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 $9.5 million, or $0.85 per diluted share, for the year ended December 31, 2015,  compared to $8.2 million, or $0.71 per diluted share, for the year ended December 31, 2014.  The Company reported net income of $1.8 million, or $0.16 per diluted share, for the quarter ended December 31, 2015 compared to net income of $2.1 million, or $0.19 per diluted share, for the quarter ended December 31, 2014. 

2015 results include one-time after-tax core data processing systems conversion-related expenses of $839,000 ($0.08 per share) and after-tax merger-related expenses of $396,000 ($0.03 per share). The fourth quarter 2015 results include one-time after-tax core data processing systems conversion-related expenses of $193,000 ($0.02 per share) and after-tax merger-related expenses of $396,000 ($0.03 per share).  

The Company also announced that its Board of Directors declared a cash dividend of $0.28 per outstanding share of common stock.  This quarter’s dividend is comprised of a regular quarterly dividend of $0.14 and a nonrecurring dividend of $0.14 per outstanding common share.  Cumulative dividends paid for 2015 totaled $0.70 per share, which represented 82% of the Company's 2015 net income. The dividend will be paid on February 25, 2016 to stockholders of record as of the close of business on February 11, 2016. 

Commenting on the Company’s performance, Thomas M. Petro, President and Chief Executive Officer stated, “We are pleased with continued improvements in our operating performance, especially in this challenging interest rate environment. In addition, we are excited about our merger with Univest Corporation of Pennsylvania and are moving forward to obtain the necessary approvals to close the transaction in the third quarter of 2016.  We believe this affiliation will create a stronger franchise and provide greater benefits to customers, shareholders and the communities we serve.”

Highlights at and for the year and quarter ended December 31, 2015 included:

