SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996].
For the fiscal year ended December 31, 2008
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED].
For the transition period from to
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Commission File Number 000-33384
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A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
ESSA Bank & Trust 401(k) Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
ESSA Bancorp, Inc.
200 Palmer Street
Stroudsburg, PA 18360-0160
ESSA BANK & TRUST 401(k) PLAN
STROUDSBURG, PENNSYLVANIA
AUDIT REPORT
DECEMBER 31, 2008
ESSA BANK & TRUST 401(k) PLAN
DECEMBER 31, 2008
Page
Number
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Report of Independent Registered Public Accounting Firm 1
Statement of Net Assets Available for Benefits 2
Statement of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-8
Supplemental Information 9
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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To the Trustees of the ESSA Bank & Trust 401(k) Plan
Stroudsburg, Pennsylvania
We have audited the accompanying statements of net assets available for benefits
of the ESSA Bank & Trust 401(k) Plan as of December 31, 2008 and 2007, and the
related statement of changes in net assets available for benefits for the year
ended December 31, 2008. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the ESSA Bank &
Trust 401(k) Plan as of December 31, 2008 and 2007, and the changes in net
assets available for benefits for the year ended December 31, 2008, in
conformity with U.S. generally accepted accounting principles.
As discussed in Note 7 to the financial statements, effective January 1, 2008,
the Plan adopted Statement of Financial Accounting Standards No. 157, Fair Value
Measurements.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental schedule of Assets Held for
Investment Purposes as of December 31, 2008, is presented for the purpose of
additional analysis and is not a required part of the basic financial
statements, but is supplementary information required by the United States
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedule
is the responsibility of Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ S.R. Snodgrass, A.C.
Wexford, PA
June 29, 2009
ESSA BANK & TRUST 401(k) PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
2008 2007
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ASSETS
Investments, at fair value
ESSA Bancorp, Inc. common stock $ 4,683,515 $ 3,558,341
Mutual funds 1,809,966 2,153,134
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Total investments, at fair value 6,493,481 5,711,475
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Contributions:
Employer contribution receivable 8,129 7,596
Employees contribution receivable 17,528 15,919
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Total contributions 25,657 23,515
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Net assets available for benefits $ 6,519,138 $ 5,734,990
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The accompanying notes are an integral part of these financial statements.
2
ESSA BANK & TRUST 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2008
ADDITIONS IN NET ASSETS ATTRIBUTED TO:
Investment income:
Net appreciation in fair value of investments $ 186,965
Interest and dividends on investments 37,244
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Total investment income 224,209
Contributions:
Contributions by employer 215,146
Contributions by employees 464,060
Rollover contributions 1,287
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Total contributions 680,493
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Total additions 904,702
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DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants 111,743
Administrative expenses 8,811
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Total deductions 120,554
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Net increase 784,148
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of the period 5,734,990
------------
End of the period $ 6,519,138
============
The accompanying notes are an integral part of these financial statements.
3
ESSA BANK & TRUST 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF PLAN
The following brief description of the ESSA Bank & Trust 401(k) Plan (the
"Plan") for employees of ESSA Bank & Trust (the "Bank") is provided for
general information purposes only. Participants should refer to the Plan
Document for a more comprehensive description of the Plan's provisions.
General
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The Plan is a defined contribution plan covering the employees of the Bank
who have attained the age of 21 and have completed one year of service and
1,000 hours of service. An employee becomes a participant on either January
1 or July 1, depending on when eligibility requirements are met. The Plan
includes a 401(k) before-tax savings feature, which permits participants to
defer compensation under Section 401(k) of the Internal Revenue Code. It is
subject to the provisions of the Employee Retirement Income Security Act of
1974 (ERISA), as amended.
Contributions
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Employees may elect to contribute any amount up to the maximum percentage
allowable, not to exceed the limits of Code Sections 401(k), 402(g), 404,
and 415. The Bank will match 100 percent of the participant's annual
elective deferrals that do not exceed 3 percent of the participant's
compensation, plus 50 percent of the amount of the participant's annual
elective deferrals that do not exceed 5 percent of the participant's
compensation. The participants may direct their accounts into several
different investment options. Contributions are subject to certain
limitations.
Participant Accounts
--------------------
Each participant's account is credited with Plan earnings. Allocations are
based upon participants' account balances at the beginning of the valuation
period, while forfeitures related to the non-vested portion of the employer
contributions are reallocated to remaining participants' accounts in the
ratio of each participant's compensation in relation to compensation of all
participants. The benefit to which a participant is entitled is the benefit
that can be provided from the participant's account.
Vesting
-------
Participants are immediately vested in their voluntary contributions plus
actual earnings thereon. Vesting in the sponsor's contributions in the Plan
made prior to December 1, 2004, is based on completion of credited service
years. A credited service year is considered one in which the participant
completed at least 1,000 hours of service. Such contributions are subject
to a six-year graded vesting schedule pursuant to which such amounts vest
in 20 percent increments after each completed year of service, beginning
after the completion of the second year of service. Employer contributions
made subsequent to December 1, 2004, are immediately vested.
