S-1/A

As filed with the Securities and Exchange Commission on January 22, 2007

Registration No. 333-139157

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

PRE-EFFECTIVE AMENDMENT NO. 1 TO

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

ESSA BANCORP, INC.

(Exact Name of Registrant as Specified in Its Charter)

Pennsylvania	6712	Being applied for
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

200 Palmer Street

Stroudsburg, Pennsylvania 18360

(570) 421-0531

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Gary S. Olson

200 Palmer Street

Stroudsburg, Pennsylvania 18360

(570) 421-0531

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

Copies to:

John J. Gorman, Esq.

Marc P. Levy, Esq.

Luse Gorman Pomerenk & Schick, P.C.

5335 Wisconsin Avenue, N.W., Suite 400

Washington, D.C. 20015

(202) 274-2000

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box:  x

If this Form is filed to register additional shares for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ¨

If the delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box:  ¨

CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered	Amount to be registered		Proposed maximum offering price per share		Proposed maximum aggregate offering price			Amount of registration fee
Common Stock, $0.01 par value per share	15,565,825 shares	(1)	$	10.00	$	155,658,250	(2)	$	16,656	(3)
Participation Interests	431,693 interests									(4)

(1) Includes shares to be issued to the ESSA Bank & Trust Foundation, a private foundation.

(2) Estimated solely for the purpose of calculating the registration fee.

(3) Previously paid on December 7, 2006.

(4) The securities of ESSA Bancorp, Inc. to be purchased by the ESSA Bank & Trust 401(k) Plan are included in the amount shown for common stock. However, pursuant to Rule 457(h) of the Securities Act of 1933, as amended, no separate fee is required for the participation interests. Pursuant to such rule, the amount being registered has been calculated on the basis of the number of shares of common stock that may be purchased with the current assets of such plan.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

Prospectus Supplement

Interests in

ESSA BANK & TRUST 401(k) PLAN

Offering of Participation Interests in up to                      Shares of

ESSA BANCORP, INC.

Common Stock

In connection with the adoption of a Plan of Conversion, ESSA Bancorp, Inc. is allowing participants in the ESSA Bank & Trust 401(k) Savings Plan (the “Plan”) to invest all or a portion of their accounts in a unitized account which will be invested in the common stock of ESSA Bancorp, Inc. (the “Common Stock”). ESSA Bancorp, Inc. has registered a number of participation interests through the Plan in order to enable the trustee of the Plan to purchase up to                      shares of Common Stock, based upon the value of the Plan assets at                          , 200    , and assuming a purchase price of $10.00 per share. This prospectus supplement relates to the initial election of Plan participants to direct the trustee of the Plan to invest all or a portion of their Plan accounts in the unitized ESSA Bancorp, Inc. Stock Account at the time of the stock offering. After the stock offering, participants will continue to be able to invest in the Stock Account.

ESSA Bancorp, Inc.’s prospectus, dated                     , is attached to this prospectus supplement. It contains detailed information regarding the stock offering of ESSA Bancorp, Inc. common stock and the financial condition, results of operations and business of ESSA Bank & Trust. This prospectus supplement provides information regarding the Plan. You should read this prospectus supplement together with the prospectus to which it is attached and keep both for future reference.

For a discussion of investment risks that you should consider, see “ Risk Factors” beginning on page 18 of the prospectus.

The interests in the Plan and the offering of the Common Stock have not been approved or disapproved by the Office of Thrift Supervision, the Securities and Exchange Commission or any other federal or state agency. Any representation to the contrary is a criminal offense.

The securities offered in this prospectus supplement and in the prospectus are not deposits or accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

This prospectus supplement may be used only in connection with offers and sales by ESSA Bancorp, Inc., in the stock offering, of stock units representing an interest in shares of Common Stock in the ESSA Bancorp, Inc. Stock Account of the Plan. No one may use this prospectus supplement to reoffer or resell interests in shares of Common Stock acquired through the Plan.

You should rely only on the information contained in this prospectus supplement and the attached prospectus. ESSA Bancorp, Inc., ESSA Bank & Trust and the Plan have not authorized anyone to provide you with information that is different.

This prospectus supplement does not constitute an offer to sell or solicitation of an offer to buy any securities in any jurisdiction to any person to whom it is unlawful to make an offer or solicitation in that jurisdiction. Neither the delivery of this prospectus supplement and the prospectus nor any sale of Common Stock or stock units representing an ownership interest in Common Stock shall under any circumstances imply that there has been no change in the affairs of ESSA Bank & Trust or the Plan since the date of this prospectus supplement, or that the information contained in this prospectus supplement or incorporated by reference is correct as of any time after the date of this prospectus supplement.

The date of this prospectus supplement is                                         .

TABLE OF CONTENTS

THE OFFERING	1
Securities Offered	1
Purchase Priorities	1
Allocation of Units	2
Composition of and Purpose of Stock Units	3
Value of Plan Assets	3
Election to Purchase Stock Units in the Stock Offering	3
How to Order Stock in the Offering	4
Election Form Deadline	4
Irrevocability of Transfer Direction	4
Future Direction to Purchase Common Stock	5
Voting Rights of Common Stock	5
DESCRIPTION OF THE PLAN	6
Introduction	6
Eligibility and Participation	6
Contributions under the Plan	7
Limitations on Contributions	7
Benefits Under the Plan	8
Withdrawals and Distributions from the Plan	8
Investment of Contributions and Account Balances	8
Performance History	10
Investment in Common Stock of ESSA Bancorp, Inc.	17
Notice of Investment Diversification Rights.	18
Administration of the Plan	19
Amendment and Termination	19
Merger, Consolidation or Transfer	20
Federal Income Tax Consequences	20
Additional Employee Retirement Income Security Act (“ERISA”) Considerations	21
Securities and Exchange Commission Reporting and Short-Swing Profit Liability	21
Financial Information Regarding Plan Assets	22
LEGAL OPINION	22
Statement of Net Assets Available for Benefits as of December 31, 2006	23
Statement of Changes in Net Assets Available For Plan Benefits	24

THE OFFERING
Securities Offered	ESSA Bancorp, Inc. is offering stock units in the ESSA Bank & Trust 401(k) Plan (the “Plan”). The stock units represent indirect ownership of ESSA Bancorp, Inc.’s common stock through the ESSA Bancorp, Inc. Stock Account being established under the Plan in connection with the stock offering. Given the purchase price of $10 per share in the stock offering, the Plan may acquire up to _____ shares of ESSA Bancorp, Inc. Common Stock in the stock offering. Only employees of ESSA Bank & Trust may become participants in the Plan and only participants may purchase stock units in the ESSA Bancorp, Inc. Stock Account. Your investment in stock units in connection with the stock offering through the ESSA Bancorp, Inc. Stock Account is subject to the purchase priorities contained in the ESSA Bank & Trust Plan of Conversion (the “Plan of Conversion”).
	Information with regard to the Plan is contained in this prospectus supplement and information with regard to the financial condition, results of operations and business of ESSA Bancorp, Inc. is contained in the accompanying prospectus. The address of the principal executive office of ESSA Bancorp, Inc. and ESSA Bank & Trust is 200 Palmer Street, Stroudsburg, Pennsylvania 18360.
Purchase Priorities	In connection with the stock offering, you may elect to transfer all or part of your account balances in the Plan to the ESSA Bancorp, Inc. Stock Account, to be used to purchase stock units representing an ownership interest in the Common Stock issued in the stock offering. The manner in which you make this election and transfer is discussed below under “Election to Purchase Stock Units in the Stock Offering.” All Plan participants are eligible to direct a transfer of Accounts to the ESSA Bancorp, Inc. Stock Account. However, such directions are subject to the purchase priorities in the Plan of Conversion, which contemplates a subscription offering and, possibly, a community offering.
	Subscription offering categories, in descending order of purchase priorities are as follows: (1) eligible account holders; (2) tax-qualified employee benefit plans of ESSA Bank & Trust, including the Plan and the employee stock ownership plan which we adopted; (3) supplemental eligible account holders; and (4) other depositors. An “eligible account holder” is a depositor whose deposit account(s) totaled $50.00 or more on April 30, 2005. A “supplemental eligible account holder” is a depositor whose deposit account(s) totaled $50.00 or more on                     . “Other depositors” are depositors of the Bank as of                     . If you meet the requirements of subscription offering categories

	(1), (3) or (4), you have rights to subscribe to purchase stock in the offering separate from any rights you may have to purchase stock in the offering as a participant in the Plan. Even if you are ineligible to purchase through subscription offering categories (1), (3) or (4), you may be able to purchase stock units in the subscription offering through the Plan since ESSA Bancorp, Inc. has determined to allow the Plan to purchase stock through subscription offering category (2), reserved for its tax-qualified employee plans. You may use your Plan Account balance to pay for any of your subscription rights in categories (1), (2), (3) or (4).
	If you choose not to direct the investment of your account balances towards the purchase of any stock units through the ESSA Bancorp, Inc. Stock Account in connection with the offering, your account balances will remain in the investment Accounts of the Plan as previously directed by you.
	If you are eligible to subscribe for stock in the subscription offering through subscription categories (1), (3), or (4), you will receive a separate mailing, including a Stock Order Form. You may subscribe for stock outside of the Plan by completing the Stock Order Form and submitting it to the Stock Information Center.
Allocation of Units	The trustee of the ESSA Bancorp, Inc. Stock Account will subscribe for Common Stock in the stock offering in accordance with your directions. No later than the end of the offering period,                      2007, the investment amount that you have elected for the purchase of stock units in the ESSA Bancorp, Inc. Stock Account in connection with the stock offering will be removed from the various 401(k) plan investment Accounts and transferred to the ESSA Bancorp, Inc. Stock Account, pending the consummation of the stock offering. After                     , 2007 we will determine whether all or any portion of your order will be filled (if the offering is oversubscribed, you may not receive any or all of your order, depending on your purchase priority, as described above). The amount that can be used toward your order will be applied to the purchase of stock units.

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	In the event the offering is oversubscribed, i.e., there are more orders for Common Stock than shares available for sale in the offering, and the trustee is unable to use the full amount allocated by you to purchase interests in Common Stock in the offering, the amount that cannot be invested in Common Stock will remain in cash in the ESSA Bancorp Stock Account until you reallocate it to other 401(k) plan investments. The prospectus describes the allocation procedures in the event of an oversubscription. See “The Conversion” section in the prospectus.
Composition of and Purpose of Stock Units	The ESSA Bancorp, Inc. Stock Account, which is being established in the Plan, will invest in the Common Stock of ESSA Bancorp, Inc. Following the stock offering, the ESSA Bancorp, Inc. Stock Account will maintain a cash component for liquidity purposes. Liquidity is required in order to facilitate daily transactions such as investment transfers or distributions from the ESSA Bancorp, Inc. Stock Account. For purchases in the offering, there will be no cash component. A stock unit will be valued at $10. After the offering, newly issued units will consist of a percentage interest in both the Common Stock and cash held in the ESSA Bancorp, Inc. Stock Account. Unit values (similar to the stock’s share price) and the number of units (similar to number of shares) will be used to communicate the dollar value of a participant’s account. Following the stock offering, each day, the stock unit value of the ESSA Bancorp, Inc. Stock Account will be determined by dividing the total market value of the Account at the end of the day by the total number of units held in the Account by all participants as of the previous day’s end. The change in stock unit value reflects the day’s change in stock price, any cash dividends accrued and the interest earned on the cash component of the Account, less any investment management fees. The market value and unit holdings of your account in the ESSA Bancorp, Inc. Stock Account will be reported to you on your quarterly statements.
Value of Plan Assets	As of                     , the market value of the assets of the Plan eligible to purchase Common Stock in the offering was approximately $                    .
Election to Purchase Stock Units in the Stock Offering	In connection with the stock offering, the Plan will permit you to direct the trustee to transfer all or part of the funds which represent your current beneficial interest in the assets of the Plan to the ESSA Bancorp, Inc. Stock Account. The amount that you wish to invest in stock units will be transferred from the various 401(k) investment alternatives to the ESSA Bancorp, Inc. Stock Account pursuant to your direction on the Special Election Form. The trustee of the Plan will subscribe for ESSA Bancorp, Inc. Common Stock offered for sale in connection with the stock offering, in accordance with each

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	participant’s direction. In order to purchase stock units representing an ownership interest in Common Stock in the stock offering through the Plan, you must purchase stock units representing an ownership interest in at least 25 shares in the offering through the Plan. The prospectus describes maximum purchase limits for investors in the stock offering. The trustee will pay $10.00 per stock unit, which will be the same price paid by all other persons who purchase shares in the subscription and community offerings.
How to Order Stock in the Offering	Enclosed is a Special Election Form on which you can elect to transfer all or a portion of your account balance in the Plan to the ESSA Bancorp, Inc. Stock Account for the purchase of stock units in connection with the stock offering, provided that you purchase stock units representing an ownership interest in at least 25 shares through the Plan. If you wish to use all or part of your account balance in the Plan to purchase Common Stock issued in the stock offering, you should indicate that decision on the Special Election Form. In order to direct the Trustee to purchase stock units in the offering, you may complete a Special Election Form indicating the dollar amount that you wish to have transferred from the various 401(k) investment Accounts into the ESSA Bancorp, Inc. Stock Account. Please note that you need not invest all the amounts that you have invested in the 401(k) plan in the ESSA Bancorp, Inc. Stock Account. You will file the Special Election Form with Thomas J. Grayuski, at ESSA Bank & Trust, 200 Palmer Street, Stroudsburg, Pennsylvania 18360. You must file the Special Election Form no later than 5:00 p.m., local time, on                                 . If you do not wish to make an election, you should check Box E on the reverse side of the Special Election Form and return the form to Thomas J. Grayuski as indicated above.
Election Form Deadline	If you wish to purchase stock units with your Plan account balances, you must return your Special Election Form to Thomas J. Grayuski, at ESSA Bank & Trust, 200 Palmer Street, Stroudsburg, Pennsylvania 18360, to be received no later than 5:00 p.m., local time, on                             . You may return your Special Election Form by hand delivery, mail or by faxing it to (570) 476-6258, so long as it is returned by the time specified. This return date is earlier than the deadline for purchases made outside of the Plan. In order to purchase shares outside the Plan, you must complete and return a Stock Order Form along with payment by check or by authorizing withdrawal from your ESSA Bank & Trust deposit account(s) to the Stock Information Center no later than 12:00 p.m., local time, on                                 .
Irrevocability of Transfer Direction	You may not change your election to transfer amounts to the ESSA Bancorp, Inc. Stock Account in connection with the stock offering.

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	Your election is irrevocable. You will, however, continue to have the ability to transfer amounts not directed towards the purchase of stock units among all of the other investment Accounts on a daily basis.
Future Direction to Purchase Common Stock	You will be able to purchase stock units after the offering through your investment in the ESSA Bancorp, Inc. Stock Account. You may direct that your future contributions or your account balance in the Plan be transferred to the ESSA Bancorp, Inc. Stock Account. After the offering, to the extent that shares are available, the trustee of the Plan will acquire Common Stock at your election in open market transactions at the prevailing price. You may change your investment allocation on a daily basis. Special restrictions may apply to transfers directed to and from the ESSA Bancorp, Inc. Stock Account by the participants who are subject to the provisions of section 16(b) of the Securities Exchange Act of 1934, as amended, relating to the purchase and sale of securities by officers, directors and principal shareholders of ESSA Bancorp, Inc.
Voting Rights of Common Stock	The Plan provides that, after the offering, you may direct the trustee how to vote any shares of ESSA Bancorp, Inc. Common Stock held by the ESSA Bancorp, Inc. Stock Account, and the interest in such shares that is credited to your account. If the trustee does not receive your voting instructions, the Plan administrator will exercise these rights as it determines in its discretion and will direct the trustee accordingly. All voting instructions will be kept confidential.

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DESCRIPTION OF THE PLAN

Introduction

ESSA Bank & Trust adopted the ESSA Bank & Trust 401(k) Plan effective December 1, 1985 (the “Plan”). The Plan is a tax-qualified plan, with a cash or deferred compensation feature, established in accordance with the requirements under Section 401(a) and Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”).

ESSA Bank & Trust intends that the Plan, in operation, will comply with the requirements under Section 401(a) and Section 401(k) of the Code. ESSA Bank & Trust will adopt any amendments to the Plan that may be necessary to ensure the continuing qualified status of the Plan under the Code and applicable Treasury Regulations.

Employee Retirement Income Security Act (“ERISA”). The Plan is an “individual account plan” other than a “money purchase pension plan” within the meaning of ERISA. As such, the Plan is subject to all of the provisions of Title I (Protection of Employee Benefit Rights) and Title II (Amendments to the Code Relating to Retirement Plans) of ERISA, except to the funding requirements contained in Part 3 of Title I of ERISA which, by their terms, do not apply to an individual account plan (other than a money purchase plan). The Plan is not subject to Title IV (Plan Termination Insurance) of ERISA. The funding requirements contained in Title IV of ERISA are not applicable to participants or beneficiaries under the Plan.

Reference to Full Text of Plan. The following portions of this prospectus supplement summarize certain provisions of the Plan. They are not complete and are qualified in their entirety by the full text of the Plan. Copies of the Plan are available to all employees by filing a request with the Plan Administrator at ESSA Bank & Trust, 200 Palmer Street, Stroudsburg, Pennsylvania 18360. You are urged to read carefully the full text of the Plan.

Eligibility and Participation

Employees who are at least 21 years old and have completed at least one year of employment with ESSA Bank & Trust are eligible to enter the Plan (effective January 1, 2007) on the January 1 or July 1 coincident with or next following the date on which the employee meets the age and year of employment requirements (a year of employment includes the performance of at least 1,000 hours of employment). Prior to January 1, 2007, employees were eligible to enter the Plan on the December 1 or June 1 coincident with or next following the date on which the employee meets the age and year of employment requirements. Employees covered by a collective bargaining agreement and nonresident aliens who receive no income from sources within the United States are not eligible to participate in the Plan. Effective January 1, 2007, the Plan year is the calendar year (the “Plan Year”). There was a short Plan Year from December 1, 2006 to December 31, 2006 and before December 1, 2006, the Plan Year was from December 1 to November 30.

As of                                 , there were approximately              employees and former employees eligible to participate in the Plan.

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Contributions under the Plan

401(k) Plan Contributions. You are permitted to defer on a pre-tax basis either a flat dollar amount or between 1% and 100% of your compensation (expressed in terms of whole percentages) for each payroll period, subject to certain restrictions imposed by the Internal Revenue Code, and to have that amount contributed to the Plan on your behalf. For purposes of the Plan, “compensation” means your compensation subject to income tax withholding at the source, as reported on your Form W-2, excluding bonuses, plus deferred income attributable to any compensation reduction agreement in connection with the Plan or compensation reduction in connection with a Section 125 plan or Internal Revenue Code Section 132(f) benefit. In 2007, the annual compensation of each participant taken into account under the Plan is limited to $225,000. (Limits established by the Internal Revenue Service are subject to increase pursuant to an annual cost-of-living adjustment, as permitted by the Internal Revenue Code). You may elect to modify the amount contributed to the Plan as of any January 1 or July 1 by filing a new elective deferral agreement with the Plan administrator.

Employer Matching Contributions. The Plan is intended to be a “safe harbor” 401(k) Plan with respect to automatically satisfying certain IRS rules with respect to nondiscrimination in the amount of contributions for highly compensated employees compared to nonhighly compensated employees. Accordingly, ESSA Bank & Trust will make matching contributions to the Plan in an amount equal to the sum of 100% of the Participant’s annual elective deferrals that do not exceed 3% of the Participant’s Compensation, plus 50% of the amount of the Participant’s annual elective deferrals that do not exceed 5% of the Participant’s Compensation. If you stop making elective deferrals for any period, ESSA Bank & Trust will also stop making matching contributions for the same period.

Limitations on Contributions

Limitations on Employee Salary Deferrals. For the Plan Year beginning January 1, 2007, the amount of your before-tax contributions may not exceed $15,500 per calendar year. This amount may be adjusted periodically by law, based on changes in the cost of living. In addition, if you are age 50 or older in 2007, you will be able to make a “catch-up” contribution of up to $5,000, in addition to the $15,500 limit. The “catch-up” contribution limit may be adjusted periodically by law, based on changes in the cost of living. Contributions in excess of these limits, as applicable to you, are known as excess deferrals. If you defer amounts in excess of these limitations, as applicable to you, your gross income for federal income tax purposes will include the excess in the year of the deferral. In addition, unless the excess deferral is distributed before April 15 of the following year, it will be taxed again in the year distributed. Income on the excess deferral distributed by April 15 of the immediately succeeding year will be treated, for federal income tax purposes, as earned and received by you in the tax year in which the contribution is made.

Limitation on Plan Contributions for Highly Compensated Employees. Special provisions of the Internal Revenue Code limit the amount of elective deferrals and employer non-matching contributions that may be made to the Plan in any year on behalf of highly compensated employees, in relation to the amount of elective deferrals and employer non-matching contributions made by or on behalf of all other employees eligible to participate in the Plan. A

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highly compensated employee includes any employee who (1) was a 5% owner of ESSA Bancorp, Inc. at any time during the current or preceding year, or (2) had compensation for the preceding year of more than $100,000. The dollar amounts in the foregoing sentence may be adjusted annually to reflect increases in the cost of living. If these limitations are exceeded, the level of deferrals by highly compensated employees may have to be adjusted.

Benefits Under the Plan

Vesting. At all times, you have a fully vested, nonforfeitable interest in the elective deferrals you have made under the Plan. Any employer contributions credited to your account before December 1, 2004 are subject to a 6-year graded vesting schedule pursuant to which such amounts vest in 20% increments after each completed year of service, beginning after the completion of the second year of service, until a participant becomes 100% vested upon completion of 6 years of service. Employer contributions to your account on and after December 1, 2004 are fully vested because the Plan is a “safe harbor” 401(k) plan as of that date. In addition, you will also become 100% vested in the employer contributions and earnings credited to your account upon your death, disability or attainment of age 65.

Withdrawals and Distributions from the Plan

In-service withdrawals from your 401(k) account are not permitted under the Plan until you attain age 70 ¹/2. Hardship withdrawals and loans are not permitted under the Plan.

Withdrawal upon Termination of Employment. You may make withdrawals from your accounts at any time after you terminate employment. If your vested account balance as of the date of your termination is $1,000 or less, distribution will be made in a lump sum. If your accounts are between $1,000 and $5,000 and you have not made any payment election, the Plan administrator will pay the distribution in a direct rollover to an individual retirement plan designated by the Plan administrator. If your accounts exceed $5,000 upon your termination of employment, payment will be deferred until you reach age 65 unless you elect an optional form of payment such as a lump sum payment or partial withdrawal (subject to a mandatory 20% income tax withholding), a rollover to an individual retirement account or to another employer’s plan (if permitted by that plan).

Distribution due to Disability, Death or Retirement. If your termination of employment is due to normal or postponed retirement, death or disability and your accounts exceed $5,000, distribution will be made in a lump sum payment upon your attainment of age 65 (or, if earlier, date of disability) unless you elect to defer distribution to a postponed retirement date or unless you elect an optional form of payment such as a lump sum payment or partial withdrawal (subject to a mandatory 20% income tax withholding), a rollover to an individual retirement account or to another employer’s plan (if permitted by that plan).

Investment of Contributions and Account Balances

All amounts credited to your accounts under the Plan are either held in insurance products or in the Plan trust (the “Trust”) which is administered by the trustee appointed by ESSA Bank & Trust’s Board of Directors.

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Prior to the effective date of the offering, you were provided the opportunity to direct the investment of your account into one or more of the following options:

• Premier Money Market (Babson Capital) MKSXX

• Premier Core Bond (Babson Capital) MCBDX

• Premier High Yield (Babson Capital) DLHYX

• Premier Strategic Income (OFI) MISLX

• Conservative Journey

• Moderate Journey

• Aggressive Journey

• Destination Retirement Income MDRLX

• Destination Retirement 2020 MRTLX

• Destination Retirement 2030 MYRLX

• Destination Retirement 2040 MRFLX

• Premier Core Value Eq (Babson/AllncBer/OFI Inst)

• Select Large Cap Value (Davis) MLVSX

• Select Indexed Equity (Northern Trust) MMIEX

• Spectrum Growth (T. Rowe Price) PRSGX

• Premier Capital Appreciation (OFI) MCASX

• Growth (OFI) OGRYX

• Ultra (American Century) TWCUX

• Premier Small Co. Opportunities II (OFI Inst) MSCDX

• Premier Small Cap Value (OFI Institutional) DSMVX

• Select Mid Cap Growth II (T. Rowe Price) MMELX

• New Horizons (T. Rowe Price) PRNHX

• Premier International Equity (OFI) MIEDX

• Global Opportunities (OFI) OGIYX

• Select Focused Value (Harris/C&B) MFVSX

In connection with the offering, the Plan now provides that in addition to the Accounts specified above, you may direct the trustee, or its representative, to invest all or a portion of your account in the ESSA Bancorp, Inc. Stock Account. You may elect to have both past contributions and earnings, as well as future contributions to your account invested among the Accounts listed above. If you fail to provide an effective investment direction in connection with the stock offering, your contributions will be invested in the various investment alternatives that you designated until such time as you change your investment directions. You may apply different investment instructions to amounts already accumulated as opposed to future contributions. You may change your investment directions at any time by telephone or electronic medium.

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Performance History

The following table provides performance data with respect to the investment Accounts available under the Plan through November 30, 2006:

PERFORMANCE

AS OF NOVEMBER 30, 2006

Stock Accounts	1 MONTH		1 YEAR		3 YEAR		5 YEAR		10 YEAR		SINCE INCEPTION
Premier Money Market (Babson Capital)	0.40	%	4.54	%	2.62	%	2.02	%	3.66	%	6.63	%
Premier Core Bond (Babson Capital)	1.09	%	5.40	%	3.99	%	4.86	%	5.82	%	8.01	%
Premier High Yield (Babson Capital)	1.28	%	10.73	%	8.63	%	11.01	%	N/A		8.95	%
Premier Strategic Income (OFI)	1.36	%	7.47	%	7.02	%	8.80	%	6.49	%	8.43	%
Conservative Journey	1.33	%	7.61	%	6.30	%	5.54	%	5.98	%	7.69	%
Moderate Journey	1.80	%	10.10	%	9.22	%	6.87	%	7.22	%	9.25	%
Aggressive Journey	2.14	%	11.16	%	11.12	%	7.33	%	8.42	%	10.62	%
Destination Retirement Income	1.23	%	6.33	%	5.48	%	4.90	%	5.70	%	8.16	%
Destination Retirement 2020	1.58	%	8.32	%	8.50	%	6.28	%	5.68	%	8.20	%
Destination Retirement 2030	1.90	%	9.86	%	10.48	%	6.77	%	5.35	%	8.47	%
Destination Retirement 2040	2.09	%	10.99	%	11.75	%	7.39	%	5.68	%	9.21	%
Premier Core Value Eq (Babson/AllncBer/OFI Inst)	2.30	%	16.66	%	14.27	%	8.55	%	6.45	%	10.08	%
Select Large Cap Value (Davis)	2.08	%	13.29	%	13.25	%	8.90	%	10.14	%	14.39	%
Select Indexed Equity (Northern Trust)	1.84	%	13.69	%	11.34	%	5.61	%	7.58	%	10.34	%
Spectrum Growth (T. Rowe Price)	2.54	%	15.36	%	14.61	%	9.59	%	8.44	%	10.73	%
Premier Capital Appreciation (OFI)	2.82	%	7.99	%	8.17	%	3.47	%	8.40	%	14.11	%
Growth (OFI)	3.20	%	5.14	%	7.46	%	1.44	%	3.20	%	13.73	%
Ultra (American Century)	1.42	%	-5.15	%	3.20	%	1.19	%	4.49	%	12.28	%
Premier Small Co. Opportunities II (OFI Inst)	2.80	%	7.69	%	8.75	%	9.46	%	8.25	%	11.43	%
Premier Small Cap Value (OFI Institutional)	2.07	%	14.26	%	11.94	%	13.87	%	11.38	%	12.56	%
Select Mid Cap Growth II (T. Rowe Price)	3.78	%	9.53	%	13.56	%	10.37	%	11.56	%	15.63	%
New Horizons (T. Rowe Price)	2.23	%	7.31	%	12.43	%	10.45	%	8.30	%	11.00	%
Premier International Equity (OFI)	5.36	%	31.77	%	21.00	%	12.22	%	9.09	%	10.39	%
Global Opportunities (OFI)	3.27	%	21.35	%	22.20	%	16.51	%	16.00	%	14.23	%
Select Focused Value (Harris/C&B)	2.55	%	17.09	%	12.47	%	13.59	%	16.62	%	18.60	%

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The following is a description of each of the Plan’s investment options (excerpted from each option’s own description):

Premier Money Market (Babson Capital) MKSXX. The fund seeks to maximize current income consistent with liquidity and preservation of capital. The fund normally invests in high-quality debt securities with a remaining maturity not exceeding 397 days, including corporate debt securities and U.S. government obligations. It seeks to maintain, but does not guarantee, a stable net asset value of $1.00 per share. The fund invests 95% of assets in Tier 1 securities and no more than 5% of net assets in Tier 2 securities. The former name of the fund is MassMutual Institutional Money Market. The fund is a taxable money market fund. Taxable money market funds invest in short-term money market securities in order to provide a level of current income that is consistent with the preservation of capital.

Premier Core Bond (Babson Capital) MCBDX. The fund seeks a high total rate of return consistent with prudent investment risk and preservation of capital. The fund invests at least 80% of assets in investment grade fixed-income securities which include U.S. dollar-denominated corporate obligations, securities issued or guaranteed by the U.S. government or its agencies, U.S. dollar-denominated bonds of foreign issuers, and mortgage-backed and other asset-backed securities. It may also invest up to 10% of assets in below investment grade debt securities. The fund’s former name is MassMutual Core Bond Fund. The fund is an intermediate-term bond fund. Intermediate-term bond funds have average durations that are greater than 3.5 years and less than six years. Most of the funds rotate among a variety of sectors in the bond market, based upon which appear to offer better values. Whatever types of bonds they hold, these funds are less sensitive to interest rates, and therefore less volatile, than funds that have longer durations.

Premier High Yield (Babson Capital) DLHYX. The fund seeks a high level of total return, with an emphasis on current income. The fund normally invests at least 80% of assets in lower-rated fixed-income securities. It may also invest in convertible securities, preferred stocks, warrants, bank borrowings, and other fixed-income securities. The fund has an average dollar-weighted portfolio maturity ranging from 4 to 10 years. The fund’s former name is DLB High Yield Fund. The fund is a high-yield bond fund. High-yield bond funds concentrate on lower-quality bonds. Because such bonds are riskier than those of higher-quality companies,

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they offer higher coupons to attract investors. Therefore, these funds generally offer higher yields than other types of funds—but they are also more vulnerable to economic and credit risk. While defaults have been rare lately, these funds can suffer losses from recessions and bankruptcies.

Premier Strategic Income (OFI) MISLX. The fund seeks high current income. The fund invests mainly in debt securities of three market sectors: foreign governments and companies, U.S. government securities, and lower-rated high-yield securities of U.S. and foreign companies. Debt securities include foreign government and U.S. government bonds and notes, CMOs, other mortgage-related securities and asset-backed securities, participation interests in loans, “structured” notes, lower-grade, high-yield domestic and foreign corporate debt obligations, and “zero-coupon” securities. The fund is a multisector bond fund. Multisector bond funds are generally more diversified than other types of bond funds. These funds typically divide their assets among U.S. government bonds, foreign government bonds, foreign corporate bonds, and domestic corporate bonds, including high-yield issues. Some of these funds go even further and invest in municipal bonds and exotic mortgage-backed securities. By spreading assets across many different markets, these funds seek higher yields without taking on undue risk.

Conservative Journey. The fund limits exposure to risk while recognizing the importance of equity investments as a hedge against inflation. The portfolio consists of equity, fixed-income and cash investments. The mix of investments should achieve growth, stability and diversification. The fund is a conservative-allocation fund. Conservative-allocation funds seek to provide both capital appreciation and income by investing in three major areas: stocks, bonds, and cash. These funds tend to hold smaller positions in stocks than moderate-allocation funds. These funds typically have 20% to 50% of assets in equities and 50% to 80% of assets in fixed income and cash.

Moderate Journey. The fund provides both long-term growth and short-term stability. The portfolio is tilted toward equities but also includes fixed-income and cash investments to take advantage of a variety of markets. This mix offers good growth potential. The fund is a moderate-allocation fund. Moderate-allocation funds seek to provide both capital appreciation and income by investing in three major areas: stocks, bonds, and cash. These funds tend to hold larger positions in stocks than conservative-allocation funds. These funds typically have 50% to 70% of assets in equities and the remainder in fixed income and cash.

Aggressive Journey. This fund is a large-blend fund, designed for investors who can keep money invested for long periods, can tolerate market fluctuations and who desire to accumulate a substantial account balance. The fund invests in stocks but diversifies with fixed-income and cash investments. This mix offers high growth potential. Large-blend funds have portfolios that are fairly representative of the overall stock market in size, growth rates, and price. They tend to invest across the spectrum of U.S. industries and, owing to their broad exposure, the funds’ returns are often similar to those of the S&P 500 index.

Destination Retirement Income MDRLX. The fund seeks to achieve high current income and, as a secondary objective, capital appreciation. The fund primarily invests in a combination of MassMutual equity, fixed income, and money market funds, using an asset

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allocation strategy designed for investors already in retirement. The former name of the fund is MassMutual Destination Retirement Income. The fund is a target-date portfolio. Target-date portfolios provide diversified exposure to stocks, bonds, and cash for those investors who have a specific date in mind (in this case, the years 2000-2014) for retirement or another goal. These portfolios aim to provide investors with an optimal level of return and risk, based solely on the target date. These portfolios get more conservative as the goal date approaches by investing more in bonds and cash. Investment managers structure these portfolios differently; two funds with the same goal year may have different allocations to equities and therefore different levels of return and risk.

Destination Retirement 2020 MRTLX. The fund seeks to achieve as high a total rate of return on an annual basis as is considered consistent with prudent investment risk and the preservation of capital. The fund primarily invests in a combination of MassMutual equity, fixed income, and money market funds, using an asset allocation strategy designed for investors expecting to retire around the year 2020. It allocates assets among underlying MassMutual Select funds and MassMutual Premier funds. The former name of the fund is MassMutual Destination Retirement 2020. The fund is a target-date portfolio. Target-date portfolios provide diversified exposure to stocks, bonds, and cash for those investors who have a specific date in mind (in this case, the years 2015-2029) for retirement or another goal. These portfolios aim to provide investors with an optimal level of return and risk, based solely on the target date. These portfolios get more conservative as the goal date approaches by investing more in bonds and cash. Investment managers structure these portfolios differently; two funds with the same goal year may have different allocations to equities and therefore different levels of return and risk.

Destination Retirement 2030 MYRLX. The fund seeks to achieve as high a total rate of return on an annual basis as is considered consistent with prudent investment risk and the preservation of capital. The fund primarily invests in a combination of MassMutual equity, fixed income, and money market funds, using an asset allocation strategy designed for investors expecting to retire around the year 2030. It allocates assets among underlying MassMutual Select funds and MassMutual Premier funds. The former name of the fund is MassMutual Destination Retirement 2030. The fund is a target-date portfolio. Target-date portfolios provide diversified exposure to stocks, bonds, and cash for those investors who have a specific date in mind (in this case, the years 2030+) for retirement or another goal. These portfolios aim to provide investors with an optimal level of return and risk, based solely on the target date. These portfolios get more conservative as the goal date approaches by investing more in bonds and cash. Investment managers structure these portfolios differently; two funds with the same goal year may have different allocations to equities and therefore different levels of return and risk.

Destination Retirement 2040 MRFLX. The fund seeks to achieve as high a total rate of return on an annual basis as is considered consistent with prudent investment risk and the preservation of capital. The fund primarily invests in a combination of MassMutual equity, fixed income, and money market funds, using an asset allocation strategy designed for investors expecting to retire around the year 2040. It allocates assets among underlying MassMutual Select funds and MassMutual Premier funds. The former name of the fund is MassMutual Destination Retirement 2040. The fund is a target-date portfolio. Target-date portfolios provide diversified exposure to stocks, bonds, and cash for those investors who

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have a specific date in mind (in this case, the years 2030+) for retirement or another goal. These portfolios aim to provide investors with an optimal level of return and risk, based solely on the target date. These portfolios get more conservative as the goal date approaches by investing more in bonds and cash. Investment managers structure these portfolios differently; two funds with the same goal year may have different allocations to equities and therefore different levels of return and risk.

Premier Core Value Eq (Babson/AllncBer/OFI Inst). The investment seeks to achieve long-term growth of capital and income by investing primarily in a diversified portfolio of equity securities of larger, well-established companies. This investment option normally invests at least 80% of its assets in stocks, securities convertible into stocks, and other securities, such as warrants and stock rights, whose value is based on stock prices. The fund is a large-value fund. Large-value funds focus on big companies that are less expensive or growing more slowly than other large-cap stocks. These funds often feature investments in energy, financial, or manufacturing sectors.

Select Large Cap Value (Davis) MLVSX. The fund seeks both capital growth and income. The fund will normally invest at least 80% of assets in common stock of companies with market capitalizations at the time of purchase of at least $5 billion. Its strategy is to select these companies for the long-term. The fund may also invest in foreign securities and use derivatives as a hedge against currency risks. The former name of the fund is MassMutual Large Cap Value. The fund is a large-blend fund. Large-blend funds have portfolios that are fairly representative of the overall stock market in size, growth rates, and price. They tend to invest across the spectrum of U.S. industries and owing to their broad exposure, the funds’ returns are often similar to those of the S&P 500 index.

Select Indexed Equity (Northern Trust) MMIEX. The fund seeks to approximate as closely as practicable (before fees and expenses) the capitalization-weighted total rate of return of that portion of the U.S. market for publicly-traded common stocks composed of larger-capitalized companies. The fund normally invests at least 80% of assets in the equity securities of companies that make up the S&P 500 index. It generally purchases securities in proportions that match their index weights. The fund may invest in other instruments whose performance is expected to correspond to the index and may also use derivatives. It is nondiversified. The former name of the funds is MassMutual Indexed Equity. The fund is a large-blend fund. Large-blend funds have portfolios that are fairly representative of the overall stock market in size, growth rates, and price. They tend to invest across the spectrum of U.S. industries and owing to their broad exposure, the funds’ returns are often similar to those of the S&P 500 index.

Spectrum Growth (T. Rowe Price) PRSGX. The investment seeks long-term capital appreciation and growth of income with current income a secondary objective. The fund normally diversifies assets widely among a set of T. Rowe Price mutual funds representing specific market segments. It normally invests in domestic and international equity funds and a money market fund. The fund is a large-blend fund. Large-blend funds have portfolios that are fairly representative of the overall stock market in size, growth rates, and price. They tend to invest across the spectrum of U.S. industries and owing to their broad exposure, the funds’ returns are often similar to those of the S&P 500 index.

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Premier Capital Appreciation (OFI) MCASX. The fund seeks long-term capital appreciation. The fund invests primarily in common stocks of growth companies. Such companies may be newer or established companies of any capitalization range that the sub-adviser believes may appreciate in value over the long-term. It does not expect to invest more than 35% of assets in foreign securities, although it has the ability to invest in them without limit. The fund is a large-growth fund. Large-growth funds invest in big companies that are projected to grow faster than other large-cap stocks. Most of these funds focus on companies in rapidly expanding industries.

Growth (OFI) OGRYX. The fund seeks capital appreciation. The fund invests in common stocks of established growth companies that the advisor believes have above-average earnings prospects and are undervalued. It may invest up to 25% of assets in foreign securities and up to 25% of assets in any one industry. The fund is a large-growth fund. Large-growth funds invest in big companies that are projected to grow faster than other large-cap stocks. Most of these funds focus on companies in rapidly expanding industries.

Ultra (American Century) TWCUX. The fund seeks long-term capital growth. The fund typically invests in equities selected for their appreciation potential. The majority of these securities are common stocks issued by companies that meet management’s standards for earnings and revenue growth. The fund may also invest up to 5% of its assets in securities of companies that have operated continuously for three or fewer years. The fund is a large-growth fund. Large-growth funds invest in big companies that are projected to grow faster than other large-cap stocks. Most of these funds focus on companies in rapidly expanding industries.

Premier Small Co. Opportunities II (OFI Inst) MSCDX. The fund seeks long-term capital appreciation. The fund invests at least 80% of net assets in the securities of companies whose market capitalizations at the time of purchase are within the range of capitalization of companies included in the Russell 2000 index and the S&P SmallCap 600 index. It may purchase stocks offered in initial public offerings and may sell these securities without regard to how long the fund has held the securities. The former name of the fund is DLB Small Company Opportunities Fund. The fund is a small-blend fund. Small-blend funds favor firms at the smaller end of the market–capitalization range, and are flexible in the types of small caps they buy. Some aim to own an array of value and growth stocks while others employ a discipline that leads to holdings with valuations and growth rates close to the small-cap averages.

Premier Small Cap Value (OFI Institutional) DSMVX. The fund seeks long-term capital appreciation. The fund normally invests at least 80% of assets in the securities of companies whose market capitalization at the time of purchase by the fund are within the range of capitalization of companies included in the Russell 2000 index. The range of capitalization of companies included in the Russell 2000 index will fluctuate as market prices increase or decrease. The former name of the fund is DLB Small Cap Value Fund. The fund is a small-blend fund. Small-blend funds favor firms at the smaller end of the market-capitalization range, and are flexible in the types of small caps they buy. Some aim to own an array of value and growth stocks while others employ a discipline that leads to holdings with valuations and growth rates close to the small-cap averages.

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Select Mid Cap Growth II (T. Rowe Price) MMELX. The fund seeks growth of capital over the long-term. The fund normally invests at lest 80% of assets in a broadly diversified portfolio of common stocks of mid-cap companies whose earnings the fund expects to grow at a faster rate than the average company. Mid-cap companies are those whose market capitalizations at the time of purchase fall within the range of companies in either the S&P MidCap 400 index or the Russell MidCap Growth index. It may also invest in other securities, including foreign securities and derivatives. The former name of the fund is MassMutual Mid Cap Growth Equity II. The fund is a mid-cap growth fund. Some mid-cap growth funds invest in stocks of all sizes, thus leading to a mid-cap profile, but others focus on midsize companies. Mid-cap growth funds target firms that are projected to grow faster than other mid-cap stocks, therefore commanding relatively higher prices. Many of these stocks are found in the volatile technology, health-care, and services sectors.

New Horizons (T. Rowe Price) PRNHX. The fund seeks long-term capital growth. The fund will invest primarily in a diversified group of small, emerging growth companies, preferably early in the corporate life cycle before a company becomes widely recognized by the investment community. It may also invest in companies that offer the possibility of accelerating earnings growth because of rejuvenated management, new products, or structural changes in the economy. While the fund invests most assets in U.S. common stocks, it may also purchase other securities including foreign stocks, futures, and options. The fund is a small-growth fund. Small-growth funds focus on faster-growing companies whose shares are at the lower end of the market-capitalization range. These funds tend to favor companies in up-and-coming industries or young firms in their early growth stages. As a result, the category tends to move in sync with the market for initial public offerings. Many of these funds invest in the technology, health-care, and services sectors. Because these businesses are fast-growing and often richly valued, their stocks tend to be volatile.

Premier International Equity (OFI) MIEDX. The fund seeks a high total rate of return over the long term. The fund invests at least 80% of assets in stock traded primarily in foreign markets, including markets in Europe, Latin America, and Asia. It focuses on well-positioned, well-managed businesses that have strong revenue growth, sustainable profit margins, capital efficiency and/or business integrity and considers the macroeconomic outlook for various regional economies. The former name of the fund is MassMutual International Equity Fund. The fund is a foreign large-growth fund. Foreign large-growth funds focus on high-priced growth stocks, mainly outside of the United States. Most of these funds divide their assets among a dozen or more developed markets, including Japan, Britain, France, and Germany. They tend to invest the rest in emerging markets such as Hong Kong, Brazil, Mexico and Thailand. These funds typically will have less than 20% of assets invested in U.S. stocks.

Global Opportunities (OFI) OGIYX. The fund seeks capital appreciation, consistent with preservation of principal, while providing current income. The fund may invest in equities and fixed-income securities. It may invest without limit in foreign securities and normally maintains investments in at least three foreign countries. The fund

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may invest up to 25% of assets in bonds rated below investment-grade. The former name of the fund is Oppenheimer Global Gr & Inc. The fund is a world-stock fund. World-stock funds have few geographical limitations. It is common for these funds to invest the majority of their assets in the U.S., Europe, and Japan, with the remainder divided among the globe’s smaller markets.

Select Focused Value (Harris/C&B) MFVSX. The fund seeks growth of capital over the long-term. The fund invests primarily in a nondiversified portfolio of U.S. equity securities. It is managed by two sub-advisers. Harris Associates L.P. seeks out companies that are trading at significant discounts to their underlying value. It focuses on companies with market capitalizations over $1 billion. Cooke & Bieler, L.P. invests primarily in the common stocks of companies with middle market capitalizations or in companies whose market capitalizations are within the range of companies contained in the Russell Midcap Value index. The fund is nondiversified. The former name of the fund is MassMutual Focused Value. The fund is a large-blend fund. Large-blend funds have portfolios that are fairly representative of the overall stock market in size, growth rates, and price. They tend to invest across the spectrum of U.S. industries and owing to their broad exposure, the fund’s returns are often similar to those of the S&P 500 index.

An investment in any of the funds listed above is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. As with any mutual fund investment, there is always a risk that you may lose money on your investment in any of the funds listed above.

Investment in Common Stock of ESSA Bancorp, Inc.

In connection with the offering, the Plan now offers the ESSA Bancorp, Inc. Stock Account as an additional choice to these investments options. The ESSA Bancorp, Inc. Stock Account invests primarily in the common stock of ESSA Bancorp, Inc. In connection with the offering, you may direct the trustee to invest up to 100% of your Plan account in the ESSA Bancorp, Inc. Stock Account as a one-time special election. Subsequent to the offering, you may elect to invest all or a portion of your payroll deduction contributions in the ESSA Bancorp, Inc. Stock Account. Subsequent to the offering, you may also elect to transfer into the ESSA Bancorp, Inc. Stock Account all or a portion of your accounts currently invested in other Accounts under the Plan.

The ESSA Bancorp, Inc. Stock Account consists primarily of investments in the Common Stock of ESSA Bancorp, Inc. After the offering, the trustee of the Plan will, to the extent practicable, use all amounts held by it in the ESSA Bancorp, Inc. Stock Account, including cash dividends paid on the Common Stock held in the Account, to purchase additional shares of Common Stock of ESSA Bancorp, Inc.

As of the date of this prospectus supplement, none of the shares of ESSA Bancorp, Inc. Common Stock have been issued or are outstanding and there is no established market for ESSA Bancorp, Inc. Common Stock. Accordingly, there is no record of the historical performance of the ESSA Bancorp, Inc. Stock Account. Performance of the ESSA Bancorp, Inc. Stock Account

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depends on a number of factors, including the financial condition and profitability of ESSA Bancorp, Inc. and ESSA Bank & Trust and market conditions for ESSA Bancorp, Inc. Common Stock generally.

Investments in the ESSA Bancorp, Inc. Stock Account involve special risks common to investments in the Common Stock of ESSA Bancorp, Inc.

For a discussion of material risks you should consider, see “Risk Factors” beginning on page 18 of the attached prospectus.

Notice of Investment Diversification Rights

The following notice is provided to you pursuant to applicable law.

Notice of Your Rights Concerning Employer Securities. This notice informs you of an important change in federal law that provides specific rights concerning investments in Common Stock. Because you may now and in the future have investments in Common Stock under the Plan, you should take the time to read this notice carefully.

Your Rights Concerning Employer Securities. The Plan must allow you to elect to move any portion of your account that is invested in Common Stock from that investment into other investment alternatives under the Plan. This right extends to all of the Common Stock held under the Plan. You may contact the person identified below for specific information regarding this legal right, including how to make this election. In deciding whether to exercise this right, you will want to give careful consideration to the information below that describes the importance of diversification. All of the investment options under the Plan are available to you if you decide to diversify out of Common Stock.

The Importance of Diversifying Your Retirement Savings. To help achieve long-term retirement security, you should give careful consideration to the benefits of a well-balanced and diversified investment portfolio. Spreading your assets among different types of investments can help you achieve a favorable rate of return, while minimizing your overall risk of losing money. This is because market or other economic conditions that cause one category of assets, or one particular security, to perform very well often cause another asset category, or another particular security, to perform poorly. If you invest more than 20% of your retirement savings in any one company or industry, your savings may not be properly diversified. Although diversification is not a guarantee against loss, it is an effective strategy to help you manage investment risk.

In deciding how to invest your retirement savings, you should take into account all of your assets, including any retirement savings outside of the Plan. No single approach is right for everyone because, among other factors, individuals have different financial goals, different time horizons for meeting their goals, and different tolerances for risk. Therefore, you should carefully consider the rights described in this notice and how these rights affect the amount of money that you invest in Common Stock through the Plan.

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It is also important to periodically review your investment portfolio, your investment objectives, and the investment options under the Plan to help ensure that your retirement savings will meet your retirement goals.

For More Information. If you have any questions about your rights under this new law, including how to make this election, contact Thomas J. Grayuski, Vice President, Human Resources Division, ESSA Bank & Trust, Telephone: (570) 422-0197. For more information on investing and diversification of retirement plan assets, please go to the Employee Benefits Security Administration website, which is located at http://www.dol.gov/ebsa/investing.html.

Administration of the Plan

The Trustee and Custodian. Plan assets are held in a group annuity contract, so the Plan assets are not required to be held in a trust. The stock account will not be held as part of the group annuity contract and the Plan will need a trustee for this asset. MassMutual has a directed Trustee arrangement with Investor’s Bank and Trust.

Plan Administrator. Pursuant to the terms of the Plan, the Plan is administered by the Plan Administrator, ESSA Bank & Trust. The address of the Plan Administrator is ESSA Bank & Trust, Attn: Thomas J. Grayuski, 200 Palmer Street, Stroudsburg, Pennsylvania 18360; telephone: (570) 422-0197. The Plan Administrator is responsible for the administration of the Plan, interpretation of the provisions of the Plan, prescribing procedures for filing applications for benefits, preparation and distribution of information explaining the Plan, maintenance of Plan records, books of account and all other data necessary for the proper administration of the Plan, preparation and filing of all returns and reports relating to the Plan which are required to be filed with the U.S. Department of Labor and the Internal Revenue Service, and for all disclosures required to be made to participants, beneficiaries and others under ERISA Sections 104 and 105.

Reports to Plan Participants. The Plan Administrator will furnish you a statement at least quarterly showing the balance in your account as of the end of that period, the amount of contributions allocated to your account for that period, and any adjustments to your account to reflect earnings or losses (if any).

Amendment and Termination

It is the intention of ESSA Bank & Trust to continue the Plan indefinitely. Nevertheless, ESSA Bank & Trust may terminate the Plan at any time. If the Plan is terminated in whole or in part, then regardless of other provisions in the Plan, you will have a fully vested interest in your accounts. ESSA Bank & Trust reserves the right to make any amendment or amendments to the Plan which do not cause any part of the trust to be used for, or diverted to, any purpose other than the exclusive benefit of participants or their beneficiaries; provided, however, that ESSA Bank & Trust may make any amendment it determines necessary or desirable, with or without retroactive effect, to comply with ERISA.

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Merger, Consolidation or Transfer

In the event of the merger or consolidation of the Plan with another plan, or the transfer of the trust assets to another plan, the Plan requires that you would, if either the Plan or the other plan terminates, receive a benefit immediately after the merger, consolidation or transfer that is equal to the benefit that you would have been entitled to receive immediately before the merger, consolidation or transfer.

Federal Income Tax Consequences

The following is a brief summary of the material federal income tax aspects of the Plan. You should not rely on this summary as a complete or definitive description of the material federal income tax consequences relating to the Plan. Statutory provisions change, as do their interpretations, and their application may vary in individual circumstances. Finally, the consequences under applicable state and local income tax laws may not be the same as under the federal income tax laws. Please consult your tax advisor with respect to any distribution from the Plan and transactions involving the Plan.

As a “tax-qualified retirement plan,” the Code affords the Plan special tax treatment, including:

(1) the sponsoring employer is allowed an immediate tax deduction for the amount contributed to the Plan each year;

(2) participants pay no current income tax on amounts contributed by the employer on their behalf; and

(3) earnings of the Plan are tax-deferred, thereby permitting the tax-free accumulation of income and gains on investments.

ESSA Bank & Trust will administer the Plan to comply with the requirements of the Code as of the applicable effective date of any change in the law.

Lump-Sum Distribution. A distribution from the Plan to a participant or the beneficiary of a participant will qualify as a lump-sum distribution if it is made within one taxable year, on account of the participant’s death, disability or separation from service, or after the participant attains age 59 ¹/2, and consists of the balance credited to participants under the Plan. The portion of any lump-sum distribution required to be included in your taxable income for federal income tax purposes consists of the entire amount of the lump-sum distribution you have made to this Plan.

ESSA Bancorp, Inc. Common Stock Included in Lump-Sum Distribution. If a lump-sum distribution includes ESSA Bancorp, Inc. Common Stock, the distribution generally will be taxed in the manner described above, except that the total taxable amount may be reduced by the amount of any net unrealized appreciation with respect to ESSA Bancorp, Inc. Common Stock; that is, the excess of the value of ESSA Bancorp, Inc. Common Stock at the time of the distribution over its cost of the securities to the trust. The tax basis of ESSA Bancorp, Inc.

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Common Stock, for purposes of computing gain or loss on its subsequent sale, equals the value of ESSA Bancorp, Inc. Common Stock at the time of distribution, less the amount of net unrealized appreciation. Any gain on a subsequent sale or other taxable disposition of ESSA Bancorp, Inc. Common Stock, to the extent of the amount of net unrealized appreciation at the time of distribution, will constitute long-term capital gain, regardless of the holding period of ESSA Bancorp, Inc. Common Stock. Any gain on a subsequent sale or other taxable disposition of ESSA Bancorp, Inc. Common Stock, in excess of the amount of net unrealized appreciation at the time of distribution, will be considered long-term capital gain. The recipient of a distribution may elect to include the amount of any net unrealized appreciation in the total taxable amount of the distribution, to the extent allowed by regulations to be issued by the Internal Revenue Service.

Distributions: Rollovers and Direct Transfers to Another Qualified Plan or to an IRA. You may roll over virtually all distributions from the Plan to another qualified plan or to an individual retirement account in accordance with the terms of the other plan or account.

Additional Employee Retirement Income Security Act (“ERISA”) Considerations

As noted above, the Plan is subject to certain provisions of ERISA, including special provisions relating to control over the Plan’s assets by participants and beneficiaries. The Plan’s feature that allows you to direct the investment of your account balances is intended to satisfy the requirements of section 404(c) of ERISA relating to control over plan assets by a participant or beneficiary. The effect of this is two-fold. First, you will not be deemed a “fiduciary” because of your exercise of investment discretion. Second, no person who otherwise is a fiduciary, such as ESSA Bank & Trust, the Plan administrator, or the Plan’s trustee is liable under the fiduciary responsibility provision of ERISA for any loss which results from your exercise of control over the assets in your Plan account.

Because you will be entitled to invest all or a portion of your account balance in the Plan in ESSA Bancorp, Inc. Common Stock, the regulations under ERISA section 404(c) require that the Plan establish procedures that ensure the confidentiality of your decision to purchase, hold, or sell employer securities, except to the extent that disclosure of such information is necessary to comply with federal or state laws not preempted by ERISA. These regulations also require that your exercise of voting and similar rights with respect to the Common Stock be conducted in a way that ensures the confidentiality of your exercise of these rights.

Securities and Exchange Commission Reporting and Short-Swing Profit Liability

Section 16 of the Securities Exchange Act of 1934 imposes reporting and liability requirements on officers, directors, and persons beneficially owning more than 10% of public companies such as ESSA Bancorp, Inc. Section 16(a) of the Securities Exchange Act of 1934 requires the filing of reports of beneficial ownership. Within 10 days of becoming an officer, director or person beneficially owning more than 10% of the shares of ESSA Bancorp, Inc., a Form 3 reporting initial beneficial ownership must be filed with the Securities and Exchange Commission. Changes in beneficial ownership, such as purchases, sales and gifts generally must be reported on a Form 4 within 2 business days after the change occurs. Insiders must file a Form 5 to report any transactions that should have been reported earlier on a Form 4 or were

21

eligible for deferred reporting. If a Form 5 must be filed, it is due 45 days after the end of ESSA Bancorp, Inc.’s fiscal year. Discretionary transactions in and beneficial ownership of the Common Stock through the ESSA Bancorp, Inc. Stock Account of the Plan by officers, directors and persons beneficially owning more than 10% of the Common Stock of ESSA Bancorp, Inc. generally must be reported to the Securities and Exchange Commission by such individuals.

In addition to the reporting requirements described above, section 16(b) of the Securities Exchange Act of 1934 provides for the recovery by ESSA Bancorp, Inc. of profits realized by an officer, director or any person beneficially owning more than 10% of ESSA Bancorp, Inc.’s Common Stock resulting from non-exempt purchases and sales of ESSA Bancorp, Inc. Common Stock within any six-month period.

The Securities and Exchange Commission has adopted rules that provide exemptions from the profit recovery provisions of section 16(b) for all transactions in employer securities within an employee benefit plan, provided certain requirements are met. These requirements generally involve restrictions upon the timing of elections to acquire or dispose of employer securities for the accounts of section 16(b) persons. Except for distributions of Common Stock due to death, disability, retirement, termination of employment or under a qualified domestic relations order, persons affected by section 16(b) are required to hold shares of Common Stock distributed from the Plan for six months following such distribution and are prohibited from directing additional purchases of units within the ESSA Bancorp, Inc. Stock Account for six months after receiving such a distribution.

Financial Information Regarding Plan Assets

Financial information representing the net assets available for Plan benefits and the change in net assets available for Plan benefits at December 31, 2006, are attached to this prospectus supplement.

LEGAL OPINION

The validity of the issuance of the Common Stock has been passed upon by Luse Gorman Pomerenk & Schick, P.C., Washington, D.C., which firm acted as special counsel to ESSA Bank & Trust in connection with ESSA Bancorp, Inc.’s stock offering.

22

ESSA BANK & TRUST

401(k) PLAN

Statement of Net Assets Available for Benefits as of December 31, 2006

	December 31, 2006
	Beginning of Year	End of Year
Assets	$	$
Investments	$	$
Liabilities	$	$
Net Assets Available for Plan Benefits	$

ESSA BANK & TRUST

401(k) PLAN

Statement of Changes in Net Assets Available For Plan Benefits

	December 31, 2006
Investment Income	$
Investment Expense	$
Net Investment Income	$
Contributions	$
Total Additions	$
Benefits paid:	$
Withdrawals	$
Increase in Net Assets	$
Net Assets Available for Plan	$
Benefits: Beginning of Year	$
End of Year	$

24

PROSPECTUS

ESSA BANCORP, INC.

(Proposed Holding Company for ESSA Bank & Trust)

Up to 12,650,000 Shares of Common Stock

ESSA Bancorp, Inc., a Pennsylvania corporation, is offering shares of common stock for sale in connection with the conversion of ESSA Bank & Trust, a Pennsylvania-chartered savings association, from the mutual to the stock form of organization. All shares of common stock are being offered for sale at a price of $10.00 per share. Shares of our common stock have been approved for trading on the Nasdaq Global Market under the symbol “ESSA.” There is currently no public market for the shares of our common stock. We also intend to contribute up to 7.0% of the shares of common stock of ESSA Bancorp, Inc. that will be sold in the offering, and up to $1.5 million in cash, to a charitable foundation established by ESSA Bank & Trust.

We are offering up to 12,650,000 shares of common stock for sale on a best efforts basis. We may sell up to 14,547,500 shares of common stock because of demand for the shares, changes in market conditions or regulatory considerations without resoliciting subscribers. We must sell a minimum of 9,350,000 shares in order to complete the offering.

We are offering the shares of common stock in a “subscription offering” in the following descending order of priority:

• First, to depositors of ESSA Bank & Trust with aggregate account balances of at least $50 as of the close of business on April 30, 2005.

• Second, to ESSA Bank & Trust’s tax-qualified employee benefit plans.

• Third, to depositors of ESSA Bank & Trust with aggregate account balances of at least $50 as of the close of business on                     .

• Fourth, to depositors and borrowers of ESSA Bank & Trust as of                     .

Shares of common stock not purchased in the subscription offering may be offered for sale to the general public in a “community offering.” We also may offer for sale shares of common stock not purchased in the subscription offering or community offering through a “syndicated community offering” managed by Ryan Beck & Co., Inc.

The minimum number of shares of common stock you may order is 25 shares. The maximum number of shares of common stock that can be ordered through a single qualifying account is 35,000 shares. The offering is expected to expire at 12:00 Noon, Eastern time, on                     . We may extend this expiration date without notice to you until                     , unless the Office of Thrift Supervision approves a later date, which may not be beyond                     . Once submitted, orders are irrevocable unless the offering is terminated or is extended beyond                     , or the number of shares of common stock to be sold is increased to more than 14,547,500 shares or decreased to less than 9,350,000 shares. If the offering is extended beyond                     , or if the number of shares of common stock to be sold is increased to more than 14,547,500 shares or decreased to less than 9,350,000 shares, we will resolicit subscribers, giving them an opportunity to change or cancel their orders. Funds received during the offering will be held in a segregated account at ESSA Bank & Trust, or in our discretion at another insured depository institution, and will earn interest at our passbook savings rate, which is currently             %.

Ryan Beck & Co., Inc. will assist us in selling shares of our common stock on a best efforts basis. Ryan Beck & Co., Inc. is not required to purchase any shares of the common stock that are being offered for sale. Purchasers will not pay a commission to purchase shares of common stock in the offering.

This investment involves a degree of risk, including the possible loss of your investment.

Please read “ Risk Factors” beginning on page 18.

TERMS OF THE OFFERING

Price: $10.00 per Share

	Minimum		Maximum		Adjusted Maximum
Number of shares		9,350,000		12,650,000		14,547,500
Gross offering proceeds	$	93,500,000	$	126,500,000	$	145,475,000
Estimated offering expenses(1)	$	2,017,000	$	2,290,000	$	2,420,000
Estimated net proceeds	$	91,483,000	$	124,210,000	$	143,055,000
Estimated net proceeds per share	$	9.78	$	9.82	$	9.83

(1) Includes selling agent fees and expenses. See “The Conversion-Marketing and Distribution; Compensation” for discussion of Ryan Beck & Co., Inc.’s compensation for this offering.

These securities are not deposits or accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

Neither the Securities and Exchange Commission, the Office of Thrift Supervision, the Pennsylvania Department of Banking nor any state securities regulator has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

For assistance, please call the Stock Information Center, toll free, at (    )             -            .

Ryan Beck & Co., Inc. [LOGO]

The date of this prospectus is                     .

[MAP SHOWING ESSA BANK & TRUST’S MARKET AREA APPEARS HERE]

i

TABLE OF CONTENTS

	Page
SUMMARY	1
RISK FACTORS	18
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA	28
RECENT DEVELOPMENTS	30
FORWARD-LOOKING STATEMENTS	34
HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING	35
OUR POLICY REGARDING DIVIDENDS	37
MARKET FOR THE COMMON STOCK	38
HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE	39
CAPITALIZATION	40
PRO FORMA DATA	41
COMPARISON OF VALUATION AND PRO FORMA INFORMATION WITH AND WITHOUT THE CHARITABLE FOUNDATION	45
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF ESSA BANCORP, INC.	46
BUSINESS OF ESSA BANCORP, INC.	64
BUSINESS OF ESSA BANK & TRUST	65
REGULATION	89
TAXATION	95
MANAGEMENT OF ESSA BANCORP, INC.	96
SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS	109
THE CONVERSION	110
ESSA BANK & TRUST FOUNDATION	132
RESTRICTIONS ON ACQUISITION OF ESSA BANCORP, INC.	137
DESCRIPTION OF CAPITAL STOCK	142
TRANSFER AGENT	144
EXPERTS	144
LEGAL MATTERS	145
WHERE YOU CAN FIND ADDITIONAL INFORMATION	145
INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

ii

SUMMARY

The following summary highlights selected information in this prospectus. It may not contain all the information that is important to you. For additional information, you should read this entire prospectus carefully, including the Consolidated Financial Statements and the notes to the Consolidated Financial Statements.

ESSA Bank & Trust

ESSA Bank & Trust was organized in 1916. ESSA Bank & Trust is a full-service, community-oriented savings association with total assets of $725.8 million, total net loans of $556.7 million, total deposits of $402.2 million and total equity of $58.3 million at September 30, 2006. We provide financial services to individuals, families and businesses through our 12 full-service banking offices, located in Monroe and Northampton Counties, Pennsylvania.

ESSA Bank & Trust’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, home equity loans and lines of credit, commercial and consumer loans. In addition, we offer a variety of deposit accounts, including checking, savings and certificates of deposits. We offer asset management and trust services. We also offer investment services through our relationship with PRIMEVEST Financial Services, Inc., a third party broker/dealer and investment advisor.

ESSA Bank & Trust’s executive offices are located at 200 Palmer Street, Stroudsburg, Pennsylvania 18360. Our telephone number at this address is (570) 421-0531. Our website address is www.essabank.com.

ESSA Bancorp, Inc.

ESSA Bancorp, Inc. is a newly-formed Pennsylvania corporation that will own all of the outstanding shares of common stock of ESSA Bank & Trust upon completion of the mutual-to-stock conversion and the offering. ESSA Bancorp, Inc. has not engaged in any business to date.

Our executive offices are located at 200 Palmer Street, Stroudsburg, Pennsylvania 18360. Our telephone number at this address is (570) 421-0531.

Our Organizational Structure

ESSA Bancorp, Inc., a Pennsylvania corporation, will own 100% of the outstanding shares of common stock of ESSA Bank & Trust. ESSA Bancorp, Inc., a Pennsylvania corporation, has not issued shares of stock to the public.

Pursuant to the terms of ESSA Bank & Trust’s plan of conversion, ESSA Bank & Trust will convert from a mutual savings association to a stock savings association operating in the holding company corporate structure. As part of the conversion, we are offering for sale in a subscription offering, and, if necessary, a community offering and a syndicated community offering, shares of common stock of ESSA Bancorp, Inc., a Pennsylvania corporation.

1

Business Strategy

Our business strategy is to grow and improve our profitability by:

• Increasing customer relationships through the offering of excellent service and the distribution of that service through effective delivery systems;

• Continuing to transform into a full service community bank by meeting the financial services needs of our customers;

• Continuing to develop into a high performing financial institution, in part by increasing interest revenue and fee income;

• Remaining within our risk management parameters; and

• Employing affordable technology to increase profitability and improve customer service.

A full description of our products and services begins on page 63 of this prospectus.

We believe that these strategies will guide our investment of the net proceeds of the offering. We intend to continue to pursue our business strategy after the conversion and the offering, subject to changes necessitated by future market conditions and other factors. We also intend to focus on the following:

• Increasing customer relationships through a continued commitment to service and enhancing products and delivery systems. We will continue to increase customer relationships by focusing on customer satisfaction with regards to service, products, systems and operations. We have upgraded and expanded certain of our facilities, including our Corporate Center, to provide additional capacity to manage future growth and expand our delivery systems.

• Continuing to transform into a full service community bank. We continue to transform from a traditional savings association into a full service community bank. During the last several years, we have begun to offer a wide variety of commercial loans and deposits, as well as trust and brokerage services.

• Continuing to develop into a high performing financial institution. We will continue to enhance profitability by focusing on increasing non-interest income as well as increasing commercial products, including our focus on commercial real estate lending, which often have a higher profit margin than more traditional products. We also will pursue lower-cost commercial deposits as part of this strategy.

• Remaining within our risk management parameters. We place significant emphasis on risk management and compliance training for all of our directors, officers and employees. We focus on establishing regulatory compliance programs to determine the degree of such compliance and to maintain the trust of our customers and community.

2

• Employing cost-effective technology to increase profitability and improve customer service. We will continue to upgrade our technology in an efficient manner. We have implemented new software for marketing purposes and have upgraded both our internal and external communication systems.

• Continuing our emphasis on commercial real estate lending to improve our overall performance. We intend to continue to emphasize the origination of higher interest rate margin commercial real estate loans as market conditions, regulations and other factors permit. We have expanded our commercial banking capabilities by adding experienced commercial bankers, and enhancing our direct marketing efforts to local businesses.

• Expanding our banking franchise through branching and acquisitions. We will attempt to use the net proceeds from the offering, as well as our new stock holding company structure, to expand our market footprint through de novo branching as well as through acquisitions of banks, savings institutions and other financial service providers in our primary market area. We will also consider establishing de novo branches or acquiring financial institutions in contiguous counties. We have received regulatory approval to open a new branch office in Tannersville, Pennsylvania which we anticipate opening in May 2007. The branch is being built pursuant to a build and lease agreement with ESSA Bank & Trust as tenant. As such, we are responsible for completing the interior finishes, furnishing and equipping this branch. The total estimated cost for these items is $600,000 of which $300,000 has been disbursed as of December 31, 2006. Funding for this project is expected to come from the Bank’s primary sources of liquidity as described under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations of ESSA Bancorp, Inc.” There can be no assurance that we will be able to consummate any acquisitions or establish any additional new branches. We may explore acquisition opportunities involving other banks and thrifts, and possibly financial service companies, when and as they arise, as a means of supplementing internal growth, filling gaps in our current geographic market area and expanding our customer base, product lines and internal capabilities, although we have no current plans, arrangements, or understandings to make any acquisitions.

• Maintaining the quality of our loan portfolio. Maintaining the quality of our loan portfolio is a key factor in managing our growth. We will continue to use customary risk management techniques, such as internal and external loan reviews, risk-focused portfolio credit analysis and field inspections of collateral in overseeing the performance of our loan portfolio.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations of ESSA Bancorp, Inc.—Business Strategy” for a further discussion of our business strategy.

3

Reasons for the Conversion

Our primary reasons for converting and raising additional capital through the offering are:

• to support our internal growth through lending in communities we serve or may serve in the future;

• to enhance our existing products and services and to support the development of new products and services;

• to improve our overall competitive position;

• to provide additional financial resources to pursue de novo branching opportunities and future acquisition opportunities as discussed above in “—Business Strategy—Expanding our banking franchise through branching and acquisitions.” We have no current arrangements or agreements to acquire other banks, thrifts and financial service companies or branch offices. We have received regulatory approval to open a new branch office in Tannersville, Pennsylvania which we anticipate opening in May 2007;

• to reduce a portion of our existing borrowings;

• to provide better capital management tools, including the ability to pay dividends and to repurchase shares of our common stock; and

• to retain and attract qualified personnel by establishing stock benefit plans for management and employees, including a stock option plan, a stock recognition and retention plan and an employee stock ownership plan.

Terms of the Conversion and the Offering

Under ESSA Bank & Trust’s plan of conversion, our organization will convert to a fully public holding company structure. In connection with the conversion, we are offering between 9,350,000 and 12,650,000 shares of common stock to eligible depositors and borrowers of ESSA Bank & Trust, to our employee benefit plans and, to the extent shares remain available, to the general public. The number of shares of common stock to be sold may be increased up to 14,547,500 as a result of demand for the shares, changes in the market for financial institution stocks or regulatory considerations. Unless the number of shares of common stock to be offered is increased to more than 14,547,500 or decreased to less than 9,350,000 or the offering is extended beyond                  ,             , subscribers will not have the opportunity to change or cancel their stock orders.

The purchase price of each share of common stock to be issued in the offering is $10.00. All investors will pay the same purchase price per share. Investors will not be charged a commission to purchase shares of common stock in the offering. Ryan Beck & Co., Inc., our marketing advisor in the offering, will use its best efforts to assist us in selling shares of our common stock. Ryan Beck & Co., Inc. is not obligated to purchase any shares of common stock in the offering.

4

Persons Who May Order Shares of Common Stock in the Offering

We are offering the shares of common stock in a “subscription offering” in the following descending order of priority:

• First, to depositors of ESSA Bank & Trust with aggregate account balances of at least $50 as of the close of business on April 30, 2005.

• Second, to ESSA Bank & Trust’s tax-qualified employee benefit plans.

• Third, to depositors of ESSA Bank & Trust with aggregate account balances of at least $50 as of the close of business on                     .

• Fourth, to depositors and borrowers of ESSA Bank & Trust as of                     .

Shares of common stock not purchased in the subscription offering may be offered for sale to the general public in a “community offering,” with a preference given to natural persons residing in the Pennsylvania Counties of Monroe and Northampton. The community offering may begin concurrently with, during or promptly after the subscription offering as we may determine at any time. If shares remain available for sale following the subscription offering or community offering, we also may offer for sale shares of common stock through a “syndicated community offering” managed by Ryan Beck & Co., Inc.

We have the right to accept or reject, in our sole discretion, orders received in the community offering or syndicated community offering. We have not established any set criteria for determining whether to accept or reject a purchase order in the community offering or the syndicated community offering, and, accordingly, any determination to accept or reject purchase orders in the community offering and the syndicated community offering will be based on the facts and circumstances known to us at the time.

To ensure a proper allocation of stock, each subscriber eligible to purchase must list on his or her stock order form all deposit accounts in which he or she had an ownership interest at April 30, 2005,                      or                     , as applicable or each loan account as of                     . Failure to list all accounts, or providing incorrect information, could result in the loss of all or part of a subscriber’s stock allocation. We will strive to identify your ownership in all accounts, but we cannot guarantee that we will identify all accounts in which you have an ownership interest. Our interpretation of the terms and conditions of the plan of conversion and of the acceptability of the order forms will be final.

If we receive orders for more shares than we are offering, we may not be able to fully or partially fill your order. Shares will be allocated first to categories in the subscription offering. A detailed description of share allocation procedures can be found in the section entitled “The Conversion.”

5

How We Determined the Offering Range

The amount of common stock that we are offering is based on an independent appraisal of the estimated market value of ESSA Bancorp, Inc., assuming the conversion and the offering are completed. RP Financial, LC., our independent appraiser, has estimated that, as of November 24, 2006, this market value ranged from $100.0 million to $135.4 million, with a midpoint of $117.7 million. Based on this valuation and a $10.00 per share price, the number of shares of common stock being offered for sale by us will range from 9,350,000 shares to 12,650,000 shares. In addition, we will contribute between 654,500 shares to 885,500 shares to a charitable foundation established by ESSA Bank & Trust. The $10.00 per share price was selected primarily because it is the price most commonly used in mutual-to-stock conversions of financial institutions. RP Financial’s appraisal is based in part on our financial condition and results of operations, the effect of the additional capital raised by the sale of shares of common stock in the offering and an analysis of a peer group of ten publicly traded savings bank and thrift holding companies that RP Financial considered comparable to us.

The following table presents a summary of selected pricing ratios for ESSA Bancorp, Inc. and our peer group companies identified by RP Financial. These ratios are based on earnings for the twelve months ended September 30, 2006 and book value as of September 30, 2006. Compared to the average pricing of the peer group, our pro forma pricing ratios at the maximum of the offering range indicated a premium of 27.3% on a price-to-earnings basis, a discount of 43.4% on a price-to-book value basis and a discount of 46.1% on a price-to-tangible book value basis. The pricing ratios result from our generally having higher levels of equity but lower earnings than the companies in the peer group on a pro forma basis. Our Board of Directors, in reviewing and approving the valuation, considered the range of price-to-core earnings multiples and the range of price-to-book value ratios and price-to-tangible book value ratios at the different amounts of shares to be sold in the offering. The appraisal did not consider one valuation approach to be more important than the other. Instead, the appraisal concluded that these ranges represented the appropriate balance of the two approaches to valuing ESSA Bancorp, Inc., and the number of shares to be sold, in comparison to the identified peer group institutions. The estimated appraised value and the resulting premium/discount took into consideration the potential financial impact of the conversion and offering.

	Pro forma price-to-earnings multiple		Pro forma price-to-book value ratio		Pro forma price-to-tangible book value ratio
ESSA Bancorp, Inc.
Maximum	22.73	x	81.04	%	81.04	%
Minimum	18.18		72.10		72.10
Valuation of peer group companies as of November 24, 2006
Averages	17.85	x	143.13	%	150.35	%
Medians	16.70		137.93		143.84

6

The independent appraisal does not indicate per share market value. Do not assume or expect that the valuation of ESSA Bancorp, Inc. as indicated above means that, after the conversion and the offering, the shares of common stock will trade at or above the $10.00 offering price. Furthermore, the pricing ratios presented above were utilized by RP Financial to estimate our market value and not to compare the relative value of shares of our common stock with the value of the capital stock of the peer group. The value of the capital stock of a particular company may be affected by a number of factors such as financial performance, asset size and market location.

The independent appraisal will be updated prior to the completion of the conversion. If the appraised value decreases below $93.5 million or increases above $145.5 million, subscribers may be resolicited with the approval of the Office of Thrift Supervision and the Pennsylvania Department of Banking and be given the opportunity to change or cancel their orders. If you do not respond, we will cancel your stock order and return your subscription funds, with interest, and cancel any authorization to withdraw funds from your deposit accounts for the purchase of shares of common stock. For a more complete discussion of the amount of common stock we are offering for sale and the independent appraisal, see “The Conversion—Determination of Share Price and Number of Shares to be Issued.”

After-Market Stock Price Performance Provided by Independent Appraiser

The appraisal report prepared by RP Financial included examples of after-market stock price performance for thrift conversion offerings completed during the three-month period ended November 24, 2006. The following table presents stock price appreciation information for all standard mutual-to-stock conversions completed between January 1, 2005 and November 24, 2006.

Mutual-to-Stock Conversion Offerings with Completed Closing Dates between January 1, 2005 and November 24, 2006

		Appreciation from Initial Trading Date
Transaction	Conversion Date	1 day		1 week		1 month		Through November 24, 2006
Chicopee Bancorp, Inc.	7/20/06	44.6	%	42.5	%	45.2	%	51.1	%
Newport Bancorp, Inc.	7/7/06	28.0	%	28.8	%	31.0	%	40.0	%
Legacy Bancorp, Inc.	10/26/05	30.3	%	34.0	%	32.0	%	60.2	%
BankFinancial Corp.	6/24/05	36.0	%	34.0	%	36.0	%	75.5	%
Benjamin Franklin Bancorp, Inc.	4/5/05	0.6	%	3.9	%	2.5	%	43.1	%
OC Financial, Inc.	4/1/05	20.0	%	8.0	%	10.0	%	5.0	%
Royal Financial, Inc.	1/21/05	16.0	%	26.0	%	25.4	%	60.0	%
Average		25.1	%	25.3	%	26.0	%	47.8	%
Median		28.0	%	28.8	%	31.0	%	51.1	%

This table is not intended to be indicative of how our stock may perform. Furthermore, this table presents only short-term price performance with respect to several companies that only recently completed their initial public offerings and may not be indicative of the longer-term stock price performance of these companies.

7

Stock price appreciation is affected by many factors, including, but not limited to: general market and economic conditions; the interest rate environment; the amount of proceeds a company raises in its offering; and numerous factors relating to the specific company, including the experience and ability of management, historical and anticipated operating results, the nature and quality of the company’s assets, and the company’s market area. The companies listed in the table above may not be similar to ESSA Bancorp, Inc., the pricing ratios for their stock offerings were in some cases different from the pricing ratios for ESSA Bancorp, Inc.’s common stock and the market conditions in which these offerings were completed were, in some cases, different from current market conditions. Any or all of these differences may cause our stock to perform differently from these other offerings.

RP Financial advised the Board of Directors that the appraisal was prepared in conformance with the regulatory appraisal methodology. That methodology requires a valuation based on an analysis of the trading prices of comparable public companies whose stocks have traded for at least one year prior to the valuation date. RP Financial also advised the Board of Directors that the aftermarket trading experience of thrift conversion offerings completed during the three-month period ended November 24, 2006 was considered in the appraisal as a general indicator of current market conditions, but was not relied upon as a primary valuation methodology. There were no standard mutual-to-stock conversion offerings completed during the three-month period ended November 24, 2006.

Our Board of Directors carefully reviewed the information provided to it by RP Financial through the appraisal process, but did not make any determination regarding whether prior standard mutual-to-stock conversions have been undervalued, nor did the board draw any conclusions regarding how the historical data reflected above may affect ESSA Bancorp, Inc.’s appraisal. Instead, we engaged RP Financial to help us understand the regulatory process as it applies to the appraisal and to advise the Board of Directors as to how much capital ESSA Bancorp, Inc. would be required to raise under the regulatory appraisal guidelines.

There can be no assurance that our stock price will not trade below $10.00 per share, as has been the case for some mutual-to-stock conversions. Before you make an investment decision, we urge you to carefully read this prospectus, including, but not limited to, the section entitled “Risk Factors” beginning on page 18.

Limits on How Much Common Stock You May Purchase

The minimum number of shares of common stock that may be purchased is 25. Generally, no individual, or individual exercising subscription rights through a single qualifying account held jointly, may purchase more than 35,000 ($350,000) shares of common stock. If any of the following persons purchases shares of common stock, their purchases, in all categories of the offering, when combined with your purchases, cannot exceed 50,000 ($500,000) shares:

• your spouse or relatives of you or your spouse living in your house;

• most companies, trusts or other entities in which you are a trustee, have a substantial beneficial interest or hold a senior management position; or

• other persons who may be your associates or persons acting in concert with you.

8

See the detailed descriptions of “acting in concert” and “associate” in “The Conversion—Limitations on Common Stock Purchases.”

How You May Purchase Shares of Common Stock

In the subscription offering and community offering, you may pay for your shares only by:

• personal check, bank check or money order, made payable to ESSA Bancorp, Inc.; or

• authorizing us to withdraw funds from the types of ESSA Bank & Trust deposit accounts designated on the stock order form.

ESSA Bank & Trust is not permitted to knowingly lend funds to anyone for the purpose of purchasing shares of common stock in the offering. Additionally, you may not use a check drawn on a ESSA Bank & Trust line of credit or a third party check to pay for shares of common stock.

You can subscribe for shares of common stock in the offering by delivering a signed and completed original stock order form, together with full payment or authorization to withdraw from one or more of your ESSA Bank & Trust deposit accounts, so that it is received (not postmarked) before 12:00 Noon, Eastern time,             , which is the expiration of the offering period. For orders paid for by check or money order, the funds will be promptly cashed and held in a segregated account at ESSA Bank & Trust, or in our discretion at another insured depository institution. We will pay interest on those funds calculated at ESSA Bank & Trust’s passbook savings rate from the date funds are received until completion or termination of the conversion and the offering. Withdrawals from certificates of deposit to purchase shares of common stock in the offering may be made without incurring an early withdrawal penalty; however, if a withdrawal results in a certificate account with a balance less than the applicable minimum balance requirement, the certificate will be canceled at the time of withdrawal without penalty and the remaining balance will earn interest at the current passbook rate subsequent to the withdrawal. All funds authorized for withdrawal from deposit accounts with ESSA Bank & Trust must be in the accounts at the time the stock order is received. However, funds will not be withdrawn from the accounts until the completion of the offering and will earn interest at the applicable deposit account rate until that time. A hold will be placed on those funds when your stock order is received, making the designated funds unavailable to you. After we receive your order, your order cannot be changed or canceled unless the number of shares of common stock to be offered is increased to more than 14,547,500 or decreased to less than 9,350,000, or the offering is extended beyond             .

By signing the stock order form, you are acknowledging receipt of a prospectus and that the shares of common stock are not deposits or savings accounts that are federally insured or otherwise guaranteed by ESSA Bank & Trust, the Federal Deposit Insurance Corporation or any other government agency.

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You may be able to subscribe for shares of common stock using funds in your individual retirement account, or IRA. However, shares of common stock must be purchased through and held in a self-directed retirement account, such as those offered by a brokerage firm. By regulation, ESSA Bank & Trust’s individual retirement accounts are not self-directed, so they cannot be used to purchase or hold shares of our common stock. If you wish to use some or all of the funds in your ESSA Bank & Trust individual retirement account to purchase our common stock, the applicable funds must be transferred to a self-directed account maintained by an independent trustee, such as a brokerage firm, and the purchase must be made through that account. If you do not have such an account, you will need to establish one before placing your stock order. It may take several weeks to transfer your ESSA Bank & Trust individual retirement account to an independent trustee, so please allow yourself sufficient time to take this action. An annual administrative fee may be payable to the independent trustee. Because individual circumstances differ and processing of retirement fund orders takes additional time, we recommend that you contact our Stock Information Center promptly, preferably at least two weeks before the             , 2007 expiration of the offering period, for assistance with purchases using your ESSA Bank & Trust individual retirement account or any other retirement account that you may have. Whether you may use such funds for the purchase of shares in the stock offering may depend on time constraints and, possibly, limitations imposed by the brokerage firm or institution where the funds are held.

Delivery of Stock Certificates

Certificates representing shares of common stock sold in the offering will be mailed to the persons entitled thereto at the certificate registration address noted by them on the order form, as soon as practicable following consummation of the offering and receipt of all necessary regulatory approvals. It is possible that, until certificates for the common stock are delivered, purchasers might not be able to sell the shares of common stock that they ordered, even though the common stock will have begun trading.

How We Intend to Use the Proceeds From the Offering

We estimate net proceeds from the offering will be between $91.5 million and $124.2 million, or $143.1 million if the offering range is increased by 15%. Approximately $45.7 million to $62.1 million of the net proceeds, or $71.5 million if the offering range is increased by 15%, will be invested in ESSA Bank & Trust. ESSA Bancorp, Inc. intends to retain between $45.7 million and $62.1 million of the net proceeds, or $71.5 million if the offering range is increased by 15%. A portion of the net proceeds retained by ESSA Bancorp, Inc. will be used for a loan to the employee stock ownership plan to fund its purchase of shares of common stock (between $8.0 million and $10.8 million, or $12.5 million if the offering is increased by 15%). ESSA Bank & Trust intends to contribute up to $1.5 million in cash to a charitable foundation it will establish as part of the stock offering. ESSA Bancorp, Inc. intends to retain the remaining funds of between $36.8 million and $50.0 million of the net proceeds, or $57.6 million if the offering range is increased by 15%. ESSA Bancorp, Inc. may use the remaining funds for investments, to pay cash dividends, to repurchase shares of common stock and other general corporate purposes discussed below.

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Funds invested in ESSA Bank & Trust will be used to support increased lending and other products and services. The net proceeds retained by ESSA Bancorp, Inc. and ESSA Bank & Trust also may be used for reducing a portion of our existing borrowings, future business expansion through acquisitions of banking or financial services companies or a limited number of de novo branches as discussed above in “—Business Strategy—Expanding our banking franchise through branching and acquisitions.” We have no current arrangements or agreements to acquire other banks, thrifts and financial service companies or branch offices. We have received regulatory approval to open a branch in Tannersville, Pennsylvania which we anticipate opening in May 2007. Initially, a substantial portion of the net proceeds will be invested in short-term investments, investment-grade debt obligations and mortgage-backed securities.

Please see the section of this prospectus entitled “How We Intend to Use the Proceeds From the Offering” for more information on the proposed use of the proceeds from the offering.

You May Not Sell or Transfer Your Subscription Rights

Office of Thrift Supervision regulations prohibit you from transferring your subscription rights. If you order shares of common stock in the subscription offering, you will be required to state that you are purchasing the shares of common stock for yourself and that you have no agreement or understanding to sell or transfer your subscription rights. We intend to take legal action, including reporting persons to federal or state regulatory agencies, against anyone who we believe has sold or given away his or her subscription rights. We will not accept your order if we have reason to believe that you have sold or transferred your subscription rights. When completing your stock order form, you should not add the name(s) of persons who do not have subscription rights or who qualify in a lower subscription priority than you do. In addition, the stock order form requires that you list all deposit or loan accounts, giving all names on each account and the account number at the applicable eligibility date. Your failure to provide this information, or providing incomplete or incorrect information, may result in a loss of part or all of your share allocation, if there is an oversubscription.

Deadline for Orders of Common Stock

If you wish to purchase shares of common stock in the offering, we must receive a properly completed original stock order form, together with full payment for the shares of common stock, at the Stock Information Center no later than 12:00 Noon, Eastern time, on             , unless we extend this deadline. A postmark prior to             will not entitle you to purchase shares of common stock unless we receive the envelope by 12:00 Noon Eastern time. You may submit your order form by mail using the order reply envelope provided, by overnight courier to the indicated address on the order form, or by hand delivery to our Stock Information Center, located at our Corporate Center, 200 Palmer Street, Stroudsburg, Pennsylvania 18360            . Once we receive it, your order is irrevocable unless the offering is terminated or extended beyond              or the number of shares of common stock to be sold is decreased to less than 9,350,000 shares or increased to more than 14,547,500 shares. If

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the offering is extended beyond             , or if the number of shares of common stock to be sold is decreased to less than 9,350,000 shares or is increased to more than 14,547,500 shares, we will, with the approval of the Office of Thrift Supervision, resolicit subscribers, giving them the opportunity to confirm, cancel or change their stock orders during a specified resolicitation period.

Although we will make reasonable attempts to provide a prospectus and offering materials to holders of subscription rights, the subscription offering and all subscription rights will expire at 12:00 Noon, Eastern time, on             , whether or not we have been able to locate each person entitled to subscription rights.

Steps We May Take if We do Not Receive Orders for the Minimum Number of Shares

If we do not receive orders for at least 9,350,000 shares of common stock, we may take several steps in order to issue the minimum number of shares of common stock in the offering range. Specifically, we may:

• increase the purchase limitations; and/or

• seek the approval of the Office of Thrift Supervision and the Pennsylvania Department of Banking to extend the offering beyond the                      expiration date, so long as we resolicit subscriptions that we have previously received in the offering.

In addition, we may terminate the offering at any time prior to the special meeting of members of ESSA Bank & Trust that is being called to vote upon the conversion, and at any time after member approval, with the approval of the Office of Thrift Supervision and, if requested, the Secretary of Pennsylvania Department of Banking.

Purchases by Officers and Directors

We expect our directors and executive officers, together with their associates, to subscribe for 427,000 shares of common stock in the offering, or 4.6% of the shares to be sold at the minimum of the offering range. The purchase price paid by them for their subscribed shares will be the same $10.00 per share price paid by all other persons who purchase shares of common stock in the offering. Purchases by directors, executive officers and their associates will be included in determining whether the required minimum number of shares has been subscribed for in the offering.

Benefits to Management and Potential Dilution to Stockholders Following the Conversion

We expect our tax-qualified employee stock ownership plan to purchase 8% of the total number of shares of common stock that we sell in the offering and contribute to our charitable foundation, or 1,082,840 shares of common stock, assuming we sell the maximum of the shares proposed to be sold. If we receive orders for more shares of common stock than the maximum of the offering range, the employee stock ownership plan will have first priority to purchase

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shares over this maximum, up to a total of 8% of the total number of shares of common stock sold in the offering and contributed to our charitable foundation. This plan is a tax-qualified retirement plan for the benefit of all our employees. Purchases by the employee stock ownership plan will be included in determining whether the required minimum number of shares has been sold in the offering. Assuming the employee stock ownership plan purchases 1,082,840 shares in the offering, we will recognize additional compensation expense of $10.8 million over a 30- year period, assuming the shares of common stock have a fair market value of $10.00 per share for the full 30-year period. If, in the future, the shares of common stock have a fair market value greater or less than $10.00, the compensation expense will increase or decrease accordingly.

We also intend to implement a stock-based recognition and retention plan and a stock option plan no earlier than six months after completion of the conversion. Stockholder approval of these plans will be required. If adopted within 12 months following the completion of the conversion, the stock recognition and retention plan will reserve a number of shares equal to not more than 4% of the shares sold in the offering and contributed to our charitable foundation, or up to 541,420 shares of common stock at the maximum of the offering range, for awards to key employees and directors, at no cost to the recipients. If adopted within 12 months following the completion of the conversion, the stock option plan will reserve a number of shares equal to not more than 10% of the shares of common stock sold in the offering and contributed to our charitable foundation, or up to 1,353,550 shares of common stock at the maximum of the offering range, for key employees and directors upon their exercise. If the stock recognition and retention plan and the stock option plan are adopted after one year from the date of the completion of the conversion, such plans would be permitted to and may grant or award shares of common stock and options greater than 4% and/or 10%, respectively, of the shares of common stock sold in the offering. We have not yet determined whether we will present these plans for stockholder approval within 12 months following the completion of the conversion or whether we will present these plans for stockholder approval more than 12 months following the completion of the conversion.

If the shares of common stock awarded under the stock recognition and retention plan come from authorized but unissued shares of common stock, stockholders would experience dilution of up to approximately 3.9% in their ownership interest in ESSA Bancorp, Inc. If the shares of common stock issued upon the exercise of options granted under the stock option plan come from authorized but unissued shares of common stock, stockholders would experience dilution of approximately 9.1% in their ownership interest in ESSA Bancorp, Inc. Awards made under these plans would be subject to vesting over a period of years.

The Company intends to enter into employment agreements with certain of its executive officers and change-in-control agreements with up to six officers who have not entered into employment agreements, in part, due to this stock offering. See “Management of ESSA Bancorp, Inc. – Benefits Plans” for a further discussion of these agreements, including their terms and potential costs, as well as a description of other benefits arrangements.

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The following table summarizes the number of shares of common stock and aggregate dollar value of grants (valuing each share granted at the offering price of $10.00) that are available under the stock recognition and retention plan and the stock option plan if such plans are adopted within one year following the completion of the conversion and the offering. The table shows the dilution to stockholders if all these shares are issued from authorized but unissued shares, instead of shares purchased in the open market. The table also sets forth the number of shares of common stock to be acquired by the employee stock ownership plan for allocation to all employees. A portion of the stock grants shown in the table below may be made to non-management employees.

	Number of Shares to be Granted or Purchased				Dilution Resulting From Issuance of Shares for Stock Benefit Plans
							Value of Grants (1)
	At Minimum of Offering Range	At Maximum of Offering Range	As a Percentage of Common Stock to be Issued in the Offering (2)				At Minimum of Offering Range		At Maximum of Offering Range
							(Dollars in thousands)
Employee stock ownership plan	800,360	1,082,840	8.00	%	—		$	8,004	$	10,828
Stock recognition and retention plan	400,180	541,420	4.00		3.85			4,002		5,414
Stock option plan	1,000,450	1,353,550	10.00		9.09			3,842		5,198
Total	2,200,990	2,977,810	22.00	%	12.28	%	$	15,848	$	21,440

(1) The actual value of restricted stock grants will be determined based on their fair value as of the date grants are made. For purposes of this table, fair value is assumed to be the same as the offering price of $10.00 per share. The fair value of stock options has been estimated at $3.84 per option using the Black-Scholes option pricing model with the following assumptions: a grant-date share price and option exercise price of $10.00; dividend yield of 0%; an expected option life of 10 years; a risk free interest rate of 4.64%; and a volatility rate of 11.32% based on an index of publicly traded thrift institutions. The actual expense of the stock option plan will be determined by the grant-date fair value of the options, which will depend on a number of factors, including the valuation assumptions used in the option pricing model ultimately adopted which may or may not be Black-Scholes.

(2) The stock option plan and stock recognition and retention plan may award a greater number of options and shares, respectively, if the plans are adopted more than one year after the completion of the conversion.

The actual value of restricted stock grants will be determined based on their fair value (the market price of shares of common stock of ESSA Bancorp, Inc.) as of the date grants are made. The stock recognition and retention plan, which is subject to stockholder approval, cannot be implemented until at least six months after the completion of the conversion. The following table presents the total value of all shares to be available for award and issuance under the stock recognition and retention plan, assuming the shares for the plan are purchased or issued in a range of market prices from $8.00 per share to $16.00 per share at the time of the grant.

Share Price	400,180 Shares Awarded at Minimum of Offering Range		470,800 Shares Awarded at Midpoint of Offering Range		541,420 Shares Awarded at Maximum of Offering Range		622,633 Shares Awarded at Maximum of Offering Range, As Adjusted
(In thousands, except share price information)
$  8.00	$	3,201	$	3,766	$	4,331	$	4,981
$10.00		4,002		4,708		5,414		6,226
$12.00		4,802		5,650		6,497		7,472
$14.00		5,603		6,591		7,580		8,717
$16.00		6,403		7,532		8,663		9,962

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The grant-date fair value of the options granted under the stock option plan will be based, in part, on the price of shares of common stock of ESSA Bancorp, Inc. at the time the options are granted, which, subject to stockholder approval, cannot be implemented until at least six months after the completion of the conversion. The value will also depend on the various assumptions utilized in the option-pricing model ultimately adopted. The following table presents the total estimated value of the options to be available for grant under the stock option plan, assuming the range of market prices for the shares are $8.00 per share to $16.00 per share at the time of the grant.

Exercise Price	Grant-Date Fair Value Per Option		1,000,450 Options at Minimum of Range		1,177,000 Options at Midpoint of Range		1,353,550 Options at Maximum of Range		1,556,583 Options at Maximum of Range, As Adjusted
(In thousands, except share price information)
$    8.00	$	3.07	$	3,071	$	3,613	$	4,155	$	4,779
10.00		3.84		3,842		4,520		5,198		5,977
12.00		4.61		4,612		5,426		6,240		7,176
14.00		5.38		5,382		6,332		7,282		8,374
16.00		6.15		6,153		7,239		8,324		9,573

The tables presented above are provided for informational purposes only. There can be no assurance that our stock price will not trade below $10.00 per share. Before you make an investment decision, we urge you to carefully read this prospectus, including, but not limited to, the section entitled “Risk Factors” beginning on page 18.

Our Issuance of Shares of Common Stock to the ESSA Bank & Trust Foundation

To further our commitment to the communities we serve, we intend to establish a charitable foundation as part of the stock offering. Assuming we receive member approval to establish the charitable foundation, we will contribute cash ranging from $935,000 at the minimum of the valuation range to $1.3 million at the maximum of the valuation range and shares of our common stock representing 7.0% of the shares of common stock of ESSA Bancorp, Inc. that will be sold in the offering. The number of shares issued to our charitable foundation will range from 654,500 shares at the minimum of the valuation range to 885,500 shares at the maximum of the valuation range, which shares will have a value of $6.5 million at the minimum of the valuation range and $8.9 million at the maximum of the valuation range, based on the $10.00 per share offering price. As a result of the issuance of shares and the contribution of cash to the charitable foundation, we will record an after-tax expense of approximately $5.6 million at the minimum of the valuation range and of approximately $8.2 million at the maximum of the valuation range, during the quarter in which the stock offering is completed.

The charitable foundation will be dedicated exclusively to supporting charitable causes and community development activities in the communities in which we operate. The charitable foundation is expected to make contributions totaling approximately $             in its first year of operation, assuming we sell our shares of common stock at the midpoint of the offering range.

Issuing shares of common stock to the charitable foundation will:

• dilute the voting interests of purchasers of shares of our common stock in the stock offering; and

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• result in an expense, and a reduction in earnings, during the quarter in which the contribution is made, equal to the full amount of the contribution to the charitable foundation, offset in part by a corresponding tax benefit.

The establishment and funding of the charitable foundation has been approved by the Board of Directors of ESSA Bancorp, Inc. and ESSA Bank & Trust and is subject to approval by members of ESSA Bank & Trust. If the members do not approve the charitable foundation, we may, in our discretion, complete the conversion and stock offering without the inclusion of the charitable foundation and without resoliciting subscribers. We may also determine, in our discretion, not to complete the conversion and stock offering if the members do not approve the charitable foundation.

See “Risk Factors—The Contribution of Shares to the Charitable Foundation Will Dilute Your Ownership Interests and May Cause A Net Loss in Fiscal 2007,” “Comparison of Valuation and Pro Forma Information With and Without the Charitable Foundation” and “ESSA Bank & Trust Foundation.”

Market for Common Stock

We have received approval for shares of our common stock to be listed on the Nasdaq Global Market under the symbol “ESSA.” See “Market for the Common Stock.”

Our Policy Regarding Dividends

Following completion of the stock offering, our Board of Directors will have the authority to declare dividends on our common stock, subject to statutory and regulatory requirements. However, no decision has been made with respect to the amount, if any, and timing of any dividend payments. The payment and amount of any dividend payments will depend upon a number of factors, including the following:

• regulatory capital requirements;

• our financial condition and results of operations;

• tax considerations;

• statutory and regulatory limitations; and

• general economic conditions.

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Tax Consequences

As a general matter, the conversion will not be a taxable transaction for federal or state income tax purposes to ESSA Bank & Trust, ESSA Bancorp, Inc., or persons eligible to subscribe in the subscription offering.

Conditions to Completion of the Conversion and the Offering

We cannot complete the conversion and the offering unless:

• The plan of conversion is approved by at least a majority of votes eligible to be cast by members of ESSA Bank & Trust (consisting of depositors and borrowers of ESSA Bank & Trust). A special meeting of members to consider and vote upon the plan of conversion has been set for                     ;

• We have received orders to purchase at least the minimum number of shares of common stock offered; and

• We receive the final approval of the Office of Thrift Supervision and the Pennsylvania Department of Banking to complete the conversion and the offering.

In addition, in order to establish and fund the charitable foundation, we will need to receive the approval of a majority of votes eligible to be cast by members of ESSA Bank & Trust at the special meeting of members to be held on                     . If the members do not approve the charitable foundation, we may, in our discretion, complete the conversion and stock offering without the inclusion of the charitable foundation and without resoliciting subscribers. We may also determine in our discretion, not to complete the conversion and stock offering if the members do not approve the charitable foundation.

How You Can Obtain Additional Information

Our branch office personnel may not, by law, assist with investment-related questions about the offering or accept stock order forms or proxy cards. If you have any questions regarding the conversion or the offering, please call or visit our Stock Information Center, toll free, at 1-            , Monday through Friday between 10:00 a.m. and 4:00 p.m., Eastern time. The Stock Information Center is located at our Corporate Center, 200 Palmer Street, Stroudsburg, Pennsylvania 18360. The Stock Information Center will be closed on weekends and bank holidays.

TO ENSURE THAT EACH PERSON RECEIVES A PROSPECTUS AT LEAST 48 HOURS PRIOR TO THE EXPIRATION DATE OF              IN ACCORDANCE WITH FEDERAL LAW, NO PROSPECTUS WILL BE MAILED ANY LATER THAN FIVE DAYS PRIOR TO              OR HAND-DELIVERED ANY LATER THAN TWO DAYS PRIOR TO             .

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RISK FACTORS

You should consider carefully the following risk factors in evaluating an investment in the shares of common stock.

Risks Related to Our Business

Future Changes in Interest Rates Could Reduce Our Profits

Our ability to make a profit largely depends on our net interest income, which could be negatively affected by changes in interest rates. Net interest income is the difference between:

(1) the interest income we earn on our interest-earning assets, such as loans and securities; and

(2) the interest expense we pay on our interest-bearing liabilities, such as deposits and borrowings.

Since September 30, 2004, the Federal Reserve Board of Governors has increased its target for the federal funds rate 17 times, from 1.0% to 5.25%. While these short-term market interest rates (which we use as a guide to price our deposits) have increased, longer-term market interest rates (which we use as a guide to price our longer-term loans) have not increased to the same degree. This “flattening” of the market yield curve has had a negative impact on our interest rate spread and net interest margin, and if short-term interest rates continue to rise, and if rates on our deposits and borrowings continue to reprice upwards faster than the rates on our long-term loans and investments, we would continue to experience compression of our interest rate spread and net interest margin, which would have a negative effect on our profitability. Our average interest rate spread decreased 39 basis points to 2.46% during the 2006 fiscal year from 2.85% during the 2005 fiscal year.

In addition, changes in interest rates can affect the average life of loans and mortgage-backed and related securities. A reduction in interest rates results in increased prepayments of loans and mortgage-backed and related securities, as borrowers refinance their loans in order to reduce their borrowing costs. This creates reinvestment risk, which is the risk that we may not be able to reinvest prepayments at rates that are comparable to the rates we earned on the prepaid loans or securities. Increases in interest rates may decrease loan demand and/or make it more difficult for borrowers to repay adjustable rate loans.

Changes in interest rates also affect the current market value of our interest-earning securities portfolio. Generally, the value of securities moves inversely with changes in interest rates. At September 30, 2006, the fair value of our available for sale agency securities, mortgage-backed securities and corporate debt obligations totaled $89.1 million. Unrealized net losses on these available for sale securities totaled approximately $287,000 at September 30, 2006 and are reported as a separate component of stockholders’ equity. Decreases in the fair value of securities available for sale in future periods would have an adverse effect on stockholder’s equity.

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We evaluate interest rate sensitivity by estimating the change in ESSA Bank & Trust’s net portfolio value over a range of interest rate scenarios. Net portfolio value is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts. At September 30, 2006, in the event of an immediate 200 basis point increase in interest rates, the Office of Thrift Supervision model projects that we would experience a $23.0 million, or 29%, decrease in net portfolio value. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations of ESSA Bancorp, Inc.—Management of Market Risk.”

A Downturn in the Local Economy or a Decline in Real Estate Values Could Reduce Our Profits.

Nearly all of our real estate loans are secured by real estate in Monroe and Northampton Counties, Pennsylvania. As a result of this concentration, a downturn in this market area could cause significant increases in nonperforming loans, which would reduce our profits. Additionally, a decrease in asset quality could require additions to our allowance for loan losses through increased provisions for loan losses, which would hurt our profits. In recent years, there have been significant increases in real estate values in our market area. As a result of rising home prices, our loans have been well collateralized. A decline in real estate values could cause some of our mortgage loans to become inadequately collateralized, which would expose us to a greater risk of loss. For a discussion of our market area, see “Business of ESSA Bank & Trust—Market Area.”

Our Continued Emphasis On Commercial Real Estate Lending Could Expose Us To Increased Lending Risks.

Our business strategy centers on continuing our emphasis on commercial real estate lending. We have grown our loan portfolio in recent years with respect to this type of loan and intend to continue to emphasize this type of lending. At September 30, 2006, $47.5 million, or 8.5%, of our total loan portfolio consisted of commercial real estate loans. Loans secured by commercial real estate generally expose a lender to greater risk of non-payment and loss than one- to four-family residential mortgage loans because repayment of the loans often depends on the successful operation of the property and the income stream of the underlying property. Additionally, such loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to one- to four-family residential mortgage loans. Accordingly, an adverse development with respect to one loan or one credit relationship can expose us to greater risk of loss compared to an adverse development with respect to a one- to four-family residential mortgage loan. We seek to minimize these risks through our underwriting policies, which require such loans to be qualified on the basis of the property’s collateral value, net income and debt service ratio; however, there is no assurance that our underwriting policies will protect us from credit-related losses.

At September 30, 2006, our largest commercial real estate lending relationship was a $2.8 million loan located in Monroe County, Pennsylvania and secured by real estate. See “Business of ESSA Bank & Trust – Lending Activities – Commercial Real Estate Loans.”

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Strong Competition Within Our Market Areas May Limit Our Growth and Profitability.

Competition in the banking and financial services industry is intense. In our market areas, we compete with commercial banks, savings institutions, mortgage brokerage firms, credit unions, finance companies, mutual funds, insurance companies, and brokerage and investment banking firms operating locally and elsewhere. Some of our competitors have greater name recognition and market presence that benefit them in attracting business, and offer certain services that we do not or cannot provide. In addition, larger competitors may be able to price loans and deposits more aggressively than we do, which could affect our ability to grow and remain profitable on a long-term basis. Our profitability depends upon our continued ability to successfully compete in our market areas. For additional information see “Business of ESSA Bank & Trust—Competition.”

If Our Allowance for Loan Losses is Not Sufficient to Cover Actual Loan Losses, Our Earnings Will Decrease.

We make various assumptions and judgments about the collectibility of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. In determining the amount of the allowance for loan losses, we review our loans and our loss and delinquency experience, and we evaluate economic conditions. If our assumptions are incorrect, our allowance for loan losses may not be sufficient to cover losses inherent in our loan portfolio, resulting in additions to our allowance. While our allowance for loan losses was 0.69% of total loans at September 30, 2006, material additions to our allowance could materially decrease our net income.

In addition, bank regulators periodically review our allowance for loan losses and may require us to increase our provision for loan losses or recognize further loan charge-offs. Any increase in our allowance for loan losses or loan charge-offs as required by these regulatory authorities might have a material adverse effect on our financial condition and results of operations.

The Federal Deposit Insurance Corporation has Issued New Rules on How it Imposes Deposit Insurance Assessments that Will Increase Our Deposit Insurance Assessments and Will Reduce Our Income.

Under its current rules, the Federal Deposit Insurance Corporation does not impose a deposit insurance assessment on financial institutions, such as ESSA Bank & Trust, that are, among other criteria, well-capitalized. On November 2, 2006, the Federal Deposit Insurance Corporation adopted final regulations establishing a risk-based assessment system that will enable the Federal Deposit Insurance Corporation to more closely tie each financial institution’s premiums to the risk it poses to the deposit insurance fund. Under the new risk-based assessment system, which becomes effective in the beginning of 2007, the Federal Deposit Insurance Corporation will evaluate the risk of each financial institution based on three primary sources of information: (1) its supervisory rating, (2) its financial ratios, and (3) its long-term debt issuer rating, if the institution has one. The new rates for nearly all of the financial institution industry will vary between five and seven cents for every $100 of domestic deposits. Once effective, this increased assessment may reduce our income.

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Our Leverage May Continue to Increase.

The Bank’s asset growth, particularly loan growth, has outpaced its deposit growth during the most recent five years. As a result, the Bank has increased its leverage through additional borrowings from the Federal Home Loan Bank. This increased leverage has contributed to a decreasing average equity to average total assets percentage (refer to the table on page 28) during this five year period. If this trend were to continue, further declines in the Bank’s average equity to total average assets percentage would be anticipated. However, anticipated percentages would be expected to remain above regulatory requirements. The table on page 38 depicts the historical and pro forma regulatory capital compliance of ESSA Bank & Trust at September 30, 2006 and across a range of pro forma offering results.

Risks Related to the Stock Offering

The Future Price of the Shares of Common Stock May Be Less Than the Purchase Price in the Stock Offering.

We cannot assure you that if you purchase shares of common stock in the stock offering you will later be able to sell them at or above the purchase price in the stock offering. The purchase price in the offering is determined by an independent, third-party appraisal, pursuant to federal banking regulations and subject to review and approval by the Office of Thrift Supervision. The appraisal is not intended, and should not be construed, as a recommendation of any kind as to the advisability of purchasing shares of common stock. The Office of Thrift Supervision attempts to ensure that the aftermarket appreciation of standard conversion stocks is not excessive. In recent years, the final independent valuation as approved by the Office of Thrift Supervision has been at the adjusted maximum of the offering range as long as total subscriptions have exceed the adjusted maximum of the offering range. However, the adjusted maximum of the offering range is approximately 30.0% higher than the fair market value of a company as determined by the independent appraisal. Our aggregate pro forma market value as reflected in the final, approved independent appraisal may exceed the market price of our shares of common stock after the completion of the offering, which may result in our stock trading below the initial offering price of $10.00 per share.

We Will Need to Implement Additional Finance and Accounting Systems, Procedures and Controls in Order to Satisfy Our New Public Company Reporting Requirements.

Upon completion of the stock offering, we will become a public reporting company. The federal securities laws and regulations of the Securities and Exchange Commission require that we file annual, quarterly and current reports and that we maintain effective disclosure controls and procedures and internal controls over financial reporting. We expect that the obligations of being a public company, including substantial public reporting obligations, will require significant expenditures and place additional demands on our management team. These obligations will increase our operating expenses and could divert our management’s attention

21

from our operations. Compliance with the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the Securities and Exchange Commission will require us to certify the adequacy of our internal controls and procedures, which could require us to upgrade our systems, and/or hire additional staff which will increase our operating costs.

Our Return on Equity Will Be Low Compared to Other Financial Institutions. This Could Negatively Affect the Trading Price of Our Shares of Common Stock.

Net income divided by average equity, known as “return on equity,” is a ratio many investors use to compare the performance of a financial institution to its peers. For the fiscal year ended September 30, 2006, our return on average equity was 7.0%, compared to the median return on average equity of 6.2% for all publicly traded savings institutions. Following the stock offering, we expect our consolidated equity to increase from $58.3 million to between $138.8 million at the minimum of the offering range and $183.1 million at the adjusted maximum of the offering range. We expect our return on equity to remain below the industry average until we are able to leverage the additional capital we receive from the stock offering. Our return on equity will be reduced by the capital raised in the stock offering, higher expenses from the costs of being a public company, and added expenses associated with our employee stock ownership plan and the stock-based incentive plan we intend to adopt. Until we can increase our net interest income and non-interest income, we expect our return on equity to be below the industry average, which may reduce the value of our shares of common stock.

The Contribution of Shares to the Charitable Foundation Will Dilute Your Ownership Interests and May Cause A Net Loss in Fiscal 2007.

We intend to establish a charitable foundation in connection with the stock offering. We will make a contribution to the charitable foundation in the form of shares of ESSA Bancorp, Inc. common stock and up to $1.5 million in cash. At the midpoint of the offering range, we will contribute 770,000 shares of common stock to the charitable foundation, which equals 7.0% of the shares of common stock sold in the stock offering and $1.1 million in cash, which represents 1.0% of the shares of common stock sold in the stock offering. The aggregate contribution will also have an adverse effect on our net income for the quarter and year in which we make the issuance and contribution to the charitable foundation. The after-tax expense of the contribution will reduce net income in our 2007 fiscal year by approximately $6.9 million at the midpoint of the offering range. Our net income for the fiscal year ended September 30, 2006 was $4.0 million; therefore we anticipate a net loss for the fiscal year ended September 30, 2007 based, in part, on the contribution to the charitable foundation. Persons purchasing shares in the stock offering will have their ownership and voting interests in ESSA Bancorp, Inc. diluted by 6.5% due to the issuance of shares of common stock to the charitable foundation.

Our Contribution to the Charitable Foundation May Not Be Tax Deductible, Which Could Reduce Our Profits.

We believe that at least a portion of the contribution to the ESSA Bank & Trust Foundation will be deductible for federal income tax purposes. However, we cannot assure you that the Internal Revenue Service will grant tax-exempt status to the charitable foundation. If the

22

contribution is not deductible, we would not receive any tax benefit from the contribution. In addition, even if the contribution is tax deductible, we are permitted to deduct only up to 10% of our taxable income for federal income tax purposes before charitable contributions. We are permitted under the Internal Revenue Code to carry the excess contribution over the five-year period following the contribution to our charitable foundation. Accordingly, we may not have sufficient profits to be able to use the deduction fully.

Our Stock-Based Benefit Plans Will Increase Our Costs, Which Will Reduce Our Income.

We anticipate that our employee stock ownership plan will purchase 8.0% of the total shares of common stock outstanding following the stock offering, including shares issued to the ESSA Bank & Trust Foundation, with funds borrowed from ESSA Bancorp, Inc. The cost of acquiring the shares of common stock for the employee stock ownership plan will be between $8.0 million at the minimum of the offering range and $12.5 million at the adjusted maximum of the offering range. We will record annual employee stock ownership plan expense in an amount equal to the fair value of shares of common stock committed to be released to employees. If shares of common stock appreciate in value over time, compensation expense relating to the employee stock ownership plan will increase.

We also intend to adopt a stock-based incentive plan after the stock offering under which plan participants would be awarded shares of our common stock (at no cost to them) or options to purchase shares of our common stock. The number of shares of restricted stock or stock options reserved for issuance under any initial stock-based incentive plan may not exceed 4.0% and 10.0%, respectively, of our total outstanding shares, including shares issued to the ESSA Bank & Trust Foundation, if these plans are adopted within one year at the completion of the conversion. Assuming the market price of the common stock is $10.00 per share; the options are granted with an exercise price of $10.00 per share; the dividend yield on the stock is 0%; the expected option life is ten years; the risk free interest rate is 4.64% (based on the ten-year Treasury rate) and the volatility rate on the shares of common stock is 11.32% (based on an index of publicly traded thrift institutions), the estimated grant-date fair value of the options utilizing a Black-Scholes option pricing analysis is $3.84 per option granted. Assuming this value is amortized over a five-year vesting period, the corresponding annual expense (pre-tax) associated with the stock options would be approximately $1.2 million at the adjusted maximum. In addition, assuming that all shares of restricted stock are awarded at a price of $10.00 per share, and that the awards vest over a five-year period, the corresponding annual expense (pre-tax) associated with shares awarded under the stock-based incentive plan would be approximately $1.2 million at the adjusted maximum. However, if we grant shares of stock or options in excess of these amounts, such grants would increase our costs further.

The shares of restricted stock granted under the stock-based incentive plan will be expensed by us over their vesting period at the fair market value of the shares on the date they are awarded. If the shares of restricted stock to be granted under the plan are repurchased in the open market (rather than issued directly from authorized but unissued shares by ESSA Bancorp, Inc.) and cost the same as the purchase price in the stock offering, the reduction to stockholders’ equity due to the plan would be between $4.0 million at the minimum of the offering range and $6.2 million at the adjusted maximum of the offering range. To the extent we repurchase shares

23

of common stock in the open market to fund the grants of shares under the plan, and the price of such shares exceeds the offering price of $10.00 per share, the reduction to stockholders’ equity would exceed the range described above. Conversely, to the extent the price of such shares is below the offering price of $10.00 per share, the reduction to stockholders’ equity would be less than the range described above.

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The Implementation of Stock-Based Incentive Plans Will Dilute Your Ownership Interest.

We intend to adopt stock-based incentive plans (which will allow participants to be awarded shares of common stock (at no cost to them) or options to purchase shares of our common stock) following the stock offering. These stock-based incentive plans will be funded through either open market purchases of shares of common stock, if permitted, or from the issuance of authorized but unissued shares of common stock. Stockholders would experience a reduction in ownership interest totaling 12.3% in the event newly issued shares are used to fund stock options or awards of shares of common stock under these plans in an amount equal to 10% and 4%, respectively, of the shares issued in the stock offering, including shares issued to the ESSA Bank & Trust Foundation.

Our Contribution to the Charitable Foundation Combined With the Costs of Our Stock-Based Benefit Plans May Result in an Overall Net Loss for Fiscal 2007.

The anticipated expenses associated with the Company’s contributions of stock and cash to the ESSA Bank & Trust Foundation combined with the anticipated expenses associated with our employee stock ownership plan and stock-based incentive plans may result in a consolidated net loss for ESSA Bancorp, Inc. for the fiscal year ended September 30, 2007. The most significant of these expenses would result from the contribution to the foundation which is not expected to be a recurring event. Therefore, future losses, while possible, are not anticipated.

We Have Broad Discretion in Using the Proceeds of the Stock Offering. Our Failure to Effectively Use Such Proceeds Could Hurt Our Profits.

We will use a portion of the net proceeds to finance the purchase of shares of common stock in the stock offering by the employee stock ownership plan and may use the remaining net proceeds to pay dividends to stockholders, repurchase shares of common stock, purchase investment securities, deposit funds in ESSA Bank & Trust, acquire other financial services companies or for other general corporate purposes. ESSA Bank & Trust may use the proceeds it receives to fund new loans, establish or acquire new branches, purchase investment securities, reduce a portion of our borrowings, or for general corporate purposes. In addition, we intend to expand our presence within and contiguous to our primary market area through de novo branching, which may negatively impact our earnings until these branches achieve profitability. We have not, however, identified specific amounts of proceeds for any of these purposes and we will have significant flexibility in determining the amount of net proceeds we apply to different uses and the timing of such applications. Our failure to utilize these funds effectively could reduce our profitability. We have not established a timetable for the effective deployment of the proceeds and we cannot predict how long we will require to effectively deploy the proceeds.

Our Stock Value May be Negatively Affected by Federal Regulations That Restrict Takeovers.

