ESSA Bancorp, Inc. (the “Company”) (NASDAQ Global Market SM “ESSA”) the holding company for ESSA Bank & Trust (the “Bank”) today announced its operating results for the three and nine months ended June 30, 2010. The Company reported net income of $1.1 million, or $0.09 per diluted share, for the three months ended June 30, 2010, as compared to net income of $1.7 million, or $0.13 per diluted share for the corresponding 2009 period. For the nine months ended June 30, 2010, the Company reported net income of $3.5 million or $0.27 per diluted share, as compared to net income of $5.1 million or $0.36 per diluted share for the corresponding 2009 period.
The decline in net income for the three months ended June 30, 2010 compared to the same period in 2009 was primarily the result of a decrease in net interest income due to declining loan demand and a decrease in the Company’s interest rate spread. Net income of $3.5 million for the nine months ending June 30, 2010, included a pre-tax write-down of $1.2 million in the value of the Company’s foreclosed real estate portfolio. The charge related to a single property in the Bank’s foreclosed real estate portfolio and was made during the first fiscal quarter of 2010 to reflect an updated appraisal. Net income for the nine months ended June 30, 2009, included a one-time tax benefit of $317,000 which was made during the first fiscal quarter of 2009. This benefit was related to the Company’s other than temporary impairment charge taken in the fourth fiscal quarter of 2008.
“The communities we serve, similar to other areas in the Country, continue to be negatively impacted by the ongoing economic difficulty. Persistent unemployment, historically low interest rates and a soft real estate market provide us with a challenging operating environment. One result has been that with declining loan balances and a continued low reinvestment rate, we are beginning to see a contraction of our net interest margin,” commented Gary S. Olson, President and Chief Executive Officer of the Company. “As long as interest rates remain at these unprecedented lows, we expect this pressure to continue. On the positive side, our credit quality improved from the prior quarter and remains above that of our peers. Also, we continue to have sufficient capital to weather the current economic conditions. We remain committed to meeting the financial needs of the communities in which we do business, including providing credit to qualified borrowers.”