declined 8.6% to $285.8 million and money market accounts increased 4.0% to $348.2 million at March 31, 2025, from September 30, 2024. Certificates of deposit increased $65.4 million or 11.2% to $647.5 million at March 31, 2025, compared to September 30, 2024. Included in the certificates of deposit increase is an increase of $65.1 million in brokered certificates of deposit. Total borrowings decreased to $200.7 million at March 31, 2025, from $290.0 million at September 30, 2024.

The Bank maintained a strong capital position with a Tier 1 capital ratio of 10.3% at March 31, 2025, exceeding regulatory standards for a well-capitalized institution. Total stockholders' equity increased $6.1 million to $236.5 million at March 31, 2025, from $230.4 million at September 30, 2024, primarily reflecting net income growth and a decrease in other comprehensive loss, offset in part by dividends paid to shareholders. Tangible book value per share at March 31, 2025, was $21.93 compared to $21.40 at September 30, 2024.

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 $2.2 billion and has 20 community offices throughout the Lehigh Valley, Greater Pocono, Scranton/Wilkes-Barre, and suburban Philadelphia areas. ESSA Bank & Trust offers a full range of commercial and retail financial services, asset management and trust services, investment services through Ameriprise Financial Institutions Group and insurance benefit services through ESSA Advisory Services, LLC. 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 status of our proposed merger with CNB Financial Corporation, 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, the recent turmoil in the banking industry , 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.

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)

		March 31,				September 30,
		2025				2024
		(dollars in thousands)
ASSETS
Cash and due from banks		$	26,553			$	38,683
Interest-bearing deposits with other institutions			2,999				9,897
Total cash and cash equivalents			29,552				48,580
Investment securities available for sale, at fair value			209,937				215,869
(net of allowance for credit losses of $0)
Investment securities held to maturity, at amortized cost
(net of allowance for credit losses of $0)			44,997				47,378
Loans receivable (net of allowance for credit losses
of $14,950 and $15,306)			1,757,056				1,744,284
Regulatory stock, at cost			15,506				18,750
Premises and equipment, net			11,296				11,253
Bank-owned life insurance			40,020				39,571
Foreclosed real estate			3,667				3,195
Goodwill			13,801				13,801
Deferred income taxes			4,562				3,889
Derivative and hedging assets			7,586				8,203
Other assets			29,644				32,944
TOTAL ASSETS		$	2,167,624			$	2,187,717
LIABILITIES
Deposits		$	1,689,754			$	1,629,051
Short-term borrowings			200,739				280,000
Other borrowings			-				10,000
Advances by borrowers for taxes and insurance			13,242				6,870
Derivative and hedging liabilities			7,126				9,183
Other liabilities			20,277				22,192
TOTAL LIABILITIES			1,931,138				1,957,296
STOCKHOLDERS' EQUITY
Common stock			181				181
Additional paid-in capital			183,278				183,073
Unallocated common stock held by the
Employee Stock Ownership Plan ("ESOP")			(5,327	)			(5,557	)
Retained earnings			167,241				163,473
Treasury stock, at cost			(103,826	)			(104,184	)
Accumulated other comprehensive loss			(5,061	)			(6,565	)
TOTAL STOCKHOLDERS' EQUITY			236,486				230,421
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	2,167,624			$	2,187,717