For three years following the stock offering, Office of Thrift Supervision regulations prohibit any person from acquiring or offering to acquire more than 10% of our common stock without the prior written approval of the Office of Thrift Supervision. See “Restrictions on Acquisition of ESSA Bancorp, Inc.” for a discussion of applicable Office of Thrift Supervision regulations regarding acquisitions.

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The Corporate Governance Provisions in our Articles of Incorporation and Bylaws and the Corporate Governance Provisions Under Pennsylvania Law May Prevent or Impede the Holders of Our Common Stock From Obtaining Representation on Our Board of Directors and May Impede Takeovers of the Company Which Our Board Might Conclude are not in the Best Interest of ESSA or its Stockholders.

Provisions in our Articles of Incorporation and Bylaws may prevent or impede holders of our common stock from obtaining representation on our Board of Directors and may make takeovers of the Company more difficult. For example, our Board of Directors is divided into three staggered classes. A classified board makes it more difficult for stockholders to change a majority of the directors because it generally takes at least two annual elections of directors for this to occur. ESSA Bancorp, Inc.’s Articles of Incorporation includes a provision that no person will be entitled to vote any shares of common stock of ESSA Bancorp, Inc. in excess of 10% of the outstanding shares of common stock of ESSA Bancorp, Inc. This limitation does not apply to the purchase of shares by a tax-qualified employee stock benefit plan of ESSA Bancorp, Inc. or ESSA Bank & Trust. In addition, the Company’s articles of incorporation and bylaws restrict who can call special meetings of stockholders and how directors can be removed from office. See “Restrictions on Acquisitions of ESSA Bancorp, Inc.” on page 135.

Provisions of the Pennsylvania Business Corporation Law applicable to ESSA Bancorp, Inc. provide among other things, that ESSA Bancorp, Inc. may not engage in a business combination with an “interested shareholder” during the five-year period after the interested shareholder became such except under certain specified circumstances. An interested shareholder is generally a holder of 20% or more of a company’s voting stock. The Pennsylvania Business Corporation Law also contains provisions providing for the ability of shareholders to object to the acquisition by a person or group of persons acting in concert of 20% or more of its outstanding voting securities and to demand that they be paid a cash payment for the fair value of their shares from the controlling person or group. In addition, there are various regulatory restrictions on acquisitions of ESSA Bancorp, Inc. See “Restrictions on Acquisition of ESSA Bancorp, Inc.” at page 135.

ESSA Bancorp, Inc. has Never Issued Common Stock and there is No Guarantee that a Liquid Market Will Develop.

ESSA Bancorp, Inc. has never issued capital stock and there is no established market for it. Shares of our common stock have been approved for trading on the Nasdaq Global Market under the symbol “ESSA,” subject to completion of the offering and compliance with certain conditions, including the presence of at least three registered and active market makers. Ryan Beck & Co., Inc. has advised us that it intends to make a market in shares of our common stock following the offering, but it is under no obligation to do so or to continue to do so once it begins. While we will attempt before completion of the offering to obtain commitments from at least two other broker-dealers to make a market in shares of our common stock, there can be no assurance that we will be successful in obtaining such commitments.

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We May Take Other Actions to Meet the Minimum Required Sales of Shares if We Cannot Find Enough Purchasers in The Community.

If we do not sell enough shares to reach the minimum of the offering range through the subscription and community offerings, shares may be offered for sale to the general public in a syndicated community offering to be managed by Ryan Beck & Co., Inc., acting as our agent. If we are not able to reach the minimum of the offering range after Ryan Beck uses its best efforts in a syndicated community offering we may do any of the following: increase the maximum purchase limitations and allow all maximum purchase subscribers to increase their orders to the new maximum purchase limitations; terminate the offering and promptly return all funds; set a new offering range, notifying all subscribers of the opportunity to confirm, cancel or change their orders; or take such other actions as may be permitted by the Office of Thrift Supervision.

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SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

The following tables set forth selected consolidated historical financial and other data of ESSA Bank & Trust and its subsidiaries for the years and at the dates indicated. The information at September 30, 2006 and 2005 and for the years ended September 30, 2006, 2005 and 2004 is derived in part from, and should be read together with, the audited consolidated financial statements and notes thereto of ESSA Bank & Trust beginning at page 144 of this prospectus. The information at September 30, 2004 and 2003 and November 30, 2002 and for the ten months ended September 30, 2003 and for the year ended November 30, 2002 is derived in part from audited consolidated financial statements that are not included in this prospectus.

	At September 30, 2006		At September 30, 2005		At September 30, 2004		At September 30, 2003		At November 30, 2002
	(In thousands)
Selected Financial Condition Data:
Total assets	$	725,796	$	656,066	$	592,824	$	533,606	$	468,055
Cash and cash equivalents		12,730		20,290		21,458		43,087		27,617
Investment securities:
Available for sale		89,122		62,506		45,074		22,986		27,301
Held to maturity		19,715		21,505		10,263		3,918		6,095
Loans, net		556,677		508,981		477,956		438,539		390,542
FHLB stock		13,675		11,916		11,358		9,187		5,304
Premises and equipment		11,447		11,560		11,444		10,547		6,223
Bank owned life insurance		13,376		12,864		10,369		—		—
Deposits		402,153		374,759		333,201		319,283		315,406
Borrowed funds		259,299		221,479		205,134		160,920		104,850
Equity		58,337		54,371		50,260		46,381		42,219

	For the Year Ended September 30, 2006		For the Year Ended September 30, 2005		For the Year Ended September 30, 2004		For the Ten Months Ended September 30, 2003		For the Year Ended November 30, 2002
	(In thousands)
Selected Data:
Interest income	$	36,451	$	31,919	$	28,810	$	24,743	$	29,065
Interest expense		19,217		14,323		11,933		9,372		12,220
Net interest income		17,234		17,596		16,877		15,371		16,845
Provision for loan losses		300		550		530		430		900
Net interest income after provision for loan losses		16,934		17,046		16,347		14,941		15,945
Non-interest income		5,518		5,281		4,280		2,976		3,477
Non-interest expense		16,685		16,493		15,540		12,080		12,408
Income before income tax expense		5,767		5,834		5,087		5,837		7,014
Income tax expense		1,813		1,383		1,172		1,681		2,314
Net income	$	3,954	$	4,451	$	3,915	$	4,156	$	4,700

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	At or For the Year Ended September 30, 2006		At or For the Year Ended September 30, 2005		At or For the Year Ended September 30, 2004		At or For the Ten Months Ended September 30, 2003		At or For the Year Ended November 30, 2002
Selected Financial Ratios and Other Data:
Performance Ratios:
Return on average assets	0.58	%	0.72	%	0.71	%	0.84	%	1.08	%
Return on average equity	6.96	%	8.42	%	8.20	%	9.46	%	11.98	%
Interest rate spread (1)	2.46	%	2.85	%	3.10	%	3.08	%	3.81	%
Net interest margin (2)	2.70	%	3.04	%	3.28	%	3.28	%	4.07	%
Efficiency ratio (3)	73.33	%	72.09	%	73.45	%	65.84	%	61.06	%
Noninterest expense to average total assets	2.45	%	2.67	%	2.82	%	2.45	%	2.84	%
Average interest-earning assets to average interest-bearing liabilities	108.00	%	107.69	%	107.70	%	109.89	%	108.70	%
Asset Quality Ratios:
Non-performing assets as a percent of total assets	0.09	%	0.10	%	0.12	%	0.14	%	0.16	%
Non-performing loans as a percent of total loans	0.11	%	0.12	%	0.12	%	0.12	%	0.17	%
Allowance for loan losses as a percent of non-performing loans	618.78	%	588.93	%	518.32	%	478.82	%	321.01	%
Allowance for loan losses as a percent of total loans	0.69	%	0.70	%	0.63	%	0.57	%	0.55	%
Capital Ratios:
Total risk-based capital (to risk weighted assets)	15.77	%	15.55	%	16.05	%	16.86	%	17.52	%
Tier 1 risk-based capital (to risk weighted assets)	14.79	%	14.59	%	15.14	%	15.99	%	16.67	%
Tangible capital (to tangible assets)	8.06	%	8.30	%	8.46	%	8.66	%	9.00	%
Tier 1 leverage (core) capital (to adjusted tangible assets)	8.06	%	8.30	%	8.49	%	8.66	%	9.00	%
Average equity to average total assets	8.36	%	8.55	%	8.67	%	8.92	%	8.99	%
Other Data:
Number of full service offices	12		12		12		12		12

(1) Represents the difference between the weighted-average yield on a fully tax equivalent basis on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the year.

(2) The net interest margin represents net interest income on a fully tax equivalent basis as a percent of average interest-earning assets for the year.

(3) The efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income.

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RECENT DEVELOPMENTS

The following tables set forth certain financial and other information of ESSA Bank & Trust at the dates and for the periods indicated. The financial data at September 30, 2006 has been derived in part from the audited consolidated financial statements of ESSA Bank & Trust and notes thereto presented elsewhere in this prospectus. The financial data at December 31, 2006 and for the three-month periods ended December 31, 2006 and December 31, 2005 have been derived in part from unaudited consolidated financial statements of ESSA Bank & Trust which, in the opinion of management, include all adjustments (consisting of normal recurring accruals) necessary for the fair presentation of such information. The results of operations for the three months ended December 31, 2006 are not necessarily indicative of the results of operations that may be expected for the fiscal year ending September 30, 2007.

	At December 31, 2006		At September 30, 2006
	(In thousands)
Selected Financial Condition Data:
Total assets	$	771,247	$	725,796
Cash and cash equivalents		38,959		12,730
Investment securities:
Available for sale		93,712		89,122
Held to maturity		18,952		19,715
Loans, net		572,776		556,677
FHLB stock		14,399		13,675
Premises and equipment		11,408		11,447
Bank owned life insurance		13,511		13,376
Deposits		448,570		402,153
Borrowed funds		257,000		259,299
Equity		59,212		58,337
	Three Months Ended December 31,
	2006		2005
	(In thousands)
Selected Data:
Interest income	$	10,094	$	8,599
Interest expense		5,834		4,403
Net interest income		4,260		4,196
Provision for loan losses		90		75
Net interest income after provision for loan losses		4,170		4,121
Non-interest income		1,428		1,433
Non-interest expense		4,431		4,219
Income before income tax expense		1,167		1,335
Income tax expense		306		390
Net income		861		945

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	At or For the Three Months Ended December 31,
	2006	2005
Selected Financial Ratios and Other Data:
Performance Ratios:
Return on average assets	0.47	0.57
Return on average equity	5.73	6.77
Interest rate spread (1)	2.20	2.48
Net interest margin (2)	2.45	2.68
Efficiency ratio (3)	77.90	74.95
Noninterest expense to average total assets	2.42	2.55
Average interest-earning assets to average interest-bearing liabilities	108.16	107.93
Asset Quality Ratios:
Non-performing assets as a percent of total assets	0.07	0.14
Non-performing loans as a percent of total loans	0.10	0.18
Allowance for loan losses as a percent of non-performing loans	708.26	383.42
Allowance for loan losses as a percent of total loans	0.68	0.69
Capital Ratios:
Total risk-based capital (to risk weighted assets)	15.39	15.54
Tier 1 risk-based capital (to risk weighted assets)	14.42	14.57
Tangible capital (to tangible assets)	7.63	8.25
Tier 1 leverage (core) capital (to adjusted tangible assets)	7.64	8.25
Average equity to average total assets	8.20	8.43
Other Data:
Number of full service offices	12	12

(1) Represents the difference between the weighted-average yield on a fully tax equivalent basis on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the three months ended December 31, 2006 and 2005.

(2) The net interest margin represents net interest income on a fully tax equivalent basis as a percent of average interest-earning assets for the three months ended December 31, 2006 and 2005.

(3) The efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income.

Comparison of Financial Condition at December 31, 2006 and September 30, 2006

Total Assets. Total assets increased by $45.4 million, or 6.3%, to $771.2 million at December 31, 2006 from $725.8 million at September 30, 2006. This increase was primarily due to increases in cash and due from banks, interest-bearing deposits with other institutions, investment securities and loans receivable.

Cash and Due from Banks. Cash and due from banks increased $6.8 million, or 58.3% to $18.5 million at December 31, 2006 from $11.7 million at September 30, 2006. The increase was primarily due to increased retail deposit volume at the Bank contributing to an increase in the Banks’ Federal Reserve Bank balance at December 31, 2006.

Interest-Bearing Deposits with Other Institutions. Interest-bearing deposits with other institutions increased $19.4 million to $20.5 million at December 31, 2006 from $1.1 million at September 30, 2006. An increase in the Bank’s retail deposits at December 31, 2006 which was in excess of the Bank’s loan and investment securities growth, contributed to an increase in the Bank’s Federal Home Loan Bank of Pittsburgh checking account balance of $19.4 million at December 31, 2006 compared to September 30, 2006.

Investment Securities. Investment securities increased $3.9 million, or 3.5% to $112.7 million at December 31, 2006, from $108.8 million at September 30, 2006. This increase was due, in part, to the Bank’s investing of funds from new deposits and borrowings in mortgage-

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backed securities which increased by $13.9 million from September 30, 2006 to December 31, 2006. For the same period the Bank’s investment in U.S. Government Obligations decreased by $10.1 million.

Net Loans. Net loans increased $16.1 million, or 2.9%, to $572.8 million at December 31, 2006 from $556.7 million at September 30, 2006. One- to four-family residential mortgages increased by $10.8 million to $463.2 million at December 31, 2006 from $452.4 million at September 30, 2006. For the same time period, commercial real estate loans increased by $4.0 million to $51.5 million from $47.5 million.

Deposits. Deposits increased by $46.4 million, or 11.5% to $448.6 million at December 31, 2006, from $402.2 million at September 30, 2006. The increase in deposits was attributable to increases in non-interest bearing accounts of $13.0 million, money market accounts of $8.9 million and savings and club accounts of $24.4 million. These deposit increases are thought to be in response to the Bank’s announced plan of conversion and not attributable to the Bank’s normal operations.

Borrowed Funds. Funds borrowed from the Federal Home Loan Bank of Pittsburgh decreased by $2.3 million, or 0.9%, to $257.0 million at December 31, 2006, from $259.3 million at September 30, 2006. The decrease in borrowed funds was primarily attributable to the increase in deposits offset by asset growth.

Total Equity. Total equity increased by $875,000, or 1.5%, to $59.2 million at December 31, 2006 from $58.3 million at September 30, 2006. The increase reflected net income of $861,000 for the three month period ended December 31, 2006 in addition to a $15,000 decrease in other comprehensive losses due to unrealized losses on investment securities available for sale at December 31, 2006.

Comparison of Operating Results for the Three Months Ended December 31, 2006 and December 31, 2005

Net Income. Net income decreased $84,000, or 8.9%, to $861,000 for the quarter ended December 31, 2006 from $945,000 for the comparable 2005 period. The decrease was primarily the result of an increase in total non-interest expense offset in part by an increase in net interest income and a decrease in income taxes.

Net Interest Income. Net interest income increased by $64,000, or 1.5%, to $4.3 million for the quarter ended December 31, 2006 from $4.2 million for the comparable 2005 period. The increase was primarily attributable to an increase in net average interest earnings assets of $6.5 million offset by a 28 basis point decrease in our interest rate spread to 2.20% for the quarter ended December 31, 2006 from 2.48% for the comparable 2005 period.

Interest Income. Interest income increased $1.5 million, or 17.4%, to $10.1 million for the quarter ended December 31, 2006 from $8.6 million for the comparable 2005 period. The increase resulted from a $69.3 million increase in average interest-earning assets combined with a 31 basis point increase in the overall yield on interest earning assets to 5.82% for the quarter

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ended December 31, 2006, from 5.51% for the comparable 2005 period. Loans increased on average $49.1 million between the two periods, along with increases in the average balances of investment securities of $1.4 million and mortgage-backed securities of $24.8 million. Federal Home Loan Bank of Pittsburgh stock and other interest earning assets decreased by $6.0 million in the aggregate.

Interest Expense. Interest expense increased $1.4 million, or 32.5%, to $5.8 million for the quarter ended December 31, 2006 from $4.4 million for the comparable 2005 period. The increase resulted from a $62.9 million increase in average interest-bearing liabilities, combined with a 59 basis point increase in the overall cost of interest bearing liabilities to 3.62% for the quarter ended December 31, 2006 from 3.03% for the comparable 2005 period. Total interest bearing deposits increased $19.7 million between the two periods along with an increase in the average balance of borrowed funds of $43.2 million.

Provision for Loan Losses. Provision for loan losses increased $15,000 or 20.0% to $90,000 for the quarter ended December 31, 2006 as compared to $75,000 for the quarter ended December 31, 2005. The allowance for loan losses was $3.9 million, or 0.68% of loans outstanding at December 31, 2006, compared to $3.6 million, or 0.69% of loans outstanding at December 31, 2005.

Non-interest Income. Non-interest income was flat at $1.4 million for the quarter ended December 31, 2006, as compared to the quarter ended December 31, 2005.

Non-interest Expense. Non-interest expense increased by $212,000, or 5.0%, to $4.4 million for the quarter ended December 31, 2006, from $4.2 million for the comparable 2005 period. Increases in compensation and employee benefits of $247,000, occupancy and equipment of $31,000 and advertising of $53,000 were partially offset by decreases in professional fees of $70,000, data processing of $21,000 and other expenses of $28,000. The increase in compensation and employee benefits was the result of normal merit increases combined with increases in board of director fees, incentive accruals and pension and other benefit costs. The increase in occupancy and equipment costs was the result of increases in lease expense and depreciation expense. Advertising expense increased as a result of our increased efforts to maintain and improve our presence in our market area. Professional fees decreased primarily as a result of the expiration of a third party consulting agreement in August 2006 related to the Bank’s overdraft protection product. Data processing costs decreased primarily as a result of the expiration in April 2006 of a third party network consulting agreement. Finally, other expenses decreased primarily due to decreases in deposit related charge-offs and loan processing costs.

Income Taxes. Income tax expense increased by $84,000, or 21.5%, to $306,000 for the quarter ended December 31, 2006 from $390,000 million for the comparable 2005 period. The effective tax rate was 26.2% for the quarter ended December 31, 2006 compared to 29.2% for the comparable 2005 period.

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FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect,” “will,” “may” and words of similar meaning. These forward-looking statements include, but are not limited to:

• statements of our goals, intentions and expectations;

• statements regarding our business plans, prospects, growth and operating strategies;

• statements regarding the asset quality of our loan and investment portfolios; and

• estimates of our risks and future costs and benefits.

These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not take any obligation to update any forward-looking statements after the date of this prospectus.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

• general economic conditions, either nationally or in our market areas, that are worse than expected;

• competition among depository and other financial institutions;

• inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments;

• adverse changes in the securities markets;

• changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;

• our ability to enter new markets successfully and capitalize on growth opportunities;

• our ability to successfully integrate acquired entities;

• changes in consumer spending, borrowing and savings habits;

• changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission and the Public Company Accounting Oversight Board;

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• changes in our organization, compensation and benefit plans;

• adverse developments concerning Fannie Mae or Freddie Mac and changes in market interest rates affecting the value of the Fannie Mae and Freddie Mac floating rate preferred stocks in our investment securities portfolio;

• changes in our financial condition or results of operations that reduce capital available to pay dividends;

• regulatory changes or actions; and

• changes in the financial condition or future prospects of issuers of securities that we own.

Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Please see “Risk Factors” beginning on page 18.

HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING

Although we cannot determine what the actual net proceeds from the sale of the shares of common stock in the offering will be until the offering is completed, we anticipate that the net proceeds will be between $91.5 million and $124.2 million, or $143.1 million if the offering range is increased by 15%. We estimate that we will contribute to ESSA Bank & Trust between $45.7 million and $62.1 million, or $71.5 million if the offering range is increased by 15%. We intend to retain at the holding company between $45.7 million and $62.1 million of the net proceeds, or $71.5 million if the offering range is increased by 15%, to be used for the purposes described below.

A summary of the anticipated net proceeds at the minimum, midpoint, maximum and adjusted maximum of the offering range and the use of the net proceeds is as follows:

	Based Upon the Sale at $10.00 Per Share of
	9,350,000 Shares				11,000,000 Shares				12,650,000 Shares				14,547,500 Shares (1)
	Amount		Percent of Net Proceeds		Amount		Percent of Net Proceeds		Amount		Percent of Net Proceeds		Amount		Percent of Net Proceeds
	(Dollars in thousands)
Stock offering proceeds	$	93,500			$	110,000			$	126,500			$	145,475
Less offering expenses		2,017				2,168				2,290				2,420
Net offering proceeds	$	91,483	100.0	%	$	107,832	100.0	%	$	124,210	100.0	%	$	143,055	100.0	%
Use of net proceeds:
To ESSA Bank & Trust	$	45,742	50.0	%	$	53,916	50.0	%	$	62,105	50.0	%	$	71,528	50.0	%
To fund loan to employee stock ownership plan		8,004	8.7			9,416	8.7			10,828	8.7			12,453	8.7
Retained by ESSA Bancorp, Inc.	$	37,738	41.3	%	$	44,500	41.3	%	$	51,277	41.3	%	$	59,075	41.3	%

(1) As adjusted to give effect to an increase in the number of shares which could occur due to a 15% increase in the offering range to reflect demand for the shares, changes in market or general financial conditions following the commencement of the offering, or regulatory considerations.

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Payments for shares of common stock made through withdrawals from existing deposit accounts will not result in the receipt of new funds for investment but will result in a reduction of ESSA Bank & Trust’s deposits. The net proceeds may vary because the total expenses relating to the offering may be more or less than our estimates. For example, our expenses would increase if a syndicated community offering were used to sell shares of common stock not purchased in the subscription and community offerings.

ESSA Bancorp, Inc. May Use the Proceeds it Retains From the Offering:

• to fund a loan to the employee stock ownership plan to purchase shares of common stock in the offering (between $8.0 million and $10.8 million, or $12.5 million if the offering is increased by 15%);

• to invest in debt securities issued by the United States government and United States government-sponsored agencies or entities;

• to finance the acquisition of financial institutions, branches or other financial service companies;

• to pay cash dividends to stockholders;

• to repurchase shares of our common stock; and

• for other general corporate purposes.

Initially, we intend to invest a substantial portion of the net proceeds in short-term investments, investment-grade debt obligations and mortgage-backed securities.

Under current Office of Thrift Supervision regulations, we may not repurchase shares of our common stock during the first year following the conversion, except when extraordinary circumstances exist and with prior regulatory approval.

ESSA Bank & Trust May Use the Net Proceeds it Receives From the Offering:

• to expand its retail and commercial banking franchise by acquiring or establishing new branches, or by acquiring other financial institutions or other financial services companies;

• to fund new loans, including residential first mortgage loans, commercial loans, commercial real estate and home equity loans and lines of credit;

• to enhance existing products and services and to support new products and services;

• to reduce a portion of our existing borrowings;

• to invest in debt securities issued by the United States government and United States government-sponsored agencies or entities; and

• for other general corporate purposes.

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Our short-term and long-term growth plans anticipate that, upon completion of the offering, we will experience measured growth through increased lending and investment activities, de novo branching and, possibly, acquisitions, with a particular emphasis on attempting to stimulate internal loan growth. We plan to explore acquisition opportunities involving other banks and thrifts, and possibly financial service companies, when and as they arise as a means of supplementing internal growth. We may also consider establishing de novo branches or acquiring financial institutions in our market area and contiguous counties.

We have no current arrangements or agreements to acquire other banks, thrifts or financial service companies. We have received regulatory approval to open a new branch office in Tannersville, Pennsylvania which we anticipate opening in May 2007. There can be no assurance that we will be able to consummate any acquisition or establish any other new branches.

Initially, the net proceeds will be invested in short-term investments, investment-grade debt obligations and mortgage-backed securities.

OUR POLICY REGARDING DIVIDENDS

Following completion of the stock offering, our Board of Directors will have the authority to declare dividends on our shares of common stock, subject to statutory and regulatory requirements. However, no decision has been made with respect to the payment of dividends. In determining whether and in what amount to pay a cash dividend, the Board is expected to take into account a number of factors, including capital requirements, our consolidated financial condition and results of operations, tax considerations, statutory and regulatory limitations and general economic conditions. No assurances can be given that any dividends will be paid or that, if paid, will not be reduced or eliminated in the future. Special cash dividends, stock dividends or returns of capital, to the extent permitted by Office of Thrift Supervision policy and regulations, may be paid in addition to, or in lieu of, regular cash dividends. We will file a consolidated tax return with ESSA Bank & Trust. Accordingly, it is anticipated that any cash distributions made by ESSA Bancorp, Inc. to its stockholders would be treated as cash dividends and not as a non-taxable return of capital for federal and state tax purposes.

Pursuant to our Articles of Incorporation, we are authorized to issue preferred stock. If we issue preferred stock, the holders thereof may have a priority over the holders of our shares of common stock with respect to the payment of dividends. For a further discussion concerning the payment of dividends on our shares of common stock, see “Description of Capital Stock—Common Stock.” Dividends we can declare and pay will depend, in part, upon receipt of dividends from ESSA Bank & Trust, because initially we will have no source of income other than dividends from ESSA Bank & Trust, earnings from the investment of proceeds from the sale of shares of common stock, and interest payments received in connection with the loan to the employee stock ownership plan. A regulation of the Office of Thrift Supervision imposes limitations on “capital distributions” by savings institutions. See “Regulation—Dividends.” See “Regulation by the Pennsylvania Department of Banking – Dividends” for a discussion of Pennsylvania regulations regarding dividends.

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Any payment of dividends by ESSA Bank & Trust to us that would be deemed to be drawn out of ESSA Bank & Trust’s bad debt reserves would require a payment of taxes at the then-current tax rate by ESSA Bank & Trust on the amount of earnings deemed to be removed from the reserves for such distribution. ESSA Bank & Trust does not intend to make any distribution to us that would create such a federal tax liability. See “Federal Taxation” and “State Taxation.”

Additionally, pursuant to Office of Thrift Supervision regulations, during the three-year period following the stock offering, we will not take any action to declare an extraordinary dividend to stockholders that would be treated by recipients as a tax-free return of capital for federal income tax purposes.

MARKET FOR THE COMMON STOCK

ESSA Bancorp, Inc. has never issued capital stock and there is no established market for it. Shares of our common stock have been approved for trading on the Nasdaq Global Market under the symbol “ESSA,” subject to completion of the offering and compliance with certain conditions, including the presence of at least three registered and active market makers. Ryan Beck & Co., Inc. has advised us that it intends to make a market in shares of our common stock following the offering, but it is under no obligation to do so or to continue to do so once it begins. While we will attempt before completion of the offering to obtain commitments from at least two other broker-dealers to make a market in shares of our common stock, there can be no assurance that we will be successful in obtaining such commitments.

The development and maintenance of a public market, having the desirable characteristics of depth, liquidity and orderliness, depends on the existence of willing buyers and sellers, the presence of which is not within our control or that of any market maker. The number of active buyers and sellers of shares of our common stock at any particular time may be limited, which may have an adverse effect on the price at which shares of our common stock can be sold. There can be no assurance that persons purchasing the shares of common stock will be able to sell their shares at or above the $10.00 offering purchase price per share. You should have a long-term investment intent if you purchase shares of our common stock and you should recognize that there may be a limited trading market in the shares of common stock.

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HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE

At September 30, 2006, ESSA Bank & Trust exceeded all of the applicable regulatory capital requirements. The table below sets forth the historical equity capital and regulatory capital of ESSA Bank & Trust at September 30, 2006, and the pro forma regulatory capital of ESSA Bank & Trust, after giving effect to the sale of shares of common stock at a $10.00 per share purchase price. The table assumes the receipt by ESSA Bank & Trust of between $45.7 million and $71.5 million of the net offering proceeds.

	ESSA Bank & Trust Historical at September 30, 2006				Pro Forma at September 30, 2006, Based Upon the Sale in the Offering of
					9,350,000 Shares					11,000,000 Shares					12,650,000 Shares					14,547,500 Shares (1)
	Amount		Percent of Assets (2)		Amount			Percent of Assets (2)		Amount			Percent of Assets (2)		Amount			Percent of Assets (2)		Amount			Percent of Assets (2)
	(Dollars in thousands)
GAAP capital	$	58,337	8.04	%	$	92,073		12.00	%	$	98,129		12.66	%	$	104,199		13.32	%	$	111,186		14.05	%
Tangible capital (3)	$	58,333	8.06	%	$	92,069		12.02	%	$	98,125		12.69	%	$	104,196		13.34	%	$	111,182		14.08	%
Tangible requirement		10,859	1.50			11,488		1.50			11,600		1.50			11,713		1.50			11,842		1.50
Excess	$	47,474	6.56	%	$	80,581		10.52	%	$	86,525		11.19	%	$	92,483		11.84	%	$	99,340		12.58	%
Core capital (3)	$	58,333	8.06	%	$	92,069		12.02	%	$	98,125		12.69	%	$	104,196		13.34	%	$	111,182		14.08	%
Core requirement (4)		28,959	4.00			30,635		4.00			30,934		4.00			31,234		4.00			31,578		4.00
Excess	$	29,374	4.06	%	$	61,434		8.02	%	$	67,191		8.69	%	$	72,962		9.34	%	$	79,604		10.08	%
Total risk-based capital (5)(6)	$	62,212	15.77	%	$	95,948		23.82	%	$	102,004		25.23	%	$	108,075		26.63	%	$	115,061		28.23	%
Risk-based requirement		31,557	8.00			32,224		8.00			32,344		8.00			32,464		8.00			32,601		8.00
Excess	$	30,655	7.77	%	$	63,724		15.82	%	$	69,660		17.23	%	$	75,611		18.63	%	$	82,460		20.23	%
Reconciliation of capital infused into ESSA Bank & Trust:
Net proceeds					$	45,742				$	53,916				$	62,105				$	71,528
Less: Common stock acquired by ESOP						(8,004	)				(9,416	)				(10,828	)				(12,453	)
Less: Common stock acquired by restricted stock plan						(4,002	)				(4,708	)				(5,414	)				(6,226	)
Pro Forma Increase					$	33,736				$	39,792				$	45,863				$	52,849

(1) As adjusted to give effect to an increase in the number of shares which could occur due to a 15% increase in the offering range to reflect demand for the shares, changes in market or general financial conditions following the commencement of the offering or regulatory considerations.

(2) Tangible and core capital levels are shown as a percentage of total adjusted assets. Risk-based capital levels are shown as a percentage of risk-weighted assets.

(3) The current Office of Thrift Supervision core capital requirement for financial institutions is 3% of total adjusted assets for financial institutions that receive the highest supervisory rating for safety and soundness and a 4% to 5% core capital ratio requirement for all other financial institutions.

(4) Pro forma amounts and percentages assume net proceeds are invested in assets that carry a 20% risk weighting.

(5) The difference between GAAP capital and regulatory tangible capital and core capital is attributable to the deduction of $193,000 of intangible assets and the addition of $189,000 of unrealized losses on available for sale securities, net of taxes.

(6) The difference between core capital and total risk-based capital is attributable to the addition of general loan loss reserves of $3.9 million and unrealized gains on available for sale equities of $24,000.

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CAPITALIZATION

The following table presents the historical consolidated capitalization of ESSA Bank & Trust, at September 30, 2006 and the pro forma consolidated capitalization of ESSA Bancorp, Inc., a Pennsylvania corporation, after giving effect to the conversion and the offering, based upon the assumptions set forth in the “Pro Forma Data” section.

	ESSA Bank & Trust Historical at September 30, 2006			Pro Forma, Based Upon the Sale in the Offering of
				9,350,000 Shares			11,000,000 Shares			12,650,000 Shares			14,547,500 Shares (1)
	(Dollars in thousands)
Deposits (2)	$	402,153		$	402,153		$	402,153		$	402,153		$	402,153
Borrowings		259,299			259,299			259,299			259,299			259,299
Total deposits and borrowed funds	$	661,452		$	661,452		$	661,452		$	661,452		$	661,452
Stockholders’ equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized; none to be issued		—			—			—			—			—
Common stock $0.01 par value, 40,000,000 shares authorized; shares to be issued as reflected (3)		—			100			118			135			156
Additional paid-in capital		—			97,928			115,414			132,930			153,082
Retained earnings (4)		58,526			58,526			58,526			58,526			58,526
Less:
Expense of stock contribution to Foundation		—			(6,545	)		(7,700	)		(8,855	)		(10,183	)
Expense of cash contribution to Foundation		—			(935	)		(1,100	)		(1,265	)		(1,455	)
Plus:
Tax benefit of contribution to Foundation (5)					1,880			1,880			1,880			1,880
Accumulated other comprehensive loss		(189	)		(189	)		(189	)		(189	)		(189	)
Less:
Common stock to be acquired by employee stock ownership plan (6)		—			(8,004	)		(9,416	)		(10,828	)		(12,453	)
Common stock to be acquired by stock recognition and retention plan (7)		—			(4,002	)		(4,708	)		(5,414	)		(6,226	)
Total stockholders’ equity	$	58,337		$	138,760		$	152,825		$	166,920		$	183,138
Total stockholders’ equity as a percentage of total assets		8.04	%		17.21	%		18.63	%		20.01	%		21.53	%

(1) As adjusted to give effect to an increase in the number of shares of common stock which could occur due to a 15% increase in the offering range to reflect demand for shares, changes in market or general financial conditions following the commencement of the subscription and community offerings or regulatory considerations.

(2) Does not reflect withdrawals from deposit accounts for the purchase of shares of common stock in the conversion and offering. These withdrawals would reduce pro forma deposits by the amount of the withdrawals.

(3) No effect has been given to the issuance of additional shares of ESSA Bancorp, Inc. common stock pursuant to a stock option plan. If this plan is implemented, an amount up to 10% of the shares of ESSA Bancorp, Inc. common stock sold in the offering will be reserved for issuance upon the exercise of options under the stock option plan. See “Management of ESSA Bancorp, Inc.”

(4) The retained earnings of ESSA Bank & Trust will be substantially restricted after the conversion. See “Our Policy Regarding Dividends,” “The Conversion—Liquidation Rights” and “Regulation.”

(5) Includes valuation allowance against deferred tax asset of $663,000, $1.1 million, $1.6 million and $2.1 million at the minimum, midpoint, maximum and adjusted maximum of the offering range, respectively.

(6) Assumes that 8.0% of the shares sold in the offering will be acquired by the employee stock ownership plan financed by a loan from ESSA Bancorp, Inc. The loan will be repaid principally from ESSA Bank & Trust’s contributions to the employee stock ownership plan. Since ESSA Bancorp, Inc. will finance the employee stock ownership plan debt, this debt will be eliminated through consolidation and no liability will be reflected on ESSA Bancorp, Inc.’s consolidated financial statements. Accordingly, the amount of shares of common stock acquired by the employee stock ownership plan is shown in this table as a reduction of total stockholders’ equity.

(7) Assumes a number of shares of common stock equal to 4% of the shares of common stock to be sold in the offering will be purchased by the stock recognition and retention plan in open market purchases. The dollar amount of common stock to be purchased is based on the $10.00 per share subscription price in the offering and represents unearned compensation. This amount does not reflect possible increases or decreases in the value of common stock relative to the subscription price in the offering. As ESSA Bancorp, Inc. accrues compensation expense to reflect the vesting of shares pursuant to the stock recognition and retention plan, the credit to equity will be offset by a charge to noninterest expense. Implementation of the stock recognition and retention plan will require stockholder approval. The funds to be used by the stock recognition and retention plan to purchase the shares will be provided by ESSA Bancorp, Inc.

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PRO FORMA DATA

The following tables summarize historical data of ESSA Bank & Trust and pro forma data of ESSA Bancorp, Inc. at and for the year ended September 30, 2006. This information is based on assumptions set forth below and in the table, and should not be used as a basis for projections of market value of the shares of common stock following the conversion and offering.

The net proceeds in the tables are based upon the following assumptions:

• all shares of common stock will be sold in the subscription and community offerings;

• 427,000 shares of common stock will be purchased by our executive officers and directors, and their associates;

• our employee stock ownership plan will purchase 8% of the shares of common stock sold in the stock offering and contributed to our charitable foundation with a loan from ESSA Bancorp, Inc. The loan will be repaid in substantially equal payments of principal and interest over a period of 30 years;

• Ryan Beck & Co., Inc. will receive a fee equal to 1% of the dollar amount of the first 10,000,000 shares of common stock sold in the stock offering and 0.75% of the dollar value of all shares of common stock sold thereafter in the stock offering. Shares issued to the charitable foundation or purchased by our employee benefit plans or by our officers, directors and employees, and their immediate families will not be included in calculating the shares of common stock sold, for this purpose; and

• total expenses of the stock offering, including the marketing fees to be paid to Ryan Beck & Co., Inc., will be between $2.0 million at the minimum of the offering range and $2.4 million at the adjusted maximum of the offering range.

We calculated pro forma consolidated net income for the fiscal year ended September 30, 2006 as if the estimated net proceeds we received had been invested at an assumed interest rate of 4.91% (3.24% on an after-tax basis). This represents the one-year U.S. Treasury Bill as of September 30, 2006, which we consider to more accurately reflect the pro forma reinvestment rate than an arithmetic average method in light of current market interests rates.

The following pro forma information may not be representative of the financial effects of the foregoing transactions at the dates on which such transactions actually occur, and should not be taken as indicative of future results of operations. Pro forma consolidated stockholders’ equity represents the difference between the stated amounts of our assets and liabilities. The pro forma stockholders’ equity is not intended to represent the fair market value of the shares of common stock. The effect of withdrawals from deposit accounts for the purchase of shares of

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common stock has not been reflected. Historical and pro forma per share amounts have been calculated by dividing historical and pro forma amounts by the indicated number of shares of common stock. No effect has been given in the pro forma stockholders’ equity calculations for the assumed earnings on the net proceeds. The book value of ESSA Bancorp, Inc. does not take into account intangibles, bad debt reserves or liquidation of assets in the event of a liquidation. It is assumed that ESSA Bancorp, Inc. will loan funds to the employee stock ownership plan, between $8.0 million and $10.8 million of the estimated net proceeds in the offering, or $12.5 million if the offering range is increased by 15%. The actual net proceeds from the sale of shares of common stock will not be determined until the offering is completed. However, we currently estimate the net proceeds to be between $91.5 million and $124.2 million, or $143.1 million if the offering range is increased by 15%. It is assumed that all shares of common stock will be sold in the subscription and community offerings.

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	At or For the Year Ended September 30, 2006 Based Upon the Sale at $10.00 Per Share of
	9,350,000 Shares at Minimum Offering Range			11,000,000 at Midpoint Offering Range 11,000,000			12,650,000 at Maximum Offering Range			14,547,500 at Adjusted Maximum of Offering Range (1)
	(Dollars in thousands, except per share amounts)
Gross proceeds of Offering	$	93,500		$	110,000		$	126,500		$	145,475
Plus: Shares Issued to the Foundation		6,545			7,700			8,855			10,183
Pro Forma Market Capitalization	$	100,045		$	117,700		$	135,355		$	155,658
Gross Proceeds of Offering		93,500			110,000			126,500			145,475
Less Expenses		(2,017	)		(2,168	)		(2,290	)		(2,420	)
Estimated net proceeds	$	91,483		$	107,832		$	124,210		$	143,055
Less: Cash Contribution to Foundation		(935	)		(1,100	)		(1,265	)		(1,455	)
Less: Common stock purchased by ESOP (2)		(8,004	)		(9,416	)		(10,828	)		(12,453	)
Less: Common stock purchased by stock award plan (3)		(4,002	)		(4,708	)		(5,414	)		(6,226	)
Estimated net cash proceeds	$	78,542		$	92,608		$	106,702		$	122,921
For the 12 Months Ended September 30, 2006
Consolidated net income:
Historical	$	3,954		$	3,954		$	3,954		$	3,954
Pro forma income on net proceeds:		2,545			3,001			3,458			3,983
Pro forma ESOP adjustment(2)		(176	)		(207	)		(238	)		(274	)
Pro forma stock award adjustment (3)		(528	)		(621	)		(715	)		(822	)
Pro forma stock options adjustment (4)		(703	)		(827	)		(951	)		(1,094	)
Pro forma net income	$	5,092		$	5,300		$	5,508		$	5,747
Per share net income
Historical	$	0.43		$	0.37		$	0.32		$	0.28
Pro forma income on net proceeds, as adjusted		0.28			0.28			0.28			0.28
Pro forma ESOP adjustment (2)		(0.02	)		(0.02	)		(0.02	)		(0.02	)
Pro forma stock award adjustment (3)		(0.06	)		(0.06	)		(0.06	)		(0.06	)
Pro forma stock option adjustment (4)		(0.08	)		(0.08	)		(0.08	)		(0.08	)
Pro forma net income per share (5)	$	0.55		$	0.49		$	0.44		$	0.40
Offering price as a multiple of pro forma net earnings per share		18.18			20.41			22.73			25.00
Number of shares outstanding for pro forma net income per share calculations		9,230,819			10,859,787			12,488,755			14,362,068
At September 30, 2006
Stockholders’ equity:
Historical	$	58,337		$	58,337		$	58,337		$	58,337
Estimated net proceeds		91,483			107,832			124,210			143,055
Plus: Shares issued to Foundation		6,545			7,700			8,855			10,183
Less: Shares issued to Foundation		(6,545	)		(7,700	)		(8,855	)		(10,183	)
Less: Cash contribution to Foundation		(935	)		(1,100	)		(1,265	)		(1,455	)
Plus: Tax benefit of contribution to Foundation(6)		1,880			1,880			1,880			1,880
Less: Common stock acquired by ESOP (2)		(8,004	)		(9,416	)		(10,828	)		(12,453	)
Less: Common stock acquired by stock-based incentive (3) (4)		(4,002	)		(4,708	)		(5,414	)		(6,226	)
Pro forma stockholders’ equity	$	138,760		$	152,825		$	166,920		$	183,138
Stockholders’ equity per share:
Historical	$	5.83		$	4.96		$	4.31		$	3.75
Estimated net proceeds		9.14			9.16			9.18			9.19
Plus: Shares issued to Foundation		0.65			0.65			0.65			0.65
Less: Shares contribution to Foundation		(0.65	)		(0.65	)		(0.65	)		(0.65	)
Less: Cash contribution to Foundation		(0.09	)		(0.09	)		(0.09	)		(0.09	)
Plus: Tax benefit of contribution to Foundation (6)		0.19			0.16			0.14			0.12
Less: Common stock acquired by ESOP (2)		(0.80	)		(0.80	)		(0.80	)		(0.80	)
Less: Common stock acquired by stock-based incentive plan (3) (4)		(0.40	)		(0.40	)		(0.40	)		(0.40	)
Pro forma stockholders’ equity per share (7)	$	13.87		$	12.99		$	12.34		$	11.77
Offering price as percentage of pro forma stockholders’ equity per share		72.10	%		76.98	%		81.04	%		84.96	%
Number of shares outstanding for pro forma book value per share calculations		10,004,500			11,770,000			13,535,500			15,565,825

(footnotes begin on following page)

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(1) As adjusted to give effect to an increase in the number of shares which could occur due to a 15% increase in the offering range to reflect demand for the shares, changes in market and financial conditions following the commencement of the offering or regulatory considerations.

(2) Assumes that 8% of shares of common stock sold in the offering will be purchased by the employee stock ownership plan. For purposes of this table, the funds used to acquire these shares are assumed to have been borrowed by the employee stock ownership plan from ESSA Bancorp, Inc. ESSA Bank & Trust intends to make annual contributions to the employee stock ownership plan in an amount at least equal to the required principal and interest payments on the debt. ESSA Bank & Trust’s total annual payments on the employee stock ownership plan debt are based upon 30 equal annual installments of principal and interest. SOP 93-6 requires that an employer record compensation expense in an amount equal to the fair value of the shares committed to be released to employees. The pro forma adjustments assume that the employee stock ownership plan shares are allocated in equal annual installments based on the number of loan repayment installments assumed to be paid by ESSA Bank & Trust, the fair value of the common stock remains equal to the subscription price and the employee stock ownership plan expense reflects an effective combined federal and state tax rate of 34.0%. The unallocated employee stock ownership plan shares are reflected as a reduction of stockholders’ equity. No reinvestment is assumed on proceeds contributed to fund the employee stock ownership plan. The pro forma net income further assumes that 26,679, 31,387, 36,095 and 41,509 shares were committed to be released during the period at the minimum, midpoint, maximum, and adjusted maximum of the offering range, respectively, and in accordance with SOP 93-6, only the employee stock ownership plan shares committed to be released during the period were considered outstanding for purposes of income per share calculations.

(3) If approved by ESSA Bancorp, Inc.’s stockholders, the stock recognition and retention plan may purchase an aggregate number of shares of common stock equal to 4% of the shares to be sold in the offering (or possibly a greater number of shares if the plan is implemented more than one year after completion of the conversion). Stockholder approval of the stock recognition and retention plan, and purchases by the plan may not occur earlier than six months after the completion of the conversion. The shares may be acquired directly from ESSA Bancorp, Inc. or through open market purchases. The funds to be used by the stock recognition and retention plan to purchase the shares will be provided by ESSA Bancorp, Inc. The table assumes that (i) the stock recognition and retention plan acquires the shares through open market purchases at $10.00 per share, (ii) 20% of the amount contributed to the stock recognition and retention plan is amortized as an expense during the year ended September 30, 2006 and (iii) the stock recognition and retention plan expense reflects an effective combined federal and state tax rate of 34.0%. Assuming stockholder approval of the stock recognition and retention plan and that shares of common stock (equal to 4% of the shares sold in the offering) are awarded through the use of authorized but unissued shares of common stock, stockholders would have their ownership and voting interests diluted by approximately 3.8%.

(4) If approved by ESSA Bancorp, Inc.’s stockholders, the stock option plan may grant options to acquire an aggregate number of shares of common stock equal to 10% of the shares to be sold in the offering (or possibly a greater number of shares if the plan is implemented more than one year after completion of the conversion. Stockholder approval of the stock option plan may not occur earlier than six months after the completion of the conversion. In calculating the pro forma effect of the stock option plan, it is assumed that the exercise price of the stock options and the trading price of the common stock at the date of grant were $10.00 per share, the estimated grant-date fair value determined using the Black-Scholes option pricing model was $3.84 for each option, the aggregate grant-date fair value of the stock options was amortized to expense on a straight-line basis over a five-year vesting period of the options, and that 25% of the amortization expense (or the assumed portion relating to options granted to directors) resulted in a tax benefit using an assumed tax rate of 34.0%. The actual expense of the stock option plan will be determined by the grant-date fair value of the options, which will depend on a number of factors, including the valuation assumptions used in the option pricing model ultimately adopted. Under the above assumptions, the adoption of the stock option plan will result in no additional shares under the treasury stock method for purposes of calculating earnings per share. There can be no assurance that the actual exercise price of the stock options will be equal to the $10.00 price per share. If a portion of the shares to satisfy the exercise of options under the stock option plan are obtained from the issuance of authorized but unissued shares, our net income per share and stockholders’ equity per share will decrease. The issuance of authorized but previously unissued shares of common stock pursuant to the exercise of options under such plan would dilute existing stockholders’ ownership and voting interests by approximately 9.1%.

(5) Income per share computations are determined by taking the number of shares assumed to be sold in the offering and, in accordance with SOP 93-6, subtracting the employee stock ownership plan shares that have not been committed for release during the period. See note 2, above.

(6) Includes valuation allowance against deferred tax asset of $663,000, $1.1 million, $1.6 million and $2.1 million at the minimum, midpoint, maximum and adjusted maximum of the offering range, respectively.

(7) The retained earnings of ESSA Bank & Trust will be substantially restricted after the conversion. See “Our Policy Regarding Dividends,” “The Conversion—Liquidation Rights” and “Regulation.”

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COMPARISON OF VALUATION AND PRO FORMA INFORMATION WITH AND WITHOUT THE CHARITABLE FOUNDATION

As reflected in the table below, if the charitable foundation is not established and funded as part of the stock offering, RP Financial, Inc. estimates that our pro forma valuation would be greater and, as a result, a greater number of shares of common stock would be issued in the stock offering. At the minimum, midpoint, maximum and adjusted maximum of the valuation range, our pro forma valuation is $100.0 million, $117.7 million, $135.4 million and $155.7 million with the charitable foundation, as compared to $112.6 million, $132.5 million, $152.4 million and $175.2 million, respectively, without the charitable foundation. There is no assurance that in the event the charitable foundation were not formed, the appraisal prepared at that time would conclude that our pro forma market value would be the same as that estimated in the table below. Any appraisal prepared at that time would be based on the facts and circumstances existing at that time, including, among other things, market and economic conditions. The establishment and funding of the charitable foundation has been approved by the Board of Directors of ESSA Bancorp, Inc. and ESSA Bank & Trust and is subject to approval by members of ESSA Bank & Trust. If the members do not approve the charitable foundation, we may, in our discretion, complete the conversion and stock offering without the inclusion of the charitable foundation and without resoliciting subscribers. We may also determine in our discretion, not to complete the conversion and stock offering if the members do not approve the charitable foundation.

For comparative purposes only, set forth below are certain pricing ratios and financial data and ratios at and for the fiscal year ended September 30, 2006 at the minimum, midpoint, maximum and adjusted maximum of the offering range, assuming the stock offering was completed at September 30, 2006, with and without the charitable foundation.

	9,350,000 Shares Sold						11,000,000 Shares Sold						12,650,000 Shares Sold						14,547,500 Shares Sold
	With Foundation			Without Foundation(1)			With Foundation			Without Foundation(1)			With Foundation			Without Foundation(1)			With Foundation			Without Foundation(1)
	(Dollars in thousands, except per share amounts)
Estimated stock offering amount	$	93,500		$	112,625		$	110,000		$	132,500		$	126,500		$	152,375		$	145,475		$	175,231
Pro forma market capitalization		100,045			112,625			117,700			132,500			135,355			152,375			155,658			175,231
Estimated pro forma valuation		100,045			112,625			117,700			132,500			135,355			152,375			155,658			175,231
Total assets		806,219			822,707			820,284			840,059			834,379			857,412			850,597			877,368
Total liabilities		667,459			667,459			667,459			667,459			667,459			667,459			667,459			667,459
Pro forma stockholders’ equity		138,760			155,248			152,825			172,600			166,920			189,953			183,138			209,909
Pro forma net income		5,092			5,510			5,300			5,793			5,508			6,075			5,747			6,402
Pro forma stockholders’ equity per share		13.87			13.78			12.99			13.02			12.34			12.47			11.77			11.98
Pro forma net income per share		0.55			0.52			0.49			0.46			0.44			0.42			0.40			0.38
Pro forma pricing ratios:
Offering price as a percentage of pro forma stockholders’ equity per share		72.10	%		72.57	%		76.98	%		76.80	%		81.04	%		80.19	%		84.96	%		83.47	%
Offering price to pro forma net income per share		18.18	x		19.23	x		20.41	x		21.74	x		22.73	x		23.81	x		25.00	x		26.32	x
Pro forma financial ratios:
Return on assets		0.63	%		0.67	%		0.65	%		0.69	%		0.66	%		0.71	%		0.68	%		0.73	%
Return on equity		3.67			3.55			3.47			3.36			3.30			3.20			3.14			3.05
Equity to assets		17.21			18.87			18.63			20.55			20.01			22.15			21.53			23.92

⁽¹⁾ The number of shares sold to the public, assuming no charitable foundation would be 11,262,500, 13,250,000, 15,237,500 and 17,523,125 at the minimum, midpoint, maximum and maximum as adjusted, respectively of the offering range.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS OF ESSA BANCORP, INC.

This section is intended to help potential investors understand the financial performance of ESSA Bank & Trust through a discussion of the factors affecting our financial condition at September 30, 2006 and September 30, 2005 and our consolidated results of operations for the years ended September 30, 2006, 2005 and 2004. This section should be read in conjunction with the Consolidated Financial Statements and notes to the financial statements that appear elsewhere in this prospectus. ESSA Bancorp, Inc. did not exist at September 30, 2006, therefore the information reflected in this section reflects the financial performance of ESSA Bank & Trust and its subsidiaries. In this section, we sometimes refer to ESSA Bank & Trust and ESSA Bancorp, Inc. together as “ESSA” since the financial condition and results of operation of ESSA Bancorp, Inc. will closely reflect the financial condition and results of operation of its operating subsidiary, ESSA Bank & Trust.

Following the completion of the reorganization and offering, we anticipate that our non-interest expense will increase as a result of the increased costs associated with managing a public company, increased compensation expenses associated with the purchases of shares of common stock by our employee stock ownership plan, and the adoption of one or more stock-based incentive plans, if approved by ESSA Bancorp Inc.’s stockholders.

Assuming that the adjusted maximum number of shares are sold in the offering and shares are issued to the ESSA Bank & Trust Foundation:

• our employee stock ownership plan will acquire 1,245,266 shares of common stock with a $12.5 million loan that is expected to be repaid over 30 years, resulting in an annual pre-tax expense of approximately $415,000 (assuming that the common stock maintains a value of $10.00 per share);

• our stock option plan would grant options to purchase shares equal to 10% of the total shares issued in the offering or 1,556,583 shares to eligible participants, which would result in compensation expense over the vesting period of the options. Assuming the market price of the common stock is $10.00 per share; all options are granted with an exercise price of $10.00 per share and have a term of 10 years; the dividend yield on the stock is zero; the expected option life is 10 years; the risk free interest rate is 4.64%; and the volatility rate on the common stock is 11.32%, the estimated grant-date fair value of the options utilizing a Black-Scholes option pricing analysis is $3.84 per option granted. Assuming this value is amortized over the five year vesting period, the corresponding annual pre-tax expense associated with the stock option plan would be approximately $1.2 million; and

• our recognition and retention plan would award a number of shares equal to 4% of the shares issued in the offering, or 622,633 shares, to eligible participants, which would be expensed as the awards vest. Assuming that all shares are awarded

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under the recognition and retention plan at a price of $10.00 per share, and that the awards vest over a five year period, the corresponding annual pre-tax expense associated with shares awarded under the recognition and retention plan would be approximately $1.2 million.

The actual expense that will be recorded for the employee stock ownership plan will be determined by the market value of the shares of common stock as they are released to employees over the term of the loan, and whether the loan is repaid faster than its contractual term. Accordingly, increases in the stock price above $10.00 per share will increase the total employee stock ownership plan expense, and any accelerated repayment of the loan will increase the annual employee stock ownership plan expense. Further, the actual expense of the recognition and retention plan will be determined by the fair market value of the stock on the grant date, which might be greater than $10.00 per share. The actual expense of the stock option plan will be determined by the grant-date fair value of the options which will depend on a number of factors, including the valuation assumptions used in the Black-Scholes option pricing model.

Overview

Our results of operations depend mainly on our net interest income, which is the difference between the interest income earned on our loan and investment portfolios and interest expense paid on our deposits and borrowed funds. Results of operations are also affected by fee income from banking operations, provisions for loan losses, gains (losses) on sales of loans and other miscellaneous income. Our noninterest expenses consist primarily of compensation and employee benefits, office occupancy, technology, marketing, general administrative expenses and income tax expense.

Our results of operations are also significantly affected by general economic and competitive conditions, particularly with respect to changes in interest rates, government policies and actions of regulatory authorities. Future changes in applicable law, regulations or government policies may materially affect our financial condition and results of operations. See “Risk Factors” beginning on page 18.

Critical Accounting Policies

We consider accounting policies that require management to exercise significant judgment or discretion or make significant assumptions that have, or could have, a material impact on the carrying value of certain assets or on income, to be critical accounting policies. We consider the following to be our critical accounting policies:

Allowance for Loan Losses. The allowance for loan losses is the estimated amount considered necessary to cover credit losses inherent in the loan portfolio at the balance sheet date. The allowance is established through the provision for loan losses which is charged against income. In determining the allowance for loan losses, management makes significant estimates and has identified this policy as one of our most critical. The methodology for determining the allowance for loan losses is considered a critical accounting policy by management due to the high degree of judgment involved, the subjectivity of the assumptions utilized and the potential for changes in the economic environment that could result in changes to the amount of the recorded allowance for loan losses.

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As a substantial amount of our loan portfolio is collateralized by real estate, appraisals of the underlying value of property securing loans and discounted cash flow valuations of properties are critical in determining the amount of the allowance required for specific loans. Assumptions for appraisals and discounted cash flow valuations are instrumental in determining the value of properties. Overly optimistic assumptions or negative changes to assumptions could significantly impact the valuation of a property securing a loan and the related allowance determined. The assumptions supporting such appraisals and discounted cash flow valuations are carefully reviewed by management to determine that the resulting values reasonably reflect amounts realizable on the related loans.

Management performs a quarterly evaluation of the adequacy of the allowance for loan losses. Consideration is given to a variety of factors in establishing this estimate including, but not limited to, current economic conditions, delinquency statistics, geographic and industry concentrations, the adequacy of the underlying collateral, the financial strength of the borrower, results of internal and external loan reviews and other relevant factors. This evaluation is inherently subjective, as it requires material estimates that may be susceptible to significant revision based on changes in economic and real estate market conditions.

The analysis of the allowance for loan losses has two components: specific and general allocations. Specific allocations are made for loans that are determined to be impaired. Impairment is measured by determining the present value of expected future cash flows or, for collateral-dependent loans, the fair value of the collateral adjusted for market conditions and selling expenses. The general allocation is determined by segregating the remaining loans by type of loan, risk weighting (if applicable) and payment history. We also analyze historical loss experience, delinquency trends, general economic conditions and geographic and industry concentrations. This analysis establishes factors that are applied to the loan groups to determine the amount of the general allocations. Actual loan losses may be significantly more than the allowance for loan losses we have established which could have a material negative effect on our financial results.

Other-than-Temporary Investment Security Impairment. Securities are evaluated periodically to determine whether a decline in their value is other-than-temporary. Management utilizes criteria such as the magnitude and duration of the decline, in addition to the reasons underlying the decline, to determine whether the loss in value is other-than-temporary. The term “other-than-temporary” is not intended to indicate that the decline is permanent, but indicates that the prospect for a near-term recovery of value is not necessarily favorable, or that there is a lack of evidence to support a realizable value equal to or greater than the carrying value of the investment. Once a decline in value is determined to be other-than-temporary, the value of the security is reduced and a corresponding charge to earnings is recognized.

Deferred Income Taxes. We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of

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existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. If current available information raises doubt as to the realization of the deferred tax assets, a valuation allowance is established. We consider the determination of this valuation allowance to be a critical accounting policy because of the need to exercise significant judgment in evaluating the amount and timing of recognition of deferred tax liabilities and assets, including projections of future taxable income. These judgments and estimates are reviewed on a continual basis as regulatory and business factors change. A valuation allowance for deferred tax assets may be required if the amount of taxes recoverable through loss carryback declines, or if we project lower levels of future taxable income. Such a valuation allowance would be established through a charge to income tax expense which would adversely affect our operating results.

Business Strategy

Our business strategy is to grow and improve our profitability by:

• Increasing customer relationships through the offering of excellent service and the distribution of that service through effective delivery systems;

• Continuing to transform into a full service community bank by meeting the financial services needs of our customers;

• Continuing to develop into a high performing financial institution, in part by increasing interest revenue and fee income;

• Remaining within our risk management parameters; and

• Employing affordable technology to increase profitability and improve customer service.

A full description of our products and services begins on page 63 of this prospectus.

We believe that these strategies will guide our investment of the net proceeds of the offering. We intend to continue to pursue our business strategy after the conversion and the offering, subject to changes necessitated by future market conditions and other factors. We also intend to focus on the following:

• Increasing customer relationships through a continued commitment to service and enhancing products and delivery systems. We will continue to increase customer relationships by focusing on customer satisfaction with regards to service, products, systems and operations. We have upgraded and expanded certain of our facilities, including our corporate center, to provide additional capacity to manage future growth and expand our delivery systems.

• Continuing to transform into a full service community bank. We continue to transform from a traditional savings association into a full service community bank. During the last several years, we have begun to offer a wide variety of commercial loans and deposits, as well as trust and brokerage services.

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• Continuing to develop into a high performing financial institution. We will continue to enhance profitability by focusing on increasing non-interest income as well as increasing commercial products, including commercial real estate lending, which often have a higher profit margin than more traditional products. We also will pursue lower-cost commercial deposits as part of this strategy.

• Remaining within our risk management parameters. We place significant emphasis on risk management and compliance training for all of our directors, officers and employees. We focus on establishing regulatory compliance programs to determine the degree of such compliance and to maintain the trust of our customers and community.

• Employing cost-effective technology to increase profitability and improve customer service. We will continue to upgrade our technology in an efficient manner. We have implemented new software for marketing purposes and have upgraded both our internal and external communication systems.

• Continuing our emphasis on commercial real estate lending to improve our overall performance. We intend to continue to emphasize the origination of higher interest rate margin commercial real estate loans as market conditions, regulations and other factors permit. We have expanded our commercial banking capabilities by adding experienced commercial bankers, and enhancing our direct marketing efforts to local businesses.

• Expanding our banking franchise through branching and acquisitions. We will attempt to use the net proceeds from the offering, as well as our new stock holding company structure, to expand our market footprint through de novo branching as well as through acquisitions of banks, savings institutions and other financial service providers in our primary market area. We will also consider establishing de novo branches or acquiring financial institutions in contiguous counties. We have received regulatory approval to open a new branch office in Tannersville, Pennsylvania which we anticipate opening in May 2007. The branch is being built pursuant to a build and lease agreement with ESSA Bank & Trust as tenant. As such, we are responsible for completing the interior finishes, furnishing and equipping this branch. The total estimated cost for these items is $600,000 of which $300,000 has been disbursed as of December 31, 2006. Funding for this project is expected to come from the Bank’s primary sources of liquidity as described under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations of ESSA Bancorp, Inc.” There can be no assurance that we will be able to consummate any acquisitions or establish any additional new branches. We may explore acquisition opportunities involving other banks and thrifts, and possibly financial service companies, when and as they arise, as a means of supplementing internal growth, filling gaps in our current geographic market area and expanding our customer base, product lines and internal capabilities, although we have no current plans, arrangements or understandings to make any acquisitions.

• Maintaining the quality of our loan portfolio. Maintaining the quality of our loan portfolio is a key factor in managing our growth. We will continue to use

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customary risk management techniques, such as independent internal and external loan reviews, risk-focused portfolio credit analysis and field inspections of collateral in overseeing the performance of our loan portfolio.

Comparison of Financial Condition At September 30, 2006 and September 30, 2005

Total Assets. Total assets increased by $69.7 million, or 10.6%, to $725.8 million at September 30, 2006 from $656.1 million at September 30, 2005. This increase was primarily due to increases in investment securities and loans receivable which were partially offset by a decrease in commercial paper.

Investment Securities. Investment securities increased $24.8 million, or 29.6% to $108.8 million at September 30, 2006, from $84.0 million at September 30, 2005. This increase was due, in part, to ESSA Bank & Trust’s investing of funds from new deposits and borrowings in mortgage-backed securities and, to a lesser extent, United States government and agency obligations.

Commercial Paper. Commercial paper declined from $7.0 million at September 30, 2005 to no outstanding commercial paper at September 30, 2006. This asset matured during fiscal year ended September 30, 2006.

Net Loans. Net loans increased $47.7 million, or 9.4%, to $556.7 million at September 30, 2006 from $509.0 million at September 30, 2005. Loan growth was primarily attributable to growth in several product categories as a result of the economic growth in our market area and our increased marketing efforts. One- to four-family residential mortgages increased by $31.2 million to $452.4 million at September 30, 2006 from $421.2 million at September 30, 2005. For the same time periods, commercial real estate loans increased by $10.5 million to $47.5 million from $37.0 million and home equity and lines of credit increased by $6.5 million to $46.8 million from $40.3 million.

Deposits. Deposits increased by $27.4 million, or 7.3% to $402.2 million at September 30, 2006, from $374.8 million at September 30, 2005. The increase in deposits was attributable to increases in retail certificates of deposit of $29.3 million and brokered certificates of deposit of $7.1 million. Retail certificates of deposits increased in part in response to rate promotions on selected products. These increases were partially offset by decreases in checking products of $859,000 and other savings products of $8.2 million. At September 30, 2006, we had $28.3 million of brokered certificates of deposit outstanding.

Borrowed Funds. Funds borrowed from the Federal Home Loan Bank of Pittsburgh increased by $37.8 million, or 17.1%, to $259.3 million at September 30, 2006, from $221.5 million at September 30, 2005. The increase in borrowed funds, combined with the increase in deposits was used to fund increases in loans and the purchase of investment securities.

Total Retained Earnings. Total retained earnings increased by $4.0 million, or 7.3%, to $58.3 million at September 30, 2006 from $54.4 million at September 30, 2005. The increase reflected net income of $4.0 million in addition to a $12,000 decrease in other comprehensive losses due to unrealized losses on investment securities available for sale at September 30, 2006.

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The decrease in unrealized losses on investments was due to changes in the composition of the investment securities portfolio combined with changes in interest rates. Management concluded that none of our impaired securities have impairments that are other than temporary.

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Comparison of Operating Results For The Years Ended September 30, 2006 and September 30, 2005

Net Income. Net income decreased $497,000, or 11.2%, to $4.0 million for fiscal year 2006 from $4.5 million for fiscal year 2005. The decrease was primarily the result of a decrease in net interest income and an increase in total non-interest expense, and an increase in income taxes, partially offset by an increase in total non-interest income.

Net Interest Income. Net interest income decreased by $362,000, or 2.1%, to $17.2 million for fiscal year 2006 from $17.6 million for fiscal year 2005. The decrease was primarily attributable to a 39 basis point decrease in our interest rate spread to 2.46% for fiscal year 2006 from 2.85% for fiscal year 2005. The decrease in the net interest margin was due to average yields on interest-earning assets increasing at a slower pace than the cost of interest-bearing liabilities. During fiscal year 2006, the Federal Reserve Board of Governors increased the federal funds rates six times.

The tables on pages 56 and 57 set forth the components of our net interest income, yields on interest-earning assets and costs of interest-bearing liabilities, and the effect on net interest income arising from changes in volumes and rates.

Interest Income. Interest income increased $4.5 million, or 14.2%, to $36.5 million for fiscal year 2006 from $31.9 million for fiscal year 2005. The increase resulted from a $59.8 million increase in average interest-earning assets which had the effect of increasing interest income by $3.2 million. In addition, there was a 19 basis point increase in the overall yield on interest earning assets to 5.68% for fiscal year 2006, from 5.49% for fiscal year 2005 which increased interest income by $1.3 million. Loans increased on average $39.4 million between the two periods, along with increases in the average balances of investment securities of $16.7 million and mortgage-backed securities of $4.3 million. Federal Home Loan Bank of Pittsburgh stock and other interest earning assets decreased by $643,000 in the aggregate. The average yield on loans increased to 5.95% for the fiscal year 2006, from 5.84% for the fiscal year 2005. The average yields on investment securities increased to 4.49% from 3.87% and the average yield on mortgage backed securities increased to 4.30% from 3.67% for the 2006 and 2005 periods, respectively.

Interest Expense. Interest expense increased $4.9 million, or 34.2%, to $19.2 million for fiscal year 2006 from $14.3 million for fiscal year 2005. The increase resulted from a $53.8 million increase in average interest-bearing liabilities, which had the effect of increasing interest expense by $2.5 million. In addition, there was a 58 basis point increase in the overall cost of interest-bearing liabilities to 3.22% for fiscal year 2006 from 2.64% for fiscal year 2005, which increased interest expense by $2.4 million. Money market and savings accounts decreased in the aggregate by approximately $11.0 million, while certificates of deposits increased in the aggregate by $47.8 million between the two periods. The average balance of borrowed funds increased $18.9 million during the same comparative periods. The cost of certificates of deposit increased to 4.02% for fiscal year 2006 from 3.32% for fiscal year 2005. The cost of borrowed funds increased to 4.47% from 4.05% for the same respective periods. The additional deposits and borrowings were used to fund increases in loans and to purchase investment securities.

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Provision for Loan Losses. ESSA Bank & Trust establishes provisions for loan losses, which are charged to earnings, at a level necessary to absorb known and inherent losses that are both probable and reasonably estimable at the date of the financial statements. In evaluating the level of the allowance for loan losses, management considers historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, peer group information and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as future events occur. After an evaluation of these factors, management made a provision of $300,000 for fiscal year 2006 compared to a $550,000 provision for year ended 2005. The allowance for loan losses was $3.9 million, or 0.69% of loans outstanding at September 30, 2006, compared to $3.6 million, or 0.70% of loans outstanding at September 30, 2005.

Determining the amount of the allowance for loan losses necessarily involves a high degree of judgment. Management reviews the level of the allowance on a quarterly basis, and establishes the provision for loan losses based on the factors set forth in the preceding paragraph. Historically, our loan portfolio has consisted primarily of one- to four-family residential mortgage loans. However, our current business plan calls for increases in commercial real estate loan originations. As management evaluates the allowance for loan losses, the increased risk associated with larger non-homogenous commercial real estate may result in large additions to the allowance for loan losses in future periods. Loans secured by commercial real estate generally expose a lender to greater risk of non-payment and loss than one- to four-family residential mortgage loans because repayment of the loans often depends on the successful operation of the property and the income stream of the underlying property. Additionally, such loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to one- to four-family residential mortgage loans. Accordingly, an adverse development with respect to one loan or one credit relationship can expose us to greater risk of loss compared to an adverse development with respect to a one- to four-family residential mortgage loan.

Although we believe that we use the best information available to establish the allowance for loan losses, future additions to the allowance may be necessary, based on estimates that are susceptible to change as a result of changes in economic conditions and other factors. In addition, the Office of Thrift Supervision, as an integral part of its examination process, will periodically review our allowance for loan losses. This agency may require us to recognize adjustments to the allowance, based on its judgments about information available to it at the time of its examination.

Non-interest Income. Non-interest income increased by $237,000, or 4.5%, to $5.5 million for fiscal year 2006, from $5.3 million for fiscal year 2005. The increase was primarily due to an increase in trust and investment fees of $238,000, partially offset by decreases in gains on sale of loans, net and other non-interest income. The increase in trust and investment fees was due primarily to the addition, by ESSA Bank & Trust of a trust officer and the addition by PRIMEVEST Financial Services, Inc. of two brokers. Other non-interest income decreased by

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$142,000 for fiscal year 2006 included approximately $45,000 in losses on asset disposals along with a reduction in rental income of approximately $25,000. Other non-interest income for fiscal year 2005 included approximately $47,000 received by us as a result of the sale of the Pulse Electronic Funds Transfer Network to Discover. Additionally, fiscal year 2005 included a $130,000 charge for an other than temporary decline in the value of one of our investment securities.

Non-interest Expense. Non-interest expense increased by $192,000, or 1.2%, to $16.7 million for fiscal year 2006, from $16.5 million for fiscal year 2005. Increases in compensation and employee benefits of $159,000, occupancy and equipment of $177,000, and advertising of $100,000 were partially offset by decreases in professional fees of $92,000 and data processing of $77,000. The increase in compensation and employee benefits was the result of normal merit increases combined with increases in health insurance, pension, and other benefit costs. The increase in occupancy and equipment was the result of increases in depreciation and real estate taxes related to ESSA Bank & Trust’s property and equipment. Advertising expense increased as a result of our increased efforts to maintain and improve our presence in our market area. Professional fees decreased primarily due to the fact that several miscellaneous, short-term consulting engagements in fiscal year 2005 were not repeated in fiscal year 2006. Data processing decreased primarily as a result of a decrease in the cost of processing ESSA Bank & Trust’s student loans which were substantially sold during fiscal year 2005.

Income Taxes. Income tax expense was $1.8 million for fiscal year 2006, an increase of $430,000, or 31.1%, compared to $1.4 million for fiscal year 2005. The effective tax rate was 31.4% in fiscal year 2006 compared to 23.7% in fiscal year 2005, principally due to the elimination of certain over-accruals for income taxes in fiscal year 2005, and an adjustment to deferred taxes and income tax expense for timing differences related to depreciation in 2006.

Comparison of Operating Results For The Years Ended September 30, 2005 and September 30, 2004

Net Income. Net income increased $536,000, or 13.7%, to $4.5 million for fiscal year 2005 from $3.9 million for fiscal year 2004. The increase was primarily the result of an increase in net interest income an increase in total non-interest income partially offset by an increase in income taxes and an increase in total non-interest expense.

Net Interest Income. Net interest income increased by $719,000, or 4.3%, to $17.6 million for fiscal year 2005 from $16.9 million for fiscal year 2004. The increase was primarily attributable to the growth of our total interest earning assets offset by a 25 basis point decrease in our interest rate spread to 2.85% for fiscal year 2005 from 3.10% for fiscal year 2004. The decrease in the interest rate spread was due to the yields on interest-earning assets decreasing while the costs of interest-bearing liabilities increased. During fiscal year 2005, the Federal Reserve Board of Governors increased the federal funds rates eight times.

The tables on pages 56 and 57 set forth the components of our net interest income, yields on interest-earning assets and costs of interest-bearing liabilities, and the effect on net interest income arising from changes in volumes and rates.

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Interest Income. Interest income increased $3.1 million, or 10.8%, to $31.9 million for fiscal year 2005 from $28.8 million for fiscal year 2004. The increase resulted from a $64.4 million increase in average interest-earning assets which had the effect of increasing interest income by $3.3 million. Partially offsetting the increase in interest income was an 8 basis point decrease in the overall yield on interest earning assets to 5.49% for fiscal year 2005, from 5.57% for fiscal year 2004 which decreased interest income by $174,000. Loans increased on average $37.4 million between the two periods, along with increases in the average balances of investment securities of $16.6 million and mortgage-backed securities of $14.1 million. Federal Home Loan Bank stock and other interest earning assets decreased by $3.6 million in the aggregate. The average yield on loans decreased to 5.84% for the fiscal year 2005, from 5.95% for the fiscal year 2004. The average yields on investment securities decreased to 3.87% from 4.63% and the average on mortgage backed securities yield increased to 3.67% from 3.13% for the 2005 and 2004 periods, respectively.

Interest Expense. Interest expense increased $2.4 million, or 20.0%, to $14.3 million for fiscal year 2005 from $11.9 million for fiscal year 2004. The increase resulted from a $59.8 million increase in average interest-bearing liabilities, which had the effect of increasing interest expense by $2.4 million. In addition, there was a 17 basis point increase in the overall cost of interest-bearing liabilities to 2.64% for fiscal year 2005 from 2.47% for fiscal year 2004 which increased interest income by $14,000. Money market and savings accounts decreased in the aggregate by approximately $1.8 million, while certificates of deposits increased in the aggregate by approximately $17.1 million between the two periods. The average balance of borrowed funds increased $44.7 million during the same comparative periods. The cost of certificates of deposit increased to 3.32% for fiscal year 2005 from 3.20% for fiscal year 2004. The cost of borrowed funds decreased to 4.05% from 4.21% for the same respective periods. The additional deposits and borrowings were used to fund increases in loans and to purchase investment securities.

Provision for Loan Losses. ESSA Bank & Trust establishes provisions for loan losses, which are charged to earnings, at a level necessary to absorb known and inherent losses that are both probable and reasonably estimable at the date of the financial statements. In evaluating the level of the allowance for loan losses, management considers historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, peer group information and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as future events occur. After an evaluation of these factors, management made a provision of $550,000 for fiscal year 2005 compared to a $530,000 provision for year ended 2004. The allowance for loan losses was $3.6 million or 0.70% of loans outstanding at September 30, 2005, compared to $3.0 million, or 0.63% of loans outstanding at September 30, 2004.

Non-interest Income. Non-interest income increased by $1.0 million, or 23.4%, to $5.3 million for fiscal year 2005, from $4.3 million for fiscal year 2004. The increase was primarily due to increases in service fees on deposit accounts of $922,000, net gain on sale of loans of

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$96,000, earnings on bank-owned life insurance of $126,000 and other non-interest income of $87,000. The increase in service fees on deposit accounts resulted primarily from increases in non-sufficient fund charges attributable to a new overdraft protection program implemented in May of 2004. The earnings on bank-owned life insurance increased during fiscal year 2005 because 2005 included twelve months of earnings on bank-owned life insurance and fiscal year 2004 included ten months of earnings as a result of when the insurance was originally purchased. ESSA Bank & Trust also purchased an additional $2.0 million of bank-owned life insurance during fiscal year 2005. Other non-interest income for fiscal year 2005 included approximately $47,000 received by ESSA Bank & Trust as a result of the sale of the Pulse Electronic Funds Transfer Network to Discover. The increases described above were partially offset by a charge during fiscal year 2005 for an other than temporary decline in the value of one of our investment securities of $130,000.

Non-interest Expense. Non-interest expense increased by $953,000, or 6.1%, to $16.5 million for fiscal year 2005, from $15.5 million for fiscal year 2004. Increases in compensation and employee benefits of $1.2 million and occupancy and equipment of $164,000 were partially offset by decreases in professional fees of $127,000 and data processing of $267,000. The increase in compensation and employee benefits was the result of normal merit increases, increases in incentive compensation and increases in health insurance, pension, and other benefit costs. The increase in occupancy and equipment was the result of increases in depreciation and real estate taxes related to ESSA Bank & Trust’s property and equipment.

Income Taxes. Income tax expense was $1.4 million for fiscal year 2005, an increase of $211,000, or 18.0%, compared to $1.2 million for fiscal year 2004. The effective tax rate was 23.7% in fiscal year 2005 compared to 23.0% in fiscal year 2004.

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The following table sets forth average balance sheets, average yields and costs, and certain other information for the periods indicated, as well as balances and average yields and costs at September 30, 2006. All average balances are monthly average balances. The yields set forth below include the effect of deferred fees and discounts and premiums that are amortized or accreted to interest income.

	At September 30, 2006		For the Years Ended September 30,
			2006							2005							2004
	Yield/ Cost		Average Balance			Interest Income/ Expense		Yield/ Cost		Average Balance			Interest Income/ Expense		Yield/ Cost		Average Balance			Interest Income/ Expense		Yield/ Cost
	(Dollars in thousands)
Interest-earning assets:
Loans(1) (2)	5.93	%	$	533,351		$	31,744	5.95	%	$	493,918		$	28,829	5.84	%	$	456,566		$	27,152	5.95	%
Investment securities
Taxable(3)	4.34	%		44,678			1,848	4.14	%		28,366			906	3.19	%		11,644			386	3.32	%
Exempt from federal income tax(3) (4)	7.15	%		5,894			278	7.15	%		5,513			267	7.34	%		5,647			274	7.35	%
Total investment securities	4.67	%		50,572			2,126	4.49	%		33,879			1,173	3.87	%		17,291			660	4.63	%
Mortgage-backed securities	4.72	%		40,247			1,731	4.30	%		35,963			1,319	3.67	%		21,882			684	3.13	%
Federal Home Loan Bank stock	5.25	%		12,115			519	4.28	%		11,604			317	2.73	%		9,615			124	1.29	%
Other	5.33	%		7,422			331	4.46	%		8,576			281	3.28	%		14,198			190	1.34	%
Total interest-earning assets	5.72	%		643,707			36,451	5.68	%		583,940			31,919	5.49	%		519,552			28,810	5.57	%
Allowance for loan losses				(3,694	)						(3,292	)						(2,748	)
Noninterest-earning assets				39,875							37,769							34,010
Total assets			$	679,888						$	618,417						$	550,814
Interest-bearing liabilities:
NOW accounts	0.07	%	$	59,709			44	0.07	%	$	61,562			79	0.13	%	$	61,792			100	0.16	%
Money market accounts	2.78	%		31,618			687	2.17	%		33,386			421	1.26	%		33,078			245	0.74	%
Savings and club accounts	0.40	%		79,452			355	0.45	%		88,727			388	0.44	%		90,853			442	0.49	%
Certificates of deposit	4.40	%		197,064			7,926	4.02	%		149,267			4,963	3.32	%		132,119			4,224	3.20	%
Borrowed funds	4.68	%		228,198			10,205	4.47	%		209,284			8,472	4.05	%		164,563			6,922	4.21	%
Total interest-bearing liabilities	3.55	%		596,041			19,217	3.22	%		542,226			14,323	2.64	%		482,405			11,933	2.47	%
Non-interest bearing demand accounts				21,383							17,527							13,281
Noninterest-bearing liabilities				5,650							5,815							7,359
Total liabilities				623,074							565,568							503,045
Equity				56,814							52,849							47,769
Total liabilities and equity			$	679,888						$	618,417						$	550,814
Net interest income						$	17,234						$	17,596						$	16,877
Interest rate spread	2.17	%						2.46	%						2.85	%						3.10	%
Net interest-earning assets			$	47,666						$	41,714						$	37,174
Net interest margin(5)	2.41	%						2.70	%						3.04	%						3.28	%
Average interest-earning assets to average interest-bearing liabilities	107.31	%		108.00	%						107.69	%						107.70	%

(1) Non-accruing loans are included in the outstanding loan balances.

(2) Interest income on loans includes net amortized revenues (costs) on loans totaling $603,000 for 2006, $748,000 for 2005, and $955,000 for 2004.

(3) Held to maturity securities are reported as amortized cost. Available for sale securities are reported at fair value.

(4) Yields on tax exempt securities have been calculated on a fully tax equivalent basis assuming a tax rate of 34%.

(5) Represents the difference between interest earned and interest paid, divided by average total interest earning assets.

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Rate/Volume Analysis

The following table presents the effects of changing rates and volumes on our net interest income for the years indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume.

	For the Years Ended September 30, 2006 vs. 2005									For the Years Ended September 30, 2005 vs. 2004
	Increase (Decrease) Due to						Net			Increase (Decrease) Due to						Net
	Volume			Rate						Volume			Rate
	(In thousands)
Interest-earning assets:
Loans s	$	2,338		$	577		$	2,915		$	2,188		$	(511	)	$	1,677
Investment securities		719			234			953			663			(150	)		513
Mortgage-backed securities		168			244			412			500			135			635
Federal Home Loan Bank stock		15			187			202			30			163			193
Other		(42	)		92			50			(98	)		189			91
Total interest-earning assets		3,198			1,334			4,532			3,283			(174	)		3,109
Interest-bearing liabilities:
NOW accounts		(2	)		(33	)		(35	)		—			(21	)		(21	)
Money market accounts		(23	)		289			266			2			174			176
Savings and club accounts		(41	)		8			(33	)		(10	)		(44	)		(54	)
Certificates of deposit		1,790			1,173			2,963			565			174			739
Borrowed funds		803			930			1,733			1,819			(269	)		1,550
Total interest-bearing liabilities		2,527			2,367			4,894			2,376			14			2,390
Net change in interest income	$	671		$	(1,033	)	$	(362	)	$	907		$	(188	)	$	719

Management of Market Risk

General. The majority of our assets and liabilities are monetary in nature. Consequently, our most significant form of market risk is interest rate risk. Our assets, consisting primarily of mortgage loans, have longer maturities than our liabilities, consisting primarily of deposits and borrowings. As a result, a principal part of our business strategy is to manage interest rate risk and reduce the exposure of our net interest income to changes in market interest rates. Accordingly, our Board of Directors has approved guidelines for managing the interest rate risk inherent in our assets and liabilities, given our business strategy, operating environment, capital, liquidity and performance objectives. Senior management monitors the level of interest rate risk on a regular basis and the asset/liability committee of the Board of Directors meets quarterly to review our asset/liability policies and interest rate risk position.

We have sought to manage our interest rate risk in order to minimize the exposure of our earnings and capital to changes in interest rates. The net proceeds from the offering will increase our capital and provide management with greater flexibility to manage our interest rate risk. In particular, management intends to leverage the capital we receive to increase our interest-earning assets.

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Net Portfolio Value. The Office of Thrift Supervision requires the computation of amounts by which the net present value of an institution’s cash flow from assets, liabilities and off balance sheet items (the institution’s net portfolio value or “NPV”) would change in the event of a range of assumed changes in market interest rates. The Office of Thrift Supervision provides all institutions that file a Consolidated Maturity/Rate Schedule as a part of their quarterly Thrift Financial Report with an interest rate sensitivity report of net portfolio value. The Office of Thrift Supervision simulation model uses a discounted cash flow analysis and an option-based pricing approach to measuring the interest rate sensitivity of net portfolio value. Historically, the Office of Thrift Supervision model estimated the economic value of each type of asset, liability and off-balance sheet contract under the assumption that the United States Treasury yield curve increases or decreases instantaneously by 100 to 300 basis points (200 basis points in the event of an interest rate decrease) in 100 basis point increments. A basis point equals one-hundredth of one percent, and 100 basis points equals one percent. An increase in interest rates from 3% to 4% would mean, for example, a 100 basis point increase in the “Change in Interest Rates” column below. The Office of Thrift Supervision provides us the results of the interest rate sensitivity model, which is based on information we provide to the Office of Thrift Supervision to estimate the sensitivity of our net portfolio value.

The table below sets forth, as of September 30, 2006, the estimated changes in our net portfolio value that would result from the designated instantaneous changes in the United States Treasury yield curve. Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions including relative levels of market interest rates, loan prepayments and deposit decay, and should not be relied upon as indicative of actual results.

Change in Interest Rates (basis points) (1)	Estimated NPV (2)		Estimated Increase (Decrease) in NPV					NPV as a Percentage of Present Value of Assets (3)
								NPV Ratio (4)		Increase (Decrease) (basis points)
			Amount			Percent
	(Dollars in thousands)
+300	$	45,309	$	(32,669	)	(42	)%	6.58	%	(393	)
+200		57,675		(20,302	)	(26	)	8.15		(235	)
+100		69,063		(8,914	)	(11	)	9.52		(99	)
—		77,977		—		—		10.51		—
-100		83,624		5,646		7		11.06		56
-200		85,574		7,596		10		11.17		66

(1) Assumes an instantaneous uniform change in interest rates at all maturities.

(2) NPV is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.

(3) Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.

(4) NPV Ratio represents NPV divided by the present value of assets.

The table above indicates that at September 30, 2006, in the event of an immediate 100 basis point decrease in interest rates, we would experience a 7% increase in net portfolio value. In the event of an immediate 100 basis point increase in interest rates, we would experience a 11% decrease in net portfolio value.

Certain shortcomings are inherent in the methodology used in the above interest rate risk measurement. Modeling changes in net portfolio value requires making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market

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interest rates. In this regard, the net portfolio value table presented assumes that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the net portfolio value table provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our net interest income and will differ from actual results.

Liquidity and Capital Resources

We maintain liquid assets at levels we consider adequate to meet both our short-term and long-term liquidity needs. We adjust our liquidity levels to fund deposit outflows, repay our borrowings and to fund loan commitments. We also adjust liquidity as appropriate to meet asset and liability management objectives.

Our primary sources of liquidity are deposits, amortization and prepayment of loans and mortgage-backed securities, maturities of investment securities and other short-term investments, and earnings and funds provided from operations, as well as access to Federal Home Loan Bank advances. While scheduled principal repayments on loans and mortgage-backed securities are a relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by market interest rates, economic conditions, and rates offered by our competition. We set the interest rates on our deposits to maintain a desired level of total deposits.

A portion of our liquidity consists of cash and cash equivalents and borrowings, which are a product of our operating, investing and financing activities. At September 30, 2006, $12.7 million of our assets were invested in cash and cash equivalents. Our primary sources of cash are principal repayments on loans, proceeds from the maturities of investment securities, principal repayments of mortgage-backed securities and increases in deposit accounts. Short-term investment securities (maturing in one year or less) totaled $23.5 million at September 30, 2006. As of September 30, 2006, we had $259.3 million in borrowings outstanding from the Federal Home Loan Bank of Pittsburgh and we have access to additional Federal Home Loan Bank advances of up to approximately $200.0 million.

At September 30, 2006, we had $53.0 million in loan commitments outstanding, which included $15.7 million in undisbursed construction loans, $21.2 million in unused home equity lines of credit, $5.2 million in commercial lines of credit and $7.3 million to originate primarily multi-family and nonresidential mortgage loans. Certificates of deposit due within one year of September 30, 2006 totaled $147.2 million, or 70.3% of certificates of deposit. If these maturing deposits do not remain with us, we will be required to seek other sources of funds, including other certificates of deposit and borrowings. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before September 30, 2007. We believe, however, based on past experience, that a significant portion of our certificates of deposit will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.

As reported in the Consolidated Statements of Cash Flows, our cash flows are classified for financial reporting purposes as operating, investing or financing cash flows. Net cash provided by operating activities was $1.8 million, $4.9 million and $3.1 million for the years

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ended September 30, 2006, 2005 and 2004, respectively. These amounts differ from our net income because of a variety of cash receipts and disbursements that did not affect net income for the respective periods. Net cash used in investing activities was $75.2 million, $63.8 million and $82.8 million in fiscal years 2006, 2005 and 2004, respectively, principally reflecting our loan and investment security activities in the respective periods. Investment security cash flows had the most significant effect, as net cash utilized in purchases amounted to $52.2 million, $44.3 million and $48.9 million in the years ended September 30, 2006, 2005 and 2004, respectively. Deposit and borrowing cash flows have comprised most of our financing activities which resulted in net cash provided of $65.8 million in fiscal year 2006, $57.7 million in fiscal year 2005 and $58.1 million in fiscal year 2004. The net effect of our operating, investing and financing activities was to reduce our cash and cash equivalents from $43.1 million at the beginning of fiscal year 2004 to $12.7 million at the end of fiscal year 2006.

The following table summarizes our significant fixed and determinable contractual obligations and other funding needs by payment date at September 30, 2006. The payment amounts represent those amounts due to the recipient and do not include any unamortized premiums or discounts or other similar carrying amount adjustments.

	Payments Due by Period
Contractual Obligations	Less than One Year		One to Three Years		Three to Five Years		More than Five Years		Total
	(In thousands)
Long-term debt	$	27,493	$	108,837	$	78,754	$	43,689	$	258,773
Operating leases		210		297		134		209		850
Certificates of deposit		150,142		47,242		21,412		—		218,796
Total	$	177,845	$	156,376	$	100,300	$	43,898	$	478,419
Commitments to extend credit	$	35,525	$	528	$	5,674	$	14,043	$	55,770

We also have obligations under our post retirement plan as described in Note 13 to the Consolidated Financial Statements. The post retirement benefit payments represent actuarially determined future payments to eligible plan participants. We expect to contribute $536,000 to our post retirement plan in 2007. In addition, as part of the reorganization and offering, the employee stock ownership plan trust intends to borrow funds from ESSA Bancorp, Inc. and use those funds to purchase a number of shares equal to 8% of the common stock issued in the offering.

Off-Balance Sheet Arrangements. In the normal course of operations, we engage in a variety of financial transactions that, in accordance with generally accepted accounting principles, are not recorded in our financial statements. These transaction involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments and lines of credit. For information about our loan commitments and unused lines of credit, see note 11 of the notes to the Consolidated Financial Statements.

For fiscal year 2006, we did not engage in any off-balance-sheet transactions other than loan origination commitments in the normal course of our lending activities.

Recent Accounting Pronouncements

In February 2006, the FASB issued FAS No. 155, Accounting for Certain Hybrid Instruments (“FAS No. 155”), an amendment of FASB Statements No. 133 and 140. FAS No.

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155 allows financial instruments that have embedded derivatives to be accounted for as a whole (eliminating the need to bifurcate the derivative from its host) if the holder elects to account for the whole instrument on a fair value basis. This statement is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. The adoption of this standard is not expected to have a material effect on our results of operations or financial position.

In March 2006, the FASB issued FAS No. 156, Accounting for Servicing of Financial Assets (“FAS No. 156”). This Statement, which is an amendment to FAS No. 140, will simplify the accounting for servicing assets and liabilities, such as those common with mortgage securitization activities. Specifically, FAS No. 156 addresses the recognition and measurement of separately recognized servicing assets and liabilities and provides an approach to simplify efforts to obtain hedge-like (offset) accounting. FAS No. 156 also clarifies when an obligation to service financial assets should be separately recognized as a servicing asset or a servicing liability, requires that a separately recognized servicing asset or servicing liability be initially measured at fair value, if practicable, and permits an entity with a separately recognized servicing asset or servicing liability to choose either of the amortization or fair value methods for subsequent measurement. The provisions of FAS No. 156 are effective as of the beginning of the first fiscal year that begins after September 15, 2006. We are currently evaluating the impact the adoption of the standard will have on our results of operations.

In September 2006, the FASB issued FAS No. 157, Fair Value Measurements (“FAS No. 157”), which provides enhanced guidance for using fair value to measure assets and liabilities. The standard applies whenever other standards require or permit assets or liabilities to be measured at fair value. The Standard does not expand the use of fair value in any new circumstances. FAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. Early adoption is permitted. The adoption of this standard is not expected to have a material effect on our results of operations or financial position.

In September 2006, the FASB issued FAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Post Retirement Plans (“FAS No. 158”), an amendment of FASB Statements No. 87, 88, 106 and 132(R). FAS No. 158 requires that a company recognize the overfunded or underfunded status of its defined benefit post retirement plans (other than multiemployer plans) as an asset or liability in its statement of financial position and that it recognize changes in the funded status in the year in which the changes occur through other comprehensive income. FAS No. 158 also requires the measurement of defined benefit plan assets and obligations as of the fiscal year end, in addition to footnote disclosures. FAS No. 158 is effective for fiscal years ending after December 15, 2006. We are currently evaluating the impact the adoption of the standard will have on our financial position.

In June 2006, the FASB issued FASB Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes. FIN 48 is an interpretation of FAS No. 109, Accounting for Income Taxes, and it seeks to reduce the diversity in practice associated with certain aspects of measurement and recognition in accounting for income taxes. In addition, FIN No. 48 requires expanded disclosure with respect to the uncertainty in income taxes and is effective for fiscal years beginning after December 15, 2006. We are currently evaluating the impact the adoption of the standard will have on our results of operations.

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In September 2006, the SEC issued Staff Accounting Bulletin No. 108 (“SAB 108”), considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements, providing guidance on quantifying financial statement misstatement and implementation when first applying this guidance. Under SAB No. 108, companies should evaluate a misstatement based on its impact on the current year income statement, as well as the cumulative effect of correcting such misstatements that existed in prior years existing in the current year’s ending balance sheet. SAB 108 is effective for fiscal years ending after November 15, 2006. We are currently evaluating the impact the adoption of the standard will have on our results of operations.

In September 2006, the FASB reached consensus on the guidance provided by Emerging Issues Task Force Issue 06-4 (“EITF 06-4”), Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements. The guidance is applicable to endorsement split-dollar life insurance arrangements, whereby the employer owns and controls the insurance policy, that are associated with a postretirement benefit. EITF 06-4 requires that for a split-dollar life insurance arrangement within the scope of the Issue, an employer should recognize a liability for future benefits in accordance with FAS No. 106 (if, in substance, a postretirement benefit plan exists) or Accounting Principles Board Opinion No. 12 (if the arrangement is, in substance, an individual deferred compensation contract) based on the substantive agreement with the employee. EITF 06-4 is effective for fiscal years beginning after December 15, 2007. We are currently evaluating the impact the adoption of the standard will have on our results of operations or financial condition.

In September 2006, the FASB reached consensus on the guidance provided by Emerging Issues Task force Issue 06-5 (“EITF 06-5”), Accounting for Purchases of Life Insurance-Determining the Amount That Could Be Realized in Accordance with FASB Technical Bulletin No. 85.4, Accounting for Purchases of Life Insurance. EITF 06-5 states that a policyholder should consider any additional amounts included in the contractual terms of the insurance policy other than the cash surrender value in determining the amount that could be realized under the insurance contract. EITF 06-5 is effective for fiscal years beginning after December 15, 2006. We are currently evaluating the impact the adoption of the standard will have on our results of operations or financial condition.

Impact of Inflation and Changing Prices

The financial statements and related notes of ESSA Bank & Trust have been prepared in accordance with United States generally accepted accounting principles (“GAAP”). GAAP generally requires the measurement of financial position and operating results in terms of historical dollars without consideration for changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of our operations. Unlike industrial companies, our assets and liabilities are primarily monetary in nature. As a result, changes in market interest rates have a greater impact on performance than the effects of inflation.

BUSINESS OF ESSA BANCORP, INC.

ESSA Bancorp, Inc. is incorporated in the Commonwealth of Pennsylvania. We have not engaged in any business to date. Upon completion of the conversion, we will own all of the issued and outstanding stock of ESSA Bank & Trust. We will retain up to 50% of the net

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proceeds from the offering and invest 50% of the remaining net proceeds in ESSA Bank & Trust as additional capital in exchange for 100% of the outstanding common stock of ESSA Bank & Trust ESSA Bancorp, Inc. will use a portion of the net proceeds to make a loan to the employee stock ownership plan. At a later date, we may use the net proceeds to pay dividends to stockholders and may repurchase shares of common stock, subject to regulatory limitations. We will invest our initial capital as discussed in “How We Intend to Use the Proceeds from the Offering.”

In the future, ESSA Bancorp, Inc., as the holding company of ESSA Bank & Trust, will be authorized to pursue other business activities permitted by applicable laws and regulations, which may include the acquisition of banking and financial services companies. See “Regulation—Holding Company Regulation” for a discussion of the activities that are permitted for savings and loan holding companies. We currently have no specific arrangements or understandings regarding any specific acquisition transaction. We may also borrow funds for reinvestment in ESSA Bank & Trust.

Following the offering, our cash flow will depend on earnings from the investment of the net proceeds from the offering that we retain, and any dividends received from ESSA Bank & Trust. Initially, ESSA Bancorp, Inc. will neither own nor lease any property, but will instead pay a fee to ESSA Bank & Trust for the use of its premises, equipment and furniture of ESSA Bank & Trust. At the present time, we intend to employ only persons who are officers of ESSA Bank & Trust to serve as officers of ESSA Bancorp, Inc. We will, however, use the support staff of ESSA Bank & Trust from time to time. We will pay a fee to ESSA Bank & Trust for the time devoted to ESSA Bancorp, Inc. by employees of ESSA Bank & Trust. However, these persons will not be separately compensated by ESSA Bancorp, Inc. ESSA Bancorp, Inc. may hire additional employees, as appropriate, to the extent it expands its business in the future.

BUSINESS OF ESSA BANK & TRUST

General

ESSA Bank & Trust was organized in 1916. ESSA Bank & Trust is a full-service, community-oriented savings association with total assets of $725.8 million, total net loans of $556.7 million, total deposits of $402.2 million and total equity of $58.3 million at September 30, 2006. We provide financial services to individuals, families and businesses through our 12 full-service banking offices, located in Monroe and Northampton Counties, Pennsylvania.

ESSA Bank & Trust’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, commercial loans as well as agency securities and mortgage-backed securities. In addition, we also offer asset management and trust services. We offer investment services through our relationship with PRIMEVEST Financial Services, Inc., a third party broker/dealer and investment advisor.

Market Area

At September 30, 2006, our 12 full-service banking offices consisted of 11 offices in Monroe County, and one office in Northampton County, Pennsylvania. Our primary market for

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deposits is currently concentrated around the areas where our full-service banking offices are located. Our primary lending area consists of the counties where our branch offices are located, and to a lesser extent the contiguous counties in the Commonwealth of Pennsylvania.

Monroe County is located in eastern Pennsylvania, situated 90 miles north of Philadelphia, 75 miles west of New York and 116 miles northeast of Harrisburg. Monroe County is comprised of 611 square miles of mostly rural terrain. Monroe County is the second-fastest growing county in Pennsylvania. Major industries include tourism, construction and educational facilities. Northampton County is located south of Monroe County and directly borders New Jersey. As of June 30, 2006, we have deposit market share of approximately 19.2% in Monroe County, which represented the second largest deposit market share in Monroe County and less than 1% in Northampton County.

Lending Activities

Historically, our principal lending activity has been the origination of first mortgage loans for the purchase or refinancing of one- to four-family residential real property. During the past five years, we have increased our originations of commercial real estate loans in an effort to increase interest income. These loans have increased from 2.6% of our total loan portfolio at November 30, 2002 to 8.4% of our total loan portfolio at September 30, 2006. One- to four-family residential real estate mortgage loans represented $452.4 million, or 80.4%, of our loan portfolio at September 30, 2006. Construction first mortgage loans totaled $5.9 million, or 1.1% of the total loan portfolio at September 30, 2006. Commercial real estate loans totaled $47.5 million, or 8.4% of our total loan portfolio at September 30, 2006, and home equity loans and lines of credit totaled $46.8 million, or 8.3% of the total loan portfolio at September 30, 2006. We originate other consumer loans on a limited basis.

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Loan Portfolio Composition. The following table sets forth the composition of our loan portfolio, by type of loan at the dates indicated, excluding loans held for sale.

	At September 30,																				At November 30,
	2006					2005					2004					2003					2002
	Amount			Percent		Amount			Percent		Amount			Percent		Amount			Percent		Amount			Percent
	(Dollars in thousands)
Residential first mortgage loans:
One- to four-family	$	452,406		80.4	%	$	421,169		81.7	%	$	399,233		82.4	%	$	378,744		85.2	%	$	336,399		84.9	%
Construction		5,943		1.1			7,597		1.5			8,309		1.7			6,093		1.4			7,504		1.9
Commercial		6,159		1.1			5,310		1.0			2,468		0.5			2,255		0.5			1,368		0.3
Commercial real estate		47,479		8.4			36,984		7.2			29,439		6.1			18,615		4.1			10,418		2.6
Home equity loans and lines of credit		46,796		8.3			40,342		7.8			34,256		7.1			26,653		6.0			25,697		6.5
Other		4,247		0.7			4,204		0.8			10,720		2.2			12,358		2.8			14,962		3.8
Total loans receivable	$	563,030		100.0	%	$	515,606		100.0	%	$	484,425		100.0	%	$	444,718		100.0	%	$	396,348		100.0	%
Deferred loan costs (fees)		(2,498	)				(3,062	)				(3,442	)				(3,670	)				(3,652	)
Allowance for loan losses		(3,855	)				(3,563	)				(3,027	)				(2,509	)				(2,154	)
Total loans receivable, net	$	556,677				$	508,981				$	477,956				$	438,539				$	390,542

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Loan Portfolio Maturities and Yields. The following table summarizes the scheduled repayments of our loan portfolio at September 30, 2006. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less.

	One- to Four-Family				Construction				Commercial				Commercial Real Estate
	Amount		Weighted Average Rate		Amount		Weighted Average Rate		Amount		Weighted Average Rate		Amount		Weighted Average Rate
	(Dollars in thousands)
Due During the Years Ending September 30,
2007	$	245	6.53	%	$	170	6.25	%	$	2,341	7.35	%	$	5,604	8.67	%
2008		631	6.43			—	—			63	6.76			812	8.12
2009		1,042	6.34			—	—			127	7.05			202	7.13
2010 to 2011		2,334	5.88			49	6.30			735	7.33			4,099	6.79
2012 to 2016		35,760	5.27			—	—			759	7.21			28,109	6.65
2017 to 2021		139,904	5.23			65	6.25			—	—			6,805	6.45
2021 and beyond		272,490	5.95			5,659	6.35			2,134	5.43			1,848	7.05
Total	$	452,406			$	5,943			$	6,159			$	47,479

	Home Equity Loans and Lines of Credit				Other				Total
	Amount		Weighted Average Rate		Amount		Weighted Average Rate		Amount		Weighted Average Rate
	(Dollars in thousands)
Due During the Years Ending September 30,
2007	$	74	6.09	%	$	2,312	8.04	%	$	10,746	8.14	%
2008		363	5.18			196	8.97			2,065	7.13
2009		702	5.66			461	8.73			2,534	6.68
2010 to 2011		3,619	5.86			854	7.37			11,690	6.39
2012 to 2016		9,015	6.38			424	7.35			74,067	5.96
2017 to 2021		14,738	6.69			—	—			161,512	5.42
2021 and beyond		18,285	8.00			—	—			300,416	6.09
Total	$	46,796			$	4,247			$	563,030

The following table sets forth the scheduled repayments of fixed- and adjustable-rate loans at September 30, 2006 that are contractually due after September 30, 2007.

	Due After September 30, 2007
	Fixed		Adjustable		Total
	(In thousands)
Residential first mortgage loans:
One- to four-family	$	396,189		55,972		452,161
Construction		5,773		—		5,773
Commercial		3,260		558		3,818
Commercial real estate		18,396		23,479		41,875
Home equity loans and lines of credit		28,018		18,704		46,722
Other		1,935		—		1,935
Total	$	453,571	$	98,713	$	552,284

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Loan Originations and Repayments. Historically, we have originated 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 and Northampton Counties, Pennsylvania. New loans are generated primarily from walk-in customers, customer referrals, a network of mortgage brokers, and other parties with whom we do business, and from the efforts of employees and advertising. Loan applications are underwritten and processed at our corporate center.

One- to Four-Family Residential Loans. Historically, our primary lending activity has consisted of the origination of one- to four-family residential mortgage loans secured primarily by properties located in Monroe and Northampton Counties, Pennsylvania. At September 30, 2006, approximately $452.4 million, or 80.4% of our loan portfolio, consisted of one- to four-family residential loans. Our origination of one- to four-family loans increased in fiscal year 2006 compared to fiscal years 2005 and 2004, although such loans are declining as a percentage of our total loan portfolio. Generally, one- to four-family residential mortgage loans are originated in amounts up to 80% of the lesser of the appraised value or purchase price of the property, although loans may be made with higher loan-to-value ratios at a higher interest rate to compensate for the risk. Private mortgage insurance is generally required on loans with a loan-to-value ratio in excess of 80%. Fixed-rate loans are originated for terms of 10, 15, 20 and 30 years. At September 30, 2006, our largest loan secured by one- to four-family real estate had a principal balance of approximately $605,000 and was secured by a single-family residence. This loan was performing in accordance with its terms.

We also offer adjustable-rate mortgage loans which have fixed terms of one, three, five or ten-years before converting to an annual adjustment schedule based on changes in a designated United States Treasury index. We originated $11.9 million of adjustable rate one- to four-family residential loans during the year ended September 30, 2006 and $13.7 million during the year ended September 30, 2005. Our adjustable rate mortgage loans provide for maximum rate adjustments of 200 basis points per adjustment, with a lifetime maximum adjustment of 600 basis points. Our adjustable rate mortgage loans amortize over terms of up to 30 years.

Adjustable rate mortgage loans decrease the risk associated with changes in market interest rates by periodically repricing, but involve other risks because, as interest rates increase, the interest payments on the loan increase, thus increasing the potential for default by the borrower. At the same time, the marketability of the underlying collateral may be adversely affected by higher interest rates. Upward adjustment of the contractual interest rate is also limited by the maximum periodic and lifetime interest rate adjustments permitted by our loan documents, and therefore, is potentially limited in effectiveness during periods of rapidly rising interest rates. At September 30, 2006, $56.0 million, or 12.4%, of our one- to four-family residential loans had adjustable rates of interest.

All one- to four-family residential mortgage loans that we originate include “due-on-sale” clauses, which give us the right to declare a loan immediately due and payable in the event that, among other things, the borrower sells or otherwise disposes of the real property subject to the mortgage and the loan is not repaid.

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Regulations limit the amount that a savings bank may lend relative to the appraised value of the real estate securing the loan, as determined by an appraisal of the property at the time the loan is originated. For all loans, we utilize outside independent appraisers approved by the Board of Directors. All borrowers are required to obtain title insurance. We also require fire and casualty insurance and, where circumstances warrant, flood insurance.

Commercial Real Estate Loans. At September 30, 2006, $47.5 million, or 8.4% of our total loan portfolio consisted of commercial real estate loans. Commercial real estate loans are secured by office buildings, mixed-use properties and other commercial properties. We generally originate adjustable rate commercial real estate loans with an initial term of five years and a repricing option, and a maximum term of up to 25 years. The maximum loan-to-value ratio of our commercial real estate loans is 85%. At September 30, 2006, we had 202 commercial real estate loans with an outstanding balance of $47.5 million. At September 30, 2006, our largest commercial real estate loan balance was $2.8 million. At September 30, 2006, all but one of our loans secured by commercial real estate were performing in accordance with their terms. One secured commercial line of credit totaling approximately $50,000 was between 60 and 90 days past due at September 30, 2006.

We consider a number of factors in originating commercial real estate loans. We evaluate 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, we consider the financial resources of the borrower, the borrower’s experience in owning or managing similar property and the borrower’s payment history with us and other financial institutions. In evaluating the property securing the loan, the factors we consider include the net operating income of the mortgaged property before debt service and depreciation, the ratio of the loan amount to the appraised value of the mortgaged property and the debt service coverage ratio (the ratio of net operating income to debt service) to ensure that it is at least 120% of the monthly debt service. All commercial real estate loans in excess of $250,000 are appraised by outside independent appraisers approved by the Board of Directors. Personal guarantees are obtained from commercial real estate borrowers although we will consider waiving this requirement based upon the loan-to-value ratio of the proposed loan. All purchase money and asset refinance borrowers are required to obtain title insurance. We also require fire and casualty insurance and, where circumstances warrant, flood insurance.

Loans secured by commercial real estate generally are considered to present greater risk than one- to four-family residential loans. Commercial real estate loans often involve large loan balances to single borrowers or groups of related borrowers. Repayment of these loans depends to a large degree on the results of operations and management of the properties securing the loans or the businesses conducted on such property, and may be affected to a greater extent by adverse conditions in the real estate market or the economy in general. Accordingly, the nature of these loans makes them more difficult for management to monitor and evaluate.

First Mortgage Construction Loans. At September 30, 2006, $5.9 million, or 1.1%, of our total loan portfolio consisted of first mortgage construction loans. Most of our first mortgage construction loans are for the first mortgage construction of residential properties. We currently offer fixed and adjustable-rate residential first mortgage construction loans. First mortgage

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construction loans are generally structured for permanent mortgage financing once the construction is completed. At September 30, 2006, our largest first mortgage construction loan balance was $600,000. The loan was performing in accordance with its terms. First mortgage construction loans, once converted to permanent financing, generally repay over a thirty-year period. First mortgage construction loans require only the payment of interest during the construction period. First mortgage construction loans will generally be made in amounts of up to 80% of the appraised value of the completed property, or the actual cost of the improvements. In certain circumstances first mortgage construction loans may be made in amounts up to 100% of the appraised value with appropriate credit enhancements such as private mortgage insurance. Funds are disbursed based on our inspections in accordance with a schedule reflecting the completion of portions of the project.

First mortgage construction loans generally involve a greater degree of credit risk than one- to four-family residential mortgage loans. The risk of loss on a construction loan depends upon the accuracy of the initial estimate of the value of the property at completion of construction compared to the estimated cost of construction. For all loans, we utilize outside independent appraisers approved by the Board of Directors. All borrowers are required to obtain title insurance. We also require fire and casualty insurance and, where circumstances warrant, flood insurance on properties.

Other Loans. We offer a variety of loans that are either unsecured or secured by property other than real estate. These loans include loans secured by deposits, personal loans and automobile loans. At September 30, 2006, these other loans totaled $4.2 million, or 0.7% of the total loan portfolio.

Loan Approval Procedures and Authority. The loan approval process is intended to assess the borrower’s ability to repay the loan, the viability of the loan, and the adequacy of the value of the property that will secure the loan. To assess the borrower’s ability to repay, we review each borrower’s employment and credit history and information on the historical and projected income and expenses of mortgagors. All residential mortgage loans in excess of the conforming loan limit but less than $500,000 must be approved by any two of the following: President, Chief Lending Officer and the Vice President, Retail Lending. All loans in excess of $500,000 but less than $750,000 must be approved by the Chief Executive Officer and either the Chief Lending Officer or the Vice President, Retail Lending. All loans in excess of $750,000 must be approved by the Management Loan Committee and all loans in excess of $1.0 million must be approved by the Director Loan Committee. The Management Loan Committee consists of the President, Chief Lending Officer, Vice President, Retail Lending and Vice President, Commercial Lending. The Director Loan Committee consists of the President and Chief Lending Officer along with the Chairman of the Board and two other outside Directors who rotate monthly.

Non-Performing Loans and Problem Assets

After a real estate secured loan becomes 15 days late, we deliver a computer generated late charge notice to the borrower and will attempt to contact the borrower by telephone. When a loan becomes 30 days delinquent, we send a delinquency letter to the borrower. We then attempt to make satisfactory arrangements to bring the account current, including interviewing the

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borrower, until the mortgage is brought current or a determination is made to recommend foreclosure, deed-in-lieu of foreclosure or other appropriate action. After 60 days, we will generally refer the matter to the Board of Directors who may authorize legal counsel to commence foreclosure proceedings.

Mortgage loans are reviewed on a regular basis and such loans are placed on non-accrual status when they become more than 90 days delinquent. When loans are placed on non-accrual status, unpaid accrued interest is fully reserved, and further income is recognized only to the extent received.

Non-performing Loans. At September 30, 2006, $623,000 (or less than 1.0% of our total loans) were non-performing loans.

As of September 30, 2006, we had no outstanding non-performing commercial real estate loans.

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Non-Performing Assets. The table below sets forth the amounts and categories of our non-performing assets at the dates indicated.

	At September 30,												At November 30, 2002
	2006			2005			2004			2003
	(Dollars in thousands)
Non-accrual loans:
Residential first mortgage loans:
One- to four-family	$	436		$	554		$	578		$	379		$	578
Construction		—			—			—			—			—
Commercial		—			—			—			—			—
Commercial real estate		—			—			—			—			—
Home equity loans and lines of credit		40			50			79			98			17
Other		—			1			8			47			76
Total		476			605			665			524			671
Accruing loans 90 days or more past due:
Residential first mortgage loans:
One- to four-family		—			—			—			—			—
Construction		—			—			—			—			—
Commercial		—			—			—			—			—
Commercial real estate		—			—			—			—			—
Home equity loans and lines of credit		—			—			—			—			—
Other		—			—			—			—			—
Total loans 90 days or more past due		—			—			—			—			—
Total non-performing loans		476			605			665			524			671
Real estate owned		—			19			101			202			101
Other non-performing assets		—			—			—			—			—
Total non-performing assets	$	476		$	624		$	766		$	726		$	772
Troubled debt restructurings:
Residential first mortgage loans::
One- to four-family	$	53		$	94		$	167		$	270		$	372
Construction		—			—			—			—			—
Commercial		—			—			—			—			—
Commercial real estate		—			—			—			—			—
Home equity loans and lines of credit		—			—			—			—			—
Other		—			—			—			—			15
Total	$	53		$	94		$	167		$	270		$	387
Ratios:
Total non-performing loans to total loans		0.08	%		0.12	%		0.14	%		0.12	%		0.17	%
Total non-performing loans to total assets		0.06	%		0.09	%		0.11	%		0.10	%		0.14	%
Total non-performing assets to total assets		0.07	%		0.10	%		0.13	%		0.14	%		0.16	%

For the year ended September 30, 2006, gross interest income that would have been recorded had our non-accruing loans been current in accordance with their original terms was insignificant.

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Delinquencies. The following table sets forth certain information with respect to our loan portfolio delinquencies at the dates indicated. Loans delinquent for 90 days or more are generally classified as nonaccrual loans.

	Loans Delinquent For						Total
	60-89 Days			90 Days and Over
	Number	Amount		Number	Amount		Number	Amount
	(Dollars in thousands)
At September 30, 2006
Residential first mortgage loans:
One- to four-family	—		—	5		436	5		436
Construction	—		—	—		—	—		—
Commercial	—		—	—		—	—		—
Commercial real estate	1		49	—		—	1		49
Home equity loans and lines of credit	—		—	1		40	1		40
Other	—		—	—		—	—		—
Total	1	$	49	6	$	476	7	$	525
At September 30, 2005
Residential first mortgage loans:
One- to four-family	4		590	8		554	12		1,144
Construction	—		—	—		—	—		—
Commercial	—		—	—		—	—		—
Commercial real estate	—		—	—		—	—		—
Home equity loans and lines of credit	1		16	3		50	4		66
Other	—		—	1		1	1		1
Total	5	$	606	12	$	605	17	$	1,211
At September 30, 2004
Residential first mortgage loans:
One- to four-family	5		237	5		497	10		734
Construction	—		—	—		—	—		—
Commercial	—		—	—		—	—		—
Commercial real estate	—		—	—		—	—		—
Home equity loans and lines of credit	—		—	5		79	5		79
Other	1		4	3		8	4		12
Total	6	$	241	13	$	584	19	$	825
At September 30, 2003
Residential first mortgage loans:
One- to four-family	2		118	5		379	7		497
Construction	—		—	—		—	—		—
Commercial	—		—	—		—	—		—
Commercial real estate	—		—	—		—	—		—
Home equity loans and lines of credit	—		—	6		98	6		98
Other	1		1	6		47	7		48
Total	3	$	119	17	$	524	20	$	643
At September 30, 2002
Residential first mortgage loans:
One- to four-family	4		243	10		578	14		821
Construction	—		—	—		—	—		—
Commercial	—		—	—		—	—		—
Commercial real estate	—		—	—		—	—		—
Home equity loans and lines of credit	1		5	1		16	2		21
Other	4		42	4		77	8		119
Total	9	$	290	15	$	671	24	$	961

Classified Assets. Banking regulations and our Asset Classification Policy provide that loans and other assets considered to be of lesser quality should be classified as “substandard,” “doubtful” or “loss” assets. An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.

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“Substandard” assets include those characterized by the “distinct possibility” that the institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard,” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. We classify an asset as “special mention” if the asset has a potential weakness that warrants management’s close attention. While such assets are not impaired, management has concluded that if the potential weakness in the asset is not addressed, the value of the asset may deteriorate, thereby adversely affecting the repayment of the asset.

An institution is required to establish general allowances for loan losses in an amount deemed prudent by management for loans classified substandard or doubtful, as well as for other problem loans. General allowances represent loss allowances which have been established to recognize the inherent losses associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets. When an institution classifies problem assets as “loss,” it is required either to establish a specific allowance for losses equal to 100% of the amount of the asset so classified or to charge off such amount. An institution’s determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the Office of Thrift Supervision which can order the establishment of additional general or specific loss allowances.

On the basis of management’s review of its assets, at September 30, 2006, we classified approximately $3.0 million of our assets as special mention and $586,000 as substandard. At September 30, 2006, none of our assets were classified as doubtful or loss.

The loan portfolio is reviewed on a regular basis to determine whether any loans require classification in accordance with applicable regulations. Not all classified assets constitute non-performing assets.

Allowance for Loan Losses

Our allowance for loan losses is maintained at a level necessary to absorb loan losses that are both probable and reasonably estimable. Management, in determining the allowance for loan losses, considers the losses inherent in its loan portfolio and changes in the nature and volume of loan activities, along with the general economic and real estate market conditions. Our allowance for loan losses consists of two elements: (1) an allocated allowance, which comprises allowances established on specific loans and class allowances based on historical loss experience and current trends, and (2) an unallocated allowance based on general economic conditions and other risk factors in our markets and portfolios. We maintain a loan review system, which allows for a periodic review of our loan portfolio and the early identification of potential impaired loans. Such system takes into consideration, among other things, delinquency status, size of loans, type and market value of collateral and financial condition of the borrowers. Specific loan loss allowances are established for identified losses based on a review of such information. A loan evaluated for impairment is considered to be impaired when, based on current information and

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events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. All loans identified as impaired are evaluated independently. We do not aggregate such loans for evaluation purposes. Loan impairment is measured based on the fair value of collateral method, taking into account the appraised value, any valuation assumptions used, estimated costs to sell and trends in the market since the appraisal date. General loan loss allowances are based upon a combination of factors including, but not limited to, actual loan loss experience, composition of the loan portfolio, current economic conditions, management’s judgment and losses which are probable and reasonably estimable. The allowance is increased through provisions charged against current earnings and recoveries of previously charged-off loans. Loans that are determined to be uncollectible are charged against the allowance. While management uses available information to recognize probable and reasonably estimable loan losses, future loss provisions may be necessary based on changing economic conditions. Payments received on impaired loans are applied first to accrued interest receivable and then to principal. The allowance for loan losses as of September 30, 2006 is maintained at a level that represents management’s best estimate of losses inherent in the loan portfolio, and such losses were both probable and reasonably estimable.

