FXCB Fox Chase Bancorp, Inc.

Fox Chase Bancorp, Inc. (the “Company”) (NASDAQ:FXCB), the holding company for Fox Chase Bank (the “Bank”), today announced net income of $2.3 million, or $0.21 per diluted share, and $7.8 million, or $0.69 per diluted share, for the three and nine months ended September 30, 2015, respectively, compared to net income of $1.8 million, or $0.16 per diluted share, and $6.1 million, or $0.53 per diluted share, for the three and nine months ended September 30, 2014, respectively.  

Commenting on performance for the quarter, Thomas M. Petro, President and CEO said, “We are pleased to report a 28% increase in net income for the three and nine months ended September 30, 2015 compared to the same periods in 2014.  This earnings improvement was driven by continued execution of our commercial banking strategy and year to date recoveries of $1.1 million (pre-tax) on previously charged-off loans.  As previously disclosed, we continued to incur one-time costs due to our core data processing systems conversion.  These pre-tax costs were $502,000 and $979,000 during the three and nine months ended September 30, 2015 and are expected to approximate $1.3 million for the full year 2015. The conversion was successfully completed in early October as planned.  As we look to the fourth quarter of 2015, we continue to see opportunities to grow despite the slow pace of economic expansion, increased competition and the low interest rate environment.”

Highlights for the three and nine months ended September 30, 2015 included:

• Total average assets were $1.10 billion for the nine months ended September 30, 2015 compared to $1.09 billion for the nine months ended September 30, 2014. Total average commercial loans increased by $45.7 million, or 7.9%, to $622.7 million for the nine months ended September 30, 2015, compared to $577.0 million for the nine months ended September 30, 2014. 
• Assets were $1.10 billion at September 30, 2015 compared to $1.09 billion at December 31, 2014 and $1.07 billion at September 30, 2014.  Total commercial loans increased by $31.6 million, or 5.2%, to $639.1 million at September 30, 2015 compared to $607.5 million at December 31, 2014. 
• Return on average assets was 0.85% and 0.94% for the three and nine months ended September 30, 2015, respectively, compared to 0.67% and 0.74% for the three and nine months ended September 30, 2014, respectively.
• Net interest income increased $466,000, or 1.8%, to $25.7 million for the nine months ended September 30, 2015, compared to $25.3 million for the nine months ended September 30, 2014 and decreased $117,000, or 1.4%, to $8.4 million for the three months ended September 30, 2015, compared to $8.5 million for the three months ended September 30, 2014.
• The net interest margin was 3.18% for the three months ended September 30, 2015, compared to 3.24% for the three months ended June 30, 2015 and 3.20% for the three months ended September 30, 2014.  During the three months ended September 30, 2015 and June 30, 2015, respectively, the Company received $143,000 and $130,000 in prepayment fees, which increased net interest margin in both periods by five basis points. 
• The Company recorded a credit to the provision for loan losses of $300,000 and $1.1 million for the three and nine months ended September 30, 2015.  The credits were primarily due to $317,000 and $1.2 million of recoveries on previously charged-off loans for the three and nine months ended September 30, 2015, respectively.  There were no commercial loan charge-offs during the three months ended September 30, 2015.
• The allowance for loan losses was $10.6 million, or 1.42% of total loans, at September 30, 2015 compared to $10.7 million, or 1.45% of total loans at June 30, 2015, and compared to $10.7 million, or 1.46% of total loans, at December 31, 2014. 
• Nonperforming assets were $6.3 million, or 0.57% of total assets, at September 30, 2015 compared to $5.8 million, or 0.53% of total assets, at June 30, 2015 and $6.3 million, or 0.57% of total assets, at December 31, 2014.  Delinquent loans totaled $720,000 at September 30, 2015, compared to $660,000 at June 30, 2015 and $258,000 at December 31, 2014. 
• Noninterest income increased $373,000 to $2.0 million for the nine months ended September 30, 2015 compared to $1.6 million for the nine months ended September 30, 2014 primarily due to an increase of $100,000 in equity in earnings of affiliate due to higher mortgage volumes, and an increase of $86,000 in income on bank-owned life insurance as the Bank purchased $10.0 million of bank-owned life insurance in the three months ended September 30, 2015.
• Noninterest expense increased $1.2 million, or 7.4%, to $17.8 million for the nine months ended September 30, 2015, compared to $16.6 million for the nine months ended September 30, 2014.  This increase was primarily due to the Company incurring $979,000 of system conversion costs.  For the nine months ended September 30, 2015, system conversion costs are captured in the following noninterest expense categories:  Salary, benefits and other compensation ($106,000), data processing costs ($498,000), professional fees ($296,000) and other ($79,000).
• Income tax provision for the nine months ended September 30, 2015 includes the reversal of an $182,000 valuation allowance on certain state deferred tax assets, which occurred during the three months ended March 31, 2015.  The effective income tax rate for the nine months ended September 30, 2015 was 29.2%.  Excluding this reversal, the effective income tax rate for the nine months ended September 30, 2015 was 30.8% compared to 29.8% for the nine months ended September 30, 2014.    

