Welcome!

Microservices Expo Authors: Pat Romanski, Dalibor Siroky, Stackify Blog, Elizabeth White, Liz McMillan

News Feed Item

ESSA Bancorp, Inc. Announces Operating Results for the First Fiscal Quarter of 2013

STROUDSBURG, PA -- (Marketwire) -- 01/23/13 -- ESSA Bancorp, Inc. (NASDAQ: ESSA), the holding company for ESSA Bank & Trust, today announced its operating results for its fiscal first quarter 2013. The Company reported net income of $2.9 million, or $0.24 per diluted share, for the three months ended December 31, 2012, compared with net income of $886,000, or $0.08 per diluted share, for the corresponding 2011 period.

The Company completed its acquisition of First Star Bancorp, Inc. on July 31, 2012. The results for the quarter ended December 31, 2012, reflect the effects of a larger company in fiscal first quarter 2013 compared to the company in fiscal first quarter 2012. Additionally, the quarter ended December 31, 2012, includes the recapture of approximately $973,000, before tax, of previous fair value adjustments on loans acquired as part of the First Star acquisition, as well as increased gains on the sale of fixed-rate long-term loans of $334,000 before tax.

Gary S. Olson, President and CEO, commented: "In our first full quarter as a combined entity, we operated with an increased base of earning assets and an enhanced presence throughout Pennsylvania's Lehigh Valley. Our earnings were consistent with anticipated results, with the positive addition of the recapture of interest income from the loans we acquired from First Star in 2012. We have made a good start in leveraging the strengths of a significantly larger institution."

As examples of the Bank's increased scale, Mr. Olson noted that assets in fiscal first quarter 2013 were $1.4 billion, compared with $1.1 billion in first quarter 2012. Loans receivable after loss allowance in fiscal first quarter 2013 were $940.3 million, compared with $742.1 million in fiscal first quarter 2012. Total deposits increased to $967.9 million in fiscal first quarter 2013, compared with $640.3 million in fiscal first quarter 2012.

"We continue to see evidence that the acquired assets are of strong quality," said Olson. "We feel asset and customer retention rates are high, and we have had excellent interaction with First Star customers on both the retail and commercial sides of our business.

"Developing a positive corporate culture following an acquisition is critical to our success. Employees have shown excitement about new opportunities, and have been instrumental in facilitating the transition. I think this spirit and attitude is evidenced by very high customer retention levels in the months following the acquisition's closing. I have had many informal meetings with employees and managers, and have been impressed with the quality and sincerity of their ideas and contributions. ESSA Bank & Trust is the largest locally based community bank in the region. I believe our employees are committed to making ESSA the clear banking choice for individuals and businesses in the region.

"For several years, our theme has been 'The Right Way to Bank.' We believe the best way for a community bank to retain and win banking business is with an enthusiastic, experienced team providing financial solutions and a great experience for customers and the community.

"We are beginning to see the financial benefits of eliminating First Star's high-rate debt instruments, reducing First Star expenses, consolidating back-office operations, as well as ESSA's prepayment of $37 million of its own higher rate borrowings in fiscal 2012. With more efficient operations and lower debt obligations, ESSA is well positioned to focus on growth opportunities."

Income Statement Demonstrates Stability, Growth Opportunities

Net interest income increased $4.0 million, or 59.8%, to $10.7 million for the three months ended December 31, 2012, from $6.7 million for the comparable period in the prior year fiscal quarter, primarily reflecting $2.9 million growth in interest income, and a decrease in interest expense from other borrowings of $1.2 million. Interest income increased primarily as a result of the growth of the company's loan portfolio in fiscal first quarter 2013 compared with fiscal first quarter 2012.

Interest income for the fiscal first quarter 2013 also includes the recapture of approximately $500,000, before tax, of a previously recorded fair value adjustment to a loan acquired as part of the First Star acquisition. This loan was fully repaid in the first quarter. An additional $473,000, before tax, was recaptured during the quarter related to similar loans that were partially repaid.

Interest expense decreased primarily as a result of a decrease in interest rates and a decrease in higher rate borrowings for the three months ended December 31, 2012 compared with the three months ended December 31, 2011. The company's interest rate spread was 3.14% for the three months ended December 31, 2012 and 2.30% for the prior year's first quarter. Net interest margin was 3.26% in fiscal first quarter 2013, compared with 2.57% in fiscal first quarter 2012.

