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Fox Chase Bancorp, Inc. Reports a 28% Increase in Earnings for the Three and Nine Months Ended September 30, 2015

HATBORO, Pa., Oct. 28, 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 $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

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