Fox Chase Bancorp 8-K Fox Chase Bancorp, Inc. Announces Results

For Immediate Release

Date: Contact:   Phone: October 30, 2013 Roger S. Deacon Chief Financial Officer (215) 775-1435

FOX CHASE BANCORP, INC. ANNOUNCES RESULTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2013

 (Declares Dividend of $0.08 Per Share)

HATBORO, PA. October 30, 2013 – Fox Chase Bancorp, Inc. (the “Company”) (NASDAQ GM: FXCB), the holding company for Fox Chase Bank (the “Bank”), today announced net income of $1.2 million, or $0.10 per diluted share, and $4.0 million, or $0.35 per diluted share, for the three and nine months ended September 30, 2013, respectively, compared to net income of $1.4 million, or $0.12 per share, and $3.2 million, or $0.27 per share, for the three and nine months ended September 30, 2012, respectively.

Commenting on the performance for the quarter, Thomas M. Petro, President and Chief Executive Officer said, “Our business strategy, which is focused on building commercial relationships, has produced commercial loan growth of $50 million, or 10%, for the first nine months of 2013. The increase in average commercial loans helped improve our net interest margin to 3.06% for the quarter as compared to 3.01% for the quarter ended June 30, 2013. Additionally, nonperforming assets continued to decrease to $17.3 million, or 1.56% of total assets, at September 30, 2013, compared to $25.6 million, or 2.36% of total assets, at December 31, 2012. We remain focused on executing our strategy of growing profitable relationships with lower middle market and small businesses while driving improvements in operating leverage and asset quality.”

Highlights for the three and nine months ended September 30, 2013 included:

· Total assets were $1.11 billion at September 30, 2013 compared to $1.09 billion at December 31, 2012.  Total loans were $700.5 million at September 30, 2013, essentially flat from the $701.1 million at June 30, 2013, and an increase of $16.7 million, or 2.4%, from $683.9 million at December 31, 2012. Total commercial loans increased $50.0 million, or 9.9%, from $505.4 million at December 31, 2012 to $555.3 million at September 30, 2013 primarily due to increases of $35.8 million in commercial and industrial loans and $30.4 million in multi-family and commercial real estate loans.  This was partially offset by a decrease of $16.2 million in commercial construction loans. As expected, one- to four-family residential mortgage loans decreased $25.8 million due to normal amortization exceeding new loans originated and consumer loans decreased $7.2 million.  

· Total stockholders’ equity was $174.2 million at September 30, 2013, a decrease of $7.2 million from $181.5 million at December 31, 2012, primarily due to the decrease in accumulated other comprehensive income (loss) of $7.1 million and the repurchase of 218,572 shares of Company common stock at an aggregate cost of $3.7 million. Excluding accumulated other comprehensive income (loss), tangible book value per share increased by $0.23 per share, to $14.55 per share at September 30, 2013 from $14.32 at December 31, 2012.  

· Return on assets was 0.49% for the nine months ended September 30, 2013 compared to 0.42% for the nine months ended September 30, 2012.  

· Net interest income increased $365,000, or 4.6%, to $8.2 million for the three months ended September 30, 2013, compared to $7.9 million for the three months ended June 30, 2013.  The increase in net interest income and margin was driven by increased average loan balances due to commercial loan growth, as well as increased yields on mortgage related securities.  

· Net interest income remained consistent at $8.2 million for the three months ended September 30, 2013 and 2012, and increased $128,000, or 0.5%, to $24.0 million for the nine months ended September 30, 2013, compared to $23.9 million for the nine months ended September 30, 2012.  

· The efficiency ratio was 63.6% for the nine months ended September 30, 2013, compared to 64.8% for the nine months ended September 30, 2012.  

