[FOX CHASE BANCORP, INC. LOGO]
NEWS RELEASE
------------
FOR IMMEDIATE RELEASE
DATE: October 30, 2008
CONTACT: Roger Deacon
Chief Financial Officer
PHONE: (215) 682-4116
FOX CHASE BANCORP ANNOUNCES IMPROVED EARNINGS
FOR 2008 THIRD QUARTER
HATBORO, PA, OCTOBER 30, 2008 - Fox Chase Bancorp, Inc. (the "Company") (NASDAQ
GM: FXCB), the holding company for Fox Chase Bank (the "Bank"), today announced
net income of $659,000 and $1.3 million for the three and nine months ended
September 30, 2008, respectively, compared to net income of $455,000 and $1.6
million for the three and nine months ended September 30, 2007, respectively.
Net income for the nine months ended September 30, 2008 included expense of
$297,000 (after tax $196,000) associated with final distributions from the
Company's terminated pension plan. Net income for the nine months ended
September 30, 2007 included a gain of $874,000 (after tax $577,000) related to
the sale of the Bank's former operations center.
Highlights for the three and nine month periods included:
- Loans totaled $572.8 million at September 30, 2008, representing a
$150.4 million, or 35.6%, increase from September 30, 2007 and a $125.8
million, or 28.1%, increase from December 31, 2007;
+ Net interest income increased $910,000, or 18.5%, to $5.8 million for
the three months ended September 30, 2008, compared to $4.9 million for
the three months ended September 30, 2007 and increased $2.1 million,
or 15.4%, to $15.9 million for the nine months ended September 30, 2008
from $13.8 million for the same period in 2007.
+ Increased provision for loan losses to $500,000 and $900,000 for the
three and nine months ended September 30, 2008, respectively, compared
to $125,000 and $200,000, respectively, for the same period in 2007.
The allowance for loan losses represents 228% of nonperforming loans at
September 30, 2008.
+ The Company had no investments considered to be other than temporarily
impaired in its investment portfolio at September 30, 2008. As
previously announced, the Company does not own any shares of Fannie Mae
or Freddie Mac stock, nor does it own any Trust Preferred Securities
(See Selected Consolidated Financial and Other Data of the Company for
details on the Company's investment portfolio).
"Despite the difficult environment for financial institutions, our third quarter
performance was solid," said Thomas M. Petro, President and Chief Executive
Officer. "During the last two months, we have seen significant deterioration in
economic and financial conditions. While many financial institutions are seeking
to strengthen their balance sheets, our strong capital position affords us the
ability to focus on our customers. During the latest quarter we experienced
solid loan growth and a significant improvement in our net interest margin while
continuing to manage our operating expenses."
"In light of the recessionary outlook and continued market challenges, we
increased our provision for loan losses in the third quarter of 2008. While we
have no individual loan or other than temporary investment impairments and have
not participated in sub-prime lending, we have experienced some credit losses
and nonperforming assets have increased a nominal amount. We also anticipate
continued strain on our loan portfolio for the foreseeable future as economic
conditions deteriorate. While these are certainly challenging times, we are very
optimistic about the future for Fox Chase Bank."
2
Total assets increased $73.8 million, or 9.1%, to $886.7 million at September
30, 2008, compared to $812.9 million at December 31, 2007. Loans increased
$125.8 million from December 31, 2007 to September 30, 2008. Approximately $91.3
million of this increase was in commercial, commercial real estate and
construction loans as we continue our strategic initiative to increase our
commercial loan portfolio. The growth in loans was funded through the
liquidation of $60.0 million in short-term auction rate bonds, the liquidation
of $20.0 million of money market funds, increased Federal Home Loan Bank
advances of $11.1 million and additional other borrowed funds of $15.0 million
in the third quarter of 2008. The $35.3 million increase in mortgage related
securities was funded by $40.0 million in Federal Home Loan Bank advances due to
a leverage strategy implemented during the first quarter of 2008. Deposits
increased $7.8 million, or 1.3%, from $585.6 million at December 31, 2007 to
$593.4 million at September 30, 2008.
Net interest income increased $910,000, or 18.5%, and $2.1 million, or 15.4%,
during the three and nine months ended September 30, 2008, respectively,
compared to the same periods in 2007. The increases in net interest income were
primarily due to the increase in loans. The Company's net interest margin was
2.79% for the three months ended September 30, 2008, compared to 2.48% for the
three months ended June 30, 2008 and 2.72% for the comparable period in 2007.
The increase from the June 30, 2008 quarter was primarily the result of a change
in composition of average interest-earning assets to higher-yielding loans from
lower-yielding investment securities, as well as the Bank utilizing borrowings
with lower interest rates to fund higher-yielding commercial loans.
