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 $2.2 million, or $0.20 per diluted share, for the three months ended March 31, 2016, compared to net income of $2.3 million, or $0.20 per diluted share, for the three months ended March 31, 2015.  

The first quarter 2016 results include after-tax merger-related professional fees of $320,000 ($0.03 per share).  The first quarter 2015 results include after-tax core data processing system conversion-related expenses of $152,000 ($0.01 per share).

Commenting on performance for the quarter, Thomas M. Petro, President and CEO said, “The Company continues to execute on its commercial business strategy as average commercial loans increased 10.2% as compared to the same quarter in 2015.  We continue to be excited about the 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 for the quarter ended March 31, 2016 included:

• Total average assets were $1.13 billion for the three months ended March 31, 2016 as compared to $1.12 billion for the three months ended December 31, 2015 and $1.10 billion for the three months ended March 31, 2015. Average commercial loans increased by $62.6 million, or 10.2%, to $678.1 million for the three months ended March 31, 2016, compared to $615.5 million for the three months ended March 31, 2015.  Additionally, average commercial loans increased by $33.7 million, or 5.2%, for the three months ended March 31, 2016, compared to $644.4 million for the three months ended December 31, 2015. 
• Total assets were $1.13 billion at March 31, 2016 as compared to $1.13 billion at December 31, 2015 and $1.12 billion at March 31, 2015.  Total commercial loans increased by $13.8 million, or 2.0%, to $687.3 million at March 31, 2016, compared to $673.5 at December 31, 2015, and increased $44.8 million, or 7.0%, compared to $642.5 million at March 31, 2015.                                             
• Nonperforming assets totaled $5.2 million, or 0.46% of total assets, at March 31, 2016 and at December 31, 2015, respectively, and $6.2 million, or 0.55% of total assets, at March 31, 2015.
• Net interest income decreased $128,000, or 1.5%, to $8.5 million for the three months ended March 31, 2016, compared to $8.7 million for the three months ended March 31, 2015. The net interest margin was 3.16% for the three months ended March 31, 2016, 3.10% for the three months ended December 31, 2015, and 3.29% for the three months ended March 31, 2015.  The increase in net interest margin as compared to the three months ended December 31, 2015 was primarily due to a reduction in excess liquidity from the three months ended December 31 2015.  The decrease from the three months ended March 31, 2015 was primarily due to the receipt of a $254,000 special dividend from the FHLB of Pittsburgh, which increased the net interest margin by 0.10%.
• Credit related costs, which include (i) provision for loan losses, (ii) valuation adjustments on assets acquired through foreclosure and (iii) net (loss) gain on sale of assets acquired through foreclosure, totaled $61,000 for the three months ended March 31, 2016, compared to $98,000 for the three months ended December 31, 2015 and $487,000 for the three months ended March 31, 2015.  Net loan charge-offs totaled $37,000 for the three months ended March 31, 2016, compared to $161,000 for the three months ended December 31, 2015 and $24,000 for the three months ended March 31, 2015. There were no commercial loan charge-offs during the three months ended March 31, 2016.
• The allowance for loan losses was $10.6 million, or 1.34% of total loans, at March 31, 2016, compared to $10.6 million, or 1.36% of total loans, at December 31, 2015 and $11.2 million, or 1.46% of total loans at March 31, 2015.
• Noninterest income increased $95,000, or 16.6%, to $666,000 for the three months ended March 31, 2016 compared to $571,000 for the three months ended March 31, 2015 primarily due to an increase of $95,000 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 and an increase of $67,000 in other noninterest income primarily due to increased cash management fees offset by a decrease of $45,000 in equity in earnings of affiliate due to lower mortgage volumes.
• Noninterest expense increased $120,000, or 2.1%, to $5.9 million for the three months ended March 31, 2016, compared to $5.8 million for the three months ended March 31, 2015.  This increase was primarily due to an increase of $224,000 in salaries, benefits and other compensation and an increase of $175,000 in professional fees related to legal fees regarding the merger offset by a decrease of $165,000 in data processing fees.  Data processing fees were higher in 2015 due to the Bank’s change in outsourced data processing systems, which was completed in the fourth quarter of 2015.
• Excluding the $346,000 of pre-tax merger-related costs incurred in the three months ended March 31, 2016 and the pre-tax one-time core data processing system costs of $230,000 during the three months ended March 31, 2015, noninterest expense remained flat at $5.5 million.
• The efficiency ratio was 63.7% and 62.2% for the three months ended March 31, 2016 and 2015, respectively. Excluding the previously discussed merger-related costs for 2016 and one-time core data processing systems conversion costs for 2015, the efficiency ratio was 60.0% and 59.7% for the three months ended March 31, 2016 and 2015, respectively.
• Income tax provision increased $304,000, or 41.8%, to $1.0 million for the three months ended March 31, 2016, compared to $727,000 for the three months ended March 31, 2015.  Income tax provision for the three months ended March 31, 2015 includes the reversal of an $182,000 valuation allowance on certain state deferred tax assets. The effective income tax rate for the three months ended March 31, 2016 and March 31, 2015 was 31.4% and 24.2%, respectively.  Excluding the reversal, the effective income tax rate for the three months ended March 31, 2015 was 30.3%.  

