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Fox Chase Bancorp, Inc. Announces Results for the Three and Nine Months Ended September 30, 2012

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HATBORO, Pa., Oct. 31, 2012 (GLOBE NEWSWIRE) -- Fox Chase Bancorp, Inc. (the "Company") (Nasdaq: FXCB), the holding company for Fox Chase Bank (the "Bank"), today announced net income of $1.4 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, compared to net income of $1.2 million, or $0.09 per share, and $3.7 million, or $0.28 per share, for the three and nine months ended September 30, 2011, respectively.

Highlights for the three and nine month periods ended September 30, 2012 included:

  • Total assets were $1.07 billion at September 30, 2012, an increase of $55.4 million, or 5.5%, from $1.02 billion at December 31, 2011. Total loans were $673.7 million at September 30, 2012, an increase of $16.9 million, or 2.6%, from $656.8 million at June 30, 2012, and an increase of $3.1 million, or 0.5%, from $670.6 million at December 31, 2011. The increase during the three months ended September 30, 2012 was driven by an increase in commercial loans of $27.7 million, comprised of increases of $18.6 million in multi-family and commercial real estate loans, $4.6 million in commercial construction loans and $4.5 million in commercial and industrial loans, offset by an $8.4 million decrease in one-to four-family residential mortgage loans due to normal amortization exceeding new loans originated, and a $2.4 million decrease in consumer loans.
  • Return on average assets improved to 0.56% for the three months ended September 30, 2012 compared to 0.22% for the three months ended June 30, 2012 and 0.46% for the three months ended September 30, 2011.
  • Net interest income increased $172,000, or 2.1%, to $8.2 million for the three months ended September 30, 2012, compared to $8.1 million for the three months ended September 30, 2011; and increased $421,000, or 1.8%, to $23.9 million for the nine months ended September 30, 2012, compared to $23.5 million for the nine months ended September 30, 2011. The net interest margin was 3.29% for the three months ended September 30, 2012, compared to 3.10% for the three months ended September 30, 2011.
  • Net interest income increased $562,000, or 7.3%, to $8.2 million for the three months ended September 30, 2012, compared to $7.7 million for the three months ended June 30, 2012. This increase was primarily driven by a $27.8 million increase in average loans, primarily due to commercial loan growth during the third quarter, and a 14 basis point increase in net interest margin to 3.29% from 3.15%, due to the Company's balance sheet restructuring in June 2012.
  • The efficiency ratio improved to 61.5% for the three months ended September 30, 2012 compared to 68.3% for the three months ended June 30, 2012 and 61.6% for the three months ended September 30, 2011.
  • Other noninterest income increased $115,000 to $248,000 for the three months ended September 30, 2012, compared to $133,000 for the three months ended September 30, 2011. Other noninterest income increased $322,000 to $544,000 for the nine months ended September 30, 2012, compared to $222,000 for the nine months ended September 30, 2011. The increase is primarily due to higher income and volumes from mortgage banking activities.
  • Noninterest expense increased $708,000 to $6.4 million for the three months ended September 30, 2012, compared to $5.7 million for the three months ended September 30, 2011. Assets acquired through foreclosure expense increased $647,000, of which $577,000 related to an increase in valuation adjustments on assets acquired through foreclosure. Valuation adjustments on assets acquired through foreclosure were $887,000 for the three months ended September 30, 2012 compared to $310,000 for the three months ended September 30, 2011. Salaries, benefits and other compensation increased $161,000, or 4.9%, for the three months ended September 30, 2012 compared to the three months ended September 30, 2011, primarily as a result of increased staffing in compliance areas, stock-based compensation expense and annual merit increases.
  • Excluding the loss on extinguishment of debt of $3.0 million, noninterest expense increased $1.2 million to $17.7 million for the nine months ended September 30, 2012, compared to $16.5 million for the nine months ended September 30, 2011. Assets acquired through foreclosure expense increased $656,000, of which $522,000 related to an increase in valuation adjustments on assets acquired through foreclosure. Valuation adjustments on assets acquired through foreclosure were $932,000 for the nine months ended September 30, 2012 compared to $410,000 for the nine months ended September 30, 2011. Salaries, benefits and other compensation increased $472,000, or 4.9%, for the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011, primarily as a result of increased staffing in compliance areas, stock-based compensation expense and annual merit increases.
  • The Company reported $2.3 million of gains on sale of investment securities for the nine months ended September 30, 2012 compared to no gains on investment securities for the comparable period in 2011.

