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Fox Chase Bancorp, Inc. Reports a 28% Increase in Earnings for the Three and Nine Months Ended September 30, 2015

/EIN News/ -- HATBORO, Pa., Oct. 28, 2015 (GLOBE NEWSWIRE) -- Fox Chase Bancorp, Inc. (the “Company”) (NASDAQ:FXCB), the holding company for Fox Chase Bank (the “Bank”), today announced net income of $2.3 million, or $0.21 per diluted share, and $7.8 million, or $0.69 per diluted share, for the three and nine months ended September 30, 2015, respectively, compared to net income of $1.8 million, or $0.16 per diluted share, and $6.1 million, or $0.53 per diluted share, for the three and nine months ended September 30, 2014, respectively.  

Commenting on performance for the quarter, Thomas M. Petro, President and CEO said, “We are pleased to report a 28% increase in net income for the three and nine months ended September 30, 2015 compared to the same periods in 2014.  This earnings improvement was driven by continued execution of our commercial banking strategy and year to date recoveries of $1.1 million (pre-tax) on previously charged-off loans.  As previously disclosed, we continued to incur one-time costs due to our core data processing systems conversion.  These pre-tax costs were $502,000 and $979,000 during the three and nine months ended September 30, 2015 and are expected to approximate $1.3 million for the full year 2015. The conversion was successfully completed in early October as planned.  As we look to the fourth quarter of 2015, we continue to see opportunities to grow despite the slow pace of economic expansion, increased competition and the low interest rate environment.”

Highlights for the three and nine months ended September 30, 2015 included:

  • Total average assets were $1.10 billion for the nine months ended September 30, 2015 compared to $1.09 billion for the nine months ended September 30, 2014. Total average commercial loans increased by $45.7 million, or 7.9%, to $622.7 million for the nine months ended September 30, 2015, compared to $577.0 million for the nine months ended September 30, 2014. 
  • Assets were $1.10 billion at September 30, 2015 compared to $1.09 billion at December 31, 2014 and $1.07 billion at September 30, 2014.  Total commercial loans increased by $31.6 million, or 5.2%, to $639.1 million at September 30, 2015 compared to $607.5 million at December 31, 2014. 
  • Return on average assets was 0.85% and 0.94% for the three and nine months ended September 30, 2015, respectively, compared to 0.67% and 0.74% for the three and nine months ended September 30, 2014, respectively.
  • Net interest income increased $466,000, or 1.8%, to $25.7 million for the nine months ended September 30, 2015, compared to $25.3 million for the nine months ended September 30, 2014 and decreased $117,000, or 1.4%, to $8.4 million for the three months ended September 30, 2015, compared to $8.5 million for the three months ended September 30, 2014.
  • The net interest margin was 3.18% for the three months ended September 30, 2015, compared to 3.24% for the three months ended June 30, 2015 and 3.20% for the three months ended September 30, 2014.  During the three months ended September 30, 2015 and June 30, 2015, respectively, the Company received $143,000 and $130,000 in prepayment fees, which increased net interest margin in both periods by five basis points. 
  • The Company recorded a credit to the provision for loan losses of $300,000 and $1.1 million for the three and nine months ended September 30, 2015.  The credits were primarily due to $317,000 and $1.2 million of recoveries on previously charged-off loans for the three and nine months ended September 30, 2015, respectively.  There were no commercial loan charge-offs during the three months ended September 30, 2015.
  • The allowance for loan losses was $10.6 million, or 1.42% of total loans, at September 30, 2015 compared to $10.7 million, or 1.45% of total loans at June 30, 2015, and compared to $10.7 million, or 1.46% of total loans, at December 31, 2014. 
  • Nonperforming assets were $6.3 million, or 0.57% of total assets, at September 30, 2015 compared to $5.8 million, or 0.53% of total assets, at June 30, 2015 and $6.3 million, or 0.57% of total assets, at December 31, 2014.  Delinquent loans totaled $720,000 at September 30, 2015, compared to $660,000 at June 30, 2015 and $258,000 at December 31, 2014. 
  • Noninterest income increased $373,000 to $2.0 million for the nine months ended September 30, 2015 compared to $1.6 million for the nine months ended September 30, 2014 primarily due to an increase of $100,000 in equity in earnings of affiliate due to higher mortgage volumes, and an increase of $86,000 in income on bank-owned life insurance as the Bank purchased $10.0 million of bank-owned life insurance in the three months ended September 30, 2015.
  • Noninterest expense increased $1.2 million, or 7.4%, to $17.8 million for the nine months ended September 30, 2015, compared to $16.6 million for the nine months ended September 30, 2014.  This increase was primarily due to the Company incurring $979,000 of system conversion costs.  For the nine months ended September 30, 2015, system conversion costs are captured in the following noninterest expense categories:  Salary, benefits and other compensation ($106,000), data processing costs ($498,000), professional fees ($296,000) and other ($79,000).
  • Income tax provision for the nine months ended September 30, 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 nine months ended September 30, 2015 was 29.2%.  Excluding this reversal, the effective income tax rate for the nine months ended September 30, 2015 was 30.8% compared to 29.8% for the nine months ended September 30, 2014.    