The Company recorded provisions for loan losses of $500,000 and $900,000 for the
three and nine months ended September 30, 2008, respectively compared to
$125,000 and $200,000 for the three and nine months ended September 30, 2007,
respectively. The increase in the provision reflected loan growth, primarily in
the commercial categories discussed previously, an increase in nonperforming and
classified assets, and management increasing the loan loss reserve assumptions
for its construction loan portfolio to reflect the challenging economic
environment. Nonperforming assets totaled $1.9 million, or 0.21% of total
assets, at September 30, 2008 compared to $1.5 million, or 0.17% of total
assets, at June 30, 2008 and $819,000, or 0.10% of total assets, at December 31,
2007. Nonperforming assets increased $1.1 million during the nine months ended
September 30, 2008, primarily due to one commercial loan secured by real estate
and four residential loans, which became 90 days past due during the year. The
Bank believes it is adequately secured on these loans. The allowance for loan
losses at September 30, 2008 was 0.74% of total loans compared to 0.75% of total
loans at December 31, 2007. The allowance for loan losses as a percentage of
nonperforming loans was 228% at September 30, 2008 as compared to 412% at
December 31, 2007.
3
Noninterest expense increased by $163,000, or 3.5%, and $842,000, or 6.2%,
between the three and nine months ended September 30, 2008 and 2007,
respectively. The increase for the three and nine month periods was primarily a
result of increased salaries and benefits costs due to expense associated with
final distributions from the Company's terminated pension plan (nine months
only), expense associated with the awards granted under the Company's 2007
Equity Incentive Plan, costs associated with the opening of the Bank's West
Chester, Pennsylvania branch in October 2007 as well as annual merit increases.
These increases were offset by a decrease in professional fees due to litigation
related matters in 2007 and lower levels of Sarbanes-Oxley compliance and audit
related costs.
During the three and nine months ended September 30, 2008, the Company
repurchased 93,991 and 222,891 shares of common stock, respectively, in
conjunction with its stock repurchase program announced in February 2008 (the
"February 2008 program"). There are 104,109 shares remaining to be repurchased
under the February 2008 program and 327,000 shares remaining to be repurchased
under the repurchase program announced in July 2008. The July 2008 program would
be executed after completion of purchases related to the February 2008 program.
Timing and volume of purchases will depend on market conditions and other
factors. Repurchased shares will be held in treasury.
Fox Chase Bancorp, Inc. is the mid-tier stock holding company of Fox Chase Bank.
The Bank is a federally chartered savings bank 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.
4
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- ---------------------------
2008 2007 2008 2007
------------- ----------- ----------- -------------
INTEREST INCOME
Interest and fees on loans $ 8,106 $ 6,746 $ 22,415 $ 18,338
Interest on money market funds -- -- 521 --
Interest on mortgage related securities 3,138 1,657 9,248 5,187
Interest on investment securities available-for-sale:
Taxable 121 905 876 1,813
Non-taxable 146 205 469 709
Dividend income 69 61 193 189
Other interest income 17 1,019 124 3,970
----------- ----------- --------- ----------
TOTAL INTEREST INCOME 11,597 10,593 33,846 30,206
----------- ----------- --------- ----------
INTEREST EXPENSE
Deposits 4,345 5,309 14,004 15,322
Federal Home Loan Bank advances 1,230 375 3,380 1,111
Other borrowed funds 203 -- 567 --
----------- ----------- --------- ----------
TOTAL INTEREST EXPENSE 5,778 5,684 17,951 16,433
----------- ----------- --------- ----------
NET INTEREST INCOME 5,819 4,909 15,895 13,773
Provision for loan losses 500 125 900 200
----------- ----------- --------- ----------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 5,319 4,784 14,995 13,573
----------- ----------- --------- ----------
NONINTEREST INCOME
Service charges and other fee income 218 204 633 623
Net gain on sale of:
Loans 6 -- 10 73
Fixed assets -- -- -- 874
Securities available-for-sale -- 19 118 19
Income on bank-owned life insurance 114 111 338 327
Other 21 53 56 160
----------- ----------- --------- ----------
TOTAL NONINTEREST INCOME 359 387 1,155 2,076
----------- ----------- --------- ----------
NONINTEREST EXPENSE
Salaries, benefits and other compensation 2,928 2,485 8,790 7,154
Occupancy expense 458 475 1,412 1,354
Furniture and equipment expense 226 230 669 712
Data processing costs 402 388 1,204 1,149
Professional fees 285 460 863 1,445
Marketing expense 117 152 337 449
FDIC premiums 26 20 81 62
Other 347 416 1,111 1,300
----------- ----------- --------- ----------
TOTAL NONINTEREST EXPENSE 4,789 4,626 14,467 13,625