In addition, the Office of Thrift Supervision and the Pennsylvania Department of Banking, as an integral part of its examination process, periodically reviews our allowance for loan losses. The banking regulators may require that we recognize additions to the allowance based on its analysis and review of information available to it at the time of its examination.

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The following table sets forth activity in our allowance for loan losses for the periods indicated.

	At or For the Years Ended September 30,									At or for the ten months ended September 30, 2003			At or for the year ended November 30, 2002
	2006			2005			2004
	(Dollars in thousands)
Balance at beginning of year	$	3,563		$	3,027		$	2,509		$	2,154		$	1,371
Charge-offs:
Residential first mortgage loans:
One- to four-family		—			(10	)		—			(28	)		(42	)
Construction		—			—			—			—			—
Commercial		—			—			—			—			—
Commercial real estate		—			—			—			—			—
Home equity loans and lines of credit		(7	)		—			(31	)		(6	)		(11	)
Other		(2	)		(5	)		(4	)		(51	)		(97	)
Total charge-offs	$	(9	)	$	(15	)	$	(35	)	$	(85	)	$	(150	)
Recoveries:
Residential first mortgage loans:
One- to four-family		—			—			7			2			12
Construction		—			—			—			—			—
Commercial		—			—			—			—			—
Commercial real estate		—			—			—			—			—
Home equity loans and lines of credit		—			—			—			—			—
Other		1			1			16			8			21
Total recoveries	$	1		$	1		$	23		$	10		$	33
Net charge-offs		(8	)		(14	)		(12	)		(75	)		(117	)
Provision for loan losses		300			550			530			430			900
Balance at end of year	$	3,855		$	3,563		$	3,027		$	2,509		$	2,154
Ratios:
Net charge-offs to average loans outstanding		—	%		—	%		—	%		(0.02	)%		(0.03	)%
Allowance for loan losses to non-performing loans at end of year		809.87	%		588.93	%		455.19	%		478.82	%		321.01	%
Allowance for loan losses to total loans at end of year		0.69	%		0.70	%		0.63	%		0.57	%		0.55	%

As indicated in the table above, we charged off a de minimus amount of loans since fiscal year 2004, due, in part, to a stable local economy with significant appreciation in real estate values, conservative underwriting of loans and aggressive monitoring of the loan portfolio to identify and address non-performing loans and potential problem assets at an early date. The amount of foreclosures we incurred in the last five years was not material to our financial statements taken as a whole and ESSA Bank & Trust suffered no material losses on foreclosed assets during that period. See “—Non-Performing Loans and Problem Assets.” There can be no assurance that we will not experience a deterioration of its loan portfolio, including increases in non-performing loans, problem assets and charge-offs, in the future.

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Allocation of Allowance for Loan Losses. The following tables set forth the allowance for loan losses allocated by loan category, the percent of the allowance to the total allowance and the percent of loans in each category to total loans at the dates indicated. The allowance for loan losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories.

	At September 30,
	2006						2005						2004
	Amount		Percent of Allowance to Total Allowance		Percent of Loans in Category to Total Loans		Amount		Percent of Allowance to Total Allowance		Percent of Loans in Category to Total Loans		Amount		Percent of Allowance to Total Allowance		Percent of Loans in Category to Total Loans
	(Dollars in thousands)
Residential first mortgage loans:
One- to four-family	$	2,026	52.56	%	80.36	%	$	1,887	52.96	%	81.68	%	$	1,397	46.15	%	82.41	%
Construction		86	2.23		1.06			104	2.92		1.47			108	3.57		1.72
Commercial		133	3.45		1.09			114	3.20		1.03			62	2.05		0.51
Commercial real estate		773	20.05		8.43			471	13.22		7.17			332	10.97		6.08
Home equity loans and lines of credit		746	19.35		8.31			661	18.55		7.82			504	16.65		7.07
Other		46	1.19		0.75			39	1.09		0.83			106	3.50		2.21
Total allocated allowance		3,810	98.83		100.00	%		3,276	91.94		100.00	%		2,509	82.89		100.00	%
Unallocated allowance		45	1.17		—			287	8.06		—			518	17.11		—
Total allowance for loan losses	$	3,855	100.00	%	100.00	%	$	3,563	100.00	%	100.00	%	$	3,027	100.00	%	100.00	%

	At September 30, 2003						At November 30, 2002
	Amount		Percent of Allowance to Total Allowance		Percent of Loans in Category to Total Loans		Amount		Percent of Allowance to Total Allowance		Percent of Loans in Category to Total Loans
	(Dollars in thousands)
Residential first mortgage loans:
One- to four-family	$	1,326	52.87	%	85.16	%	$	1,177	54.65	%	84.88	%
Construction		87	3.47		1.37			95	4.41		1.89
Commercial		44	1.75		0.51			42	1.95		0.35
Commercial real estate		208	8.29		4.19			184	8.54		2.63
Home equity loans and lines of credit		393	15.66		5.99			252	11.70		6.48
Other		123	4.90		2.78			150	6.96		3.77
Total allocated allowance		2,181	86.94		100.00	%		1,900	88.21		100.00	%
Unallocated allowance		328	13.06		—			254	11.79		—
Total allowance for loan losses	$	2,509	100.00	%	100.00	%	$	2,154	100.00	%	100.00	%

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We use the accrual method of accounting for all performing loans. The accrual of interest income is generally discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectibility of principal or interest, even though the loan is currently performing. When a loan is placed on nonaccrual status, unpaid interest previously credited to income is reversed. Interest received on nonaccrual loans generally is either applied against principal or reported as interest income, according to management’s judgment as to the collectibility of principal. Generally, residential and consumer loans are restored to accrual status when the obligation is brought in accordance with the contractual terms for a reasonable period of time and ultimate collectibility of total contractual principal and interest is no longer in doubt. Commercial loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time and ultimate collectibility of total contractual principal and interest no longer is in doubt.

In its collection efforts, we will first attempt to cure any delinquent loan. If a real estate secured loan is placed on nonaccrual status, it will be subject to transfer to the real estate owned (“REO”) portfolio (properties acquired by or in lieu of foreclosure), upon which our loan servicing department will pursue the sale of the real estate. Prior to this transfer, the loan balance will be reduced, if necessary, to reflect its current market value less estimated costs to sell. Write downs of REO that occur after the initial transfer from the loan portfolio and costs of holding the property are recorded as other operating expenses, except for significant improvements which are capitalized to the extent that the carrying value does not exceed estimated net realizable value.

Fair values for determining the value of collateral are estimated from various sources, such as real estate appraisals, financial statements and from any other reliable sources of available information. For those loans deemed to be impaired, collateral value is reduced for the estimated costs to sell. Reductions of collateral value are based on historical loss experience, current market data, and any other source of reliable information specific to the collateral.

This analysis process is inherently subjective, as it requires us to make estimates that are susceptible to revisions as more information becomes available. Although we believe that we have established the allowance at levels to absorb probable and estimable losses, future additions may be necessary if economic or other conditions in the future differ from the current environment.

Securities Activities

Our securities investment policy is established by our Board of Directors. This policy dictates that investment decisions be made based on the safety of the investment, liquidity requirements, potential returns, cash flow targets, and consistency with our interest rate risk management strategy. Our investment policy is reviewed annually by our ALCO/Investment management committee. All policy changes recommended by this management committee must be approved by the Board of Directors. The Committee is composed of

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the Chief Financial Officer, Controller and Chief Executive Officer. Authority to make investments under the approved guidelines will be delegated by the Committee to appropriate officers. While general investment strategies will be developed and authorized by the ALCO/Investment management committee, the execution of specific actions rests with the Chief Financial Officer.

The approved investment officers are authorized to execute investment transactions up to $4.0 million per transaction without the prior approval of the ALCO/Investment Committee and within the scope of the established investment policy. These officers are also authorized to execute investment transactions between $4.0 million and $6.0 million with the additional approval from two of the following officers: Chief Executive Officer, Chief Operating Officer, or Chief Lending Officer. Each transaction in excess of $6.0 million must receive prior approval of the Investment Committee.

Our current investment policy generally permits securities investments in debt securities issued by the U.S. government and U.S. agencies, municipal bonds, and corporate debt obligations, as well as investments in preferred and common stock of government agencies and government sponsored enterprises such as Fannie Mae, Freddie Mac and 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. The policy also permits investments in mortgage-backed securities, including pass-through securities issued and guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae as well as commercial paper, corporate debt and municipal securities. As of September 30, 2006, we held no asset-backed securities, and other equity securities consisted almost exclusively of securities issued by Fannie Mae and the Federal Home Loan Bank of Pittsburgh. Our current investment strategy uses a risk management approach of diversified investing in fixed-rate securities with short- to intermediate-term maturities, as well as adjustable-rate securities, which may have a longer term to maturity. The emphasis of this approach is to increase overall investment securities yields while managing interest rate risk.

SFAS No. 115 requires that, at the time of purchase, we designate a security as held to maturity, available-for-sale, or trading, depending on our ability and intent. Securities available-for-sale are reported at fair value, while securities held to maturity are reported at amortized cost.

Mortgage-Backed Securities. We purchase mortgage-backed securities in order to generate positive interest rate spreads with minimal administrative expense, lower credit risk as a result of the guarantees provided by Freddie Mac, Fannie Mae and Ginnie Mae, and increased liquidity. We invest primarily in mortgage-backed securities issued or sponsored by Fannie Mae, Freddie Mac, and Ginnie Mae. To a lesser extent, we also invest in securities backed by U.S. government agencies. At September 30, 2006 our mortgage-backed securities portfolio had a fair value of $54.4 million, consisting of Freddie Mac, Fannie Mae and Ginnie Mae mortgage-backed securities.

Mortgage-backed securities are created by pooling mortgages and issuing a security collateralized by the pool of mortgages with an interest rate that is less than the interest rate on

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the underlying mortgages. Mortgage-backed securities typically represent a participation interest in a pool of single-family or multi-family mortgages, although most of our mortgage-backed securities are collateralized by single-family mortgages. The issuers of such securities (generally U.S. government agencies and U.S. government sponsored enterprises, including Fannie Mae, Freddie Mac and Ginnie Mae) pool and resell the participation interests in the form of securities to investors, such as ESSA Bank & Trust, and guarantee the payment of principal and interest to these investors. Investments in mortgage-backed securities involve a risk that actual prepayments will be greater or less than the prepayment rate estimated at the time of purchase, which may require adjustments to the amortization of any premium or accretion of any discount relating to such instruments, thereby affecting the net yield on such securities. We review prepayment estimates for our mortgage-backed securities at the time of purchase to ensure that prepayment assumptions are reasonable considering the underlying collateral for the securities at issue and current interest rates, and to determine the yield and estimated maturity of the mortgage-backed securities portfolio. Periodic reviews of current prepayment speeds are performed in order to ascertain whether prepayment estimates require modification that would cause amortization or accretion adjustments.

Equity Securities. At September 30, 2006, our equity securities consisted almost entirely of securities issued by Fannie Mae, which are classified as available-for-sale.

In addition, we hold Federal Home Loan Bank of Pittsburgh common stock to qualify for membership in the Federal Home Loan Bank System and to be eligible to borrow funds under the Federal Home Loan Bank of Pittsburgh advance program. There is no market for the common stock.

The aggregate fair value of our Federal Home Loan Bank of Pittsburgh common stock as of September 30, 2006 was $13.7 million based on its par value. No unrealized gains or losses have been recorded because we have determined that the par value of the common stock represents its fair value. We owned shares of Federal Home Loan Bank of Pittsburgh common stock at September 30, 2006 with a par value that was $189,000 more than we were required to own to maintain our membership in the Federal Home Loan Bank System and to be eligible to obtain advances. We are required to purchase additional stock as our outstanding advances increase. Any excess stock we own is redeemed monthly by the Federal Home Loan Bank of Pittsburgh.

We review equity and debt securities with significant declines in fair value on a periodic basis to determine whether they should be considered temporarily or other than temporarily impaired. If a decline in the fair value of a security is determined to be other than temporary, we are required to reduce the carrying value of the security to its fair value and record a non-cash impairment charge in the amount of the decline, net of tax effect, against our current income.

Our investment securities portfolio contains unrealized losses of securities, including mortgage-related instruments issued or backed by the full faith and credit of the United States government, or generally viewed as having the implied guarantee of the U.S. government, and debt obligations of a U.S. state or political subdivision.

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Our policy is to recognize an other-than-temporary impairment of equity securities where the fair value has been significantly below cost for three consecutive quarters. For fixed maturity investments with unrealized losses due to interest rates where we have the positive intent and ability to hold the investment for a period of time sufficient to allow a market recovery, declines in value below cost are not assumed to be other than temporary. We review our position quarterly and concluded that at September 30, 2006, the declines outlined in the table below represent temporary declines due to interest rate change, and we have the intent and ability to hold those securities either to maturity or to allow a market recovery. However, as of September 30, 2005, we recognized a loss of $130,000 on equity securities that we deemed, through analysis of the security, to be other than a temporary loss.

The following table sets forth the composition of our securities portfolio (excluding Federal Home Loan Bank of Pittsburgh common stock) at the dates indicated.

	At September 30,
	2006				2005				2004
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Investment securities available for sale:
U.S. Government agency obligations	$	41,960	$	41,815	$	34,989	$	34,729	$	14,981	$	14,992
Obligations of state and political subdivisions		6,240		6,465		5,102		5,377		5,341		5,691
Mortgage-backed securities		40,327		39,907		18,799		18,491		20,482		20,444
Corporate notes		—		—		3,039		3,030		3,041		3,039
Total debt securities		88,527		88,187		61,929		61,627		43,845		44,166
Equity securities		882		935		882		879		1,012		908
Total investment securities available-for-sale	$	89,409	$	89,122	$	62,811	$	62,506	$	44,857	$	45,074
Investment securities held-to-maturity:
U.S. Government agency obligations	$	4,730	$	4,681	$	4,730	$	4,704	$	—	$	—
Mortgage-backed securities		14,985		14,512		16,775		16,593		10,263		10,282
Total securities held to maturity	$	19,715	$	19,193	$	21,505	$	21,297	$	10,263	$	10,282

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Portfolio Maturities and Yields. The composition and maturities of the investment securities portfolio at September 30, 2006 are summarized in the following table. Maturities are based on the final contractual payment dates, and do not reflect the impact of prepayments or early redemptions that may occur.

	One Year or Less				More than One Year through Five Years				More than Five Years through Ten Years				More than Ten Years				Total Securities
	Amortized Cost		Weighted Average Yield		Amortized Cost		Weighted Average Yield		Amortized Cost		Weighted Average Yield		Amortized Cost		Weighted Average Yield		Amortized Cost		Fair Value		Weighted Average Yield
	(Dollars in thousands)
Investment securities available for sale:
U.S. Government agency obligations	$	22,968	3.95	%	$	17,070	4.73	%	$	1,922	5.00	%	$	—	—	%	$	41,960	$	41,815	4.32	%
Obligations of state and political subdivisions		—	—			—	—			—	—			6,240	4.72			6,240		6,465	4.72
Mortgage-backed securities		511	5.29			12,538	4.46			169	5.50			27,109	4.88			40,327		39,907	4.76
Corporate notes		—	—			—	—			—	—			—	—			—		—	—
Total debt securities		23,479	3.98	%		29,608	4.62	%		2,091	5.04	%		33,349	4.85	%		88,527		88,187	4.55	%
Equity securities		882				—				—				—				882		935
Total investment securities available for-sale	$	24,361			$	29,608			$	2,091			$	33,349			$	89,409	$	89,122
Investment securities held-to-maturity:
U.S. Government agency obligations	$	—	—	%	$	4,730	4.35	%	$	—	—	%	$	—	—	%	$	4,730	$	4,681	4.35	%
Mortgage-backed securities		—	—			7,261	4.54			3,312	4.76			4,412	4.64			14,985		14,512	4.62
Total securities held to maturity	$	—	—	%	$	11,991	4.46	%	$	3,312	4.76	%	$	4,412	4.64	%	$	19,715	$	19,193	4.55	%

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Sources of Funds

General. Deposits, borrowings, repayments and prepayments of loans and securities, proceeds from maturing securities and cash flows from operations are the primary sources of our funds for use in lending, investing and for other general purposes.

Deposits. We offer a variety of deposit accounts with a range of interest rates and terms. Our deposit accounts consist of savings accounts, NOW accounts, checking accounts, money market accounts, club accounts, certificates of deposit and IRAs and other qualified plan accounts. We provide commercial checking accounts for businesses.

At September 30, 2006, our deposits totaled $402.2 million. Interest-bearing NOW, savings and club and money market deposits totaled $168.9 million at September 30, 2006. At September 30, 2006, we had a total of $209.6 million in certificates of deposit. Noninterest-bearing demand deposits totaled $23.7 million. Although we have a significant portion of our deposits in shorter-term certificates of deposit, we monitor activity on these accounts and, based on historical experience and our current pricing strategy, we believe we will retain a large portion of these accounts upon maturity.

Our deposits are obtained predominantly from the areas in which our branch offices are located. We rely on our favorable locations, customer service and competitive pricing to attract and retain these deposits. While we accept certificates of deposit in excess of $100,000 for which we may provide preferential rates, we generally do not solicit such deposits as they are more difficult to retain than core deposits. At September 30, 2006, we had a total of $28.4 million of brokered certificates of deposits, an increase of $7.1 million from the prior fiscal year end. Our brokered certificates of deposits range from one- to five-year terms, and are purchased only through pre-approved brokers.

The following table sets forth the distribution of total deposit accounts, by account type, at the dates indicated.

	For the Years Ended September 30,
	2006						2005						2004
	Average Balance		Percent		Weighted Average Rate		Average Balance		Percent		Weighted Average Rate		Average Balance		Percent		Weighted Average Rate
	(Dollars in thousands)
Deposit type:
Noninterest bearing demand accounts	$	21,383	5.49	%	—	%	$	17,527	5.00	%	—	%	$	13,281	4.01	%	—	%
Interest bearing NOW		59,709	15.34		0.07			61,562	17.57		0.13			61,792	18.66		0.16
Money market		31,618	8.12		2.17			33,386	9.53		1.26			33,078	9.99		0.74
Savings and club		79,452	20.41		0.45			88,727	25.32		0.44			90,853	27.44		0.49
Certificates of deposit		197,064	50.64		4.47			149,267	42.58		3.32			132,119	39.90		3.20
Total deposits	$	389,226	100.00	%	2.32	%	$	350,469	100.00	%	1.67	%	$	331,123	100.00	%	1.51	%

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As of September 30, 2006, the aggregate amount of outstanding certificates of deposit in amounts greater than or equal to $100,000 was approximately $81.0 million. The following table sets forth the maturity of those certificates as of September 30, 2006.

	At September 30, 2006
	(In thousands)
Three months or less	$	15,157
Over three months through six months		17,882
Over six months through one year		22,969
Over one year		25,027
Total	$	81,035

At September 30, 2006, $147.2 million of our certificates of deposit had maturities of one year or less. We monitor activity on these accounts and, based on historical experience and our current pricing strategy, we believe we will retain a large portion of these accounts upon maturity.

The following tables sets forth, by interest rate ranges, information concerning certificates of deposit.

	At September 30, 2006 Period to Maturity
	Less Than or Equal to One Year		More Than One to Two Years		More Than Two to Three Years		More Than Three Years		Total		Percent of Total
	(Dollars in thousands)
Interest Rate Range:
2.00% and below	$	49	$	—	$	—	$	—	$	49	$	0.02	%
2.01% to 3.00%		3,991		670		—		—		4,661		2.22	%
3.01% to 4.00%		42,910		11,314		8,683		1,860		64,767		30.90	%
4.01% to 5.00%		57,345		15,300		6,024		14,695		93,364		44.56	%
5.01% to 6.00%		42,949		1,911		200		1,673		46,733		22.30	%
6.01% and above		3		—		—		—		3		—	%
Total	$	147,247	$	29,195	$	14,907	$	18,228	$	209,577	$	100	%

The following table sets forth time deposits classified by interest rate at the dates indicated.

	At September 30,
	2006		2005		2004
	(In thousands)
Interest Rate
2.00% and below	$	49	$	4,737	$	44,520
2.01% to 3.00%		4,661		37,440		16,395
3.01% to 4.00%		64,767		80,140		24,755
4.01% to 5.00%		93,364		31,470		19,560
5.01% to 6.00%		46,733		19,131		20,783
6.01% and above		3		226		1,502
Total	$	209,577	$	173,144	$	127,515

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Borrowings. Our short-term borrowings consist of Federal Home Loan Bank advances. The following table sets forth information concerning balances and interest rates on all of our short-term borrowings at the dates and for the years indicated.

	At or For the Years Ended September 30,
	2006			2005			2004
	(Dollars in thousands)
Balance at end of year	$	35,299		$	27,479		$	11,134
Maximum outstanding at any month end	$	35,299		$	27,479		$	16,878
Average balance during year	$	21,957		$	18,991		$	10,388
Weighted average interest rate at end of year		5.40	%		3.84	%		1.96	%
Average interest rate during year		4.92	%		2.92	%		1.36	%

At September 30, 2006, we had the ability to borrow approximately $496.1 million under our credit facilities with the Federal Home Loan Bank of Pittsburgh.

Competition

We face significant competition in both originating loans and attracting deposits. The counties in which we operate have a significant concentration of financial institutions, many of which are significantly larger institutions and have greater financial resources than we, and many of which are our competitors to varying degrees. Our competition for loans comes principally from commercial banks, savings banks, mortgage banking companies, credit unions, leasing companies, insurance companies and other financial service companies. Our most direct competition for deposits has historically come from commercial banks, savings banks and credit unions. We face additional competition for deposits from nondepository competitors such as the mutual fund industry, securities and brokerage firms and insurance companies.

We seek to meet this competition by the convenience of our branch locations, emphasizing personalized banking and the advantage of local decision-making in our banking business. Specifically, we promote and maintain relationships and build customer loyalty within local communities by focusing our marketing and community involvement on the specific needs of individual neighborhoods. As of June 30, 2006 ESSA Bank & Trust had the second largest deposit market share in Monroe County, Pennsylvania. We do not rely on any individual, group, or entity for a material portion of our deposits.

Employees

As of September 30, 2006, we had 142 full-time employees and 28 part-time employees. The employees are not represented by a collective bargaining unit and we consider our relationship with our employees to be good.

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Properties

As of September 30, 2006, the net book value of our properties was $6.4 million. The following is a list of our offices:

Location	Leased or Owned	Year Acquired or Leased	Square Footage
Main Office:
200 Palmer Street Stroudsburg, PA 18360	Owned	2003	36,000
Full Service Branches:
Route 940 HC 1 Box 1192 Blakeslee, PA 18610	Owned	2002	2,688
Route 209 & Lake Mineola Road P.O. Box 35 Brodheadsville, PA 18301	Owned	1983	4,100
Route 209 7001 Milford Road East Stroudsburg, PA	Leased	1997	1,700
Routes 209 & 447 695 North Courtland Street East Stroudsburg, PA 18301	Leased	1999	420
75 Washington Street East Stroudsburg, PA 18301	Owned	1966	3,300
Route 209 P.O. Box 1009 Marshalls Creek, PA 18335	Leased	1991	1,560
Mount Pocono Plaza 601 Route 940 Mt. Pocono, PA 18344	Leased	1999	536
1309 Blue Valley Drive Pen Argyl, PA 18072	Leased	2001	444
744 Main Street P.O. Box L Stroudsburg, PA 18360	Owned	1985	12,000
Route 611 1070 North Ninth Street Stroudsburg, PA 18360	Leased	2000	488

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Location	Leased or Owned	Year Acquired or Leased	Square Footage
Route 611 RR1 Box 402 Tannersville, PA 18372	Leased	1993	611
Route 209 & Weir Lake Road P.O. Box 271 Brodheadsville, PA 18322	Leased	1997	576
Other Properties
746-752 Main Street Stroudsburg, PA 18360	Owned	2004	4,650

Subsidiary Activities

ESSA Bank & Trust has two wholly-owned subsidiaries, ESSACOR, Inc. and Pocono Investment Company. ESSACOR, Inc. is a Pennsylvania corporation that is currently inactive. Pocono Investment Company is a Delaware corporation formed as an investment company subsidiary to hold and manage certain investments of ESSA Bank & Trust, including certain intellectual property.

Legal Proceedings

We are not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business, which, in the aggregate, involve amounts which we believe are immaterial to our consolidated financial condition and results of operations.

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REGULATION

General

ESSA Bancorp, Inc. is a Pennsylvania corporation. As a savings and loan holding company, we are required to file certain reports with, and otherwise comply with the rules and regulations of the Office of Thrift Supervision.

ESSA Bank & Trust is a Pennsylvania-chartered savings association and its deposit accounts are insured up to applicable limits by the Federal Deposit Insurance Corporation under the Deposit Insurance Fund (“DIF”). We are subject to extensive regulation by the Pennsylvania Department of Banking, as its chartering agency, and by the Office of Thrift Supervision, as its primary federal regulator. We must file reports with the Pennsylvania Department of Banking and the Office of Thrift Supervision 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. There are periodic examinations by the Pennsylvania Department of Banking and the Office of Thrift Supervision to test our compliance with various regulatory requirements. This regulation and supervision establishes a comprehensive framework of activities in which an institution can engage and is intended primarily for the protection of the Federal Deposit Insurance Corporation insurance fund and depositors. The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and with their examination policies, including policies with respect to the classification of assets and the establishment of adequate loan loss reserves for regulatory purposes. Any change in such regulation, whether by the Pennsylvania Department of Banking or the Office of Thrift Supervision could have a material adverse impact on us and our operations.

Regulation by the Pennsylvania Department of Banking

The Pennsylvania Savings Association Code of 1967, as amended (the “Savings Association 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 ESSA Bank & Trust and its affairs. The Savings Association Code delegates extensive rulemaking power and administrative discretion to the Pennsylvania Department of Banking so that the supervision and regulation of state-chartered savings associations may be flexible and readily responsive to changes in economic conditions and in savings and lending practices.

One of the purposes of the Savings Association Code is to provide savings associations with the opportunity to be competitive with each other and with other financial institutions existing under other Pennsylvania laws as well as other state, federal and foreign laws. A Pennsylvania savings association may locate or change the location of its principal place of business and establish an office anywhere in Pennsylvania, with the prior approval of the Pennsylvania Department of Banking.

The Department generally examines each savings association not less frequently than once every two years. Although the Department may accept the examinations and reports of the

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Office of Thrift Supervision in lieu of the Department’s examination, the current practice is for the Department to conduct individual examinations. The Department may order any savings association to discontinue any violation of law or unsafe or unsound business practice and may direct any trustee, officer, attorney, or employee of a savings association engaged in an objectionable activity, after the Department has ordered the activity to be terminated, to show cause at a hearing before the Department why such person should not be removed.

Regulation by the Office of Thrift Supervision

ESSA Bank & Trust is also subject to extensive regulation, examination and supervision by the Office of Thrift Supervision, as its primary federal regulator. Such regulation and supervision:

• establishes a comprehensive framework of activities in which the Bank can engage;

• limits the ability of ESSA Bank & Trust to extend credit to any given borrower;

• significantly limits the transactions in which ESSA Bank & Trust may engage with its affiliates;

• requires ESSA Bank & Trust to meet a qualified thrift lender test which requires ESSA Bank & Trust to invest in qualified thrift investments, which include primarily residential mortgage loans and related investments;

• places limitations on capital distributions by savings associations, such as ESSA Bank & Trust, including cash dividends;

• imposes assessments to the Office of Thrift Supervision to fund their operations;

• establishes a continuing and affirmative obligation, consistent with ESSA Bank & Trust’s safe and sound operation, to help meet the credit needs of its community, including low and moderate income neighborhoods;

• establishes various capital categories resulting in various levels of regulatory scrutiny applied to the institutions in a particular category; and

• establishes standards for safety and soundness.

The Office of Thrift Supervision generally examines each savings association not less frequently than once every two years. The Office of Thrift Supervision has the authority to order any savings association or its directors, trustees, officers, attorneys or employees to discontinue any violation of law or unsafe or unsound banking practice. See “- Regulatory Enforcement Authority.”

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Transactions with Affiliates

Sections 23A and 23B of the Federal Reserve Act and its implementing regulations, govern transactions between depository institutions and their affiliates. These provisions are made applicable to savings associations, such as ESSA Bank & Trust, by the Home Owners’ Loan Act and Office of Thrift Supervision regulation. In a holding company context, the parent holding company of a savings association and any companies that are controlled by the parent holding company, are affiliates of the savings association.

Section 23A limits the extent to which the savings association or its subsidiaries may engage in certain transactions with its affiliates. These transactions include, among other things, the making of loans or other extensions of credit to an affiliate and the purchase of assets from an affiliate. Generally, these transactions between the savings association and any one affiliate cannot exceed 10% of the savings association’s capital stock and surplus, and these transactions between the savings institution and all of its affiliates cannot, in the aggregate, exceed 20% of the savings institution’s capital stock and surplus. Section 23A also establishes specific collateral requirements for loans or extensions of credit to an affiliate, and for guarantees or acceptances on letters of credit issued on behalf of an affiliate. Applicable regulations prohibit a savings association from lending to any affiliate engaged in activities not permissible for a bank holding company or for the purpose of acquiring the securities of most affiliates.

Section 23B requires that transactions covered by Section 23A and a broad list of other specified transactions be on terms and under circumstances substantially the same, or no less favorable to the savings association or its subsidiary, as similar transactions with non-affiliates. In addition to the restrictions on transactions with affiliates that Sections 23A and 23B of the Federal Reserve Act impose on depository institutions, the regulations of the Office of Thrift Supervision also generally prohibit a savings association from purchasing or investing in securities issued by an affiliate.

Insurance of Accounts and Regulation by the Federal Deposit Insurance Corporation

Deposit accounts in ESSA Bank & Trust are insured by the Federal Deposit Insurance Corporation generally up to a maximum of $100,000 per separately insured depositor and up to a maximum of $250,000 for self-directed retirement accounts. ESSA Bank & Trust’s deposits, therefore, are subject to Federal Deposit Insurance Corporation deposit insurance assessments.

On February 15, 2006, federal legislation to reform federal deposit insurance was enacted. This new legislation required, among other things, that the Federal Deposit Insurance Corporation adopt regulations increasing the maximum amount of federal deposit insurance coverage per separately insured depositor beginning in 2010 (with a cost of living adjustment to become effective in five years) and modifying the deposit fund’s reserve ratio for a range between 1.15% and 1.50% of estimated insured deposits.

On November 2, 2006, the Federal Deposit Insurance Corporation adopted final regulations establishing a risk-based assessment system that will enable the Federal Depoist Insurance Corporationi to more closely tie each financial institution’s premiums to the risk it

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poses to the deposit insurance fund. Under the new risk-based assessment system, which becomes effective in the beginning of 2007, the Federal Deposit Insurance Corporation will evaluate the risk of each financial institution based on three primary sources of information: (1) its supervisory rating, (2) its financial ratios, and (3) its long-term debt issuer rating, if the institution has one. The new rates for nearly all of the financial institution industry will vary between five and seven cents for every $100 of domestic deposits. At the same time, the Federal Deposit Insurance Corporation also adopted final regulations designating the reserve ratio for the deposit insurance fund during 2007 at 1.25% of estimated insured deposits.

Effective March 31, 2006, the Federal Deposit Insurance Corporation merged the Bank Insurance Fund (“BIF”) and the Savings Association Insurance Fund (“SAIF”) into a single insurance fund called the Deposit Insurance Fund. As a result of the merger, the BIF and SAIF were abolished. The merger of the BIF and SAIF into the Deposit Insurance Fund does not affect the authority of the Financing Corporation (“FICO”) to impose and collect, with approval of the Federal Deposit Insurance Corporation, assessments for anticipated payments, insurance costs and custodial fees on bonds issued by the FICO in the 1980s to recapitalize the Federal Savings and Loan Insurance Corporation. The bonds issued by the FICO are due to mature in 2017 through 2019. For the quarter ended June 30, 2006, the FICO assessment was equal to 1.28 basis points for each $100 in domestic deposits maintained at an institution.

Capital Requirements

Any savings institution that fails any of the capital requirements is subject to possible enforcement actions by the Office of Thrift Supervision. Such actions could include a capital directive, a cease and desist order, civil money penalties, the establishment of restrictions on an institution’s operations, termination of federal deposit insurance, and the appointment of a conservator or receiver. Certain actions are required by law. The Office of Thrift Supervision’s capital regulation provides that such actions, through enforcement proceedings or otherwise, could require one or more of a variety of corrective actions.

We are also subject to more stringent capital guidelines of the Department. Although not adopted in regulation form, the Department utilizes capital standards of 6% leverage capital and 10% risk-based capital. The components of leverage and risk-based capital are substantially the same as those defined by the Office of Thrift Supervision.

Loans-to-One Borrower Limitation

Under federal regulations, with certain limited exceptions, a Pennsylvania chartered savings association may lend to a single or related group of borrowers on an “unsecured” basis an amount equal to 15% of its unimpaired capital and surplus. An additional amount, equal to 10% of unimpaired capital and surplus, may be lent if such loan is secured by readily marketable collateral, which is defined to include certain securities, but generally does not include real estate. Our internal policy, however, is to not make loans either individually or in the aggregate to one entity in excess of $3.0 million in commercial relationships, nor $3.5 million in total loan relationships, including the borrower’s residential mortgage and consumer loans. However, in special circumstances this limit may be exceeded subject to the approval of the Management Loan Committee in addition to a majority of the members of the Board of Directors.

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Prompt Corrective Action

Under federal regulations, a savings association is deemed to be (i) “well capitalized” if it has total risk-based capital of 10.0% or more, has a Tier 1 risk-based capital ratio of 6.0% or more, has a Tier I leverage capital ratio of 5.0% or more and is not subject to any written capital order or directive; (ii) “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or more, a Tier I risk-based capital ratio of 4.0% or more and a Tier I leverage capital ratio of 4.0% or more (3.0% under certain circumstances) and does not meet the definition of “well capitalized”; (iii) “undercapitalized” if it has a total risk-based capital ratio that is less than 8.0%, a Tier I risk-based capital ratio that is less than 4.0% or a Tier I leverage capital ratio that is less than 4.0% (3.0% under certain circumstances); (iv) “significantly undercapitalized” if it has a total risk-based capital ratio that is less than 6.0%, a Tier I risk-based capital ratio that is less than 3.0% or a Tier I leverage capital ratio that is less than 3.0%; and (v) “critically undercapitalized” if it has a ratio of tangible equity to total assets that is equal to or less than 2.0%. Federal regulations also specify circumstances under which a federal banking agency may reclassify a well capitalized institution as adequately capitalized and may require an adequately capitalized institution to comply with supervisory actions as if it were in the next lower category (except that the Office of Thrift Supervision may not reclassify a significantly undercapitalized institution as critically undercapitalized). As of September 30, 2006, the Bank was a “well-capitalized institution” for this purpose.

The USA PATRIOT Act

The USA PATRIOT Act of 2001 gave the federal government new powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing and broadened anti-money laundering requirements. 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. Accordingly, if we engage in a merger or other acquisition, our controls designed to combat money laundering would be considered as part of the application process. We have established policies, procedures and systems designed to comply with these regulations.

Holding Company Regulation

Upon completion of the conversion, ESSA Bancorp, Inc. will be a unitary savings and loan holding company, subject to regulation and supervision by the Office of Thrift Supervision. The Office of Thrift Supervision will have enforcement authority over ESSA Bancorp and its non-savings institution subsidiaries. Among other things, this authority permits the Office of Thrift Supervision to restrict or prohibit activities that are determined to be a risk to ESSA Bank & Trust.

Under prior law, a unitary savings and loan holding company generally had no regulatory restrictions on the types of business activities in which it could engage, provided that its subsidiary savings association was a qualified thrift lender. The Gramm-Leach-Bliley Act of 1999, however, restricts unitary savings and loan holding companies not existing on, or applied

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for before, May 4, 1999 to those activities permissible for financial holding companies or for multiple savings and loan holding companies. The Company will not be a grandfathered unitary savings and loan holding company and, therefore, will be limited to the activities permissible for financial holding companies or for multiple savings and loan holding companies. A financial holding company may engage in activities that are financial in nature, including underwriting equity securities and insurance as well as activities that are incidental to financial activities or complementary to a financial activity. A multiple savings and loan holding company is generally limited to activities permissible for bank holding companies under Section 4(c)(8) of the Bank Holding Company Act, subject to the prior approval of the Office of Thrift Supervision, and certain additional activities authorized by Office of Thrift Supervision regulations.

Federal law prohibits a savings and loan holding company, directly or indirectly, or through one or more subsidiaries, from acquiring control of another savings institution or holding company thereof, without prior written approval of the Office of Thrift Supervision. It also prohibits the acquisition or retention of, with specified exceptions, more than 5% of the equity securities of a company engaged in activities that are not closely related to banking or financial in nature or acquiring or retaining control of an institution that is not federally insured. In evaluating applications by holding companies to acquire savings institutions, the Office of Thrift Supervision must consider the financial and managerial resources and future prospects of the savings institution involved, the effect of the acquisition on the risk to the insurance fund, the convenience and needs of the community, the effectiveness of each parties’ anti-money laundering program, and competitive factors.

Federal Securities Laws

Shares of ESSA Bancorp, Inc.’s common stock are registered with the SEC under Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). ESSA Bancorp, Inc. is also subject to the proxy rules, tender offer rules, insider trading restrictions, annual and periodic reporting, and other requirements of the Exchange Act.

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 was enacted in response to public concerns regarding corporate accountability in connection with certain accounting scandals. The stated goals of the Sarbanes-Oxley Act are to increase corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies, and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws. The Sarbanes-Oxley Act generally applies to all companies that file or are required to file periodic reports with the Securities and Exchange Commission, under the Securities Exchange Act of 1934.

The Sarbanes-Oxley Act includes specific additional disclosure requirements, requires the Securities and Exchange Commission and national securities exchanges to adopt extensive additional disclosure, corporate governance and other related rules, and mandates further studies of certain issues by the Securities and Exchange Commission. The Sarbanes-Oxley Act

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represents significant federal involvement in matters traditionally left to state regulatory systems, such as the regulation of the accounting profession, and to corporate law, such as the relationship between a board of directors and management and between a board of directors and its committees.

Although we will incur additional expense in complying with the provisions of the Sarbanes-Oxley Act and the resulting regulations, management does not expect that such compliance will have a material impact on our results of operations or financial condition.

Regulatory Enforcement Authority

Federal law provides federal banking regulators with substantial enforcement powers. This enforcement authority includes, among other things, the ability to assess civil money penalties, to issue cease-and-desist or removal orders, and to initiate injunctive actions against banking organizations and institution-affiliated parties, as defined. In general, these enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound practices. Other actions or inactions may provide the basis for enforcement action, including misleading or untimely reports filed with regulatory authorities.

Dividends

Our ability to pay dividends depends, to a large extent, upon ESSA Bank & Trust’s ability to pay dividends to ESSA Bancorp. The Savings Association Code states, in part, that dividends may be declared and paid by the Bank only out of net earnings for the then current year. A dividend may not be declared or paid if it would impair the general reserves of ESSA Bank & Trust required to be maintained under the Savings Association Code. In addition, we are required to notify the Office of Thrift Supervision prior to declaring a dividend to the Company, and receive the nonobjection of the Office of Thrift Supervision to any such dividend.

TAXATION

Federal Taxation

General. ESSA Bancorp, Inc. and ESSA Bank & Trust are subject to federal income taxation in the same general manner as other corporations, with some exceptions discussed below. The following discussion of federal taxation is intended only to summarize material federal income tax matters and is not a comprehensive description of the tax rules applicable to ESSA Bancorp, Inc. and ESSA Bank & Trust.

Method of Accounting. For federal income tax purposes, ESSA Bank & Trust currently reports its income and expenses on the accrual method of accounting and uses a tax year ending September 30th for filing its consolidated federal income tax returns. The Small Business Protection Act of 1996 eliminated the use of the reserve method of accounting for bad debt reserves by savings institutions, effective for taxable years beginning after 1995.

Bad Debt Reserves. Prior to the Small Business Protection Act of 1996, ESSA Bank & Trust was permitted to establish a reserve for bad debts for tax purposes and to make annual additions to the reserve. These additions could, within specified formula limits, be deducted in

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arriving at ESSA Bank & Trust’s taxable income. As a result of the Small Business Protection Act of 1996, ESSA Bank & Trust must use the specific charge off method in computing its bad debt deduction for tax purposes.

Taxable Distributions and Recapture. Prior to the Small Business Protection Act of 1996, bad debt reserves created prior to 1988 were subject to recapture into taxable income if ESSA Bank & Trust failed to meet certain thrift asset and definition tests. The Small Business Protection Act of 1996 eliminated these thrift-related recapture rules. However, under current law, pre-1988 reserves remain subject to tax recapture should ESSA Bank & Trust make certain distributions from its tax bad debt reserve or cease to maintain a financial institution charter. At September 30, 2006, ESSA Bank & Trust’s total federal pre-1988 reserve was approximately $4.3 million. This reserve reflects the cumulative effects of federal tax deductions by ESSA Bank & Trust for which no federal income tax provision has been made.

Minimum Tax. The Internal Revenue Code of 1986, as amended, imposes an alternative minimum tax at a rate of 20% on a base of regular taxable income plus certain tax preferences, referred to as “alternative minimum taxable income.” The alternative minimum tax is payable to the extent alternative minimum taxable income is in excess of an exemption amount. Net operating losses can, in general, offset no more than 90% of alternative minimum taxable income. Certain payments of alternative minimum tax may be used as credits against regular tax liabilities in future years. At September 30, 2006, ESSA Bank & Trust had no minimum tax credit carryforward.

Net Operating Loss Carryovers. A financial institution may carry back net operating losses to the preceding two taxable years (five years for losses incurred in 2001 and 2002) and forward to the succeeding 20 taxable years. At September 30, 2006, ESSA Bank & Trust had no net operating loss carryforward for federal income tax purposes.

Corporate Dividends. We may exclude from our income 100% of dividends received from ESSA Bank & Trust as a member of the same affiliated group of corporations.

Audit of Tax Returns. ESSA Bank & Trust’s federal income tax returns have not been audited in the most recent five-year period. The 2004, 2005 and 2006 tax years remain open.

State Taxation

Pennsylvania State Taxation. As a Pennsylvania business corporation, ESSA Bancorp, Inc. will be required to file annual returns and pay annual fees to the State of Pennsylvania.

MANAGEMENT OF ESSA BANCORP, INC.

Shared Management Structure

The directors of ESSA Bancorp, Inc. are those same persons who are the directors of ESSA Bank & Trust. In addition, each executive officer of ESSA Bancorp, Inc. is also an executive officer of ESSA Bank & Trust. We expect that ESSA Bancorp, Inc. and ESSA Bank & Trust will continue to have common executive officers until there is a business reason to establish separate management structures. To date, executive officers have been compensated for their services by ESSA Bank & Trust.

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Executive Officers of ESSA Bancorp, Inc. and ESSA Bank & Trust

The following individuals are the executive officers of ESSA Bancorp, Inc. and ESSA Bank & Trust, their ages as of September 30, 2006 and the position they hold.

Name	Age	Position
Gary S. Olson	52	President and Chief Executive Officer
Allan A. Muto	46	Executive Vice President and Chief Financial Officer
Robert S. Howes, Jr.,	53	Senior Vice President, Lending Services Division
Diane K. Reimer	50	Vice President, Administrative Services Division
V. Gail Warner	50	Vice President, Retail Services Division
Thomas J. Grayuski	45	Vice President, Human Resource Services Division

The executive officers of ESSA Bancorp, Inc. are elected annually.

Directors of ESSA Bank & Trust and ESSA Bancorp, Inc.

Composition of our Board. ESSA Bancorp, Inc. has nine directors. Directors serve three-year staggered terms so that approximately one-third of the directors are elected at each annual meeting. Directors of ESSA Bank & Trust are elected by ESSA Bancorp, Inc. as its sole stockholder.

The following table states our directors’ names, their ages as of September 30, 2006, and the years when they began serving as directors of ESSA Bank & Trust and when their current term expires:

Name	Position(s) Held With ESSA Bancorp, Inc.	Age	Director Since	Current Term Expires
Daniel J. Henning	Director	54	1995	2007
Frederick E. Kutteroff	Director	63	2005	2007
Elizabeth B. Weekes	Director	47	2001	2007
John E. Burrus	Chairman of the Board	67	1970	2008
John S. Schoonover, Jr.	Director	65	1989	2008
Robert C. Selig, Jr.	Director	58	1990	2008
William P. Douglass	Director	64	1978	2009
Gary S. Olson	Director, President and     Chief Executive Officer	52	2000	2009
William A. Viechnicki, D.D.S.	Director	62	1981	2009

The Business Background of Our Directors and Executive Officers. The business experience for the past five years of each of our directors and executive officers is set forth below. Unless otherwise indicated, directors and executive officers have held their positions for the past five years.

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Directors

John E. Burrus has served as Chairman of the Board of ESSA Bank & Trust since 1989. In 2005, Mr. Burrus retired as the owner of John E. Burrus Landscape which designs, sells, installs and maintains landscapes for private homes, and commercial properties in Monroe County, Easton and Scranton, Pennsylvania. Mr. Burrus is a graduate of Rutgers University.

William P. Douglass has been President of Douglass Enterprises, Inc., doing business as Olde Engine Works Market Place which is an antiques and collectibles co-operative. Mr. Douglass is a graduate of Texas Christian University.

Daniel J. Henning is a builder/real estate developer has been the Owner/President of A.C. Henning Enterprises, Inc., a general contractor of custom built homes, multi-family townhouses and light commercial construction and renovation, since 1982. Mr. Henning is a graduate of Spring Garden College.

Frederick E. Kutteroff served as President, Chief Executive Officer of Keystone Savings Bank from 1990 until his retirement in 2003. Mr. Kutteroff holds a Certificate of Business Administration from Temple University.

Gary S. Olson has been President and Chief Executive Officer of ESSA Bank & Trust since 2000. Mr. Olson began his career at ESSA Bank & Trust in 1977. Mr. Olson is a graduate of East Stroudsburg University.

John S. Schoonover, Jr. has been a registered architect/principal in the architectural firm of Schoonover and Vanderhoof, LLC since 1978. He is a licensed architect registered to practice in Pennsylvania, New Jersey, New York and North Carolina. Mr. Schoonover served in the United States Marine Corps from 1962 through 1967.

Robert C. Selig, Jr. has served as President of Selig Construction Company since 1972. Selig Construction Company is in the business of building primary and vacation residences. Mr. Selig is a graduate of West Side Area Vocational/Technical School.

William A. Viechnicki, D.D.S. has been in the private practice of orthodontics in East Stroudsburg, Pennsylvania since 1971. Dr. Viechnicki is a graduate of Pennsylvania State University and Temple University School of Dentistry where he serves as a professor of orthodontics.

Elizabeth B. Weekes has been a partner in the law firm Bensinger and Weekes, P.A. since 1987. Ms. Weekes’ practice focuses on real estate, civil litigation, domestic relations, banking, municipalities and estates. Ms. Weekes is a graduate of Colgate University and Dickinson School of Law.

Executive Officers of ESSA Bank & Trust Who Are Not Also Directors

Allan A. Muto has been the Executive Vice President and Chief Financial Officer of ESSA Bank & Trust since January 2006. Prior to that time Mr. Muto served as Executive Vice

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President, Chief Operating Officer beginning in 2001. Mr. Muto previously served as Senior Vice President, Chief Financial Officer at Pioneer American Bank, N.A. in Carbondale, Pennsylvania.

Robert S. Howes, Jr. has been with ESSA Bank & Trust in various capacities since 1985 and has been Senior Vice President, Lending Services Division since 2001. Previously, Mr. Howes served as Branch Manager at Franklin First Federal Savings and Loan Association in Wilkes-Barre, Pennsylvania.

Diane K. Reimer has been Vice President, Administrative Services Division since 1998 and first joined ESSA Bank & Trust in 1983.

V. Gail Warner has been Vice President, Retail Services Division since 1999. Previously, Ms. Warner served as Assistant Vice President, Branch Sales Manager at First Eastern Bank in Mount Pocono, Pennsylvania.

Thomas J. Grayuski has been Vice President, Human Resources Services Division since 2000. Previously, Mr. Grayuski was the Senior Personnel Management Specialist at the United States Army Armament Research, Development and Engineering Center in Dover, New Jersey.

Meetings and Committees of the Board of Directors of ESSA Bancorp, Inc.

We conduct business through meetings of our Board of Directors and its committees. During the fiscal year ended September 30, 2006, the Board of Directors of ESSA Bancorp, Inc. did not meet and the Board of Directors of ESSA Bank & Trust met 13 times. The Board of Directors of ESSA Bancorp, Inc. has established the following standing committees: the Compensation Committee, the Nominating and Corporate Governance Committee and the Audit Committee.

The Audit Committee, currently consisting of Messrs. Henning (Chair), Douglass, Kutteroff and Viechnicki, is responsible for providing oversight relating to our financial statements and financial reporting process, systems of internal accounting and financial controls, internal audit function, annual independent audit and the compliance and ethics programs established by management and the board. Each member of the Audit Committee is independent in accordance with the listing standards of the Nasdaq Stock Market. The Board of Directors believes that Mr. Kutteroff qualifies as an “audit committee financial expert” as that term is defined in the rules and regulations of the Securities and Exchange Commission. The Audit Committee of ESSA Bank & Trust met four times in fiscal year 2006.

The Compensation Committee, currently consisting of Messrs. Douglass (Chair), Burrus, Viechnicki and Olson and Ms. Weekes, is responsible for human resources policies, salaries and benefits, incentive compensation, executive development and management succession planning. Each member of the Compensation Committee, except for Mr. Olson, is independent in accordance with the listing standards of the Nasdaq Stock Market.

The Nominating and Corporate Governance Committee, currently consisting of Messrs. Douglass (Chair), Henning, Selig, Burrus and Olson and Ms. Weekes, is responsible for

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identifying individuals qualified to become board members and recommending a group of nominees for election as directors at each annual meeting of stockholders, ensuring that the board and its committees have the benefit of qualified and experienced independent directors, and developing a set of corporate governance policies and procedures.

Each of these committees operates under a written charter, which governs its composition, responsibilities and operations.

In addition, ESSA Bank & Trust maintains a Trust Committee (chaired by Ms. Weekes) and an Executive Committee.

Corporate Governance Policies and Procedures

In addition to having established committees of the Board of Directors, ESSA Bancorp, Inc. has adopted policies to govern the activities of both ESSA Bancorp, Inc. and ESSA Bank & Trust, including a corporate governance policy and a code of business conduct and ethics. The corporate governance policy sets forth:

• the duties and responsibilities of each director;

• the composition, responsibilities and operation of the Board of Directors;

• the establishment and operation of board committees, including audit, nominating and compensation committees;

• succession planning;

• convening executive sessions of independent directors;

• the Board of Directors’ interaction with management and third parties; and

• the evaluation of the performance of the Board of Directors and the chief executive officer.

ESSA Bancorp, Inc. has adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer and persons performing similar functions. The code of ethics is designed to deter wrongdoing and to promote honest and ethical conduct, the avoidance of conflicts of interest, full and accurate disclosure and compliance with all applicable laws, rules and regulations.

Director Fees

Director Fees. Each of the individuals who serves as a director of ESSA Bancorp, Inc. also serves as a director of ESSA Bank & Trust and earns director fees in that capacity. Each non-employee director (except for the Chairman of the Board) is paid a fee of $2,000 per month for their service and $1,000 for each Board meeting attended. In addition, the Chairperson of a committee is paid $750 for each committee meeting attended and committee members are paid $500 for each committee meeting attended. In lieu of the above mentioned fees, the Chairman of the Board is paid an annual retainer of $60,000 and $1,500 for each Board meeting attended. The Chairman of the Board is not compensated for attendance at any committee meetings.

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Executive Officer Compensation

Summary Compensation Table. The following table sets forth for the fiscal year ended September 30, 2006, certain information as to the total remuneration paid by ESSA Bank & Trust to its Chief Executive Officer as well as to the four most highly compensated executive officers of ESSA Bank & Trust, other than the Chief Executive Officer, who received total annual salary and bonus in excess of $100,000. Each of the individuals listed in the table below is referred to as a Named Executive Officer.

Name and Principal Position	Fiscal Year	Annual Compensation (1)
		Salary (2)		Bonus		Other Annual Compensation (3)	All Other Compensation (4)
Gary S. Olson, President and Chief Executive Officer	2006	$	201,500	$	94,000	—	$	18,700
Allan A. Muto, Executive Vice President and Chief Financial Officer	2006	$	131,500	$	49,000	—	$	11,900
Robert S. Howes, Jr., Senior Vice President, Lending Services Division	2006	$	112,800	$	37,000	—	$	10,800
V. Gail Warner, Vice President, Retail Services Division	2006	$	103,500	$	34,000	—	$	11,900
Diane K. Reimer, Vice President, Administrative Services Division	2006	$	92,700	$	26,000	—	$	12,800

(1) Summary compensation information is excluded for the fiscal years ended September 30, 2005 and 2004, as ESSA Bancorp, Inc. was not a public company during those periods.

(2) Current base salaries for Messrs. Olson, Muto and Howes and Mmes. Warner and Reimer are $211,900, $141,700, $117,100, $111,500 and $97,200, respectively.

(3) ESSA Bank & Trust provides certain of its executive officers with non-cash benefits and perquisites. Management believes that the aggregate value of these benefits for fiscal year 2006 did not, in the case of the named executive officers, exceed the greater of $50,000 or 10% of the aggregate salary and annual bonus reported for them in the Summary Compensation Table.

(4) Represents employer contributions under ESSA Bank & Trust’s 401(k) Plan for Named Executive Officer as well as health, life and disability insurance premiums.

Benefit Plans

Employment Agreements. ESSA Bancorp, Inc. intends to enter into employment agreements with each of Messrs. Olson, Muto, Howes and Grayuski and Ms. Warner and Ms. Reimer. The agreements with Messrs. Olson and Muto will have an initial term of three years. The agreements with Messrs. Howes and Grayuski and Ms. Warner and Ms. Reimer will have terms of two years. Unless notice of non-renewal is provided, the agreements renew annually. Under the agreements, the initial base salaries for Messrs. Olson, Muto, Howes, Ms. Warner, Ms. Reimer and Mr. Grayuski are $211,900, $141,700, $117,100, $111,500, $97,200 and $80,000, respectively. Base salaries will be reviewed at least annually and may be increased, but not decreased. In addition to the base salary, each agreement will provide for, among other things, participation in bonus programs and other employee pension benefit and fringe benefit plans applicable to executive employees and use of an automobile (in the case of Mr. Olson). The executive’s employment may be terminated for cause at any time, in which event the executive would have no right to receive compensation or other benefits for any period after termination.

Each of the executives is entitled to severance payments and benefits in the event of his or her termination of employment under specified circumstances. In the event the executive’s

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employment is terminated for reasons other than for cause, disability or retirement, or in the event the executive resigns within 90 days following (1) the failure to elect or reelect or to appoint or reappoint the executive to his executive position, (2) a material change in the executive’s functions, duties, or responsibilities, which change would cause executive’s position to become one of lesser responsibility, importance or scope, (3) the relocation of executive’s principal place of employment to a location that is more than 50 miles from the location of the Bank’s principal executive offices as of the date of the agreement, (4) a material reduction in benefits and perquisites including base salary (except for any Bank-wide or officer-wide reduction), (5) the liquidation or dissolution of ESSA Bancorp, Inc. or ESSA Bank & Trust, (6) a change in control of ESSA Bancorp, Inc. or (7) a breach of the employment agreement by ESSA Bancorp, Inc., the executive would be entitled to a severance payment equal to three times (in the case of Messrs. Olson and Muto, two times for Mr. Howes, Ms. Warner, Ms. Reimer and Mr. Grayuski) the sum of the executive’s base salary and the highest rate of bonus awarded to the executive during the prior three years, payable in a lump sum. In addition, the executive would be entitled, at ESSA Bancorp, Inc.’s sole expense, to the continuation of life, medical, dental, vision and disability coverage for 36 months (in the case of Messrs. Olson and Muto; twenty-four months for all other executives) after termination of the agreement. The executive would also receive a lump sum payment of the excess, if any, of the present value of the benefits he would be entitled to under the ESSA Bancorp, Inc. or ESSA Bank & Trust’s defined benefit pension plan if he had continued working for ESSA Bancorp, Inc. for 36 months (in the case of Messrs. Olson and Muto; twenty-four months for all other executives) over the present value of the benefits to which he is actually entitled as of the date of termination. In the event that the severance payment provisions of the employment agreement are triggered for one of the covered executives at September 30, 2006, the executive would be entitled to a cash severance benefit in the amount of approximately $            , $            , $            , $             and $            , in the case of Messrs. Olson, Muto, Howes, Ms. Warner, Ms. Reimer or Mr. Grayuski, respectively. The executive would be entitled to no additional benefits under the employment agreement upon retirement at age 65.

Upon termination of the executive’s employment other than in connection with a change in control, the executive agrees not to compete with ESSA Bancorp, Inc. for one year following termination of employment within 50 miles of any existing branch of ESSA Bank & Trust or 50 miles of any office for which ESSA Bank & Trust or a subsidiary has filed an application for regulatory approval. Should the executive become disabled, ESSA Bancorp, Inc. would continue to pay the executive his base salary for the longer of the remaining term of the agreement or one year, provided that any amount paid to the executive pursuant to any disability insurance would reduce the compensation he would receive. In the event the executive dies while employed by ESSA Bancorp, Inc., the executive’s estate will be paid the executive’s base salary for one year and the executive’s family will be entitled to continuation of medical, dental and vision benefits for one year after the executive’s death.

The employment agreements for Messrs. Howes and Grayuski and Ms. Warner and Ms. Reimer also provide for an automatic reduction in the amount of any payments made in connection with a change in control which would otherwise constitute “excess parachute payments” under Section 280G of the Internal Revenue Code. The total payment owed to the executive upon a change in control will be reduced to an amount that is $1.00 less than the amount that would otherwise be an “excess parachute payment” under Code Section 280G. Messrs. Olson and Muto may elect to have such reductions made in their sole discretion.

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Change-in-Control Agreements. ESSA Bancorp, Inc. intends to enter into change-in-control agreements with up to six officers who are not entering into employment agreements, which would provide certain benefits in the event of a termination of employment following a change in control of ESSA Bancorp, Inc. or ESSA Bank & Trust. Each of the change-in-control agreements provides for a term of eighteen months. Commencing on each anniversary date, the agreements will be renewed for an additional year so that the remaining term will be eighteen months, subject to notice of non-renewal. The change-in-control agreements enable ESSA Bancorp, Inc. to offer to designated officers certain protections against termination without cause in the event of a change in control (as defined in the agreements). Such protections are frequently offered by other financial institutions, and ESSA Bancorp, Inc. may be at a competitive disadvantage in attracting and retaining key employees if it does not offer similar protections.

Following a change in control of ESSA Bancorp, Inc. or ESSA Bank & Trust, an officer is entitled under the agreement to a payment if the officer’s employment is terminated during the term of such agreement, other than for cause, or if the officer voluntarily terminates employment during the term of such agreement as a result of a demotion, loss of title, office or significant authority (in each case, other than as a result of the fact that either ESSA Bank & Trust or ESSA Bancorp, Inc. is merged into another entity in connection with a change in control and will not operate as a stand-alone, independent entity), reduction in his annual compensation or benefits, or relocation of his or her principal place of employment by more than 30 miles from its location immediately prior to the change in control. In the event an officer who is a party to a change-in-control agreement is entitled to receive payments pursuant to the change-in-control agreement, he will receive a cash payment equal to 1.5 times his or her highest rate of base salary and the highest rate of bonus awarded to the executive during the prior two years, payable in a lump sum. In addition to the cash payment, each covered officer is entitled to receive life, medical, and dental coverage for a period of 18 months from the date of termination. Notwithstanding any provision to the contrary in the change-in-control agreement, payments under the change in control agreements are limited so that they will not constitute an excess parachute payment under Section 280G of the Internal Revenue Code.

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Defined Benefit Pension Plan. Since 1969, ESSA Bank & Trust has maintained an individually designed, tax-qualified defined benefit plan (the “Pension Plan”). Effective January 1, 2007, the Pension Plan will be operated on a calendar year basis. All employees age 21 or older who have completed one year of employment with ESSA Bank & Trust are eligible for membership in the Pension Plan; however, only employees who have been credited with 1,000 or more hours of service with ESSA Bank & Trust are eligible to accrue benefits under the Pension Plan. ESSA Bank & Trust annually contributes an amount to the plan necessary to satisfy the minimum funding requirements established under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

The regular form of retirement benefit is a straight life annuity (if single) and a joint and survivor annuity (if married), however, various alternative forms of joint and survivor annuities may be selected instead. Upon termination of employment at or after age 65 with at least 5 years of employment, a participant is entitled to a normal retirement annual benefit equal to a percentage of average monthly compensation determined over the participant’s high 5-year average salary during the 10 years before the participant’s retirement. If the participant terminates employment on or after attaining age 60 with 15 years of service, his normal retirement benefit will be reduced by 0.5% for each month by which the participant’s actual retirement date precedes his or her normal retirement date. A participant may postpone retirement beyond normal retirement date, in which case the participant will continue earning service towards his or her accrued benefit. If a married participant dies while in active service and after having become fully vested (i.e., completed 5 years of service), a qualified 50% survivor spouse benefit will be payable to the participant’s beneficiary. No pre-retirement death benefits are available to unmarried participants. Upon termination of employment due to disability, the participant will be entitled to an early or normal retirement benefit, where the participant’s accrued benefit is determined based on service performed through the disability date.

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The following table indicates the annual retirement benefit that would be payable under the plan upon retirement at age 65 during the plan year ended November 30, 2006, expressed in the form of a single life annuity for the final average salary and benefit service classification specified below:

Final Average Annual Compensation	Years of Benefit Service and Benefit Payable at Retirement
	5		10		20		30		40
$    10,000	$	750	$	1,500	$	3,000	$	4,500	$	5,000
$    30,000	$	2,250	$	4,500	$	9,000	$	13,500	$	15,000
$    60,000	$	4,500	$	9,000	$	18,000	$	27,000	$	30,000
$    90,000	$	6,750	$	13,500	$	27,000	$	40,500	$	45,000
$  120,000	$	9,000	$	18,000	$	36,000	$	54,000	$	60,000
$  150,000	$	11,250	$	22,500	$	45,000	$	67,500	$	75,000
$  160,000	$	12,000	$	24,000	$	48,000	$	72,000	$	80,000
$  170,000	$	12,750	$	25,500	$	51,000	$	76,500	$	85,000
$  200,000	$	15,000	$	30,000	$	60,000	$	90,000	$	100,000
$  220,000 and above(1)	$	16,500	$	33,000	$	66,000	$	99,000	$	110,000

(1) Reflects the maximum benefit payable under the Defined Benefit Pension Plan due to tax law limitations.

At November 30, 2006, Messrs. Olson, Muto, Howes, Ms. Warner and Ms. Reimer had 29, 5, 20, 12 and 23 years of credited service, respectively, under the plan.

401(k) Plan. ESSA Bank & Trust maintains a non-standardized prototype 401(k) plan through Massachusetts Mutual Life Insurance Company (MassMutual). Effective January 1, 2007, the 401(k) plan will be operated on a calendar year basis. Employees may participate in the plan when they have attained age 21 and completed one year of service and have been credited with 1,000 hours during the year of service. Participants may make pre-tax salary deferrals to the plan not to exceed $15,500 (which is the 2007 limit; the limit is adjusted annual for IRS-announced cost-of-living increases). In addition, participants who are 50 or older may make pre-tax “catch up” contributions to the plan up to $5,000 (this limit is also adjusted annually by the IRS for cost-of-living increases). The plan is a 401(k) “safe harbor” which means that the employer matches participant pre-tax salary deferrals dollar for dollar up to 3% of compensation, then the employer matches pre-tax salary deferrals at the rate of 50 cents on the dollar for amounts up to 5% of compensation. All contributions are 100% vested. Distributions will be made upon death, disability, termination of employment, or attainment of age 59 ¹/2. In addition to the other self-directed investment alternatives offered under the plan, Participants will be offered the opportunity to purchase stock in the offering through a unitized employer stock fund, consisting of 95% stock and 5% cash. Benefits are paid in the form of lump sum, installments, partial withdrawals, or a joint and 100% survivor annuity.

Supplemental Retirement Plan. ESSA Bank & Trust has entered into Executive Salary Continuation Agreements (“Supplemental Retirement Plan”) with Mr. Olson, Ms. Reimer, Mr. Howes and Mr. Grayuski. If the designated executive has been employed with ESSA Bank & Trust for at least 30 years upon normal retirement age (65) or early retirement age (60), then the benefit described in the agreement will be paid to the executive for no less than 192 months following the executive’s retirement, unless the executive elects to receive the present value of the payments as a lump sum. The amount of the normal benefit equals 70% of the executive’s final compensation determined over the participant’s high 5-year average salary during the 10 years before the participant’s retirement. The normal retirement benefit is reduced by 0.05% for

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each month the executive terminates employment after early retirement age but prior to normal retirement age. If the executive voluntarily terminates employment before age 65 or has his or her employment involuntarily terminated other than for cause, the employer shall pay in a lump sum or 60 monthly installments, the amount accrued to fund the promised benefit as of the date of such termination. If a change in control occurs, then the benefits promised under the Supplemental Retirement Plan at normal retirement age will be paid to the executive at normal retirement age, even if the executive’s employment terminates before normal retirement age (except no payment shall be made if the termination is due to cause). Benefits become vested after 5 years of service and before completing 5 years of service, benefits are zero percent vested. If the executive dies while actively employed by us, but before attaining age 65, the amount accrued under the plan as of the executive’s date of death will be paid to the executive’s designated beneficiaries. If the executive dies after the commencement of payment of benefits under the Supplemental Retirement Plan, remaining payments will be made to the executive’s beneficiaries. We recorded an expense of $160,155 for the Supplemental Retirement Plan during the fiscal year ended September 30, 2006. Based on current compensation levels, the Company anticipates the estimated aggregate expense of the Supplemental Retirement Plan to be approximately $1.3 million through September 30, 2011 and approximately $2.6 million through September 30, 2016. These estimated expenses will increase as compensation levels of the participants increase.

Stock Benefit Plans

Employee Stock Ownership Plan and Trust. We intend to implement an employee stock ownership plan in connection with the stock offering. As part of the stock offering, the employee stock ownership plan trust intends to borrow funds from ESSA Bancorp, Inc. and use those funds to purchase a number of shares equal to 8% of the common stock sold in the stock offering and issued to the Charitable Foundation. Collateral for the loan will be the common stock purchased by the employee stock ownership plan. The loan will be repaid principally from discretionary contributions by ESSA Bank & Trust to the employee stock ownership plan over a period of up to 30 years. The loan documents will provide that the loan may be repaid over a shorter period, without penalty for prepayments. We anticipate that the interest rate on the loan will equal the prime interest rate at the closing of the stock offering, and will adjust annually at the beginning of each calendar year. Shares purchased by the employee stock ownership plan will be held in a suspense account for allocation among participants as the loan is repaid.

Shares released from the suspense account will be allocated among employee stock ownership plan participants on the basis of compensation in the year of allocation. Benefits under the plan will not vest at all until a participant has three years of credited service at which time participants will become fully vested. Credit will be given for vesting purposes to participants for years of service with ESSA Bank & Trust prior to the adoption of the plan. A participant’s interest in his account under the plan will also fully vest in the event of termination of service due to a participant’s early or normal retirement, death, disability, or upon a change in control (as defined in the plan). Vested benefits will be payable generally in the form of common stock, or to the extent participants’ accounts contain cash, benefits will be paid in cash. ESSA Bank & Trust’s contributions to the employee stock ownership plan are discretionary, subject to the loan terms and tax law limits. Therefore, benefits payable under the employee stock ownership plan cannot be estimated. Pursuant to SOP 93-6, we will be required to record

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compensation expense each year in an amount equal to the fair market value of the shares released from the suspense account. In the event of a change in control, the employee stock ownership plan will terminate.

Transactions with Certain Related Persons

Loans and Extensions of Credit. The Sarbanes-Oxley Act of 2002 generally prohibits us from making loans to our executive officers and directors, but it contains a specific exemption from such prohibition for loans made by ESSA Bank & Trust to our executive officers and directors in compliance with federal banking regulations. Federal regulations require that all loans or extensions of credit to executive officers and directors of insured institutions must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and must not involve more than the normal risk or repayment or present other unfavorable features. ESSA Bank & Trust is therefore prohibited from making any loans or extensions of credit to executive officers and directors at different rates or terms than those offered to the general public, except for loans made under a benefit program generally available to all other employees and that does not give preference to any executive officer or director over any other employee.

In addition, loans made to a director or executive officer must be approved in advance by a majority of the disinterested members of the Board of Directors. The aggregate amount of our loans to our officers and directors and their related entities was $2.0 million at September 30, 2006. As of September 30, 2006, these loans were performing according to their original terms.

Benefits to be Considered Following Completion of the Conversion

We intend to adopt and request stockholder approval of one or more stock-based incentive plans, including a stock option plan and a stock recognition and retention plan, no earlier than six months after the completion of the conversion. The stock option plan and stock recognition and retention plan may be established as separate plans or part of a single stock-based incentive plan.

Stock Option Plan. If adopted within one year of the conversion and approved by stockholders, the stock option plan would reserve an amount equal to 10% of the shares of common stock sold in the offering for issuance upon exercise of stock options. 10% of the shares of common stock issued in the offering would amount to 1,000,450 shares, 1,177,000 shares, 1,353,550 shares and 1,556,583 shares at the minimum, midpoint, maximum and adjusted maximum of the offering range, respectively. If we adopt the stock option plan after one year following the completion of the conversion, we may grant options in an amount greater than 10% of the shares of common stock sold in the offering. We have not yet determined whether we will present this plan for stockholder approval within 12 months following the completion of the conversion or whether we will present this plan for stockholder approval more than 12 months following the completion of the conversion. No options would be granted under the new stock option plan until stockholder approval of the plan is received. In the event that shares underlying options come from authorized but unissued shares of common stock, stockholders would experience dilution of approximately 9.1% of their ownership interest in ESSA Bancorp, Inc. We will have to recognize compensation expense for accounting purposes ratably over the vesting period, equal to the fair value of the options on the original grant date.

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The exercise price of the options granted under the stock option plan will be equal to the fair market value of ESSA Bancorp, Inc. common stock on the date of grant of the stock options. If the stock option plan is adopted within one year following the conversion, options may vest no faster than 20% per year beginning 12 months after the date of grant. Options granted under the stock option plan would be adjusted for capital changes such as stock splits and stock dividends. Awards will be 100% vested upon termination of employment due to death, disability or following a change in control, and if the stock option plan is adopted more than one year after the conversion, awards would be 100% vested upon normal retirement. Under Office of Thrift Supervision regulations, if the stock option plan is adopted within one year of the conversion, no individual officer may receive more than 25% of the awards under the plan, no non-employee director may receive more than 5% of the awards under the plan and all non-employee directors as a group may receive in the aggregate no more than 30% of the awards under the plan.

The stock option plan would be administered by a committee of non-employee members of ESSA Bancorp, Inc.’s Board of Directors. Options granted under the stock option plan to employees may be “incentive” stock options, which are designed to result in a beneficial tax treatment to the employee but no tax deduction to ESSA Bancorp, Inc. Non-qualified stock options may also be granted to employees under the stock option plan, and will be granted to the non-employee directors who receive stock options. In the event an option recipient terminated his or her employment or service as an employee or director, the options would terminate after certain specified periods following termination.

Stock Recognition and Retention Plan. If adopted within one year of the conversion and approved by stockholders, the stock recognition and retention plan would reserve an amount equal to 4% of the shares of common stock sold in the offering, or 400,180 shares, 470,800 shares, 541,420 shares and 622,633 shares at the minimum, midpoint, maximum and adjusted maximum of the offering range, respectively. If we adopt the recognition and retention plan after one year following the completion of the conversion, we may grant shares in an amount greater than 4% of the shares of common stock sold in the offering. We have not yet determined whether we will present this plan for stockholder approval within 12 months following the completion of the conversion or whether we will present this plan for stockholder approval more than 12 months following the completion of the conversion. We must recognize an expense for shares of common stock awarded over their vesting period at the fair market value of the shares on the date they are awarded. The recipients will be awarded shares of common stock under the stock recognition and retention plan at no cost to them. No awards would be made under the stock recognition and retention plan until the plan is approved by stockholders. If the shares awarded under the stock recognition and retention plan come from authorized but unissued shares of the common stock totaling 4% of the shares sold in the offering, stockholders would experience dilution of approximately 3.8% in their ownership interest in ESSA Bancorp, Inc.

Awards granted under the stock recognition and retention plan would be nontransferable and nonassignable. Under Office of Thrift Supervision regulations, if the stock recognition and retention plan is adopted within one year following the conversion, the shares of common stock which are subject to an award may vest no faster than 20% per year beginning 12 months after

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the date of grant of the award. Awards would be adjusted for capital changes such as stock dividends and stock splits. Awards would be 100% vested upon termination of employment or service due to death, disability or following a change in control, and if the stock recognition and retention plan is adopted more than one year after the conversion, awards also would be 100% vested upon normal retirement. Under Office of Thrift Supervision rules, if the stock recognition and retention plan is adopted within one year of the conversion, no individual officer may receive more than 25% of the awards under the plan, no non-employee director may receive more than 5% of the awards under the plan, and all non-employee directors as a group may receive no more than 30% of the awards under the plan in the aggregate.

The recipient of an award will recognize income equal to the fair market value of the stock earned, determined as of the date of vesting, unless the recipient makes an election under Section 83(b) of the Internal Revenue Code of 1986, as amended, to be taxed earlier. The amount of income recognized by the recipient would be a deductible expense of ESSA Bancorp, Inc. for tax purposes.

SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information regarding intended common stock subscriptions by each of the directors and executive officers of ESSA Bank & Trust and their associates, and by all directors and executive officers as a group. In the event the individual maximum purchase limitation is increased, persons subscribing for the maximum amount may increase their purchase order. Directors and executive officers will purchase shares of common stock at the same $10.00 purchase price per share and on the same terms as other purchasers in the offering. This table excludes shares of common stock to be purchased by the employee stock ownership plan, as well as any recognition and retention plan awards or stock option grants that may be made no earlier than six months after the completion of the offering. The directors and officers have indicated their intention to subscribe in the offering for an aggregate of $4.3 million of shares of common stock, equal to 4.6% of the number of shares of common stock to be sold in the offering at the minimum of the offering range, assuming shares are available. Purchases by directors, executive officers and their associates will be included in determining whether the required minimum number of shares has been subscribed for in the offering.

Name	Number of Shares (1)	Aggregate Purchase Price (1)		Percent at Minimum
John E. Burrus	10,000	$	100,000	*	%
William P. Douglass	15,000		150,000	*
Daniel J. Henning	50,000		500,000	*
Frederick E. Kutteroff	25,000		250,000	*
Gary S. Olson	50,000		500,000	*
John S. Schoonover, Jr.	2,000		20,000	*
Robert C. Selig, Jr.	50,000		500,000	*
William A. Viechnicki, D.D.S.	50,000		500,000	*
Elizabeth B. Weekes	5,000		50,000	*
Allan A. Muto	25,000		250,000	*
Robert S. Howes, Jr.	20,000		200,000	*
Diane K. Reimer	45,000		450,000	*
V. Gail Warner	35,000		350,000	*
Thomas J. Grayuski	45,000		450,000	*
All directors and executive officers as a group	427,000		$4.27 million	4.6	%

* Less than 1%.

(1) Includes purchases by the individual’s spouse and other relatives of the named individual living in the same household. The above named individuals are not aware of any other purchases by a person who, or entity which, would be considered an associate of the named individuals under the Plan of Conversion.

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THE CONVERSION

The Boards of Directors of ESSA Bancorp, Inc. and ESSA Bank & Trust have approved the plan of conversion. The plan of conversion must also be approved by the members of ESSA Bank & Trust (depositors and borrowers of ESSA Bank & Trust at             ). A special meeting of members has been called for this purpose. The Office of Thrift Supervision and the Pennsylvania Department of Banking have each conditionally approved the plan of conversion; however, such approval does not constitute a recommendation or endorsement of the plan of conversion by that agency.

General

Pursuant to the plan of conversion, ESSA Bank & Trust will convert from mutual to stock form and will be wholly owned by ESSA Bancorp, Inc., a new Pennsylvania corporation. When the conversion is completed, all of the capital stock of ESSA Bank & Trust will be owned by ESSA Bancorp, Inc., our newly formed Pennsylvania holding company, and all of the common stock of ESSA Bancorp, Inc. will be owned by public stockholders.

We intend to retain between $91.5 million and $124.2 million of the net proceeds of the offering, or $143.1 million if the offering range is increased by 15%, and to contribute the balance of the net proceeds to ESSA Bank & Trust. The conversion will be consummated only upon the issuance of at least 9,350,000 shares of our common stock offered pursuant to the plan of conversion.

The plan of conversion provides that we will offer shares of common stock for sale in the subscription offering to eligible account holders, our tax-qualified employee benefit plans, including the employee stock ownership plan and our 401(k), supplemental eligible account holders and other members (depositors and borrowers of ESSA Bank & Trust). If all shares are not subscribed for in the subscription offering, we may, at our discretion, offer common stock for sale in a community offering to members of the general public, with a preference given to natural persons residing in the Pennsylvania Counties of Monroe and Northampton.

We have the right to accept or reject, in whole or in part, any orders to purchase shares of the common stock received in the community offering. The community offering, if any, may begin at the same time as, during, or after the subscription offering, and must be completed within 45 days after the completion of the subscription offering unless otherwise extended by us with the approval of the Office of Thrift Supervision. See “—Community Offering.”

We determined the number of shares of common stock to be offered in the offering based upon an independent valuation appraisal of the estimated consolidated pro forma market value of ESSA Bancorp, Inc. All shares of common stock to be sold in the offering will be sold at $10.00 per share. Investors will not be charged a commission to purchase shares of common stock in the offering. The independent valuation will be updated and the final number of the shares of common stock to be issued in the offering will be determined at the completion of the offering. See “—Determination of Share Price and Number of Shares to be Issued” for more information as to the determination of the estimated pro forma market value of the common stock.

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The following is a brief summary of the conversion and is qualified in its entirety by reference to the provisions of the plan of conversion. A copy of the plan of conversion is available for inspection at each branch office of ESSA Bank & Trust and at the Northeast Regional and the Washington, D.C. offices of the Office of Thrift Supervision. The plan of conversion is also filed as an exhibit to ESSA Bank & Trust’s application to convert from mutual to stock form of which this prospectus is a part, copies of which may be obtained from the Office of Thrift Supervision. See “Where You Can Find Additional Information.”

Reasons for the Conversion

The primary reasons for the conversion and related stock offering are:

• to support our internal growth through lending in communities we serve or may serve in the future;

• to enhance our existing products and services and to support the development of new products and services;

• to improve our overall competitive position;

• to provide additional financial resources to pursue limited de novo branching opportunities and future acquisition opportunities;

• to reduce a portion of our existing borrowings;

• to provide better capital management tools, including the ability to pay dividends and to repurchase shares of our common stock; and

• to retain and attract qualified personnel by establishing stock benefit plans for management and employees, including a stock option plan, a stock recognition and retention plan and an employee stock ownership plan.

In the stock holding company structure, we will have greater flexibility in structuring mergers and acquisitions. Potential sellers often want stock for at least part of the acquisition consideration. Our new stock holding company structure will enable us to offer stock or cash consideration, or a combination thereof, and will therefore enhance our ability to compete with other bidders when acquisition opportunities arise.

We have no current arrangements or agreements to acquire other banks, thrifts and financial service companies or branch offices. We have received regulatory approval to open a new branch office in Tannersville, Pennsylvania which we anticipate opening in May 2007. There can be no assurance that we will be able to consummate any acquisitions or establish any additional new branches.

Approvals Required

The affirmative vote of a majority of the total eligible votes of the members of ESSA Bank & Trust at the special meeting of members is required to approve the plan of conversion.

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The members of ESSA Bank & Trust will also be asked to approve the establishment and funding of the ESSA Bank & Trust Foundation. The plan of conversion also must be approved by the Office of Thrift Supervision and the Pennsylvania Banking Department, which have each given its conditional approval.

A special meeting of members to consider and vote upon the plan of conversion and the charitable foundation has been set for             .

Effects of Conversion on Depositors, Borrowers and Members

Continuity. While the conversion is being accomplished, the normal business of ESSA Bank & Trust of accepting deposits and making loans will continue without interruption. ESSA Bank & Trust will continue to be a Pennsylvania chartered savings association and will continue to be regulated by the Pennsylvania Department of Banking. After the conversion, ESSA Bank & Trust will continue to offer existing services to depositors, borrowers and other customers. The directors serving ESSA Bank & Trust, at the time of the conversion will be the directors of ESSA Bancorp, Inc., a Pennsylvania corporation, and ESSA Bank & Trust after the conversion.

Effect on Deposit Accounts. Pursuant to the plan of conversion, each depositor of ESSA Bank & Trust at the time of the conversion will automatically continue as a depositor after the conversion, and the deposit balance, interest rate and other terms of such deposit accounts will not change as a result of the conversion. Each such account will be insured by the Federal Deposit Insurance Corporation to the same extent as before the conversion. Depositors will continue to hold their existing certificates, passbooks and other evidences of their accounts.

Effect on Loans. No loan outstanding from ESSA Bank & Trust will be affected by the conversion, and the amount, interest rate, maturity and security for each loan will remain as it was contractually fixed prior to the conversion.

Effect on Voting Rights of Members. At present, all depositors and borrowers of ESSA Bank & Trust are members of, and have voting rights in, ESSA Bank & Trust as to all matters requiring membership action. Upon completion of the conversion, depositors and borrowers will cease to be members of ESSA Bank & Trust and will no longer have voting rights. Upon completion of the conversion, all voting rights in ESSA Bank & Trust will be vested in ESSA Bancorp, Inc. as the sole stockholder of ESSA Bank & Trust. The stockholders of ESSA Bancorp, Inc. will possess exclusive voting rights with respect to ESSA Bancorp, Inc. common stock.

Tax Effects. We will receive an opinion of counsel or tax advisor with regard to federal and state income tax consequences of the conversion to the effect that the conversion will not be taxable for federal or state income tax purposes to ESSA Bank & Trust, ESSA Bancorp, Inc., members of ESSA Bank & Trust, eligible account holders, supplemental eligible account holders, or ESSA Bank & Trust See “—Material Income Tax Consequences.”

Effect on Liquidation Rights. Each depositor in ESSA Bank & Trust has both a deposit account in ESSA Bank & Trust and a pro rata ownership interest in the net worth of ESSA Bank & Trust based upon the deposit balance in his or her account. This ownership interest is tied to the depositor’s account and has no tangible market value separate from the deposit account. This

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interest may only be realized in the event of a complete liquidation of ESSA Bank & Trust . Any depositor who opens a deposit account obtains a pro rata ownership interest in ESSA Bank & Trust without any additional payment beyond the amount of the deposit. A depositor who reduces or closes his or her account receives a portion or all, respectively, of the balance in the deposit account but nothing for his or her ownership interest in the net worth of ESSA Bank & Trust, which is lost to the extent that the balance in the account is reduced or closed.

Consequently, depositors in a stock subsidiary of a holding company normally have no way of realizing the value of their ownership interest, which has realizable value only in the unlikely event that ESSA Bank & Trust is completely liquidated. If this occurs, the depositors of record at that time, as owners, would share pro rata in any residual surplus and reserves of ESSA Bank & Trust after other claims, including claims of depositors to the amounts of their deposits, are paid.

In the unlikely event that ESSA Bank & Trust were to liquidate after the conversion, all claims of creditors, including those of depositors, also would be paid first, followed by distribution of the “liquidation account” to depositors as of              and                                  who continue to maintain their deposit accounts as of the date of liquidation, with any assets remaining thereafter distributed to ESSA Bancorp, Inc. as the holder of ESSA Bank & Trust’s capital stock. Pursuant to the rules and regulations of the Office of Thrift Supervision, a post-conversion merger, consolidation, sale of bulk assets or similar combination or transaction with another insured savings institution would not be considered a liquidation and, in such a transaction, the liquidation account would be assumed by the surviving institution. See “—Liquidation Rights.”

Determination of Share Price and Number of Shares to be Issued

The plan of conversion and bank regulations require that the aggregate purchase price of the common stock sold in the offering be based on the appraised pro forma market value of the common stock, as determined by an independent valuation. ESSA Bank & Trust and ESSA Bancorp, Inc. have retained RP Financial, LC. to prepare an independent valuation appraisal. For its services in preparing the initial valuation, RP Financial will receive a fee of $90,000, and will be reimbursed for its expenses. RP Financial will receive an additional fee of $10,000 for each update to the valuation appraisal. ESSA Bank & Trust and ESSA Bancorp, Inc. have agreed to indemnify RP Financial and its employees and affiliates against specified losses, including any losses in connection with claims under the federal securities laws, arising out of its services as independent appraiser, except where such liability results from its negligence or bad faith.

The independent valuation appraisal considered the pro forma impact of the offering. Consistent with the Office of Thrift Supervision appraisal guidelines, the appraisal applied three primary methodologies: the pro forma price-to-book value approach applied to both reported book value and tangible book value; the pro forma price-to-earnings approach applied to reported and core earnings; and the pro forma price-to-assets approach. The market value ratios applied in the three methodologies were based upon the current market valuations of the peer group companies identified by RP Financial, subject to valuation adjustments applied by RP Financial to account for differences between ESSA Bancorp, Inc. and the peer group. RP Financial placed the greatest emphasis on the price-to-core earnings and price-to-book value approaches in estimating pro forma market value.

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The independent valuation was prepared by RP Financial in reliance upon the information contained in this prospectus, including the consolidated financial statements of ESSA Bank & Trust. RP Financial also considered the following factors, among others:

• the present results and financial condition of ESSA Bank & Trust, and the projected results and financial condition of ESSA Bancorp, Inc., a Pennsylvania corporation;

• the economic and demographic conditions in ESSA Bank & Trust’s existing market area;

• certain historical, financial and other information relating to ESSA Bank & Trust;

• a comparative evaluation of the operating and financial characteristics of ESSA Bank & Trust with those of other similarly situated publicly traded savings institutions located in the Commonwealth of Pennsylvania, and other states in the mid-Atlantic and northeast regions of the United States;

• the impact of the conversion and the offering on ESSA Bancorp, Inc.’s stockholders’ equity and earnings potential;

• the proposed dividend policy of ESSA Bancorp, Inc.; and

• the trading market for securities of comparable institutions and general conditions in the market for such securities.

Included in RP Financial’s independent valuation were certain assumptions as to the pro forma earnings of ESSA Bancorp, Inc. after the conversion that were utilized in determining the appraised value. These assumptions included estimated expenses, an assumed after-tax rate of return on the net offering proceeds and purchases in the open market of 4% of the common stock issued in the offering by the recognition and retention plan at the $10.00 purchase price. See “Pro Forma Data” for additional information concerning these assumptions. The use of different assumptions may yield different results.

The independent valuation states that as of November 24, 2006, the estimated pro forma market value of ESSA Bancorp, Inc. ranged from $100.0 million to $135.4 million, with a midpoint of $117.7 million. The Board of Directors of ESSA Bancorp, Inc. decided to offer the shares of common stock for a price of $10.00 per share primarily because it is the price most commonly used in mutual-to-stock conversions of financial institutions. The number of shares offered will be equal to the aggregate offering price of the shares divided by the price per share. Based on the valuation range and the $10.00 price per share, the minimum of the offering range will be 9,350,000 shares, the midpoint of the offering range will be 11,000,000 shares and the maximum of the offering range will be 12,650,000 shares, or 14,547,500 if the maximum amount is adjusted because of demand for shares or changes in market conditions.

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The following table presents a summary of selected pricing ratios for ESSA Bancorp, Inc. and our peer group companies identified by RP Financial. These ratios are based on earnings for the twelve months ended September 30, 2006 and book value as of September 30, 2006. Compared to the average pricing of the peer group, our pro forma pricing ratios at the maximum of the offering range indicated a premium of 27.3% on a price-to-earnings basis, a discount of 43.4% on a price-to-book value basis and a discount of 46.1% on a price-to-tangible book value basis. The pricing ratios result from our generally having higher levels of equity but lower earnings than the companies in the peer group on a pro forma basis. Our Board of Directors, in reviewing and approving the valuation, considered the range of price-to-core earnings multiples and the range of price-to-book value ratios and price-to-tangible book value ratios at the different amounts of shares to be sold in the offering. The appraisal did not consider one valuation approach to be more important than the other. Instead, the appraisal concluded that these ranges represented the appropriate balance of the two approaches to valuing ESSA Bancorp, Inc., and the number of shares to be sold, in comparison to the identified peer group institutions. Specifically, in approving the valuation, the board believed that ESSA Bancorp, Inc. would not be able to sell its shares at a price-to-book value that was in line with the peer group without unreasonably exceeding the peer group on a price-to-core earnings basis. The estimated appraised value and the resulting premium/discount took into consideration the potential financial impact of the conversion and offering.

	Pro forma price-to-earnings multiple		Pro forma price-to-book value ratio		Pro forma price-to-tangible book value ratio
ESSA Bancorp, Inc.
Maximum	22.73	x	81.04	%	81.04	%
Minimum	18.18		72.10		72.10
Valuation of peer group companies as of November 24, 2006
Averages	17.85	x	143.13	%	150.35	%
Medians	16.70		137.93		143.84

The Board of Directors of ESSA Bancorp, Inc. reviewed the independent valuation and, in particular, considered the following:

• ESSA Bank & Trust’s financial condition and results of operations;

• comparison of financial performance ratios of ESSA Bank & Trust to those of other financial institutions of similar size; and

• market conditions generally and, in particular, for financial institutions.

All of these factors are set forth in the independent valuation. The Board of Directors also reviewed the methodology and the assumptions used by RP Financial, LC. in preparing the independent valuation and believes that such assumptions were reasonable. The offering range may be amended with the approval of the Office of Thrift Supervision, if required, as a result of subsequent developments in the financial condition of ESSA Bancorp, Inc. or ESSA Bank & Trust or market conditions generally.

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The independent valuation is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing shares of our common stock. RP Financial, LC. did not independently verify our consolidated financial statements and other information that we provided to them, nor did RP Financial, LC. independently value our assets or liabilities. The independent valuation considers ESSA Bank & Trust as a going concern and should not be considered as an indication of the liquidation value of ESSA Bank & Trust. Moreover, because the valuation is necessarily based upon estimates and projections of a number of matters, all of which may change from time to time, no assurance can be given that persons purchasing our common stock in the offering will thereafter be able to sell their shares at prices at or above the $10.00 offering price per share.

Following commencement of the subscription offering, the maximum of the valuation range may be increased by up to 15%, or up to $155.7 million, without resoliciting subscribers, which will result in a corresponding increase of up to 15% in the maximum of the offering range to up to 14,547,500 shares, in addition to the 1,018,325 shares to be issued to the ESSA Bank & Trust charitable foundation to reflect changes in the market and financial conditions or demand for the shares. We will not decrease the minimum of the valuation range and the minimum of the offering range without a resolicitation of subscribers. The subscription price of $10.00 per share will remain fixed. See “—Limitations on Common Stock Purchases” as to the method of distribution and allocation of additional shares that may be issued in the event of an increase in the offering range to fill unfilled orders in the offering.

If the update to the independent valuation at the conclusion of the offering results in an increase in the maximum of the valuation range to more than $155.7 million and a corresponding increase in the offering range to more than 14,547,500 shares, or a decrease in the minimum of the valuation range to less than $100.0 million and a corresponding decrease in the offering range to fewer than 9,350,000 shares, then, with regulatory approval, we may terminate the offering and promptly return, with interest at ESSA Bank & Trust’s passbook savings rate, all funds previously delivered to us to purchase shares of common stock and cancel deposit account withdrawal authorizations, and, after consulting with the Office of Thrift Supervision, we may terminate the plan of conversion and the stock offering. Alternatively, we may establish a new offering range and extend the offering period and commence a resolicitation of subscribers or take other actions as permitted by the Office of Thrift Supervision in order to complete the conversion and the offering. In the event that a resolicitation is commenced, we will notify subscribers of the extension of time and of the rights of subscribers to confirm, change or cancel their stock orders for a specified resolicitation period. If a subscriber does not respond, we will cancel the stock order and return funds, as described above. Any resolicitation following the conclusion of the subscription and community offerings would not exceed 45 days.

An increase in the number of shares to be issued in the offering would decrease both a subscriber’s ownership interest and ESSA Bancorp, Inc.’s pro forma earnings and stockholders’ equity on a per share basis while increasing pro forma earnings and stockholders’ equity on an aggregate basis. A decrease in the number of shares to be issued in the offering would increase both a subscriber’s ownership interest and ESSA Bancorp, Inc.’s pro forma earnings and stockholders’ equity on a per share basis, while decreasing pro forma earnings and stockholders’ equity on an aggregate basis. For a presentation of the effects of these changes, see “Pro Forma Data.”

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Copies of the independent valuation appraisal report of RP Financial, LC. and the detailed memorandum setting forth the method and assumptions used in the appraisal report are available for inspection at the main office of ESSA Bank & Trust and as specified under “Where You Can Find Additional Information.”

Subscription Offering and Subscription Rights

In accordance with the plan of conversion, rights to subscribe for shares of common stock in the subscription offering have been granted in the following descending order of priority. The filling of all subscriptions that we receive will depend on the availability of common stock after satisfaction of all subscriptions of all persons having prior rights in the subscription offering and to the maximum, minimum and overall purchase limitations set forth in the plan of conversion and as described below under “—Limitations on Common Stock Purchases.”

Priority 1: Eligible Account Holders. Each ESSA Bank & Trust depositor with aggregate deposit account balances of $50.00 or more (a “Qualifying Deposit”) as of the close of business on April 30, 2005 (an “Eligible Account Holder”) will receive, without payment therefor, nontransferable subscription rights to purchase, subject to the overall purchase limitations, up to $350,000 or 35,000 shares of our common stock or, if greater, 15 times the number of subscription shares offered multiplied by a fraction of which the numerator is the aggregate Qualifying Deposit account balances of the Eligible Account Holder and the denominator is the aggregate Qualifying Deposit account balances of all Eligible Account Holders, subject to the overall purchase limitations. See “—Limitations on Common Stock Purchases.” If there are not sufficient shares available to satisfy all subscriptions, shares will first be allocated so as to permit each Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100 shares or the number of shares for which he or she subscribed. Thereafter, unallocated shares will be allocated to each Eligible Account Holder whose subscription remains unfilled in the proportion that the amount of his or her Qualifying Deposit bears to the total amount of Qualifying Deposits of all subscribing Eligible Account Holders whose subscriptions remain unfilled. If an amount so allocated exceeds the amount subscribed for by any one or more Eligible Account Holders, the excess shall be reallocated among those Eligible Account Holders whose subscriptions are not fully satisfied until all available shares have been allocated.

To ensure proper allocation of shares of our common stock, each Eligible Account Holder must list on his or her stock order form all deposit accounts in which he or she has an ownership interest on April 30, 2005. In the event of oversubscription, failure to list an account could result in fewer shares being allocated than if all accounts had been disclosed. In the event of an oversubscription, the subscription rights of Eligible Account Holders who are also directors or executive officers of ESSA Bancorp, Inc. or their associates will be subordinated to the subscription rights of other Eligible Account Holders to the extent attributable to increased deposits in the twelve months preceding April 30, 2005.

Priority 2: Tax-Qualified Plans. Our tax-qualified employee benefit plans, including our employee stock ownership plan and 401(k) plan, will receive, without payment therefor, nontransferable subscription rights to purchase in the aggregate up to 10% of the shares of common stock sold in the offering.

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Priority 3: Supplemental Eligible Account Holders. To the extent that there are sufficient shares of common stock remaining after satisfaction of subscriptions by Eligible Account Holders and our tax-qualified employee benefit plans, each ESSA Bank & Trust depositor with a Qualifying Deposit as of the close of business on                                          who is not an Eligible Account Holder (“Supplemental Eligible Account Holder”) will receive, without payment therefor, nontransferable subscription rights to purchase up to $350,000 or 35,000 shares of common stock or, if greater, 15 times the number of subscription shares offered multiplied by a fraction of which the numerator is the aggregate Qualifying Deposit account balances of the Supplemental Eligible Account Holder and the denominator is the aggregate Qualifying Deposit account balances of all Supplemental Eligible Account Holders, subject to the overall purchase limitations. See “—Limitations on Common Stock Purchases.” If there are not sufficient shares available to satisfy all subscriptions, shares will be allocated so as to permit each Supplemental Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100 shares of common stock or the number of shares for which he or she subscribed. Thereafter, unallocated shares will be allocated to each Supplemental Eligible Account Holder whose subscription remains unfilled in the proportion that the amount of his or her Qualifying Deposit bears to the total amount of Qualifying Deposits of all Supplemental Eligible Account Holders whose subscriptions remain unfilled. If an amount so allocated exceeds the amount subscribed for by any one or more Supplemental Eligible Account Holders, the excess shall be reallocated among those Supplemental Eligible Account Holders whose subscriptions are not fully satisfied until all available shares have been allocated.

To ensure proper allocation of common stock, each Supplemental Eligible Account Holder must list on the stock order form all deposit accounts or loan accounts in which he or she has an ownership interest at                                         . In the event of oversubscription, failure to list an account could result in fewer shares being allocated than if all accounts had been disclosed.

Priority 4: Other Members. To the extent that there are shares of common stock remaining after satisfaction of subscriptions by Eligible Account Holders, our tax-qualified employee benefit plans and Supplemental Eligible Account Holders, each depositor and each borrower of ESSA Bank & Trust on the voting record date of                                          who is not an Eligible Account Holder or Supplemental Eligible Account Holder (“Other Members”) will receive, without payment therefor, nontransferable subscription rights to purchase up to $350,000 or 35,000 shares of common stock, subject to the overall purchase limitations. See “—Limitations on Common Stock Purchases.” If there are not sufficient shares available to satisfy all subscriptions, available shares will be allocated on a pro rata basis based on the size of the order of each Other Member whose order remains unfilled.

To ensure proper allocation of common stock, each Other Member must list on the stock order form all deposit accounts or loan accounts in which he or she has an ownership interest at                                         . In the event of oversubscription, failure to list an account could result in fewer shares being allocated than if all accounts had been disclosed.

Expiration Date. The Subscription Offering will expire at 12:00 Noon, Eastern time, on                     , unless extended by us for up to 45 days or such additional periods with the approval of the Office of Thrift Supervision, if necessary. Subscription rights will expire whether

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or not each eligible depositor or borrower can be located. We may decide to extend the expiration date of the subscription offering for any reason, whether or not subscriptions have been received for shares at the minimum, midpoint or maximum of the offering range. Subscription rights which have not been exercised prior to the expiration date will become void. We may extend the offering, without notice, until                     , 2007.

We will not execute orders until we have received orders to purchase at least the minimum number of shares of common stock. If we have not received orders to purchase at least 9,350,000 shares by                     , 2007, and the Office of Thrift Supervision has not consented to an extension, all funds delivered to us to purchase shares of common stock in the offering will be returned promptly to the subscribers with interest calculated at ESSA Bank & Trust’s passbook savings rate and all deposit account withdrawal authorizations will be canceled. If an extension beyond the 45-day period following the expiration date is granted by the Office of Thrift Supervision, for any reason, we will notify all subscribers in the stock offering of the extension of time and of the rights of subscribers to confirm, change or cancel their stock order during a specified resolicitation period. Aggregate extensions may not go beyond                     , which is two years after the special meeting of voting members of ESSA Bank & Trust to vote on the plan of conversion.

Community Offering

To the extent that shares of common stock remain available for purchase after satisfaction of all subscriptions of the Eligible Account Holders, our tax-qualified employee benefit plans, Supplemental Eligible Account Holders and Other Members, we may offer shares pursuant to the plan of conversion to members of the general public in a community offering. Shares may be offered with a preference to natural persons residing in the Pennsylvania Counties of Monroe and Northampton.

Subscribers in the community offering may purchase up to 35,000 shares of common stock, subject to the overall purchase limitations. See “—Limitations on Common Stock Purchases.” The opportunity to purchase shares of common stock in the community offering category is subject to our right, in our sole discretion, to accept or reject any such orders in whole or in part either at the time of receipt of an order or as soon as practicable following the expiration date of the offering.

If we do not have sufficient shares of common stock available to fill all of the orders of natural persons residing in the Pennsylvania Counties of Monroe and Northampton, we will allocate the available shares among those persons in a manner that permits each of them, to the extent possible, to purchase the lesser of 100 shares, or the number of shares subscribed for by such person. Thereafter, unallocated shares will be allocated among natural persons residing in the Pennsylvania Counties of Monroe and Northampton whose orders remain unsatisfied on an equal number of shares basis per order.

The term “residing” or “resident” as used in this prospectus means any person who occupies a dwelling within the Pennsylvania Counties of Monroe and Northampton, has a present intent to remain within this community for a period of time and manifests the genuineness of that intent by establishing an ongoing physical presence within the community,

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together with an indication that this presence within the community is something other than merely transitory in nature. We may utilize deposit or loan records or other evidence provided to us to decide whether a person is a resident. In all cases, however, the determination shall be in our sole discretion.

We have retained Ryan Beck & Co., Inc., as our marketing advisor in the offering. Ryan Beck & Co., Inc. will provide advisory services for both the subscription and community offerings. No additional fee will be paid to Ryan Beck & Co., Inc. other then disclosed on page 122.

Expiration Date. The community offering may begin with, during or after the subscription offering, and is currently expected to terminate at the same time as the subscription offering, and must terminate no more than 45 days following the subscription offering.

Syndicated Community Offering

The plan of conversion provides that, if necessary, shares of common stock not purchased in the subscription offering and community offering may be offered for sale to the general public in a syndicated community offering to be managed by Ryan Beck & Co., Inc., acting as our agent. In such capacity, Ryan Beck & Co., Inc. may form a syndicate of other broker-dealers. Neither Ryan Beck & Co., Inc. nor any registered broker-dealer will have any obligation to take or purchase any shares of the common stock in the syndicated community offering; however, Ryan Beck & Co., Inc. has agreed to use its best efforts in the sale of shares in any syndicated community offering. The syndicated community offering would terminate no later than 45 days after the expiration of the subscription offering, unless extended by us, with approval of the Office of Thrift Supervision. See “—Community Offering” above for a discussion of rights of subscribers in the event an extension is granted.

The syndicated community offering, if held, will be managed by Ryan Beck & Co., Inc., acting as our agent. See “—Marketing and Distribution; Compensation” below for a discussion of fees associated with a syndicated community offering. In such capacity, Ryan Beck & Co., Inc., may form a syndicate of other brokers-dealers who are National Association of Securities Dealers, Inc. member firms. Neither Ryan Beck & Co., Inc. nor any registered broker-dealer will have any obligation to take or purchase any shares of the common stock in the syndicated community offering. The syndicated community offering will be conducted in accordance with certain Securities and Exchange Commission rules applicable to best efforts offerings. Generally under those rules, Ryan Beck & Co., Inc., a broker-dealer, will deposit funds it receives prior to closing from interested investors into a separate non-interest-bearing bank account. If and when all the conditions for the closing are met, funds for common stock sold in the syndicated community offering will be promptly delivered to us. If the offering is consummated, but some or all of an interested investor’s funds are not accepted by us, those funds will be returned to the interested investor promptly, without interest. If the offering is not consummated, funds in the account will be promptly returned, without interest, to the potential investor. Normal customer ticketing will be used for order placement. In the syndicated community offering, order forms will not be used.

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The opportunity to subscribe for shares of common stock in the syndicated community offering is subject to our right to reject orders, in whole or in part, either at the time of receipt of an order or as soon as practicable following the expiration date of the offering. If your order is rejected in part, you will not have the right to cancel the remainder of your order.

Purchasers in the syndicated community offering are eligible to purchase up to $350,000 or 35,000 shares of common stock, subject to the overall purchase limitations. See “—Limitations on Common Stock Purchases.” We may begin the syndicated community offering at any time following the commencement of the subscription offering.

If we are unable to find purchasers from the general public to meet the minimum of the offering range we will make other purchase arrangements, if feasible. Other purchase arrangements must be approved by the Office of Thrift Supervision and may provide for purchases by directors, officers, their associates and other persons in excess of the limitations provided in the plan of conversion and in excess of the proposed director purchases discussed earlier, although no purchases are currently intended. If other purchase arrangements cannot be made, we may do any of the following: terminate the offering and promptly return all funds; set a new offering range, notifying all subscribers of the opportunity to confirm, cancel or change their orders; or take such other actions as may be permitted by the Office of Thrift Supervision.

Limitations on Common Stock Purchases

The plan of conversion includes the following limitations on the number of shares of common stock that may be purchased in the offering:

• No person (or persons exercising subscription rights through a single qualifying deposit or loan account held jointly) may purchase fewer than 25 shares of common stock or generally more than $350,000 or 35,000 shares;

• Our tax-qualified stock benefit plans, including our employee stock ownership plan and 401(k) plan may purchase in the aggregate up to 10% of the shares of common stock issued in the offering, including shares issued in the event of an increase in the offering range of up to 15%;

• Except for the tax-qualified employee benefit plans, as described above, no person or entity, together with associates or persons acting in concert with such person or entity, may purchase more than $500,000 or 50,000 shares in all categories of the offering combined;

• The maximum purchase limitations may not be increased to a percentage in excess of 5% of the shares issued in the offering except the maximum purchase limitation may be increased up to 9.99% of the shares issued in the offering, provided that orders for common stock exceeding 5% of the shares of common stock issued in the offering shall not exceed in the aggregate 10% of the total shares of common stock issued in the offering; and

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• The maximum number of shares of common stock that may be purchased in all categories of the offering by our executive officers and directors and their associates, in the aggregate may not exceed 25% of the shares issued in the offering.

Depending upon market or financial conditions, our Board of Directors, with the approval of the Office of Thrift Supervision and without further approval of members of ESSA Bank & Trust, may decrease or increase the purchase limitations. If a purchase limitation is increased, subscribers in the subscription offering who ordered the maximum amount will be, and, in our sole discretion, some other large subscribers may be, given the opportunity to increase their subscriptions up to the then applicable limit. The effect of this type of resolicitation will be an increase in the number of shares of common stock owned by subscribers who choose to increase their subscriptions.

In the event of an increase in the offering range of up to 15% of the total number of shares of common stock offered in the offering, shares will be allocated in the following order of priority in accordance with the plan of conversion:

(1) to fill our tax-qualified employee benefit plans’ subscriptions for up to 10% of the total number of shares of common stock issued in the offering;

(2) in the event that there is an oversubscription at the Eligible Account Holder, Supplemental Eligible Account Holder or Other Member levels, to fill unfulfilled subscriptions of these subscribers according to their respective priorities; and

(3) to fill unfulfilled subscriptions in the community offering, with preference given first to natural persons residing in the Pennsylvania Counties of Monroe and Northampton.

The term “associate” of a person means:

(1) any corporation or organization, other than ESSA Bancorp, Inc., ESSA Bank & Trust or a majority-owned subsidiary of ESSA Bank & Trust, of which the person is a director, senior officer, partner or 10% beneficial stockholder;

(2) any trust or other estate in which the person has a substantial beneficial interest or serves as a trustee or in a fiduciary capacity, excluding any employee stock benefit plan in which the person has a substantial beneficial interest or serves as trustee or in a fiduciary capacity; and

(3) any blood or marriage relative of the person, who either lives in the same home as the person or who is a director or senior officer of ESSA Bancorp, Inc. or ESSA Bank & Trust, or a subsidiary of either of them

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The term “acting in concert” means:

(1) knowing participation in a joint activity or interdependent conscious parallel action towards a common goal whether or not pursuant to an express agreement; or

(2) a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise.

Any persons or companies having the same address on an account or stock order form may be considered to be acting in concert. A person or company which acts in concert with another person or company (“other party”) shall also be deemed to be acting in concert with any person or company who is also acting in concert with that other party, except that any tax-qualified employee stock benefit plan will not be deemed to be acting in concert with its trustee or a person who serves in a similar capacity solely for the purpose of determining whether common stock held by the trustee and common stock held by the employee stock benefit plan will be aggregated.

Our directors are not treated as associates of each other solely because of their membership on the Board of Directors. We have the right to determine whether prospective purchasers are associates or acting in concert. Shares of common stock purchased in the offering will be freely transferable except for shares purchased by executive officers and directors of ESSA Bancorp, Inc. or ESSA Bank & Trust and except as described below. Any purchases made by any associate of ESSA Bancorp, Inc. or ESSA Bank & Trust for the explicit purpose of meeting the minimum number of shares of common stock required to be sold in order to complete the offering shall be made for investment purposes only and not with a view toward redistribution. In addition, under the guidelines of the National Association of Securities Dealers, Inc., members of the National Association of Securities Dealers and their associates are subject to certain restrictions on transfer of securities purchased in accordance with subscription rights and to certain reporting requirements upon purchase of these securities. For a further discussion of limitations on purchases of shares of our common stock at the time of conversion and thereafter, see “—Certain Restrictions on Purchase or Transfer of Our Shares After Conversion” and “Restrictions on Acquisition of ESSA Bancorp, Inc.”

Marketing and Distribution; Compensation

Offering materials have been initially distributed to certain persons by mail, with additional copies made available through our Stock Information Center.

We have engaged Ryan Beck & Co., Inc. a broker-dealer registered with the National Association of Securities Dealers, as a financial and marketing advisor in connection with the offering of our common stock. In its role in providing advisory, administrative and marketing services, Ryan Beck & Co. Inc. will assist us in the offering as follows:

• acting as our financial advisor for the conversion and offering;

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• providing administrative services and managing the Stock Information Center;

• educating our employees regarding the stock offering;

• targeting our sales efforts, including assisting in the preparation of marketing materials;

• soliciting orders for common stock; and

• assisting in soliciting proxies of our members regarding the special meeting of members.

For these services, Ryan Beck & Co., Inc. will receive an advisory and administrative fee of $50,000 and if the conversion is consummated, a sales fee of 1.0% of the aggregate dollar amount of the common stock sold in the subscription and community offerings up to $100 million; and 0.75% of the aggregate dollar amount in excess of $100 million, excluding in each case shares purchased by our charitable foundation, tax qualified employee benefit plans and shares purchased by our directors, officers and employees and their immediate families. For these services, we made an initial advance payment of $25,000 and a payment of $12,500 upon the initial filing of this prospectus. We will make another payment of $12,500 upon the closing of the conversion and offering. The $50,000 advisory and administrative fee will be deducted from the sales fee.

The plan of conversion provides that, if necessary, all shares of common stock not purchased in the subscription offering and community offering may be offered for sale to the general public in a syndicated community offering to be managed by Ryan Beck & Co., Inc. In such capacity, Ryan Beck & Co., Inc. may form a syndicate of other broker-dealers. Neither Ryan Beck & Co., Inc. nor any registered broker-dealer will have any obligation to take or purchase any shares of the common stock in the syndicated community offering; however, Ryan Beck & Co., Inc. has agreed to use its best efforts in the sale of shares in any syndicated community offering. If there is a syndicated community offering, Ryan Beck & Co., Inc. will receive a management fee of 1.0% of the aggregate dollar amount of the common stock sold in the syndicated community offering. The total fees payable to Ryan Beck & Co., Inc. and other NASD member firms in the syndicated community offering will not exceed 6.0% of the aggregate dollar amount of the common stock sold in the syndicated community offering.

We also will reimburse Ryan Beck & Co., Inc. for its reasonable out-of-pocket expenses associated with its marketing effort, up to a maximum of $20,000 unless otherwise agreed by us. We will also reimburse Ryan Beck & Co., Inc. for its legal fees (excluding the out-of-pocket expenses of counsel) up to $75,000. If the plan of conversion is terminated or if Ryan Beck & Co., Inc.’s engagement is terminated in accordance with the provisions of the agreement, Ryan Beck & Co., Inc. will only receive reimbursement of its reasonable out-of-pocket expenses and will return any amounts paid or advanced by us in excess of these expenses. We will indemnify Ryan Beck & Co., Inc. against liabilities and expenses (including legal fees) incurred in connection with certain claims or litigation arising out of or based upon untrue statements or omissions contained in the offering material for the common stock, including liabilities under the Securities Act of 1933.

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Our directors and executive officers may participate in the solicitation of offers to purchase common stock. These persons will be reimbursed for their reasonable out-of-pocket expenses incurred in connection with the solicitation. Other trained employees of ESSA Bank & Trust may assist in the offering in ministerial capacities, providing clerical work in effecting a sales transaction or answering questions of a ministerial nature. No offers or sales may be made by tellers or at the teller counters. All sales activity will be conducted in a segregated or separately identifiable area of ESSA Bank & Trust’s office facility apart from the area accessible to the general public. Other questions of prospective purchasers will be directed to executive officers or registered representatives of Ryan Beck & Co., Inc. Our other employees have been instructed not to solicit offers to purchase shares of common stock or provide advice regarding the purchase of common stock. We will rely on Rule 3a4-1 under the Securities Exchange Act of 1934, as amended, and sales of common stock will be conducted within the requirements of Rule 3a4-1, so as to permit officers, directors and employees to participate in the sale of common stock. None of our officers, directors or employees will be compensated in connection with their participation in the offering by the payment of commissions or other remuneration based either directly or indirectly on the transactions in the shares of common stock.

The offering will comply with the requirements of Rule 10b-9 under the Securities Exchange Act of 1934.

Procedure for Purchasing Shares

Expiration Date. The subscription offering is expected to expire at 12:00 Noon, Eastern time, on                     . The community offering is expected to expire at the same time. We may extend the offering for up to 45 days without notice to purchasers in the offering. Any extension of the subscription and/or community offering beyond                      would require the Office of Thrift Supervision’s approval.

To ensure that each purchaser receives a prospectus at least 48 hours before the expiration date of the offering in accordance with Rule 15c2-8 of the Securities Exchange Act of 1934, as amended, no prospectus will be mailed any later than five days prior to the expiration date or hand delivered any later than two days prior to the expiration date. Execution of an order form will confirm receipt of delivery in accordance with Rule 15c2-8. Order forms will be distributed only with a prospectus. Subscription funds will be maintained in a segregated account at ESSA Bank & Trust, or in our discretion at another insured depository institution and will earn interest at our passbook savings rate from the date of receipt.

We reserve the right in our sole discretion to terminate the offering at any time and for any reason, in which case we will cancel any deposit account withdrawal orders and promptly return all funds delivered to us, with interest calculated at ESSA Bank & Trust’s passbook savings rate from the date of receipt.

We have the right to reject any order submitted in the offering by a person who we believe is making false representations or who we otherwise believe, either alone or acting in concert with others, is violating, evading, circumventing, or intends to violate, evade or circumvent the terms and conditions of the plan of conversion.

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Use of Order Forms. In order to purchase shares of common stock in the subscription offering and community offering, you must complete an order form and remit full payment. We will not be required to accept incomplete order forms, unsigned order forms, orders submitted on photocopied or facsimiled order forms. All order forms must be received (not postmarked) by the Stock Information Center prior to 12:00 Noon, Eastern time, on                     . We are not required to accept order forms that are not received by that time, are executed defectively or are received without full payment or without appropriate withdrawal instructions. We are not required to notify subscribers of incomplete or improperly executed order forms. We have the right to permit the correction of incomplete or improperly executed order forms or waive immaterial irregularities. We do not represent, however, that we will do so and we have no affirmative duty to notify any prospective subscriber of any such defects. You may submit your order form and payment by mail using the order reply envelope provided, by bringing your order form to our Stock Information Center or by overnight delivery to the indicated address on the order form. Once tendered, an order form cannot be modified or revoked without our consent. We reserve the absolute right, in our sole discretion, to reject orders received in the community offering, in whole or in part, at the time of receipt or at any time prior to completion of the offering. If you are ordering shares, you must represent that you are purchasing shares for your own account and that you have no agreement or understanding with any person for the sale or transfer of the shares. Our interpretation of the terms and conditions of the plan of conversion and of the acceptability of the order forms will be final, subject to the authority of the Office of Thrift Supervision.

By signing the order form, you will be acknowledging that the common stock is not a deposit or savings account and is not federally insured or otherwise guaranteed by ESSA Bank & Trust or the federal government, and that you received a copy of this prospectus. However, signing the order form will not result in you waiving your rights under the Securities Act of 1933 or the Securities Exchange Act of 1934.

Payment for Shares. Payment for all shares of common stock will be required to accompany completed order forms, in order for the purchase to be valid. Payment for shares may only be made by:

(1) personal check, bank check or money order, made payable to ESSA Bancorp, Inc.; or

(2) authorization of withdrawal from the types of ESSA Bank & Trust deposit accounts designated on the stock order form.

Appropriate means for designating withdrawals from deposit accounts at ESSA Bank & Trust are provided on the order form. The funds designated must be available in the account(s) at the time the order form is received. A hold will be placed on these funds, making them unavailable to the depositor. Funds authorized for withdrawal will continue to earn interest within the account at the contract rate until the offering is completed, at which time the designated withdrawal will be made. Interest penalties for early withdrawal applicable to

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certificate accounts will not apply to withdrawals authorized for the purchase of shares of common stock; however, if a withdrawal results in a certificate account with a balance less than the applicable minimum balance requirement, the certificate will be canceled at the time of withdrawal without penalty and the remaining balance will earn interest at the current passbook rate subsequent to the withdrawal. In the case of payments made by personal check these funds must be available in the account(s). Checks and money orders will be immediately cashed and placed in a segregated account at ESSA Bank & Trust, or in our discretion at another insured depository institution, and will earn interest at ESSA Bank & Trust’s passbook savings rate from the date payment is received until the offering is completed or terminated.

Cash and wire transfers will not be accepted. You may not use a check drawn on a ESSA Bank & Trust line of credit, and we will not accept third-party checks (a check written by someone other than you) payable to you and endorsed over to ESSA Bancorp, Inc. Once we receive your executed order form, it may not be modified, amended or rescinded without our consent, unless the offering is not completed by the expiration date, in which event purchasers may be given the opportunity to increase, decrease or rescind their orders for a specified period of time.

If you are interested in using your individual retirement account funds to purchase shares of common stock, you must do so through a self-directed individual retirement account such as a brokerage firm individual retirement account. By regulation, ESSA Bank & Trust’s individual retirement accounts are not self-directed, so they cannot be invested in shares of our common stock. Therefore, if you wish to use your funds that are currently in a ESSA Bank & Trust individual retirement account, you may not designate on the order form that you wish funds to be withdrawn from the account for the purchase of common stock. The funds you wish to use for the purchase of common stock will have to be transferred to a brokerage account. It may take several weeks to transfer your ESSA Bank & Trust individual retirement account to an independent trustee, so please allow yourself sufficient time to take this action. An annual administrative fee may be payable to the new trustee. There will be no early withdrawal or Internal Revenue Service interest penalties for these transfers. If you are interested in using funds in an ESSA Bank & Trust individual retirement account or any other retirement account to purchase shares of common stock please contact our Stock Information Center as soon as possible, preferably at least two weeks prior to the end of the offering period, because processing such transactions takes additional time, and whether such funds can be used may depend on limitations imposed by the institutions where such funds are currently held. We cannot guarantee that you will be able to use such funds.

We will have the right, in our sole discretion, to permit institutional investors to submit irrevocable orders together with the legally binding commitment for payment and to thereafter pay for the shares of common stock for which they subscribe in the community offering at any time prior to 48 hours before the completion of the offering. This payment may be made by wire transfer.

