Fox Chase Bancorp 10-K/A 2011 FY Annual report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to            

Commission File Number: 000-54025

FOX CHASE BANCORP, INC.

(Exact name of registrant as specified in its charter)

Maryland	35-2379633
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4390 Davisville Road, Hatboro, Pennsylvania	19040
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (215) 682-7400

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, par value $0.01 per share	Nasdaq Stock Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes  o  No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  o  No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x  No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x  No  o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer o	Accelerated Filer x
Non-Accelerated Filer o (Do not check if a smaller reporting company)	Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).  Yes  o  No  x

The aggregate market value of the voting and non-voting common equity held by nonaffiliates as of June 30, 2011 was approximately $188.2 million. Solely for purposes of this calculation, the shares held by directors and officers of the registrant are deemed to be held by affiliates.

The number of shares outstanding of the registrant’s common stock as of March 1, 2012 was 12,869,263.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s proxy statement for its 2012 annual meeting of stockholders are incorporated into Part III of this Annual Report on Form 10-K by reference.

EXPLANATORY NOTE

This Form 10-K/A is being filed by Fox Chase Bancorp, Inc. (the “Company”) to include electronically conformed signatures on the Reports of Independent Registered Public Accounting Firm included in Items 8 and 9A and the KPMG LLP consent filed as Exhibit 23.1 and referenced in Item 15.  These conformed signatures were inadvertently omitted from the Annual Report on Form 10-K (the “Form 10-K”) that the Company filed with the Securities and Exchange Commission on March 12, 2012. The corrected Items 8, 9A and 15 of the Form 10-K follow. Aside from the electronically conformed signatures mentioned above, no other changes have been made to the information included in Item 8 or Item 9A.  Item 15 has also been amended to incorporate by reference other exhibits filed with the Form 10-K into this Form 10-K/A.

INDEX

		Page
Part II
Item 8.	Financial Statements and Supplementary Data	1
Item 9A.	Controls and Procedures	1
Part IV
Item 15.	Exhibits and Financial Statement Schedules	4
SIGNATURES

ITEM  8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Information required by this item is included herein beginning on page F-1.

ITEM  9A.CONTROLS AND PROCEDURES

The Company’s management, including the Company’s Principal Executive Officer and Principal Financial Officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”): (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its Principal Executive and Principal Financial officers, as appropriate to allow timely decisions regarding required disclosure.

No change in the Company’s internal control over financial reporting occurred during the quarter ended December 31, 2011 that has materially affected, or is reasonably likely to affect, the Company’s internal control over financial reporting.

1

Management’s Report on Internal Control Over Financial Reporting

The management of Fox Chase Bancorp, Inc. (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting. The internal control process has been designed under our supervision to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.

Management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2011, utilizing the framework established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has determined that the Company’s internal control over financial reporting as of December 31, 2011 is effective.

Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that accurately and fairly reflect, in reasonable detail, transactions and dispositions of assets; and provide reasonable assurances that: (1) transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles; (2) receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and (3) unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s financial statements are prevented or timely detected.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

KPMG LLP, an independent registered public accounting firm, has audited the Company’s consolidated financial statements as of and for the year ended December 31, 2011, and the effectiveness of the Company’s internal control over financial reporting as of December 31, 2011, as stated in their reports, which are included herein.

/s/ Thomas M. Petro

Thomas M. Petro

President and Chief Executive Officer

/s/ Roger S. Deacon

Roger S. Deacon

Chief Financial Officer

March 12, 2012

2

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Fox Chase Bancorp, Inc.:

We have audited Fox Chase Bancorp, Inc.’s (the Company) internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Fox Chase Bancorp, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control — Integrated Framework issued by the COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statements of condition of the Fox Chase Bancorp, Inc., and subsidiary as of December 31, 2011 and 2010, and the related consolidated statements of operations, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2011, and our report dated March 12, 2012 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

Philadelphia, Pennsylvania

March 12, 2012

3

PART IV

ITEM  15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(1)The financial statements required in response to this item are incorporated by reference from Item 8 of this Report.

(2)All financial statement schedules are omitted because they are not required or applicable, or the required information is shown in the consolidated financial statements or the notes thereto.

(3)Exhibits

Exhibit No	Description	Location
3.1	Articles of Incorporation of Fox Chase Bancorp, Inc.	Incorporated herein by reference to Exhibit 3.1 to the Fox Chase Bancorp, Inc. Registration Statement on Form S-1 (No. 333-165416) as filed on March 12, 2010
3.2	Bylaws of Fox Chase Bancorp, Inc.	Incorporated herein by reference to Exhibit 3.2 to the Fox Chase Bancorp, Inc. Registration Statement on Form S-1 (No. 333-165416) as filed on March 12, 2010
4.1	Stock Certificate of Fox Chase Bancorp, Inc.	Incorporated herein by reference to Exhibit 4.0 to the Fox Chase Bancorp, Inc. Registration Statement on Form S-1 (No. 333-165416) as filed on March 12, 2010
10.1	*Fox Chase Bank 401(k) Profit-Sharing Plan and Trust	Incorporated herein by reference to Exhibit 10.3 to the Fox Chase Bancorp, Inc. Registration Statement on Form S-1/A (No. 333-134160) as filed on July 5, 2006
10.2	*Employment Agreement between Thomas M. Petro, Fox Chase Bancorp, Inc. and Fox Chase Bank, as amended and restated	Incorporated herein by reference to Exhibit 10.2 to the Fox Chase Bancorp, Inc. Annual Report on Form 10-K as filed on March 12, 2012
10.3	*Employment Agreement between Jerry D. Holbrook, Fox Chase Bancorp, Inc. and Fox Chase Bank, as amended and restated	Incorporated herein by reference to Exhibit 10.3 to the Fox Chase Bancorp, Inc. Annual Report on Form 10-K as filed on March 12, 2012
10.4	*Employment Agreement between Keiron G. Lynch, Fox Chase Bancorp, Inc. and Fox Chase Bank, as amended and restated	Incorporated herein by reference to Exhibit 10.4 to the Fox Chase Bancorp, Inc. Annual Report on Form 10-K as filed on March 12, 2012
10.5	*Employment Agreement between Roger S. Deacon, Fox Chase Bancorp, Inc. and Fox Chase Bank, as amended and restated	Incorporated herein by reference to Exhibit 10.5 to the Fox Chase Bancorp, Inc. Annual Report on Form 10-K as filed on March 12, 2012
10.6	*Employment Agreement between Michael S. Fitzgerald, Fox Chase Bancorp, Inc. and Fox Chase Bank, as amended and restated	Incorporated herein by reference to Exhibit 10.6 to the Fox Chase Bancorp, Inc. Annual Report on Form 10-K as filed on March 12, 2012
10.7	*Fox Chase Bank Executive Long-Term Incentive Plan	Incorporated herein by reference to Exhibit 10.9 to the Fox Chase Bancorp, Inc. Registration Statement on Form S-1 (No. 333-134160) as filed on May 16, 2006
10.8	*Fox Chase Bank Employee Severance Compensation Plan, as amended and restated	Incorporated herein by reference to Exhibit 10.10 to the Fox Chase Bancorp, Inc. Registration Statement on Form S-1 (No. 333-134160) as filed on May 16, 2006

4

Exhibit No	Description	Location
10.9	*Fox Chase Bancorp, Inc. 2007 Equity Incentive Plan	Incorporated herein by reference to Appendix A to the Fox Chase Bancorp, Inc. Definitive Proxy Statement (File No. 1-132971) as filed on April 12, 2007
10.10	*Fox Chase Bancorp, Inc. Executive Incentive Compensation Plan	Incorporated herein by reference to Exhibit 10.10 to the Fox Chase Bancorp, Inc. Annual Report on Form 10-Q for the quarter ended June 30, 2011 (File No. 0-54025) as filed on August 5, 2011.
10.11	*Fox Chase Bancorp, Inc. 2011 Equity Incentive Plan	Incorporated herein by reference to Appendix A to the Fox Chase Bancorp, Inc. Definitive Proxy Statement (File No. 0-54025) as filed on July 5, 2011
21.0	List of Subsidiaries	Incorporated herein by reference to Exhibit 21.0 to the Fox Chase Bancorp, Inc. Annual Report on Form 10-K as filed on March 12, 2012
23.1	Consent of KPMG LLP	Filed herewith
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer	Filed herewith
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer	Filed herewith
32	Section 1350 Certification of Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer	Filed herewith
101.0	The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, formatted in XBRL (Extensible Business Reporting Language):  (i)  the Consolidated Statements of Condition, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Changes in Equity, (iv) the Consolidated Statements of Cash Flows, and (v) the Notes to Consolidated Financial Statements	Furnished herewith

*      Management contract or compensatory plan or arrangement.

5

FOX CHASE BANCORP, INC.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Fox Chase Bancorp, Inc.:

We have audited the accompanying consolidated statements of condition of Fox Chase Bancorp, Inc. and subsidiary (the Company) as of December 31, 2011 and 2010, and the related consolidated statements of operations, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2011. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Fox Chase Bancorp, Inc. and subsidiary as of December 31, 2011 and 2010, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for other-than-temporary impairments of debt securities due to the adoption of FASB Staff Position No. FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments,” (included in FASB ASC Topic 320, Investments — Debt and Equity Securities), as of April 1, 2009.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Fox Chase Bancorp, Inc., internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 12, 2012 expressed an unqualified opinion on the effectiveness of Fox Chase Bancorp, Inc.’s, internal control over financial reporting.

/s/ KPMG LLP

Philadelphia, Pennsylvania

March 12, 2012

F-1

FOX CHASE BANCORP, INC.

CONSOLIDATED STATEMENTS OF CONDITION (IN THOUSANDS, EXCEPT SHARE DATA)

	December 31,
	2011			2010
ASSETS
Cash and due from banks	$	734		$	156
Interest-earning demand deposits in other banks	6,852			38,158
Total cash and cash equivalents	7,586			38,314
Investment securities available-for-sale	23,106			32,671
Mortgage related securities available-for-sale	225,664			278,632
Mortgage related securities held-to-maturity (fair value of $41,758 at December 31, 2011 and $50,817 at December 31, 2010)	41,074			51,835
Loans, net of allowance for loan losses of $12,075 at December 31, 2011 and $12,443 at December 31, 2010	670,572			642,653
Other real estate owned	2,423			3,186
Federal Home Loan Bank stock, at cost	8,074			9,913
Bank-owned life insurance	13,606			13,138
Premises and equipment, net	10,431			10,693
Real estate held for investment	1,620			1,730
Accrued interest receivable	4,578			4,500
Mortgage servicing rights, net	316			448
Deferred tax asset, net	1,682			1,376
Other assets	5,131			6,414
Total Assets	$	1,015,863		$	1,095,503
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Deposits	$	676,594		$	711,763
Short-term borrowings	8,500			—
Federal Home Loan Bank advances	88,278			122,800
Other borrowed funds	50,000			50,000
Advances from borrowers for taxes and insurance	1,736			1,896
Accrued interest payable	418			580
Accrued expenses and other liabilities	2,145			2,760
Total Liabilities	827,671			889,799
COMMITMENTS AND CONTINGENCIES (Note 11)
STOCKHOLDERS’ EQUITY
Preferred stock ($.01 par value; 1,000,000 shares authorized, none issued and outstanding at December 31, 2011 and 2010)	—			—
Common stock ($.01 par value; 60,000,000 shares authorized, 13,037,310 shares issued and outstanding at December 31, 2011 and 14,547,173 shares issued and outstanding at December 31, 2010)	146			145
Additional paid-in capital	134,871			133,997
Treasury stock, at cost (1,524,900 shares at December 31, 2011 and 0 shares at December 31, 2010)	(19,822		)	—
Common stock acquired by benefit plans	(11,541		)	(9,283		)
Retained earnings	77,971			74,307
Accumulated other comprehensive income, net	6,567			6,538
Total Stockholders’ Equity	188,192			205,704
Total Liabilities and Stockholders’ Equity	$	1,015,863		$	1,095,503

The accompanying notes are an integral part of these consolidated financial statements.

F-2

FOX CHASE BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA)

	Years Ended December 31,
	2011			2010		2009
INTEREST INCOME
Interest and fees on loans	$	35,428		$	36,320	$	34,693
Interest on money market funds	—			—		183
Interest on mortgage related securities	9,775			11,874		14,654
Interest on investment securities available-for-sale
Taxable	488			471		763
Nontaxable	184			334		482
Dividend income	—			—		1
Other interest income	71			286		622
Total Interest Income	45,946			49,285		51,398
INTEREST EXPENSE
Deposits	8,672			15,203		20,589
Short-term borrowings	5			—		—
Federal Home Loan Bank advances	4,085			4,789		5,311
Other borrowed funds	1,733			1,733		1,735
Total Interest Expense	14,495			21,725		27,635
Net Interest Income	31,451			27,560		23,763
Provision for loan losses	5,734			6,213		9,052
Net Interest Income after Provision for Loan Losses	25,717			21,347		14,711
NONINTEREST INCOME
Service charges and other fee income	1,630			1,132		935
Net gain on sale of loans	—			—		3
Net gain on sale of premises and equipment	—			6		—
Net gain on sale of other real estate owned	250			44		—
Impairment loss on real estate held for investment	(110		)	—		(150		)
Income on bank-owned life insurance	468			471		453
Other	375			273		302
Total other-than-temporary impairment loss	(407		)	—		(605		)
Less: Portion of loss recognized in other comprehensive income (before taxes)	46			—		448
Net other-than-temporary impairment loss	(361		)	—		(157		)
Gains on sale of investment securities	1,091			1,963		2,381
Net investment securities gains	730			1,963		2,224
Total Noninterest Income	3,343			3,889		3,767
NONINTEREST EXPENSE
Salaries, benefits and other compensation	12,761			12,128		11,503
Occupancy expense	1,845			1,822		1,825
Furniture and equipment expense	442			454		580
Data processing costs	1,719			1,662		1,664
Professional fees	1,720			1,374		1,107
Marketing expense	356			291		346
FDIC premiums	870			1,401		1,795
Provision for loss on other real estate owned	657			436		—
Other real estate owned expense	105			107		—
Other	1,594			1,697		1,513
Total Noninterest Expense	22,069			21,372		20,333
Income (Loss) Before Income Taxes	6,991			3,864		(1,855		)
Income tax provision (benefit)	2,212			1,120		(827		)
Net Income (Loss)	$	4,779		$	2,744	$	(1,028	)
Earnings (loss) per share:
Basic	$	0.36		$	0.20	$	(0.07	)
Diluted	$	0.36		$	0.20	$	(0.07	)

The accompanying notes are an integral part of these consolidated financial statements.

