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[FOX CHASE BANCORP, INC. LETTERHEAD]
NEWS RELEASE
FOR IMMEDIATE RELEASE
DATE: May 7, 2007
CONTACT: Jerry Holbrook
Chief Financial Officer
PHONE: (215) 682-4107
FAX: (215) 682-4144
FOX CHASE BANCORP ANNOUNCES EARNINGS
FOR THE FIRST QUARTER
HATBORO, PA, May 7, 2007 - Fox Chase Bancorp, Inc. (the "Company") (NASDAQ GM:
FXCB), the holding company for Fox Chase Bank (the "Bank"), today announced net
income of $293,000 for the three months ended March 31, 2007, compared to net
income of $268,000 for the three months ended March 31, 2006.
Highlights for the quarter included:
o The net interest margin improved during the three months ended March
31, 2007 to 2.45% compared to 2.21% during the three months ended March
31, 2006. This increase reflects the Bank's increase in
noninterest-bearing demand deposits of $5.9 million at March 31, 2007
when compared to the levels at March 31, 2006. In addition, the Bank
had an increase of $33.0 million of higher-yielding commercial,
commercial real estate and construction loans during the three months
ended March 31, 2007 when compared to the levels of such loans at March
31, 2006. The net interest margin was 2.69% during the three months
ended December 31, 2006. The margin for the three months ended
December 31, 2006 included substantial recoveries (approximately 0.28%)
of interest income on the Bank's largest nonperforming commercial loan
when this loan was collected in full in October 2006.
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o An increase in total loans outstanding of $20.6 million primarily due to a
$25.9 million increase in higher yielding commercial, commercial real
estate and construction loans outstanding during the three months ended
March 31, 2007 over the levels reported at December 31, 2006.
o Continued reductions in the levels of nonperforming assets from $3.2
million at the end of 2006 to $158,000 at March 31, 2007. The allowance
for loan losses remained unchanged at $2.9 million at March 31, 2007.
BALANCE SHEET
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Total assets decreased $14.7 million, or 1.9%, to $742.3 million at March 31,
2007, compared to $757.0 million at December 31, 2006. The reduction in assets
was primarily due to an $18.8 million decrease in cash and cash equivalents,
which was used to fund the increase of $20.6 million in loans. In addition,
mortgage related securities decreased $12.3 million from December 31, 2006 to
March 31, 2007 due primarily to principal payments. Investment securities
available-for-sale also decreased $3.7 million as the remaining corporate bonds
held by the Company matured in the first quarter.
Deposits decreased $14.5 million, or 2.4%, from $596.5 at December 31, 2006 to
$582.1 million at March 31, 2007 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.
ASSET QUALITY
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Nonperforming assets totaled $158,000, or 0.02% of total assets, at March 31,
2007 compared to $3.2 million, or 0.43% of total assets, at December 31, 2006.
During the three months ended December 31, 2006, a loan totaling $2.9 million
went past its contractual maturity and was included in the accruing loans past
due 90 days or more category of nonperforming assets. The Bank extended the
maturity on this loan in the first quarter of 2007 and therefore removed it
from the total nonperforming assets, accounting for a majority of the $3.1
million decrease in nonperforming assets. This loan remains current on all
required payments under the extension agreement and is secured by real estate.
Additionally, the property is under an agreement of sale and expected to be
sold in 2007.
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NET INTEREST MARGIN
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As previously discussed, the Company's net interest margin was 2.45% for the
three months ended March 31, 2007 compared to 2.21% for the comparable period in
2006. This improvement was primarily the result of higher loan yields and
increased volume in interest- earning demand deposits produced by the proceeds
received in the initial public offering. These increases were offset by
decreased volume in the taxable securities due to the maturing of corporate
bonds in the first quarter of 2007 as well as higher rates paid on deposits due
to the higher interest rate environment and competition.
NONINTEREST INCOME
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Noninterest income increased $8,000 between three-month periods ended March 31,
2007 and 2006. Noninterest income was relatively flat because increases in
service charges and gains on sales of loans in the three months ended March 31,
2007 offset the previous period gain on sale of assets acquired through
foreclosure.
NONINTEREST EXPENSE
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Noninterest expense increased by $271,000, or 6.5%, between the three months
ended March 31, 2007 and 2006. The two largest changes period over period were
an increase in salaries and benefits and a decrease in Federal Deposit Insurance
Corporation insurance premiums, which directly offset each other. Salaries and
benefits costs rose $322,000 between three month periods 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 in September 2006
in conjunction with the Bank's conversion to a public entity. Federal Deposit
Insurance Corporation premiums decreased $321,000 for the three months March 31,
2007 compared to 2006. The reduction in the levels of premiums was primarily due
to the lifting of the Bank's Cease and Desist order on June 28, 2006 and, to a
lesser extent, to changes made by the FDIC in the way it assesses financial
institutions. The majority of remaining increases in operating expenses were
related to the addition of the Marmora, New Jersey branch office and the opening
of two loan production offices in Media and Exton, Pennsylvania in the second
quarter of 2006. Additionally, marketing costs increased between periods due to
additional expenditures to market and promote the Bank's commercial lending and
deposit initiatives.
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INCOME TAXES
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The Company's effective income tax rate was 11.2% and 2.2% for the three-month
periods ended March 31, 2007 and 2006, respectively. These rates reflect the
Company's levels of tax-exempt income for both periods relative to the overall
level of taxable income.
