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ESB Financial Corporation Reports Third Quarter 2010 Earnings

ESB Financial Corporation (Nasdaq: ESBF), the parent company of ESB Bank, today announced earnings for the quarter ended September 30, 2010 of $0.29 per diluted share on net income of $3.5 million compared to earnings of $0.29 per diluted share on net income of $3.5 million for the quarter ended September 30, 2009. The Company’s annualized return on average assets and average equity were 0.71% and 7.89%, respectively, for the quarter ended September 30, 2010, compared to 0.71% and 8.72%, respectively, for the quarter ended September 30, 2009.

For the nine month period ended September 30, 2010, the Company realized earnings of $0.90 per diluted share on net income of $10.8 million compared to earnings of $0.80 per diluted share on net income of $9.7 million for the same period in the prior year, a 12.5% increase in net income per diluted share. The Company’s annualized return on average assets and average equity were 0.74% and 8.39%, respectively, for the nine-month period ended September 30, 2010, compared to 0.65% and 8.45%, respectively, for the nine months ended September 30, 2009.

Charlotte A. Zuschlag, President and Chief Executive Officer of the Company, stated, “The Board of Directors, senior management and I are pleased with the improvement in earnings for the nine months ended September 30, 2010. We have been successful and prudent in managing and improving our net interest rate margin while maintaining our asset quality and improving our future earnings potential. Our net interest rate margin has improved 35 basis points since December 31, 2009. This improvement is largely fueled by the growth in our deposits of $59.1 million, or 6.3%, since December 31, 2009. This steadfast policy in managing and growing our interest rate margin has minimized the effect of impairment related charges on securities and joint ventures on our net income in 2010.” Ms. Zuschlag concluded by stating, “Management will continue to strive to pursue investment and growth opportunities that will provide a sound investment return to our shareholders, such as the recent relocation of the Zelienople branch office from a strip mall to a free standing full service office and our plans to expand with the construction of our 25 th office in Cranberry, Township, Butler County, which is scheduled to open in the fourth quarter of 2011.”

Consolidated net income remained unchanged at $3.5 million for the quarter ended September 30, 2010, compared to the same period in the prior year. Net interest income increased $1.2 million, or 12.3%, primarily due to decreases in interest expense on deposits and borrowings of $3.0 million, partially offset by a decrease in interest income of $1.8 million. Offsetting the increase to net interest income was an increase in provision for loan losses of $314,000, a decrease of $185,000 in noninterest income, an increase in noninterest expense of $775,000 and an increase of $127,000 in net income attributable to the noncontrolling interest. The Company’s provision for income taxes decreased $153,000 over the same period last year. The $314,000 increase in provisions for loan losses was primarily related to the estimated loss of $506,000 on a commercial loan to a local automobile dealer. Included in the decrease in non-interest income were increases to net impairment losses on securities and impairment losses on derivatives of $210,000 and $149,000, respectively, partially offset by an increase to income from real estate joint ventures of $296,000. The $775,000 increase in non-interest expense included increases in compensation and employee benefits and other expenses of $495,000 and $256,000, respectively.

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