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FOX CHASE BANCORP, INC.
4390 DAVISVILLE ROAD, HATBORO, PA 19040 PHONE (215) 682-7400 FAX (215) 682-4144
NEWS RELEASE
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FOR IMMEDIATE RELEASE
DATE: November 2, 2006
CONTACT: Jerry Holbrook
Chief Financial Officer
PHONE: (215) 682-4107
FAX: (215) 682-4144
FOX CHASE BANCORP ANNOUNCES EARNINGS OF $1.0 MILLION FOR THE THIRD QUARTER
HATBORO, PA, NOVEMBER 2, 2006 - Fox Chase Bancorp, Inc. (the "Company") (NASDAQ
GM: FXCB), the holding company for Fox Chase Bank (the "Bank"), today announced
third quarter net income of $1.0 million, compared to net income of $1.3 million
for the third quarter of 2005. The Company reported earnings for the nine months
ended September 30, 2006 of $1.6 million, compared to net income of $4.0 million
for the comparable period in 2005. Results for the three months ended September
30, 2006 included a number of non-recurring transactions including:
o A credit to the provision for loan losses of $2.8 million, which
reduced the allowance for loan losses to $5.2 million at September 30,
2006 compared to $8.3 million at December 31, 2005. This credit was due
to continued reductions in the levels of criticized and classified
assets during the September quarter.
o A $1.5 million pre-tax charitable contribution expense in connection
with the establishment and funding of the Fox Chase Bank Charitable
Foundation.
o The completion of the reorganization of the Bank into the mutual
holding company structure and the initial public offering of 43.6% of
the Company's stock in a subscription offering. Net proceeds of the
offering totaled $56.6 million.
BALANCE SHEET
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Assets decreased $14.1 million, or 1.8%, to $767.2 million at September 30,
2006, compared to $781.3 million at December 31, 2005. The reduction in assets
was primarily due to a $70.1 million, or 21.3%, decrease in investment and
mortgage related securities and a $16.6 million, or 4.4%, decrease in total
gross loans, offset by an increase of $71.2 million in the levels of
interest-earnings deposits in other banks. The decrease in securities was
primarily due to the maturing and paying down of lower-yielding securities. In
addition, the Bank sold $17.2 million of mutual fund investments in the first
quarter of 2006. Loans decreased due to: (1) a decrease in construction loans,
as management continued to reduce from the portfolio the acquisition,
development and construction loans originated by former management in the
southern New Jersey shore area; (2) the sale of $14.2 million in longer-term
fixed-rate loans in the secondary market in an effort to manage interest rate
risk; and (3) the presence of a Cease and Desist Order (the "Order"), which
prohibited the Bank from making commercial loans and certain types of consumer
loans until the first quarter of 2006. The Order was rescinded on June 28, 2006.
Total gross loans increased $588,000 in the third quarter, primarily due to an
increase in multi-family and commercial real estate loans. Most of the increase
in interest-earning deposits was due to proceeds received in the initial public
offering of stock and due to proceeds from the maturation of securities and the
sale of loans.
Deposits decreased $77.4 million, or 11.3%, to $604.9 million at September 30,
2006 as the Bank's funding needs decreased due to the decrease in assets.
Additionally, the Bank is located in a highly competitive deposit market, which
combined with the flat yield curve has created a difficult climate for gathering
deposits cost effectively. All categories of deposits fell during this period
with the largest reductions occurring in time deposits.
Stockholders' equity increased $59.3 million to $122.8 million at September 30,
2006 compared to $63.5 million at December 31, 2005. The primary reason for the
increase was $56.6 million in net proceeds from the Company's initial public
offering on September 29, 2006. The Company sold 6,395,835 shares of common
stock to eligible depositors for $10 per share representing 43.6% of the total
outstanding shares of the Company. In addition, $150,000 and 135,000 shares,
representing 0.9% of the Company's outstanding shares of common stock, were
contributed to Fox Chase Bank Charitable Foundation and 8,148,915 shares,
representing 55.5% of the Company's outstanding shares of common stock, were
issued to Fox Chase MHC, the federally chartered mutual holding company formed
in connection with the reorganization.
