Executive Summary

Q2 2025 diluted EPS was $0.29 and net income $2.7M; excluding $1.0M pre-tax merger costs tied to the pending CNB Financial transaction, EPS was $0.40 and net income $3.8M, indicating underlying profitability despite deal expenses .
Net interest margin was 2.78% (vs 2.68% in Q1 2025 and 2.79% in Q4 2024), with cost of interest-bearing liabilities at 2.80% and ongoing deposit repricing pressures; interest expense rose year over year .
Deposit growth continued (total deposits $1.69B), but mix shifted further toward higher-cost brokered CDs (+$65.1M), partially offset by lower borrowings (-$89.3M) and stable asset quality (NPAs 0.54%) .
Merger with CNB advanced materially: ESSA shareholders approved on April 15, 2025, and bank regulatory approvals were received with expected closing on July 23, 2025, providing a clear near-term catalyst for the stock narrative .

What Went Well and What Went Wrong

What Went Well

Loan growth in residential and commercial segments lifted total net loans to $1.76B; residential mortgages rose to $734.8M and commercial loans to $48.6M, highlighting pipeline conversion and disciplined originations .
Asset quality remained strong with NPAs at 0.54% of assets and ACL/loans at 0.84%; Tier 1 capital ratio at 10.3% underscores a well-capitalized balance sheet .
Management highlighted “strong, positive operational results” while progressing toward the merger; shareholder approval was secured, supporting deal certainty and long-term value creation thesis (“enthusiastic about the future possibilities”) .

What Went Wrong

Year-over-year margin compression and funding costs persisted: interest expense increased to $11.4M vs $10.8M in Q2 2024, while NIM ticked down to 2.78% from 2.87% .
Noninterest expense rose to $12.8M from $11.7M YoY, including $1.0M merger-related costs; excluding these, OpEx was still modestly higher due to compensation and benefits .
The release of credit losses was much smaller ($42k vs $496k YoY), removing a tailwind present in prior periods and modestly reducing net interest income after reserve releases .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Diluted EPS ($)	$0.44	$0.41	$0.29
Diluted EPS, ex-merger costs ($)	N/A	N/A	$0.40
Net Income ($USD Millions)	$4.179	$3.956	$2.735
Net Interest Income ($USD Millions)	$14.396	$14.144	$14.210
Release of Credit Losses ($USD Millions)	$(0.120)	$(0.607)	$(0.042)
Noninterest Income ($USD Millions)	$2.120	$2.058	$2.017
Net Interest Margin (%)	2.79%	2.68%	2.78%
ROAA (%)	0.77%	0.71%	0.51%
ROAE (%)	7.28%	6.72%	4.70%

Q2 YoY comparison (Q2 2024 vs Q2 2025):

Metric	Q2 2024	Q2 2025
Diluted EPS ($)	$0.48	$0.29
Net Interest Income ($USD Millions)	$14.854	$14.210
Interest Expense ($USD Millions)	$10.796	$11.422
Noninterest Expense ($USD Millions)	$11.714	$12.807
Release of Credit Losses ($USD Millions)	$(0.496)	$(0.042)
Net Interest Margin (%)	2.87%	2.78%

Loan portfolio breakdown (point-in-time):

Category ($USD Millions)	Sep 30, 2024	Mar 31, 2025
Total Net Loans	$1,740.0	$1,760.0
Residential Real Estate	$721.5	$734.8
Commercial Real Estate	$884.6	$870.8
Commercial (C&I)	$36.8	$48.6
States/Political Subdivisions	$48.6	$48.3
Consumer	$51.3	$52.5

KPIs (mix, funding, capital, asset quality):

Metric	Q4 2024	Q1 2025	Q2 2025
Total Deposits ($USD Billions)	$1.63	$1.70	$1.69
Core Deposits ($USD Billions, % of total)	$1.05 (64.3%)	$1.05 (62%)	$1.04 (62%)
Brokered CDs ($USD Millions)	$252.0	+$67.0 increase	+$65.1 increase
Total Borrowings ($USD Millions)	$290.0	$225.0	$200.7
Nonperforming Assets ($USD Millions, % assets)	$12.8 (0.58%)	$11.8 (0.54%)	$11.7 (0.54%)
ACL / Total Loans (%)	0.87%	0.85%	0.84%
Tier 1 Capital Ratio (%)	10.01%	10.0%	10.3%
Tangible Book Value/Share ($)	$21.40	$21.70	$21.93

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per share	Q2 2025	$0.15 (Q1 2025 actual)	$0.15 (Q2 2025 actual)	Maintained
Merger timeline	Q2–Q3 2025	Shareholders approved April 15, 2025	Regulatory approvals received; expected closing July 23, 2025	Updated timeline

Note: ESSA did not issue quantitative forward-looking revenue or margin guidance in Q2 2025 press materials .