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 or about May 26, 2016 to stockholders of record as of the close of business on May 12, 2016. 

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
						March 31,
							2016				2015
						(Unaudited)
INTEREST INCOME
	Interest and fees on loans					$	8,506			$	8,139
	Interest and dividends on investment securities						1,632				1,982
	Other interest income						9				3
			Total Interest Income				10,147				10,124
INTEREST EXPENSE
	Deposits						807				715
	Short-term borrowings						59				32
	Federal Home Loan Bank advances						557				539
	Other borrowed funds						180				166
			Total Interest Expense				1,603				1,452
			Net Interest Income				8,544				8,672
	Provision for loan losses						45				472
			Net Interest Income after Provision for Loan Losses				8,499				8,200
NONINTEREST INCOME
	Service charges and other fee income						362				384
	Income on bank-owned life insurance						215				120
	Equity in earnings of affiliate						(5	)			40
	Other						94				27
			Total Noninterest Income				666				571
NONINTEREST EXPENSE
	Salaries, benefits and other compensation						3,943				3,719
	Occupancy expense						430				477
	Furniture and equipment expense						77				83
	Data processing costs						408				573
	Professional fees						538				363
	Marketing expense						24				41
	FDIC premiums						134				119
	Assets acquired through foreclosure expense						30				30
	Other						301				360
			Total Noninterest Expense				5,885				5,765
			Income Before Income Taxes				3,280				3,006
		Income tax provision					1,031				727
			Net Income			$	2,249			$	2,279
Earnings per share:
	Basic					$	0.20			$	0.21
	Diluted					$	0.20			$	0.20

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands, Except Share Data)
				March 31,				December 31,
					2016				2015
				(Unaudited)				(Audited)
ASSETS
	Cash and due from banks			$	3,737			$	3,413
	Interest-earning demand deposits in other banks				5,375				4,385
		Total cash and cash equivalents			9,112				7,798
	Investment securities available-for-sale				135,826				139,751
	Investment securities held-to-maturity (fair value of $146,665 at
		March 31, 2016 and $149,850 at December 31, 2015)			144,528				150,190
	Loans, net of allowance for loan losses of $10,570
		at March 31, 2016 and $10,562 at December 31, 2015			776,669				767,683
	Federal Home Loan Bank stock, at cost				6,186				6,734
	Bank-owned life insurance				25,902				25,687
	Premises and equipment, net				8,895				9,030
	Assets acquired through foreclosure				2,615				2,623
	Real estate held for investment				1,620				1,620
	Accrued interest receivable				3,348				3,145
	Mortgage servicing rights, net				97				104
	Deferred tax asset, net				3,993				5,142
	Other assets				12,950				6,096
		Total Assets		$	1,131,741			$	1,125,603
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
	Deposits			$	815,708			$	764,974
	Short-term borrowings				15,000				38,496
	Federal Home Loan Bank advances				90,000				110,000
	Other borrowed funds				30,000				30,000
	Advances from borrowers for taxes and insurance				1,350				1,422
	Accrued interest payable				302				319
	Accrued expenses and other liabilities				1,541				3,478
		Total Liabilities			953,901				948,689
STOCKHOLDERS' EQUITY
	Preferred stock ($.01 par value; 1,000,000 shares authorized,
		none issued and outstanding at March 31, 2016 and December 31, 2015)			-				-
	Common stock ($.01 par value; 60,000,000 shares authorized,
		11,767,590 shares outstanding at March 31, 2016
		and December 31, 2015)			149				149
	Additional paid-in capital				141,833				142,189
	Treasury stock, at cost (3,141,201 shares at March 31, 2016 and
		December 31, 2015)			(44,468	)			(44,468	)
	Common stock acquired by benefit plans				(5,876	)			(6,717	)
	Retained earnings				85,542				86,241
	Accumulated other comprehensive income (loss), net				660				(480	)
		Total Stockholders' Equity			177,840				176,914
		Total Liabilities and Stockholders' Equity		$	1,131,741			$	1,125,603

