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FOX CHASE BANCORP, INC. ANNUAL EARNINGS 2006
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[LETTERHEAD OF FOX CHASE BANCORP, INC.]
NEWS RELEASE
For Immediate Release
Date: February 13, 2007
Contact: Jerry Holbrook
Chief Financial Officer
Phone: (215) 682-4107
Fax: (215) 682-4144
FOX CHASE BANCORP ANNOUNCES EARNINGS
FOR THE FOURTH QUARTER AND YEAR
ANNOUNCES ANNUAL MEETING DATE
HATBORO, PA, February 13, 2007 - Fox Chase Bancorp, Inc. (the "Company") (NASDAQ
GM: FXCB), the holding company for Fox Chase Bank (the "Bank"), today announced
net income of $3.6 million for the year ended December 31, 2006, compared to net
income of $6.0 million for the year ended December 31, 2005. The Company
reported earnings for the three months ended December 31, 2006 and 2005 of $2.0
million.
Highlights for the year included:
o A 38% reduction in the levels of nonperforming assets from $5.2 million
at the end of 2005 to $3.2 million at the end of 2006. These reductions
resulted in a credit to the provision for loan losses of $5.4 million,
which reduced the allowance for loan losses to $2.9 million at December
31, 2006 compared to $8.3 million at December 31, 2005.
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.
o A $1.5 million pre-tax charitable contribution expense in connection
with the establishment and funding of the Fox Chase Bank Charitable
Foundation as part of the Bank's reorganization.
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FOX CHASE BANCORP, INC. ANNUAL EARNINGS 2006
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BALANCE SHEET
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Total assets decreased $24.9 million, or 3.2%, to $756.4 million at December 31,
2006, compared to $781.3 million at December 31, 2005. The reduction in assets
was primarily due to a $101.1 million, or 30.7%, decrease in investment and
mortgage related securities and a $10.8 million, or 2.9%, decrease in total
loans, offset by an increase of $88.8 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. 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 maturity of
securities and the sale of loans. Loans decreased due to: (1) a decrease in
construction loans, as management continued to reduce the portfolio of
acquisition, development and construction loans originated by former management
in the southern New Jersey shore area; (2) the sale of $24.9 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. Deposits decreased $85.8 million, or 12.6%, to $596.5 million
at December 31, 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 $62.1 million to $125.6 million at December 31,
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 for $10 per share representing 43.6% of the total outstanding shares of
the Company. In addition, $150,000 in cash 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.
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FOX CHASE BANCORP, INC. ANNUAL EARNINGS 2006
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ASSET QUALITY
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Nonperforming assets totaled $3.2 million, or 0.43% of total assets, at December
31, 2006 compared to $5.2 million, or 0.65% of total assets, at December 31,
2005. The $2.0 million reduction during the year ended December 31, 2006 was
primarily the result of workout strategies the Bank established to collect on
such loans within a reasonable timeframe. In October 2006, the Bank collected
one of its larger nonperforming loans, a commercial real estate loan totaling
$2.5 million. During the three months ended December 31, 2006, a loan totaling
$2.9 million went past its contractual maturity and is now included in the
accruing loans past due 90 days or more category of nonperforming assets. This
loan is well secured and has continued to keep its interest payments current,
but the borrowers have not been able to repay the loan principal.
The Bank credited the provision for loan losses $2.2 million for the three
months ended December 31, 2006 compared to $4.0 million for the comparable
three-month period in 2005. The Bank credited the provision for loan losses $5.4
million for the twelve months ended December 31, 2006 compared to a credit of
$6.0 million for the comparable period in 2005. The allowance for loan losses
totaled $2.9 million at December 31, 2006, compared to $8.3 million at December
31, 2005. The credit to the provision of $2.2 million in the fourth quarter of
2006 was primarily due to: (1) a decrease in criticized and classified assets
from $13.2 million at September 30, 2006 to $9.0 million at December 31, 2006
due to the collection on one of the Bank's most significant nonperforming loans
totaling $2.5 million; 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
December 31, 2006 was 0.82% of total loans outstanding compared to 2.22% at
December 31, 2005.
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FOX CHASE BANCORP, INC. ANNUAL EARNINGS 2006
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NET INTEREST MARGIN
- -------------------
The Company's net interest margin was 2.69% for the three months ended December
31, 2006 compared to 1.98% for the comparable period in 2005. The net interest
margin was 2.33% for the twelve months ended December 31, 2006 compared to 2.05%
for the same period in 2005. This improvement was primarily the result of higher
yields on mortgage related and investment securities due to maturing and paying
down of certain lower-yielding securities offset by higher rates paid on
deposits due to the higher interest rate environment and competition.
Additionally, the Bank recorded a significant level of past due interest income
from a nonperforming loan that paid off in October 2006. The Company has
instituted pricing disciplines for loans and deposits to continue improving
future levels of net interest income.
