ESSA Bancorp, Inc. Announces Fiscal Third Quarter and Fiscal Nine Months 2024 Financial Results
ESSA Bancorp, Inc. (NASDAQ:ESSA) reported its fiscal third quarter and nine months 2024 financial results. Net income for Q3 2024 was $3.9 million ($0.41 per diluted share), compared to $4.4 million ($0.45 per diluted share) in Q3 2023. For the nine months ended June 30, 2024, net income was $12.8 million ($1.34 per diluted share), down from $13.9 million ($1.44 per diluted share) in the same period of 2023.
Total interest income increased 17.9% to $25.7 million in Q3 2024, while total interest expense rose 76.3% to $11.5 million. The net interest margin decreased to 2.77% in Q3 2024 from 3.22% in Q3 2023. Total net loans increased to $1.71 billion, and total deposits were $1.55 billion as of June 30, 2024. The company maintained strong asset quality with a nonperforming assets to total assets ratio of 0.56%.
- Total interest income increased 17.9% to $25.7 million in Q3 2024
- Total net loans increased to $1.71 billion from $1.68 billion at September 30, 2023
- Commercial real estate loans grew 3.1% to $847.6 million
- Strong asset quality with nonperforming assets to total assets ratio of 0.56%
- Tangible book value per share increased to $20.89 from $19.80 at September 30, 2023
- Net income decreased to $3.9 million in Q3 2024 from $4.4 million in Q3 2023
- Net interest margin declined to 2.77% in Q3 2024 from 3.22% in Q3 2023
- Total interest expense increased 76.3% to $11.5 million in Q3 2024
- Total deposits decreased to $1.55 billion from $1.66 billion at September 30, 2023
- Core deposits declined to 64% of total deposits from 70% at September 30, 2023
Insights
ESSA Bancorp's fiscal Q3 2024 results present a mixed picture. While the company has shown resilience in a challenging interest rate environment, there are some concerning trends to note:
- Net income decreased to
$3.9 million ($0.41 per diluted share) in Q3 2024, down from$4.4 million ($0.45 per diluted share) in Q3 2023. - The net interest margin contracted to
2.77% in Q3 2024 from3.22% in Q3 2023, reflecting pressure on margins due to higher interest rates. - Return on average assets and return on average equity both declined year-over-year, indicating reduced profitability.
On the positive side:
- Total interest income increased by
17.9% year-over-year in Q3, driven by loan repricing and higher yields on investment securities. - Asset quality remains strong, with nonperforming assets to total assets ratio improving to
0.56% from0.63% at the fiscal year-start. - Tangible book value per share increased to
$20.89 from$19.80 at the fiscal year-start, indicating growth in shareholder value.
The bank's strategy of focusing on operating efficiency and maintaining asset strength appears to be helping mitigate some of the challenges posed by the current interest rate environment. However, the pressure on net interest margin and the decline in core deposits are areas that warrant close monitoring by investors.
ESSA Bancorp's Q3 results highlight several industry-wide trends affecting regional banks:
- The impact of rising interest rates is evident in the
76.3% increase in interest expense, which outpaced the17.9% growth in interest income. This squeeze on net interest margin is a common challenge in the current environment. - The shift in deposit composition, with core deposits declining from
70% to64% of total deposits, reflects the industry-wide struggle to retain low-cost deposits in a high-rate environment. - The increase in certificates of deposit, including a rise in brokered CDs, indicates a trend towards higher-cost funding sources.
ESSA's approach to deposit retention is noteworthy. By selectively adjusting rates and avoiding aggressive pricing, they're prioritizing relationship banking over simply chasing deposits. This strategy may help maintain profitability in the long term but could lead to slower deposit growth in the near term.
The bank's strong capital position (Tier 1 capital ratio of
Overall, ESSA Bancorp's performance reflects the delicate balance regional banks must strike between growth, profitability and risk management in the current banking landscape.
