ESSA Bancorp, Inc. :ESSA-US: Earnings Analysis: Q4, 2016 By the Numbers : October 28, 2016

ESSA Bancorp, Inc. reports financial results for the quarter ended September 30, 2016.

We analyze the earnings along side the following peers of ESSA Bancorp, Inc. – Northwest Bancshares, Inc. and Harleysville Savings Financial Corporation (NWBI-US and HARL-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 14.14 million, Net Earnings of USD 1.53 million.
  • Net interest income margins narrowed from 84.70% to 82.74% compared to the same period last year.
  • Net loan assets changed 10.62% compared to same period last year and -1.16% from previous period, total deposits changed 10.77% compared to same period last year and 3.89% from previous period.
  • Earnings decline from worsening in operating margins as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2015-09-30 2015-12-31 2016-03-31 2016-06-30 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 12.94 12.92 14.4 14.23 14.14
Revenue Growth (%YOY) 0.29 0.13 10.43 9.89 9.27
Earnings (mil) 2.31 1.96 2.13 2.11 1.53
Earnings Growth (%YOY) -2.78 -24.61 -12.46 -14.04 -33.69
Net Margin (%) 17.82 15.15 14.78 14.84 10.81
EPS 0.22 0.19 0.2 0.2 0.14
Return on Equity (%) 5.38 4.59 4.94 4.8 3.46
Return on Assets (%) 0.57 0.46 0.48 0.48 0.35

Access our Ratings and Scores for ESSA Bancorp, Inc.

Market Share Versus Profits

Revenues History
Earnings History

ESSA-US‘s change in revenue this period compared to the same period last year of 9.27% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that ESSA-US is holding onto its market share. Also, for comparison purposes, revenues changed by -0.65% and earnings by -27.60% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

ESSA-US‘s year-on-year decline in earnings was influenced by a weakening of net interest income margins from 84.70% to 82.74% as well as issues with loan loss provisions. As a result, net interest income after provisions margins went from 80.26% to 77.44% in this period. For comparison, net interest income margins were 83.33% and net interest income after provisions margins 79.11% in the last period. In addition, loan loss provisions as a percentage of net interest income were 6.41% this period and 5.25% a year ago.

Net Interest Income Margin Versus Loan Loss Provisions Margin

Quadrant label definitions. Hover to know more

High Risk; High Reward Loans, Risky Loan Portfolio, Conservative Loan Portfolio, Safer Loan Portfolio
Net Interest Income Margin History
Loan Loss Provisions Margin History

Net Loans and Total Deposits

A financial institution’s core operations represented by Net Interest Income and Net Interest Income after Provisions are dependent on both the growth and quality of its deposits as well as the growth and quality of its loans. A firm could boost its interest income in the short-term by just increasing its loan assets with less concern about their quality – but this would eventually lead to greater loan loss provisions. Similarly a drive to increase deposits could result in higher interest expenses and eventually effect the firm’s equity. It is thus important to understand net interest income performance in context to loan loss provisions, loan assets and deposits.

Loan Assets Growth Rate History (Qtr YOY)
Total Deposits Growth Rate History (Qtr YOY)

The firm’s decline in net interest income margins came despite the relative increase in the levels of net loan assets. In addition, total deposits as a percentage of equity went from 6.40% to 6.89%. On an absolute basis, net loan assets changed 10.62% compared to the same period last year and -1.16% from the previous period. Total deposits changed 10.77% compared to the same period last year and 3.89% from the previous period.


The company’s decline in earnings has been influenced by the following factors: (1) Contraction of operating margins from 24.94% to 14.07% and (2) One-time items that contributed to a decrease in pretax margins from 22.74% to 14.34%

EBIT Margin History
PreTax Margin History
EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables

Access our Ratings and Scores for ESSA Bancorp, Inc.

Company Profile

ESSA Bancorp, Inc. is a holding company that engages in the provision of banking, trust, and advisory services. It offers personal and business banking; government financial services; investment and wealth management; retirement planning; and insurance products. The company was founded in 2006 and is headquartered in Stroudsburg, PA.

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