ESSA Bancorp, Inc. operates as the bank holding company for ESSA Bank & Trust that provides financial services to individuals, families, and businesses.
The company operates through its community offices, located in Monroe, Northampton, Lehigh, Lackawanna, Luzerne, Chester, Delaware and Montgomery counties, Pennsylvania. The company is subject to comprehensive regulation and examination by the Pennsylvania Department of Banking and Securities and the Federal Deposit Insurance Corporation.
The...
ESSA Bancorp, Inc. operates as the bank holding company for ESSA Bank & Trust that provides financial services to individuals, families, and businesses.
The company operates through its community offices, located in Monroe, Northampton, Lehigh, Lackawanna, Luzerne, Chester, Delaware and Montgomery counties, Pennsylvania. The company is subject to comprehensive regulation and examination by the Pennsylvania Department of Banking and Securities and the Federal Deposit Insurance Corporation.
The company's business consists primarily of accepting deposits from the general public and investing those deposits, together with funds generated from operations and borrowings, in residential first mortgage loans (including construction mortgage loans), commercial real estate loans, home equity loans and lines of credit, and commercial and industrial loans. The company offers investment services through its relationship with Ameriprise Financial Services, LLC, a third-party broker/dealer and registered investment advisor. It offers insurance benefit consulting services through its wholly owned subsidiary, ESSA Advisory Services, LLC.
Market Area
The company's primary market for deposits is concentrated around the areas where its full-service banking offices are located. The company's primary lending area consists of the counties where its branch offices are located, and to a lesser extent, the contiguous counties in the Commonwealth of Pennsylvania.
Lending Activities
Loan Originations and Repayments: The company originates residential mortgage loans pursuant to underwriting standards that generally conform to Fannie Mae and Freddie Mac guidelines. Loan origination activities are primarily concentrated in Monroe, Northampton, Lehigh, Lackawanna, Luzerne, Chester, Delaware, and Montgomery Counties, Pennsylvania.
The company also offers adjustable-rate mortgage loans which have initial fixed terms of one, three, five or seven-years before converting to an annual adjustment schedule based on changes in a designated United States Treasury index. The company’s adjustable rate mortgage loans provide for maximum rate adjustments of 200 basis points per adjustment, with a lifetime maximum adjustment of 500 basis points. The company’s adjustable rate mortgage loans amortize over terms of up to 30 years.
All one- to four-family residential mortgage loans that the company originates include a due-on-sale clause, which provides the right to declare a loan immediately due and payable in the event that the borrower sells or otherwise conveys title to the real property subject to the mortgage and the loan is not repaid. For all purchase money loans, the company utilizes outside independent appraisers approved in accordance with the bank’s appraisal policy. All purchase money and most refinance loans require a lender’s title insurance policy. Certain modest refinance requests may utilize an exterior inspection report and title search. The company also requires fire and casualty insurance and, where circumstances warrant, flood insurance.
Home Equity Loans and Lines of Credit: Home equity loans and lines of credit are generated by the company’s loan originators. Eligible properties include primary and vacation homes located in Monroe, Northampton, Lackawanna, Luzerne, Lehigh, Chester, Delaware, and Montgomery Counties, Pennsylvania and secondarily in other Pennsylvania counties contiguous to the company’s primary market area.
The company’s home equity lines of credit typically feature a 10-year draw period with interest-only payments permitted, followed by another 20 years of fully amortizing payments with no further ability to draw funds.
Loan underwriting standards limit the maximum size of a junior lien loan to between $10,000 and $500,000, depending on the loan type and collateral. All loans exceeding 75% of value require an appraisal by bank-approved, licensed appraisers. Loans up to $25,000 with lesser loan-to-value ratios may utilize an automated valuation model. Title/lien searches are secured on all home equity loans and lines.
Commercial Real Estate Loans: The company’s total loan portfolio consists of commercial real estate loans. Commercial real estate loans are secured by office and industrial buildings, multi-family, mixed-use properties and other commercial properties. The company generally originates fixed rate commercial real estate loans with an initial term of five to seven years and a repricing option, and a maximum term of up to 25 years for existing properties and 30 years for new construction.
The company considers a number of factors in originating commercial real estate loans. The company evaluates the qualifications and financial condition of the borrower, including credit history, profitability and expertise, as well as the value and condition of the mortgaged property securing the loan. When evaluating the qualifications of the borrower, the company considers the financial resources of the borrower, the borrower’s experience in owning or managing similar property and the borrower’s payment history with it and other financial institutions.