Our employee stock ownership plan and 401(k) will not be required to pay for any shares purchased in the offering until consummation of the offering. Our ESOP must provide a loan commitment from an unrelated financial institution or ESSA Bancorp, Inc. to lend to the employee stock ownership plan the necessary amount to fund the purchase.

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Regulations prohibit ESSA Bank & Trust from knowingly lending funds or extending credit to any persons to purchase shares of common stock in the offering.

Delivery of Stock Certificates. Certificates representing shares of common stock issued in the offering will be mailed by ESSA Bancorp, Inc. to the persons entitled thereto at the certificate registration address noted by them on the order form, as soon as practicable following consummation of the offering. Any certificates returned as undeliverable will be held by our transfer agent until claimed by persons legally entitled thereto or otherwise disposed of in accordance with applicable law. Until certificates for the shares of common stock are delivered, purchasers may not be able to sell the shares of common stock which they ordered, even though the common stock will have begun trading.

Other Restrictions. Notwithstanding any other provision of the plan of conversion, no person is entitled to purchase any shares of common stock to the extent the purchase would be illegal under any federal or state law or regulation, including state “blue sky” regulations, or would violate regulations or policies of the National Association of Securities Dealers, Inc., particularly those regarding free riding and withholding. We may ask for an acceptable legal opinion from any purchaser as to the legality of his or her purchase and we may refuse to honor any purchase order if an opinion is not timely furnished. In addition, we are not required to offer shares of common stock to any person who resides in a foreign country.

Restrictions on Transfer of Subscription Rights and Shares

Office of Thrift Supervision regulations prohibit any person with subscription rights, including the Eligible Account Holders, Supplemental Eligible Account Holders and Other Members, from transferring or entering into any agreement or understanding to transfer the legal or beneficial ownership of the subscription rights issued under the plan of conversion or the shares of common stock to be issued upon their exercise. These rights may be exercised only by the person to whom they are granted and only for his or her account. Each person exercising subscription rights will be required to certify that he or she is purchasing shares solely for his or her own account and that he or she has no agreement or understanding regarding the sale or transfer of subscription rights or stock shares. The regulations also prohibit any person from offering or making an announcement of an offer or intent to make an offer to purchase subscription rights or shares of common stock to be issued upon their exercise prior to completion of the offering.

We intend to pursue any and all legal and equitable remedies in the event we become aware of the transfer of subscription rights, and we will not honor orders that we believe involve the transfer of subscription rights.

How You Can Obtain Additional Information

Our branch office personnel may not, by law, assist with investment-related questions about the offering or accept stock order forms or proxy cards. If you have any questions regarding the conversion or the offering, please call or visit our Stock Information Center, toll free, at 1-                    , Monday through Friday between 10:00 a.m. and 4:00 p.m., Eastern time. The Stock Information Center is located at our Corporate Center, 200 Palmer Street, Stroudsburg, Pennsylvania 18360                                         . The Stock Information Center will be closed on weekends and bank holidays.

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Liquidation Rights

In the unlikely event of a complete liquidation of ESSA Bancorp, Inc. prior to the conversion, all claims of creditors of ESSA Bancorp, Inc., including those of depositors of ESSA Bank & Trust (to the extent of their deposit balances), would be paid first. Thereafter, if there were any assets of ESSA Bancorp, Inc. remaining, these assets would be distributed to stockholders, including ESSA Bank & Trust. In the unlikely event that ESSA Bank & Trust and ESSA Bancorp, Inc. liquidated prior to the conversion, all claims of their creditors would be paid first. Then, if there were any assets of ESSA Bank & Trust remaining, members of ESSA Bank & Trust would receive those remaining assets, pro rata, based upon the deposit balances in their deposit account in ESSA Bank & Trust immediately prior to liquidation. In the unlikely event that ESSA Bank & Trust were to liquidate after the conversion, all claims of creditors, including those of depositors, would be paid first, followed by distribution of the “liquidation account” to certain depositors, with any assets remaining thereafter distributed to ESSA Bancorp, Inc. as the holder of ESSA Bank & Trust capital stock. Pursuant to the rules and regulations of the Office of Thrift Supervision, a post-conversion merger, consolidation, sale of bulk assets or similar combination or transaction with another insured savings institution would not be considered a liquidation and, in these types of transactions, the liquidation account would be assumed by the surviving institution.

The plan of conversion provides for the establishment, upon the completion of the conversion, of a special “liquidation account” for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders in an amount equal to the total equity of ESSA Bank & Trust as of the date of its latest balance sheet contained in this prospectus.

The purpose of the liquidation account is to provide Eligible Account Holders and Supplemental Eligible Account Holders who maintain their deposit accounts with ESSA Bank & Trust after the conversion with a liquidation interest in the unlikely event of the complete liquidation of ESSA Bank & Trust after the conversion. Each Eligible Account Holder and Supplemental Eligible Account Holder that continues to maintain his or her deposit account at ESSA Bank & Trust, would be entitled, on a complete liquidation of ESSA Bank & Trust after the conversion, to an interest in the liquidation account prior to any payment to the stockholders of ESSA Bancorp, Inc. Each Eligible Account Holder and Supplemental Eligible Account Holder would have an initial interest in the liquidation account for each deposit account, including savings accounts, transaction accounts such as negotiable order of withdrawal accounts, money market deposit accounts, and certificates of deposit, with a balance of $50 or more held in ESSA Bank & Trust on April 30, 2005 and                                         , respectively. Each Eligible Account Holder and Supplemental Eligible Account Holder would have a pro rata interest in the total liquidation account for each such deposit account, based on the proportion that the balance of each such deposit account on April 30, 2005 or                                         , respectively, bears to the balance of all deposit accounts in ESSA Bank & Trust on such dates.

If, however, on any December 31 annual closing date commencing on or after the effective date of the conversion, the amount in any such deposit account is less than the amount

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in the deposit account on April 30, 2005 or                                         , as applicable, or any other annual closing date, then the interest in the liquidation account relating to such deposit account would be reduced from time to time by the proportion of any such reduction, and such interest will cease to exist if such deposit account is closed. In addition, no interest in the liquidation account would ever be increased despite any subsequent increase in the related deposit account. Payment pursuant to liquidation rights of Eligible Account Holders and Supplemental Eligible Account Holders would be separate and apart from the payment of any insured deposit accounts to such depositor. Any assets remaining after the above liquidation rights of Eligible Account Holders and Supplemental Eligible Account Holders are satisfied would be distributed to ESSA Bancorp, Inc. as the sole stockholder of ESSA Bank & Trust.

Material Income Tax Consequences

Consummation of the conversion is subject to the prior receipt of an opinion of counsel or tax advisor with respect to federal and state income taxation that the conversion will not be a taxable transaction to ESSA Bank & Trust or ESSA Bancorp, Inc., Eligible Account Holders, Supplemental Eligible Account Holders, and other members of ESSA Bank & Trust. Unlike private letter rulings, opinions of counsel or tax advisors are not binding on the Internal Revenue Service or any state taxing authority, and such authorities may disagree with such opinions. In the event of such disagreement, there can be no assurance that ESSA Bancorp, Inc. or ESSA Bank & Trust would prevail in a judicial proceeding.

ESSA Bank & Trust and ESSA Bancorp, Inc. have received an opinion of counsel, Luse Gorman Pomerenk & Schick, P.C., regarding all of the material federal income tax consequences of the conversion, which includes the following:

1. The conversion of ESSA Bank & Trust to a Pennsylvania chartered stock savings association will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(F) of the Internal Revenue Code.

2. Neither ESSA Bancorp, Inc., a Pennsylvania corporation nor ESSA Bank & Trust will recognize any gain or loss upon the transfer of assets of ESSA Bancorp, Inc. to ESSA Bank & Trust in exchange for shares of common stock of ESSA Bank & Trust, which will be constructively received by ESSA Bank & Trust (Sections 361 and 1032(a) of the Internal Revenue Code).

3. The basis of the assets of ESSA Bancorp, Inc. and the holding period of such assets to be received by ESSA Bank & Trust will be the same as the basis and holding period in such assets in the hands of ESSA Bancorp, Inc. immediately before the exchange. (Sections 362(b) and 1223(2) of the Internal Revenue Code).

4. The exchange of Eligible Account Holders’ and Supplemental Account Holders’ interests in ESSA Bank & Trust for interests in a liquidation account established in ESSA Bank & Trust will satisfy the continuity of interest requirement of Section 1.368-1(b) of the Federal Income Tax Regulations.

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5. None of ESSA Bank & Trust, nor Eligible Account Holders, Supplemental Eligible Account Holders or Other Members, will recognize any gain or loss on the transfer of the assets of ESSA Bank & Trust to ESSA Bank & Trust in exchange for an interest in a liquidation account established in ESSA Bank & Trust for the benefit of Eligible Account Holders and Supplemental Eligible Account holders who remain depositors of ESSA Bank & Trust and nontransferable subscription rights to purchase shares of ESSA Bancorp, Inc. common stock.

6. It is more likely than not that the nontransferable subscription rights have no value, based on the fact that these rights are acquired by the recipients without cost, are nontransferable and of short duration, and afford the recipients the right only to purchase the common stock at a price equal to its estimated fair market value, which will be the same price as the subscription price for the shares of common stock in the offering. Accordingly, no gain or loss will be recognized by Eligible Account Holders, Supplemental Eligible Account Holders or other members upon distribution to them of nontransferable subscription rights to purchase shares of ESSA Bancorp, Inc. common stock, provided that the amount to be paid for ESSA Bancorp, Inc. common stock is equal to the fair market value of ESSA Bancorp, Inc. common stock.

7. The basis of the shares of ESSA Bancorp, Inc. common stock purchased in the offering will be the purchase price. The holding period of the ESSA Bancorp, Inc. common stock purchased pursuant to the exercise of nontransferable subscription rights will commence on the date on which the right to acquire such stock was exercised.

8. No gain or loss will be recognized by ESSA Bancorp, Inc. on the receipt of money in exchange for shares of ESSA Bancorp, Inc. common stock sold in the offering.

In the view of RP Financial, LC. (who is acting as independent appraiser of the value of the shares of ESSA Bancorp, Inc. common stock in connection with the conversion), which view is not binding on the Internal Revenue Service, the subscription rights do not have any value for the reasons set forth in paragraph 6, above. If the subscription rights granted to Eligible Account Holders and Supplemental Eligible Account Holders are deemed to have an ascertainable value, receipt of these rights could result in taxable gain to those Eligible Account Holders and Supplemental Eligible Account Holders who exercise the subscription rights in an amount equal to their value, and ESSA Bancorp, Inc. could recognize gain on a distribution. Eligible Account Holders and Supplemental Eligible Account Holders are encouraged to consult with their own tax advisors as to the tax consequences in the event that subscription rights are deemed to have an ascertainable value.

The Internal Revenue Service has announced that it will not issue private letter rulings with respect to the issue of whether nontransferable rights have value. Unlike private letter rulings, an opinion of counsel or the view of an independent appraiser is not binding on the Internal Revenue Service and the Internal Revenue Service could disagree with the conclusions

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reached therein. Depending on the conclusion or conclusions with which the Internal Revenue Service disagrees, the Internal Revenue Service may take the position that the transaction is taxable to any one or more of ESSA Bank & Trust, the members of ESSA Bank & Trust, ESSA Bancorp, Inc. and the Eligible Account Holders and Supplemental Eligible Account Holders who exercise their subscription rights. In the event of a disagreement, there can be no assurance that ESSA Bancorp, Inc. or ESSA Bank & Trust would prevail in a judicial or administrative proceeding.

The federal tax opinion has been filed with the Securities and Exchange Commission as an exhibit to ESSA Bancorp, Inc.’s registration statement.

Certain Restrictions on Purchase or Transfer of Our Shares after Conversion

All shares of common stock purchased in the offering by a director or an executive officer of ESSA Bank & Trust generally may not be sold for a period of one year following the closing of the conversion, except in the event of the death of the director or executive officer. Each certificate for restricted shares will bear a legend giving notice of this restriction on transfer, and instructions will be issued to the effect that any transfer within this time period of any certificate or record ownership of the shares other than as provided above is a violation of the restriction. Any shares of common stock issued at a later date as a stock dividend, stock split or otherwise with respect to the restricted stock will be similarly restricted. The directors and executive officers of ESSA Bancorp, Inc. also will be restricted by the insider trading rules promulgated pursuant to the Securities Exchange Act of 1934.

Purchases of shares of our common stock by any of our directors, executive officers and their associates, during the three-year period following the closing of the conversion may be made only through a broker or dealer registered with the Securities and Exchange Commission, except with the prior written approval of the Office of Thrift Supervision. This restriction does not apply, however, to negotiated transactions involving more than 1% of our outstanding common stock or to purchases of our common stock by our stock option plan or any of our tax-qualified employee stock benefit plans or nontax-qualified employee stock benefit plans, including any recognition and retention plans or restricted stock plans.

Office of Thrift Supervision regulations prohibit ESSA Bancorp, Inc. from repurchasing its shares of common stock during the first year following conversion unless compelling business reasons exist for such repurchases. After one year, the Office of Thrift Supervision does not impose any repurchase restrictions.

ESSA BANK & TRUST FOUNDATION

General

In furtherance of our commitment to our local community, the plan of conversion provides that we will establish ESSA Bank & Trust Foundation as a non-stock, nonprofit Delaware corporation in connection with the stock offering. The charitable foundation will be funded with cash and shares of ESSA Bancorp, Inc. common stock, as further described below.

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By further enhancing our visibility and reputation in our local community, we believe that the charitable foundation will enhance the long-term value of ESSA Bank & Trust’s community banking franchise. The stock offering presents us with a unique opportunity to provide a substantial and continuing benefit to our community and to receive the associated tax benefits.

The establishment and funding of the charitable foundation has been approved by the Board of Directors of ESSA Bancorp, Inc. and ESSA Bank & Trust and is subject to approval by members of ESSA Bank & Trust. If the members do not approve the charitable foundation, we may, in our discretion, complete the conversion and stock offering without the inclusion of the charitable foundation and without resoliciting subscribers. We may also determine in our discretion, not complete the conversion and stock offering if the members do not approve the charitable foundation.

Purpose of the Charitable Foundation

In connection with the closing of the stock offering, ESSA Bancorp, Inc. intends to contribute up to $1.5 million cash and issue a number of shares equal to 7.0% of the shares of common stock that will be sold in the stock offering to ESSA Bank & Trust Foundation. The purpose of the charitable foundation is to provide financial support to charitable organizations in the communities in which we operate and to enable our communities to share in our long-term growth. ESSA Bank & Trust Foundation will be dedicated completely to community activities and the promotion of charitable causes, and may be able to support such activities in ways that are not presently available to us. ESSA Bank & Trust Foundation will also support our ongoing obligations to the community under the Community Reinvestment Act. ESSA Bank & Trust received an “outstanding” rating in its most recent Community Reinvestment Act examination by the Federal Deposit Insurance Corporation.

Funding ESSA Bank & Trust Foundation with shares of ESSA Bancorp, Inc. common stock is also intended to allow our community to share in the potential growth and success of ESSA Bank & Trust after the stock offering is completed because ESSA Bank & Trust Foundation will benefit directly from any increases in the value of ESSA Bancorp, Inc. common stock. In addition, ESSA Bank & Trust Foundation will maintain close ties with ESSA Bank & Trust, thereby forming a partnership within the communities in which ESSA Bank & Trust operates.

Structure of the Charitable Foundation

The ESSA Bank & Trust Foundation will be incorporated under Delaware law as a non-stock, nonprofit corporation. The certificate of incorporation of ESSA Bank & Trust Foundation will provide that the corporation is organized exclusively for charitable purposes as set forth in Section 501(c)(3) of the Internal Revenue Code. ESSA Bank & Trust Foundation’s certificate of incorporation will further provide that no part of the net earnings of the charitable foundation will inure to the benefit of, or be distributable to, its directors or officers.

We have selected Messrs.                                          of our current directors to serve on the initial board of directors of the charitable foundation. As required by Office of Thrift Supervision regulations, we also will select one additional person to serve on the initial

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board of directors who will not be one of our officers or directors and who will have experience with local charitable organizations and grant making. While there are no plans to change the size of the initial board of directors during the year following the completion of the stock offering, following the first anniversary of the stock offering, the charitable foundation may alter the size and composition of its board of directors. For five years after the stock offering, one seat on the charitable foundation’s board of directors will be reserved for a person from our local community who has experience with local community charitable organizations and grant making and who is not one of our officers, directors or employees, and one seat on the charitable foundation’s board of directors will be reserved for one of ESSA Bank & Trust’s directors.

The business experience of our current directors is described in “Management of ESSA Bancorp, Inc.”

The board of directors of ESSA Bank & Trust Foundation will be responsible for establishing its grant and donation policies, consistent with the purposes for which it was established. As directors of a nonprofit corporation, directors of ESSA Bank & Trust Foundation will at all times be bound by their fiduciary duty to advance the charitable foundation’s charitable goals, to protect its assets and to act in a manner consistent with the charitable purposes for which the charitable foundation is established. The directors of ESSA Bank & Trust Foundation also will be responsible for directing the activities of the charitable foundation, including the management and voting of the shares of common stock of ESSA Bancorp, Inc. held by the charitable foundation. However, as required by Office of Thrift Supervision regulations, all shares of common stock held by ESSA Bank & Trust Foundation must be voted in the same ratio as all other shares of the common stock on all proposals considered by stockholders of ESSA Bancorp, Inc.

ESSA Bank & Trust Foundation’s place of business will be located at our administrative offices. The board of directors of ESSA Bank & Trust Foundation will appoint such officers and employees as may be necessary to manage its operations. Any director or officer or employee of the charitable foundation who is also a director, officer or employee of ESSA Bancorp, Inc. or ESSA Bank & Trust will receive no salary or benefits from ESSA Bank & Trust Foundation. To the extent applicable, we will comply with the affiliates restrictions set forth in Sections 23A and 23B of the Federal Reserve Act and the Office of Thrift Supervision regulations governing transactions between ESSA Bank & Trust and the charitable foundation.

ESSA Bank & Trust Foundation will receive working capital from its initial cash contribution of up to $1.5 million and:

(1) any dividends that may be paid on ESSA Bancorp, Inc.’s shares of common stock in the future;

(2) within the limits of applicable federal and state laws, loans collateralized by the shares of common stock; or

(3) the proceeds of the sale of any of the shares of common stock in the open market from time to time.

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As a private foundation under Section 501(c)(3) of the Internal Revenue Code, ESSA Bank & Trust Foundation will be required to distribute annually in grants or donations a minimum of 5% of the average fair market value of its net investment assets. One of the conditions imposed on the gift of common stock is that the amount of shares of common stock that may be sold by ESSA Bank & Trust Foundation in any one year shall not exceed 5% of the average market value of the assets held by ESSA Bank & Trust Foundation, except where the board of directors of the charitable foundation determines that the failure to sell an amount of common stock greater than such amount would result in a long-term reduction of the value of its assets and/or would otherwise jeopardize its capacity to carry out its charitable purposes.

Tax Considerations

Our independent tax advisor, Luse Gorman Pomerenk & Schick, P.C., has advised us that an organization created for the above purposes should qualify as a Section 501(c)(3) exempt organization under the Internal Revenue Code and should be classified as a private foundation. ESSA Bank & Trust Foundation will submit a timely request to the Internal Revenue Service to be recognized as an exempt organization. As long as ESSA Bank & Trust Foundation files its application for tax-exempt status within 15 months from the date of its organization, and provided the Internal Revenue Service approves the application, its effective date as a Section 501(c)(3) organization will be the date of its organization. Our independent tax advisor, however, has not rendered any advice on whether ESSA Bank & Trust Foundation’s tax exempt status will be affected by the regulatory requirement that all shares of common stock of ESSA Bancorp, Inc. held by ESSA Bank & Trust Foundation must be voted in the same ratio as all other outstanding shares of common stock of ESSA Bancorp, Inc. on all proposals considered by stockholders of ESSA Bancorp, Inc.

ESSA Bancorp, Inc. and ESSA Bank & Trust are authorized by federal law to make charitable contributions. We believe that the stock offering presents a unique opportunity to establish and fund a charitable foundation given the substantial amount of additional capital being raised. In making such a determination, we considered the dilutive impact to our stockholders of the contribution of shares of common stock to ESSA Bank & Trust Foundation. We believe that the contribution to ESSA Bank & Trust Foundation in excess of the 10% annual limitation on charitable deductions described below is justified given ESSA Bank & Trust’s capital position and its earnings, the substantial additional capital being raised in the stock offering and the potential benefits of ESSA Bank & Trust Foundation to our community. See “Capitalization,” “Historical and Pro Forma Regulatory Capital Compliance”, and “Comparison of Valuation and Pro Forma Information With and Without the Charitable Foundation.” The amount of the contribution will not adversely affect our financial condition. We therefore believe that the amount of the charitable contribution is reasonable given our pro forma capital position, and it does not raise safety and soundness concerns.

We have received an opinion from our independent tax advisor that ESSA Bancorp, Inc.’s contribution of its shares of stock to ESSA Bank & Trust Foundation should not constitute an act of self-dealing and that we should be entitled to a deduction in the amount of the fair market value of the stock at the time of the contribution less the nominal amount that ESSA Bank & Trust Foundation is required to pay ESSA Bancorp, Inc. for such stock. We are permitted to deduct only an amount equal to 10% of our annual taxable income in any one year.

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We are permitted under the Internal Revenue Code to carry the excess contribution over the five-year period following the contribution to ESSA Bank & Trust Foundation. We estimate that most of the contribution should be deductible over the six-year period (i.e., the year in which the contribution is made and the succeeding five-year period). However, we do not have any assurance that the Internal Revenue Service will grant tax-exempt status to the charitable foundation. Furthermore, even if the contribution is deductible, we may not have sufficient earnings to be able to use the deduction in full. Any such decision to continue to make additional contributions to ESSA Bank & Trust Foundation in the future would be based on an assessment of, among other factors, our financial condition at that time, the interests of our stockholders and depositors, and the financial condition and operations of the foundation.

Although we have received an opinion from our independent tax advisor that we should be entitled to a deduction for the charitable contribution, there can be no assurances that the Internal Revenue Service will recognize ESSA Bank & Trust Foundation as a Section 501(c)(3) exempt organization or that the deduction will be permitted. In such event, our contribution to ESSA Bank & Trust Foundation would be expensed without tax benefit, resulting in a reduction in earnings in the year in which the Internal Revenue Service makes such a determination.

As a private foundation, earnings and gains, if any, from the sale of common stock or other assets are exempt from federal and state income taxation. However, investment income, such as interest, dividends and capital gains, is generally taxed at a rate of 2.0%. ESSA Bank & Trust Foundation will be required to file an annual return with the Internal Revenue Service within four and one-half months after the close of its fiscal year. ESSA Bank & Trust Foundation will be required to make its annual return available for public inspection. The annual return for a private foundation includes, among other things, an itemized list of all grants made or approved, showing the amount of each grant, the recipient, any relationship between a grant recipient and the foundation’s managers and a concise statement of the purpose of each grant.

Regulatory Requirements Imposed on the Charitable Foundation

Office of Thrift Supervision regulations impose the following requirements on the establishment of the charitable foundation:

• the Office of Thrift Supervision may examine the charitable foundation at the foundation’s expense;

• the charitable foundation must comply with all supervisory directives imposed by the Office of Thrift Supervision;

• the charitable foundation must provide annually to the Office of Thrift Supervision a copy of the annual report that the foundation submits to the Internal Revenue Service;

• the charitable foundation must operate according to written policies adopted by its board of directors, including a conflict of interest policy;

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• the charitable foundation may not engage in self-dealing and must comply with all laws necessary to maintain its tax-exempt status under the Internal Revenue Code; and

• the charitable foundation must vote its shares in the same ratio as all of the other shares voted on each proposal considered by the stockholders of ESSA Bancorp, Inc.

Within six months of completing the stock offering, the ESSA Bank & Trust Foundation must submit to the Office of Thrift Supervision a three-year operating plan.

RESTRICTIONS ON ACQUISITION OF ESSA BANCORP, INC.

Although the Board of Directors of ESSA Bancorp, Inc. is not aware of any effort that might be made to obtain control of ESSA Bancorp, Inc. after the conversion, the Board of Directors believes that it is appropriate to include certain provisions as part of ESSA Bancorp, Inc.’s articles of incorporation to protect the interests of ESSA Bancorp, Inc. and its stockholders from takeovers which the Board of Directors of ESSA Bancorp, Inc. might conclude are not in the best interests of ESSA Bank & Trust, ESSA Bancorp, Inc. or ESSA Bancorp, Inc.’s stockholders.

The following discussion is a general summary of the material provisions of ESSA Bancorp, Inc.’s articles of incorporation and bylaws, ESSA Bank & Trust’s charter and bylaws and certain other statutory and regulatory provisions that may be deemed to have an “anti-takeover” effect. The following description of certain of these provisions is necessarily general and, with respect to provisions contained in ESSA Bancorp, Inc.’s articles of incorporation and bylaws and ESSA Bank & Trust’s charter and bylaws, reference should be made in each case to the document in question, each of which is part of ESSA Bank & Trust’s application for conversion with the Office of Thrift Supervision and ESSA Bancorp, Inc.’s registration statement filed with the Securities and Exchange Commission. See “Where You Can Find Additional Information.”

ESSA Bancorp, Inc.’s Articles of Incorporation and Bylaws

ESSA Bancorp, Inc.’s articles of incorporation and bylaws contain a number of provisions relating to corporate governance and rights of stockholders that might discourage future takeover attempts. As a result, stockholders who might desire to participate in such transactions may not have an opportunity to do so. In addition, these provisions will also render the removal of the Board of Directors or management of ESSA Bancorp, Inc. more difficult.

The following description is a summary of the provisions of the articles of incorporation and bylaws. See “Where You Can Find Additional Information” as to how to review a copy of these documents.

Directors. Initially, the Board of Directors will be divided into three classes. Only one class of directors will be elected annually. Thus, it would take at least two annual elections to replace a majority of ESSA Bancorp, Inc.’s Board of Directors. Further, the articles of incorporation authorize the Board of Directors to fill any vacancies so created, including any

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vacancy created by an increase in the number of directors, by a majority vote of directors then in office. The bylaws impose notice, informational and other requirements and conditions in connection with the nomination by stockholders of candidates for election to the Board of Directors or the proposal by stockholders of business to be acted upon at an annual meeting of stockholders.

Any person appointed or elected to ESSA Bancorp, Inc.’s Board of Directors shall own, or within a reasonable time following such appointment or election shall acquire, at least 1,000 shares of the ESSA Bancorp, Inc.’s common stock. In addition, at the time of initial appointment/election, such person must reside, or work, in a county in which ESSA Bank & Trust maintains an office or in a county contiguous to a county in which ESSA Bank & Trust maintains an office.

Restrictions on Call of Special Meetings. The bylaws provide that special meetings of stockholders can be called by the Chairman of the Board, the President or the Board of Directors pursuant to a resolution adopted by a majority of the total number of directors authorized by our articles of incorporation and bylaws. The articles of incorporation and the bylaws do not provide for stockholder ability to call a special meeting.

Prohibition of Cumulative Voting. The articles of incorporation prohibit cumulative voting for the election of Directors.

Limitation of Voting Rights. The articles of incorporation provide that in no event will any person who beneficially owns, directly or indirectly, more than 10% of the then-outstanding shares of common stock, be entitled or permitted to vote any of the shares of common stock held in excess of the 10% limit.

Restrictions on Removing Directors from Office. The articles of incorporation provide that directors can be removed from office for cause if the removal is approved by the vote of stockholders owning not less than 60% of the total votes eligible to be cast by stockholders at a duly constituted meeting (after giving effect to the limitation on voting rights discussed above in “—Limitation of Voting Rights).

Authorized but Unissued Shares. After the conversion, ESSA Bancorp, Inc. will have authorized but unissued shares of common and preferred stock. See “Description of Capital Stock.” The articles of incorporation authorize 40,000,000 shares of common stock and 10,000,000 shares of serial preferred stock. The Board of Directors of ESSA Bancorp, Inc. may amend the articles of incorporation, without action by the stockholders, to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that ESSA Bancorp, Inc. has authority to issue. In addition, the Board of Directors of ESSA Bancorp, Inc. is authorized, without further approval of the stockholders, to issue additional shares of common or preferred stock and to classify or reclassify any unissued shares of stock (including common stock and preferred stock) from time to time into one or more classes or series subject to applicable provisions of law, and the Board of Directors is authorized to fix by setting or changing the designations, and the relative preferences, conversion or other rights (including offering rights), voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption for each class or series,

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voting rights, if any, including without limitation, offering rights of such shares (which could be multiple or as a separate class). In the event of a proposed merger, tender offer or other attempt to gain control of ESSA Bancorp, Inc. that the Board of Directors does not approve, it might be possible for the Board of Directors to authorize the issuance of common stock or a series of preferred stock with rights and preferences that would impede the completion of the transaction. An effect of the possible issuance of common or preferred stock therefore may be to deter a future attempt to gain control of ESSA Bancorp, Inc. The Board of Directors has no present plan or understanding to issue any preferred stock.

Amendments to Articles of Incorporation and Bylaws. Pennsylvania law provides that, subject to limited exceptions, the amendment or repeal of any provision of our articles of incorporation requires the approval of a majority of votes cast by all stockholders entitled to vote on the matter (after giving effect to the limitation on voting rights discussed above in “—Limitation of Voting Rights”). Our articles of incorporation, however, provide that amendments to certain provisions of our article of incorporation requires the approval of 80% of shares entitled to vote (after giving effect to the limitation on voting rights discussed above in “—Limitation of Voting Rights”). The provisions of our articles of incorporation that require approval of 80% shares entitled to vote relate to the limitation on voting rights, the authority of the Board of Directors to fix terms of preferred stock, the number, classification, terms, prohibition of cumulative voting, board vacancies, removal of directors, meetings of shareholders, liability of directors and officers and the amendment of the articles of incorporation and bylaws. Our articles of incorporation also provide that, in any event, the proposed amendment or repeal of any provision of our articles of incorporation must be approved by a majority of our Board of Directors then in office before it can be submitted for consideration at an annual or special meeting.

The bylaws may be amended exclusively by the affirmative vote of a majority of the directors then in office or by the affirmative vote of at least 80% of the shares entitled to vote.

Approval of Consolidations, Mergers, and Other Similar Transactions. Pennsylvania law provides that, subject to limited exceptions, consolidations, mergers and other similar transactions require the approval of a majority of the votes cast by shareholders eligible to vote.

Pennsylvania General Corporate Law

The Pennsylvania Business Corporation Law of 1988, as amended, also contains certain provisions applicable to ESSA Bancorp, Inc. that may have the effect of deterring or discouraging an attempt to take control of ESSA Bancorp, Inc. These provisions, among other things:

• Require that, following any acquisition by any person or group of 20% of a public corporation’s voting power, the remaining shareholders have the right to receive payment for their shares, in cash, from such person or group in an amount equal to the “fair value” of the shares, including an increment representing a proportion of any value payable for control of the corporation (Subchapter 25E of the Business Corporation Law);

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• Prohibit for five years, subject to certain exceptions, a “business combination” (which includes a merger or consolidation of the corporation or a sale, lease or exchange of assets) with a person or group beneficially owning 20% or more of a public corporation’s voting power (Subchapter 25F of the Business Corporation Law);

• Prevent a person or group acquiring different levels of voting power (20%, 33% and 50%) from voting any shares over the applicable threshold, unless “disinterested shareholders” approve such voting rights (Subchapter 25G of the Business Corporation Law);

• Require any person or group that publicly announces that it may acquire control of a corporation, or that acquires or publicly discloses an intent to acquire 20% or more of the voting power of a corporation, to disgorge to the corporation any profits that it receives from sales of the corporation’s equity securities purchased over the prior 18 months (Subchapter 25H of the Business Corporation Law);

• Expand the factors and groups (including shareholders) which a corporation’s Board of Directors can consider in determining whether an action is in the best interests of the corporation;

• Provide that a corporation’s Board of Directors need not consider the interests of any particular group as dominant or controlling;

• Provide that a corporation’s directors, in order to satisfy the presumption that they have acted in the best interests of the corporation, need not satisfy any greater obligation or higher burden of proof with respect to actions relating to an acquisition or potential acquisition of control;

• Provide that actions relating to acquisitions of control that are approved by a majority of “disinterested directors” are presumed to satisfy the directors’ fiduciary duty, unless it is proven by clear and convincing evidence that the directors did not assent to such action in good faith after reasonable investigation; and

• Provide that the fiduciary duty of a corporation’s directors is solely to the corporation and may be enforced by the corporation or by a shareholder in a derivative action, but not by a shareholder directly.

The Pennsylvania Business Corporation Law also explicitly provides that the fiduciary duty of directors does not require them to:

• Redeem any rights under, or to modify or render inapplicable, any shareholder rights plan;

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• Render inapplicable, or make determinations under, provisions of the Pennsylvania Business Corporation Law relating to control transactions, business combinations, control-share acquisitions or disgorgement by certain controlling shareholders following attempts to acquire control; or

• Act as the Board of Directors, a committee of the board or an individual director, solely because of the effect the action might have on an acquisition or potential acquisition of control of the corporation or the consideration that might be offered or paid to shareholders in such an acquisition.

One effect of these provisions may be to make it more difficult for a shareholder to successfully challenge the actions of ESSA Bancorp, Inc.’s Board of Directors in a potential change in control context. Pennsylvania case law appears to provide that the fiduciary duty standard under the Pennsylvania Business Corporation Law grants directors the statutory authority to reject or refuse to consider any potential or proposed acquisition of the corporation.

Conversion Regulations

Office of Thrift Supervision regulations prohibit any person from making an offer, announcing an intent to make an offer or participating in any other arrangement to purchase stock or acquiring stock or subscription rights in a converting institution or its holding company from another person prior to completion of its conversion. Further, without the prior written approval of the Office of Thrift Supervision, no person may make an offer or announcement of an offer to purchase shares or actually acquire shares of a converted institution or its holding company for a period of three years from the date of the completion of the conversion if, upon the completion of such offer, announcement or acquisition, the person would become the beneficial owner of more than 10% of the outstanding stock of the institution or its holding company. The Office of Thrift Supervision has defined “person” to include any individual, group acting in concert, corporation, partnership, association, joint stock company, trust, unincorporated organization or similar company, a syndicate or any other group formed for the purpose of acquiring, holding or disposing of securities of an insured institution. However, offers made exclusively to a bank or its holding company, or an underwriter or member of a selling group acting on the converting institution’s or its holding company’s behalf for resale to the general public are excepted. The regulation also provides civil penalties for willful violation or assistance in any such violation of the regulation by any person connected with the management of the converting institution or its holding company or who controls more than 10% of the outstanding shares or voting rights of a converted institution or its holding company.

Change of Control Regulations

Under the Change in Bank Control Act, no person may acquire control of an insured federal savings bank or its parent holding company unless the Office of Thrift Supervision has been given 60 days’ prior written notice and has not issued a notice disapproving the proposed acquisition. In addition, Office of Thrift Supervision regulations provide that no company may acquire control of a savings bank without the prior approval of the Office of Thrift Supervision. Any company that acquires such control becomes a “savings and loan holding company” subject to registration, examination and regulation by the Office of Thrift Supervision.

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Control, as defined under federal law, means ownership, control of or holding irrevocable proxies representing more than 25% of any class of voting stock, control in any manner of the election of a majority of the savings bank’s directors, or a determination by the Office of Thrift Supervision that the acquiror has the power to direct, or directly or indirectly to exercise a controlling influence over, the management or policies of the institution. Acquisition of more than 10% of any class of a savings bank’s voting stock, if the acquiror is also subject to any one of eight “control factors,” constitutes a rebuttable determination of control under the regulations. Such control factors include the acquiror being one of the two largest stockholders. The determination of control may be rebutted by submission to the Office of Thrift Supervision, prior to the acquisition of stock or the occurrence of any other circumstances giving rise to such determination, of a statement setting forth facts and circumstances which would support a finding that no control relationship will exist and containing certain undertakings. The regulations provide that persons or companies which acquire beneficial ownership exceeding 10% or more of any class of a savings bank’s stock who do not intend to participate in or seek to exercise control over a savings bank’s management or policies may qualify for a safe harbor by filing with the Office of Thrift Supervision a certification form that states, among other things, that the holder is not in control of such institution, is not subject to a rebuttable determination of control and will take no action which would result in a determination or rebuttable determination of control without prior notice to or approval of the Office of Thrift Supervision, as applicable. There are also rebuttable presumptions in the regulations concerning whether a group “acting in concert” exists, including presumed action in concert among members of an “immediate family.”

The Office of Thrift Supervision may prohibit an acquisition of control if it finds, among other things, that:

(1) the acquisition would result in a monopoly or substantially lessen competition;

(2) the financial condition of the acquiring person might jeopardize the financial stability of the institution; or

(3) the competence, experience or integrity of the acquiring person indicates that it would not be in the interest of the depositors or the public to permit the acquisition of control by such person.

DESCRIPTION OF CAPITAL STOCK

General

At the effective date, ESSA Bancorp, Inc. will be authorized to issue 40,000,000 shares of common stock, par value of $0.01 per share, and 10,000,000 shares of preferred stock, par value $0.01 per share. ESSA Bancorp, Inc. currently expects to issue in the offering up to              shares of common stock, subject to adjustment. ESSA Bancorp, Inc. will not issue shares of preferred stock in the conversion. Each share of ESSA Bancorp, Inc. common stock will have the same relative rights as, and will be identical in all respects to, each other share of common stock. Upon payment of the subscription price for the common stock, in accordance with the plan of conversion, all of the shares of common stock will be duly authorized, fully paid and nonassessable.

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The shares of common stock of ESSA Bancorp, Inc. will represent nonwithdrawable capital, will not be an account of an insurable type, and will not be insured by the Federal Deposit Insurance Corporation or any other government agency.

Common Stock

Dividends. ESSA Bancorp, Inc. may pay dividends out of statutory surplus or from net earnings if, as and when declared by its Board of Directors. The payment of dividends by ESSA Bancorp, Inc. is subject to limitations that are imposed by law and applicable regulation. The holders of common stock of ESSA Bancorp, Inc. will be entitled to receive and share equally in dividends as may be declared by the Board of Directors of ESSA Bancorp, Inc. out of funds legally available therefor. If ESSA Bancorp, Inc. issues shares of preferred stock, the holders thereof may have a priority over the holders of the common stock with respect to dividends.

Voting Rights. Upon consummation of the conversion, the holders of common stock of ESSA Bancorp, Inc. will have exclusive voting rights in ESSA Bancorp, Inc. They will elect ESSA Bancorp, Inc.’s Board of Directors and act on other matters as are required to be presented to them under Pennsylvania law or as are otherwise presented to them by the Board of Directors. Generally, each holder of common stock will be entitled to one vote per share and will not have any right to cumulate votes in the election of directors. Any person who beneficially owns more than 10% of the then-outstanding shares of ESSA Bancorp, Inc.’s common stock, however, will not be entitled or permitted to vote any shares of common stock held in excess of the 10% limit. If ESSA Bancorp, Inc. issues shares of preferred stock, holders of the preferred stock may also possess voting rights. See “Restrictions on Acquisition of ESSA Bancorp, Inc. – Pennsylvania General Corporate Law” for additional information regarding voting rights.

As a Pennsylvania stock savings association, corporate powers and control of ESSA Bank & Trust are vested in its Board of Directors, who elect the officers of ESSA Bank & Trust and who fill any vacancies on the Board of Directors. Voting rights of ESSA Bank & Trust are vested exclusively in the owners of the shares of capital stock of ESSA Bank & Trust, which will be ESSA Bancorp, Inc., and voted at the direction of ESSA Bancorp, Inc.’s Board of Directors. Consequently, the holders of the common stock of ESSA Bancorp, Inc. will not have direct control of ESSA Bank & Trust

Liquidation. In the event of any liquidation, dissolution or winding up of ESSA Bank & Trust, ESSA Bancorp, Inc., as the holder of 100% of ESSA Bank & Trust’s capital stock, would be entitled to receive all assets of ESSA Bank & Trust available for distribution, after payment or provision for payment of all debts and liabilities of ESSA Bank & Trust, including all deposit accounts and accrued interest thereon, and after distribution of the balance in the liquidation account to Eligible Account Holders and Supplemental Eligible Account Holders. In the event of liquidation, dissolution or winding up of ESSA Bancorp, Inc., the holders of its common stock would be entitled to receive, after payment or provision for payment of all its debts and liabilities, all of the assets of ESSA Bancorp, Inc. available for distribution. If preferred stock is issued, the holders thereof may have a priority over the holders of the common stock in the event of liquidation or dissolution.

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Preemptive Rights. Holders of the common stock of ESSA Bancorp, Inc. will not be entitled to preemptive rights with respect to any shares that may be issued. The common stock is not subject to redemption.

Preferred Stock

None of the shares of ESSA Bancorp, Inc.’s authorized preferred stock will be issued as part of the offering. Preferred stock may be issued with preferences and designations as our Board of Directors may from time to time determine. Our Board of Directors may, without stockholder approval, issue shares of preferred stock with voting, dividend, liquidation and conversion rights that could dilute the voting strength of the holders of the common stock and may assist management in impeding an unfriendly takeover or attempted change in control.

TRANSFER AGENT

The transfer agent and registrar for ESSA Bancorp, Inc.’s common stock is                                         .

EXPERTS

The Consolidated Financial Statements of ESSA Bank & Trust as of September 30, 2006 and 2005, and for the years then ended appearing elsewhere in this prospectus have been included herein and in the registration statement in reliance upon the report of S.R. Snodgrass, A.C. an independent registered public accounting firm, which is included herein and upon the authority of said firm as experts in accounting and auditing.

The Consolidated Financial Statements of ESSA Bank & Trust as of September 30, 2004 and for the year then ended appearing elsewhere in this prospectus and in the registration statement have been audited by Beard Miller Company LLP, an independent registered public accounting firm, as set forth in its report appearing elsewhere in this prospectus and elsewhere in the registration statement are included in reliance upon such report given upon the authority of such firm as experts in accounting and auditing.

The Board of Directors instituted a practice of rotating ESSA Bank & Trust’s independent registered public accounting firm every five fiscal years. Therefore, subsequent to the September 30, 2004 fiscal year-end, the Audit Committee of ESSA Bank & Trust replaced Beard Miller Company LLP with S.R. Snodgrass, A.C. as its independent registered public accounting firm. Beard Miller Company LLP did not issue to the Company an adverse opinion or a disclaimer of opinion, nor were there any disagreements with Beard Miller Company LLP on any matter of accounting principles or practices, financial statement disclosure or audit scope or procedure. Beard Miller Company LLP has issued a letter to the Company stating that it agrees with the Company's disclosure on this matter.

RP Financial, LC. has consented to the publication herein of the summary of its report to ESSA Bancorp, Inc. setting forth its opinion as to the estimated pro forma market value of the shares of common stock upon completion of the conversion and offering and its letter with respect to subscription rights.

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LEGAL MATTERS

Luse Gorman Pomerenk & Schick, P.C., Washington, D.C., counsel to ESSA Bancorp, Inc., ESSA Bank & Trust and ESSA Bank & Trust, will issue to ESSA Bancorp, Inc. its opinion regarding the legality of the common stock and the federal income tax consequences of the conversion. Certain legal matters will be passed upon for Ryan Beck & Co., Inc. by Rhoads & Sinon LLP, Harrisburg, Pennsylvania.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

ESSA Bancorp, Inc. has filed with the Securities and Exchange Commission a registration statement under the Securities Act of 1933 with respect to the shares of common stock offered hereby. As permitted by the rules and regulations of the Securities and Exchange Commission, this prospectus does not contain all the information set forth in the registration statement. Such information, including the appraisal report which is an exhibit to the registration statement, can be examined without charge at the public reference facilities of the Securities and Exchange Commission located at 100 F Street, N.E., Washington, D.C. 20549, and copies of such material can be obtained from the Securities and Exchange Commission at prescribed rates. The Securities and Exchange Commission telephone number is 1-800-SEC-0330. In addition, the Securities and Exchange Commission maintains a web site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Securities and Exchange Commission, including ESSA Bancorp, Inc. The statements contained in this prospectus as to the contents of any contract or other document filed as an exhibit to the registration statement are, of necessity, brief descriptions of the material terms of, and should be read in conjunction with, such contract or document.

ESSA Bank & Trust has filed with the Office of Thrift Supervision an Application on Form AC with respect to the conversion. This prospectus omits certain information contained in the application. The application may be examined at the principal office of the Office of Thrift Supervision, 1700 G Street, N.W., Washington, D.C. 20552, and at the Northeast Regional Office of the Office of Thrift Supervision, located at Harborside Financial Center Plaza Five, Suite 1600, Jersey City, New Jersey 07311.

In connection with the offering, ESSA Bancorp, Inc. will register its common stock under Section 12(b) of the Securities Exchange Act of 1934 and, upon such registration, ESSA Bancorp, Inc. and the holders of its common stock will become subject to the proxy solicitation rules, reporting requirements and restrictions on common stock purchases and sales by directors, officers and greater than 10% stockholders, the annual and periodic reporting and certain other requirements of the Securities Exchange Act of 1934. Under the plan of conversion, ESSA Bancorp, Inc. has undertaken that it will not terminate such registration for a period of at least three years following the conversion and the offering.

145

ESSA BANK & TRUST AND SUBSIDIARIES

INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2006

	Page Number
Report of Independent Registered Public Accounting Firm	F -1
Report of Independent Registered Public Accounting Firm	F -2
Financial Statements
Consolidated Balance Sheet At September 30, 2006 and 2005	F -3
Consolidated Statement of Income for the Years Ended September 30, 2006, 2005 and 2004	F -4
Consolidated Statement of Changes in Equity for the Years Ended September 30, 2006, 2005 and 2004	F -5
Consolidated Statement of Cash Flows for the Years Ended September 30, 2006,2005 and 2004	F -6
Notes to the Consolidated Financial Statements	F -7 – F -31

All schedules are omitted as the required information either is not applicable or is included in the consolidated financial statements or related notes.

ESSA Bancorp, Inc. was incorporated in the Commonwealth of Pennsylvania on December 6, 2006. Therefore the financial statements that follow are those of ESSA Bank & Trust and its subsidiaries.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

ESSA Bank & Trust

We have audited the consolidated balance sheet of ESSA Bank & Trust and subsidiaries as of September 30, 2006 and 2005, and the related consolidated statements of income, changes in equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these consolidated 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 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of ESSA Bank & Trust and subsidiaries as of September 30, 2006 and 2005, and the consolidated results of their operations and their cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

/s/ S.R. Snodgrass, A.C.

Wexford, PA

October 27, 2006

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

ESSA Bank & Trust

Stroudsburg, Pennsylvania

We have audited the accompanying consolidated statements of income, changes in equity, and cash flows of ESSA Bank & Trust for the year ended September 30, 2004. These consolidated financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

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. The Bank is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of ESSA Bank & Trust and subsidiaries for the year ended September 30, 2004, in conformity with U.S. generally accepted accounting principles.

/s/ Beard Miller Company LLP

Beard Miller Company LLP

Harrisburg, Pennsylvania

October 29, 2004

F-2

ESSA BANK & TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

	September 30,
	2006			2005
	(dollars in thousands)
ASSETS
Cash and due from banks	$	11,677		$	12,240
Interest-bearing deposits with other institutions		1,053			1,068
Commercial paper		—			6,982
Total cash and cash equivalents		12,730			20,290
Investment securities available for sale		89,122			62,506
Investment securities held to maturity (market value of $19,193 and $21,297)		19,715			21,505
Loans receivable (net of allowance for loan losses of $3,855 and $3,563)		556,677			508,981
Federal Home Loan Bank stock		13,675			11,916
Premises and equipment		11,447			11,560
Bank-owned life insurance		13,376			12,864
Other assets		9,054			6,444
TOTAL ASSETS	$	725,796		$	656,066
LIABILITIES
Deposits	$	402,153		$	374,759
Short-term borrowings		35,299			27,479
Other borrowings		224,000			194,000
Advances by borrowers for taxes and insurance		2,198			1,591
Other liabilities		3,809			3,866
TOTAL LIABILITIES		667,459			601,695
Commitment and contingencies (Note 11)		—			—
EQUITY
Retained earnings		58,526			54,572
Accumulated other comprehensive loss		(189	)		(201	)
TOTAL EQUITY		58,337			54,371
TOTAL LIABILITIES AND EQUITY	$	725,796		$	656,066

See accompanying notes to the consolidated financial statements.

F-3

ESSA BANK & TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

	Year Ended September 30,
	2006		2005			2004
	(dollars in thousands)
INTEREST INCOME
Loans receivable	$	31,744	$	28,829		$	27,152
Investment securities:
Taxable		3,579		2,225			1,070
Exempt from federal income tax		278		267			274
Other investment income		850		598			314
Total interest income		36,451		31,919			28,810
INTEREST EXPENSE
Deposits		9,012		5,851			5,011
Short-term borrowings		1,081		554			141
Other borrowings		9,124		7,918			6,781
Total interest expense		19,217		14,323			11,933
NET INTEREST INCOME		17,234		17,596			16,877
Provision for loan losses		300		550			530
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		16,934		17,046			16,347
NONINTEREST INCOME
Service fees on deposit accounts		3,825		3,747			2,825
Services charges and fees on loans		491		486			475
Trust and investment fees		642		404			515
Impairment loss on securities		—		(130	)		—
Gain on sale of loans, net		7		96			—
Earnings on Bank-owned life insurance		512		495			369
Other		41		183			96
Total noninterest income		5,518		5,281			4,280
NONINTEREST EXPENSE
Compensation and employee benefits		9,194		9,035			7,872
Occupancy and equipment		2,395		2,218			2,054
Professional fees		736		828			955
Data processing		1,819		1,896			2,163
Advertising		577		477			503
Contributions		423		484			416
Other		1,541		1,555			1,577
Total noninterest expense		16,685		16,493			15,540
Income before income taxes		5,767		5,834			5,087
Income taxes		1,813		1,383			1,172
NET INCOME	$	3,954	$	4,451		$	3,915

See accompanying notes to the consolidated financial statements.

F-4

ESSA BANK & TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total Equity			Comprehensive Income
	(dollars in thousands)
Balance, September 30, 2003	$	46,206	$	175		$	46,381
Net income		3,915		—			3,915		$	3,915
Other comprehensive loss:
Unrealized loss on securities available for sale, net of income tax benefit of $12		—		(36	)		(36	)		(36	)
Comprehensive income									$	3,879
Balance, September 30, 2004		50,121		139			50,260
Net income		4,451					4,451		$	4,451
Other comprehensive loss:
Unrealized loss on securities available for sale, net of reclassification adjustment, net of income tax benefit of $176				(340	)		(340	)		(340	)
Comprehensive income									$	4,111
Balance, September 30, 2005		54,572		(201	)		54,371
Net income		3,954					3,954		$	3,954
Other comprehensive income:
Unrealized gain on securities available for sale, net of income taxes of $6				12			12			12
Comprehensive income									$	3,966
Balance, September 30, 2006	$	58,526	$	(189	)	$	58,337

	2006		2005			2004
Components of other comprehensive income (loss):
Change in net unrealized gain (loss) on investment securities available for sale	$	12	$	(426	)	$	(36	)
Realized impairment loss included in net income, net of taxes of $44 in 2005		—		(86	)		—
Total	$	12	$	(340	)	$	(36	)

See accompanying notes to the consolidated financial statements.

F-5

ESSA BANK & TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

	Year Ended September 30,
	2006			2005			2004
	(dollars in thousands)
OPERATING ACTIVITIES
Net income	$	3,954		$	4,451		$	3,915
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		300			550			530
Provision for depreciation and amortization		1,063			969			956
Amortization (accretion) of discounts and premiums		(500	)		(394	)		348
Impairment loss on securities		—			130			—
Gain on sale of loans, net		(7	)		(96	)		—
Decrease (increase) in accrued interest receivable		(530	)		(303	)		76
Increase (decrease) in accrued interest payable		551			139			(2,924	)
Increase in other receivables		(1,841	)		—			—
Earnings on Bank-owned life insurance		(512	)		(495	)		(369	)
Deferred federal income taxes		76			159			183
Other, net		(708	)		(180	)		352
Net cash provided by operating activities		1,846			4,930			3,067
INVESTING ACTIVITIES
Investment securities available for sale:
Proceeds from principal repayments and maturities		23,537			11,356			16,165
Purchases		(50,213	)		(27,126	)		(38,639	)
Investment securities held to maturity:
Proceeds from principal repayments and maturities		3,753			3,293			3,950
Purchases		(1,988	)		(17,191	)		(10,305	)
Increase in loans receivable, net		(47,800	)		(36,244	)		(39,906	)
Proceeds from sale of loans		340			5,605			—
Redemption of FHLB stock		2,325			2,696			1,394
Purchase of FHLB stock		(4,084	)		(3,254	)		(3,565	)
Purchase of Bank-owned life insurance		—			(2,000	)		(10,000	)
Proceeds from sale of other real estate		83			118			221
Purchase of premises, equipment, and software		(1,180	)		(1,053	)		(2,152	)
Net cash used for investing activities		(75,227	)		(63,800	)		(82,837	)
FINANCING ACTIVITIES
Increase in deposits, net		27,394			41,232			14,032
Net increase (decrease) in short-term borrowings		7,820			16,345			(6,786	)
Proceeds from other borrowings		57,000			23,000			64,000
Repayment of other borrowings		(27,000	)		(23,000	)		(13,000	)
Increase (decrease) in advances by borrowers for taxes and insurance		607			125			(105	)
Net cash provided by financing activities		65,821			57,702			58,141
Decrease in cash and cash equivalents		(7,560	)		(1,168	)		(21,629	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		20,290			21,458			43,087
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	12,730		$	20,290		$	21,458
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid:
Interest	$	18,666		$	14,303		$	11,982
Income taxes		1,550			900			1,375
Noncash items:
Other real estate owned		74			42			81

See accompanying notes to the consolidated financial statements.

F-6

ESSA BANK & TRUST AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of significant accounting and reporting policies applied in the presentation of the accompanying financial statements follows:

Nature of Operations and Basis of Presentation

ESSA Bank & Trust (the “Bank”) is a Pennsylvania chartered savings and loan institution located in Stroudsburg, Pennsylvania. The Bank’s primary business consists of the taking of deposits and granting of loans to customers generally in Monroe and Northampton counties, Pennsylvania. The Bank is subject to regulation and supervision by the Pennsylvania Department of Banking and the Office of Thrift Supervision (the “OTS”).

The consolidated financial statements include the accounts of ESSA Bank & Trust and its wholly owned subsidiaries, ESSACOR Inc. and Pocono Investment Company. ESSACOR, Inc. is a Pennsylvania corporation that is currently inactive. Pocono Investment Company is a Delaware corporation formed as an investment company subsidiary to hold and manage certain investments of ESSA Bank & Trust, including certain intellectual property. All intercompany transactions have been eliminated in consolidation.

Use of Estimates in the Preparation of Financial Statements

The accounting principles followed by the Bank and its subsidiaries and the methods of applying these principles conform to U.S. generally accepted accounting principles and to general practice within the banking industry. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the balance sheet date and related revenues and expenses for the period. Actual results could differ significantly from those estimates.

Securities

Management determines the appropriate classification of debt securities at the time of purchase and reevaluates such designation as of each balance sheet date.

Securities classified as available for sale are those securities that the Bank intends to hold for an indefinite period of time but not necessarily to maturity. Any decision to sell a security classified as available for sale would be based on various factors, including significant movement in interest rates, changes in maturity mix of the Bank’s assets and liabilities, liquidity needs, regulatory capital considerations, and other similar factors. Securities available for sale are carried at fair value. Unrealized gains and losses are reported in other comprehensive income, net of the related deferred tax effects. Realized gains or losses, determined on the basis of the cost of the specific securities sold, are included in earnings. Premiums and discounts are recognized in interest income using the interest method over the period to maturity.

Securities classified as held to maturity are those debt securities the Bank has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs, or changes in general economic conditions. These securities are carried at cost adjusted for the amortization of premium and accretion of discount, recognized in interest income using the interest method over the period to maturity.

F-7

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Securities (Continued)

Declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers: (1) the length of time and the extent to which the fair value has been less than cost; (2) the financial condition and near-term prospects of the issuer; and (3) the intent and ability of the Bank to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

Federal law requires a member institution of the Federal Home Loan Bank (“FHLB”) system to hold stock of its district FHLB according to a predetermined formula. This restricted stock is carried at cost.

Loans Receivable

Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at their outstanding unpaid principal balances, net of an allowance for loan losses and any deferred fees and costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the yield (interest income) of the related loans. The Bank is amortizing loan origination fees, net of certain direct origination costs over the contractual life of the loan. Mortgage loans sold in the secondary market are sold without recourse.

The accrual of interest is generally discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectibility of principal or interest, even though the loan is currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the allowance for loan losses. Interest received on nonaccrual loans generally is either applied against principal or reported as interest income, according to management’s judgment as to the collectibility of principal. Generally loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectibility of the total contractual principal and interest is no longer in doubt.

Allowance for Loan Losses

The allowance for loan losses is established through provisions for loan losses charged against income. Loans deemed to be uncollectible are charged against the allowance for loan losses, and subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is maintained at a level by management which represents the evaluation of known and inherent losses in the loan portfolio at the consolidated balance sheet date. Management’s periodic evaluation of the adequacy of the allowance is based on the Bank’s past loan loss experience, known and inherent losses in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions, and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change, including the amounts and timing of future cash flows expected to be received on impaired loans.

The allowance consists of specific and general components. The specific component related to loans that are classified as either doubtful, substandard, or special mention. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers nonclassified loans and is based on historical loss experience adjusted for qualitative factors.

F-8

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Allowance for Loan Losses (Continued)

A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial and construction loans by the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Bank does not separately identify individual consumer and residential mortgage loans for impairment disclosures.

Loans Held for Sale and Loans Sold.

Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. The Bank had no loans classified as held for sale at September 30, 2006 or 2005.

As part of the Bank’s overall management of its interest rate risk, longer term, fixed rate residential loans have occasionally been sold in the secondary market. Such sales are infrequent and completed on a non-recourse, servicing retained basis.

In addition, the Bank sold its entire portfolio of student loans to the Pennsylvania Higher Education Assistance Agency (PHEAA) in two separate transactions during fiscal years 2005 and 2006. These loans were serviced for the Bank by PHEAA, prior to the sale. At September 30, 2006, the Bank had no outstanding student loans.

Loan Servicing

Servicing assets are recognized as separate assets when rights are acquired through purchase or through sale of financial assets. Capitalized servicing rights are reported in other assets and are amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets. Servicing assets are evaluated for impairment based upon the fair value of the rights as compared to amortized cost. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Impairment is recognized through a valuation allowance to the extent that fair value is less than the capitalized amount. Total servicing assets included in other assets as of September 30, 2006, 2005 and 2004, were $215,000, $253,000 and $302,000, respectively.

Premises and Equipment

Premises and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the useful lives of the related assets, which range from 10 to 40 years for building and leasehold improvements and 3 to 7 years for furniture, fixtures, and equipment. Expenditures for maintenance and repairs are charged to operations as incurred. Costs of major additions and improvements are capitalized.

F-9

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Real Estate Owned

Real estate owned acquired in settlement of foreclosed loans is carried at the lower of cost or fair value minus estimated costs to sell. Valuation allowances for estimated losses are provided when the carrying value of the real estate acquired exceeds fair value minus estimated costs to sell. Operating expenses of such properties, net of related income, are expensed in the period incurred. Foreclosed real estate included in other assets totaled $0 and $19,000 at September 30, 2006 and 2005, respectively.

Employee Benefit Plans

The Bank maintains a noncontributory, defined benefit pension plan for all employees who have met age and length of service requirements. The Bank’s funding policy is to contribute annually the maximum amount that can be deducted for federal income tax purposes. The Bank also maintains a defined contribution Section 401(k) plan covering eligible employees. Contributions matching those made by eligible employees and an elective contribution are made annually at the discretion of the Board of Directors.

Advertising Costs

In accordance with Statement of Position No. 93-7, Reporting on Advertising Costs, the Bank expenses all advertising expenditures incurred.

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Bank, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Bank does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Federal Income Taxes

Deferred tax assets and liabilities are reflected based on the differences between the financial statement and the income tax basis of assets and liabilities using the enacted marginal tax rates. Deferred income tax expense and benefit are based on the changes in the deferred tax assets or liabilities from period to period.

The Bank files a consolidated federal income tax return. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which such items are expected to be realized or settled. As changes in tax rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

Cash and Cash Equivalents

The Bank has defined cash and cash equivalents as cash and due from banks, interest-bearing deposits with other institutions, and commercial paper with original maturities of 90 days or less.

Comprehensive Income

The Bank is required to present comprehensive income and its components in a full set of general-purpose financial statements for all periods presented. Other comprehensive income is composed exclusively of net unrealized holding gains or losses on its available-for-sale investment and mortgage-backed securities portfolio.

F-10

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Comprehensive Income (Continued)

The Bank has elected to report the effects of other comprehensive income as part of the Consolidated Statement of Changes in Equity.

Reclassification of Comparative Amounts

Certain items previously reported have been reclassified to conform to the current year’s reporting format. Such reclassifications did not affect net income or equity.

Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (FAS No. 123R). FAS No. 123R revised FAS No. 123, Accounting for Stock-Based Compensation, and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. FAS No. 123R will require compensation costs related to share-based payment transactions to be recognized in the financial statement (with limited exceptions). The amount of compensation cost will be measured based on the grant-date fair value of the equity or liability instruments issued. Compensation cost will be recognized over the period during which an employee provides service in exchange for the award.

In April 2005, the Securities and Exchange Commission adopted a new rule that amends the compliance dates for FAS No. 123R. The statement requires that compensation cost relating to share-based payment transactions be recognized in financial statements and that this cost be measured based on the fair value of the equity or liability instruments issued. FAS No. 123R covers a wide range of share-based compensation arrangements, including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. The Bank will adopt FAS No. 123R on October 1, 2006, and unless options are granted, management does not anticipate any compensation expense as a result of the adoption of this statement.

In March 2005, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 107 (“SAB No. 107”), Share-Based Payment, providing guidance on option valuation methods, the accounting for income tax effects of share-based payment arrangements upon adoption of FAS No. 123R, and the disclosures in MD&A subsequent to the adoption. Unless options are granted management does not anticipate any compensation expense as a result of the adoption of this statement.

In June 2005, the FASB issued FAS No. 154, Accounting Changes and Errors Corrections, a replacement of APB Opinion No. 20 and FAS No. 3. The statement applies to all voluntary changes in accounting principle and changes the requirements for accounting for and reporting of a change in accounting principle. FAS No. 154 requires retrospective application to prior periods’ financial statements of a voluntary change in accounting principle unless it is impractical. APB Opinion No. 20 previously required that most voluntary changes in accounting principle be recognized by including in net income of the period of the change the cumulative effect of changing to the new accounting principle. FAS No. 154 improves the financial reporting because its requirements enhance the consistency of financial reporting between periods. The provisions of FAS No. 154 are effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The adoption of this standard is not expected to have a material effect on the Bank’s results of operations or financial position.

In February 2006, the FASB issued FAS No. 155, Accounting for Certain Hybrid Instruments, an amendment of FASB Statements No. 133 and 140. FAS No. 155 allows financial instruments that have embedded derivatives to be accounted for as a whole (eliminating the need to bifurcate the derivative from its host) if the holder elects to account for the whole instrument on a fair value basis. This statement is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. The adoption of this standard is not expected to have a material effect on the Bank’s results of operations or financial position.

F-11

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements (Continued)

In March 2006, the FASB issued FAS No. 156, Accounting for Servicing of Financial Assets. This Statement, which is an amendment to FAS No. 140, will simplify the accounting for servicing assets and liabilities, such as those common with mortgage securitization activities. Specifically, FAS No. 156 addresses the recognition and measurement of separately recognized servicing assets and liabilities and provides an approach to simplify efforts to obtain hedge-like (offset) accounting. FAS No. 156 also clarifies when an obligation to service financial assets should be separately recognized as a servicing asset or a servicing liability, requires that a separately recognized servicing asset or servicing liability be initially measured at fair value, if practicable, and permits an entity with a separately recognized servicing asset or servicing liability to choose either of the amortization or fair value methods for subsequent measurement. The provisions of FAS No. 156 are effective as of the beginning of the first fiscal year that begins after September 15, 2006. The Bank is currently evaluating the impact the adoption of the standard will have on the Bank’s results of operations.

In September 2006, the FASB issued FAS No. 157, Fair Value Measurements, which provides enhanced guidance for using fair value to measure assets and liabilities. The standard applies whenever other standards require or permit assets or liabilities to be measured at fair value. The Standard does not expand the use of fair value in any new circumstances. FAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. Early adoption is permitted. The adoption of this standard is not expected to have a material effect on the Bank’s results of operations or financial position.

In September 2006, the FASB issued FAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Post Retirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R). FAS No. 158 requires that a company recognize the overfunded or underfunded status of its defined benefit post retirement plans (other than multiemployer plans) as an asset or liability in its statement of financial position and that it recognize changes in the funded status in the year in which the changes occur through other comprehensive income. FAS No. 158 also requires the measurement of defined benefit plan assets and obligations as of the fiscal year end, in addition to footnote disclosures. FAS No. 158 is effective for fiscal years ending after December 15, 2006. The Bank is currently evaluating the impact the adoption of the standard will have on the Bank’s financial position.

In June 2006, the FASB issued FASB Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes. FIN 48 is an interpretation of FAS No. 109, Accounting for Income Taxes, and it seeks to reduce the diversity in practice associated with certain aspects of measurement and recognition in accounting for income taxes. In addition, FIN No. 48 requires expanded disclosure with respect to the uncertainty in income taxes and is effective for fiscal years beginning after December 15, 2006. The Bank is currently evaluating the impact the adoption of the standard will have on the Bank’s results of operations.

In September 2006, the SEC issued Staff Accounting Bulletin No. 108 (“SAB 108”), Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements, providing guidance on quantifying financial statement misstatement and implementation when first applying this guidance. Under SAB No. 108, companies should evaluate a misstatement based on its impact on the current year income statement, as well as the cumulative effect of correcting such misstatements that existed in prior years existing in the current year's ending balance sheet. SAB 108 is effective for fiscal years ending after November 15, 2006. The Bank is currently evaluating the impact the adoption of the standard will have on the Bank’s results of operations.

F-12

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements (Continued)

In September 2006, the FASB reached consensus on the guidance provided by Emerging Issues Task Force Issue 06-4 (“EITF 06-4”), Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements. The guidance is applicable to endorsement split-dollar life insurance arrangements, whereby the employer owns and controls the insurance policy, that are associated with a postretirement benefit. EITF 06-4 requires that for a split-dollar life insurance arrangement within the scope of the Issue, an employer should recognize a liability for future benefits in accordance with FAS No. 106 (if, in substance, a postretirement benefit plan exists) or Accounting Principles Board Opinion No. 12 (if the arrangement is, in substance, an individual deferred compensation contract) based on the substantive agreement with the employee. EITF 06-4 is effective for fiscal years beginning after December 15, 2007. The Bank is currently evaluating the impact the adoption of the standard will have on the Bank’s results of operations or financial condition.

In September 2006, the FASB reached consensus on the guidance provided by Emerging Issues Task Force Issue 06-5(“EITF 06-5”), Accounting for Purchases of Life Insurance—Determining the Amount That Could Be Realized in Accordance with FASB Technical Bulletin No. 85-4, Accounting for Purchases of Life Insurance. EITF 06-5 states that a policyholder should consider any additional amounts included in the contractual terms of the insurance policy other than the cash surrender value in determining the amount that could be realized under the insurance contract. EITF 06-5 also states that a policyholder should determine the amount that could be realized under the life insurance contract assuming the surrender of an individual-life by individual-life policy (or certificate by certificate in a group policy). EITF 06-5 is effective for fiscal years beginning after December 15, 2006. The Bank is currently evaluating the impact the adoption of the standard will have on the Bank’s results of operations or financial condition.

F-13

2. INVESTMENT SECURITIES

The amortized cost and estimated market value of investment securities available for sale and held to maturity are summarized as follows (in thousands):

	2006
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Market Value
Available for Sale
Fannie Mae	$	6,988	$	33	$	(31	)	$	6,990
Freddie Mac		22,836		3		(523	)		22,316
Governmental National Mortgage Association securities		10,503		98		—			10,601
Total mortgage-backed securities		40,327		134		(554	)		39,907
Obligations of states and political subdivisions		6,240		225		—			6,465
U.S. government agency securities		41,960		35		(180	)		41,815
Total debt securities		88,527		394		(734	)		88,187
Equity securities		882		64		(11	)		935
Total	$	89,409	$	458	$	(745	)	$	89,122
Held to Maturity
Fannie Mae	$	9,263	$	4	$	(309	)	$	8,958
Freddie Mac		5,722		—		(168	)		5,554
Total mortgage-backed securities		14,985		4		(477	)		14,512
U.S. government agency securities		4,730		—		(49	)		4,681
Total	$	19,715	$	4	$	(526	)	$	19,193

F-14

2. INVESTMENT SECURITIES (Continued)

	2005
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Market Value
Available for Sale
Fannie Mae	$	1,599	$	5	$	(24	)	$	1,580
Freddie Mac		17,135		4		(292	)		16,847
Governmental National Mortgage Association securities		65		—		(1	)		64
Total mortgage-backed securities		18,799		9		(317	)		18,491
Obligations of states and political subdivisions		5,102		275		—			5,377
U.S. government agency securities		34,989		—		(260	)		34,729
Corporate securities		3,039		—		(9	)		3,030
Total debt securities		61,929		284		(586	)		61,627
Equity securities		882		15		(18	)		879
Total	$	62,811	$	299	$	(604	)	$	62,506
Held to Maturity
Fannie Mae	$	11,724	$	5	$	(131	)	$	11,598
Freddie Mac		5,051		1		(57	)		4,995
Total mortgage-backed securities		16,775		6		(188	)		16,593
U.S. government agency securities		4,730		—		(26	)		4,704
Total	$	21,505	$	6	$	(214	)	$	21,297

The amortized cost and estimated market value of debt securities at September 30, 2006, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties (in thousands):

	AVAILABLE FOR SALE				HELD TO MATURITY
	Amortized Cost		Estimated Market Value		Amortized Cost		Estimated Market Value
Due in one year or less	$	23,479	$	23,399	$	—	$	—
Due after one year through five years		29,608		29,032		11,991		11,655
Due after five years through ten years		2,091		2,114		3,312		3,248
Due after ten years		33,349		33,642		4,412		4,290
Total	$	88,527	$	88,187	$	19,715	$	19,193

The Bank had no sale of investment securities for the three years ending September 30, 2006.

Investment securities with a carrying value of $6,493,000 and $4,448,000 at September 30, 2006 and 2005, respectively, were pledged to secure public deposits and other purposes as required by law.

F-15

3. UNREALIZED LOSSES ON SECURITIES

The following table shows the Bank’s gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position (in thousands):

	2006
	Number of Securities	Less than Twelve Months					Twelve Months or Greater					Total
		Estimated Market Value		Gross Unrealized Losses			Estimated Market Value		Gross Unrealized Losses			Estimated Market Value		Gross Unrealized Losses
Fannie Mae	11	$	3,081	$	(97	)	$	6,730	$	(243	)	$	9,811	$	(340	)
Freddie Mac	34		9,911		(69	)		15,776		(622	)		25,687		(691	)
U.S. government agency securities	28		12,898		(32	)		27,509		(197	)		40,407		(229	)
Equity securities	1		489		(11	)		—		—			489		(11	)
Total	74	$	26,379	$	(209	)	$	50,015	$	(1,062	)	$	76,394	$	(1,271	)

	2005
	Number of Securities	Less than Twelve Months					Twelve Months or Greater					Total
		Estimated Market Value		Gross Unrealized Losses			Estimated Market Value		Gross Unrealized Losses			Estimated Market Value		Gross Unrealized Losses
Fannie Mae	10	$	7,104	$	(88	)	$	3,565	$	(67	)	$	10,669	$	(155	)
Freddie Mac	28		15,432		(217	)		5,779		(132	)		21,211		(349	)
Governmental National Mortgage Association securities	1		64		(1	)		—		—			64		(1	)
U.S. government agency securities	29		38,440		(279	)		993		(7	)		39,433		(286	)
Corporate securities	3		3,030		(9	)		—		—			3,030		(9	)
Equity securities	1		—		—			482		(18	)		482		(18	)
Total	72	$	64,070	$	(594	)	$	10,819	$	(224	)	$	74,889	$	(818	)

The Bank’s investment securities portfolio contains unrealized losses on securities, including mortgage-related instruments issued or backed by the full faith and credit of the United States government, or generally viewed as having the implied guarantee of the U.S. government, and debt obligations of a U.S. state or political subdivision.

The policy of the Bank is to recognize an other-than-temporary impairment of equity securities where the fair value has been significantly below cost for three consecutive quarters. For fixed maturity investments with unrealized losses due to interest rates where the Bank has the positive intent and ability to hold the investment for a period of time sufficient to allow a market recovery, declines in value below cost are not assumed to be other than temporary. The Bank reviews its position quarterly and has asserted that at September 30, 2006, the declines outlined in the above table represent temporary declines and the Bank does have the intent and ability to hold those securities either to maturity or to allow a market recovery.

The Bank has concluded that any impairment of its investment securities portfolio is not other than temporary but is the result of interest rate changes that are not expected to result in the noncollection of principal and interest during the period. However, as of September 30, 2005, the Bank recognized a loss of $130,000 on equity securities that it deemed, through analysis of the security, to be other than a temporary loss.

F-16

4. LOANS RECEIVABLE

Loans receivable consist of the following (in thousands):

	2006		2005
Real estate loans:
Residential	$	452,406	$	421,169
Construction		5,943		7,597
Commercial		47,479		36,984
Commercial		6,159		5,310
Home equity loans and lines of credit		46,796		40,342
Other		4,247		4,204
		563,030		515,606
Less deferred loan fees		2,498		3,062
		560,532		512,544
Less allowance for loan losses		3,855		3,563
Net loans	$	556,677	$	508,981

Mortgage loans serviced by the Bank for others amounted to $21,894,000, $25,554,000 and $30,896,000 at September 30, 2006,2005 and 2004, respectively.

At September 30, 2006, 2005, and 2004, the Bank had nonaccrual loans of $476,000, $605,000, and $665,000, respectively. Additional interest income that would have been recorded under the original terms of the loan agreements amounted to $37,000, $56,000, and $23,000 for the years ended September 30, 2006, 2005, and 2004.

The Bank’s primary business activity is with customers located within its local trade area. Commercial, residential, and consumer loans are granted. The Bank also funds commercial and residential loans originated outside its immediate trade area provided such loans meet the Bank’s credit policy guidelines. Although the Bank has a diversified loan portfolio at September 30, 2006 and 2005, loans outstanding to individuals and businesses are dependent upon the local economic conditions in its immediate trade area.

F-17

4. LOANS RECEIVABLE (Continued)

Activity in the allowance for loan losses for the years ended is summarized as follows (in thousands):

	2006			2005			2004
Balance, beginning of period	$	3,563		$	3,027		$	2,509
Add:
Provision charged to operations		300			550			530
Loan recoveries		1			1			23
		3,864			3,578			3,062
Less loans charged off		(9	)		(15	)		(35	)
Balance, end of period	$	3,855		$	3,563		$	3,027

The Bank has had, and may be expected to have in the future, banking transactions in the ordinary course of business with directors, officers, their immediate families, and affiliated companies (commonly referred to as related parties), on the same terms including interest rates and collateral, as those prevailing at the time for comparable transactions with others. At September 30, 2006 and 2005, these persons were indebted to the Bank for loans totaling $1,750,000 and $1,838,000, respectively. During the year ended September 30, 2006, $82,000 of new loans were made and repayments totaled $170,000.

5. FEDERAL HOME LOAN BANK STOCK

The Bank is a member of the Federal Home Loan Bank System. As a member, the Bank maintains an investment in the capital stock of the FHLB of Pittsburgh in an amount not less than 70 basis points of the outstanding unused FHLB borrowing capacity or 1/20 of its outstanding FHLB borrowings, whichever is greater, as calculated throughout the year.

6. PREMISES AND EQUIPMENT

Premises and equipment consist of the following (in thousands):

	2006			2005
Land and land improvements	$	2,199		$	1,816
Buildings and leasehold improvements		10,043			9,896
Furniture, fixtures, and equipment		6,070			5,828
Construction in process		201			121
		18,513			17,661
Less accumulated depreciation		(7,066	)		(6,101	)
Total	$	11,447		$	11,560

Depreciation expense amounted to $985,000, $911,000, and $809,000 for the years ended September 30, 2006, 2005, and 2004, respectively.

F-18

7. DEPOSITS

Currently, deposit accounts are insured by the Federal Deposit Insurance Corporation generally up to a maximum of $100,000 per separately insured depositor and up to a maximum of $250,000 for self-directed retirement accounts. Deposits and their respective weighted average interest rate consist of the following major classifications (in thousands):

	2006						2005
	Weighted Average Interest Rate			Amount			Weighted Average Interest Rate			Amount
Non-interest bearing demand accounts		—	%	$	23,675			—	%	$	21,134
NOW accounts		0.07			59,480			0.09			62,880
Money market accounts		2.78			33,255			1.66			33,749
Savings and club accounts		0.40			76,166			0.40			83,852
Certificates of deposit		4.40			209,577			3.67			173,144
Total		2.59	%	$	402,153			1.94	%	$	374,759
	2006						2005
	Amount			Weighted Average Interest Rate			Amount			Weighted Average Interest Rate
Time certificates of deposit:
0.00 - 2.00%	$	49			1.76	%	$	4,737			1.52	%
2.01 - 4.00%		69,429			3.66			117,580			3.31
4.01 - 6.00%		140,096			4.76			50,601			4.70
6.01 - 8.00%		3			6.11			226			6.06
Total	$	209,577			4.40	%	$	173,144			3.67	%

At September 30, scheduled maturities of certificates of deposit are as follows (in thousands):

2007	$	147,246
2008		29,196
2009		14,907
2010		10,944
2011		7,284
Total	$	209,577

The aggregate amount of certificates of deposit with a minimum denomination of $100,000 was $81,035,000 and $56,835,000 at September 30, 2006 and 2005, respectively.

The scheduled maturities of time certificates of deposit in denominations of $100,000 or more are as follows (in thousands):

	2006
Within three months	$	15,157
Three through six months		17,882
Six through twelve months		22,969
Over twelve months		25,027
Total	$	81,035

F-19

7. DEPOSITS (Continued)

A summary of interest expense on deposits for the years ended is as follows (in thousands):

	2006		2005		2004
NOW accounts	$	44	$	79	$	100
Money market accounts		687		421		245
Savings and club accounts		355		388		442
Certificates of deposits		7,926		4,963		4,224
Total	$	9,012	$	5,851	$	5,011

8. SHORT-TERM BORROWINGS

As of September 30, 2006 and 2005, the Bank had $35,299,000 and $27,479,000 of short-term borrowings, respectively, of which $22,298,000 and $25,479,000, respectively, were advances on a $75,000,000 line of credit with the FHLB.

All borrowings from the FHLB are secured by a blanket lien on qualified collateral, defined principally as investment securities and mortgage loans which are owned by the Bank free and clear of any liens or encumbrances. During 2006, the Bank had a borrowing limit of approximately $496 million, with a variable rate of interest, based on the FHLB’s cost of funds.

The following table sets forth information concerning short-term borrowings (in thousands):

	2006			2005
Balance at year-end	$	35,299		$	27,479
Maximum amount outstanding at any month-end		35,299			27,479
Average balance outstanding during the year		21,957			18,991
Weighted-average interest rate:
As of year-end		5.40	%		3.84	%
Paid during the year		4.92	%		2.92	%

Average balances outstanding during the year represent daily average balances, and average interest rates represent interest expenses divided by the related average balance.

9. OTHER BORROWINGS

The following table presents contractual maturities of FHLB long-term advances (in thousands):

Description	Maturity range		Weighted- average interest rate		Stated interest rate ranged				2006		2005
	from	to			from		to
Convertible	2/20/2008	8/25/2015	5.46	%	4.17	%	6.06	%	$	32,000	$	33,000
Fixed rate	11/15/2006	5/5/2014	4.39		2.49		5.95			147,000		126,000
Mid-term	12/22/2006	9/21/2009	4.56		2.46		5.69			45,000		35,000
Total									$	224,000	$	194,000

F-20

9. OTHER BORROWINGS (Continued)

Maturities of FHLB long-term advances are summarized as follows (in thousands):

Year Ending September 30,	Amount		Weighted- average Rate
2007	$	27,000	3.49	%
2008		43,000	4.43
2009		56,000	4.61
2010		20,000	4.74
2011		45,000	5.17
2012 and thereafter		33,000	4.67
Total	$	224,000	4.57	%

Included above are seven convertible notes which total $32,000,000 and are convertible to variable-rate advances on specific dates at the discretion of the FHLB. Should the FHLB convert these advances, the Bank has the option of accepting the variable rate or repaying the advance without penalty.

The advances are secured by qualifying assets of the Bank which include the FHLB stock, securities, and first mortgage loans.

10. INCOME TAXES

The provision for income taxes consists of (in thousands):

	2006		2005		2004
Federal:
Current	$	1,737	$	1,224	$	989
Deferred		76		159		183
Total	$	1,813	$	1,383	$	1,172

F-21

10. INCOME TAXES (Continued)

The tax effects of deductible and taxable temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows (in thousands):

	2006		2005
Deferred tax assets:
Allowance for loan losses	$	1,311	$	1,211
Net unrealized loss on securities		97		104
Charitable contributions carryover		145		163
Other		135		232
Total gross deferred tax assets		1,688		1,710
Deferred tax liabilities:
Pension plan		632		468
Mortgage servicing rights		73		86
Premises and equipment		568		652
Other		88		94
Total gross deferred tax liabilities		1,361		1,300
Net deferred tax assets	$	327	$	410

No valuation allowance was established at September 30, 2006 and 2005, in view of the Bank’s ability to carryback to taxes paid in previous years and certain tax strategies, coupled with the anticipated future taxable income as evidenced by the Bank’s earnings potential.

The reconciliation of the federal statutory rate and the Bank’s effective income tax rate is as follows (in thousands):

	2006					2005					2004
	Amount			% of Pre tax Income		Amount			% of Pre tax Income		Amount			% of Pre tax Income
Provision of statutory rate	$	1,961		34.0	%	$	1,984		34.0	%	$	1,730		34.0	%
Income from Bank-owned life insurance		(174	)	(3.0	)		(168	)	(2.9	)		(125	)	(2.5	)
Tax-exempt income		(124	)	(2.2	)		(117	)	(2.0	)		(116	)	(2.3	)
Low-income housing credits		(68	)	(1.2	)		(72	)	(1.2	)		(138	)	(2.7	)
Other, net		218		3.8			(244	)	(4.2	)		(179	)	(3.5	)
Actual tax expense and effective rate	$	1,813		31.4	%	$	1,383		23.7	%	$	1,172		23.0	%

F-22

10. INCOME TAXES (Continued)

The Bank is subject to the Pennsylvania Mutual Thrift Institutions Tax that is calculated at 11.5 percent of earnings based on U.S. generally accepted accounting principles with certain adjustments.

Retained earnings include $4,308,000 at September 30, 2006, for which no provision for federal income tax has been made. This amount represents deductions for bad debt reserves for tax purposes which were only allowed to savings institutions which met certain definitional tests prescribed by the Internal Revenue Code of 1986, as amended. The Small Business Job Protection Act of 1996 eliminated the special bad debt deduction granted solely to thrifts. Under the terms of the Act, there would be no recapture of the pre-1988 (base year) reserves. However, these pre-1988 reserves would be subject to recapture under the rules of the Internal Revenue Code if the Bank itself pays a cash dividend in excess of earnings and profits or liquidates. The Act also provides for the recapture of deductions arising from “applicable excess reserve: defined as the total amount of reserve over the base year reserve.” The Bank’s total reserve exceeds the base year reserve and deferred taxes have been provided for this excess.

11. COMMITMENTS

In the normal course of business, management makes various commitments which are not reflected in the consolidated financial statements. These commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Consolidated Balance Sheet. The Bank’s exposure to credit loss in the event of nonperformance by the other parties to the financial instruments is represented by the contractual amounts as disclosed. Losses, if any, are charged to the allowance for loan losses. The Bank minimizes its exposure to credit loss under these commitments by subjecting them to credit approval and review procedures and collateral requirements, as deemed necessary, in compliance with lending policy guidelines.

The off-balance-sheet commitments consist of the following (in thousands):

	2006		2005
Commitments to extend credit	$	10,939	$	10,333
Standby letters of credit		2,758		1,491
Unfunded lines of credit		42,073		42,900

Commitments to extend credit consist of fixed-rate commitments with interest rates ranging from 5.85 percent to 10.25 percent. The commitments outstanding at September 30, 2006, contractually mature in less than one year.

The instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Consolidated Balance Sheet. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. The amount of collateral obtained, as deemed necessary, is based upon management’s credit evaluation in compliance with the lending policy guidelines. Since many of the credit line commitments are expected to expire without being fully drawn upon, the total contractual amounts do not necessarily represent future funding requirements.

Standby letters of credit and financial guarantees represent conditional commitments issued to guarantee performance of a customer to a third party. The coverage period for these instruments is typically a one-year period with renewal option subject to prior approval by management. Fees earned from the issuance of these letters are recognized over the coverage period. For secured letters of credit, the collateral is typically Bank deposit instruments.

F-23

12. LEASE COMMITMENTS AND TOTAL RENTAL EXPENSE

The Bank leases various branch locations and other offices under long-term operating leases. Future minimum lease payments by year and in the aggregate, under noncancellable operating leases with initial or remaining terms of one year or more, consisted of the following at September 30, 2006 (in thousands):

2007	$	210
2008		181
2009		116
2010		78
2011		56
2012 and beyond		209
Total	$	850

The total rental expense for the above leases for the years ended September 30, 2006, 2005, and 2004, were $368,000, $343,000, and $361,000, respectively.

13. EMPLOYEE BENEFITS

The Bank sponsors a trusteed, noncontributory defined benefit pension plan covering substantially all employees and officers. The plan calls for benefits to be paid to eligible employees at retirement based primarily upon years of service with the Bank and compensation rates near retirement. The Bank’s funding policy is to make annual contributions, if needed, based upon the funding formula developed by the plan’s actuary.

Pension Plan

The following table sets forth the status (in thousands):

	2006			2005
Change in benefit obligation
Benefit obligation at beginning of year	$	4,966		$	4,740
Service cost		534			377
Interest cost		397			295
Actuarial loss		873			213
Benefits paid		(696	)		(659	)
Benefit obligation at end of year		6,074			4,966
Change in plan assets
Fair value of plan assets at beginning of year		4,322			3,106
Actual return on plan assets		254			456
Employer contribution		1,654			1,419
Benefits paid		(696	)		(659	)
Fair value of plan assets at end of year		5,534			4,322
Funded status		(540	)		(644	)
Unrecognized transition adjustment		—			2
Unrecognized net actuarial loss		2,383			1,499
Unrecognized prior service cost		47			56
Net Prepaid Benefit Cost Recognized	$	1,890		$	913

F-24

13. EMPLOYEE BENEFITS (Continued)

Pension Plan (Continued)

The accumulated benefit obligation for the defined benefit pension plan was $3,044,000 and $2,805,000 as of September 30, 2006 and 2005, respectively.

The following table comprises the components of net periodic benefit cost for the years ended (in thousands):

	2006			2005			2004
Service cost	$	534		$	377		$	393
Interest cost		397			295			314
Expected return on plan assets		(387	)		(235	)		(186	)
Amortization of prior service cost		9			9			9
Amortization of unrecognized loss		122			43			84
Amortization of transition obligation		2			3			3
Net periodic benefit cost	$	677		$	492		$	617

Weighted-average assumptions used to determine benefit obligations:

	2006		2005
Discount rate	6.25	%	6.25	%
Rate of compensation increase	5.50		5.50

Weighted-average assumptions used to determine net periodic benefit cost for years ended:

	2006		2005		2004
Discount rate	6.25	%	6.25	%	7.00	%
Expected long-term return on plan assets	8.00		8.00		8.00
Rate of compensation increase	5.50		5.50		5.50

The expected long-term rate of return was estimated using market benchmarks by which the plan assets would outperform the market in the future, based on historical experience adjusted for changes in asset allocation and expectations for overall lower future returns on similar investments compared to past periods.

Plan Assets

The Bank’s pension plan weighted-average asset allocations by asset category are as follows:

	2006		2005
Cash and fixed income securities	35.4	%	35.4	%
Equity securities	64.6		64.6
Total	100.0	%	100.0	%

The Bank believes that the plan’s risk and liquidity position are, in large part, a function of the asset class mix. The Bank desires to utilize a portfolio mix that results in a balanced investment strategy. Three asset classes are outlined, as above. The target allocations of these classes are as follows: equities, 65 percent; cash and fixed income, 35 percent.

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13. EMPLOYEE BENEFITS (Continued)

Pension Plan (Continued)

The Bank expects to contribute $536,000 to its pension plan in 2007.

Estimated future benefit payments, which reflect expected future service, as appropriate, are as follows (in thousands):

2007	$	40
2008		42
2009		73
2010		74
2011		80
2012 - 2016		576

401(k) Plan

The Bank also has a savings plan qualified under Section 401(k) of the Internal Revenue Code which covers substantially all employees over 21 years of age. Employees can contribute to the Plan, but are not required to. Employer contributions are allocated based on employee contribution levels. The expense related to the Plan for the years ended September 30, 2006, 2005, and 2004, were $190,000, $152,000, $106,000, respectively.

Supplemental Executive Retirement Plan

On September 15, 2004, the Bank entered into a salary continuation agreement with certain executives of the Bank, which provides for benefits upon retirement to be paid to the executive for no less than 192 months, unless the executive elects to receive the present value of the payments as a lump sum. The Bank has recorded an accrual of $284,000 and $124,000, at September 30, 2006 and September 30, 2005, respectively, which represents the estimated present value (using a discount rate of 7.5 percent) of the benefits earned under this agreement.

In connection with the Supplemental Executive Retirement Plan, the Bank funded life insurance policies with an aggregate amount of $7.7 million on the lives of those officers. The cash surrender value of these policies totaled $2.2 million and $2.1 million at September 30, 2006 and 2005, respectively. In addition, to offset the costs of the Bank’s other benefit plans, the Bank funded life insurance policies with an aggregate amount of $34.1 million on the lives of various officers. The cash surrender value of these policies totaled $11.2 million and $10.8 million at September 30, 2006 and 2005, respectively. These policies provide that death benefits totaling $5.1 million at September 30, 2006, will be paid to the officers’ beneficiaries in the event the officer should die.

14. REGULATORY RESTRICTIONS

The Bank is required to maintain reserve funds in cash or in deposit with the Federal Reserve Bank. The required reserve at September 30, 2006 and 2005, was $4 million and $0, respectively.

15. REGULATORY CAPITAL REQUIREMENTS

Federal regulations require the Bank to maintain certain minimum amounts of capital. Specifically, the Bank is required to maintain certain minimum dollar amounts and ratios of Total and Tier I capital to risk-weighted assets and of Tier I capital to average total assets.

In addition to the capital requirements, the Federal Deposit Insurance Corporation Improvement Act (“FDICIA”) established five capital categories ranging from “well capitalized” to “critically undercapitalized.” Should any institution fail to meet the requirements to be considered “adequately capitalized,” it would become subject to a series of increasingly restrictive regulatory actions. Management believes as of September 30, 2006, the Bank met all capital adequacy requirements to which they are subject.

F-26

As of September 30, 2006 and 2005, the OTS categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be classified as a well capitalized financial institution, Total risk-based, Tier 1 risk-based, core capital, and tangible equity capital ratios must be at least 10 percent, 6 percent, 5 percent, and 1.5 percent, respectively. There have been no conditions or events since the notification that management believes have changed the Bank’s category.

F-27

15. REGULATORY CAPITAL REQUIREMENTS (Continued)

The following table reconciles the Bank’s capital under U.S. generally accepted accounting principles to regulatory capital (in thousands):

	2006			2005
Total equity	$	58,337		$	54,371
Accumulated other comprehensive loss		189			201
Disallowed servicing assets		(193	)		(229	)
Tier I, core, and tangible capital		58,333			54,343
Allowance for loan losses		3,855			3,563
Unrealized gains on equity securities		24			—
Total risk-based capital	$	62,212		$	57,906

The Bank’s actual capital ratios are presented in the following table (dollars in thousands):

	2006				2005
	Amount		Ratio		Amount		Ratio
Total Capital (to Risk-Weighted Assets)
Actual	$	62,212	15.8	%	$	57,906	15.6	%
For Capital Adequacy Purposes		31,557	8.0			32,993	8.0
To Be Well Capitalized		39,446	10.0			37,242	10.0
Tier I Capital (to Risk-Weighted Assets)
Actual	$	58,333	14.8	%	$	54,343	14.6	%
For Capital Adequacy Purposes		15,778	4.0			14,897	4.0
To Be Well Capitalized		23,667	6.0			22,345	6.0
Tier I Capital (to Average Assets)
Actual	$	58,333	8.1	%	$	54,343	8.3	%
For Capital Adequacy Purposes		28,959	4.0			26,193	4.0
To Be Well Capitalized		36,199	5.0			32,741	5.0
Tangible Capital (to Adjusted Assets)
Actual	$	58,333	8.1	%	$	54,343	8.3	%
For Capital Adequacy Purposes		10,859	1.5			9,822	1.5

F-28

16. FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair values of the Bank’s financial instruments are as follows (in thousands):

	2006				2005
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets:
Cash and cash equivalents	$	12,730	$	12,730	$	20,290	$	20,290
Investment and mortgage- backed securities:
Available for sale		89,122		89,122		62,506		62,506
Held to maturity		19,715		19,193		21,505		21,297
Loans receivable, net		556,677		554,405		508,981		508,162
Accrued interest receivable		3,185		3,185		2,655		2,655
FHLB stock		13,675		13,675		11,916		11,916
Mortgage servicing rights		215		244		253		253
Bank-owned life insurance		13,376		13,376		12,864		12,864
Financial liabilities:
Deposits	$	402,153	$	401,035	$	374,759	$	373,662
Short-term borrowings		35,299		35,299		27,479		27,479
Other borrowings		224,000		224,495		194,000		191,652
Advances by borrowers for taxes and insurance		2,198		2,198		1,591		1,591
Accrued interest payable		1,399		1,399		848		848

Financial instruments are defined as cash, evidence of an 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 or liquidation 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.

If no readily available market exists, the fair value estimates for financial instruments should be based upon management’s judgment regarding current economic conditions, interest rate risk, expected cash flows, future estimated losses, and other factors as determined through various option pricing formulas or simulation modeling.

As many of these assumptions result from judgments made by management based upon estimates which are inherently uncertain, the resulting estimated values may not be indicative of the amount realizable in the sale of a particular financial instrument. In addition, changes in the assumptions on which the estimated values are based may have a significant impact on the resulting estimated values.

As certain assets and liabilities, such as deferred tax assets, premises and equipment, and many other operational elements of the Bank, are not considered financial instruments but have value, this estimated fair value of financial instruments would not represent the full market value of the Bank.

F-29

16. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

The Bank employed simulation modeling in determining the estimated fair value of financial instruments for which quoted market prices were not available based upon the following assumptions:

Cash and Cash Equivalents, Accrued Interest Receivable, Short-Term Borrowings, Advances by Borrowers for Taxes and Insurance, and Accrued Interest Payable

The fair value approximates the current book value.

Bank-Owned Life Insurance

The fair value is equal to the cash surrender value of the Bank-owned life insurance.

Investment and Mortgage-Backed Securities Available for Sale and Held to Maturity and FHLB Stock

The fair value of investment and mortgage-backed securities available for sale is equal to the available quoted market price. If no quoted market price is available, fair value is estimated using the quoted market price for similar securities. Since the FHLB stock is not actively traded on a secondary market and held exclusively by member financial institutions, the estimated fair market value approximates the carrying amount.

Loans Receivable, Deposits, Other Borrowings, and Mortgage Servicing Rights

The estimated fair values for loans and mortgage servicing rights are estimated by discounting contractual cash flows and adjusting for prepayment estimates. Discount rates are based upon rates generally charged for such loans with similar characteristics. Demand, savings, and money market deposit accounts are valued at the amount payable on demand as of year end. Fair values for time deposits and other borrowings are estimated using a discounted cash flow calculation that applies contractual costs currently being offered in the existing portfolio to current market rates being offered for deposits and borrowings of similar remaining maturities.

Commitments to Extend Credit

These financial instruments are generally not subject to sale, and estimated fair values are not readily available. The carrying value, represented by the net deferred fee arising from the unrecognized commitment, and the fair value, determined by discounting the remaining contractual fee over the term of the commitment using fees currently charged to enter into similar agreements with similar credit risk, are not considered material for disclosure. The contractual amounts of unfunded commitments are presented in Note 11.

F-30

17. PLAN OF REORGANIZATION AND STOCK ISSUANCE

On July 25, 2006, the Board of Directors of the Bank unanimously adopted a Plan of Conversion (the “Plan”) pursuant to which the Bank will convert into a Pennsylvania chartered stock savings association (the “Stock Savings Association”) and form ESSA Bancorp, Inc., a Pennsylvania chartered company (the “Stock Holding Company”). The newly chartered Stock Holding Company will offer shares of its common stock to the Bank’s eligible account holders, to the Bank’s tax-qualified employee benefit plans, and, if necessary, to the general public in accordance with the priorities set forth in the Plan. The Plan also provides for the establishment and funding of a charitable foundation. The Stock Holding Company intends to contribute up to 7.0% of the shares of common stock of the Stock Holding Company that will be sold in the offering, and up to $1.5 million in cash. The Plan is subject to the approval of the OTS, the Pennsylvania Department of Banking, as well as the Members of the Bank, as set forth in the Plan.

Following the sale of common stock, all depositors who had membership or liquidation rights with respect to the Bank as of the effective date of the transaction will continue to have such rights solely with respect to the Stock Savings Association as long as they continue to hold deposit accounts with the Bank. In addition, all persons who become depositors of the Bank subsequent to the date of the transaction will have such membership and liquidation rights with respect to the Stock Savings Association. Borrowers of the Bank as of the date of the transaction will have the same membership rights in the Stock Savings Association that they had in the Bank immediately prior to the date of the transaction as long as their existing borrowings remain outstanding.

The regulations of the OTS prohibit the Bank from declaring or paying a cash dividend if the effect thereof would cause the Bank’s regulatory capital to be reduced below either the amount required for the liquidation account or the federal regulatory capital requirement in section 567.2 of the Rules and Regulations of the OTS.

Costs associated with the conversion will be deferred and deducted from the proceeds of the stock offering. If, for any reason, the offering is not successful, the deferred costs will be charged to operations. As of September 30, 2006, there was approximately $119,000 of costs incurred with the conversion.

F-31

You should rely only on the information contained in this document or that to which we have referred you. No person has been authorized to give any information or to make any representation other than as contained in this prospectus and, if given or made, such other information or representation must not be relied upon as having been authorized by ESSA Bancorp, Inc. or ESSA Bank & Trust. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby to any person in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. Neither the delivery of this prospectus nor any sale hereunder shall under any circumstances create any implication that there has been no change in the affairs of ESSA Bancorp, Inc. or ESSA Bank & Trust since any of the dates as of which information is furnished herein or since the date hereof.

ESSA Bancorp, Inc.

(Proposed Holding Company for

ESSA Bank & Trust)

12,650,000 Shares of

Common Stock

Par value $0.01 per share

(Subject to Increase to up to 14,547,500)

PROSPECTUS

Ryan Beck & Co., Inc.

Until              or 25 days after commencement of the syndicated community offering, if any, whichever is later, all dealers effecting transactions in the registered securities, whether or not participating in this distribution, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver the prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PART II: INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

		Amount(1)
*	Registrant’s Legal Fees and Expenses	$	450,000
*	Marketing Agent Legal Fees and Expenses		75,000
*	Registrant’s Accounting Fees and Expenses		120,000
*	Conversion Agent and Data Processing Fees		50,000
*	Marketing Agent Fees and Expenses		1,221,753
*	Appraisal and Business Plan Fees and Expenses		127,000
*	Printing, Postage and Mailing		225,000
*	Filing Fees (OTS, NASD, Nasdaq and SEC)		132,783
*	Other		18,464
*	Total	$	2,420,000

* Estimated

(1) ESSA Bancorp, Inc. has retained Ryan Beck & Co., Inc. to assist in the sale of common stock on a best efforts basis in the offerings. Fees are estimated at the midpoint of the offering range.

Item 14. Indemnification of Directors and Officers

Indemnification of Directors and Officers of ESSA Bank & Trust. Article VI of the bylaws of ESSA Bank & Trust, set forth circumstances under which directors, officers, employees and agents of ESSA Bank & Trust may be insured or indemnified against liability which they incur in their capacities as such:

Article VI; Indemnification and Liability of Directors and Officers

Section 1. Personal Liability of Directors. A director of ESSA Bank & Trust shall not be personally liable for monetary damages for any action taken, or any failure to take any action, as a director except to the extent that by law (including the Director’s Liability Act, 42 Pa. C.S. 8361 et seq.) a director’s liability for monetary damages may not be limited.

Section 2. Indemnification. The Bank shall indemnify in accordance with its Indemnification Policy any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, including actions by or in the right of ESSA Bank & Trust, whether civil, criminal, administrative or investigative, by reason of the fact that such a person is or was a director or officer of ESSA Bank & Trust, or is or was serving while a director or officer of ESSA Bank & Trust and at the request of ESSA Bank & Trust, as a director, officer, employee, agent, fiduciary or other representative of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorneys’ fees), judgments, fines, excise taxes and amounts paid n settlement actually and reasonable incurred by such person in connection with such action, suit or proceeding to the full extent permissible under Pennsylvania law.

Section 3. Advancement of Expenses. Reasonable expenses incurred by an officer or director of ESSA Bank & Trust in defending a civil or criminal action, suit or proceeding described in Section 2 shall be paid by ESSA Bank & Trust in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that the person is not entitled to be indemnified by ESSA Bank & Trust.

Section 4. Other Rights. The indemnification and advancement of expenses provided by or pursuant to this Article shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled, any insurance or other agreement, vote of shareholders or directors or otherwise, both as to actions in their official capacity and as to actions in another capacity while holding an office, and shall continue as a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such person.

II-1

Section 5. Insurance. The Bank shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of ESSA Bank & Trust, or is or was serving at the request of ESSA Bank & Trust as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against any liability asserted against him/her and incurred by him/her in any such capacity, or arising out of his/her status as such, whether or not ESSA Bank & Trust should have the power to indemnify him/her against such liability under the provisions of these By-Laws.

Section 6. Security Fund; Indemnity Agreements. By action of the Board of Directors (notwithstanding their interest in the transaction) ESSA Bank & Trust may create and fund a trust or fund of any nature, any may enter into agreements with its officers and directors, for the purpose of securing or insuring in any manner its obligation to indemnify or advance expenses provided for in this Article.

Section 7. Modification. The duties of ESSA Bank & Trust to indemnify and to advance expenses to a director or officer provided in this Article shall be in the nature of a contract between ESSA Bank & Trust and each such director or officer, and no amendment or repeal of any provision of the Article, and no amendment or termination of any trust or other fund created pursuant to Section 6 shall alter, the detriment of such director or officer, the right of such person to the advance of expenses or indemnification related to a claim based on an act or failure to act which took place prior to such amendment, repeal or termination.

Indemnification of Directors and Officers of ESSA Bancorp, Inc.. Article VI of the bylaws of ESSA Bancorp, Inc., a Pennsylvania corporation, set forth circumstances under which directors, officers, employees and agents of ESSA Bancorp, Inc. may be insured or indemnified against liability which they incur in their capacities as such:

Article VI; Indemnification

6.1 Persons Covered. Subject to, and in accordance with, the provisions of this Article VI, ESSA Bancorp, Inc. shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, including actions by or in the right of ESSA Bancorp, Inc., whether civil, criminal, administrative, or investigative, by reason of the fact that such person is or was a director, officer, employee, fiduciary, trustee, or agent of ESSA Bancorp, Inc., or is or was serving at the request of ESSA Bancorp, Inc. as a director, officer, employee, fiduciary, trustee, or agent of another corporation, partnership, joint venture, trust, or other enterprise.

6.2 Derivative Actions.

(a) In the case of a threatened, pending, or completed action or suit by or in the right of ESSA Bancorp, Inc. against a person named in Section 6.1 by reason of such person holding a position named in Section 6.1, ESSA Bancorp, Inc. shall indemnify such person if such person satisfies the standard in Section 6.2(b), for expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of the action or suit.

(b) In the case of a threatened, pending, or completed action or suit by or in the right of ESSA Bancorp, Inc., a person named in Section 6.1 shall be indemnified only if:

(1) such person is successful on the merits or otherwise; or

(2) such person acted in good faith in the transaction that is the subject of the suit or action, and in a manner reasonably believed to be in, or not opposed to, the best interests of ESSA Bancorp, Inc.. However, such person shall not be indemnified in respect of any claim, issue, or matter as to which such person has been adjudged liable to ESSA Bancorp, Inc. unless (and only to the extent that) the court of common pleas or the court in which the suit was brought shall determine, upon application, that despite the adjudication of liability but in view of all the circumstances, such person is fairly and reasonably entitled to indemnity for such expenses as the court shall deem proper.

II-2

6.3 Third-Party Actions.

(a) In case of a threatened, pending, or completed suit, action, or proceeding (whether civil, criminal, administrative, or investigative), other than a suit by or in the right of ESSA Bancorp, Inc., together hereafter referred to as a third-party action, against a person named in Section 6.1 by reason of such person holding a position named in Section 6.1, ESSA Bancorp, Inc. shall indemnify such person if such person satisfies the standard in Section 6.3(b), for amounts actually and reasonably incurred by such person in connection with the defense or settlement of the third-party action, including, but not limited to (i) expenses (including attorneys’ fees), (ii) amounts paid in settlement, (iii) judgments, and (iv) fines.

(b) In case of a third-party action, a person named in Section 6.1 shall be indemnified only if:

(1) such person is successful on the merits or otherwise; or

(2) such person acted in good faith in the transaction that is the subject of the third-party action and in a manner such person reasonably believed to be in, or not opposed to, the best interests of the Corporation and, with respect to any criminal action or proceeding, such person had no reasonable cause to believe such person’s conduct was unlawful. The termination of a third-party action by judgment, order, settlement, conviction, or upon a pleas of nolo contendere or its equivalent shall not, in itself, create a presumption that the person failed to satisfy the standard of this Section 6.3(b).

6.4 Determination That Standard Has Been Met. A determination that the standard of either Section 6.2(b) or 6.3(b) has been satisfied may be made by a court, or, except as stated in the record sentence of Section 6.2(b), the determination may be made by:

(1) the Board of Directors by a majority vote of a quorum consisting of directors of ESSA Bancorp, Inc. who were not parties to the action, suit, or proceeding;

(2) if such a quorum is not obtainable or if obtainable and a majority of a quorum of disinterested directors so directs, by independent legal counsel in a written opinion; or

(3) the shareholders of ESSA Bancorp, Inc..

6.5 Proration. Anyone making a determination under Section 6.4 may determine that a person has met the standard as to some matters but not as to others, and may reasonably prorate amounts to be indemnified.

6.6 Advancement of Expenses. Reasonable expenses incurred by a director, officer, employee, or agent of ESSA Bancorp, Inc. in defending a civil or criminal action, suit, or proceeding described in Section 6.1 shall be paid by ESSA Bancorp, Inc. in advance of the final disposition of such action, suit, or proceeding upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that the person is not entitled to be indemnified by ESSA Bancorp, Inc.

6.7 Other Rights. The indemnification and advancement of expenses provided by or pursuant to this Article VI shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any insurance or other agreement, vote of shareholders or directors, or otherwise, both as to actions in their official capacity and as to actions in another capacity while holding an office, and shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such person.

6.8 Insurance. The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not ESSA Bancorp, Inc. would have the power to indemnify such person against such liability under the provisions of this Article VI.

II-3

6.9 Security Fund; Indemnity Agreements. By action of the Board of Directors (notwithstanding their interest in the transaction), ESSA Bancorp, Inc. may create and fund a trust fund or fund of any nature, and may enter into agreements with its officers, directors, employees, and agents for the purpose of securing or insuring in any manner its obligation to indemnify or advance expenses provided for in this Article VI.

6.10 Modification. The duties of ESSA Bancorp, Inc. to indemnify and to advance expenses to any person as provided in this Article VI shall be in the nature of a contract between ESSA Bancorp, Inc. and each such person, and no amendment or repeal of any provision of this Article VI, and no amendment or termination of any trust fund or other fund created pursuant to Section 6.9 hereof, shall alter to the detriment of such person the right of such person to the advancement of expenses or indemnification related to a claim based on an act or failure to act which took place prior to such amendment, repeal, or termination.

6.11 Proceedings Initiated by Indemnified Persons. Notwithstanding any other provision in this Article VI, ESSA Bancorp, Inc. shall not indemnify a director, officer, employee, or agent for any liability incurred in an action, suit, or proceeding initiated by (which shall not be deemed to include counter-claims or affirmative defenses) or participated in as an intervenor or amicus curiae by the person seeking indemnification unless such initiation of or participation in the action, suit, or proceeding is authorized, either before or after its commencement, by the affirmative vote of a majority of the directors then in office.

6.12 Savings Clause. If this Article VI or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then ESSA Bancorp, Inc. shall nevertheless indemnify each director, officer, employee, and agent of ESSA Bancorp, Inc. as to costs, charges, and expenses (including attorneys’ fees), judgments, fines, and amounts paid in settlement with respect to any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, including an action by or in the right of ESSA Bancorp, Inc., to the fullest extent permitted by any applicable portion of this Article VI that shall not have been invalidated and to the fullest extent permitted by applicable law.

If the laws of the Commonwealth of Pennsylvania are amended to permit further indemnification of the directors, officers, employees, and agents of ESSA Bancorp, Inc., then ESSA Bancorp, Inc. shall indemnify such persons to the fullest extent permitted by law. Any repeal or modification of this Article VI by the Board of Directors or the shareholders of ESSA Bancorp, Inc. shall not adversely affect any right or protection of a director, officer, employee, or agent existing at the time of such repeal or modification.

Item 15. Recent Sales of Unregistered Securities

Not Applicable.

Item 16. Exhibits and Financial Statement Schedules:

The exhibits and financial statement schedules filed as part of this registration statement are as follows:

(a) List of Exhibits

1.1	Engagement Letter between ESSA Bank & Trust and Ryan Beck & Co., Inc.*
1.2	Form of Agency Agreement between ESSA Bank & Trust, ESSA Bancorp, Inc., and Ryan Beck & Co., Inc.
2	Plan of Conversion, as amended.
3.1	Articles of Incorporation of ESSA Bancorp, Inc.*
3.2	Bylaws of ESSA Bancorp, Inc.
4	Form of Common Stock Certificate of ESSA Bancorp, Inc.*
5	Opinion of Luse Gorman Pomerenk & Schick regarding legality of securities being registered*
8	Federal Tax Opinion of Luse Gorman Pomerenk & Schick*
10.1	Form of Employee Stock Ownership Plan*

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10.2	Form of Employment Agreement for Chief Executive Officer*
10.3	Form of Employment Agreement for Executive Officers*
10.4	Form of Change in Control Agreement*
10.5	[Reserved]
10.6	Supplemental Retirement Plan for Gary S. Olson
10.7	Supplemental Retirement Plan for Robert S. Howes, Jr.
10.8	Supplemental Retirement Plan for Diane K. Reimer
10.9	Supplemental Retirement Plan for Thomas J. Grayuski
16	Letter from Beard Miller Company LLP
21	Subsidiaries of Registrant*
23.1	Consent of Luse Gorman Pomerenk & Schick (contained in Opinions included as Exhibits 5 and 8)
23.2	Consent of S.R. Snodgrass, A.C.
23.3	Consent of Beard Miller Company LLP
23.4	Consent of RP Financial, LC.
24	Power of Attorney (set forth on signature page)
99.1	Appraisal Agreement between ESSA Bank & Trust and RP Financial, LC.*
99.2	Letter of RP Financial, LC. with respect to Subscription Rights*
99.3	Appraisal Report of RP Financial, LC.**
99.4	Marketing Materials
99.5	Order and Acknowledgment Form

* Previously filed.

** Supporting financial schedules filed pursuant to Rule 202 of Regulation S-T.

(b) Financial Statement Schedules

No financial statement schedules are filed because the required information is not applicable or is included in the consolidated financial statements or related notes.

Item 17. Undertakings

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which it offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

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(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Stroudsburg, Commonwealth of Pennsylvania on January 22, 2007.

ESSA BANCORP, INC.
By:	/s/ Gary S. Olson
	Gary S. Olson
	Chief Executive Officer and President
	(Duly Authorized Representative)

POWER OF ATTORNEY

We, the undersigned directors and officers of ESSA Bancorp, Inc. (the “Company”) hereby severally constitute and appoint Gary S. Olson as our true and lawful attorney and agent, to do any and all things in our names in the capacities indicated below which said Gary S. Olson may deem necessary or advisable to enable the Company to comply with the Securities Act of 1933, and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with the registration statement on Form S-1 relating to the offering of the Company’s common stock, including specifically, but not limited to, power and authority to sign for us in our names in the capacities indicated below the registration statement and any and all amendments (including post-effective amendments) thereto; and we hereby approve, ratify and confirm all that said Gary S. Olson shall do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signatures	Title	Date
/s/ Gary S. Olson Gary S. Olson	President, Chief Executive Officer and Director (Principal Executive Officer)	January 22, 2007
/s/ Allan A. Muto Allan A. Muto	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)	January 22, 2007
/s/ John E. Burrus John E. Burrus	Director	January 22, 2007
/s/ William P. Douglass William P. Douglass	Director	January 22, 2007

/s/ Daniel J. Henning Daniel J. Henning	Director	January 22, 2007
/s/ Frederick E. Kutteroff Frederick E. Kutteroff	Director	January 22, 2007
/s/ Robert C. Selig, Jr. Robert C. Selig, Jr.	Director	January 22, 2007
/s/ John S. Schoonover, Jr. John S. Schoonover, Jr.	Director	January 22, 2007
/s/ William A. Viechnicki, D.D.S. William A. Viechnicki, D.D.S.	Director	January 22, 2007
/s/ Elizabeth B. Weeks Elizabeth B. Weekes	Director	January 22, 2007

EX-1.2

Exhibit 1.2

ESSA BANCORP, INC.

Up to 12,650,000 Shares

(Subject to Increase Up to 14,547,500 Shares)

COMMON STOCK ($0.01 Par Value)

Subscription Price $10.00 Per Share

FORM OF AGENCY AGREEMENT

                    , 2007

Ryan Beck & Co., Inc.

18 Columbia Turnpike

Florham Park, New Jersey 07932

Ladies and Gentlemen:

ESSA Bancorp, Inc., a Pennsylvania corporation in formation (the “Company”), and ESSA Bank & Trust, a Pennsylvania-chartered savings association in mutual form (the “Bank”) (references to the “Bank” include the Bank as a Pennsylvania-chartered savings association in mutual form and as a Pennsylvania-chartered savings association in stock form, as indicated by the context, and together with the Company, the “Primary Parties”), hereby confirm, jointly and severally, their agreement with Ryan Beck & Co., Inc. (the “Agent”), as follows:

1. The Offering. On July 25, 2006, the Board of Directors of the Bank adopted a Plan of Conversion (the “Plan”), which provides for the conversion of the Bank from a Pennsylvania-chartered savings association in mutual form to a Pennsylvania-chartered savings bank in stock form (the “Conversion”), the reorganization of the Bank into a holding company structure, and the issuance of all of the Bank’s outstanding common stock to the Company (together with the Conversion and the Offering or Conversion Offerings, as defined below, the “Reorganization”). Upon completion of the Reorganization, the Bank will be a wholly-owned subsidiary of the Company. The Reorganization will be accomplished pursuant to applicable federal law, Pennsylvania law and the rules and regulations of the Pennsylvania Department of Banking (the “Department”) and the Office of Thrift Supervision (the “OTS”). The Company is offering up to 12,650,000 shares (the “Shares” or “Conversion Shares”) of common stock, par value $            per share (the “Common Stock”) (subject to an increase up to 14,547,500 shares), in (i) a subscription offering (the “Subscription Offering”), and, if necessary; (ii) a direct community offering (the “Direct Community Offering”); and (iii) a syndicated community offering (the “Syndicated Community Offering”), in connection with the Reorganization. (The Subscription Offering, Direct Community Offering and Syndicated Community Offering are herein sometimes collectively referred to as the “Conversion Offerings” or the “Offerings”). The Plan also provides that the Company shall contribute 7.0% of the shares sold in the Offerings (the “Charitable Shares”) to a charitable foundation to be established by the Bank (“Charitable Foundation”).

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The Company will issue the Shares at a purchase price of $10.00 per share (the “Purchase Price”). If the number of Conversion Shares is increased or decreased in accordance with the Plan, the term “Shares” or “Conversion Shares” shall mean such greater or lesser number, where applicable.

In the Subscription Offering, non-transferable rights to subscribe for between twenty-five (25) and thirty-five thousand (35,000) shares of the Common Stock (“Subscription Rights”) will be granted, in the following order of priority: (1) the Bank’s depositors with account balances of at least $50.00 as of the close of business on April 30, 2005 (“Eligible Account Holders”); (2) any tax-qualified employee stock benefit plans of the Bank or the Company, including the Company’s employee stock ownership plan (ESOP) and 401(k) savings plan; (3) the Bank’s depositors with account balances of at least $50.00 as of the close of business on                  , 200     (“Supplemental Eligible Account Holders”); and (4) the Bank’s depositors on the record date for the meeting of members to approve the Plan and the Bank’s borrowers who qualify as “voting members” on such record date. The Company may offer shares of Common Stock for which subscriptions have not been received in the Subscription Offering in the Community Offering to members of the general public, with preference given to natural persons residing in Monroe and Northhampton Counties, Pennsylvania. In the event a Community Offering is held, it may be held at any time during or immediately after the Subscription Offering. Depending on market conditions, shares not subscribed for in the Subscription Offering or purchased in the Community Offering may be offered in the Syndicated Community Offering to selected members of the general public through a syndicate of registered broker-dealers managed by the Agent (“Assisting Brokers”) which are members of the National Association of Securities Dealers, Inc. (“NASD”).

It is acknowledged that the number of Shares to be sold in the Offering may be increased or decreased as described in the Prospectus (as hereinafter defined); that the purchase of Shares in the Offering is subject to maximum and minimum purchase limitations as described in the Prospectus; and that the Company may reject, in whole or in part, any subscription received in the Community Offering and Syndicated Community Offering.

The Company has filed with the U.S. Securities and Exchange Commission (the “Commission”) a Registration Statement on Form S-1 (File No.                 ) in order to register the Shares and the Charitable Shares under the Securities Act of 1933, as amended (the “1933 Act”), and has filed such amendments thereto as have been required to the date hereof (the “Registration Statement”). The prospectus, as amended, included in the Registration Statement at the time it initially became effective is hereinafter called the “Prospectus,” except that if any prospectus is filed by the Company pursuant to Rule 424(b) or (c) of the regulations of the Commission under the 1933 Act differing from the prospectus included in the Registration Statement at the time it initially becomes effective, the term “Prospectus” shall refer to the prospectus filed pursuant to Rule 424(b) or (c) from and after the time said prospectus is filed with the Commission and shall include any supplements and amendments thereto from and after their dates of effectiveness or use, respectively.

