(Source: Business Wire)ESSA Bancorp, Inc. (the "Company") (NASDAQ Global MarketSM "ESSA") the holding company for ESSA Bank & Trust (the "Bank") today announced its operating results for the three months and year ended September 30, 2009. The Company reported net income of $1.4 million, or $0.11 per diluted share, for the three months ended September 30, 2009, as compared to net income of $760,000, or $0.05 per diluted share, for the corresponding 2008 period. For the year ended September 30, 2009, the Company reported net income of $6.6 million, or $0.47 per diluted share, as compared to net income of $6.1 million or $0.38 per diluted share for the corresponding 2008 period.

The increase in net income of $688,000 for the three months ended September 30, 2009, as compared to the corresponding 2008 period was due primarily to increases in net interest income of $370,000 and total non-interest income of $789,000, partially offset by an increase in total non-interest expense of $519,000.

The increase in net income of $479,000 for the year ended September 30, 2009, as compared to the 2008 fiscal year was due primarily to increases in net interest income of $2.6 million and total non-interest income of $925,000, partially offset by increases in the provision for loan losses of $600,000 and total non-interest expense of $2.9 million.

"We are pleased to report solid fourth quarter and fiscal year financial results," noted Gary S. Olson, President and Chief Executive Officer of the Company. "Despite the difficult economic conditions that we and our customers continue to experience, the Company was able to increase its loan and deposit portfolios and to record strong operating results for fiscal 2009. During the year just ended, the Company also completed its first 15% stock repurchase program and began a second 10% program. We also began construction of our fourteenth full-service branch in Mountainhome, Pennsylvania. Finally, despite an increase in our non-performing assets, we are confident that our asset quality and capital remain sound."

Net Interest Income:

Net interest income increased $370,000, or 5.3%, to $7.3 million for the three months ended September 30, 2009, from $7.0 million for the comparable period in 2008. The increase was primarily attributable to an increase in the Company's interest rate spread to 2.42% for the three months ended September 30, 2009, from 2.23% for the comparable period in 2008, offset in part by a decrease in the Company's average net earning assets of $19.5 million.

Net interest income increased $2.6 million, or 9.7%, to $29.0 million for the year ended September 30, 2009, from $26.4 million for the 2008 fiscal year. The increase was primarily attributable to an increase in the Company's interest rate spread to 2.40% for the year ended September 30, 2009, from 2.09% for the comparable period in 2008, offset in part by a decrease in the Company's average net earning assets of $19.5 million.

Provision for Loan Losses:

The provision for loan losses decreased $75,000 or 16.7%, to $375,000 for the three months ended September 30, 2009, from $450,000 for the comparable period in 2008. The provision for loan losses increased $600,000 or 66.6%, to $1.5 million for the year ended September 30, 2009, from $900,000 for the comparable period in 2008.

In evaluating the level of the allowance for loan losses, management considers historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect a borrower's ability to repay, the estimated value of any underlying collateral, peer group information, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are subject to interpretation and revision as more information becomes available or as future events occur. The changes in the provision for loan losses for the one-year period ended September 30, 2009, as compared to the comparable 2008 period was in response to this evaluation and to the growth in the Company's loan portfolio. The decrease in the provision for loan losses for the three months ended September 30, 2009 as compared to the comparable period in 2008 was primarily the result of the addition of specific reserves for two commercial relationships judged to be impaired during the three months ended September 30, 2008.

Noninterest Income:

Noninterest income increased $789,000 or 130.4%, to $1.4 million for the three months ended September 30, 2009, from $605,000 for the comparable period in 2008. The primary reason for the increase was an other-than-temporary impairment pretax charge of $802,000, recorded in the fourth quarter of 2008, related to Fannie Mae preferred stock the Company owns. When the other-than-temporary impairment charge is excluded from the comparison, noninterest income decreased $13,000 for the three months ended September 30, 2009, as compared to the comparable period in 2008.

Noninterest income increased $925,000, or 19.3%, to $5.7 million for the year ended September 30, 2009, from $4.8 million for the comparable period in 2008. The primary reason for the increase was an other-than-temporary impairment pretax charge of $802,000, recorded in the fourth quarter of 2008, related to Fannie Mae preferred stock that the Company owns. When the other-than-temporary impairment charge is excluded from the comparison, noninterest income increased $123,000 for the year ended September 30, 2009, as compared to the comparable period in 2008. Increases in net gain on the sale of loans of $430,000 and net gain on the sale of investments of $148,000 which were partially offset by a decline in service fees on deposit and loan accounts of $356,000 were the primary reasons for the increase.

Noninterest Expense:

Noninterest expense increased $519,000, or 9.2%, to $6.2 million for the three months ended September 30, 2009, from $5.6 million for the comparable period in 2008. The primary reason for the increase was an increase in compensation and employee benefits of $291,000, Federal Deposit Insurance Corporation (FDIC) insurance premiums of $125,000, and other operating expenses of $131,000. Compensation and employee benefits increased primarily as a result of normal salary increases of $141,000 and increases in annual incentive pay of $193,000. Deposit insurance premiums increased primarily as a result of an increase in the FDIC quarterly assessment. Other operating expenses increased primarily as a result of an increase in foreclosed real estate costs of $97,000.

Noninterest expense increased $2.9 million, or 13.8%, to $24.1 million for the year ended September 30, 2009, from $21.2 million for the comparable period in 2008. The primary reasons for the increase were increases in compensation and employee benefits of $1.9 million, deposit insurance premiums of $634,000 and other operating expenses of $288,000. Compensation and employee benefits increased primarily as a result of an increase of $1.4 million related to the Company's Equity Incentive Plan. As previously announced, the Company's stockholders approved the ESSA Bancorp, Inc. 2007 Equity Incentive Plan at the 2008 Annual Meeting of Stockholders on May 8, 2008. Awards granted under the Equity Incentive Plan were made on May 23, 2008. FDIC premiums increased primarily as a result of a special assessment of $408,000 along with increases in the regular quarterly FDIC assessment. Other operating expenses increased primarily as a result of an increase in foreclosed real estate costs of $232,000.

Balance Sheet:

Total assets increased $48.6 million, or 4.9%, to $1.04 billion at September 30, 2009, compared to $993.5 million at September 30, 2008. The primary reasons for the increase in assets were increases in net loans receivable of $26.7 million and investment securities available for sale of $13.5 million. The increase in net loans receivable included net increases in residential loans of $31.8 million and commercial loans of $4.5 million which were partially offset by decreases in commercial real estate loans of $1.5 million, construction loans of $6.5 million, and home equity loans and lines of credit of $716,000. The Company sold $26.4 million of residential loans during fiscal 2009. There were no loan sales during fiscal 2008.

Total deposits increased $38.3 million at September 30, 2009, compared to September 30, 2008, primarily as a result of increases in money market accounts of $34.5 million. Borrowed funds increased during the same time period by $25.8 million.

Stockholders' equity decreased $14.6 million to $185.5 million at September 30, 2009, compared to $200.1 million at September 30, 2008, primarily as a result of the Company's stock repurchase program. In June, 2009 the Company announced that it had completed its first stock repurchase program after having purchased 2,547,135 shares at a weighted average cost of $13.14. It was also announced that the Company's Board of Directors authorized a second stock repurchase program to purchase up to an additional 10% of its outstanding shares.