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Fox Chase Bancorp, Inc. Announces Results for the Three and Nine Months Ended September 30, 2013

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HATBORO, Pa., Oct. 30, 2013 (GLOBE NEWSWIRE) -- Fox Chase Bancorp, Inc. (the "Company") (Nasdaq:FXCB), the holding company for Fox Chase Bank (the "Bank"), today announced net income of $1.2 million, or $0.10 per diluted share, and $4.0 million, or $0.35 per diluted share, for the three and nine months ended September 30, 2013, respectively, compared to net income of $1.4 million, or $0.12 per share, and $3.2 million, or $0.27 per share, for the three and nine months ended September 30, 2012, respectively.

Commenting on the performance for the quarter, Thomas M. Petro, President and Chief Executive Officer said, "Our business strategy, which is focused on building commercial relationships, has produced commercial loan growth of $50 million, or 10%, for the first nine months of 2013. The increase in average commercial loans helped improve our net interest margin to 3.06% for the quarter as compared to 3.01% for the quarter ended June 30, 2013. Additionally, nonperforming assets continued to decrease to $17.3 million, or 1.56% of total assets, at September 30, 2013, compared to $25.6 million, or 2.36% of total assets, at December 31, 2012. We remain focused on executing our strategy of growing profitable relationships with lower middle market and small businesses while driving improvements in operating leverage and asset quality."

Highlights for the three and nine months ended September 30, 2013 included:

  • Total assets were $1.11 billion at September 30, 2013 compared to $1.09 billion at December 31, 2012. Total loans were $700.5 million at September 30, 2013, essentially flat from the $701.1 million at June 30, 2013, and an increase of $16.7 million, or 2.4%, from $683.9 million at December 31, 2012. Total commercial loans increased $50.0 million, or 9.9%, from $505.4 million at December 31, 2012 to $555.3 million at September 30, 2013 primarily due to increases of $35.8 million in commercial and industrial loans and $30.4 million in multi-family and commercial real estate loans. This was partially offset by a decrease of $16.2 million in commercial construction loans. As expected, one- to four-family residential mortgage loans decreased $25.8 million due to normal amortization exceeding new loans originated and consumer loans decreased $7.2 million.
  • Total stockholders' equity was $174.2 million at September 30, 2013, a decrease of $7.2 million from $181.5 million at December 31, 2012, primarily due to the decrease in accumulated other comprehensive income (loss) of $7.1 million and the repurchase of 218,572 shares of Company common stock at an aggregate cost of $3.7 million. Excluding accumulated other comprehensive income (loss), tangible book value per share increased by $0.23 per share, to $14.55 per share at September 30, 2013 from $14.32 at December 31, 2012.
  • Return on assets was 0.49% for the nine months ended September 30, 2013 compared to 0.42% for the nine months ended September 30, 2012.
  • Net interest income increased $365,000, or 4.6%, to $8.2 million for the three months ended September 30, 2013, compared to $7.9 million for the three months ended June 30, 2013. The increase in net interest income and margin was driven by increased average loan balances due to commercial loan growth, as well as increased yields on mortgage related securities.
  • Net interest income remained consistent at $8.2 million for the three months ended September 30, 2013 and 2012, and increased $128,000, or 0.5%, to $24.0 million for the nine months ended September 30, 2013, compared to $23.9 million for the nine months ended September 30, 2012.
  • The efficiency ratio was 63.6% for the nine months ended September 30, 2013, compared to 64.8% for the nine months ended September 30, 2012.
  • Noninterest expense increased $247,000, or 1.2%, to $21.0 million for the nine months ended September 30, 2013, compared to $20.7 million for the nine months ended September 30, 2012. Loss on extinguishment of debt decreased $3.0 million due to the extinguishment of debt during the nine months ended September 30, 2012. No debt was extinguished during 2013. This decrease was offset by an increase of $3.4 million in assets acquired through foreclosure expense as the Company recorded $4.3 million in valuation adjustments on assets acquired through foreclosure during the nine months ended September 30, 2013 compared to $932,000 for the nine months ended September 30, 2012. This increase was primarily driven by $4.5 million in valuation adjustments on foreclosed life insurance policies, of which $1.3 million was recorded in the three months ended September 30, 2013. Salaries, benefits and other compensation increased $479,000 for the nine months ended September 30, 2013, primarily as a result of increased staffing costs and annual compensation increases. These increases were offset by decreases of $77,000 in professional fees primarily due to lower loan work-out expense and $204,000 in data processing costs related to a renegotiated data processing contract that became effective in January 2013.
  • Excluding the previously mentioned loss on the extinguishment of debt and valuation adjustments, noninterest expense decreased $107,000, or 0.6%, from $16.8 million for the nine months ended September 30, 2012, to $16.7 million for the nine months ended September 30, 2013.

