ESSA Bancorp, Inc. Announces Fiscal Third Quarter

and Fiscal Nine Months 2024 Financial Results

Stroudsburg, PA. - July 24, 2024- 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 third quarter and fiscal nine months periods ended June 30, 2024.

Net income was $3.9 million, or $0.41 per diluted share, for the three months ended June 30, 2024, compared with $4.4 million, or $0.45 per diluted share, for the three months ended June 30, 2023. For the nine months ended June 30, 2024, net income was $12.8 million, or $1.34 per diluted share, compared with $13.9 million, or $1.44 per diluted share, for the nine months ended June 30, 2023.

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 0.56% ratio of non-performing assets to total assets at June 30, 2024, reflected the ongoing strength of our credit and risk management practices, as did a reduction in the provision for credit losses based on anticipated risk.

"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."

Fiscal Third quarter and Year-to-date 2024 Income Statement Review

Total interest income increased to $25.7 million for the third quarter of fiscal 2024 compared with $21.8 million a year earlier, reflecting interest earning asset growth and an increase in the total yield on average interest earning assets to 5.02% from 4.60%.

Total interest income increased to $77.4 million for the nine months ended June 30, 2024, compared with $60.4 million a year earlier, reflecting interest-earning asset growth and an increase in the total yield on average interest earning assets to 4.96% from 4.38%.

Interest expense was $11.5 million for the third quarter of 2024, compared with $6.5 million for the same period in 2023, reflecting growth in interest-bearing liabilities and increased interest rates on deposits and short-term borrowings. The Company's cost of interest-bearing liabilities was 2.80% in the 2024 third quarter compared with 1.75% for the same quarter in 2023.

Interest expense was $33.5 million for the nine months ended June 30, 2024, compared with $14.4 million for the same period in 2023, reflecting growth in interest-bearing liabilities and increased interest rates on deposits and short-term borrowings. The Company's cost of interest-bearing liabilities was 2.66% for the nine-month period in fiscal 2024 compared with 1.34% for the same period in fiscal 2023.

Net interest income before (release of) provision for credit losses was $14.2 million in the third quarter of 2024 compared with net interest income before provision for credit losses of $15.2 million in the third quarter of 2023. In the nine months of 2024, net interest income before (release of) provision for credit losses was $43.9 million compared with net interest income before provision for credit losses in the nine months of 2023 of $46.0 million.

The net interest margin for the third quarter of 2024 was 2.77% compared with 3.22% for the comparable period of fiscal 2023. For the three months ended June 30, 2024, the Company's return on average assets and return on average equity were 0.72% and 6.96%, compared with 0.88% and 7.97%, respectively, for the comparable period of fiscal 2023.

The net interest margin for the nine months ended June 30, 2024, was 2.81% compared with 3.34% for the comparable period of fiscal 2023. For the nine months ended June 30, 2024, the Company's return on average assets and return on average equity were 0.78% and 7.68%, compared with 0.96% and 8.52%, respectively, for the comparable period of fiscal 2023.

The provision for credit losses decreased $497,000 for the third quarter of fiscal 2024 compared to the same fiscal quarter of 2023. The decrease was primarily driven by a decrease in expected losses in the loan portfolio, including unfunded commitments.

The provision for credit losses decreased $1.7 million for the nine months ended June 30, 2024, compared to the same period in 2023. The decrease was primarily driven by a decrease in expected losses in the loan portfolio, including unfunded commitments.

Noninterest income was $2.1 million for the third quarter of 2024, compared with $1.9 million a year earlier. The three-month year-over-year comparison reflected increases in other noninterest income, loan swap fees, gain on loan sales and service fees on loans, offset by decreases in service fees on deposits in addition to a decrease in trust and investment fees.

Noninterest income was $6.1 million for the nine months ended June 30, 2024, compared with $5.9 million a year earlier. The nine-month year-over-year comparison reflected increases in gain on loan sales and in other noninterest income offset by decreases in service fees on deposits and loans along with a decrease in insurance commissions.

Noninterest expense for the third quarter of 2024 was $11.8 million compared to $11.5 million for the comparable quarter in 2023. Noninterest expense for the nine months ended June 30, 2024, was $35.4 million compared to $34.2 million for the comparable period in 2023.

Balance Sheet, Asset Quality and Capital Adequacy Review

Total assets were $2.2 billion at June 30, 2024, compared with $2.3 billion at September 30, 2023. The decrease of $59.6 million, or 2.6%, reflects the growth in cash and cash equivalents and total net loans outstanding, which were more than offset by decreases in investment securities available for sale.

Total net loans were $1.71 billion at June 30, 2024, up from $1.68 billion at September 30, 2023. Residential real estate loans were $713.4 million at June 30, 2024, compared with $713.3 million at September 30, 2023. Commercial real estate loans increased to $847.6 million at June 30, 2024, compared with $822.0 million at September 30, 2023. Commercial loans (primarily commercial and industrial) were $47.7 million compared with $48.1 million at September 30, 2023. Loans to states and political subdivisions were $48.1 million at June

30, 2024, and September 30, 2023. Consumer loans were $50.0 million at June 30, 2024, compared to $48.2 million at September 30, 2023.

Nonperforming assets were $12.4 million, or 0.56% of total assets at June 30, 2024, compared to $14.4 million or 0.63% at September 30, 2023. The allowance for credit losses to total loans was 0.89% at June 30, 2024, compared to 1.09% at September 30, 2023. Foreclosed real estate was $3.2 million at June 30, 2024, compared to $3.3 million at September 30, 2023, reflecting one commercial property the Company is actively marketing.

Total deposits were $1.55 billion at June 30, 2024, compared with $1.66 billion at September 30, 2023. Core deposits were $989.8 million, or 64% of total deposits, at June 30, 2024, compared to $1.16 billion, or 70% of total deposits at September 30, 2023.

Noninterest bearing demand accounts at June 30, 2024, were $261.3 million, down 7% from September 30, 2023. Interest bearing demand accounts declined 16% to $290.6 million and money market accounts declined 22% to $287.3 million at June 30, 2024, from September 30, 2023. The decreases reflect the continuing highly competitive interest rate environment. Certificates of deposit increased $60.6 million or 12% to $564.5 million at June 30, 2024, compared to September 30, 2023. Included in the certificates of deposit increase is an increase of $29.1 million in brokered certificates of deposit. Total borrowings increased to $406.5 million at June 30, 2024, from $374.7 million at September 30, 2023.

The Bank maintained a strong capital position with a Tier 1 capital ratio of 9.8% at June 30, 2024, exceeding regulatory standards for a well-capitalized institution. Total stockholders' equity increased $5.8 million to $225.5 million at June 30, 2024, from $219.7 million at September 30, 2023, primarily reflecting net income growth and a decrease in other comprehensive loss, offset in part by dividends paid to shareholders and the repurchase of 303,609 shares during the fiscal first quarter of 2024. Tangible book value per share at June 30, 2024, was $20.89 compared to $19.80 at September 30, 2023.

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 21 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 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.

FINANCIAL TABLES FOLLOW

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 $0)			48,632		52,242
	Loans, held for sale					140		250
	Loans receivable (net of allowance for credit losses
	of $15,298 and $18,525)					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%