ESSA Bancorp, Inc. (ESSA) | Investment Case

1. Company Snapshot

1.a. Company Description

ESSA Bancorp, Inc.operates as a bank holding company for ESSA Bank & Trust that provides a range of financial services to individuals, families, and businesses in Pennsylvania.The company accepts savings accounts, interest bearing demand accounts, checking accounts, money market accounts, club accounts, certificates of deposit and IRAs, and other qualified plan accounts, as well as commercial checking accounts.

Its loan portfolio includes first mortgage loans for the purchase, construction, or refinancing of one- to four-family residential real estate property; commercial real estate loans; home equity loans and lines of credit; and commercial and other consumer loans, as well as loans secured by deposits and personal unsecured loans.In addition, the company offers insurance benefits consulting services, such as health insurance, life insurance, short term and long term disability, dental, vision, 401(K) retirement planning, and individual health products, as well as asset management and trust, and investment services.As of September 30, 2021, it operated 21 community offices, including seven offices in Monroe County, three offices in Lehigh County, five offices in Northampton County, one office in Lackawanna County, one office in Luzerne County, one office in Chester County, two offices in Delaware County, and one office in Montgomery County, Pennsylvania.

The company was founded in 1916 and is headquartered in Stroudsburg, Pennsylvania.

Show Full description

1.b. Last Insights on ESSA

ESSA Bancorp, Inc.'s recent performance was driven by several positive developments. The company's receipt of bank regulatory approvals for its proposed merger with CNB Financial Corporation is a significant milestone, clearing the path for a seamless integration. Additionally, the declaration of a quarterly dividend of $0.15 per share demonstrates the company's commitment to returning value to shareholders. Furthermore, the validation of K12 Tutoring's impact on student achievement by ESSA Level II validation underscores the company's focus on education and community development.

1.c. Company Highlights

Last Price	20.61
Change Percentage	2.54%
Open	20.61
Previous Close	20.61
Market Cap ( Millions)	209
Volume	345696
Year High	22.22
Year Low	15.82
M A 50	19.26
M A 200	19.57

FCF Yield	6.05%
Dividend Yield	2.91%
ROE	6.38%
Debt / Equity	84.88%
Net Debt / EBIDTA	848.05%
Price To Book	0.83
Price Earnings Ratio	13.3
Price To FCF	16.54
Price To sales	1.86
EV / EBITDA	18.85

2. Transcript Summary

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3. NewsRoom

ESSA Announces Completion of Arrangement with XenoTherapeutics

Oct -09

Source: prnewswire.com

ESSA Securityholders Approve Acquisition by XenoTherapeutics

Oct -06

Source: prnewswire.com

K12 Tutoring Strengthens ESSA Validation with New Multi-Grade Results

Sep -29

Source: globenewswire.com

ESSA Pharma Inc. Amends Agreement with XenoTherapeutics

Sep -24

Source: prnewswire.com

CNB Financial Corporation Completes Merger with ESSA Bancorp, Inc.

Jul -24

Source: globenewswire.com

ESSA Pharma Inc. Provides Update on its Application to the Supreme Court of British Columbia for Approval of an Interim Order and Cash Distribution to Shareholders

Jul -23

Source: prnewswire.com

ESSA Pharma Inc. Announces Definitive Agreement to be Acquired by XenoTherapeutics, Inc., Backed by XOMA Royalty Corporation in All-Cash Transaction

Jul -14

Source: prnewswire.com

CNB Financial Corporation and ESSA Bancorp, Inc. Receive Bank Regulatory Approvals for Merger

Jun -30

Source: accessnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.00%)

6. Segments

Banking and Related Activities

Expected Growth: 3.0%

ESSA Bancorp, Inc.'s 3.0% growth in Banking and Related Activities is driven by increasing loan demand, expansion of commercial banking services, and strategic acquisitions. Additionally, the company's focus on digital transformation, cost savings initiatives, and a favorable interest rate environment contribute to its growth momentum.