· Noninterest expense increased $247,000, or 1.2%, to $21.0 million for the nine months ended September 30, 2013, compared to $20.7 million for the nine months ended September 30, 2012. Loss on extinguishment of debt decreased $3.0 million due to the extinguishment of debt during the nine months ended September 30, 2012.  No debt was extinguished during 2013.  This decrease was offset by an increase of $3.4 million in assets acquired through foreclosure expense as the Company recorded $4.3 million in valuation adjustments on assets acquired through foreclosure during the nine months ended September 30, 2013 compared to $932,000 for the nine months ended September 30, 2012.   This increase was primarily driven by $4.5 million in valuation adjustments on foreclosed life insurance policies, of which $1.3 million was recorded in the three months ended September 30, 2013.  Salaries, benefits and other compensation increased $479,000 for the nine months ended September 30, 2013, primarily as a result of increased staffing costs and annual compensation increases.  These increases were offset by decreases of $77,000 in professional fees primarily due to lower loan work-out expense and $204,000 in data processing costs related to a renegotiated data processing contract that became effective in January 2013.  

· Excluding the previously mentioned loss on the extinguishment of debt and valuation adjustments, noninterest expense decreased $107,000, or 0.6%, from $16.8 million for the nine months ended September 30, 2012, to $16.7 million for the nine months ended September 30, 2013.  

Credit related items as of and for the quarter ended September 30, 2013 include:

· Total credit related costs, which include (i) provision for loan losses and (ii) valuation adjustments on assets acquired through foreclosure, offset by (iii) net gain on sale of assets acquired through foreclosure, totaled $1.7 million for the three months ended September 30, 2013, compared to $1.8 million for the three months ended June 30, 2013 and $1.3 million for the three months ended September 30, 2012;  

· The allowance for loan losses was $11.1 million, or 1.56% of total loans, at September 30, 2013 compared to $10.5 million, or 1.48% of total loans, at June 30, 2013 and $11.2 million, or 1.61% of total loans, at December 31, 2012.  The level of nonperforming assets continued to improve during the three months ended September 30, 2013;  

· Net loan charge-offs totaled $45,000 and $574,000 for the three and nine months ended September 30, 2013, respectively, compared to $476,000 and $3.9 million for the three and nine months ended September 30, 2012, respectively;  

· Delinquent loans totaled $2.1 million at September 30, 2013, compared to $1.9 million at June 30, 2013 and $2.1 million at December 31, 2012.

The Company also announced that its Board of Directors declared a cash dividend of $0.08 per outstanding share of common stock. The dividend will be paid on or about November 27, 2013 to stockholders of record as of the close of business on November 13, 2013.

Fox Chase Bancorp, Inc. will host a conference call to discuss third quarter 2013 results on Thursday, October 31, 2013 at 9:00 am EDT.  The general public can access the call by dialing (888) 317-6016.  A replay of the conference call will be available through December 13, 2013 by dialing (877) 344-7529; use Conference ID: 10034509.

Fox Chase Bancorp, Inc. is a stock holding company of Fox Chase Bank.  The Bank offers traditional banking services and products from its main office in Hatboro, Pennsylvania and ten branch offices in Bucks, Montgomery, Chester, Delaware 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,
	2013		2012		2013		2012
	(Unaudited)
INTEREST INCOME
Interest and fees on loans	$	8,241	$	8,582	$	24,319	$	25,792
Interest on mortgage related securities		1,807		1,888		5,296		5,822
Interest on investment securities available-for-sale
Taxable		92		60		221		231
Nontaxable		-		1		-		34
Other interest income		1		-		2		5
Total Interest Income		10,141		10,531		29,838		31,884
INTEREST EXPENSE
Deposits		1,055		1,578		3,373		4,986
Short-term borrowings		45		16		94		26
Federal Home Loan Bank advances		555		450		1,606		1,892
Other borrowed funds		254		254		753		1,096
Total Interest Expense		1,909		2,298		5,826		8,000
Net Interest Income		8,232		8,233		24,012		23,884
Provision for loan losses		675		470		532		3,036
Net Interest Income after Provision for Loan Losses		7,557		7,763		23,480		20,848
NONINTEREST INCOME
Service charges and other fee income		437		364		1,260		1,138
Net gain on sale of assets acquired through foreclosure		303		8		484		135
Income on bank-owned life insurance		118		117		351		354
Equity in earnings of affiliate		135		210		470		445
Net gain on sale of investment securities		-		-		532		2,340
Other		36		38		125		99
Total Noninterest Income		1,029		737		3,222		4,511
NONINTEREST EXPENSE
Salaries, benefits and other compensation		3,644		3,458		10,629		10,150
Occupancy expense		403		415		1,243		1,294
Furniture and equipment expense		117		119		358		409
Data processing costs		390		441		1,155		1,359
Professional fees		474		369		1,250		1,327
Marketing expense		59		65		167		217
FDIC premiums		175		199		525		581
Assets acquired through foreclosure expense		1,370		962		4,465		1,115
Loss on extinguishment of debt		-		-		-		3,018
Other		370		370		1,192		1,267
Total Noninterest Expense		7,002		6,398		20,984		20,737
Income Before Income Taxes		1,584		2,102		5,718		4,622
Income tax provision		411		666		1,674		1,460
Net Income	$	1,173	$	1,436	$	4,044	$	3,162
Earnings per share:
Basic	$	0.10	$	0.12	$	0.36	$	0.27
Diluted	$	0.10	$	0.12	$	0.35	$	0.27