Earnings Call Themes & Trends

Note: No Q2 2025 earnings call transcript was located in our filings search; themes below reflect press releases and 8-Ks.

Topic	Previous Mentions (Q4 2024 and Q1 2025)	Current Period (Q2 2025)	Trend
Net interest margin and funding costs	Margin compressed; NIM 2.79% in Q4 amid elevated deposit costs ; Q1 NIM 2.68%, “stable vs a year earlier,” with cost of interest-bearing liabilities 2.88% .	NIM 2.78%; cost of interest-bearing liabilities 2.80%, deposit repricing continues .	Stable-to-slight compression; funding cost pressure persists.
Deposit mix shift	Core deposits 64.3% in Q4; brokered CDs $252M .	Q1: brokered CDs +$67.0M; core 62% .	Q2: brokered CDs +$65.1M; core 62% .
Asset quality	Q4 NPAs 0.58%; ACL/loans 0.87% .	Q1 NPAs 0.54%; ACL/loans 0.85% .	Q2 NPAs 0.54%; ACL/loans 0.84% .
Credit loss reserve releases	Q4 release $(0.120)M .	Q1 release $(0.607)M .	Q2 release $(0.042)M .
Merger progress (CNB)	None in Q4 PR; merger announced post-fiscal year .	Q1: “recently announced planned merger with CNB” and confidence in long-term value .	Q2: shareholder approval secured; later regulatory approvals; expected close July 23, 2025 .

Management Commentary

“In our fiscal second quarter 2025, the Company continued to generate strong, positive operational results as ESSA progressed toward the anticipated closing of its merger with CNB Financial Corporation… the merger received formal approval from ESSA Bancorp, Inc.’s shareholders.” — Gary S. Olson, President & CEO .
“We demonstrated year-over-year growth in commercial, commercial real estate and residential mortgage loan portfolios… While a flat yield curve continues to put pressure on margins, net interest margin remained stable in the first quarter of 2025 compared with a year earlier.” — Gary S. Olson .

Q&A Highlights

No Q2 2025 earnings call transcript was available in our document set; therefore, no Q&A-specific disclosures or clarifications beyond the press release and 8-K filings can be provided for this quarter.

Estimates Context

S&P Global consensus EPS and revenue estimates for ESSA were unavailable in our system at the time of review due to a mapping issue; as a result, we cannot quantify beats/misses against Street expectations for Q2 2025. When available, comparisons are anchored to S&P Global consensus.

Key Takeaways for Investors

Underlying EPS of $0.40 (ex-merger costs) indicates resilient core earnings despite deal-related expenses; margin pressure tempered by disciplined loan pricing and stable NIM .
Funding mix continues to shift toward brokered CDs, raising liability costs; monitor core deposit retention and brokered dependence post-merger integration .
Asset quality and capital remain solid (NPAs 0.54%, Tier 1 10.3%), limiting credit risk volatility and supporting dividend continuity .
Reserve releases are diminishing, implying fewer nonrecurring boosts to net interest income; future earnings will rely more on sustainable spread and fee contributions .
Merger provides near-term narrative catalyst with expected close July 23, 2025; watch for synergy targets, branch overlap rationalization, and funding cost optimization under CNB .
Operational expense control (ex-merger costs) remains a focus; compensation/benefits increases offset declines elsewhere—scrutinize run-rate OpEx and integration costs .
With estimates unavailable, traders should frame performance vs internal run-rate trends (NIM, deposit costs, loan growth) and merger milestones as primary drivers of sentiment .

ESSA Bancorp, Inc. (ESSA)·Q2 2025 Earnings Summary