The Company also announced that its Board of Directors declared a cash dividend of $0.14 per outstanding share of common stock. The dividend will be paid on November 25, 2015 to stockholders of record as of the close of business on November 11, 2015.  During the three months ended September 30, 2015, the Company repurchased 19,500 shares of treasury stock and has approximately 817,000 shares remaining in its approved repurchase plans.

Fox Chase Bancorp, Inc. will host a conference call to discuss third quarter 2015 results on Thursday, October 29, 2015 at 9:00 am EDT.  The general public can access the call by dialing (877) 507-3275.  A replay of the conference call will be available through December 11, 2015 by dialing (877) 344-7529; use Conference ID: 10074213.  Participants may preregister at http://dpregister.com/10074213.

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   Nine Months Ended
            September 30,   September 30,
              2015       2014       2015       2014  
                                         
            (Unaudited)
INTEREST INCOME            
  Interest and fees on loans   $ 8,243     $ 8,375     $ 24,773     $ 24,615  
  Interest and dividends on investment securities     1,659       1,777       5,337       5,672  
  Other interest income     4       1       10       2  
      Total Interest Income     9,906       10,153       30,120       30,289  
INTEREST EXPENSE                
  Deposits       745       760       2,188       2,455  
  Short-term borrowings     25       45       79       100  
  Federal Home Loan Bank advances     568       577       1,630       1,723  
  Other borrowed funds     167       253       497       751  
      Total Interest Expense     1,505       1,635       4,394       5,029  
      Net Interest Income     8,401       8,518       25,726       25,260  
  (Credit) provision for loan losses     (300 )     1,493       (1,095 )     1,593  
                                       
      Net Interest Income after Provision for Loan Losses     8,701       7,025       26,821       23,667  
NONINTEREST INCOME                
  Service charges and other fee income     377       416       1,200       1,192  
  Net gain (loss) on sale of assets acquired through foreclosure     1       (15 )     (14 )     (136 )
  Income on bank-owned life insurance     202       121       444       358  
  Equity in earnings of affiliate     74       91       225       125  
  Other     67       29       133       76  
                         
      Total Noninterest Income     721       642       1,988       1,615  
NONINTEREST EXPENSE                
  Salaries, benefits and other compensation     3,836       3,510       11,498       10,670  
  Occupancy expense     391       407       1,288       1,321  
  Furniture and equipment expense     81       93       263       300  
  Data processing costs     676       384       1,751       1,146  
  Professional fees     370       271       1,147       1,086  
  Marketing expense     35       54       133       156  
  FDIC premiums     124       136       384       451  
  Assets acquired through foreclosure expense     131       10       223       403  
  Other     414       333       1,159       1,077  
      Total Noninterest Expense     6,058       5,198       17,846       16,610  
      Income Before Income Taxes     3,364       2,469       10,963       8,672  
    Income tax provision     1,036       653       3,200       2,585  
      Net Income   $ 2,328     $ 1,816     $ 7,763     $ 6,087  
Earnings per share:                
  Basic   $ 0.21     $ 0.16     $ 0.71     $ 0.54  
  Diluted     $ 0.21     $ 0.16     $ 0.69     $ 0.53  

 

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands, Except Share Data)
 
        September 30,   December 31,
          2015       2014  
        (Unaudited)   (Audited)
ASSETS
  Cash and due from banks   $ 322     $ 2,763  
  Interest-earning demand deposits in other banks     6,889       14,450  
    Total cash and cash equivalents     7,211       17,213  
  Investment securities available-for-sale     138,756       134,037  
   Investment securities held-to-maturity (fair value of $157,665 at September 30, 2015 and $170,854 at December 31, 2014)     156,099       170,172  
  Loans, net of allowance for loan losses of $10,623        
    at September 30, 2015 and $10,730 at December 31, 2014     739,489       724,326  
  Federal Home Loan Bank stock, at cost     4,986       6,015  
  Bank-owned life insurance     25,471       15,027  
  Premises and equipment, net     9,157       9,418  
  Assets acquired through foreclosure     2,815       2,814  
  Real estate held for investment     1,620       1,620  
  Accrued interest receivable     3,174       3,147  
  Mortgage servicing rights, net     98       111  
  Deferred tax asset, net     4,451       4,561  
  Other assets     5,470       6,155  
    Total Assets   $ 1,098,797     $ 1,094,616  
             
LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES
  Deposits   $ 717,702     $ 711,909  
  Short-term borrowings     60,000       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     1,025       1,447  
  Accrued interest payable     310       311  
  Accrued expenses and other liabilities     3,758       5,038  
    Total Liabilities     922,795       918,705  
STOCKHOLDERS' EQUITY
   Preferred stock ($.01 par value; 1,000,000 shares authorized, none issued and outstanding at September 30, 2015 and December 31, 2014)     -       -  
   Common stock ($.01 par value; 60,000,000 shares authorized, 11,591,401 shares outstanding at September 30, 2015 and 11,802,791 shares outstanding at December 31, 2014)     147       147  
  Additional paid-in capital     140,805       139,177  
   Treasury stock, at cost (3,141,201 shares at September 30, 2015 and 2,852,572 at December 31, 2014)     (44,468 )     (39,698 )
  Common stock acquired by benefit plans     (6,878 )     (8,056 )
  Retained earnings     86,012       84,225  
  Accumulated other comprehensive income, net     384       116  
    Total Stockholders' Equity     176,002       175,911  
             
    Total Liabilities and Stockholders' Equity   $ 1,098,797     $ 1,094,616  


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,  
        2015       2015       2014       2014    
CAPITAL RATIOS:                  
Stockholders’ equity (to total assets) (1)     16.02 %     15.95 %     16.07 %     16.59 %  
                     
Common equity tier 1 capital ratio (to risk-weighted assets) (2)     16.93       16.86       N/A       N/A    
Tier 1 leverage ratio (to adjusted average assets) (2)     13.64       13.30       13.99       13.35    
Tier 1 capital ratio (to risk-weighted assets) (2)     16.93       16.86       18.97       19.18    
Total capital ratio (to risk-weighted assets) (2)     17.95       17.91       20.02       20.22    
                     
ASSET QUALITY INDICATORS:                  
Nonperforming Assets:                  
  Nonaccruing loans   $ 3,446     $ 3,002     $ 3,454     $ 3,641    
  Accruing loans past due 90 days or more     -       -       -       -    
  Total nonperforming loans   $ 3,446     $ 3,002     $ 3,454     $ 3,641    
  Assets acquired through foreclosure     2,815       2,819       2,814       1,889    
  Total nonperforming assets   $ 6,261     $ 5,821     $ 6,268     $ 5,530    
                     
  Ratio of nonperforming loans to total loans     0.46 %     0.41 %     0.47 %     0.50 %  
  Ratio of nonperforming assets to total assets     0.57       0.53       0.57       0.51    
  Ratio of allowance for loan losses to total loans     1.42       1.45       1.46       1.54    
  Ratio of allowance for loan losses to nonperforming loans     308.3       357.6       310.7       304.8    
Troubled Debt Restructurings:                  
  Nonaccruing troubled debt restructurings (3)   $ 1,123     $ 1,331     $ 1,401     $ 277    
  Accruing troubled debt restructurings     5,971       5,892       3,624       5,504    
  Total troubled debt restructurings   $ 7,094     $ 7,223     $ 5,025     $ 5,781    
                     
Past Due Loans:                  
  30 - 59 days   $ 541     $ 639     $ 113     $ 939    
  60 - 89 days     179       21       145       124    
  Total   $ 720     $ 660     $ 258     $ 1,063    
 
(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
      September 30,   June 30,   December 31,   September 30,  
        2015       2015       2014       2014    
PERFORMANCE RATIOS  (4):                  
  Return on average assets     0.85 %     1.15 %     0.79 %     0.67 %  
  Return on average equity     5.32       7.22       4.76       4.07    
  Net interest margin     3.18       3.24       3.18       3.20    
  Efficiency ratio (5)     65.1       64.3       63.3       56.7    
OTHER:                  
  Average commercial loans   $ 621,942     $ 630,577     $ 571,875     $ 593,847    
  Tangible book value per share - Core (6)   $ 15.15     $ 15.03     $ 14.89     $ 14.81    
  Tangible book value per share (7)   $ 15.18     $ 15.03     $ 14.90     $ 14.78    
  Employees (full-time equivalents)     138       136       138       141    
                     
                     
    At or for the Nine Months Ended          
      September 30,   September 30,          
        2015       2014            
PERFORMANCE RATIOS  (4):                  
  Average commercial loans   $ 622,664     $ 577,010            
  Return on average assets     0.94 %     0.74 %          
  Return on average equity     5.90       4.59            
  Net interest margin     3.24       3.19            
  Efficiency ratio (5)     63.9       60.4            
                     