• Total assets were $1.13 billion at December 31, 2015 compared to $1.09 billion at December 31, 2014.  Total loans were $767.7 million at December 31, 2015, an increase of $28.2 million, or 3.8%, from $739.5 million at September 30, 2015, and an increase of $43.4 million, or 6.0%, from $724.3 million at December 31, 2014.
• Total commercial loans increased $66.0 million, or 10.9%, from $607.5 million at December 31, 2014 to $673.5 million at December 31, 2015 primarily due to increases of $53.8 million in multi-family and commercial real estate loans and $15.9 million in commercial and industrial loans offset by paydowns of $3.7 million in construction loans. Total commercial loans increased $34.4 million, or 5.4%, from $639.1 million at September 30, 2015 to $673.5 million at December 31, 2015 primarily due to increases of $38.6 million in multi-family and commercial real estate loans offset by paydowns of $3.9 million in construction loans.
• Total average assets were $1.10 billion for the year ended December 31, 2015 compared to $1.08 billion for the year ended December 31, 2014.  Total average commercial loans increased by $52.4 million, or 9.1%, to $628.1 million for the year ended December 31, 2015, compared to $575.7 million for the year ended December 31, 2014. 
• Nonperforming assets decreased to $5.2 million, or 0.46% of total assets, at December 31, 2015 compared to $6.3 million, or 0.57% of total assets, at both September 30, 2015 and December 31, 2014.
• Return on average assets was 0.87% for the year ended December 31, 2015 compared to 0.76% for the year ended December 31, 2014. 
• Net interest income increased $622,000, or 1.9%, to $34.1 million for the year ended December 31, 2015, compared to $33.5 million for the year ended December 31, 2014.  The net interest margin was 3.20% for the year ended December 31, 2015, compared to 3.19% for the year ended December 31, 2014. 
• Net interest income increased $156,000, or 1.9%, to $8.4 million for the three months ended December 31, 2015, compared to $8.2 million for the three months ended December 31, 2014.  Net interest income was also $8.4 million for the three months ended September 30, 2015.  The net interest margin was 3.10% for the three months ended December 31, 2015, compared to 3.18% for the three months ended December 31, 2014 and the three months ended September 30, 2015. The decrease in net interest margin during the quarter was primarily due to lower rates on new commercial loans and repricing of certain credits to lower rates given the competitive environment.
• The Company recorded a credit to the provision for loan losses of $995,000 during the year ended December 31, 2015, compared to a provision for loan losses of $1.9 million for the year ended December 31, 2014.  The credit to the provision was primarily due to $1.2 million of recoveries, during 2015, on previously charged-off loans.  The Company recorded net loan recoveries of $827,000 and net charge-offs of $161,000 for the year and quarter ended December 31, 2015, respectively, compared to net charge-offs of $2.7 million and $720,000, respectively, for the year and quarter ended December 31, 2014.  The charge-offs in the quarter ended December 31, 2015 were primarily related to one residential mortgage loan.  There were no commercial loan charge-offs.   
• The allowance for loan losses was $10.6 million, or 1.36% of total loans at December 31, 2015, compared to $10.6 million, or 1.42% of total loans at September 30, 2015 and $10.7 million or 1.46% of total loans at December 31, 2014.
• Noninterest income increased $440,000 to $2.7 million for the year ended December 31, 2015, compared to $2.3 million for the year ended December 31, 2014, primarily due to an increase of $181,000 in income on bank-owned life insurance as the Bank purchased $10.0 million of bank-owned life insurance in the third quarter of 2015, an increase of $131,000 in equity in earnings of affiliate due to higher mortgage volumes and an increase of $104,000 in other noninterest income primarily due to increased cash management fees.
• Noninterest expense increased $2.0 million, or 9.0%, to $24.2 million for the year ended December 31, 2015, compared to $22.2 million for the year ended December 31, 2014. This increase was primarily due to the Company incurring $1.8 million (pre-tax) of one-time costs, of which $1.3 million related to the core data processing systems conversion and $487,000 related to the previously announced merger with Univest Corporation of Pennsylvania (NASDAQ:UVSP), (“Univest”).  For the year ended December 31, 2015, pre-tax system conversion and merger related costs are captured in the following noninterest expense categories:  Salary, benefits and other compensation ($149,000), data processing costs ($632,000), professional fees ($883,000) and other ($94,000).
• Excluding the one-time core data processing systems costs and merger-related costs noted in the above paragraph, noninterest expense increased $244,000, or 1.1%, to $22.5 million for the year ended December 31, 2015 from $22.2 million for the year ended December 31, 2014. 
• Noninterest expense increased $766,000, or 13.6%, to $6.4 million for the three months ended December 31, 2015, compared to $5.6 million for the three months ended December 31, 2014. This increase was due to the Company incurring $779,000 (pre-tax) of one-time costs, of which $292,000 related to the core data processing systems conversion and $487,000 related to the previously announced merger with Univest. For the three months ended December 31, 2015, pre-tax system conversion and merger related costs are captured in the following noninterest expense categories:  Salary, benefits and other compensation ($43,000), data processing costs ($134,000), professional fees ($587,000) and other ($15,000). 
• The efficiency ratio was 65.4% and 69.9% for the year and quarter ended December 31, 2015, respectively, compared to 61.2% and 63.3% for the year and quarter ended December 31, 2014, respectively. Excluding the previously discussed one-time core data processing systems conversion and merger related costs, the efficiency ratio was 60.6% and 61.4% for the year and quarter ended December 31, 2015, respectively.
• Income tax provision for the year ended December 31, 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 year ended December 31, 2015 was 29.9%.  Excluding this reversal, the effective income tax rate for the year ended December 31, 2015 was 31.2%, compared to 29.4% for the year ended December 31, 2014. 

On December 8, 2015, Univest and the Company announced the signing of a definitive agreement and plan of merger under which Univest will acquire the Company through the merger of the Company with and into Univest, with Univest surviving the merger, in a cash and stock transaction for total consideration valued at approximately $244.3 million.  Subject to the satisfaction or waiver of the closing conditions contained in the merger agreement, including the approval of the merger agreement by the Company’s shareholders and the receipt of required regulatory approvals, Univest and the Company expect that the merger will be completed during the third quarter of 2016. However, it is possible that factors outside the control of both companies, including whether or when the required regulatory approvals will be received, could result in the merger being completed at a different time or not at all.