STROUDSBURG, PA / ACCESSWIRE / July 24, 2024 / 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 delivered another quarter of steady earnings and enhanced shareholder value by focusing on operating efficiently, maintaining asset strength, and managing the diversity and risk characteristics of our loan, deposit and investment portfolios.
"Commercial and residential lending activity generated significant year-over-year interest income growth in the third quarter and year to date periods. At the same time, higher interest rates have continued to pressure margins, particularly the higher cost of interest-bearing liabilities including borrowings and retail deposits.
"Generating and retaining retail deposits continues to be one of the Bank's key initiatives. We have selectively adjusted rates on interest bearing accounts and avoided chasing customers by offering the highest rates. We are committed to maintaining a desirable loan-to-deposit ratio.
"Expense management and asset quality are critical to supporting quality earnings. The
"Noninterest expenses, including salaries and benefits, remained relatively flat year-over-year. We are committed to providing attractive compensation and benefits to retain an outstanding team of banking professionals. They have played a critical role in the Company's performance, and in providing the financial solutions to our valued customers."
THIRD QUARTER, NINE MONTHS OF 2024 HIGHLIGHTS
Total interest income increased
17.9% to$25.7 million in the third quarter of 2024 compared with the third quarter of 2023, and in the nine months of 2024 rose28.1% to$77.4 million compared with the nine months of 2023, primarily reflecting ongoing repricing of commercial loans and increased yields from investment securities along with growth in total interest earning assets.Total yield on average interest earning assets increased to
5.02% for the quarter ended June 30, 2024, from4.60% for the quarter ended June 30, 2023.Total interest expense increased
76.3% to$11.5 million in the third quarter of 2024 compared with the third quarter of 2023, and in the nine months of 2024 rose132.4% to$33.5 million compared with the nine months of 2023, primarily reflecting ongoing repricing of deposits and borrowed funds along with growth in total interest-bearing liabilities.Total cost of interest-bearing liabilities increased to
2.80% for the quarter ended June 30, 2024, from1.75% for the quarter ended June 30, 2023.Net interest income before the provision for credit losses for the third quarter and nine months of 2024 was
$14.2 million and$43.9 million , respectively, compared with$15.2 million and$46.0 million in the 2023 periods, respectively. Both 2024 periods reflected higher interest expenses compared with a year earlier.The provision for credit losses for the three months ended June 30, 2024, was a release of
$347,000 compared to a provision of$150,000 for the three months ended June 30, 2023. The provision for the nine-month period in 2024 was a release of$1.2 million compared to a provision of$450,000 for the same period in 2023.Total net loans at June 30, 2024, increased to
$1.71 billion from$1.68 billion at September 30, 2023.Lending activity was highlighted by
3.1% growth in commercial real estate loans to$847.6 million at June 30, 2024, from$822.0 million at September 30, 2023. Residential mortgages increased$87,000 from September 30, 2023, net of the sales of$15.2 million of mortgage loans during the same period.Asset quality remained strong, with a ratio of nonperforming assets to total assets of
0.56% at June 30, 2024, compared to0.63% at September 30, 2023. The allowance for credit losses to total loans was0.89% at June 30, 2024, compared with1.09% at September 30, 2023. Charge-offs net of recoveries for the nine months ended June 30, 2024, resulted in a net recovery of$137,000. Total deposits were
$1.55 billion at June 30, 2024, with lower-cost core deposits (demand, savings and money market accounts) comprising64% of total deposits. Total deposits were$1.66 billion at September 30, 2023, with core deposits comprising70% of total deposits. Uninsured deposits were26% of total deposits at June 30, 2024, including approximately$149.1 million of fully collateralized municipal deposits.The Bank continued to demonstrate financial strength, with a Tier 1 capital ratio of
9.8% at June 30, 2024.Measures of shareholder value demonstrated growth. Tangible book value per share at June 30, 2024, increased to
$20.89 from$19.80 at September 30, 2023. Total stockholders' equity increased to$225.5 million at June 30, 2024, from$219.7 million at September 30, 2023. The Company further enhanced shareholder value by repurchasing 303,609 ESSA shares in the first fiscal quarter of 2024.
