ESSA Bancorp, Inc. Announces Operating Results for the Third Fiscal Quarter of 2008

STROUDSBURG, Pa.--(Business Wire)--
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, 2008. The Company reported net income of $2.0 million, or
$0.12 per diluted share, for the three months ended June 30, 2008, as
compared to a net loss of $9.0 million for the corresponding 2007
period. The net loss of $9.0 million for the three months ending June
30, 2007, was primarily due to a one time allocation of $12.7 million
made by the Company to the ESSA Bank & Trust Foundation (the
"Foundation"), in conjunction with the Company's stock offering which
was consummated on April 3, 2007.

For the nine months ended June 30, 2008, the Company reported net
income of $5.3 million, or $0.33 per diluted share, as compared to a
net loss of $6.8 million for the comparable period in 2007. The
primary reason for the increase in net income for the nine month
period was the Company's contribution to the Foundation during the
prior period. In addition, increases in average net earning assets
added to net income during the current period. Average net earning
assets increased $95.7 million, average loans outstanding increased
$76.3 million and average investments and mortgage-backed securities
increased $80.3 million for the nine months ended June 30, 2008, as
compared to the comparable period in 2007.

"It has been a successful and eventful quarter for the Company and
our stockholders," noted Gary S. Olson, President and Chief Executive
Officer of the Company. "In addition to holding our first annual
meeting of stockholders in May, our Board of Directors, at its
regularly scheduled May meeting, authorized the repurchase of up to
15% of the Company's outstanding stock and declared a $.04 per share
dividend which was paid on June 30, 2008." Mr. Olson continued, "Our
operating results were strong as our net interest spread improved from
the previous quarter and we continued to grow our Company through
prudent loan originations. Our asset quality remains strong, as
evidenced by our low ratio of non-performing assets to total assets."

Net Interest Income:

Net interest income increased $548,000, or 8.7%, to $6.9 million
for the three months ended June 30, 2008, from $6.3 million for the
comparable period in 2007. The increase was primarily attributable to
an increase in average net earning assets of $15.4 million, offset in
part by a one basis point decrease in the Company's interest rate
spread to 2.18% for the three months ended June 30, 2008, from 2.19%
for the comparable period in 2007.

Net interest income increased $4.0 million, or 25.4%, to $19.5
million for the nine months ended June 30, 2008, from $15.5 million
for the comparable period in 2007. The increase was primarily
attributable to an increase in average net earning assets of $95.7
million to $204.8 million for the nine months ended June 30, 2008,
from $109.1 million for the comparable period in 2007 and was offset
in part by a 20 basis point decrease in the Company's interest rate
spread to 2.04% for the nine months ended June 30, 2008, from 2.24%
for the comparable period in 2007.

NonInterest Income:

Noninterest income was unchanged in the 2008 period compared to
the 2007 period, remaining at $1.4 million for the three months ended
June 30, 2008 and 2007, respectively.

Noninterest income increased $62,000, or 1.5%, to $4.2 million for
the nine months ended June 30, 2008, from $4.1 million for the
comparable period in 2007. Increases in service charges and fees on
loans, trust and investment fees and earnings on bank-owned life
insurance were offset, in part, by decreases in service fees on
deposit accounts, net gain on sale of loans and other income.

NonInterest Expense:

Noninterest expense decreased $12.3 million, or 69.7%, to $5.3
million for the three months ended June 30, 2008, from $17.6 million
for the comparable period in 2007. The primary reason for the decrease
was the Company's contribution of $12.7 million to the Foundation in
April 2007. Excluding the contribution, noninterest expense increased
$444,000 or 9.1%. The primary reasons for the increase excluding the
contribution were increases in compensation and employee benefits of
$341,000 and professional fees of $101,000. Compensation and employee
benefits increased primarily as a result of normal compensation
increases of $168,000 in addition to an expense of $191,000 related to
the Company's equity incentive plan. As previously announced, the
Company's stockholders approved the ESSA Bancorp, Inc. 2007 Equity
Incentive Plan at the 2008 Annual Meeting of Stockholders on May 8,
2008. Awards granted under the Equity Incentive Plan were made on May
23, 2008. Professional fees increased primarily as a result of
increased legal, accounting and regulatory fees associated with being
a public reporting company and included approximately $72,000 related
to the Company's compliance with section 404 of the Sarbanes-Oxley
Act.