Credit related items as of and for the quarter ended September 30, 2012 include:

  • The allowance for loan losses was $11.2 million, or 1.64% of total loans at September 30, 2012 compared to $11.2 million, or 1.68% of total loans at June 30, 2012 and $12.1 million, or 1.77% of total loans at December 31, 2011;
  • Total credit related costs, which includes (i) provision for loan losses, (ii) valuation adjustments on assets acquired through foreclosure, offset by (iii) net gain on sale of assets acquired through foreclosure totalled $1.3 million for the three months ended September 30, 2012, compared to $1.3 million for the three months ended September 30, 2011 and $1.2 million for the three months ended June 30, 2012;
  • Net loan charge-offs totaled $476,000 and $3.9 million for the three and nine months ended September 30, 2012, respectively, compared to $889,000 and $3.0 million for the three and nine months ended September 30, 2011, respectively;
  • Classified loans decreased $15.0 million for the three months ended September 30, 2012 to $27.2 million compared to $42.2 million at June 30, 2012, largely due to payoffs of substandard loans; and
  • Nonperforming assets decreased $240,000 for the three months ended September 30, 2012 to $25.2 million, or 2.35% of total assets at September 30, 2012.

The Company also announced that its Board of Directors declared a cash dividend of $0.04 per outstanding share of common stock. The dividend will be paid on or about November 29, 2012 to stockholders of record as of the close of business on November 15, 2012.

Commenting on the quarter, Thomas M. Petro, President and Chief Executive Officer, said, "We are pleased with our financial performance for the quarter. Solid commercial loan growth coupled with the positive benefit of our second quarter balance sheet restructuring provided for a significant increase in net interest income for the quarter. Economic conditions remain largely unchanged in our markets since the end of the second quarter. We are encouraged by the improvement in classified loans, however, the sustained low rate environment, increased regulatory related costs and uneven loan demand may continue to provide earnings headwinds. We believe our strategy is appropriate and we are well-positioned to exit this economic cycle."

Fox Chase Bancorp, Inc. will host a conference call to discuss third quarter 2012 results on Thursday, November 1, 2012 at 9:00 am EDT. The general public can access the call by dialing (877) 317-6789. A replay of the conference call will be available through December 10, 2012 by dialing (877) 344-7529; use Conference ID: 10019874.

Fox Chase Bancorp, Inc. is a 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.

The Fox Chase Bancorp, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4080

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,
  2012 2011 2012 2011
   (Unaudited)
INTEREST INCOME        
Interest and fees on loans  $ 8,582  $ 9,021  $ 25,792  $ 26,579
Interest on mortgage related securities  1,888  2,425  5,822  7,651
Interest on investment securities available-for-sale        
Taxable  60  116  231  380
Nontaxable  1  28  34  165
Other interest income  --  16  5   69
Total Interest Income   10,531  11,606  31,884  34,844
INTEREST EXPENSE        
Deposits  1,578  2,099  4,986  6,769
Short-term borrowings  16  2   26   2
Federal Home Loan Bank advances  450  1,007  1,892  3,314
Other borrowed funds  254  437  1,096  1,296
Total Interest Expense  2,298  3,545  8,000  11,381
Net Interest Income  8,233  8,061  23,884  23,463
Provision for loan losses  470   1,034  3,036  2,909
Net Interest Income after Provision for Loan Losses  7,763  7,027  20,848  20,554
NONINTEREST INCOME        
Service charges and other fee income  364  428  1,138  1,207
Net gain on sale of assets acquired through foreclosure  8  57  135   77
Impairment loss on real estate held for investment  --  (110)  --  (110)
Income on bank-owned life insurance  117  119  354  349
Other  248  133  544  222
Total other-than-temporary impairment loss  --  (206)  --   (407)
Less: Portion of loss recognized in other comprehensive income (before taxes)  --  46  --   46
Net other-than-temporary impairment loss  --  (160)  --   (361)
Net gains on sale of investment securities   --  --   2,340  -- 
Net investment securities gains (losses)    --  (160)  2,340  (361)
         