Fiscal Third quarter and Year-to-date 2024 Income Statement Review
Total interest income increased to
Total interest income increased to
Interest expense was
Interest expense was
Net interest income before (release of) provision for credit losses was
The net interest margin for the third quarter of 2024 was
The net interest margin for the nine months ended June 30, 2024, was
The provision for credit losses decreased
The provision for credit losses decreased
Noninterest income was
Noninterest income was
Noninterest expense for the third quarter of 2024 was
Balance Sheet, Asset Quality and Capital Adequacy Review
Total assets were
Total net loans were
Nonperforming assets were
Total deposits were
Noninterest bearing demand accounts at June 30, 2024, were
The Bank maintained a strong capital position with a Tier 1 capital ratio of
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, 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)
| June 30, |
|
| September 30, |
| |||
| 2024 |
|
| 2023 |
| |||
| (dollars in thousands) |
| ||||||
ASSETS |
|
|
|
|
|
| ||
Cash and due from banks |
| $ | 55,300 |
|
| $ | 39,008 |
|
Interest-bearing deposits with other institutions |
|
| 72,699 |
|
|
| 46,394 |
|
Total cash and cash equivalents |
|
| 127,999 |
|
|
| 85,402 |
|
Investment securities available for sale, at fair value |
|
| 215,201 |
|
|
| 334,056 |
|
Investment securities held to maturity, at amortized cost |
|
|
|
|
|
|
|
|
(net of allowance for credit losses of |
|
| 48,632 |
|
|
| 52,242 |
|
Loans, held for sale |
|
| 140 |
|
|
| 250 |
|
Loans receivable (net of allowance for credit losses |
|
|
|
|
|
|
|
|
of |
|
| 1,708,572 |
|
|
| 1,680,525 |
|
Regulatory stock, at cost |
|
| 18,758 |
|
|
| 17,890 |
|
Premises and equipment, net |
|
| 11,368 |
|
|
| 12,913 |
|
Bank-owned life insurance |
|
| 39,678 |
|
|
| 39,026 |
|
Foreclosed real estate |
|
| 3,195 |
|
|
| 3,311 |
|
Intangible assets, net |
|
| - |
|
|
| 91 |
|
Goodwill |
|
| 13,801 |
|
|
| 13,801 |
|
Deferred income taxes |
|
| 5,797 |
|
|
| 6,877 |
|
Derivative and hedging assets |
|
| 12,289 |
|
|
| 19,662 |
|
Other assets |
|
| 28,204 |
|
|
| 27,200 |
|
|
|
|
|
|
|
|
| |
TOTAL ASSETS |
| $ | 2,233,634 |
|
| $ | 2,293,246 |
|
|
|
|
|
|
|
|
| |
LIABILITIES |
|
|
|
|
|
|
|
|
Deposits |
| $ | 1,554,300 |
|
| $ | 1,661,016 |
|
Short-term borrowings |
|
| 396,458 |
|
|
| 374,652 |
|
Other borrowings |
|
| 10,000 |
|
|
| - |
|
Advances by borrowers for taxes and insurance |
|
| 15,242 |
|
|
| 6,550 |
|
Derivative and hedging liabilities |
|
| 7,565 |
|
|
| 9,579 |
|
Other liabilities |
|
| 24,574 |
|
|
| 21,741 |
|
|
|
|
|
|
|
|
| |
TOTAL LIABILITIES |
|
| 2,008,139 |
|
|
| 2,073,538 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Common stock |
|
| 181 |
|
|
| 181 |
|
Additional paid-in capital |
|
| 182,889 |
|
|
| 182,681 |
|
Unallocated common stock held by the |
|
|
|
|
|
|
|
|
Employee Stock Ownership Plan ("ESOP") |
|
| (5,670 | ) |
|
| (6,009 | ) |