In accordance with Article XI of the Pennsylvania Savings Association Code of 1967 and the applicable rules and regulations of the OTS, including, without limitation, 12 CFR Part 563b (collectively, the “Conversion Regulations”), the Bank has filed with the Department an

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Application for Conversion and with the OTS an application for conversion on Form AC, (such applications, as amended or supplemented form time to time, are hereinafter referred to as the “Conversion Applications”).

In connection with the Reorganization, the Company filed an application with the OTS on Form H-(e)1 (the “Holding Company Application,” and together with the Conversion Applications, the “Applications”) for approval to become a unitary savings and loan holding company under the Home Owners Loan Act of 1933, as amended, and the regulation, promulgated thereunder (“HOLA”).

Concurrently with the execution of this Agreement, the Company is delivering to the Agent copies of the Prospectus dated                 , 2007 of the Company to be used in the Subscription Offering and Community Offering (if any), and, if necessary, will deliver copies of the Prospectus and any prospectus supplement for use in a Syndicated Community Offering as defined in the Prospectus.

2. Appointment of Agent. Subject to the terms and conditions of this Agreement, the Primary Parties hereby appoint Agent to consult with and to advise and assist the Primary Parties with respect to the sale of the Conversion Shares in the Conversion Offerings.

On the basis of the representations and warranties of the Primary Parties contained in, and subject to the terms and conditions of, this Agreement the Agent accepts such appointment and agrees to consult with and advise the Company and the Bank as to the matters set forth in the letter agreement (“Letter Agreement”), dated May 30, 2006, between the Bank and Agent (a copy of which is attached hereto as Exhibit A). It is acknowledged by the Primary Parties that the Agent shall not be obligated to purchase any Shares and shall not be obligated to take any action which is inconsistent with any applicable law, regulation, decision or order. Except as provided in the last paragraph of this Section 2, the appointment of the Agent hereunder shall terminate upon consummation of the Offering.

If selected broker-dealers are used to assist in the sale of Conversion Shares in the Syndicated Community Offering, the Primary Parties hereby, subject to the terms and conditions of this Agreement, appoint the Agent to manage such broker-dealers in the Syndicated Community Offering. On the basis of the representations and warranties of the Primary Parties contained in, and subject to the terms and conditions of, this Agreement, the Agent accepts such appointment and agrees to manage the selling group of broker-dealers in the Syndicated Community Offering.

The Agent agrees to make available to the Company for a period of one year following the consummation of the Offering its Strategic Advisory Services (“STARS”) program. If the Bank elects to participate in the STARS program, the Agent will meet with the Bank at its request and will render general advice on the financial matters listed in Section 9 of the Letter Agreement (but not including (i) any in-depth merger and acquisition analyses or studies which are available under the Agent’s normal fee schedule, or (ii) advice with respect to a specific acquisition transaction by, or sale of, the Bank or the Company). If the Company elects to participate in the STARS program, the Agent will waive the regular retainer fee and hourly charges for the first one-year period. The Company would be required, however, to reimburse

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the Agent for its reasonable out-of-pocket expenses incurred in conjunction with the performance of these services. Such out-of-pocket expenses include travel, legal and other miscellaneous expenses. The Agent would not be permitted to incur any single expense in excess of $1,000 pursuant to this paragraph without the prior approval of the Company. If negotiations for a transaction conducted during the one-year period result in the execution of a definitive agreement and/or consummation of a transaction for which the Agent customarily would be entitled to a fee for its advisory or other investment banking services, the Agent shall receive a contingent advisory fee in accordance with the terms of a separate engagement letter to be entered into with respect to such transaction. Nothing in this Agreement shall require the Company to obtain such financial advisory services from the Agent. After the completion of such one-year period, if the parties wish to continue the relationship, a fee will be negotiated and an agreement with respect to specific advisory services will be entered into at that time.

3. Refund of Purchase Price. In the event that the Offering is not consummated for any reason, including but not limited to the inability to sell the Conversion Shares during the Offering (including any permitted extension thereof), this Agreement shall terminate and any persons who have subscribed for any of the Conversion Shares shall have refunded to them the full amount which has been received from such person, together with interest, if applicable, at the Bank’s current passbook savings rate, from the date payment is received to the date said refund is made as provided in the Prospectus. Upon termination of this Agreement, neither the Agent nor the Primary Parties shall have any obligation to the other except that (i) the Primary Parties shall remain liable for any amounts due pursuant to Sections 4, 8, 10 and 11 hereof, unless the transaction is not consummated due to the breach by the Agent of a warranty, representation or covenant; and (ii) the Agent shall remain liable for any amount due pursuant to Sections 10 and 11 hereof, unless the transaction is not consummated due to the breach by the Primary Parties of a warranty, representation or covenant.

4. Fees. In addition to the expenses specified in Section 8 hereof, as compensation for the Agent’s services under this Agreement, the Agent has received or will receive the following fees from the Primary Parties:

(a) A conversion and proxy vote advisory and administrative services fee in the amount of $50,000, of which $37,500 has been paid prior to the date hereof and the remaining $12,500 shall be payable at the Closing Date.

(b) A sales fee equal to 1.00% of the aggregate Purchase Price of the Conversion Shares sold in the Offering up to $100 million and .75% of the aggregate Purchase Price of the Conversion Shares sold in the Offering in excess of $100 million, in either case, other than those Shares sold pursuant to subparagraph (c) below. No fee shall be payable pursuant to this subsection in connection with the sale of Shares to officers, directors, employees or immediate family members (which term includes spouses, parents, siblings and children who live in the same house as the officer, director or employee) of such persons and qualified and non-qualified employee benefit plans of the Company and the Bank and the Charitable Shares to be issued to the Charitable Foundation.

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(c) A fee equal to 1.00% of the aggregate Purchase Price of the Conversion Shares sold by the Agent in any Syndicated Community Offering which fee along with the fee payable directly by the Company to assisting brokers (including Ryan Beck) will not exceed 6.00% of the aggregate dollar amount of common stock so sold. Assisting Brokers will not be utilized without the prior approval of the Primary Parties, and it is agreed that Agent will manage the Assisting Brokers in the Syndicated Offering.

In the event that the Company is required to resolicit subscribers for Shares in the Subscription and Community Offering and the Agent is required to provide significant additional services in connection with such a resolicitation, the Primary Parties and the Agent shall mutually agree to the dollar amount of additional fees due to the Agent, if any. Until any agreement called for by this paragraph is reached, the Agent shall not accrue expenses relating to any resolicitation in an amount that would cause the total expenses incurred by the Agent to be greater than as set forth in Section 8 hereof without the prior written consent of the Company or the Bank, which consent shall not be unreasonably withheld.

If this Agreement is terminated in accordance with the provisions of Sections 3, 9, or 13, and the sale of Shares is not consummated, the Agent shall not be entitled to receive the fee set forth in Sections 4(a)-(c), but the Agent will be entitled to payment of $25,000 for its conversion and proxy vote advisory services and the Primary Parties will reimburse the Agent for its reasonable expenses pursuant to Section 8.

5. Closing. If the minimum number of Conversion Shares required to be sold in the Offering on the basis of the most recently updated Appraisal (as defined in Section 6(g)) are subscribed for at or before the termination of the Offering, and the other conditions to the completion of the Offering are satisfied, the Company agrees to issue the Shares on the Closing Date (as hereinafter defined) against payment therefore by the means authorized by the Plan and to deliver certificates evidencing ownership of the Conversion Shares in such authorized denominations and registered in such names as may be indicated on the subscription order forms directly to the purchasers thereof as promptly as practicable after the Closing Date. The Closing shall be held at the offices of special counsel to the Primary Parties, or at such other place as shall be agreed upon among the Primary Parties and the Agent, at 10:00 a.m., Eastern Standard Time, on the business day selected by the Company which business day shall be no less than two business days following the giving of prior notice by the Company to the Agent or at such other time as shall be agreed upon by the Primary Parties and the Agent. At the Closing, the Primary Parties shall deliver to the Agent by wire transfer in same-day funds the commissions, fees and expenses owing as set forth in Sections 4 and 8 hereof and the opinions required hereby and other documents deemed reasonably necessary by the Agent shall be executed and delivered to effect the sale of the Shares as contemplated hereby and pursuant to the terms of the Prospectus; provided, however, that all out-of-pocket expenses to which the Agent is entitled under Section 8 hereof shall be due and payable upon receipt of the Company or the Bank of a written accounting therefor setting forth in reasonable detail the expenses incurred by the Agent. The hour and date upon which the Company shall release the Conversion Shares for delivery in accordance with the terms hereof is referred to herein as the “Closing Date.”

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The Agent shall have no liability to any party for the records or other information provided by the Company and the Bank (or their agents) to the Agent for use in allocating the Shares. Subject to the limitations of Section 10 hereof, the Company and the Bank shall indemnify and hold harmless the Agent for any liability arising out of the allocation of the Shares in accordance with (i) the Plan generally, and (ii) the records or other information provided to the Agent by the Company and the Bank (or their agents).

6. Representations and Warranties of the Primary Parties. The Primary Parties jointly and severally represent and warrant to the Agent that, except as disclosed in the Prospectus:

(a) The Bank has and, as of the Closing Date, Company will have all such power, authority, authorizations, approvals and orders as may be required to enter into this Agreement, to carry out the provisions and conditions hereof and to issue and sell the Shares as provided herein and as described in the Prospectus, subject to the various limitations and required approvals described therein. Subject to the receipt of corporator and regulatory approval, the consummation of the Conversion and the Reorganization, the execution, delivery and performance of this Agreement and the Letter Agreement and the consummation of the transactions herein contemplated have been duly and validly authorized by all necessary corporate action on the part of the Bank and, as of the Closing Date, will have been duly and validly authorized by all necessary corporate action on the part of the Company. This Agreement has been validly executed and delivered by the Company (in formation) and the Bank, and is a valid, legal and binding obligation of the Company and the Bank, enforceable in accordance with its terms, except to the extent, if any, that the provisions of Sections 10 and 11 hereof may be unenforceable as against public policy, and except to the extent that such enforceability may be limited by bankruptcy laws, insolvency laws, or other laws affecting the enforcement of creditors’ rights generally, or the rights of creditors of savings institutions insured by the FDIC (including the laws relating to the rights of the contracting parties to equitable remedies).

(b) The Plan has been approved by the Department and the OTS.

(c) The Registration Statement was declared effective by the Commission on                 , 2006, and no stop order has been issued with respect thereto and no proceedings therefore have been initiated or, to the best knowledge of the Primary Parties, threatened by the Commission. At the time the Registration Statement, including the Prospectus contained therein (including any amendment or supplement thereto), became effective, the Registration Statement complied as to form in all material respects with the 1933 Act and the regulations promulgated thereunder and the Registration Statement, including the Prospectus contained therein (including any amendment or supplement thereto), any Blue Sky Application or any Sales Information (as such terms are defined in Section 10 hereof) authorized by the Primary Parties for use in connection with the Offering did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in

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light of the circumstances under which they were made, not misleading, and at the time any Rule 424(b) or (c) Prospectus was filed with the Commission and at the Closing Date referred to in Section 5, the Registration Statement, including the Prospectus contained therein (including any amendment or supplement thereto), and any Blue Sky Application or any Sales Information authorized by the Primary Parties for use in connection with the Offering will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this Section 6(c) shall not apply to statements or omissions made in reliance upon and in conformity with written information furnished to the Primary Parties by the Agent expressly regarding the Agent for use under the captions “Market for the Common Stock” and “The Conversion – “Marketing and Distribution; Compensation;”“ or written statements or omissions from any Blue Sky Application or any Sales Information.

(d) At the time of filing the Registration Statement relating to the offering of the Shares and at the date hereof, the Company was not, and is not, an ineligible issuer, as defined in Rule 405. At the time of the filing of the Registration Statement and at the time of the use of any issuer free writing prospectus, as defined in Rule 433(h), the Company met the conditions required by Rules 164 and 433 for the use of a free writing prospectus. If required to be filed, the Company has filed any issuer free writing prospectus related to the offered Shares at the time it is required to be filed under Rule 433 and, if not required to be filed, will retain such free writing prospectus in the Company’s records pursuant to Rule 433(g) and if any issuer free writing prospectus is used after the date hereof in connection with the offering of the Shares the Company will file or retain such free writing prospectus as required by Rule 433.

(e) As of the Applicable Time, neither (i) the Issuer-Represented General Free Writing Prospectus(es) issued at or prior to the Applicable Time and the Statutory Prospectus, all considered together (collectively, the “General Disclosure Package”), nor (ii) any individual Issuer-Represented Limited-Use Free Writing Prospectus, when considered together with the General Disclosure Package, included any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from any Prospectus included in the Registration Statement relating to the offered Shares or any Issuer-Represented Free Writing Prospectus based upon and in conformity with written information furnished to the Company by the Agent specifically for use therein. As used in this paragraph and elsewhere in this Agreement:

(i) “Applicable Time” means each and every date when a potential purchaser submitted a subscription or otherwise committed to purchase Shares.

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(ii) “Statutory Prospectus” as of any time, means the Prospectus relating to the offered Shares that is included in the Registration Statement relating to the offered Shares immediately prior to that time, including any document incorporated by reference therein.

(iii) “Issuer-Represented Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in Rule 433(h), relating to the offered Shares that is required to be filed with the Commission by the Company or required to be filed with the Commission. The term does not include any writing exempted from the definition of prospectus pursuant to clause (g) of Section 2(a)(10) of the 1933 Act, without regard to Rule 172 or Rule 173.

(iv) “Issuer-Represented General Free Writing Prospectus” means any Issuer-Represented Free Writing Prospectus that is intended for general distribution to prospective investors, as evidenced by its being specified in Exhibit B to this Agreement.

(v) “Issuer-Represented Limited-Use Free Writing Prospectus” means any Issuer-Represented Free Writing Prospectus that is not an Issuer-Represented General Free Writing Prospectus. The term Issuer-Represented Limited-Use Free Writing Prospectus also includes any “bona fide electronic road show,” as defined in Rule 433, that is made available without restriction pursuant to Rule 433(d)(8)(ii) or otherwise, even though not required to be filed with the Commission.

(f) Each Issuer-Represented Free Writing Prospectus, as of its date of first use and at all subsequent times through the completion of the Offering and sale of the offered Shares or until any earlier date that the Company notified or notifies the Agent (as described in the next sentence), did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in the Registration Statement relating to the offered Shares, including any document incorporated by reference therein that has not been superseded or modified. If at any time following the date of first use of an Issuer-Represented Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer-Represented Free Writing Prospectus conflicted or would conflict with the information contained in the Registration Statement relating to the offered Shares or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading, the Company has notified or will notify promptly the Agent so that any use of such Issuer-Represented Free-Writing Prospectus may cease until it is amended or supplemented and the Company has promptly amended or will promptly amend or supplement such Issuer-Represented Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission. The foregoing two sentences do not apply to statements in or omissions from any Issuer-Represented Free Writing Prospectus based upon

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and in conformity with written information furnished to the Company by the Agent specifically for use therein.

(g) The Conversion Applications were approved by the Department on             , 2006 and the OTS on             , 2006. The Conversion Applications did and will comply as to form in all material respects with all applicable rules and regulations of the Department and the OTS, as applicable. On the Closing Date, the Conversion will have been completed. At the time of the approvals and at all times subsequent thereto until the Closing Date, each of the Conversion Applications and the Prospectus (including any amendment or supplement thereto), did not and does not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that representations or warranties in this subsection (g) shall not apply to statements or omissions made in reliance upon and in conformity with written information furnished to the Primary Parties by the Agent expressly regarding the Agent for use in Prospectus under the captions “Market for the Common Stock” and “The Conversion – Marketing and Distribution; Compensation” or written statements or omissions from any Blue Sky Applications or any Sales Information.

(h) No order has been issued by the Department or the OTS, or any other state or federal regulatory authority, preventing or suspending the use of the Prospectus and no action by or before any such government entity to revoke any approval, authorization or order of effectiveness related to the Reorganization is pending or, to the best knowledge of the Primary Parties, threatened.

(i) The Plan has been duly adopted by the Board of Directors of the Bank. To the best knowledge of the Primary Parties, no person has, or at the Closing Date will have, sought to obtain review of the final action of any state or federal regulatory authority in approving the Plan, the Conversion, the Reorganization, or the Applications, pursuant to HOLA or any other statute or regulation.

(j) The Company has filed the Holding Company Application with the OTS and as of the Closing Date, the OTS will have approved the Company’s acquisition of the Bank.

(k) RP Financial, LC., which prepared the appraisal of the aggregate pro forma market value of the Bank on which the Offering was based (the “Appraisal”), has advised the Primary Parties in writing that it is independent with respect to each of the Primary Parties within the meaning of the Conversion Regulations.

(l) S.R. Snodgrass A.C., which certified the financial statements filed as part of the Registration Statement, has advised the Primary Parties that it is, with respect to each of the Primary Parties, an independent certified public accountant under the 1933 Act and the regulations promulgated thereunder.

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(m) The financial statements and the notes thereto which are included in the Registration Statement and which are a part of the Prospectus present fairly the financial condition and retained earnings of the Bank as of the dates indicated and the results of operations and cash flows for the periods specified. The financial statements comply in all material respects with the applicable accounting requirements of Title 12 of the Code of Federal Regulations, Regulation S-X of the Commission and accounting principles generally accepted in the United States of America (“GAAP”) applied on a consistent basis during the periods presented except as otherwise noted therein, and present fairly in all material respects the information required to be stated therein. The other financial, statistical and pro forma information and related notes included in the Prospectus present fairly the information shown therein on a basis consistent with the audited and unaudited financial statements included in the Prospectus, and as to the pro forma adjustments, the adjustments made therein have been properly applied on the basis described therein.

(n) Since September 30, 2006, other than as disclosed in the Prospectus: (i) there has not been any material adverse change in the financial condition or in the earnings, capital, properties or business affairs of any of the Primary Parties or of the Primary Parties considered as one enterprise, whether or not arising in the ordinary course of business; (ii) there has not been any material change in total assets of the Bank, any material increase in the aggregate amount of loans past due ninety (90) days or more, or any real estate acquired by foreclosure or loans characterized as “in substance foreclosure;” nor has the Bank or the Company issued any securities or incurred any liability or obligation for borrowings other than in the ordinary course of business; and (iii) there have not been any material transactions entered into by any of the Primary Parties, other than those in the ordinary course of business. The capitalization, liabilities, assets, properties and business of the Primary Parties conform in all material respects to the descriptions thereof contained in the Prospectus and none of the Primary Parties has any material liabilities of any kind, contingent or otherwise, except as disclosed in Registration Statement or the Prospectus.

(o) The Company is a corporation duly organized and validly existing under the laws of the Commonwealth of Pennsylvania, with corporate power and authority to own its properties and to conduct its business as described in the Prospectus, and will be qualified to transact business and in good standing in each jurisdiction in which the conduct of business requires such qualification unless the failure to qualify in one or more of such jurisdictions would not have a material adverse effect on the financial condition, results of operations, capital, properties, business affairs or prospects of the Primary Parties taken as a whole (a “Material Adverse Effect”). As of the Closing Date, the Company will have obtained all licenses, permits and other governmental authorizations required for the conduct of its business, except those that individually or in the aggregate would not have a Material Adverse Effect; and all such licenses, permits and governmental authorizations are in full force and effect, and the Company will be in compliance therewith in all material respects.

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(p) The Bank is a duly organized and validly existing Pennsylvania-chartered savings association in mutual form, and, upon completion of the Reorganization, will become a duly organized and validly existing Pennsylvania-chartered savings association in stock form, in both instances duly authorized to conduct its business as described in the Prospectus; the activities of the Bank are permitted by the rules, regulations and practices of the Department and the FDIC; the Bank has obtained all licenses, permits and other governmental authorizations currently required for the conduct of its business except those that individually or in the aggregate would not materially adversely affect the financial condition of the Primary Parties taken as a whole; all such licenses, permits and other governmental authorizations are in full force and effect and the Bank is and, as of the Closing Date will be, in good standing under the laws of the Commonwealth of Pennsylvania; all of the issued and outstanding capital stock of the Bank will be duly and validly issued and fully paid and nonassessable; and as of the Closing Date, the Company will directly own all of such capital stock free and clear of any mortgage, pledge, lien, encumbrance, claim or restriction. The Bank does not own equity securities or any equity interest in any other business enterprise except as otherwise described in the Prospectus.

(q) The Bank is a member of the Federal Home Loan Bank of Pittsburgh (“FHLB of Pittsburgh”), and the deposit accounts of the Bank are insured by the FDIC up to applicable limits. Upon consummation of the Conversion and Reorganization, the Bank will establish a liquidation account for the benefit of the Bank’s depositors, in accordance with the Plan and the requirements of applicable Conversion Regulations.

(r) Prior to completion of the Reorganization, the Bank is not authorized to issue any shares of Common Stock.

(s) The Charitable Foundation has been duly authorized and incorporated and is validly existing as a non-stock corporation in good standing under the laws of the State of Delaware with corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus; and no approvals are required to establish the Charitable Foundation and to contribute the shares of Common Stock thereto as described in the Prospectus other than those imposed by the Department or the OTS. The issuance of the Charitable Shares to the Charitable Foundation pursuant to the Plan has been registered pursuant to the Registration Statement.

(t) Upon consummation of the Reorganization, the authorized, issued and outstanding equity capital of the Company will be within the range set forth in the Prospectus under the caption “Capitalization;” no shares of Common Stock have been or will be issued and outstanding prior to the Closing Date; and the shares of Common Stock to be subscribed for in the Offering and the Charitable Shares issued to the Charitable Foundation have been duly and validly authorized for issuance and, when issued and delivered by the Company pursuant to the Plan against payment of the consideration (or contributed to the Charitable Foundation

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as it relates to the Charitable Shares) calculated as set forth in the Plan and the Prospectus, will be duly and validly issued and fully paid and nonassessable; the issuance of the Shares and the Charitable Shares are not subject to preemptive rights, except for the Subscription Rights granted to the Shares pursuant to the Plan; and the terms and provisions of the shares of Common Stock will conform in all material respects to the description thereof contained in the Prospectus. Upon issuance of the Shares and the Charitable Shares, good title to the Shares and the Charitable Shares will be transferred from the Company to the purchasers of Shares and the Charitable Foundation against payment therefor (or contributed to the Charitable Foundation as it relates to the Charitable Shares) in the Offering as set forth in the Plan and the Prospectus.

(u) The Bank is not and, as of the Closing Date, the Company will not be in violation of their respective charter or their respective bylaws, or in material default in the performance or observance of any obligation, agreement, covenant, or condition contained in any contract, lease, loan agreement, indenture or other instrument to which they are a party or by which they, or any of their respective property, may be bound which would result in a material adverse change in the condition (financial or otherwise), earnings, capital, properties or assets. The consummation of the transactions herein contemplated will not (i) conflict with or constitute a breach of, or default under, the charter or bylaws of the Bank and, as of the Closing Date, the Company, or materially conflict with or constitute a material breach of, or default under, any material contract, lease or other instrument to which any of the Primary Parties has a beneficial interest, or any applicable law, rule, regulation or order that is material to the financial condition of the Bank; (ii) violate any authorization, approval, judgment, decree, order, statute, rule or regulation applicable to the Primary Parties except for such violations which would not have a material adverse effect on the financial condition and results of operations of the Bank; or (iii) result in the creation of any material lien, charge or encumbrance upon any property of the Primary Parties.

(v) No material default exists, and no event has occurred which with notice or lapse of time, or both, would constitute a material default on the part of any of the Primary Parties, in the due performance and observance of any term, covenant or condition of any indenture, mortgage, deed of trust, note, bank loan or credit agreement or any other material instrument or agreement to which any of the Primary Parties is a party or by which any of them or any of their property is bound or affected in any respect which, in any such case, is material to the Primary Parties individually or considered as one enterprise, and such agreements are in full force and effect; and no other party to any such agreements has instituted or, to the best knowledge of the Primary Parties, threatened any action or proceeding wherein any of the Primary Parties is alleged to be in default thereunder under circumstances where such action or proceeding, if determined adversely to any of the Primary Parties, would have a material adverse effect upon the Primary Parties individually or considered as one enterprise.

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(w) The Primary Parties have good and marketable title to all assets which are material to the businesses of the Primary Parties and to those assets described in the Prospectus as owned by them, free and clear of all material liens, charges, encumbrances, restrictions or other claims, except such as are described in the Prospectus or which do not have a Material Adverse Effect on the businesses of the Primary Parties taken as a whole; and all of the leases and subleases which are material to the businesses of the Primary Parties, as described in the Registration Statement or Prospectus, are in full force and effect.

(x) The Primary Parties are not in material violation of any directive from the Department, the OTS, the Commission, or any other agency to make any material change in the method of conducting their respective businesses; the Primary Parties have conducted and are conducting their respective businesses so as to comply in all respects with all applicable statutes and regulations (including, without limitation, regulations, decisions, directives and orders of the Department, the OTS, and the Commission, except where the failure to so comply would not reasonably be expected to result in any Material Adverse Effect on the Primary Parties considered as one enterprise and there is no charge, investigation, action, suit or proceeding before or by any court, regulatory authority or governmental agency or body pending or, to the best knowledge of any of the Primary Parties, threatened, which would reasonably be expected to materially and adversely affect the Reorganization and the Offering, the performance of this Agreement, or the consummation of the transactions contemplated in the Plan as described in the Registration Statement, or which would reasonably be expected to result in any Material Adverse Effect.

(y) The Primary Parties have received an opinion of their special counsel, Luse Gorman Pomerenk & Schick, P.C., with respect to the federal income tax consequences and the Commonwealth of Pennsylvania income tax consequences of the Reorganization, as described in the Registration Statement and the Prospectus; and the facts and representations upon which such opinions are based are truthful, accurate and complete, and none of the Primary Parties will take any action inconsistent therewith.

(z) The Bank has timely filed or extended all required federal and state tax returns, has paid all taxes that have become due and payable in respect of such returns, except where permitted to be extended, has made adequate reserves for similar future tax liabilities, and no deficiency has been asserted with respect thereto by any taxing authority.

(aa) No approval, authorization, consent or other order of any regulatory or supervisory or other public authority is required for the execution and delivery by the Primary Parties of this Agreement, or the issuance of the Shares or the Charitable Shares, except for the approval of the Department, the OTS, and the Commission (which will have been received as of the Closing Date) and any necessary qualification, notification, or registration or exemption under the securities or blue sky laws of the various states in which the Shares are to be offered.

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(bb) To the knowledge of the Company, there are no affiliations or associations (as such terms are defined by the NASD) between any member of the NASD and any director or officer of any of the Primary Parties. None of the Primary Parties has: (i) issued any securities within the last 18 months (except for (a) notes to evidence bank loans or other liabilities in the ordinary course of business or as described in the Prospectus, and (b) shares of Common Stock issued in connection with the Company’s initial capitalization); (ii) had any dealings with respect to sales of securities within the 12 months prior to the date hereof with any member of the NASD, or any person related to or associated with such member, other than discussions and meetings relating to the Offering and purchases and sales of U.S. government and agency and other securities in the ordinary course of business; (iii) entered into a financial or management consulting agreement except for the Letter Agreement and as contemplated hereunder; or (iv) engaged any intermediary between the Agent and the Primary Parties in connection with the Offering, and no person is being compensated in any manner for such services.

(cc) Neither the Primary Parties nor, to the best knowledge of the Primary Parties, any employee of the Primary Parties, has made any payment of funds of the Primary Parties as a loan to any person for the purchase of Conversion Shares, except for the Company’s loan to the ESOP, the proceeds of which will be used to purchase Conversion Shares, or has made any other payment of funds prohibited by law, and no funds have been set aside to be used for any payment prohibited by law.

(dd) The Bank complies in all material respects with the applicable financial record keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, and the regulations and rules thereunder.

(ee) The Primary Parties have not relied upon Agent or its counsel for any legal, tax or accounting advice in connection with the Reorganization.

(ff) The records of Eligible Account Holders, Supplemental Eligible Account Holders and Other Members are accurate and complete in all material respects.

(gg) The Primary Parties comply in all material respects with all laws, rules and regulations relating to environmental protection, and none of them has been notified or is otherwise aware that any of them is potentially liable, or is considered potentially liable, under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, or any other federal, state or local environmental laws and regulations; no action, suit, regulatory investigation or other proceeding is pending, or to the knowledge of the Primary Parties, threatened against the Primary Parties relating to environmental protection, nor do the Primary Parties have any reason to believe any such proceedings may be brought against any of them; and no disposal, release or discharge of hazardous or toxic substances, pollutants or contaminants, including

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petroleum and gas products, as any of such terms may be defined under federal, state or local law, has occurred on, in, at or about any facilities or properties owned or leased by any of the Primary Parties or, to the best knowledge of the Primary Parties, in which the Bank has a security interest.

(hh) All of the loans represented as assets in the most recent financial information of the Bank included in the Prospectus meet or are exempt from all requirements of federal, state and local law pertaining to lending, including, without limitation, truth in lending (including the requirements of 12 C.F.R. Part 226 (Regulation Z)), real estate settlement procedures, consumer credit protection, equal credit opportunity and all disclosure laws applicable to such loans, except for violations which, if asserted, would not result in a material adverse effect on the financial condition, results of operations or business of the Primary Parties taken as a whole.

(ii) None of the Primary Parties are required to be registered as an investment company under the Investment Company Act of 1940.

(jj) As of the date hereof, the articles of incorporation of the Company have been filed with the Secretary of the Commonwealth of Pennsylvania, and are effective and in force.

(kk) The Primary Parties have taken all actions necessary to obtain at the Closing Date a Blue Sky Memorandum from Luse Gorman Pomerenck & Schick, P.C..

Any certificates signed by an officer of any of the Primary Parties and delivered to the Agent or its counsel that refer to this Agreement shall be deemed to be a representation and warranty by the Primary Parties to the Agent as to the matters covered thereby with the same effect as if such representation and warranty were set forth herein.

Section 6B. Representations and Warranties of the Agent. Agent represents and warrants to the Primary Parties that:

(a) Agent is a corporation and is validly existing in good standing under the laws of the State of New Jersey with full power and authority to provide the services to be furnished to the Primary Parties hereunder.

(b) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary action on the part of Agent, and this Agreement and the Letter Agreement is the legal, valid and binding agreement of Agent, enforceable in accordance with its terms except as the legality, validity, binding nature and enforceability thereof may be limited by (i) bankruptcy, insolvency, moratorium, conservatorship, receivership or other similar laws relating to or affecting the enforcement of creditors’ rights generally; (ii) general equity principles regardless of whether such enforceability is considered in a proceeding in equity or at law; and (iii) the extent, if any, that the provisions of Sections 10 or 11 hereof may be unenforceable as against public policy.

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(c) Each of Agent and its employees, agents and representatives who shall perform any of the services hereunder shall have, and until the Reorganization is completed or terminated shall maintain all licenses, approvals and permits necessary to perform such services.

(d) No action, suit, charge or proceeding before the Commission, the NASD, any state securities commission or any court is pending, or to the knowledge of Agent threatened, against Agent which, if determined adversely to Agent, would have a material adverse effect upon the ability of Agent to perform its obligations under this Agreement.

(e) Agent is registered as a broker/dealer pursuant to Section 15(b) of the 1934 Act and is a member of the National Association of Securities Dealers, Inc.

(f) Any funds received in the Offering by the Agent will be handled by the Agent in accordance with Rule 15c2-4 under the Securities Exchange Act of 1934, as amended (the “1934 Act”) to the extent applicable.

7. Covenants of the Primary Parties. The Primary Parties hereby jointly and severally covenant with the Agent as follows:

(a) The Company will not, at any time after the date the Registration Statement is declared effective, file any amendment or supplement to the Registration Statement without providing the Agent and its counsel an opportunity to review such amendment or supplement or file any amendment or supplement to which amendment or supplement the Agent or its counsel shall reasonably object. The Company will furnish promptly to the Agent and its counsel copies of all correspondence from the Commission with respect to the Registration Statement and the Company’s responses thereto.

(b) The Company represents and agrees that, unless it obtains the prior consent of the Agent and the Agent represents and agrees that, unless it obtains the prior consent of the Company, it has not made and will not make any offer relating to the offered Shares that would constitute an “issuer free writing prospectus,” as defined in Rule 433, or that would constitute a “free writing prospectus,” as defined in Rule 405, required to be filed with the Commission. Any such free writing prospectus consented to by the Company and the Agent is hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company represents that it has treated or agrees that it will treat each Permitted Free Writing Prospectus as an “issuer free writing prospectus,” as defined in Rule 433, and has complied and will comply with the requirements of Rule 433 applicable to any Permitted Free Writing Prospectus, including timely Commission filing where required, legending and record keeping. The Company need not treat any communication as a free writing prospectus if it is exempt from the definition of prospectus pursuant to Clause (a) of Section 2(a)(10) of the 1933 Act without regard to Rule 172 or 173.

(c) The Primary Parties will not, at any time after the date the Applications are approved, file any amendment or supplement to such Applications without

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providing the Agent and its counsel an opportunity to review such amendment or supplement or file any amendment or supplement to which amendment or supplement the Agent or its counsel shall reasonably object. The Primary Parties will furnish promptly to the Agent and its counsel copies of all correspondence from the Department or the OTS with respect to the Applications and the Primary Parties’ responses thereto.

(d) The Primary Parties will use their best efforts to cause the OTS to approve the Company’s acquisition of the Bank and will use their best efforts to cause any post-effective amendment to the Registration Statement to be declared effective by the Commission and any post-effective amendment to the Applications to be approved by the Department or the OTS, as applicable, and will immediately upon receipt of any information concerning the events listed below notify the Agent (i) when the Registration Statement, as amended, has become effective; (ii) when each of the Applications, as amended, have been approved by the Department or the OTS, as applicable; (iii) of the receipt of any comments from the Commission or any other governmental entity with respect to the Reorganization or the transactions contemplated by this Agreement; (iv) of any request by the Commission, the Department, the OTS, or any other governmental entity for any amendment or supplement to the Registration Statement or the Applications or for additional information; (v) of the issuance by the Commission, the Department, the OTS, or any other governmental agency of any order or other action suspending the Conversion, the Reorganization or the Offering or the use of the Registration Statement or the Prospectus or any other filing of the Primary Parties under the Conversion Regulations or the Conversion Regulations or other applicable law, or the threat of any such action; or (vi) of the issuance by the Commission, the Department, the OTS, or any Bank authority of any stop order suspending the effectiveness of the Registration Statement or of the initiation or threat of initiation or threat of any proceedings for that purpose. The Primary Parties will make every reasonable effort to prevent the issuance by the Commission, the Department, the OTS, or any other state or federal authority of any order referred to in (v) and (vi) above and, if any such order shall at any time be issued, to obtain the lifting thereof at the earliest possible time.

(e) The Primary Parties will deliver to the Agent and to its counsel conformed copies of each of the following documents, with all exhibits: the Conversion Applications and the Holding Company Application, each as originally filed and each amendment or supplement thereto; and the Registration Statement, as originally filed and each amendment thereto. Further, the Primary Parties will deliver such additional copies of the foregoing documents to counsel to the Agent as may be required for any NASD filings. In addition, the Primary Parties will also deliver to the Agent such number of copies of the Prospectus, as amended or supplemented, as the Agent may reasonably request.

(f) The Primary Parties will comply in all material respects with any and all terms, conditions, requirements and provisions with respect to the Reorganization and the transactions contemplated thereby imposed by the Commission, by applicable

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state law and regulations, and by the 1933 Act, the 1934 Act, and the rules and regulations of the Commission promulgated under such statutes, to be complied with prior to or subsequent to the Closing Date; and when the Prospectus is required to be delivered, the Primary Parties will comply in all material respects, at their own expense, with all material requirements imposed upon them by the Department, the OTS, the Conversion Regulations (except as modified or waived in writing by the Department, or the OTS, as applicable), the Commission, by applicable state law and regulations and by the 1933 Act, the 1934 Act and the rules and regulations of the Commission promulgated under such statutes, in each case as from time to time in force, so far as necessary to permit the continuance of sales or dealing in shares of Common Stock during such period in accordance with the provisions hereof and the Prospectus.

(g) The Primary Parties will also comply with any conditions imposed by the Department or the OTS in connection with the establishment and operation of the Charitable Foundation and use their best efforts to ensure that the Charitable Foundation submits within the time frames required by applicable law a request to the Internal Revenue Service to be recognized as a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code; the Primary Parties will take no action which will result in the possible loss of the Charitable Foundation’s tax exempt status; and none of the Primary Parties will contribute any additional assets to the Charitable Foundation until such time that such additional contributions will be deductible for federal and state income tax purposes.

(h) Each of the Primary Parties will inform the Agent of any event or circumstances of which it is or becomes aware as a result of which the Registration Statement and/or Prospectus, as then supplemented or amended, would include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading. If it is necessary, in the reasonable opinion of counsel for the Primary Parties, to amend or supplement the Registration Statement or the Prospectus in order to correct such untrue statement of a material fact or to make the statements therein not misleading in light of the circumstances existing at the time of their use, the Primary Parties will, at their expense, prepare, file with the Commission, the Department or the OTS, as necessary under applicable federal and state rules and regulations, and furnish to the Agent, a reasonable number of copies of an amendment or amendments of, or a supplement or supplements to, the Registration Statement and the Prospectus (in form and substance reasonably satisfactory to counsel for the Agent after a reasonable time for review) which will amend or supplement the Registration Statement and/or the Prospectus so that as amended or supplemented it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at the time, not misleading. For the purpose of this subsection, each of the Primary Parties will furnish such information with respect to itself as the Agent may from time to time reasonably request.

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(i) Pursuant to the terms of the Plan, the Company will endeavor in good faith, in cooperation with the Agent, to register or to qualify the Shares for offer and sale or to exempt such Shares from registration and to exempt the Company and its officers, directors and employees from registration as broker-dealers, under the applicable securities laws of the jurisdictions in which the Offering will be conducted; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation to do business in any jurisdiction in which it is not so qualified. In each jurisdiction where any of the Shares shall have been registered or qualified as above provided, the Company will make and file such statements and reports in each year as are or may be required by the laws of such jurisdictions.

(j) The Company will not sell or issue, contract to sell or otherwise dispose of, for a period of 90 days after the date hereof, without the Agent’s prior written consent, which consent shall not be unreasonably withheld, any shares of Common Stock other than in connection with any plan or arrangement described in the Prospectus.

(k) For the period of three years from the date of this Agreement, the Company will furnish to the Agent upon request (i) a copy of each report of the Company furnished to or filed with the Commission under the 1934 Act or any national securities exchange or system on which any class of securities of the Company is listed or quoted, (ii) a copy of each report of the Company mailed to holders of Common Stock or non-confidential report filed with the Commission, the Department, the OTS or any other supervisory or regulatory authority or any national securities exchange or system on which any class of the securities of the Company is listed or quoted, (iii) each press release and material news item and article released by the Company and/or Bank, and (iv) from time-to-time, such other publicly available information concerning the Primary Parties as the Agent may reasonably request.

(l) The Primary Parties will use the net proceeds from the sale of the Common Stock in the manner set forth in the Prospectus under the caption “Use of Proceeds.”

(m) The Company will distribute the Prospectus or other offering materials in connection with the offering and sale of the Common Stock only in accordance with the Conversion Regulations, the 1933 Act and the 1934 Act and the rules and regulations promulgated under such statutes, and the laws of any state in which the shares are qualified for sale.

(n) Prior to the Closing Date, the Company shall register its Common Stock under Section 12(g) of the 1934 Act, as amended, and will request that such registration statement be effective upon completion of the Reorganization. The Company shall maintain the effectiveness of such registration for not less than three years or such shorter period as permitted by the Department and the OTS.

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(o) For so long as the Common Stock is registered under the 1934 Act, the Company will furnish to its stockholders after the end of each fiscal year, in the time periods prescribed by applicable law and regulations, such reports and other information as are required to be furnished to its stockholders under the 1934 Act (including consolidated financial statements of the Company and its subsidiaries, certified by independent public accountants).

(p) The Company will report the use of proceeds of the Offering in accordance with Rule 463 under the 1933 Act.

(q) The Primary Parties will maintain appropriate arrangements for depositing all funds received from persons mailing subscriptions for or orders to purchase Conversion Shares on an interest bearing basis at the rate described in the Prospectus until the Closing Date and satisfaction of all conditions precedent to the release of the Company’s obligation to refund payments received from persons subscribing for or ordering Conversion Shares in the Conversion Offerings, in accordance with the Plan as described in the Prospectus, or until refunds of such funds have been made to the persons entitled thereto or withdrawal authorizations canceled in accordance with the Plan and as described in the Prospectus. The Primary Parties will maintain, together with the Agent, such records of all funds received to permit the funds of each subscriber to be separately insured by the FDIC (to the maximum extent allowable) and to enable the Primary Parties to make the appropriate refunds of such funds in the event that such refunds are required to be made in accordance with the Plan and as described in the Prospectus.

(r) The Primary Parties will take such actions and furnish such information as are reasonably requested by the Agent in order for the Agent to ensure compliance with Rule 2790 of the National Association of Securities Dealers, Inc. (“NASD”).

(s) The Primary Parties will conduct their businesses in compliance in all material respects with all applicable federal and state laws, rules, regulations, decisions, directives and orders including, all decisions, directives and orders of the Commission, the Department and the OTS.

(t) The Company and the Bank shall comply with any and all terms, conditions, requirements and provisions with respect to the Reorganization and the establishment and operation of the Charitable Foundation and the transactions contemplated thereby imposed by the Department, the OTS, the HOLA, the Commission, the 1933 Act, the Conversion Regulations, the Exchange Act and the regulations promulgated by the Commission pursuant to the Exchange Act to be complied with subsequent to the Closing Date. The Company will comply with all provisions of all undertakings contained in the Registration Statement.

(u) The Primary Parties will not amend the Plan without notifying the Agent prior thereto.

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(v) The Company shall provide the Agent with any information necessary to assist with the allocation of the Conversion Shares in the event of an oversubscription, and such information shall be accurate and reliable in all material respects.

(w) The Company will not deliver the Shares until the Primary Parties have satisfied or caused to be satisfied each condition set forth in Section 9 hereof, unless such condition is waived in writing by the Agent.

(x) Immediately upon completion of the sale by the Company of the Shares contemplated by the Plan and the Prospectus, (i) all of the issued and outstanding shares of capital stock of the Bank shall be owned by the Company, (ii) the Company shall have no direct subsidiaries other than the Bank, and (iii) the Reorganization shall have been effected in accordance with all applicable statutes, regulations, decisions and orders; and all terms, conditions, requirements and provisions with respect to the Reorganization (except those that are conditions subsequent) imposed by the Commission, the Department, the OTS, or any other governmental agency, if any, shall have been complied with by the Primary Parties in all material respects or appropriate waivers shall have been obtained and all notice and waiting periods shall have been satisfied, waived or elapsed.

(y) Prior to the Closing Date, the Plan shall have been approved by the eligible voting members of the Bank in accordance with the Conversion Regulations and the provisions of the Bank’s charter and bylaws.

(z) As of the Closing Date, the Primary Parties shall have completed all conditions precedent to the Reorganization (including the Conversion) in accordance with the Plan and shall have complied, in all material respects with the Conversion Regulations and with any other applicable laws, regulations (except as modified or waived in writing by the Department or the OTS), decisions and orders, including all terms, conditions, requirements and provisions precedent to the Reorganization imposed upon any of the Primary Parties by the Department, the OTS or any other regulatory authority as set forth in correspondence received from the Department, the OTS or any other regulatory authority.

(aa) On or before the Closing Date, the Primary Parties will have completed all conditions precedent to the Offering specified in the Plan and the offer and sale of the Shares will have been conducted in all material respects in accordance with the Plan, the Conversion Regulations (except as modified or waived in writing by the Department) and with all other applicable laws, regulations, decisions and orders, including all terms, conditions, requirements and provisions precedent to the Offering imposed upon any of the Primary Parties by the Department, the OTS, the Commission or any other regulatory authority and in the manner described in the Prospectus.

(bb) The Company shall notify the Agent when funds shall have been received for the minimum number of shares of the Common Stock.

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8. Payment of Expenses. Whether or not the Reorganization is completed or is consummated, the Primary Parties will pay for all expenses incident to the performance of this Agreement, including without limitation: (a) the preparation and filing of the Applications; (b) the preparation, printing, filing, delivery and shipment of the Registration Statement, including the Prospectus, and all amendments and supplements thereto; (c) all filing fees and expenses in connection with the qualification or registration of the Shares for offer and sale by the Company under the securities or “blue sky” laws, including without limitation filing fees, reasonable legal fees and disbursements of counsel in connection therewith, and in connection with the preparation of a blue sky law survey; (d) the filing fees of the NASD; (e) fees and expenses related to the preparation of the independent appraisal; and (f) the reasonable expenses of the Agent. Notwithstanding the foregoing, the Primary Parties shall not be required to reimburse Agent for more than $75,000 in legal fees (other than such fees as shall be related to “blue sky” matters and other than legal out of pocket expenses), except with the prior approval of the Primary Parties. In the Subscription Offering and the Community Offering, the Agent will not incur reimbursable out of pocket expenses in excess of $20,000 without the consent of the Primary Parties. In the event that the Agent incurs any expenses on behalf of the Primary Parties, the Primary Parties will pay or reimburse the Agent for such expenses regardless of whether the Conversion is successfully completed, and such reimbursements will not be included in the expense limitations set forth above. The Agent will not incur any single out-of-pocket expense of more than $1,000 pursuant to this paragraph without the prior approval of the Company or the Bank. The Primary Parties acknowledge, however, that expense caps may be increased by the mutual consent of the Primary Parties and the Agent in the event of delay in the Offering requiring the Agent to utilize a Syndicated Community Offering, a delay as a result of circumstances requiring material additional work by the Agent or its counsel or an update of the financial information contained in the Registration Statement, as amended or supplemented, to reflect a period later than that set forth in the financial statements included in the original Registration Statement. Not later than two days prior to the Closing Date, the Agent will provide the Bank with a detailed accounting of all reimbursable expenses to be paid at the Closing.

9. Conditions to the Agent’s Obligations. The obligations of the Agent hereunder and the occurrence of the Closing and the Reorganization are subject to the condition that all representations and warranties and other statements of the Primary Parties herein contained are, at and as of the commencement of the Offering and at and as of the Closing Date, true and correct, the condition that the Primary Parties shall have performed all of their obligations hereunder to be performed on or before such dates and to the following further conditions:

(a) The Conversion shall have been approved by the Department and the OTS. The Registration Statement shall have been declared effective by the Commission, the Holding Company Application shall have been approved by the OTS, and no stop order or other action suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act or proceedings therefore initiated or, to any of the Primary Parties’ best knowledge, threatened by the Commission or any state authority and no order or other action suspending the authorization for use of the Prospectus or the consummation of the Reorganization shall have been issued or proceedings therefore initiated or, to any of the Primary Parties’ best knowledge, threatened by the Department, the OTS, the Commission, or any other governmental body.

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(b) At the Closing Date, the Agent shall have received:

(1) The favorable opinion, dated as of the Closing Date, of Luse Gorman Pomerenk & Schick, P.C., and/or local counsel acceptable to the Agent in form and substance satisfactory to counsel for the Agent to the effect that:

(i) The Company is a corporation duly organized and validly existing under the laws of the Commonwealth of Pennsylvania, with corporate power and authority to own its properties and to conduct its business as described in the Prospectus, and will be duly qualified to transact business and will be in good standing in each jurisdiction in which the conduct of its business requires such qualification and in which the failure to qualify would have a Material Adverse Effect.

(ii) The Bank is a duly organized and validly existing Pennsylvania-chartered savings association in mutual form and, following the Conversion, will be a duly organized and validly existing Pennsylvania-chartered savings association in stock form with full power and authority to own its properties and to conduct its business as described in the Prospectus and to enter into this Agreement and perform its obligations hereunder; the activities of the Bank as described in the Prospectus are permitted by the rules, regulations and practices of the Department and the OTS; the issuance and sale of the Common Stock of the Bank to the Company in the Reorganization has been duly and validly authorized by all necessary corporate action on the part of the Company and the Bank and, upon payment therefor in accordance with the terms of the Plan, will be validly issued, fully paid and nonassessable, and will be owned of record and beneficially by the Company, free and clear of any mortgage, pledge, lien, encumbrance, claim or restriction.

(iii) The activities of the Bank described in the Prospectus are permitted under federal law to a federally chartered savings association. To the best of such counsel’s knowledge, each of the Company and the Bank has obtained all licenses, permits, and other governmental authorizations that are material for the conduct of its business, all such licenses, permits and other governmental authorization are in full force and effect, and the Company and the Bank are complying therewith in all material respects.

(iv) The Bank is a member of the FHLB of Pittsburgh and the Bank is an insured depository institution under the provisions of the Federal Deposit Insurance Act, as amended, and to such counsel’s knowledge no proceedings for the termination or revocation of such insurance are pending or threatened.

(v) The Charitable Foundation has been duly authorized and incorporated and is validly existing as a non-stock corporation in good standing under the laws of the State of Delaware with corporate power and authority to own,

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lease and operate its properties and to conduct its business as described in the Prospectus and no approvals are required to establish the Charitable Foundation and to contribute the shares of Common Stock thereto as described in the Prospectus other than those imposed by the Department or the OTS.

(vi) The authorized capital stock of the Company consists of              shares of Common Stock and              shares of preferred stock, no par value per share; no shares of Common Stock or preferred stock will be issued and outstanding prior to the Closing Date. Immediately upon consummation of the Reorganization, (a) the issued and outstanding capital stock of the Company will be within the range set forth in the Prospectus under the caption “Capitalization,”; (b) the shares of Common Stock of the Company to be subscribed for in the Offering and the Charitable Shares issued to the Charitable Foundation will have been duly and validly authorized for issuance, and when issued and delivered by the Company pursuant to the Plan against payment of the consideration (or contributed to the Charitable Foundation as it relates to the Charitable Shares) calculated as set forth in the Plan, will be fully paid and nonassessable; and (c) the issuance of the shares of Common Stock and the Charitable Shares are not subject to preemptive rights under the charter or bylaws of any of the Primary Parties, or arising or outstanding by operation of law or, to the best knowledge of such counsel, under any contract, indenture, agreement, instrument or other document, except for the subscription rights under the Plan.

(vii) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Primary Parties; and this Agreement constitutes a valid, legal and binding obligation of each of the Primary Parties, enforceable in accordance with its terms, except to the extent that the provisions of Sections 10 and 11 hereof may be unenforceable as against public policy, and except to the extent that such enforceability may be limited by bankruptcy laws, insolvency laws, or other laws affecting the enforcement of creditors’ rights generally, or the rights of creditors of savings institutions insured by the FDIC (including the laws relating to the rights of the contracting parties to equitable remedies).

(viii) The Plan has been duly adopted by the Board of Directors of the Bank and by the corporators of the Bank in the manner required by the Conversion Regulations and the Bank’s charter and bylaws.

(ix) The Reorganization, including the Conversion and the Offering was effected in accordance with the Plan and all applicable laws, including statutes, regulations, decisions and orders; and all terms, conditions, requirements and provisions with respect to the Reorganization imposed

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by the Commission, the Department, the OTS, or any other governmental agency, if any, were complied with by the Bank in all material respects or appropriate waivers were obtained and all notice and waiting periods were satisfied, waived or elapsed.

(x) The Applications have been approved by the Department and the OTS and subject to the satisfaction of any conditions set forth in such approvals and clearance under applicable securities laws, no further approval, registration, authorization, consent or other order of any federal or state regulatory agency, public board or body is required in connection with the execution and delivery of this Agreement, the offer, sale and issuance of the Shares and the consummation of the Reorganization.

(xi) The purchase by the Company of all of the issued and outstanding Common Stock of the Bank has been authorized by the Department and the OTS, and no action has been taken, or to such counsel’s knowledge, is pending or threatened, to revoke any such authorization or approval.

(xii) The Registration Statement is effective under the 1933 Act, no stop order suspending the effectiveness of the Registration Statement has been issued, and, to such counsel’s knowledge, no proceedings for that purpose have been instituted or threatened.

(xiii) The material tax consequences of the Reorganization are set forth in the Prospectus under the caption “Summary - Tax Consequences” and “Federal and State Taxation.” The information in the Prospectus under the caption “Summary - Tax Consequences” and “Federal and State Taxation” has been reviewed by such counsel and fairly describes such opinion rendered by such counsel to the Primary Parties with respect to such matters.

(xiv) The terms and provisions of the shares of Common Stock conform to the description thereof contained in the Registration Statement and the Prospectus, and the forms of certificates proposed to be used to evidence the shares of Common Stock are in due and proper form.

(xv) At the time the Applications were approved and as of the Closing Date, the Applications (as amended or supplemented), complied as to form in all material respects with the requirements of the Conversion Regulations and all applicable laws, rules and regulations and decisions and orders of the Department, and the OTS, as applicable, except as modified or waived in writing by the Department and the OTS, as applicable (other than the financial statements, notes to financial statements, financial tables and other financial and statistical data included therein and the appraisal valuation and the business plan as to which counsel need express no opinion). To such counsel’s knowledge, no person has sought to obtain

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regulatory or judicial review of the final action of the Department and the OTS, as applicable, approving the Applications.

(xvi) At the time that the Registration Statement became effective and as of the Closing Date, the Registration Statement, including the Prospectus contained therein (as amended or supplemented) (other than the financial statements, notes to financial statements, financial tables or other financial and statistical data included therein and the appraisal valuation and the business plan as to which counsel need express no opinion), complied as to form in all material respects with the requirements of the 1933 Act and the rules and regulations promulgated thereunder.

(xvii) To such counsel’s knowledge, there are no legal or governmental proceedings pending, or threatened (i) asserting the invalidity of this Agreement or (ii) seeking to prevent the Reorganization or the offer, sale or issuance of the Shares.

(xviii) The information in the Prospectus under the captions “Regulation,” “Federal and State Taxation,” “Restrictions on Acquisition of ESSA Bancorp, Inc.,” “Description of Capital Stock” and “The Conversion,” to the extent that it constitutes matters of law, summaries of legal matters, documents or proceedings, or legal conclusions, has been reviewed by such counsel and is accurate in all material respects.

(xix) None of the Primary Parties are required to be registered as an investment company under the Investment Company Act of 1940.

(xx) The Bank has duly adopted a Pennsylvania stock charter and bylaws effective upon consummation of the Reorganization and none of the Primary Parties is in violation of its charter or its bylaws or, to such counsel’s knowledge, any material obligation, agreement, covenant or condition contained in any material contract, indenture, mortgage, loan agreement, note, lease or other instrument filed as an exhibit to, or incorporated by reference in, the Registration Statement, which violation would have a material adverse effect on the financial condition of the Primary Parties considered as one enterprise, or on the earnings, capital, properties or business affairs of the Primary Parties considered as one enterprise. In addition, the execution and delivery of and performance under this Agreement by the Primary Parties, the incurrence of the obligations set forth herein and the consummation of the transactions contemplated herein will not result in any material violation of the provisions of the charter or the bylaws of any of the Primary Parties or any material violation of any applicable law, act, regulation, or to such counsel’s knowledge, order or court order, writ, injunction or decree.

In rendering such opinion, such counsel may rely as to matters of fact, to the extent such counsel deems proper, on certificates of responsible officers of the Primary Parties and public

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officials, provided copies of any such opinion(s) or certificates of public officials are delivered to Agent together with the opinion to be rendered hereunder by counsel to the Primary Parties. The opinion of such counsel for the Primary Parties shall state that it has no reason to believe that the Agent is not justified in relying thereon.

(2) The letter of Luse Gorman Pomerenk & Schick, P.C. to the effect that during the preparation of the Registration Statement and the Prospectus, Luse Gorman Pomerenk & Schick, P.C. participated in conferences with certain officers of and other representatives of the Primary Parties, counsel to the Agent, representatives of the independent public accounting firm for the Primary Parties and representatives of the Agent at which the contents of the Registration Statement and the Prospectus and related matters were discussed and has considered the matters required to be stated therein and the statements contained therein and, although (without limiting the opinions provided pursuant to Section 9(b)(1)) Luse Gorman Pomerenk & Schick, P.C. has not independently verified the accuracy, completeness or fairness of the statements contained in the Registration Statement and Prospectus, on the basis of the foregoing, nothing has come to the attention of Luse Gorman Pomerenk & Schick, P.C. that caused Luse Gorman Pomerenk & Schick, P.C. to believe that the Registration Statement and the Prospectus at the time it was declared effective by the Commission and as of the date of such letter or that the General Disclosure Package as of the Applicable Time, contained or contains any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (it being understood that counsel need express no comment or opinion with respect to the financial statements, schedules and other financial and statistical data included, or statistical or appraisal methodology employed, in the Registration Statement, Prospectus or General Disclosure Package).

(3) The favorable opinion, dated as of the Closing Date, of Rhoads & Sinon LLP, counsel for the Agent, with respect to such matters as the Agent may reasonably require; such opinion may rely, as to matters of fact, upon certificates of officers and directors of the Primary Parties delivered pursuant hereto or as such counsel may reasonably request and upon the opinion of Rhoads & Sinon LLP.

(4) A Blue Sky Memorandum from Luse Gorman Pomerenck & Schick, P.C. relating to the offering relating to the offering, including the Agent’s participation therein, and should be furnished to the Agent with a copy thereof addressed to the Agent or upon which Luse Gorman Pomerenck & Schick, P.C. shall state the Agent may rely. The Blue Sky Memorandum will relate to the necessity of obtaining or confirming exemptions, qualifications or the registration of the Common Stock under applicable state securities law.

(c) Concurrently with the execution of this Agreement, the Agent shall receive a letter from S.R. Snodgrass, A.C., dated the date hereof and addressed to the Agent, such letter (i) confirming that S.R. Snodgrass, A.C., is a firm of independent public accountants within the meaning of the Code of Professional Ethics of the American Institute of Certified Public Accountants, the 1933 Act

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and the regulations promulgated thereunder, and no information concerning its relationship with or interests in the Primary Parties is required by the Applications or Item 13 of the Registration Statement, (ii) stating in effect that in S.R. Snodgrass, A.C.’s opinion the financial statements of the Bank included in the Prospectus comply as to form in all material respects with the applicable accounting requirements of the 1933 Act, the 1934 Act and the related published rules and regulations of the Commission thereunder and the Conversion Regulations and generally accepted accounting principles consistently applied; (iii) stating in effect that, on the basis of certain agreed upon procedures set forth in detail in such letter, nothing has came to their attention which caused them to believe that: (A) the unaudited financial statements and supporting schedules included in the Registration Statement, the Prospectus and the General Disclosure Package do not comply as to form in all material respects with the applicable accounting requirements of the Conversion Regulations, the Securities Act, and the regulations of the Commission, or are not in conformity with generally accepted accounting principles applied on a basis substantially consistent with that of the audited financial statements included in the Prospectus; or (B) the unaudited amounts of net interest income and net income set forth under “Selected Financial and Other Data” in the Registration Statement and Prospectus do not agree with the amounts set forth in unaudited financial statements as of and for the dates and periods presented under such captions or such amounts were not determined on a basis substantially consistent with that used in determining the corresponding amounts in the audited financial statements included in the Registration Statement, (C) at a specified date not more than five days prior to the date of this Agreement, there has been any increase in the long-term or short-term debt of the Bank or any decrease in consolidated total assets, the allowance for loan losses, total deposits or net worth of the Bank, in each case as compared with the amounts shown in the September 30, 2006 balance sheet included in the Registration Statement or, (D) during the period from September 30, 2006 to a specified date not more than five days prior to the date of this Agreement, there were any decreases, as compared with the corresponding period in the preceding year, in total increase income, net interest income, net interest income after provision for loan losses, income before income tax expense or net income of the Bank, except in all instances for increases or decreases which the Registration Statement and the Prospectus and the General Disclosure Package disclose have occurred or may occur; and (iv) stating that, in addition to the audit examination referred to in its opinion included in the Prospectus and the performance of the procedures referred to in clause (iii) of this subsection (c), they have compared with the general accounting records of the Bank, which are subject to the internal controls of the accounting system of the Bank and other data prepared by the Primary Parties directly from such accounting records, to the extent specified in such letter, such amounts and/or percentages set forth in the Prospectus as the Agent may reasonably request, and they have found such amounts and percentages to be in agreement therewith (subject to rounding).

(d) At the Closing Date, the Agent shall receive a letter from S.R. Snodgrass, A.C. dated the Closing Date, addressed to the Agent, confirming the statements made by its letter delivered by it pursuant to subsection (c) of this Section 9, the “specified date” referred to in clause (ii)(C) and (D) thereof to be a date specified in such letter, which shall not be more than three business days prior to the Closing Date.

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(e) At the Closing Date, the Shares shall have been approved for listing on the Nasdaq Global Market.

(f) At the Closing Date, counsel to the Agent shall have been furnished with such documents and opinions as counsel for the Agent may require for the purpose of enabling them to advise the Agent with respect to the issuance and sale of the Common Stock as herein contemplated and related proceedings, or in order to evidence the accuracy of any of the representations and warranties, or the fulfillment of any of the conditions herein contained.

(g) At the Closing Date, the Agent shall receive a certificate of the Chief Executive Officer and Chief Financial Officer of each of the Primary Parties, dated the Closing Date, without personal liability to the effect that: (i) they have examined the Prospectus and at the time the Prospectus became authorized for final use, the Prospectus did not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) there has not been, since the respective dates as of which information is given in the Prospectus, any material adverse change in the financial condition or in the earnings, capital, properties, business prospects or business affairs of the Primary Parties, considered as one enterprise, whether or not arising in the ordinary course of business; (iii) the representations and warranties contained in Section 6 of this Agreement are true and correct with the same force and effect as though made at and as of the Closing Date; (iv) each of the Primary Parties has complied in all material respects with all material agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Date including the conditions contained in this Section 9; (v) no stop order has been issued or, to the best of their knowledge, is threatened, by the Commission or any other governmental body; (vi) no order suspending the Reorganization, including the Conversion and the Offering, the acquisition of all of the shares of the Bank by the Company or the effectiveness of the Registration Statement has been issued and to the best of their knowledge, no proceedings for any such purpose have been initiated or threatened by the Department, the OTS, the Commission, or any other federal or state authority; (vii) to the best of their knowledge, no person has sought to obtain regulatory or judicial review of the action of the Department in approving the Plan or to enjoin the Reorganization.

(h) At the Closing Date, the Agent shall receive a letter from RP Financial, LC., dated as of the Closing Date, (i) confirming that said firm is independent of the Primary Parties and is experienced and expert in the area of corporate appraisals within the meaning of the Conversion Regulations, (ii) stating in effect that the Appraisal complies in all material respects with the applicable requirements of the Conversion Regulations, and (iii) further stating that its opinion of the aggregate pro forma market value of the Primary Parties, as converted, expressed in the Appraisal as most recently updated, remains in effect.

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(i) Prior to and at the Closing Date, none of the Primary Parties shall have sustained, since the date of the latest audited financial statements included in the Registration Statement and Prospectus, any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth in the Registration Statement and the Prospectus, and since the respective dates as of which information is given in the Registration Statement and the Prospectus, there shall not have been any material change, or any development involving a prospective material change in, or affecting the general affairs of, management, financial position, retained earnings, long-term debt, stockholders’ equity or results of operations of any of the Primary Parties, otherwise than as set forth or contemplated in the Registration Statement and the Prospectus, the effect of which, in any such case described above, is in the Agent’s reasonable judgment sufficiently material and adverse as to make it impracticable or inadvisable to proceed with the Offering or the delivery of the Shares on the terms and in the manner contemplated in the Prospectus.

(j) Prior to and at the Closing Date: (i) in the reasonable opinion of the Agent there shall have been no material adverse change in the financial condition or in the earnings, capital, properties or business affairs of the Primary Parties considered as one enterprise, from and as of the latest dates as of which such condition is set forth in the Prospectus, except as referred to therein; (ii) there shall have been no material transaction entered into by the Primary Parties, independently or considered as one enterprise, from the latest date as of which the financial condition of the Primary Parties is set forth in the Prospectus, other than transactions referred to or contemplated therein; (iii) none of the Primary Parties shall have received from the Department or the OTS any direction (oral or written, other than directions applicable to all federally chartered savings banks) to make any material change in the method of conducting their business with which it has not complied in all material respects (which direction, if any, shall have been disclosed to the Agent) and which would reasonably be expected to have a material and adverse effect on the condition (financial or otherwise) or on the earnings, capital, properties or business affairs of the Primary Parties considered as one enterprise; (iv) none of the Primary Parties shall have been in default (nor shall an event have occurred which, with notice or lapse of time or both, would constitute a default) under any provision of any agreement or instrument relating to any material outstanding indebtedness; (v) no action, suit or proceeding, at law or in equity or before or by any federal or state commission, board or other administrative agency, shall be pending or, to the knowledge of the Primary Parties, threatened against any of the Primary Parties or affecting any of their properties wherein an unfavorable decision, ruling or finding would reasonably be expected to have a material and adverse effect on the financial condition or on the earnings, capital, properties or business affairs of the Primary

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Parties, considered as one enterprise; and (vi) the Shares shall have been qualified or registered for offering and sale under the securities or “blue sky” laws of the jurisdictions requested by the Agent.

(k) At or prior to the Closing Date, the Agent shall receive (i) a copy of the letters from each of the Department and the OTS approving the Conversion Applications, (ii) a copy of the letter from the OTS authorizing the Holding Company Application, (iii) a copy of the order from the Commission declaring the Registration Statement effective, (iv) copies of certificates of existence for each of the Primary Parties, or other writing from the Department in form and substance reasonably satisfactory to the Agent evidencing the valid existence of the Company and the Bank as of the Closing Date (v) a certificate from the FDIC evidencing the Bank’s insurance of accounts, (vi) a certificate of the FHLB of Pittsburgh evidencing the Bank’s membership therein, and (vii) any other documents that Agent shall reasonably request.

(l) Subsequent to the date hereof, there shall not have occurred any of the following: (i) a suspension or limitation in trading in securities generally on the New York Stock Exchange or American Stock Exchange or in the over-the-counter market, or quotations halted generally on the Nasdaq Stock Market, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices for securities have been required by either of such exchanges or the NASD or by order of the Commission or any other governmental authority other than temporary trading halts (A) imposed as a result of intraday changes in the Dow Jones Industrial Average, (B) lasting no longer than until the regularly scheduled commencement of trading on the next succeeding business-day, and (C) which, when combined with all other such halts occurring during the previous five business days, total less than three; (ii) a general moratorium on the operations of savings banks or other state- or federally-insured financial institutions or general moratorium on the withdrawal of deposits from savings banks or other state- or federally-insured financial institutions declared by either federal or state authorities; (iii) any material adverse change in the financial markets in the United States or elsewhere; or (iv) any outbreak of hostilities or escalation thereof or other calamity or crisis, including, without limitation, terrorist activities after the date hereof, the effect of any of (i) through (iv) herein, in the judgment of the Agent, is so material and adverse as to make it impracticable market the Shares or to enforce contracts, including subscriptions or purchase orders, for the sale of the Shares.

All such opinions, certificates, letters and documents will be in compliance with the provisions hereof only if they are reasonably satisfactory in form and substance to the Agent and of counsel for the Agent. Any certificate signed by an officer of the Company or the Bank and delivered to the Agent or to counsel for the Agent shall be deemed a representation and warranty by the Company or the Bank, as the case may be, to the Agent as to the statements made therein. If any condition to the Agent’s obligations hereunder to be fulfilled prior to or at the Closing Date is not fulfilled, the Agent may terminate this Agreement (provided that if this Agreement is so terminated but the sale of Shares is nevertheless consummated, the Agent shall be entitled to the full compensation provided for in Section 4 hereof) or, if the Agent so elects, may waive any such conditions which have not been fulfilled or may extend the time of their fulfillment.

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10. Indemnification.

(a) The Primary Parties jointly and severally agree to indemnify and hold harmless the Agent, its officers, directors, agents, attorneys, servants and employees and each person, if any, who controls the Agent within the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act, against any and all loss, liability, claim, damage or expense whatsoever (including but not limited to settlement expenses, subject to the limitation set forth in the last sentence of paragraph (c) below), joint or several, that the Agent or any of such officers, directors, agents, attorneys, servants, employees and controlling Persons (collectively, the “Related Persons”) may suffer or to which the Agent or the Related Persons may become subject under all applicable federal and state laws or otherwise, and to promptly reimburse the Agent and any Related Persons upon written demand for any reasonable expenses (including reasonable fees and disbursements of counsel) incurred by the Agent or any Related Persons in connection with investigating, preparing or defending any actions, proceedings or claims (whether commenced or threatened) to the extent such losses, claims, damages, liabilities or actions: (i) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment or supplement thereto), the Prospectus (or any amendment or supplement thereto), any Issuer-Represented Free Writing Prospectus, the Applications, or any blue sky application or other instrument or document of the Primary Parties or based upon written information supplied by any of the Primary Parties filed in any state or jurisdiction to register or qualify any or all of the Shares under the securities laws thereof (collectively, the “Blue Sky Applications”), or any application or other document, advertisement, or communication (“Sales Information”) prepared, made or executed by or on behalf of any of the Primary Parties with its consent or based upon written information furnished by or on behalf of any of the Primary Parties, whether or not filed in any jurisdiction in order to qualify or register the Shares under the securities laws thereof, (ii) arise out of or are based upon the omission or alleged omission to state in any of the foregoing documents or information, a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (iii) arise from any theory of liability whatsoever relating to or arising from or based upon the Registration Statement (or any amendment or supplement thereto), the Prospectus (or any amendment or supplement thereto), any Issuer-Represented Free Writing Prospectus, the Applications, any Blue Sky Applications or Sales Information or other documentation distributed in connection with the Offering; or (iv) result from any claims made with respect to the accuracy, reliability and completeness of the records of Eligible Account Holders, Supplemental Eligible Account Holders and Other Members or for any denial or reduction of a subscription or order to purchase Common Stock, whether as a result of a properly calculated allocation pursuant to the Plan or otherwise, based upon such records; provided, however, that no indemnification is required

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under this paragraph (a) to the extent such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue material statements or alleged untrue material statements in, or material omission or alleged material omission from, the Registration Statement (or any amendment or supplement thereto) or the Prospectus (or any amendment or supplement thereto), any Issuer-Represented Free Writing Prospectus, the Applications, the Blue Sky Applications or Sales Information or other documentation distributed in connection with the Reorganization made in reliance upon and in conformity with written information furnished to the Primary Parties by the Agent or its representatives (including counsel) with respect to the Agent expressly for use in the Registration Statement (or any amendment or supplement thereto) or Prospectus (or any amendment or supplement thereto) under the captions “Market for the Common Stock” and “The Conversion – Marketing and Distribution; Compensation;” provided, further, that the Primary Parties will not be responsible for any loss, liability, claim, damage or expense to the extent that a court of competent jurisdiction finds that they result primarily from material oral misstatements by the Agent to a purchaser of Shares which are not based upon information in the Registration Statement or Prospectus, and the Agent agrees to repay to the Primary Parties any amounts advanced to it by the Primary Parties in connection with matters as to which it is found by a court of competent jurisdiction not to be entitled to indemnification hereunder.

(b) The Agent agrees to indemnify and hold harmless the Primary Parties, their directors and officers, agents, servants and employees and each person, if any, who controls any of the Primary Parties within the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act against any and all loss, liability, claim, damage or expense whatsoever (including but not limited to settlement expenses, subject to the limitation set forth in the last sentence of paragraph (c) below), joint or several which they, or any of them, may suffer or to which they, or any of them, may become subject under all applicable federal and state laws or otherwise, and to promptly reimburse the Primary Parties and any such persons upon written demand for any reasonable expenses (including fees and disbursements of counsel) incurred by them in connection with investigating, preparing or defending any actions, proceedings or claims (whether commenced or threatened) to the extent such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment of supplement thereto), any Issuer-Represented Free Writing Prospectus, the Applications or any Blue Sky Applications or Sales Information or are based upon the omission or alleged omission to state in any of the foregoing documents a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Agent’s obligations under this Section 10(b) shall exist only if and only to the extent that such untrue statement or alleged untrue statement was made in, or such material fact or alleged material fact was omitted from, the Registration Statement (or any amendment or supplement thereto), the Prospectus (or any amendment or supplement thereto), any blue skies applications or sales information in reliance upon and in

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conformity with written information furnished to the Primary Parties by the Agent or its representatives (including counsel) expressly for use under the captions “Market for the Common Stock” and “The Conversion – Marketing and Distribution; Compensation.”

(c) Each indemnified party shall give prompt written notice to each indemnifying party of any action, proceeding, claim (whether commenced or threatened), or suit instituted against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve it from any liability which it may have on account of this Section 10, Section 11 or otherwise. An indemnifying party may participate at its own expense in the defense of such action. In addition, if it so elects within a reasonable time after receipt of such notice, an indemnifying party, jointly with any other indemnifying parties receiving such notice, may assume the defense of such action with counsel chosen by it reasonably acceptable to the indemnified parties that are defendants in such action, unless such indemnified parties reasonably object to such assumption on the ground that there may be legal defenses available to them that are different from or in addition to those available to such indemnifying party. If an indemnifying party assumes the defense of such action, the indemnifying parties shall not be liable for any fees and expenses of counsel for the indemnified parties incurred thereafter in connection with such action, proceeding or claim, other than reasonable costs of investigation. In no event shall the indemnifying parties be liable for the fees and expenses of more than one separate firm of attorneys (unless an indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them which are different from or in addition to those of other indemnified parties) for all indemnified parties in connection with any one action, proceeding or claim or separate but similar or related actions, proceedings or claims in the same jurisdiction arising out of the same general allegations or circumstances. The Company shall be liable for any settlement of any claim against the Agent (or its directors, officers, employees, affiliates or controlling persons), made with the Company’s consent, which consent shall not be unreasonably withheld. The Company shall not, without the written consent of the Agent, settle or compromise any claim against it based upon circumstances giving rise to an indemnification claim against the Company hereunder unless such settlement or compromise provides that the Agent and the other indemnified parties shall be unconditionally and irrevocably released from all liability in respect of such claim.

(d) The agreements contained in this Section 10 and in Section 11 hereof and the representations and warranties of the Primary Parties set forth in this Agreement shall remain operative and in full force and effect regardless of (i) any investigation made by or on behalf of the Agent or its officers, directors, controlling persons, agents or employees or by or on behalf of any of the Primary Parties or any officers, directors, controlling persons, agents or employees of any of the Primary Parties; (ii) delivery of and payment hereunder for the Shares; or (iii) any termination of this Agreement.

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11. Contribution.

(a) In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in Section 10 is due in accordance with its terms but is found in a final judgment by a court to be unavailable from the Primary Parties or the Agent, the Primary Parties and the Agent shall contribute to the aggregate losses, claims, damages and liabilities of the nature contemplated by such indemnification in such proportion so that (i) the Agent is responsible for that portion represented by the percentage that the fees paid to the Agent pursuant to Section 4 of this Agreement (not including expenses) (“Agent’s Fees”), less any portion of Agent’s Fees paid by Agent to Assisting Brokers, bear to the total proceeds received by the Primary Parties from the sale of the Conversion Shares in the Conversion Offerings, net of all expenses of the Offerings except Agent’s Fees, and (ii) the Primary Parties shall be responsible for the balance. If, however, the allocation provided above is not permitted by applicable law or if the indemnified party failed to give the notice required under Section 10 above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative fault of the Primary Parties on the one hand and the Agent on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions, proceedings or claims in respect thereof), but also the relative benefits received by the Primary Parties on the one hand and the Agent on the other from the Offering, as well as any other relevant equitable considerations. The relative benefits received by the Primary Parties on the one hand and the Agent on the other hand shall be deemed to be in the same proportion as the total proceeds from the Conversion Offerings, net of all expenses of the Conversion Offerings except Agent’s Fees, received by the Primary Parties bear, with respect to the Agent, to the total fees (not including expenses) received by the Agent less the portion of such fees paid by the Agent to Assisting Brokers. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Primary Parties on the one hand or the Agent on the other and the parties relative intent, good faith, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Primary Parties and the Agent agree that it would not be just and equitable if contribution pursuant to this Section 11 were determined by pro-rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 11. The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or action, proceedings or claims in respect thereof) referred to above in this Section 11 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action, proceeding or claim. It is expressly agreed that the Agent shall not be liable for any loss, liability, claim, damage or expense or be required to contribute any amount which in the aggregate exceeds the amount paid (excluding reimbursable expenses) to the Agent under this Agreement less the portion of

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such fees paid by the Agent to Assisting Brokers. It is understood and agreed that the above-stated limitation on the Agent’s liability is essential to the Agent and that the Agent would not have entered into this Agreement if such limitation had not been agreed to by the parties to this Agreement. No person found guilty of any fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not found guilty of such fraudulent misrepresentation. For purposes of this Section 11, each of the Agent’s and the Primary Parties’ officers and directors and each person, if any, who controls the Agent or any of the Primary Parties within the meaning of the 1933 Act and the 1934 Act shall have the same rights to contribution as the Primary Parties and the Agent. Any party entitled to contribution, promptly after receipt of notice of commencement of any action, suit, claim or proceeding against such party in respect of which a claim for contribution may be made against another party under this Section 11, will notify such party from whom contribution may be sought, but the omission to so notify such party shall not relieve the party from whom contribution may be sought from any other obligation it may have hereunder or otherwise than under this Section 11.

12. Survival. All representations, warranties and indemnities and other statements contained in this Agreement, and Section 11 of the Letter Agreement, or contained in certificates of officers of the Primary Parties or the Agent submitted pursuant hereto, shall remain operative and in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of the Agent or its controlling persons, or by or on behalf of the Primary Parties and shall survive the issuance of the Shares, and any legal representative, successor or assign of the Agent, any of the Primary Parties, and any indemnified person shall be entitled to the benefit of the respective agreements, indemnities, warranties and representations.

13. Termination. Agent may terminate this Agreement by giving the notice indicated below in this Section at any time after this Agreement becomes effective as follows:

(a) In the event (i) the Plan is abandoned or terminated by the Company; (ii) the Company fails to consummate the sale of the minimum number of the Conversion Shares by                  , 200     in accordance with the provisions of the Plan or as required by the Conversion Regulations and applicable law; (iii) the Agent terminates this relationship because there has been a material adverse change in the financial condition or operations of the Primary Parties, considered as one enterprise, since the date of the latest financial statements included in the Prospectus; or (iv) immediately prior to commencement of the Offering, the Agent terminates this relationship because in its opinion, which shall have been formed in good faith after reasonable determination and consideration of all relevant factors, there has been a failure to satisfactorily disclose all relevant information in the Prospectus or the existence of market conditions which might render the sale of the Shares inadvisable, this Agreement shall terminate and no party to this Agreement shall have any obligation to the other hereunder, except as set forth in Sections 3, 4, 8, 10 and 11 hereof.

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(b) If any of the conditions specified in Section 9 shall not have been fulfilled when and as required by this Agreement, or by the Closing Date, or waived in writing by the Agent, this Agreement and all of the Agent’s obligations hereunder may be canceled by the Agent by notifying the Bank of such cancellation in writing at any time at or prior to the Closing Date, and any such cancellation shall be without liability of any party to any other party except as otherwise provided in Sections 3, 4, 8, 10 and 11 hereof.

(c) If Agent elects to terminate this Agreement as provided in this Section, the Bank shall be notified by the Agent as provided in Section 14 hereof.

(d) If this Agreement is terminated in accordance with the provisions of this Agreement, the Primary Parties shall pay the Agent the fees earned pursuant to Section 4 and will reimburse the Agent for its reasonable expenses pursuant to Section 8.

14. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to Agent shall be directed to Ryan Beck & Co. Inc., 18 Columbia Turnpike, Florham Park, New Jersey 07932, Attention: Michael Rasmussen (with a copy to Charles J. Ferry, Esquire, Rhoads & Sinon LLP, One South Market Square, Harrisburg, Pennsylvania 17101); notices to the Primary Parties shall be directed to ESSA Bancorp, Inc., 200 Palmer Street, Stroudsburg, Pennsylvania 18360, Attention: Gary S. Olson, President and chief Executive Officer (with copies to Marc P. Levy, Esquire, Luse Gorman Pomerenk & Schick, P.C., 5535 Wisconsin Avenue, N.W., Suite 400, Washington, D.C. 20015.).

15. Parties. This Agreement shall inure to the benefit of and be binding upon the Agent and the Primary Parties, and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the parties hereto and their respective successors and the controlling persons and officers and directors referred to in Sections 10 and 11 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provisions herein contained. It is understood and agreed that this Agreement is the exclusive agreement among the parties, supersedes any prior Agreement among the parties and may not be varied except by a writing signed by all parties, except for Section 10 of this Agreement and Section 11 of the Letter Agreement, which may not be so amended.

16. Partial Invalidity. In the event that any term, provision or covenant herein or the application thereof to any circumstances or situation shall be invalid or unenforceable, in whole or in part, the remainder hereof and the application of said term, provision or covenant to any other circumstance or situation shall not be affected thereby, and each term, provision or covenant herein shall be valid and enforceable to the full extent permitted by law.

17. Construction. This Agreement shall be construed in accordance with the laws of the State of New Jersey.

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If the foregoing is in accordance with your understanding of our agreement, please sign and return to us a counterpart hereof, whereupon this instrument along with all counterparts will become a binding agreement between you and us in accordance with its terms.

Very truly yours,
ESSA BANK AND TRUST
By:
	Gary S. Olson, President and Chief Executive Officer
ESSA BANCORP, INC.
By:
	Gary S. Olson, President and Chief Executive Officer

The foregoing Agency Agreement is hereby confirmed and accepted as of the date first set and above written.

RYAN BECK & CO., INC.

By:

Managing Director

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Master Selected Dealer Agreement

                                     , 2006

Ryan Beck & Co., Inc.

18 Columbia Turnpike

Florham Park, NJ 07932

Gentlemen:

(1) General. We understand that Ryan Beck & Co., Inc. (“Ryan Beck”) is entering into this Agreement with us and other firms who may be offered the right to purchase as principal a portion of securities being distributed to the public. The terms and conditions of this Agreement shall be applicable to any public offering of securities (“Securities”) pursuant to a registration statement filed under the Securities Act of 1933 (the “Securities Act”) or exempt from registration thereunder (other than a public offering of Securities effected wholly outside the United States of America), wherein Ryan Beck (acting for its own account or for the account of any underwriting or similar group or syndicate) is responsible for managing or otherwise implementing the sale of the Securities to selected dealers (“Selected Dealers”) and has informed us that such terms and conditions shall be applicable. Any such offering of Securities to us as a Selected Dealer is hereinafter called an “Offering.” In the case of any Offering in which you are acting for the account of any underwriting or similar group or syndicate (“Underwriters”), the terms and conditions of this Agreement shall be for the benefit of, and binding upon, such Underwriters, including, in the case of any Offering in which you are acting with others as representatives of Underwriters, such other representatives. The term “preliminary prospectus” means any preliminary prospectus relating to an Offering of Securities or any preliminary prospectus supplement together with a prospectus relating to an Offering of Securities; the term “Prospectus” means the prospectus, together with the final prospectus supplement, if any, relating to an Offering of Securities, filed pursuant to Rule 424(b) or Rule 424(c) under the Securities Act or any successor or similar rules.

This Agreement constitutes the entire agreement of the parties with regard to the subject matter hereof and supersedes any prior oral or written agreements or understanding between the parties hereto or their predecessors with respect to the subject matter hereof.

(2) Conditions of Offering, Acceptance and Purchase. Any Offering will be subject to delivery of the Securities and their acceptance by you and any other Underwriters, may be subject to the approval of all legal matters by counsel and the satisfaction of other conditions, and may be made on the basis of reservation of Securities or an allotment against subscription. You will advise us by telegram, telex, facsimile, e-mail, or other form of written communication (“Written Communication”) of the particular method and supplementary terms and conditions (including, without limitation, the information as to prices and offering date referred to in Section 3(c)) of any Offering in which we are invited to participate. To the extent such supplementary terms and conditions are inconsistent with any provision herein, such terms and conditions shall supersede any such provision. Unless otherwise indicated in any such Written Communication, acceptances and other communications by us with respect to any Offering should be sent to Ryan Beck. You may close the subscription books at any time in your sole

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discretion without notice, and you reserve the right to reject any acceptance in whole or in part. Payment for Securities purchased by us is to be made at such office as you may designate, at the public offering price, or, if you shall so advise us, at such price less the concession to dealers or at the price set forth or indicated in a Written Communication, on such date as you shall determine, on one day’s prior notice to us, by wire transfer to a Ryan Beck account, against delivery of certificates or other forms evidencing such Securities. If payment is made for Securities purchased by us at the public offering price, the concession to which we shall be entitled will be paid to us upon termination of the provisions of Section 3(c) with respect to such Securities.

Unless we promptly give you written instructions otherwise, if transactions in the Securities may be settled through the facilities of The Depository Trust Company, delivery of Securities purchased by us will be made through such facilities if we are a member, or if we are not a member, settlement may be made through our ordinary correspondent who is a member.

(3) Representations, Warranties, and Agreements.

(a) Registered Offerings. In the case of any Offering of Securities that are registered under the Securities Act (“Registered Offering”), you shall provide us with such number of copies of each preliminary prospectus, the Prospectus and any supplement thereto relating to each Registered Offering as we may reasonably request for the purposes contemplated by the Securities Act and the Securities Exchange Act of 1934 (the “Exchange Act”) and the applicable Rules and regulations of the Securities and Exchange Commission thereunder. We represent that we are familiar with Rule 15c2-8 under the Exchange Act relating to the distribution of preliminary and final prospectuses and agree that we will comply therewith. We agree to keep an accurate record of our distribution (including dates, number of copies, and persons to whom sent) of copies of the Prospectus or any preliminary prospectus (or any amendment or supplement to any thereof), and promptly upon request by you, to bring all subsequent changes to the attention of anyone to whom such material shall have been furnished. We agree to furnish to persons who receive a confirmation of sale a copy of the Prospectus filed pursuant to Rule 424(b) or Rule 424(c) under the Securities Act. We agree that in purchasing Securities in a Registered Offering we will rely upon no statements whatsoever, written or oral, other than the statements in the Prospectus delivered to us by you. We will not be authorized by the issuer or other seller of Securities offered pursuant to a Prospectus or by any Underwriter to give any information or to make any representation not contained in the Prospectus in connection with the sale of such Securities. We will not use any free writing prospectus, unless consented to by you or authorized expressly in writing to you by the issuer in the Registered Offering.

(b) Offerings Pursuant to Offering Circular. In the case of any Offering of Securities, other than a Registered Offering, which is made pursuant to an offering circular or other document comparable to a prospectus in a Registered Offering, including, without limitation, an Offering of “exempted securities” as defined in Section 3(a)(2) of the Securities Act (an “Exempted Securities Offering”), you shall provide us with such number of copies of each preliminary offering circular, the final offering circular and any supplement thereto relating to each Offering as we may reasonably request. We agree that we will comply with the applicable federal and state laws, and the applicable rules and regulations of any regulatory body promulgated thereunder, governing the use and distribution of offering circulars by brokers or

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dealers. We agree that in purchasing Securities pursuant to an offering circular we will rely upon no statements whatsoever, written or oral, other than the statements in the final offering circular delivered to us by you. We will not be authorized by the issuer or other seller of Securities offered pursuant to an offering circular or by any Underwriter to give any information or to make any representation not contained in the offering circular in connection with the sale of such Securities.

(c) Offer and Sale to the Public. With respect to any Offering of Securities, you will inform us by a Written Communication of the public offering price, the selling concession, the reallowance (if any) to dealers, and the time when we may commence selling Securities to the public. After such public offering has commenced, you may change the public offering price, the selling concession, and the reallowance to dealers. With respect to each Offering of Securities, until the provisions of this Section 3(c) shall be terminated pursuant to Section 5, we agree to offer Securities to the public only at the public offering price, except that if a reallowance is in effect, a reallowance from the public offering price not in excess of such reallowance may be allowed as consideration for services rendered in distribution to dealers who are actually engaged in the investment banking or securities business, who execute the written agreement prescribed by Rule 2740 of the Rules of Conduct of the National Association of Securities Dealers, Inc. (the “NASD”) and who are either members in good standing of the NASD or foreign brokers or dealers not eligible for membership in the NASD who represent to us that they will promptly reoffer such Securities at the public offering price and will abide by the conditions with respect to foreign brokers and dealers set forth in Section 3(f) hereof.

(d) Stabilization and Overallotment. You may, with respect to any Offering, be authorized to over-allot in arranging sales to Selected Dealers, to purchase and sell Securities, any other securities of the issuer of the Securities of the same class and series and any other securities of such issuer that you may designate for long or short account, and to stabilize or maintain the market price of the Securities. We agree not to purchase and sell Securities for which an order from a client has not been received without your consent in each instance. We agree to advise you from time to time upon request, prior to the termination of the provisions of Section 3(c) with respect to any Offering, of the amount of Securities purchased by us hereunder remaining unsold and we will, upon your request, sell to you, for the accounts of the Underwriters, such amount of Securities as you may designate, at the public offering price thereof less an amount to be determined by you not in excess of the concession to dealers. In the event that prior to the later of (i) the termination of the provisions of Section 3(c) with respect to any Offering, or (ii) the covering by you of any short position created by you in connection with such Offering for your account or the account of one or more Underwriters, you purchase or contract to purchase for the account of any of the Underwriters, in the open market or otherwise, any Securities theretofore delivered to us, you reserve the right to withhold the above-mentioned concession to dealers on such Securities if sold to us at the public offering price, or if such concession has been allowed to us through our purchase at a net price, we agree to repay such concession upon your demand, plus in each case any taxes on redelivery, commissions, accrued interest, and dividends paid in connection with such purchase or contract to purchase.

(e) Open Market Transactions. We agree to abide by Regulation M under the Exchange Act and we agree not to bid for, purchase, attempt to purchase, or sell, directly or indirectly, any Securities, any other Reference Securities (as defined in Regulation M) of the issuer, or any other

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securities of such issuer as you may designate, except as brokers pursuant to unsolicited orders and as otherwise provided in this Agreement. If the Securities are common stock or securities convertible into common stock, we agree not to effect, or attempt to induce others to effect, directly or indirectly, any transactions in or relating to any stock of such issuer, except to the extent permitted by Rule 101 of Regulation M under the Exchange Act.

(f) NASD. We represent that we are actually engaged in the investment banking or securities business and we are either (i) a member in good standing of the NASD, (ii) if not such a member, a foreign dealer not eligible for membership, or (iii) solely in connection with an Exempted Securities Offering, a bank, as defined in Section 3(a)(6) of the Exchange Act, that does not otherwise fall within provision (i) or (ii) of this sentence (a “Bank”). If we are a member as described in (i), we agree that in making sales of the Securities we will comply with all applicable interpretative materials and Conduct Rules of the NASD, including, without limitation, Conduct Rules 2740 (relating to Selling Concessions, Discounts and Other Allowances) and 2790 (relating to New Issues). If we are a foreign dealer as described in (ii), we agree not to offer or sell any Securities in the United States of America, its territories or its possessions or to persons who are citizens thereof or residents therein (other than through you), and in making sales of Securities outside the United States of America we agree to comply as though we were a member with Conduct Rules 2730 (relating to Securities Taken in Trade), 2740 (relating to Selling Concessions), 2750 (relating to Transactions with Related Persons) and 2790 (relating to New Issues) as though we were such a member and to comply with Conduct Rule 2420 (relating to Dealing with Non-Members) as it applies to a nonmember broker or dealer in a foreign country. In connection with an Exempted Securities Offering, if we are a Bank, we agree to also comply, as though we were an NASD member, with the provision of Rules 2730, 2740 and 2750 of the Conduct Rules. We further represent, by our participating in an Offering, that we have provided to you all documents and other information required to be filed with respect to us, any related person or any person associated with us or any such related person pursuant to the supplementary requirements of the NASD’s interpretation with respect to review of corporate financing as such requirements relate to such Offering.

We further agree that, in connection with any purchase of Securities from you that is not otherwise covered by the terms of this Agreement (whether you are acting as manager, as member of an underwriting syndicate or a selling group or otherwise), if a selling concession, discount or other allowance is granted to us, the preceding paragraph will be applicable.

(g) Relationship among Underwriters and Selected Dealers. You may buy Securities from or sell Securities to any Underwriter or Selected Dealer and, with your consent, the Underwriters (if any) and the Selected Dealers may purchase Securities from and sell Securities to each other at the public offering price less all or any part of the concession. We are not authorized to act as agent for you or any Underwriter or the issuer or other seller of any Securities in offering Securities to the public or otherwise. Nothing contained herein or in any Written Communication from you shall constitute the Selected Dealers partners with you or any Underwriter or with one another. If the Selected Dealers, among themselves or with the Underwriters, should be deemed to constitute a partnership for federal income tax purposes, then we elect to be excluded from the application of Subchapter K, Chapter 1, Subtitle A of the Internal Revenue Code of 1986 and agree not to take any position inconsistent with that election. We authorize you, in your discretion, to execute and file on our behalf such evidence of that

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election as may be required by the Internal Revenue Service. Neither you nor any Underwriter shall be under any obligation to us except for obligations assumed hereby or in any Written Communication from you in connection with any Offering. In connection with any Offering, we agree to pay our proportionate share of any tax, claim, demand, or liability asserted against us, and the other Selected Dealers or any of them, or against you or the Underwriters, if any, based on any claim that such Selected Dealers or any of them constitute an association, unincorporated business, or other separate entity, including in each case our proportionate share of any expense incurred in defending against any such tax, claim, demand, or liability.

(h) Blue Sky Laws. Upon application to you, you will inform us as to the jurisdictions in which you believe the Securities have been qualified for sale or are exempt under the respective securities or “blue sky” laws of such jurisdictions. We understand and agree that compliance with the securities or “blue sky” laws in each jurisdiction in which we shall offer or sell any of the Securities shall be our sole responsibility and that you assume no responsibility or obligations as to the eligibility of the Securities for sale or our right to sell the Securities in any jurisdiction.

(i) Compliance with Law. We agree that in selling Securities pursuant to any Offering (which agreement shall also be for the benefit of the issuer or other seller of such Securities), we will comply with the applicable provisions of the Securities Act and the Exchange Act, the applicable Rules and regulations of the Securities and Exchange Commission thereunder, the applicable Rules and regulations of the NASD, the applicable Rules and regulations of any securities exchange having jurisdiction over the Offering, and the applicable laws, rules and regulations specified in Section 3(c) hereof. Without limiting the foregoing, (a) we agree that, at all times since we were invited to participate in an Offering of Securities, we have complied with the provisions of Regulation M applicable to such Offering, in each case after giving effect to any applicable exemptions and (b) we represent that our incurrence of obligations hereunder in connection with any Offering of Securities will not result in the violation by us of Rule 15c3-1 under the Exchange Act, if such requirements are applicable to us. You shall have full authority to take such action as you may deem advisable in respect of all matters pertaining to any Offering. Neither you nor any Underwriter shall be under any liability to us, except for lack of good faith and for obligations expressly assumed by you in this Agreement; provided, however, that nothing in this sentence shall be deemed to relieve you from any liability imposed by the Securities Act.

(j) Best Efforts Offerings. If you communicate to us that a particular offering is being made on a best efforts basis, then the terms in this Section 3(j) apply and other inconsistent terms in this Agreement do not apply.

(i) The offering will be a best efforts offering. The offering also will be contingent and involve a closing only after receipt of necessary documentation from the issuer and satisfaction of other conditions, if any, specified in the prospectus or offering circular and the agency or engagement agreement with you and the issuer. The offering is designed to comply with applicable SEC rules, including Rules 15c2-4, 10b-9, and 15c6-1. See NASD Notice to Members 98-4, 87-61 and 84-7.

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(ii) We represent and agree that we shall take necessary steps to comply with SEC Rules 15c2-4, 10b-9 and 15c6-1, including, but not limited to, depositing funds in a complying special account if funds are received before all closing conditions have been met. We also represent that we are aware that those who purchase in this best efforts offering are subject to the investor purchase limitations described in the prospectus or offering circular.

(4) Indemnification. We agree to indemnify and hold harmless Ryan Beck, the issuer of the Securities, each person, if any, who controls (within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act) Ryan Beck or the issuer of the Securities, and their respective directors, officers and employees from and against any and all losses, liabilities, costs or claims (or actions in respect thereof) (collectively, “Losses”) to which any of them may become subject (including all reasonable costs of investigating, disputing or defending any such claim or action), insofar as such Losses arise out of or are in connection with the breach of any representation, warranty or agreement made by us herein.

If any claim, demand, action or proceeding (including any governmental investigation) shall be brought or alleged against an indemnified party in respect of which indemnity is to be sought against an indemnifying party, the indemnified party shall promptly notify the indemnifying party in writing, and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnified party may designate in such proceeding and shall pay the reasonable fees and expenses of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the reasonable fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel, (ii) the indemnifying party has failed within a reasonable time to retain counsel reasonably satisfactory to such indemnified party or (iii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is agreed that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate law firm (in addition to local counsel where necessary) for all such indemnified parties. Such firm shall be designated in writing by the indemnified party. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding.

The indemnity agreements contained in this Section and the representations and warranties by us in this Agreement shall remain operative and in full force and effect regardless of: (i) any termination of this Agreement, (ii) any investigation made by an indemnified party or

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on such party’s behalf or any person controlling an indemnified party or by or on behalf of the indemnifying party, its directors or officers or any person controlling the indemnifying party, and (iii) acceptance of and payment for any Securities.

(5) Termination; Supplements and Amendments. This Agreement may be terminated by either party hereto upon five business days’ written notice to the other party; provided that with respect to any Offering for which a Written Communication was sent and accepted prior to such notice, this Agreement as it applies to such Offering shall remain in full force and effect and shall terminate with respect to such Offering in accordance with the last sentence of this Section. This Agreement may be supplemented or amended by you by written notice thereof to us, and any such supplement or amendment to this Agreement shall be effective with respect to any Offering to which this Agreement applies after the date of such supplement or amendment. Each reference to “this Agreement” herein shall, as appropriate, be to this Agreement as so amended and supplemented. The terms and conditions set forth in Sections 3(c) and (e) with regard to any offering will terminate at the close of business on the thirtieth day after the date of the initial public offering of the Securities to which such Offering relates, but such terms and conditions, upon notice to us, may be terminated by you at any time.

(6) Successors and Assigns. This Agreement shall be binding on, and inure to the benefit of, the parties hereto and other persons specified or indicated in Section 1, and the respective successors and assigns of each of them.

(7) Governing Law. This Agreement and the terms and conditions set forth herein with respect to any Offering together with such supplementary terms and conditions with respect to such Offering as may be contained in any Written Communication from you to us in connection therewith shall be governed by, and construed in accordance with, the laws of the State of New York without regard to conflicts of laws principles.

By signing this Agreement we confirm that our subscription to, or our acceptance of any reservation of, any Securities pursuant to an Offering shall constitute (i) acceptance of and agreement to the terms and conditions of this Agreement (as supplemented and amended pursuant to Section 5) together with and subject to any supplementary terms and conditions contained in any Written Communication from you in connection with such Offering, all of which shall constitute a binding agreement between us and you, individually, or as representative of any Underwriters, (ii) in confirmation that our representations and warranties set forth in Section 3 are true and correct at that time and (iii) confirmation that our agreements set forth in Sections 2 and 3 have been and will be fully performed by us to the extent and at the times required thereby.

Very truly yours,

(Name of Firm)

By:

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Confirmed, as of the date first above written.

RYAN, BECK & CO., INC.

By:

Execution Date: ______________________________

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EX-2

Exhibit 2

ESSA BANK & TRUST

STROUDSBURG, PENNSYLVANIA

PLAN OF CONVERSION

From Mutual to Stock Form of Organization

1. General

This Plan of Conversion provides for the conversion of ESSA Bank & Trust (the “Bank”) from a Pennsylvania chartered mutual savings association to a Pennsylvania chartered stock savings association pursuant to the rules and regulations of the Department and the OTS. As part of the Conversion, the Plan provides for the concurrent formation of a holding company (the “Holding Company”) that will own 100% of the common stock of the Bank. The Board of Directors has considered the alternatives available to the Bank with respect to its corporate structure, and has determined that a mutual-to-stock conversion as described in this Plan will be in the best interests of the Bank, its depositors and the communities in which the Bank operates. Restructuring the Bank into the capital stock form of organization will increase its capital base and enhance the Bank’s ability to expand its franchise and the range of products and services it offers. The conversion proceeds will provide the Bank with additional resources to further develop and enhance its technology capabilities and delivery channels. It will provide the Bank with greater flexibility to structure and finance the expansion of its operations, including the potential acquisition of other financial institutions. The stock form of organization will also enable the Bank to adopt stock benefit plans as a further performance incentive and as a further means of attracting, retaining and compensating management and other key personnel. The stock holding company form of organization will also offer the Bank greater organizational and operating flexibility, including the expanded powers available to holding companies under the recently enacted financial modernization legislation.

The Plan provides that non-transferable subscription rights to purchase Conversion Stock will be offered first to Eligible Account Holders of record as of the Eligibility Record Date, then to the Bank’s Tax-Qualified Employee Plans, then to Supplemental Eligible Account Holders as of the Supplemental Eligibility Record Date and then to Voting Members. Concurrently with, at any time during, or promptly after the Subscription Offering, and subject to availability after the satisfaction of subscription rights, an opportunity to subscribe may also be offered to the general public in a Community Offering with a preference given to natural persons who reside in the Bank’s Local Community. The price of the Conversion Stock will be based upon an independent appraisal of the Bank and the Holding Company and will reflect its estimated pro forma market value, as converted. No change will be made in the Board of Directors or management as a result of the Conversion.

In furtherance of the Bank’s commitment to its community, this Plan provides for the establishment of a charitable foundation as part of the Conversion. The Foundation is intended to complement the Bank’s existing community reinvestment activities in a manner that will allow the Bank’s local communities to share in the growth and profitability of the Holding Company and the Bank over the long term. Consistent with the Bank’s goal, the Holding Company intends to donate to the Foundation cash and shares of Common Stock, in an aggregate amount up to 8% of the value of the shares of Conversion Stock sold in the Conversion.

Upon the Conversion, the legal existence of the Bank shall not terminate but the stock Bank shall be a continuation of the entity of the mutual Bank and all property of the mutual Bank, including its right, title and interest in and to all property of whatever kind and nature, whether real, personal, or mixed, and things, and choses in action, and every right, privilege,

interest and asset of every conceivable value or benefit then existing or pertaining to it, or which would inure to it, immediately by operation of law and without the necessity of any conveyance or transfer and without any further act or deed shall vest in the stock Bank. The stock Bank shall have, hold, and enjoy the same in its own right as fully and to the same extent as the same was possessed, held and enjoyed by the mutual Bank. The stock Bank at the time and the taking effect of the Conversion shall continue to have and succeed to all the rights, obligations and relations of the mutual Bank. All pending actions and other judicial or administrative proceedings to which the Bank was a party shall not be discontinued by reason of the Conversion, but may be prosecuted to final judgment or order in the same manner as if the Conversion had not been made and the stock Bank resulting from the Conversion may continue the actions in its name notwithstanding the Conversion.

Upon the Conversion, each Person having a Deposit Account at the Bank prior to the Conversion will continue to have a Deposit Account, without further payment therefore, in the same amount and subject to the same terms and conditions (except for liquidation rights) as in effect prior to the Conversion. All of the Bank’s insured Deposit Accounts will continue to be insured by the FDIC to the extent provided by applicable law.

This Plan has been unanimously approved by the Board of Directors of the Bank and must be approved by the affirmative vote of at least a majority of the eligible votes of Voting Members. Each Voting Member will be entitled to cast one vote for each $100 or fraction thereof of deposits in the Bank on the Voting Record Date, and each Voting Member who is a borrower from the Bank shall be entitled to one vote for all borrowings from the Bank as of the Voting Record Date, providing that no Voting Member shall be entitled to cast more than 1,000 votes. By approving the Plan, the Voting Members will also be approving all steps necessary and incidental to the formation of the Bank (in stock form) and the Holding Company. The Conversion is also subject to the approval of the Secretary and the OTS.

2. Definitions

Acting in Concert: the term “acting in concert” means (i) knowing participation in a joint activity or interdependent conscious parallel action towards a common goal whether or not pursuant to an express agreement; and (ii) a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise. A person or company which acts in concert with another person or company (“other party”) shall also be deemed to be acting in concert with any person or company who is also acting in concert with that other party. A Tax-Qualified Employee Plan will not be deemed to be acting in concert with its trustee or a person who serves in a similar capacity solely for the purpose of determining whether stock held by the trustee and stock held by the plan will be aggregated.

Application: The application to be filed with the OTS and the Secretary by the Bank, and by the Holding Company with the OTS, in connection with the Conversion.

Associate: The term “Associate,” when used to indicate a relationship with any Person, means: (i) any corporation or organization (other than the Bank, the Holding Company or a majority-owned subsidiary of the Bank or the Holding Company) of which such Person is a

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senior officer or partner, or beneficially owns, directly or indirectly, 10% or more of any class of equity securities of the corporation or organization; (ii) any trust or other estate, if the Person has a substantial beneficial interest in the trust or estate or is a trustee or fiduciary of the trust or estate (for purposes of §§ 563b.370, 563b.380, 563b.385, 563b.390, 563b.395 and 563b.505 of the Regulations, a Person who has a substantial beneficial interest in a Tax-Qualified or Non-Tax Qualified Employee Plan, or who is a trustee or a fiduciary of the plan, is not an associate of the plan; and for purposes of § 563b.370 of the Regulations, a Tax-Qualified Employee Plan is not an associate of a Person); (iii) any Person who is related by blood or marriage to such Person and (a) who lives in the same house as the Person; or (b) who is a director or senior officer of the Bank or the Holding Company or a subsidiary thereof.

Bank: ESSA Bank & Trust, Stroudsburg, Pennsylvania, in its pre-Conversion mutual form or post-Conversion stock form, as indicated by the context in which it is used.

Community Offering: The offering to the general public of any unsubscribed shares, which may be effected as provided in Section 5 hereof. The Community Offering may include a Syndicated Community Offering managed by one or more investment banking firms.

Control: The possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities of such Person, the ownership of voting securities of any company that possesses such power, or otherwise.

Conversion: The conversion and reorganization of the Bank to stock form pursuant to this Plan, and all steps incident or necessary thereto, including the formation of the Holding Company and the Stock Offering.

Conversion Stock: Shares of common stock that will be issued and sold by the Holding Company as a part of the Conversion; provided, however, that for purposes of calculating Subscription Rights and maximum purchase limitations under the Plan, references to the number of shares of Conversion Stock shall refer to the number of shares issued in the Subscription Offering.

Department: The Pennsylvania Department of Banking.

Deposit Account: Any deposit maintained at the Bank, including without limitation, savings, time, demand, negotiable orders of withdrawal (NOW), money market and passbook accounts, but excluding tax, insurance and other escrow accounts.

Director: A member of the Board of Directors of the Bank or a member of the Board of Directors of the Holding Company.

Eligibility Record Date: The close of business on April 30, 2005.

Eligible Account Holder: Any Person holding a Qualifying Deposit in the Bank on the Eligibility Record Date.

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Employee: Any individual who is employed by the Bank on a substantially full-time basis.

ESOP: The Employee Stock Ownership Plan established by the Bank or the Holding Company.

Estimated Price Range: The range of the minimum and maximum aggregate values of the Conversion Stock determined by the Board of Directors of the Bank and the Board of Directors of the Holding Company. The Estimated Price Range will be within the estimated pro forma market value of the Conversion Stock as determined by the Independent Appraiser prior to the Subscription Offering as updated from time to time thereafter.

Exchange Act: The Securities Exchange Act of 1934, as amended.

Foundation: The charitable foundation that will qualify as an exempt organization under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, the establishment and funding of which is contemplated by Section 14 herein.

Holding Company: The corporation which, upon completion of the Conversion, will own all of the outstanding common stock of the Bank.

Independent Appraiser: An appraiser retained by the Bank to prepare an appraisal of the pro forma market value of the Conversion Stock.

Internal Revenue Code: The Internal Revenue Code of 1986, as amended.

Liquidation Account: The interest in the Bank received by Eligible Account Holders and Supplemental Eligible Account Holders in connection with the Conversion, as set forth in Section 13 of this Plan.

Local Community: The Counties of Monroe and Northhampton in the Commonwealth of Pennsylvania.

Market Maker: A dealer (i.e., any Person who engages directly or indirectly as agent, broker or principal in the business of offering, buying, selling, or otherwise dealing or trading in securities issued by another Person) who, with respect to a particular security, (i) regularly publishes bona fide, competitive bid and offer quotations in a recognized inter-dealer quotation system; or (ii) furnishes bona fide competitive bid and offer quotations on request; and (iii) is ready, willing, and able to effect transactions in reasonable quantities at his quoted prices with other brokers or dealers.

Member: Any Person or entity who qualifies as a member of the Bank pursuant to its articles of incorporation and bylaws.

Non-Tax-Qualified Employee Benefit Plan: Any stock option, bonus stock or restricted stock plan or other employee benefit plan that is not a “Tax-Qualified Employee Benefit Plan” and that is maintained by the Bank or the Holding Company for the benefit of Officers, Employees or Directors of the Bank or the Holding Company, or any Affiliate of any of them.

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Officer: An executive officer of the Holding Company or the Bank, including the Chief Executive Officer, President, Executive or Senior Vice Presidents in charge of principal business functions, Secretary, Treasurer and any other person performing similar functions.

Order Form: Any form to be used in the Subscription Offering and in the Community Offering or the Syndicated Community Offering to purchase Conversion Stock.

Person: An individual, a corporation, a partnership, an association, a joint-stock company, a trust, any unincorporated organization, or a government or political subdivision thereof.

Plan: This Plan of Conversion of the Bank, including any amendment approved as provided in this Plan.

Public Offering: The offering for sale by the Underwriters to the general public of any shares of Conversion Stock not subscribed for in the Subscription Offering or the Community Offering.

Purchase Price: The price per share, determined as provided in Section 5 of the Plan, at which the Conversion Stock will be sold in accordance with the terms hereof.

Qualifying Deposit: The aggregate balance of all Deposit Accounts of an Eligible Account Holder as of the Eligibility Record Date or a Supplemental Eligible Account Holder as of the Supplemental Eligibility Record Date, in each case provided such aggregate balance is not less than $50.

Resident and Residence: Any person who occupies a dwelling within the Commonwealth of Pennsylvania or county and establishes an ongoing physical presence within the Commonwealth of Pennsylvania or county together with an indication that such presence is something other than merely transitory in nature. To the extent the person is a corporation or other business entity, the principal place of business or headquarters shall be in the Commonwealth of Pennsylvania or county. To the extent a person is a personal benefit plan, the circumstances of the beneficiary shall apply with respect to this definition. In the case of all other benefit plans, the circumstances of the trustee shall be examined for purposes of this definition. The Bank may utilize deposit or loan records or such other evidence provided to it to make a determination as to whether a person is a Resident. In all cases, however, such a determination shall be made in the sole discretion of the Bank.

SEC: Securities and Exchange Commission.

Secretary: The Secretary of Pennsylvania Department of Banking.

Special Meeting: The Special Meeting of Voting Members called for the purpose of considering and voting upon the Plan of Conversion.

Stock Offering: The offering and issuance, pursuant to this Plan, of the Conversion Stock in the Subscription Offering, Community Offering or Syndicated Community Offering, as the case may be.

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Subscription Offering: The offering of shares of Conversion Stock for subscription and purchase pursuant to Section 5 of the Plan.

Subscription Rights: Non-transferable, non-negotiable, personal rights of the Bank’s Eligible Account Holders, Tax-Qualified Employee Plans, Supplemental Eligible Account Holders, and Voting Members, to subscribe for shares of Conversion Stock in the Subscription Offering.

Supplemental Eligibility Record Date: The close of business on the last day of the calendar quarter preceding approval of the Plan by the Secretary.

Supplemental Eligible Account Holder: Any person holding a Qualifying Deposit (other than an officer or director of the Bank and their associates) on the Supplemental Eligibility Record Date.

Syndicated Community Offering: The offering of Conversion Stock, following or concurrently with the Community Offering, through a syndicate of broker-dealers.

Tax-Qualified Employee Plans: Any defined benefit plan or defined contribution plan of the Bank or the Holding Company, such as the ESOP and the Bank’s 401(k) savings plan, which with its related trust meets the requirements to be “qualified” under Section 401 of the Internal Revenue Code.

Underwriters: The investment banking firm or firms agreeing to purchase Conversion Stock in order to offer and sell such Conversion Stock in the Public Offering.

Voting Member: Any person holding a Deposit Account on the Voting Record Date, or any borrower who qualifies as a Voting Member on the Voting Record Date.

Voting Record Date: The date fixed by the Board of Directors as the date for determining Voting Members of the Bank entitled to notice of and to vote at the Special Meeting, which date shall not be more than 60 nor less than 20 days before the date of the Special Meeting.

3. Regulatory and Depositor Approvals

This Plan, having been unanimously adopted by the Board of Directors of the Bank, shall be submitted, together with an Application, to the OTS and to the Secretary for approval. Following approval of this Plan by the Board of Directors of the Bank, the Bank shall cause notice of the adoption of the Plan, and of its intention to convert to stock form, to be conspicuously posted at its home office and each of its branch offices. The Bank shall also issue a press release containing all of the material terms of the proposed Conversion and may place an advertisement containing such material terms in a newspaper having general circulation in the communities in which the principal office and branches of the Bank are located.

Following (i) approval of the Bank’s Application by the OTS and the Secretary, and (ii) the receipt of any necessary waivers from the OTS or the Secretary, the Bank shall submit the

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Plan to the Bank’s Voting Members for approval at the Special Meeting. The Bank shall mail to each Voting Member, at his or her last known address appearing on the records of the Bank, a Notice of Special Meeting, a proxy card and a Proxy Statement and certain other documents relating to the Bank and its Conversion.

The Special Meeting shall be held upon written notice given no less than 20 days nor more than 45 days prior to the date of the Special Meeting. At the Special Meeting, each Voting Member shall be entitled to cast one vote in person or by proxy for every one hundred dollars ($100.00) of Deposit Accounts such Voting Member had with the Bank as of the Voting Record Date. Each Voting Member who is a borrower of the Bank shall be entitled to cast one vote for all borrowings from the Bank as of the Voting Record Date. No Voting Member, however, shall be entitled to cast more than 1,000 votes. The Board of Directors shall appoint an independent custodian and tabulator to receive and hold proxies to be voted at the Special Meeting and count the votes cast in favor of and in opposition to the Plan.

The Secretary shall be notified of the results of the Special Meeting by a certificate signed by the appropriate Officers of the Bank promptly after the conclusion of the Special Meeting. The Plan must be approved by the affirmative vote of at least a majority of the number of votes entitled to be cast by Voting Members at the Special Meeting. If the Plan is so approved, the Bank shall take all other necessary steps to effect the Conversion subject to the terms and conditions of the Plan. If the Plan is not so approved, upon conclusion of the Special Meeting and any adjournment or postponement thereof, the Plan shall not be implemented without further vote and all funds submitted in the Subscription Offering and Community Offering shall be returned to subscribers, with interest as provided herein, and all withdrawal authorizations shall be canceled.

The Board of Directors of the Bank intends to take all necessary steps to form the Holding Company. The Holding Company will make timely applications for any requisite regulatory approvals, including an Application with the Secretary, a savings and loan holding company application with the OTS, and a Registration Statement on Form S-1 with the SEC.

4. Conversion Procedures

The Conversion Stock will be offered for sale in the Subscription Offering to Eligible Account Holders, the Tax-Qualified Employee Plans, Supplemental Eligible Account Holders and Voting Members in the priorities set forth in Section 5.C of this Plan, prior to or within 45 days after the date of the Special Meeting. The Subscription Offering may begin as early as the mailing of the proxy statement for the Special Meeting. The Bank may, either concurrently with, at any time during, or promptly after the Subscription Offering, also offer the Conversion Stock to and accept orders from other Persons in a Community Offering with a preference given to natural persons residing in the Local Community; provided that the Bank’s Eligible Account Holders, Tax-Qualified Employee Plans, Supplemental Eligible Account Holders and Voting Members shall have the priority rights to subscribe for Conversion Stock set forth in Section 5 of this Plan. The Holding Company and the Bank may delay commencing the Subscription Offering beyond such 45-day period in the event there exists unforeseen material adverse market or financial conditions. If the Subscription Offering commences prior to the Special Meeting, subscriptions will be accepted subject to the approval of the Plan at the Special Meeting.

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The period for the Subscription Offering will be not less than 20 days nor more than 45 days and the period for the Community Offering will be not more than 45 days, unless extended by the Bank. If, upon completion of the Subscription Offering and any Community Offering, any shares of Conversion Stock remain available for sale, such shares may, if feasible, be offered for sale in a Syndicated Community Offering or sold to the Underwriters for resale to the general public in the Public Offering. If for any reason a Syndicated Community Offering or Public Offering of all shares not sold in the Subscription Offering and Community Offering cannot be effected, the Holding Company and the Bank will use their best efforts to obtain other purchasers, subject to regulatory approval. Completion of the sale of all shares of Conversion Stock not sold in the Subscription Offering and Community Offering is required within 45 days after termination of the Subscription Offering, subject to extension of such 45-day period by the Holding Company and the Bank with the approval of the Secretary, and the OTS if required. The Holding Company and the Bank may jointly seek one or more extensions of such 45-day period if necessary to complete the sale of all shares of Conversion Stock. In connection with such extensions, subscribers and other purchasers will be permitted to increase, decrease or rescind their subscriptions or purchase orders to the extent required by the OTS and/or the Secretary in approving the extensions. Completion of the sale of all shares of Conversion Stock is required within 24 months after the date of the Special Meeting. The Bank may elect to pay fees on a per share basis to brokers who assist Persons in determining to purchase Conversion Stock in the Community Offering and Syndicated Community Offering.

The Boards of Directors of the Holding Company and the Bank also intend to take all necessary steps to establish the Foundation and to fund the Foundation in the manner set forth in Section 14 hereof. Upon the issuance of the Conversion Stock, the Holding Company will purchase from the Bank all of the capital stock of the Bank to be issued by the Bank in the Conversion in exchange for at least 50% of the Conversion proceeds.

The Boards of Directors of the Bank may determine for any reason at any time prior to the issuance of the Conversion Stock not to utilize a holding company form of organization in the Conversion. If the Board of Directors determines not to complete the Conversion utilizing a holding company form of organization, the stock of the Bank will be issued and sold in accordance with the Plan. In such case, the Holding Company’s registration statement will be withdrawn from the SEC, the Bank will take steps necessary to complete the Conversion, including filing any necessary documents with the Secretary and the OTS and will issue and sell the Conversion Stock in accordance with this Plan. In such event, any subscriptions or orders received for Conversion Stock of the Holding Company shall be deemed to be subscriptions or orders for Conversion Stock of the Bank, and the Bank shall take such steps as permitted or required by the OTS, the Secretary and the SEC.

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5. Stock Offering

A. Total Number of Shares and Purchase Price of Conversion Stock

The total number of shares of Conversion Stock to be issued and sold in the Conversion will be determined jointly by the Board of Directors of the Holding Company and the Board of Directors of the Bank prior to the commencement of the Subscription Offering, subject to adjustment if necessitated by market or financial conditions prior to consummation of the Conversion. In particular, the total number of shares may be increased by up to 15% of the number of shares offered in the Subscription and Community Offering if the Estimated Price Range is increased subsequent to the commencement of the Subscription and Community Offering to reflect changes in market and financial conditions, demand for the shares, and regulatory considerations.

All shares of Conversion Stock offered for sale in the Subscription Offering, Community Offering, Syndicated Community Offering or Public Offering will be sold at a uniform price per share referred to in this Plan as the Purchase Price. The aggregate price for which all shares of Conversion Stock will be sold will be based on an independent appraisal of the estimated total pro forma market value of the Holding Company and the Bank. The appraisal will be performed in accordance with regulatory guidelines and will be made by an Independent Appraiser experienced in the area of thrift institution appraisals. The appraisal will include, among other things, an analysis of the historical and pro forma operating results and capital of the Bank and a comparison of the Holding Company, the Bank and the Conversion Stock with comparable thrift institutions and holding companies and their respective outstanding capital stock.