F-3

FOX CHASE BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (IN THOUSANDS)

For the Years Ended December 31, 2011, 2010 and 2009

										Common						Accumulated
				Additional						Stock						Other
	Common			Paid in			Treasury			Acquired by			Retained			Comprehensive			Total
	Stock			Capital			Stock			Benefit Plans			Earnings			Income, Net			Equity
BALANCE - DECEMBER 31, 2008	$	147		$	63,516		$	(7,293	)	$	(7,819	)	$	72,664		$	5		$	121,220
Purchase of treasury stock, net	—			—			(4,521		)	—			—			—			(4,521		)
Stock based compensation expense	—			961			—			—			—			—			961
Issuance of stock for vested equity awards	—			(542		)	—			574			(32		)	—			—
Unallocated ESOP shares committed to employees	—			(8		)	—			383			—			—			375
Shares allocated in long-term incentive plan	—			89			—			—			—			—			89
Net income	—			—			—			—			(1,028		)	—			(1,028		)
Other comprehensive income	—			—			—			—			—			6,538			6,538
BALANCE - DECEMBER 31, 2009	$	147		$	64,016		$	(11,814	)	$	(6,862	)	$	71,604		$	6,543		$	123,634
Stock based compensation expense	—			929			—			—			—			—			929
Issuance of stock for vested equity awards	—			(519		)	—			560			(41		)	—			—
Unallocated ESOP shares committed to employees	—			18			—			504			—			—			522
Shares allocated in long-term incentive plan	—			89			—			—			—			—			89
Forfeited LTI shares converted to treasury	—			30			(30		)	—			—			—			—
Corporate Reorganization:	—			—			—			—			—			—			—
Merger of Fox Chase Mutual Holding Company	(81		)	188			—			—			—			—			107
Treasury stock retired	(11		)	(11,833		)	11,844			—			—			—			—
Exchange of common stock	(55		)	55			—			—			—			—			—
Proceeds from stock offering, net of offering expenses	145			81,024			—			—			—			—			81,169
Purchase of common stock by ESOP	—			—			—			(3,485		)	—			—			(3,485		)
Net income	—			—			—			—			2,744			—			2,744
Other comprehensive income	—			—			—			—			—			(5		)	(5		)
BALANCE - DECEMBER 31, 2010	$	145		$	133,997		$	—		$	(9,283	)	$	74,307		$	6,538		$	205,704
Purchase of treasury stock, net	—			—			(19,822		)	—			—			—			(19,822		)
Purchase of common stock for equity incentive plan	—			—			—			(3,474		)	—			—			(3,474		)
Stock based compensation expense	—			1,041			—			—			—			—			1,041
Unallocated ESOP shares committed to employees	—			216			—			624			—			—			840
Issuance of stock for vested equity awards	—			(544		)	—			592			(48		)	—			—
Common stock issued for exercise of vested stock options	1			161			—			—			—			—			162
Dividends paid ($.08 per share)	—			—			—			—			(1,067		)	—			(1,067		)
Net income	—			—			—			—			4,779			—			4,779
Other comprehensive income	—			—			—			—			—			29			29
BALANCE - DECEMBER 31, 2011	$	146		$	134,871		$	(19,822	)	$	(11,541	)	$	77,971		$	6,567		$	188,192

The accompanying notes are an integral part of these consolidated financial statements.

F-4

FOX CHASE BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)

	Years Ended December 31,
	2011			2010			2009
Cash Flows From Operating Activities
Net income (loss)	$	4,779		$	2,744		$	(1,028	)
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	5,734			6,213			9,052
Provision for loss on other real estate owned	657			436			—
Impairment loss on real estate held for investment	110			—			150
Depreciation	709			693			828
Net amortization of securities premiums and discounts	3,289			4,713			3,034
Benefit for deferred income taxes	(343		)	(9		)	(3,134		)
Stock compensation from benefit plans	1,881			1,540			1,425
Origination of loans held for sale	—			—			(585		)
Proceeds from sales of loans held for sale	—			—			578
Net gain on sales of loans and loans held for sale	—			—			(3		)
Net gain on sale of other real estate owned	(250		)	(44		)	—
Net gain on sale of premises and equipment	—			(6		)
Gain on sale of investment securities	(1,091		)	(1,963		)	(2,381		)
Net other-than-temporary impairment loss	361			—			157
Income on bank-owned life insurance	(468		)	(471		)	(453		)
Decrease in mortgage servicing rights, net	132			235			144
Decrease (increase) in accrued interest receivable and other assets	746			1,454			(6,083		)
(Decrease) increase in accrued interest payable, accrued expenses and other liabilities	(777		)	717			13
Net Cash Provided by Operating Activities	15,469			16,252			1,714
Cash Flows from Investing Activities
Equity investment in unconsolidated entity	45			—			(630		)
Investment securities - available-for-sale:
Purchases	—			(19,786		)	(19,184		)
Proceeds from sales	—			—			14,482
Proceeds from maturities, calls and principal repayments	9,094			6,882			12,500
Mortgage related securities — available-for-sale:
Purchases	(35,031		)	(46,229		)	(294,289		)
Proceeds from sales	13,976			36,480			63,049
Proceeds from maturities, calls and principal repayments	73,187			131,519			104,524
Mortgage related securities — held-to-maturity:
Purchases	—			(52,601		)	—
Proceeds from sales	—			—			—
Proceeds from maturities, calls and principal repayments	10,040			661			—
Net (increase) decrease in loans	(2,581		)	8,866			(55,297		)
Purchases of loans and loan participations	(32,655		)	(27,788		)	(127		)
Net decrease (increase) in Federal Home Loan Bank stock	1,839			522			(728		)
Deposit on real estate held for investment	—			—			77
Purchases of premises and equipment	(447		)	(243		)	(217		)
Proceeds from sales and payments on other real estate owned	1,888			1,672			—
Net Cash Provided by (Used in) Investing Activities	39,355			39,955			(175,840		)

(Continued)

F-5

FOX CHASE BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)

	Years Ended December 31,
	2011			2010			2009
Cash Flows from Financing Activities
Net (decrease) increase in deposits	(35,169		)	(146,514		)	249,805
Decrease in advances from borrowers for taxes and insurance	(160		)	(223		)	(470		)
Principal payments on Federal Home Loan Bank advances	(34,522		)	(14,365		)	(9,214		)
Short-term borrowings, net	8,500			—			—
Common stock issued for exercise of stock options	162			—			—
Acquisition of common stock for equity incentive plan	(3,474		)	—			—
Purchase of treasury stock	(19,822		)	—			(4,521		)
Cash dividends paid	(1,067		)	—			—
Merger of Fox Chase Mutual Holding Company	—			107			—
Proceeds from stock offering, net of offering expenses	—			81,169			—
Purchase of common stock by ESOP	—			(3,485		)	—
Net Cash (Used in) Provided by Financing Activities	(85,552		)	(83,311		)	235,600
Net (Decrease) Increase in Cash and Cash Equivalents	(30,728		)	(27,104		)	61,474
Cash and Cash Equivalents — Beginning	38,314			65,418			3,944
Cash and Cash Equivalents — Ending	$	7,586		$	38,314		$	65,418
Supplemental Disclosure of Cash Flow Information
Interest paid	$	14,657		$	21,841		$	27,666
Income taxes paid	$	2,500		$	1,501		$	2,481
Transfers of loans to other real estate owned	$	1,479		$	1,198		$	4,052
Net charge-offs	$	6,102		$	4,375		$	4,707

The accompanying notes are an integral part of these consolidated financial statements.

F-6

FOX CHASE BANCORP, INC.

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

Fox Chase Bancorp, Inc. (the “Bancorp”) is a Maryland corporation that was incorporated in March 2010 to be the successor corporation to old Fox Chase Bancorp, Inc. (“Old Fox Chase Bancorp”), the federal corporation and the former stock holding company for Fox Chase Bank (the “Bank”), upon completion of the mutual-to-stock conversion of Fox Chase MHC, the former mutual holding company for Fox Chase Bank.

The mutual-to-stock conversion was completed on June 29, 2010.  In connection with the conversion, Bancorp sold 8,712,500 shares of common stock at $10.00 per share in a public offering.  Concurrent with the completion of the offering, shares of Old Fox Chase Bancorp’s common stock owned by public stockholders were exchanged for 1.0692 shares of Bancorp common stock.  In lieu of fractional shares, Old Fox Chase Bancorp shareholders were paid cash at a rate of $10.00 per share.  Additionally, as part of the mutual-to-stock conversion, the Bank’s Employee Stock Ownership Plan (“ESOP”) acquired 348,500 shares, or 4.0% of Bancorp’s issued shares, at $10.00 per share. As a result of the offering and the exchange, as of June 29, 2010 and December 31, 2010, Bancorp had 14,547,173 shares outstanding.  Net proceeds from the conversion and offering, after the loan made to the ESOP, were approximately $77.8 million.

Financial information presented in this Annual Report on Form 10-K is derived from the consolidated financial statements of Fox Chase Bancorp, Inc. and subsidiaries on and after June 29, 2010 and from the consolidated financial statements of Old Fox Chase Bancorp and subsidiaries prior to June 29, 2010.

The Bancorp’s primary business has been that of holding the common stock of the Bank and making two loans to the ESOP. The Bancorp is authorized to pursue other business activities permissible by laws and regulations for savings and loan holding companies.

Bancorp and the Bank (collectively referred to as the “Company”) provide a wide variety of financial products and services to individuals and businesses through the Bank’s eleven branches in Philadelphia, Richboro, Willow Grove, Warminster, Lahaska, Hatboro, Media and West Chester, Pennsylvania, and Ocean City, Marmora and Egg Harbor Township, New Jersey.  The operations of the Company are managed as a single business segment.  The Company competes with other financial institutions and other companies that provide financial services.  The Bank also owns approximately 45% of Philadelphia Mortgage Advisors, a mortgage banker located in Blue Bell, Pennsylvania and Ocean City, New Jersey.

The Company is subject to regulations of certain federal banking agencies.  These regulations can and do change significantly from period to period.  The Company also undergoes periodic examinations by regulatory agencies which may subject them to further changes with respect to asset valuations and classifications, amounts of required loan loss allowances and operating restrictions resulting from the regulators’ judgments based on information available to them at the time of their examinations.

Principles of Consolidation and Presentation

The consolidated financial statements include the accounts of the Bancorp and the Bank. The Bank’s operations include the accounts of its wholly owned subsidiaries, Fox Chase Financial, Inc., Fox Chase Service Corporation, 104 S. Oakland Ave., LLC and Davisville Associates, LLC.  Fox Chase Financial Inc. is a Delaware chartered investment holding company and its sole purpose is to manage and hold investment securities.  Fox Chase Service Corporation is a Pennsylvania chartered company and its purposes are to facilitate the Bank’s investment in PMA and, for regulatory purposes, to hold commercial loans.  At December 31, 2011, Fox Chase Service Corporation held $20.0 million in commercial loans.  104 S. Oakland Ave., LLC is a New Jersey-chartered limited liability company formed to secure, manage and hold foreclosed real estate.  Davisville Associates, LLC is a Pennsylvania-chartered limited liability company formed to secure, manage and hold foreclosed real estate.  All material inter-company transactions and balances have been eliminated in consolidation. Prior period amounts are reclassified, when necessary, to conform with the current year’s presentation.

The Company follows accounting principles and reporting practices that are in compliance with U.S. generally accepted accounting principles (“GAAP”). The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the valuation and realizability of deferred tax assets and the evaluation of other than temporary impairment and valuation of investments.

F-7

FOX CHASE BANCORP, INC.

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Risk and Uncertainties

In the normal course of its business, the Company encounters two significant types of risk: economic risk and regulatory risk. There are three main components of economic risk: interest rate risk, credit risk and market risk. The Company is subject to interest rate risk to the degree that its interest-bearing liabilities mature or reprice at different speeds, or on a different basis, from its interest-earning assets. The Company’s primary credit risk is the risk of defaults in the Company’s loan portfolio that result from borrowers’ inability or unwillingness to make contractually required payments. The Company’s lending activities are concentrated in Southeastern Pennsylvania and Southern New Jersey. The ability of the Company’s borrowers to repay amounts owed is dependent on several factors, including the economic conditions in the borrowers’ geographic regions and the borrowers’ financial conditions. The Company also has credit risk related to the risk of defaults in its investment securities portfolio. The ability of the Company’s investment securities to be fully realized depends on several factors, including the cash flows, credit enhancements and underlying structures of the individual investment securities. Market risk reflects changes in the value of the collateral underlying loans, the valuation of real estate held by the Company, and the valuation of loans held for sale, securities, mortgage servicing assets and other investments.

The Company is subject to the regulations of various government agencies. These regulations may change significantly from period to period. The Company also undergoes periodic examinations by regulatory agencies that may subject them to further changes with respect to asset valuations and classifications, amounts required for the allowance for loan losses and operating restrictions resulting from the regulators’ judgment based on information available to them at the time of their examination.

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks, interest-earning demand deposits in other banks and money market funds. At times, such balances exceed the FDIC limits for insurance coverage.

The Company accounts for cash accounts that are in a net overdraft position as a liability and reports changes in book overdraft positions in operating cash flows.

Investment and Mortgage Related Securities

The Company accounts for its investment securities in accordance with standards that require, among other things, that debt and equity securities are classified into three categories and accounted for as follows:

·Debt securities with the positive intention to hold to maturity are classified as “held-to-maturity” and reported at amortized cost.

·Debt and equity securities purchased with the intention of selling them in the near future are classified as “trading securities” and are reported at fair value, with unrealized gains and losses included in earnings. As of the balance sheet dates, the Bank did not have any trading securities.

·Debt and equity securities not classified in either of the above categories are classified as “available-for-sale securities” and reported at fair value, with unrealized gains and losses excluded from earnings and reported, net of tax, as increases or decreases in other comprehensive income, a separate component of stockholders’ equity. Securities classified as available-for-sale are those securities that the Company intends to hold for an indefinite period of time but not necessarily to maturity. Any decision to sell a security classified as available-for-sale would be based on various factors, including movement in interest rates, changes in the maturity or mix of the Company’s assets and liabilities, liquidity needs, regulatory capital considerations and other factors.

Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designation as of each balance sheet date.

Beginning on April 1, 2009, the Company implemented ASC 320-10-65-1 “Recognition and Presentation of Other-Than-Temporary Impairments” that amended the accounting for recognizing other-than-temporary impairment for debt securities and expanded disclosure requirements for other-than-temporarily impaired debt and equity securities. Under the guidance, companies are required to record other-than-temporary impairment charges, through earnings, if they have the intent to sell, or will more likely than not be required to sell, an impaired debt security before a recovery of its amortized cost basis. In addition, companies are required to record other-than-temporary impairment charges through earnings for the amount of credit losses, regardless of the intent or requirement to sell. Credit loss is measured as the difference between the present value of an impaired debt security’s cash flows and its amortized cost basis. Non-credit related write-downs to fair value must be recorded as decreases to accumulated other

F-8

FOX CHASE BANCORP, INC.

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

comprehensive income as long as a company has no intent or requirement to sell an impaired security before a recovery of amortized cost basis. Finally, companies were required to record all previously recorded non-credit related other-than-temporary impairment charges for debt securities as cumulative effect adjustments to retained earnings as of the beginning of the period of adoption. Since the Company did not have any other-than-temporary impairment as of March 31, 2009, no cumulative effect adjustments were required at adoption.

Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Because of the volatility of the financial markets in which securities are traded, there is the risk that any future fair value could be significantly less than that recorded or disclosed in the accompanying financial statements. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

Federal law requires a member institution of the Federal Home Loan Bank System to hold stock of its district Federal Home Loan Bank according to a predetermined formula. The Company’s investment in FHLB of Pittsburgh stock is carried at cost and was $8.1 million at December 31, 2011.  As of July 1, 2010, the FHLB of Pittsburgh modified its methodology for calculating a member bank’s required stock ownership. The new methodology requires a member bank to own capital stock in the FHLB of Pittsburgh in a minimum amount of at least 4.60% of its advances plus 0.35% of the Bank’s “eligible assets,” as such term is defined by the FHLB; and a maximum amount of 6.00% of its advances plus 1.0% of the Bank’s “eligible assets.”  The FHLB of Pittsburgh has indicated it would only redeem from any member the lesser of the amount of the member’s excess capital stock or 5% of the member’s total capital stock.  The FHLB also indicated that it may increase its individual member stock investment requirements. As of December 31, 2011, the new methodology provides for a minimum required capital stock ownership of $6.4 million and a maximum required stock ownership of $11.9 million. The FHLB of Pittsburgh ceased paying a dividend on its common stock during the first quarter of 2009 and has not paid a dividend through December 31, 2011. Beginning in the first quarter of 2012, the FHLB of Pittsburgh reinstated its dividend at an annual rate of 0.10% of the Bank’s average stock held during the quarter ended December 31, 2011.

Loans Held for Sale

The Company originates mortgage loans for investment and for sale. At origination, a mortgage loan is identified as either for sale or for investment. Mortgage loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or estimated fair value. Net unrealized losses are recognized by charges to operations. Cash payments and cash receipts resulting from acquisitions and sales of loans are classified as operating cash flows if those loans are acquired specifically for resale. Cash receipts resulting from sales of loans that were not specifically acquired for resale are classified as investing cash inflows regardless of a change in the purpose for holding those loans. As of the balance sheet dates, the Bank did not have any loans held for sale.

