UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

_______________________________________________________________

FORM 10-Q

__________________________________________________

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2015~~2016

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 000-54025

_________________________________________________________________

Fox Chase Bancorp, Inc.

(Exact name of registrant as specified in its charter)

_________________________________________________________________



Maryland		35-2379633
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

4390 Davisville Road, Hatboro, Pennsylvania		19040
(Address of principal executive offices)		(Zip Code)

(215) 283-2900

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

_______________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):



Large Accelerated Filer [ ]		Accelerated Filer [X ]
Non-Accelerated Filer [ ]		Smaller Reporting Company [ ]
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No ý

As of ~~October~~April 3130, ~~2015~~2016, there were 11,~~591~~769,~~401~~390 shares of the registrant’s common stock outstanding.

Table of Contents

	FOX CHASE BANCORP, INC.
	Table of Contents
		PageNo.
Part I. Financial Information
Item 1.	Financial Statements	3
	Consolidated Statements of Condition at September 30, 2015 (Unaudited) and December 31, 2014	3
	Consolidated Statements of Condition at March 31, 2016 (Unaudited) and December 31, 2015	3
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2015 and 2014 (Unaudited)	4
	Consolidated Statements of Operations for the Three Months Ended March 31, 2016 and 2015 (Unaudited)	4
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2015 and 2014 (Unaudited)	5
	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2016 and 2015 (Unaudited)	5
	Consolidated Statements of Changes in Equity for the Nine Months Ended September 30, 2015 and 2014 (Unaudited)	6
	Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2016 and 2015 (Unaudited)	6
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2015 and 2014 (Unaudited)	7
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2016 and 2015 (Unaudited)	7
	Notes to the Unaudited Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2827
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3736
Item 4.	Controls and Procedures	3836
Part II. Other Information
Item 1.	Legal Proceedings	3836
Item 1A.	Risk Factors	3836
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3837
Item 3.	Defaults Upon Senior Securities	3938
Item 4.	Mine Safety Disclosures	3938
Item 5.	Other Information	3938
Item 6.	Exhibits	3938
Signatures

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

FOX CHASE BANCORP, INC.

Consolidated Statements of Condition

(In Thousands, Except Share Data)

		September 30, 2015			December 31, 2014
		March 31, 2016			December 31, 2015
		(Unaudited)
ASSETS
	Cash and due from banks	$	~~322~~3,737		$	23,~~763~~413
	Interest-earning demand deposits in other banks	65,~~889~~375			144,~~450~~385
	Total cash and cash equivalents	79,~~211~~112			177,~~213~~798
	Investment securities available-for-sale	~~138~~135,~~756~~826			~~134~~139,~~037~~751
	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
	Investment securities held-to-maturity (fair value of $146,655 at March 31, 2016 and $149,850 at December 31, 2015)	144,528			150,190
	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
	Loans, net of allowance for loan losses of $10,570 at March 31, 2016 and $10,562 at December 31, 2015	776,669			767,683
	Federal Home Loan Bank stock, at cost	46,~~986~~186			6,~~015~~734
	Bank-owned life insurance	25,~~471~~902			1525,~~027~~687
	Premises and equipment, net	98,~~157~~895			9,~~418~~030
	Assets acquired through foreclosure	2,~~815~~615			2,~~814~~623
	Real estate held for investment	1,620			1,620
	Accrued interest receivable	3,~~174~~348			3,~~147~~145
	Mortgage servicing rights, net	9897			~~111~~104
	Deferred tax asset, net	43,~~451~~993			45,~~561~~142
	Other assets	512,~~470~~950			6,~~155~~096
	Total Assets	$	1,~~098~~131,~~797~~741		$	1,~~094~~125,~~616~~603
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
	Deposits	$	~~717~~815,~~702~~708		$	~~711~~764,~~909~~974
	Short-term borrowings	6015,000			5038,~~000~~496
	Federal Home Loan Bank advances	~~110~~90,000			~~120~~110,000
	Other borrowed funds	30,000			30,000
	Advances from borrowers for taxes and insurance	1,~~025~~350			1,~~447~~422
	Accrued interest payable	~~310~~302			~~311~~319
	Accrued expenses and other liabilities	31,~~758~~541			53,~~038~~478
	Total Liabilities	~~922~~953,~~795~~901			~~918~~948,~~705~~689
STOCKHOLDERS’ EQUITY
	Preferred stock ($.01 par value; 1,000,000 shares authorized, none issued and outstanding at September 30, 2015 and December 31, 2014)	—			—
	Preferred stock ($.01 par value; 1,000,000 shares authorized, none issued and outstanding at March 31, 2016 and December 31, 2015)	—			—
	Common stock ($.01 par value; 60,000,000 shares authorized, 11,591,401 shares outstanding at September 30, 2015 and 11,802,791 shares outstanding at December 31, 2014)	147			147
	Common stock ($.01 par value; 60,000,000 shares authorized, 11,767,590 shares outstanding at March 31, 2016 and December 31, 2015)	149			149
	Additional paid-in capital	~~140~~141,~~805~~833			~~139~~142,~~177~~189
	Treasury stock, at cost (3,141,201 shares at September 30, 2015 and 2,852,572 shares at December 31, 2014)	(44,468		)	(39,698		)
	Treasury stock, at cost (3,141,201 shares at March 31, 2016 and December 31, 2015)	(44,468		)	(44,468		)
	Common stock acquired by benefit plans	(65,~~878~~876		)	(86,~~056~~717		)
	Retained earnings	8685,~~012~~542			8486,~~225~~241
	Accumulated other comprehensive income, net	384			116
	Accumulated other comprehensive income (loss), net	660			(480		)
	Total Stockholders’ Equity	~~176~~177,~~002~~840			~~175~~176,~~911~~914
	Total Liabilities and Stockholders’ Equity	$	1,~~098~~131,~~797~~741		$	1,~~094~~125,~~616~~603