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollars in Thousands, Except Share Data)

	September 30,			December 31,
	2013			2012
	(Unaudited)			(Audited)
ASSETS
Cash and due from banks	$	114		$	162
Interest-earning demand deposits in other banks		6,301			24,928
Total cash and cash equivalents		6,415			25,090
Investment securities available-for-sale		10,501			12,491
Mortgage related securities available-for-sale		258,406			283,616
Mortgage related securities held-to-maturity (fair value of $70,601 at
September 30, 2013 and $29,451 at December 31, 2012)		70,928			28,369
Loans, net of allowance for loan losses of $11,128
at September 30, 2013 and $11,170 at December 31, 2012		700,544			683,865
Federal Home Loan Bank stock, at cost		10,013			8,097
Bank-owned life insurance		14,428			14,077
Premises and equipment, net		9,988			10,443
Assets acquired through foreclosure		6,588			8,524
Real estate held for investment		1,620			1,620
Accrued interest receivable		3,267			3,223
Mortgage servicing rights, net		157			170
Deferred tax asset, net		7,738			2,953
Other assets		6,291			5,803
Total Assets	$	1,106,884		$	1,088,341
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits	$	683,008		$	687,409
Short-term borrowings		61,600			70,500
Federal Home Loan Bank advances		150,000			110,000
Other borrowed funds		30,000			30,000
Advances from borrowers for taxes and insurance		1,010			1,699
Accrued interest payable		314			330
Accrued expenses and other liabilities		6,720			6,938
Total Liabilities		932,652			906,876
STOCKHOLDERS' EQUITY
Preferred stock ($.01 par value; 1,000,000 shares authorized,
none issued and outstanding at September 30, 2013 and December 31, 2012)		-			-
Common stock ($.01 par value; 60,000,000 shares authorized,
12,147,803 shares issued and outstanding at September 30, 2013
and 12,356,564 shares issued and outstanding at December 31, 2012)		146			146
Additional paid-in capital		137,152			136,132
Treasury stock, at cost (2,468,172 shares at September 30, 2013 and
2,249,600 shares at December 31, 2012)		(33,436	)		(29,733	)
Common stock acquired by benefit plans		(9,431	)		(10,228	)
Retained earnings		82,318			80,608
Accumulated other comprehensive (loss) income, net		(2,517	)		4,540
Total Stockholders' Equity		174,232			181,465
Total Liabilities and Stockholders' Equity	$	1,106,884		$	1,088,341