4
NOTE 1 - DESCRIPTION OF PLAN (Continued)
Payment of Benefits
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Upon termination of service, participants whose accounts do not exceed
$1,000 may receive a lump-sum amount equal to the value of their account.
Participants whose accounts are between $1,000 and $5,000 may have the
balance of their account rolled over into an IRA. Participants whose vested
account balance at the time of termination exceeds $5,000 may receive a
lump-sum distribution or an annuity or may defer payments of benefits until
April 1 of the calendar year following the calendar year during which the
participant reaches age 70 1/2.
Forfeitures
-----------
At December 31, 2008 and December 31, 2007, forfeited nonvested accounts
totaled $4, respectively. These amounts will be utilized to reduce future
employer contributions or to pay Plan administrative expenses. During the
year ended December 31, 2008 and 2007, $0 and $1,027 in forfeitures were
utilized to reduce the employer's contribution.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting principles followed by the Plan and the methods of applying
these principles conform to U.S. generally accepted accounting principles.
A summary of the significant accounting and reporting policies applied in
the presentation of the accompanying financial statements follows:
Accounting Estimates
--------------------
The financial statements have been prepared in conformity with U.S.
generally accepted accounting principles. In preparing the financial
statements, management is required to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ
significantly from those estimates.
Valuation of Investments and Income Recognition
-----------------------------------------------
The Plan's investments are stated at fair value. The fair value of mutual
funds is determined using the quoted net asset value of the specified fund.
The fair value of ESSA Bancorp, Inc. common stock is determined based on a
quoted market price.
The net appreciation (depreciation) in fair value of investments includes
investments purchased, sold, and held during the year.
Purchases and sale of investments are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded on
the ex-dividend date.
Payment of Benefits
-------------------
Benefit payments to participants are recorded upon distribution.
5
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Administrative Expenses
-----------------------
Administrative expenses of the Plan relating to investment management and
recordkeeping fees are paid by the Plan. Fees relating to accounting and
miscellaneous administrative expenses are paid by the Plan's sponsor. Such
expenses amounted to $14,895 for the year ended December 31, 2008.
NOTE 3 - INVESTMENTS
The Plan investments are administered by Massachusetts Mutual Life
Insurance Company ("trustee").
The fair value of the individual investments that represent 5 percent or
more of the Plan's net assets as of December 31 are as follows:
2008 2007
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Fair Fair
Value Value
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Investments at fair value as
determined by quoted market price:
Premium Money Market Fund (Babson) $ 477,982 $ 310,288
ESSA Bancorp, Inc. common stock 4,683,515 3,558,341
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Total $ 5,161,497 $ 3,868,629
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The Plan's investments appreciated in fair value for the year ended
December 31 as follows:
Net Appreciation (Depreciation)
in Fair Value During
2008
-------------------
Investments at fair value as determined
by quoted market price:
Mutual funds $ (733,436)
Common stock 920,401
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Net appreciation in fair value $ 186,965
===================
NOTE 4 - PLAN TERMINATION
Although it has not expressed any intent to do so, the Bank has the right
under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
termination of the Plan, participants will become 100 percent vested in
their accounts.
NOTE 5 - TAX STATUS
The Plan obtained its latest determination letter on April 23, 2002, in
which the Internal Revenue Service stated that the Plan, as then designed,
was in compliance with the applicable requirements of the Internal Revenue
Code. The Plan has been amended since receiving the determination letter.
However, the Plan administrator believes that the Plan is currently
designed and being operated in compliance with the applicable requirements
of the Internal Revenue Code.
6
NOTE 6 - PARTY-IN-INTEREST TRANSACTIONS
Certain Plan investments are shares of mutual funds that are managed by
Massachusetts Mutual Life Insurance Company, the defined trustee of the
Plan. Therefore, related transactions qualify as party-in-interest
transactions. Fees paid by the Plan for investment management services
amounted to $8,809 for the year ended December 31, 2008.
At December 31, 2008, the Plan held 332,049 shares of ESSA Bancorp, Inc.
common stock. Dividends received on these shares in 2008 totaled $37,244.
NOTE 7 - FAIR VALUE MEASUREMENTS
Effective January 1, 2008, the Plan adopted Statement of Financial
Accounting Standards (FAS) No. 157, which, among other things, requires
enhanced disclosures about assets and liabilities carried at fair value.
FAS No. 157 establishes a framework for measuring fair value. That
framework provides a fair value hierarchy that prioritizes the inputs to
valuation techniques used to measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities and lowest priority to unobservable inputs.
The three levels of the fair value hierarchy under FAS No. 157 are
described below:
Level I: Inputs to the valuation methodology are unadjusted quoted
prices for identical assets or liabilities in active markets
that the Plan has the ability to access.