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

FOX CHASE BANCORP, INC.

Consolidated Statements of Operations

(In Thousands, Except Per Share Data)

(Unaudited)

		Three Months Ended September 30,						Nine Months Ended September 30,
		Three Months Ended March 31,
		2015			2014			2015			2014
		2016			2015
INTEREST INCOME
	Interest and fees on loans	$	8,~~243~~506		$	8,~~375~~139		$	~~24,773~~		$	~~24,615~~
	Interest and dividends on investment securities	1,~~659~~632			1,~~777~~982			~~5,337~~			~~5,672~~
	Other interest income	49			13			10			2
	Total Interest Income	910,~~906~~147			10,~~153~~124			~~30,120~~			~~30,289~~
INTEREST EXPENSE
	Deposits	~~745~~807			~~760~~715			~~2,188~~			~~2,455~~
	Short-term borrowings	2559			4532			79			~~100~~
	Federal Home Loan Bank advances	~~568~~557			~~577~~539			~~1,630~~			~~1,723~~
	Other borrowed funds	~~167~~180			~~253~~166			~~497~~			~~751~~
	Total Interest Expense	1,~~505~~603			1,~~635~~452			~~4,394~~			~~5,029~~
	Net Interest Income	8,~~401~~544			8,~~518~~672			~~25,726~~			~~25,260~~
	(Credit) provision for loan losses	(300		)	1,493			(1,095		)	1,593
	Provision for loan losses	45			472
	Net Interest Income after (Credit) Provision for Loan Losses	8,701			7,025			26,821			23,667
	Net Interest Income after Provision for Loan Losses	8,499			8,200
NONINTEREST INCOME
	Service charges and other fee income	~~377~~362			~~416~~384			~~1,200~~			~~1,192~~
	Net gain (loss) on sale of assets acquired through foreclosure	1			(15		)	(14		)	(136		)
	Income on bank-owned life insurance	215			120
	Income on bank-owned life insurance	202			121			444			358
	Equity in earnings of affiliate	(5		)	40
	Equity in earnings of affiliate	74			91			225			125
	Other	94			27
	Other	67			29			133			76
	Total Noninterest Income	666			571
	Total Noninterest Income	721			642			1,988			1,615
NONINTEREST EXPENSE
NONINTEREST EXPENSE
	Salaries, benefits and other compensation	3,943			3,719
	Salaries, benefits and other compensation	3,836			3,510			11,498			10,670
	Occupancy expense	430			477
	Occupancy expense	391			407			1,288			1,321
	Furniture and equipment expense	77			83
	Furniture and equipment expense	81			93			263			300
	Data processing costs	408			573
	Data processing costs	676			384			1,751			1,146
	Professional fees	538			363
	Professional fees	370			271			1,147			1,086
	Marketing expense	24			41
	Marketing expense	35			54			133			156
	FDIC premiums	134			119
	FDIC premiums	124			136			384			451
	Assets acquired through foreclosure expense	30			30
	Assets acquired through foreclosure expense	131			10			223			403
	Other	301			360
	Other	414			333			1,159			1,077
	Total Noninterest Expense	5,885			5,765
	Total Noninterest Expense	6,058			5,198			17,846			16,610
	Income Before Income Taxes	3,280			3,006
	Income Before Income Taxes	3,364			2,469			10,963			8,672
	Income tax provision	1,031			727
	Income tax provision	1,036			653			3,200			2,585
	Net Income	$	2,249		$	2,279
	Net Income	$	2,328		$	1,816		$	7,763		$	6,087
Earnings per share:
Earnings per share:
	Basic	$	0.20		$	0.21
	Basic	$	0.21		$	0.16		$	0.71		$	0.54
	Diluted	$	0.20		$	0.20
	Diluted	$	0.21		$	0.16		$	0.69		$	0.53

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

FOX CHASE BANCORP, INC.