Prior to the commencement of the Subscription and Community Offerings, an Estimated Price Range will be established, which range will vary within 15% above to 15% below the midpoint of such range. The number of shares of Conversion Stock to be issued and the Purchase Price per share may be increased or decreased by the Bank. In the event that the aggregate Purchase Price of the Conversion Stock to be issued in the Conversion is below the minimum of the Estimated Price Range, or materially above the maximum of the Estimated Price Range, resolicitation of purchasers may be required; provided that up to a 15% increase above the maximum of the Estimated Price Range will not be deemed material so as to require a resolicitation. In the event that the aggregate Purchase Price of the Conversion Stock is below the minimum of the Estimated Price Range or in excess of 15% above the maximum of the Estimated Price Range, and a resolicitation is required, such resolicitation shall be effected in such manner and within such time as the Bank shall establish, with the approval of the OTS and the Secretary, if required. Based upon the independent appraisal, the Board of Directors of the Holding Company and the Board of Directors of the Bank will jointly fix the Purchase Price. The Purchase Price for each share of Conversion Stock will be determined by dividing the estimated appraised aggregate pro forma market value of the Holding Company and the Bank, based on the independent appraisal, by the total number of shares of Conversion Stock to be issued and sold by the Holding Company upon Conversion. If, following completion of the Subscription Offering and any Community Offering or Syndicated Community Offering, a Public Offering is effected, the Purchase Price for each share of Conversion Stock in the Public Offering will be the same as the Purchase Price in the Subscription and Community Offering. The price paid by the Underwriters for each share of Conversion Stock will be the Purchase Price less a negotiated underwriting discount.

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Notwithstanding the foregoing, no sale of Conversion Stock may be consummated unless, prior to such consummation, the Independent Appraiser confirms to the Bank, the Holding Company and to the Secretary and the OTS that, to the best knowledge of the Independent Appraiser, nothing of a material nature has occurred which, taking into account all relevant factors, would cause the Independent Appraiser to conclude that the aggregate value of the Conversion Stock at the Purchase Price is incompatible with its estimate of the aggregate consolidated pro forma market value of the Holding Company and the Bank. If such confirmation is not received, the Bank may cancel the Subscription and Community Offerings and/or any Syndicated Community Offering or Public Offering, extend the Conversion, establish a new Estimated Price Range, extend, reopen or hold new Subscription, Community or Syndicated Community Offerings, or take such other action as the Secretary and the OTS may permit.

B. Purchase by the Holding Company of the Stock of the Bank

Upon the consummation of the sale of all of the Conversion Stock, the Holding Company will purchase from the Bank all of the capital stock of the Bank to be issued by the Bank in the Conversion in exchange for at least 50% of the Conversion proceeds.

The Holding Company may retain up to 50% of the proceeds of the Conversion. The Conversion proceeds will provide economic strength to the Holding Company and the Bank for the future in a highly competitive and regulated environment and would facilitate expansion through acquisitions, diversification into other related businesses and for other business and investment purposes, including the payment of dividends and future repurchases of Conversion Stock.

C. Subscription Rights

Non-transferable Subscription Rights to purchase shares will be issued without payment therefor to Eligible Account Holders, the Tax-Qualified Employee Plans, Supplemental Eligible Account Holders and the Voting Members as set forth below.

1. Preference Category No. 1: Eligible Account Holders

Each Eligible Account Holder shall receive non-transferable Subscription Rights to subscribe for shares of Conversion Stock in an amount equal to the greater of 35,000 shares, one-tenth of one percent (.10%) of the total offering of shares, or 15 times the product (rounded down to the next whole number) obtained by multiplying the total number of shares of common stock to be issued by a fraction, the numerator of which is the amount of the Qualifying Deposit of the Eligible Account Holder and the denominator is the total amount of Qualifying Deposits of all Eligible Account Holders as of the Eligibility Record Date. If sufficient shares are not available, shares shall be allocated first to permit each subscribing Eligible Account Holder to purchase to the extent possible 100 shares, and thereafter among each subscribing Eligible Account

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Holder pro rata in the same proportion as his Qualifying Deposit bears to the total Qualifying Deposits of all subscribing Eligible Account Holders whose subscriptions remain unsatisfied.

Non-transferable Subscription Rights to purchase Conversion Stock received by Directors and Officers of the Bank and their Associates, based on their increased deposits in the Bank in the one-year period preceding the Eligibility Record Date, shall be subordinated to all other subscriptions involving the exercise of non-transferable Subscription Rights of Eligible Account Holders.

2. Preference Category No. 2: Tax-Qualified Employee Plans.

The Tax-Qualified Employee Plans shall be given the opportunity to purchase in the aggregate up to 10% of the shares issued in the Stock Offering. In the event of an oversubscription in the Stock Offering, subscriptions for shares by the Tax-Qualified Employee Plans may be satisfied, in whole or in part, out of authorized but unissued shares of the Holding Company subject to the maximum purchase limitations applicable to such plans as set forth in Section 5E, or may be satisfied, in whole or in part, through open market purchases by the Tax-Qualified Employee Plans subsequent to the closing of the Stock Offering. If the final valuation exceeds the maximum of the Offering Range, up to 10% of the Common Stock issued in the Stock Offering may be sold to the Tax-Qualified Employee Plans notwithstanding any oversubscription by Eligible Account Holders.

3. Preference Category No. 3: Supplemental Eligible Account Holders

Each Supplemental Eligible Account Holder shall receive non-transferable Subscription Rights to subscribe for shares of Conversion Stock in an amount equal to the greater of 35,000 shares, one-tenth of one percent (.10%) of the total offering of shares, or 15 times the product (rounded down to the next whole number) obtained by multiplying the total number of shares of common stock to be issued by a fraction, the numerator of which is the amount of the qualifying deposit of the Supplemental Eligible Account Holder and the denominator is the total amount of qualifying deposits of all Supplemental Eligible Account Holders in the converting Bank, in each case on the Supplemental Eligibility Record Date.

Subscription Rights received pursuant to this category shall be subordinated to all Subscription Rights received by Eligible Account Holders and the Tax-Qualified Employee Plans pursuant to Category Nos. 1 and 2 above.

Any non-transferable Subscription Rights to purchase shares received by an Eligible Account Holder in accordance with Category No. 1 shall reduce to the extent thereof the Subscription Rights to be distributed to such person pursuant to this Category.

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In the event of an oversubscription for shares under the provisions of this subparagraph, the shares available shall be allocated first to permit each subscribing Supplemental Eligible Account Holder, to the extent possible, to purchase a number of shares sufficient to make his total allocation (including the number of shares, if any, allocated in accordance with Category No. 1) equal to 100 shares, and thereafter among each subscribing Supplemental Eligible Account Holder pro rata in the same proportion as his Qualifying Deposit bears to the total Qualifying Deposits of all subscribing Supplemental Eligible Account Holders whose subscriptions remain unsatisfied.

4. Preference Category No. 4: Voting Members

To the extent there are sufficient shares remaining after satisfaction of subscriptions by Eligible Account Holders, the Tax-Qualified Employee Plans, and Supplemental Eligible Account Holders, each Voting Member who is not an Eligible Account Holder or Supplemental Eligible Account Holders shall receive non-transferable subscription rights to subscribe for shares of Common Stock offered in the Stock Offering in an amount equal to the greater of 35,000 shares, or one-tenth of one percent (.1%) of the total shares offered in the Stock Offering. In the event Voting Members subscribe for a number of shares which, when added to the shares subscribed for by Eligible Account Holders, the Tax-Qualified Employee Plans, and Supplemental Eligible Account Holders, is in excess of the total shares offered in the Stock Offering, the subscriptions of Voting Members will be allocated among subscribing Voting Members so as to permit each subscribing Voting Member to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100 shares or the number of shares for which such person has subscribed. Thereafter, unallocated shares will be allocated to each subscribing Voting Member whose subscription remains unfilled on a pro rata basis based on the size of the order of each Voting Member.

D. Community Offering, Syndicated Offering and Public Offering

1. Any remaining shares of Conversion Stock not sold in the Subscription Offering may be offered for sale to the general public through a Community Offering, with preference as to the purchase of Conversion Stock given first to natural persons residing in the Bank’s Local Community and then to the public at large. The Community Offering, if any, may commence simultaneously with the Subscription Offering, or may commence during or after the commencement of the Subscription Offering, as the Board of Directors of the Holding Company and the Board of Directors of the Bank so determine. The right to subscribe for shares of Conversion Stock in the Community Offering is subject to the right of the Bank and Holding Company to accept or reject such subscriptions in whole or in part in their sole discretion. Conversion Stock being sold in the Community Offering will be offered and sold in a manner that will achieve the widest distribution of the Conversion Stock. No person may subscribe for or purchase more than 35,000 shares of Conversion Stock offered in the Community Offering; provided, however, that the amount permitted to be purchased in the Community Offering may be

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increased to 5% of the total offering of shares without the resolicitation of subscribers, unless required by the Secretary and/or the OTS. If the maximum purchase limit is so increased, orders accepted in the Community Offering shall be filled up to a maximum of 2% of the total offering and thereafter remaining shares shall be allocated on an equal number of shares basis per order until all orders have been filled. Further, the Bank may limit total subscriptions under this Section 5.D.1 so as to assure that the number of shares available for the Public Offering may be up to a specified percentage of the number of shares of Conversion Stock. The Community Offering shall be completed within 45 days after the termination of the Subscription Offering, unless such period is extended.

2. If any Conversion Stock remains unsold after the close of the Subscription and Community Offerings, the Holding Company and the Bank may use the services of a syndicate of registered broker-dealers to sell such unsold shares on a best efforts basis in a Syndicated Community Offering. The syndicate of registered broker-dealers may be managed by one of the syndicate members who will act as agent of the Holding Company and the Bank to assist the Holding Company and the Bank in the sale of the Conversion Stock. Neither the syndicate manager nor any other syndicate member shall have any obligation to take or purchase any of the shares of Conversion Stock in the Syndicated Community Offering. No person may subscribe for or purchase more than 35,000 shares of Conversion Stock offered in any Syndicated Community Offering, subject to the overall purchase limitations; provided, however, that the amount permitted to be purchased in the Syndicated Community Offering may be increased to 5% of the total offering of shares without the resolicitation of subscribers, unless required by the Secretary and/or the OTS. If the maximum purchase limit is so increased, orders accepted in the Syndicated Community Offering shall be filled up to a maximum of 2% of the total offering and thereafter remaining shares shall be allocated on an equal number of shares basis per order. Any shares of Conversion Stock not sold in the Subscription Offering, the Community Offering or the Syndicated Community Offering may be offered for sale through an underwritten firm commitment public offering. Any Syndicated Community Offering shall be completed within 45 days after the termination of the Subscription Offering, unless such period is extended.

3. Any shares of Conversion Stock not sold in the Subscription Offering, the Community Offering or any Syndicated Community Offering, if any, shall then be sold to the Underwriters for resale to the general public in the Public Offering. It is expected that the Public Offering will commence as soon as practicable after termination of the Subscription Offering and any Community Offering or Syndicated Community Offering. No person may subscribe for or purchase more than 35,000 shares of Conversion Stock offered in the Public Offering; provided, however, that the amount permitted to be purchased in the Public Offering may be increased to 5% of the total offering of shares without the resolicitation of subscribers, unless required by the Secretary and/or the OTS. The Public Offering shall be completed within 45 days after the termination of the Subscription Offering, unless such period is extended as provided in Section 5 hereof. Each share of Conversion Stock will be offered for sale in the Public Offering at the Purchase Price less any underwriting discount as provided in Section 5.A hereof, and set

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forth in the underwriting agreement between the Holding Company, the Bank and the Underwriters. Such underwriting agreement shall be filed with the Secretary, the OTS and the SEC.

4. If for any reason a Public Offering of unsubscribed shares of Conversion Stock cannot be effected and any shares remain unsold after the Subscription Offering and any Community Offering/Syndicated Community Offering, the Board of Directors of the Holding Company and the Board of Directors of the Bank will seek to make other arrangements for the sale of the remaining shares. Such other arrangements will be subject to the approval of the Secretary and the OTS and to compliance with applicable securities laws.

E. Additional Limitations Upon Purchases of Shares of Conversion Stock

The following additional limitations shall be imposed on all purchases of Conversion Stock in the Conversion:

1. The maximum purchase of Conversion Stock in the Offering by any person or group of persons through a single account is 35,000 shares. No Person, by himself or herself, or with an Associate or group of Persons acting in concert, may purchase more than 50,000 shares of Conversion Stock, except for the ESOP, which may subscribe for up to 8% of the Conversion Stock issued in the Conversion. For purposes of this paragraph, an Associate of a Person does not include a Tax-Qualified or Non-Tax Qualified Employee Plan in which the person has a substantial beneficial interest or serves as a trustee or in a similar fiduciary capacity. Moreover, for purposes of this paragraph, shares held by one or more Tax-Qualified or Non-Tax Qualified Employee Plans attributed to a Person shall not be aggregated with shares purchased directly by or otherwise attributable to that Person.

2. Directors and Officers and their Associates may not purchase in all categories in the Conversion an aggregate of more than 25.0% of the Conversion Stock. For purposes of this paragraph, an Associate of a Person does not include any Tax-Qualified Employee Plan. Moreover, any shares attributable to the Officers and Directors and their Associates, but held by one or more Tax-Qualified Employee Plans shall not be included in calculating the number of shares which may be purchased under the limitation in this paragraph.

3. The minimum number of shares of Conversion Stock that may be purchased by any Person in the Conversion is 25 shares, provided sufficient shares are available.

4. Depending upon market, financial or other conditions, the Board of Directors of the Bank and the Holding Company, with the receipt of any required approvals of the OTS and/or the Secretary and without further approval of Voting Members, may decrease or increase the purchase limitations in this Section 5 of the Plan, provided that the maximum purchase limitations may not be increased to a percentage in excess of 5% of the shares issued in the Stock Offering except as provided below. If the Bank and the Holding Company increase the maximum purchase limitations, the Bank

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and the Holding Company are only required to resolicit Persons who subscribed for the maximum purchase amount in the Subscription Offering and may, in their sole discretion, resolicit certain other large subscribers. The maximum purchase limitation may be increased to up to 9.99% of the shares issued in the Stock Offering, provided that orders for Common Stock exceeding 5% of the shares of Common Stock issued in the Stock Offering shall not exceed in the aggregate 10% of the total shares of Common Stock issued in the Stock Offering.

For purposes of this Section 5, the Directors and/or Officers of the Holding Company and the Bank shall not be deemed to be Associates or a group acting in concert solely as a result of their serving in such capacities.

Each Person purchasing Conversion Stock in the Conversion shall be deemed to confirm that such purchase does not conflict with the above purchase limitations.

F. Restrictions and Other Characteristics of Conversion Stock Being Sold

1. Transferability of Shares Purchased by Officers and Directors. Shares purchased by Directors or Officers may not be sold or otherwise disposed of for value for a period of one year from the date of Conversion, except for any disposition of such shares following the death of the original purchaser.

The certificates representing shares of Conversion Stock issued to Directors and Officers shall bear a legend giving appropriate notice of the one-year holding period restriction. Appropriate instructions shall be given to the transfer agent for such stock with respect to the applicable restrictions relating to the transfer of restricted stock. Any shares of common stock of the Holding Company subsequently issued as a stock dividend, stock split, or otherwise, with respect to any such restricted stock, shall be subject to the same holding period restrictions for Holding Company or Bank Directors and Officers as may be then applicable to such restricted stock.

2. Purchases After Conversion by Officers and Directors. No Director or Officer of the Holding Company or of the Bank, or Associate of such a Director or Officer, shall purchase any outstanding shares of capital stock of the Holding Company, except through a broker or dealer registered with the SEC, for a period of three years following the Conversion without the prior written approval of the Secretary. This restriction does not apply, however, to: (a) negotiated transactions involving more than one percent of the outstanding common stock; (b) the purchase of common stock made pursuant to an employee stock option plan or employee stock purchase plan which meets the requirements of Section 423 of the Internal Revenue Code; or (c) the purchase of common stock pursuant to a non-tax-qualified employee stock benefit plan which may be attributable to individual Officers and Directors of the Bank or Holding Company. As used herein, the term “negotiated transaction” means a transaction in which the securities are offered and the terms and arrangements relating to any sale are arrived at through direct communications between the seller or any Person acting on its behalf and the

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purchaser or his investment representative. The term “investment representative” shall mean a professional investment advisor acting as agent for the purchaser and independent of the seller and not acting on behalf of the seller in connection with the transaction.

3. Stock Repurchases by the Holding Company. Applicable OTS regulations prohibit the Holding Company from repurchasing its capital stock within one year following the Conversion, except that open market stock repurchases of up to 5% of its outstanding capital stock may be permitted if extraordinary circumstances exist and the OTS does not disapprove of such repurchases. Purchases to fund tax qualified employee stock benefit plans do not count toward this repurchase limitation. Repurchases to fund management recognition plans that have been approved by stockholders do not count toward the repurchase limitations (but prior written notification to the OTS is required).

4. Voting Rights. After Conversion, holders of deposit accounts will not have voting rights in the Bank or the Holding Company. Exclusive voting rights as to the Bank will be vested in the Holding Company, as the sole stockholder of the Bank. Voting rights as to the Holding Company will be held exclusively by its stockholders.

G. Exercise of Subscription Rights; Order Forms

1. If the Subscription Offering occurs concurrently with the solicitation of proxies for the Special Meeting, the subscription prospectus and Order Form may be sent to each Eligible Account Holder, the Tax-Qualified Employee Plans, Supplemental Eligible Account Holders and Voting Members at their last known address as shown on the records of the Bank as of the Voting Record Date. However, the Bank may, and if the Subscription Offering commences after the Special Meeting the Bank shall, furnish a subscription prospectus and Order Form only to Eligible Account Holders, the Tax-Qualified Employee Plans, Supplemental Eligible Account Holders and Voting Members who have returned to the Bank by a specified date prior to the commencement of the Subscription Offering a post card or other written communication requesting a subscription prospectus and Order Form. In such event, the Bank shall provide a postage-paid post card for this purpose and make appropriate disclosure in its proxy statement for the solicitation of proxies to be voted at the Special Meeting and/or letter sent in lieu of the proxy statement to those Eligible Account Holders, the Tax-Qualified Employee Plans, Supplemental Eligible Account Holders who are not Voting Members on the Voting Record Date.

2. Each Order Form will be preceded or accompanied by a prospectus describing the Holding Company and the Bank and the shares of Conversion Stock being offered for subscription and containing all other information required by the OTS, Secretary, or the SEC or necessary to enable Persons to make informed investment decisions regarding the purchase of Conversion Stock.

3. The Order Forms (or accompanying instructions) used for the Subscription Offering and any Community Offering will contain, among other things, the following:

(i) A clear and intelligible explanation of the Subscription Rights granted under the Plan to Eligible Account Holders, the Tax-Qualified Employee Plans, Supplemental Eligible Account Holders and the Voting Members;

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(ii) A specified expiration date by which Order Forms must be returned to and actually received by the Bank or its representative for purposes of exercising Subscription Rights, which date will be not less than 20 days after the Order Forms are mailed by the Bank;

(iii) The Purchase Price to be paid for each share subscribed for when the Order Form is returned;

(iv) A statement that 25 shares is the minimum number of shares of Conversion Stock that may be subscribed for under the Plan;

(v) A specifically designated blank space for indicating the number of shares being subscribed for;

(vi) A set of detailed instructions as to how to complete the Order Form including a statement as to the available alternative methods of payment for the shares being subscribed for;

(vii) Specifically designated blank spaces for dating and signing the Order Form;

(viii) An acknowledgment that the subscriber has received the subscription prospectus;

(ix) A statement of the consequences of failing to properly complete and return the Order Form, including a statement that the Subscription Rights will expire on the expiration date specified on the Order Form unless such expiration date is extended by the Holding Company and the Bank, and that the Subscription Rights may be exercised only by delivering the Order Form, properly completed and executed, to the Bank or its representative by the expiration date, together with required payment of the Purchase Price for all shares of Conversion Stock subscribed for;

(x) A statement that the Subscription Rights are non-transferable and that all shares of Conversion Stock subscribed for upon exercise of Subscription Rights must be purchased on behalf of the Person exercising the Subscription Rights for his own account; and

(xi) A statement that, after receipt by the Bank or its representative, an order may not be modified, withdrawn or canceled without the consent of the Bank.

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H. Method of Payment

Full payment for all shares of Conversion Stock at the Purchase Price per share must accompany all completed Order Forms. Payment may be made by check, bank draft or money order, or if the subscriber has a Deposit Account in the Bank (including a certificate of deposit), the subscriber may authorize the Bank to charge the subscriber’s account. Payment may not be made by wire transfer or any other electronic transfer of funds.

If a subscriber authorizes the Bank to charge his or her account, the funds will continue to earn interest, but may not be used by the subscriber until all Conversion Stock has been sold or the Plan is terminated, whichever is earlier. The Bank will allow subscribers to purchase shares by withdrawing funds from certificate accounts without the assessment of early withdrawal penalties with the exception of prepaid interest in the form of promotional gifts. In the case of early withdrawal of only a portion of such account, the certificate evidencing such account shall be canceled if the remaining balance of the account is less than the applicable minimum balance requirement, in which event the remaining balance will earn interest at the passbook rate. This waiver of the early withdrawal penalty is applicable only to withdrawals made in connection with the purchase of Conversion Stock under the Plan. Interest will also be paid, at not less than the then-current passbook rate, on all orders paid in cash, by check or money order, from the date payment is received until consummation of the Conversion. Payments made by check, bank draft or money order will be placed by the Bank in an escrow account at the Bank, or in our discretion at another insured depository institution, or other account established specifically for this purpose.

In the event of an unfilled amount of any order, the Bank will make an appropriate refund or cancel an appropriate portion of the related withdrawal authorization, after consummation of the Conversion. If for any reason the Conversion is not consummated, purchasers will have refunded to them all payments made (with applicable interest) and all withdrawal authorizations will be canceled in the case of subscription payments authorized from accounts at the Bank.

If any Tax-Qualified Employee Plans or Non-Tax-Qualified Employee Plans subscribe for shares during the Subscription Offering, such plans will not be required to pay for the shares subscribed for at the time they subscribe, but may pay for such shares of Conversion Stock subscribed for upon consummation of the Conversion. In the event that, after the completion of the Subscription Offering, the number of shares to be issued is increased above the maximum of the appraisal range included in the Prospectus, the Tax-Qualified and Non-Tax Qualified Employee Plans shall be entitled to increase their subscriptions by a percentage equal to the percentage increase in the number of shares to be issued above the maximum of the appraisal range, provided that such subscriptions shall continue to be subject to applicable purchase limits and stock allocation procedures.

I. Undelivered, Defective or Late Order Forms; Insufficient Payment

The Holding Company and the Bank shall have the absolute right, in their sole discretion, to reject any Order Form, including but not limited to, any Order Forms which (i) are not delivered or are returned by the United States Postal Service (or the addressee cannot be located); (ii) are not received back by the Bank or its representative, or are received after the

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termination date specified thereon; (iii) are defectively completed or executed; (iv) are not accompanied by the total required payment for the shares of Conversion Stock subscribed for (including cases in which the subscribers’ Deposit Accounts or certificate accounts are insufficient to cover the authorized withdrawal for the required payment); (v) are photocopies or facsimiles of the printed Order Forms mailed to each Person; or (vi) are submitted by or on behalf of a Person whose representations the Holding Company and the Bank believe to be false or who they otherwise believe, either alone or acting in concert with others, is violating, evading or circumventing, or intends to violate, evade or circumvent, the terms and conditions of this Plan. In such event, the Subscription Rights of the Person to whom such rights have been granted will not be honored and will be treated as though such Person failed to return the completed Order Form within the time period specified therein. The Bank may, but will not be required to, waive any irregularity relating to any Order Form or require submission of corrected Order Forms or the remittance of full payment for subscribed shares by such date as the Bank may specify. The interpretation of the Holding Company and the Bank of the terms and conditions of this Plan and of the proper completion of the Order Form will be final, subject to the authority of the OTS and the Secretary.

J. Transfer of Subscriptions Prohibited

Subscription Rights are nontransferable, and it is a violation of Federal and state law to either transfer or attempt to transfer Subscription Rights. Persons who transfer or attempt to transfer their Subscription Rights may be prosecuted and will risk forfeiture of such Subscription Rights.

K. Member in Non-Qualified States or in Foreign Countries

The Holding Company and the Bank will make reasonable efforts to comply with the securities laws of all states in the United States in which Persons entitled to subscribe for Conversion Stock pursuant to the Plan reside. However, no shares will be offered or sold under the Plan of Conversion to any such Person who (1) resides in a foreign country or (2) resides in a state of the United States in which a small number of Persons otherwise eligible to subscribe for shares under the Plan of Conversion reside or as to which the Holding Company and the Bank determine that compliance with the securities laws of such state would be impracticable for reasons of cost or otherwise, including, but not limited to, a requirement that the Holding Company or the Bank or any of their Officers, Directors or Employees register, under the securities laws of such state, as a broker, dealer, salesman or agent. No payments will be made in lieu of the granting of Subscription Rights to any such Person.

6. Stock Certificate of Incorporation and Bylaws

A. As part of the Conversion, the Bank will take all appropriate steps to amend its certificate of incorporation to read in the form of a Pennsylvania stock savings association certificate of incorporation, as prescribed by the Pennsylvania Banking Law. A copy of the proposed stock certificate of incorporation is available upon request.

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B. The Bank will also take appropriate steps to amend its bylaws to read in the form prescribed by the Banking Law for a capital stock savings association. A copy of the proposed stock bylaws is available upon request.

C. The effective date of the adoption of the Bank’s stock certificate of incorporation and bylaws shall be the date of the issuance and sale of the Conversion Stock as specified by the Secretary.

7. Holding Company Certificate of Incorporation

A copy of the proposed certificate of incorporation and bylaws of the Holding Company will be made available from the Bank upon request.

8. Directors of the Bank

Each Person serving as a member of the Board of Directors of the Bank at the time of the Conversion will thereupon become a Director of the Bank after the Conversion.

9. Stock Benefit Plans

In order to provide an incentive for Directors, Officers and Employees of the Holding Company and its subsidiaries (including the Bank), the Board of Directors of the Holding Company intends to adopt, subject to shareholder approval, a stock based incentive plan following completion of the Conversion, subject to applicable regulatory requirements.

10. Contributions to Tax-Qualified Employee Plans

The Bank and the Holding Company may in their discretion make scheduled contributions to any Tax-Qualified Employee Plans, provided that any such contributions which are for the acquisition of Conversion Stock, or the repayment of debt incurred for such an acquisition, do not cause the Bank to fail to meet its regulatory capital requirements.

11. Securities Registration and Market Making

Promptly following the Conversion, the Holding Company will register its common stock with the SEC pursuant to the Exchange Act. In connection with the registration, the Holding Company will undertake not to deregister such common stock, without the approval of the Secretary and the OTS for a period of three years thereafter.

The Holding Company shall use its best efforts to encourage and assist two or more Market Makers to establish and maintain a market for its common stock promptly following Conversion. The Holding Company will also use its best efforts to cause its common stock to be quoted on the Nasdaq System or to be listed on a national or regional securities exchange.

12. Status of Deposit Accounts and Loans Subsequent to Conversion

Each Deposit Account holder shall retain, without payment, a withdrawable Deposit Account or Accounts in the Bank, equal in amount to the withdrawable value of such account holder’s Deposit Account or Accounts prior to the Conversion. All Deposit Accounts will

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continue to be insured by the Federal Deposit Insurance Corporation up to the applicable limits of insurance coverage, and shall be subject to the same terms and conditions (except as to voting and liquidation rights) as such Deposit Account in the Bank at the time of the Conversion. All loans shall retain the same status after Conversion as these loans had prior to Conversion.

13. Liquidation Account

For purposes of granting to Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain Deposit Accounts at the Bank a priority in the event of a complete liquidation of the Bank, the Bank will, at the time of Conversion, establish a liquidation account in an amount equal to the surplus and reserves of the Bank as shown on its latest statement of financial condition contained in the final offering circular used in connection with the Conversion. The creation and maintenance of the liquidation account will not operate to restrict the use or application of any of the capital accounts of the Bank; provided, however, that such capital accounts will not be voluntarily reduced below the required dollar amount of the liquidation account. Each Eligible Account Holder and Supplemental Eligible Account Holder shall, with respect to the Deposit Account held, have a related inchoate interest in a portion of the liquidation account balance (“subaccount balance”).

The initial subaccount balance of a Deposit Account held by an Eligible Account Holder or Supplemental Eligible Account Holder shall be determined by multiplying the opening balance in the liquidation account by a fraction, the numerator of which is the amount of the Qualifying Deposit in the Deposit Account on the Eligibility Record Date or the Supplemental Eligibility Record Date and the denominator is the total amount of the Qualifying Deposits of all Eligible Account Holders or Supplemental Eligible Account Holders on such record dates in the Bank. Such initial subaccount balance shall not be increased, and it shall be subject to downward adjustment as provided below.

If the deposit balance in any Deposit Account of an Eligible Account Holder or Supplemental Eligible Account Holder at the close of business on any annual closing date subsequent to the record date is less than the lesser of (i) the deposit balance in such Deposit Account at the close of business on any other annual closing date subsequent to the Eligibility Record Date or the Supplemental Eligibility Record Date or (ii) the amount of the Qualifying Deposit in such Deposit Account on the Eligibility Record Date or the Supplemental Eligibility Record Date, the subaccount balance shall be reduced in an amount proportionate to the reduction in such deposit balance. In the event of a downward adjustment, the subaccount balance shall not be subsequently increased, notwithstanding any increase in the deposit balance of the related Deposit Account. If all funds in such Deposit Account are withdrawn, the related subaccount balance shall be reduced to zero.

In the event of a complete liquidation of the Bank (and only in such event), each Eligible Account Holder and Supplemental Eligible Account Holder shall be entitled to receive a liquidation distribution from the liquidation account in the amount of the then-current adjusted subaccount balances for Deposit Accounts then held before any liquidation distribution may be made to stockholders. No merger, consolidation, bulk purchase of assets with assumptions of Deposit Accounts and other liabilities, or similar transactions with another institution the accounts of which are insured by the Federal Deposit Insurance Corporation, shall be considered to be a complete liquidation. In such transactions, the liquidation account shall be assumed by the surviving institution.

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14. Establishment And Funding Of Charitable Foundation.

As part of the Conversion, the Holding Company and the Bank intend to establish the Foundation, which will qualify as an exempt organization under Section 501(c)(3) of the Internal Revenue Code, and to donate to the Foundation cash and shares of Common Stock, in an aggregate amount up to 8% of the value of the shares of Conversion Stock sold in the Conversion. The Foundation is being formed in connection with the Conversion in order to complement the Bank’s existing community reinvestment activities and to share with the Bank’s local community a part of the Bank’s financial success as a locally headquartered, community minded, financial services institution. The funding of the Foundation with Common Stock accomplishes this goal as it enables the community to share in the growth and profitability of the Holding Company and the Bank over the long- term.

The Foundation will be dedicated to the promotion of charitable purposes including community development, grants or donations to support housing assistance, not-for-profit community groups and other types of organizations or civic minded projects. The Foundation will annually distribute total grants to assist charitable organizations or to fund projects within its local community of not less than 5% of the average fair market value of Foundation assets each year, less certain expenses. In order to serve the purposes for which it was formed and maintain its Section 501(c)(3) qualification, the Foundation may sell, on an annual basis, a limited portion of the Common Stock contributed to it by the Holding Company.

The board of directors of the Foundation will be comprised of individuals who are Officers and/or Directors of the Holding Company or the Bank. For at least five years after the organization of the Corporation, except for temporary periods resulting from death, resignation, removal or disqualification, at least (i) one director shall be an independent director who is unaffiliated with the Bank or the Holding Company, who is from the Bank’s local community and who has experience with local community charitable organizations and grant making, and (ii) at least one director shall be a person who is also a member of the board of directors of the Bank.

The board of directors of the Foundation will be responsible for establishing the policies of the Foundation with respect to grants or donations, consistent with the stated purposes of the Foundation.

Depositors shall approve the establishment and funding of the Foundation as required by the OTS.

15. Restrictions on Acquisition of the Bank

Banking regulations limit acquisitions, and offers to acquire, direct or indirect beneficial ownership of more than 10% of any class of an equity security of the Bank or the Holding Company. In addition, the stock certificate of incorporation of the Bank shall provide that for a period of five years following completion of the Conversion: (i) no Person (i.e., no individual,

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group acting in concert, corporation, partnership, association, joint stock company, trust, or unincorporated organization or similar company, syndicate, or any other group formed for the purpose of acquiring, holding or disposing of securities of an insured institution) shall directly or indirectly offer to acquire or acquire beneficial ownership of more than 10% of any class of the Bank’s equity securities. Shares beneficially owned in violation of this charter provision shall not be counted as shares entitled to vote and shall not be voted by any Person or counted as voting shares in connection with any matter submitted to the shareholders for a vote.

16. Amendment or Termination of the Plan

If deemed necessary or desirable, this Plan may be substantively amended by the Board of Directors of the Bank as a result of comments from the OTS, the Department or otherwise at any time prior to solicitation of proxies from Voting Members to vote on this Plan, and at any time thereafter by the Board of Directors of the Bank with the concurrence of the OTS and if required, the Secretary. Any amendment to this Plan made after approval by Voting Members with the approval of the OTS shall not require further approval by Voting Members unless otherwise required by the OTS or the Secretary. The Board of Directors of the Bank may terminate this Plan at any time prior to the Special Meeting of Members to vote on this Plan, and at any time thereafter with the concurrence of the OTS and if required, the Secretary.

The Plan shall terminate if the sale of all shares of Conversion Stock is not completed within 24 months of the date of the Special Meeting. A specific resolution approved by a majority of the Board of Directors of the Bank is required in order for the Bank to terminate the Plan prior to the end of such 24-month period.

17. Expenses of the Conversion

The Holding Company and the Bank shall use their best efforts to assure that expenses incurred by them in connection with the Conversion shall be reasonable.

18. Tax Matters

Consummation of the Conversion is expressly conditioned upon prior receipt of either a ruling of the United States Internal Revenue Service or an opinion of tax counsel or other tax advisor with respect to federal taxation, and either a ruling of the Pennsylvania taxation authorities or an opinion of tax counsel or other tax advisor with respect to Pennsylvania taxation, to the effect that consummation of the transactions contemplated herein will not be taxable to the Holding Company or the Bank.

19. Extension of Credit for Purchase of Common Stock

The Bank may not loan funds or otherwise extend credit to any Person to purchase in the Conversion shares of Conversion Stock.

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20. Registration Under Securities Exchange Act of 1934

The Holding Company shall register its Conversion Stock under the Securities Exchange Act of 1934, as amended, concurrently with or promptly following the Conversion. The Holding Company shall not deregister such securities for a period of three years thereafter.

21. Conversion Stock Not Insured

The Conversion Stock will not be insured by the FDIC or any other federal or state government agency or authority.

22. Interpretation

Subject to applicable law as set forth in Section 23, all interpretations of this Plan and all applications of the provisions of this Plan to particular circumstances by a majority of the Board of Directors of the Bank shall be final, subject to the authority of the OTS and the Secretary.

23. Severability

If any term, provision, covenant or restriction contained in this Plan is held by a court or a federal or state regulatory agency of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions contained in this Plan shall remain in full force and effect, and shall in no way be affected, impaired or invalidated.

Approved on July 25, 2006 and amended on November 21, 2006 and January 23, 2007.

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EX-3.2

EXHIBIT 3.2

BYLAWS

OF

ESSA BANCORP, INC.

ARTICLE I

OFFICES

1.1 Registered Office and Registered Agent. The registered office ESSA Bancorp, Inc. (“Corporation”) shall be located in the Commonwealth of Pennsylvania at such place as may be fixed from time to time by the Board of Directors upon filing of such notices as may be required by law, and the registered agent shall have a business office identical with such registered office.

1.2 Other Offices. The Corporation may have other offices within or outside the Commonwealth of Pennsylvania at such place or places as the Board of Directors may from time to time determine.

ARTICLE II

SHAREHOLDERS’ MEETINGS

2.1 Place of Meetings. All meetings of the shareholders shall be held at such place within or outside the Commonwealth of Pennsylvania as shall be determined by the Board of Directors.

2.2 Annual Meetings. The annual meeting of the shareholders for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held each year on such date and time as may be determined by the Board of Directors and stated in the notice of such meeting.

2.3 Organization and Conduct. Each meeting of the shareholders shall be presided over by the President and Chief Executive Officer, or if the President and Chief Executive Officer is not present, by the Chairman of the Board or any Executive Vice President or such other person as the directors may determine. The Secretary, or in his absence any Assistant Secretary or temporary Secretary, shall act as secretary of each meeting of the shareholders. In the absence of the Secretary, Assistant Secretary and any temporary Secretary, the chairman of the meeting may appoint any person present to act as secretary of the meeting. The chairman of any meeting of the shareholders, unless prescribed by law or regulation or unless the Board of Directors has otherwise determined, shall determine the order of the business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussions as shall be deemed appropriate by him in his sole discretion.

2.4 Notice.

(a) Written notice of every meeting of shareholders shall be given by, or at the direction of, the Secretary of the Corporation or other authorized person to each shareholder of record entitled to vote at the meeting at least (i) ten days prior to the day named for a meeting that will consider a fundamental change under Chapter 19 of the Pennsylvania Business Corporation Law (“BCL”), or any successor thereto, or (ii) five days prior to the day named for a meeting in any other case. A notice of meeting shall specify the place, day and hour of the meeting, and in the case of a special meeting, the general nature of the business to be transacted thereat, as well as any other information required by law.

(b) When a meeting of shareholders is adjourned, it shall not be necessary to give any notice of the adjourned meeting or of the business to be transacted at an adjourned meeting, other than by announcement at the meeting at which the adjournment is taken, unless the Board of Directors fixes a new record date for the adjourned meeting or notice of the business to be transacted is required to be given by applicable law and such notice previously has not been given.

2.5 Record Date. The Board of Directors may fix in advance a record date for the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders, or any adjournment thereof, such date to be not more than 90 days and not less than (i) ten days in the case of a meeting that will consider a fundamental change under Chapter 19 of the BCL, or any successor thereto, or (ii) five days in the case of a meeting for any other purpose, prior to the date of the meeting established by the Board of Directors.

2.6 Voting List. The officer or agent having charge of the transfer books for shares of the Corporation shall make a complete list of the shareholders entitled to vote at any meeting of shareholders, arranged in alphabetical order, with the address of and number of shares held by each. The list shall be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting for the purposes thereof.

2.7 Quorum. Except as otherwise required by law:

(a) The presence of shareholders entitled to vote at least a majority of the votes that all shareholders are entitled to cast on a particular matter (after giving effect to the provisions of Article IV.C of the Articles of Incorporation) to be acted upon at a meeting of shareholders shall constitute a quorum for the purposes of consideration and action on the matter.

(b) The shareholders present at a duly organized meeting can continue to do business until adjournment notwithstanding the general withdrawal of enough shareholders to leave less than a quorum.

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2.8 Voting of Shares.

(a) Except as otherwise provided by law, the Corporation’s Articles of Incorporation or paragraph (b) of this Section 2.8, any corporate action to be taken by vote of the shareholders of the Corporation shall be authorized by receiving the affirmative vote of a majority of the votes cast by all shareholders entitled to vote thereon (after giving effect to the provisions of Article IV.C of these Articles of Incorporation) and, if any shareholders are entitled to vote thereon as a class, upon receiving the affirmative vote of a majority of the votes cast by shareholders entitled to vote as a class.

(b) Directors are to be elected by a plurality of votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. If, at any meeting of the shareholders, due to a vacancy or vacancies or otherwise, directors of more than one class of the Board of Directors are to be elected, each class of directors to be elected at the meeting shall be elected in a separate election by a plurality vote.

2.9 Proxies. Every shareholder entitled to vote at a meeting of shareholders may authorize another person to act for him by a proxy duly executed by the shareholder or his duly authorized attorney-in-fact. The presence of, or vote or other action at a meeting of shareholders, by a proxy of a shareholder shall constitute the presence of, or vote or other action by, the shareholder for all purposes. No proxy shall be valid after three years from the date of execution unless a longer time is expressly provided therein.

2.10 Shareholder Proposals.

(a) At an annual meeting of shareholders, only such business shall be conducted, and only such proposals shall be acted upon, as shall have been brought before the annual meeting by, or at the direction of, (a) the Board of Directors or (b) any shareholder of the Corporation who complies with all the requirements set forth in this Section 2.10.

(b) Proposals, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Corporation as set forth in this Section 2.10. For shareholder proposals to be included in the Corporation’s proxy materials, the shareholder must comply with all the timing and informational requirements of Rule 14a-8 of the Securities Exchange Act of 1934, as amended (“Exchange Act”) (or any successor regulation). With respect to shareholder proposals to be considered at the annual meeting of shareholders but not included in the Corporation’s proxy materials, the shareholder notice shall be delivered to, or mailed and received at, the principal executive offices of the Corporation not later than (x) 120 days prior to the anniversary date of the proxy statement or of a notice of the meeting by the Corporation in connection with the immediately preceding annual meeting of shareholders of the Corporation or (y), with respect to the first annual meeting of shareholders of the Corporation, which is expected to be held in February 2008, notice must be provided by September 3, 2007. Such shareholder’s notice shall set forth as to each matter the shareholder proposes to bring before the annual meeting (1) a description of the proposal desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (2) the name and address, as they appear on the Corporation’s books, of the shareholder

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proposing such business and, to the extent known, any other shareholders known by such shareholder to be supporting such proposal, (3) the class and number of shares of the Corporation’s stock which are Beneficially Owned (as defined in Section 3.12 (d) hereof) by the shareholder submitting the notice, by any Person who is Acting in Concert with or who is an Affiliate or Associate of such shareholder (as such capitalized terms are defined in Section 3.12 (d) hereof), by any Person who is a member of any group with such shareholder with respect to the Corporation stock or who is known by such shareholder to be supporting such proposal on the date the notice is given to the Corporation, and by each Person who is in control of, is controlled by or is under common control with any of the foregoing Persons (if any of the foregoing Persons is a partnership, corporation, limited liability company, association or trust, information shall be provided regarding the name and address of, and the class and number of shares of Corporation stock which are Beneficially Owned (as defined in Section 3.12(d) hereof) by, each partner in such partnership, each director, executive officer and shareholder in such corporation, each member in such limited liability company or association, and each trustee and beneficiary of such trust, and in each case each Person controlling such entity and each partner, director, executive officer, shareholder, member or trustee of any entity which is ultimately in control of such partnership, corporation, limited liability company, association or trust), (4) the identification of any person retained or to be compensated by the shareholder submitting the proposal, or any person acting on his or her behalf, to make solicitations or recommendations to shareholders for the purpose of assisting in the passage of such proposal and a brief description of the terms of such employment, retainer or arrangement for compensation, and (5) any material interest of the shareholder in such business.

(c) The Board of Directors may reject any shareholder proposal not timely made in accordance with the terms of this Section 2.10. If the Board of Directors, or a designated committee thereof or other authorized individual, determines that the information provided in a shareholder’s notice does not satisfy the information requirements of this Section 2.10 in any material respect, the Secretary of the Corporation or a duly authorized representative of the Corporation shall promptly notify such shareholder of the deficiency in the notice. The shareholder shall have an opportunity to cure the deficiency by providing additional information to the Secretary within such period of time not to exceed five days from the date such deficiency notice is given to the shareholder as the Board of Directors or such committee or other authorized individual shall reasonably determine. If the deficiency is not cured within such period, or if the Board of Directors or such committee or other authorized individual determines that the additional information provided by the shareholder, together with information previously provided, does not satisfy the requirements of this Section 2.10 in any material respect, then the Board of Directors may reject such shareholder’s proposal. The Secretary of the Corporation or a duly authorized representative of the Corporation shall notify a shareholder in writing whether his proposal has been made in accordance with the time and informational requirements of this Section 2.10. Notwithstanding the procedures set forth in this paragraph, if neither the Board of Directors nor such committee or other authorized individual makes a determination as to the validity of any shareholder proposal, the presiding officer of the annual meeting shall determine and declare at the annual meeting whether the shareholder proposal was made in accordance with the terms of this Section 2.10. If the presiding officer determines that a shareholder proposal was made in accordance with the terms of this Section 2.10, he shall so declare at the annual meeting and ballots shall be provided for use at the meeting with respect to any such proposal. If the

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presiding officer determines that a shareholder proposal was not made in accordance with the terms of this Section 2.10, he shall so declare at the annual meeting and any such proposal shall not be acted upon at the annual meeting.

(d) This provision shall not prevent the consideration and approval or disapproval at the annual meeting of reports of officers, directors and committees of the Board of Directors, but in connection with such reports, no new business shall be acted upon at such annual meeting unless stated, filed and received as herein provided.

2.11 Judges of Election.

(a) For each meeting of shareholders, the Board of Directors may appoint judges of election, who need not be shareholders, to act at the meeting or any adjournment thereof. If judges of election are not so appointed, the presiding officer of the meeting may, and on the request of any shareholder shall, appoint judges of election at the meeting. The number of judges shall be one or three. A person who is a candidate for office to be filled at the meeting shall not act as a judge.

(b) The judges of election shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, the authenticity, validity and effect of proxies, receive votes or ballots, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes, determine the result and do such acts as may be proper to conduct the election or vote with fairness to all shareholders. The judges of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three judges of election, the decision, act or certificate of a majority shall be effective in all respects as the decision, act or certificate of all.

ARTICLE III

BOARD OF DIRECTORS

3.1 Number and Powers. The business affairs of the Corporation shall be managed under the direction of a Board of Directors of not less than five nor more than twelve, as set from time to time by resolution of the Board of Directors. In addition to the powers and authorities expressly conferred upon it by these Bylaws and the Articles of Incorporation, all such powers of the Corporation as are not by statute or by the Corporation’s Articles of Incorporation or by these Bylaws directed or required to be exercised or done by the shareholders, may be exercised by or under the authority of the Board of Directors.

3.2 Classification and Terms. The classification and terms of the directors shall be as set forth in the Corporation’s Articles of Incorporation, which provisions are incorporated herein with the same effect as if they were set forth herein.

3.3 Vacancies. All vacancies on the Board of Directors shall be filled in the manner provided in the Corporation’s Articles of Incorporation, which provisions are incorporated herein with the same effect as if they were set forth herein.

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3.4 Removal of Directors. Directors may be removed in the manner provided in the Corporation’s Articles of Incorporation, which provisions are incorporated herein with the same effect as if they were set forth herein.

3.5 Regular Meetings. Regular meetings of the Board of Directors or any committee may be held without notice at the principal place of business of the Corporation or at such other place or places, either within or outside the Commonwealth of Pennsylvania, as the Board of Directors or such committee, as the case may be, may from time to time appoint or as may be designated in the notice of the meeting. A regular meeting of the Board of Directors shall be held without notice immediately after the annual meeting of shareholders.

3.6 Special Meetings.

(a) Special meetings of the Board of Directors may be called at any time by the Chairman of the Board, the President or by a majority of the authorized number of directors, to be held at the principal place of business of the Corporation or at such other place or places as the Board of Directors or the person or persons calling such meeting may from time to time designate. Notice of all special meetings of the Board of Directors shall be given to each director at least twenty-four (24) hours prior to such meeting if notice is given in person or by telephone, telex, facsimile or other electronic transmission and at least five (5) days prior to such meeting if notice is given in writing and delivered by courier or by postage prepaid mail. Such notice need not specify the business to be transacted at, nor the purpose of, the meeting. Any director may waive notice of any meeting by submitting a signed waiver of notice with the Secretary, whether before or after the meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened.

(b) Special meetings of any committee may be called at any time by such person or persons and with such notice as shall be specified for such committee by the Board of Directors, or in the absence of such specification, in the manner and with the notice required for special meetings of the Board of Directors.

3.7 Action of Directors by Communications Equipment. One or more persons may participate in a meeting of directors, or of a committee thereof, by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other.

3.8 Quorum of and Action by Directors. A majority of the Board of Directors then in office shall be necessary at all meetings to constitute a quorum for the transaction of business and the acts of a majority of the directors present and voting at a meeting at which a quorum is present shall be the acts of the Board of Directors. Every director of the Corporation shall be entitled to one vote.

3.9 Presumption of Assent. A director who is present at a meeting of the Board of Directors or of a committee thereof, at which action on a corporate matter is taken on which the

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director is generally competent to act, shall be presumed to have assented to such action unless his dissent is entered in the minutes of the meeting, or unless he files his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof, or unless he delivers his dissent in writing to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action.

3.10 Action by Directors Without a Meeting. Any action which may be taken at a meeting of the directors, or of a committee thereof, may be taken without a meeting if, prior or subsequent to the action, a consent or consents in writing, setting forth the action so taken or to be taken, is signed by all of the directors in office, or by all of the members of the committee, as the case may be, and filed with the Secretary of the Corporation. Such consent shall have the same effect as a unanimous vote.

3.11 Compensation of Directors. The Board of Directors shall have the authority to fix the compensation of directors for their service as directors, including reimbursement for reasonable expenses of attendance at board and committee meetings, and a director may be a salaried officer of the Corporation.

3.12 Nominations of Directors.

(a) Nominations of candidates for election as directors at any annual meeting of shareholders may be made (1) by, or at the direction of, a majority of the Board of Directors (or by or at the direction of a majority of a committee of directors) or (2) by any shareholder entitled to vote at such annual meeting. Only persons nominated in accordance with the procedures set forth in this Section 3.12 shall be eligible for election as directors at an annual meeting. Ballots bearing the names of all the persons who have been nominated for election as directors at an annual meeting in accordance with the procedures set forth in this Section 3.12 shall be provided for use at the annual meeting.

(b) Nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Corporation as set forth in this Section 3.12. To be timely, a shareholder’s notice shall be delivered to, or mailed and received at, the principal executive offices of the Corporation not later than (x) 120 days prior to the anniversary date of the proxy statement or a notice of the meeting by the Corporation in connection with the immediately preceding annual meeting of shareholders of the Corporation or (y), with respect to the first annual meeting of shareholders of the Corporation, which is expected to be held in February 2008, notice must be provided by September 3, 2007. Such shareholder’s notice shall set forth (1) the name, age, business address and residence address of the shareholder who intends to make the nomination and of the person or persons to be nominated; (2) the principal occupation or employment of the shareholder submitting the notice and of each person being nominated; (3) the class and number of shares of the Corporation’s stock which are Beneficially Owned (as defined in Section 3.12(d) hereof) by the shareholder submitting the notice, by any Person who is Acting in Concert with or who is an Affiliate or Associate of such shareholder (as such capitalized terms are defined in Section 3.12(d) hereof), by any Person who is a member of any group with such shareholder with respect to the Corporation stock or who is

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known by such shareholder to be supporting such nominee(s) on the date the notice is given to the Corporation, by each person being nominated, and by each Person who is in control of, is controlled by or is under common control with any of the foregoing Persons (if any of the foregoing Persons is a partnership, corporation, limited liability company, association or trust, information shall be provided regarding the name and address of, and the class and number of shares of Corporation stock which are Beneficially Owned by, each partner in such partnership, each director, executive officer and shareholder in such corporation, each member in such limited liability company or association, and each trustee and beneficiary of such trust, and in each case each Person controlling such entity and each partner, director, executive officer, shareholder, member or trustee of any entity which is ultimately in control of such partnership, corporation, limited liability company, association or trust); (4) a representation that the shareholder is and will continue to be a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (5) a description of all arrangements or understandings between the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder; (6) such other information regarding the shareholder submitting the notice, each nominee proposed by such shareholder and any other Person covered by clause (3) of this paragraph as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission, whether or not the Corporation’s common stock is registered under the Exchange Act; and (7) the consent of each nominee to serve as a director of the Corporation if so elected. At the request of the Board of Directors, any person nominated by, or at the direction of, the Board for election as a director at an annual meeting shall furnish to the Secretary of the Corporation that information required to be set forth in a shareholder’s notice of nomination which pertains to the nominee.

(c) The Board of Directors may reject any nomination by a shareholder not timely made in accordance with the requirements of this Section 3.12. If the Board of Directors, or a designated committee thereof or other authorized individual, determines that the information provided in a shareholder’s notice does not satisfy the informational requirements of this Section 3.12 in any material respect, the Secretary of the Corporation or a duly authorized representative of the Corporation shall promptly notify such shareholder of the deficiency in the notice. The shareholder shall have an opportunity to cure the deficiency by providing additional information to the Secretary within such period of time, not to exceed five days from the date such deficiency notice is given to the shareholder, as the Board of Directors or such committee or other authorized individual shall reasonably determine. If the deficiency is not cured within such period, or if the Board of Directors or such committee or other authorized individual reasonably determines that the additional information provided by the shareholder, together with information previously provided, does not satisfy the requirements of this Section 3.12 in any material respect, then the Board of Directors may reject such shareholder’s nomination. The Secretary of the Corporation or a duly authorized representative of the Corporation shall notify a shareholder in writing whether his nomination has been made in accordance with the time and informational requirements of this Section 3.12. Notwithstanding the procedures set forth in this paragraph, if neither the Board of Directors nor such committee or other authorized individual makes a determination as to the validity of any nominations by a shareholder, the presiding officer of the annual meeting shall determine and declare at the annual meeting whether the

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nomination was made in accordance with the terms of this Section 3.12. If the presiding officer determines that a nomination was made in accordance with the terms of this Section 3.12, he shall so declare at the annual meeting and ballots shall be provided for use at the meeting with respect to such nominee. If the presiding officer determines that a nomination was not made in accordance with the terms of this Section 3.12, he shall so declare at the annual meeting and the defective nomination shall be disregarded.

(d) For purposes of these Bylaws, the following capitalized terms shall have the meanings indicated:

(1) Acquire. The term “Acquire” includes every type of acquisition, whether effected by purchase, exchange, operation of law or otherwise.

(2) Acting in Concert. The term “Acting in Concert” means (a) knowing participation in a joint activity or conscious parallel action towards a common goal whether or not pursuant to an express agreement, or (b) a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise.

(3) Affiliate. An “Affiliate” of, or a Person “affiliated with,” a specified Person, means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified.

(4) Associate. The term “Associate” used to indicate a relationship with any Person means:

(i) Any corporation, partnership, limited liability company or other organization (other than the Corporation or a Subsidiary of the Corporation), or any subsidiary or parent thereof, of which such Person is a director, officer, partner or member or is, directly or indirectly, the Beneficial Owner of 10% or more of any class of equity securities; (ii) Any trust or other estate in which such Person has a 10% or greater beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity, provided, however, such term shall not include any employee stock benefit plan of the Corporation or a Subsidiary of the Corporation in which such Person has a 10% or greater beneficial interest or serves as a trustee or in a similar fiduciary capacity;

(iii) Any relative or spouse of such Person (or any relative of such spouse) who has the same home as such Person or who is a director or officer of the Corporation or a Subsidiary of the Corporation (or any subsidiary or parent thereof); or (iv) Any investment company registered under the Investment Company Act of 1940 for which such Person or any Affiliate or Associate of such Person serves as investment advisor.

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(5) Beneficial Owner (including Beneficially Owned). A Person shall be considered the “Beneficial Owner” of any shares of stock (whether or not owned of record):

(i) With respect to which such Person or any Affiliate or Associate of such Person directly or indirectly has or shares (A) voting power, including the power to vote or to direct the voting of such shares of stock, and/or (B) investment power, including the power to dispose of or to direct the disposition of such shares of stock;

(ii) Which such Person or any Affiliate or Associate of such Person has (A) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, and/or (B) the right to vote pursuant to any agreement, arrangement or understanding (whether such right is exercisable immediately or only after the passage of time); or

(iii) Which are Beneficially Owned within the meaning of (i) or (ii) of this Section 3.12(d)(5) by any other Person with which such first-mentioned Person or any of its Affiliates or Associates either (A) has any agreement, arrangement or understanding, written or oral, with respect to acquiring, holding, voting or disposing of any shares of stock of the Corporation or any Subsidiary of the Corporation or acquiring, holding or disposing of all or substantially all, or any Substantial Part, of the assets or business of the Corporation or a Subsidiary of the Corporation, or (B) is Acting in Concert. For the purpose only of determining whether a Person is the Beneficial Owner of a percentage specified in these Bylaws of the outstanding Voting Shares, such shares shall be deemed to include any Voting Shares which may be issuable pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants, options or otherwise and which are deemed to be Beneficially Owned by such Person pursuant to the foregoing provisions of this Section 3.12(d)(5) but shall not include any other Voting Shares which may be issuable in such manner.

(6) Person. The term “Person” shall mean any individual, partnership, corporation, limited liability company, association, trust, group or other entity. When two or more Persons act as a partnership, limited partnership, limited liability company, syndicate, association or other group for the purpose of acquiring, holding or disposing of shares of stock, such partnership, syndicate, associate or group shall be deemed a “Person.”

(7) Substantial Part. The term “Substantial Part” as used with reference to the assets of the Corporation or of any Subsidiary means assets having a value of more than 10% of the total consolidated assets of the Corporation and its Subsidiaries as of the end of the Corporation’s most recent fiscal year ending prior to the time the determination is being made.

(8) Subsidiary. “Subsidiary” means any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the Person in question.

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(9) Voting Shares. “Voting Shares” shall mean shares of the Corporation entitled to vote generally in an election of directors.

3.13. Director Qualifications. Any person appointed or elected to the Board of Directors shall, in order to qualify as such, shall own at least 1,000 shares of the Corporation’s common stock (or within a reasonable time following such appointment or election shall acquire such ownership), and shall, at the time of initial appointment/election, reside, or work, in a county in which ESSA Bank & Trust (the banking subsidiary of the Corporation) maintains an office (at the time of initial appointment/election) or in a county contiguous to a county in which ESSA Bank & Trust maintains an office.

ARTICLE IV

EXECUTIVE AND OTHER COMMITTEES

4.1 Executive Committee.

(a) The Board of Directors may appoint from the Board of Directors an Executive Committee of not less than three members, and may delegate to such committee, except as otherwise provided by law or the Articles of Incorporation, the powers of the Board of Directors in the management of the business and affairs of the Corporation in the intervals between meetings of the Board of Directors in all cases in which specific directions shall not have been given by the Board, as well as the power to authorize the seal of the Corporation to be affixed to all papers which may require it, provided, however, that the Executive Committee shall not have the power or authority of the Board of Directors with respect to the following: the submission to shareholders of any action requiring approval of shareholders by law; the creation or filling of vacancies on the Board of Directors; the adoption, amendment or repeal of the Articles of Incorporation or these Bylaws; the amendment or repeal of any resolution of the Board of Directors that by its terms is amendable or repealable only by the Board of Directors; action on matters committed by these Bylaws or resolution of the Board of Directors to another committee of the Board of Directors; the declaration of dividends; and approval of a transaction in which any member of the Executive Committee, directly or indirectly, has any material beneficial interest.

(b) Meetings of the Executive Committee shall be held at such times and places as the Chairman of the Executive Committee may determine. The Executive Committee, by a vote of a majority of its members, may appoint a Chairman and fix its rules of procedure, determine its manner of acting and specify what notice, if any, of meetings shall be given, except as otherwise set forth in these Bylaws or as the Board of Directors shall by resolution otherwise provide.

(c) The Executive Committee shall keep minutes of all business transacted by it. All completed action by the Executive Committee shall be reported to the Board of Directors at its meeting next succeeding such action or at its meeting held in the month following the taking of such action, and shall be subject to revision or alteration by the Board of Directors.

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4.2 Other Committees. The Board may, by resolutions passed by a majority of the Board of Directors, designate members of the Board to constitute other committees, which shall in each case consist of one or more directors and shall have and may execute such powers as may be determined and specified in the respective resolutions appointing them. A majority of all the members of any such committee may fix its rules of procedure, determine its manner of acting and fix the time and place of its meetings and specify what notice thereof, if any, shall be given, except as otherwise set forth in these Bylaws or as the Board of Directors shall by resolution otherwise provide.

4.3 Term. A majority of the Board of Directors shall have the power to change the membership of any committee of the Board of Directors at any time, to fill vacancies therein and to discharge any such committee or to remove any member thereof, either with or without cause, at any time.

ARTICLE V

OFFICERS

5.1 Designations. The Board of Directors shall annually appoint a Chairman of the Board, a President, a Secretary, a Chief Financial Officer and such other officers as the Board of Directors may from time to time deem appropriate. The Board of Directors shall designate one officer as the Corporation’s Chief Executive Officer and may designate another officer as the Chief Operating Officer.

5.2 Powers and Duties. The officers of the Corporation shall have such authority and perform such duties as are specified in these Bylaws and as the Board of Directors may from time to time authorize or determine. In the absence of action by the Board of Directors, the officers shall have such powers and duties as generally pertain to their respective offices.

5.3 Chairman of the Board. The Chairman of the Board, who shall be chosen from among the directors, shall preside at all meetings of the Board of Directors. He shall supervise the carrying out of the policies adopted or approved by the Board of Directors.

5.4 Chief Executive Officer and President. The Chief Executive Officer and President shall have general executive powers and shall have and may exercise any and all other powers and duties pertaining by law, regulations or practice to the office of the President and Chief Executive Officer, or imposed by these Bylaws. The President and Chief Executive Officer shall have general executive powers and shall have and may exercise any and all other powers and duties pertaining by law, regulations or practice to the office of President and Chief Executive Officer, or imposed by these Bylaws.

5.5 Secretary. The Secretary shall keep the minutes of the meetings of the shareholders and the Board of Directors and shall give notice of all such meetings as required in these Bylaws, the Corporation’s Articles of Incorporation or by law. The Secretary shall have custody of such minutes, the seal of the Corporation and the stock certificate records of the Corporation, except to the extent some other person is authorized to have custody and possession thereof by a resolution of the Board of Directors.

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5.6 Chief Financial Officer. The Chief Financial Officer shall keep, or cause to be kept, the fiscal accounts of the Corporation, including an account of all monies received or disbursed.

5.7 Term; Removal. Each officer of the Corporation shall hold office for a term of one year and until his successor has been selected and qualified or until his earlier death, resignation or removal. Any officer or agent of the Corporation may be removed at any time, with or without cause, by the Board of Directors, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights.

5.8 Compensation. The officers of the Corporation shall receive such salary or compensation as may be determined by or under authority of the Board of Directors.

5.9 Delegation. In the case of absence or inability to act of any officer of the Corporation and of any person herein authorized to act in his place, the Board of Directors may from time to time delegate the powers or duties of such officer to any other officer or any director or other person whom it may select.

5.10 Vacancies. Vacancies in any office arising from any cause may be filled by the Board of Directors at any regular or special meeting of the Board.

ARTICLE VI

INDEMNIFICATION

6.1 Persons Covered. Subject to, and in accordance with, the provisions of this Article VI, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, including actions by or in the right of the Corporation, whether civil, criminal, administrative, or investigative, by reason of the fact that such person is or was a director, officer, employee, fiduciary, trustee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, fiduciary, trustee, or agent of another corporation, partnership, joint venture, trust, or other enterprise.

6.2 Derivative Actions.

(a) In the case of a threatened, pending, or completed action or suit by or in the right of the Corporation against a person named in Section 6.1 by reason of such person holding a position named in Section 6.1, the Corporation shall indemnify such person if such person satisfies the standard in Section 6.2(b), for expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of the action or suit.

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(b) In the case of a threatened, pending, or completed action or suit by or in the right of the Corporation, a person named in Section 6.1 shall be indemnified only if:

(1) such person is successful on the merits or otherwise; or

(2) such person acted in good faith in the transaction that is the subject of the suit or action, and in a manner reasonably believed to be in, or not opposed to, the best interests of the Corporation. However, such person shall not be indemnified in respect of any claim, issue, or matter as to which such person has been adjudged liable to the Corporation unless (and only to the extent that) the court of common pleas or the court in which the suit was brought shall determine, upon application, that despite the adjudication of liability but in view of all the circumstances, such person is fairly and reasonably entitled to indemnity for such expenses as the court shall deem proper.

6.3 Third-Party Actions.

(a) In case of a threatened, pending, or completed suit, action, or proceeding (whether civil, criminal, administrative, or investigative), other than a suit by or in the right of the Corporation, together hereafter referred to as a third-party action, against a person named in Section 6.1 by reason of such person holding a position named in Section 6.1, the Corporation shall indemnify such person if such person satisfies the standard in Section 6.3(b), for amounts actually and reasonably incurred by such person in connection with the defense or settlement of the third-party action, including, but not limited to (i) expenses (including attorneys’ fees), (ii) amounts paid in settlement, (iii) judgments, and (iv) fines.

(b) In case of a third-party action, a person named in Section 6.1 shall be indemnified only if:

(1) such person is successful on the merits or otherwise; or

(2) such person acted in good faith in the transaction that is the subject of the third-party action and in a manner such person reasonably believed to be in, or not opposed to, the best interests of the Corporation and, with respect to any criminal action or proceeding, such person had no reasonable cause to believe such person’s conduct was unlawful. The termination of a third-party action by judgment, order, settlement, conviction, or upon a pleas of nolo contendere or its equivalent shall not, in itself, create a presumption that the person failed to satisfy the standard of this Section 6.3(b).

6.4 Determination That Standard Has Been Met. A determination that the standard of either Section 6.2(b) or 6.3(b) has been satisfied may be made by a court, or, except as stated in the record sentence of Section 6.2(b), the determination may be made by:

(1) the Board of Directors by a majority vote of a quorum consisting of directors of the Corporation who were not parties to the action, suit, or proceeding;

(2) if such a quorum is not obtainable or if obtainable and a majority of a quorum of disinterested directors so directs, by independent legal counsel in a written opinion; or

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(3) the shareholders of the Corporation.

6.5 Proration. Anyone making a determination under Section 6.4 may determine that a person has met the standard as to some matters but not as to others, and may reasonably prorate amounts to be indemnified.

6.6 Advancement of Expenses. Reasonable expenses incurred by a director, officer, employee, or agent of the Corporation in defending a civil or criminal action, suit, or proceeding described in Section 6.1 shall be paid by the Corporation in advance of the final disposition of such action, suit, or proceeding upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that the person is not entitled to be indemnified by the Corporation.

6.7 Other Rights. The indemnification and advancement of expenses provided by or pursuant to this Article VI shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any insurance or other agreement, vote of shareholders or directors, or otherwise, both as to actions in their official capacity and as to actions in another capacity while holding an office, and shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such person.

6.8 Insurance. The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article VI.

6.9 Security Fund; Indemnity Agreements. By action of the Board of Directors (notwithstanding their interest in the transaction), the Corporation may create and fund a trust fund or fund of any nature, and may enter into agreements with its officers, directors, employees, and agents for the purpose of securing or insuring in any manner its obligation to indemnify or advance expenses provided for in this Article VI.

6.10 Modification. The duties of the Corporation to indemnify and to advance expenses to any person as provided in this Article VI shall be in the nature of a contract between the Corporation and each such person, and no amendment or repeal of any provision of this Article VI, and no amendment or termination of any trust fund or other fund created pursuant to Section 6.9 hereof, shall alter to the detriment of such person the right of such person to the advancement of expenses or indemnification related to a claim based on an act or failure to act which took place prior to such amendment, repeal, or termination.

6.11 Proceedings Initiated by Indemnified Persons. Notwithstanding any other provision in this Article VI, the Corporation shall not indemnify a director, officer, employee, or agent for any liability incurred in an action, suit, or proceeding initiated by (which shall not be deemed to include counter-claims or affirmative defenses) or participated in as an intervenor or

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amicus curiae by the person seeking indemnification unless such initiation of or participation in the action, suit, or proceeding is authorized, either before or after its commencement, by the affirmative vote of a majority of the directors then in office.

6.12 Savings Clause. If this Article VI or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director, officer, employee, and agent of the Corporation as to costs, charges, and expenses (including attorneys’ fees), judgments, fines, and amounts paid in settlement with respect to any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, including an action by or in the right of the Corporation, to the fullest extent permitted by any applicable portion of this Article VI that shall not have been invalidated and to the fullest extent permitted by applicable law.

If the laws of the Commonwealth of Pennsylvania are amended to permit further indemnification of the directors, officers, employees, and agents of the Corporation, then the Corporation shall indemnify such persons to the fullest extent permitted by law. Any repeal or modification of this Article VI by the Board of Directors or the shareholders of the Corporation shall not adversely affect any right or protection of a director, officer, employee, or agent existing at the time of such repeal or modification.

ARTICLE VII

CAPITAL STOCK

7.1 Certificates. Certificates of stock shall be issued in numerical order, and each shareholder shall be entitled to a certificate signed by the President or a Vice President, and the Secretary or the Treasurer, or in such other manner as the Corporation may determine, and may be sealed with the seal of the Corporation or a facsimile thereof. The signatures of such officers may be facsimiles if the certificate is manually signed on behalf of a transfer agent, or registered by a registrar, other than the Corporation itself or an employee of the Corporation. If an officer who has signed or whose facsimile signature has been placed upon such certificate ceases to be an officer before the certificate is issued, it may be issued by the Corporation with the same effect as if the person were an officer on the date of issue. Each certificate of stock shall state:

(a) that the Corporation is incorporated under the laws of the Commonwealth of Pennsylvania;

(b) the name of the person to whom issued;

(c) the number and class of shares and the designation of the series, if any, which such certificate represents; and

(d) the par value of each share represented by such certificate, or a statement that such shares are without par value.

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7.2 Transfers.

(a) Transfers of stock shall be made only upon the stock transfer books of the Corporation, kept at the registered office of the Corporation or at its principal place of business, or at the office of its transfer agent or registrar, and before a new certificate is issued the old certificate shall be surrendered for cancellation. The Board of Directors may, by resolution, open a share register in any state of the United States, and may employ an agent or agents to keep such register, and to record transfers of shares therein.

(b) Shares of stock shall be transferred by delivery of the certificates therefor, accompanied either by an assignment in writing on the back of the certificate or an assignment separate from the certificate, or by a written power of attorney to sell, assign and transfer the same, signed by the holder of said certificate. Subject to the provisions of Section 7.4 hereof, no shares of stock shall be transferred on the books of the Corporation until the outstanding certificates therefor have been surrendered to the Corporation.

7.3 Registered Owner. Registered shareholders shall be treated by the Corporation as the holders in fact of the stock standing in their respective names and the Corporation shall not be bound to recognize any equitable or other claim to or interest in any share on the part of any other person, whether or not it shall have express or other notice thereof, except as expressly provided below or by the laws of the Commonwealth of Pennsylvania. The Board of Directors may adopt by resolution a procedure whereby a shareholder of the Corporation may certify in writing to the Corporation that all or a portion of the shares registered in the name of such shareholder are held for the account of a specified person or persons. The resolution shall set forth:

(a) The classification of shareholder who may certify;

(b) The purpose or purposes for which the certification may be made;

(c) The form of certification and information to be contained therein;

(d) If the certification is with respect to a record date, the time after the record date within which the certification must be received by the Corporation; and

(e) Such other provisions with respect to the procedure as are deemed necessary or desirable.

Upon receipt by the Corporation of a certification complying with the above requirements, the persons specified in the certification shall be deemed, for the purpose or purposes set forth in the certification, to be the holders of record of the number of shares specified in place of the shareholder making the certification.

7.4 Mutilated, Lost or Destroyed Certificates. In case of any mutilation, loss or destruction of any certificate of stock, another may be issued in its place upon receipt of proof of such mutilation, loss or destruction. The Board of Directors may impose conditions on such issuance and may require the giving of a satisfactory bond or indemnity to the Corporation in such sum as they might determine, or establish such other procedures as they deem necessary.

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7.5 Fractional Shares or Scrip. The Corporation may (a) issue fractions of a share which shall entitle the holder to exercise voting rights, to receive dividends thereon, and to participate in any of the assets of the Corporation in the event of liquidation; (b) arrange for the disposition of fractional interests by those entitled thereto; (c) pay in cash the fair value of fractions of a share as of the time when those entitled to receive such shares are determined; or (d) issue scrip in registered or bearer form which shall entitle the holder to receive a certificate for a full share upon the surrender of such scrip aggregating a full share.

7.6 Uncertificated Shares. If determined by the Board, any or all classes and series of shares, or any part thereof, may be uncertificated shares, except that such a provision shall not apply to shares represented by a certificate until the certificate is surrendered to the Corporation.

ARTICLE VIII

FISCAL YEAR; ANNUAL AUDIT

The fiscal year of the Corporation shall end on the 30th day of September of each year. The Corporation shall be subject to an annual audit as of the end of its fiscal year by independent public accountants appointed by and responsible to the Board of Directors or the Audit Committee of the Board of Directors.

ARTICLE IX

DIVIDENDS AND FINANCE

9.1 Dividends. Dividends may be declared by the Board of Directors and paid by the Corporation in accordance with the conditions and subject to the limitations imposed by the laws of the Commonwealth of Pennsylvania. The Board of Directors may declare dividends payable only to shareholders of record at the close of business on any business day not more than 90 days prior to the date on which the dividend is paid.

9.2 Depositories. The monies of the Corporation shall be deposited in the name of the Corporation in such bank or banks or trust company or trust companies as the Board of Directors shall designate, and shall be drawn out only by check or other order for payment of money signed by such persons and in such manner as may be determined by resolution of the Board of Directors.

ARTICLE X

NOTICES

10.1 Notice. Whenever written notice is required to be given to any person pursuant to these Bylaws, it may be given to the person either personally or by sending a copy thereof by first class or express mail, postage prepaid, or by electronic mail, telegram (with messenger service specified), telex or TWX (with answerback received) or courier service, charges prepaid, or by facsimile transmission, to his address (or to his telex, TWX or facsimile number), in the case of shareholders, appearing on the books of the Corporation or, in the case of directors, supplied by them to the Corporation for the purpose of notice or, in the case of the Corporation,

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at the address of its principal executive offices. If the notice is sent by mail, telegraph or courier service, it shall be deemed to have been given to the person entitled thereto when deposited in the United States mail or with a telegraph office or courier service for delivery to that person or, in the case of, electronic mail, telex or TWX, when dispatched.

10.2 Written Waiver of Notice. Whenever any written notice is required to be given under these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to the notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of the notice. Neither the business to be transacted at, nor the purpose of, a meeting need be specified in the waiver of notice of the meeting.

10.3 Waiver of Notice by Attendance. Attendance of a person at any meeting shall constitute a waiver of notice of the meeting except where a person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting was not lawfully called or convened.

ARTICLE XI

SEAL

The corporate seal of the Corporation shall be in such form and bear such inscription as may be adopted by resolution of the Board of Directors, or by usage of the officers on behalf of the Corporation.

ARTICLE XII

BOOKS AND RECORDS

The Corporation shall keep correct and complete books and records of account and shall keep minutes and proceedings of meetings of its shareholders and Board of Directors; and it shall keep at its registered office or principal place of business, or at the office of its transfer agent or registrar, a record of its shareholders, giving the names and addresses of all shareholders and the number and class of the shares held by each. Any books, records and minutes may be in written form or any other form capable of being converted into written form within a reasonable time.

ARTICLE XIII

AMENDMENTS

The Bylaws may be altered, amended or repealed only as set forth in the Corporation’s Articles of Incorporation, which are incorporated herein with the same effect as if they were set forth herein.

ARTICLE XIV

MISCELLANEOUS

In these Bylaws, unless otherwise indicated, defined terms in singular shall include the plural as well as vice versa, and the masculine, feminine or neuter gender shall include all genders.

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EX-10.6

Exhibit 10.6

EXECUTIVE SALARY CONTINUATION AGREEMENT THAT

SUPERCEDES AND REPLACES THE EXECUTIVE MURP

AGREEMENT DATED August 24, 1999 Including Amendment # 1

THIS AGREEMENT, made and entered into this 15th day of September, 2004, by and between ESSA Bank & Trust, a savings and loan association organized and existing under the laws of the State of Pennsylvania (hereinafter referred to as the “Bank”), and Gary Olson an Executive of the Bank (hereinafter referred to as the “Executive”).

WITNESSETH:

WHEREAS, the Executive has been and continues to be a valued Executive of the Bank, and is now serving the Bank as its President; and

WHEREAS, it is the consensus of the Board of Directors (hereinafter referred to as the “Board”) that the Executive’s services to the Bank in the past have been of exceptional merit and have constituted an invaluable contribution to the general welfare of the Bank in bringing the Bank to its present status of operating efficiency and present position in its field of activity;

WHEREAS, the Executive’s experience, knowledge of the affairs of the Bank, reputation, and contacts in the industry are so valuable that assurance of the Executive’s continued services is essential for the future growth and profits of the Bank and it is in the best interests of the Bank to arrange terms of continued employment for the Executive so as to reasonably assure the Executive remains in the Bank’s employ during the Executive’s lifetime or until the age of retirement;

WHEREAS, it is the desire of the Bank that the Executive’s services be retained as herein provided;

ACCORDINGLY, it is the desire of the Bank and the Executive to enter into this Agreement under which the Bank will agree to make certain payments to the Executive at retirement or the Executive’s beneficiary(ies) in the event of the Executive’s death pursuant to this Agreement;

FURTHERMORE, it is the intent of the parties hereto that this Executive Plan be considered an unfunded arrangement maintained primarily to provide supplemental retirement benefits for the Executive, and be considered a non-qualified benefit plan for purposes of the Employee Retirement Income Security Act of 1974, as amended

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(“ERISA”). The Executive is fully advised of the Bank’s financial status and has had substantial input in the design and operation of this benefit plan; and

NOW, THEREFORE, in consideration of services performed in the past and to be performed in the future as well as of the mutual promises and covenants herein contained it is agreed as follows:

I. EMPLOYMENT

The Bank agrees to employ the Executive in such capacity as the Bank may from time to time determine. The Executive will continue in the employ of the Bank in such capacity and with such duties and responsibilities as may be assigned to him, and with such compensation as may be determined from time to time by the Board of Directors of the Bank.

II. SUPPLEMENTAL BENEFITS

The Salary continuation benefits provided by this Agreement are granted by the Bank as a supplemental benefit to the Executive and are not part of any Salary reduction plan or an arrangement deferring a bonus or a Salary increase. The Executive has no option to take any current payment or bonus in lieu of these Salary continuation benefits except as set forth hereinafter.

III. RETIREMENT DATE AND NORMAL RETIREMENT AGE

A. Retirement Date:

If the Executive remains in the continuous employ of the Bank, the Executive shall retire from active employment with the Bank on the Executive’s sixty-fifth (65^th) birthday.

B. Normal Retirement Age:

Normal Retirement Age shall mean the date on which the Executive attains age sixty-five (65).

C. Early Retirement Date:

Early Retirement Date shall mean a retirement from employment which is effective prior to the Normal Retirement Age stated herein, provided the Executive has attained age sixty (60) with thirty (30) years of service with the bank.

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IV. RETIREMENT BENEFIT AND POST-RETIREMENT DEATH BENEFIT

A. Normal Retirement:

Upon said retirement, if the Executive has been employed with the Bank for thirty (30) years, the Bank, commencing with the first day of the month following the date of such retirement, shall pay the Executive an annual benefit as described in Exhibit 1. Exhibit 1 shall be calculated by Benmark at the Bank’s request. Said benefit may be paid in equal monthly installments (1/12^th of the annual benefit) until the death of the executive, annual installments until the death of the executive or in a lump sum reduced to present value as set forth in Subparagraph XI (K). Executive must decide on the payout mode, one (1) year prior to retirement. If, however, less than one-hundred and ninety-two (192) such monthly payments have been made prior to the death of the Executive, then the Bank, at its discretion, will continue the payments until the full one-hundred and ninety-two (192) payments have been made or will make the total amount of said payment(s) payable in a lump sum reduced to present value as set forth in Subparagraph XI (K) to said beneficiary(ies). In the absence of any effective beneficiary designation, any such amounts becoming due and payable upon the death of the Executive shall be payable to the duly qualified executor or administrator of the Executive’s estate. Said payments due hereunder shall begin the first day of the second month following the decease of the Executive

B. Early Retirement:

Should the Executive leave the employment of the Bank in accordance with the Early Retirement Date (Subparagraph III [C]) and has served 30 (thirty) years, the Executive’s benefit shall be reduced by one half of one percent (.05%) for each month the Executive leaves prior to Normal Retirement Age.

V. DEATH BENEFIT PRIOR TO RETIREMENT

In the event the Executive should die while actively employed by the Bank at any time after the date of this Agreement but prior to the Executive attaining the age of sixty-five (65) years (or such later date as may be agreed upon), the Bank will pay the Executive’s accrued liability retirement account to such individual or individuals as the Executive may have designated in writing and filed with the Bank. This assumes the Executive has met the vesting requirement (Subsection VII, below). In the absence of any effective beneficiary designation, any such amounts becoming due and payable upon the death of the Executive shall be payable to the duly qualified executor or administrator of the Executive’s estate. Said payments due hereunder shall begin the first day of the second month following the decease of the Executive.

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VI. BENEFIT ACCOUNTING

The Bank shall account for this benefit using the generally accepted accounting principles. The Bank shall establish an accrued liability retirement account for the Executive into which appropriate reserves shall be accrued.

VII. VESTING

Executive’s interest in the benefits that are the subject of this Agreement shall be subject to a cliff vesting schedule such that the Executive will be zero percent (0%) vested until he has completed five (5) years of service with the bank. At the conclusion of five (5) years of service, the Executive will be 100% vested in the accrual balance. Vesting will begin from the date of first service with the bank.

VIII.  OTHER TERMINATION OF EMPLOYMENT

Subject to Subparagraph VIII (i) hereinbelow, in the event that the employment of the Executive shall terminate prior to Normal Retirement Age, as provided in Paragraph III, by the Executive’s voluntary action, or by the Executive’s discharge by the Bank without cause, then this Agreement shall terminate upon the date of such termination of employment and the Bank shall pay to the Executive as severance compensation, and at the Executive’s discretion, in either sixty (60) equal monthly payments or a lump sum, an amount equal to the accrued balance on the date of termination, of the Executive’s liability reserve account assuming the Executive has become vested in his benefit. Interest will be equal to the one-year Treasury bill as of the date of termination if Executive selects the monthly payout option.

In the event the Executive’s death should occur after such severance but prior to the completion of the monthly payments provided for in this Paragraph VIII, the remaining installments will be reduced to present value as set forth in Subparagraph XI (K), and will be paid to such individual or individuals as the Executive may have designated in writing and filed with the Bank. In the absence of any effective beneficiary designation, any such amounts shall be payable to the duly qualified executor or administrator of the Executive’s estate.

(i) Discharge for Cause:

In the event the Executive shall be discharged for cause at any time or resigns due to a pending discharge for cause, all benefits provided herein shall be forfeited. The term “for cause” shall mean any of the following that result in material measurable adverse effect on the Bank: (i) the conviction of a felony or gross misdemeanor involving fraud or dishonesty; (ii) an intentional failure to perform stated duties; or (iii) a breach of fiduciary duty

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involving personal profit. If a dispute arises as to discharge “for cause,” such dispute shall be resolved by arbitration as set forth in this Executive Plan.

IX. MUTUAL TO STOCK CONVERSION OR CHANGE OF CONTROL

A. Mutual to Stock Conversion shall mean the conversion of the Bank from a mutual savings bank to an entity that issues stock and is owned by its shareholders. Such Mutual to Stock Conversion shall be deemed to be a Change of Control for purposes of this Agreement. For the purposes of this Agreement, transfers of stock on account of deaths or gifts, transfers between family members or transfers to a qualified retirement plan maintained by the Bank shall not be considered in determining whether there has been a Change of Control. The formation of a mutual holding company, for the purposes of this Agreement, is not a change of control.

B. Upon a Mutual to Stock Conversion or a Change of Control (as defined in Subparagraph IX [A] hereinabove), if the Executive’s employment is subsequently terminated, except for cause, then the Executive shall receive the benefits promised in this Agreement upon attaining Normal Retirement Age, as if the Executive had been continuously employed by the Bank until said Normal Retirement Age. The Executive will also remain eligible for all promised death benefits in this Agreement. In addition, no sale, merger, consolidation or conversion of the Bank shall take place unless the new or surviving entity expressly acknowledges the obligations under this Agreement and agrees to abide by its terms.

X. RESTRICTIONS ON FUNDING

The Bank shall have no obligation to set aside, earmark or entrust any fund or money with which to pay its obligations under this Executive Plan. The Executive, their beneficiary(ies), or any successor in interest shall be and remain simply a general creditor of the Bank in the same manner as any other creditor having a general claim for matured and unpaid compensation.

The Bank reserves the absolute right, at its sole discretion, to either fund the obligations undertaken by this Executive Plan or to refrain from funding the same and to determine the extent, nature and method of such funding. Should the Bank elect to fund this Executive Plan, in whole or in part, through the purchase of life insurance, mutual funds, disability policies or annuities, the Bank reserves the absolute right, in its sole discretion, to terminate such funding at any time, in whole or in part. At no time shall any Executive be deemed to have any lien, right, title or interest in any specific funding investment or assets of the Bank.

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If the Bank elects to invest in a life insurance, disability or annuity policy on the life of the Executive, then the Executive shall assist the Bank by freely submitting to a physical exam and supplying such additional information necessary to obtain such insurance or annuities.

XI. MISCELLANEOUS

A. Alienability and Assignment Prohibitions:

Neither the Executive, nor the Executive’s surviving spouse, nor any other beneficiary(ies) under this Executive Plan shall have any power or right to transfer, assign, anticipate, hypothecate, mortgage, commute, modify or otherwise encumber in advance any of the benefits payable hereunder nor shall any of said benefits be subject to seizure for the payment of any debts, judgments, alimony or separate maintenance owed by the Executive or the Executive’s beneficiary(ies), nor be transferable by operation of law in the event of bankruptcy, insolvency or otherwise. In the event the Executive or any beneficiary attempts assignment, commutation, hypothecation, transfer or disposal of the benefits hereunder, the Bank’s liabilities shall forthwith cease and terminate.

B. Binding Obligation of the Bank and any Successor in Interest:

The Bank shall not merge or consolidate into or with another bank or bank holding company or sell substantially all of its assets to another bank, firm or person until such bank, firm or person expressly agrees, in writing, to assume and discharge the duties and obligations of the Bank under this Executive Plan. This Executive Plan shall be binding upon the parties hereto, their successors, beneficiaries, heirs and personal representatives.

C. Amendment or Revocation:

Subject to Paragraph XIII, it is agreed by and between the parties hereto that, during the lifetime of the Executive, this Executive Plan may be amended or revoked at any time or times, in whole or in part, by the mutual written consent of the Executive and the Bank.

D. Gender:

Whenever in this Executive Plan words are used in the masculine gender, they shall be read and construed as in the masculine or feminine gender, whenever they should so apply.

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E. Effect on Other Bank Benefit Plans:

Nothing contained in this Executive Plan shall affect the right of the Executive to participate in or be covered by any qualified or non-qualified pension, profit-sharing, group, bonus or other supplemental compensation or fringe benefit plan constituting a part of the Bank’s existing or future compensation structure.

F. Headings:

Headings and subheadings in this Executive Plan are inserted for reference and convenience only and shall not be deemed a part of this Executive Plan.

G. Applicable Law:

The validity and interpretation of this Agreement shall be governed by the laws of the State of Pennsylvania.

H. 12 U.S.C. § 1828(k):

Any payments made to the Executive pursuant to this Executive Plan, or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C. § 1828(k) or any other pertinent regulations.

I. Partial Invalidity:

If any term, provision, covenant, or condition of this Executive Plan is determined by an arbitrator or a court, as the case may be, to be invalid, void, or unenforceable, such determination shall not render any other term, provision, covenant, or condition invalid, void, or unenforceable, and the Executive Plan shall remain in full force and effect notwithstanding such partial invalidity.

J. Not a Contract of Employment:

This Agreement shall not be deemed to constitute a contract of employment between the parties hereto, nor shall any provision hereof restrict the right of the Bank to discharge the Executive, or restrict the right of the Executive to terminate employment.

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K. Present Value:

All present value calculations under this Agreement shall be based on the following discount rate:

Discount Rate: The discount rate as used in the FASB 87 calculations for the Executive Plan.

XII. ERISA PROVISION

A. Named Fiduciary and Plan Administrator:

The “Named Fiduciary and Plan Administrator” of this Executive Plan shall be ESSA Bank & Trust until its resignation or removal by the Board. As Named Fiduciary and Plan Administrator, the Bank shall be responsible for the management, control and administration of the Executive Plan. The Named Fiduciary may delegate to others certain aspects of the management and operation responsibilities of the Executive Plan including the employment of advisors and the delegation of ministerial duties to qualified individuals.

B. Claims Procedure and Arbitration:

In the event a dispute arises over benefits under this Executive Plan and benefits are not paid to the Executive (or to the Executive’s beneficiary(ies) in the case of the Executive’s death) and such claimants feel they are entitled to receive such benefits, then a written claim must be made to the Named Fiduciary and Plan Administrator named above within forty-five (45) days from the date payments are refused. The Named Fiduciary and Plan Administrator shall review the written claim and if the claim is denied, in whole or in part, they shall provide in writing within forty-five (45) days of receipt of such claim the specific reasons for such denial, reference to the provisions of this Executive Plan upon which the denial is based and any additional material or information necessary to perfect the claim. Such written notice shall further indicate the additional steps to be taken by claimants if a further review of the claim denial is desired. A claim shall be deemed denied if the Named Fiduciary and Plan Administrator fail to take any action within the aforesaid forty-five(45)day period.

If claimants desire a second review they shall notify the Named Fiduciary and Plan Administrator in writing within forty-five (45) days of the first

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claim denial. Claimants may review this Executive Plan or any documents relating thereto and submit any written issues and comments they may feel appropriate. In their sole discretion, the Named Fiduciary and Plan Administrator shall then review the second claim and provide a written decision within forty-five (45) days of receipt of such claim. This decision shall likewise state the specific reasons for the decision and shall include reference to specific provisions of the Plan Agreement upon which the decision is based.

If claimants continue to dispute the benefit denial based upon completed performance of this Executive Plan or the meaning and effect of the terms and conditions thereof, then claimants may submit the dispute to an arbitrator for final arbitration. The arbitrator shall be selected by mutual agreement of the Bank and the claimants. The arbitrator shall operate under any generally recognized set of arbitration rules. The parties hereto agree that they and their heirs, personal representatives, successors and assigns shall be bound by the decision of such arbitrator with respect to any controversy properly submitted to it for determination.

Where a dispute arises as to the Bank’s discharge of the Executive “for cause,” such dispute shall likewise be submitted to arbitration as above described and the parties hereto agree to be bound by the decision thereunder.

XIII.  EFFECTIVE DATE

The effective date of the Executive Plan shall be September 23, 2004.

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IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully read this Agreement and executed the original thereof on the first day set forth hereinabove, and that, upon execution, each has received a conforming copy.

	ESSA BANK & TRUST
	Stroudsburg, PA
/s/ Lisa Mostiller	By:	/s/ Thomas J. Grayuski                                          VP - HR
Witness		(Bank Officer other than Insured)                              Title
/s/ Kathleen Hahn	/s/ Gary Olson
Witness	Gary Olson

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FIRST AMENDMENT TO THE

EXECUTIVE SALARY CONTINUATION AGREEMENT

WHEREAS, ESSA Bank & Trust (the “Bank”) has entered into a Executive Salary Continuation Agreement dated September 15, 1004 (the “Agreement”) with the undersigned executive (the “Executive”); and

WHEREAS, the Agreement provides that a mutual to stock conversion of the Bank shall constitute change in control of the Bank; and

WHEREAS, the Bank has adopted a plan of conversion from the mutual to the stock form of organization and in connection therewith will offer shares of common stock of a newly formed holding company to depositors and the public; and

WHEREAS, the Bank and the Executive wish to amend the agreement to provide that the conversion of the Bank from the mutual to the stock form of organization, and in connection therewith the formation of a holding company that will sell shares of common stock to Bank depositors and the public, will not constitute a change in control, but to provide that certain enumerated events that may occur to the public holding company subsequent to the completion of the conversion will constitute a change in control; and

WHEREAS, except for the change to the definition of a change in control, there are no other changes to the Agreement and all other provisions of the Agreements shall remain unchanged; and

WHEREAS, the Agreement provides that it may be amended at any time, in whole or in part, by mutual written consent of the Executive and the Bank.

NOW THEREFORE, the Agreement is hereby amended as follows:

1. Section IX is amended to read in its entirety as follows:

IX CHANGE IN CONTROL

A. For purposes of this Agreement, and except as provided in B below, the term “Change in Control” shall mean any of the following events:

(i) a change in control of a nature that would be required to be reported in response to Item 5.01(a) of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); or

(ii) a change in control of the Bank or ESSA Bancorp, Inc. (the proposed holding company for the Bank – the “Company”) within the meaning of the Home Owners Loan Act, as amended (“HOLA”), and applicable rules and regulations promulgated thereunder, as in effect at the time of the Change in Control; or

(iii) any of the following events, upon which a Change in Control shall be deemed to have occurred:

(A) any “person” (as the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of Company’s outstanding securities except for any securities purchased by the Bank’s employee stock ownership plan or trust; or

(B) individuals who constitute the Board on the date hereof (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board, or whose nomination for election by the Company’s stockholders was approved by the same Nominating Committee serving under an Incumbent Board, shall be, for purposes of this subsection (B), considered as though he were a member of the Incumbent Board; or

(C) a tender offer is made for 25% or more of the voting securities of the Company and the shareholders owning beneficially or of record 25% or more of the outstanding securities of the Company have tendered or offered to sell their shares pursuant to such tender offer and such tendered shares have been accepted by the tender offeror.

B. Notwithstanding anything to contrary elsewhere in this Agreement, the conversion of the Bank from the mutual to the stock form of organization, and in connection therewith the formation of the Company as the Bank’s parent holding company and the sale of shares of Company common stock to depositors and the public, is not a “Change in Control” for any purpose of this Agreement.

C. Upon a Change in Control (as defined in Subparagraph IX(A) above), if the Executive’s employment is subsequently terminated, except for cause, then the Executive shall receive the benefits promised in this Agreement upon attaining Normal Retirement Age, as if the Executive had been continuously employed by the Bank until said Normal Retirement Age. The Executive will also remain eligible for all promised death benefits in this Agreement. In addition, no sale, merger or consolidation of the Bank shall take place unless the new or surviving entity expressly acknowledges the obligations under this Agreement and agrees to abide by its terms.

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IN WITNESS WHEREOF, this First Amendment is executed effective as of the latest date set forth below.

	ESSA BANK & TRUST
December 4, 2006	By:	/s/ Suzie T. Farley
Date	Title:	Corporate Secretary
	EXECUTIVE
December 4, 2006	/s/ Gary Olson
Date

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Exhibit 1

(For Gary Olson)

The annual benefit is based on the following formula:

Benefit will be equal to seventy (70) percent of compensation averaged on a monthly basis over the five (5) consecutive years of credited service during the ten (10) year period immediately preceding retirement which produces the highest monthly average. Excluded from this calculation will be income attributable to the bank’s Long Term Incentive Bonus Plan. This value will be annualized and will be offset by fifty (50) percent of annual Social Security benefit, the bank’s annualized defined benefit pension plan benefit, and the annualized 401-k benefit attributable to the bank match component only.

In 2004, based on current assumptions and calculations, this benefit for Gary Olson was calculated to be $167,855.

The assumptions will be evaluated and reviewed periodically by Benmark at the bank’s discretion.

An EXAMPLE of the calculation is presented below:

Gary Olson’s projected final salary at age 65 based on a 5.5% salary inflator and a 50% short term incentive bonus: $592,977

70%=$374,003

50% of Social Security projected to be $13,274

Annual ESSA defined pension plan benefit = $145,858

Annual annuitized 401-k benefit (bank match only and excluding Short Term Incentive) = $47,016

$	374,003			70% of final average salary
$	(13,274	)		50% of Social Security
$	(145,858	)		Annual pension benefit
$	(47,016	)		Annual annuitized 401-k, bank match only
$	167,855		=	the annual value of the lifetime SERP

EX-10.7

Exhibit 10.7

EXECUTIVE SALARY CONTINUATION AGREEMENT THAT

SUPERCEDES AND REPLACES THE EXECUTIVE MURP

AGREEMENT DATED August 24, 1999 Including Amendment #1

THIS AGREEMENT, made and entered into this 15th day of September, 2004, by and between ESSA Bank & Trust, a savings and loan association organized and existing under the laws of the State of Pennsylvania (hereinafter referred to as the “Bank”), and Robert Howes, Jr., an Executive of the Bank (hereinafter referred to as the “Executive”).

WITNESSETH:

WHEREAS, the Executive has been and continues to be a valued Executive of the Bank, and is now serving the Bank as its Senior Vice-President; and

WHEREAS, it is the consensus of the Board of Directors (hereinafter referred to as the “Board”) that the Executive’s services to the Bank in the past have been of exceptional merit and have constituted an invaluable contribution to the general welfare of the Bank in bringing the Bank to its present status of operating efficiency and present position in its field of activity;

WHEREAS, the Executive’s experience, knowledge of the affairs of the Bank, reputation, and contacts in the industry are so valuable that assurance of the Executive’s continued services is essential for the future growth and profits of the Bank and it is in the best interests of the Bank to arrange terms of continued employment for the Executive so as to reasonably assure the Executive remains in the Bank’s employ during the Executive’s lifetime or until the age of retirement;

WHEREAS, it is the desire of the Bank that the Executive’s services be retained as herein provided;

WHEREAS, the Executive is willing to continue in the employ of the Bank provided the Bank agrees to pay the Executive or the Executive’s beneficiary(ies), certain benefits in accordance with the terms and conditions hereinafter set forth;

ACCORDINGLY, it is the desire of the Bank and the Executive to enter into this Agreement under which the Bank will agree to make certain payments to the Executive at retirement or the Executive’s beneficiary(ies) in the event of the Executive’s death pursuant to this Agreement;

FURTHERMORE, it is the intent of the parties hereto that this Executive Plan be considered an unfunded arrangement maintained primarily to provide supplemental retirement benefits for the Executive, and be considered a non-qualified benefit plan for purposes of the Employee Retirement Income Security Act of 1974, as amended

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(“ERISA”). The Executive is fully advised of the Bank’s financial status and has had substantial input in the design and operation of this benefit plan; and

NOW, THEREFORE, in consideration of services performed in the past and to be performed in the future as well as of the mutual promises and covenants herein contained it is agreed as follows:

I. EMPLOYMENT

The Bank agrees to employ the Executive in such capacity as the Bank may from time to time determine. The Executive will continue in the employ of the Bank in such capacity and with such duties and responsibilities as may be assigned to him, and with such compensation as may be determined from time to time by the Board of Directors of the Bank.

II. FRINGE BENEFITS

The Salary continuation benefits provided by this Agreement are granted by the Bank as a fringe benefit to the Executive and are not part of any Salary reduction plan or an arrangement deferring a bonus or a Salary increase. The Executive has no option to take any current payment or bonus in lieu of these Salary continuation benefits except as set forth hereinafter.

III. RETIREMENT DATE AND NORMAL RETIREMENT AGE

A. Retirement Date:

If the Executive remains in the continuous employ of the Bank, the Executive shall retire from active employment with the Bank on the Executive’s sixty-fifth (65^th) birthday.

B. Normal Retirement Age:

Normal Retirement Age shall mean the date on which the Executive attains age sixty-five (65).

C. Early Retirement Date:

Early Retirement Date shall mean a retirement from employment which is effective prior to the Normal Retirement Age stated herein, provided the Executive has attained age sixty (60) with thirty (30) years of service with the bank.

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IV. RETIREMENT BENEFIT AND POST-RETIREMENT DEATH BENEFIT

A. Normal Retirement:

Upon said retirement, if the Executive has been employed with the Bank for thirty (30) years, the Bank, commencing with the first day of the month following the date of such retirement, shall pay the Executive an annual benefit as described in Exhibit 1. Said benefit may be paid in equal monthly installments (1/12^th of the annual benefit) until the death of the executive, annual installments until the death of the executive or in a lump sum reduced to present value as set forth in Subparagraph XI (K). Executive must decide on the payout mode, one (1) year prior to retirement. If, however, less than one-hundred and ninety-two (192) such monthly payments have been made prior to the death of the Executive, then the Bank, at its discretion, will continue the payments until the full one-hundred and ninety-two (192) payments have been made or will make the total amount of said payment(s) payable in a lump sum reduced to present value as set forth in Subparagraph XI (K) to said beneficiary(ies). In the absence of any effective beneficiary designation, any such amounts becoming due and payable upon the death of the Executive shall be payable to the duly qualified executor or administrator of the Executive’s estate. Said payments due hereunder shall begin the first day of the second month following the decease of the Executive

B. Early Retirement:

Should the Executive leave the employment of the Bank in accordance with the Early Retirement Date (Subparagraph III [C]) and has served 30 (thirty) years, the Executive’s benefit shall be reduced by one half of one percent (.05%) for each month the Executive leaves prior to Normal Retirement Age.

V. DEATH BENEFIT PRIOR TO RETIREMENT

In the event the Executive should die while actively employed by the Bank at any time after the date of this Agreement but prior to the Executive attaining the age of sixty-five (65) years (or such later date as may be agreed upon), the Bank will pay the Executive’s accrued liability retirement account to such individual or individuals as the Executive may have designated in writing and filed with the Bank. This assumes the Executive has met the vesting requirement (Subsection VII, below). In the absence of any effective beneficiary designation, any such amounts becoming due and payable upon the death of the Executive shall be payable to the duly qualified executor or administrator of the Executive’s estate. Said payments due hereunder shall begin the first day of the second month following the decease of the Executive.

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VI. BENEFIT ACCOUNTING

The Bank shall account for this benefit using the generally accepted accounting principles of the Bank’s primary federal regulator. The Bank shall establish an accrued liability retirement account for the Executive into which appropriate reserves shall be accrued.

VII. VESTING

Executive’s interest in the benefits that are the subject of this Agreement shall be subject to a cliff vesting schedule such that the Executive will be zero percent (0%) vested until he has completed five (5) years of service with the bank. At the conclusion of five (5) years of service, the Executive will be 100% vested in the accrual balance. Vesting will begin from the date of first service with the bank.

VIII.  OTHER TERMINATION OF EMPLOYMENT

Subject to Subparagraph VIII (i) hereinbelow, in the event that the employment of the Executive shall terminate prior to Normal Retirement Age, as provided in Paragraph III, by the Executive’s voluntary action, or by the Executive’s discharge by the Bank without cause, then this Agreement shall terminate upon the date of such termination of employment and the Bank shall pay to the Executive as severance compensation, and at the Executive’s discretion, in either sixty (60) equal monthly payments or a lump sum, an amount equal to the accrued balance on the date of termination, of the Executive’s liability reserve account assuming the Executive has become vested in his benefit. Interest will be equal to the one-year Treasury bill as of the date of termination if Executive selects the monthly payout option.

In the event the Executive’s death should occur after such severance but prior to the completion of the monthly payments provided for in this Paragraph VIII, the remaining installments will be reduced to present value as set forth in Subparagraph XI (K), and will be paid to such individual or individuals as the Executive may have designated in writing and filed with the Bank. In the absence of any effective beneficiary designation, any such amounts shall be payable to the duly qualified executor or administrator of the Executive’s estate.

(i) Discharge for Cause:

In the event the Executive shall be discharged for cause at any time or resigns due to a pending discharge for cause, all benefits provided herein shall be forfeited. The term “for cause” shall mean any of the following that result in material measurable adverse effect on the Bank: (i) the conviction of a felony or gross misdemeanor involving fraud or dishonesty; (ii) an intentional failure to perform stated duties; or (iii) a breach of fiduciary duty involving personal profit. If a dispute arises as to discharge “for cause,” such dispute shall be resolved by arbitration as set forth in this Executive Plan.

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IX. MUTUAL TO STOCK CONVERSION OR CHANGE OF CONTROL

A. Mutual to Stock Conversion shall mean the conversion of the Bank from a mutual savings bank to an entity that issues stock and is owned by its shareholders. Such Mutual to Stock Conversion shall be deemed to be a Change of Control for purposes of this Agreement. For the purposes of this Agreement, transfers of stock on account of deaths or gifts, transfers between family members or transfers to a qualified retirement plan maintained by the Bank shall not be considered in determining whether there has been a Change of Control. The formation of a mutual holding company, for the purposes of this Agreement, is not a change of control.

B. Upon a Mutual to Stock Conversion or a Change of Control (as defined in Subparagraph IX [A] hereinabove), if the Executive’s employment is subsequently terminated, except for cause, then the Executive shall receive the benefits promised in this Agreement upon attaining Normal Retirement Age, as if the Executive had been continuously employed by the Bank until said Normal Retirement Age. The Executive will also remain eligible for all promised death benefits in this Agreement. In addition, no sale, merger, consolidation or conversion of the Bank shall take place unless the new or surviving entity expressly acknowledges the obligations under this Agreement and agrees to abide by its terms.

X. RESTRICTIONS ON FUNDING

The Bank shall have no obligation to set aside, earmark or entrust any fund or money with which to pay its obligations under this Executive Plan. The Executive, their beneficiary(ies), or any successor in interest shall be and remain simply a general creditor of the Bank in the same manner as any other creditor having a general claim for matured and unpaid compensation.

The Bank reserves the absolute right, at its sole discretion, to either fund the obligations undertaken by this Executive Plan or to refrain from funding the same and to determine the extent, nature and method of such funding. Should the Bank elect to fund this Executive Plan, in whole or in part, through the purchase of life insurance, mutual funds, disability policies or annuities, the Bank reserves the absolute right, in its sole discretion, to terminate such funding at any time, in whole or in part. At no time shall any Executive be deemed to have any lien, right, title or interest in any specific funding investment or assets of the Bank.

If the Bank elects to invest in a life insurance, disability or annuity policy on the life of the Executive, then the Executive shall assist the Bank by freely submitting

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to a physical exam and supplying such additional information necessary to obtain such insurance or annuities.

XI. MISCELLANEOUS

A. Alienability and Assignment Prohibitions:

Neither the Executive, nor the Executive’s surviving spouse, nor any other beneficiary(ies) under this Executive Plan shall have any power or right to transfer, assign, anticipate, hypothecate, mortgage, commute, modify or otherwise encumber in advance any of the benefits payable hereunder nor shall any of said benefits be subject to seizure for the payment of any debts, judgments, alimony or separate maintenance owed by the Executive or the Executive’s beneficiary(ies), nor be transferable by operation of law in the event of bankruptcy, insolvency or otherwise. In the event the Executive or any beneficiary attempts assignment, commutation, hypothecation, transfer or disposal of the benefits hereunder, the Bank’s liabilities shall forthwith cease and terminate.

B. Binding Obligation of the Bank and any Successor in Interest:

The Bank shall not merge or consolidate into or with another bank or bank holding company or sell substantially all of its assets to another bank, firm or person until such bank, firm or person expressly agrees, in writing, to assume and discharge the duties and obligations of the Bank under this Executive Plan. This Executive Plan shall be binding upon the parties hereto, their successors, beneficiaries, heirs and personal representatives.

C. Amendment or Revocation:

Subject to Paragraph XIII, it is agreed by and between the parties hereto that, during the lifetime of the Executive, this Executive Plan may be amended or revoked at any time or times, in whole or in part, by the mutual written consent of the Executive and the Bank.

D. Gender:

Whenever in this Executive Plan words are used in the masculine gender, they shall be read and construed as in the masculine or feminine gender, whenever they should so apply.

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E. Effect on Other Bank Benefit Plans:

Nothing contained in this Executive Plan shall affect the right of the Executive to participate in or be covered by any qualified or non-qualified pension, profit-sharing, group, bonus or other supplemental compensation or fringe benefit plan constituting a part of the Bank’s existing or future compensation structure.

F. Headings:

Headings and subheadings in this Executive Plan are inserted for reference and convenience only and shall not be deemed a part of this Executive Plan.

G. Applicable Law:

The validity and interpretation of this Agreement shall be governed by the laws of the State of Pennsylvania.

H. 12 U.S.C. § 1828(k):

Any payments made to the Executive pursuant to this Executive Plan, or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C. § 1828(k) or any other pertinent regulations.

I. Partial Invalidity:

If any term, provision, covenant, or condition of this Executive Plan is determined by an arbitrator or a court, as the case may be, to be invalid, void, or unenforceable, such determination shall not render any other term, provision, covenant, or condition invalid, void, or unenforceable, and the Executive Plan shall remain in full force and effect notwithstanding such partial invalidity.

J. Not a Contract of Employment:

This Agreement shall not be deemed to constitute a contract of employment between the parties hereto, nor shall any provision hereof restrict the right of the Bank to discharge the Executive, or restrict the right of the Executive to terminate employment.

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K. Present Value:

All present value calculations under this Agreement shall be based on the following discount rate:

Discount Rate: The discount rate as used in the FASB 87 calculations for the Executive Plan.

XII. ERISA PROVISION

A. Named Fiduciary and Plan Administrator:

The “Named Fiduciary and Plan Administrator” of this Executive Plan shall be ESSA Bank & Trust until its resignation or removal by the Board. As Named Fiduciary and Plan Administrator, the Bank shall be responsible for the management, control and administration of the Executive Plan. The Named Fiduciary may delegate to others certain aspects of the management and operation responsibilities of the Executive Plan including the employment of advisors and the delegation of ministerial duties to qualified individuals.

B. Claims Procedure and Arbitration:

In the event a dispute arises over benefits under this Executive Plan and benefits are not paid to the Executive (or to the Executive’s beneficiary(ies) in the case of the Executive’s death) and such claimants feel they are entitled to receive such benefits, then a written claim must be made to the Named Fiduciary and Plan Administrator named above within forty-five (45) days from the date payments are refused. The Named Fiduciary and Plan Administrator shall review the written claim and if the claim is denied, in whole or in part, they shall provide in writing within forty-five (45) days of receipt of such claim the specific reasons for such denial, reference to the provisions of this Executive Plan upon which the denial is based and any additional material or information necessary to perfect the claim. Such written notice shall further indicate the additional steps to be taken by claimants if a further review of the claim denial is desired. A claim shall be deemed denied if the Named Fiduciary and Plan Administrator fail to take any action within the aforesaid forty-five(45)day period.

If claimants desire a second review they shall notify the Named Fiduciary and Plan Administrator in writing within forty-five (45) days of the first claim denial. Claimants may review this Executive Plan or any documents relating thereto and submit any written issues and comments they may feel appropriate. In their sole discretion, the Named Fiduciary and Plan Administrator shall then review the second claim and provide a written

8

decision within forty-five (45) days of receipt of such claim. This decision shall likewise state the specific reasons for the decision and shall include reference to specific provisions of the Plan Agreement upon which the decision is based.

If claimants continue to dispute the benefit denial based upon completed performance of this Executive Plan or the meaning and effect of the terms and conditions thereof, then claimants may submit the dispute to an arbitrator for final arbitration. The arbitrator shall be selected by mutual agreement of the Bank and the claimants. The arbitrator shall operate under any generally recognized set of arbitration rules. The parties hereto agree that they and their heirs, personal representatives, successors and assigns shall be bound by the decision of such arbitrator with respect to any controversy properly submitted to it for determination.

Where a dispute arises as to the Bank’s discharge of the Executive “for cause,” such dispute shall likewise be submitted to arbitration as above described and the parties hereto agree to be bound by the decision thereunder.

XIII.  TERMINATION OR MODIFICATION OF AGREEMENT BY REASON OF CHANGES IN THE LAW, RULES OR REGULATIONS

The Bank is entering into this Agreement upon the assumption that certain existing tax laws, rules and regulations will continue in effect in their current form. If any said assumptions should change and said change has a detrimental effect on this Executive Plan, then the Bank reserves the right to terminate or modify this Agreement accordingly. Upon a Change of Control (Paragraph IX), this paragraph shall become null and void effective immediately upon said Change of Control.

XIV. EFFECTIVE DATE

The effective date of the Executive Plan shall be September 23, 2004.

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IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully read this Agreement and executed the original thereof on the first day set forth hereinabove, and that, upon execution, each has received a conforming copy.

	ESSA BANK & TRUST
	Stroudsburg, PA
/s/ Sandra L. Oberholtzer	By:	/s/ Thomas J. Grayuski                                          VP-HR
Witness		(Bank Officer other than Insured)                              Title
/s/ Sandra L. Oberholtzer	/s/ Robert Howes, Jr.
Witness	Robert Howes, Jr.

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FIRST AMENDMENT TO THE

EXECUTIVE SALARY CONTINUATION AGREEMENT

WHEREAS, ESSA Bank & Trust (the “Bank”) has entered into a Executive Salary Continuation Agreement dated September 15, 1004 (the “Agreement”) with the undersigned executive (the “Executive”); and

WHEREAS, the Agreement provides that a mutual to stock conversion of the Bank shall constitute change in control of the Bank; and

WHEREAS, the Bank has adopted a plan of conversion from the mutual to the stock form of organization and in connection therewith will offer shares of common stock of a newly formed holding company to depositors and the public; and

WHEREAS, the Bank and the Executive wish to amend the agreement to provide that the conversion of the Bank from the mutual to the stock form of organization, and in connection therewith the formation of a holding company that will sell shares of common stock to Bank depositors and the public, will not constitute a change in control, but to provide that certain enumerated events that may occur to the public holding company subsequent to the completion of the conversion will constitute a change in control; and

WHEREAS, except for the change to the definition of a change in control, there are no other changes to the Agreement and all other provisions of the Agreements shall remain unchanged; and

WHEREAS, the Agreement provides that it may be amended at any time, in whole or in part, by mutual written consent of the Executive and the Bank.

NOW THEREFORE, the Agreement is hereby amended as follows:

1. Section IX is amended to read in its entirety as follows:

IX CHANGE IN CONTROL

A. For purposes of this Agreement, and except as provided in B below, the term “Change in Control” shall mean any of the following events:

(i) a change in control of a nature that would be required to be reported in response to Item 5.01(a) of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); or

(ii) a change in control of the Bank or ESSA Bancorp, Inc. (the proposed holding company for the Bank – the “Company”) within the meaning of the Home Owners Loan Act, as amended (“HOLA”), and applicable rules and regulations promulgated thereunder, as in effect at the time of the Change in Control; or

(iii) any of the following events, upon which a Change in Control shall be deemed to have occurred:

(A) any “person” (as the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of Company’s outstanding securities except for any securities purchased by the Bank’s employee stock ownership plan or trust; or

(B) individuals who constitute the Board on the date hereof (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board, or whose nomination for election by the Company’s stockholders was approved by the same Nominating Committee serving under an Incumbent Board, shall be, for purposes of this subsection (B), considered as though he were a member of the Incumbent Board; or

(C) a tender offer is made for 25% or more of the voting securities of the Company and the shareholders owning beneficially or of record 25% or more of the outstanding securities of the Company have tendered or offered to sell their shares pursuant to such tender offer and such tendered shares have been accepted by the tender offeror.

B. Notwithstanding anything to contrary elsewhere in this Agreement, the conversion of the Bank from the mutual to the stock form of organization, and in connection therewith the formation of the Company as the Bank’s parent holding company and the sale of shares of Company common stock to depositors and the public, is not a “Change in Control” for any purpose of this Agreement.

C. Upon a Change in Control (as defined in Subparagraph IX(A) above), if the Executive’s employment is subsequently terminated, except for cause, then the Executive shall receive the benefits promised in this Agreement upon attaining Normal Retirement Age, as if the Executive had been continuously employed by the Bank until said Normal Retirement Age. The Executive will also remain eligible for all promised death benefits in this Agreement. In addition, no sale, merger or consolidation of the Bank shall take place unless the new or surviving entity expressly acknowledges the obligations under this Agreement and agrees to abide by its terms.

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IN WITNESS WHEREOF, this First Amendment is executed effective as of the latest date set forth below.

	ESSA BANK & TRUST
December 4, 2006	By:	/s/ Suzie T. Farley
Date	Title:	Corporate Secretary
	EXECUTIVE
December 4, 2006	/s/ Robert Howes
Date

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Exhibit 1

(For Robert Howes)

The annual benefit is based on the following formula:

Benefits will be equal to the difference in benefits to which the Executive would have been entitled under the Basic Retirement Plan if such benefits were calculated under the Basic Retirement Plan (i) pursuant to the provisions in effect immediately prior to the restatement of the Basic Retirement Plan effective November 1, 1989 and (ii) applying the limitations and restrictions imposed by the application of Code Sections 401 (a)(l7) and 415 or any successor provisions and the benefits from the Basic Retirement Plan as

actually payable to the Executive under the Basic Retirement Plan in effect as of November l, 1989 and later and applying the limitations and restrictions imposed by the application of Code Sections 411 (a)(17) and 415 or any successor provisions.

In 2004, based on current assumptions and calculations, this benefit for Robert Howes, Jr. was calculated to be $58,827.

The assumptions will be evaluated and reviewed periodically by Benmark at the bank’s discretion.

EX-10.8

Exhibit 10.8

EXECUTIVE SALARY CONTINUATION AGREEMENT

THIS AGREEMENT, made and entered into this 15th day of September, 2004, by and between ESSA Bank & Trust, a savings and loan association organized and existing under the laws of the State of Pennsylvania (hereinafter referred to as the “Bank”), and Diane Reimer, an Executive of the Bank (hereinafter referred to as the “Executive”).

WITNESSETH:

WHEREAS, the Executive has been and continues to be a valued Executive of the Bank, and is now serving the Bank as a Vice-President; and

WHEREAS, it is the consensus of the Board of Directors (hereinafter referred to as the “Board”) that the Executive’s services to the Bank in the past have been of exceptional merit and have constituted an invaluable contribution to the general welfare of the Bank in bringing the Bank to its present status of operating efficiency and present position in its field of activity;

WHEREAS, the Executive’s experience, knowledge of the affairs of the Bank, reputation, and contacts in the industry are so valuable that assurance of the Executive’s continued services is essential for the future growth and profits of the Bank and it is in the best interests of the Bank to arrange terms of continued employment for the Executive so as to reasonably assure the Executive remains in the Bank’s employ during the Executive’s lifetime or until the age of retirement;

WHEREAS, it is the desire of the Bank that the Executive’s services be retained as herein provided;

WHEREAS, the Executive is willing to continue in the employ of the Bank provided the Bank agrees to pay the Executive or the Executive’s beneficiary(ies), certain benefits in accordance with the terms and conditions hereinafter set forth;

ACCORDINGLY, it is the desire of the Bank and the Executive to enter into this Agreement under which the Bank will agree to make certain payments to the Executive at retirement or the Executive’s beneficiary(ies) in the event of the Executive’s death pursuant to this Agreement;

FURTHERMORE, it is the intent of the parties hereto that this Executive Plan be considered an unfunded arrangement maintained primarily to provide supplemental retirement benefits for the Executive, and be considered a non-qualified benefit plan for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Executive is fully advised of the Bank’s financial status and has had substantial input in the design and operation of this benefit plan; and

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NOW, THEREFORE, in consideration of services performed in the past and to be performed in the future as well as of the mutual promises and covenants herein contained it is agreed as follows:

I. EMPLOYMENT

The Bank agrees to employ the Executive in such capacity as the Bank may from time to time determine. The Executive will continue in the employ of the Bank in such capacity and with such duties and responsibilities as may be assigned to him, and with such compensation as may be determined from time to time by the Board of Directors of the Bank.

II. FRINGE BENEFITS

The Salary continuation benefits provided by this Agreement are granted by the Bank as a fringe benefit to the Executive and are not part of any Salary reduction plan or an arrangement deferring a bonus or a Salary increase. The Executive has no option to take any current payment or bonus in lieu of these Salary continuation benefits except as set forth hereinafter.