ASSET QUALITY
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Nonperforming assets totaled $4.6 million, or 0.60% of total assets, at
September 30, 2006 compared to $5.2 million, or 0.65% of total assets, at
December 31, 2005. The $597,000 reduction during the nine months ended September
30, 2006 was primarily the result of workout strategies the Bank has established
for its large commercial nonaccruing loans that are designed to prudently exit
or collect on such loans within a reasonable timeframe.
The Bank credited the allowance for loan losses $2.8 million for the three
months ended September 30, 2006 compared to $2.0 million for the comparable
three-month period in 2005. The Bank credited the provision for loan losses $3.2
million for the nine months ended September 30, 2006 compared to a credit of
$2.0 million for the comparable period in 2005. The allowance for loan losses
totaled $5.2 million at September 30, 2006, compared to $8.3 million at December
31, 2005. The $3.2 million reduction in the allowance was primarily due to: (1)
a decrease in criticized and classified assets from $28.7 million at June 30,
2006 to $13.2 million at September 30, 2006; and (2) a decrease in the loan
portfolio, particularly the construction portfolio, which carries a higher risk
of default than one- to-four family residential real estate loans. The allowance
for loan losses at September 30, 2006 was 1.45% of total loans outstanding
compared to 2.22% at December 31, 2005.
NET INTEREST MARGIN
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The Company's net interest margin was 2.21% for the three months ended September
30, 2006 compared to 1.82% for the comparable third quarter in 2005. The net
interest margin was 2.21% for the nine-months ended September 30, 2006 compared
to 2.15% for the same period in 2005. This improvement was primarily the result
of higher yields on mortgage related and investment securities offset by higher
rates paid on deposits. The Company has instituted pricing disciplines for loans
and deposits to continue improving its levels of net interest margin.
NONINTEREST EXPENSE
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Noninterest expense increased by $1.4 million, or 34.0%, and $3.5 million, or
31.4% during the three and nine months ended September 30, 2006, respectively,
compared to the same periods in 2005. Such increases included the contribution
expense of $1.5 million to the Fox Chase Bank Charitable Foundation. Total
salaries and other compensation expense increased by $1.2 million between
nine-month periods due to the Bank hiring additional lenders and credit staff in
2006 to execute the Bank's lending strategy. The remainder of the increase in
noninterest expense was attributable to higher professional fees, due to the
hiring of a consulting firm to assist with the implementation of internal
policies and procedures related to the Sarbanes-Oxley Act, and increased Federal
Deposit Insurance Corporation premiums resulting from our designation by the
Office of Thrift Supervision as a troubled institution for regulatory purposes
in January 2005. However, due to the lifting of our troubled institution
designation in June 2006, our Federal Deposit Insurance Corporation premiums are
expected to return to historic levels.
Mr. Thomas Petro, President and CEO of the Company said, "We have accomplished a
great deal during the first nine months of 2006. The turnaround of the Bank is
underway and we have substantially reduced the levels of problem assets. The
completion of the initial public offering of stock has increased our level of
capital and provides us additional flexibility to meet the needs of our
customers and allow us to grow. Fox Chase Bank has been providing banking
services to individuals and small businesses for 139 years and is expanding its
services. During 2006, we opened three new locations and expect to continue
providing additional locations and products as we grow. I want to thank each of
the dedicated employees who have worked to accomplish so much in 2006. We also
want to welcome all of our stockholders."
Fox Chase Bancorp, Inc. is the mid-tier stock holding company of Fox Chase Bank.
The Bank is a federally chartered savings bank originally established in 1867.
The Bank offers traditional banking services and products from its main office
in Hatboro, Pennsylvania and ten branch offices in Bucks, Montgomery, Chester,
Delaware and Philadelphia Counties in Pennsylvania and Atlantic and Cape May
Counties in New Jersey. For more information, please visit the Bank's website at
www.foxchasebank.com.