(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) Total stockholders’ equity, excluding the impact of accumulated other comprehensive income (loss), net ($384,000 at September 30, 2015, ($99,000) at June 30, 2015, $116,000 at December 31, 2014 and $453,000 at September 30, 2014), 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,
          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 $ 10,586     $ 4       0.16 %   $ 6,815     $ 1       0.06 %
  Investment securities   304,386       1,659       2.18 %     322,178       1,777       2.21 %
  Loans (1)   735,872       8,243       4.45 %     730,410       8,375       4.56 %
  Allowance for loan losses   (10,731 )             (11,541 )        
  Net loans   725,141       8,243           718,869       8,375      
    Total interest-earning assets   1,040,113       9,906       3.79 %     1,047,862       10,153       3.85 %
Noninterest-earning assets   51,792               41,403          
  Total assets $ 1,091,905             $ 1,089,265          
Liabilities and equity:                      
Interest-bearing liabilities:                      
  Interest-bearing deposits $ 572,028     $ 745       0.52 %   $ 552,072     $ 760       0.55 %
  Borrowings   170,923       760       1.76 %     228,737       875       1.52 %
  Total interest-bearing liabilities   742,951       1,505       0.80 %     780,809       1,635       0.83 %
  Noninterest-bearing deposits   168,357               123,709          
  Other noninterest-bearing liabilities   5,505               6,407          
    Total liabilities   916,813               910,925          
  Stockholders' equity   175,047               178,984          
  Accumulated comprehensive income   45               (644 )        
    Total stockholders' equity   175,092               178,340          
    Total liabilities and stockholders' equity $ 1,091,905             $ 1,089,265          
                             
  Net interest income     $ 8,401             $ 8,518      
  Interest rate spread           2.99 %             3.02 %
  Net interest margin           3.18 %             3.20 %
                                 
  (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, 2015   June 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 $ 10,586     $ 4       0.16 %   $ 10,285     $ 3       0.13 %
  Investment securities   304,386       1,659       2.18 %     309,583       1,696       2.19 %
  Loans (1)   735,872       8,243       4.45 %     749,997       8,391       4.49 %
  Allowance for loan losses   (10,731 )             (11,919 )        
  Net loans   725,141       8,243           738,078       8,391      
    Total interest-earning assets   1,040,113       9,906       3.79 %     1,057,946       10,090       3.82 %
Noninterest-earning assets   51,792               42,400          
  Total assets $ 1,091,905             $ 1,100,346          
Liabilities and equity:                      
Interest-bearing liabilities:                      
  Interest-bearing deposits $ 572,028     $ 745       0.52 %   $ 585,892     $ 728       0.50 %
  Borrowings   170,923       760       1.76 %     156,130       709       1.82 %
  Total interest-bearing liabilities   742,951       1,505       0.80 %     742,022       1,437       0.78 %
  Noninterest-bearing deposits   168,357               177,223          
  Other noninterest-bearing liabilities   5,505               6,353          
    Total liabilities   916,813               925,598          
  Stockholders' equity   175,047               174,201          
  Accumulated comprehensive income   45               547          
    Total stockholders' equity   175,092               174,748          
    Total liabilities and stockholders' equity $ 1,091,905             $ 1,100,346          
                             
  Net interest income     $ 8,401             $ 8,653      
  Interest rate spread           2.99 %             3.04 %
  Net interest margin           3.18 %             3.24 %
                                 
  (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)
 
        Nine Months Ended September 30,
          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 $ 10,807     $ 10       0.13 %   $ 6,794     $ 2       0.05 %
  Investment securities   308,339       5,337       2.31 %     330,211       5,672       2.29 %
  Loans (1)   742,624       24,773       4.46 %     719,879       24,615       4.57 %
  Allowance for loan losses   (11,142 )             (11,566 )        
  Net loans   731,482       24,773           708,313       24,615      
    Total interest-earning assets   1,050,628       30,120       3.83 %     1,045,318       30,289       3.87 %
Noninterest-earning assets   45,631               44,496          
  Total assets $ 1,096,259             $ 1,089,814          
Liabilities and equity:                      
Interest-bearing liabilities:                      
  Interest-bearing deposits $ 568,128     $ 2,188       0.51 %   $ 562,000     $ 2,455       0.58 %
  Borrowings   172,394       2,206       1.71 %     221,806       2,574       1.55 %
  Total interest-bearing liabilities   740,522       4,394       0.79 %     783,806       5,029       0.86 %
  Noninterest-bearing deposits   173,989               121,770          
  Other noninterest-bearing liabilities   6,433               7,437          
    Total liabilities   920,944               913,013          
  Stockholders' equity   174,934               178,382          
  Accumulated comprehensive income   381               (1,581 )        
    Total stockholders' equity   175,315               176,801          
    Total liabilities and stockholders' equity $ 1,096,259             $ 1,089,814          
                             
  Net interest income     $ 25,726             $ 25,260      
  Interest rate spread           3.04 %             3.01 %
  Net interest margin           3.24 %             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

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