Thomas Petro, President and CEO of the Company said, "With the Bank's credit
quality problems now largely behind us, our energies are fully directed toward
repositioning the Company for profitable growth. We are exerting significant
energy to align our people, products and processes to deliver what clients care
about most. Our substantial investment last year to recruit nineteen commercial
banking, credit and cash management professionals is showing the promise that we
expected. Although the local banking market remains highly competitive, we are
pleased with the pace and progress of our turnaround."
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
celebrating its 140th year of business. 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.
5
<Table>
<Caption>
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED MARCH 31,
----------------------------
2007 2006
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(UNAUDITED)
INTEREST INCOME
Interest and fees on loans $5,548 $5,425
Interest on mortgage related securities 1,818 1,886
Interest on investment securities available-for-sale:
Taxable 453 910
Nontaxable 245 206
Dividend income 66 193
Other interest income 1,457 263
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TOTAL INTEREST INCOME 9,587 8,883
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INTEREST EXPENSE
Deposits 4,870 4,485
Federal Home Loan Bank advances 366 366
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TOTAL INTEREST EXPENSE 5,236 4,851
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NET INTEREST INCOME 4,351 4,032
Provision for loan losses -- --
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NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 4,351 4,032
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NONINTEREST INCOME
Service charges and other fee income 216 194
Net gain (loss) on sale of:
Loans 57 (12)
Assets acquired through foreclosure -- 85
Securities -- (17)
Income on bank-owned life insurance 107 104
Other 56 74
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TOTAL NONINTEREST INCOME 436 428
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NONINTEREST EXPENSE
Salaries, benefits and other compensation 2,417 2,095
Occupancy expense 381 349
Furniture and equipment expense 229 184
Data processing costs 373 329
Professional fees 492 480
Marketing expense 121 82
FDIC premiums 20 341
Other 424 326
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TOTAL NONINTEREST EXPENSE 4,457 4,186
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INCOME BEFORE INCOME TAXES 330 274
Income tax provision 37 6
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NET INCOME $ 293 $ 268
============ ============
Earnings per share (1):
Basic $ 0.02 $ --
Diluted $ 0.02 $ --
</Table>
(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 three months
ended March 31, 2006 is not applicable.
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<Table>
<Caption>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
MARCH 31, DECEMBER 31,
2007 2006
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(UNAUDITED)
ASSETS
Cash and due from banks $ 2,724 $ 3,295
Interest-earning demand deposits in other banks 112,931 131,146
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Total cash and cash equivalents 115,655 134,441
Investment securities available-for-sale 66,404 70,112
Mortgage related securities available-for-sale 146,021 158,320
Loans held for sale 1,345 1,194
Loans, net of allowance for loan losses of $2,949
at March 31, 2007 and December 31, 2006 376,176 355,617
Federal Home Loan Bank stock, at cost 4,193 4,422
Bank-owned life insurance 11,431 11,324
Premises and equipment 14,173 14,287
Accrued interest and dividends receivable 3,187 3,397
Mortgage servicing rights 1,150 1,177
Deferred tax asset, net 795 1,087
Other assets 1,735 1,607
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TOTAL ASSETS $ 742,265 $ 756,985
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits $ 582,059 $ 596,534
Federal Home Loan Bank advances 30,000 30,000
Advances from borrowers for taxes and insurance 1,748 2,262
Accrued interest payable 280 298
Accrued expenses and other liabilities 1,604 2,246
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TOTAL LIABILITIES 615,691 631,340
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STOCKHOLDERS' EQUITY
Preferred stock ($.01 par value; 1,000,000 shares
authorized, none issued and outstanding at
March 31, 2007 or December 31, 2006) -- --
Common stock ($.01 par value; 35,000,000 shares
authorized, 14,679,750 shares issued and
outstanding at March 31, 2007 and December
31, 2006) 147 147
Additional paid-in capital 62,436 62,365
Unearned common stock held by employee stock
ownership plan (5,275) (5,371)
Retained earnings 69,838 69,545
Accumulated other comprehensive loss, net (572) (1,041)
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TOTAL STOCKHOLDERS' EQUITY 126,574 125,645
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 742,265 $ 756,985
============ ============
</Table>
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<Table>
<Caption>
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA OF THE COMPANY (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
March 31, December 31, March 31,
2007 2006 2006
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CAPITAL RATIOS(1):
Tier 1 capital (to adjusted assets) 12.81% 12.49% 8.72%
Tier 1 risk-based capital
(to risk-weighted assets) 26.22 26.79 18.79
Total risk-based capital
(to risk-weighted assets) 27.03 27.62 20.06
ASSET QUALITY INDICATORS:
Nonperforming assets:
Nonaccruing loans $ 158 $ 284 $3,520
Accruing loans past due 90 days or more -- 2,941 949
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Total nonperforming loans 158 3,225 4,469
Real estate owned -- -- --
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Total nonperforming assets $ 158 $3,225 $4,469
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Ratio of nonperforming loans to
total loans 0.04% 0.90% 1.23%
============ ============ ==========
Ratio of nonperforming loans to
total assets 0.02 0.43 0.59
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Ratio of allowance for loan losses
to total loans 0.77 0.82 2.29
============ ============ ==========
</Table>
<Table>
<Caption>
At or for the three months ended;
March 31, December 31, March 31,
2007 2006 2006
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PERFORMANCE RATIOS:
Return on average assets (2) 0.16% 1.07% 0.14%
Return on average equity (2) 0.94 6.48 1.68
Net interest margin (2) 2.45 2.69 2.21
OTHER:
Book value per share $ 8.62 $ 8.56 (3)
Employees (full-time equivalents) 143 141 134
</Table>
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(1) Represents capital ratios at Fox Chase Bank
(2) Annualized
(3) Not applicable