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								Twelve Months Ended
						December 31,								December 31,
							2015				2014				2015				2014
						(Unaudited)								(Unaudited)				(Audited)
INTEREST INCOME
	Interest and fees on loans					$	8,288			$	8,085			$	33,061			$	32,700
	Interest and dividends on investment securities						1,650				1,750				6,987				7,422
	Other interest income						15				5				25				7
			Total Interest Income				9,953				9,840				40,073				40,129
INTEREST EXPENSE
	Deposits						812				761				3,000				3,216
	Short-term borrowings						15				27				94				127
	Federal Home Loan Bank advances						568				565				2,198				2,288
	Other borrowed funds						168				253				665				1,004
			Total Interest Expense				1,563				1,606				5,957				6,635
			Net Interest Income				8,390				8,234				34,116				33,494
	Provision (credit) for loan losses						100				350				(995	)			1,943
			Net Interest Income after Provision for Loan Losses				8,290				7,884				35,111				31,551
NONINTEREST INCOME
	Service charges and other fee income						372				412				1,572				1,604
	Net gain (loss) on sale of assets acquired through foreclosure						2				68				(12	)			(68	)
	Income on bank-owned life insurance						217				122				661				480
	Equity in earnings of affiliate						78				47				303				172
	Other						76				29				209				105
			Total Noninterest Income				745				678				2,733				2,293
NONINTEREST EXPENSE
	Salaries, benefits and other compensation						3,972				3,710				15,470				14,380
	Occupancy expense						375				388				1,663				1,709
	Furniture and equipment expense						95				90				358				390
	Data processing costs						560				396				2,311				1,542
	Professional fees						823				331				1,970				1,417
	Marketing expense						59				146				192				302
	FDIC premiums						125				120				509				571
	Assets acquired through foreclosure expense						24				17				247				420
	Other						354				423				1,513				1,500
			Total Noninterest Expense				6,387				5,621				24,233				22,231
			Income Before Income Taxes				2,648				2,941				13,611				11,613
		Income tax provision					865				833				4,065				3,418
			Net Income			$	1,783			$	2,108			$	9,546			$	8,195
Earnings per share:
	Basic					$	0.16			$	0.19			$	0.87			$	0.73
	Diluted					$	0.16			$	0.19			$	0.85			$	0.71

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands, Except Share Data)
				December 31,
					2015				2014
				(Unaudited)				(Audited)
ASSETS
	Cash and due from banks			$	3,413			$	2,763
	Interest-earning demand deposits in other banks				4,385				14,450
		Total cash and cash equivalents			7,798				17,213
	Investment securities available-for-sale				139,751				134,037
	Investment securities held-to-maturity (fair value of $149,850 at
		December 31, 2015 and $170,854 at December 31, 2014)			150,190				170,172
	Loans, net of allowance for loan losses of $10,562
		at December 31, 2015 and $10,730 at December 31, 2014			767,683				724,326
	Federal Home Loan Bank stock, at cost				6,734				6,015
	Bank-owned life insurance				25,687				15,027
	Premises and equipment, net				9,030				9,418
	Assets acquired through foreclosure				2,623				2,814
	Real estate held for investment				1,620				1,620
	Accrued interest receivable				3,145				3,147
	Mortgage servicing rights, net				104				111
	Deferred tax asset, net				5,142				4,561
	Other assets				6,096				6,155
		Total Assets		$	1,125,603			$	1,094,616
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
	Deposits			$	764,974			$	711,909
	Short-term borrowings				38,496				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				1,422				1,447
	Accrued interest payable				319				311
	Accrued expenses and other liabilities				3,478				5,038
		Total Liabilities			948,689				918,705
STOCKHOLDERS' EQUITY
	Preferred stock ($.01 par value; 1,000,000 shares authorized,
		none issued and outstanding at December 31, 2015 and December 31, 2014)			-				-
	Common stock ($.01 par value; 60,000,000 shares authorized,
		11,767,590 shares outstanding at December 31, 2015
		and 11,802,791 shares outstanding at December 31, 2014)			149				147
	Additional paid-in capital				142,189				139,177
	Treasury stock, at cost (3,141,201 shares at December 31, 2015 and
		2,852,572 at December 31, 2014)			(44,468	)			(39,698	)
	Common stock acquired by benefit plans				(6,717	)			(8,056	)
	Retained earnings				86,241				84,225
	Accumulated other comprehensive (loss) income, net				(480	)			116
		Total Stockholders' Equity			176,914				175,911
		Total Liabilities and Stockholders' Equity		$	1,125,603			$	1,094,616

