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Fox Chase Bancorp Inc. Reports Operating Results (10-Q)

August 06, 2009 | About:

Fox Chase Bancorp Inc. (FXCB) filed Quarterly Report for the period ended 2009-06-30.

FOX CHASE BANCORP INC. is the mid-tier stock holding company of Fox Chase Bank a federally chartered savings bank. The Bank offers traditional banking services and products from its main office in Hatboro Pennsylvania and other branch offices in Bucks Montgomery Chester Delaware and Philadelphia Counties in Pennsylvania and Atlantic and Cape May Counties in New Jersey. The bank\'s vision is to be the leading relationship-based business and consumer bank in the markets it chooses to serve by delivering financial products and services consistent with what the clients care about most. Serving a growing number of satisfied clients will drive earnings growth and profitability. Year-over-year earnings growth will enable the bank to choose to remain a viable profitable independent growth-oriented company. The bank\'s success will be achieved through a professional engaged and satisfied workforce that has an ownership stake in the company. Fox Chase Bancorp Inc. has a market cap of $134.2 million; its shares were traded at around $9.62 with a P/E ratio of 87.5 and P/S ratio of 2.8.

Highlight of Business Operations:

Total assets increased $238.4 million, or 25.6%, to $1.17 billion at June 30, 2009, compared to $931.3 million at December 31, 2008. Cash and cash equivalents increased $101.3 million from December 31, 2008 to June 30, 2009 as excess funds from deposit inflows were invested in interest-earning demand deposits in other banks and in money market funds. Loans increased $35.6 million from December 31, 2008 to June 30, 2009. Commercial and commercial real estate loans increased $49.7 million as we continue our strategic initiative to increase our commercial loan portfolio, while commercial construction loans decreased by $14.8 million as we de-emphasized construction lending during the quarter. Additionally, our one- to four-family real estate loans increased $3.9 million offset by a $2.3 million decrease in consumer loans. The modest increase in one-to four-family real estate loans was due to increased originations through our correspondent relationships, while the decrease in consumer loans was due to the Companys decision to de-emphasize these types of loans in the current economic environment. Mortgage related securities available-for-sale increased $88.2 million, primarily due to an increase in agency residential mortgage related securities. Investment related securities available for sale increased $12.2 million, primarily due to an increase in corporate securities. All of the increases in assets were directly funded by the increase in deposits.

Deposits increased $236.2 million, or 38.8%, from $608.5 at December 31, 2008 to $844.7 million at June 30, 2009. Money market accounts increased $57.8 million, or 57.0%, and certificates of deposits increased $175.0 million, or 46.8%, from December 31, 2008 to June 30, 2009. During March 2009, the Bank offered attractive rates on selected money market and

Stockholders equity increased $3.3 million to $124.5 million at June 30, 2009 compared to $121.2 million at December 31, 2008 primarily due to unrealized gains, net of taxes, on the investment portfolio of $4.3 million and net income of $899,000 offset by the repurchase of 266,589 shares of common stock at a cost of $2.6 million.

General. Net income decreased $6,000, or 2.0%, to $298,000 for the three months ended June 30, 2009 compared to $304,000 for the three months ended June 30, 2008, primarily due to a $536,000 increase in noninterest expense, a $342,000 increase in the provision for loan losses and a $24,000 increase in tax expense, offset by a $300,000 increase in net interest income and a $596,000 increase in other noninterest income. Noninterest expense for the three months ended June 30, 2009 included a special assessment by the Federal Deposit Insurance Corporation of $536,000 as well as a $270,000 increase related to the current year assessment compared to the same quarter in the prior year. Noninterest expense for the three months ended June 30, 2008 included an expense of $244,000 associated with final distributions from the Companys terminated pension plan in the second quarter of 2008. The increase in noninterest income was primarily related to the gain on sale of securities of $588,000 in the second quarter of 2009 offset by an other-than-temporary impairment loss recognized on a private label residential mortgage related security in the amount of $157,000. The Bank also reduced the valuation allowance on the mortgage servicing rights in the amount of $99,000 during the three months ended June 30, 2009.

Net income increased $250,000, or 38.5%, to $899,000 for the six months ended June 30, 2009 compared to $649,000 for the six months ended June 30, 2008, primarily due to an increase in net interest income of $1.2 million and an increase of $550,000 in noninterest income offset by an increase in noninterest expense of $765,000, an increase in the provision for loan losses of $562,000 and an increase in tax expense of $139,000. The increase in noninterest income of $550,000 was primarily the result of a gain on the sale of securities of $588,000 in the second quarter of 2009 offset by an other-than-temporary impairment loss recognized on a private label residential mortgage related security in the amount of $157,000. The Bank also had a net reduction in the valuation allowance on the mortgage servicing rights in the amount of $75,000. The increase in noninterest expense of $765,000 included a special assessment by the Federal Deposit Insurance Corporation of $536,000 for the six months ended June 30, 2009 as well as a $481,000 increase related to the current year assessment compared to the same period in the prior year. Noninterest expense for the six months ended June 30, 2008 included an expense of $297,000 associated with final distributions from the Companys terminated pension plan in the second quarter of 2008.

Net Interest Income. Net interest income increased $300,000, or 5.8%, to $5.4 million for the three months ended June 30, 2009 compared the same period in 2008 primarily due to an increase in total interest income of $1.9 million offset by a $1.6 million increase in total interest expense. The increase in total interest income was primarily due to an increase in average total interest earning assets of $294.8 million, offset by a decrease in the average yield on interest-earning assets from 5.34% to 4.60%. The increase in average balances of interest-earning assets was primarily due to: (1) an increase in the average balance of loans of $139.0 million year over year primarily related to the Companys focus on increasing its levels of commercial lending; (2) an increase in the average balance of mortgage related securities of $82.3 million year over year and (3) an increase in the average balance of money market funds of $33.6 million and interest-earning demand deposits of $30.0 million year over year, both a result of excess funds from deposit inflows. The decrease in yield on interest-earning assets was primarily due to a reduction in overall interest rates from 2008 to 2009 as well as a slight mix shift from higher yielding loans to interest earning deposits and money market funds.

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