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Fox Chase Bancorp, Inc. Reports Increased Earnings for the Three and Six Months Ended June 30, 2015

HATBORO, Pa., July 29, 2015 (GLOBE NEWSWIRE) -- Fox Chase Bancorp, Inc. (the “Company”) (NASDAQ:FXCB), the holding company for Fox Chase Bank (the “Bank”), today announced net income of $3.2 million, or $0.28 per diluted share, and $5.4 million, or $0.48 per diluted share, for the three and six months ended June 30, 2015, compared to net income of $2.3 million, or $0.20 per diluted share, and $4.3 million, or $0.37 per diluted share, for the three and six  months ended June 30, 2014, respectively.  

Commenting on performance for the quarter, Thomas M. Petro, President and CEO said, “We are pleased with the impressive earnings growth for the three and six months ended June 30, 2015.  We continue to build our commercial bank balance sheet as commercial loans increased to 84% of total loans, average commercial loan growth was 10.4% and our business fundamentals remain strong.  The current quarter results were positively impacted by $840,000 (pre-tax) of recoveries on previously charged-off loans.  The outsourced data processing systems conversion, which will provide the Company the ability to be more responsive to commercial customers, deliver innovative services and provide increased productivity, is expected to be completed in the fourth quarter of 2015.  The pre-tax expenses related to this initiative were $248,000 in the second quarter of 2015 and $478,000 for the first half of 2015.  Total expense related to this initiative is estimated to be approximately $1.1 million to $1.3 million for 2015.” 

Highlights for the three and six months ended June 30, 2015 included:

  • Total average assets were $1.10 billion for the six months ended June 30, 2015 compared to $1.09 billion for the six months ended June 30, 2014. Total average commercial loans increased by $54.4 million, or 9.6%, to $623.0 million for the six months ended June 30, 2015, compared to $568.6 million for the six months ended June 30, 2014.  Additionally, average commercial loans increased by $15.1 million, or 2.5%, to $630.6 million for the three months ended June 30, 2015, compared to $615.5 million for the three months ended March 31, 2015.
  • Assets were $1.09 billion at June 30, 2015 as compared to $1.09 billion at December 31, 2014 and $1.11 billion at June 30, 2014.  Total commercial loans increased by $17.4 million, or 2.8% to $624.9 million at June 30, 2015 compared to $607.5 million at December 31, 2014.  As anticipated, total commercial loans decreased by $17.6 million, or 2.7%, to $624.9 million at June 30, 2015 compared to $642.5 million at March 31, 2015.  This reduction was due to seasonal line usage and expected payoffs.
  • Return on average assets was 1.15% and 0.99% for the three and six months ended June 30, 2015, respectively, compared to 0.85% and 0.78% for the three and six months ended June 30, 2014, respectively.
  • Net interest income increased $583,000, or 3.5%, to $17.3 million for the six months ended June 30, 2015, compared to $16.7 million for the six months ended June 30, 2014 and increased $228,000, or 2.7%, to $8.7 million for the three months ended June 30, 2015, compared to $8.4 million for the three months ended June 30, 2014. The net interest margin was 3.24% for the three months ended June 30, 2015, compared to 3.29% for the three months ended March 31, 2015 and 3.20% for the three months ended June 30, 2014.  During the three months ended June 30, 2015, the Company received $130,000 in prepayment fees, which increased net interest margin by five basis points.  During the three months ended March 31, 2015, the Company received a $254,000 special dividend from the FHLB of Pittsburgh, which increased the net interest margin by ten basis points.
  • The Company recorded a credit to the provision for loan losses of $1.3 million during the three months ended June 30, 2015, which was primarily due to $840,000 of recoveries on previously charged-off loans, a decrease in the loan portfolio of $25.0 million, of which $17.6 million was commercial loans, and loan pay downs on two classified loans. The ratio of the allowance for loan losses to total loans was 1.45% at June 30, 2015, compared to 1.46% at March 31, 2015 and December 31, 2014. 
  • Nonperforming assets continued to decrease to $5.8 million, or 0.53% of total assets, at June 30, 2015 compared to $6.2 million, or 0.55% of total assets, at March 31, 2015 and $6.3 million, or 0.57% of total assets, at December 31, 2014.  Delinquent loans totaled $660,000 at June 30, 2015, compared to $780,000 at March 31, 2015 and $258,000 at December 31, 2014.  There was only one delinquent commercial loan totaling $49,000 at June 30, 2015.
  • Noninterest income increased $294,000 to $1.3 million for the six months ended June 30, 2015 compared to $973,000 for the six months ended June 30, 2014 primarily due to an increase of $117,000 in equity in earnings of affiliate due to higher mortgage volumes, an increase of $47,000 in service charges and other fee income due to increased loan fees.
  • Noninterest expense increased $376,000, or 3.3%, to 11.8 million for the six months ended June 30, 2015, compared to $11.4 million for the six months ended June 30, 2014.  This increase was primarily due to the Company incurring $478,000 of system conversion costs offset by a decrease of $301,000 in assets acquired through foreclosure expense.  System conversion costs for the six months ended June 30, 2015 are captured in the following financial statement categories:  Salary, benefits and other compensation ($70,000), data processing costs ($247,000), professional fees ($147,000) and other ($14,000).
  • Income tax provision for the six months ended June 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 six months ended June 30, 2015 was 28.5%.  Excluding this reversal, the effective income tax rate for the six months ended June 30, 2015 was 30.9% compared to 31.1% for the six months ended June 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 or about August 27, 2015 to stockholders of record as of the close of business on August 13, 2015.  Finally, on July 29, 2015, the Board of Directors approved an additional 5% stock repurchase plan (the “July 2015 Plan”).  Subject to market conditions and other factors, repurchases related to the July 2015 Plan will begin subsequent to the completion of repurchases under the Company’s existing repurchase plan, which was approved in July 2014.  During the three months ended June 30, 2015, the Company repurchased 199,329 shares of treasury stock and has approximately 258,000 shares remaining in its’ approved repurchase plan.