Credit related items as of and for the quarter ended September 30, 2013 include:

  • Total credit related costs, which include (i) provision for loan losses and (ii) valuation adjustments on assets acquired through foreclosure, offset by (iii) net gain on sale of assets acquired through foreclosure, totaled $1.7 million for the three months ended September 30, 2013, compared to $1.8 million for the three months ended June 30, 2013 and $1.3 million for the three months ended September 30, 2012;
  • The allowance for loan losses was $11.1 million, or 1.56% of total loans, at September 30, 2013 compared to $10.5 million, or 1.48% of total loans, at June 30, 2013 and $11.2 million, or 1.61% of total loans, at December 31, 2012. The level of nonperforming assets continued to improve during the three months ended September 30, 2013;
  • Net loan charge-offs totaled $45,000 and $574,000 for the three and nine months ended September 30, 2013, respectively, compared to $476,000 and $3.9 million for the three and nine months ended September 30, 2012, respectively;
  • Delinquent loans totaled $2.1 million at September 30, 2013, compared to $1.9 million at June 30, 2013 and $2.1 million at December 31, 2012.

The Company also announced that its Board of Directors declared a cash dividend of $0.08 per outstanding share of common stock. The dividend will be paid on or about November 27, 2013 to stockholders of record as of the close of business on November 13, 2013.

Fox Chase Bancorp, Inc. will host a conference call to discuss third quarter 2013 results on Thursday, October 31, 2013 at 9:00 am EDT. The general public can access the call by dialing (888) 317-6016. A replay of the conference call will be available through December 13, 2013 by dialing (877) 344-7529; use Conference ID: 10034509.