The Company also announced that its Board of Directors declared a cash dividend of $0.14 per outstanding share of common stock. The dividend will be paid on November 25, 2015 to stockholders of record as of the close of business on November 11, 2015.  During the three months ended September 30, 2015, the Company repurchased 19,500 shares of treasury stock and has approximately 817,000 shares remaining in its approved repurchase plans.

Fox Chase Bancorp, Inc. will host a conference call to discuss third quarter 2015 results on Thursday, October 29, 2015 at 9:00 am EDT.  The general public can access the call by dialing (877) 507-3275.  A replay of the conference call will be available through December 11, 2015 by dialing (877) 344-7529; use Conference ID: 10074213.  Participants may preregister at http://dpregister.com/10074213.

Fox Chase Bancorp, Inc. is the stock holding company of Fox Chase Bank. The Bank is a Pennsylvania state-chartered savings bank originally established in 1867.  The Bank offers traditional banking services and products from its main office in Hatboro, Pennsylvania and nine branch offices in Bucks, Montgomery, Chester and Philadelphia Counties in Pennsylvania and Atlantic and Cape May Counties in New Jersey.  For more information, please visit the Bank’s website at www.foxchasebank.com.

This news release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements can generally be identified by the fact that they do not relate strictly to historical or current facts.  They often include words like “believe,” “expect,” “anticipate,” “estimate” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.”  Statements in this release that are not strictly historical are forward-looking and are based upon current expectations that may differ materially from actual results.  These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated by the statements made herein.  These risks and uncertainties involve general economic trends, changes in interest rates, loss of deposits and loan demand to other financial institutions, substantial changes in financial markets; changes in real estate value and the real estate market, regulatory changes, possibility of unforeseen events affecting the industry generally, the uncertainties associated with newly developed or acquired operations, the outcome of pending litigation, and market disruptions and other effects of terrorist activities.  The Company undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unforeseen events, except as required under the rules and regulations of the Securities and Exchange Commission. 

CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)
						Three Months Ended								Nine Months Ended
						September 30,								September 30,
							2015				2014				2015				2014
						(Unaudited)
INTEREST INCOME
	Interest and fees on loans					$	8,243			$	8,375			$	24,773			$	24,615
	Interest and dividends on investment securities						1,659				1,777				5,337				5,672
	Other interest income						4				1				10				2
			Total Interest Income				9,906				10,153				30,120				30,289
INTEREST EXPENSE
	Deposits						745				760				2,188				2,455
	Short-term borrowings						25				45				79				100
	Federal Home Loan Bank advances						568				577				1,630				1,723
	Other borrowed funds						167				253				497				751
			Total Interest Expense				1,505				1,635				4,394				5,029
			Net Interest Income				8,401				8,518				25,726				25,260
	(Credit) provision for loan losses						(300	)			1,493				(1,095	)			1,593
			Net Interest Income after Provision for Loan Losses				8,701				7,025				26,821				23,667
NONINTEREST INCOME
	Service charges and other fee income						377				416				1,200				1,192
	Net gain (loss) on sale of assets acquired through foreclosure						1				(15	)			(14	)			(136	)
	Income on bank-owned life insurance						202				121				444				358
	Equity in earnings of affiliate						74				91				225				125
	Other						67				29				133				76
			Total Noninterest Income				721				642				1,988				1,615
NONINTEREST EXPENSE
	Salaries, benefits and other compensation						3,836				3,510				11,498				10,670
	Occupancy expense						391				407				1,288				1,321
	Furniture and equipment expense						81				93				263				300
	Data processing costs						676				384				1,751				1,146
	Professional fees						370				271				1,147				1,086
	Marketing expense						35				54				133				156
	FDIC premiums						124				136				384				451
	Assets acquired through foreclosure expense						131				10				223				403
	Other						414				333				1,159				1,077
			Total Noninterest Expense				6,058				5,198				17,846				16,610
			Income Before Income Taxes				3,364				2,469				10,963				8,672
		Income tax provision					1,036				653				3,200				2,585
			Net Income			$	2,328			$	1,816			$	7,763			$	6,087
Earnings per share:
	Basic					$	0.21			$	0.16			$	0.71			$	0.54
	Diluted					$	0.21			$	0.16			$	0.69			$	0.53