Consolidated Statements of Comprehensive Income

(In Thousands, Unaudited)

		Three Months Ended September 30,						Nine Months Ended September 30,
		Three Months Ended March 31,
		2015			2014			2015			2014
		2016			2015
Net income		$	2,~~328~~249		$	12,~~816~~279		$	~~7,763~~		$	~~6,087~~
Other comprehensive income (loss):
Other comprehensive income:
	Unrealized holding gains (losses) on investment securities	675			(320		)	253			6,160
	Unrealized holding gains on investment securities	1,694			800
	Tax effect	(~~230~~583		)	~~109~~(276		)	~~(81~~		)	~~(2,174~~		)
	Net of tax amount	~~445~~1,111			~~(211~~524		)	~~172~~			~~3,986~~
	Accretion of unrealized loss on securities reclassified to held-to-maturity	5946			1641			~~151~~			16
	Tax effect	(2117		)	(615		)	~~(55~~		)	(6		)
	Net of tax amount	3829			1026			96			10
Other comprehensive income (loss)		483			(201		)	268			3,996
Other comprehensive income		1,140			550
Comprehensive income		$	23,~~811~~389		$	12,~~615~~829		$	~~8,031~~		$	~~10,083~~

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

FOX CHASE BANCORP, INC.

Consolidated Statements of Changes in Equity

~~Nine~~Three Months Ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015

(In Thousands Except Share Data, Unaudited)

	CommonStock		AdditionalPaid-inCapital			TreasuryStock			CommonStockAcquired byBenefit Plans			RetainedEarnings			AccumulatedOtherComprehensive(Loss) Income, net			TotalEquity
BALANCE - DECEMBER 31, 2013	$	146	$	137,593		$	(33,436	)	$	(9,272	)	$	82,885		$	(4,449	)	$	173,467
Purchase of treasury stock (116,600 shares)	—		—			(1,902		)	—			—			—			(1,902		)
Stock based compensation expense	—		894			—			—			—			—			894
ESOP shares allocated to employees	—		353			—			468			—			—			821
Issuance of stock for vested equity awards	—		(651		)	—			589			62			—			—
Common stock issued for exercise of vested stock options	1		391			—			—			—			—			392
Excess tax benefit from exercise of stock options and vesting of restricted stock	—		83			—			—			—			—			83
Dividends paid ($0.48 per share)	—		—			—			—			(5,553		)	—			(5,553		)
Net income	—		—			—			—			6,087			—			6,087
Other comprehensive income	—		—			—			—			—			3,996			3,996
BALANCE - SEPTEMBER 30, 2014	$	147	$	138,663		$	(35,338	)	$	(8,215	)	$	83,481		$	(453	)	$	178,285
	CommonStock		AdditionalPaid-inCapital			TreasuryStock			CommonStockAcquired byBenefit Plans			RetainedEarnings			AccumulatedOtherComprehensiveIncome, net			TotalEquity
BALANCE - DECEMBER 31, 2014	$	147	$	139,177		$	(39,698	)	$	(8,056	)	$	84,225		$	116		$	175,911
Purchase of treasury stock (288,629 shares)	—		—			(4,770		)	—			—			—			(4,770		)
Purchase of treasury stock (69,800 shares)	—		—			(1,137		)	—			—			—			(1,137		)
Stock based compensation expense	—		~~1,042~~310			—			—			—			—			~~1,042~~310
ESOP shares allocated to employees	—		~~350~~113			—			~~468~~156			—			—			~~818~~269
Issuance of stock for vested equity awards	—		(~~784~~333		)	—			~~710~~254			7479			—			—
Common stock issued for exercise of vested stock options	—		~~932~~—			—			—			—			—			~~932~~—
Excess tax benefit from exercise of stock options and vesting of restricted stock	—		88(3		)	—			—			—			—			88(3		)
Dividends paid ($0.54 per share)	—		—			—			—			(6,050		)	—			(6,050		)
Dividends paid ($0.26 per share)	—		—			—			—			(2,940		)	—			(2,940		)
Net income	—		—			—			—			72,~~763~~279			—			72,~~763~~279
Other comprehensive income	—		—			—			—			—			~~268~~550			~~268~~550
BALANCE - SEPTEMBER 30, 2015	$	147	$	140,805		$	(44,468	)	$	(6,878	)	$	86,012		$	384		$	176,002
BALANCE - MARCH 31, 2015	$	147	$	139,264		$	(40,835	)	$	(7,646	)	$	83,643		$	666		$	175,239
	CommonStock		AdditionalPaid-inCapital			TreasuryStock			CommonStockAcquired byBenefit Plans			RetainedEarnings			AccumulatedOtherComprehensive(Loss) Income, net			TotalEquity
BALANCE - DECEMBER 31, 2015	$	149	$	142,189		$	(44,468	)	$	(6,717	)	$	86,241		$	(480	)	$	176,914
Purchase of treasury stock	—		—			—			—			—			—			—
Stock based compensation expense	—		349			—			—			—			—			349
ESOP shares allocated to employees	—		158			—			156			—			—			314
Issuance of stock for vested equity awards	—		(913		)	—			685			228			—			—
Common stock issued for exercise of vested stock options	—		—			—			—			—			—			—
Excess tax benefit from exercise of stock options and vesting of restricted stock	—		50			—			—			—			—			50
Dividends paid ($0.28 per share)	—		—			—			—			(3,176		)	—			(3,176		)
Net income	—		—			—			—			2,249			—			2,249
Other comprehensive income	—		—			—			—			—			1,140			1,140
BALANCE - MARCH 31, 2016	$	149	$	141,833		$	(44,468	)	$	(5,876	)	$	85,542		$	660		$	177,840