Mortgage Servicing Rights

Upon the sale of a residential mortgage loan where the Company retains servicing rights, a mortgage servicing right is recorded. GAAP requires that mortgage servicing rights on these loans be amortized into income over the estimated life of the loans sold using the interest method. At each reporting period, such assets are subject to an impairment test. The impairment test stratifies servicing assets based on predominant risk characteristics of the underlying financial assets. The Company has stratified its mortgage servicing assets by date of sale, which approximates date of origination.

In conjunction with the impairment test, the Company records a valuation allowance when the fair value of the stratified servicing asset is less than amortized cost. Subsequent changes in the valuation of the assets are recorded as either an increase or a reduction of the valuation allowance, however, if the fair value exceeds amortized cost, such excess will not be recognized.

Loans, Loan Origination Fees and Uncollected Interest

Loans are recorded at cost, net of unearned discounts, deferred fees and allowances. Discounts or premiums on purchased loans are amortized using the interest method over the remaining contractual life of the portfolio, adjusted for actual prepayments. Loan origination fees and certain direct origination costs are deferred and amortized using the interest method over the contractual life as an adjustment to yield on the loans. Interest income is accrued on the unpaid principal balance. From time-to-time, the Company sells certain loans for liquidity purposes or to manage interest rate risk.

The accrual of interest is generally discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing. A loan that is more than 90 days past due may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid interest income is reversed and the amortization of net deferred loan fees is suspended. Interest received on nonaccrual loans generally is either applied against principal or reported as interest income, according to management’s judgment as to the ultimate collectability of principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

F-9

FOX CHASE BANCORP, INC.

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Allowance for Loan Losses

The allowance for loan losses is adjusted through increases or reductions in the provisions for loan losses charged against or credited to income. Loans deemed to be uncollectible are charged against the allowance for loan losses, and subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is maintained at a level representing management’s best estimate of known and inherent losses in the portfolio, based upon management’s evaluation of the portfolio’s collectability. Our methodology for assessing the appropriateness of the allowance for loan losses consists of an allowance on impaired loans and a general valuation allowance on the remainder of the portfolio. Although we determine the amount of each element of the allowance separately, the entire allowance for loan losses is available for losses on the entire portfolio.

Loans are deemed impaired when, based on current information and events, it is probable that the Company will be unable to collect all proceeds due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Impairment is measured on a loan by loan basis for commercial loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral less costs to sell if the loan is collateral dependent.  The Company establishes an allowance for loan loss in the amount of the difference between fair value of the impaired loan and the loan’s carrying amount.

We establish a general allowance for loans that are not considered impaired to recognize the inherent losses associated with lending activities. This general valuation allowance is determined by segmenting the loan portfolio by loan segments (described below) and assigning percentages, known as loss factors, to each category. The percentages are adjusted for significant factors that, in management’s judgment, affect the collectability of the portfolio as of the evaluation date. These significant factors include the size and composition of the loan portfolio, the Bank’s loss experience by particular segment, trends and absolute levels of nonperforming loans, trends and absolute levels of classified and criticized loans, trends and absolute levels in delinquent loans, trends in risk ratings, trends in industry charge-offs and changes in existing general economic and business conditions affecting our lending areas and the national economy. These loss factors are subject to ongoing evaluation to ensure their relevance in the current economic environment. We perform this systematic analysis of the allowance on a quarterly basis. These criteria are analyzed and the allowance is developed and maintained at the segment level.

Additional risk is associated with the analysis of the allowance for loan losses as such evaluations are highly subjective, and future adjustments to the allowance may be necessary if conditions differ substantially from the assumptions used in making the evaluations.  In addition, various regulatory agencies periodically review the Company’s allowance for loan losses. Such agencies may require the Company to recognize adjustments to the allowance, based on their judgments at the time of their examination.

The loan segments utilized by management to develop the allowance for loan losses are (1) one- to four-family real estate, (2) multi-family and commercial real estate, (3) construction, (4) consumer and (5) commercial and industrial loans.

One- to four-family real estate lending risks generally include the borrower’s ability to make repayment from his or her employment or other income, and if the borrower defaults, the ability to obtain repayment from sale of the underlying collateral securing the loan. Risk associated with one- to four-family lending would be higher during a period of increased unemployment or reduced real estate value.

Multi-family and commercial real estate lending risks generally relate to the borrower’s creditworthiness and the feasibility and cash flow potential of the underlying project. Payments on loans secured by income properties often depend on successful operation and management of the properties. As a result, repayment of such loans may be subject to adverse conditions in the real estate market or the economy.

Construction lending is generally considered to have a higher degree of lending risk than long-term financing on improved, occupied real estate.  Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the property’s value at completion of construction, the estimated cost (including interest) of construction and the ability of the project to be sold or refinanced upon completion.

Commercial and industrial loans are typically made on the basis of the borrower’s ability to make repayment from the cash flows of the borrower’s underlying business. As a result, the availability of funds for the repayment of commercial loans may depend substantially on the success of the business itself. Further, any collateral securing such loans may depreciate over time, may be difficult to appraise and may fluctuate in value.

F-10

FOX CHASE BANCORP, INC.

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Consumer lending includes unsecured lending or loans secured by assets that depreciate rapidly. In such cases, repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan and the remaining deficiency often does not warrant further substantial collection efforts against the borrower. Consumer loan collections depend on the borrower’s continuing financial stability. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans.

Troubled Debt Restructurings

Loans whose terms are modified are classified as troubled debt restructurings if the Company grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty. Concessions granted under a troubled debt restructuring generally involve a reduction in interest rate, extension of a loan’s stated maturity date or temporary deferral of payments.  Accrual of interest continues upon modification if the borrower has demonstrated a history of making payment as contractually due and has provided evidence which supports the borrower’s ability to make payments.  The accrual of interest income on accruing troubled debt restructurings is generally discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing. Troubled debt restructurings which are subsequently reported as non-accrual remain as such until they demonstrate consistent payment performance for a minimum period of six months.  All loans classified as troubled debt restructurings are considered impaired.

Other Real Estate Owned

Real estate and other repossessed collateral acquired through a foreclosure or by a deed-in-lieu of foreclosure are classified as other real estate owned. Other real estate owned is carried at the lower of cost or fair value, less estimated selling costs. Costs related to the development or improvement of a foreclosed property are capitalized. Holding costs are recorded as other real estate owned expense and declines in carrying value after acquisition of the property are recorded as provision for loss on other real estate owned in the consolidated statements of operations.   As of December 31, 2011 and 2010, the Bank held $2.4 million and $3.2 million, respectively, in other real estate owned.

Bank-Owned Life Insurance

The Company has invested in bank-owned life insurance (“BOLI”). BOLI involves the purchasing of life insurance by the Company on a chosen group of employees and directors. The Company is the owner and beneficiary of the policies. This life insurance investment is carried at the cash surrender value of the underlying policies. Income from the increase in cash surrender value of the policies is included in noninterest income in the consolidated statements of operations.

Premises and Equipment

Premises and equipment are carried at cost less accumulated depreciation. Depreciation is computed on the straight-line method over the assets’ estimated useful lives or, for leasehold improvements, over the life of the related lease if less than the estimated useful life of the asset. The estimated useful life is generally 10-39 years for buildings and 3-7 years for furniture and equipment. When assets are retired, or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts. The cost of maintenance and repairs is charged to expense when incurred and renewals and improvements are capitalized. Rental concessions on leased properties are recognized over the life of the lease.

Real Estate Held for Investment

Real estate held for investment is carried at cost and is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. At December 31, 2011 and December 31, 2010, real estate held for investment represented undeveloped land located in Absecon, New Jersey. The property was acquired by the Bank in 2003 to expand the Bank’s retail branch network in southern New Jersey. The property was under an option to be sold no later than 2010; however, the prospective buyer defaulted under its financial obligations associated with the option agreement during the fourth quarter of 2009. As a result of the default, management obtained an appraisal on the property and recorded an impairment loss of $150,000 for the difference between carrying value and fair value at December 31, 2009.   Management obtained a new appraisal during the fourth quarter of 2010 and determined there was no additional impairment at December 31, 2010.  During the third quarter of 2011, the Bank obtained an updated appraisal and recorded an additional impairment of $110,000.

In accordance with regulatory guidelines, because this real estate held for investment was not sold or placed in service by June 2011 (eight years from acquisition); for regulatory reporting purposes, the full amount of this asset is recorded as a reduction of regulatory capital at December 31, 2011.

F-11

FOX CHASE BANCORP, INC.

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before maturity.

Income Taxes

The Company accounts for income taxes under the asset/liability method. Deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company files a consolidated federal income tax return and its subsidiaries file individual state income tax returns.

The Company recognizes a tax position if it is more likely than not that the tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. If the tax position meets the more-likely-than-not recognition threshold, the position is measured to determine the amount of the benefit to recognize and is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement. The Company has no material tax exposure matters that were accrued as of December 31, 2011 or 2010. The Company’s policy is to account for interest and penalties as components of income tax expense.

Marketing and Advertising

The Company expenses marketing and advertising costs as incurred.

Off-Balance Sheet Financial Instruments

In the ordinary course of business, the Company has entered into off-balance sheet financial instruments consisting of commitments to extend credit. Such financial instruments are recorded in the balance sheet when they are funded. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet financial instruments.

Fair Value of Financial Instruments

Certain of the Company’s financial instruments are carried at fair value. Generally, fair value is the price that a willing buyer and a willing seller would agree upon in an other than a distressed sale situation. Because of the uncertainties inherent in determining fair value, fair value estimates may not be precise. Many of the fair value estimates are based on highly subjective judgments and assumptions made about market information and economic conditions. See Note 13 for a detailed discussion of fair value measurements and methodology used to determine fair value.

Employee Stock Ownership Plan

The ESOP borrows funds from the Bancorp to purchase shares of common stock in the Bancorp.  The funds borrowed by the ESOP from Old Fox Chase Bancorp to purchase shares of common stock in Old Fox Chase Bancorp’s initial public offering in 2006 are being repaid from the Bank’s contributions over a period of 15 years from 2006 to 2020. The funds borrowed by the ESOP from the Bancorp to purchase shares of common stock in the Bancorp’s mutual-to-stock conversion in 2010 are being repaid from the Bank’s contributions over a period of 14.5 years from 2010 to 2024.   The Bancorp’s common stock not yet allocated to participants is recorded as a reduction of stockholders’ equity at cost. The Bancorp’s loans to the ESOP and the ESOP’s note payables are not reflected in the consolidated statements of condition. Compensation expense for the ESOP is based on the average market price of the Company’s stock and is recognized as shares are committed to be released to participants. The notes receivable and related interest income are included in the parent company financial statements presented in Note 17.

For purposes of computing basic and diluted earnings per share, ESOP shares that have been committed to be released are considered outstanding. ESOP shares that have not been committed to be released are not considered outstanding.

F-12

FOX CHASE BANCORP, INC.

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Stock Based Compensation

The Company grants equity awards to employees, consisting of stock options and restricted stock, under its Long-Term Incentive Plan, its 2007 Equity Incentive Plan and its 2011 Equity Incentive Plan. The vesting period represents the period during which employees are required to provide service in exchange for such awards. The equity awards are recognized as compensation costs in the financial statements, over the service period based on their fair values.

Per Share Information

Basic earnings per share exclude dilution and is computed by dividing income available to common stockholders by the weighted-average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock. Proceeds assumed to have been received on such exercises are assumed to be used to purchase shares of the Company’s common stock at the average market price during the periods, as required by the treasury stock method of accounting.  Unallocated shares in the ESOP (See Note 8), shares purchased to fund the 2007 and 2011 Equity Incentive Plans (See Note 9) and treasury stock are not included in either basic or diluted earnings per share.  As a result of the mutual-to-stock conversion, all share information for periods prior to June 30, 2010 has been revised to reflect the 1.0692 exchange ratio.

Earnings (loss) per share (“EPS”), basic and diluted, were $0.36, $0.20 and $(0.07) for the years ended December 31, 2011, 2010 and 2009, respectively.

The following table presents the reconciliation of the numerators and denominators of the basic and diluted EPS computations.

	Year Ended
	December 31,
	2011			2010			2009
Net income	$	4,779,000		$	2,744,000		$	(1,028,000	)
Weighted-average common shares outstanding (1)	14,112,359			14,548,812			14,779,068
Average common stock acquired by stock benefit plans:
Unvested shares — long-term incentive plan	—			(7,582		)	(17,455		)
ESOP shares unallocated	(716,530		)	(607,235		)	(473,212		)
Shares purchased by trust	(249,670		)	(199,111		)	(246,504		)
Weighted-average common shares used
to calculate basic earnings per share	13,146,159			13,734,884			14,041,897
Dilutive effect of:
Unvested shares — long-term incentive plans	—			7,582			17,455
Restricted stock awards	33,089			10,132			4,889
Stock option awards	52,582			—			—
Weighted-average common shares used
to calculate diluted earnings per share	13,231,830			13,752,598			14,064,241
Earnings per share-basic	$	0.36		$	0.20		$	(0.07	)
Earnings per share-diluted	$	0.36		$	0.20		$	(0.07	)
Outstanding common stock equivalents having no dilutive effect	822,461			807,827			822,552

(1) Excludes treasury stock.

F-13

NOTE 2—INVESTMENT AND MORTGAGE RELATED SECURITIES

The amortized cost and fair value of securities available-for-sale and held-to-maturity as of December 31, 2011 and 2010 are summarized as follows:

	December 31, 2011
			Gross		Gross
	Amortized		Unrealized		Unrealized			OTTI			Fair
	Cost		Gains		Losses			in AOCI			Value
	(In Thousands)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	6,424	$	90	$	—		$	—		$	6,514
State and political subdivisions	1,865		8		—			—			1,873
Corporate securities	15,007		16		(304		)	—			14,719
	23,296		114		(304		)	—			23,106
Private label residential mortgage related security	164		4		—			(46		)	122
Private label commercial mortgage related securities	8,799		107		—			—			8,906
Agency residential mortgage related securities	206,285		10,357		(6		)	—			216,636
Total mortgage related securities	215,248		10,468		(6		)	(46		)	225,664
Total available-for-sale securities	$	238,544	$	10,582	$	(310	)	$	(46	)	$	248,770
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	41,074	$	684	$	—		$	—		$	41,758
Total mortgage related securities	41,074		684		—			—			41,758
Total held-to-maturity securities	$	41,074	$	684	$	—		$	—		$	41,758

	December 31, 2010
			Gross		Gross
	Amortized		Unrealized		Unrealized			OTTI			Fair
	Cost		Gains		Losses			in AOCI			Value
	(In Thousands)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	6,489	$	32	$	—		$	—		$	6,521
State and political subdivisions	7,240		65		(26		)	—			7,279
Corporate securities	18,674		221		(24		)	—			18,871
	32,403		318		(50		)	—			32,671
Private label residential mortgage related security	559		55		—			(448		)	166
Private label commercial mortgage related securities	11,385		382		—			—			11,767
Agency residential mortgage related securities	256,796		10,057		(154		)	—			266,699
Total mortgage related securities	268,740		10,494		(154		)	(448		)	278,632
Total available-for-sale securities	$	301,143	$	10,812	$	(204	)	$	(448	)	$	311,303
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	51,835	$	19	$	(1,037	)	$	—		$	50,817
Total mortgage related securities	51,835		19		(1,037		)	—			50,817
Total held-to-maturity securities	$	51,835	$	19	$	(1,037	)	$	—		$	50,817

Obligations of U.S. government agencies represents debt issued by the Federal Home Loan Bank and are not backed by the full faith and credit of the United States government.