NONINTEREST INCOME
- ------------------
Noninterest income increased $924,000 and $859,000 between three- and
twelve-month periods ended December 31, 2006 and 2005, respectively. The 2006
income levels were higher primarily due to the recording of $964,000 of losses
on certain investment securities in the fourth quarter of 2005. Gains on sales
of loans were lower by $81,000 and $368,000 in the three- and twelve-month
periods ended 2006 when compared with the levels in 2005. During 2006, the Bank
sold approximately $24.9 million of loans compared to $83.3 million in 2005.
NONINTEREST EXPENSE
- -------------------
Noninterest expense increased by $1.2 million, or 28.7%, and $4.7 million, or
30.6%, during the three and twelve months ended December 31, 2006, respectively.
Salaries and benefit costs rose $593,000 between three month periods and $1.8
million between years due to the hiring of a team of experienced commercial
lenders and commercial credit staff in the spring of 2006 and the adoption of an
Employee Stock Ownership Plan (the "ESOP") in September 2006 in conjunction with
the Bank's conversion to a public entity. ESOP expense reflected the recognition
of $512,000 in connection with the initial release of shares for allocation to
employees at December 31, 2006. Professional fees increased by $356,000 between
three month periods and $726,000 between years due to the hiring of consulting
firms to assist with the implementation of internal policies and procedures
related to the Sarbanes-Oxley Act as well as fees related to various strategic
considerations the Company is reviewing. The remainder of the increase in
noninterest expense for the year was attributable to the $1.5 million
contribution to the Fox Chase Bank Charitable Foundation offset by a $279,000
reduction in the levels of Federal Deposit Insurance Corporation premiums. The
reduction in the levels of premiums was due to the lifting of the Bank's Cease
and Desist order on June 28, 2006.
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FOX CHASE BANCORP, INC. ANNUAL EARNINGS 2006
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INCOME TAXES
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The Company's effective income tax rate fell to approximately 16.9% and 15.8%
for the three- and twelve-month periods ended December 31, 2006. This was
primarily due to the Company reversing a valuation allowance of $312,000 it had
established in prior periods for possible non-realizable deferred tax asset
benefits associated with certain capital loss carryforwards. The Bank entered
into an agreement to sell one of its office facilities in the fourth quarter of
2006 that is projected to result in sufficient capital gain income to utilize
such capital loss carryforwards.
The Company also announced that its annual meeting of stockholders will be held
at The Buck Hotel, 1200 Buck Road, Feasterville, Pennsylvania on Tuesday, May
22, 2007 at 9:00 a.m.
Mr. Thomas Petro, President and CEO of the Company said, "During 2006, we
changed the strategic focus and culture of the Company, collected a significant
amount of problem assets, developed new products for small business customers
and began the turnaround of Fox Chase Bank. It was an exciting year and the
Company is poised to now profit from these initiatives. The completion of the
initial public offering of stock increased our level of capital and provides us
with additional flexibility to meet the needs of our customers and will allow
us to grow. In 2007, Fox Chase Bank will celebrate its 140th anniversary as a
leading provider of banking services to individuals and small businesses in the
greater Philadelphia area. Our managers and directors want to thank each of the
dedicated employees who have worked to accomplish so much in 2006 and to thank
our new stockholders for their continued support."
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.
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FOX CHASE BANCORP, INC. ANNUAL EARNINGS 2006
PAGE 6
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.
7
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
Three Months Ended Year Ended
December 31, December 31,
2006 2005 2006 2005
------------ ------------ ------------ ------------
INTEREST INCOME
Interest and fees on loans $ 5,826 $ 5,560 $ 21,742 $ 25,722
Interest on mortgage related securities 1,954 1,397 8,035 5,641
Interest on investments securities AFS:
Taxable 610 766 3,523 3,061
Nontaxable 245 186 934 754
Dividend income 58 229 370 874
Other income 1,488 691 2,573 1,549
------------ ------------ ------------ ------------
Total Interest Income 10,181 8,829 37,177 37,601
------------ ------------ ------------ ------------
INTEREST EXPENSE
Deposits 4,946 4,695 18,974 19,212
Federal Home Loan Bank advances 375 374 1,485 1,485
------------ ------------ ------------ ------------
Total Interest Expense 5,321 5,069 20,459 20,697
------------ ------------ ------------ ------------
Net Interest Income 4,860 3,760 16,718 16,904
------------ ------------ ------------ ------------
Provision (credit) for loan losses (2,233) (4,000) (5,394) (6,025)
------------ ------------ ------------ ------------
Net Interest Income after Provision
(Credit) for Loan Losses 7,093 7,760 22,112 22,929
------------ ------------ ------------ ------------
NONINTEREST INCOME
Service charges and other fee income 386 192 1,037 775
Gain (loss) on sale of:
Available-for-sale investments - - - -
Mortgage related securities - 108 - 108
Loans 95 176 199 567
Assets acquired through foreclosure - - 85 6
Fixed assets (53) (20) (59) (161)
Securities (losses) and impairment
(losses), net - (964) (17) (917)
Income on bank-owned life insurance 109 106 427 448
Other 84 99 401 388
------------ ------------ ------------ ------------
Total Noninterest Income 621 (303) 2,073 1,214
------------ ------------ ------------ ------------
NONINTEREST EXPENSE
Salaries, benefits and other compensation 2,659 2,066 9,194 7,442
Occupancy 399 454 1,567 1,740
Furniture and equipment 412 153 1,048 814
Data processing costs 423 371 1,514 1,452
Professional fees 760 404 1,853 1,127
Marketing 181 75 621 373
FDIC premiums 71 350 796 765
Contribution to charitable foundation - - 1,500 -
Other 384 238 1,774 1,495
------------ ------------ ------------ ------------
Total Noninterest Expense 5,289 4,111 19,867 15,208
------------ ------------ ------------ ------------
Income before Income Taxes 2,425 3,346 4,318 8,935
Income tax provision 410 1,373 684 2,975
------------ ------------ ------------ ------------
Net Income $ 2,015 $ 1,973 $ 3,634 $ 5,960
============ ============ ============ ============
Earnings per share (1) :
Basic $ 0.14 - $ 0.14 -
Diluted 0.14 - 0.14 -
(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 information for the year ended December
31, 2006 is only for the period September 29, 2006 through December 31, 2006.