First Mortgage Construction Loans: The company’s first mortgage construction loans are for the construction of residential properties. The company offers fixed- and adjustable-rate residential first mortgage construction loans. First mortgage construction loans are generally structured for permanent mortgage financing once the construction is completed.
For all such loans, the company utilizes outside independent appraisers approved in accordance with the bank’s Appraisal Policy. All borrowers are required to obtain title insurance. The company also requires fire and casualty insurance and, where circumstances warrant, flood insurance on properties.
Commercial Loans: The company generally offers commercial loans to businesses located in its primary market area. The commercial loan portfolio includes lines of credit, equipment loans, vehicle loans, improvement loans and term loans. These loans are primarily secured by vehicles, machinery and equipment, inventory, accounts receivable, marketable securities, deposit accounts and real estate.
Obligations of States and Political Subdivisions: The company’s loan portfolio consists loan transactions including tax and revenue anticipation notes, general obligation notes, and authority general revenue notes.
Auto Loans: The company offers auto loans. Collision and comprehensive insurance is required and the bank must be listed as the loss payee.
Other Loans: The company offers a variety of loans that are either unsecured or secured by property other than real estate. These loans include loans secured by deposits and personal unsecured loans.
Securities Activities
The company’s investment policy generally permits investments in debt securities issued by the U.S. government and U.S. agencies, obligations of states and political subdivisions, and corporate debt obligations, as well as investments in the Federal Home Loan Bank of Pittsburgh (federal agency securities) and, to a much lesser extent, other equity securities. Securities in these categories are classified as investment securities for financial reporting purposes.
Deposits
The company’s deposit accounts consist of savings accounts, interest bearing demand accounts, checking accounts, money market accounts, club accounts, certificates of deposit and IRAs and other qualified plan accounts. The company provides commercial checking accounts for businesses.
Supervision and Regulation
As a bank holding company, the company is required to file certain reports with, and otherwise comply with the rules and regulations of the Board of Governors of the Federal Reserve System (Federal Reserve Board).
The bank is a Pennsylvania-chartered savings bank and its deposit accounts are insured up to applicable limits by the Federal Deposit Insurance Corporation (FDIC) under the Deposit Insurance Fund (DIF).
The company is subject to extensive regulation by the Pennsylvania Department of Banking and Securities (the 'Department'), its chartering agency; and by the FDIC, its primary federal regulator. The company must file reports with the Department and the FDIC concerning its activities and financial condition, in addition to obtaining regulatory approvals prior to entering into certain transactions, including but not limited to, mergers with or acquisitions of other savings institutions.
The Pennsylvania Banking Code of 1965, as amended (the 'Banking Code') contains detailed provisions governing the organization, location of offices, rights and responsibilities of directors, officers, employees, and depositors, as well as corporate powers, savings and investment operations, and other aspects of the bank and its affairs. The company is also subject to extensive regulation, examination and supervision by the Federal Deposit Insurance Corporation (FDIC) as its primary federal regulator.
Transactions between an insured bank, such as the bank, and any of its affiliates are governed by Sections 23A and 23B of the Federal Reserve Act and implementing regulations.
The Bank Secrecy Act (BSA) and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act) require the company to implement a compliance program to detect and prevent money laundering, terrorist financing, and illicit crime. The USA PATRIOT Act also required the federal banking agencies to take into consideration the effectiveness of controls designed to combat money laundering activities in determining whether to approve a merger or other acquisition application of a member institution. The company has established policies, procedures and systems designed to comply with the BSA, USA PATRIOT Act, and regulations implemented thereunder.
The company is a bank holding company that has elected to be a financial holding company and is subject to examination, regulation and periodic reporting under the Bank Holding Company Act of 1956 (the 'Bank Holding Company Act'), as administered by the Federal Reserve Board.
Shares of the company's common stock are registered with the Securities and Exchange Commission under Section 12(b) of the Securities Exchange Act of 1934, as amended (the 'Exchange Act'). The company is also subject to the proxy rules, tender offer rules, insider trading restrictions, annual and periodic reporting, and other requirements of the Exchange Act.
History
ESSA Bancorp, Inc. was founded in 1916.
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