Fox Chase Bancorp, Inc. will host a conference call to discuss second quarter 2015 results on Thursday, July 30, 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 September 11, 2015 by dialing (877) 344-7529; use Conference ID: 10067181.  Participants may preregister at http://dpregister.com/10067181.

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
June 30,
 Six Months Ended
June 30,
     2015   2014   2015   2014 
    (Unaudited)
INTEREST INCOME     
 Interest and fees on loans$   8,391  $  8,130  $  16,530  $  16,240 
 Interest and dividends on investment securities    1,696     1,947     3,678     3,895 
 Other interest income    3     1     6     1 
   Total Interest Income    10,090     10,078     20,214     20,136 
INTEREST EXPENSE       
 Deposits    728     797     1,443     1,695 
 Short-term borrowings    22     30     54     55 
 Federal Home Loan Bank advances    523     576     1,062     1,146 
 Other borrowed funds    164     250     330     498 
   Total Interest Expense    1,437     1,653     2,889     3,394 
   Net Interest Income    8,653     8,425     17,325     16,742 
 (Credit) provision for loan losses   (1,267)    100     (795)    100 
                   
   Net Interest Income after Provision for Loan Losses    9,920     8,325      18,120     16,642 
NONINTEREST INCOME       
 Service charges and other fee income    439     424     823     776 
 Net loss on sale of assets acquired through foreclosure   (15)    (121)    (15)    (121)
 Income on bank-owned life insurance    122     120     242     237 
 Equity in earnings of affiliate    111     67     151     34 
 Other    39     24     66     47 
           
   Total Noninterest Income    696     514     1,267     973 
NONINTEREST EXPENSE       
 Salaries, benefits and other compensation    3,943     3,519     7,662     7,160 
 Occupancy expense   420     418     897     914 
 Furniture and equipment expense    99     96     182     207 
 Data processing costs   502     377     1,075     762 
 Professional fees   414     337     777     815 
 Marketing expense   57     61     98     102 
 FDIC premiums    141     150     260     315 
 Assets acquired through foreclosure expense   62     72     92     393 
 Other   385     389     745     744 
   Total Noninterest Expense   6,023     5,419      11,788      11,412 
   Income Before Income Taxes   4,593     3,420      7,599     6,203 
  Income tax provision   1,437     1,105     2,164     1,932 
   Net Income $  3,156  $  2,315  $   5,435  $  4,271 
Earnings per share:       
 Basic$  0.29  $  0.21  $  0.49  $  0.38 
 Diluted$  0.28  $  0.20  $  0.48  $  0.37 


CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands, Except Share Data)

    June 30,
2015
 
  December 31,
2014
 
   (Unaudited) (Audited)
ASSETS
 Cash and due from banks$  1,795  $  2,763 
 Interest-earning demand deposits in other banks   3,557     14,450 
  Total cash and cash equivalents    5,352     17,213 
 Investment securities available-for-sale   139,381     134,037 
 Investment securities held-to-maturity (fair value of $162,182 at   
  June 30, 2015 and $170,854 at December 31, 2014)   162,995     170,172  
 Loans, net of allowance for loan losses of $10,736   
  at June 30, 2015 and $10,730 at December 31, 2014   729,217     724,326 
 Federal Home Loan Bank stock, at cost   6,786     6,015 
 Bank-owned life insurance   15,269     15,027 
 Premises and equipment, net   9,269     9,418 
 Assets acquired through foreclosure   2,819     2,814 
 Real estate held for investment   1,620     1,620 
 Accrued interest receivable   3,118     3,147 
 Mortgage servicing rights, net   102     111 
 Deferred tax asset, net   4,536     4,561 
 Other assets   9,506     6,155 
  Total Assets$   1,089,970  $  1,094,616 
      