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,
	2013			2013			2012			2012
CAPITAL RATIOS:
Stockholders’ equity (to total assets) (1)		15.74	%		15.45	%		16.67	%		17.14	%
Tier 1 capital (to adjusted assets) (2)		13.10			12.78			12.90			14.01
Tier 1 risk –based capital (to risk-weighted assets) (2)		18.98			18.94			19.45			21.37
Total risk-based capital (to risk-weighted assets) (2)		20.02			19.98			20.48			22.39
ASSET QUALITY INDICATORS:
Nonperforming Assets:
Nonaccruing loans	$	9,057		$	9,989		$	17,124		$	17,385
Accruing loans past due 90 days or more (3)		1,640			-			-			165
Total nonperforming loans	$	10,697		$	9,989		$	17,124		$	17,550
Assets acquired through foreclosure		6,588			9,948			8,524			7,646
Total nonperforming assets	$	17,285		$	19,937		$	25,648		$	25,196
Ratio of nonperforming loans to total loans		1.50	%		1.40	%		2.46	%		2.56	%
Ratio of nonperforming assets to total assets		1.56			1.78			2.36			2.35
Ratio of allowance for loan losses to total loans		1.56			1.48			1.61			1.64
Ratio of allowance for loan losses to nonperforming loans		104.0			105.1			65.2			63.9
Impaired Loans:
Nonaccruing loans	$	9,057		$	9,989		$	17,124		$	17,385
Troubled debt restructurings		7,265			7,265			7,388			7,342
Other impaired loans		-			-			-			165
Total impaired loans	$	16,322		$	17,254		$	24,512		$	24,892
Past Due Loans:
30 - 59 days	$	1,481		$	1,618		$	41		$	700
60 - 89 days		569			323			2,026			523
Total	$	2,050		$	1,941		$	2,067		$	1,223

(1) Represents stockholders’ equity ratio of Fox Chase Bancorp, Inc.

(2) Represents regulatory capital ratios of Fox Chase Bank.

(3) As of September 30, 2013, represents one commercial loan relationship which was greater than 90 days past maturity. The loan was extended in

     October 2013 and the loan is no longer considered delinquent.

	At or for the Three Months Ended
	September 30,			June 30,			December 31,			September 30,
	2013			2013			2012			2012
PERFORMANCE RATIOS(4):
Return on average assets		0.42	%		0.38	%		0.73	%		0.56	%
Return on average equity		2.71			2.34			4.15			3.13
Net interest margin		3.06			3.01			3.11			3.29
Efficiency ratio (5)		63.5			64.2			62.8			61.5
OTHER:
Tangible book value per share - Core (6)	$	14.55		$	14.48		$	14.32		$	14.22
Tangible book value per share (7)	$	14.34		$	14.28		$	14.69		$	14.75
Employees (full-time equivalents)		142			143			141			144
	At or for the Nine Months Ended
	September 30,			September 30,
		2013			2012
PERFORMANCE RATIOS(4):
Return on average assets		0.49	%		0.42	%
Return on average equity		3.04			2.27
Net interest margin		3.05			3.24
Efficiency ratio (5)		63.6			64.8