III. RETIREMENT DATE AND NORMAL RETIREMENT AGE

A. Retirement Date:

If the Executive remains in the continuous employ of the Bank, the Executive shall retire from active employment with the Bank on the Executive’s sixty-fifth (65^th) birthday.

B. Normal Retirement Age:

Normal Retirement Age shall mean the date on which the Executive attains age sixty-five (65).

C. Early Retirement Date:

Early Retirement Date shall mean a retirement from employment which is effective prior to the Normal Retirement Age stated herein, provided the Executive has attained age sixty (60) with thirty (30) years of service with the bank.

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IV. RETIREMENT BENEFIT AND POST-RETIREMENT DEATH BENEFIT

A. Normal Retirement:

Upon said retirement, if the Executive has been employed with the Bank for thirty (30) years, the Bank, commencing with the first day of the month following the date of such retirement, shall pay the Executive an annual benefit as described in Exhibit 1. Said benefit may be paid in equal monthly installments (1/12^th of the annual benefit) until the death of the executive, annual installments until the death of the executive or in a lump sum reduced to present value as set forth in Subparagraph XI (K). Executive must decide on the payout mode, one (1) year prior to retirement. If, however, less than one-hundred and ninety-two (192) such monthly payments have been made prior to the death of the Executive, then the Bank, at its discretion, will continue the payments until the full one-hundred and ninety-two (192) payments have been made or will make the total amount of said payment(s) payable in a lump sum reduced to present value as set forth in Subparagraph XI (K) to said beneficiary(ies). In the absence of any effective beneficiary designation, any such amounts becoming due and payable upon the death of the Executive shall be payable to the duly qualified executor or administrator of the Executive’s estate. Said payments due hereunder shall begin the first day of the second month following the decease of the Executive

B. Early Retirement:

Should the Executive leave the employment of the Bank in accordance with the Early Retirement Date (Subparagraph III [C]) and has served 30 (thirty) years, the Executive’s benefit shall be reduced by one half of one percent (.05%) for each month the Executive leaves prior to Normal Retirement Age.

V. DEATH BENEFIT PRIOR TO RETIREMENT

In the event the Executive should die while actively employed by the Bank at any time after the date of this Agreement but prior to the Executive attaining the age of sixty-five (65) years (or such later date as may be agreed upon), the Bank will pay the Executive’s accrued liability retirement account to such individual or individuals as the Executive may have designated in writing and filed with the Bank. This assumes the Executive has met the vesting requirement (Subsection VII, below). In the absence of any effective beneficiary designation, any such amounts becoming due and payable upon the death of the Executive shall be payable to the duly qualified executor or administrator of the Executive’s estate. Said payments due hereunder shall begin the first day of the second month following the decease of the Executive.

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VI. BENEFIT ACCOUNTING

The Bank shall account for this benefit using the generally accepted accounting principles of the Bank’s primary federal regulator. The Bank shall establish an accrued liability retirement account for the Executive into which appropriate reserves shall be accrued.

VII. VESTING

Executive’s interest in the benefits that are the subject of this Agreement shall be subject to a cliff vesting schedule such that the Executive will be zero percent (0%) vested until he has completed five (5) years of service with the bank. At the conclusion of five (5) years of service, the Executive will be 100% vested in the accrual balance. Vesting will begin from the date of first service with the bank.

VIII.  OTHER TERMINATION OF EMPLOYMENT

Subject to Subparagraph VIII (i) hereinbelow, in the event that the employment of the Executive shall terminate prior to Normal Retirement Age, as provided in Paragraph III, by the Executive’s voluntary action, or by the Executive’s discharge by the Bank without cause, then this Agreement shall terminate upon the date of such termination of employment and the Bank shall pay to the Executive as severance compensation, and at the Executive’s discretion, in either sixty (60) equal monthly payments or a lump sum, an amount equal to the accrued balance on the date of termination, of the Executive’s liability reserve account assuming the Executive has become vested in his benefit. Interest will be equal to the one-year Treasury bill as of the date of termination if Executive selects the monthly payout option.

In the event the Executive’s death should occur after such severance but prior to the completion of the monthly payments provided for in this Paragraph VIII, the remaining installments will be reduced to present value as set forth in Subparagraph XI (K), and will be paid to such individual or individuals as the Executive may have designated in writing and filed with the Bank. In the absence of any effective beneficiary designation, any such amounts shall be payable to the duly qualified executor or administrator of the Executive’s estate.

(i) Discharge for Cause:

In the event the Executive shall be discharged for cause at any time or resigns due to a pending discharge for cause, all benefits provided herein shall be forfeited. The term “for cause” shall mean any of the following that result in material measurable adverse effect on the Bank: (i) the conviction of a felony or gross misdemeanor involving fraud or dishonesty; (ii) an intentional failure to perform stated duties; or (iii) a breach of fiduciary duty

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involving personal profit. If a dispute arises as to discharge “for cause,” such dispute shall be resolved by arbitration as set forth in this Executive Plan.

IX. MUTUAL TO STOCK CONVERSION OR CHANGE OF CONTROL

A. Mutual to Stock Conversion shall mean the conversion of the Bank from a mutual savings bank to an entity that issues stock and is owned by its shareholders. Such Mutual to Stock Conversion shall be deemed to be a Change of Control for purposes of this Agreement. For the purposes of this Agreement, transfers of stock on account of deaths or gifts, transfers between family members or transfers to a qualified retirement plan maintained by the Bank shall not be considered in determining whether there has been a Change of Control. The formation of a mutual holding company, for the purposes of this Agreement, is not a change of control.

B. Upon a Mutual to Stock Conversion or a Change of Control (as defined in Subparagraph IX [A] hereinabove), if the Executive’s employment is subsequently terminated, except for cause, then the Executive shall receive the benefits promised in this Agreement upon attaining Normal Retirement Age, as if the Executive had been continuously employed by the Bank until said Normal Retirement Age. The Executive will also remain eligible for all promised death benefits in this Agreement. In addition, no sale, merger, consolidation or conversion of the Bank shall take place unless the new or surviving entity expressly acknowledges the obligations under this Agreement and agrees to abide by its terms.

X. RESTRICTIONS ON FUNDING

The Bank shall have no obligation to set aside, earmark or entrust any fund or money with which to pay its obligations under this Executive Plan. The Executive, their beneficiary(ies), or any successor in interest shall be and remain simply a general creditor of the Bank in the same manner as any other creditor having a general claim for matured and unpaid compensation.

The Bank reserves the absolute right, at its sole discretion, to either fund the obligations undertaken by this Executive Plan or to refrain from funding the same and to determine the extent, nature and method of such funding. Should the Bank elect to fund this Executive Plan, in whole or in part, through the purchase of life insurance, mutual funds, disability policies or annuities, the Bank reserves the absolute right, in its sole discretion, to terminate such funding at any time, in whole or in part. At no time shall any Executive be deemed to have any lien, right, title or interest in any specific funding investment or assets of the Bank.

If the Bank elects to invest in a life insurance, disability or annuity policy on the life of the Executive, then the Executive shall assist the Bank by freely submitting

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to a physical exam and supplying such additional information necessary to obtain such insurance or annuities.

XI. MISCELLANEOUS

A. Alienability and Assignment Prohibitions:

Neither the Executive, nor the Executive’s surviving spouse, nor any other beneficiary(ies) under this Executive Plan shall have any power or right to transfer, assign, anticipate, hypothecate, mortgage, commute, modify or otherwise encumber in advance any of the benefits payable hereunder nor shall any of said benefits be subject to seizure for the payment of any debts, judgments, alimony or separate maintenance owed by the Executive or the Executive’s beneficiary(ies), nor be transferable by operation of law in the event of bankruptcy, insolvency or otherwise. In the event the Executive or any beneficiary attempts assignment, commutation, hypothecation, transfer or disposal of the benefits hereunder, the Bank’s liabilities shall forthwith cease and terminate.

B. Binding Obligation of the Bank and any Successor in Interest:

The Bank shall not merge or consolidate into or with another bank or bank holding company or sell substantially all of its assets to another bank, firm or person until such bank, firm or person expressly agrees, in writing, to assume and discharge the duties and obligations of the Bank under this Executive Plan. This Executive Plan shall be binding upon the parties hereto, their successors, beneficiaries, heirs and personal representatives.

C. Amendment or Revocation:

Subject to Paragraph XIII, it is agreed by and between the parties hereto that, during the lifetime of the Executive, this Executive Plan may be amended or revoked at any time or times, in whole or in part, by the mutual written consent of the Executive and the Bank.

D. Gender:

Whenever in this Executive Plan words are used in the masculine gender, they shall be read and construed as in the masculine or feminine gender, whenever they should so apply.

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E. Effect on Other Bank Benefit Plans:

Nothing contained in this Executive Plan shall affect the right of the Executive to participate in or be covered by any qualified or non-qualified pension, profit-sharing, group, bonus or other supplemental compensation or fringe benefit plan constituting a part of the Bank’s existing or future compensation structure.

F. Headings:

Headings and subheadings in this Executive Plan are inserted for reference and convenience only and shall not be deemed a part of this Executive Plan.

G. Applicable Law:

The validity and interpretation of this Agreement shall be governed by the laws of the State of Pennsylvania.

H. 12 U.S.C. § 1828(k):

Any payments made to the Executive pursuant to this Executive Plan, or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C. § 1828(k) or any other pertinent regulations.

I. Partial Invalidity:

If any term, provision, covenant, or condition of this Executive Plan is determined by an arbitrator or a court, as the case may be, to be invalid, void, or unenforceable, such determination shall not render any other term, provision, covenant, or condition invalid, void, or unenforceable, and the Executive Plan shall remain in full force and effect notwithstanding such partial invalidity.

J. Not a Contract of Employment:

This Agreement shall not be deemed to constitute a contract of employment between the parties hereto, nor shall any provision hereof restrict the right of the Bank to discharge the Executive, or restrict the right of the Executive to terminate employment.

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K. Present Value:

All present value calculations under this Agreement shall be based on the following discount rate:

Discount Rate: The discount rate as used in the FASB 87 calculations for the Executive Plan.

XII. ERISA PROVISION

A. Named Fiduciary and Plan Administrator:

The “Named Fiduciary and Plan Administrator” of this Executive Plan shall be ESSA Bank & Trust until its resignation or removal by the Board. As Named Fiduciary and Plan Administrator, the Bank shall be responsible for the management, control and administration of the Executive Plan. The Named Fiduciary may delegate to others certain aspects of the management and operation responsibilities of the Executive Plan including the employment of advisors and the delegation of ministerial duties to qualified individuals.

B. Claims Procedure and Arbitration:

In the event a dispute arises over benefits under this Executive Plan and benefits are not paid to the Executive (or to the Executive’s beneficiary(ies) in the case of the Executive’s death) and such claimants feel they are entitled to receive such benefits, then a written claim must be made to the Named Fiduciary and Plan Administrator named above within forty-five (45) days from the date payments are refused. The Named Fiduciary and Plan Administrator shall review the written claim and if the claim is denied, in whole or in part, they shall provide in writing within forty-five (45) days of receipt of such claim the specific reasons for such denial, reference to the provisions of this Executive Plan upon which the denial is based and any additional material or information necessary to perfect the claim. Such written notice shall further indicate the additional steps to be taken by claimants if a further review of the claim denial is desired. A claim shall be deemed denied if the Named Fiduciary and Plan Administrator fail to take any action within the aforesaid forty-five(45)day period.

If claimants desire a second review they shall notify the Named Fiduciary and Plan Administrator in writing within forty-five (45) days of the first claim denial. Claimants may review this Executive Plan or any documents relating thereto and submit any written issues and comments they may feel

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appropriate. In their sole discretion, the Named Fiduciary and Plan Administrator shall then review the second claim and provide a written decision within forty-five (45) days of receipt of such claim. This decision shall likewise state the specific reasons for the decision and shall include reference to specific provisions of the Plan Agreement upon which the decision is based.

If claimants continue to dispute the benefit denial based upon completed performance of this Executive Plan or the meaning and effect of the terms and conditions thereof, then claimants may submit the dispute to an arbitrator for final arbitration. The arbitrator shall be selected by mutual agreement of the Bank and the claimants. The arbitrator shall operate under any generally recognized set of arbitration rules. The parties hereto agree that they and their heirs, personal representatives, successors and assigns shall be bound by the decision of such arbitrator with respect to any controversy properly submitted to it for determination.

Where a dispute arises as to the Bank’s discharge of the Executive “for cause,” such dispute shall likewise be submitted to arbitration as above described and the parties hereto agree to be bound by the decision thereunder.

XIII.  TERMINATION OR MODIFICATION OF AGREEMENT BY REASON OF CHANGES IN THE LAW, RULES OR REGULATIONS

The Bank is entering into this Agreement upon the assumption that certain existing tax laws, rules and regulations will continue in effect in their current form. If any said assumptions should change and said change has a detrimental effect on this Executive Plan, then the Bank reserves the right to terminate or modify this Agreement accordingly. Upon a Change of Control (Paragraph IX), this paragraph shall become null and void effective immediately upon said Change of Control.

XIV.  EFFECTIVE DATE

The effective date of the Executive Plan shall be September 23, 2004.

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IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully read this Agreement and executed the original thereof on the first day set forth hereinabove, and that, upon execution, each has received a conforming copy.

	ESSA BANK & TRUST
	Stroudsburg, PA
/s/ Lisa Mostellar	By:	/s/ Thomas J. Grayuski                                          VP-HR
Witness		(Bank Officer other than Insured)                                 Title
/s/ Jeff Reimer	/s/ Diane Reimer
Witness	Diane Reimer

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FIRST AMENDMENT TO THE

EXECUTIVE SALARY CONTINUATION AGREEMENT

WHEREAS, ESSA Bank & Trust (the “Bank”) has entered into a Executive Salary Continuation Agreement dated September 15, 1004 (the “Agreement”) with the undersigned executive (the “Executive”); and

WHEREAS, the Agreement provides that a mutual to stock conversion of the Bank shall constitute change in control of the Bank; and

WHEREAS, the Bank has adopted a plan of conversion from the mutual to the stock form of organization and in connection therewith will offer shares of common stock of a newly formed holding company to depositors and the public; and

WHEREAS, the Bank and the Executive wish to amend the agreement to provide that the conversion of the Bank from the mutual to the stock form of organization, and in connection therewith the formation of a holding company that will sell shares of common stock to Bank depositors and the public, will not constitute a change in control, but to provide that certain enumerated events that may occur to the public holding company subsequent to the completion of the conversion will constitute a change in control; and

WHEREAS, except for the change to the definition of a change in control, there are no other changes to the Agreement and all other provisions of the Agreements shall remain unchanged; and

WHEREAS, the Agreement provides that it may be amended at any time, in whole or in part, by mutual written consent of the Executive and the Bank.

NOW THEREFORE, the Agreement is hereby amended as follows:

1. Section IX is amended to read in its entirety as follows:

IX CHANGE IN CONTROL

A. For purposes of this Agreement, and except as provided in B below, the term “Change in Control” shall mean any of the following events:

(i) a change in control of a nature that would be required to be reported in response to Item 5.01(a) of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); or

(ii) a change in control of the Bank or ESSA Bancorp, Inc. (the proposed holding company for the Bank – the “Company”) within the meaning of the Home Owners Loan Act, as amended (“HOLA”), and applicable rules and regulations promulgated thereunder, as in effect at the time of the Change in Control; or

(iii) any of the following events, upon which a Change in Control shall be deemed to have occurred:

(A) any “person” (as the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of Company’s outstanding securities except for any securities purchased by the Bank’s employee stock ownership plan or trust; or

(B) individuals who constitute the Board on the date hereof (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board, or whose nomination for election by the Company’s stockholders was approved by the same Nominating Committee serving under an Incumbent Board, shall be, for purposes of this subsection (B), considered as though he were a member of the Incumbent Board; or

(C) a tender offer is made for 25% or more of the voting securities of the Company and the shareholders owning beneficially or of record 25% or more of the outstanding securities of the Company have tendered or offered to sell their shares pursuant to such tender offer and such tendered shares have been accepted by the tender offeror.

B. Notwithstanding anything to contrary elsewhere in this Agreement, the conversion of the Bank from the mutual to the stock form of organization, and in connection therewith the formation of the Company as the Bank’s parent holding company and the sale of shares of Company common stock to depositors and the public, is not a “Change in Control” for any purpose of this Agreement.

C. Upon a Change in Control (as defined in Subparagraph IX(A) above), if the Executive’s employment is subsequently terminated, except for cause, then the Executive shall receive the benefits promised in this Agreement upon attaining Normal Retirement Age, as if the Executive had been continuously employed by the Bank until said Normal Retirement Age. The Executive will also remain eligible for all promised death benefits in this Agreement. In addition, no sale, merger or consolidation of the Bank shall take place unless the new or surviving entity expressly acknowledges the obligations under this Agreement and agrees to abide by its terms.

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IN WITNESS WHEREOF, this First Amendment is executed effective as of the latest date set forth below.

	ESSA BANK & TRUST
December 4, 2006	By:	/s/ Suzie T. Farley
Date	Title:	Corporate Secretary
	EXECUTIVE
December 5, 2006	/s/ Diane K. Reimer
Date

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Exhibit 1

(For Diane Reimer)

The annual benefit is based on the following formula:

Benefits will be equal to the difference in benefits to which the Executive would have been entitled under the Basic Retirement Plan if such benefits were calculated under the Basic Retirement Plan (i) pursuant to the provisions in effect immediately prior to the

restatement of the Basic Retirement Plan effective November 1, 1989 and (ii) applying the limitations and restrictions imposed by the application of Code Sections 401 (a)(17) and 415 or any successor provisions and the benefits from the Basic Retirement Plan as

actually payable to the Executive under the Basic Retirement Plan in effect as of November l, 1989 and later and applying the limitations and restrictions imposed by the application of Code Sections 411 (a)(17) and 415 or any successor provisions.

In 2004, based on current assumptions and calculations, this benefit for Diane Reimer was calculated to be $42,601.

The assumptions will be evaluated and reviewed periodically by Benmark at the bank’s discretion.

EX-10.9

Exhibit 10.9

EXECUTIVE SALARY CONTINUATION AGREEMENT

THIS AGREEMENT, made and entered into this 15th day of September, 2004, by and between ESSA Bank & Trust, a savings and loan association organized and existing under the laws of the State of Pennsylvania (hereinafter referred to as the “Bank”), and Thomas J. Grayuski, an Executive of the Bank (hereinafter referred to as the “Executive”).

WITNESSETH:

WHEREAS, the Executive has been and continues to be a valued Executive of the Bank, and is now serving the Bank as a Vice-President, Human Resources; and

WHEREAS, it is the consensus of the Board of Directors (hereinafter referred to as the “Board”) that the Executive’s services to the Bank in the past have been of exceptional merit and have constituted an invaluable contribution to the general welfare of the Bank in bringing the Bank to its present status of operating efficiency and present position in its field of activity;

WHEREAS, the Executive’s experience, knowledge of the affairs of the Bank, reputation, and contacts in the industry are so valuable that assurance of the Executive’s continued services is essential for the future growth and profits of the Bank and it is in the best interests of the Bank to arrange terms of continued employment for the Executive so as to reasonably assure the Executive remains in the Bank’s employ during the Executive’s lifetime or until the age of retirement;

WHEREAS, it is the desire of the Bank that the Executive’s services be retained as herein provided;

ACCORDINGLY, it is the desire of the Bank and the Executive to enter into this Agreement under which the Bank will agree to make certain payments to the Executive at retirement or the Executive’s beneficiary(ies) in the event of the Executive’s death pursuant to this Agreement;

FURTHERMORE, it is the intent of the parties hereto that this Executive Plan be considered an unfunded arrangement maintained primarily to provide supplemental retirement benefits for the Executive, and be considered a non-qualified benefit plan for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Executive is fully advised of the Bank’s financial status and has had substantial input in the design and operation of this benefit plan; and

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NOW, THEREFORE, in consideration of services performed in the past and to be performed in the future as well as of the mutual promises and covenants herein contained it is agreed as follows:

I. EMPLOYMENT

The Bank agrees to employ the Executive in such capacity as the Bank may from time to time determine. The Executive will continue in the employ of the Bank in such capacity and with such duties and responsibilities as may be assigned to him, and with such compensation as may be determined from time to time by the Board of Directors of the Bank.

II. SUPPLEMENTAL BENEFITS

The Salary continuation benefits provided by this Agreement are granted by the Bank as a supplemental benefit to the Executive and are not part of any Salary reduction plan or an arrangement deferring a bonus or a Salary increase. The Executive has no option to take any current payment or bonus in lieu of these Salary continuation benefits except as set forth hereinafter.

III. RETIREMENT DATE AND NORMAL RETIREMENT AGE

A. Retirement Date:

If the Executive remains in the continuous employ of the Bank, the Executive shall retire from active employment with the Bank on the Executive’s sixty-fifth (65^th) birthday.

B. Normal Retirement Age:

Normal Retirement Age shall mean the date on which the Executive attains age sixty-five (65).

C. Early Retirement Date:

Early Retirement Date shall mean a retirement from employment which is effective prior to the Normal Retirement Age stated herein, provided the Executive has attained age sixty (60) with thirty (30) years of service with the bank.

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IV. RETIREMENT BENEFIT AND POST-RETIREMENT DEATH BENEFIT

A. Normal Retirement:

Upon said retirement, if the Executive has been employed with the Bank for thirty (30) years, the Bank, commencing with the first day of the month following the date of such retirement, shall pay the Executive an annual benefit as described in Exhibit 1. Exhibit 1 shall be calculated by Benmark, at the Bank’s request. Said benefit may be paid in equal monthly installments (1/12^th of the annual benefit) until the death of the executive, annual installments until the death of the executive or in a lump sum reduced to present value as set forth in Subparagraph XI (K). Executive must decide on the payout mode, one (1) year prior to retirement. If, however, less than one-hundred and ninety-two (192) such monthly payments have been made prior to the death of the Executive, then the Bank, at its discretion, will continue the payments until the full one-hundred and ninety-two (192) payments have been made or will make the total amount of said payment(s) payable in a lump sum reduced to present value as set forth in Subparagraph XI (K) to said beneficiary(ies). In the absence of any effective beneficiary designation, any such amounts becoming due and payable upon the death of the Executive shall be payable to the duly qualified executor or administrator of the Executive’s estate. Said payments due hereunder shall begin the first day of the second month following the decease of the Executive

B. Early Retirement:

Should the Executive leave the employment of the Bank in accordance with the Early Retirement Date (Subparagraph III [C]) and has served 30 (thirty) years, the Executive’s benefit shall be reduced by one half of one percent (.05%) for each month the Executive leaves prior to Normal Retirement Age.

V. DEATH BENEFIT PRIOR TO RETIREMENT

In the event the Executive should die while actively employed by the Bank at any time after the date of this Agreement but prior to the Executive attaining the age of sixty-five (65) years (or such later date as may be agreed upon), the Bank will pay the Executive’s accrued liability retirement account to such individual or individuals as the Executive may have designated in writing and filed with the Bank. This assumes the Executive has met the vesting requirement (Subsection VII, below). In the absence of any effective beneficiary designation, any such amounts becoming due and payable upon the death of the Executive shall be payable to the duly qualified executor or administrator of the Executive’s estate. Said payments due hereunder shall begin the first day of the second month following the decease of the Executive.

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VI. BENEFIT ACCOUNTING

The Bank shall account for this benefit using the generally accepted accounting principles. The Bank shall establish an accrued liability retirement account for the Executive into which appropriate reserves shall be accrued.

VII. VESTING

Executive’s interest in the benefits that are the subject of this Agreement shall be subject to a cliff vesting schedule such that the Executive will be zero percent (0%) vested until he has completed five (5) years of service with the bank. At the conclusion of five (5) years of service, the Executive will be 100% vested in the accrual balance. Vesting will begin from the date of first service with the bank.

VIII.  OTHER TERMINATION OF EMPLOYMENT

Subject to Subparagraph VIII (i) hereinbelow, in the event that the employment of the Executive shall terminate prior to Normal Retirement Age, as provided in Paragraph III, by the Executive’s voluntary action, or by the Executive’s discharge by the Bank without cause, then this Agreement shall terminate upon the date of such termination of employment and the Bank shall pay to the Executive as severance compensation, and at the Executive’s discretion, in either sixty (60) equal monthly payments or a lump sum, an amount equal to the accrued balance on the date of termination, of the Executive’s liability reserve account assuming the Executive has become vested in his benefit. Interest will be equal to the one-year Treasury bill as of the date of termination if Executive selects the monthly payout option.

In the event the Executive’s death should occur after such severance but prior to the completion of the monthly payments provided for in this Paragraph VIII, the remaining installments will be reduced to present value as set forth in Subparagraph XI (K), and will be paid to such individual or individuals as the Executive may have designated in writing and filed with the Bank. In the absence of any effective beneficiary designation, any such amounts shall be payable to the duly qualified executor or administrator of the Executive’s estate.

(i) Discharge for Cause:

In the event the Executive shall be discharged for cause at any time or resigns due to a pending discharge for cause, all benefits provided herein shall be forfeited. The term “for cause” shall mean any of the following that result in material measurable adverse effect on the Bank: (i) the conviction of a felony or gross misdemeanor involving fraud or dishonesty; (ii) an intentional

4

failure to perform stated duties; or (iii) a breach of fiduciary duty involving personal profit. If a dispute arises as to discharge “for cause,” such dispute shall be resolved by arbitration as set forth in this Executive Plan.

IX. MUTUAL TO STOCK CONVERSION OR CHANGE OF CONTROL

A. Mutual to Stock Conversion shall mean the conversion of the Bank from a mutual savings bank to an entity that issues stock and is owned by its shareholders. Such Mutual to Stock Conversion shall be deemed to be a Change of Control for purposes of this Agreement. For the purposes of this Agreement, transfers of stock on account of deaths or gifts, transfers between family members or transfers to a qualified retirement plan maintained by the Bank shall not be considered in determining whether there has been a Change of Control. The formation of a mutual holding company, for the purposes of this Agreement, is not a change of control.

B. Upon a Mutual to Stock Conversion or a Change of Control (as defined in Subparagraph IX [A] hereinabove), if the Executive’s employment is subsequently terminated, except for cause, then the Executive shall receive the benefits promised in this Agreement upon attaining Normal Retirement Age, as if the Executive had been continuously employed by the Bank until said Normal Retirement Age. The Executive will also remain eligible for all promised death benefits in this Agreement. In addition, no sale, merger, consolidation or conversion of the Bank shall take place unless the new or surviving entity expressly acknowledges the obligations under this Agreement and agrees to abide by its terms.

X. RESTRICTIONS ON FUNDING

The Bank shall have no obligation to set aside, earmark or entrust any fund or money with which to pay its obligations under this Executive Plan. The Executive, their beneficiary(ies), or any successor in interest shall be and remain simply a general creditor of the Bank in the same manner as any other creditor having a general claim for matured and unpaid compensation.

The Bank reserves the absolute right, at its sole discretion, to either fund the obligations undertaken by this Executive Plan or to refrain from funding the same and to determine the extent, nature and method of such funding. Should the Bank elect to fund this Executive Plan, in whole or in part, through the purchase of life insurance, mutual funds, disability policies or annuities, the Bank reserves the absolute right, in its sole discretion, to terminate such funding at any time, in whole or in part. At no time shall any Executive be deemed to have any lien, right, title or interest in any specific funding investment or assets of the Bank.

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If the Bank elects to invest in a life insurance, disability or annuity policy on the life of the Executive, then the Executive shall assist the Bank by freely submitting to a physical exam and supplying such additional information necessary to obtain such insurance or annuities.

XI. MISCELLANEOUS

A. Alienability and Assignment Prohibitions:

Neither the Executive, nor the Executive’s surviving spouse, nor any other beneficiary(ies) under this Executive Plan shall have any power or right to transfer, assign, anticipate, hypothecate, mortgage, commute, modify or otherwise encumber in advance any of the benefits payable hereunder nor shall any of said benefits be subject to seizure for the payment of any debts, judgments, alimony or separate maintenance owed by the Executive or the Executive’s beneficiary(ies), nor be transferable by operation of law in the event of bankruptcy, insolvency or otherwise. In the event the Executive or any beneficiary attempts assignment, commutation, hypothecation, transfer or disposal of the benefits hereunder, the Bank’s liabilities shall forthwith cease and terminate.

B. Binding Obligation of the Bank and any Successor in Interest:

The Bank shall not merge or consolidate into or with another bank or bank holding company or sell substantially all of its assets to another bank, firm or person until such bank, firm or person expressly agrees, in writing, to assume and discharge the duties and obligations of the Bank under this Executive Plan. This Executive Plan shall be binding upon the parties hereto, their successors, beneficiaries, heirs and personal representatives.

C. Amendment or Revocation:

Subject to Paragraph XIII, it is agreed by and between the parties hereto that, during the lifetime of the Executive, this Executive Plan may be amended or revoked at any time or times, in whole or in part, by the mutual written consent of the Executive and the Bank.

D. Gender:

Whenever in this Executive Plan words are used in the masculine gender, they shall be read and construed as in the masculine or feminine gender, whenever they should so apply.

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E. Effect on Other Bank Benefit Plans:

Nothing contained in this Executive Plan shall affect the right of the Executive to participate in or be covered by any qualified or non-qualified pension, profit-sharing, group, bonus or other supplemental compensation or fringe benefit plan constituting a part of the Bank’s existing or future compensation structure.

F. Headings:

Headings and subheadings in this Executive Plan are inserted for reference and convenience only and shall not be deemed a part of this Executive Plan.

G. Applicable Law:

The validity and interpretation of this Agreement shall be governed by the laws of the State of Pennsylvania.

H. 12 U.S.C. § 1828(k):

Any payments made to the Executive pursuant to this Executive Plan, or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C. § 1828(k) or any other pertinent regulations.

I. Partial Invalidity:

If any term, provision, covenant, or condition of this Executive Plan is determined by an arbitrator or a court, as the case may be, to be invalid, void, or unenforceable, such determination shall not render any other term, provision, covenant, or condition invalid, void, or unenforceable, and the Executive Plan shall remain in full force and effect notwithstanding such partial invalidity.

J. Not a Contract of Employment:

This Agreement shall not be deemed to constitute a contract of employment between the parties hereto, nor shall any provision hereof restrict the right of the Bank to discharge the Executive, or restrict the right of the Executive to terminate employment.

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K. Present Value:

All present value calculations under this Agreement shall be based on the following discount rate:

Discount Rate: The discount rate as used in the FASB 87 calculations for the Executive Plan.

XII. ERISA PROVISION

A. Named Fiduciary and Plan Administrator:

The “Named Fiduciary and Plan Administrator” of this Executive Plan shall be ESSA Bank & Trust until its resignation or removal by the Board. As Named Fiduciary and Plan Administrator, the Bank shall be responsible for the management, control and administration of the Executive Plan. The Named Fiduciary may delegate to others certain aspects of the management and operation responsibilities of the Executive Plan including the employment of advisors and the delegation of ministerial duties to qualified individuals.

B. Claims Procedure and Arbitration:

In the event a dispute arises over benefits under this Executive Plan and benefits are not paid to the Executive (or to the Executive’s beneficiary(ies) in the case of the Executive’s death) and such claimants feel they are entitled to receive such benefits, then a written claim must be made to the Named Fiduciary and Plan Administrator named above within forty-five (45) days from the date payments are refused. The Named Fiduciary and Plan Administrator shall review the written claim and if the claim is denied, in whole or in part, they shall provide in writing within forty-five (45) days of receipt of such claim the specific reasons for such denial, reference to the provisions of this Executive Plan upon which the denial is based and any additional material or information necessary to perfect the claim. Such written notice shall further indicate the additional steps to be taken by claimants if a further review of the claim denial is desired. A claim shall be deemed denied if the Named Fiduciary and Plan Administrator fail to take any action within the aforesaid forty-five(45)day period.

If claimants desire a second review they shall notify the Named Fiduciary and Plan Administrator in writing within forty-five (45) days of the first

8

claim denial. Claimants may review this Executive Plan or any documents relating thereto and submit any written issues and comments they may feel appropriate. In their sole discretion, the Named Fiduciary and Plan Administrator shall then review the second claim and provide a written decision within forty-five (45) days of receipt of such claim. This decision shall likewise state the specific reasons for the decision and shall include reference to specific provisions of the Plan Agreement upon which the decision is based.

If claimants continue to dispute the benefit denial based upon completed performance of this Executive Plan or the meaning and effect of the terms and conditions thereof, then claimants may submit the dispute to an arbitrator for final arbitration. The arbitrator shall be selected by mutual agreement of the Bank and the claimants. The arbitrator shall operate under any generally recognized set of arbitration rules. The parties hereto agree that they and their heirs, personal representatives, successors and assigns shall be bound by the decision of such arbitrator with respect to any controversy properly submitted to it for determination.

Where a dispute arises as to the Bank’s discharge of the Executive “for cause,” such dispute shall likewise be submitted to arbitration as above described and the parties hereto agree to be bound by the decision thereunder.

XIII.  EFFECTIVE DATE

The effective date of the Executive Plan shall be September 23, 2004.

9

IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully read this Agreement and executed the original thereof on the first day set forth hereinabove, and that, upon execution, each has received a conforming copy.

	ESSA BANK & TRUST
	Stroudsburg, PA
/s/ Robert Selitto	By:	/s/ Matthew Kennedy                                              VP/CFO
Witness		(Bank Officer other than Insured)                                 Title
/s/ Robert Selitto	/s/ Thomas Grayuski
Witness	Thomas Grayuski

10

FIRST AMENDMENT TO THE

EXECUTIVE SALARY CONTINUATION AGREEMENT

WHEREAS, ESSA Bank & Trust (the “Bank”) has entered into a Executive Salary Continuation Agreement dated September 15, 1004 (the “Agreement”) with the undersigned executive (the “Executive”); and

WHEREAS, the Agreement provides that a mutual to stock conversion of the Bank shall constitute change in control of the Bank; and

WHEREAS, the Bank has adopted a plan of conversion from the mutual to the stock form of organization and in connection therewith will offer shares of common stock of a newly formed holding company to depositors and the public; and

WHEREAS, the Bank and the Executive wish to amend the agreement to provide that the conversion of the Bank from the mutual to the stock form of organization, and in connection therewith the formation of a holding company that will sell shares of common stock to Bank depositors and the public, will not constitute a change in control, but to provide that certain enumerated events that may occur to the public holding company subsequent to the completion of the conversion will constitute a change in control; and

WHEREAS, except for the change to the definition of a change in control, there are no other changes to the Agreement and all other provisions of the Agreements shall remain unchanged; and

WHEREAS, the Agreement provides that it may be amended at any time, in whole or in part, by mutual written consent of the Executive and the Bank.

NOW THEREFORE, the Agreement is hereby amended as follows:

1. Section IX is amended to read in its entirety as follows:

IX CHANGE IN CONTROL

A. For purposes of this Agreement, and except as provided in B below, the term “Change in Control” shall mean any of the following events:

(i) a change in control of a nature that would be required to be reported in response to Item 5.01(a) of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); or

(ii) a change in control of the Bank or ESSA Bancorp, Inc. (the proposed holding company for the Bank – the “Company”) within the meaning of the Home Owners Loan Act, as amended (“HOLA”), and applicable rules and regulations promulgated thereunder, as in effect at the time of the Change in Control; or

(iii) any of the following events, upon which a Change in Control shall be deemed to have occurred:

(A) any “person” (as the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of Company’s outstanding securities except for any securities purchased by the Bank’s employee stock ownership plan or trust; or

(B) individuals who constitute the Board on the date hereof (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board, or whose nomination for election by the Company’s stockholders was approved by the same Nominating Committee serving under an Incumbent Board, shall be, for purposes of this subsection (B), considered as though he were a member of the Incumbent Board; or

(C) a tender offer is made for 25% or more of the voting securities of the Company and the shareholders owning beneficially or of record 25% or more of the outstanding securities of the Company have tendered or offered to sell their shares pursuant to such tender offer and such tendered shares have been accepted by the tender offeror.

B. Notwithstanding anything to contrary elsewhere in this Agreement, the conversion of the Bank from the mutual to the stock form of organization, and in connection therewith the formation of the Company as the Bank’s parent holding company and the sale of shares of Company common stock to depositors and the public, is not a “Change in Control” for any purpose of this Agreement.

C. Upon a Change in Control (as defined in Subparagraph IX(A) above), if the Executive’s employment is subsequently terminated, except for cause, then the Executive shall receive the benefits promised in this Agreement upon attaining Normal Retirement Age, as if the Executive had been continuously employed by the Bank until said Normal Retirement Age. The Executive will also remain eligible for all promised death benefits in this Agreement. In addition, no sale, merger or consolidation of the Bank shall take place unless the new or surviving entity expressly acknowledges the obligations under this Agreement and agrees to abide by its terms.

2

IN WITNESS WHEREOF, this First Amendment is executed effective as of the latest date set forth below.

	ESSA BANK & TRUST
December 4, 2006	By:	/s/ Suzie T. Farley
Date	Title:	Corporate Secretary
	EXECUTIVE
December 4, 2006	/s/ Thomas J. Grayuski
Date

3

Exhibit 1

(For Tom Grayuski)

The annual benefit is based on the following formula:

Benefit will be equal to seventy (70) percent of compensation averaged on a monthly basis over the five (5) consecutive years of credited service during the ten (10) year period immediately preceding retirement which produces the highest monthly average. Excluded from this calculation will be income attributable to the bank’s Long Term Incentive Bonus Plan. This value will be annualized and will be offset by fifty (50) percent of annual Social Security benefit, the bank’s annualized defined benefit pension plan benefit, and the annualized 401-k benefit attributable to the bank match component only.

In 2004, based on current assumptions and calculations, this benefit for Tom Grayuski was calculated to be $22,997.

The assumptions will be evaluated and reviewed periodically by Benmark at the bank’s discretion.

An EXAMPLE of the calculation is presented below:

Tom Grayuski’s projected final salary at age 65 based on a 5.5% salary inflator and a 30% short term incentive bonus: $280,447

70%=$176,902

50% of Social Security projected to be $16,600

Annual ESSA defined pension plan benefit = $115,087

Annual annuitized 401-k benefit (bank match only and excluding Short Term Incentive) = $22,218

$	176,902			70% of final average salary
$	(16,600	)		50% of Social Security
$	(115,087	)		Annual pension benefit
$	(22,218	)		Annual annuitized 401-k, bank match only
$	22,997		=	the annual value of the lifetime SERP

EX-16

EXHIBIT 16

January 18, 2007

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Dear Sir or Madam:

We have read the section captioned “Experts” in the Pre-Effective Amendment No.1 to the Registration Statement on Form S-1 filed by our former client, ESSA Bank & Trust, and are in agreement with the statements concerning our firm contained therein and we have no basis to agree or disagree with the other statements of the registrant contained therein.

Very truly yours,

/s/ Beard Miller Company LLP

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the use of our report, dated October 27, 2006, relating to our audit of the consolidated financial statements of ESSA Bank & Trust as of September 30, 2006 and 2005, and for the years then ended in Amendment No. 1 of the Registration Statement on Form S-l. We also consent to the reference to us under the headings “Material Income Tax Consequences” and “Experts” in the Prospectus.

/s/ S.R. Snodgrass, A.C.

Wexford, Pennsylvania

January 18, 2007

S.R. Snodgrass, A.C.  •  2100 Corporate Drive, Suite 400  •  Wexford, Pennsylvania 15090-7647  •  Phone:  (724)934-0344  •  Facsmile: (724) 934-0345

EX-23.3

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the use of our report, dated October 29, 2004, relating to the consolidated financial statements of ESSA Bank & Trust as of September 30, 2004 and for the year then ended in the Pre-Effective Amendment No. 1 to the Registration Statement of Form S-1.

We also consent to the reference to us under the caption “Experts” in the Prospectus:

/s/ Beard Miller Company LLP

Beard Miller Company LLP

Harrisburg, Pennsylvania

January 18, 2007

EX-23.4

Exhibit 23.4

RP^® FINANCIAL, LC.

Financial Services Industry Consultants

January 19, 2007

Board of Directors

ESSA Bancorp, Inc.

ESSA Bank & Trust

200 Palmer Street

Stroudsburg, Pennsylvania 18360

Members of the Boards of Directors:

We hereby consent to the use of our firm’s name in the Form AC Application for Conversion, and any amendments thereto to be filed with Office of Thrift Supervision, and in the Registration Statement on Form S-1, and any amendments thereto to be filed with the Securities and Exchange Commission. We also hereby consent to the inclusion of, summary of and references to our Valuation Appraisal Report and any Valuation Appraisal Report Updates in such filings including the prospectus of ESSA Bancorp, Inc. and to the reference to our firm under the heading “Experts” in the prospectus.

Sincerely,

RP^® FINANCIAL, LC.

Washington Headquarters
Rosslyn Center	Telephone: (703) 528-1700
1700 North Moore Street, Suite 2210	Fax No.: (703) 528-1788
Arlington, VA 22209	Toll-Free No.: (866) 723-0594

EX-99.3

Exhibit 99.3

AMENDMENT #1

FILED AS OF JANUARY 19, 2007

PRO FORMA VALUATION REPORT

ESSA BANCORP, INC.

PROPOSED HOLDING COMPANY FOR

ESSA BANK & TRUST

Stroudsburg, Pennsylvania

Dated as of:

November 24, 2006

RP^® Financial, LC.

1700 North Moore Street

Suite 2210

Arlington, Virginia 22209

RP^® FINANCIAL, LC.

Financial Services Industry Consultants

November 24, 2006

Board of Directors

ESSA Bank & Trust

200 Palmer Street

Stroudsburg, Pennsylvania 18360

Members of the Board of Directors:

At your request, we have completed and hereby provide an independent appraisal (“Appraisal”) of the estimated pro forma market value of the common stock which is to be issued in connection with the mutual-to-stock conversion of ESSA Bank & Trust, Stroudsburg, Pennsylvania (“ESSA Bank” or the “Bank”). The common stock issued in connection with the Bank’s conversion will simultaneously be acquired by a holding company, ESSA Bancorp, Inc. (“ESSA Bancorp” or the “Company”). Pursuant to the plan of conversion, ESSA Bancorp will offer its stock in a subscription offering to Eligible Account Holders, Tax-Qualified Plans including ESSA Bank’s employee stock ownership plan (the “ESOP”), Supplemental Eligible Account Holders and Other Members. To the extent that shares remain available for purchase after satisfaction of all subscriptions received in the subscription offering, the shares may be offered for sale to members of the general public in a community offering.

This Appraisal is furnished pursuant to the conversion regulations promulgated by the Office of Thrift Supervision (“OTS”). Specifically, this Appraisal has been prepared in accordance with the “Guidelines for Appraisal Reports for the Valuation of Savings and Loan Associations Converting from Mutual to Stock Form of Organization” as set forth by the OTS, and applicable regulatory interpretations thereof.

Description of Plan of Conversion

The Board of Directors of ESSA Bank & Trust adopted the plan of conversion on July 25, 2006 and amended it on November 21, 2006, incorporated herein by reference. Pursuant to the plan of conversion, the Bank will convert from a Pennsylvania-chartered mutual savings association to a Pennsylvania-chartered stock savings association and become a wholly-owned subsidiary of ESSA Bancorp, a newly formed Pennsylvania corporation. ESSA Bancorp will offer 100% of its common stock to qualifying depositors of ESSA Bank in a subscription offering and, if necessary, to members of the general public through a community offering and/or a syndicated community offering of registered broker-dealers. Going forward, ESSA Bancorp will own 100% of the Bank’s stock, and the Bank will initially be ESSA Bancorp’s sole subsidiary. A portion of the net proceeds received from the sale of common stock will be used to purchase all of the then to be issued and outstanding capital stock of the Bank and the balance of the net proceeds will be retained by the Company.

Washington Headquarters
Rosslyn Center	Telephone: (703) 528-1700
1700 North Moore Street, Suite 2210	Fax No.: (703) 528-1788
Arlington, VA 22209	Toll-Free No.: (866) 723-0594
www.rpfinancial.com	E-Mail: mail@rpfinancial.com

Board of Directors

November 24, 2006

Page 2

At this time, no other activities are contemplated for the Company other than the ownership of the Bank, a loan to the newly-formed ESOP and reinvestment of the proceeds that are retained by the Company. In the future, ESSA Bancorp may acquire or organize other operating subsidiaries, diversify into other banking-related activities, pay dividends or repurchase its stock, although there are no specific plans to undertake such activities at the present time.

The plan of conversion provides for the establishment of ESSA Foundation (the “Foundation”). The Foundation will be funded with ESSA Bancorp common stock contributed by the Company in an amount equal to 7.0% of the shares of common stock issued in the offering and cash equal to 1.0% of the gross proceeds raised in the conversion offering . The purpose of the Foundation is to provide financial support to charitable organizations in the communities in which ESSA Bank operates and to enable those communities to share in ESSA Bank’s long-term growth. The Foundation will be dedicated completely to community activities and the promotion of charitable causes.

RP^®Financial, LC.

RP^® Financial, LC. (“RP Financial”) is a financial consulting firm serving the financial services industry nationwide that, among other things, specializes in financial valuations and analyses of business enterprises and securities, including the pro forma valuation for savings institutions converting from mutual-to-stock form. The background and experience of RP Financial is detailed in Exhibit V-1. We believe that, except for the fee we will receive for our appraisal, we are independent of the Bank and the other parties engaged by ESSA Bank to assist in the corporate reorganization and stock issuance process.

Valuation Methodology

In preparing our appraisal, we have reviewed the Bank’s and the Company’s regulatory applications, including the prospectus as filed with the OTS and the Securities and Exchange Commission (“SEC”). We have conducted a financial analysis of the Bank that has included due diligence related discussions with ESSA Bank’s management; S.R. Snodgrass., the Bank’s independent auditor; Luse Gorman Pomerenk & Schick, P.C., ESSA Bank’s conversion counsel; and Ryan Beck & Co., Inc., which has been retained as the financial and marketing advisor in connection with the Bank’s stock offering. All conclusions set forth in the Appraisal were reached independently from such discussions. In addition, where appropriate, we have considered information based on other available published sources that we believe are reliable. While we believe the information and data gathered from all these sources are reliable, we cannot guarantee the accuracy and completeness of such information.

We have investigated the competitive environment within which ESSA Bank operates and have assessed the Bank’s relative strengths and weaknesses. We have monitored all material regulatory and legislative actions affecting financial institutions generally and analyzed the

Board of Directors

November 24, 2006

Page 3

potential impact of such developments on ESSA Bank and the industry as a whole to the extent we were aware of such matters. We have analyzed the potential effects of the stock conversion on the Bank’s operating characteristics and financial performance as they relate to the pro forma market value of ESSA Bancorp. We have reviewed the economy and demographic characteristics of the primary market area in which the Bank currently operates. We have compared ESSA Bank’s financial performance and condition with publicly-traded thrift institutions evaluated and selected in accordance with the Valuation Guidelines, as well as all publicly-traded thrifts and thrift holding companies. We have reviewed conditions in the securities markets in general and the market for thrifts and thrift holding companies, including the market for new issues.

The Appraisal is based on ESSA Bank’s representation that the information contained in the regulatory applications and additional information furnished to us by the Bank and its independent auditors, legal counsel, investment bankers and other authorized agents are truthful, accurate and complete. We did not independently verify the financial statements and other information provided by the Bank, or its independent auditors, legal counsel, investment bankers and other authorized agents nor did we independently value the assets or liabilities of the Bank. The valuation considers ESSA Bank only as a going concern and should not be considered as an indication of the Bank’s liquidation value.

Our appraised value is predicated on a continuation of the current operating environment for the Bank and the Company and for all thrifts and their holding companies. Changes in the local and national economy, the federal and state legislative and regulatory environments for financial institutions and mutual holding companies, the stock market, interest rates, and other external forces (such as natural disasters or significant world events) may occur from time to time, often with great unpredictability, and may materially impact the value of thrift stocks as a whole or the Bank’s value alone. It is our understanding that ESSA Bank intends to remain an independent institution and there are no current plans for selling control of the Bank as a converted institution. To the extent that such factors can be foreseen, they have been factored into our analysis.

The estimated pro forma market value is defined as the price at which the Company’s stock, immediately upon completion of the offering, would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

Valuation Conclusion

It is our opinion that, as of November 24, 2006, the estimated aggregate pro forma market value of the shares to be issued immediately following the conversion, including shares to be issued to the Foundation, equaled $117,700,000 at the midpoint, equal to 11,770,000 shares offered at a per share value of $10.00. Pursuant to conversion guidelines, the 15% offering range indicates a minimum value of $100,045,000 and a maximum value of $135,355,000. Based on the $10.00 per share offering price determined by the Board, this valuation range equates to total

Board of Directors

November 24, 2006

Page 4

shares outstanding of 10,004,500 at the minimum and 13,535,500 at the maximum. In the event the appraised value is subject to an increase, the aggregate pro forma market value may be increased up to a supermaximum value of $155,658,250 without a resolicitation. Based on the $10.00 per share offering price, the supermaximum value would result in total shares outstanding of 15,565,825. Based on this valuation range, the offering range is as follows: $93,500,000 at the minimum, $110,000,000 at the midpoint, $126,500,000 at the maximum and $145,475,000 at the supermaximum. Based on the $10.00 per share offering price, the number of offering shares is as follows: 9,350,000 at the minimum, 11,000,000 at the midpoint, 12,650,000 at the maximum and 14,547,500 at the supermaximum.

Limiting Factors and Considerations

The valuation is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing shares of the common stock. Moreover, because such valuation is determined in accordance with applicable OTS regulatory guidelines and is necessarily based upon estimates and projections of a number of matters, all of which are subject to change from time to time, no assurance can be given that persons who purchase shares of common stock in the conversion will thereafter be able to buy or sell such shares at prices related to the foregoing valuation of the estimated pro forma market value thereof. The appraisal reflects only a valuation range as of this date for the pro forma market value of ESSA Bancorp immediately upon issuance of the stock and does not take into account any trading activity with respect to the purchase and sale of common stock in the secondary market on the date of issuance of such securities or at anytime thereafter following the completion of the public stock offering.

The valuation prepared by RP Financial in accordance with applicable OTS regulatory guidelines was based on the financial condition and operations of ESSA Bank as of September 30, 2006, the date of the financial data included in the prospectus.

RP Financial is not a seller of securities within the meaning of any federal and state securities laws and any report prepared by RP Financial shall not be used as an offer or solicitation with respect to the purchase or sale of any securities. RP Financial maintains a policy which prohibits RP Financial, its principals or employees from purchasing stock of its financial institution clients.

The valuation will be updated as provided for in the OTS conversion regulations and guidelines. These updates will consider, among other things, any developments or changes in the financial performance and condition of ESSA Bank, management policies, and current conditions in the equity markets for thrift stocks, both existing issues and new issues. These updates may also consider changes in other external factors which impact value including, but not limited to: various changes in the federal and state legislative and regulatory environments for financial institutions, the stock market and the market for thrift stocks, and interest rates. Should any such new developments or changes be material, in our opinion, to the valuation of the shares, appropriate adjustments to the estimated pro forma market value will be made. The reasons for any such adjustments will be explained in the update at the date of the release of the update.

Board of Directors

November 24, 2006

Page 5

Respectfully submitted,

RP^® FINANCIAL, LC.

William E. Pommerening

Chief Executive Officer and

    Managing Director

Gregory E. Dunn

Senior Vice President

RP^® Financial, LC.

TABLE OF CONTENTS

ESSA BANK & TRUST

Stroudsburg, Pennsylvania

DESCRIPTION	PAGE NUMB ER
CHAPTER ONE                 OVERVIEW AND FINANCIAL ANALYSIS
Introduction	1.1
Plan of Conversion	1.1
Strategic Overview	1.2
Balance Sheet Trends	1.5
Income and Expense Trends	1.9
Interest Rate Risk Management	1.12
Lending Activities and Strategy	1.13
Asset Quality	1.16
Funding Composition and Strategy	1.16
Subsidiary Activities	1.17
Legal Proceedings	1.18
CHAPTER TWO               MARKET AREA
Introduction	2.1
Market Area Demographics	2.1
National Economic Factors	2.4
Local Economy	2.8
Market Area Deposit Characteristics	2.10
Competition	2.10
CHAPTER THREE            PEER GROUP ANALYSIS
Peer Group Selection	3.1
Financial Condition	3.5
Income and Expense Components	3.8
Loan Composition	3.12
Interest Rate Risk	3.14
Credit Risk	3.14
Summary	3.17

RP^® Financial, LC.

TABLE OF CONTENTS

ESSA BANK & TRUST

Stroudsburg, Pennsylvania

(continued)

DESCRIPTION	PAGE NUMBER
CHAPTER FOUR             VALUATION ANALYSIS
Introduction	4.1
Appraisal Guidelines	4.1
RP Financial Approach to the Valuation	4.1
Valuation Analysis	4.2
1. Financial Condition	4.3
2. Profitability, Growth and Viability of Earnings	4.4
3. Asset Growth	4.6
4. Primary Market Area	4.6
5. Dividends	4.8
6. Liquidity of the Shares	4.9
7. Marketing of the Issue	4.9
A. The Public Market	4.10
B. The New Issue Market	4.15
C. The Acquisition Market	4.16
8. Management	4.19
9. Effect of Government Regulation and Regulatory Reform	4.20
Summary of Adjustments	4.20
Valuation Approaches	4.20
1. Price-to-Earnings (“P/E”)	4.22
2. Price-to-Book (“P/B”)	4.24
3. Price-to-Assets (“P/A”)	4.24
Comparison to Recent Offerings	4.24
Valuation Conclusion	4.25

RP^® Financial, LC.

LIST OF TABLES

ESSA BANK & TRUST

Stroudsburg, Pennsylvania

TABLE NUMBER	DESCRIPTION	PAGE
1.1	Historical Balance Sheets	1.6
1.2	Historical Income Statements	1.10
2.1	Summary Demographic Data	2.3
2.2	Primary Market Area Employment Sectors	2.9
2.3	Unemployment Trends	2.9
2.4	Deposit Summary	2.11
2.5	Market Area County Deposit Competitors	2.12
3.1	Peer Group of Publicly-Traded Thrifts	3.3
3.2	Balance Sheet Composition and Growth Rates	3.6
3.3	Income as a Percent of Average Assets and Yields, Costs, Spreads	3.9
3.4	Loan Portfolio Composition and Related Information	3.13
3.5	Interest Rate Risk Measures and Net Interest Income Volatility	3.15
3.6	Credit Risk Measures and Related Information	3.16
4.1	Market Area Unemployment Rates	4.7
4.2	Recent Conversion Pricing Characteristics	4.17
4.3	Market Pricing Recent Conversions	4.18
4.4	Public Market Pricing	4.23

RP^® Financial, LC.

Page 1.1

I. OVERVIEW AND FINANCIAL ANALYSIS

Introduction

ESSA Bank & Trust (“ESSA Bank” or the “Bank”), chartered in 1916, is a Pennsylvania-chartered savings and loan association headquartered in Stroudsburg, Pennsylvania. ESSA Bank serves east-central Pennsylvania through 12 full service branch offices, of which 11 are located in Monroe County. One branch office is located in Northampton County. The major portion of the Bank’s activities are conducted within the markets served by the retail branches and surrounding contiguous markets. A map of the Bank’s branch office locations is provided in Exhibit I-1. ESSA Bank is a member of the Federal Home Loan Bank (“FHLB”) system, and its deposits are insured up to the regulatory maximums by the Federal Deposit Insurance Corporation (“FDIC”). At September 30, 2006, ESSA Bank had $725.8 million in assets, $402.2 million in deposits and total equity of $58.3 million equal to 8.0% of total assets. ESSA Bank’s audited financial statements are included by reference as Exhibit I-2.

Plan of Conversion

The Board of Directors of ESSA Bank & Trust adopted the plan of conversion on July 25, 2006 and amended it on November 21, 2006, incorporated herein by reference. Pursuant to the plan of conversion, the Bank will convert from a Pennsylvania-chartered mutual savings association to a Pennsylvania-chartered stock savings association and become a wholly-owned subsidiary of ESSA Bancorp, Inc. (“ESSA Bancorp” or the “Company”), a newly formed Pennsylvania corporation. ESSA Bancorp will offer 100% of its common stock to qualifying depositors of ESSA Bank in a subscription offering and, if necessary, to members of the general public through a community offering and/or a syndicated community offering of registered broker-dealers. Going forward, ESSA Bancorp will own 100% of the Bank’s stock, and the Bank will initially be ESSA Bancorp’s sole subsidiary. A portion of the net proceeds received from the sale of common stock will be used to purchase all of the then to be issued and outstanding capital stock of the Bank and the balance of the net proceeds will be retained by the Company.

RP^® Financial, LC.

Page 1.2

At this time, no other activities are contemplated for the Company other than the ownership of the Bank, a loan to the newly-formed employee stock ownership plan (the “ESOP”) and reinvestment of the proceeds that are retained by the Company. In the future, ESSA Bancorp may acquire or organize other operating subsidiaries, diversify into other banking-related activities, pay dividends or repurchase its stock, although there are no specific plans to undertake such activities at the present time.

The plan of conversion provides for the establishment of ESSA Foundation (the “Foundation”). The Foundation will be funded with ESSA Bancorp common stock contributed by the Company in an amount equal to 7.0% of the shares of common stock issued in the offering and cash equal to 1.0% of the gross proceeds raised in the conversion offering. The purpose of the Foundation is to provide financial support to charitable organizations in the communities in which ESSA Bank operates and to enable those communities to share in ESSA Bank’s long-term growth. The Foundation will be dedicated completely to community activities and the promotion of charitable causes.

Strategic Overview

ESSA Bank maintains a local community banking emphasis, with a primary strategic objective of meeting the borrowing and savings needs of its local customer base. Historically, ESSA Bank’s operating strategy has been fairly reflective of a traditional thrift operating strategy in which 1-4 family residential mortgage loans and retail deposits have constituted the principal components of the Bank’s assets and liabilities, respectively. Beyond 1-4 family permanent mortgage loans, lending diversification by the Bank has emphasized commercial real estate loans and home equity loans. On a more limited basis, the Bank’s lending activities include origination of construction loans, commercial business loans and consumer loans other than home equity loans. Pursuant to the Bank’s business plan, ESSA Bank will continue to emphasize 1-4 family lending and will emphasize growth of commercial real estate loans as the primary area of lending diversification.

Investments serve as a supplement to the Bank’s lending activities. The investment portfolio is considered to be indicative of a low risk investment philosophy, which consists

RP^® Financial, LC.

Page 1.3

primarily of securities with short-to intermediate maturities, as well as adjustable rate securities, for purposes of supporting management of the Bank’s interest rate risk. The investment portfolio is comprised primarily of U.S. Treasury and agency securities and mortgage-backed securities, with the balance of investment portfolio consisting of municipal bonds, corporate bonds, equity securities and FHLB stock.

Retail deposits have consistently served as the primary interest-bearing funding source for the Bank. Transaction and savings accounts constitute almost half of the Bank’s deposits, reflecting the Bank’s emphasis on marketing and cross-selling those accounts. However, recent deposit growth has consisted mostly of certificates of deposit (CDs), as higher market rates have increased depositor preference for CDs in general. The Bank utilizes borrowings as a supplemental funding source to facilitate management of funding costs and interest rate risk. FHLB advances have been the Bank’s primary source of borrowings, which consist of a mixture of short- and long-term borrowings advances with laddered terms out to ten years.

ESSA Bank’s earnings base is largely dependent upon net interest income and operating expense levels. In recent periods, the Bank has experienced some compression of the net interest margin, as the flat yield curve has resulted in narrower spreads with the rise in short-term interest rates having a more immediate impact on the Bank’s funding costs relative to the yields earned on loans and investments. Operating expenses have generally been maintained at a higher level compared to thrifts in general, which can in part be attributed to the relatively high concentration of assets maintained in loans, which are more costly to generate and service than investments. The Bank’s funding composition, which consists of a relatively high level of transaction and savings accounts, would also tend to place upward pressure on the operating expense ratio, given that transaction and savings account deposits are more costly to service than time deposits and borrowings. The operating expense ratio is also inflated by expenses incurred to support the Bank’s off-balance sheet activities, which include asset management and trust services and retail brokerage services. The Bank’s trust department managed approximately $30 million of assets at fiscal year end 2006. Revenues derived from non-interest sources have been a notable contributor to the Bank’s core earnings base, with such income consisting mostly of service fees on deposit accounts. Other major sources of non-interest operating income include trust and investment fees, earnings on bank-owned life insurance (“BOLI”) and service charges and fees on loans. The Bank also generates fee income through commission income realized from investment services through a third party broker/dealer.

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The post-offering business plan of the Bank is expected to continue to focus on products and services which have facilitated ESSA Bank’s recent growth. Specifically, ESSA Bank will continue to be an independent community-oriented financial institution with a commitment to local real estate financing with operations funded by retail deposits, borrowings, equity capital and internal cash flows. In addition, the Bank will continue to emphasize multi-family and commercial real estate loans as the primary area of lending diversification.

The Bank’s Board of Directors has elected to complete a mutual-to-stock conversion to improve the competitive position of ESSA Bank. The capital realized from the stock offering will increase the operating flexibility and overall financial strength of ESSA Bank. The additional capital realized from stock proceeds will increase liquidity to support funding of future loan growth and other interest-earning assets. ESSA Bank’s higher capital position resulting from the infusion of stock proceeds will also serve to reduce interest rate risk, particularly through enhancing the Bank’s interest-earning-assets-to-interest-bearing-liabilities (“IEA/IBL”) ratio. The additional funds realized from the stock offering will provide an alternative funding source to deposits and borrowings in meeting the Bank’s future funding needs, which may facilitate a reduction in ESSA Bank’s funding costs. Additionally, ESSA Bank’s higher equity-to-assets ratio will also better position the Bank to take advantage of expansion opportunities as they arise. Such expansion would most likely occur through the establishment or acquisition of additional banking offices or customer facilities that would provide for further penetration in the markets currently served by the Bank or nearby surrounding markets. The Bank will also be bettered position to pursue growth through acquisition of other financial service providers following the stock offering, given its strengthened capital position. At this time, the Bank has no specific plans for expansion other than through establishing additional branches. The projected uses of proceeds are highlighted below.

• ESSA Bancorp, Inc. The Company is expected to retain up to 50% of the net offering proceeds. At present, funds at the Company level, net of the loan to the ESOP, are expected to be primarily invested initially into short-term investment grade securities. Over time, the funds may be utilized for various corporate

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purposes, possibly including acquisitions, infusing additional equity into the Bank, repurchases of common stock, and the payment of regular and/or special cash dividends.

• ESSA Bank. Approximately 50% of the net stock proceeds will be infused into the Bank in exchange for all of the Bank’s newly issued stock. Cash proceeds (i.e., net proceeds less deposits withdrawn to fund stock purchases) infused into the Bank are anticipated to become part of general operating funds, and are expected to be primarily utilized to fund loan growth.

Overall, it is the Bank’s objective to pursue growth that will serve to increase returns, while, at the same time, growth will not be pursued that could potentially compromise the overall risk associated with ESSA Bank’s operations.

Balane Sheet Trends

Table 1.1 shows the Bank’s historical balance sheet data for the past five fiscal years. The Bank switched from a November to a September fiscal year in 2003. From fiscal year end 2002 through fiscal year end 2006, ESSA Bank’s assets increased at a 12.1% annual rate. Asset growth was largely the result of loan growth and loans constitute the major portion of the Bank’s interest-earning asset composition. Loan growth was supplemented with growth of investment securities. Asset growth has been funded with a combination of deposits and borrowings, as well as retained earnings. A summary of ESSA Bank’s key operating ratios for the past five years are presented in Exhibit I-3.

Loans receivable increased at a 9.7% annual rate from fiscal year end 2002 through fiscal year end 2006, with the portfolio exhibiting positive growth throughout the period. The Bank’s lower loan growth rate compared to its asset growth rate provided for a decrease in the loans-to-assets ratio from 83.4% at fiscal year end 2002 to 76.7% at fiscal year end 2006. ESSA Bank’s historical emphasis on 1-4 family lending is reflected in its loan portfolio composition, as 80.4% of total loans receivable consisted of 1-4 family loans at fiscal year end 2006. Trends in the Bank’s loan portfolio composition over the past five fiscal years show that the concentration of 1-4 loans comprising total loans have decreased slightly, with such loans ranging from a high of 85.2% of total loans at fiscal year end 2003 to a low of 80.4% of total loans at fiscal year end 2006.

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Table 1.1

ESSA Bank & Trust

Historical Balance Sheets

(Amount and Percent of Assets)(1)

																					Annual Growth Rate Pct
	At November 30,				At Fiscal Year End September 30,
	2002				2003				2004				2005				2006
	Amount		Pct		Amount		Pct		Amount		Pct		Amount		Pct		Amount		Pct
	($000)		(%)		($000)		(%)		($000)		(%)		($000)		(%)		($000)		(%)		(%)
Total Amount of:
Assets	$	468,055	100.0	%	$	533,606	100.0	%	$	592,824	100.0	%	$	656,066	100.0	%	$	725,796	100.0	%	12.1	%
Cash and cash equivalents		27,617	5.9	%		43,087	8.1	%		55,337	9.3	%		20,290	3.1	%		12,730	1.8	%	-18.3	%
Investment securities		33,396	7.1	%		26,904	5.0	%		55,337	9.3	%		84,011	12.8	%		108,837	15.0	%	36.1	%
Loans receivable, net		390,542	83.4	%		438,539	82.2	%		477,956	80.6	%		508,981	77.6	%		556,677	76.7	%	9.7	%
FHLB stock		5,304	1.1	%		9,187	1.7	%		11,358	1.9	%		11,916	1.8	%		13,675	1.9	%	28.0	%
Deposits		315,406	67.4	%		319,283	59.8	%		332,201	56.0	%		374,759	57.1	%		402,153	55.4	%	6.5	%
Borrowings		104,850	22.4	%		160,920	30.2	%		205,134	34.6	%		221,479	33.8	%		259,299	35.7	%	26.6	%
Total equity		42,219	9.0	%		46,381	8.7	%		50,260	8.5	%		54,371	8.3	%		58,337	8.0	%	8.8	%
Branch Offices		12				12				12				12				12

(1) Ratios are as a percent of ending assets.

Sources: ESSA Bank’s prospectus, audited financial statements and RP Financial calculations.

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The decrease in the ratio of 1-4 family loans comprising total loans since fiscal year end 2003 was the result of comparatively stronger growth of commercial business loans, commercial real estate loans and home equity loans. Over the past five fiscal years, lending diversification by the Bank has been mostly in the areas of commercial real estate loans and home equity loans, which equaled 8.4% and 8.3% of total loans, respectively, at September 30, 2006. Commercial real estate loans and home equity loans equaled 2.6% and 6.5% of total loanps, respectively, at fiscal year end 2002. Other areas of lending diversification have been relatively limited over the past five fiscal years, with the balance of the portfolio at September 30, 2006 consisting of construction loans (1.1% of total loans), commercial business loans (1.1% of total loans) and consumer loans other than home equity loans (0.7% of total loans). Commercial business loans trended higher since fiscal year end 2002, while construction and consumer loans reflected lower balances at fiscal year end 2006 compared to fiscal year end 2002.

The intent of the Bank’s investment policy is to provide adequate liquidity and to generate a favorable return within the context of supporting ESSA Bank’s overall credit and interest rate risk objectives. It is anticipated that proceeds retained at the holding company level will primarily be initially invested into investments with short-term maturities. Over the past five fiscal years, the Bank’s level of cash and investment securities (inclusive of FHLB stock) has trended higher, increasing from 14.2% of assets at fiscal year end 2002 to 18.6% of assets at fiscal year end 2006. Growth was sustained by investment securities and FHLB stock, which was partially offset by a decrease in cash and cash equivalents. U.S. Government and agency securities and mortgage-backed securities, which equaled $46.5 million and $54.9 million, respectively, at September 30, 2006, comprised the most significant components of the Bank’s investment portfolio. Other investments held by the Bank at September 30, 2006 consisted of municipal bonds ($6.5 million), equity securities ($935,000) and FHLB stock ($13.7 million). Mortgage-backed securities held by the Bank consist of pass-through securities which are guaranteed or insured by Government Sponsored Enterprises (“GSEs”). To facilitate management of interest rate risk, the Bank has emphasized investment in securities that mature or reprice within three years. At September 30, 2006, investments classified as held to maturity equaled $19.7 million and investments classified as available for sale equaled $89.1 million. The available for sale portfolio had a net unrealized loss of $287,000 at September 30, 2006. The Bank also maintained cash and cash equivalents of $12.7 million at September 30, 2006, which equaled 1.8% of assets and was at the low end of the range of cash and cash equivalents

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maintained over the past five fiscal years. The ratio of cash and cash equivalents peaked at 9.3% of assets at fiscal year end 2004. Exhibit I-4 provides historical detail of the Bank’s investment portfolio.

The Bank also maintains an investment in bank-owned life insurance (“BOLI”) policies, which cover the lives of some of the Bank’s officers and directors. The purpose of the investment is to provide funding for the benefit plans of the covered individuals. The life insurance policies earn tax-exempt income through cash value accumulation and death proceeds. As of September 30, 2006, the cash surrender value of the Bank’s BOLI equaled $13.4 million or 1.8% of assets.

Over the past five fiscal years, ESSA Bank’s funding needs have been substantially met through retail deposits, internal cash flows, borrowings and retained earnings. From fiscal year end 2002 through fiscal year end 2006, the Bank’s deposits increased at an annual rate of 6.5%. Positive deposit growth was sustained throughout the period covered in Table 1.1, but the level of deposits funding assets declined reflecting an increase in the level of borrowings utilized by the Bank. Accordingly, deposits as a percent of assets declined from 67.4% at fiscal year end 2002 to 55.4% at fiscal year end 2006. In recent years, deposit growth has been sustained largely through growth of CDs and, as a result, CDs comprised slightly more than half of the Bank’s total deposits at September 30, 2006. CDs increased from 38.6% of total deposits at September 30, 2004 to 52.3% of total deposits at September 30, 2006. Comparatively, transaction and savings accounts decreased from 61.4% of total deposits at September 30, 2004 to 47.7% of total deposits at September 30, 2004.

Borrowings serve as an alternative funding source for the Bank to address funding needs for growth and to support management of deposit costs and interest rate risk. Borrowings have become a more prominent funding source for the Bank during the past five fiscal years, as borrowings increased from 22.4% of assets at fiscal year end 2002 to 35.7% of assets at fiscal year end 2006. Borrowings held by the Bank consist primarily of long-term FHLB advances, while, to a lesser extent, the Bank’s utilization of borrowings includes short-term FHLB advances.

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Since fiscal year end 2002, retention of earnings and the adjustment for the net unrealized loss or gain on available for sale securities translated into an annual equity growth rate of 8.8% for the Bank. Asset growth outpaced the Bank’s equity growth rate, as ESSA Bank’s equity-to-assets ratio decreased from 9.0% at fiscal year end 2002 to 8.0% at fiscal year end 2006. All of the Bank’s capital is tangible capital, and the Bank maintained capital surpluses relative to all of its regulatory capital requirements at September 30, 2006. The addition of stock proceeds will serve to strengthen ESSA Bank’s capital position and competitive posture within its primary market area, as well as possibly support expansion into other nearby markets if favorable growth opportunities are presented. At the same time, as the result of the Bank’s relatively high pro forma capital position, ESSA Bank’s ROE can be expected to initially be below industry averages following its stock offering.

Income and Expense Trends

Table 1.2 shows the Bank’s historical income statements for the past five fiscal years. The Bank reported positive earnings over the past five years, ranging from a low of 0.58% of average assets during fiscal 2006 to a high of 1.08% of average assets during fiscal 2002. The downward trend in the Bank’s earnings has paralleled the downward trend in the Bank’s net interest income to average assets ratio. Net interest income and operating expenses represent the primary components of the Bank’s earnings. Other revenues for the Bank largely are derived from customer service fees, which constitute the major portion of the Bank’s non-interest operating income. Favorable credit quality has generally served to limit the amount of loan loss provisions the Bank established over the past five years. Gains and losses from the sale of loans and investments have been a relatively minor factor in the Bank’s earnings.

Over the past five fiscal years, the Company’s net interest income to average assets ratio ranged from a high of 3.87% during fiscal 2002 to a low of 2.53% during fiscal 2006. The general downward trend experienced in the Bank’s net interest income ratio has resulted from spread compression. As short-term interest rates have increased and the yield curve has flattened, the Bank’s funding costs have increased more than yields earned on assets. A shift in the Bank’s deposit composition towards a higher concentration of CDs and increased utilization of borrowings as a funding source have also put upward pressure on the Bank’s funding costs.

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Table 1.2

ESSA Bank & Trust

Historical Income Statements

(Amount and Percent of Avg. Assets)(1)

	For the Fiscal Year Ended November 30,					For the Fiscal Year Ended September 30,
	2002					2003(2)					2004					2005					2006
	Amount			Pct		Amount			Pct		Amount			Pct		Amount			Pct		Amount			Pct
	($000)			(%)		($000)			(%)		($000)			(%)		($000)			(%)		($000)			(%)
Interest Income	$	29,065		6.68	%	$	24,743		6.01	%	$	28,810		5.22	%	$	31,919		5.16	%	$	36,451		5.35	%
Interest Expense		(12,220	)	-2.81	%		(9,372	)	-2.28	%		(11,933	)	-2.16	%		(14,323	)	-2.32	%		(19,217	)	-2.82	%
Net Interest Income	$	16,845		3.87	%	$	15,371		3.74	%	$	16,877		3.06	%	$	17,596		2.85	%	$	17,234		2.53	%
Provision for Loan Losses		(900	)	-0.21	%		(430	)	-0.10	%		(530	)	-0.10	%		(550	)	-0.09	%		(300	)	-0.04	%
Net Interest Income after Provisions	$	15,945		3.66	%	$	14,941		3.63	%	$	16,347		2.96	%	$	17,046		2.76	%	$	16,934		2.48	%
Other operating income	$	3,269		0.75	%	$	2,881		0.70	%	$	4,280		0.78	%	$	5,315		0.86	%	$	5,511		0.81	%
Operating Expense		(12,408	)	-2.85	%		(12,080	)	-2.94	%		(15,540	)	-2.82	%		(16,493	)	-2.67	%		(16,685	)	-2.45	%
Net Operating Income	$	6,806		1.56	%	$	5,742		1.40	%	$	5,087		0.92	%	$	5,868		0.95	%	$	5,760		0.84	%
Non-Operating Income
Net gain(loss) on sale of loans	$	107		0.02	%	$	62		0.02	%	$	0		0.00	%	$	96		0.02	%	$	7		0.00	%
Impairment loss on securities		0		0.00	%		0		0.00	%		0		0.00	%		(130	)	-0.02	%		0		0.00	%
Net gain(loss) on sale of REO		101		0.02	%		33		0.01	%		0		0.00	%		0		0.00	%		0		0.00	%
Net Non-Operating Income	$	208		0.05	%	$	95		0.02	%	$	0		0.00	%	($	34	)	-0.01	%	$	7		0.00	%
Net Income Before Tax	$	7,014		1.61	%	$	5,837		1.42	%	$	5,087		0.92	%	$	5,834		0.94	%	$	5,767		0.85	%
Income Taxes		(2,314	)	-0.53	%		(1,681	)	-0.41	%		(1,172	)	-0.21	%		(1,383	)	-0.22	%		(1,813	)	-0.27	%
Net Income (Loss)	$	4,700		1.08	%	$	4,156		1.01	%	$	3,915		0.71	%	$	4,451		0.72	%	$	3,954		0.58	%
Adjusted Earnings
Net Income Before Ext. Items	$	4,700		1.08	%	$	4,156		1.01	%	$	3,915		0.71	%	$	4,451		0.72	%	$	3,954		0.58	%
Addback: Non-Operating Losses		0		0.00	%		0		0.00	%		0		0.00	%		130		0.02	%		0		0.00	%
Deduct: Non-Operating Gains		(208	)	-0.05	%		(95	)	-0.02	%		0		0.00	%		(96	)	-0.02	%		(7	)	0.00	%
Tax Effect Non-Op. Items(3)		71		0.02	%		32		0.01	%		0		0.00	%		(12	)	0.00	%		2		0.00	%
Adjusted Net Income	$	4,563		1.05	%	$	4,093		0.99	%	$	3,915		0.71	%	$	4,473		0.72	%	$	3,949		0.58	%

(1) Ratios are as a percent of average assets.

(2) For the ten months ended September 30, 2003, ratios have been annualized.

(3) Assumes tax rate of 34.0%.

Sources: ESSA Bank’s prospectus, audited financial statements and RP Financial calculations.

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Over the past five fiscal years, the Bank’s interest rate spread declined from 3.81% during fiscal 2002 to 2.46% during fiscal 2006. At September 30, 2006, the Bank maintained an interest rate spread of 2.17%, implying that the downward trend in the net interest margin will continue into fiscal 2007. The Bank’s historical interest rate spreads and yields and costs are set forth in Exhibits I-3 and I-5.

Non-interest operating income has been a fairly stable contributor to the Bank’s earnings over the past five fiscal years, ranging from a low of 0.70% of average assets during fiscal 2003 to a high of 0.86% of average assets during fiscal 2005. Non-interest operating income equaled 0.81% of average assets during fiscal 2006. Customer service fees on deposit accounts constitute the largest source of non-interest operating income for the Bank, with other non-interest operating revenues being fairly evenly distributed between service charges and fees on loans, trust and investment fees, and earnings on BOLI.

Operating expenses represent the other major component of the Bank’s earnings, ranging from a high of 2.94% of average assets during fiscal 2003 to a low of 2.45% of average assets during fiscal 2006. Growth of investments at a faster rate than loans and funding a larger portion of asset growth through borrowings have facilitated leveraging of the Bank’s operating expense ratio. Upward pressure will be placed on the Bank’s expense ratio following the stock offering, due to expenses associated with operating as a publicly-traded company, including expenses related to the stock benefit plans. At the same time, the increase in capital realized from the stock offering will increase the Bank’s capacity to leverage operating expenses through pursuing a more aggressive growth strategy.

Overall, the general trends in the Bank’s net interest margin and operating expense ratio since fiscal 2002 reflect a decline in core earnings, as indicated by the Bank’s expense coverage ratio (net interest income divided by operating expenses). ESSA Bank’s expense coverage ratio equaled 1.36 times during fiscal 2002, versus a comparable ratio of 1.03 times during fiscal 2006. Similarly, ESSA Bank’s efficiency ratio (operating expenses, net of amortization of intangibles, as a percent of the sum of net interest income and other operating income) of 61.7% during fiscal 2002 was more favorable than the 73.4% efficiency ratio maintained during fiscal 2006. The Bank’s less favorable expense and efficiency ratios for fiscal 2006 both resulted from the decrease in the net interest income ratio, which more than offset improved ratios for operating expenses and non-interest operating income.

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Over the past five fiscal years, loan loss provisions established by the Bank ranged from a high of 0.21% of average assets during fiscal 2002 to a low of 0.04% of average assets during fiscal 2006. The lower loan loss provisions established during fiscal 2006 reflects the Bank’s maintenance of a low ratio of non-performing loans. As of December 31, 2006, the Bank maintained valuation allowances of $3.9 million, equal to 0.69% of net loans receivable and 570.3% of non-performing loans. Exhibit I-6 sets forth the Bank’s loan loss allowance activity during the past five fiscal years.

Non-operating income has had only a modest impact on the Bank’s earnings during the past five fiscal years, ranging from a high of 0.05% of average assets during fiscal 2002 to a net loss equal to 0.01% of average assets during fiscal 2005. The net loss during fiscal 2005 was the result of an impairment loss on securities, which more than offset loan sale gains. For fiscal 2006, non-operating income consisted only of a nominal amount of loan sale gains. Beyond loan sale gains and the impairment loss on securities, the only other non-operating income recorded during the past five fiscal years were gains on the sale of real estate owned during fiscal years 2002 and 2003.

The Bank’s effective tax rate ranged from a low of 23.04% during fiscal 2004 to a high of 32.99% during fiscal 2002. For fiscal 2006, the Bank’s effective tax rate equaled 31.44%. As set forth in the prospectus, the Bank’s marginal effective statutory tax rate approximates 34.0%.

Interest Rate Risk Management

The Bank’s balance sheet is liability-sensitive in the short-term (less than one year) and, thus, the net interest margin will typically be adversely affected during periods of rising and higher interest rates, as well as during the prevailing interest rate environment in which the yield curve has become inverted due to short-term interest rates increasing to levels that exceed the yields earned on longer-term Treasury bonds. As of September 30, 2006, the Net Portfolio Value (“NPV”) analysis provided by the OTS indicated that a 2.0% instantaneous and sustained increase in interest rates would result in a 29% decline in the Bank’s NPV (see Exhibit I-7).

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The Bank pursues a number of strategies to manage interest rate risk, particularly with respect to seeking to limit the repricing mismatch between interest rate sensitive assets and liabilities. The Bank manages interest rate risk from the asset side of the balance sheet through underwriting residential mortgages that will allow for their sale to the secondary market when such a strategy is appropriate, maintaining investments as available for sale, emphasizing investing in securities with short-terms or adjustable rates, and diversifying into other types of lending beyond 1-4 family permanent mortgage loans which consists primarily of shorter term fixed rate loans or adjustable rate loans. As of September 30, 2006, of the Bank’s total loans due after September 30, 2007, ARM loans comprised 13.5% of those loans (see Exhibit I-8). On the liability side of the balance sheet, management of interest rate risk has been pursued through utilizing fixed rate FHLB advances with laddered maturities out to ten years, extending CD maturities through offering attractive rates on certain longer term CDs and through maintaining a high concentration of deposits in lower costing and less interest rate sensitive transaction and savings accounts. Transaction and savings accounts comprised 47.9% of the Bank’s deposits at September 30, 2006.

The infusion of stock proceeds will serve to further limit the Bank’s interest rate risk exposure, as most of the net proceeds will be redeployed into interest-earning assets and the increase in the Bank’s capital position will lessen the proportion of interest rate sensitive liabilities funding assets.

Lending Activities and Strategy

ESSA Bank’ lending activities have traditionally emphasized 1-4 family permanent mortgage loans and such loans continue to comprise the largest component of the Bank’s loan portfolio. Beyond 1-4 family loans, lending diversification by the Bank has emphasized commercial real estate loans and home equity loans. To a lesser extent, the Bank’s lending activities include construction loans, commercial business loans and consumer loans other than home equity loans. Going forward, the Bank’s lending strategy is expected to remain fairly consistent with recent historical trends, with the origination of 1-4 family permanent mortgage loans remaining as the primary source of loan originations. Lending diversification by the Bank will continue to emphasize growth of commercial real estate loans and home equity loans.

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Exhibit I-9 provides historical detail of ESSA Bank’s loan portfolio composition over the past five fiscal years and Exhibit I-10 provides the contractual maturity of the Bank’s loan portfolio by loan type as of September 30, 2006.

ESSA Bank originates both fixed rate and adjustable rate 1-4 family permanent mortgage loans. From time-to-time, the Bank sells fixed rate 1-4 family loans for purposes of interest rate risk management, with such loans sold on a servicing retained basis. Loans are generally underwritten to secondary market standards. ARM loans offered by the Bank include loans with initial repricing terms of one, three, five or ten years, which convert to a one year ARM loan after the initial repricing period. ARM loans are indexed to the yield on one year U.S. Treasury securities adjusted to a constant maturity (1-year CMT). Fixed rate 1-4 family mortgage loans offered by the Bank have terms ranging from 10-to-30 years. As of September 30, 2006, the Bank’s outstanding balance of 1-4 family permanent mortgage loans equaled $452.4 million or 80.4% of total loans outstanding.

ESSA Bank’s1-4 family lending activities include home equity loans, which have been a lending growth area as home values have appreciated throughout the Bank’s regional lending area. Home equity loans are offered as fixed rate amortizing loans or floating rate lines of credit. Home equity loans are offered for terms of up to 15 years and a maximum loan amount of $200,000. Home equity loans are offered up to a LTV ratio of 90.0%, inclusive of other liens on the property. Home equity lines of credit are tied to the prime rate as reported in The Wall Street Journal. As of September 30 2006, the Bank’s home equity loan portfolio totaled $47.0 million or 8.3% of total loans outstanding.

Construction loans originated by the Bank consist substantially of loans to finance the construction of 1-4 family residences, while, on a limited basis, commercial real estate construction loans are originated by the Bank. The Bank’s 1-4 family construction lending activities consist mostly of construction financing for construction/permanent loans and, to a lesser extent, speculative loans that are extended to builders. Generally, construction loans are offered up to a loan-to-value (“LTV”) ratio of 80% and require payment of interest only during the construction period. Commercial real estate construction loans are originated as construction/permanent loans and are subject to the same underwriting criteria as required for permanent mortgage loans, as well as submission of completed plans, specifications and cost estimates related to the proposed construction. As of September 30, 2006, ESSA Bank’s outstanding balance of construction loans totaled $5.9 million or 1.1% of total loans outstanding.

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The balance of the mortgage loan portfolio consists of commercial real estate loans, which are collateralized by properties in the Bank’s regional market area. Commercial real estate loans are generally originated up to a maximum LTV ratio of 85.0% and require a minimum debt-coverage ratio of 1.2 times. Commercial real estate loans offered by ESSA Bank generally reprice every five years with amortization terms of up to 25 years. Properties securing the commercial real estate loan portfolio include apartments, office buildings, retail strip malls, churches, warehouses and other retail properties. Growth of the commercial real estate loan portfolio is a targeted area of lending growth for the Bank. As of September 30, 2005, the Bank’s commercial real estate loan portfolio totaled $47.5 million or 8.4% of the total loan portfolio.

ESSA Bank’s diversification into non-mortgage types of lending has been fairly limited, with such loans consisting of small balances of consumer and commercial business loans. Consumer loans, other than home equity loans, consist of loans secured by deposits, auto loans and personal loans. The consumer loan portfolio has also included student loans, which were sold off during fiscal years 2005 and 2006. Other than home equity lending, consumer lending is expected to remain as a limited area of loan diversification for ESSA Bank. The consumer loan portfolio, exclusive of home equity loans, totaled $4.2 million or 0.7% of total loans outstanding at September 30, 2006.

The Bank offers commercial business loans and lines of credit to small- and medium-sized companies in its market area. Commercial business loans offered by the Bank consist of floating rate loans indexed to the prime rate and fixed rate terms loans. The commercial business loan portfolio consists primarily of secured loans, while the portfolio also includes a minor amount of unsecured loans for purposes of financing expansion or providing working capital for general business purposes. Growth of the commercial business loan portfolio will be pursued in conjunction with the Bank’s commercial real estate lending activities, pursuant to which the Bank will seek to become a full service community bank to its commercial loan customers through offering a full range of commercial loan products that can be packaged with lower cost commercial deposit products. As of September 30, 2006, ESSA Bank’s outstanding balance of commercial business loans totaled $6.2 million or 1.1% of total loans outstanding.

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Asset Quality

The Bank’s emphasis on credit risk management, as well as generally favorable local real estate market conditions, is evidenced by the low balance of non-performing assets maintained over the past five fiscal years. As shown in Exhibit I-11, ESSA Bank’s ratio of non-performing assets ranged from a high of 0.16% of assets at fiscal year end 2002 to a low of 0.09% of assets at fiscal year end 2006. In general, non-performing assets held by the Bank over the past five fiscal years have consisted largely of non-accruing 1-4 family first mortgage loans. The Bank’s balance of non-performing assets at September 30, 2006 consisted of $623,000 of non-accruing loans and $53,000 of troubled debt restructurings. As of September 30, 2006, non-accruing loans consisted of $583,000 of 1-4 family first mortgage loans and $40,000 of home equity loans. The $53,000 balance of troubled debt restructurings also consisted of 1-4 family first mortgage loans.

To track the Bank’s asset quality and the adequacy of valuation allowances, ESSA Bank has established detailed asset classification policies and procedures which are consistent with regulatory guidelines. Detailed asset classifications are reviewed quarterly by senior management and the Board. Pursuant to these procedures, when needed, the Bank establishes additional valuation allowances to cover anticipated losses in classified or non-classified assets. As of September 30, 2006, the Bank maintained valuation allowances of $3.9 million, equal to 0.69% of net loans receivable and 570.3% of non-performing loans.

Funding Composition and Strategy

Deposits have consistently accounted for the largest portion of the Bank’s interest-bearing funding composition and at September 30, 2006 deposits equaled 60.8% of ESSA Bank’s interest-bearing funding composition. Exhibit I-12 sets forth the Bank’s deposit composition for the past three fiscal years and Exhibit I-13 provides the interest rate and maturity composition of the CD portfolio at September 30, 2006. Deposit growth in recent years has been

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sustained by growth of CDs and, thus, the concentration of CDs comprising total deposits has increased since fiscal year end 2004. As of September 30, 2006, the CD portfolio totaled $210.4 million or 52.3% of total deposits, versus comparable measures of $128.2 million and 38.6% of total deposits as of September 30, 2006. Short-term CDs (CDs scheduled to mature in one year or less) accounted for 70.4% of the Bank’s CDs at September 30, 2006. As of September 30, 2006, jumbo CDs (CD accounts with balances of $100,000 or more) amounted to $81.0 million or 38.5% of total CDs. The Bank’s deposit base included $28.3 million of brokered deposits at September 30, 2006.

Lower cost savings and transaction accounts comprise the balance of the Bank’s deposit composition, with such deposits amounting to $191.8 million or 47.7% of total deposits at September 30, 2006. Comparatively, core deposits equaled $204.0 million or 61.4% of total deposits at fiscal year end 2004. The decrease in core deposits comprising total deposits has resulted from a combination of CD growth and disintermediation of core deposits, with most of the decline in core deposits consisting of savings account deposits. The Bank’s core deposits consist mostly of savings account deposits, which totaled $76.2 million or 39.6% of core deposits at September 30, 2006.

Borrowings serve as an alternative funding source for the Bank to facilitate management of funding costs and interest rate risk. The Bank’s utilization of borrowings has typically been limited to FHLB advances. ESSA Bank maintained $259.3 million of FHLB advances at September 30, 2006, which consisted of $35.3 million of short-term borrowings and $224.0 million of long-term fixed rate FHLB advances with laddered terms out to ten years. Exhibit I-14 provides further detail of ESSA Bank’s short-term borrowing activities during the past three fiscal years.

Subsidiary Activities

ESSA Bank has two wholly-owned subsidiaries, ESSACOR, Inc. and Pocono Investment Company. ESSACOR, Inc. is a Pennsylvania corporation that is currently inactive. Pocono Investment Company is a Delaware corporation formed as an investment company subsidiary to hold and manage certain investments of ESSA Bank, including certain intellectual property.

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Page 1.18

Legal Proceedings

ESSA Bank is not currently party to any pending legal proceedings that the Bank’s management believes would have a material adverse effect on the Bank’s financial condition, results of operations or cash flows.

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Page 2.1

II. MARKET AREA

Introduction

ESSA Bank serves east-central Pennsylvania through its main office in East Stroudsburg, Monroe County, ten branch offices located in Monroe County and a single branch office in Northampton County, directly to the south of Monroe County. The major portion of the Bank’s deposit activities are conducted within the markets served by the retail branches and surrounding region, while lending activities extend to contiguous counties, including Northampton County to the south, and Pike County to the north. Deposit gathering in Northampton County is limited to the immediate area around the branch office in Pen Argyl, which is located in the extreme northern section of Northampton County, close to the Monroe County border. Exhibit II-1 provides information on the Bank’s office facilities. The primary market area served by the Bank is largely rural in nature, with the East Stroudsburg metropolitan area representing the most populous and largest source of economic activity in the market area. The Bank’s competitive environment includes a number of thrifts, commercial banks and other financial service providers, some of which have a regional or national presence. The primary market area economy is fairly diversified, with services, wholesale/retail trade and government constituting the basis of the primary market area economy.

Future business and growth opportunities will be partially influenced by economic and demographic characteristics of the markets served by the Bank, particularly the future growth and stability of the regional economy, demographic growth trends, and the nature and intensity of the competitive environment for financial institutions. These factors have been examined to help determine the growth potential that exists for the Bank and the relative economic health of the Bank’s market area.

Market Area Demographics

Key demographic and economic indicators in the Bank’s market include population, number of households and household/per capita income levels. Demographic data for Monroe and Northampton Counties, as well as comparative data for Pennsylvania and the U.S., is

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Page 2.2

provided in Table 2.1. Monroe County along with Pike County to the north and Northampton County to the south, are the three fastest growing counties in Pennsylvania. The primary reason for such growth is the proximity to northern New Jersey and New York City, as many residents of these Pennsylvania counties commute to jobs in those areas. The lower housing costs and more rural lifestyles are attractive to residents, along with a large recreational and tourism industry, due to the presence of the Pocono Mountains and related resorts. As shown in Table 2.1, since 2000, population and household growth have been strong in Monroe and Northampton Counties, exceeding the comparable Pennsylvania and nationwide growth measures. Population and household growth for the primary market area counties are projected to be consistent with recent historical trends over the next five years.

Income levels in the market area reflect that both market area counties are relatively affluent market areas, as implied by household income measures that exceed the comparable U.S. and Pennsylvania measures. Per capita income levels in Monroe County were somewhat lower than the comparable averages, as there remains a base of longer term residents who live in the more rural areas of the county. Pennsylvania’s median household and per capita income measures were $50,000 and $27,000, respectively, which approximated the comparable U.S. measures. Over the next five years, growth rates for household and per capita income in Monroe County and Northampton County are projected to be fairly comparable to the U.S. and Pennsylvania growth rates, with Northampton County projected to record somewhat more favorable income growth rates than Monroe County. Household income distribution measures further imply that Monroe and Northampton Counties are relatively affluent market areas, as both maintain a higher percentage of households with incomes exceeding $50,000 as compared to the U.S. and Pennsylvania.

In summary, the demographic characteristics of the primary market area are considered to be conducive for facilitating loan and deposit growth, in both Monroe County and Northampton County.

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Page 2.3

Table 2.1

ESSA Bank & Trust

Summary Demographic Data

	Year									Growth Rate		Growth Rate
	2000			2006			2011			2000-06		2006-2011
Population(000)
United States		281,422			303,582			323,786		1.3	%	1.3	%
Pennsylvania		12,281			12,590			12,833		0.4	%	0.4	%
Monroe County		139			167			196		3.2	%	3.3	%
Northampton County		267			293			318		1.6	%	1.6	%
Households(000)
United States		105,480			114,050			121,863		1.3	%	1.3	%
Pennsylvania		4,777			4,937			5,057		0.6	%	0.5	%
Monroe County		49			60			71		3.3	%	3.3	%
Northampton County		102			111			121		1.5	%	1.7	%
Median Household Income($)
United States	$	42,164		$	51,546		$	60,704		3.4	%	3.3	%
Pennsylvania		40,108			50,132			60,151		3.8	%	3.7	%
Monroe County		46,282			55,922			65,026		3.2	%	3.1	%
Northampton County		45,222			56,249			66,922		3.7	%	3.5	%
Per Capita Income($)
United States	$	21,587		$	27,084		$	32,982		3.9	%	4.0	%
Pennsylvania		20,880			26,797			33,188		4.2	%	4.4	%
Monroe County		20,011			24,588			29,616		3.5	%	3.8	%
Northampton County		21,399			27,146			33,317		4.0	%	4.2	%
2005 HH Income Dist.(%)	Less Than $25,000			$25,000 to 50,000			$50,000 to $100,000			Over $100,000
United States		22.7	%		25.8	%		31.8	%	19.8	%
Pennsylvania		23.5	%		26.3	%		32.2	%	18.0	%
Monroe County		19.0	%		25.0	%		36.6	%	19.5	%
Northampton County		18.8	%		25.4	%		35.4	%	20.5	%

Sources: SNL Financial, LC. and ESRI Business Information Solutions

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Page 2.4

National Economic Factors

The future success of the Bank’s operations is partially dependent upon various national and local economic trends. In assessing recent economic trends, economic data at the beginning of 2006 generally reflected a healthy economy. Retail sales surged in January and the U.S. unemployment rate dropped to 4.7%, the lowest rate in more than four years. The service sector also continued to expand in January, although at a slower pace compared to December. While rising home inventories in a number of large cities signaled a cooling market for housing, housing starts surged 14.5% in January with the help of unusually mild weather. Notwithstanding the increase in housing starts, both new and existing home sales declined in January and unsold homes reached a ten year high. Other data reflected a more positive picture of the economy, which included an upward revision in fourth quarter GDP to 1.7% and healthy growth in the manufacturing and service sectors during February. The February employment report showed strong job growth, but the national unemployment rate for February edged up from 4.7% to 4.8% as more people entered the labor market. Mild weather supported a surge in existing home sales during February, but, at the same time, the inventory of houses for sale also increased. Economic data for March generally reflected a strong economy, based on robust numbers for retail sales, new home sales and durable-goods orders. The national unemployment rate for March declined to 4.7%, with over 200,000 jobs added during the month. First quarter GDP growth was revised upward to an annual rate of 5.3% compared to an original estimate of 4.7%.

Economic data at the start of the second quarter 2006 was somewhat mixed. April data for retail sales, manufacturing activity and new home sales all showed positive trends, while, comparatively, durable-goods orders were down sharply in April, existing home sales were lower in April and the pace of job growth slowed in April. The national unemployment rate for April held steady at 4.7%. Following a strong rise in manufacturing activity during April, the index for manufacturing activity fell in May. The pace of job growth slowed further in May, although the May national unemployment rate dipped to 4.6% which was the lowest rate since the summer of 2001. In a sign that higher gasoline prices and weaker home sales may be slowing the economy, retail sales rose only 0.1% in May from April. Weaker consumer demand also translated into a decline in factory output for May. New home sales rose in May for the third

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Page 2.5

straight month, but sales of existing homes fell in May reflecting the impact of higher interest rates. While first quarter GDP growth was revised upward to a 5.6% annual rate, second quarter growth was expected to be much slower. Job growth in June fell short of expectations, but the unemployment rate for June held steady at 4.6%. While strong business investment provided for a jump in U.S. industrial production in June, other data reflected a slowing economy. Home sales of new and existing homes fell in June, while inventories of homes for sale swelled to a nine year high. Second quarter GDP slowed to a 2.5% annual rate and June durable-goods orders excluding defense products increased at a slower pace.

Despite signs of a cooling economy and record high oil prices, consumer confidence edged up in July 2006. Manufacturing activity picked up in July and retail sales were up in July as well, while the number of jobs added in July was less than forecasted. The national unemployment rate for July rose to 4.8%, the first increase since February 2006. Other signs of slower economic growth included the index of leading indicators easing slightly in July and July sales of existing and new homes tumbling, while the inventory of unsold homes rose to a record high. Consumer spending was up strongly in July, but retailers reported mixed sales for August. Solid job growth provided for a dip in the August unemployment rate to 4.7%. Home inventories continued to rise in August, which translated in fewer housing starts in August. Existing home sales also declined in August, which put downward pressure on home prices with the median home price for existing home sales falling in August for the first time since 1995. Durable-goods orders fell in August, while new home sales posted an unexpected gain in August. Job growth slowed in September, but the unemployment rate edged down to 4.6%.

The mid-October 2006 release of the Federal Reserve’s “beige book” indicated that consumer spending remained strong, despite the slowdown in the housing market. The Federal Reserve’s “beige book” also found job markets tightening across the U.S., but without an accompanying increase in wages. Falling gas prices supported a solid increase in September retail sales. Excluding gas sales, retail sales increased 0.6% in September. While new home construction rose in September, building permits declined pointing to a softening in residential construction. Lower median home prices and a decline in construction spending in September provided further evidence of a cooling housing market. A slowing economy was also indicated by a decline in industrial output in September and a decline in manufacturing activity in October. At the same time the economy showed signs of resilience, as the October unemployment rate dropped to a five-year low of 4.4% and retail sales, excluding gas sales, rose in October.

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Page 2.6

In terms of interest rate trends during 2006, Treasury yields stabilized through most of January 2006 as the Federal Reserve indicated that it was becoming less worried about inflation and may be nearing an end to its campaign to raise rates. Uncertainty over future Federal Reserve policy with the incoming of a new Federal Reserve Chairman pushed long-term Treasury yields higher in late-January. The Federal Reserve concluded its end of January meeting by raising the target interest rate another quarter point to 4.5%, which was the 14^th consecutive rate hike implemented by the Federal Reserve over the past 19 months. An expanding economy with inflation under control provided for a relatively stable interest rate environment through most of February. Consumer prices jumped 0.7% in January due to higher energy costs, but core prices rose only 0.2% which served to soothe inflation fears. Interest rates edged higher in early-March, reflecting growing expectations that foreign central banks would keep raising interest rates based on forecasts of an improving global economy. A positive report on consumer-price inflation for February helped to pull Treasury yields lower in mid-March, while, comparatively, an upward revision to consumer-price inflation for the fourth quarter of 2005 and a quarter point rate hike by the Federal Reserve with hints of more rate increases to come pushed Treasury yields higher at the close of the first quarter.

The upward trend in interest rates continued into the second quarter of 2006, with the yield on the 10-year Treasury note moving above 5.0% in mid-April for the first time since mid-2002. Economic data showing a strengthening economy and higher consumer prices pushed bond yields higher into early-May, reflecting growing expectations that more rate increases were in store from the Federal Reserve to contain inflation. As expected, the Federal Reserve concluded its May meeting by increasing the federal funds rate another quarter point to 5.0% and kept its options open for future rate increases. Interest rates stabilized during the second half of May and then edged lower in early-June on news that job growth was weaker than expected during May. A 2.4% increase in core consumer prices for May pushed interest rates higher in mid-June, as expectations increased that the Federal Reserve would raise interest rates again despite signs of a cooling economy. Inflation concerns pushed the yield on the 10-year Treasury note to a four year high in late-June. The Federal Reserve concluded its late-June meeting by

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Page 2.7

raising the federal funds rate a quarter point to 5.25%, its 17^th straight rate increase. Bond prices rallied following the Federal Reserve meeting, as the Federal Reserve’s statement suggested that a pause in the current cycle of rate increases may be appropriate.

Long-term Treasury yields eased lower at the start of the third quarter of 2006, based on expectations of a cooling economy as reflected by the weaker than expected job growth in the June employment data. A flight to safety, amid violence in the Middle East, furthered the upward trend in bond prices in mid-July. Economic data showing economic growth slowing and comments from the Federal Reserve Chairman that slower economic growth was expected to reverse the rise in inflation extended the bond rally through the end of July, with the yield on the 10-year Treasury note dipping below 5.0% in late-July. Weaker than expected job growth in July continued the downward trend in long-term Treasury yields in the first week of August, as the yield on the 10-year Treasury note dipped to a four-month low of 4.90%. Long-term Treasury yields continued to ease lower into the second half of August, as the Federal Reserve left rates unchanged at 5.25%, its first pause after two years of steady increases. Modest increases in producer prices and core consumer prices for July, as well as weaker home sales in July, sustained the downward trend in long-term interest rates into late-August. After stabilizing in the first half of September, long-term Treasury yields trended lower during the balance of September amid signs of slower economic growth. The September meeting of the Federal Reserve concluded with no change in interest rates.

The rally in long-term Treasury bonds extended into early-October 2006, as the Federal Reserve Chairman suggested that the sinking housing market could slow economic growth in the U.S. Growing expectations that the Federal Reserve would leave rates unchanged at its next meeting reversed the downward trend in interest rates heading into mid-October. Interest rates stabilized ahead of the Federal Reserve meeting in October and then trended lower in late-October as the Federal Reserve held rates steady as expected. After edging up slightly in early-November, long-term Treasury yields declined slightly in mid-November on upbeat comments by the St. Louis Federal Reserve about interest rates. A smaller than expected increase in core consumer prices for October also served to boost bond prices in late-November. As of November 24, 2006, the bond equivalent yields for U.S. Treasury bonds with terms of one and ten years equaled 5.00% and 4.55%, respectively, versus comparable year ago yields of 4.31% and 4.47%. Exhibit II-2 provides historical interest rate trends from 1995 through October 16, 2006.

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Page 2.8

Local Economy

The Bank’s primary market area has a fairly diversified local economy. Similar to statewide data, services, government and trade play a major role in the local market area economy. Manufacturing and finance/insurance/real estate jobs also constitute major employment sectors regionally. The market area is influenced by the presence of the Pocono Mountain region, which is a popular resort and recreation area for both in-state and out-of-state residents. Thus, tourism and recreation (year round) are a large part of the local economy. The market area also acts as a “bedroom” community for a sizeable portion of the population that commutes to employment in northern New Jersey, New York City, or the Allentown-Bethlehem-Easton metropolitan area directly to the south. In addition, Interstate-80 crosses into Pennsylvania through Monroe County, resulting in a concentration of travel/trade related employment, as Interstate-80 is a major east-west highway, particularly a westward route from the New York City/Northern New Jersey metropolitan area. Major employers in Monroe County include recreational companies such as Camelback Ski Corporation, Pocono Manor Inn and Golf Resort, Shawnee Inn, Skytop Lodge Corp, Resorts USA, Inc., and wholesale/retail trade companies such as Roadway Express and Wal-Mart Distribution Center.

Comparative employment data shown in Table 2.2 shows that Monroe County reported a slightly lower employment concentration in services and higher concentrations of employment in trade and government than the state of Pennsylvania, while Northampton County recorded services employment in line with the state measure. Manufacturing employment was higher in Northampton County compared to Monroe County and Pennsylvania. Table 2.2 provides an overview of employment by sector, for both of the primary market area counties and the state of Pennsylvania.

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Page 2.9

Table 2.2

Primary Market Area Employment Sectors

(Percent of Labor Force)(1)

Employment Sectors	Pennsylvania		Monroe		Northampton
Services	38.9	%	34.1	%	38.1	%
Wholesale/Retail Trade	15.4		17.1		15.4
Government	11.6		16.5		12.3
Fin., Ins., Real Estate	7.7		7.9		6.1
Manufacturing	10.7		7.3		13.4
Construction	5.4		6.9		6.4
Transport. & Warehousing	3.9		5.4		3.9
Agriculture	1.1		0.4		0.6
Other	5.4		4.5		3.8
	100.0	%	100.0	%	100.0	%

(1) Data is as of 2003.

Source: Regional Economic Information System Bureau of Economic Analysis.

Comparative unemployment rates for Monroe and Northampton Counties, as well as for the U.S. and Pennsylvania, are shown in Table 2.3. Monroe County’s September 2006 unemployment rate of 4.3% was between than the comparable Pennsylvania unemployment rate of 4.2% and the U.S. unemployment rate of 4.4%. Northampton County posted a slightly lower unemployment rate of 4.0% for September 2006. Consistent with the U.S. and Pennsylvania unemployment trends, both Monroe and Northampton County’s September 2006 unemployment rates were lower compared to the year ago rates of 4.7% and 4.4%, respectively.

Table 2.3

Unemployment Trends(1)

Region	September 2005 Unemployment		September 2006 Unemployment
United States	4.8	%	4.4	%
Pennsylvania	4.5		4.2
Monroe County	4.7		4.3
Northampton County	4.4		4.0

(1) Unemployment rates have not been seasonally adjusted. Source: U.S. Bureau of Labor Statistics.

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Page 2.10

Market Area Deposit Characteristics

The Bank’s retail deposit base is closely tied to the economic fortunes of east-central Pennsylvania and, in particular, the markets that are nearby to each of ESSA Bank’s branch office locations. Table 2.4 displays deposit market trends from June 30, 2002 through June 30, 2006 for the branches that were maintained by the Bank during that period. Additional data is also presented for the state of Pennsylvania. The data indicates that Monroe County’s relatively favorable demographic trends translated into a slightly stronger deposit growth rate compared to statewide deposit growth, with total thrift and bank deposits increasing by 7.9% annually compared to 7.4% annually for the state during the four year period covered in Table 2.4. Comparatively, Northampton County recorded deposit growth of 5.6% annually over the same time period. Consistent with the state of Pennsylvania, commercial banks maintained a larger market share of deposits than savings institutions in both market area counties. For the four year period covered in Table 2.4, savings institutions experienced an increase in deposit market share in Monroe County and Northampton County.

ESSA Bank’s $396.5 million of deposits in Monroe County represented a 19.2% market share of thrift and bank deposits at June 30, 2006. During the four year period, ESSA Bank’s deposit market share decreased from 20.4% to 19.2% in Monroe County based on an annual deposit growth rate of 6.2%. In Northampton County, ESSA Bank’s single branch office location held only a minimal 0.2% deposit market share as of June 30, 2006.

Competition

The Bank faces notable competition in both deposit gathering and lending activities, including direct competition with several financial institutions and credit unions that primarily have a local or regional presence. Securities firms and mutual funds also represent major sources of competition in raising deposits. In many cases, these competitors are also seeking to provide some or all of the community-oriented services as ESSA Bank. With regard to lending competition, the Bank encounters the most significant competition from the same institutions providing deposit services. In addition, the Bank competes with mortgage companies and independent mortgage brokers in originating mortgage loans.

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Page 2.11

Table 2.4

ESSA Bank & Trust

Deposit Summary

	As of June 30,
	2002					2006					Deposit
	Deposits		Market Share		# of Branches	Deposits		Market Share		# of Branches	Growth Rate 2002-2006
					(Dollars in Thousands)						(%)
State of Pennsylvania	$	188,304,000	100.0	%	4,588	$	250,157,000	100.0	%	4,700	7.4	%
Commercial Banks		136,705,000	72.6	%	3,292		172,897,000	69.1	%	3,384	6.0	%
Savings Institutions		51,599,000	27.4	%	1,296		77,260,000	30.9	%	1,316	10.6	%
Monroe County	$	1,522,395	100.0	%	54	$	2,060,495	100.0	%	53	7.9	%
Commercial Banks		983,129	64.6	%	32		1,235,750	60.0	%	29	5.9	%
Savings Institutions		539,266	35.4	%	22		824,745	40.0	%	24	11.2	%
ESSA Bank & Trust		311,231	20.4	%	11		396,497	19.2	%	11	6.2	%
Northampton County	$	3,561,547	100.0	%	109	$	4,427,370	100.0	%	117	5.6	%
Commercial Banks		2,697,151	75.7	%	86		2,948,285	66.6	%	82	2.3	%
Savings Institutions		864,396	24.3	%	23		1,479,085	33.4	%	35	14.4	%
ESSA Bank & Trust		1,528	0.0	%	1		9,535	0.2	%	1	58.1	%
Source: FDIC.

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Page 2.12

Table 2.5 lists the Bank’s largest competitors in the two counties currently served by its branches, based on deposit market share as noted parenthetically. The Bank’s deposit market share and market rank are also provided in Table 2.5.

Table 2.5

ESSA Bank & Trust

Market Area Deposit Competitors

Location	Name
Monroe County	PNC Bank, NA (24.2%)
	ESSA Bank & Trust (19.2%)
	Citizens Bank of PA (14.3%)
	First NB of Palmerton (11.1%)
	Wachovia Bank, NA (8.2%)
Northampton County	Keystone Nazareth B&T (21.2%)
	Lafayette Ambassador Bank (17.0%)
	Wachovia Bank, NA (15.3%)
	PNC Bank, NA (11.7%)
	Bank of America NA (7.9%)
	ESSA Bank & Trust (0.2%)
Source: FDIC.

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Page 3.1

III. PEER GROUP ANALYSIS

This chapter presents an analysis of ESSA Bank’s operations versus a group of comparable savings institutions (the “Peer Group”) selected from the universe of all publicly-traded savings institutions in a manner consistent with the regulatory valuation guidelines. The basis of the pro forma market valuation of ESSA Bank is derived from the pricing ratios of the Peer Group institutions, incorporating valuation adjustments for key differences in relation to the Peer Group. Since no Peer Group can be exactly comparable to ESSA Bank, key areas examined for differences are: financial condition; profitability, growth and viability of earnings; asset growth; primary market area; dividends; liquidity of the shares; marketing of the issue; management; and effect of government regulations and regulatory reform.

Peer Group Selection

The Peer Group selection process is governed by the general parameters set forth in the regulatory valuation guidelines. Accordingly, the Peer Group is comprised of only those publicly-traded savings institutions whose common stock is either listed on a national exchange (NYSE or AMEX), or is NASDAQ listed, since their stock trading activity is regularly reported and generally more frequent than non-publicly traded and closely-held institutions. Institutions that are not listed on a national exchange or NASDAQ are inappropriate, since the trading activity for thinly-traded or closely-held stocks is typically highly irregular in terms of frequency and price and thus may not be a reliable indicator of market value. We have also excluded from the Peer Group those companies under acquisition or subject to rumored acquisition, mutual holding companies and recent conversions, since their pricing ratios are subject to unusual distortion and/or have limited trading history. A recent listing of the universe of all publicly-traded savings institutions is included as Exhibit III-1.

Ideally, the Peer Group, which must have at least 10 members to comply with the regulatory valuation guidelines, should be comprised of locally or regionally-based institutions with comparable resources, strategies and financial characteristics. There are approximately 171 publicly-traded institutions nationally and, thus, it is typically the case that the Peer Group will

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be comprised of institutions with relatively comparable characteristics. To the extent that differences exist between the converting institution and the Peer Group, valuation adjustments will be applied to account for the differences. Since ESSA Bank will be a full public company upon completion of the offering, we considered only full public companies to be viable candidates for inclusion in the Peer Group. From the universe of publicly-traded thrifts, we selected ten institutions with characteristics similar to those of ESSA Bank. In the selection process, we applied three “screens” to the universe of all public companies:

• Screen #1 Pennsylvania institutions with assets between $450 million and $1.5 billion, tangible equity-to-assets ratios of greater than 6.0%, positive core earnings and return on equity ratios of less than 12.0%. Two companies met the criteria for Screen #1 and both were included in the Peer Group: Harleysville Savings Financial Corp. and TF Financial Corp. Exhibit III-2 provides financial and public market pricing characteristics of all publicly-traded Pennsylvania thrifts.

• Screen #2 Mid-Atlantic institutions, except for Pennsylvania thrifts, with assets between $450 million and $1.5 billion, tangible equity-to-assets ratios of greater than 7.5%, positive core earnings and core return on equity ratios of less than 12.0%. Three companies met the criteria for Screen #2 and all three were included in the Peer Group: American Bancorp of New Jersey, Pamrapo Bancorp, Inc. of New Jersey and Synergy Financial Group of New Jersey. Exhibit III-3 provides financial and public market pricing characteristics of all publicly-traded Mid Atlantic thrifts.

• Screen #3. New England institutions with assets between $450 million and $1.5 billion, tangible equity-to-assets ratios of greater than 7.5%, positive core earnings and core return on equity ratios of less than 12.0%. Six companies met the criteria for Screen #3 and five were included in the Peer Group: Benjamin Franklin Bancorp of Massachusetts, Hingham Institution for Savings of Massachusetts, LSB Corp. of North Andover Massachusetts, Legacy Bancorp, Inc. of Massachusetts and MassBank Corp. of Reading Massachusetts. Newport Bancorp, Inc. of Rhode Island was excluded due to the recency of its conversion, which was completed less than one year ago. Exhibit III-4 provides financial and public market pricing characteristics of all publicly-traded New England thrifts.

Table 3.1 shows the general characteristics of each of the 10 Peer Group companies and Exhibit III-5 provides summary demographic and deposit market share data for the primary market areas served by each of the Peer Group companies. While there are expectedly some differences between the Peer Group companies and ESSA Bank, we believe that the Peer Group companies, on average, provide a good basis for valuation subject to valuation adjustments.

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[Table Filed via Form SE]

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The following sections present a comparison of ESSA Bank’s financial condition, income and expense trends, loan composition, interest rate risk and credit risk versus the Peer Group as of the most recent publicly available date.

A summary description of the key characteristics of each of the Peer Group companies is detailed below.

• American Bancorp of New Jersey. Selected due to comparable interest-earning asset composition, relatively high equity-to-assets ratio, comparable net interest margin, similar concentration of mortgage-backed securities and 1-4 family loans in aggregate comprising total assets and comparable diversification into higher risk types of lending.

• Benjamin Franklin Bancorp, Inc. of Massachusetts. Selected due to comparable interest-earning asset composition, comparable return on average assets and favorable credit quality measures.

• Harleysville Savings Financial Corp. of Pennsylvania. Selected due to eastern Pennsylvania market area, comparable asset size and comparable interest-bearing funding composition.

• Hingham Institution for Savings of Massachusetts. Selected due to comparable asset size, comparable interest-earning asset composition, comparable interest-bearing funding composition, comparable net interest margin and favorable credit quality measures.

• LSB Corp. of North Andover Massachusetts. Selected due to comparable interest-bearing funding composition, comparable net interest margin, similar earnings contribution from non-interest operating income, comparable level of operating expenses and favorable credit quality measures.

• Legacy Bancorp, Inc. of Massachusetts Selected due to comparable asset size, comparable size of branch network, relatively high equity-to-assets ratio and favorable credit quality measures.

• MassBank Corp. of Reading Massachusetts. Selected due to comparable net interest margin and favorable credit quality measures.

• Pamrapo Bancorp, Inc. of New Jersey. Selected due to similar loans-to-assets ratio, similar concentration of mortgage-backed securities and 1-4 family loans in aggregate comprising total assets and favorable credit quality measures.

• Synergy Financial Group of New Jersey. Selected due to comparable interest-earning asset composition, comparable net interest margin and favorable credit quality measures.

• TF Financial Corp. of Pennsylvania. Selected due to eastern Pennsylvania market area, comparable asset size, comparable size of branch network, comparable interest-earning asset composition, comparable level of operating expenses as a percent of average assets, similar concentration of mortgage-backed securities and 1-4 family loans in aggregate comprising total assets and favorable credit quality measures.

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In aggregate, the Peer Group companies maintained a similar level of capital as the industry average (12.1% of assets versus 11.6% for all public companies), generated slightly lower earnings as a percent of average assets (0.54% ROAA versus 0.60% for all public companies), and earned a slightly lower ROE (5.78% ROE versus 6.34% for all public companies). Overall, the Peer Group’s average P/B ratio and average P/E multiple were below the respective averages for all publicly-traded thrifts.

	All Publicly-Traded			Peer Group
Financial Characteristics (Averages)
Assets ($Mil)	$	3,003		$	733
Market capitalization ($Mil)	$	427		$	121
Equity/assets (%)		11.60	%		12.12	%
Return on average assets (%)		0.60			0.54
Return on average equity (%)		6.34			5.78
Pricing Ratios (Averages)(1)
Price/earnings (x)		19.46x			17.85x
Price/book (%)		154.46	%		143.13	%
Price/assets (%)		18.31			16.82

(1) Based on market prices as of November 24, 2006.

Ideally, the Peer Group companies would be comparable to ESSA Bank in terms of all of the selection criteria, but the universe of publicly-traded thrifts does not provide for an appropriate number of such companies. However, in general, the companies selected for the Peer Group were fairly comparable to ESSA Bank, as will be highlighted in the following comparative analysis.

Financial Condition

Table 3.2 shows comparative balance sheet measures for ESSA Bank and the Peer Group, reflecting the expected similarities and some differences given the selection procedures outlined above. The Bank’s and the Peer Group’s ratios reflect balances as of September 30, 2006, unless indicated otherwise for the Peer Group companies. ESSA Bank’s equity-to-assets ratio of 8.0% was below the Peer Group’s average net worth ratio of 12.1%.

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[Table Filed via Form SE]

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However, the Bank’s pro forma capital position will increase with the addition of stock proceeds and will exceed the Peer Group’s ratio following the stock offering. Tangible equity-to-assets ratios for the Bank and the Peer Group equaled 8.0% and 11.6%, respectively. The increase in ESSA Bank’s pro forma capital position will be favorable from a risk perspective and in terms of future earnings potential that could be realized through leverage and lower funding costs. At the same time, the Bank’s higher pro forma capitalization will initially depress return on equity. Both ESSA Bank’s and the Peer Group’s capital ratios reflected capital surpluses with respect to the regulatory capital requirements, with the Peer Group’s ratios currently exceeding the Bank’s ratios. On a pro forma basis, the Bank’s regulatory surpluses will likely be comparable to or above the Peer Group’s ratios.