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

FOX CHASE BANCORP, INC.

Consolidated Statements of Cash Flows

(In Thousands, Unaudited)

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2015			2014
	2016			2015
Cash Flows From Operating Activities
Net income	$	72,~~763~~249		$	62,~~087~~279
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
(Credit) provision for loan losses	(1,095		)	1,593
Provision for loan losses	45			472
Valuation adjustment for assets acquired through foreclosure	~~137~~16			~~282~~15
Depreciation	~~479~~135			~~533~~163
Net amortization of securities premiums and discounts	~~1,295~~366			~~1,430~~423
Deferred income tax (benefit) expense	(25		)	1,992
Deferred income tax benefit (expense)	550			(16		)
Stock compensation from benefit plans	~~1,860~~663			~~1,715~~579
Net loss on sale of assets acquired through foreclosure	14			136
Income on bank-owned life insurance	(215		)	(120		)
Income on bank-owned life insurance	(444		)	(358		)
Excess tax (benefit) expense from exercise of stock options and vesting of restricted stock	(50		)	3
Excess tax benefit from exercise of stock options and vesting of restricted stock	(88		)	(83		)
Decrease in mortgage servicing rights, net	7			5
Decrease in mortgage servicing rights, net	13			26
(Increase) decrease in accrued interest receivable and other assets	(7,110		)	2,675
Decrease in accrued interest receivable and other assets	1,105			303
Decrease in accrued interest payable, accrued expenses and other liabilities	(1,954		)	(716		)
Decrease in accrued interest payable, accrued expenses and other liabilities	(1,227		)	(737		)
Net Cash (Used in) Provided by Operating Activities	(5,298		)	5,762
Net Cash Provided by Operating Activities	9,787			12,919
Cash Flows from Investing Activities
Equity investment in unconsolidated entity	90			90
Investment securities - available-for-sale:
Purchases	~~(28,455~~—		)	(28,~~830~~056		)
Proceeds from maturities, calls and principal repayments	235,~~397~~536			287,~~303~~967
Investment securities - held-to-maturity:
Purchases	~~(5,823~~—		)	(95,~~767~~823		)
Proceeds from maturities, calls and principal repayments	195,~~375~~527			95,~~665~~817
Net decrease in loans	14,165			16,876
Net increase in loans	(9,031		)	(9,651		)
Purchases of loans and loan participations	~~(29,083~~—		)	(920,~~371~~968		)
Net decrease (increase) in Federal Home Loan Bank stock	1,029			(1,339		)
Net decrease in Federal Home Loan Bank stock	548			1,000
Purchase of bank-owned life insurance	(10,000		)	—
Purchases of premises and equipment	—			(37		)
Purchases of premises and equipment	(218		)	(261		)
Additions to assets acquired through foreclosure	(8		)	(5		)
Additions to assets acquired through foreclosure	(83		)	(17		)
Net Cash Provided by (Used in) Investing Activities	2,572			(29,756		)
Proceeds from sales and payments on assets acquired through foreclosure	246			4,504
Net Cash (Used in) Provided by Investing Activities	(15,360		)	35,853
Cash Flows from Financing Activities
Net increase (decrease) in deposits	5,793			(9,987		)
Net increase in deposits	50,734			91,120
Decrease in advances from borrowers for taxes and insurance	(~~422~~72		)	(~~525~~192		)
Proceeds from Federal Home Loan Bank advances	20,000			—
Principal payments on Federal Home Loan Bank advances	(20,000		)	(10,000		)
Principal payments on Federal Home Loan Bank advances	(30,000		)	(15,000		)
Net decrease in short-term borrowings	(23,496		)	(50,000		)
Net increase (decrease) in short-term borrowings	10,000			(20,500		)
Excess tax benefit (expense) from exercise of stock options and vesting of restricted stock	50			(3		)
Excess tax benefit from exercise of stock options and vesting of restricted stock	88			83
Purchase of treasury stock	—			(1,137		)
Proceeds from exercise of stock options	932			392
Cash dividends paid	(3,176		)	(2,940		)
Purchase of treasury stock	(4,770		)	(1,902		)
Net Cash Provided by Financing Activities	4,040			26,848
Cash dividends paid	(6,050		)	(5,553		)
Net Increase in Cash and Cash Equivalents	1,314			2,854
Net Cash Used in Financing Activities	(4,429		)	(52,992		)
Cash and Cash Equivalents – Beginning	7,798			17,213
Net Decrease in Cash and Cash Equivalents	(10,002		)	(4,220		)
Cash and Cash Equivalents – Ending	$	9,112		$	20,067
Cash and Cash Equivalents – Beginning	17,213			11,947
Cash and Cash Equivalents – Ending	$	7,211		$	7,727
Supplemental Disclosure of Cash Flow Information
Interest paid	$	41,~~395~~620		$	51,~~029~~495
Income taxes paid	$	~~3,035~~1		$	~~1,460~~—
Transfers of loans to assets acquired through foreclosure	$	~~315~~—		$	~~542~~—
Net (recoveries) charge-offs	$	(988	)	$	2,023
Net charge-offs	$	37		$	24