(4)    Annualized

(5) Represents noninterest expense, excluding valuation adjustments on assets acquired through foreclosure and loss on extinguishment of debt, 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 ($2.5 million loss at September 30, 2013, $2.4 million loss at June 30, 2013, $4.5 million income at December 31, 2012 and $6.7 million income at September 30, 2012); 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,
	2013								2012
				Interest								Interest
	Average			and		Yield/			Average			and		Yield/
	Balance			Dividends		Cost (2)			Balance			Dividends		Cost (2)
Assets:
Interest-earning assets:
Interest-earning demand deposits	$	5,652		$	1		0.03	%	$	5,741		$	-		0.05	%
Mortgage related securities		334,883			1,807		2.16	%		294,914			1,888		2.56	%
Taxable securities		21,012			92		1.74	%		17,207			60		1.38	%
Nontaxable securities		-			-		0.00	%		4			1		87.75	%
Loans (1)		708,177			8,241		4.63	%		681,575			8,582		5.02	%
Allowance for loan losses		(10,854	)							(11,615	)
Net loans		697,323			8,241					669,960			8,582
Total interest-earning assets		1,058,870			10,141		3.81	%		987,826			10,531		4.25	%
Noninterest-earning assets		50,589								44,930
Total assets	$	1,109,459							$	1,032,756
Liabilities and equity:
Interest-bearing liabilities:
Interest-bearing deposits	$	566,745		$	1,055		0.74	%		609,202			1,578		1.03	%
Borrowings		234,783			854		1.44	%		121,318			720		2.36	%
Total interest-bearing liabilities		801,528			1,909		0.94	%		730,520			2,298		1.25	%
Noninterest-bearing deposits		128,437								114,983
Other noninterest-bearing liabilities		6,080								3,529
Total liabilities		936,045								849,032
Stockholders' equity		176,915								178,169
Accumulated comprehensive income		(3,501	)							5,555
Total stockholder's equity		173,414								183,724
Total liabilities and stockholders' equity	$	1,109,459							$	1,032,756
Net interest income				$	8,232							$	8,233
Interest rate spread							2.87	%							3.00	%
Net interest margin							3.06	%							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								Three Months Ended
	September 30, 2013								June 30, 2013
				Interest								Interest
	Average			and		Yield/			Average			and		Yield/
	Balance			Dividends		Cost (2)			Balance			Dividends		Cost (2)
Assets:
Interest-earning assets:
Interest-earning demand deposits	$	5,652		$	1		0.03	%	$	5,822		$	-		0.04	%
Mortgage related securities		334,883			1,807		2.16	%		331,110			1,751		2.12	%
Taxable securities		21,012			92		1.74	%		20,713			58		1.14	%
Nontaxable securities		-			-		0.00	%		-			-		0.00	%
Loans (1)		708,177			8,241		4.63	%		690,584			8,016		4.65	%
Allowance for loan losses		(10,854	)							(11,962	)
Net loans		697,323			8,241					678,622			8,016
Total interest-earning assets		1,058,870			10,141		3.81	%		1,036,267			9,825		3.80	%
Noninterest-earning assets		50,589								51,250
Total assets	$	1,109,459							$	1,087,517
Liabilities and equity:
Interest-bearing liabilities:
Interest-bearing deposits	$	566,745		$	1,055		0.74	%	$	581,391		$	1,141		0.79	%
Borrowings		234,783			854		1.44	%		196,632			817		1.67	%
Total interest-bearing liabilities		801,528			1,909		0.94	%		778,023			1,958		1.01	%
Noninterest-bearing deposits		128,437								124,025
Other noninterest-bearing liabilities		6,080								6,727
Total liabilities		936,045								908,775
Stockholders' equity		176,915								176,645
Accumulated comprehensive income		(3,501	)							2,097
Total stockholder's equity		173,414								178,742
Total liabilities and stockholders' equity	$	1,109,459							$	1,087,517
Net interest income				$	8,232							$	7,867
Interest rate spread							2.87	%							2.79	%
Net interest margin							3.06	%							3.01	%

(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,
	2013								2012
				Interest								Interest
	Average			and		Yield/			Average			and		Yield/
	Balance			Dividends		Cost (2)			Balance			Dividends		Cost (2)
Assets:
Interest-earning assets:
Interest-earning demand deposits	$	5,540		$	2		0.04	%	$	7,213		$	5		0.10	%
Mortgage related securities		329,788			5,296		2.14	%		283,678			5,822		2.74	%
Taxable securities		20,899			221		1.41	%		21,734			231		1.41	%
Nontaxable securities		-			-		0.00	%		984			34		4.65	%
Loans (1)		695,682			24,319		4.67	%		668,705			25,792		5.15	%
Allowance for loan losses		(11,420	)							(11,836	)
Net loans		684,262			24,319					656,869			25,792
Total interest-earning assets		1,040,489			29,838		3.79	%		970,478			31,884		4.33	%
Noninterest-earning assets		49,905								43,720
Total assets	$	1,090,394							$	1,014,198
Liabilities and equity:
Interest-bearing liabilities:
Interest-bearing deposits	$	576,054		$	3,373		0.78	%		585,409			4,986		1.14	%
Borrowings		207,868			2,453		1.58	%		135,457			3,014		2.97	%
Total interest-bearing liabilities		783,922			5,826		0.99	%		720,866			8,000		1.48	%
Noninterest-bearing deposits		121,778								103,299
Other noninterest-bearing liabilities		7,115								4,576
Total liabilities		912,815								828,741
Stockholders' equity		176,893								179,178
Accumulated comprehensive income		686								6,279
Total stockholder's equity		177,579								185,457
Total liabilities and stockholders' equity	$	1,090,394							$	1,014,198
Net interest income				$	24,012							$	23,884
Interest rate spread							2.80	%							2.85	%
Net interest margin							3.05	%							3.24	%

(1)   Nonperforming loans are included in average balance computation.

(2)   Yields are not presented on a tax-equivalent basis.