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
 Deposits$  715,630  $  711,909 
 Short-term borrowings   64,800     50,000 
 Federal Home Loan Bank advances   100,000     120,000 
 Other borrowed funds   30,000     30,000 
 Advances from borrowers for taxes and insurance   1,592     1,447 
 Accrued interest payable   269     311 
 Accrued expenses and other liabilities   3,866     5,038 
  Total Liabilities    916,157     918,705 
STOCKHOLDERS' EQUITY
 Preferred stock ($.01 par value; 1,000,000 shares authorized,   
  none issued and outstanding at June 30, 2015 and December 31, 2014)    -      -  
 Common stock ($.01 par value; 60,000,000 shares authorized,   
  11,567,540 shares outstanding at June 30, 2015   
  and 11,802,791 shares outstanding at December 31, 2014)   147     147 
 Additional paid-in capital   139,837     139,177 
 Treasury stock, at cost (3,121,701 shares at June 30, 2015 and   
  2,852,572 at December 31, 2014)   (44,135)    (39,698)
 Common stock acquired by benefit plans   (7,201)    (8,056)
 Retained earnings   85,264     84,225 
 Accumulated other comprehensive income, net   (99)    116 
  Total Stockholders' Equity    173,813      175,911 
      
  Total Liabilities and Stockholders' Equity$  1,089,970   $  1,094,616 


SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA OF THE COMPANY (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)

   June 30,
2015
  March 31,
2015
  December 31,
2014
  June 30,
2014
 
CAPITAL RATIOS:        
Stockholders’ equity (to total assets) (1)   15.95%   15.59%   16.07%   16.13%
          
Common equity tier 1 capital ratio (to risk-weighted assets) (2)   16.86    16.28  N/A  N/A 
Tier 1 leverage ratio (to adjusted average assets) (2) 13.30    13.04    13.99    13.18 
Tier 1 capital ratio (to risk-weighted assets) (2) 16.86    16.28    18.97    18.59 
Total capital ratio (to risk-weighted assets) (2) 17.91    17.34    20.02    19.64 
          
ASSET QUALITY INDICATORS:        
Nonperforming Assets:        
 Nonaccruing loans$   3,002 $  3,374 $  3,454 $  4,144 
 Accruing loans past due 90 days or more   -     -     -     -  
 Total nonperforming loans$   3,002 $  3,374 $  3,454 $  4,144 
 Assets acquired through foreclosure    2,819    2,804    2,814    2,017 
 Total nonperforming assets$   5,821 $  6,178 $  6,268 $  6,161 
          
 Ratio of nonperforming loans to total loans    0.41%   0.44%   0.47%   0.56%
 Ratio of nonperforming assets to total assets   0.53    0.55    0.57     0.56 
 Ratio of allowance for loan losses to total loans    1.45    1.46    1.46    1.57 
 Ratio of allowance for loan losses to nonperforming loans 357.6    331.3    310.7    279.3 
Troubled Debt Restructurings:        
 Nonaccruing troubled debt restructurings (3)$  1,331 $  1,349 $  1,401 $  282 
 Accruing troubled debt restructurings   5,892    4,817    3,624    5,324 
 Total troubled debt restructurings$   7,223 $  6,166 $  5,025 $  5,606 
          
Past Due Loans:        
 30 - 59 days$  639 $  653 $  113 $  526 
 60 - 89 days   21    127    145    10 
 Total$   660 $  780 $  258 $  536 
              
(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
    June 30,
2015
  March 31,
2015
  December 31,
2014
  June 30,
2014
 
PERFORMANCE RATIOS  (4):         
 Return on average assets    1.15%   0.83%   0.79%   0.85%
 Return on average equity    7.22    5.18    4.76    5.25 
 Net interest margin    3.24    3.29    3.18    3.20 
 Efficiency ratio (5)    64.3    62.2    63.3    59.8 
OTHER:         
 Average commercial loans $    630,577 $  615,474 $  571,875 $  571,032 
 Tangible book value per share - Core (6) $    15.03 $  14.88 $  14.89 $  14.73 
 Tangible book value per share (7) $    15.03 $  14.94 $  14.90 $  14.71 
 Employees (full-time equivalents)     136    136    138    140 
           
           
  At or for the Six Months
Ended
     
    June 30,
2015
  June 30,
2014
     
PERFORMANCE RATIOS  (4):         
 Average commercial loans $  623,026 $  568,591     
 Return on average assets    0.99%   0.78%    
 Return on average equity    6.20    4.85     
 Net interest margin    3.26    3.19     
 Efficiency ratio (5)    63.2    62.4     
           