Retained earnings |
|
| 160,770 |
|
|
| 151,856 |
|
Treasury stock, at cost |
|
| (104,050 | ) |
|
| (99,508 | ) |
Accumulated other comprehensive loss |
|
| (8,625 | ) |
|
| (9,493 | ) |
|
|
|
|
|
|
|
|
|
TOTAL STOCKHOLDERS' EQUITY |
|
| 225,495 |
|
|
| 219,708 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
| $ | 2,233,634 |
|
| $ | 2,293,246 |
|
ESSA BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
| Three Months Ended June 30, |
|
| Nine Months Ended June 30, |
| |||||||||||
| 2024 |
|
| 2023 |
|
| 2024 |
|
| 2023 |
| |||||
| (dollars in thousands, except per share data) |
| ||||||||||||||
INTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Loans receivable, including fees |
| $ | 21,965 |
|
|
| 19,132 |
|
|
| 65,103 |
|
|
| 52,721 |
|
Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
| 2,564 |
|
|
| 2,161 |
|
|
| 9,201 |
|
|
| 6,348 |
|
Exempt from federal income tax |
|
| 11 |
|
|
| 11 |
|
|
| 32 |
|
|
| 32 |
|
Other investment income |
|
| 1,122 |
|
|
| 461 |
|
|
| 3,066 |
|
|
| 1,337 |
|
Total interest income |
|
| 25,662 |
|
|
| 21,765 |
|
|
| 77,402 |
|
|
| 60,438 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
INTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
| 7,973 |
|
|
| 4,915 |
|
|
| 24,025 |
|
|
| 10,733 |
|
Short-term borrowings |
|
| 3,380 |
|
|
| 1,606 |
|
|
| 9,100 |
|
|
| 3,691 |
|
Other borrowings |
|
| 144 |
|
|
| - |
|
|
| 394 |
|
|
| - |
|
Total interest expense |
|
| 11,497 |
|
|
| 6,521 |
|
|
| 33,519 |
|
|
| 14,424 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
NET INTEREST INCOME |
|
| 14,165 |
|
|
| 15,244 |
|
|
| 43,883 |
|
|
| 46,014 |
|
(Release of) Provision for credit losses |
|
| (347 | ) |
|
| 150 |
|
|
| (1,240 | ) |
|
| 450 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
NET INTEREST INCOME AFTER (RELEASE OF) PROVISION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR CREDIT LOSSES |
|
| 14,512 |
|
|
| 15,094 |
|
|
| 45,123 |
|
|
| 45,564 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
NONINTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service fees on deposit accounts |
|
| 719 |
|
|
| 782 |
|
|
| 2,089 |
|
|
| 2,343 |
|
Services charges and fees on loans |
|
| 356 |
|
|
| 288 |
|
|
| 981 |
|
|
| 985 |
|
Loan swap fees |
|
| 53 |
|
|
| - |
|
|
| 127 |
|
|
| 138 |
|
Unrealized loss on equity securities |
|
| (1 | ) |
|
| (1 | ) |
|
| (6 | ) |
|
| (4 | ) |
Trust and investment fees |
|
| 400 |
|
|
| 426 |
|
|
| 1,211 |
|
|
| 1,231 |
|
Gain on sale of loans, net |
|
| 112 |
|
|
| 39 |
|
|
| 288 |
|
|
| 97 |
|
Earnings on bank-owned life insurance |
|
| 220 |
|
|
| 196 |
|
|
| 652 |
|
|
| 582 |
|
Insurance commissions |
|
| 133 |
|
|
| 145 |
|
|
| 395 |
|
|
| 459 |
|
Other |
|
| 127 |
|
|
| 64 |
|
|
| 347 |
|
|
| 92 |
|
Total noninterest income |
|
| 2,119 |
|
|
| 1,939 |
|
|
| 6,084 |
|
|
| 5,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
NONINTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and employee benefits |
|