Olson stated: "Acquiring First Star bolstered interest income, and we believe we have an excellent platform for building our commercial and lending businesses that should contribute to our future growth. A key initiative is to grow both business and retail checking in our served markets throughout the coming year. A critical component of this will be to expand relationships with both retail customers and businesses.

"We have maintained our banking leadership role in Monroe County, as a major lending source, and have the most deposits of any bank serving the county. However, this area was hard-hit by the recession and has struggled to recover. Our loan and deposit base in this market remains reasonably stable, but does not offer immediate opportunities for market growth as mortgage lending and business lending have been scarce. We have a solid and stable customer base in a market that has supported ESSA for 97 years, and we'll continue to seek out every opportunity to serve Monroe County and support its recovery and growth."

The provision for loan losses increased $500,000, or 100.0%, to $1,000,000 for the three months ended December 31, 2012, from $500,000 for the comparable period in 2011. 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 provision for loan losses was in response to this evaluation.

Noninterest income increased $502,000, or 32.9%, to $2.0 million for the three months ended December 31, 2012, compared with the three months ended December 31, 2011, primarily reflecting an increase in the gain on sale of loans of $334,000. As part of its interest rate risk management strategy, the Company sold $11.5 million of long-term, fixed-rate mortgage loans during the quarter ended December 31, 2012. There were no loans sold during the comparable 2011 period.

"Although these loans are currently generating attractive returns in a low-interest rate environment, and they are good quality credits, we determined that since the Federal Reserve continues to keep long-term rates low, loans at these rates could have a negative impact on the Bank's margins once rates begin to rise," said Olson. "We anticipate selling more of these long-term loans during the next several quarters to further reduce our interest rate risk."

Noninterest expense increased to $7.5 million or 12.7%, for the three months ended December 31, 2012, from $6.7 million for the comparable period in 2011, reflecting increases in compensation and employee benefits of $620,000, occupancy and equipment of $193,000, data processing of $181,000 and amortization of intangible assets of $169,000. These increases were partially offset by decreases in professional fees of $178,000 and a decrease in the cost to liquidate foreclosed real estate of $293,000.

The increases in noninterest expenses were due primarily to the larger organization in fiscal first quarter 2013 compared with fiscal first quarter 2012. Management notes the Company is on-track to achieve a 30% cost savings in First Star's operations. The decrease in professional fees was due primarily to merger-related legal fees. There was a gain on the sales of foreclosed real estate of $226,000 for the quarter ended December 31, 2012, compared with a loss of $67,000 for the comparable period in 2011.

Balance Sheet, Asset Quality and Capital Adequacy

Total assets decreased $13.1 million, or 0.9%, to $1.41 billion at December 31, 2012, compared to $1.42 billion at September 30, 2012, although up significantly compared with pre-merger total assets. Increases in cash and cash equivalents of $4.4 million and investment securities of $1.9 million at December 31, 2012, compared with September 30, 2012, were offset by decreases in total loans receivable of $8.0 million, regulatory stock of $2.9 million and other assets of $8.5 million.

Total deposits decreased $27.7 million, or 2.8%, to $967.9 million at December 31, 2012, from $995.6 million at September 30, 2012. The primary reason for the decrease in deposits was a decrease in higher-rate certificates of deposit of $22.1 million, which the Company did not renew. Borrowings increased $9.2 million to $244.0 million from $234.7 million during the same period.

Stockholders' equity increased $1.9 million, or 1.1%, to $177.3 million at December 31, 2012, from $175.4 million at September 30, 2012. The increase was due primarily to an increase in retained earnings of $2.3 million. The Company's tier 1 leverage ratio was 12.38% at December 31, 2012.

Nonperforming assets totaled $28.5 million, or 2.03%, of total assets at December 31, 2012, compared with $27.2 million, or 1.92%, of total assets at September 30, 2012. The increase in nonperforming assets of $1.3 million at December 31, 2012 compared to September 30, 2012 was due primarily to an increase in non-performing residential mortgage loans of $1.3 million. The Company made a provision for loan losses of $1,000,000 for the three months ended December 31, 2012, compared with a provision of $500,000 for the comparable three-month period in 2011. The allowance for loan losses was $7.6 million, or 0.80%, of loans outstanding at December 31, 2012, compared to $7.3 million, or 0.76%, of loans outstanding at September 30, 2012.