Fox Chase Bancorp, Inc. is a stock holding company of Fox Chase Bank. 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 STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012
(Unaudited)
INTEREST INCOME
Interest and fees on loans $8,241 $8,582 $24,319 $25,792
Interest on mortgage related securities 1,807 1,888 5,296 5,822
Interest on investment securities available-for-sale
Taxable 92 60 221 231
Nontaxable -- 1 -- 34
Other interest income 1 -- 2 5
Total Interest Income 10,141 10,531 29,838 31,884
INTEREST EXPENSE
Deposits 1,055 1,578 3,373 4,986
Short-term borrowings 45 16 94 26
Federal Home Loan Bank advances 555 450 1,606 1,892
Other borrowed funds 254 254 753 1,096
Total Interest Expense 1,909 2,298 5,826 8,000
Net Interest Income 8,232 8,233 24,012 23,884
Provision for loan losses 675 470 532 3,036
Net Interest Income after Provision for Loan Losses 7,557 7,763 23,480 20,848
NONINTEREST INCOME
Service charges and other fee income 437 364 1,260 1,138
Net gain on sale of assets acquired through foreclosure 303 8 484 135
Income on bank-owned life insurance 118 117 351 354
Equity in earnings of affiliate 135 210 470 445
Net gain on sale of investment securities -- -- 532 2,340
Other 36 38 125 99
Total Noninterest Income 1,029 737 3,222 4,511
NONINTEREST EXPENSE
Salaries, benefits and other compensation 3,644 3,458 10,629 10,150
Occupancy expense 403 415 1,243 1,294
Furniture and equipment expense 117 119 358 409
Data processing costs 390 441 1,155 1,359
Professional fees 474 369 1,250 1,327
Marketing expense 59 65 167 217
FDIC premiums 175 199 525 581
Assets acquired through foreclosure expense 1,370 962 4,465 1,115
Loss on extinguishment of debt -- -- -- 3,018
Other 370 370 1,192 1,267
Total Noninterest Expense 7,002 6,398 20,984 20,737
Income Before Income Taxes 1,584 2,102 5,718 4,622
Income tax provision 411 666 1,674 1,460
Net Income $1,173 $1,436 $4,044 $3,162
Earnings per share:
Basic $0.10 $0.12 $0.36 $0.27
Diluted $0.10 $0.12 $0.35 $0.27
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands, Except Share Data)
September 30, December 31,
2013 2012
(Unaudited) (Audited)
ASSETS
Cash and due from banks $114 $162
Interest-earning demand deposits in other banks 6,301 24,928
Total cash and cash equivalents 6,415 25,090
Investment securities available-for-sale 10,501 12,491
Mortgage related securities available-for-sale 258,406 283,616
Mortgage related securities held-to-maturity (fair value of $70,601 at September 30, 2013 and $29,451 at December 31, 2012) 70,928 28,369
Loans, net of allowance for loan losses of $11,128 at September 30, 2013 and $11,170 at December 31, 2012 700,544 683,865
Federal Home Loan Bank stock, at cost 10,013 8,097
Bank-owned life insurance 14,428 14,077
Premises and equipment, net 9,988 10,443
Assets acquired through foreclosure 6,588 8,524
Real estate held for investment 1,620 1,620
Accrued interest receivable 3,267 3,223
Mortgage servicing rights, net 157 170
Deferred tax asset, net 7,738 2,953
Other assets 6,291 5,803
Total Assets $1,106,884 $1,088,341
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits $683,008 $687,409
Short-term borrowings 61,600 70,500
Federal Home Loan Bank advances 150,000 110,000
Other borrowed funds 30,000 30,000
Advances from borrowers for taxes and insurance 1,010 1,699
Accrued interest payable 314 330
Accrued expenses and other liabilities 6,720 6,938
Total Liabilities 932,652 906,876
STOCKHOLDERS' EQUITY
Preferred stock ($.01 par value; 1,000,000 shares authorized, none issued and outstanding at September 30, 2013 and December 31, 2012) -- --
Common stock ($.01 par value; 60,000,000 shares authorized, 12,147,803 shares issued and outstanding at September 30, 2013 and 12,356,564 shares issued and outstanding at December 31, 2012) 146 146
Additional paid-in capital 137,152 136,132
Treasury stock, at cost (2,468,172 shares at September 30, 2013 and 2,249,600 shares at December 31, 2012) (33,436) (29,733)
Common stock acquired by benefit plans (9,431) (10,228)
Retained earnings 82,318 80,608
Accumulated other comprehensive (loss) income, net (2,517) 4,540