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA OF THE COMPANY (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
			December 31,				September 30,				December 31,
				2015				2015				2014
CAPITAL RATIOS:
Stockholders’ equity (to total assets) (1)				15.72		%		16.02		%		16.07		%
Common equity tier 1 capital ratio (to risk-weighted assets) (2)				16.65				16.93			N/A
Tier 1 leverage ratio (to adjusted average assets) (2)				13.52				13.64				13.99
Tier 1 capital ratio (to risk-weighted assets) (2)				16.65				16.93				18.97
Total capital ratio (to risk-weighted assets) (2)				17.63				17.95				20.02
ASSET QUALITY INDICATORS:
Nonperforming Assets:
	Nonaccruing loans		$	2,534			$	3,446			$	3,454
	Accruing loans past due 90 days or more			-				-				-
	Total nonperforming loans		$	2,534			$	3,446			$	3,454
	Assets acquired through foreclosure			2,623				2,815				2,814
	Total nonperforming assets		$	5,157			$	6,261			$	6,268
	Ratio of nonperforming loans to total loans			0.33		%		0.46		%		0.47		%
	Ratio of nonperforming assets to total assets			0.46				0.57				0.57
	Ratio of allowance for loan losses to total loans			1.36				1.42				1.46
	Ratio of allowance for loan losses to nonperforming loans			416.8				308.3				310.7
Troubled Debt Restructurings:
	Nonaccruing troubled debt restructurings (3)		$	1,122			$	1,123			$	1,401
	Accruing troubled debt restructurings			6,440				5,971				3,624
	Total troubled debt restructurings		$	7,562			$	7,094			$	5,025
Past Due Loans:
	30 - 59 days		$	1,021			$	541			$	113
	60 - 89 days			685				179				145
	Total		$	1,706			$	720			$	258

                                                                               

(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
		December 31,				September 30,				December 31,
			2015				2015				2014
PERFORMANCE RATIOS  (4):
Return on average assets			0.64	%			0.85	%			0.79	%
Return on average equity			4.03				5.32				4.76
Net interest margin			3.10				3.18				3.18
Efficiency ratio (5)			69.9				65.1				63.3
Efficiency ratio (excludes one-time costs) (6)			61.4				59.6				63.3
OTHER:
Average commercial loans		$	644,403			$	621,942			$	571,875
Tangible book value per share - Core (7)		$	15.07			$	15.15			$	14.89
Tangible book value per share (8)		$	15.03			$	15.18			$	14.90
Employees (full-time equivalents)			134				138				138
		At or for the Twelve Months Ended
		December 31,				December 31,
			2015				2014
PERFORMANCE RATIOS:
Average commercial loans		$	628,099			$	575,727
Return on average assets			0.87	%			0.76	%
Return on average equity			5.43				4.63
Net interest margin			3.20				3.19
Efficiency ratio (5)			65.4				61.2
Efficiency ratio (excludes one-time costs) (6)			60.6				61.2