"We continue to be satisfied with the quality of our loan portfolio," explained Olson. "We maintain very strict credit quality policies, and are comfortable with our current loan loss allowance and asset quality ratios. Due to a slowly recovering economy, we will continue to carefully monitor asset quality metrics and will continue to work diligently to reduce non-performing loans."

Olson concluded: "We believe economic conditions in the Lehigh Valley, particularly Bethlehem and Allentown, have not only stabilized, but are showing encouraging signs of strength and revitalization that we believe can generate lending and banking relationship opportunities. We also provide a full range of asset management, business services and employee benefits consulting capabilities, which we believe gives us a competitive advantage in winning customers' financial services business."

ESSA Bank & Trust, a wholly-owned subsidiary of ESSA Bancorp, Inc., has total assets of over $1.4 billion and is the leading service-oriented financial institution headquartered in the Greater Pocono, Pennsylvania region. The Bank maintains its corporate headquarters in downtown Stroudsburg, Pennsylvania and has 26 community offices throughout the Greater Pocono and Lehigh Valley areas in Pennsylvania. In addition to being one of the region's largest mortgage lenders, ESSA Bank & Trust offers a full range of retail, commercial financial services, and financial advisory and asset management capabilities. 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 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.

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
                         CONSOLIDATED BALANCE SHEET
                                (UNAUDITED)

                                               December 31,   September 30,
                                                    2012           2012
                                               -------------  -------------
                                                  (dollars in thousands)
ASSETS
  Cash and due from banks                      $      12,443  $      11,034
  Interest-bearing deposits with other
   institutions                                        7,474          4,516
                                               -------------  -------------

    Total cash and cash equivalents                   19,917         15,550
  Certificates of deposit                              1,766          1,266
  Investment securities available for sale           331,525        329,585
  Loans receivable held for sale                       2,096            346
  Loans receivable (net of allowance for loan
   losses of $7,555 and $7,302)                      940,275        950,009
  Regulatory stock, at cost                           19,054         21,914
  Premises and equipment, net                         16,100         16,170
  Bank-owned life insurance                           28,075         27,848
  Foreclosed real estate                               2,503          2,998
  Intangible assets, net                               3,207          3,457
  Goodwill                                             8,541          8,541
  Deferred income taxes                               11,359         11,336
  Other assets                                        21,224         29,766
                                               -------------  -------------

    TOTAL ASSETS                               $   1,405,642  $   1,418,786
                                               =============  =============


LIABILITIES
  Deposits                                     $     967,892  $     995,634
  Short-term borrowings                               84,500         43,281
  Other borrowings                                   159,460        191,460
  Advances by borrowers for taxes and
   insurance                                           6,943          3,432
  Other liabilities                                    9,500          9,568
                                               -------------  -------------

    TOTAL LIABILITIES                              1,228,295      1,243,375
                                               -------------  -------------


STOCKHOLDERS' EQUITY
  Common stock                                           181            181
  Additional paid in capital                         181,748        181,220
  Unallocated common stock held by the
   Employee Stock Ownership Plan                     (10,872)       (10,985)
  Retained earnings                                   67,455         65,181
  Treasury stock, at cost                            (62,353)       (61,944)
  Accumulated other comprehensive income               1,188          1,758
                                               -------------  -------------

    TOTAL STOCKHOLDERS' EQUITY                       177,347        175,411
                                               -------------  -------------

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $   1,405,642  $   1,418,786
                                               =============  =============



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

                                                    For the Three Months
                                                     Ended December 31
                                               -----------------------------

                                                   (dollars in thousands)
                                                    2012           2011
                                               -------------  --------------
INTEREST INCOME
  Loans receivable                             $      12,237  $        9,341
  Investment securities:
    Taxable                                            1,630           1,638
    Exempt from federal income tax                        54              48
  Other investment income                                 29               2
                                               -------------  --------------

    Total interest income                             13,950          11,029
                                               -------------  --------------


INTEREST EXPENSE
  Deposits                                             1,971           1,911
  Short-term borrowings                                   36               5
  Other borrowings                                     1,224           2,405
                                               -------------  --------------

    Total interest expense                             3,231           4,321
                                               -------------  --------------


NET INTEREST INCOME                                   10,719           6,708
  Provision for loan losses                            1,000             500
                                               -------------  --------------


NET INTEREST INCOME AFTER PROVISION FOR LOAN
 LOSSES                                                9,719           6,208
                                               -------------  --------------