F-14

NOTE 2—INVESTMENT AND MORTGAGE RELATED SECURITIES (CONTINUED)

The following tables show gross unrealized losses and fair value of securities, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2011 and 2010:

	December 31, 2011
	Less than 12 Months					12 Months or More					Total
								Unrealized
								Losses
								Plus
	Fair		Unrealized			Fair		OTTI			Fair		Unrealized
	Value		Losses			Value		in AOCI			Value		Losses
	(In Thousands)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	—	$	—		$	—	$	—		$	—	$	—
State and political subdivisions	—		—			—		—			—		—
Corporate securities	4,799		(182		)	2,878		(122		)	7,677		(304		)
	4,799		(182		)	2,878		(122		)	7,677		(304		)
Private label residential mortgage related security	—		—			122		(42		)	122		(42		)
Private label commercial mortgage related securities	—		—			—		—			—		—
Agency residential mortgage related securities	1,538		(6		)	—		—			1,538		(6		)
Total mortgage related securities	1,538		(6		)	122		(42		)	1,660		(48		)
Total available-for-sale securities	$	6,337	$	(188	)	$	3,000	$	(164	)	$	9,337	$	(352	)
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	—	$	—		$	—	$	—		$	—	$	—
Total mortgage related securities	—		—			—		—			—		—
Total held-to-maturity securities	$	—	$	—		$	—	$	—		$	—	$	—
Total Temporarily Impaired Securities	$	6,337	$	(188	)	$	3,000	$	(164	)	$	9,337	$	(352	)

	December 31, 2010
	Less than 12 Months					12 Months or More					Total
								Unrealized
								Losses
								Plus
	Fair		Unrealized			Fair		OTTI			Fair		Unrealized
	Value		Losses			Value		in AOCI			Value		Losses
	(In Thousands)
Available-for-Sale Securities:
State and political subdivisions	$	831	$	(26	)	$	—	$	—		$	831	$	(26	)
Corporate securities	3,968		(24		)	—		—			3,968		(24		)
	4,799		(50		)	—		—			4,799		(50		)
Private label residential mortgage related security	—		—			166		(393		)	166		(393		)
Private label commercial mortgage related securities	—		—			—		—			—		—
Agency residential mortgage related securities	21,254		(154		)	—		—			21,254		(154		)
Total mortgage related securities	21,254		(154		)	166		(393		)	21,420		(547		)
Total available-for-sale securities	$	26,053	$	(204	)	$	166	$	(393	)	$	26,219	$	(597	)
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	46,645	$	(1,037	)	$	—	$	—		$	46,645	$	(1,037	)
Total mortgage related securities	46,645		(1,037		)	—		—			46,645		(1,037		)
Total held-to-maturity securities	$	46,645	$	(1,037	)	$	—	$	—		$	46,645	$	(1,037	)
Total Temporarily Impaired Securities	$	72,698	$	(1,241	)	$	166	$	(393	)	$	72,864	$	(1,634	)

F-15

NOTE 2—INVESTMENT AND MORTGAGE RELATED SECURITIES (CONTINUED)

At December 31, 2011, after other-than-temporary impairment charges, the private label residential mortgage related security had an amortized cost of $164,000, a fair value of $122,000 with a remaining net unrealized loss, including other-than-temporary impairment in accumulated other comprehensive income, of $42,000. At December 31, 2010, after other-than-temporary impairment charges, the private label residential mortgage related security had an amortized cost of $559,000, a fair value of $166,000 with a remaining net unrealized loss, including other-than-temporary impairment in accumulated other comprehensive income, of $393,000.

During the year ended December 31, 2009, management determined that there was other-than-temporary impairment in the amount of $605,000, $157,000 of which was recognized on the statement of operations and $448,000 of which was recognized in the statement of condition in accumulated other comprehensive income (before taxes).  This impairment was due to an increase in delinquency levels, a slowdown in principal payments for the security’s underlying collateral and a downgrade in the security from AAA to BB+.  There was no additional other-than-temporary credit impairment charge on this investment through December 31, 2010. During the year ended December 31, 2011, management determined that there was additional other-than-temporary impairment in the amount of $407,000, $361,000 of which was recognized on the statement of operations and $46,000 of which was recognized on the statement of condition in accumulated other comprehensive income (before taxes).  This additional impairment was primarily due to a slowdown in principal payment speeds, an increase in default rates and an increase in estimated loss severity at default on the underlying residential mortgage collateral. The remaining unrealized loss at December 31, 2011 is not considered an other-than-temporary impairment, as management does not have the intention to sell this security and it is not more likely than not that the security will be required to be sold before recovery of its amortized cost.

As of December 31, 2011, the Company held three private label CMBS with an amortized cost of $8.8 million. These securities had a net unrealized gain of $107,000 at December 31, 2011 and all individual securities were held at an unrealized gain. As of December 31, 2010, the Company held four private label CMBS with an amortized cost of $11.4 million. These securities had a net unrealized gain of $382,000 at December 31, 2010 and all individual securities were held at an unrealized gain. During 2011, one security paid off in full.

The Company evaluates current characteristics of each of these private label securities such as delinquency and foreclosure levels, credit enhancement, projected losses, coverage and actual and projected cash flows, on a quarterly basis. It is possible that the underlying collateral of these securities will perform worse than current expectations, which may lead to adverse changes in cash flows on these securities and potential future other-than-temporary impairment losses. Events that may trigger material declines in fair values for these securities in the future would include but are not limited to deterioration of credit metrics, significantly higher levels of default and severity of loss on the underlying collateral, deteriorating credit enhancement and loss coverage ratios, or further illiquidity.

Securities that have been impaired greater than twelve months as of December 31, 2011 are the private label residential mortgage related security, which was discussed above, and one corporate security with a fair value of $2.9 million with a rating of “Baa1”, with an unrealized loss of $122,000.

Of the six securities with a temporary impairment at December 31, 2011, one has a rating of “AAA”.  The securities with a rating of less than AAA are: (1) one private label collateralized mortgage obligation, which was discussed above, with a total fair value of $122,000 and a rating of “CC”; (2) three corporate securities with a fair value of $5.9 million and a rating of “Baa1” and (3) one corporate security with a fair value of $1.8 million and a rating of “A2”.

Gross gains of $1.1 million, $2.0 million and $2.4 million and gross losses of $0, $0 and $0 were realized on sales of securities during the years ended December 31, 2011, 2010 and 2009, respectively.

F-16

NOTE 2—INVESTMENT AND MORTGAGE RELATED SECURITIES (CONTINUED)

The following schedule provides a summary of the components of net gains on sale of investment securities in the Company’s Consolidated Statement of Operations:

					Other-than-
	Gross		Gross		Temporary			Portion of
	Realized		Realized		Impairment			OTTI		Net Gains
	Gains		Losses		Losses			in OCI		(Losses)
	(in thousands)
Twelve Months Ended December 31, 2011:
Obligations of U.S. government agencies	$	—	$	—	$	—		$	—	$	—
State and political subdivisions	—		—		—			—		—
Corporate securities	—		—		—			—		—
	—		—		—			—		—
Private label residential mortgage related security	—		—		(407		)	46		(361		)
Private label commercial mortgage related securities	—		—		—			—		—
Agency residential mortgage related securities	1,091		—		—			—		1,091
Total mortgage related securities	1,091		—		(407		)	46		730
Total securities available-for-sale	$	1,091	$	—	$	(407	)	$	46	$	730

					Other-than-
	Gross		Gross		Temporary		Portion of
	Realized		Realized		Impairment		OTTI		Net Gains
	Gains		Losses		Losses		in OCI		(Losses)
	(in thousands)
Twelve Months Ended December 31, 2010:
Obligations of U.S. government agencies	$	—	$	—	$	—	$	—	$	—
State and political subdivisions	—		—		—		—		—
Corporate securities	—		—		—		—		—
	—		—		—		—		—
Private label residential mortgage related security	—		—		—		—		—
Private label commercial mortgage related securities	50		—		—		—		50
Agency residential mortgage related securities	1,913		—		—		—		1,913
Total mortgage related securities	1,963		—		—		—		1,963
Total securities available-for-sale	$	1,963	$	—	$	—	$	—	$	1,963

F-17

NOTE 2—INVESTMENT AND MORTGAGE RELATED SECURITIES (CONTINUED)

					Other-than-
	Gross		Gross		Temporary			Portion of
	Realized		Realized		Impairment			OTTI		Net Gains
	Gains		Losses		Losses			in OCI		(Losses)
	(in thousands)
Twelve Months Ended December 31, 2009:
Obligations of U.S. government agencies	$	—	$	—	$	—		$	—	$	—
State and political subdivisions	—		—		—			—		—
Corporate securities	796		—		—			—		796
	796		—		—			—		796
Private label residential mortgage related security	—		—		(605		)	448		(157		)
Private label commercial mortgage related securities	—		—		—			—		—
Agency residential mortgage related securities	1,585		—		—			—		1,585
Total mortgage related securities	1,585		—		(605		)	448		1,428
Total securities available-for-sale	$	2,381	$	—	$	(605	)	$	448	$	2,224

The amortized cost and estimated fair value of investment securities available-for-sale and held-to-maturity at December 31, 2011 and 2010 by contractual maturity are as follows:

	Available for Sale				Held to Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
	(In Thousands)				(In Thousands)
December 31, 2011
Due in one year or less	$	8,022	$	8,013	$	—	$	—
Due after one year through five years	14,072		13,886		—		—
Due after five years through ten years	763		766		—		—
Due after ten years	439		441		—		—
Total mortgage related securities	215,248		225,664		41,074		41,758
	$	238,544	$	248,770	$	41,074	$	41,758
December 31, 2010
Due in one year or less	$	3,674	$	3,692	$	—	$	—
Due after one year through five years	23,420		23,649		—		—
Due after five years through ten years	3,046		3,079		—		—
Due after ten years	2,263		2,251		—		—
Total mortgage related securities	268,740		278,632		51,835		50,817
	$	301,143	$	311,303	$	51,835	$	50,817

Securities with a carrying value of $8.1 million and $13.7 million at December 31, 2011 and 2010, respectively, were pledged to secure public deposits and for other purposes as required or permitted by law.

Securities with a carrying value of $63.2 million and $58.7 million at December 31, 2011 and 2010, respectively, were pledged as collateral for $50.0 million in borrowed funds. See Note 7.

F-18

NOTE 3—LOANS

The composition of net loans at December 31, 2011 and 2010 is provided below (in thousands).

	December 31,
	2011			2010
Real estate loans:
One- to four-family	$	198,669		$	238,612
Multi-family and commercial	313,060			249,262
Construction	18,243			31,190
	529,972			519,064
Consumer loans	44,667			55,169
Commercial and industrial loans	107,781			80,645
Total loans	682,420			654,878
Deferred loan origination cost, net	227			218
Allowance for loan losses	(12,075		)	(12,443		)
Net loans	$	670,572		$	642,653

The Company had approximately $124.5 million and $125.9 million of commercial mortgage, construction and commercial and industrial loans in the Southern New Jersey shore area at December 31, 2011 and 2010, respectively. Other than the commercial mortgage, construction and commercial and industrial loans in Southern New Jersey, a majority of the Company’s loans are in the geographic areas near the Company’s branches in Southeastern Pennsylvania.

The Company reclassified $21,000 and $13,000 of deposit accounts that were overdrawn to other consumer loans as of December 31, 2011 and 2010, respectively.

The following table presents changes in the allowance for loan losses (in thousands):

	Years Ended December 31,
	2011			2010			2009
Balance, beginning	$	12,443		$	10,605		$	6,260
Provision for loan losses	5,734			6,213			9,052
Loans charged off	(6,331		)	(4,402		)	(4,707		)
Recoveries	229			27			—
Balance, ending	$	12,075		$	12,443		$	10,605

F-19

NOTE 3—LOANS (CONTINUED)

The following tables present changes in the allowance for loan losses by loan segment for the years ended December 31, 2011 and 2010:

	For the Year Ended December 31, 2011
	One- to Four- Family Loans			Multi-family and Commercial Real Estate Loans			Construction Loans			Consumer Loans			Commercial and Industrial Loans			Unallocated		Total
	(In thousands)
Balance, beginning	$	1,990		$	4,624		$	3,260		$	665		$	1,707		$	197	$	12,443
Provision for loan losses	324			2,608			1,010			221			1,546			25		5,734
Loans charged off	(567		)	(1,290		)	(3,445		)	(433		)	(596		)	—		(6,331		)
Recoveries	13			170			44			2			—			—		229
Balance, ending	$	1,760		$	6,112		$	869		$	455		$	2,657		$	222	$	12,075

	For the Year Ended December 31, 2010
	One- to Four- Family Loans			Multi-family and Commercial Real Estate Loans		Construction Loans			Consumer Loans			Commercial and Industrial Loans			Unallocated		Total
	(In thousands)
Balance, beginning	$	1,455		$	3,716	$	3,782		$	707		$	824		$	121	$	10,605
Provision for loan losses	1,938			897		1,468			456			1,378			76		6,213
Loans charged off	(1,403		)	—		(1,990		)	(514		)	(495		)	—		(4,402		)
Recoveries	—			11		—			16			—			—		27
Balance, ending	$	1,990		$	4,624	$	3,260		$	665		$	1,707		$	197	$	12,443

The recorded investment in impaired loans was $30.5 million at December 31, 2011 and $39.1 million at December 31, 2010. The recorded investment in impaired loans with an allowance for loan losses was $29.4 million at December 31, 2011 and $35.6 million at December 31, 2010. The related allowance for loan losses associated with these loans was $3.6 million at December 31, 2011 and $5.2 million at December 31, 2010. For the years ended December 31, 2011, 2010 and 2009, the average recorded investment in these impaired loans was $32.0 million, $42.0 million and $32.3 million, respectively. The interest income recognized on these impaired loans was $825,000, $399,000 and $896,000 for the years ended December 31, 2011, 2010 and 2009, respectively.

F-20

NOTE 3—LOANS (CONTINUED)

The following table sets forth the breakdown of impaired loans by loan segment as of December 31, 2011 and 2010.

December 31, 2011

									Impaired		Impaired
					Other		Total		Loans		Loans
	Nonaccrual		Accruing		Impaired		Impaired		with		without
	Loans		TDRs		Loans		Loans		Allowance		Allowance
	(in thousands)
Real estate loans:
One- to four-family	$	6,885	$	307	$	—	$	7,192	$	7,192	$	—
Multi-family and commercial	3,814		6,836		—		10,650		9,570		1,080
Construction	6,372		—		—		6,372		6,372		—
Consumer loans	7		64		6,229		6,300		6,300		—
Commercial and industrial	—		—		—		—		—		—
Total	$	17,078	$	7,207	$	6,229	$	30,514	$	29,434	$	1,080

December 31, 2010

									Impaired		Impaired
					Other		Total		Loans		Loans
	Nonaccrual		Accruing		Impaired		Impaired		with		without
	Loans		TDRs		Loans		Loans		Allowance		Allowance
	(in thousands)
Real estate loans:
One- to four-family	$	10,813	$	1,007	$	—	$	11,820	$	11,820	$	—
Multi-family and commercial	6,180		3,569		—		9,749		6,260		3,489
Construction	9,279		3,441		3,894		16,614		16,614		—
Consumer loans	365		—		—		365		303		62
Commercial and industrial			600		—		600		600		—
Total	$	26,637	$	8,617	$	3,894	$	39,148	$	35,597	$	3,551

At December 31, 2011, two troubled debt restructurings totaling $5.2 million are excluded from the TDR column as they are included in nonaccrual loans and total impaired loans.

At December 31, 2010, one troubled debt restructuring of $2.1 million is excluded from the TDR column above as it is included in the nonaccrual loans and total impaired loans.

