ESSA Bancorp(ESSA) - 2024 Q4 - Annual Results

Financial Performance Summary ESSA Bancorp reported a decline in net income for FY2024 to $17.0 million, with the CEO highlighting disciplined loan growth and strong asset quality Net Income and Earnings Per Share (EPS) | Period | Net Income | Diluted EPS | | :--- | :--- | :--- | | Q4 2024 | $4.2 million | $0.44 | | Q4 2023 | $4.6 million | $0.47 | | FY 2024 | $17.0 million | $1.78 | | FY 2023 | $18.6 million | $1.91 | - Maintained high loan quality as a top priority in a high-rate environment, leading to improved asset quality ratios and negligible charge-offs[2] - Managed significant increases in interest expense by adjusting loan rates, which helped mitigate margin compression[2] - The company is well-positioned for potential loan and deposit growth with the prospect of decreasing interest rates[2] Key Financial and Operational Highlights FY2024 highlights include solid profitability with ROAA of 0.78%, 3.8% loan growth to $1.74 billion, improved asset quality, and a strong capital position Profitability Ratios (FY 2024) | Metric | FY 2024 | Q4 2024 | | :--- | :--- | :--- | | Return on Average Assets (ROAA) | 0.78% | 0.77% | | Return on Average Equity (ROAE) | 7.58% | 7.28% | - Total interest income for FY 2024 rose to $103.5 million from $85.5 million in FY 2023, primarily due to asset growth and higher yields on earning assets[3] Loan Portfolio Growth (as of Sep 30, 2024 vs. Sep 30, 2023) | Loan Category | YoY Growth | Balance | | :--- | :--- | :--- | | Total Net Loans | +3.8% | $1.74 billion | | Commercial Real Estate | +7.6% | $884.6 million | | Residential Mortgage | +1.2% | $721.5 million | Asset Quality Improvement (as of Sep 30, 2024 vs. Sep 30, 2023) | Metric | Sep 30, 2024 | Sep 30, 2023 | | :--- | :--- | :--- | | Nonperforming Assets to Total Assets | 0.58% | 0.63% | | Allowance for Credit Losses to Total Loans | 0.87% | 1.09% | - Total deposits were $1.63 billion, with lower-cost core deposits representing 64.3% of the total, and uninsured deposits at 30%[4] - Tangible book value per share increased to $21.40 at September 30, 2024, from $19.80 a year earlier[4] Income Statement Analysis FY2024 saw interest income rise to $103.5 million offset by a near doubling of interest expense to $45.2 million, compressing net interest margin to 2.80% Interest Income & Expense (Full Year) | Metric | FY 2024 | FY 2023 | Change | | :--- | :--- | :--- | :--- | | Total Interest Income | $103.5M | $85.5M | +21.1% | | Total Interest Expense | $45.2M | $23.9M | +89.1% | Net Interest Income & Margin (Full Year) | Metric | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Net Interest Income | $58.3M | $61.6M | | Net Interest Margin | 2.80% | 3.24% | - The company recorded a $1.4 million release of credit loss provisions in fiscal 2024, compared to a $700,000 provision in fiscal 2023, driven by improved expected credit losses in the loan portfolio[6] - Full-year noninterest expense increased to $46.9 million from $45.7 million, primarily due to higher costs for compensation, benefits, and data processing[8] Balance Sheet, Asset Quality and Capital Adequacy Analysis Total assets decreased to $2.2 billion due to lower investment securities, while net loans grew to $1.74 billion and asset quality improved, maintaining a strong capital position - Total assets decreased by $105.5 million (4.6%) to $2.2 billion, primarily reflecting a $118.2 million decrease in investment securities available for sale[9] Loan Portfolio Composition (as of Sep 30, 2024) | Loan Type | Balance | YoY Change | | :--- | :--- | :--- | | Commercial Real Estate | $884.6M | +$62.6M | | Residential Real Estate | $721.5M | +$8.2M | | Commercial (C&I) | $36.8M | -$11.3M | Deposit Composition (as of Sep 30, 2024 vs. Sep 30, 2023) | Deposit Type | Balance | % of Total | YoY Change | | :--- | :--- | :--- | :--- | | Core Deposits | $1.05B | 64.3% | -$110M | | Certificates of Deposit (CDs) | $582.1M | 35.7% | +$78.1M | | Total Deposits | $1.63B | 100% | -$31M | - The Bank maintained a strong capital position with a Tier 1 capital ratio of 10.01%, exceeding regulatory standards for a well-capitalized institution[12] Consolidated Financial Statements This section provides the detailed consolidated balance sheet, statement of operations, and key financial ratios for the company's fiscal year 2024 Consolidated Balance Sheet Total assets decreased to $2.19 billion as of September 30, 2024, driven by lower cash and investment securities, while net loans grew to $1.74 billion Consolidated Balance Sheet Summary (in thousands) | Account | Sep 30, 2024 | Sep 30, 2023 | | :--- | :--- | :--- | | Total Cash & Cash Equivalents | $48,580 | $85,402 | | Net Loans Receivable | $1,744,284 | $1,680,525 | | Total Assets | $2,187,717 | $2,293,246 | | Total Deposits | $1,629,051 | $1,661,016 | | Total Borrowings | $290,000 | $374,652 | | Total Liabilities | $1,957,296 | $2,073,538 | | Total Stockholders' Equity | $230,421 | $219,708 | Consolidated Statement of Operations Net income for FY2024 decreased to $17.0 million, primarily due to a decline in net interest income to $58.3 million despite a credit loss provision release Consolidated Statement of Operations Summary (Full Year, in thousands) | Account | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Net Interest Income | $58,279 | $61,554 | | (Release of) Provision for credit losses | $(1,360) | $700 | | Net Interest Income after Provision | $59,639 | $60,854 | | Total Noninterest Income | $8,204 | $7,906 | | Total Noninterest Expense | $46,881 | $45,690 | | Income Before Income Taxes | $20,962 | $23,070 | | Net Income | $16,992 | $18,576 | Key Ratios and Per Share Data FY2024 saw net interest margin compress to 2.80% and diluted EPS decrease to $1.78, while dividends per share remained $0.60 Key Performance Ratios (Full Year) | Ratio | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Net Interest Rate Spread | 2.28% | 2.90% | | Net Interest Margin | 2.80% | 3.24% | Per Share Data (Full Year) | Data Point | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Diluted EPS | $1.78 | $1.91 | | Dividends Per Share | $0.60 | $0.60 |