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

FOX CHASE BANCORP, INC

Notes to the Unaudited Consolidated Financial Statements

NOTE 1 - PRINCIPLES OF CONSOLIDATION AND PRESENTATION

Fox Chase Bancorp, Inc. (the "Bancorp" or "Fox Chase") is a Maryland corporation. The Bancorp’s primary business is holding ~~all of~~ the common stock of Fox Chase Bank (the "Bank") and making two loans to the Fox Chase Bank Employee Stock Ownership Plan (the "ESOP"). The Bancorp is authorized to pursue other business activities permissible by laws and regulations for bank holding companies.

The Bancorp is a bank holding company and is regulated by the Board of Governors of the Federal Reserve System. The Bank is a Pennsylvania state-chartered savings bank and is regulated by the Pennsylvania Department of Banking and Securities and the Federal Deposit Insurance Corporation (the "FDIC").

The Bancorp and the Bank (collectively referred to as the "Company" or the "Corporation") provide a wide variety of financial products and services to individuals and businesses through the Bank’s ten branches in Philadelphia, Richboro, Willow Grove, Warminster, Lahaska, Hatboro, and West Chester, Pennsylvania, and Ocean City, Marmora and Egg Harbor Township, New Jersey. The operations of the Company are managed as a single business segment. The Bank also owns 46.15% of Philadelphia Mortgage Advisors ("PMA"), a mortgage banker ~~located~~with offices in Plymouth Meeting and Doylestown, Pennsylvania and Ocean City, New Jersey.

The Company is subject to the regulations of certain federal and state banking agencies. These regulations can and do change significantly from period to period. The Company also undergoes periodic examinations by regulatory agencies, which may subject it to further changes with respect to asset valuations, amounts of required loan loss allowances and operating restrictions resulting from the regulators’ judgments based on information available to them at the time of their examinations.

The consolidated financial statements include the accounts of the Bancorp and the Bank. The Bank’s operations include the accounts of its wholly owned subsidiaries, Fox Chase Financial, Inc., Fox Chase Service Corporation, 104 S. Oakland Ave., LLC and Davisville Associates, LLC. Fox Chase Financial, Inc. is a Delaware-chartered investment holding company and its sole purpose is to manage and hold investment securities. Fox Chase Service Corporation is a Pennsylvania-chartered company and its sole purpose is to facilitate the Bank’s investment in PMA. 104 S. Oakland Ave., LLC is a New Jersey-chartered limited liability company formed to secure, manage and hold foreclosed real estate. Davisville Associates, LLC is a Pennsylvania-chartered limited liability company formed to secure, manage and hold foreclosed real estate. All material inter-company transactions and balances have been eliminated in consolidation. Prior period amounts are reclassified, when necessary, to conform with the current year’s presentation.

The Company follows accounting principles and reporting practices that are in compliance with U.S. generally accepted accounting principles ("GAAP"). The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclose contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

These interim financial statements do not contain all necessary disclosures required by GAAP for complete financial statements and therefore should be read in conjunction with the audited financial statements and the notes thereto included in Fox Chase Bancorp, Inc.’s Annual Report on Form 10-K for the year ended December 31, ~~2014~~2015, as filed with the Securities and Exchange Commission on March 64, ~~2015~~2016. These financial statements include all normal and recurring adjustments which management believes were necessary in order to conform to GAAP. The results for the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2015~~2016 or any other period.

Table of Contents

NOTE 1 - PRINCIPLES OF CONSOLIDATION AND PRESENTATION (CONTINUED)

Per Share Information

Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted-average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock. Average unallocated shares in the ESOP and shares purchased to fund the Bancorp’s equity incentive plans are not included in either basic or diluted earnings per share.