 

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands, Except Share Data)
				September 30,				December 31,
					2015				2014
				(Unaudited)				(Audited)
ASSETS
	Cash and due from banks			$	322			$	2,763
	Interest-earning demand deposits in other banks				6,889				14,450
		Total cash and cash equivalents			7,211				17,213
	Investment securities available-for-sale				138,756				134,037
	Investment securities held-to-maturity (fair value of $157,665 at September 30, 2015 and $170,854 at December 31, 2014)				156,099				170,172
	Loans, net of allowance for loan losses of $10,623
		at September 30, 2015 and $10,730 at December 31, 2014			739,489				724,326
	Federal Home Loan Bank stock, at cost				4,986				6,015
	Bank-owned life insurance				25,471				15,027
	Premises and equipment, net				9,157				9,418
	Assets acquired through foreclosure				2,815				2,814
	Real estate held for investment				1,620				1,620
	Accrued interest receivable				3,174				3,147
	Mortgage servicing rights, net				98				111
	Deferred tax asset, net				4,451				4,561
	Other assets				5,470				6,155
		Total Assets		$	1,098,797			$	1,094,616
LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES
	Deposits			$	717,702			$	711,909
	Short-term borrowings				60,000				50,000
	Federal Home Loan Bank advances				110,000				120,000
	Other borrowed funds				30,000				30,000
	Advances from borrowers for taxes and insurance				1,025				1,447
	Accrued interest payable				310				311
	Accrued expenses and other liabilities				3,758				5,038
		Total Liabilities			922,795				918,705
STOCKHOLDERS' EQUITY
	Preferred stock ($.01 par value; 1,000,000 shares authorized, none issued and outstanding at September 30, 2015 and December 31, 2014)				-				-
	Common stock ($.01 par value; 60,000,000 shares authorized, 11,591,401 shares outstanding at September 30, 2015 and 11,802,791 shares outstanding at December 31, 2014)				147				147
	Additional paid-in capital				140,805				139,177
	Treasury stock, at cost (3,141,201 shares at September 30, 2015 and 2,852,572 at December 31, 2014)				(44,468	)			(39,698	)
	Common stock acquired by benefit plans				(6,878	)			(8,056	)
	Retained earnings				86,012				84,225
	Accumulated other comprehensive income, net				384				116
		Total Stockholders' Equity			176,002				175,911
		Total Liabilities and Stockholders' Equity		$	1,098,797			$	1,094,616

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA OF THE COMPANY (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
			September 30,				June 30,				December 31,				September 30,
				2015				2015				2014				2014
CAPITAL RATIOS:
Stockholders’ equity (to total assets) (1)				16.02	%			15.95	%			16.07	%			16.59	%
Common equity tier 1 capital ratio (to risk-weighted assets) (2)				16.93				16.86				N/A				N/A
Tier 1 leverage ratio (to adjusted average assets) (2)				13.64				13.30				13.99				13.35
Tier 1 capital ratio (to risk-weighted assets) (2)				16.93				16.86				18.97				19.18
Total capital ratio (to risk-weighted assets) (2)				17.95				17.91				20.02				20.22
ASSET QUALITY INDICATORS:
Nonperforming Assets:
	Nonaccruing loans		$	3,446			$	3,002			$	3,454			$	3,641
	Accruing loans past due 90 days or more			-				-				-				-
	Total nonperforming loans		$	3,446			$	3,002			$	3,454			$	3,641
	Assets acquired through foreclosure			2,815				2,819				2,814				1,889
	Total nonperforming assets		$	6,261			$	5,821			$	6,268			$	5,530
	Ratio of nonperforming loans to total loans			0.46	%			0.41	%			0.47	%			0.50	%
	Ratio of nonperforming assets to total assets			0.57				0.53				0.57				0.51
	Ratio of allowance for loan losses to total loans			1.42				1.45				1.46				1.54
	Ratio of allowance for loan losses to nonperforming loans			308.3				357.6				310.7				304.8
Troubled Debt Restructurings:
	Nonaccruing troubled debt restructurings (3)		$	1,123			$	1,331			$	1,401			$	277
	Accruing troubled debt restructurings			5,971				5,892				3,624				5,504
	Total troubled debt restructurings		$	7,094			$	7,223			$	5,025			$	5,781
Past Due Loans:
	30 - 59 days		$	541			$	639			$	113			$	939
	60 - 89 days			179				21				145				124
	Total		$	720			$	660			$	258			$	1,063
(1) Represents stockholders’ equity ratio of Fox Chase Bancorp, Inc.
(2) Represents regulatory capital ratios of Fox Chase Bank.
(3) Nonaccruing troubled debt restructurings are included in total nonaccruing loans above.