Level II: Inputs to the valuation methodology include quoted prices
for similar assets or liabilities in active markets; quoted
prices for identical or similar assets or liabilities in
inactive markets; inputs other than quoted prices that are
observable for the asset or liability; and inputs that are
derived principally from or corroborated by observable
market data by correlation or other means. If the asset or
liability has a specified (contractual) term, the Level II
input must be observable for substantially the full term of
the asset or liability.
Level III: Inputs to the valuation methodology are unobservable and
significant to the fair value measurement.
The asset's or liability's fair value measurement level within the fair
value hierarchy is based on the lowest level of any input that is
significant to the fair value measurement. Valuation techniques used need
to maximize the use of observable inputs and minimize the use of
unobservable inputs.
Following is a description of the valuation methodologies used for assets
measured at fair value. There have been no changes in the methodologies
used at December 31, 2008 and 2007.
Common Stocks
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Valued at the closing price reported on the active market on which the
individual securities are traded.
Mutual Funds
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Valued at the net asset value ("NAV") of shares held by the Plan at
year-end.
The methods described above may produce a fair value calculation that may
not be indicative of net realizable value or reflective of future fair
values. Furthermore, while the Plan believes its valuation methods are
appropriate and consistent with other market participants, the use of
different methodologies or assumptions to determine the fair value of
certain financial instruments could result in a different fair value
measurement at the reporting date.
7
NOTE 7 - FAIR VALUE MEASUREMENTS (Continued)
The following table sets forth by level, within the fair value hierarchy,
the Plan's assets at fair value as of December 31, 2008:
December 31, 2008
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Level I Level II Level III Total
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Assets:
Mutual funds $ 1,809,966 $ - $ - $ 1,809,966
Common stock 4,683,515 - - 4,683,515
--------------- --------------- --------------- ----------------
Total assets at fair value $ 6,493,481 $ - $ - $ 6,493,481
=============== =============== =============== ================
NOTE 8 - FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, Disclosures About Fair
Value of Financial Instruments, requires the Plan to disclose the estimated
fair value of its financial instruments. Financial instruments are defined
as cash, evidence of ownership interest in an entity, or a contract which
creates an obligation or right to receive or deliver cash or another
financial instrument from/to a second entity on potentially favorable or
unfavorable terms. Fair value is defined as the amount at which a financial
instrument could be exchanged in a current transaction between willing
parties other than in a forced liquidation or sale. If a quoted market
price is available for a financial instrument, the estimated fair value
would be calculated based upon the market price per trading unit of the
instrument.
Investments in mutual funds, common stock and contributions receivable
would be considered a financial instrument. At December 31, 2008 and
December 31, 2007, the carrying amounts of these financial instruments
approximate fair value.
NOTE 9 - RISKS AND UNCERTAINTIES
The Plan invests in various investment securities. Investment securities
are exposed to various risks such as interest rate, market, and credit
risks. Due to the level of risk associated with certain investment
securities, it is at least reasonably possible that changes in the values
of investment securities will occur in the near term and that such changes
could materially affect participants' account balances and the amounts
reported in the Statement of Net Assets Available for Benefits.
8
ESSA BANK & TRUST 401(k) PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
EMPLOYER IDENTIFICATION NUMBER 24-0568185
PLAN NUMBER - 002
DECEMBER 31, 2008
Par or Fair
Shares Value
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Mutual Funds
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Aggressive Journey 415 $ 39,766
* Premium Core Bond (Babson) 50 77,462
Premium Core Value Equity (Babson/OFI) 4 15,743
* SEI Indexed Equity (Northern Trust) 622 155,047
* SEI Mid Cap Growth II (TRP) 241 37,182
* SEI Large Cap Value (Davis) 741 92,741
* Premium International Equity (OFI) 377 115,425
* Premium High Yield (Babson) 234 25,654
Capital Appreciation (OFI) 856 123,467
Moderate Journey 283 31,555
* Premier Strategic Income (OFI) 482 76,726
* Premium Money Market Fund (Babson) 749 477,982
New Horizons (T Rowe Price) 275 64,614
Conservative Journey 152 19,666
Spectrum Growth (T Rowe Price) 103 21,465
* Premier Cap Appreciation (OFI) 106 10,844
Adv SmMid Cap Value(Wls Fargo) 646 38,707
Dow Jones Target 2015(SSGA) 1,264 115,949
Dow Jones Target 2025(SSGA) 1,334 108,961
Dow Jones Target 2035(SSGA) 479 35,601
Dow Jones Target Today(SSGA) 489 50,701
Large Cap Value (Eaton Vance) 261 16,799
NFJ Small Cap Value (Allianz) 257 41,993
Int'l New Discovery (MFS) 92 15,916
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1,809,966
Common Stock
------------
* ESSA Bancorp, Inc. common stock 332,049 4,683,515
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Total $ 6,493,481
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* Party-in-interest
9
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
ESSA BANK & TRUST 401(k) PLAN
Date: June 26, 2009 By: /s/ Gary S. Olson
---------------------------
Name: Gary S. Olson
Title: Plan Administrator
ESSA Bank & Trust