NONINTEREST INCOME
  Service fees on deposit accounts                       807             727
  Services charges and fees on loans                     229             184
  Trust and investment fees                              215             215
  Gain on sale of investments, net                        30               -
  Gain on sale of loans, net                             334               -
  Earnings on Bank-owned life insurance                  226             198
  Insurance commissions                                  175             191
  Other                                                   10               9
                                               -------------  --------------

    Total noninterest income                           2,026           1,524
                                               -------------  --------------

NONINTEREST EXPENSE
  Compensation and employee benefits                   4,556           3,936
  Occupancy and equipment                                949             756
  Professional fees                                      312             490
  Data processing                                        663             482
  Advertising                                            110              86
  Federal Deposit Insurance Corporation (FDIC)
   Premiums                                              185             162
  Loss (Gain) on foreclosed real estate                 (226)             67
  Amortization of intangible assets                      250              81
  Other                                                  706             602
                                               -------------  --------------

    Total noninterest expense                          7,505           6,662
                                               -------------  --------------

Income before income taxes                             4,240           1,070
Income taxes                                           1,361             184
                                               -------------  --------------


NET INCOME                                     $       2,879  $          886
                                               =============  ==============

Earnings per share
  Basic                                        $        0.24  $         0.08
  Diluted                                               0.24            0.08



                                                At and for the Three Months
                                                    Ended December 31,
                                               ----------------------------
                                                    2012           2011
                                               -------------  -------------
                                                  (dollars in thousands)
CONSOLIDATED AVERAGE BALANCES:
  Total assets                                 $   1,398,734  $   1,091,756
  Total interest-earning assets                    1,304,096      1,037,175
  Total interest-bearing liabilities               1,157,020        887,040
  Total stockholders' equity                         177,337        161,880

PER COMMON SHARE DATA:
  Average shares outstanding - basic              12,088,125     10,807,598
  Average shares outstanding - diluted            12,088,125     10,807,598
  Book value shares                               13,191,008     12,109,622

Net interest rate spread                                3.14%          2.30%
Net interest margin                                     3.26%          2.57%