F-21

NOTE 3—LOANS (CONTINUED)

The following table sets forth a summary of the TDR activity for the twelve months ended December 31, 2011:

	As of and for the Twelve Months Ended December 31, 2011
						TDRs that Defaulted in
						Current Period that
						were Restructured in
	Restructured Current Year					the Prior Twelve Months
		Pre-		Post-			Post-
		Modification		Modification			Modification
		Outstanding		Outstanding			Outstanding
	Number	Recorded		Recorded		Number	Recorded
	of Loans	Investment		Investment		of Loans	Investment
	(Dollars in Thousands)
Real estate loans:
One- to four-family	2	$	307	$	307	—	$	—
Multi-family and commercial	1	4,673		4,673		—	—
Construction	—	—		—		1	3,115
Consumer loans	2	64		64		—	—
Commercial and industrial	—	—		—		1	600
Total	5	$	5,044	$	5,044	2	$	3,715

The Company may, under certain circumstances, restructure loans as a concession to borrowers who have experienced financial difficulty.  TDRs are included in impaired loans.  TDRs typically result from the Company’s loss mitigation activities which, among other activities, could include rate reductions, payment extension, and/or principal forgiveness.

At December 31, 2011, the Bank had TDRs totaling $12.4 million. Of this amount, $5.2 million relates to two construction loans which are classified as nonperforming assets.  The Bank has commitments of $2.5 million to lend additional funds related to one of these construction loans.  The remaining $7.2 million is comprised of $6.8 million related to four multi-family and commercial real estate loans, $307,000 related to two residential mortgage loans and $64,000 related to two consumer loans secured by second or third mortgages. The $7.2 million in TDRs are on accrual status as the borrowers have a demonstrated history of making payment as contractually due, are current as of December 31, 2011 and have provided evidence which supports the borrower’s ability to make payments.

Of the loans classified as TDRs at December 31, 2011, the two construction loans, totaling $5.2 million, and three of the multi-family and commercial real estate loans, totaling $2.2 million, were classified as TDRs during 2010.  These loans were classified as TDRs because they matured during 2010 and the Bank extended the loans with uncertainty as to whether the borrowers could obtain similar financing from another financial institution at the time of the extension, thus representing the granting of a financial concession.  The Bank did not lower the interest rate on these loans.  As of December 31, 2011, four of the loans are performing in accordance with the modified terms and one of the loans in the amount of $3.2 million is currently in default and migrated to nonperforming during 2011.

The other multi-family and commercial real estate loan classified as a TDR at December 31, 2011, totaling $4.7 million, was first classified as a TDR during the three months ended March 31, 2011.  The loan was classified as a TDR as the Bank agreed to restructure the terms of the loan, which included reducing payments to interest only for a period of nine months and reducing the rate for the term of the interest only period. This loan is secured by partially owner occupied commercial property located in Chester County, Pennsylvania.  As of December 31, 2011, this loan is performing in accordance with its restructured terms and is no longer reported as delinquent.

The four residential and consumer loans classified as a TDR at December 31, 2011, totaling $371,000, were first classified during the three months ended December 31, 2011 as the Bank agreed to modified terms with the borrower, which included the borrower paying interest only for a period greater than six months.

F-22

NOTE 3—LOANS (CONTINUED)

The following tables set forth the allowance for loan loss for impaired loans and general allowance by loan segment as of December 31, 2011 and 2010.

December 31, 2011

	Allowance for Loan Losses
	Impaired Loans
					Other		Total
	Nonaccrual		Accruing		Impaired		Impaired
	Loans		TDRs		Loans		Loans		General		Total
	(in thousands)
Real estate loans:
One- to four-family	$	1,394	$	3	$	—	$	1,397	$	363	$	1,760
Multi-family and commercial	466		975		—		1,441		4,671		6,112
Construction	565		—		—		565		304		869
Consumer loans	7		7		156		170		285		455
Commercial and industrial	—		—		—		—		2,657		2,657
Unallocated	—		—		—		—		222		222
Total allowance for loan losses	$	2,432	$	985	$	156	$	3,573	$	8,502	$	12,075

December 31, 2010

	Allowance for Loan Losses
	Impaired Loans
					Other		Total
	Nonaccrual		Accruing		Impaired		Impaired
	Loans		TDR’s		Loans		Loans		General		Total
	(in thousands)
Real estate loans:
One- to four-family	$	1,537	$	2	$	—	$	1,539	$	451	$	1,990
Multi-family and commercial	195		236		—		431		4,193		4,624
Construction	2,447		258		195		2,900		360		3,260
Consumer loans	294		—		—		294		371		665
Commercial and industrial	—		30		—		30		1,677		1,707
Unallocated	—		—		—		—		197		197
Total allowance for loan losses	$	4,473	$	526	$	195	$	5,194	$	7,249	$	12,443

Loans on which the accrual of interest has been discontinued amounted to $17.1 million at December 31, 2011 and $26.6 million at December 31, 2010. If interest on such loans had been recorded in accordance with contractual terms, interest income would have increased by $1.1 million, $1.5 million and $735,000 in 2011, 2010 and 2009, respectively. There was $3.9 million, $0 and $601,000 of loans past due 90 days or more and still accruing interest at December 31, 2011, 2010 and 2009, respectively. There were $12.4 million, $10.7 million and $1.2 million of loans classified as troubled debt restructurings as of December 31, 2011, 2010 and 2009, respectively.

F-23

NOTE 3—LOANS (CONTINUED)

The following table sets forth past due loans by segment as of December 31, 2011 and 2010.

	At December 31,
	2011				2010
	30-59		60-89		30-59		60-89
	Days		Days		Days		Days
	Past Due		Past Due		Past Due		Past Due
	(In thousands)
One- to four-family real estate	$	370	$	252	$	96	$	144
Multi-family and commercial real estate	—				4,735
Construction real estate	—		—		—		—
Consumer	1,097		169		170		—
Commercial and industrial	—		—		—		—
Total	$	1,467	$	421	$	5,001	$	144

There are three classifications for problem assets: substandard, doubtful and loss. “Substandard assets” must have one or more defined weaknesses and are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. “Doubtful assets” have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss. An asset classified “loss” is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted. The regulations also provide for a “special mention” category, described as assets which do not currently expose us to a sufficient degree of risk to warrant classification but do possess credit deficiencies or potential weaknesses deserving our close attention. If we classify an asset as loss, it is recorded as a loan charged off in the current period.

The following table sets forth criticized and classified loans by segment as of December 31, 2011 and 2010.

	At December 31, 2011
	One- to Four- Family Loans		Multi-family and Commercial Real Estate Loans		Construction Loans		Consumer Loans		Commercial and Industrial Loans		Total
	(In thousands)
Special mention loans	$	—	$	13,226	$	—	$	6,229	$	1,407	$	20,862
Substandard loans	6,885		14,319		6,372		7		4,273		31,856
Doubtful loans	—		—		—		—		—		—
Total criticized and classified loans	$	6,885	$	27,545	$	6,372	$	6,236	$	5,680	$	52,718

	At December 31, 2010
	One- to Four- Family Loans		Multi-family and Commercial Real Estate Loans		Construction Loans		Consumer Loans		Commercial and Industrial Loans		Total
	(In thousands)
Special mention loans	$	—	$	19,889	$	114	$	—	$	1,099	$	21,102
Substandard loans	10,812		6,745		16,614		365		5,937		40,473
Doubtful loans	—		—		—		—		—		—
Total criticized and classified loans	$	10,812	$	26,634	$	16,728	$	365	$	7,036	$	61,575

F-24

NOTE 3—LOANS (CONTINUED)

On November 3, 2006, the Company entered an interest rate swap with a notional amount of $1.1 million, which is used to hedge a 15-year fixed rate loan that is earning interest at 7.43%. The Company is receiving variable rate payments of one-month LIBOR plus 224 basis points and will pay fixed rate payments of 7.43%.  The swap matures in April 2022 and had a fair value loss position of $214,000 and $161,000 at December 31, 2011 and 2010, respectively.  The interest rate swap is carried at fair value in accordance with FASB ASC 815 “Derivatives and Hedging”.  The loan is carried at fair value under the fair value option as permitted by FASB ASC 825 “Financial Instruments”.

On October 12, 2011, the Company entered an interest rate swap with a notional amount of $1.6 million, which is used to hedge a 10-year fixed rate loan that is earning interest at 5.83%. The Company is receiving variable rate payments of one-month LIBOR plus 350 basis points and will pay fixed rate payments of 5.83%.  The Company designated this relationship as a fair value hedge.  The swap matures in October 2021 and had a fair value loss position of $65,000 at December 31, 2011, with ineffectiveness of $5,000.  The difference between changes in the fair values of interest rate swap agreement and the hedged loan represents hedge ineffectiveness and is recorded in other non-interest income in the statement of operations.

NOTE 4—MORTGAGE SERVICING ACTIVITY

Loans serviced for others are not included in the accompanying consolidated statements of condition. The unpaid principal balances of these loans were $50.0 million at December 31, 2011, $65.7 million at December 31, 2010, and $88.2 million at December 31, 2009. The Company received fees, net of amortization, from the servicing of loans of $25,000, $11,000 and $63,000 during 2011, 2010 and 2009, respectively.

The following summarizes mortgage-servicing rights activity for the years ended December 31, 2011, 2010 and 2009 (in thousands):

							Net
	Servicing			Valuation			Carrying
	Rights			Allowance			Value
Balance at December 31, 2008	$	960		$	(133	)	$	827
Reductions	—			48			48
Amortization	(192		)	—			(192		)
Balance at December 31, 2009	$	768		$	(85	)	$	683
Additions	—			(46		)	(46		)
Amortization	(189		)	—			(189		)
Balance at December 31, 2010	$	579		$	(131	)	$	448
Additions	—			(8		)	(8		)
Amortization	(124		)	—			(124		)
Balance at December 31, 2011	$	455		$	(139	)	$	316

The estimated amortization expense of amortizing mortgage servicing rights for each of the five succeeding fiscal years after December 31, 2011 is as follows (in thousands):

Year
2012	$	116
2013	88
2014	66
2015	50
2016	37
Thereafter	98
Total	$	455

F-25

NOTE 4—MORTGAGE SERVICING ACTIVITY (CONTINUED)

As of December 31, 2011 and 2010, the fair value of the mortgage servicing rights (“MSRs”) was $322,000 and $462,000, respectively. The fair value of the MSRs for these periods was determined using a third-party valuation model that calculates the present value of estimated future servicing income. The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds and discount rates. Mortgage loan prepayment speed is the annual rate at which borrowers are forecasted to repay their mortgage loan principal and is based on historical experience and current interest rates. The discount rate used to determine the present value of future net servicing income—another key assumption in the model—is the required rate of return the market would expect for an asset with similar risk. Both assumptions can, and generally will, change quarterly valuations as market conditions and interest rates change.

During the year ended December 31, 2008, the Bank recorded an initial valuation allowance of $133,000 on its MSRs, which was due to a significant decrease in interest rates for residential mortgages during the year resulting in assumed higher mortgage prepayments. The valuation allowance was reduced by $48,000 during the year ended December 31, 2009 due to assumed slower prepayments.  The valuation allowance was increased by $46,000 and $8,000 during the years ended December 31, 2010 and December 31, 2011, respectively, due to continued low interest rates and high level of prepayments. The amount of the valuation adjustment is recorded as an adjustment to service charges and other fee income in the Company’s consolidated statement of operations.

NOTE 5—PREMISES AND EQUIPMENT

The components of premises and equipment at December 31, 2011 and 2010 were as follows (in thousands):

	December 31,
	2011			2010
Land	$	3,207		$	3,207
Buildings	13,479			13,376
Leasehold improvements	190			190
Furniture, fixtures and equipment	5,125			4,869
	22,001			21,642
Less: accumulated depreciation	(11,570		)	(10,949		)
Premises and equipment, net	$	10,431		$	10,693

As of December 31, 2011, the Company leased space for an operations center in Blue Bell, Pennsylvania, a branch location in Media, Pennsylvania and certain office equipment. The leases are accounted for as operating leases. The Blue Bell lease expires in July 2012 and, upon expiration, the Company has the option to extend the lease for an additional five-year period at the then prevailing market rate. The following rental expenses were included in the Company’s financial statements (in thousands):

	December 31,
	2011		2010		2009
	(in thousands)
Office rent	$	486	$	470	$	467
Equipment lease	2		6		12
	$	488	$	476	$	479

F-26

NOTE 5—PREMISES AND EQUIPMENT (CONTINUED)

The following table shows the minimum future rental payments under non-cancelable leases for premises and equipment at December 31, 2011 (in thousands):

Year
2012	$	300
2013	—
2014	—
2015	—
2016	—

NOTE 6—DEPOSITS

The weighted average interest rate and balance of deposits at December 31, 2011 and 2010 consisted of the following (dollars in thousands):

	December 31,
	2011				2010
	Weighted AverageInterest Rate		Amount		Weighted Average Interest Rate		Amount
Noninterest-bearing demand accounts	—	%	$	84,374	—	%	$	70,990
NOW accounts	0.39		45,948		0.30		40,505
Money market accounts	0.38		127,667		0.47		148,904
Savings and club accounts	0.29		80,740		0.05		54,921
Brokered deposits	0.53		10,162		—		—
Certificates of deposit	2.03		327,703		2.44		396,443
	1.12	%	$	676,594	1.48	%	$	711,763

The scheduled maturities of certificates of deposit and brokered deposits for periods subsequent to December 31, 2011 are as follows (in thousands):

	December 31,
	Certificates		Brokered
Year	of Deposit		Deposits		Total
2012	$	189,448	$	5,069	$	194,517
2013	59,256		—		59,256
2014	48,323		5,093		53,416
2015	12,449		—		12,449
2016	9,389		—		9,389
Thereafter	8,838		—		8,838
	$	327,703	$	10,162	$	337,865

F-27

NOTE 6—DEPOSITS (CONTINUED)

A summary of interest expense on deposits for the years ended December 31, 2011, 2010 and 2009 is as follows (in thousands):

	2011		2010		2009
NOW accounts	$	143	$	210	$	340
Money market accounts	596		1,294		2,534
Savings and club accounts	148		45		90
Brokered deposits	13		—		—
Certificates of deposit	7,772		13,654		17,625
	$	8,672	$	15,203	$	20,589

The aggregate amount of certificates of deposit with a minimum denomination of $100,000 was $81.6 million and $101.2 million at December 31, 2011 and 2010, respectively.  Brokered deposits in the amount of $10.2 million at December 31, 2011 are not included in the total certificates of deposit with a minimum denomination of $100,000.  Deposits in excess of $250,000 are not insured by the Federal Deposit Insurance Corporation (the “FDIC”).

NOTE 7—BORROWINGS

The following is a summary of borrowed funds by type:

					Maximum
					Amount				Weighted
					Outstanding		Average		Average
			Weighted		at Month		Amount		Interest
	Balance		Average		End		Outstanding		Rate
	at End of		Interest		During the		During the		During the
	Year		Rate		Year		Year		Year
	(Dollars in thousands)
2011
FHLB advances	$	88,278	3.41	%	$	122,429	$	110,180	3.66	%
Other borrowed funds - long term	50,000		3.42		50,000		50,000		3.42
Other borrowed funds - short term	8,500		0.25		24,000		2,239		0.23
2010
FHLB advances	$	122,800	3.77	%	$	136,807	$	125,963	3.75	%
Other borrowed funds - long term	50,000		3.42		50,000		50,000		3.42

F-28

NOTE 7—BORROWINGS (CONTINUED)

Federal Home Loan Bank Advances

Maturity Date	Amount		Interest Rate		Call Date	Rate if Called
	(in thousands)
July 2013	$	9,158	4.10	%
December 2013	5,000		2.80	%	March 2012	LIBOR + 1.04%
January 2015	14,120		3.49	%
December 2015	5,000		3.06	%	March 2012	LIBOR + 1.12%
November 2017	15,000		3.62	%	February 2012	LIBOR + 0.10%
November 2017	15,000		3.87	%	February 2012	LIBOR + 0.10%
December 2017	20,000		2.83	%	March 2012	LIBOR + 0.11%
December 2018	5,000		3.15	%	December 2012	LIBOR + 1.14%
	$	88,278	3.41	%

Advances from the FHLB of Pittsburgh with rates ranging from 2.80% to 4.10% are due as follows.  These amounts include principle amortization on the two amortizing advances that mature in July 2013 and January 2015.