(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) Same as (5) except noninterest expense in this ratio excludes costs related to the core data processing systems conversion and the previously announced merger with Univest Corporation.  Such costs were $779,000, $502,000 and $0 for the three months ended December 31, 2015, September 2015 and December 2014, respectively.  Such costs were $1.8 million and $0 for the twelve months ended December 31, 2015 and December 31, 2014, respectively.(7) Total stockholders’ equity, excluding the impact of accumulated other comprehensive (loss) gain, net ($(480,000) at December 31, 2015, $384,000 at September 30, 2015 and $116,000 at December 31, 2014) divided by total shares outstanding.(8) 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 December 31,
					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			$	26,625			$	15				0.23	%		$	12,883			$	5				0.14	%
	Investment securities				298,284				1,650				2.21	%			314,172				1,750				2.23	%
	Loans (1)				752,744				8,288				4.37	%			703,052				8,085				4.57	%
	Allowance for loan losses				(10,605	)											(11,133	)
	Net loans				742,139				8,288								691,919				8,085
		Total interest-earning assets			1,067,048				9,953				3.71	%			1,018,974				9,840				3.84	%
Noninterest-earning assets					53,523												43,137
	Total assets			$	1,120,571											$	1,062,111
Liabilities and equity:
Interest-bearing liabilities:
	Interest-bearing deposits			$	586,944			$	812				0.55	%		$	546,781			$	761				0.55	%
	Borrowings				154,865				751				1.93	%			194,498				845				1.73	%
	Total interest-bearing liabilities				741,809				1,563				0.84	%			741,279				1,606				0.86	%
	Noninterest-bearing deposits				197,711												135,746
	Other noninterest-bearing liabilities				4,292												7,962
		Total liabilities			943,812												884,987
	Stockholders' equity				176,601												177,126
	Accumulated comprehensive income				158												(2	)
		Total stockholders' equity			176,759												177,124
		Total liabilities and stockholders' equity		$	1,120,571											$	1,062,111
	Net interest income							$	8,390											$	8,234
	Interest rate spread												2.87	%											2.98	%
	Net interest margin												3.10	%											3.18	%

                                                                       

(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
				December 31, 2015												September 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			$	26,625			$	15				0.23	%		$	10,586			$	4				0.16	%
	Investment securities				298,284				1,650				2.21	%			304,386				1,659				2.18	%
	Loans (1)				752,744				8,288				4.37	%			735,872				8,243				4.45	%
	Allowance for loan losses				(10,605	)											(10,731	)
	Net loans				742,139				8,288								725,141				8,243
		Total interest-earning assets			1,067,048				9,953				3.71	%			1,040,113				9,906				3.79	%
Noninterest-earning assets					53,523												51,792
	Total assets			$	1,120,571											$	1,091,905
Liabilities and equity:
Interest-bearing liabilities:
	Interest-bearing deposits			$	586,944			$	812				0.55	%		$	572,028			$	745				0.52	%
	Borrowings				154,865				751				1.93	%			170,923				760				1.76	%
	Total interest-bearing liabilities				741,809				1,563				0.84	%			742,951				1,505				0.80	%
	Noninterest-bearing deposits				197,711												168,357
	Other noninterest-bearing liabilities				4,292												5,505
		Total liabilities			943,812												916,813
	Stockholders' equity				176,601												175,047
	Accumulated comprehensive income				158												45
		Total stockholders' equity			176,759												175,092
		Total liabilities and stockholders' equity		$	1,120,571											$	1,091,905
	Net interest income							$	8,390											$	8,401
	Interest rate spread												2.87	%											2.99	%
	Net interest margin												3.10	%											3.18	%

                                                                       

(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)
				Twelve Months Ended December 31,
					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			$	14,762			$	25				0.17	%		$	8,316			$	7				0.08	%
	Investment securities				305,826				6,987				2.28	%			326,201				7,422				2.28	%
	Loans (1)				745,154				33,061				4.44	%			715,673				32,700				4.57	%
	Allowance for loan losses				(11,008	)											(11,458	)
	Net loans				734,146				33,061								704,215				32,700
		Total interest-earning assets			1,054,734				40,073				3.80	%			1,038,732				40,129				3.86	%
Noninterest-earning assets					47,604												44,156
	Total assets			$	1,102,338											$	1,082,888
Liabilities and equity:
Interest-bearing liabilities:
	Interest-bearing deposits			$	572,832			$	3,000				0.52	%		$	558,194			$	3,216				0.58	%
	Borrowings				168,012				2,957				1.76	%			214,980				3,419				1.59	%
	Total interest-bearing liabilities				740,844				5,957				0.80	%			773,174				6,635				0.86	%
	Noninterest-bearing deposits				179,920												125,264
	Other noninterest-bearing liabilities				5,898												7,569
		Total liabilities			926,662												906,007
	Stockholders' equity				175,351												178,068
	Accumulated comprehensive income				325												(1,187	)
		Total stockholders' equity			175,676												176,881
		Total liabilities and stockholders' equity		$	1,102,338											$	1,082,888
	Net interest income							$	34,116											$	33,494
	Interest rate spread												3.00	%											3.00	%
	Net interest margin												3.20	%											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