The following table presents the reconciliation of the numerators and denominators of the basic and diluted earnings per share computations.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

2015

2014

2015

2014

2016

2015

(Dollars in thousands except per share data, Unaudited)

(Unaudited)

Net income

2,~~328~~249,000

12,~~816~~279,000

~~7,763~~

~~6,087~~

Weighted-average common shares outstanding (1)

11,~~581~~767,~~257~~590

1211,~~075~~768,~~448~~571

~~11,661,023~~

~~12,110,185~~

Average common stock acquired by stock benefit plans:

ESOP shares unallocated

(~~448~~415,~~395~~800

)

(~~513~~480,~~441~~852

)

~~(464,495~~

)

~~(529,544~~

)

Shares purchased by trust

(~~213~~195,~~953~~115

)

(~~274~~260,~~123~~153

)

~~(235,200~~

)

~~(289,261~~

)

Weighted-average common shares used to calculate basic earnings per share

1011,~~918~~156,~~909~~675

11,~~287~~027,~~884~~566

~~10,961,328~~

~~11,291,380~~

Dilutive effect of:

Restricted stock awards

3243,~~370~~279

4246,~~294~~597

~~40,489~~

~~50,477~~

Stock option awards

~~196~~114,~~981~~434

193,~~739~~503

~~197,179~~

~~199,215~~

Weighted-average common shares used to calculate diluted earnings per share

11,~~148~~314,~~260~~388

11,~~523~~267,~~917~~666

~~11,198,996~~

~~11,541,072~~

Earnings per share - basic

0.2120

0.1621

~~0.71~~

~~0.54~~

Earnings per share - diluted

0.2120

0.1620

~~0.69~~

~~0.53~~

Outstanding common stock equivalents which are anti-dilutive

~~485~~71,~~060~~668

~~293~~508,~~500~~610

~~485,960~~

~~293,500~~

(1) Excludes treasury stock.

NOTE 2 - BUSINESS COMBINATIONS

Proposed Merger with Univest Corporation of Pennsylvania

On December 8, 2015, Univest Corporation of Pennsylvania ("Univest") and Fox Chase entered into a merger agreement (the "Merger Agreement") that provides that the Company will merge with and into Univest, with Univest remaining as the surviving entity. Following the merger, Fox Chase Bank will merge with and into Univest Bank and Trust Co., with Univest Bank and Trust Co. remaining as the surviving entity.

At the effective time of the Merger, Fox Chase shareholders will be entitled to elect to receive, for each share of Fox Chase common stock, subject to the election and adjustment procedures described in the joint proxy statement/prospectus, either 0.9731 shares of Univest common stock or $21.00 in cash; provided, however, that 60% of the total number of outstanding shares of Fox Chase common stock will be converted into Univest common stock, and the remaining outstanding shares of Fox Chase common stock will be converted into cash. As a result, if more Fox Chase shareholders elect to receive either Univest common stock or cash than is available as merger consideration under the merger agreement, those Fox Chase shareholders electing the over-subscribed form of consideration may have the over-subscribed consideration proportionately reduced and substituted with consideration in the alternative form.

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NOTE 2 - ~~INVESTMENT~~BUSINESS ~~AND~~COMBINATIONS ~~MORTGAGE RELATED SECURITIES~~(CONTINUED)

~~The~~Subject ~~amortized~~to ~~cost~~the ~~and~~satisfaction ~~fair~~or ~~value~~waiver of ~~securities~~the ~~available-for-sale~~closing conditions contained in the merger agreement, including the approval of the merger agreement by the Company’s and ~~held-to-maturity~~Univest's asshareholders and the receipt of ~~September 30~~required regulatory approvals, ~~2015~~Univest and ~~December 31~~the Company expect that the merger will be completed during the third quarter of 2016. However, ~~2014~~it ~~are~~is ~~summarized~~possible asthat ~~follows:~~ 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.

	September 30, 2015
	AmortizedCost		GrossUnrealizedGains		GrossUnrealizedLosses			FairValue
	(In thousands, Unaudited)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	301	$	3	$	—		$	304
Corporate securities	17,641		35		(30		)	17,646
Agency residential mortgage related securities	118,807		2,147		(148		)	120,806
Total available-for-sale securities	$	136,749	$	2,185	$	(178	)	$	138,756
Held-to-Maturity Securities:
Corporate securities	$	1,776	$	—	$	(5	)	$	1,771
Private label residential mortgage related securities	2,652		1		—			2,653
Agency residential mortgage related securities	151,671		1,766		(196		)	153,241
Total held-to-maturity securities	$	156,099	$	1,767	$	(201	)	$	157,665
	December 31, 2014
	AmortizedCost		GrossUnrealizedGains		GrossUnrealizedLosses			FairValue
	(In thousands)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	300	$	2	$	—		$	302
Corporate securities	8,053		33		—			8,086
Agency residential mortgage related securities	123,929		2,392		(672		)	125,649
Total available-for-sale securities	$	132,282	$	2,427	$	(672	)	$	134,037
Held-to-Maturity Securities:
Private label residential mortgage related securities	$	2,979	$	6	$	—		$	2,985
Agency residential mortgage related securities	167,193		1,239		(563		)	167,869
Total held-to-maturity securities	$	170,172	$	1,245	$	(563	)	$	170,854