This news release contains forward-looking statements within the meaning of the
federal securities laws. Forward-looking statements can generally be identified
by the fact that they do not relate strictly to historical or current facts.
They often include words like "believe," "expect," "anticipate," "estimate" and
"intend" or future or conditional verbs such as "will," "would," "should,"
"could" or "may." Statements in this release that are not strictly historical
are forward-looking and are based upon current expectations that may differ
materially from actual results. These forward-looking statements involve risks
and uncertainties that could cause actual results to differ materially from
those anticipated by the statements made herein. These risks and uncertainties
involve general economic trends, changes in interest rates, loss of deposits and
loan demand to other financial institutions, substantial changes in financial
markets; changes in real estate value and the real estate market, regulatory
changes, possibility of unforeseen events affecting the industry generally, the
uncertainties associated with newly developed or acquired operations, the
outcome of pending litigation, and market disruptions and other effects of
terrorist activities. The Company undertakes no obligation to update these
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unforeseen events, except as required
under the rules and regulations of the Securities and Exchange Commission.
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
-------------- ------------ ----------- ------------
INTEREST INCOME
Interest and fees on loans $ 5,248 $ 5,712 $ 15,916 $ 20,162
Interest on mortgage related securities 2,047 1,423 6,081 4,244
Interest investments securities AFS:
Taxable 953 748 2,913 2,295
Nontaxable 245 186 690 568
Dividend income 61 201 312 645
Other income 552 538 1,085 858
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Total Interest Income 9,106 8,808 26,997 28,772
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INTEREST EXPENSE
Deposits 4,850 4,855 14,028 14,517
Federal Home Loan Bank advances 378 375 1,111 1,111
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Total Interest Expense 5,228 5,230 15,139 15,628
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Net Interest Income 3,878 3,578 11,858 13,144
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Provision (credit) for loan losses (2,778) (2,000) (3,161) (2,025)
-------------- ------------ ---------- ------------
Net Interest Income after Provision
(Credit) for Loan Losses 6,656 5,578 15,019 15,169
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NONINTEREST INCOME
Service charges and other fee income 177 238 652 583
Gain (loss) on sale of:
Available-for-sale investments -- -- (14) 47
Mortgage related securities -- -- (4) --
Loans 69 16 103 391
Assets acquired through foreclosure -- -- 85 6
Fixed assets (5) (16) (6) (141)
Income on bank owned life insurance 108 108 318 342
Other 87 99 317 289
-------------- ------------ ---------- ------------
Total Noninterest Income 436 445 1,451 1,517
-------------- ------------ ---------- ------------
NONINTEREST EXPENSE
Salaries, benefits and other compensation 2,206 1,771 6,535 5,376
Occupancy expense 397 415 1,168 1,286
Furniture and equipment 233 292 635 661
Data processing costs 374 438 1,090 1,081
Professional fees 326 413 1,094 723
Marketing expense 199 91 440 298
FDIC premiums 71 359 725 415
Contribution to charitable foundation 1,500 -- 1,500 --
Other 400 478 1,390 1,257
-------------- ------------ ---------- ------------
Total Noninterest Expense 5,706 4,257 14,577 11,097
-------------- ------------ ---------- ------------
Income before Income Taxes 1,386 1,766 1,893 5,589
-------------- ------------ ---------- ------------
Income tax provision 365 502 273 1,602
-------------- ------------ ---------- ------------
Net Income $ 1,021 $ 1,264 $ 1,620 $ 3,987
============== ============ ========== ============
Earnings per share:
Basic (1) -- (1) --
Diluted (1) -- (1) --
(1) Due to the timing of the Bank's reorganization into the mutual holding
company form and the completion of the Company's initial public offering on