(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 (loss) income, net (($99,000) at June 30, 2015, $666,000 at March 31, 2015, $116,000 at December 31, 2014 and ($252,000) at June 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 June 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$   10,285  $  3     0.13% $  6,241  $  1   0.05%
 Investment securities   309,583     1,696     2.19%     332,940     1,947   2.34%
 Loans (1)   749,997     8,391     4.49%    714,243     8,130   4.56%
 Allowance for loan losses   (11,919)        (11,553)    
 Net loans   738,078      8,391       702,690     8,130   
  Total interest-earning assets    1,057,946      10,090     3.82%    1,041,871     10,078   3.88%
Noninterest-earning assets   42,400         45,628     
 Total assets$  1,100,346      $  1,087,499     
Liabilities and equity:           
Interest-bearing liabilities:           
 Interest-bearing deposits$  585,892  $  728     0.50% $  560,578  $  797   0.57%
 Borrowings   156,130     709       1.82%    220,770     856   1.56%
 Total interest-bearing liabilities    742,022     1,437     0.78%    781,348     1,653   0.85%
 Noninterest-bearing deposits   177,223         122,395     
 Other noninterest-bearing liabilities   6,353         7,284     
  Total liabilities   925,598          911,027     
 Stockholders' equity   174,201         177,895     
 Accumulated comprehensive income   547         (1,423)    
  Total stockholders' equity   174,748          176,472     
  Total liabilities and stockholders' equity$  1,100,346      $  1,087,499     
               
 Net interest income  $  8,653      $  8,425   
 Interest rate spread       3.04%      3.03%
 Net interest margin       3.24%      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
    June 30, 2015 March 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$   10,285   $  3   0.13% $  11,550  $  3   0.10%
 Investment securities    309,583      1,696   2.19%    311,049      1,982   2.55%
 Loans (1)   749,997     8,391   4.49%    742,005     8,139   4.44%
 Allowance for loan losses   (11,919)        (10,777)    
 Net loans   738,078     8,391       731,228     8,139   
  Total interest-earning assets   1,057,946     10,090   3.82%    1,053,827     10,124   3.88%
Noninterest-earning assets    42,400         42,702     
 Total assets$   1,100,346       $  1,096,529     
Liabilities and equity:           
Interest-bearing liabilities:           
 Interest-bearing deposits$   585,892  $   728   0.50% $  546,465  $  715   0.53%
 Borrowings   156,130     709   1.82%    190,129     737   1.57%
 Total interest-bearing liabilities   742,022     1,437   0.78%    736,594     1,452   0.80%
 Noninterest-bearing deposits   177,223         176,389     
 Other noninterest-bearing liabilities   6,353         7,442     
  Total liabilities   925,598         920,425     
 Stockholders' equity   174,201         175,552     
 Accumulated comprehensive income    547         552     
  Total stockholders' equity   174,748          176,104     
  Total liabilities and stockholders' equity$   1,100,346       $  1,096,529     
               
 Net interest income  $  8,653      $  8,672   
 Interest rate spread     3.04%      3.08%
 Net interest margin     3.24%      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)

    Six Months Ended June 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$  10,917  $   6      0.11% $  6,783  $  1   0.04%
 Investment securities   310,316      3,678      2.37%    334,228     3,895   2.33%
 Loans (1)   746,001      16,530      4.46%    714,613     16,240   4.57%
 Allowance for loan losses   (11,348)        (11,578)    
 Net loans    734,653     16,530       703,035     16,240   
  Total interest-earning assets   1,055,886     20,214     3.85%    1,044,046     20,136   3.88%
Noninterest-earning assets   42,551         46,043     
 Total assets$  1,098,437      $  1,090,089     
Liabilities and equity:           
Interest-bearing liabilities:           
 Interest-bearing deposits$  566,178  $   1,443     0.51% $  566,963  $  1,695   0.60%
 Borrowings   173,130     1,446     1.68%    218,343     1,699   1.57%
 Total interest-bearing liabilities   739,308     2,889     0.79%    785,306     3,394   0.87%
 Noninterest-bearing deposits   176,806         120,801     
 Other noninterest-bearing liabilities   6,897         7,952     
  Total liabilities   923,011         914,059     
 Stockholders' equity   174,877         178,081     
 Accumulated comprehensive income   549         (2,051)    
  Total stockholders' equity   175,426         176,030     
  Total liabilities and stockholders' equity$  1,098,437      $  1,090,089     
               
 Net interest income  $   17,325       $  16,742   
 Interest rate spread       3.06%      3.01%
 Net interest margin       3.26%      3.19%
                 
(1) Nonperforming loans are included in average balance computation.
(2) Yields are not presented on a tax-equivalent basis.


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

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