NOTE 3 - INVESTMENT SECURITIES

The amortized cost and fair value of securities available-for-sale and held-to-maturity as of March 31, 2016 and December 31, 2015 are summarized as follows:



	March 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands, Unaudited)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	301	$	5	$	—		$	306
Corporate securities	17,608		107		—			17,715
Agency residential mortgage related securities	115,592		2,258		(45		)	117,805
Total available-for-sale securities	$	133,501	$	2,370	$	(45	)	$	135,826

Held-to-Maturity Securities:
Corporate securities	$	1,776	$	34	$	—		$	1,810
Private label residential mortgage related securities	2,452		11		—			2,463
Agency residential mortgage related securities	140,300		2,182		(100		)	142,382
Total held-to-maturity securities	$	144,528	$	2,227	$	(100	)	$	146,655

	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	301	$	—	$	(2	)	$	299
Corporate securities	17,625		9		(93		)	17,541
Agency residential mortgage related securities	121,195		1,597		(881		)	121,911
Total available-for-sale securities	$	139,121	$	1,606	$	(976	)	$	139,751

Held-to-Maturity Securities:
Corporate securities	$	1,776	$	—	$	(11	)	$	1,765
Private label residential mortgage related securities	2,522		—		(25		)	2,497
Agency residential mortgage related securities	145,892		663		(967		)	145,588
Total held-to-maturity securities	$	150,190	$	663	$	(1,003	)	$	149,850

Obligations of U.S. government agencies represents debt issued by the Federal Home Loan Bank (the "FHLB") and are not backed by the full faith and credit of the United States government.

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NOTE 23 - INVESTMENT ~~AND MORTGAGE RELATED~~ SECURITIES (CONTINUED)

The following tables show gross unrealized losses and fair value of securities, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015.

	September 30, 2015
	March 31, 2016
	Less than 12 Months					12 Months or More					Total
	FairValue		UnrealizedLosses			FairValue		UnrealizedLosses			FairValue		UnrealizedLosses
	(In thousands, Unaudited)
Available-for-Sale Securities:
Corporate securities	12,062		(30		)	—		—			12,062		(30		)
Agency residential mortgage related securities	$	2,587	$	(4	)	$	17,179	$	(41	)	$	19,766	$	(45	)
Agency residential mortgage related securities	$	23,424	$	(75	)	$	8,306	$	(73	)	$	31,730	$	(148	)
Total available-for-sale securities	$	2,587	$	(4	)	$	17,179	$	(41	)	$	19,766	$	(45	)
Total available-for-sale securities	$	35,486	$	(105	)	$	8,306	$	(73	)	$	43,792	$	(178	)
Held-to-Maturity Securities:
Corporate securities	1,771		(5		)	—		—			1,771		(5		)
Agency residential mortgage related securities	$	1,324	$	—		$	9,438	$	(100	)	$	10,762	$	(100	)
Agency residential mortgage related securities	$	7,726	$	(34	)	$	10,258	$	(162	)	$	17,984	$	(196	)
Total held-to-maturity securities	$	1,324	$	—		$	9,438	$	(100	)	$	10,762	$	(100	)
Total held-to-maturity securities	$	9,497	$	(39	)	$	10,258	$	(162	)	$	19,755	$	(201	)
Total temporarily impaired securities	$	3,911	$	(4	)	$	26,617	$	(141	)	$	30,528	$	(145	)
Total temporarily impaired securities	$	44,983	$	(144	)	$	18,564	$	(235	)	$	63,547	$	(379	)
	December 31, 2015
	December 31, 2014
	Less than 12 Months					12 Months or More					Total
	FairValue		UnrealizedLosses			FairValue		UnrealizedLosses			FairValue		UnrealizedLosses
	(In thousands)
Available-for-Sale Securities:
Agency residential mortgage related securities	$	8,229	$	(15	)	$	64,502	$	(657	)	$	72,731	$	(672	)
Obligations of U.S. government agencies	$	299	$	(2	)	$	—	$	—		$	299	$	(2	)
Total available-for-sale securities	$	8,229	$	(15	)	$	64,502	$	(657	)	$	72,731	$	(672	)
Corporate securities	15,015		(93		)	—		—			15,015		(93		)
Agency residential mortgage related securities	79,995		(716		)	7,927		(165		)	87,922		(881		)
Total available-for-sale securities	$	95,309	$	(811	)	$	7,927	$	(165	)	$	103,236	$	(976	)
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	25,660	$	(110	)	$	27,182	$	(453	)	$	52,842	$	(563	)
Corporate securities	$	1,766	$	(11	)	$	—	$	—		$	1,766	$	(11	)
Total held-to-maturity securities	$	25,660	$	(110	)	$	27,182	$	(453	)	$	52,842	$	(563	)
Private label residential mortgage related securities	2,497		(25		)	—		—			2,497		(25		)
Total temporarily impaired securities	$	33,889	$	(125	)	$	91,684	$	(1,110	)	$	125,573	$	(1,235	)
Agency residential mortgage related securities	80,741		(709		)	9,768		(258		)	90,509		(967		)
Total held-to-maturity securities	$	85,004	$	(745	)	$	9,768	$	(258	)	$	94,772	$	(1,003	)
Total temporarily impaired securities	$	180,313	$	(1,556	)	$	17,695	$	(423	)	$	198,008	$	(1,979	)