Total Noninterest Income  737  467  4,511  1,384
NONINTEREST EXPENSE        
Salaries, benefits and other compensation  3,458  3,297  10,150   9,678
Occupancy expense  415  457  1,294  1,388
Furniture and equipment expense  119  107  409  314
Data processing costs   441  439   1,359  1,277
Professional fees  369  410  1,327  1,245
Marketing expense  65  95  217   240
FDIC premiums  199  170  581  682
Assets acquired through foreclosure expense  962  315  1,115  459
Loss on extinguishment of debt  --  --   3,018  -- 
Other  370  400  1,267   1,185
Total Noninterest Expense  6,398  5,690  20,737   16,468
Income Before Income Taxes  2,102   1,804  4,622  5,470
Income tax provision  666  572  1,460  1,735
Net Income  $ 1,436  $ 1,232  $ 3,162  $ 3,735
Earnings per share:        
Basic  $ 0.12  $ 0.09  $ 0.27  $ 0.28
Diluted  $ 0.12  $ 0.09  $ 0.27  $ 0.28
 
 
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands, Except Share Data)
  September 30, December 31,
  2012 2011
  (Unaudited)  (Audited)
ASSETS    
Cash and due from banks  $  120  $  734
Interest-earning demand deposits in other banks    14,959  6,852
Total cash and cash equivalents    15,079  7,586
Investment securities available-for-sale    12,507  23,106
Mortgage related securities available-for-sale    285,726  225,664
Mortgage related securities held-to-maturity (fair value of $32,958 at September 30, 2012 and $41,758 at December 31, 2011)    31,651  41,074
Loans, net of allowance for loan losses of $11,220 at September 30, 2012 and $12,075 at December 31, 2011    673,701  670,572
Federal Home Loan Bank stock, at cost    7,407  8,074
Bank-owned life insurance    13,960  13,606
Premises and equipment, net    10,486  10,431
Assets acquired through foreclosure     7,646  2,423
Real estate held for investment   1,620  1,620
Accrued interest receivable    3,443  4,578
Mortgage servicing rights, net     199  316
Deferred tax asset, net    1,292  1,682
Other assets    6,516  5,131
Total Assets  $  1,071,233  $ 1,015,863
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
LIABILITIES    
Deposits  $  703,133  $ 676,594
Short-term borrowings    51,300  8,500
Federal Home Loan Bank advances   95,000  88,278
Other borrowed funds   30,000  50,000
Advances from borrowers for taxes and insurance   1,096  1,736
Accrued interest payable    345  418
Accrued expenses and other liabilities    6,743  2,145
Total Liabilities    887,617  827,671
STOCKHOLDERS' EQUITY    
Preferred stock ($.01 par value; 1,000,000 shares authorized, none issued and outstanding at September 30, 2012 and December 31, 2011)    --   -- 
Common stock ($.01 par value; 60,000,000 shares authorized, 12,447,637 shares issued and outstanding at September 30, 2012 and 13,037,310 shares issued and outstanding at December 31, 2011)      146  146
Additional paid-in capital    135,857  134,871
Treasury stock, at cost (2,157,800 shares at September 30, 2012 and 1,524,900 shares at December 31, 2011)    (28,307)  (19,822)
Common stock acquired by benefit plans    (10,387)  (11,541)
Retained earnings    79,645  77,971
Accumulated other comprehensive income, net    6,662  6,567
Total Stockholders' Equity    183,616  188,192
     
Total Liabilities and Stockholders' Equity  $  1,071,233  $ 1,015,863
     
 
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,
  2012 2012 2011 2011
CAPITAL RATIOS:        
Stockholders' equity (to total assets) (1)  17.14%  18.05%  18.53%  19.14%
         