			Weighted
			Average
Maturity	Amount		Rate
	(Dollars in Thousands)
2012	4,684		3.53	%
2013	18,459		3.60	%
2014	4,733		3.49	%
2015	5,402		3.09	%
2016	—		0.00	%
2017-2019	55,000		3.36	%
	$	88,278	3.41	%

For the borrowings which have “Call Dates” disclosed in the above table, if the borrowing is called, the Bank has the option to either pay off the borrowing without penalty or the borrowing’s fixed rate resets to a variable LIBOR based rate, as noted in the above table. Subsequent to the call date, the borrowings are callable by the FHLB quarterly. Accordingly, the contractual maturities above may differ from actual maturities.

The borrowing that matures in July 2013 has a five year contractual maturity with principal and interest being paid monthly utilizing a 25 year amortization period. The borrowing that matures in January 2015 is a seven year contractual maturity with principal and interest being paid monthly.

Pursuant to collateral agreements with the FHLB, advances are secured by qualifying first mortgage loans, qualifying fixed-income securities, FHLB stock and an interest-bearing demand deposit account with the FHLB. As of December 31, 2011, the Bank has $125.6 million in qualifying collateral pledged against its advances.

The Bank had a maximum borrowing capacity with the FHLB of Pittsburgh of approximately $384.7 million at December 31, 2011. Additionally, as of December 31, 2011, the Bank has a maximum borrowing capacity of $58.8 million with the Federal Reserve Bank of Philadelphia through the Discount Window.

F-29

NOTE 7—BORROWINGS (CONTINUED)

As a member of the FHLB of Pittsburgh, the Bank is required to acquire and hold shares of capital stock in the FHLB of Pittsburgh in an amount at least equal to at least 4.60% of its advances plus 0.35% of the Bank’s “eligible assets,” as such term is defined by the FHLB; and a maximum amount of 6.00% of its advances plus 1.0% of the Bank’s “eligible assets.”  The FHLB of Pittsburgh has indicated it would only redeem from any member the lesser of the amount of the member’s excess capital stock or 5% of the member’s total capital stock.  The FHLB also indicated and that it may increase its individual member stock investment requirements.  As of December 31, 2011, the Company’s minimum stock obligation was $6.4 million and a maximum stock obligation was $11.9 million.  The FHLB of Pittsburgh ceased paying a dividend on its common stock during the first quarter of 2009 and has not paid a dividend through December 31, 2011.  Beginning in the first quarter of 2012, the FHLB of Pittsburgh reinstated its dividend at an annual rate of 0.10% of the Bank’s average stock held during the quarter ended December 31, 2011.

Other Borrowed Funds — Long Term

Other borrowed funds obtained from large commercial banks totaled $50.0 million at December 31, 2011. These borrowings contractually mature with dates ranging from November 2014 thru November 2018 and may be called by the lender based on the underlying agreements. Subsequent to the call date, these borrowings are callable by the lender quarterly. Accordingly, the contractual maturities above may differ from actual maturities.

Maturity			Interest
Date	Amount		Rate		Call Date
	(in thousands)
November 2014	$	20,000	3.60	%	February 2012
September 2018	10,000		3.40	%	September 2012
September 2018	5,000		3.20	%	September 2012
October 2018	5,000		3.15	%	October 2012
October 2018	5,000		3.27	%	N/A
November 2018	5,000		3.37	%	November 2013
	$	50,000

Mortgage backed securities with a fair value of $63.2 million at December 31, 2011 were pledged as collateral for these other borrowed funds.

Other Borrowed Funds — Short Term

As of December 31, 2011 and December 31, 2010, the Company had $8.5 million and $0, respectively, of short-term borrowings.  The short-term borrowings at December 31, 2011 had a rate of 0.25%.  The short-term borrowings, which represent overnight borrowings, were obtained from a large commercial bank and a participant in the Federal Funds market.

F-30

NOTE 8—EMPLOYEE BENEFITS

401(k) Plan

The Bank has a 401(k) retirement plan covering all employees meeting certain eligibility requirements. Employees may contribute a percentage of their salary to the Plan each year, subject to limitations set by law. The Bank matches a portion of each employee contribution and also may make discretionary contributions, based on the Bank’s performance. The Bank provides a matching contribution equivalent to 33% of the first 6% of the contribution made by an employee. The Bank’s contributions to the plan on behalf of its employees resulted in an expenditure of $121,000, $110,000 and $115,000 for the years ended December 31, 2011, 2010 and 2009, respectively.

Employee Stock Ownership Plan

The ESOP is a tax-qualified plan designed to invest primarily in the Bancorp’s common stock that provides employees meeting certain eligibility requirements with the opportunity to receive a funded retirement benefit, based primarily on the value of the Bancorp’s common stock. The ESOP has purchased 963,767 shares of common stock and has total loans outstanding of $7.2 million as of December 31, 2011.  The ESOP purchased shares in two separate transactions as described in the next paragraph.

The ESOP initially purchased 615,267 shares of common stock in Old Fox Chase Bancorp’s initial stock offering in 2006 at a price of $9.35 per share with the proceeds of a loan from Old Fox Chase Bancorp to the ESOP. The outstanding loan principal balance on the initial ESOP transaction at December 31, 2011 and 2010 was $4.0 million and $4.3 million, respectively.  The ESOP purchased an additional 348,500 shares of common stock in conjunction with the Bancorp’s mutual-to-stock conversion completed on June 29, 2010 at a price of $10.00 per share with the proceeds of a second loan from the Bancorp to the ESOP.  The outstanding loan principal balance at December 31, 2011 and 2010 was $3.2 million and $3.4 million, respectively.

Shares of the Bancorp’s common stock pledged as collateral for the loan are released from the pledge for allocation to Plan participants as loan payments are made. The Bank releases shares annually based upon the ratio that the current principal and interest payment bears to the current and remaining scheduled future principal and interest payments. Dividends declared on common stock held by the ESOP and not allocated to the account of a participant were used to repay the loan.

At December 31, 2011, there were a total of 246,108 ESOP shares committed to employees from the initial 2006 stock offering, representing 41,018 shares allocated and committed to be released in each of the years from December 31, 2006 to December 31, 2011.  ESOP shares from this transaction that were unallocated at December 31, 2011 totaled 369,159 and had a fair market value of $4.7 million.

At December 31, 2011, there were a total of 36,049 ESOP shares committed to employees from the mutual-to-stock conversion transaction, representing 12,014 shares allocated and committed to be released in 2010 and 24,035 shares allocated and committed to be released in 2011.  ESOP shares from this transaction that were unallocated at December 31, 2011 totaled 312,451 and had a fair market value of $3.9 million.

As of December 31, 2011, there were a total of 282,157 shares committed to employees and 681,610 unallocated shares to be released in future periods.

Total ESOP compensation expense for the year ended December 31, 2011, 2010 and 2009 was $840,000, $522,000 and $375,000, respectively, representing the average fair market value of shares allocated or committed to be released during the year.

Long-Term Incentive Plan

The Bank maintains the Fox Chase Bank Executive Long-Term Incentive Plan (the “Incentive Plan”).  All plan assets are invested in Bancorp common stock. The Incentive Plan became effective January 1, 2006. During 2011, 2010 and 2009, the Bank recorded compensation expense of $0, $89,000 and $89,000, respectively, for the Incentive Plan. All shares in the plan were fully vested on January 1, 2011.

F-31

NOTE 9—STOCK BASED COMPENSATION

In 2007, stockholders approved the Fox Chase Bancorp, Inc. 2007 Equity Incentive Plan (the “2007 Plan”). The Plan provides that 769,083 shares of common stock may be issued in connection with the exercise of stock options and 307,633 shares of common stock may be issued as restricted stock. The Plan allows for the granting of non-statutory stock options (“NSOs”), incentive stock options and restricted stock. Options are granted at no less than the fair value of the Bancorp’s common stock on the date of the grant.

In 2007, Old Fox Chase Bancorp’s Board of Directors approved the funding of a trust that purchased 307,395 shares of Bancorp’s common stock, or approximately 1.96% of Old Fox Chase Bancorp’s outstanding common stock, to fund restricted stock awards under the Plan. The 307,395 shares were purchased by the trust at a weighted average cost of $12.18 per share. The Company classifies share-based compensation for employees and outside directors within “Salaries, benefits and other compensation” in the Consolidated Statements of Operations to correspond with the same line item as compensation paid. Additionally, the Company reports (1) the expense associated with the grants as an adjustment to operating cash flows and (2) any benefits of realized tax deductions in excess of previously recognized tax benefits on compensation expense as a financing cash flow. There were no such excess tax benefits in 2008, 2009 and 2010.

In August 2011, stockholders approved the Fox Chase Bancorp, Inc. 2011 Equity Incentive Plan (the “2011 Plan”).  The 2011 Plan provides that 685,978 shares of common stock may be issued in connection with the exercise of stock options and 274,391 shares of common stock may be issued as restricted stock; including performance based restricted stock.  In August 2011, the Board of Directors approved the funding of a trust that purchased 274,391 shares of Bancorp’s common stock to fund restricted stock awards under the 2011 Plan.  During the year ended December 31, 2011, 274,391 shares were purchased by the trust at a weighted average cost of $12.66 per share.

In August 2011, the Company granted 10,668 shares of performance-based restricted stock to certain executive officers of the Company.  The performance metrics to be evaluated during the performance period are (1) return on assets compared to peer group and (2) earnings growth rate compared to peer group.  On the third anniversary of the grant date, the Company’s level of performance relative to the performance metrics will be evaluated and, if such performance metrics have been achieved, an amount of shares that will vest at that time and over the following two years will be determined.  Of the shares that will vest, 50% of the shares will vest on the third anniversary of the date of grant and 25% will vest on each of the fourth and fifth anniversaries of the date of grant.

Stock options vest over a five-year service period and expire ten years after grant date. The Company recognizes compensation expense for the fair values of stock options using the straight-line method over the requisite service period for the entire award.

Restricted shares vest over a five-year service period. The product of the number of shares granted and the grant date market price of the Company’s common stock determine the fair value of restricted shares under the Company’s restricted stock plan. The Company recognizes compensation expense for the fair value of restricted shares on a straight-line basis over the requisite service period for the entire award.

During the years ended December 31, 2011, 2010 and 2009, the Company recorded $1.0 million, $929,000, and $961,000 of stock based compensation expense, respectively, comprised of stock option expense of $436,000, $400,000 and $416,000, respectively, and restricted stock expense of $606,000, $529,000 and $545,000, respectively.

As a result of the mutual-to-stock conversion, all presented share information for periods prior to June 30, 2010 has been revised to reflect the 1.0692 exchange ratio.

F-32

NOTE 9—STOCK BASED COMPENSATION (CONTINUED)

The following is a summary of Bancorp’s stock option activity and related information for the 2007 Plan and 2011 Plan for the years ended December 31, 2011, 2010 and 2009:

				Weighted
			Weighted	Average
	Number of		Average	Remaining	Aggregate
	Stock		Exercise	Contractual	Intrinsic
	Options		Price	Life	Value
Outstanding at December 31, 2008	657,801		11.43	8.8 years	$	—
Granted	91,276		8.28
Exercised	—		—
Forfeited	(71,696	)	11.25
Outstanding at December 31, 2009	677,381		11.03	7.9 years	$	105,000
Granted	39,500		9.67
Exercised	—		—
Forfeited	(24,703	)	10.45
Outstanding at December 31, 2010	692,178		10.97	7.1 years	$	608,000
Granted	135,494		12.49
Exercised	(15,037	)	10.69
Forfeited / Cancelled	(24,493	)	11.24
Outstanding at December 31, 2011	788,142		11.23	6.6 years	$	1,111,000
Exercisable at December 31, 2011	465,612		11.24	5.9 years	$	649,000

Management estimated the fair values of all option grants using the Black-Scholes option-pricing model. Through June 30, 2011, as limited historical information on the volatility of the Company’s stock existed, management considered the average volatilities of comparable public companies over a period equal to the expected life of the options in determining the expected volatility rate, of 40.0%. Beginning in the quarter ended September 30, 2011, management began to utilize the Company’s actual volatility in determining the expected volatility rate, an amount that was 33.0% for the second half of 2011. Management estimated the expected life of the options using the simplified method allowed under certain accounting standards. The risk-free rate was determined utilizing the Treasury yield for the expected life of the option contract.

The fair value of the stock option grants was estimated with the following weighted average assumptions:

	2011	2010	2009
Expected dividend yield	1.90% – 2.00%	1.90%	1.90%
Expected volatility	33.0% - 40.0%	35.0%	30.0%
Risk-free interest rate	1.21% - 2.51%	2.04%	2.33% – 2.51%
Expected option life in years	6.50	6.50	6.50

F-33

NOTE 9—STOCK BASED COMPENSATION (CONTINUED)

The following is a summary of the Company’s unvested options as of December 31, 2011, 2010 and 2009 and changes therein during the years then ended:

			Weighted
	Number of		Average
	Stock		Grant Date
	Options		Fair Value
Unvested at December 31, 2008	542,459		$	3.07
Granted	91,276		2.25
Exercised	—		—
Vested	(131,895	)	3.08
Forfeited	(46,034	)	3.02
Unvested at December 31, 2009	455,806		$	2.91
Granted	39,500		2.97
Exercised	—		—
Vested	(133,561	)	2.97
Forfeited	(17,748	)	2.73
Unvested at December 31, 2010	343,997		$	2.90
Granted	135,494		3.60
Exercised	—		—
Vested	(135,464	)	2.98
Forfeited/Cancelled	(21,497	)	3.06
Unvested at December 31, 2011	322,530		$	3.15

Expected future expense relating to the 322,530 unvested options outstanding as of December 31, 2011 is $810,000 over a weighted average period of 3.1 years.

The following is a summary of the status of the Company’s restricted stock as of December 31, 2011, 2010 and 2009 and changes therein during the years then ended:

			Weighted
	Number of		Average
	Restricted		Grant Date
	Shares		Fair Value
Unvested at December 31, 2008	192,005		$	11.49
Granted	17,731		8.80
Vested	(47,087	)	11.51
Forfeited	(13,836	)	11.57
Unvested at December 31, 2009	148,813		$	11.16
Granted	15,640		9.67
Vested	(45,888	)	11.30
Forfeited	(1,134	)	10.87
Unvested at December 31, 2010	117,431		$	10.91
Granted	57,036		12.54
Vested	(48,620	)	11.19
Forfeited/Cancelled	(5,857	)	11.72
Unvested at December 31, 20101	119,990		$	11.54

Expected future compensation expense relating to the 119,990 restricted shares at December 31, 2011 is $1.1 million over a weighted average period of 3.2 years.

F-34

NOTE 10—INCOME TAXES

The components of income tax expense (benefit) for the years ended December 31, 2011, 2010 and 2009 are as follows (in thousands):

	December 31,
	2011			2010			2009
Federal:
Current	$	2,555		$	1,129		$	2,305
Deferred	(359		)	(13		)	(3,138		)
	2,196			1,116			(833		)
State:
Current	—			—			2
Deferred	16			4			4
	16			4			6
	$	2,212		$	1,120		$	(827	)

The provision for income taxes differs from the statutory rate of 34% due to the following (in thousands):

	December 31,
	2011			2010			2009
Federal income tax at statutory rate of 34%	$	2,377		$	1,314		$	(631	)
Tax exempt interest, net	(62		)	(113		)	(164		)
Bank-owned life insurance	(159		)	(160		)	(154		)
ESOP compensation expense	73			6			—
Equity incentive plans	1			46			83
Other, net	—			23			37
Dividends paid on benefit plans	(26		)	—			—
State taxes, net	126			436			(58		)
Increase/ (decrease) in valuation allowance	(118		)	(432		)	60
Total provision	$	2,212		$	1,120		$	(827	)
Effective tax rate	31.64		%	28.99		%	44.58		%

F-35

NOTE 10—INCOME TAXES (CONTINUED)

The net deferred tax asset consisted of the following components as of December 31, 2011 and 2010 (in thousands):

	December 31,
	2011			2010
Deferred tax assets:
Allowance for loan losses, net	$	4,106		$	4,333
Provision for loss on other real estate owned	402			199
Nonaccrual interest	502			592
Accrued compensation	151			30
Equity incentive plans	644			489
Accrued expenses	345			214
Deferred lease liability	10			24
Impairment loss on investments	176			54
State net operating loss carryforward	343			425
	6,679			6,360
Valuation allowance	(307		)	(425		)
	6,372			5,935
Deferred tax liabilities:
Prepaid expense deduction	181			174
Mortgage servicing rights	107			152
Loan origination costs	58			82
Deferrable earnings on investments	227			140
Depreciation of premises and equipment	458			389
Unrealized gains on securities available-for-sale	3,659			3,622
	4,690			4,559
Net Deferred Tax Asset	$	1,682		$	1,376

Based on the Company’s history of earnings and its expectation of future taxable income, management anticipates that it is more likely than not that the above deferred tax assets will be realized, except for the $307,000 gross deferred tax assets related to Fox Chase Bank’s state net operating loss carryforward.