8
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
December 31,
2006 2005
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ASSETS
Cash and due from banks $ 3,295 $ 3,761
Interest-earning deposits in other banks 131,146 42,325
Interest-earning time deposits in other banks - 600
Investment securities available-for-sale 70,112 141,783
Mortgage related securities available-for-sale 158,320 187,721
Loans held for sale 1,194 357
Loans, net of allowance for loan loss of $2,949
and $8,349 at December 31, 2006 and 2005 355,617 366,393
Federal Home Loan Bank stock, at cost 4,422 4,146
Assets acquired through foreclosure - 107
Bank-owned life insurance 11,324 10,897
Premises and equipment 14,287 14,153
Accrued interest and dividends receivable 3,397 3,301
Mortgage servicing rights 1,177 1,168
Deferred tax asset, net 1,128 2,811
Other assets 974 1,768
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Total Assets $ 756,393 $ 781,291
============= =============
LIABILITIES
Deposits $ 596,534 $ 682,307
Federal Home Loan Bank advances 30,000 30,000
Advances from borrowers for taxes and insurance 2,262 2,503
Accrued interest payable 298 268
Accrued expenses and other liabilities 1,654 2,692
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Total Liabilities 630,748 717,770
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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 62,365 -
Unearned common stock held by employee stock ownership plan (5,371) -
Retained earnings 69,544 65,911
Accumulated other comprehensive loss (1,040) (2,390)
------------- -------------
Total Stockholders' Equity 125,645 63,521
------------- -------------
Total Liabilities and Stockholders' Equity $ 756,393 $ 781,291
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9
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA OF THE COMPANY (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
December 31, September 30, December 31,
2006 2006 2005
------------- ------------- -------------
CAPITAL RATIOS(3):
Tier 1 capital (to adjusted assets) 12.49% 11.99% 8.40%
Tier 1 risk -based capital (to risk-weighted assets) 26.79 26.06 17.76
Total risked-based capital (to risk-weighted assets) 27.62 26.91 19.02
ASSET QUALITY INDICATORS:
Nonperforming assets:
Nonaccruing loans $ 284 $ 2,802 $ 3,520
Accruing loans past due 90 days or more 2,941 1,802 1,574
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Total nonperforming loans 3,225 4,604 5,094
Real estate owned - - 107
------------- ------------- -------------
Total nonperforming assets $ 3,225 $ 4,604 $ 5,201
============= ============= =============
Ratio of nonperforming loans to total loans 0.90% 1.28% 1.36%
============= ============= =============
Ratio of nonperforming loans to total assets 0.43 0.60 0.65
============= ============= =============
Ratio of allowance for loan losses to total loans 0.82 1.45 2.22
============= ============= =============
Ratio of allowance for loan losses to
nonperforming loans 91.44 112.55 163.90
============= ============= =============
At or for the three months ended
December 31, September 30, December 31,
2006 2006 2005
---------------- --------------- ----------------
PERFORMANCE RATIOS:
Return on average assets (1) 1.07% 0.56% 1.00%
Return on average equity (1) 6.48 6.29 12.66
Net interest margin (1) 2.69 2.21 1.98
OTHER:
Book value per share $ 8.56 $ 8.37 (2)
Employees (full-time equivalents) 141 148 129
For the twelve months ended
December 31, December 31,
2006 2005
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PERFORMANCE RATIOS:
Return on average assets 0.49% 0.71%
Return on average equity 4.59 9.50
Net interest margin 2.33 2.05
(1) Annualized
(2) Not applicable
(3) Represents capital ratios at Fox Chase Bank
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