Noninterest expense decreased $10.8 million, or 40.9%, to $15.5
million for the nine months ended June 30, 2008, from $26.3 million
for the comparable period in 2007. The primary reason for the
nine-month decrease was the $12.7 million contribution to the
Foundation. Excluding the contribution, noninterest expense increased
$1.9 million or 14.2%. The primary reasons for the increase excluding
the contribution were increases in compensation and employee benefits
of $1.2 million, occupancy and equipment of $157,000, professional
fees of $481,000 and other expenses of $142,000. Compensation and
employee benefits increased primarily as a result of normal
compensation increases of $574,000, along with an increase in the
expense related to the Employee Stock Ownership Plan of $264,000 and
the additional expense of $191,000 related to the Equity Incentive
Plan. Occupancy and equipment costs increased primarily as a result of
increases in rental costs of $49,000, along with increases in
depreciation expense of $58,000. Professional fees increased primarily
as a result of increased legal, accounting and regulatory fees
associated with being a public reporting company, including
approximately $216,000 related to the Company's compliance with
Section 404 of the Sarbanes-Oxley Act. Other expense increased
primarily due to increased loan processing costs related to increased
volume.

Balance Sheet

Total assets increased $74.5 million, or 8.2%, to $984.9 million
at June 30, 2008, compared to $910.4 million at September 30, 2007.
The primary reasons for the increase in assets were increases in
certificates of deposit of $3.8 million, net loans receivable of $66.8
million and an increase in cash and cash equivalents of $3.1 million.
The increase in net loans receivable included net increases in
residential loans of $53.8 million, commercial loans of $14.3 million
and a decrease in consumer loans of $1.3 million.

Retail deposits decreased $5.0 million and brokered certificates
of deposit decreased $9.0 million at June 30, 2008, compared to
September 30, 2007. Borrowed funds increased during the same time
period by $79.4 million.

Stockholders' equity increased $3.2 million to $207.9 million at
June 30, 2008, compared to $204.7 million at September 30, 2007.

Asset Quality:

Nonperforming assets totaled $1.1 million or 0.11% of total assets
at June 30, 2008, compared to $555,000, or 0.06%, of total assets at
September 30, 2007. The Company, in response to continued loan growth,
made a provision for loan losses of $150,000 for the three months
ended June 30, 2008, as compared to a provision of $90,000 for the
comparable three-month period in 2007. The Company made a provision
for loan losses of $450,000 for the nine months ended June 30, 2008,
as compared to a provision of $270,000 for the comparable nine month
period in 2007. The allowance for loan losses was $4.5 million, or
0.65%, of loans outstanding at June 30, 2008, compared to $4.2
million, or 0.67%, of loans outstanding at September 30, 2007.

ESSA Bank & Trust, a wholly-owned subsidiary of ESSA Bancorp,
Inc., has total assets of over $919 million and is the leading
service-oriented financial institution headquartered in the greater
Pocono, Pennsylvania region. The Bank maintains its corporate
headquarters in downtown Stroudsburg, Pennsylvania and has 13
community offices throughout the Pocono, Pennsylvania area. In
addition to being one of the region's largest mortgage lenders, ESSA
Bank & Trust offers a full range of retail and commercial financial
services. 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
regulatory fees and capital requirements, changes in prevailing
interest rates, acquisitions and the integration of acquired
businesses, credit risk management, asset-liability management, the
financial and securities markets and the availability of and costs
associated with sources of liquidity.

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, which 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.