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA OF THE COMPANY (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
			March 31,				December 31,				March 31,
				2016				2015				2015
CAPITAL RATIOS:
Stockholders’ equity (to total assets) (1)				15.71		%		15.72		%		15.59		%
Common equity tier 1 capital ratio (to risk-weighted assets) (2)				16.66				16.69				16.28
Tier 1 leverage ratio (to adjusted average assets) (2)				13.74				13.52				13.04
Tier 1 capital ratio (to risk-weighted assets) (2)				16.66				16.69				16.28
Total capital ratio (to risk-weighted assets) (2)				17.63				17.68				17.34
ASSET QUALITY INDICATORS:
Nonperforming Assets:
	Nonaccruing loans		$	2,606			$	2,534			$	3,374
	Accruing loans past due 90 days or more			-				-				-
	Total nonperforming loans		$	2,606			$	2,534			$	3,374
	Assets acquired through foreclosure			2,615				2,623				2,804
	Total nonperforming assets		$	5,221			$	5,157			$	6,178
	Ratio of nonperforming loans to total loans			0.33		%		0.33		%		0.44		%
	Ratio of nonperforming assets to total assets			0.46				0.46				0.55
	Ratio of allowance for loan losses to total loans			1.34				1.36				1.46
	Ratio of allowance for loan losses to nonperforming loans			405.6				416.8				331.3
Troubled Debt Restructurings:
	Nonaccruing troubled debt restructurings (3)		$	1,113			$	1,122			$	1,349
	Accruing troubled debt restructurings			6,488				6,440				4,817
	Total troubled debt restructurings		$	7,601			$	7,562			$	6,166
Past Due Loans:
	30 - 59 days		$	412			$	1,021			$	653
	60 - 89 days			70				685				127
	Total		$	482			$	1,706			$	780
(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
			March 31,				December 31,				March 31,
				2016				2015				2015
PERFORMANCE RATIOS  (4):
	Return on average assets			0.80	%			0.64	%			0.83	%
	Return on average equity			5.07				4.03				5.18
	Net interest margin			3.16				3.10				3.29
	Efficiency ratio (5)			63.7				69.9				62.2
	Efficiency ratio (excluding one-time costs) (6)			60.0				61.4				59.7
OTHER:
	Average commercial loans		$	678,099			$	644,403			$	615,474
	Tangible book value per share - Core (7)		$	15.06			$	15.07			$	14.88
	Tangible book value per share (8)		$	15.11			$	15.03			$	14.94
	Employees (full-time equivalents)			132				134				136
(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 of Pennsylvania.  Such costs were $346,000, $779,000 and $230,000 for the three months ended March 31, 2016, December 31, 2015 and March 31, 2015, respectively.
(7) Total stockholders’ equity, excluding the impact of accumulated other comprehensive income (loss), net ($660,000 at March 31, 2016, $(480,000) at December 31, 2015 and $666,000 at March 31, 2015), 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 March 31,
					2016												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			$	10,417			$	9				0.34	%		$	11,550			$	3				0.10	%
	Investment securities				292,553				1,632				2.23	%			311,049				1,982				2.55	%
	Loans (1)				781,349				8,506				4.37	%			742,005				8,139				4.44	%
	Allowance for loan losses				(10,563	)											(10,777	)
	Net loans				770,786				8,506								731,228				8,139
		Total interest-earning assets			1,073,756				10,147				3.80	%			1,053,827				10,124				3.88	%
Noninterest-earning assets					53,961												42,702
	Total assets			$	1,127,717											$	1,096,529
Liabilities and equity:
Interest-bearing liabilities:
	Interest-bearing deposits			$	591,839			$	807				0.55	%		$	546,465			$	715				0.53	%
	Borrowings				178,098				796				1.80	%			190,129				737				1.57	%
	Total interest-bearing liabilities				769,937				1,603				0.84	%			736,594				1,452				0.80	%
	Noninterest-bearing deposits				175,527												176,389
	Other noninterest-bearing liabilities				4,645												7,442
		Total liabilities			950,109												920,425
	Stockholders' equity				177,444												175,552
	Accumulated comprehensive income				164												552
		Total stockholders' equity			177,608												176,104
		Total liabilities and stockholders' equity		$	1,127,717											$	1,096,529
	Net interest income							$	8,544											$	8,672
	Interest rate spread												2.96	%											3.08	%
	Net interest margin												3.16	%											3.29	%
(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
				March 31, 2016												December 31, 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			$	10,417			$	9				0.34	%		$	26,625			$	15				0.23	%
	Investment securities				292,553				1,632				2.23	%			298,284				1,650				2.21	%
	Loans (1)				781,349				8,506				4.37	%			752,744				8,288				4.37	%
	Allowance for loan losses				(10,563	)											(10,605	)
	Net loans				770,786				8,506								742,139				8,288
		Total interest-earning assets			1,073,756				10,147				3.80	%			1,067,048				9,953				3.71	%
Noninterest-earning assets					53,961												53,523
	Total assets			$	1,127,717											$	1,120,571
Liabilities and equity:
Interest-bearing liabilities:
	Interest-bearing deposits			$	591,839			$	807				0.55	%		$	586,944			$	812				0.55	%
	Borrowings				178,098				796				1.80	%			154,865				751				1.93	%
	Total interest-bearing liabilities				769,937				1,603				0.84	%			741,809				1,563				0.84	%
	Noninterest-bearing deposits				175,527												197,711
	Other noninterest-bearing liabilities				4,645												4,292
		Total liabilities			950,109												943,812
	Stockholders' equity				177,444												176,601
	Accumulated comprehensive income				164												158
		Total stockholders' equity			177,608												176,759
		Total liabilities and stockholders' equity		$	1,127,717											$	1,120,571
	Net interest income							$	8,544											$	8,390
	Interest rate spread												2.96	%											2.87	%
	Net interest margin												3.16	%											3.10	%
(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