ESSA Bancorp, Inc. reported a decrease in net income for the second quarter of fiscal 2025, with earnings of $2.7 million, down 40% from $4.6 million in the same period last year. This decline was attributed to increased non-interest expenses, including merger-related costs, a decrease in the release of credit losses, and a slight drop in net interest income. For the six months ending March 31, 2025, net income also fell to $6.7 million from $8.9 million in the prior year, reflecting similar challenges.
Total interest income for the quarter was $25.6 million, a marginal decrease from $25.7 million year-over-year, while interest expense rose to $11.4 million from $10.8 million, driven by higher interest rates and the repricing of deposits. The net interest income decreased to $14.2 million, down 4.3% from the previous year. The company reported a release of credit losses of $42,000 for the quarter, a decrease from the previous year's release, indicating a tightening in credit quality.
In terms of operational metrics, total assets decreased by $20.1 million, or 0.9%, to $2.2 billion as of March 31, 2025. This decline was primarily due to reductions in cash and cash equivalents, investment securities, and regulatory stock, although loans receivable increased by $12.8 million to $1.76 billion. Deposits rose by $60.7 million, or 3.7%, to $1.69 billion, with significant increases in certificates of deposit and money market accounts.
Strategically, ESSA Bancorp is in the process of merging with CNB Financial Corporation, with the merger expected to close in the second half of 2025, subject to regulatory approvals. The merger agreement stipulates that each share of ESSA common stock will be converted into 0.8547 shares of CNB common stock. This merger is anticipated to enhance the company's market position and operational capabilities.
Looking ahead, ESSA Bancorp's management remains cautious about the economic environment, particularly regarding interest rates and competition in the banking sector. The company is focused on managing its interest rate risk and maintaining adequate liquidity to support its operations and growth strategies.
About ESSA Bancorp, Inc.
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