Retained earnings include $6.0 million at December 31, 2011, 2010 and 2009, for which no provision for federal income tax has been made. This amount represents deductions for bad debt reserves for tax purposes, which were only allowed to savings institutions that met certain criteria prescribed by the Internal Revenue Code of 1986, as amended. The Small Business Job Protection Act of 1996 (the “Act”) eliminated the special bad debt deduction granted solely to thrifts. Under the terms of the Act, there would be no recapture of the pre-1988 (base year) reserves. However, these pre-1988 reserves would be subject to recapture under the rules of the Internal Revenue Code if the Company pays a cash dividend in excess of earnings and profits, or liquidates.

Approximately $343,000 of gross deferred tax assets were related to state tax net operating losses at December 31, 2011. Of this amount, $307,000 is related to the Bank and has a full valuation allowance of $307,000 on this deferred tax asset due to an expectation of such net operating losses expiring before being utilized. The remaining $36,000 of gross deferred tax assets were related to state tax net operating losses on Fox Chase Service Corporation and have no valuation allowance as it is more likely than not that it will be fully utilized before it expires.  The Company has $4.3 million of state net operating losses remaining as of December 31, 2011 for the Bank, which will begin to expire December 31, 2012.  The Company has $356,000 of state net operating losses remaining as of December 31, 2011 for Fox Chase Service Corporation, which will begin to expire December 31, 2029.

As of December 31, 2011 and prior periods, the Company had no material unrecognized tax benefits or accrued interest and penalties. The Company’s policy is to account for interest and penalties as a component of income tax expense. Federal and state tax years 2008 through 2010 were open for examination as of December 31, 2011.

F-36

NOTE 11—COMMITMENTS AND CONTINGENCIES

Lending Operations

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized on the statements of financial condition.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

A summary of the Company’s financial instrument commitments at December 31, 2011 and 2010 is as follows (in thousands):

	December 31,
	2011		2010
Commitments to grant loans	$	74,372	$	55,274
Unfunded commitments under lines of credit	105,983		106,397
Standby letters of credit	12,010		3,408
	$	192,365	$	165,079

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation. Collateral held varies, but includes principally residential or commercial real estate, accounts receivable or inventory. Fixed rate commitments to grant loans were $15.5 million and $37.6 million as of December 31, 2011 and December 31, 2010, respectively. The interest rates on these fixed rate loans ranged from 5.25% to 6.00% as of December 31, 2011 and 4.75% to 6.50% as of December 31, 2010.

Legal Proceedings

The Company is periodically subject to various pending and threatened legal actions, which involve claims for monetary relief. Based upon information presently available to the Company, it is the Company’s opinion that any legal and financial responsibility arising from such claims will not have a material adverse effect on the Company’s results of operations.

Data Processing

The Company has entered into contracts with third-party providers to manage the Company’s network operations, data processing and other related services. The projected amount of the Company’s future minimum payments contractually due after December 31, 2011 is as follows (in thousands):

Year	Amount
2012	$	1,707
2013	1,659
2014	—
2015	—
2016	—

F-37

NOTE 12—STOCKHOLDERS’ EQUITY

The Bank is subject to various regulatory capital requirements administered by federal banking agencies. The Bancorp, as a savings and loan holding company, is not subject to separate capital requirements. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth below) of Total and Tier 1 capital (as defined in the regulations) to risk-weighted assets, and of Tier 1 capital to total assets, as defined. Management believes, as of December 31, 2011, that the Bank meets all capital adequacy requirements to which it was subject.

As of December 31, 2011, the Bank is categorized as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank’s category.

The Bank’s actual capital amounts and ratios at December 31, 2011 and 2010 and the minimum amounts and ratios required for capital adequacy purposes and to be well capitalized under the prompt corrective action provisions are as follows:

								To be Well Capitalized
								under Prompt
				For Capital Adequacy				Corrective Action
	Actual			Purposes				Provisions
	Amount	Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
December 31, 2011
Total risk-based capital (to risk-weighted assets)	161,494	23.90	%	$	> 54,054	> 8.0	%	$	> 67,567	> 10.0	%
Tier 1 capital (to risk-weighted assets)	154,623	22.88		> 27,027		> 4.0		> 40,540		> 6.0
Tier 1 capital (to adjusted assets)	154,787	15.30		> 40,461		> 4.0		> 50,576		> 5.0
December 31, 2010
Total risk-based capital (to risk-weighted assets)	156,045	23.76	%	$	> 52,550	> 8.0	%	$	> 65,688	> 10.0	%
Tier 1 capital (to risk-weighted assets)	147,982	22.53		> 26,275		> 4.0		> 39,413		> 6.0
Tier 1 capital (to adjusted assets)	148,541	13.60		> 43,689		> 4.0		> 54,611		> 5.0

The Bancorp’s ability to pay dividends is limited by statutory and regulatory requirements. The Bancorp may not declare nor pay dividends on its stock if such declaration or payment would violate statutory or regulatory requirements.  The Bancorp paid a cash dividend of $0.02 per common share during each of the four quarters in 2011.  Additionally, the Bancorp paid a cash dividend of $0.04 per common share on February 29, 2012.

The Bancorp raised net proceeds of $77.8 million from the mutual to stock conversion completed on June 29, 2010.  During 2010, the Bancorp contributed $48.5 million to the Bank, $7.5 million in the first quarter and $41.0 million in the second quarter in conjunction with the mutual-to-stock conversion.

The Bancorp repurchased 1,524,900 shares of common stock during the year ended December 31, 2011 in conjunction with stock repurchase programs. There were no shares repurchased during the year ended December 31, 2010.  The purchases were recorded as treasury stock, at cost, on the Bancorp’s statements of condition in the amount of $19.8 million at December 31, 2011.

F-38

NOTE 13—FAIR VALUE OF FINANCIAL INSTRUMENTS

Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction on the dates indicated. The estimated fair value amounts have been measured as of the respective year ends, and have not been reevaluated or updated for purposes of these consolidated financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each year end.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments at December 31, 2011 and 2010:

Cash and Cash Equivalents

The carrying amounts of cash and cash equivalents approximate their fair value.

Investment and Mortgage Related Securities—Available-for-Sale and Held-to-Maturity

Fair values for investment securities and mortgage related securities are obtained from one external pricing service (“primary pricing service”) as the provider of pricing on the investment portfolio on a quarterly basis. We generally obtain one quote per investment security. If quoted market prices are not available, fair values are based on quoted market prices of comparable securities. If quoted market prices are not available for comparable securities, fair value is based on quoted bids for the security or comparable securities. We review the estimates of fair value provided by the pricing service to determine if they are representative of fair value based upon our general knowledge of market conditions and relative changes in interest rates and the credit environment. The Company made no adjustments to the values obtained from the primary pricing service.

Loans Held for Sale

The fair values of mortgage loans originated and intended for sale in the secondary market are based on current quoted market prices.

Loans Receivable, Net

To determine the fair values of loans that are not impaired, we employ discounted cash flow analyses that use interest rates and terms similar to those currently being offered to borrowers. We do not record loans at fair value on a recurring basis. We record fair value adjustments to loans on a nonrecurring basis to reflect full and partial charge-offs due to impairment. For impaired loans, we use a variety of techniques to measure fair value, such as using the current appraised value of the collateral, agreements of sale, discounting the contractual cash flows, and analyzing market data that we may adjust due to specific characteristics of the loan or collateral.

Federal Home Loan Bank Stock

The fair value of the Federal Home Loan Bank stock is assumed to equal its cost, since the stock is nonmarketable but redeemable at its par value.

Mortgage Servicing Rights

The fair value of the MSRs for these periods was determined using a third-party valuation model that calculates the present value of estimated future servicing income. The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds and discount rates.

Accrued Interest Receivable and Accrued Interest Payable

The carrying amount of accrued interest receivable and accrued interest payable approximates fair value.

F-39

NOTE 13—FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

Deposit Liabilities

Fair values for demand deposits (including NOW accounts), savings and club accounts and money market deposits are, by definition, equal to the amount payable on demand at the reporting date. Fair values of fixed-maturity certificates of deposit, including brokered deposits, are estimated using a discounted cash flow calculation that applies interest rates currently being offered on similar instruments with similar maturities.

Short-term Borrowings, Federal Home Loan Bank Advances and Other Borrowed Funds

Fair value of short-term borrowings, Federal Home Loan Bank advances and other borrowed funds are estimated using discounted cash flow analyses, based on rates currently available to the Bank for advances with similar terms and remaining maturities.

Interest Rate Swap Contracts

The fair values of swap contracts are based upon the estimated amount the Company would receive or pay to terminate the contracts or agreements, taking into account current interest rates and, when appropriate, the current creditworthiness of the counterparties.

Off-Balance Sheet Financial Instruments

Fair value of commitments to extend credit are estimated using the fees currently charged to enter into similar agreements, taking into account market interest rates, the remaining terms and present credit worthiness of the counterparties.

The estimated fair values of the Company’s financial instruments at December 31, 2011 and 2010 were as follows (in thousands):

	December 31,
	2011				2010
			Estimated				Estimated
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Financial assets:
Cash and cash equivalents	$	7,586	$	7,586	$	38,314	$	38,314
Available for sale securities:
Investment securities available-for-sale	23,106		23,106		32,671		32,671
Private label residential mortgage related security	122		122		166		166
Private label commercial mortgage related securities	8,906		8,906		11,767		11,767
Agency residential mortgage related securities	216,636		216,636		266,699		266,699
Held to maturity securities:
Agency mortgage related securities	41,074		41,758		51,835		50,817
Loans receivable, net	670,572		672,847		642,653		643,967
Federal Home Loan Bank stock	8,074		8,074		9,913		9,913
Accrued interest receivable	4,578		4,578		4,500		4,500
Mortgage servicing rights	316		322		448		462
Financial liabilities:
Savings and club accounts	80,740		80,740		54,921		54,921
Demand, NOW and money market deposits	257,989		257,989		260,399		260,399
Brokered deposits	10,162		10,129		—		—
Certificates of deposit	327,703		330,941		396,443		401,222
Short-term borrowings	8,500		8,500		—		—
Federal Home Loan Bank advances	88,278		95,878		122,800		129,522
Other borrowed funds	50,000		55,103		50,000		53,851
Accrued interest payable	418		418		580		580
Swap contracts	279		279		161		161
Off-balance sheet instruments	—		1,443		—		1,238

F-40

NOTE 13—FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

The Company determines the fair value of financial instruments using three levels of input:

Level 1—Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that are accessible at the measurement date.

Level 2—Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Valuations are observed from unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company classified three types of financial instruments as Level 3 as of December 31, 2011. The first instrument is a private label collateralized mortgage obligation (“CMO”), the fair value of which, unlike U.S. agency mortgage related securities, is more difficult to determine because they are not actively traded in securities markets. The second type of instrument includes three private label commercial mortgage backed securities (“CMBS”), the fair value of which is also more difficult to determine because they are not actively traded in securities markets. The third instrument includes two loans at December 31, 2011 and one loan at December 31, 2010 since lending credit risk is not an observable input for this individual commercial loan (see Note 3). The net unrealized loss, including other-than-temporary impairment in accumulated other comprehensive income, in the private label CMO was $42,000 and $393,000 at December 31, 2011 and 2010, respectively. The net unrealized gain in the private label CMBS portfolio was $107,000 and $382,000 at December 31, 2011 and 2010, respectively. The unrealized gain on the two loans was $268,000 at December 31, 2011 compared to an unrealized gain on one loan of $161,000 at December 31, 2010.

The following measures were made on a recurring basis as of December 31, 2011 and 2010:

				Fair Value Measurements at Reporting Date Using
				Quoted Prices in		Significant			Significant
				Active Markets		Other			Other
				for Identical		Observable			Unobservable
	As of			Assets		Inputs			Inputs
Description	December 31, 2011			(Level 1)		(Level 2)			(Level 3)
	(In Thousands)
Available for Sale Securities:
Obligations of U.S. government agencies	$	6,514		$	—	$	6,514		$	—
State and political subdivisions	1,873			—		1,873			—
Corporate securities	14,719			—		14,719			—
Private label residential mortgage related security	122			—		—			122
Private label commercial mortgage related securities	8,906			—		—			8,906
Agency residential mortgage related securities	216,636			—		216,636			—
Loans (1)	2,877			—		—			2,877
Swap contracts (1)	(279		)	—		(279		)	—
Total	$	251,368		$	—	$	239,463		$	11,905

F-41

NOTE 13—FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

				Fair Value Measurements at Reporting Date Using
				Quoted Prices in		Significant			Significant
				Active Markets		Other			Other
				for Identical		Observable			Unobservable
	As of			Assets		Inputs			Inputs
Description	December 31, 2010			(Level 1)		(Level 2)			(Level 3)
	(In Thousands)
Available-for-sale securities:
Obligations of U.S. government agencies	$	6,521		$	—	$	6,521		$	—
State and political subdivisions	7,279			—		7,279			—
Corporate securities	18,871			—		18,871			—
Private label residential mortgage related security	166			—		—			166
Private label commercial mortgage related securities	11,767			—		—			11,767
Agency residential mortgage related securities	266,699			—		266,699			—
Loan (1)	1,241			—		—			1,241
Swap contract (1)	(161		)	—		(161		)	—
Total	$	312,383		$	—	$	299,209		$	13,174

(1)Such financial instruments are recorded at fair value as further described in Note 3.

The following measures were made on a non-recurring basis as of December 31, 2011 and 2010:

The loans were partially charged off at December 31, 2011 and 2010.  The loans’ fair values are based on Level 3 inputs, which are either an appraised value or a sales agreement, less costs to sell. These amounts do not include fully charged-off loans, because we carry fully charged-off loans at zero on our balance sheet.

For MSR’s, the fair value was determined using a third-party valuation model that calculates the present value of estimated future servicing income. The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds and discount rates.

For other real estate owned, we used Level 3 inputs, which consist of appraisals. Other real estate owned is recorded on our balance sheet at fair value, net of costs to sell, when we obtain control of the property.

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in		Significant		Significant
			Active Markets		Other		Other
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
Description	Balance		(Level 1)		(Level 2)		(Level 3)
	(In Thousands)
As of December 31, 2011
Loans	$	2,490	$	—	$	—	$	2,490
Mortgage servicing rights	282		—		282		—
Other real estate owned	2,423		—		—		2,423
Total	$	5,195	$	—	$	282	$	4,913
As of December 31, 2010
Loans	$	6,119	$	—	$	—	$	6,119
Mortgage servicing rights	405		—		405		—
Other real estate owned	3,186		—		—		3,186
Total	$	9,710	$	—	$	405	$	9,305

F-42

NOTE 13—FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

The following table includes a roll forward of the financial instruments which fair value is determined using Significant Other Unobservable Inputs (Level 3), on a recurring basis, for the period of January 1, 2010 to December 31, 2011.