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

		Three Months Ended March 31,								Six Months Ended March 31,
		2025				2024				2025				2024
		(dollars in thousands, except per share data)
INTEREST INCOME
Loans receivable, including fees		$	22,520			$	21,724			$	45,513			$	43,138
Investment securities:
Taxable			2,438				2,750				4,948				6,637
Exempt from federal income tax			7				10				18				21
Other investment income			667				1,166				1,525				1,944
Total interest income			25,632				25,650				52,004				51,740
INTEREST EXPENSE
Deposits			9,813				7,590				20,142				16,052
Short-term borrowings			1,530				3,064				3,285				5,720
Other borrowings			79				142				223				250
Total interest expense			11,422				10,796				23,650				22,022
NET INTEREST INCOME			14,210				14,854				28,354				29,718
Release of credit losses			(42	)			(496	)			(649	)			(893	)
NET INTEREST INCOME AFTER RELEASE OF
CREDIT LOSSES			14,252				15,350				29,003				30,611
NONINTEREST INCOME
Service fees on deposit accounts			665				674				1,380				1,370
Services charges and fees on loans			329				295				609				625
Loan swap fees			33				74				132				74
Unrealized loss on equity securities			(1	)			(2	)			-				(5	)
Trust and investment fees			435				418				910				811
Gain on sale of loans, net			98				58				158				176
Earnings on bank-owned life insurance			220				220				454				432
Insurance commissions			125				134				245				262
Other			113				133				187				220
Total noninterest income			2,017				2,004				4,075				3,965
NONINTEREST EXPENSE
Compensation and employee benefits			6,880				6,673				14,080				13,419
Occupancy and equipment			1,215				1,228				2,403				2,457
Professional fees			1,133				1,039				2,096				2,064
Data processing			1,432				1,360				2,900				2,702
Advertising			168				239				272				375
Federal Deposit Insurance Corporation ("FDIC")
premiums			398				475				755				855
Foreclosed real estate			-				-				-				101
Merger-related costs			1,044				-				1,044				-
Amortization of intangible assets			-				44				-				91
Other			537				656				1,191				1,507
Total noninterest expense			12,807				11,714				24,741				23,571
Income before income taxes			3,462				5,640				8,337				11,005
Income taxes			727				1,078				1,646				2,106
NET INCOME		$	2,735			$	4,562			$	6,691			$	8,899
Earnings per share:
Basic		$	0.29			$	0.48			$	0.70			$	0.93
Diluted		$	0.29			$	0.48			$	0.70			$	0.93
Dividends per share		$	0.15			$	0.15			$	0.30			$	0.30

		For the Three Months								For the Six Months
		Ended March 31,								Ended March 31,
		2025				2024				2025				2024
		(unaudited)
		(dollars in thousands, except per share data)
CONSOLIDATED AVERAGE BALANCES:
Total assets		$	2,183,673			$	2,191,544			$	2,192,408			$	2,213,976
Total interest-earning assets			2,076,180				2,077,074				2,083,259				2,099,284
Total interest-bearing liabilities			1,654,509				1,675,831				1,663,953				1,698,571
Total stockholders' equity			236,216				222,906				234,823				221,265
PER COMMON SHARE DATA:
Average shares outstanding - basic			9,537,210				9,513,656				9,570,264				9,575,730
Average shares outstanding - diluted			9,560,278				9,513,798				9,592,682				9,575,730
Book value shares			10,154,664				10,131,521				10,154,664				10,131,521
Net interest rate spread:			2.21	%			2.37	%			2.16	%			2.33	%
Net interest margin:			2.78	%			2.87	%			2.73	%			2.82	%

SOURCE: ESSA Bancorp Inc.

View the original press release on ACCESS Newswire

FAQ

What was ESSA Bancorp's earnings per share (EPS) for Q2 2025?

ESSA reported earnings of $0.29 per diluted share for Q2 2025, or $0.40 per share excluding merger-related costs.

How much are ESSA's merger-related costs with CNB Financial ?

ESSA incurred $1.0 million in pre-tax merger-related costs in Q2 2025 related to the CNB Financial merger.

What is ESSA Bancorp's current Tier 1 capital ratio as of March 2025?

ESSA Bank maintained a Tier 1 capital ratio of 10.3% as of March 31, 2025.

How did ESSA's net interest margin change in Q2 2025 compared to Q2 2024?

ESSA's net interest margin decreased to 2.78% in Q2 2025 from 2.87% in Q2 2024.

What is ESSA's current asset quality status as of March 2025?

Nonperforming assets were $11.7 million or 0.54% of total assets, with an allowance for credit losses to total loans of 0.84%.