 

			At or for the Three Months Ended
			September 30,				June 30,				December 31,				September 30,
				2015				2015				2014				2014
PERFORMANCE RATIOS  (4):
	Return on average assets			0.85	%			1.15	%			0.79	%			0.67	%
	Return on average equity			5.32				7.22				4.76				4.07
	Net interest margin			3.18				3.24				3.18				3.20
	Efficiency ratio (5)			65.1				64.3				63.3				56.7
OTHER:
	Average commercial loans		$	621,942			$	630,577			$	571,875			$	593,847
	Tangible book value per share - Core (6)		$	15.15			$	15.03			$	14.89			$	14.81
	Tangible book value per share (7)		$	15.18			$	15.03			$	14.90			$	14.78
	Employees (full-time equivalents)			138				136				138				141
			At or for the Nine Months Ended
			September 30,				September 30,
				2015				2014
PERFORMANCE RATIOS  (4):
	Average commercial loans		$	622,664			$	577,010
	Return on average assets			0.94	%			0.74	%
	Return on average equity			5.90				4.59
	Net interest margin			3.24				3.19
	Efficiency ratio (5)			63.9				60.4
(4) Annualized
(5)  Represents noninterest expense, excluding valuation adjustments on assets acquired through foreclosure, divided by the sum of net interest income and noninterest income, excluding gains or losses on the sale of securities, premises and equipment and assets acquired through foreclosure.
(6) Total stockholders’ equity, excluding the impact of accumulated other comprehensive income (loss), net ($384,000 at September 30, 2015, ($99,000) at June 30, 2015, $116,000 at December 31, 2014 and $453,000 at September 30, 2014), divided by total shares outstanding.
(7) Total stockholders’ equity divided by total shares outstanding.  Tangible book value per share and book value per share were the same for all periods indicated.

 

AVERAGE BALANCE SHEET
(Dollars in Thousands, Unaudited)
				Three Months Ended September 30,
					2015												2014
								Interest													Interest
				Average				and				Yield/				Average					and					Yield/
				Balance				Dividends				Cost (2)				Balance					Dividends					Cost (2)
Assets:
Interest-earning assets:
	Interest-earning demand deposits			$	10,586			$	4				0.16	%		$	6,815				$	1					0.06	%
	Investment securities				304,386				1,659				2.18	%			322,178					1,777					2.21	%
	Loans (1)				735,872				8,243				4.45	%			730,410					8,375					4.56	%
	Allowance for loan losses				(10,731	)											(11,541	)
	Net loans				725,141				8,243								718,869					8,375
		Total interest-earning assets			1,040,113				9,906				3.79	%			1,047,862					10,153					3.85	%
Noninterest-earning assets					51,792												41,403
	Total assets			$	1,091,905											$	1,089,265
Liabilities and equity:
Interest-bearing liabilities:
	Interest-bearing deposits			$	572,028			$	745				0.52	%		$	552,072				$	760					0.55	%
	Borrowings				170,923				760				1.76	%			228,737					875					1.52	%
	Total interest-bearing liabilities				742,951				1,505				0.80	%			780,809					1,635					0.83	%
	Noninterest-bearing deposits				168,357												123,709
	Other noninterest-bearing liabilities				5,505												6,407
		Total liabilities			916,813												910,925
	Stockholders' equity				175,047												178,984
	Accumulated comprehensive income				45												(644	)
		Total stockholders' equity			175,092												178,340
		Total liabilities and stockholders' equity		$	1,091,905											$	1,089,265
	Net interest income							$	8,401												$	8,518
	Interest rate spread												2.99	%													3.02	%
	Net interest margin												3.18	%													3.20	%
	(1)Nonperforming loans are included in average balance computation.
	(2)Yields are not presented on a tax-equivalent basis.