	Private Label			Private Label
	Residential			Commercial
	Mortgage			Mortgage
	Security			Securities			Loans			Total
	(In thousands)
Beginning balance, January 1, 2010	$	195		$	17,833		$	1,259		$	19,287
Purchases	—			—			—			—
Sales	—			(3,926		)	—			(3,926		)
Payments received	(69		)	(2,403		)	(54		)	(2,526		)
Discount accretion, net	—			107			—			107
Increase/(decrease) in value	40			156			36			232
Reclassification to Level 3	—			—			—			—
Ending balance, December 31, 2010	$	166		$	11,767		$	1,241		$	13,174
Addition	—			—			1,600			1,600
Purchases	—			—			—			—
Sales	—			—			—			—
Payments received	(34		)	(2,570		)	(71		)	(2,675		)
Premium amortization, net	—			(16		)	—			(16		)
Increase/(decrease) in value	(10		)	(275		)	107			(178		)
Reclassification to Level 3	—			—			—			—
Ending balance, December 31, 2011	$	122		$	8,906		$	2,877		$	11,905

F-43

NOTE 14—COMPREHENSIVE INCOME

Comprehensive income for the years ended December 31, 2011, 2010 and 2009 is as follows (in thousands):

	December 31,
	2011			2010			2009
Net income (loss)	$	4,779		$	2,744		$	(1,028	)
Other comprehensive income (loss):
Unrealized holding gains arising during the period, (net of taxes of $424, $767 and $4,023 for the years ended December 31, 2011, 2010 and 2009, respectively)	779			1,291			7,483
Non-credit related unrealized loss on other-than temporary impaired securities (net of taxes of $(16), $0 and $(152) for the years ended December 31, 2011, 2010 and 2009, respectively)	(30		)	—			(296		)
Less: Reclassification adjustment for net investment securities gains included in net income, (net of taxes of $371, $667 and $335)	720			1,296			649
Other comprehensive income (loss)	29			(5		)	6,538
Comprehensive income	$	4,808		$	2,739		$	5,510

NOTE 15—RELATED PARTY TRANSACTIONS

The Company may from time to time enter into transactions with its directors, officers and employees. Such transactions are made in the ordinary course of business on substantially the same terms and conditions, including interest rates and collateral, as those prevailing at the same time for comparable transactions with other customers, and do not, in the opinion of management, involve more than the normal credit risk or present other unfavorable features.

There were no loans to directors and executive officers as of December 31, 2011 and 2010.

During 2011 and 2010, the Bank engaged in certain business activities with Philadelphia Mortgage Advisors, Inc. (“PMA”). These activities included providing a warehouse line of credit to PMA, as well as acquiring residential mortgage and home equity loans from PMA. The Bank recorded interest income from PMA on the warehouse line of $220,000, $285,000 and $245,000 for the years ended December 31, 2011, 2010 and 2009, respectively, as well as loan satisfaction fees, which are recorded in service charges and other fee income, from PMA of $50,000, $65,000 and $54,000 for the years ended December 31, 2011, 2010 and 2009, respectively. In addition, the Bank acquired total loans from PMA of $10.6 million and $23.9 million for the years ended December 31, 2011 and 2010, respectively, which includes the cost of the loans. The Company eliminates intercompany profits and losses until realized by the Company.

During 2010, the Bank provided PMA a term loan in the amount of $1.2 million, which is secured by a residential property owned by PMA.  The Bank recorded interest income from PMA on this term loan of $25,000 and $15,000 for the years ended December 31, 2011 and 2010, respectively.  The loan was paid off during the second quarter of 2011.

F-44

NOTE 16—ACCOUNTING PRONOUNCEMENTS

Accounting Standards Update (ASU) 2010-06 - Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. The ASU amends Subtopic 820-10 with new disclosure requirements and clarification of existing disclosure requirements. New disclosures required include the amount of significant transfers in and out of Levels 1 and 2 fair value measurements and the reasons for the transfers. In addition, the reconciliation for Level 3 activity will be required on a gross rather than net basis. The ASU provides additional guidance related to the level of disaggregation in determining classes of assets and liabilities and disclosures about inputs and valuation techniques. The amendments was effective for annual or interim reporting periods beginning after December 15, 2009, except for the requirement to provide the reconciliation for Level 3 activity on a gross basis, which was effective for fiscal years beginning after December 15, 2010. The Company adopted this ASU effective January 1, 2010.  Effective January 1, 2011 the Company adopted the requirements to provide the reconciliation for Level 3 activity on a gross basis.  This ASU did not have a material effect on the Company’s financial position or results of operations but did result in changes to disclosures about fair value measurements.

Accounting Standards Update (ASU) No. 2010-20 - Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. This ASU requires significant new disclosures about the allowance for credit losses and the credit quality of financing receivables. The requirements are intended to enhance transparency regarding credit losses and the credit quality of loan and lease receivables. Under this statement, allowance for credit losses and fair value are to be disclosed by portfolio segment, while credit quality information, impaired financing receivables and nonaccrual status are to be presented by class of financing receivable.  Disclosure of the nature and extent, the financial impact and segment information of troubled debt restructurings will also be required.  The disclosures are to be presented at the level of disaggregation that management uses when assessing and monitoring the portfolio’s risk and performance. Disclosures related to period-end information (e.g., credit quality information and the ending financing receivables balance segregated by impairment method) were effective in all interim and annual reporting periods ending on or after December 15, 2010. Disclosures of activity that occurs during a reporting period (e.g., modifications and the rollforward of allowance for credit losses by portfolio segment) were effective in interim or annual periods beginning on or after December 15, 2010.  The Company has complied with the required disclosures as of December 31, 2011.

Accounting Standards Update (ASU) No. 2011-01 - Receivables (Topic 310): Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No 2010-20. The amendments in ASU No. 2011-01 temporarily delayed the effective date of the disclosures about troubled debt restructurings in ASU No. 2010-20- Receivables (Topic 310) - Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses, for public entities.   As a result of ASU No. 2011-02, the provisions of ASU No. 2010-20 were effective for the Company’s interim or annual periods beginning on or after June 15, 2011.  The Company complied with the required disclosures as of September 30, 2011 and December 31, 2011.

Accounting Standards Update (ASU) No. 2011-02 - Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring. The provisions of ASU No. 2011-02 provide additional guidance related to determining whether a creditor has granted a concession, include factors and examples for creditors to consider in evaluating whether a restructuring results in a delay in payment that is insignificant, prohibit creditors from using the borrower’s effective rate test to evaluate whether a concession has been granted to the borrower, and add factors for creditors to use in determining whether a borrower is experiencing financial difficulties.  A provision in ASU No. 2011-02 also ends the FASB’s deferral of the additional disclosures about troubled debt restructurings as required by ASU No. 2010-20.  The provisions of ASU No. 2011-02 were effective for the Company’s interim or annual periods beginning on or after June 15, 2011.  The Company has evaluated the guidance included in this update and has determined that it does not result in any new troubled debt restructurings that should be reported as of December 31, 2011.

Accounting Standards Update (ASU) No. 2011-03 - Transfers and Servicing (Topic 860): Reconsideration of Effective Control for Repurchase Agreements.  This update is intended to improve financial reporting of repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. ASU No. 2011-03 removes from the assessment of effective control (i) the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee, and (ii) the collateral maintenance guidance related to that criterion. ASU No. 2011-03 will be effective for the Company on January 1, 2012 and is not expected to have a material impact on the Company’s financial position or results of operations.

F-45

NOTE 16—ACCOUNTING PRONOUNCEMENTS (CONTINUED)

Accounting Standards Update (ASU) No. 2011-04 - Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. The amendments were issued to achieve convergence between U.S. GAAP and IFRS.  The guidance clarifies how a principal market is determined, addresses the fair value measurement of instruments with offsetting market or counterparty credit risks and the concept of valuation premise and highest and best use, extends the prohibition on blockage factors to all three levels of the fair value hierarchy, and requires additional disclosures. ASU No. 2011-04 will be effective for the Company on January 1, 2012 and is to be applied prospectively.   The Company has evaluated the guidance included in this update and has determined that it is not expected to have a material impact on the Company’s financial position or results of operations.

Accounting Standards Update (ASU) No. 2011-05 - Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The provisions of ASU No. 2011-05 are intended to improve the comparability, consistency and transparency of financial reporting and to increase prominence of the items reported in other comprehensive income.  The guidance requires entities to report the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. This update is effective for the Company on January 1, 2012, and is to be applied retrospectively. The Company does not expect the guidance will have a material impact on its financial statements but will result in a revised format for the presentation of comprehensive income and the components of other comprehensive income.

Accounting Standards Update (ASU) No. 2011-11 - Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities.  The provisions of ASU 2011-11 are intended to enhance current disclosure requirements on offsetting financial assets and liabilities.  The new disclosures will enable financial statement users to compare balance sheets prepared under U.S. GAAP and International Financial Reporting Standards (IFRS), which are subject to different offsetting models. The disclosures will be limited to financial instruments (and derivatives) subject to enforceable master netting arrangements or similar agreements and will be effective for the Company on January 1, 2013 and is to be applied retrospectively.  The Company has evaluated the guidance included in this update and has determined that it is not expected to have a material impact on the Company’s financial position or results of operations.

Accounting Standards Update (ASU) No. 2011-12 - Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.  This update defers the effective date of the requirement to present separate line items on the income statement for reclassification adjustments of items out of accumulated other comprehensive income into net income. The deferral is temporary until the Board reconsiders the operational concerns and needs of financial statement users. The Board has not yet established a timetable for its reconsideration.  Entities are still required to present reclassification adjustments within other comprehensive income either on the face of the statement that reports other comprehensive income or in the notes to the financial statements. The Company does not expect the guidance will have a material impact on its financial statements but will result in a revised format for the presentation of comprehensive income and the components of other comprehensive.

F-46

NOTE 17—PARENT COMPANY ONLY FINANCIAL STATEMENTS

The following condensed financial statements for Fox Chase Bancorp, Inc. (parent company only) reflect the investment in its wholly owned subsidiary, Fox Chase Bank, using the equity method of accounting.

CONDENSED BALANCE SHEET

	December 31,
	2011		2010
	(In Thousands)
Assets
Cash and due from banks	$	444	$	1
Interest-earning deposits with banks	18,783		42,601
Total cash and cash equivalents	19,227		42,602
Investment in subsidiary	161,353		155,079
Due from subsidiary	266		289
ESOP loan	7,175		7,662
Other assets	241		141
Total Assets	188,262		205,773
Liabilities and stockholders’ equity
Other liabilities	70		69
Total Liabilities	70		69
Stockholders’ Equity	188,192		205,704
Total Liability and Stockholders’ Equity	$	188,262	$	205,773

CONDENSED STATEMENTS OF OPERATIONS

	For the Years Ended
	December 31,
	2011			2010			2009
	(In Thousands)
Income
Interest on deposits with banks	$	219		$	182		$	234
Interest on ESOP loan	463			432			395
Total Income	682			614			629
Expenses
Other expenses	970			841			789
Total Expenses	970			841			789
Loss before income tax benefit and equity in undistributed net loss of subsidiary	(288		)	(227		)	(160		)
Income tax benefit	(98		)	(77		)	(54		)
Loss before equity in undistributed net loss of subsidiary	(190		)	(150		)	(106		)
Equity in undistributed net earnings (loss) of subsidiary	4,969			2,894			(922		)
Net Income (Loss)	$	4,779		$	2,744		$	(1,028	)

F-47

NOTE 17—PARENT COMPANY ONLY FINANCIAL STATEMENTS (CONTINUED)

CONDENSED STATEMENTS OF CASH FLOWS

	For the Years Ended
	December 31,
	2011			2010			2009
	(In Thousands)
Cash Flows From Operating Activities
Net income (loss)	$	4,779		$	2,744		$	(1,028	)
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed earnings (loss) of subsidiary	(4,969		)	(2,894		)	922
Decrease in deferred tax asset	—			89			251
Decrease (increase) in due from subsidiary	84			118			(75		)
Increase in other assets	(100		)	(79		)	(62		)
Increase (decrease) in other liabilities	1			5			(66		)
Net Cash Used in Operating Activities	(205		)	(17		)	(58		)
Cash Flows From Investing Activities
Loan payment received on ESOP loan	487			364			249
Net Cash Provided by Investing Activities	487			364			249
Cash Flows From Financing Activities
Purchase of treasury stock	(19,822		)	—			(4,521		)
Acquisition of common stock for equity incentive plan	(3,474		)	—			—
Receipt from subsidiary related to vesting of stock in equity incentive plan	544			519			542
Common stock issued for exercise of vested stock options	162			—			—
Capital contribution to subsidiary	—			(48,500		)	—
Purchase of common stock by ESOP	—			(3,485		)	—
Merger of Fox Chase Mutual Holding Company	—			107			—
Proceeds from stock offering, net of offering expenses	—			81,169			—
Cash dividends paid	(1,067		)	—			—
Proceeds from stock offering, net	—			—			—
Net Cash (Used in) Provided by Financing Activities	(23,657		)	29,810			(3,979		)
Net (Decrease) Increase in Cash and Cash Equivalents	(23,375		)	30,157			(3,788		)
Cash and Cash Equivalents - Beginning	42,602			12,445			16,233
Cash and Cash Equivalents - Ending	$	19,227		$	42,602		$	12,445

F-48

NOTE 18—QUARTERLY FINANCIAL DATA (UNAUDITED)

The following represents summarized quarterly financial data of Fox Chase Bancorp, Inc. and subsidiary, which, in the opinion of management, reflects all adjustments (comprising only normal recurring accruals) necessary for a fair presentation. The Company reported net income of $1.0 million for the quarter ended December 31, 2011 and net income of $893,000 for the quarter ended December 31, 2010.

The net income for the quarter ended December 31, 2011 included a provision for loan losses of $2.8 million, primarily related to specific impairments totaling $2.2 million on three commercial loans, all of which are located in Southern New Jersey, and a gain of $1.1 million on the sale of $12.8 million of mortgage related securities.

The net income for the quarter ended December 31, 2010 did not include any unusual or nonrecurring items.

Three Months Ended	12/31/2011		9/30/2011		6/30/2011		3/31/2011		12/31/2010		9/30/2010		6/30/2010		3/31/2010
	(In Thousands, except per share data)
Interest income	$	11,102	$	11,606	$	11,607	$	11,631	$	11,709	$	12,385	$	12,532	$	12,659
Interest expense	3,114		3,545		3,827		4,009		4,296		5,365		5,842		6,222
Net interest income	7,988		8,061		7,780		7,622		7,413		7,020		6,690		6,437
Provision for loan losses	2,825		1,034		900		975		1,358		2,889		1,075		891
Net interest income after provision for loan losses	5,163		7,027		6,880		6,647		6,055		4,131		5,615		5,546
Noninterest income	1,959		467		450		467		659		2,393		434		403
Noninterest expense	5,601		5,690		5,480		5,298		5,432		5,558		5,202		5,180
Income before taxes	1,521		1,804		1,850		1,816		1,282		966		847		769
Income tax provision	477		572		593		570		389		274		239		218
Net income	$	1,044	$	1,232	$	1,257	$	1,246	$	893	$	692	$	608	$	551
Per Common Share Data
Weighted average common shares — basic	12,214,704		13,087,582		13,662,264		13,636,010		13,610,257		13,562,837		13,885,425		13,880,730
Weighted average common shares — diluted	12,287,733		13,175,689		13,770,934		13,678,887		13,629,851		13,573,250		13,910,837		13,890,460
Net income per share — basic	$	0.09	$	0.09	$	0.09	$	0.09	$	0.07	$	0.05	$	0.04	$	0.04
Net income per share — diluted	$	0.09	$	0.09	$	0.09	$	0.09	$	0.07	$	0.05	$	0.04	$	0.04

F-49

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FOX CHASE BANCORP, INC.
Date: March 20, 2012	By:	/s/ Thomas M. Petro
		Thomas M. Petro
		President and Chief Executive Officer