----------- ----------- --------- ----------
INCOME BEFORE INCOME TAXES 889 545 1,683 2,024
Income tax provision 230 90 375 424
----------- ----------- --------- ----------
NET INCOME $ 659 $ 455 $ 1,308 $ 1,600
=========== =========== ========= ===========
Earnings per share:
Basic $ 0.05 $ 0.03 $ 0.10 $ 0.11
Diluted $ 0.05 $ 0.03 $ 0.10 $ 0.11
5
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands, Except Share Data)
SEPTEMBER 30, DECEMBER 31,
2008 2007
------------- --------------
(UNAUDITED)
ASSETS
Cash and due from banks $ 382 $ 3,307
Interest-earning demand deposits in other banks 6,100 7,968
Money market funds -- 20,000
------------- --------------
Total cash and cash equivalents 6,482 31,275
Investment securities available-for-sale 23,805 91,159
Mortgage related securities available-for-sale 240,429 205,145
Loans, net of allowance for loan losses of $4,261 and $3,376
at September 30, 2008 and December 31, 2007, respectively 572,838 447,035
Federal Home Loan Bank stock, at cost 8,961 5,875
Bank-owned life insurance 12,100 11,762
Premises and equipment 13,921 14,466
Accrued interest receivable 3,452 3,360
Mortgage servicing rights 955 1,066
Deferred tax asset, net 1,641 410
Other assets 2,090 1,366
------------- --------------
TOTAL ASSETS $ 886,674 $ 812,919
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits $ 593,398 $ 585,560
Federal Home Loan Bank advances 131,060 80,000
Other borrowed funds 35,000 20,000
Advances from borrowers for taxes and insurance 1,682 2,374
Accrued interest payable 651 504
Accrued expenses and other liabilities 4,201 2,110
------------- --------------
TOTAL LIABILITIES 765,992 690,548
------------- --------------
STOCKHOLDERS' EQUITY
Preferred stock ($.01 par value; 1,000,000 shares authorized,
none issued and outstanding at September 30, 2008 or December 31, 2007) -- --
Common stock ($.01 par value; 35,000,000 shares authorized,
14,679,750 shares issued; 14,129,859 and 14,352,750 shares outstanding
at September 30, 2008 and December 31, 2007, respectively) 147 147
Additional paid-in capital 63,213 62,909
Treasury stock (at cost, 549,891 and 327,000 shares at September 30, 2008 and
December 31, 2007, respectively) (6,595) (3,924)
Common stock acquired by benefit plans (7,915) (8,732)
Retained earnings 72,783 71,475
Accumulated other comprehensive income (loss), net (951) 496
------------- --------------
TOTAL STOCKHOLDERS' EQUITY 120,682 122,371
------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 886,674 $ 812,919
============= ==============
6
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA OF THE COMPANY (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
2008 2007 2007
----------------- --------------- ----------------
CAPITAL RATIOS:
Total Stockholders' Equity (to Total Assets)(1) 13.61% 15.05% 17.05%
Tier 1 capital (to adjusted assets) (2) 11.20% 12.03% 12.98%
Tier 1 risk-based capital (to risk-weighted assets) (2) 18.72 21.78 23.30
Total risk-based capital (to risk-weighted assets) (2) 19.52 22.54 24.06
ASSET QUALITY INDICATORS:
Nonperforming loans (3) $ 1,871 $ 819 $ 521
Real estate owned -- -- --
--------- -------- --------
Total nonperforming assets $ 1,871 $ 819 $ 521
========= ======== ========
Ratio of nonperforming loans to total loans 0.32% 0.18% 0.12%
========= ======== ========
Ratio of nonperfomring loans to total assets 0.21 0.10 0.07
========= ======== ========
Ratio of allowance for loan losses to total loans 0.74 0.75 0.74
========= ======== ========
Ratio of allowance for loan losses to
nonperforming loans 228% 412% 605%
========= ======== ========
AS OF SEPTEMBER 30, 2008
--------------------------------------------------
AMORTIZED FAIR UNREALIZED
COST VALUE GAIN/(LOSS)
----------------- --------------- ----------------
INVESTMENT AND MORTGAGE RELATED SECURITIES:
Private Label Residential Mortgage Related Security $ 930 $ 488 $ (442)
Private Label Commercial Mortgage Related Securities 10,054 9,332 (722)
Agency Residential Mortgage Related Securities 230,368 230,609 241
--------- -------- --------
Total Mortgage Related Securities 241,352 240,429 (923)
State and Political Subdivisions 14,677 14,258 (419)
Corporate Bonds 9,706 9,547 (159)
--------- -------- --------
24,383 23,805 (578)
Total Securities $ 265,735 $264,234 $ (1,501)
========= ======== ========
(1) Represents stockholders' equity ratio of Fox Chase Bancorp, Inc.
(2) Represents capital ratios of Fox Chase Bank
(3) Includes nonaccruing loans and accruing loans past due 90 days or more
7
AT AND FOR THE THREE MONTHS ENDED
-------------------------------------------------
SEPTEMBER 30, JUNE 30, SEPTEMBER 30,
2008 2008 2007
---------------- -------------- -----------------
PERFORMANCE RATIOS (3):
Return on average assets 0.31% 0.14% 0.24%
Return on average equity 2.18 0.99 1.44
Net interest margin 2.79 2.48 2.72
OTHER:
Book value per share $ 8.54 $ 8.51 $ 8.66
Employees (full-time equivalents) 139 138 139
(3) Annualized
8