Tier 1 capital (to adjusted assets) (2)  14.01  14.82  15.30  14.95
Tier 1 risk –based capital (to risk-weighted assets) (2)  21.37  22.32  22.88  23.27
Total risk-based capital (to risk-weighted assets) (2)  22.39  23.33  23.90  24.28
         
ASSET QUALITY INDICATORS:        
Nonperforming Assets:        
Nonaccruing loans  $ 17,385  $ 17,271  $ 17,078  $ 20,629
Accruing loans past due 90 days or more  165  --   3,875  2,117
Total nonperforming loans  $ 17,550  $ 17,271  $ 20,953  $ 22,746
Assets acquired through foreclosure  7,646  8,165  2,423  2,907
Total nonperforming assets  $ 25,196  $ 25,436  $ 23,376  $ 25,653
         
Ratio of nonperforming loans to total loans  2.56%  2.59%  3.07%  3.44%
Ratio of nonperforming assets to total assets  2.35  2.51  2.30  2.49
Ratio of allowance for loan losses to total loans  1.64  1.68  1.77  1.90
Ratio of allowance for loan losses to nonperforming loans  63.9  65.0 57.6 55.3
         
Impaired Loans:        
Nonperforming loans  $ 17,550  $ 17,271  $ 20,953  $ 22,746
Troubled debt restructurings  7,342  7,747  7,207   6,856
Other impaired loans  --   --   2,354  -- 
Total impaired loans  $ 24,892  $ 25,018  $ 30,514  $ 29,602
         
Past Due Loans:        
30 - 59 days  $ 700  $ 1,546  $ 1,467  $ 846
60 - 89 days  523  754  421  3,612
Total  $ 1,223  $ 2,300  $ 1,888  $ 4,458
 
(1) Represents stockholders' equity ratio of Fox Chase Bancorp, Inc.
(2) Represents regulatory capital ratios of Fox Chase Bank.
   
   
  At or for the Three Months Ended
  September 30, June 30, September 30,
  2012 2012 2011
PERFORMANCE RATIOS (3):      
Return on average assets  0.56%  0.22%  0.46%
Return on average equity  3.13   1.16  2.42
Net interest margin  3.29  3.15  3.10
Efficiency ratio (4)  61.5  68.3  61.6
OTHER:      
Tangible book value per share  $ 14.75  $ 14.50  $ 14.33
Employees (full-time equivalents)  144  138  135
       
       
  At or for the Nine Months Ended  
  September 30, September 30,  
  2012 2011  
PERFORMANCE RATIOS (3):      
Return on average assets  0.42%  0.46%  
Return on average equity  2.27  2.41  
Net interest margin  3.24  2.96  
Efficiency ratio (4)  64.8  63.6  
       
(3) Annualized      
(4) 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.
 
 
AVERAGE BALANCE SHEET
(Dollars in Thousands, Unaudited)
 
  Nine Months Ended September 30,
  2012 2011
    Interest     Interest  
  Average and Yield/ Average and Yield/
  Balance Dividends Cost (2) Balance Dividends Cost (2)
Assets:            
Interest-earning assets:            
Interest-earning demand deposits  $ 7,213  $ 5 0.10%  $ 40,141  $ 69 0.23%
Mortgage related securities  283,678  5,822 2.74%  325,387  7,651 3.14%
Taxable securities  21,734  231 1.41%  32,464  380 1.56%
Nontaxable securities  984  34 4.65%   4,767  165 4.62%
Loans (1)  668,705  25,792 5.15%  646,002  26,579 5.45%
Allowance for loan losses  (11,836)      (12,851)    
Net loans  656,869  25,792    633,151  26,579  
Total interest-earning assets   970,478  31,884 4.33%  1,035,910  34,844 4.41%
Noninterest-earning assets  43,720      42,140    
Total assets  $ 1,014,198      $ 1,078,050    
Liabilities and equity:            
Interest-bearing liabilities:            
Interest-bearing deposits  585,409  4,986 1.14%  606,981  6,769 1.49%
Borrowings  135,457  3,014 2.97%  167,949   4,612 3.62%
Total interest-bearing liabilities  720,866  8,000 1.48%  774,930  11,381 1.95%
Noninterest-bearing deposits  103,299      90,021    
Other noninterest-bearing liabilities  4,576      6,686    
Total liabilities  828,741      871,637    
Stockholders' equity   179,178      199,263    
Accumulated comprehensive income   6,279      7,150    
Total stockholder's equity  185,457      206,413    
Total liabilities and stockholders' equity  $ 1,014,198      $ 1,078,050    
             