Total Stockholders' Equity 174,232 181,465
Total Liabilities and Stockholders' Equity $1,106,884 $1,088,341
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA OF THE COMPANY (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
September 30, June 30, December 31, September 30,
2013 2013 2012 2012
CAPITAL RATIOS:
Stockholders' equity (to total assets) (1) 15.74% 15.45% 16.67% 17.14%
Tier 1 capital (to adjusted assets) (2) 13.10 12.78 12.90 14.01
Tier 1 risk –based capital (to risk-weighted assets) (2) 18.98 18.94 19.45 21.37
Total risk-based capital (to risk-weighted assets) (2) 20.02 19.98 20.48 22.39
ASSET QUALITY INDICATORS:
Nonperforming Assets:
Nonaccruing loans $9,057 $9,989 $17,124 $17,385
Accruing loans past due 90 days or more (3) 1,640 -- -- 165
Total nonperforming loans $10,697 $9,989 $17,124 $17,550
Assets acquired through foreclosure 6,588 9,948 8,524 7,646
Total nonperforming assets $17,285 $19,937 $25,648 $25,196
Ratio of nonperforming loans to total loans 1.50% 1.40% 2.46% 2.56%
Ratio of nonperforming assets to total assets 1.56 1.78 2.36 2.35
Ratio of allowance for loan losses to total loans 1.56 1.48 1.61 1.64
Ratio of allowance for loan losses to nonperforming loans 104.0 105.1 65.2 63.9
Impaired Loans:
Nonaccruing loans $9,057 $9,989 $17,124 $17,385
Troubled debt restructurings 7,265 7,265 7,388 7,342
Other impaired loans -- -- -- 165
Total impaired loans $16,322 $17,254 $24,512 $24,892
Past Due Loans:
30 - 59 days $1,481 $1,618 $41 $700
60 - 89 days 569 323 2,026 523
Total $2,050 $1,941 $2,067 $1,223
(1) Represents stockholders' equity ratio of Fox Chase Bancorp, Inc.
(2) Represents regulatory capital ratios of Fox Chase Bank.
(3) As of September 30, 2013, represents one commercial loan relationship which was greater than 90 days past maturity. The loan was extended in October 2013 and the loan is no longer considered delinquent.
At or for the Three Months Ended
September 30, June 30, December 31, September 30,
2013 2013 2012 2012
PERFORMANCE RATIOS (4):
Return on average assets 0.42% 0.38% 0.73% 0.56%
Return on average equity 2.71 2.34 4.15 3.13
Net interest margin 3.06 3.01 3.11 3.29
Efficiency ratio (5) 63.5 64.2 62.8 61.5
OTHER:
Tangible book value per share - Core (6) $14.55 $14.48 $14.32 $14.22
Tangible book value per share (7) $14.34 $14.28 $14.69 $14.75
Employees (full-time equivalents) 142 143 141 144
At or for the Nine Months Ended
September 30, September 30,
2013 2012
PERFORMANCE RATIOS (4):
Return on average assets 0.49% 0.42%
Return on average equity 3.04 2.27
Net interest margin 3.05 3.24
Efficiency ratio (5) 63.6 64.8
(4) Annualized
(5) Represents noninterest expense, excluding valuation adjustments on assets acquired through foreclosure and loss on extinguishment of debt, divided by the sum of net interest income and noninterest income, excluding gains or losses on the sale of securities, premises and equipment and assets acquired through foreclosure.
(6) Total stockholders' equity, excluding the impact of accumulated other comprehensive (loss) income, net ($2.5 million loss at September 30, 2013, $2.4 million loss at June 30, 2013, $4.5 million income at December 31, 2012 and $6.7 million income at September 30, 2012); divided by total shares outstanding.
(7) Total stockholders' equity divided by total shares outstanding. Tangible book value per share and book value per share were the same for all periods indicated.
AVERAGE BALANCE SHEET
(Dollars in Thousands, Unaudited)
Three Months Ended September 30,
2013 2012
Interest Interest
Average and Yield/ Average and Yield/
Balance Dividends Cost (2) Balance Dividends Cost (2)
Assets:
Interest-earning assets:
Interest-earning demand deposits $5,652 $1 0.03% $5,741 $ -- 0.05%
Mortgage related securities 334,883 1,807 2.16% 294,914 1,888 2.56%
Taxable securities 21,012 92 1.74% 17,207 60 1.38%
Nontaxable securities -- -- 0.00% 4 1 87.75%
Loans (1) 708,177 8,241 4.63% 681,575 8,582 5.02%
Allowance for loan losses (10,854) (11,615)
Net loans 697,323 8,241 669,960 8,582
Total interest-earning assets 1,058,870 10,141 3.81% 987,826 10,531 4.25%
Noninterest-earning assets 50,589 44,930
Total assets $1,109,459 $1,032,756
Liabilities and equity:
Interest-bearing liabilities:
Interest-bearing deposits $566,745 $1,055 0.74% 609,202 1,578 1.03%
Borrowings 234,783 854 1.44% 121,318 720 2.36%
Total interest-bearing liabilities 801,528 1,909 0.94% 730,520 2,298 1.25%
Noninterest-bearing deposits 128,437 114,983
Other noninterest-bearing liabilities 6,080 3,529
Total liabilities 936,045 849,032
Stockholders' equity 176,915 178,169
Accumulated comprehensive income (3,501) 5,555
Total stockholder's equity 173,414 183,724
Total liabilities and stockholders' equity $1,109,459 $1,032,756
Net interest income $8,232 $8,233
Interest rate spread 2.87% 3.00%
Net interest margin 3.06% 3.29%
(1) Nonperforming loans are included in average balance computation.
(2) Yields are not presented on a tax-equivalent basis.
AVERAGE BALANCE SHEET
(Dollars in Thousands, Unaudited)
Three Months Ended Three Months Ended
September 30, 2013 June 30, 2013
Interest Interest
Average and Yield/ Average and Yield/
Balance Dividends Cost (2) Balance Dividends Cost (2)
Assets:
Interest-earning assets:
Interest-earning demand deposits $5,652 $1 0.03% $5,822 0.04%
Mortgage related securities 334,883 1,807 2.16% 331,110 1,751 2.12%
Taxable securities 21,012 92 1.74% 20,713 58 1.14%
Nontaxable securities -- -- 0.00% -- 0.00%
Loans (1) 708,177 8,241 4.63% 690,584 8,016 4.65%
Allowance for loan losses (10,854) (11,962)
Net loans 697,323 8,241 678,622 8,016
Total interest-earning assets 1,058,870 10,141 3.81% 1,036,267 9,825 3.80%
Noninterest-earning assets 50,589 51,250
Total assets $1,109,459 $1,087,517
Liabilities and equity:
Interest-bearing liabilities:
Interest-bearing deposits $566,745 $1,055 0.74% $581,391 $1,141 0.79%
Borrowings 234,783 854 1.44% 196,632 817 1.67%
Total interest-bearing liabilities 801,528 1,909 0.94% 778,023 1,958 1.01%
Noninterest-bearing deposits 128,437 124,025
Other noninterest-bearing liabilities 6,080 6,727
Total liabilities 936,045 908,775
Stockholders' equity 176,915 176,645
Accumulated comprehensive income (3,501) 2,097
Total stockholder's equity 173,414 178,742
Total liabilities and stockholders' equity $1,109,459 $1,087,517
Net interest income $8,232 $7,867
Interest rate spread 2.87% 2.79%
Net interest margin 3.06% 3.01%
(1) Nonperforming loans are included in average balance computation.
AVERAGE BALANCE SHEET
(Dollars in Thousands, Unaudited)
Nine Months Ended September 30,
2013 2012
Interest Interest
Average and Yield/ Average and Yield/
Balance Dividends Cost (2) Balance Dividends Cost (2)
Assets:
Interest-earning assets:
Interest-earning demand deposits $5,540 $2 0.04% $7,213 $5 0.10%
Mortgage related securities 329,788 5,296 2.14% 283,678 5,822 2.74%
Taxable securities 20,899 221 1.41% 21,734 231 1.41%
Nontaxable securities -- -- 0.00% 984 34 4.65%
Loans (1) 695,682 24,319 4.67% 668,705 25,792 5.15%
Allowance for loan losses (11,420) (11,836)
Net loans 684,262 24,319 656,869 25,792
Total interest-earning assets 1,040,489 29,838 3.79% 970,478 31,884 4.33%
Noninterest-earning assets 49,905 43,720
Total assets $1,090,394 $1,014,198
Liabilities and equity:
Interest-bearing liabilities:
Interest-bearing deposits $576,054 $3,373 0.78% 585,409 4,986 1.14%
Borrowings 207,868 2,453 1.58% 135,457 3,014 2.97%
Total interest-bearing liabilities 783,922 5,826 0.99% 720,866 8,000 1.48%
Noninterest-bearing deposits 121,778 103,299
Other noninterest-bearing liabilities 7,115 4,576
Total liabilities 912,815 828,741
Stockholders' equity 176,893 179,178
Accumulated comprehensive income 686 6,279
Total stockholder's equity 177,579 185,457
Total liabilities and stockholders' equity $1,090,394 $1,014,198
Net interest income $24,012 $23,884
Interest rate spread 2.80% 2.85%
Net interest margin 3.05% 3.24%
(1) Nonperforming loans are included in average balance computation.
(2) Yields are not presented on a tax-equivalent basis.

CONTACT: Roger S. Deacon Chief Financial Officer (215) 775-1435

Source:Fox Chase Bancorp, Inc.