The interest-earning asset compositions for the Bank and the Peer Group were somewhat similar, with loans constituting the bulk of interest-earning assets for ESSA Bank and the Peer Group. The Bank’s loans-to-assets ratio of 76.7% was higher than the comparable Peer Group ratio of 64.7%. Comparatively, the Peer Group’s cash and investments-to-assets ratio of 31.3% was above the comparable ratio for the Bank of 18.7%. Overall, ESSA Bank’s interest-earning assets amounted to 95.4% of assets, which approximated the comparable Peer Group ratio of 96.0%.

ESSA Bank’s funding liabilities reflected a funding strategy that was somewhat similar to that of the Peer Group’s funding composition. The Bank’s deposits equaled 55.4% of assets, which was below the comparable Peer Group ratio of 66.1%. Comparatively, borrowings were utilized to a greater degree by the Bank, as indicated by borrowings-to-assets ratios of 35.7% and 20.9% for ESSA Bank and the Peer Group, respectively. Total interest-bearing liabilities maintained by the Bank and the Peer Group, as a percent of assets, equaled 91.1% and 87.0%, respectively. Following the increase in capital provided by the net proceeds of the stock offering, the Bank’s ratio of interest-bearing liabilities as a percent of assets will be less than the Peer Group’s ratio.

A key measure of balance sheet strength for a thrift institution is its IEA/IBL ratio. Presently, the Peer Group’s IEA/IBL ratio is stronger than the Bank’s ratio, based on IEA/IBL ratios of 110.3% and 104.7%, respectively. The additional capital realized from stock proceeds

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should serve to provide ESSA Bank with an IEA/IBL ratio that approximates or exceeds the Peer Group’s ratio, as the increase in capital provided by the infusion of stock proceeds will serve to lower the level of interest-bearing liabilities funding assets and will be primarily deployed into interest-earning assets.

The growth rate section of Table 3.2 shows annual growth rates for key balance sheet items. ESSA Bank’s and the Peer Group’s growth rates are based on growth for the twelve months ended September 30, 2006 or the most recent period available. ESSA Bank’s assets increased at a 10.6% annual rate, which was well above the Peer Group’s asset growth rate of 1.5%. Asset growth for the Bank was realized through a combination of loan growth as well as growth of cash and investments. Asset growth for the Peer Group consisted of loan growth, which was in part funded with cash and investments. The Bank’s loan growth rate of 9.4% was slightly above the Peer Group’s loan growth rate of 7.8%.

Deposits and borrowings funded the Bank’s asset growth, with borrowings increasing at a faster rate than deposits. Asset growth for the Peer Group was funded by modest increases in deposits and borrowings. The Bank’s 7.3% deposit growth rate was well above the Peer Group’s deposit growth rate of 0.7%. Capital growth rates posted by the Bank and the Peer Group equaled 7.3% and 2.3%, respectively. The higher capital growth rate posted by the Bank resulted from the Bank’s lower capital position as well as retention of all of its earnings. Comparatively, in addition to recording a slightly lower return on assets than the Bank, the Peer Group’s lower capital growth rate reflects the impact of dividend payments as well as stock repurchases. The increase in capital realized from stock proceeds will likely depress the Bank’s capital growth rate initially following the stock offering. Dividend payments and stock repurchases, pursuant to regulatory limitations and guidelines, could also potentially slow the Bank’s capital growth rate in the longer term following the stock offering.

Income and Expense Components

Table 3.3 displays comparable statements of operations for the Bank and the Peer Group, based on earnings for the twelve months ended September 30, 2006, unless otherwise indicated for the Peer Group companies.

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[Table Filed via Form SE]

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ESSA Bank and the Peer Group reported net income to average assets ratios of 0.58% and 0.54%, respectively. The Bank’s higher return was supported by higher non-interest operating income and the absence of non-operating losses. The Peer Group’s earnings reflected comparative earnings advantages with respect to maintaining a higher net interest margin and a lower level of operating expenses.

The Peer Group’s stronger net interest margin was realized through maintenance of a lower interest expense ratio, which was partially offset by the Bank’s higher interest income ratio. The Bank’s higher interest income ratio was realized through earning a higher yield on interest-earning assets (5.68% versus 5.44% for the Peer Group), which was supported by the Bank’s higher concentration of interest-earning assets maintained in loans compared to lower yielding investments. The Peer Group’s lower interest expense ratio was supported by maintenance of a lower cost of funds (2.91% versus 3.12% for the Bank) and maintenance of a lower level of interest-bearing liabilities funding assets. Overall, ESSA Bank and the Peer Group reported net interest income to average assets ratios of 2.53% and 2.69%, respectively.

In another key area of core earnings strength, the Peer Group maintained a lower operating expense ratio than the Bank. For the period covered in Table 3.3, the Bank and the Peer Group reported operating expense to average assets ratios of 2.45% and 2.04%, respectively. The Bank’s higher operating expense ratio could in part be attributed to higher expenses that tend to accompany generation of non-interest revenues, as the Bank maintained a higher level of non-interest operating income compared to the Peer Group. Consistent with the Bank’s higher operating expense ratio, staffing levels relative to asset size were higher for the Bank. Assets per full time equivalent employee equaled $4.7 million for the Bank, versus $6.3 million for the Peer Group. On a post-offering basis, the Bank’s operating expenses can be expected to increase with the addition of stock benefit plans and certain expenses that result from being a publicly-traded company, with such expenses already impacting the Peer Group’s operating expenses. At the same time, ESSA Bank’s capacity to leverage operating expenses will be greater than the Peer Group’s leverage capacity following the increase in capital realized from the infusion of net stock proceeds.

When viewed together, net interest income and operating expenses provide considerable insight into a thrift’s earnings strength, since those sources of income and expenses are typically

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the most prominent components of earnings and are generally more predictable than losses and gains realized from the sale of assets or other non-recurring activities. In this regard, as measured by their expense coverage ratios (net interest income divided by operating expenses), the Peer Group’s earnings were stronger than the Bank’s. Expense coverage ratios posted by ESSA Bank and the Peer Group equaled 1.03x and 1.32x, respectively. An expense coverage ratio of greater than 1.0x indicates that an institution is able to sustain pre-tax profitability without having to rely on non-interest sources of income.

Sources of non-interest operating income provided a larger contribution to the Bank’s earnings. Non-interest operating income equaled 0.81% and 0.38% of ESSA Bank’s and the Peer Group’s average assets, respectively. Taking non-interest operating income into account in comparing the Bank’s and the Peer Group’s earnings, ESSA Bank’s efficiency ratio (operating expenses, net of amortization of intangibles, as a percent of the sum of non-interest operating income and net interest income) of 73.4% was less favorable than the Peer Group’s efficiency ratio of 65.8%. The Peer Group’s more favorable efficiency ratio was realized through maintenance of a higher net interest income ratio and a lower operating expense ratio.

Loan loss provisions had a similar impact on the Peer Group’s earnings, with loan loss provisions established by the Bank and the Peer Group equaling 0.04% and 0.05% of average assets, respectively. The relatively minor impact of loan loss provisions on the Bank’s and the Peer Group’s earnings were indicative of their generally favorable credit quality measures and low risk lending strategies.

Non-operating gains and losses were not a factor in the Bank’s earnings during the twelve month period, while the Peer Group reported net non-operating losses equal to 0.19% of average assets. Typically, gains and losses generated from the sale of assets are viewed as earnings with a relatively high degree of volatility, particularly to the extent that such gains and losses result from the sale of investments or other assets that are not considered to be part of an institution’s core operations. Comparatively, to the extent that gains have been derived through selling fixed rate loans into the secondary market, such gains may be considered to be an ongoing activity for an institution particularly during periods of low interest rates and, therefore, warrant some consideration as a core earnings factor for an institution. However, loan sale gains are still

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viewed as a more volatile source of income than income generated through the net interest margin and non-interest operating income. Extraordinary items were not a factor in either the Bank’s or the Peer Group’s earnings.

Taxes had a similar impact on the Bank’s and the Peer Group’s earnings, as ESSA Bank and the Peer Group posted effective tax rates of 31.44% and 33.89%, respectively. As indicated in the prospectus, the Bank’s effective marginal tax rate is equal to 34.0%.

Loan Composition

Table 3.4 presents data related to the Bank’s and the Peer Group’s loan portfolio compositions and investment in mortgage-backed securities. The Bank’s loan portfolio composition reflected a higher concentration of 1-4 family permanent mortgage loans and mortgage-backed securities than maintained by the Peer Group (69.9% versus 54.8% for the Peer Group). The Bank’s higher ratio was attributable to maintaining a higher concentration of 1-4 family loans, which was partially offset by the Peer Group’s higher concentration of mortgage-backed securities. Loans serviced for others equaled 3.0% and 3.1% of the Bank’s and the Peer Group’s assets, respectively, thereby indicating a similar influence of mortgage banking activities on the Bank’s and the Peer Group’s operations. Servicing intangible assets were not a significant balance sheet item for either the Bank or the Peer Group.

Diversification into higher risk types of lending was greater for the Peer Group. Consumer loans, which includes home equity loans, represented the most significant area of lending diversification for the Bank (7.0% of assets), followed by commercial real estate/multi-family loans (6.5% of assets). The Peer Group’s lending diversification consisted primarily of commercial real estate/multi-family loans (18.1% of assets), while other areas of lending diversification for the Peer Group were fairly evenly distributed between the other loan types. Consumer loans were the only type of lending diversification that was more significant for the Bank in comparison to the Peer Group’s loan portfolio composition. Overall, the Peer Group’s greater degree of lending diversification into higher risk types of lending translated into a slightly higher risk weighted assets-to-assets ratio of 58.3%, versus a comparable ratio of 54.4% for the Bank.

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[Table Filed via Form SE]

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Interest Rate Risk

Table 3.5 reflects various key ratios highlighting the relative interest rate risk exposure of the Bank versus the Peer Group. In terms of balance sheet composition, ESSA Bank’s interest rate risk characteristics were considered to be less favorable than the Peer Group’s. Most notably, ESSA Bank’s lower tangible capital position, lower IEA/IBL ratio and higher ratio of non-interest earning assets indicate a greater dependence on the yield-cost spread to sustain the net interest margin. On a pro forma basis, the infusion of stock proceeds should provide the Bank with comparable or more favorable balance sheet interest rate risk characteristics than currently maintained by the Peer Group, particularly with respect to the increases that will be realized in Bank’s equity-to-assets and IEA/IBL ratios.

To analyze interest rate risk associated with the net interest margin, we reviewed quarterly changes in net interest income as a percent of average assets for ESSA Bank and the Peer Group. In general, the relative fluctuations in the Bank’s and the Peer Group’s net interest income to average assets ratios were considered to be fairly comparable and, thus, based on the interest rate environment that prevailed during the period analyzed in Table 3.5, ESSA Bank and the Peer Group were viewed as maintaining a similar degree of interest rate risk exposure in their respective net interest margins. The stability of the Bank’s net interest margin should be enhanced by the infusion of stock proceeds, as the increase in capital will reduce the level of interest rate sensitive liabilities funding ESSA Bank’s assets.

Credit Risk

Overall, the Bank’s and the Peer Group’s credit risk exposure generally appears to be fairly comparable, based on their comparative ratios for non-performing assets and reserve coverage ratios. As shown in Table 3.6, the Bank’s ratio of non-performing assets and accruing loans that are more than 90 days past due equaled 0.09% of assets, which was nominally below the comparable Peer Group ratio of 0.11%. ESSA Bank’s non-performing loans/loans ratio of 0.12% was also nominally lower than the comparable Peer Group ratio of 0.14%.

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[Table Filed via Form SE]

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[Table Filed via Form SE]

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ESSA Bank maintained a higher level of loss reserves as a percent of non-performing loans (570.3% versus 398.0% for the Company), while the Peer Group maintained a slightly higher level of reserves as percent of loans (0.76% versus 0.68% for ESSA Bank). The Company recorded a modest net recovery to loan loss provisions, versus a nominal amount of net loan charge-offs recorded by the Peer Group. Net loan charge-offs were modest for both the Bank and the Peer Group.

Summary

Based on the above analysis and the criteria employed in the selection of the companies for the Peer Group, RP Financial concluded that the Peer Group forms a reasonable basis for determining the pro forma market value of ESSA Bank. Such general characteristics as asset size, capital position, interest-earning asset composition, funding composition, core earnings measures, loan composition, credit quality and exposure to interest rate risk all tend to support the reasonability of the Peer Group from a financial standpoint. Those areas where differences exist will be addressed in the form of valuation adjustments to the extent necessary.

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IV. VALUATION ANALYSIS

Introduction

This chapter presents the valuation analysis and methodology, prepared pursuant to the regulatory valuation guidelines, and valuation adjustments and assumptions used to determine the estimated pro forma market value of the common stock to be issued in conjunction with the Bank’s conversion transaction.

Appraisal Guidelines

The OTS written appraisal guidelines specify the market value methodology for estimating the pro forma market value of an institution pursuant to a mutual-to-stock conversion. Pursuant to this methodology: (1) a peer group of comparable publicly-traded institutions is selected; (2) a financial and operational comparison of the subject company to the peer group is conducted to discern key differences; and (3) a valuation analysis in which the pro forma market value of the subject company is determined based on the market pricing of the peer group as of the date of valuation, incorporating valuation adjustments for key differences. In addition, the pricing characteristics of recent conversions, both at conversion and in the aftermarket, must be considered.

RP Financial Approach to the Valuation

The valuation analysis herein complies with such regulatory approval guidelines. Accordingly, the valuation incorporates a detailed analysis based on the Peer Group, discussed in Chapter III, which constitutes “fundamental analysis” techniques. Additionally, the valuation incorporates a “technical analysis” of recently completed stock conversions, including closing pricing and aftermarket trading of such offerings. It should be noted that these valuation analyses cannot possibly fully account for all the market forces which impact trading activity and pricing characteristics of a particular stock on a given day.

The pro forma market value determined herein is a preliminary value for the Company’s to-be-issued stock. Throughout the conversion process, RP Financial will: (1) review changes in

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ESSA Bank’s operations and financial condition; (2) monitor ESSA Bank’s operations and financial condition relative to the Peer Group to identify any fundamental changes; (3) monitor the external factors affecting value including, but not limited to, local and national economic conditions, interest rates, and the stock market environment, including the market for thrift stocks; and (4) monitor pending conversion offerings (including those in the offering phase), both regionally and nationally. If material changes should occur during the conversion process, RP Financial will evaluate if updated valuation reports should be prepared reflecting such changes and their related impact on value, if any. RP Financial will also prepare a final valuation update at the closing of the offering to determine if the prepared valuation analysis and resulting range of value continues to be appropriate.

The appraised value determined herein is based on the current market and operating environment for the Bank and for all thrifts. Subsequent changes in the local and national economy, the legislative and regulatory environment, the stock market, interest rates, and other external forces (such as natural disasters or major world events), which may occur from time to time (often with great unpredictability) may materially impact the market value of all thrift stocks, including ESSA Bank’s value, or ESSA Bank’s value alone. To the extent a change in factors impacting the Bank’s value can be reasonably anticipated and/or quantified, RP Financial has incorporated the estimated impact into the analysis.

Valuation Analysis

A fundamental analysis discussing similarities and differences relative to the Peer Group was presented in Chapter III. The following sections summarize the key differences between the Bank and the Peer Group and how those differences affect the pro forma valuation. Emphasis is placed on the specific strengths and weaknesses of the Bank relative to the Peer Group in such key areas as financial condition, profitability, growth and viability of earnings, asset growth, primary market area, dividends, liquidity of the shares, marketing of the issue, management, and the effect of government regulations and/or regulatory reform. We have also considered the market for thrift stocks, including the market for new issues, to assess the impact on value of ESSA Bank coming to market at this time.

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1. Financial Condition

The financial condition of an institution is an important determinant in pro forma market value because investors typically look to such factors as liquidity, capital, asset composition and quality, and funding sources in assessing investment attractiveness. The similarities and differences in the Bank’s and the Peer Group’s financial strengths are noted as follows:

• Overall A/L Composition. Loans funded by retail deposits were the primary components of both ESSA Bank’s and the Peer Group’s balance sheets. The Bank’s interest-earning asset composition exhibited a higher concentration of loans, while diversification into higher risk and higher yielding types of loans was greater for the Peer Group. Overall, the Bank’s asset composition provided for a higher yield earned on interest-earning assets and a lower risk weighted assets-to-assets ratio than maintained by the Peer Group. ESSA Bank’s funding composition reflected a lower level of deposits and a higher level of borrowings in comparison to the Peer Group’s ratios. Overall, the Peer Group maintained a lower cost of funds than the Bank. As a percent of assets, the Bank maintained a similar level of interest-earning assets and a higher level of interest-bearing liabilities compared to the Peer Group’s ratios, which provided for a higher IEA/IBL ratio for the Peer Group. After factoring in the impact of the net stock proceeds, the Bank’s IEA/IBL ratio will likely be slightly above the Peer Group’s ratio. On balance, RP Financial concluded that the Bank’s pro forma asset/liability composition was a neutral factor in our adjustment for financial condition.

• Credit Quality. The Bank and the Peer Group maintained similar ratios for non-performing assets-to-assets and non-performing loans-to-loans. Loss reserves as a percent of loans were slightly higher for the Peer Group, while the Bank maintained higher loss reserves as a percent of non-performing loans. Net loan charge-offs were insignificant for the Bank and the Peer Group, while the Peer Group maintained a slightly higher risk weighted assets-to-assets ratio. Overall, RP Financial concluded that credit quality was a neutral factor in our adjustment for financial condition.

• Balance Sheet Liquidity. The Peer Group maintained a higher level of cash and investment securities relative to the Bank (31.3% of assets versus 18.7% for the Bank). Following the infusion of stock proceeds, the Bank’s cash and investments ratio is expected to increase as the proceeds retained at the holding company level will be initially deployed into investments. The Bank’s future borrowing capacity was considered to be slightly less than the Peer Group’s, based on its current greater utilization of borrowings. Overall, RP Financial concluded that this was a neutral factor in our adjustment for financial condition.

• Funding Liabilities. The Bank’s interest-bearing funding composition reflected a lower concentration of deposits and a higher concentration of borrowings relative

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to the comparable Peer Group ratios, with the Peer Group maintaining a lower cost of funds than the Bank. In total, the Bank maintained a higher level of interest-bearing liabilities than the Peer Group, which was attributable to ESSA Bank’s lower capital position. Following the stock offering, the increase in the Bank’s capital position should serve to reduce the level of interest-bearing liabilities funding assets to a ratio that is less than the Peer Group’s ratio. Overall, RP Financial concluded that the Bank’s lower pro forma ratio of interest-bearing liabilities funding assets adequately offset the Peer Group’s lower cost of funds and higher concentration of interest-bearing funds maintained in deposits. Accordingly, we concluded that this was a neutral factor in our adjustment for financial condition.

• Capital. The Peer Group operates with a higher equity-to-assets ratio than the Bank. However, following the stock offering, ESSA Bank’s pro forma capital position will exceed the Peer Group’s equity-to-assets ratio. The increase in the Bank’s pro forma capital position will result in greater leverage potential and reduce the level of interest-bearing liabilities utilized to fund assets. At the same time, the Bank more significant capital surplus will likely result in a lower ROE. On balance, RP Financial concluded that capital strength was a slightly positive factor in our adjustment for financial condition.

On balance, ESSA Bank’s pro forma balance sheet strength was considered to be slightly more favorable than the Peer Group’s. Accordingly, a slight upward adjustment was applied for the Bank’s financial condition.

2. Profitability, Growth and Viability of Earnings

Earnings are a key factor in determining pro forma market value, as the level and risk characteristics of an institution’s earnings stream and the prospects and ability to generate future earnings heavily influence the multiple that the investment community will pay for earnings. The major factors considered in the valuation are described below.

• Reported Earnings. The Bank’s reported earnings were slightly higher than the Peer Group’s on a ROAA basis (0.58% of average assets versus 0.54% for the Peer Group). The Bank’s higher return was primarily attributable to a higher level of non-interest operating income and non-operating losses reported by the Peer Group. A higher net interest margin and lower operating expenses represented earnings advantages for the Peer Group. Reinvestment of stock proceeds into interest-earning assets will serve to increase the Bank’s earnings, with the benefit of reinvesting proceeds expected to be somewhat offset by higher operating expenses associated with operating as a publicly-traded company and the implementation of stock benefit plans. Overall, the Bank’s pro forma reported

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earnings were considered to be fairly comparable to the Peer Group’s, particularly since the Peer Group’s lower return was the result of non-recurring losses. Accordingly, RP Financial concluded that no adjustment was appropriate for the Bank’s reported earnings.

• Core Earnings. Both the Bank’s and the Peer Group’s earnings were derived largely from recurring sources, including net interest income, operating expenses, and non-interest operating income. In these measures, the Bank operated with a lower net interest margin, a higher operating expense ratio and a higher level of non-interest operating income. The Bank’s lower net interest margin and higher level of operating expenses translated into a lower expense coverage ratio (1.03x versus 1.32x for the Peer Group). Similarly, the Peer Group’s higher net interest margin and lower level of operating expenses also supported a more favorable efficiency ratio of 65.8% versus 73.4% for the Bank. Loss provisions and effective tax rates were similar for the Bank and the Peer Group. Overall, these measures, as well as the expected earnings benefit the Bank should realize from the redeployment of stock proceeds into interest-earning assets net of the additional expenses associated with the stock benefit plans, indicate that the Bank’s pro forma core earnings will be fairly comparable the Peer Group’s core earnings. On balance, we concluded that no adjustment was appropriate for the Bank’s pro forma core earnings.

• Interest Rate Risk. Quarterly changes in the Bank’s and the Peer Group’s net interest income to average assets ratios indicated the degree of volatility associated with the Bank’s and the Peer Group’s net interest margins were fairly comparable. Other measures of interest rate risk, such as capital, IEA/IBL and non-interest earning assets ratios were more favorable for the Peer Group, thereby indicating a lower dependence on the yield-cost spread to sustain net interest income. On a pro forma basis, the infusion of stock proceeds can be expected to provide the Bank with equity-to-assets and IEA/ILB ratios that are above the Peer Group ratios, as well as enhance the stability of the Bank’s net interest margin through the reinvestment of stock proceeds into interest-earning assets. On balance, RP Financial concluded that interest rate risk was a slightly positive factor in our adjustment for profitability, growth and viability of earnings.

• Credit Risk. Loan loss provisions were a comparable factor in the Bank’s and the Peer Group’s earnings. In terms of future exposure to credit quality related losses, the Bank maintained a higher concentration of assets in loans. However, lending diversification into higher risk types of loans was slightly greater for the Peer Group. The Bank’s and the Peer Group’s credit quality measures generally indicated limited credit risk exposure. On balance, RP Financial concluded that credit risk was a neutral factor in our adjustment for profitability, growth and viability of earnings.

• Earnings Growth Potential. Several factors were considered in assessing earnings growth potential. First, the Bank’s historical asset growth was above the Peer Group’s growth, with the Bank’s stronger growth rate supported by higher

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yielding loan growth. Second, the infusion of stock proceeds will increase the Bank’s earnings growth potential with respect to leverage capacity. Lastly, the Bank’s higher level of non-interest operating income provides greater earnings growth potential and sustainability of earnings during periods when net interest margins come under pressure as the result of unfavorable changes in the yield curve. On balance, this was a slightly positive factor in our adjustment for profitability, growth and viability of earnings.

• Return on Equity. The Bank’s current return on equity is comparable to the Peer Group’s return on equity ratio. Accordingly, as the result of the significant increase in capital that will be realized from the infusion of net stock proceeds into the Bank’s equity, combined with the Bank’s lower return on assets, the Bank’s pro forma return on equity on a core earnings basis will be well below the Peer Group’s return on equity ratio. Accordingly, this was a negative factor in the adjustment for profitability, growth and viability of earnings.

Overall, the upward adjustments applied for the Bank’s interest rate risk and earnings growth potential were considered to be somewhat negated by the downward adjustment applied for the Bank’s return on equity. Accordingly, we concluded that no adjustment was warranted for this factor.

3. Asset Growth

The Bank recorded stronger asset growth than the Peer Group (10.6% versus 1.5% for the Peer Group), in which the Bank recorded strong growth of loans and cash and investments relative to the comparable Peer Group growth rates. On a pro forma basis, the Bank’s tangible equity-to-assets ratio will be above the Peer Group’s tangible equity-to-assets ratio, implying greater leverage capacity for the Bank. Accordingly, on balance, we believe that a slight upward valuation adjustment was warranted for this factor.

4. Primary Market Area

The general condition of an institution’s market area has an impact on value, as future success is in part dependent upon opportunities for profitable activities in the local market served. ESSA Bank’s primary market area for loans and deposits is considered to be Monroe County, where the main office and ten out eleven branch locations are maintained. Monroe County has experienced growth in population and household income since 2000, with such

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growth exceeding the comparable Pennsylvania and U.S. growth rates. Household income for Monroe County was slightly above the Pennsylvania and U.S. measures, while Monroe County’s per capita income was slightly below the Pennsylvania and U.S. measures.

Overall, the markets served by the Peer Group companies were viewed as having less favorable growth characteristics than the Bank’s primary market area. On average, the Peer Group companies serve more populous and slower growing markets than the primary market area served by the Bank. The average and median deposit market shares maintained by the Peer Group companies were less than the Bank’s market share of deposits in Monroe County. In general, the degree of competition faced by the Peer Group companies was viewed as being more significant in comparison to the Bank’s competitive environment, given the more rural characteristics of the Bank’s market area compared to the majority of the markets served by the Peer Group companies. Summary demographic and deposit market share data for the Bank and the Peer Group companies is provided in Exhibit III-5. As shown in Table 4.1, Monroe County’s September 2006 unemployment rate was in the middle of the range of unemployment rates indicated for the markets served by the Peer Group companies. On balance, we concluded that a slight upward adjustment was appropriate for the Bank’s market area.

Table 4.1

Market Area Unemployment Rates

ESSA Bank & Trust and the Peer Group Companies(1)

		September 2006 Unemployment
	County
ESSA Bank & Trust - PA	Monroe	4.3	%
The Peer Group
American Bancorp – NJ	Essex	6.6	%
Benjamin Franklin Bancorp – MA	Norfolk	4.5
Harleysville Savings - PA	Montgomery	3.4
Hingham Inst. For Savings – MA	Plymouth	5.1
LSB Corp. of No. Andover – MA	Essex	5.4
Legacy Bancorp, Inc. – MA	Berkshire	4.4

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Table 4.1 (continued)

Market Area Unemployment Rates

ESSA Bank & Trust and the Peer Group Companies(1)

		September 2006 Unemployment
	County
MassBank Corp. of Reading – MA	Middlesex	4.4	%
Pamrapo Bancorp, Inc. – NJ	Hudson	6.1
Synergy Financial Group- NJ	Union	5.4
TF Financial Corp. - PA	Bucks	3.6

(1) Unemployment rates are not seasonally adjusted.

Source: U.S. Bureau of Labor Statistics.

5. Dividends

At this time the Bank has not established a dividend policy. Future declarations of dividends by the Board of Directors will depend upon a number of factors, including investment opportunities, growth objectives, financial condition, profitability, tax considerations, minimum capital requirements, regulatory limitations, stock market characteristics and general economic conditions.

All ten of the Peer Group companies pay regular cash dividends, with implied dividend yields ranging from 1.12% to 3.98%. The average dividend yield on the stocks of the Peer Group institutions equaled 2.38% as of November 24, 2006. As of November 24, 2006, approximately 84% of all publicly-traded thrifts had adopted cash dividend policies (see Exhibit IV-1), exhibiting an average yield of 2.09%. The dividend paying thrifts generally maintain higher than average profitability ratios, facilitating their ability to pay cash dividends.

While the Bank has not established a definitive dividend policy prior to converting, the Bank will have the capacity to pay a dividend comparable to the Peer Group’s average dividend yield based on pro forma earnings and capitalization. On balance, we concluded that no adjustment was warranted for purposes of the Bank’s dividend policy.

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6. Liquidity of the Shares

The Peer Group is by definition composed of companies that are traded in the public markets. All ten of the Peer Group members trade on the NASDAQ Global Select Market. Typically, the number of shares outstanding and market capitalization provides an indication of how much liquidity there will be in a particular stock. The market capitalization of the Peer Group companies ranged from $71.8 million to $183.4 million as of November 24, 2006, with average and median market values of $120.6 million and $116.5 million, respectively. The shares issued and outstanding to the public shareholders of the Peer Group members ranged from 2.1 million to 14.1 million, with average and median shares outstanding of 6.7 million and 4.8 million, respectively. The Bank’s stock offering is expected to have a pro forma market value that will be comparable to the average and median market values indicated for the Peer Group, while shares outstanding for the Bank will be in the upper end of the range of shares outstanding indicated for Peer Group companies. Like all of the Peer Group companies, the Bank’s stock will be quoted on the NASDAQ Global Market following the stock offering. Overall, we anticipate that the Bank’s public stock will have a comparable trading market as the Peer Group companies on average and, therefore, concluded no adjustment was necessary for this factor.

7. Marketing of the Issue

We believe that three separate markets exist for thrift stocks, including those coming to market such as ESSA Bank: (1) the after-market for public companies, in which trading activity is regular and investment decisions are made based upon financial condition, earnings, capital, ROE, dividends and future prospects; (2) the new issue market in which converting thrifts are evaluated on the basis of the same factors, but on a pro forma basis without the benefit of prior operations as a fully-converted publicly-held company and stock trading history; and (3) the acquisition market for thrift franchises in Pennsylvania All three of these markets were considered in the valuation of the Bank’s to-be-issued stock.

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A. The Public Market

The value of publicly-traded thrift stocks is easily measurable, and is tracked by most investment houses and related organizations. Exhibit IV-1 provides pricing and financial data on all publicly-traded thrifts. In general, thrift stock values react to market stimuli such as interest rates, inflation, perceived industry health, projected rates of economic growth, regulatory issues and stock market conditions in general. Exhibit IV-2 displays historical stock market trends for various indices and includes historical stock price index values for thrifts and commercial banks. Exhibit IV-3 displays historical stock price indices for thrifts only.

In terms of assessing general stock market conditions, the performance of the overall stock market has been mixed over the past year. Stocks fluctuated in first half of December 2005, as strong economic news and higher oil prices renewed concerns about inflation and rising interest rates. Acquisitions in the technology and pharmaceutical industries, along with some positive economic news showing a dip in unemployment claims and strong third quarter GDP growth, provided a boost to the broader stock market heading into late-December. However, the gains were not sustained through the end of the year, as higher oil prices, inflation concerns and the inversion of the yield curve pulled stocks lower in late-December.

The broader stock market rallied higher at the start of 2006 on indications that the Federal Reserve was nearing an end to the current cycle of rate increases. In the second week of January, the Dow Jones Industrial Average (“DJIA”) closed above 11000 for the first time since before September 11, 2001. Higher oil prices, some disappointing fourth quarter earnings and worries about Iran pushed stocks lower in mid-January, which was followed by a rebound in the broader stock market in late-January. The late-January gains were supported by some favorable fourth quarter earnings and economic news showing strong December orders for durable goods and lower than expected unemployment. Mixed reaction to some fourth quarter earnings reports and concerns about the housing market cooling off provided for a choppy market during the first half of February. Some favorable economic data, which included a surge in January retail sales and only a slight rise in core consumer prices for January, supported gains in the broader stock market heading into late-February. Major indexes approached multi-year highs in late-February, before faltering at the end of February on economic data showing a decline in consumer

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confidence and the housing market slowing down. However, in early-March 2006, stocks trended lower on concerns that rising global interest rates would hurt corporate profits. Stocks rebounded in mid-March, as economic data showing steady economic growth and little consumer inflation helped to lift the DJIA to a four and one-half year high. Stocks trended lower at the close of the first quarter on interest rate worries, as the Federal Reserve lifted rates another quarter point and hinted at more increases to come.

The broader stock market traded up at the start of the second quarter of 2006, reflecting optimism about first quarter earnings and that tame inflation would bring an end to rate increases by the Federal Reserve. Higher oil prices curbed the positive trend in stocks during mid-April, which was followed by the biggest gain of the year for the DJIA. The release of the minutes from the Federal Reserve’s March meeting, which signaled that the Federal Reserve was about to stop raising rates served as the catalyst to the rally. Stocks generally edged higher through the end of April, as investors focused on strong first quarter earnings reports by a number of blue chip stocks. However, the positive trend was somewhat subdued by new inflation fears resulting from March economic data. Lower oil prices and a strong retail sales report for April helped to lift the DJIA to a six year high in early-May. Stocks traded flat on news of another rate increase by the Federal Reserve, which was followed by a sharp sell-off in mid-May as a larger than expected rise in April consumer prices sparked inflation fears. An upward revision to first quarter GDP growth provided a boost to stocks heading into late-May, but the rally was cut short as a drop in consumer-confidence numbers for May and concerns of slower economic growth hurting corporate profits spurred another sell-off in late-May. Despite closing up on the last day of May, the month of May was the worst monthly performance for the DJIA in eleven months.

The down turn in the broader stock market continued during the first part of June 2006, as stocks tumbled after an inflation warning by the Federal Reserve Chairman stoked fears of future rate increases. Comparatively, stocks rallied in mid-June following reassuring inflation comments by the Federal Reserve Chairman. Higher interest rates dampened the rally ahead of the Federal Reserve meeting in late-June. Stocks surged higher following the Federal Reserve meeting in late-June, as comments from the Federal Reserve served to calm inflation worries and raised expectations of an end to the current cycle of rate increases.

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Geopolitical turmoil and higher oil prices pulled stocks lower at the start of the third quarter of 2006. The broader stock market rallied briefly in mid-July on comments from the Federal Reserve that hinted at the possibility of a pause in the current cycle of rate increases and some favorable second quarter earnings reports. After trading in a narrow range during late-July and early-August, stocks retreated following the Federal Reserve meeting in August. While the Federal Reserve left rates unchanged, stocks declined on concerns of an economic slow down. Favorable inflation data reflected in wholesale and retail prices for July provided a boost to stocks in mid-August. Stocks traded in a narrow range before strengthening at the end of August, as oil prices dropped below $70 a barrel for the first time in two months and the unemployment rate for August dropped to 4.7%. The DJIA moved to a four-month high in mid-September, with further declines in oil prices and the Federal Reserve’s decision to leave rates unchanged helping to sustain the positive trend. Stocks retreated modestly heading into late-September, as investors reacted negatively to an economic report showing a slow down in business activity in the Mid-Atlantic region. Lower oil prices and a strong consumer sentiment report helped stocks to rally at the close of the third quarter.

The broader stock market rally was sustained into the fourth quarter of 2006, as the DJIA moved to an all-time high in early-October. Lower oil prices and growing expectations that the next move by the Federal Reserve would be to cut rates extended the stock market rally into mid-October, with the DJIA approaching the 12000 mark. The DJIA closed above 12000 heading into late-October, with optimism about corporate earnings, the Federal Reserve’s decision to hold rates steady and lower oil prices sustaining the rally. Despite a slight pullback at the end of October, the 3.4% gain in DJIA for October was the best monthly gain since November 2005. Stocks continued to edge lower at the beginning of November, but then rebounded strongly in mid-November. Favorable inflation data reflected in wholesale and consumer prices for October, merger news and upbeat comments by the Federal Reserve about interest rates were factors that contributed to rally in the broader market. Stocks traded in a narrow range ahead of the holiday shopping season in late-November. As an indication of the general trends in the nation’s stock markets over the past year, as of November 24, 2006, the DJIA closed at 12280.17 an increase of 12.3% from one year ago and an increase of 14.6% year-to-date, and the NASDAQ closed at 2460.26 an increase of 8.7% from one year ago and an

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increase of 11.6% year-to-date. The Standard & Poors 500 Index closed at 14006.95 on November 24, 2006, an increase of 10.5% from one year ago and an increase of 12.2% year-to-date.

The market for thrift stocks has been mixed during the past twelve months, but, in general, thrift issues have paralleled trends in the broader market. Thrift issues generally eased lower during early-December 2005, reflecting concerns about higher interest rates and the strength of the housing market. Signals from the Federal Reserve that it could stop raising rates sometime in 2006 and easing inflation fears on lower than expected revised third quarter GDP growth lifted thrift stocks going into late-December. However, weakness in the broader market and an inverted yield curve pressured thrift stocks lower at year end.

Thrift stocks participated in the broader stock market rally at the beginning of the New Year, as interest rate sensitive issues benefited from news that rate increases by the Federal Reserve may be nearing an end. Thrift stocks continued to parallel the broader market in mid-January, as the sector traded down following some disappointing fourth quarter earnings caused by net interest margin compression. Short covering and a slight improvement in the yield curve provided for a brief rebound in thrift stocks in late-January 2006, followed by a downward move in the sector at the end of January as investors anticipated another rate hike by the Federal Reserve. The downward trend in thrift stocks continued through mid-February, reflecting concerns that valuations were too high in light of a number of thrift issues experiencing a weaker earnings outlook due to spread compression resulting from the inverted yield curve. Thrift stocks strengthened along with the broader market heading into late-February, as mortgage lenders benefited from inflation data that showed only a small rise in core consumer prices for January and news that housing starts surged in January. Comparatively, reports of declining home sales, lower consumer confidence and higher oil prices depressed thrift stocks at the end of February and the first week of March. Thrift stocks rebounded in conjunction with the broader market in mid-March 2006, as interest rate sensitive issues benefited from tame inflation data reflected in the February consumer price index. The proposed acquisition of North Fork Bancorp by Capital One helped to further the advance in thrift stocks, particularly in the Northeast states. Higher interest rates pushed thrift stocks lower in late-March, particularly after the Federal Reserve increased rates another quarter point and indicated that more rate increases were likely.

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Thrift issues traded in a narrow range during the first half of April 2006, in which mixed earnings reports and concerns about interest rates and inflation provided for an uneven trading market. Thrift stocks spiked higher in conjunction with the broader market heading into the second half of April, as investors reacted favorably to news that the Federal Reserve was contemplating an end to rate increases during its March meeting. The rally in thrift stocks was short-lived, with renewed concerns about interest rates and inflation providing for a modest pull back in thrift stocks during late-April. However, thrift stocks rebounded at the end of April, as comments from the Federal Reserve Chairman fueled speculation that the current cycle of Federal Reserve rate hikes may be nearing an end.

Strength in the broader market sustained a rally in thrift stocks during early-May. Higher interest rates, weakness in the broader market and a drop in consumer confidence pushed thrift stocks lower in mid-May. Inflation fears continued the slide in thrift stocks in late-May, although thrift stocks closed out May advancing in conjunction with the broader market. Inflation fears, sparked by comments from the Federal Reserve Chairman, pulled thrift stocks lower along with the broader market in early-June. Acquisition speculation helped thrift stocks to stabilize ahead of the broader market heading into mid-June. Interest rate concerns weighed on thrift stocks in mid-June, although thrift stocks moved higher following comments from the Federal Reserve Chairman that eased inflationary concerns. Thrift stocks traded in a narrow range ahead of the Federal Reserve meeting in late-June and then rallied strongly following statements from the Federal Reserve that hinted at the possibility of taking a break from raising interest rates further.

Activity in thrift stocks was neutral at the beginning of the third quarter of 2006, which was followed by a downturn in thrift stocks along with the broader market in mid-July. Comments from the Federal Reserve indicating expectations of inflation moderating and some positive second quarter earnings sparked a brief rally in thrift stocks, which was followed by a pull back in late-July. Earnings falling short of expectations due to margin compression contributed to the sell-off in thrift stocks. Thrift stocks bounced higher in early-August, as July

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employment data provided signs of a slowing economy and increased expectations that the Federal Reserve would stop raising rates. Mortgage data showing a drop in loan fundings reversed the positive trend in thrift stocks heading into mid-August, which was followed by an upturn in mid-August as thrift stocks participated in the broader market rally that was powered by favorable inflation data. Thrift stocks trended lower in late-August, reflecting concerns of a slowdown in housing. A favorable August employment report provided a boost to the thrift sector at the beginning of September. Inflationary fears prompted a brief sell-off in thrift stocks heading into mid-September, which was followed by a rebound as falling oil prices benefited stocks in general.

Thrift stocks advanced at the start of the fourth quarter of 2006, based on economic data that suggested the economy was slowing and comments from the Federal Reserve Chairman that raised hopes of a decline in short-term interest rates. Acquisition news and strength in the broader market sustained the upward trend in thrift stocks into mid-October. Thrift stocks sold off with the broader market at the end of October and into early-November, as economic data showing slower growth raised concerns for some investors. Strength in the broader market supported a rebound in thrift stocks ahead of the national elections. Favorable inflation data boosted thrifts stocks along with the broader market in mid-November. Weaker than expected housing data pressured thrift stocks lower heading into late-November. On November 24, 2006, the SNL Index for all publicly-traded thrifts closed at 1,784.9 an increase of 9.6% from one year ago and an increase of 10.4% year-to-date.

B. The New Issue Market

In addition to thrift stock market conditions in general, the new issue market for converting thrifts is also an important consideration in determining the Bank’s pro forma market value. The new issue market is separate and distinct from the market for seasoned thrift stocks in that the pricing ratios for converting issues are computed on a pro forma basis, specifically: (1) the numerator and denominator are both impacted by the conversion offering amount, unlike existing stock issues in which price change affects only the numerator; and (2) the pro forma pricing ratio incorporates assumptions regarding source and use of proceeds, effective tax rates, stock plan purchases, etc. which impact pro forma financials, whereas pricing for existing issues

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are based on reported financials. The distinction between pricing of converting and existing issues is perhaps no clearer than in the case of the price/book (“P/B”) ratio in that the P/B ratio of a converting thrift will typically result in a discount to book value whereas in the current market for existing thrifts the P/B ratio often reflects a premium to book value. Therefore, it is appropriate to also consider the market for new issues, both at the time of the conversion and in the aftermarket.

Thrift offerings completed over the past year have generally been well received, with most offerings being oversubscribed and trading higher in initial trading activity. As shown in Table 4.2, one second-step conversion offering and three mutual holding company offerings were the only offerings completed during the past three months. All four of the recent offerings were closed at the top of their super ranges. The only standard conversion offerings completed in 2006, which are considered to be more relevant for purposes of our analysis, were completed by Newport Bancorp, Inc., Newport, Rhode Island (“Newport Bancorp”) and Chicopee Bancorp, Inc., Chicopee, Massachusetts (“Chicopee Bancorp”). Both offerings were completed in July 2006. The average closing pro forma price/tangible book ratio of those two standard conversions equaled 78.1%. On average, the trading prices of those two standard conversion offerings appreciated 35.7% after one week of trading and appreciated 38.1% after one month of trading.

Shown in Table 4.3 are the current pricing ratios for Citizen Community Bancorp, which is the only company that completed a fully-converted offering during the past three months. Citizen Community’s offering was a second-step conversion, which tend to be priced higher on a P/TB basis than a standard conversion. The current P/TB ratio of Citizens Community equaled 100.9%. Citizens Community’s closing stock price on November 24, 2006 was 2.1% below its IPO price.

C. The Acquisition Market

Also considered in the valuation was the potential impact on ESSA Bank’s stock price of recently completed and pending acquisitions of other thrift institutions operating in Pennsylvania.

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[Table Filed via Form SE]

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[Table Filed via Form SE]

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As shown in Exhibit IV-4, there were 14 Pennsylvania thrift acquisitions completed from the beginning of 2003 through November 24, 2006, and there are currently no acquisitions pending of a Pennsylvania savings institution. The recent acquisition activity involving Pennsylvania savings institutions may imply a certain degree of acquisition speculation for the Bank’s stock. To the extent that acquisition speculation may impact the Bank’s offering, we have largely taken this into account in selecting companies for the Peer Group which operate in markets that have experienced a comparable level of acquisition activity as the Bank’s market and, thus, are subject to the same type of acquisition speculation that may influence ESSA Bank’s stock. However, since converting thrifts are subject to a three-year regulatory moratorium from being acquired, acquisition speculation in ESSA Bank’s stock would tend to be less compared to the stocks of the Peer Group companies.

* * * * * * * * * * *

In determining our valuation adjustment for marketing of the issue, we considered trends in the overall thrift market, the new issue market and the local acquisition market for thrift stocks. Taking these factors and trends into account, RP Financial concluded that no adjustment was appropriate in the valuation analysis for purposes of marketing of the issue.

8. Management

ESSA Bank’s management team appears to have experience and expertise in all of the key areas of the Bank’s operations. Exhibit IV-5 provides summary resumes of ESSA Bank’s Board of Directors and senior management. The financial characteristics of the Bank suggest that the Board and senior management have been effective in implementing an operating strategy that can be well managed by the Bank’s present organizational structure. The Bank currently does not have any senior management positions that are vacant.

Similarly, the returns, capital positions and other operating measures of the Peer Group companies are indicative of well-managed financial institutions, which have Boards and management teams that have been effective in implementing competitive operating strategies. Therefore, on balance, we concluded no valuation adjustment relative to the Peer Group was appropriate for this factor.

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9. Effect of Government Regulation and Regulatory Reform

In summary, as a fully-converted OTS regulated institution, ESSA Bank will operate in substantially the same regulatory environment as the Peer Group members — all of whom are adequately capitalized institutions and are operating with no apparent restrictions. Exhibit IV-6 reflects the Bank’s pro forma regulatory capital ratios. On balance, no adjustment has been applied for the effect of government regulation and regulatory reform.

Summary of Adjustments

Overall, based on the factors discussed above, we concluded that the Bank’s pro forma market value should reflect the following valuation adjustments relative to the Peer Group:

Key Valuation Parameters:	Valuation Adjustment
Financial Condition	Slight Upward
Profitability, Growth and Viability of Earnings	No Adjustment
Asset Growth	Slight Upward
Primary Market Area	Slight Upward
Dividends	No Adjustment
Liquidity of the Shares	No Adjustment
Marketing of the Issue	No Adjustment
Management	No Adjustment
Effect of Government Regulations and Regulatory Reform	No Adjustment

Valuation Approaches

In applying the accepted valuation methodology promulgated by the OTS, i.e., the pro forma market value approach, we considered the three key pricing ratios in valuing ESSA Bank’s to-be-issued stock — price/earnings (“P/E”), price/book (“P/B”), and price/assets (“P/A”) approaches — all performed on a pro forma basis including the effects of the stock proceeds. In computing the pro forma impact of the conversion and the related pricing ratios, we have incorporated the valuation parameters disclosed in ESSA Bank’s prospectus for offering expenses, reinvestment rate, effective tax rate and stock benefit plan assumptions (summarized in Exhibits IV-7 and IV-8).

RP Financial’s valuation placed an emphasis on the following:

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• P/E Approach. The P/E approach is generally the best indicator of long-term value for a stock. Given the similarities between the Bank’s and the Peer Group’s operating strategies, earnings composition and overall financial condition, the P/E approach was carefully considered in this valuation. At the same time, since reported earnings for both the Bank and the Peer Group included certain non-recurring items, we also made adjustments to earnings to arrive at core earnings estimates for the Bank and the Peer Group and resulting price/core earnings ratios.

• P/B Approach. P/B ratios have generally served as a useful benchmark in the valuation of thrift stocks, particularly in the context of a public offering, as the earnings approach involves assumptions regarding the use of proceeds. RP Financial considered the P/B approach to be a useful indicator of pro forma value, taking into account the pricing ratios under the P/E and P/A approaches. We have also modified the P/B approach to exclude the impact of intangible assets (i.e., price/tangible book value or “P/TB”), in that the investment community frequently makes this adjustment in its evaluation of this pricing approach.

• P/A Approach. P/A ratios are generally a less reliable indicator of market value, as investors typically assign less weight to assets and attribute greater weight to book value and earnings—we have also given less weight to the assets approach. Furthermore, this approach as set forth in the regulatory valuation guidelines does not take into account the amount of stock purchases funded by deposit withdrawals, thus understating the pro forma P/A ratio. At the same time, the P/A ratio is an indicator of franchise value, and, in the case of highly capitalized institutions, high P/A ratios may limit the investment community’s willingness to pay market multiples for earnings or book value when ROE is expected to be low.

The Bank will adopt Statement of Position (“SOP”) 93-6, which will cause earnings per share computations to be based on shares issued and outstanding excluding unreleased ESOP shares. For purposes of preparing the pro forma pricing analyses, we have reflected all shares issued in the offering, including all ESOP shares, to capture the full dilutive impact, particularly since the ESOP shares are economically dilutive, receive dividends and can be voted. However, we did consider the impact of the adoption of SOP 93-6 in the valuation.

Based on the application of the three valuation approaches, taking into consideration the valuation adjustments discussed above and the dilutive impact of the stock contribution to the Foundation, RP Financial concluded that, as of November 24, 2006, the pro forma market value of ESSA Bank’s conversion stock was $117,700,000 at the midpoint, equal to 11,770,000 shares at $10.00 per share.

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1. Price-to-Earnings (“P/E”). The application of the P/E valuation method requires calculating the Bank’s pro forma market value by applying a valuation P/E multiple to the pro forma earnings base. In applying this technique, we considered both reported earnings and a recurring earnings base, that is, earnings adjusted to exclude any one-time non-operating items, plus the estimated after-tax earnings benefit of the reinvestment of the net proceeds. The Bank’s reported earnings equaled $3.954 million for the twelve months ended September 30, 2006. In deriving ESSA Bank’s estimated core earnings for purposes of the valuation, the only adjustment made to reported earnings was to eliminate net gains on the sales of loans, which equaled $7,000. As shown below, on a tax-effected basis, assuming an effective marginal tax rate of 34.0%, the Bank’s core earnings were determined to equal $3.949 million for the twelve months ended September 30, 2006. (Note: see Exhibit IV-9 for the adjustments applied to the Peer Group’s earnings in the calculation of core earnings).

	Amount
	$	(000	)
Net income	$	3,954
Less: Gain on sale of loans(1)		(5	)
Core earnings estimate	$	3,949

(1) Tax effected at 34.0%.

Based on ESSA Bank’s reported and estimated core earnings and incorporating the impact of the pro forma assumptions discussed previously, the Bank’s pro forma reported and core P/E multiples at the $117.7 million midpoint value equaled 22.21 times and 22.23 times, respectively, which provided for premiums of 24.4% and 22.0% relative to the Peer Group’s average reported and core P/E multiples of 17.85 times and 18.22 times, respectively (see Table 4.4). At the top of the superrange, the Bank’s reported and core P/E multiples equaled 27.08 times and 27.11 times, respectively.

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[Table Filed via Form SE]

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In comparison to the Peer Group’s average reported and core P/E multiples, the Bank’s P/E multiples at the top of the superrange reflected premiums of 51.7% and 48.8% on a reported and core earnings basis, respectively.

2. Price-to-Book (“P/B”). The application of the P/B valuation method requires calculating the Bank’s pro forma market value by applying a valuation P/B ratio, as derived from the Peer Group’s P/B ratio to ESSA Bank’s pro forma book value. Based on the $117.7 million midpoint valuation, ESSA Bank’s pro forma P/B and P/TB ratios both equaled 76.98%. In comparison to the average P/B and P/TB ratios for the Peer Group of 143.13% and 150.35%, the Bank’s ratios reflected a discount of 46.2% on a P/B basis and a discount of 48.8% on a P/TB basis. At the top of the superrange, the Bank’s P/B and P/TB ratios both equaled 84.96%. In comparison to the Peer Group’s average P/B and P/TB ratios, the Bank’s P/B and P/TB ratios at the top of the superrange reflected discounts of 40.6% and 43.5%, respectively. RP Financial considered the discounts under the P/B approach to be reasonable, in light of the previously referenced valuation adjustments, the nature of the calculation of the P/B ratio which mathematically results in a ratio discounted to book value and the resulting premium pricing ratios indicated under the earnings approach.

3. Price-to-Assets (“P/A”). The P/A valuation methodology determines market value by applying a valuation P/A ratio to the Bank’s pro forma asset base, conservatively assuming no deposit withdrawals are made to fund stock purchases. In all likelihood there will be deposit withdrawals, which results in understating the pro forma P/A ratio which is computed herein. At the midpoint of the valuation range, ESSA Bank’s value equaled 14.35% of pro forma assets. Comparatively, the Peer Group companies exhibited an average P/A ratio of 16.82%, which implies a discount of 14.7% has been applied to the Bank’s pro forma P/A ratio.

Comparison to Recent Offerings

As indicated at the beginning of this chapter, RP Financial’s analysis of recent conversion offering pricing characteristics at closing and in the aftermarket has been limited to a “technical” analysis and, thus, the pricing characteristics of recent conversion offerings can not be a primary determinate of value. Particular focus was placed on the P/TB approach in this analysis, since the P/E multiples do not reflect the actual impact of reinvestment and the source of the stock

RP^® Financial, LC.

Page 4.25

proceeds (i.e., external funds vs. deposit withdrawals). As discussed previously, Newport Bancorp and Chicopee Bancorp were the most recent standard conversion offerings completed. In comparison to Newport Bancorp’s and Chicopee Bancorp’s average pro closing forma P/TB ratio of 78.1%, the Bank’s P/TB ratio of 77.0% at the midpoint value reflects an implied discount of 1.4%. At the top of the superrange, the Bank’s P/TB ratio of 85.0% reflects an implied premium of 8.8% relative to Newport Bancorp’s and Chicopee Bancorp’s average closing P/TB ratio. Newport Bancorp’s and Chicopee Bancorp’s current average P/TB ratio, based on its closings stock price as of November 24, 2006, equaled 109.9%. In comparison to Newport Bancorp’s and Chicopee Bancorp’s current average P/TB ratio, the Bank’s P/TB ratio at the midpoint value reflects an implied discount of 29.9% and at the top of the superrange the discount narrows to 22.7%.

Valuation Conclusion

Based on the foregoing, it is our opinion that, as of November 24, 2006, the estimated aggregate pro forma market value of the shares to be issued immediately following the conversion, including shares to be issued to the Foundation, equaled $117,700,000 at the midpoint, equal to 11,770,000 shares offered at a per share value of $10.00. Pursuant to conversion guidelines, the 15% offering range indicates a minimum value of $100,045,000 and a maximum value of $135,355,000. Based on the $10.00 per share offering price determined by the Board, this valuation range equates to total shares outstanding of 10,004,500 at the minimum and 13,535,500 at the maximum. In the event the appraised value is subject to an increase, the aggregate pro forma market value may be increased up to a supermaximum value of $155,658,250 without a resolicitation. Based on the $10.00 per share offering price, the supermaximum value would result in total shares outstanding of 15,565,825. Based on this valuation range, the offering range is as follows: $93,500,000 at the minimum, $110,000,000 at the midpoint, $126,500,000 at the maximum and $145,475,000 at the supermaximum. Based on the $10.00 per share offering price, the number of offering shares is as follows: 9,350,000 at the minimum, 11,000,000 at the midpoint, 12,650,000 at the maximum and 14,547,500 at the supermaximum. The pro forma valuation calculations relative to the Peer Group are shown in Table 4.4 and are detailed in Exhibit IV-7 and Exhibit IV-8.

EX-99.4

Exhibit 99.4

ESSA Bank & Trust

Full Conversion Transaction

Marketing Materials

TABLE OF CONTENTS

LETTERS

Letter to Members (Depositors and Borrowers Eligible to Vote and Buy)

Letter to Closed Deposit Accountholders (Eligible to Buy, Not Vote)

Letter to Potential Investors (Community Prospects)

Ryan Beck “Broker Dealer” Letter

OTS Required Letter

Member Proxy Card Reminder Notice (optional)

Stock Order Acknowledgment Letter

Stock Certificate Mailing Letter

Reminder Member Proxygram – #1

Reminder Member Proxygram – #2

Reminder Member Proxygram – #3

ADVERTISEMENTS

Local Tombstone Newspaper Advertisement¹ (optional – requires a Community Offering be underway)

Branch Lobby Posters:

Option #1 – Vote Only

Option #2 – Vote and Offering

Bank Statement Vote Reminder (optional)

FORMS

Stock Order Form

Proxy Card - Not included. Drafted by counsel.

OTHER

Q&A Brochure

LETTER TO MEMBERS (Depositors & Borrowers Eligible to Vote and Buy)

[ESSA Bancorp, Inc. Letterhead]

Dear ESSA Bank & Trust Customer:

I am pleased to inform you of an investment opportunity and, just as importantly, to request your vote on our proposed Plan of Conversion (the “Plan”). Pursuant to the Plan, ESSA Bancorp, Inc., which we have formed to become the parent company of ESSA Bank & Trust, is conducting an initial public offering of up to 14,547,500 shares of common stock. As a result of the stock offering, ESSA Bank & Trust will convert from a mutual (meaning no stockholders) to a 100% stockholder-owned organization. The Plan further allows for the establishment of a charitable foundation, ESSA Bank & Trust Foundation, to be funded with cash and with stock issued in the conversion. The charitable foundation will be dedicated exclusively to supporting charitable causes and development activities in our local communities. Enclosed you will find a Prospectus and Proxy Statement with important information about the Plan, the stock offering and the proxy vote.

The Proxy Vote

Your vote is extremely important. Although we have received conditional regulatory approval, the Plan and the charitable foundation are also subject to approval of our voting members. Therefore, on behalf of the Board of Directors of ESSA Bank & Trust, I urge you to read the enclosed materials carefully and cast your votes in favor of each of the two proposals. Note that you may receive more than one proxy card, depending on the ownership structure of your ESSA Bank & Trust account. Please vote all the proxy cards you receive – none are duplicates! To cast your votes, please sign each proxy card and return the card(s) in the enclosed Proxy Reply Envelope. Not voting has the same effect as voting against each of the proposals, so I urge you to vote. If you vote to approve the Plan and the charitable foundation, be assured that:

• Our business focus will not change. The proceeds resulting form the sale of shares will give us additional flexibility to continue to grow and to achieve our business goals.

• There will be no change to account numbers, interest rates or other terms of your accounts at ESSA Bank & Trust.

• We will continue to operate as an independent bank. Our management and staff will continue to serve you, and your deposit accounts will continue to be insured by the FDIC up to the maximum legal limits.

• Voting does not obligate you to purchase shares of common stock in our stock offering.

The Stock Offering

We are offering shares of common stock for sale at $10.00 per share. There will be no sales commission charged to purchasers in this stock offering. As an eligible ESSA Bank & Trust customer, you have the right, but no obligation, to buy shares of ESSA Bancorp, Inc. common stock before any shares are offered for sale to the public.

Before making an investment decision, please carefully review the Prospectus. If you are interested in purchasing shares of common stock, complete the enclosed Stock Order Form and return it, with full payment, in the Order Reply Envelope provided. Stock Order Forms must be received (not postmarked) by 12:00 Noon, Eastern time, on _______, 2007. If you are considering purchasing stock with funds you have in an IRA, call our Stock Information Center promptly for guidance, because IRA-related orders require additional processing time.

After the offering concludes, ESSA Bancorp, Inc. common stock is expected to be quoted on the Nasdaq Global Market, under the symbol “ESSA.”

I invite you to consider this opportunity to share in our future and, together with our Board of Directors, I thank you for your continued support as a customer of ESSA Bank & Trust.

Sincerely,

Gary S. Olson

President and Chief Executive Officer,

ESSA Bank & Trust

This letter is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offer is made only by the Prospectus. The shares of common stock are not savings accounts or deposits and are not insured by the Federal Deposit Insurance Corporation or any other government agency.

Questions?

Call our Stock Information Center, toll free, at 1-(__) ___-____

From 10:00 a.m. to 4:00 p.m., Eastern time, Monday through Friday

LETTER TO CLOSED DEPOSIT ACCOUNTHOLDERS (Eligible to Buy, Not Vote)

[ESSA Bancorp, Inc. Letterhead]

Dear Friend:

I am pleased to tell you about an investment opportunity. ESSA Bancorp, Inc., the newly-formed parent company of ESSA Bank & Trust, is offering shares of its common stock for sale at a price of $10.00 per share. No commission will be charged to purchasers in this initial stock offering.

As an eligible depositor of ESSA Bank & Trust on April 30, 2005 or __________, whose account was closed thereafter, you have a right, without any obligation, to purchase shares of common stock, before shares are offered for sale to the general public.

Before making an investment decision, please carefully review the enclosed Prospectus. If you are interested in purchasing shares of ESSA Bank & Trust common stock, complete the enclosed Stock Order Form and return it, with full payment, in the enclosed Order Reply Envelope. If you wish to purchase stock with funds you have in an IRA, call our Stock Information Center promptly for guidance, because IRA-related orders require additional processing time. Stock Order Forms must be received (not postmarked) by no later than 12:00 Noon, Eastern time, on _______, 2007.

After the offering concludes, ESSA Bancorp, Inc. common stock is expected to be quoted on the Nasdaq Global Market, under the symbol “ESSA.”

If you have questions regarding the offering, please refer to the Prospectus or call our Stock Information Center at the number shown below.

Sincerely,

Gary S. Olson

President and Chief Executive Officer,

ESSA Bank & Trust

This letter is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offer is made only by the Prospectus. The shares of common stock are not savings accounts or deposits and are not insured by the Federal Deposit Insurance Corporation or any other government agency.

Questions?

Call our Stock Information Center, toll free, at 1-(__) ___-____

From 10:00 a.m. to 4:00 p.m., Eastern time, Monday through Friday

LETTER TO POTENTIAL INVESTORS (Community Prospects)

[ESSA Bancorp, Inc. Letterhead]

Dear Friend:

I am pleased to tell you about an investment opportunity. ESSA Bancorp, Inc., the newly-formed parent company of ESSA Bank & Trust, is offering shares of its common stock for sale at a price of $10.00 per share. No commission will be charged to purchasers in this initial stock offering.

Before making an investment decision, please carefully review the enclosed Prospectus. If you are interested in purchasing shares of ESSA Bancorp, Inc. common stock, complete the enclosed Stock Order Form and return it, with full payment, in the enclosed Order Reply Envelope. If you wish to purchase stock with funds you have in an IRA, call our Stock Information Center promptly for guidance, because IRA-related orders require additional processing time. Stock Order Forms must be received (not postmarked) no later than 12:00 Noon, Eastern time, on _______, 2007.

After the offering concludes, ESSA Bancorp, Inc. common stock is expected to be quoted on the Nasdaq Global Market, under the symbol “ESSA.”

If you have questions regarding the offering, please refer to the Prospectus or call our Stock Information Center at the number shown below.

Sincerely,

Gary S. Olson

President and Chief Executive Officer,

ESSA Bank & Trust

This letter is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offer is made only by the Prospectus. The shares of common stock are not savings accounts or deposits and are not insured by the Federal Deposit Insurance Corporation or any other government agency.

Questions?

Call our Stock Information Center, toll free, at 1-(__) ___-____

From 10:00 a.m. to 4:00 p.m., Eastern time, Monday through Friday

Note: This letter is for call-ins and community prospects in the event of a Community Offering.

RYAN BECK “BROKER DEALER” LETTER

[Ryan Beck Letterhead]

Dear Sir/Madam:

At the request of ESSA Bancorp, Inc., we are enclosing materials regarding the offering of shares of ESSA Bancorp, Inc. common stock. Included in this package is a Prospectus describing the stock offering. We encourage you to read the enclosed information carefully, including the “Risk Factors” section of the Prospectus.

Ryan Beck & Co., Inc. has been retained by ESSA Bancorp, Inc. as selling agent in connection with the stock offering.

Sincerely,

This letter is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offer is made only by the Prospectus. The shares of common stock are not savings accounts or deposits and are not insured by the Federal Deposit Insurance Corporation or any other government agency.

NOTE: To accompany – not replace – one of the preceding letters.

OTS REQUIRED LETTER – Side 1

READ THIS FIRST

Office of Thrift Supervision Guidance for Accountholders

Your financial institution is in the process of selling stock to the public, in either a mutual-to-stock conversion or a stock issuance by a subsidiary of a mutual holding company. As an accountholder at this institution, you have certain priority subscription rights to purchase stock in the offering. These priority subscription rights are non-transferable. If you subscribe for stock, you will be asked to sign a statement that the purchase is for your own account, and that you have no agreement or understanding regarding the subsequent sale or transfer of any shares you receive.

On occasion, unscrupulous people attempt to persuade accountholders to transfer subscription rights, or to purchase shares in the offering based on the understanding that the shares will subsequently be transferred to others. Such arrangements violate federal regulations. If you participate in these schemes, you are breaking the law and may be subject to prosecution. If someone attempts to persuade you to participate in such a scheme, please contact Office of Thrift Supervision (OTS) at (202) 906-6202. OTS is very interested in ensuring that the prohibitions on transfer of subscription rights are not violated.

How will you know if you are being approached illegally? Typically, a fraudulent opportunist will approach you and offer to “loan” you money to purchase a significant amount of stock in the offering. In exchange for that “loan” you most likely will be asked either to transfer control of any stock purchased with that money to an account the other person controls, or sell the stock and give the majority of the profits to the other person. You may be told, untruthfully, that there is no risk to you, that the practice is common, and even if you are caught, that your legal expenses will be covered.

On the back of this page is a list of some key concepts that you should keep in mind when considering whether to participate in a mutual-to-stock conversion or stock issuance by a mutual holding company subsidiary. If you have questions, please contact the stock information center listed elsewhere in the literature you are receiving. Alternatively, you can contact us at: ombudsman@ots.treas.gov.

(over)

OTS REQUIRED LETTER – Side 2

What Investors Need to Know

Key concepts for investors to bear in mind when considering whether to participate in a conversion offering, or a stock offering by a subsidiary of a mutual holding company, include the following:

• Know the Rules — By law, accountholders cannot sell or transfer their priority subscription rights, or the stock itself, prior to the completion of a financial institution’s conversion. Moreover, accountholders cannot enter into agreements or arrangements to sell or transfer either their subscription rights or the underlying conversion stock.

• “Neither a Borrower nor a Lender Be” — If someone offers to lend you money so that you can participate — or participate more fully — in a conversion, be extremely wary. Be even more wary if the source of the money is someone you do not know. The loan agreement may make you unable to certify truthfully that you are the true holder of the subscription rights and the true purchaser of the stock and that you have no agreements regarding the sale or transfer of the stock.

• Watch Out for Opportunists — The opportunist may tell you that he or she is a lawyer — or a consultant or a professional investor or some similarly impressive tale — who has experience with similar mutual conversion transactions. The opportunist may go to extreme lengths to assure you that the arrangement you are entering into is legitimate. They might tell you that they have done scores of these transactions and that this is simply how they work. Or they might downplay the warnings or restrictions in the prospectus or order form, telling you that “everyone” enters into such agreements or that the deal they are offering is legitimate. They may also tell you that you have no risk in the transaction. The cold, hard truth is that these are lies, and if you participate, you are breaking the law.

• Get the Facts from the Source — If you have any questions about the securities offering, ask the savings bank or savings association for more information. If you have any doubts about a transaction proposed to you by someone else, ask the financial institution whether the proposed arrangement is proper. You may be able to find helpful resources on the institution’s website or by visiting a branch office.

The bottom line for investors is always to remember that if an opportunity sounds too good to be true, it probably is too good to be true.

MEMBER PROXY CARD REMINDER NOTICE (optional)

ESSA BANK & TRUST [LOGO]

IMPORTANT NOTICE

THIS PACKAGE INCLUDES PROXY CARD(S)

REQUIRING YOUR SIGNATURE.

IF MORE THAN ONE PROXY CARD IS ENCLOSED,

PLEASE PROMPTLY VOTE EACH CARD…

NONE ARE DUPLICATES!

THANK YOU,

YOUR BOARD OF DIRECTORS

NOTE: Can be included in original mailing of voting member packages, printed on 8 ¹/2” x 11” colored paper.

STOCK ORDER ACKNOWLEDGEMENT LETTER

[ESSA Bancorp, Inc. Letterhead]

[imprinted with name & address of subscriber]

Date

STOCK ORDER ACKNOWLEDGEMENT

This letter confirms receipt of your order to purchase shares of ESSA Bancorp, Inc. common stock. Please review the following information carefully to verify that we have accurately recorded your order information. If any information does not agree with your records, please call our Stock Information Center, toll free, at 1-(            )             -            , from 10:00 a.m. to 4:00 p.m., Eastern time, Monday through Friday. Refer to the batch and order number listed below.

ORDER INFORMATION:

Batch #:                     

Order #:                     

No. of Shares Requested:                     

Offering Category:                      (subject to verification; see descriptions below)

STOCK REGISTRATION:

Name 1

Name 2

Name 3

Address1

Address2

City, State, Zip

Ownership Type:                     

This letter acknowledges only that your order and payment have been received. It does not guarantee that your order will be filled, either completely or partially. Purchase limitations and share allocation procedures in the event of an oversubscription are described in the Prospectus dated                     , 2007, in the section entitled “The Conversion – Subscription Offering and Subscription Rights.”

The offering period ends at 12:00 Noon, Eastern time, on                     , 2007. We will then be required to receive final regulatory approval, as well as the approval of our customers, before stock certificates can be mailed and the newly issued shares can begin trading. Your patience is appreciated.

Thank you for your order,

ESSA Bancorp, Inc.

Offering Category Descriptions:

1. ESSA Bank & Trust depositors with aggregate balances of at least $50 at the close of business on April 30, 2005;

2. Our tax-qualified and employee benefit plans;

3. ESSA Bank & Trust depositors with aggregate balances of at least $50 at the close of business on                     ;

4. ESSA Bank & Trust depositors and borrowers at the close of business on                     .

NOTE: Printed and mailed in the Stock Information Center after an order is processed.

STOCK CERTIFICATE MAILING LETTER

[ESSA Bancorp, Inc. Letterhead]

Dear Stockholder:

I would like to welcome you as a stockholder of ESSA Bancorp, Inc. A total of                      shares were purchased by investors at $10.00 per share.

Your stock certificate is enclosed. We recommend that you keep it in a safe place, such as in a safety deposit box or deposited with a brokerage firm. Replacing a lost or destroyed stock certificate can be a costly and lengthy process.

Carefully review the certificate to make sure the registration name and address are correct. If you find an error or have questions about your certificate, please contact our Transfer Agent:

by mail:

by phone:

by email:

If the enclosed stock certificate must be forwarded to the Transfer Agent, we recommend that you deliver it using registered mail. If you change your address, please notify the Transfer Agent immediately, so that you will continue to receive all stockholder communications.

If you submitted a check or money order in full or partial payment for your stock order, you have received, or soon will receive, a check. It reflects interest at the ESSA Bank & Trust passbook savings rate of       % APY, calculated from the date your funds were received until the date of the check.

If your stock order was paid in full or in part by authorizing a withdrawal from an ESSA Bank & Trust deposit account, the withdrawal was made on                 , 2007. Until then, interest was earned at your applicable contractual deposit account rate, and it remains in your account.

ESSA Bancorp, Inc. common stock trades on the Nasdaq Global Market under the symbol “ESSA.” Should you wish to buy or sell ESSA Bancorp, Inc. shares in the future, please contact a stockbroker.

Thank you for sharing in our company’s future.

Sincerely,

Gary S. Olson

President and Chief Executive Officer,

ESSA Bancorp, Inc.

NOTE: Letter assumes the order is filled. This letter will be tailored in the event of an oversubscription to mention interest plus refund. This letter will be mailed by the Transfer Agent.

REMINDER MEMBER PROXYGRAM #1

This reminder note accompanies a proxy card and return envelope sent to high vote customers shortly after the initial mailing. For follow-up reminders, we may use the one or both of the following two pages.

[ESSA BANK & TRUST] [LOGO]

PLEASE VOTE AND RETURN

THE ENCLOSED PROXY CARD!

If you have not yet voted the Proxy Card(s) we mailed to you,

please vote the enclosed replacement Proxy Card using the reply envelope provided.

YOUR BOARD OF DIRECTORS HOPES THAT YOU VOTE “FOR”

OUR PLAN OF CONVERSION AND “FOR” ESTABLISHMENT AND FUNDING OF A

CHARITABLE FOUNDATION TO BENEFIT OUR COMMUNITIES

NOT VOTING HAS THE SAME EFFECT AS VOTING

“AGAINST” THE TWO PROPOSALS

VOTING DOES NOT OBLIGATE YOU TO PURCHASE COMMON STOCK

DURING THE ESSA BANCORP, INC. STOCK OFFERING

THE PLAN OF CONVERSION CHANGES OUR FORM OF CORPORATE

ORGANIZATION ONLY, BUT WILL NOT RESULT IN CHANGES TO BANK STAFF,

MANAGEMENT OR YOUR ESSA BANK & TRUST DEPOSIT ACCOUNTS OR LOANS

If you receive more than one of these reminder mailings,

please vote each Proxy Card received. None are duplicates!

YOUR VOTE IS IMPORTANT….THANK YOU!

Questions?

Please call our Stock Information Center, toll free, at 1-(__) ___-____

Monday through Friday, 10:00 a.m. to 4:00 p.m., Eastern time

NOTE: This can be printed on 8 ¹/2” x 11” yellow paper.

REMINDER MEMBER PROXYGRAM #2

REMINDER . . .

HAVE YOU VOTED YET?

PLEASE VOTE THE ENCLOSED PROXY CARD!

Our records indicate that you have not voted the Proxy Card(s)

we mailed to you

Our Board of Directors urges you to vote

“FOR” our Plan of Conversion and

“FOR” establishment and funding of a charitable foundation to benefit our

communities.

NOT VOTING HAS THE SAME EFFECT AS VOTING “AGAINST” THE TWO PROPOSALS.

IF YOU ARE UNSURE WHETHER YOU VOTED, PLEASE VOTE THE ENCLOSED REPLACEMENT

PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE.

YOUR VOTE CANNOT BE COUNTED TWICE.

VOTING DOES NOT OBLIGATE YOU TO PURCHASE SHARES OF

COMMON STOCK IN THE ESSA BANCORP, INC. STOCK OFFERING, NOR DOES IT

AFFECT YOUR ESSA BANK & TRUST DEPOSIT ACCOUNTS OR LOANS

If you receive more than one of these reminder mailings,

please vote each Proxy Card received. None are duplicates.

QUESTIONS?

Please call our Stock Information Center, toll free, at 1-(            )          -             

Monday through Friday, 10:00 a.m. to 4:00 p.m., Eastern time

[ESSA BANK & TRUST] [LOGO]

NOTE: This is printed on 8 ¹/2” x 11” blue paper.

REMINDER MEMBER PROXYGRAM #3

YOUR VOTE IS IMPORTANT!

NOT VOTING HAS THE SAME EFFECT

AS VOTING “AGAINST” THE PLAN

In order to implement ESSA Bank & Trust’s proposed Plan of Conversion

and to establish and fund the proposed charitable foundation,

we must obtain the approval of our customers.

If you are unsure whether you voted, please promptly vote

the enclosed replacement Proxy Card.

Your vote cannot be counted twice!

OUR BOARD OF DIRECTORS HOPES THAT YOU VOTE

“FOR” OUR PLAN OF CONVERSION AND

“FOR” ESTABLISHMENT AND FUNDING OF A

CHARITABLE FOUNDATION.

If you receive more than one of these reminder mailings,

please vote each proxy card received. None are duplicates!

THANK YOU!

QUESTIONS?

Please call us toll free at 1-(            )          -             

Monday through Friday, 10:00 a.m. to 4:00 p.m., Eastern time

ESSA BANK & TRUST [LOGO]

NOTE: This can be printed on 8 ¹/2” x 11” green paper.

LOCAL TOMBSTONE NEWSPAPER ADVERTISEMENT – Optional

(requires that a community offering be underway)

ESSA BANCORP, INC. [LOGO]

Holding Company for ESSA Bank & Trust

UP TO                      SHARES

COMMON STOCK

PRICE

$10.00 Per Share

ESSA Bancorp, Inc., the stock holding company for ESSA Bank & Trust,

is conducting its initial public offering of common stock.

Shares may be purchased directly from ESSA Bancorp, Inc., without sales commissions or fees, during the offering period.

THIS OFFERING EXPIRES AT 12:00 NOON ON                     , 2007.

To receive a Prospectus and stock order form, you may call or visit the Stock Information Center, open Monday

through Friday, from 10:00 a.m. to 4:00 p.m. The Stock Information Center is located at the ESSA Bank & Trust

corporate center, located at 200 Palmer Street, Stroudsburg.

The toll-free Stock Information Center phone number is 1-(            )          -             .

This advertisement is neither an offer to sell nor a solicitation of an offer to buy common stock. The offer is made only by the Prospectus. The shares of common stock are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation or any other government agency.

BRANCH LOBBY POSTER – OPTION #1: VOTE ONLY

[NOTE: This notice should be printed by ESSA Bank & Trust and placed in branches, in one or more ways: on an easel, on the front doors, at teller windows, on counters, at customer service/branch manager’s desk.]

HAVE YOU VOTED YET?

We would like to remind customers to vote on our Plan of Conversion

and establishment and funding of a charitable foundation.

Ÿ The Plan will not result in changes to our Board of Directors, bank staff, or your account

relationships with ESSA Bank & Trust.

Ÿ Your deposit accounts will continue to be insured by the FDIC,

up to the maximum legal limits.

Ÿ Voting does not obligate you to purchase shares of common stock

during the ESSA Bancorp, Inc. stock offering.

Our Board of Directors recommends that you join them in voting

“FOR” both of these important proposals.

If you have questions, call our Stock Information Center, toll free, at 1-(            )          -         

From 10:00 a.m. to 4:00 p.m., Monday through Friday

Our Stock Information Center is located at our corporate center,

200 Palmer Street, Stroudsburg

[ESSA BANK & TRUST] [LOGO]

This notice is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offer is made only by the Prospectus. The shares of common stock are not savings accounts and are not insured by the FDIC or any other government agency.

BRANCH LOBBY POSTER – OPTION #2: VOTE & BUY

[NOTE: If used, this notice should be printed by ESSA Bank & Trust and placed in branches, in one or more ways: on an easel, on the front doors, at teller windows, on counters, at customer service/branch manager’s desk.]

TIME IS RUNNING OUT!

We are conducting an offering of shares of our common stock

UP TO                          SHARES

COMMON STOCK

$                 Per Share

THIS OFFERING EXPIRES AT 12:00 NOON ON _____________, 2007

*****************

HAVE YOU VOTED YET?

We would like to remind members to vote on our Plan of Conversion and

establishment and funding of a charitable foundation to benefit our communities.

Ÿ The Plan will not result in changes to our Board of Directors, bank staff, or your account relationships

with ESSA Bank & Trust.

Ÿ Your deposit accounts will continue to be insured by the FDIC,

up to the maximum legal limits.

Ÿ Voting does not obligate you to purchase shares of common stock

during the ESSA Bancorp, Inc. stock offering.

If you have any questions about the stock offering or voting,

please call our Stock Information Center, toll free, at 1-(            )          -             ,

Monday through Friday, from 10:00 a.m. to 4:00 p.m.

Our Stock Information Center is located at our corporate center,

200 Palmer Street, Stroudsburg.

ESSA BANK & TRUST [LOGO]

This notice is neither an offer to sell nor a solicitation of an offer to buy common stock. The offer is made only by the Prospectus. The shares of common stock are not savings accounts or savings deposits and are not insured by the Federal Deposit Insurance Corporation or any other government agency.

BANK STATEMENT VOTE REMINDER CLAUSE-optional

In                 , you may have received a large envelope containing proxy card(s) to be used to vote on our organization’s Plan of Conversion and establishment and funding of a charitable foundation. If you received proxy card(s), but have not voted, please do so. If you have questions about voting, call our Stock Information Center, toll free, at 1-(        )          -         , Monday through Friday, 10:00 a.m. to 4:00 p.m., Eastern time. Thank you.

NOTE: This optional reminder can be printed in a “notice” section of bank statements. Alternatively, statement can include a slip of paper printed with this reminder.

Q&A BROCHURE

Q&A About Our Conversion and Stock Offering

This pamphlet answers questions about ESSA Bancorp, Inc.’s conversion and stock offering. Investing in shares of common stock involves certain risks. Before making an investment decision, please read the enclosed Prospectus carefully, including the “Risk Factors” section, beginning on page __.

GENERAL — THE CONVERSION

Our Board of Directors has determined that the conversion is in the best interest of ESSA Bank & Trust, our customers and the communities we serve.

Q. What is the conversion?

A. Under our Plan of Conversion, ESSA Bank & Trust will convert from the mutual (meaning no stockholders) to the stock form of organization, 100% owned by stockholders. This will be accomplished through a sale of shares of common stock by ESSA Bancorp, Inc., our newly-formed holding company.

Q. What are the reasons for the conversion?

A. We believe that our competitive position will be improved as a result of the conversion and related offering. The funds generated from the sale of stock will support continued internal growth of ESSA Bank & Trust through lending in communities we serve and will support the enhancement of existing products and services and development of new products and services. Our stock holding company structure will enhance our business flexibility and will facilitate growth through branch and whole bank acquisitions as opportunities may arise.

Q. What is the difference between ESSA Bank & Trust and ESSA Bancorp, Inc.?

A. ESSA Bank & Trust was organized in 1916, recently completing 90 years of providing financial services to individuals and businesses. We recently formed ESSA Bancorp, Inc. to become the parent company of ESSA Bank & Trust upon the completion of the conversion and related stock offering. The directors of ESSA Bancorp, Inc. are the same persons who are the directors of ESSA Bank & Trust. ESSA Bancorp, Inc. will be owned by those who purchase shares of our common stock offered for sale.

Q. Will customers notice any change in ESSA Bank & Trust’s day-to-day activities as a result of the conversion?

A. No. It will be business as usual. The conversion is an internal change in our corporate structure. There will be no change to our management, staff or branches as a result.

Q. Will the conversion affect customers’ deposit accounts or loans?

A. No. The conversion will not affect the balance or terms of deposits or loans, and deposits will continue to be federally insured by the Federal Deposit Insurance Corporation, up to the maximum legal limit. Deposit accounts are not being converted to stock.

Q. What is the charitable foundation, and why is it being established?

A. The Plan provides for the establishment and funding of the ESSA Foundation, which will provide financial support to charitable organizations in the market areas served by ESSA Bank & Trust. The charitable foundation will be funded with a combination of ESSA Bancorp, Inc. common stock and cash.

Q. Why should I vote on the Plan of Conversion and on the ESSA Foundation?

A. Each ESSA Bank & Trust voting member (depositors and borrowers) who is eligible to vote received a proxy card attached to a stock order form. Members’ packages include detailed information with regard to the two proposals, which cannot be implemented without their approval. Our Board of Directors believes that converting to a fully-public company will best support ESSA Bank & Trust’s future growth, and that establishing and funding the charitable foundation is in keeping with our long-standing commitment to supporting charitable causes and organizations within the communities we serve. VOTING IS IMPORTANT! Not returning a proxy card has the same effect as a vote ‘AGAINST’ the proposals. Our Board urges a vote ‘FOR’ each of the proposals.

THE STOCK OFFERING AND PURCHASING SHARES

Q. How many shares are being offered and at what price?

A. ESSA Bancorp, Inc. is offering for sale between 9,350,000 and 14,547,500 shares of common stock at $10.00 per share.

Q. Who is eligible to purchase stock in the Subscription Offering?

A. Pursuant to our Plan of Conversion, non-transferable rights to buy shares of common stock in a Subscription Offering have been granted in the following order of eligibility priority:

Priority #1 – ESSA Bank & Trust depositors with aggregate account balances of at least $50 as of the close of business on April 30, 2005;

Priority #2 – Our tax-qualified employee benefit plans;

Priority #3 – ESSA Bank & Trust depositors with aggregate balances of at least $50 as of the close of business on                     ; and,

Priority #4 – ESSA Bank & Trust depositors and borrowers on                 , 2007.

Shares not sold in the Subscription Offering may be offered for sale to the general public in a Community Offering.

Q. How can I buy shares during the Offering?

A. Shares may be purchased by completing a stock order form and returning it, with full payment, so that it is physically received (not postmarked) by the offering deadline. Delivery of a stock order form may be made in one of the following ways: (1) by mail, using the Order Reply Envelope provided, (2) by overnight delivery to the Stock Information Center address noted on the stock order form, or (3) by hand-delivery to the Stock Information Center, located at our corporate center, 200 Palmer Street, Stroudsburg, Pennsylvania. Stock order forms may NOT be delivered to ESSA Bank & Trust branches.

Q. What is the deadline for purchasing shares?

A. An executed stock order form with the required full payment must be physically received by us, using an accepted method of delivery as described above, by no later than 12:00 Noon, Eastern time, on                 , 2007.

Q. How can I pay for the shares?

A. Payment for shares can be remitted in two ways:

(1) By personal check, bank check or money order, made payable to ESSA Bancorp, Inc. These will be cashed upon receipt. Cash, wire transfers and ESSA Bank & Trust line of credit checks will not be accepted.

(2) By authorizing direct withdrawal of funds from your ESSA Bank & Trust deposit account(s). The order form section titled “Method of Payment – Account Withdrawal” allows you to list the account number(s) and amount(s) to be withdrawn. The types of ESSA Bank & Trust deposit accounts that may be used for this purpose are outlined on the stock order form. The funds designated must be available within the account(s) at the time the order form is received.

Q. Can I use my ESSA Bank & Trust IRA to purchase the shares?

A. You might be able to use IRA funds, although using them for this type of purchase requires special arrangements and additional processing time. If you are interested in using funds held in an ESSA Bank & Trust IRA, funds in an IRA with EB&T’s trust division or IRA’s held elsewhere, please call the Stock Information Center as soon as possible – preferably two weeks before the ______, 2007 Offering deadline.

Q. Can I use a loan from ESSA Bank & Trust to pay for shares?

A. No. ESSA Bank & Trust, by regulation, may not extend a loan for the purchase of ESSA Bancorp, Inc. stock in the Offering. Similarly, you may not use existing ESSA Bank & Trust line of credit checks to purchase stock in the Offering.

Q. Will I earn interest on my funds?

A. Yes. If you pay by check or money order, you will earn interest at ESSA Bank & Trust’s passbook savings rate from the day we receive your check or money order until the closing of the conversion. At that time, we will issue you a check for interest earned on these funds. If you pay for the shares by authorizing a direct withdrawal from your ESSA Bank & Trust deposit account(s), your funds will continue earning interest during the Offering at the contractual rate. The interest will remain in your account(s) when the designated withdrawal is made, upon completion of the conversion.

Q. Are there limits to how many shares I can order?

A. Yes. The minimum order is 25 shares ($250). The maximum number of shares that may be purchased by one person, or persons exercising subscription rights through a single qualifying deposit or loan account held jointly, is 35,000 ($350,000). Also, no person, with associates, or with persons acting in concert, may purchase more than 50,000 shares ($500,000). More detail on purchase limits, including the definition of “associate” and “acting in concert” can be found in the Prospectus section entitled “The Conversion – Limitations on Common Stock Purchases.”

Q. Is it possible that I will not receive any or all of the shares I ordered?

A. Yes. If we receive orders in the Offering for more shares than we have available to sell, we will allocate shares as described in the Prospectus. If we are unable to fill your order, in whole or in part, you will receive a refund based upon your method of payment.

Q. I am eligible to subscribe for shares of common stock in the Subscription Offering, but am not interested in investing. May I allow someone else to use my stock order form to take advantage of my priority as an eligible subscriber?

A. No…subscription rights are non-transferable! Only the ESSA Bank & Trust customers described above have non-transferable rights to purchase shares in the Subscription Offering. To preserve subscription rights, the shares may only be registered in the name(s) of the eligible subscriber(s), as described further in the enclosed Prospectus. On occasion, unscrupulous people attempt to persuade eligible accountholders to transfer subscription rights, or to purchase shares in an offering based on an understanding that the shares will be subsequently transferred to others. Participation in such schemes is against the law and may be subject involved parties to prosecution. If you become aware of any such activities, we ask that you notify us promptly so that we can take the necessary steps to protect our eligible members’ subscription rights in the Subscription Offering.

Q. Will the stock be insured?

A. No. Like any common stock, ESSA Bancorp, Inc.’s stock will not be insured.

Q. Will dividends be paid on the stock?

A. No decision has been made with respect to a dividend amount, if any, or the timing of any dividend payments. The payment and amount of dividend payments will depend on a number of factors, including regulatory capital requirements, our financial condition and general economic conditions.

Q. How will ESSA Bancorp, Inc.’s shares trade?

A. Upon completion of the offering, ESSA Bancorp, Inc.’s shares are expected to trade on the Nasdaq Global Market, under the symbol “ESSA”. Once the shares have begun trading, you may contact a firm offering investment services in order to buy or sell ESSA Bancorp, Inc. shares in the future. Purchasers may not be able to sell the shares of common stock they ordered in our offering until their stock certificate is delivered to them, even though the common stock will have begun trading.

Q. Are officers and directors of ESSA Bancorp, Inc. planning to purchase stock?

A. Yes! The executive officers and directors of ESSA Bancorp, Inc. and their associates plan to purchase, in the aggregate, $4.3 million worth of stock or approximately 5% of the common stock that would be at the midpoint of the offering range and contributed to the charitable foundation.

Q. Can I change my mind after I place an order to subscribe for stock?

A. No. After receipt, your order cannot be modified or withdrawn.

WHERE TO GET MORE INFORMATION

Q. How can I get more information?

A. A Stock Information Center has been established at our corporate center, 200 Palmer Street, Stroudsburg, Pennsylvania. You may visit the Stock Information Center or call, toll free, at 1-(            )          -         , from 10:00 a.m. to 4:00 p.m., Eastern time, Monday through Friday. The Center is not open on weekends or on bank holidays.

This brochure is neither an offer to sell nor a solicitation of an offer to buy shares of common stock. The offer is made only by the Prospectus. The shares of common stock are not savings accounts or deposits and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

EX-99.5

Exhibit 99.5

STOCK ORDER FORM

PLEASE PRINT CLEARLY AND COMPLETE ALL

APPLICABLE SHADED AREAS SEE REVERSE SIDE OF THIS FORM FOR

ADDITIONAL INSTRUCTIONS

Stock Information Center

200 Palmer Street Stroudsburg, PA 18360

QUESTIONS?

Call us, toll-free, at 1-( )—10:00 a.m. to 4:00 p.m., Monday through Friday

For Internal Use Onlyfu

REC’D # BATCH # ORDER # CATEGORY #

O C

ORDER DEADLINE AND DELIVERY: Stock Order Forms, properly completed and with full payment, must be received (not postmarked) by 12:00 Noon, Eastern time, on , 2007. Stock Order Forms may be delivered by using the enclosed order reply envelope, or by hand or overnight delivery to the Stock Information Center address at the top of this form. You may NOT deliver this form to ESSA Bank & Trust branch offices. Please read important instructions on the reverse side of this form. Faxes or copies of this form are not required to be accepted.

(1) Number of Shares Price Per Share (2) Total Payment Due

X $10.00 = $ .00

Minimum Number of Shares: 25 ($250). Maximum number of Shares: 35,000 ($350,000).

(3) Method of Payment Check or Money Order

Enclosed is a check or money order payable to ESSA Bancorp, Inc. in the amount of:

$ .00

Cash or wire transfers will not be accepted. Checks and money orders will be cashed upon receipt. ESSA Bank & Trust line of credit checks and third party checks may not be remitted as payment.

(4) Method of Payment - Deposit Account Withdrawal

The undersigned authorizes withdrawal from the ESSA Bank & Trust deposit account(s) listed below. There will be no early withdrawal penalty applicable for funds authorized on this form. Funds designated for withdrawal must be available within the account(s) listed at the time this form is received. ESSA Bank & Trust IRA accounts and accounts with check-writing privileges may NOT be listed for direct withdrawal below.

For Internal Use Only ESSA Bank & Trust Deposit Account Number Withdrawal Amount $ .00 $ .00 $ .00

Total Withdrawal Amount $ .00

(5) Purchaser Information

Subscription Offering. Check the one box that applies, as of the earliest date, to the purchaser(s) listed in Section 7: If you checked boxes (a), (b) or (c), please provide the following information as of the eligibility date under which purchaser(s) listed in Section 7 below qualify in the Subscription Offering: a. Purchaser(s) listed below had a minimum of $50 on deposit at ESSA Bank & Trust on April 30, 2005. Account Title (Name(s) on Account) ESSA Bank & Trust Account Number b. Box (a) above does not apply, however purchaser(s) listed below had a minimum of $50 on deposit at ESSA Bank & Trust on .

c. Boxes (a) and (b) above do not apply, however purchaser(s) listed below had a deposit or loan account at

ESSA Bank & Trust on , 2007.

Community Offering. If (a) through (c) above do not apply to the purchaser(s) listed in Section 7, check the box below:

d. This order is placed in a Community Offering, if held.

NOTE: NOT LISTING ALL ELIGIBLE ACCOUNTS, OR PROVIDING INCORRECT OR INCOMPLETE INFORMATION, COULD RESULT IN THE LOSS OF ALL OR PART OF ANY SHARE ALLOCATION. ATTACH A SEPARATE PAGE IF ADDITIONAL SPACE IS NEEDED.

(6) Management and Employees (Check a box, if applicable)

Check if you are an ESSA Bank & Trust: Director Officer Employee Member of the immediate family of a Director, Officer or Employee.

(immediate family is defined on the reverse side of this form)

(7) Stock Registration The name(s) and address that you provide below will be reflected on your stock certificate, and will be used for communications related to this order. Please PRINT clearly and use full first and last name(s), not initials. If purchasing in the Subscription Offering (i.e., you checked box (a), (b) or (c) in Section 5 of this form), you should not add the name(s) of persons/entities who do not have subscription rights or who qualify only in a lower purchase priority.

First Name, Middle Initial, Last Name

Reporting SSN/Tax ID No.

First Name, Middle Initial, Last Name

SSN/Tax ID No.

Street

Daytime Phone Number (important)

City State Zip County (important)

Evening Phone Number (important)

(8)

Individual Joint Tenants Tenants in Common UniformTransfer to Minors Act

(for reporting SSN, use Minor’s)

Corporation/Partnership Other

FOR SELF-DIRECTED ACCOUNT TRUSTEE USE ONLY

IRA

SSN of Beneficial Owner: - -

(9) Acknowledgment and Signature I understand that, to be effective, this Stock Order Form must be received by ESSA Bancorp, Inc. by no later than 12:00 Noon, Eastern time, on , 2007, otherwise, this Stock Order Form and all subscription rights will be void. I agree that after receipt by ESSA Bancorp, Inc., this Stock Order Form may not be modified or canceled without ESSA Bancorp, Inc.’s consent, and that if withdrawal from a deposit account has been authorized above, the amount will not otherwise be available for withdrawal. Regulations prohibit any person from transferring or entering into any agreement directly or indirectly to transfer the legal or beneficial ownership of subscription rights, or the underlying securities, to the account of another. Under penalty of perjury, I certify that (1) the Social Security or Tax ID information and all other information provided hereon are true, correct and complete, (2) I am purchasing solely for my own account, and there is no agreement or understanding regarding the sale or transfer of the shares, or my right to subscribe for shares, and (3) I am not subject to backup withholding tax [cross out (3) if you have been notified by the IRS that you are subject to backup withholding.] I acknowledge that this security is not a deposit or savings account, is not federally insured and is not guaranteed by ESSA Bancorp, Inc., ESSA Bank & Trust or by the federal government. If anyone asserts that the common stock is federally insured or guaranteed, or is as safe as an insured deposit, I should call the Office of Thrift Supervision’s Northeast Regional Office at (201) 413-0100. I further certify that, before purchasing the common stock of ESSA Bancorp, Inc., I received the Prospectus dated , 2007.

The Prospectus that I received contains disclosure concerning the nature of the common stock being offered by ESSA Bancorp, Inc. and describes, in the Risk Factors section beginning on page of the Prospectus, the risks involved in the investment in this common stock. Risks include, but are not limited to the following:

1. Future changes in interest rates could reduce our profits.

2. A downturn in the local economy or a decline in real estate values could reduce our profits.

3. Our continued emphasis on commercial real estate lending could expose us to increased lending risks.

4. Strong competition within our market areas may limit our growth and profitability.

5. If our allowance for loan losses is not sufficient to cover actual loan losses, our earnings will decrease.

6. The Federal Deposit Insurance Corporation has issued new rules on how it imposes deposit insurance assessments that will increase our deposit insurance assessments and will reduce our income.

7. The future price of the shares of common stock may be less than the purchase price in the stock offering.

8. We will need to implement additional finance and accounting systems, procedures and controls in order to satisfy our new public company reporting requirements.

9. Our return on equity will be low compared to other financial institutions. This could negatively affect the trading price of our shares of common stock.

10. The contribution of shares to the charitable foundation will dilute your ownership interests and adversely affect net income in fiscal 2007.

11. Our contribution to the charitable foundation may not be tax deductible, which could reduce our profits.

12. Our stock-based benefit plans will increase our costs, which will reduce our income.

13. The implementation of stock-based incentive plans will dilute your ownership interest.

14. We have broad discretion in using the proceeds of the stock offering. Our failure to effectively use such proceeds could hurt our profits.

15. Our stock value may be negatively affected by federal regulations that restrict takeovers.

16. The corporate governance provisions in our articles of incorporation and bylaws and

the corporate governance provisions under Pennsylvania law may prevent or impede the holders of our common stock from obtaining representation on our Board of

Subscription rights pertain to those eligible to subscribe in the Subscription Offering. ESSA Bancorp, Inc. will pursue any and all legal and equitable remedies in the event it becomes aware of the transfer of subscription rights, and will not honor orders known to involve such transfer.

ORDER NOT VALID UNLESS SIGNED

ONE SIGNATURE REQUIRED, UNLESS SECTION 4 OF THIS FORM INCLUDES ACCOUNTS REQUIRING MORE THAN ONE SIGNATURE TO AUTHORIZE WITHDRAWAL.

IF SIGNING AS A CUSTODIAN, CORPORATE OFFICER, ETC., PLEASE INCLUDE YOUR FULL TITLE.

Signature (title, if applicable) (Date) Signature (title, if applicable) (Date)

QUESTIONS? Call our Stock Information Center, toll-free, at 1-( )— , Monday through Friday from 10:00 a.m. to 4:00 p.m., Eastern time.

ESSA Bancorp, Inc. Stock Order Form Instructions

Sections (1) and (2) - Number of Shares and Total Payment Due. Indicate the Number of Shares for which you wish to subscribe and the Total Payment Due. Calculate the Total Payment Due by multiplying the number of shares by the $10.00 price per share. The minimum purchase is 25 shares

($250). The maximum allowable purchase by an individual, or by individuals exercising subscription rights through a single qualifying deposit account or loan held jointly, is 35,000 shares ($350,000). Further, no person, together with associates or persons acting in concert, may purchase an aggregate of more than 50,000 shares ($500,000), in all categories of the offering, combined. Please see the Prospectus section entitled “The Conversion — Limitations on Common Stock Purchases” for more specific information. By signing this form, you are certifying that your order does not conflict with these purchase limitations.

Section (3) - Payment by Check or Money Order. Payment may be made by including with this form a personal check, bank check or money order payable to ESSA Bancorp, Inc. These will be cashed immediately upon receipt, so the funds must be available within the accounts when your Stock Order Form is received. You may not remit cash, an ESSA Bank & Trust line of credit check, a third party check or wire transfers. Interest on your funds will be earned at the ESSA Bank & Trust’s passbook savings rate until the offering is completed. After receipt of this order, it may not be modified or canceled without ESSA Bancorp, Inc.’s consent.

Section (4) - Payment by Account Withdrawal. Payment may be made by authorizing direct withdrawal from your ESSA Bank & Trust deposit account(s). Indicate the account number(s) and the amount(s) that you wish withdrawn. Funds designated for withdrawal must be available within the account(s) at the time this stock order form is received. Upon receipt of this order, we will place a hold on the amount(s) designated by you — they will be unavailable to you for withdrawal during the stock offering. The funds will continue to earn interest within the account(s) at the contractual rate, and account withdrawals will be made at the completion of the offering. There will be no early withdrawal penalty for withdrawal from a an Essa Bank & Trust certificate of deposit account. You may NOT list ESSA Bank & Trust IRA accounts or such accounts with ESSA Bank & Trust’s trust division. You may NOT list accounts with check-writing privileges — please submit a check instead. For guidance using IRA funds for this purchase, please contact the Stock Information Center as soon as possible—preferably at least two weeks before the , 2007 offering deadline.

Section (5) - Purchaser Information. Please check the one box that applies to the purchaser(s) listed in Section 7 of this form. Purchase priorities are based on eligibility dates. Boxes (a), (b) and (c) refer to the Subscription Offering. If you checked box (a), (b) or (c), list all ESSA Bank & Trust account numbers that the purchaser(s) had ownership in as of the applicable eligibility date. Include all forms of account ownership (individual, joint, IRA, etc.). If purchasing shares for a minor, list only the minor’s eligible accounts. If purchasing shares for a corporation or partnership, list only that entity’s eligible accounts. Attach a separate page, if necessary. Failure to complete this section, or providing incorrect or incomplete information, could result in a loss of part or all of your share allocation in the event of an oversubscription. Box (d) refers to a Community Offering, if held. Orders placed in the Subscription Offering will take preference over orders placed in a Community Offering. See “The Conversion — Subscription Offering and Subscription Rights” section of the Prospectus for further details about the Subscription Offering and Community Offering, and the method for allocating shares in the event of an oversubscription.

Section (6) - Management and Employees. Check the applicable box if you are an ESSA Bank & Trust, director, officer or employee or a member of their immediate family. Immediate family includes spouse, parents, siblings and children who live in the same house as the trustee, director, officer or employee.

Section (7) - Stock Registration. Clearly PRINT the name(s) in which you want the shares registered and the mailing address for all correspondence related to this order, including a stock certificate. Each Stock Order Form will generate one stock certificate, subject to the stock allocation provisions described in the Prospectus. IMPORTANT: Subscription rights are non-transferable. If you checked box (a), (b) or (c) as a purchaser eligible in the Subscription Offering, you may not add the name(s) of persons/entities who do not have subscription rights or who qualify only in a lower purchase priority than yours. A Social Security or Tax ID Number must be provided. The first number listed will be identified with the stock certificate for tax reporting purposes. Listing at least one phone number is important, in the event we need to contact you about this form. NOTE FOR NASD MEMBERS: If you are a member of the NASD (“National Association of Securities Dealers”), or a person affiliated or associated with an NASD member, you may have additional reporting requirements. Please report this subscription in writing to the applicable NASD member within one day of payment thereof.

Section (8) - Form of Stock Ownership. For reasons of clarity and standardization, the stock transfer industry has developed uniform stockholder registrations for issuance of stock

certificates. Beneficiaries may not be named on stock registration. If you have any questions on wills, estates, beneficiaries, etc., please consult your legal advisor. When registering stock, do not use two initials—use the full first name, middle initial and last name. Omit words that do not affect ownership such as “Dr.”, “Mrs.”, etc. Check the one box that applies.

Buying Stock Individually _ Used when shares are registered in the name of only one owner. To qualify in the Subscription Offering, the purchaser named in Section 7 of this form must have had an eligible account at ESSA Bank & Trust on either April 30, 2005, or .

Joint Tenants - Joint Tenancy (with Right of Survivorship) may be specified to identify two or more owners where ownership is intended to pass automatically to the surviving tenant(s). All owners must agree to the sale of shares. To qualify in the Subscription Offering, the purchasers named in Section 7 of this form must have had an eligible account at ESSA Bank & Trust on either April 30, 2005, or .

Tenants in Common - May be specified to identify two or more owners where, upon the death of one co-tenant, ownership of the stock will be held by the surviving co-tenant(s) and by the heirs of the deceased co-tenant. All owners must agree to the sale of shares. To qualify in the Subscription Offering, the purchasers named in Section 7 of this form must have had an eligible account at ESSA Bank & Trust on either April 30, 2005, or .

Buying Stock for a Minor - Shares may be held in the name of a custodian for a minor under the Uniform Transfer to Minors Act. To qualify in the Subscription Offering, the minor (not the custodian) named in Section 7 of this form must have had an eligible account at ESSA Bank & Trust on either April 30, 2005, or . The standard abbreviation for custodian is “CUST”, while the Uniform Transfer to Minors Act is “UTMA”, followed by the state abbreviation. For example, stock held by John Smith as custodian for Susan Smith under the PA Uniform Transfer to Minors Act, should be registered as John Smith CUST Susan Smith UTMA PA (list only the minor’s social security number).

Buying Stock for a Corporation/Partnership - On the first name line, indicate the name of the corporation or partnership and indicate that entity’s Tax ID Number for reporting purposes. To qualify in the Subscription Offering, the corporation or partnership named in Section 7 of this form must have had an eligible account at ESSA Bank & Trust on either April 30, 2005, or .

Buying Stock in a Trust/Fiduciary Capacity - Indicate the name of the fiduciary and the capacity under which they are acting (for example, “Executor”), or the name of the trust, the trustees and the date of the trust. Indicate the Tax ID Number to be used for reporting purposes. To qualify in the Subscription Offering, the entity named in Section 7 of this form must have had an eligible account at ESSA Bank & Trust on either April 30, 2005, or .

Buying Stock in a Self-Directed IRA - (for trustee/broker use only) Registration should reflect the custodian or trustee firm’s registration requirements. For example, on the first name line indicate the name of the brokerage firm, followed by CUST or TRUSTEE. On the second name line, indicate the name of the beneficial owner (for example, “FBO JOHN SMITH IRA”). You can indicate an account number or other underlying information, and the custodian or trustee firm’s address and department to which all correspondence should be mailed related to this order, including a stock certificate. Indicate the Tax ID Number under which the IRA account should be reported for tax purposes. To qualify in the Subscription Offering, the beneficial owner named in Section 7 of this form must have had an eligible account at ESSA Bank & Trust on either April 30, 2005, or .

Section (9) - Acknowledgment and Signature. Sign and date this form where indicated. Before you sign, please carefully review the information you provided and read the acknowledgment. Verify that you have printed clearly, and completed all applicable shaded areas on this form. Only one signature is required, unless any account listed in Section 4 of this form requires more than one signature to authorize a withdrawal.

Please review the Prospectus carefully before making an investment decision. Deliver your completed Stock Order Form, with full payment and/or withdrawal authorization, so that it is received (not postmarked) by ESSA Bancorp, Inc. by 12:00 Noon, Eastern time, on , 2007. We are not required to accept Stock Order Forms that are found to be deficient or incorrect, that do not include proper payment or required signature(s). An order reply envelope has been included for your convenience. OVERNIGHT DELIVERY can be made to: ESSA Bank & Trust, Attn: Stock Information Center, 200 Palmer Street, Stroudsburg, PA 18360. You may also hand deliver to this location. Please do not deliver Stock Order Forms to any ESSA Bank & Trust branch offices.

QUESTIONS? Call our Stock Information Center, toll-free, at 1-( ) — , Monday through Friday from 10:00 a.m. to 4:00 p.m., Eastern time.

CORRESP

LUSE GORMAN POMERENK & SCHICK

A PROFESSIONAL CORPORATION

ATTORNEYS AT LAW

5335 WISCONSIN AVENUE, N.W., SUITE 400

WASHINGTON, D.C. 20015

TELEPHONE (202) 274-2000

FACSIMILE (202) 362-2902

www.luselaw.com

WRITER’S DIRECT DIAL NUMBER	WRITER’S EMAIL
(202) 274-2009	mlevy@luselaw.com

January 22, 2007

Mr. Todd Schiffman

Assistant Director

U.S. Securities and Exchange Commission

Financial Services Group

100 F Street, N.E.

Washington, DC 20549

Re: ESSA Bancorp, Inc., Registration Statement on Form S-1

File No. 333-139157

Dear Mr. Schiffman:

We are in receipt of your letter dated December 29, 2006 providing comments on the referenced filing for ESSA Bancorp, Inc. (the “Company”). The Company’s responses are set forth below and are keyed to the staff’s comment letter.

Form S-1

Summary

ESSA Bank & Trust, page 1

1. Revise the first paragraph to disclose the total equity at September 30, 2006

The Prospectus has been revised in the “Summary” and “Business of ESSA Bank & Trust” sections to include the Company’s total equity at September 30, 2006.

Business Strategy, page 2

2. Revise the penultimate bullet on page 3 (“Expanding our banking franchise…”) to indicate whether or not you have any plans, arrangements or understandings to make any acquisitions. In addition, for the branch opening in 2007, indicate the total estimated cost, amounts already expensed and the anticipated source of the funding.

The Prospectus has been revised in the “Summary” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of ESSA Bancorp, Inc.-Business

LUSE GORMAN POMERENK & SCHICK

A PROFESSIONAL CORPORATION

Mr. Todd Schiffman

January 22, 2007

Page 2

Strategy” sections to disclose that the Company does not have any plans, arrangements or understandings to make any acquisitions, and to state the costs and funding associated with the new branch office.

After-Market Stock Price Performance…, page 7

3. Revise the first full paragraph on page 8 to briefly discuss what the analysis yielded, e.g., that the valuation was consistent with the comparables.

The Prospectus has been revised in the “Summary-After-Market Stock Price Performance Provided by Independent Appraiser” in response to the Staff’s comments.

Benefits to Management and Potential…, page 12

4. Noting the statement that you reserve the right to make open market purchases to fund the ESOP, revise to provide the circumstances that might give rise to open market purchases.

The Prospectus has been revised in the “Summary-Benefits to Management and Potential Dilution to Stockholders Following the Conversion” in response to the Staff’s comment to remove the reference to open market purchases on behalf of the ESOP.

5. Revise to also briefly discuss the other benefits to management and directors resulting from the transaction, i.e., those benefits disclosed on pages 95-102. In this regard, benefits such as new employment agreements, change in control agreements, supplemental retirement plans should be disclosed and the benefits quantified.

The Prospectus has been revised in the “Summary-Benefits to Management and Potential Dilution to Stockholders Following the Conversion” in response to the Staff’s comment. We note that while the employment agreements and change in control agreements will be entered pursuant to the plan of conversion, the Deferred Benefit Pension Plan, the 401(k) Plan and the Supplemental Retirement Plan are existing arrangements that predate the plan of conversion.

LUSE GORMAN POMERENK & SCHICK

A PROFESSIONAL CORPORATION

Mr. Todd Schiffman

January 22, 2007

Page 3

The Contribution of Shares to the Charitable Foundation…, page 22

6. Revise to disclose the net income for the last full fiscal year. In addition, if a loss is expected for fiscal 2007 as a result of the charitable expenses and the expenses associated with the stock option and retention and recognition plans, add a risk factor disclosing such anticipated result.

The Prospectus has been revised in the “Risk Factors-The Contribution of Shares to the Charitable Foundation Will Dilute Your Ownership Interests and May Cause a Net Loss in Fiscal 2007” to disclose that we anticipate a net loss in the fiscal year ending September 30, 2007, due, in part, to the contribution of common stock to the charitable foundation. The Prospectus also has been revised to include a new risk factor entitled “Our Contribution to the Charitable Foundation Combined with the Costs of Our Stock-Based Benefit Plans May Result in a Net Loss in Fiscal 2007.”

Our Stock Based Benefit Plans…, page 22

7. Revise to add a new first paragraph and disclose therein the anticipated annual expense or range of expense resulting from all three benefit plans discussed herein.

Additional disclosure is not required in response to this comment pursuant to a discussion with the Staff.

The Implementation of Stock-Based…, page 24

8. Revise to clarify whether you are referring to both the retention and option plans. In this regard, we note the captions speaks to plural plans yet the first sentence uses a singular tense.

The Prospectus has been revised in the “Risk Factors-The Implementation of Stock-Based Incentive Plans Will Dilute Your Ownership Interest” to clarify the disclosure refers to both the retention plan and option plan.

Other Risks

9. Revise to add a risk factor for the increasing leverage of the company. In this regard, we note that capital as a percentage of assets has been decreasing for the last five years. In addition, disclose the effect the offering (at the midpoint) would have on the leverage of the company based on your anticipated use of proceeds.

The Prospectus has been revised to include a new risk factor entitled “Our Leverage May Continue to Increase.”

LUSE GORMAN POMERENK & SCHICK

A PROFESSIONAL CORPORATION

Mr. Todd Schiffman

January 22, 2007

Page 4

10. Add a risk factor addressing liquidity noting that Ryan Beck intends to make a market but does not guarantee such action and no assurance can be given that a liquid market will develop for the common stock.

The Prospectus has been revised to include a new risk factor entitled “ESSA Bancorp, Inc. has Never Issued Common Stock and There is No Guarantee That a Liquid Market Will Develop.”

Comparison of Valuation and Pro Forma…, page 40

11. With a view towards revised disclosure, supplementally provide the staff with a reconciliation of the first 2 amounts presented, $93,500 and $112,625. In this regard, start with the $112,625 estimated stock offering amount and subtract foundation deductions by category to arrive at the $93,500. Similarly, provide the same analysis for the pro forma stockholders equity numbers, $138,760 and $155,248.

The Staff is supplementally advised that RP Financial’s estimate of ESSA Bancorp’s pro forma valuation without the foundation was based on the resulting pro forma pricing ratios, such that there was comparability in the pro forma price/earnings and price/book ratios with and without the foundation. At the midpoint of the valuation range, RP Financial estimated that ESSA Bancorp’s pro forma valuation without a foundation was equal to $132.5 million compared to $117.7 million with a foundation. Under each valuation scenario, the resulting valuation range is calculated such that the minimum of the valuation range is equal to 85% of the midpoint value, the maximum of the valuation range is equal to 115% of the midpoint value and the valuation range at the maximum, as adjusted is equal to 115% of the maximum of the valuation range. The estimated midpoint value without the foundation is not derived through a reconciliation for the foundation (i.e., the $14.8 million difference between the with and without foundation pro valuations at the midpoint value is not based on a reconciliation of the foundation contributions equal to a $7.7 million stock contribution and a $1.1 million cash contribution), rather the “without foundation” valuation (like the pro forma appraisal report for the offering) was determined on a stand-alone basis through applying pro forma pricing analysis.

LUSE GORMAN POMERENK & SCHICK

A PROFESSIONAL CORPORATION

Mr. Todd Schiffman

January 22, 2007

Page 5

Loan Approval Procedures and Authority, page 65

12. Revise to name by titles or otherwise identify those members of the Management and Director Loan committees.

The Prospectus has been revised in the “Business of ESSA Bank & Trust-Lending Activities-Loan Approval Procedures and Authority” section in response to the Staff’s comment.

Supplemental Retirement Plan, page 99

13. Revise to include a table similar to the one presented above for the regular pension plan.

The Staff is supplementally advised that the Supplemental Retirement Plan (“SRP”) payments are based on each of the four individual’s final compensation determined over a 10-year period prior to their retirement. This formula is different from the pension plan, which is a broad-based plan including all employees, thereby making it appropriate to show projected future liabilities over a wide range of compensation in tabular form. The SRP expense does not lend itself to be presented in tabular form; rather, the Company has revised the Prospectus to disclose the estimated liabilities of the SRP over five-year intervals.

Community Offering, page 113

14. Revise to indicate whom will conduct the community offering and what, if any, compensation will be paid in addition to the 1% sales fee paid to RBCO. In addition, advise the staff how the offering will be made known to the community.

The Prospectus has been revised in “The Conversion—Community Offering” section in response to the Staff’s comments. The Staff is supplementally advised that a community offering would be initiated via advertisement in local newspapers. In addition, the Company would consider issuing a press release and/or holding meetings in the local community in the event of a community offering.

LUSE GORMAN POMERENK & SCHICK

A PROFESSIONAL CORPORATION

Mr. Todd Schiffman

January 22, 2007

Page 6

Syndicated Community Offering, page 114

15. Revise to indicate if any compensation will be paid in addition to the 1% sales fee paid to RBCO.

The Prospectus has been revised in “The Conversion—Syndicated Community Offering” section in response to the Staff’s comments.

16. Noting the disclosures in the last paragraph of this section, revise to add a risk factor with a caption similar to, “We may take other actions to meet the minimum required sales of shares if we cannot find enough purchasers in the community” and include the narrative from the last paragraph of this section. In addition, indicate that a post-effective amendment will be filed to explain the other actions that are taken to meet the minimum.

The Prospectus has been revised to include a new risk factor entitled “We May Take Other Actions to Meet the Minimum Required Sales of Shares if We Cannot Find Enough Purchasers in The Community” in response to the Staff’s comment.

Material Income Tax Consequences, page 124

17. Revise to either delete the last paragraph on page 125 or revise to indicate the summary of the opinion on state taxes and file the opinion as an exhibit.

The Prospectus has been revised to delete the last sentence of “The Conversion-Material Income Tax Consequences.”

Structure of the Charitable Foundation, page 127

18. Revise to disclose whether or not Bank or Company employees who work on foundation matters or are employed by the foundation will receive salaries or other benefits in addition to those received from the Bank and Company. If so, disclose how the pay and benefits will be determined.

The Prospectus has been revised in the “ESSA Bank & Trust Foundation-Structure of the Charitable Foundation” section in response to the Staff’s comment.

LUSE GORMAN POMERENK & SCHICK

A PROFESSIONAL CORPORATION

Mr. Todd Schiffman

January 22, 2007

Page 7

Restrictions on Acquisition of ESSA…, page 130

19. Noting the restrictions presented, revise the Summary or add a risk factor and disclose therein the material restrictions discussed herein.

The Prospectus has been revised to expand the risk factor entitled “The Corporate Governance Provisions in our Articles of Incorporation and Bylaws and the Corporate Governance Provisions Under Pennsylvania Law May Prevent or Impede the Holders of Our Common Stock From Obtaining Representation on Our Board of Directors” to include the effects of certain provisions of our articles of incorporation and bylaws on the potential acquisition of the Company.

Experts, page 138

20. We note that Beard Miller Company reported on your financial statements for the fiscal year ended September 30, 2004 and S.R. Snodgrass reported on your financial statements for the fiscal years ended September 30, 2005 and 2006. Based on the October 24, 2004 audit report date for Beard Miller Company’s report it appears that the change in accountants occurred during your two most recent fiscal years. Please provide all of the disclosure required by Item 304 of Regulation S-K, including filing as Exhibit 16 a letter from Beard Miller Company stating whether it agrees with your disclosure made in response to Item 304(a) of Regulation S-K. Refer to Item 11(i) of Form S-1.

The Prospectus has been revised in the “Experts” section in response to the Staff’s comment. The Form S-1 has been revised to include as Exhibit 16 a letter from BMC LLP stating that it agrees with the Company’s disclosure made in response to Item 304(a) of Regulation S-K.

Where you can find…, page 138

21. With regard to the last paragraph on page 139, revise to indicate registration under 12(g), not 12(b).

As The NASDAQ Stock Market is a national securities exchange, the Company’s NASDAQ-listed Securities are registered under Section 12(b) of the Securities Exchange Act of 1939.

LUSE GORMAN POMERENK & SCHICK

A PROFESSIONAL CORPORATION

Mr. Todd Schiffman

January 22, 2007

Page 8

Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies, page F-7

22. We note that you have recognized gains on sales of loans during your two most recent fiscal years. Please revise to disclose the following regarding your loan sales:

• your related accounting policies;

• the types of loans you typically sell;

• when the decision to sell is typically made for these loans, such as when originated or after certain events or circumstances occur; and

• the nature of any continuing involvement in the sold loans.

Note 1 to the Financial Statements has been revised in response to the Staff’s comment.

Exhibits 10.6 through 10.9

23. Revise to add the Exhibit 1 referred to in paragraph IV, A of each agreement and refile as exhibits.

The Company has refiled Exhibits 10.6 through 10.9 in response to the Staff’s comment.

We trust the foregoing is responsive to the Staff’s comments. We request that any questions with regard to the foregoing should be directed to the undersigned at 202-274-2009.

Very truly yours,

/s/ Marc P. Levy

Marc P. Levy

cc:	Gary S. Olson
	John Spitz
	Joyce Sweeney
	Michael R. Clampitt
	John J. Gorman, Esq.