September 29, 2006, earnings per share for the periods shown is not considered
meaningful.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
September 30, December 31,
2006 2005
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ASSETS
Cash and due from banks $ 3,125 $ 3,761
Interest-earning deposits in other banks 113,525 42,325
Interest-earning time deposits in other banks -- 600
Investment securities available-for-sale 87,729 141,783
Mortgage related securities available-for-sale 171,652 187,721
Loans held for sale 1,408 357
Loans, net of allowance for loan loss of $5,182 at September 30, 2006
and $8,349 at December 31, 2005 351,969 366,393
Federal Home Loan Bank stock, at cost 4,574 4,146
Asset acquired through foreclosure -- 107
Bank-owned life insurance 11,215 10,897
Premises and equipment 14,748 14,153
Accrued interest and dividends receivable 3,296 3,301
Mortgage servicing rights 1,182 1,168
Deferred tax asset, net 1,697 2,811
Other assets 1,046 1,768
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Total Assets $ 767,166 $ 781,291
=============== =============
LIABILITIES
Deposits $ 604,909 $ 682,307
Federal Home Loan Bank advances 30,000 30,000
Advances from borrowers for taxes and insurance 1,272 2,503
Accrued interest payable 302 268
Accrued expenses and other liabilities 7,865 2,692
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Total Liabilities 644,348 717,770
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STOCKHOLDERS' EQUITY
Preferred stock ($.01 par value; 1,000,000 shares authorized,
none issued) -- --
Common stock ($.01 par value; 35,000,000 shares authorized,
14,679,650 shares issued and outstanding) 147 --
Additional paid-in capital 62,235 --
Unearned common stock held by:
Employee stock ownership plan (5,755) --
Retained earnings 67,531 65,911
Accumulated other comprehensive loss (1,340) (2,390)
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Total Stockholders' Equity 122,818 63,521
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Total Liabilities and Stockholders' Equity $ 767,166 $ 781,291
=============== =============
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA OF THE COMPANY (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
September 30, June 30, December 31,
2006 2006 2005
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CAPITAL RATIOS(4):
Tier 1 capital (to adjusted assets) 11.99% 8.96% 8.40%
Tier 1 capital (to risk-weighted assets) 26.06% 19.01% 17.76%
Total risked-based capital (to risk-weighted assets) 26.91% 20.27% 19.02%
ASSET QUALITY INDICATORS:
Nonperforming assets:
Nonaccruing loans $ 2,802 $ 3,057 $ 3,520
Accruing loans past due 90 days or more 1,802 -- 1,574
-------- --------- ---------
Total nonperforming loans 4,604 3,057 5,094
Real estate owned -- -- 107
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Total nonperforming assets $ 4,604 $ 3,057 $ 5,201
======== ========= =========
Ratio of nonperforming loans to total loans 1.28% 0.86% 1.36%
======== ========= =========
Ratio of nonperforming loans to total assets 0.60 0.42 0.65
======== ========= =========
Ratio of nonperforming assets to total assets 0.60 0.42 0.67
======== ========= =========
Ratio of allowance for loan losses to total
gross loans 1.45 2.23 2.22
======== ========= =========
Ratio of allowance for loan losses to
nonperforming loans 112.55 260.61 163.90
======== ========= =========
At or for the three months ended
September 30, June 30, September 30,
2006 2006 2005
---------------- --------------- ----------------
PERFORMANCE RATIOS:
Return on average assets (1) 0.56% 0.18% 0.61%
Return on average equity (1) 6.29 2.09 8.29
Net interest margin (1) (2) 2.21 2.21 1.82
OTHER:
Book value per share $ 8.37 (3) (3)
Employees (full-time equivalents) 148 139 129
For the nine months ended
September 30, September 30,
2006 2005
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PERFORMANCE RATIOS:
Return on average assets 0.29% 0.62%
Return on average equity 3.38 9.15
Net interest margin (1) (2) 2.21 2.15
(1) Annualized
(2) Computed on a fully tax equivalent basis
(3) Not applicable
(4) Represents capital ratios at Fox Chase Bank