7. Detailed Products

Personal Banking

ESSA Bancorp, Inc. offers a range of personal banking services, including checking and savings accounts, credit cards, loans, and investment products.

Business Banking

ESSA Bancorp, Inc. provides business banking services, including commercial loans, cash management, and treasury management solutions.

Wealth Management

ESSA Bancorp, Inc. offers wealth management services, including investment advice, portfolio management, and retirement planning.

Mortgage Lending

ESSA Bancorp, Inc. provides mortgage lending services, including residential and commercial mortgage loans.

Insurance Services

ESSA Bancorp, Inc. offers insurance services, including life insurance, disability insurance, and long-term care insurance.

Online Banking

ESSA Bancorp, Inc. provides online banking services, including bill pay, fund transfer, and account management.

Mobile Banking

ESSA Bancorp, Inc. offers mobile banking services, including mobile deposit, bill pay, and account management.

8. ESSA Bancorp, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

ESSA Bancorp, Inc. operates in a highly competitive industry, but the threat of substitutes is mitigated by the company's strong brand recognition and customer loyalty.

Bargaining Power Of Customers

ESSA Bancorp, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products and services are not easily substitutable.

Bargaining Power Of Suppliers

ESSA Bancorp, Inc. relies on a few large suppliers for its operations, which gives them some bargaining power. However, the company's strong relationships with its suppliers mitigate this risk.

Threat Of New Entrants

The banking industry has high barriers to entry, including regulatory hurdles and capital requirements, which reduces the threat of new entrants.

Intensity Of Rivalry

ESSA Bancorp, Inc. operates in a highly competitive industry with many established players, leading to a high intensity of rivalry.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	63.03%
Debt Cost	5.73%
Equity Weight	36.97%
Equity Cost	5.73%
WACC	5.73%
Leverage	170.52%

11. Quality Control: ESSA Bancorp, Inc. passed 2 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Bank of South Carolina

A-Score: 7.5/10

Value: 6.3

Growth: 3.9

Quality: 8.8

Yield: 8.0

Momentum: 9.0

Volatility: 9.3

1-Year Total Return ->

Meridian

A-Score: 6.5/10

Value: 7.9

Growth: 4.2

Quality: 5.1

Yield: 7.0

Momentum: 8.0

Volatility: 7.0

1-Year Total Return ->

TriCo

A-Score: 6.3/10

Value: 6.1

Growth: 4.8

Quality: 8.2

Yield: 6.0

Momentum: 5.0

Volatility: 7.7

1-Year Total Return ->

Provident Financial Services

A-Score: 6.3/10

Value: 6.8

Growth: 5.7

Quality: 4.4

Yield: 9.0

Momentum: 5.0

Volatility: 6.7

1-Year Total Return ->

ESSA Bancorp

A-Score: 6.2/10

Value: 5.1

Growth: 5.2

Quality: 5.0

Yield: 6.0

Momentum: 7.0

Volatility: 8.7

1-Year Total Return ->

ConnectOne

A-Score: 5.0/10

Value: 4.2

Growth: 5.0

Quality: 4.3

Yield: 6.0

Momentum: 4.0

Volatility: 6.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

0.32%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

5.73%

ESSA Bancorp, Inc. - US29667D1046

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on ESSA

1.c. Company Highlights

Medium Volatility

Average Yield

Fairly Valued

Earnings Beats

Revenues Beats

Average Quality

Earnings Miss

Stable Momentum

Average Growth

Revenues Miss

Weak Momentum

Lower Quality

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.00%)

6. Segments

Banking and Related Activities

Expected Growth: 3.0%

7. Detailed Products

Personal Banking

Business Banking

Wealth Management

Mortgage Lending

Insurance Services

Online Banking

Mobile Banking

8. ESSA Bancorp, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: ESSA Bancorp, Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

20.61$

Current Price

20.61$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA