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Fox Chase Bancorp, Inc. Announces Earnings for the Quarter and Year Ended December 31, 2015

HATBORO, Pa., Jan. 26, 2016 (GLOBE NEWSWIRE) -- Fox Chase Bancorp, Inc. (the “Company”) (NASDAQ:FXCB), the holding company for Fox Chase Bank (the “Bank”), today announced net income of $9.5 million, or $0.85 per diluted share, for the year ended December 31, 2015, compared to $8.2 million, or $0.71 per diluted share, for the year ended December 31, 2014. The Company reported net income of $1.8 million, or $0.16 per diluted share, for the quarter ended December 31, 2015 compared to net income of $2.1 million, or $0.19 per diluted share, for the quarter ended December 31, 2014.

2015 results include one-time after-tax core data processing systems conversion-related expenses of $839,000 ($0.08 per share) and after-tax merger-related expenses of $396,000 ($0.03 per share). The fourth quarter 2015 results include one-time after-tax core data processing systems conversion-related expenses of $193,000 ($0.02 per share) and after-tax merger-related expenses of $396,000 ($0.03 per share).

The Company also announced that its Board of Directors declared a cash dividend of $0.28 per outstanding share of common stock. This quarter’s dividend is comprised of a regular quarterly dividend of $0.14 and a nonrecurring dividend of $0.14 per outstanding common share. Cumulative dividends paid for 2015 totaled $0.70 per share, which represented 82% of the Company's 2015 net income. The dividend will be paid on February 25, 2016 to stockholders of record as of the close of business on February 11, 2016.

Commenting on the Company’s performance, Thomas M. Petro, President and Chief Executive Officer stated, “We are pleased with continued improvements in our operating performance, especially in this challenging interest rate environment. In addition, we are excited about our merger with Univest Corporation of Pennsylvania and are moving forward to obtain the necessary approvals to close the transaction in the third quarter of 2016. We believe this affiliation will create a stronger franchise and provide greater benefits to customers, shareholders and the communities we serve.”

Highlights at and for the year and quarter ended December 31, 2015 included:

  • Total assets were $1.13 billion at December 31, 2015 compared to $1.09 billion at December 31, 2014. Total loans were $767.7 million at December 31, 2015, an increase of $28.2 million, or 3.8%, from $739.5 million at September 30, 2015, and an increase of $43.4 million, or 6.0%, from $724.3 million at December 31, 2014.
  • Total commercial loans increased $66.0 million, or 10.9%, from $607.5 million at December 31, 2014 to $673.5 million at December 31, 2015 primarily due to increases of $53.8 million in multi-family and commercial real estate loans and $15.9 million in commercial and industrial loans offset by paydowns of $3.7 million in construction loans. Total commercial loans increased $34.4 million, or 5.4%, from $639.1 million at September 30, 2015 to $673.5 million at December 31, 2015 primarily due to increases of $38.6 million in multi-family and commercial real estate loans offset by paydowns of $3.9 million in construction loans.
  • Total average assets were $1.10 billion for the year ended December 31, 2015 compared to $1.08 billion for the year ended December 31, 2014. Total average commercial loans increased by $52.4 million, or 9.1%, to $628.1 million for the year ended December 31, 2015, compared to $575.7 million for the year ended December 31, 2014.
  • Nonperforming assets decreased to $5.2 million, or 0.46% of total assets, at December 31, 2015 compared to $6.3 million, or 0.57% of total assets, at both September 30, 2015 and December 31, 2014.
  • Return on average assets was 0.87% for the year ended December 31, 2015 compared to 0.76% for the year ended December 31, 2014.
  • Net interest income increased $622,000, or 1.9%, to $34.1 million for the year ended December 31, 2015, compared to $33.5 million for the year ended December 31, 2014. The net interest margin was 3.20% for the year ended December 31, 2015, compared to 3.19% for the year ended December 31, 2014.
  • Net interest income increased $156,000, or 1.9%, to $8.4 million for the three months ended December 31, 2015, compared to $8.2 million for the three months ended December 31, 2014. Net interest income was also $8.4 million for the three months ended September 30, 2015. The net interest margin was 3.10% for the three months ended December 31, 2015, compared to 3.18% for the three months ended December 31, 2014 and the three months ended September 30, 2015. The decrease in net interest margin during the quarter was primarily due to lower rates on new commercial loans and repricing of certain credits to lower rates given the competitive environment.
  • The Company recorded a credit to the provision for loan losses of $995,000 during the year ended December 31, 2015, compared to a provision for loan losses of $1.9 million for the year ended December 31, 2014. The credit to the provision was primarily due to $1.2 million of recoveries, during 2015, on previously charged-off loans. The Company recorded net loan recoveries of $827,000 and net charge-offs of $161,000 for the year and quarter ended December 31, 2015, respectively, compared to net charge-offs of $2.7 million and $720,000, respectively, for the year and quarter ended December 31, 2014. The charge-offs in the quarter ended December 31, 2015 were primarily related to one residential mortgage loan. There were no commercial loan charge-offs.
  • The allowance for loan losses was $10.6 million, or 1.36% of total loans at December 31, 2015, compared to $10.6 million, or 1.42% of total loans at September 30, 2015 and $10.7 million or 1.46% of total loans at December 31, 2014.
  • Noninterest income increased $440,000 to $2.7 million for the year ended December 31, 2015, compared to $2.3 million for the year ended December 31, 2014, primarily due to an increase of $181,000 in income on bank-owned life insurance as the Bank purchased $10.0 million of bank-owned life insurance in the third quarter of 2015, an increase of $131,000 in equity in earnings of affiliate due to higher mortgage volumes and an increase of $104,000 in other noninterest income primarily due to increased cash management fees.
  • Noninterest expense increased $2.0 million, or 9.0%, to $24.2 million for the year ended December 31, 2015, compared to $22.2 million for the year ended December 31, 2014. This increase was primarily due to the Company incurring $1.8 million (pre-tax) of one-time costs, of which $1.3 million related to the core data processing systems conversion and $487,000 related to the previously announced merger with Univest Corporation of Pennsylvania (NASDAQ:UVSP), (“Univest”). For the year ended December 31, 2015, pre-tax system conversion and merger related costs are captured in the following noninterest expense categories: Salary, benefits and other compensation ($149,000), data processing costs ($632,000), professional fees ($883,000) and other ($94,000).
  • Excluding the one-time core data processing systems costs and merger-related costs noted in the above paragraph, noninterest expense increased $244,000, or 1.1%, to $22.5 million for the year ended December 31, 2015 from $22.2 million for the year ended December 31, 2014.
  • Noninterest expense increased $766,000, or 13.6%, to $6.4 million for the three months ended December 31, 2015, compared to $5.6 million for the three months ended December 31, 2014. This increase was due to the Company incurring $779,000 (pre-tax) of one-time costs, of which $292,000 related to the core data processing systems conversion and $487,000 related to the previously announced merger with Univest. For the three months ended December 31, 2015, pre-tax system conversion and merger related costs are captured in the following noninterest expense categories: Salary, benefits and other compensation ($43,000), data processing costs ($134,000), professional fees ($587,000) and other ($15,000).
  • The efficiency ratio was 65.4% and 69.9% for the year and quarter ended December 31, 2015, respectively, compared to 61.2% and 63.3% for the year and quarter ended December 31, 2014, respectively. Excluding the previously discussed one-time core data processing systems conversion and merger related costs, the efficiency ratio was 60.6% and 61.4% for the year and quarter ended December 31, 2015, respectively.
  • Income tax provision for the year ended December 31, 2015 includes the reversal of an $182,000 valuation allowance on certain state deferred tax assets, which occurred during the three months ended March 31, 2015. The effective income tax rate for the year ended December 31, 2015 was 29.9%. Excluding this reversal, the effective income tax rate for the year ended December 31, 2015 was 31.2%, compared to 29.4% for the year ended December 31, 2014.

On December 8, 2015, Univest and the Company announced the signing of a definitive agreement and plan of merger under which Univest will acquire the Company through the merger of the Company with and into Univest, with Univest surviving the merger, in a cash and stock transaction for total consideration valued at approximately $244.3 million. Subject to the satisfaction or waiver of the closing conditions contained in the merger agreement, including the approval of the merger agreement by the Company’s shareholders and the receipt of required regulatory approvals, Univest and the Company expect that the merger will be completed during the third quarter of 2016. However, it is possible that factors outside the control of both companies, including whether or when the required regulatory approvals will be received, could result in the merger being completed at a different time or not at all.

Fox Chase Bancorp, Inc. is the stock holding company of Fox Chase Bank. The Bank is a Pennsylvania state-chartered savings bank originally established in 1867. The Bank offers traditional banking services and products from its main office in Hatboro, Pennsylvania and nine branch offices in Bucks, Montgomery, Chester 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 Twelve Months Ended
December 31, December 31,
2015 2014 2015 2014
(Unaudited) (Unaudited) (Audited)
INTEREST INCOME
Interest and fees on loans $ 8,288 $ 8,085 $ 33,061 $ 32,700
Interest and dividends on investment securities 1,650 1,750 6,987 7,422
Other interest income 15 5 25 7
Total Interest Income 9,953 9,840 40,073 40,129
INTEREST EXPENSE
Deposits 812 761 3,000 3,216
Short-term borrowings 15 27 94 127
Federal Home Loan Bank advances 568 565 2,198 2,288
Other borrowed funds 168 253 665 1,004
Total Interest Expense 1,563 1,606 5,957 6,635
Net Interest Income 8,390 8,234 34,116 33,494
Provision (credit) for loan losses 100 350 (995) 1,943
Net Interest Income after Provision for Loan Losses 8,290 7,884 35,111 31,551
NONINTEREST INCOME
Service charges and other fee income 372 412 1,572 1,604
Net gain (loss) on sale of assets acquired through foreclosure 2 68 (12) (68)
Income on bank-owned life insurance 217 122 661 480
Equity in earnings of affiliate 78 47 303 172
Other 76 29 209 105
Total Noninterest Income 745 678 2,733 2,293
NONINTEREST EXPENSE
Salaries, benefits and other compensation 3,972 3,710 15,470 14,380
Occupancy expense 375 388 1,663 1,709
Furniture and equipment expense 95 90 358 390
Data processing costs 560 396 2,311 1,542
Professional fees 823 331 1,970 1,417
Marketing expense 59 146 192 302
FDIC premiums 125 120 509 571
Assets acquired through foreclosure expense 24 17 247 420
Other 354 423 1,513 1,500
Total Noninterest Expense 6,387 5,621 24,233 22,231
Income Before Income Taxes 2,648 2,941 13,611 11,613
Income tax provision 865 833 4,065 3,418
Net Income $ 1,783 $ 2,108 $ 9,546 $ 8,195
Earnings per share:
Basic $ 0.16 $ 0.19 $ 0.87 $ 0.73
Diluted $ 0.16 $ 0.19 $ 0.85 $ 0.71


CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands, Except Share Data)
December 31,
2015 2014
(Unaudited) (Audited)
ASSETS
Cash and due from banks $ 3,413 $ 2,763
Interest-earning demand deposits in other banks 4,385 14,450
Total cash and cash equivalents 7,798 17,213
Investment securities available-for-sale 139,751 134,037
Investment securities held-to-maturity (fair value of $149,850 at
December 31, 2015 and $170,854 at December 31, 2014) 150,190 170,172
Loans, net of allowance for loan losses of $10,562
at December 31, 2015 and $10,730 at December 31, 2014 767,683 724,326
Federal Home Loan Bank stock, at cost 6,734 6,015
Bank-owned life insurance 25,687 15,027
Premises and equipment, net 9,030 9,418
Assets acquired through foreclosure 2,623 2,814
Real estate held for investment 1,620 1,620
Accrued interest receivable 3,145 3,147
Mortgage servicing rights, net 104 111
Deferred tax asset, net 5,142 4,561
Other assets 6,096 6,155
Total Assets $ 1,125,603 $ 1,094,616
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits $ 764,974 $ 711,909
Short-term borrowings 38,496 50,000
Federal Home Loan Bank advances 110,000 120,000
Other borrowed funds 30,000 30,000
Advances from borrowers for taxes and insurance 1,422 1,447
Accrued interest payable 319 311
Accrued expenses and other liabilities 3,478 5,038
Total Liabilities 948,689 918,705
STOCKHOLDERS' EQUITY
Preferred stock ($.01 par value; 1,000,000 shares authorized,
none issued and outstanding at December 31, 2015 and December 31, 2014) - -
Common stock ($.01 par value; 60,000,000 shares authorized,
11,767,590 shares outstanding at December 31, 2015
and 11,802,791 shares outstanding at December 31, 2014) 149 147
Additional paid-in capital 142,189 139,177
Treasury stock, at cost (3,141,201 shares at December 31, 2015 and
2,852,572 at December 31, 2014) (44,468) (39,698)
Common stock acquired by benefit plans (6,717) (8,056)
Retained earnings 86,241 84,225
Accumulated other comprehensive (loss) income, net (480) 116
Total Stockholders' Equity 176,914 175,911
Total Liabilities and Stockholders' Equity $ 1,125,603 $ 1,094,616


SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA OF THE COMPANY (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
December
31,
September 30, December 31,
2015 2015 2014
CAPITAL RATIOS:
Stockholders’ equity (to total assets) (1) 15.72 % 16.02 % 16.07 %
Common equity tier 1 capital ratio (to risk-weighted assets) (2) 16.65 16.93 N/A
Tier 1 leverage ratio (to adjusted average assets) (2) 13.52 13.64 13.99
Tier 1 capital ratio (to risk-weighted assets) (2) 16.65 16.93 18.97
Total capital ratio (to risk-weighted assets) (2) 17.63 17.95 20.02
ASSET QUALITY INDICATORS:
Nonperforming Assets:
Nonaccruing loans $2,534 $3,446 $3,454
Accruing loans past due 90 days or more - - -
Total nonperforming loans $2,534 $3,446 $3,454
Assets acquired through foreclosure 2,623 2,815 2,814
Total nonperforming assets $5,157 $6,261 $6,268
Ratio of nonperforming loans to total loans 0.33 % 0.46 % 0.47 %
Ratio of nonperforming assets to total assets 0.46 0.57 0.57
Ratio of allowance for loan losses to total loans 1.36 1.42 1.46
Ratio of allowance for loan losses to nonperforming loans 416.8 308.3 310.7
Troubled Debt Restructurings:
Nonaccruing troubled debt restructurings (3) $1,122 $1,123 $1,401
Accruing troubled debt restructurings 6,440 5,971 3,624
Total troubled debt restructurings $7,562 $7,094 $5,025
Past Due Loans:
30 - 59 days $1,021 $541 $113
60 - 89 days 685 179 145
Total $1,706 $720 $258

(1) Represents stockholders’ equity ratio of Fox Chase Bancorp, Inc.
(2) Represents regulatory capital ratios of Fox Chase Bank.
(3) Nonaccruing troubled debt restructurings are included in total nonaccruing loans above.

At or for the Three Months Ended
December 31, September 30, December 31,
2015 2015 2014
PERFORMANCE RATIOS (4):
Return on average assets 0.64% 0.85% 0.79%
Return on average equity 4.03 5.32 4.76
Net interest margin 3.10 3.18 3.18
Efficiency ratio (5) 69.9 65.1 63.3
Efficiency ratio (excludes one-time costs) (6) 61.4 59.6 63.3
OTHER:
Average commercial loans $644,403 $621,942 $571,875
Tangible book value per share - Core (7)$15.07 $15.15 $14.89
Tangible book value per share (8)$15.03 $15.18 $14.90
Employees (full-time equivalents) 134 138 138
At or for the Twelve Months Ended
December 31, December 31,
2015 2014
PERFORMANCE RATIOS:
Average commercial loans $628,099 $575,727
Return on average assets 0.87% 0.76%
Return on average equity 5.43 4.63
Net interest margin 3.20 3.19
Efficiency ratio (5) 65.4 61.2
Efficiency ratio (excludes one-time costs) (6) 60.6 61.2

(4) Annualized
(5) Represents noninterest expense, excluding valuation adjustments on assets acquired through foreclosure, 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) Same as (5) except noninterest expense in this ratio excludes costs related to the core data processing systems conversion and the previously announced merger with Univest Corporation. Such costs were $779,000, $502,000 and $0 for the three months ended December 31, 2015, September 2015 and December 2014, respectively. Such costs were $1.8 million and $0 for the twelve months ended December 31, 2015 and December 31, 2014, respectively.
(7) Total stockholders’ equity, excluding the impact of accumulated other comprehensive (loss) gain, net ($(480,000) at December 31, 2015, $384,000 at September 30, 2015 and $116,000 at December 31, 2014) divided by total shares outstanding.
(8) 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 December 31,
2015 2014
Interest Interest
Average and Yield/ Average and Yield/
Balance Dividends Cost (2) Balance Dividends Cost (2)
Assets:
Interest-earning assets:
Interest-earning demand deposits$ 26,625 $ 15 0.23% $ 12,883 $ 5 0.14%
Investment securities 298,284 1,650 2.21% 314,172 1,750 2.23%
Loans (1) 752,744 8,288 4.37% 703,052 8,085 4.57%
Allowance for loan losses (10,605) (11,133)
Net loans 742,139 8,288 691,919 8,085
Total interest-earning assets 1,067,048 9,953 3.71% 1,018,974 9,840 3.84%
Noninterest-earning assets 53,523 43,137
Total assets$ 1,120,571 $ 1,062,111
Liabilities and equity:
Interest-bearing liabilities:
Interest-bearing deposits$ 586,944 $ 812 0.55% $ 546,781 $ 761 0.55%
Borrowings 154,865 751 1.93% 194,498 845 1.73%
Total interest-bearing liabilities 741,809 1,563 0.84% 741,279 1,606 0.86%
Noninterest-bearing deposits 197,711 135,746
Other noninterest-bearing liabilities 4,292 7,962
Total liabilities 943,812 884,987
Stockholders' equity 176,601 177,126
Accumulated comprehensive income 158 (2)
Total stockholders' equity 176,759 177,124
Total liabilities and stockholders' equity$ 1,120,571 $ 1,062,111
Net interest income $ 8,390 $ 8,234
Interest rate spread 2.87% 2.98%
Net interest margin 3.10% 3.18%

(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
December 31, 2015 September 30, 2015
Interest Interest
Average and Yield/ Average and Yield/
Balance Dividends Cost (2) Balance Dividends Cost (2)
Assets:
Interest-earning assets:
Interest-earning demand deposits$ 26,625 $ 15 0.23% $ 10,586 $ 4 0.16%
Investment securities 298,284 1,650 2.21% 304,386 1,659 2.18%
Loans (1) 752,744 8,288 4.37% 735,872 8,243 4.45%
Allowance for loan losses (10,605) (10,731)
Net loans 742,139 8,288 725,141 8,243
Total interest-earning assets 1,067,048 9,953 3.71% 1,040,113 9,906 3.79%
Noninterest-earning assets 53,523 51,792
Total assets$ 1,120,571 $ 1,091,905
Liabilities and equity:
Interest-bearing liabilities:
Interest-bearing deposits$ 586,944 $ 812 0.55% $ 572,028 $ 745 0.52%
Borrowings 154,865 751 1.93% 170,923 760 1.76%
Total interest-bearing liabilities 741,809 1,563 0.84% 742,951 1,505 0.80%
Noninterest-bearing deposits 197,711 168,357
Other noninterest-bearing liabilities 4,292 5,505
Total liabilities 943,812 916,813
Stockholders' equity 176,601 175,047
Accumulated comprehensive income 158 45
Total stockholders' equity 176,759 175,092
Total liabilities and stockholders' equity$ 1,120,571 $ 1,091,905
Net interest income $ 8,390 $ 8,401
Interest rate spread 2.87% 2.99%
Net interest margin 3.10% 3.18%

(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)
Twelve Months Ended December 31,
2015 2014
Interest Interest
Average and Yield/ Average and Yield/
Balance Dividends Cost (2) Balance Dividends Cost (2)
Assets:
Interest-earning assets:
Interest-earning demand deposits$ 14,762 $ 25 0.17% $ 8,316 $ 7 0.08%
Investment securities 305,826 6,987 2.28% 326,201 7,422 2.28%
Loans (1) 745,154 33,061 4.44% 715,673 32,700 4.57%
Allowance for loan losses (11,008) (11,458)
Net loans 734,146 33,061 704,215 32,700
Total interest-earning assets 1,054,734 40,073 3.80% 1,038,732 40,129 3.86%
Noninterest-earning assets 47,604 44,156
Total assets$ 1,102,338 $ 1,082,888
Liabilities and equity:
Interest-bearing liabilities:
Interest-bearing deposits$ 572,832 $ 3,000 0.52% $ 558,194 $ 3,216 0.58%
Borrowings 168,012 2,957 1.76% 214,980 3,419 1.59%
Total interest-bearing liabilities 740,844 5,957 0.80% 773,174 6,635 0.86%
Noninterest-bearing deposits 179,920 125,264
Other noninterest-bearing liabilities 5,898 7,569
Total liabilities 926,662 906,007
Stockholders' equity 175,351 178,068
Accumulated comprehensive income 325 (1,187)
Total stockholders' equity 175,676 176,881
Total liabilities and stockholders' equity$ 1,102,338 $ 1,082,888
Net interest income $ 34,116 $ 33,494
Interest rate spread 3.00% 3.00%
Net interest margin 3.20% 3.19%

(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 Phone: (215) 775-1435

Source:Fox Chase Bancorp, Inc.