 

AVERAGE BALANCE SHEET
(Dollars in Thousands, Unaudited)
				Three Months Ended
				September 30, 2015												June 30, 2015
								Interest												Interest
				Average				and				Yield/				Average				and				Yield/
				Balance				Dividends				Cost (2)				Balance				Dividends				Cost (2)
Assets:
Interest-earning assets:
	Interest-earning demand deposits			$	10,586			$	4				0.16	%		$	10,285			$	3				0.13	%
	Investment securities				304,386				1,659				2.18	%			309,583				1,696				2.19	%
	Loans (1)				735,872				8,243				4.45	%			749,997				8,391				4.49	%
	Allowance for loan losses				(10,731	)											(11,919	)
	Net loans				725,141				8,243								738,078				8,391
		Total interest-earning assets			1,040,113				9,906				3.79	%			1,057,946				10,090				3.82	%
Noninterest-earning assets					51,792												42,400
	Total assets			$	1,091,905											$	1,100,346
Liabilities and equity:
Interest-bearing liabilities:
	Interest-bearing deposits			$	572,028			$	745				0.52	%		$	585,892			$	728				0.50	%
	Borrowings				170,923				760				1.76	%			156,130				709				1.82	%
	Total interest-bearing liabilities				742,951				1,505				0.80	%			742,022				1,437				0.78	%
	Noninterest-bearing deposits				168,357												177,223
	Other noninterest-bearing liabilities				5,505												6,353
		Total liabilities			916,813												925,598
	Stockholders' equity				175,047												174,201
	Accumulated comprehensive income				45												547
		Total stockholders' equity			175,092												174,748
		Total liabilities and stockholders' equity		$	1,091,905											$	1,100,346
	Net interest income							$	8,401											$	8,653
	Interest rate spread												2.99	%											3.04	%
	Net interest margin												3.18	%											3.24	%
	(1) Nonperforming loans are included in average balance computation.
	(2) Yields are not presented on a tax-equivalent basis.

 

AVERAGE BALANCE SHEET
(Dollars in Thousands, Unaudited)
				Nine Months Ended September 30,
					2015												2014
								Interest												Interest
				Average				and				Yield/				Average				and				Yield/
				Balance				Dividends				Cost (2)				Balance				Dividends				Cost (2)
Assets:
Interest-earning assets:
	Interest-earning demand deposits			$	10,807			$	10				0.13	%		$	6,794			$	2				0.05	%
	Investment securities				308,339				5,337				2.31	%			330,211				5,672				2.29	%
	Loans (1)				742,624				24,773				4.46	%			719,879				24,615				4.57	%
	Allowance for loan losses				(11,142	)											(11,566	)
	Net loans				731,482				24,773								708,313				24,615
		Total interest-earning assets			1,050,628				30,120				3.83	%			1,045,318				30,289				3.87	%
Noninterest-earning assets					45,631												44,496
	Total assets			$	1,096,259											$	1,089,814
Liabilities and equity:
Interest-bearing liabilities:
	Interest-bearing deposits			$	568,128			$	2,188				0.51	%		$	562,000			$	2,455				0.58	%
	Borrowings				172,394				2,206				1.71	%			221,806				2,574				1.55	%
	Total interest-bearing liabilities				740,522				4,394				0.79	%			783,806				5,029				0.86	%
	Noninterest-bearing deposits				173,989												121,770
	Other noninterest-bearing liabilities				6,433												7,437
		Total liabilities			920,944												913,013
	Stockholders' equity				174,934												178,382
	Accumulated comprehensive income				381												(1,581	)
		Total stockholders' equity			175,315												176,801
		Total liabilities and stockholders' equity		$	1,096,259											$	1,089,814
	Net interest income							$	25,726											$	25,260
	Interest rate spread												3.04	%											3.01	%
	Net interest margin												3.24	%											3.19	%
	(1) Nonperforming loans are included in average balance computation.
	(2) Yields are not presented on a tax-equivalent basis.

Contact: Roger S. Deacon 
Chief Financial Officer
Phone: (215) 775-1435