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

@MicroservicesExpo Stories
While some developers care passionately about how data centers and clouds are architected, for most, it is only the end result that matters. To the majority of companies, technology exists to solve a business problem, and only delivers value when it is solving that problem. 2017 brings the mainstream adoption of containers for production workloads. In his session at 21st Cloud Expo, Ben McCormack, VP of Operations at Evernote, discussed how data centers of the future will be managed, how the p...
The nature of test environments is inherently temporary—you set up an environment, run through an automated test suite, and then tear down the environment. If you can reduce the cycle time for this process down to hours or minutes, then you may be able to cut your test environment budgets considerably. The impact of cloud adoption on test environments is a valuable advancement in both cost savings and agility. The on-demand model takes advantage of public cloud APIs requiring only payment for t...
It has never been a better time to be a developer! Thanks to cloud computing, deploying our applications is much easier than it used to be. How we deploy our apps continues to evolve thanks to cloud hosting, Platform-as-a-Service (PaaS), and now Function-as-a-Service. FaaS is the concept of serverless computing via serverless architectures. Software developers can leverage this to deploy an individual "function", action, or piece of business logic. They are expected to start within milliseconds...
As DevOps methodologies expand their reach across the enterprise, organizations face the daunting challenge of adapting related cloud strategies to ensure optimal alignment, from managing complexity to ensuring proper governance. How can culture, automation, legacy apps and even budget be reexamined to enable this ongoing shift within the modern software factory? In her Day 2 Keynote at @DevOpsSummit at 21st Cloud Expo, Aruna Ravichandran, VP, DevOps Solutions Marketing, CA Technologies, was jo...
You know you need the cloud, but you’re hesitant to simply dump everything at Amazon since you know that not all workloads are suitable for cloud. You know that you want the kind of ease of use and scalability that you get with public cloud, but your applications are architected in a way that makes the public cloud a non-starter. You’re looking at private cloud solutions based on hyperconverged infrastructure, but you’re concerned with the limits inherent in those technologies.
Is advanced scheduling in Kubernetes achievable?Yes, however, how do you properly accommodate every real-life scenario that a Kubernetes user might encounter? How do you leverage advanced scheduling techniques to shape and describe each scenario in easy-to-use rules and configurations? In his session at @DevOpsSummit at 21st Cloud Expo, Oleg Chunikhin, CTO at Kublr, answered these questions and demonstrated techniques for implementing advanced scheduling. For example, using spot instances and co...
The cloud era has reached the stage where it is no longer a question of whether a company should migrate, but when. Enterprises have embraced the outsourcing of where their various applications are stored and who manages them, saving significant investment along the way. Plus, the cloud has become a defining competitive edge. Companies that fail to successfully adapt risk failure. The media, of course, continues to extol the virtues of the cloud, including how easy it is to get there. Migrating...
For DevOps teams, the concepts behind service-oriented architecture (SOA) are nothing new. A style of software design initially made popular in the 1990s, SOA was an alternative to a monolithic application; essentially a collection of coarse-grained components that communicated with each other. Communication would involve either simple data passing or two or more services coordinating some activity. SOA served as a valid approach to solving many architectural problems faced by businesses, as app...
Some journey to cloud on a mission, others, a deadline. Change management is useful when migrating to public, private or hybrid cloud environments in either case. For most, stakeholder engagement peaks during the planning and post migration phases of a project. Legacy engagements are fairly direct: projects follow a linear progression of activities (the “waterfall” approach) – change managers and application coders work from the same functional and technical requirements. Enablement and develo...
Gone are the days when application development was the daunting task of the highly skilled developers backed with strong IT skills, low code application development has democratized app development and empowered a new generation of citizen developers. There was a time when app development was in the domain of people with complex coding and technical skills. We called these people by various names like programmers, coders, techies, and they usually worked in a world oblivious of the everyday pri...
From manual human effort the world is slowly paving its way to a new space where most process are getting replaced with tools and systems to improve efficiency and bring down operational costs. Automation is the next big thing and low code platforms are fueling it in a significant way. The Automation era is here. We are in the fast pace of replacing manual human efforts with machines and processes. In the world of Information Technology too, we are linking disparate systems, softwares and tool...
DevOps is good for organizations. According to the soon to be released State of DevOps Report high-performing IT organizations are 2X more likely to exceed profitability, market share, and productivity goals. But how do they do it? How do they use DevOps to drive value and differentiate their companies? We recently sat down with Nicole Forsgren, CEO and Chief Scientist at DORA (DevOps Research and Assessment) and lead investigator for the State of DevOps Report, to discuss the role of measure...
DevOps is under attack because developers don’t want to mess with infrastructure. They will happily own their code into production, but want to use platforms instead of raw automation. That’s changing the landscape that we understand as DevOps with both architecture concepts (CloudNative) and process redefinition (SRE). Rob Hirschfeld’s recent work in Kubernetes operations has led to the conclusion that containers and related platforms have changed the way we should be thinking about DevOps and...
"As we've gone out into the public cloud we've seen that over time we may have lost a few things - we've lost control, we've given up cost to a certain extent, and then security, flexibility," explained Steve Conner, VP of Sales at Cloudistics,in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
These days, APIs have become an integral part of the digital transformation journey for all enterprises. Every digital innovation story is connected to APIs . But have you ever pondered over to know what are the source of these APIs? Let me explain - APIs sources can be varied, internal or external, solving different purposes, but mostly categorized into the following two categories. Data lakes is a term used to represent disconnected but relevant data that are used by various business units wit...
With continuous delivery (CD) almost always in the spotlight, continuous integration (CI) is often left out in the cold. Indeed, it's been in use for so long and so widely, we often take the model for granted. So what is CI and how can you make the most of it? This blog is intended to answer those questions. Before we step into examining CI, we need to look back. Software developers often work in small teams and modularity, and need to integrate their changes with the rest of the project code b...
"I focus on what we are calling CAST Highlight, which is our SaaS application portfolio analysis tool. It is an extremely lightweight tool that can integrate with pretty much any build process right now," explained Andrew Siegmund, Application Migration Specialist for CAST, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
"Cloud4U builds software services that help people build DevOps platforms for cloud-based software and using our platform people can draw a picture of the system, network, software," explained Kihyeon Kim, CEO and Head of R&D at Cloud4U, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
Kubernetes is an open source system for automating deployment, scaling, and management of containerized applications. Kubernetes was originally built by Google, leveraging years of experience with managing container workloads, and is now a Cloud Native Compute Foundation (CNCF) project. Kubernetes has been widely adopted by the community, supported on all major public and private cloud providers, and is gaining rapid adoption in enterprises. However, Kubernetes may seem intimidating and complex ...
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm. In their Day 3 Keynote at 20th Cloud Expo, Chris Brown, a Solutions Marketing Manager at Nutanix, and Mark Lav...