| 6,771 |
|
|
| 6,622 |
|
|
| 20,190 |
|
|
| 20,154 |
|
Occupancy and equipment |
|
| 1,170 |
|
|
| 1,068 |
|
|
| 3,627 |
|
|
| 3,223 |
|
Professional fees |
|
| 1,218 |
|
|
| 1,223 |
|
|
| 3,282 |
|
|
| 3,581 |
|
Data processing |
|
| 1,364 |
|
|
| 1,296 |
|
|
| 4,066 |
|
|
| 3,697 |
|
Advertising |
|
| 116 |
|
|
| 181 |
|
|
| 491 |
|
|
| 535 |
|
Federal Deposit Insurance Corporation ("FDIC") premiums |
|
| 454 |
|
|
| 380 |
|
|
| 1,309 |
|
|
| 748 |
|
Foreclosed real estate |
|
| - |
|
|
| (1 | ) |
|
| 101 |
|
|
| (4 | ) |
Amortization of intangible assets |
|
| - |
|
|
| 47 |
|
|
| 91 |
|
|
| 142 |
|
Other |
|
| 715 |
|
|
| 677 |
|
|
| 2,222 |
|
|
| 2,143 |
|
Total noninterest expense |
|
| 11,808 |
|
|
| 11,493 |
|
|
| 35,379 |
|
|
| 34,219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Income before income taxes |
|
| 4,823 |
|
|
| 5,540 |
|
|
| 15,828 |
|
|
| 17,268 |
|
Income taxes |
|
| 909 |
|
|
| 1,144 |
|
|
| 3,015 |
|
|
| 3,321 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
NET INCOME |
| $ | 3,914 |
|
| $ | 4,396 |
|
| $ | 12,813 |
|
| $ | 13,947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | 0.41 |
|
| $ | 0.45 |
|
| $ | 1.34 |
|
| $ | 1.44 |
|
Diluted |
| $ | 0.41 |
|
| $ | 0.45 |
|
| $ | 1.34 |
|
| $ | 1.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Dividends per share |
| $ | 0.15 |
|
| $ | 0.15 |
|
| $ | 0.45 |
|
| $ | 0.45 |
|
| For the Three Months |
|
| For the Nine Months |
| |||||||||||
| Ended June 30, |
|
| Ended June 30, |
| |||||||||||
| 2024 |
|
| 2023 |
|
| 2024 |
|
| 2023 |
| |||||
| (unaudited) |
| ||||||||||||||
| (dollars in thousands, except per share data) |
| ||||||||||||||
CONSOLIDATED AVERAGE BALANCES: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total assets |
| $ | 2,171,985 |
|
| $ | 2,012,804 |
|
| $ | 2,199,980 |
|
| $ | 1,950,672 |
|
Total interest-earning assets |
|
| 2,056,044 |
|
|
| 1,899,554 |
|
|
| 2,085,204 |
|
|
| 1,837,787 |
|
Total interest-bearing liabilities |
|
| 1,649,117 |
|
|
| 1,495,520 |
|
|
| 1,682,086 |
|
|
| 1,431,090 |
|
Total stockholders' equity |
|
| 226,090 |
|
|
| 221,279 |
|
|
| 222,873 |
|
|
| 218,894 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
PER COMMON SHARE DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average shares outstanding - basic |
|
| 9,517,948 |
|
|
| 9,734,708 |
|
|
| 9,560,306 |
|
|
| 9,716,593 |
|
Average shares outstanding - diluted |
|
| 9,517,948 |
|
|
| 9,734,708 |
|
|
| 9,560,306 |
|
|
| 9,716,593 |
|
Book value shares |
|
| 10,131,521 |
|
|
| 10,401,205 |
|
|
| 10,131,521 |
|
|
| 10,401,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net interest rate spread: |
|
| 2.22 | % |
|
| 2.85 | % |
|
| 2.30 | % |
|
| 3.04 | % |
Net interest margin: |
|
| 2.77 | % |
|
| 3.22 | % |
|
| 2.81 | % |
|
| 3.34 | % |
SOURCE: ESSA Bancorp Inc.
View the original press release on accesswire.com
FAQ
What was ESSA Bancorp's net income for Q3 2024?
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