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*T
ESSA BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(UNAUDITED)

June 30, September 30,
2008 2007
------------- -------------
(dollars in thousands)
ASSETS
Cash and due from banks $ 9,126 $ 10,604
Interest-bearing deposits with other
institutions 10,782 6,175
------------- -------------

Total cash and cash equivalents 19,908 16,779
Certificates of deposit 3,836 --
Investment securities available for
sale 209,345 205,267
Investment securities held to maturity
(fair value of $12,358 and $16,876) 12,358 17,130
Loans receivable (net of allowance for
loan losses of $4,464 and $4,206) 686,609 619,845
Federal Home Loan Bank stock 18,430 16,453
Premises and equipment 10,885 11,277
Bank-owned life insurance 14,370 13,941
Other assets 9,116 9,723
------------- -------------

TOTAL ASSETS $ 984,857 $ 910,415
============= =============

LIABILITIES
Deposits $ 370,677 $ 384,716
Short-term borrowings 44,526 34,230
Other borrowings 348,847 279,697
Advances by borrowers for taxes and
insurance 6,278 1,423
Other liabilities 6,626 5,657
------------- -------------

TOTAL LIABILITIES 776,954 705,723
------------- -------------

Commitment and contingencies -- --

STOCKHOLDERS' EQUITY
Preferred Stock -- --
Common stock 170 170
Additional paid in capital 164,577 166,782
Unallocated common stock held by the
Employee Stock Ownership Plan (12,906) (13,283)
Retained earnings 58,092 53,400
Accumulated other comprehensive loss (2,030) (2,377)
------------- -------------

TOTAL STOCKHOLDERS' EQUITY 207,903 204,692
------------- -------------

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 984,857 $ 910,415
============= =============
*T

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*T
ESSA BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)

For the Three Months For the Nine Months
Ended June 30, Ended June 30,
--------------------- ---------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
(dollars in thousands)
INTEREST INCOME
Loans receivable $ 10,130 $ 9,041 $ 29,797 $ 26,426
Investment securities:
Taxable 2,674 2,634 8,013 5,127
Exempt from federal
income tax 83 74 249 221
Other investment
income 217 424 825 1,209
---------- ---------- ---------- ----------

Total interest
income 13,104 12,173 38,884 32,983
---------- ---------- ---------- ----------

INTEREST EXPENSE
Deposits 2,018 2,550 7,154 7,916
Short-term borrowings 1,052 480 1,815 1,319
Other borrowings 3,164 2,821 10,470 8,238
---------- ---------- ---------- ----------

Total interest
expense 6,234 5,851 19,439 17,473
---------- ---------- ---------- ----------

NET INTEREST INCOME 6,870 6,322 19,445 15,510
Provision for loan
losses 150 90 450 270
---------- ---------- ---------- ----------

NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 6,720 6,232 18,995 15,240
---------- ---------- ---------- ----------

NONINTEREST INCOME
Service fees on
deposit accounts 873 873 2,619 2,629
Services charges and
fees on loans 174 178 472 434
Trust and investment
fees 208 195 645 595
Gain on sale of loans,
net -- -- -- 12
Earnings on Bank-owned
life insurance 146 143 429 410
Other 9 22 33 56
---------- ---------- ---------- ----------

Total noninterest
income 1,410 1,411 4,198 4,136
---------- ---------- ---------- ----------

NONINTEREST EXPENSE
Compensation and
employee benefits 3,169 2,828 9,174 7,995
Occupancy and
equipment 705 690 2,108 1,951
Professional fees 379 278 1,067 586
Data processing 443 475 1,400 1,358
Advertising 155 178 447 514
Contribution to
Charitable Foundation -- 12,693 -- 12,693
Other 464 422 1,344 1,202
---------- ---------- ---------- ----------

Total noninterest
expense 5,315 17,564 15,540 26,299
---------- ---------- ---------- ----------

Income (loss ) before
income taxes (benefit) 2,815 (9,921) 7,653 (6,923)
Income taxes (benefit) 849 (915) 2,336 (79)
---------- ---------- ---------- ----------

NET INCOME (LOSS) $ 1,966 $ (9,006) $ 5,317 $ (6,844)
========== ========== ========== ==========
EARNINGS PER SHARE
Basic $ 0.13 (0.58) 0.34 (0.58)
Diluted 0.12 (0.58) 0.33 (0.58)

Prior period earnings per share are calculated for the period
beginning with the date of conversion or April 3, 2007.
*T

ESSA Bancorp, Inc.
Gary S. Olson, 570-421-0531
President & CEO

Copyright Business Wire 2008