Net interest income    $ 23,884      $ 23,463  
Interest rate spread     2.85%     2.46%
Net interest margin     3.24%     2.96%
 
(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 September 30,
  2012 2011
    Interest     Interest  
  Average and Yield/ Average and Yield/
  Balance Dividends Cost (2) Balance Dividends Cost (2)
Assets:            
Interest-earning assets:            
Interest-earning demand deposits  $ 5,741  $ -- 0.05%  $  28,268  $   16 0.22%
Mortgage related securities  294,914  1,888 2.56%   315,815   2,425 3.07%
Taxable securities  17,207    60 1.38%   31,516   116 1.47%
Nontaxable securities    4   1 87.75%    2,105  28 5.30%
Loans (1)  681,575  8,582 5.02%   652,669  9,021 5.45%
Allowance for loan losses   (11,615)       (12,834)    
Net loans  669,960  8,582      639,835   9,021  
Total interest-earning assets  987,826  10,531 4.25%  1,017,539   11,606 4.46%
Noninterest-earning assets  44,930        44,186    
Total assets  $ 1,032,756      $ 1,061,725    
Liabilities and equity:            
Interest-bearing liabilities:            
Interest-bearing deposits  609,202   1,578 1.03%   596,979  2,099 1.40%
Borrowings  121,318  720 2.36%   160,201  1,446 3.53%
Total interest-bearing liabilities   730,520  2,298 1.25%   757,180  3,545 1.85%
Noninterest-bearing deposits  114,983       91,414    
Other noninterest-bearing liabilities  3,529        9,176    
Total liabilities  849,032       857,770    
Stockholders' equity  178,169       195,957    
Accumulated comprehensive income  5,555        7,998    
Total stockholder's equity  183,724        203,955    
Total liabilities and stockholders' equity  $ 1,032,756      $  1,061,725    
             
 Net interest income    $ 8,233      $ 8,061  
Interest rate spread     3.00%     2.61%
Net interest margin     3.29%     3.10%
 
(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, 2012 June 30, 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  $ 5,741  $ -- 0.05%  $ 7,207  $  2 0.10%
Mortgage related securities  294,914  1,888 2.56%  281,767    1,955 2.78%
Taxable securities   17,207  60 1.38%  22,059  78 1.40%
Nontaxable securities   4   1 87.75%  1,075   14 5.45%
Loans (1)  681,575  8,582 5.02%  653,730   8,362 5.08%
Allowance for loan losses  (11,615)      (11,597)    
Net loans  669,960  8,582      642,133   8,362  
Total interest-earning assets  987,826  10,531 4.25%   954,241  10,411 4.34%
Noninterest-earning assets  44,930       43,375    
Total assets  $ 1,032,756      $ 997,616    
Liabilities and equity:            
Interest-bearing liabilities:            
Interest-bearing deposits  609,202  1,578 1.03%  569,395  1,637 1.16%
Borrowings  121,318  720 2.36%  137,038  1,103 3.18%
Total interest-bearing liabilities  730,520  2,298 1.25%  706,433  2,740 1.55%
Noninterest-bearing deposits  114,983      101,143    
Other noninterest-bearing liabilities  3,529      4,712    
Total liabilities  849,032        812,288    
Stockholders' equity  178,169      178,651    
Accumulated comprehensive income  5,555      6,677    
Total stockholder's equity  183,724        185,328    
Total liabilities and stockholders' equity  $ 1,032,756      $ 997,616    
             
Net interest income    $ 8,233      $ 7,671  
Interest rate spread     3.00%     2.79%
Net interest margin     3.29%     3.15%
 
(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

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