During the three ~~and nine~~ month periods ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015, no securities were sold. There were no net investment securities gains or losses in the consolidated statement of operations for the three ~~and nine~~ month periods ended ~~September~~March 3031, ~~2015~~2016 or ~~2014~~2015.

The Company evaluates a variety of factors when concluding whether a security is other-than-temporarily impaired. These factors include, but are not limited to, the type and purpose of the security, the underlying rating of the issuer, the presence of credit enhancements, the length of time a security has been in a loss position and the severity of the loss.

At September 30, 2015, gross unrealized losses totaled $379,000. Ten agency residential mortgage related securities, with a fair value of $18.6 million, had an unrealized loss position of $235,000 for twelve months or longer as of September 30, 2015. Additionally, 18 agency residential mortgage related securities, with a fair value of $31.2 million and an unrealized loss position of $109,000 and six corporate securities, with a fair value of $13.8 million and unrealized loss position of $35,000, had unrealized loss positions for less than twelve months as of September 30, 2015. The fair value of these 34 securities primarily fluctuates with changes in market conditions for the underlying securities and changes in the interest rate environment. The Company does not intend to sell the securities in an unrealized loss position and it is not more likely than not that it will be required to sell these securities before a recovery of fair value, which may be maturity. Upon review of the attributes of the individual securities, the Company concluded these securities were not other-than-temporarily impaired.

Table of Contents

NOTE 23 - INVESTMENT ~~AND MORTGAGE RELATED~~ SECURITIES (CONTINUED)

At ~~September~~March 3031, ~~2015~~2016, ~~the~~gross ~~amortized~~unrealized ~~cost~~losses totaled $145,000. Fifteen agency residential mortgage related securities, with a fair value of ~~held-~~$26.6 million, had an unrealized loss position of $141,000 for twelve months or longer as of March 31, 2016. Additionally, four agency residential mortgage related securities, with a fair value of $3.9 million and an unrealized loss position of $4,000, had unrealized loss positions for less than twelve months as of March 31, 2016. The fair value of these nineteen securities primarily fluctuates with changes in market conditions for the underlying securities and changes in the interest rate environment. The Company does not intend to- sell the securities in an unrealized loss position and it is not more likely than not that it will be required to sell these securities before a recovery of fair value, which may be maturity. Upon ~~investments~~review ~~consisted~~of the attributes of the ~~following~~individual ~~(in~~securities, ~~thousands):~~the Company concluded these securities were not other-than-temporarily impaired.

	OriginalCost		Unrealized Lossat Transfer			Post-transferAccretion			AmortizedCost
Securities transferred from available-for-sale	$	85,784	$	(1,625	)	$	(211	)	$	83,948
Other held-to-maturity securities	72,151		—			—			72,151
Total	$	157,935	$	(1,625	)	$	(211	)	$	156,099

At March 31, 2016, the amortized cost of held-to-maturity investments consisted of the following (in thousands):

As of September 30, 2015, the Company held one private label residential mortgage related security ("PLMBS") with an amortized cost of $2.7 million. This security had an unrealized gain of $1,000 at September 30, 2015. As of December 31, 2014, the Company held this same PLMBS at an amortized cost of $3.0 million and this security had an unrealized gain of $6,000 at December 31, 2014.



	Original Cost		Unrealized Loss at Transfer			Post-transfer Accretion			Amortized Cost
Securities transferred from available-for-sale	$	80,730	$	(1,625	)	$	(312	)	$	78,793
Other held-to-maturity securities	65,735		—			—			65,735
Total	$	146,465	$	(1,625	)	$	(312	)	$	144,528

The amortized cost and estimated fair value of investment securities available-for-sale and held-to-maturity at ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015 by contractual maturity are as follows:

	Available-for-Sale				Held-to-Maturity
	AmortizedCost		FairValue		AmortizedCost		FairValue
	(In thousands)
September 30, 2015 (Unaudited)
March 31, 2016 (Unaudited)
Due in one year or less	$	2,~~525~~508	$	2,~~542~~515	$	—	$	—
Due after one year through five years	15,~~417~~401		15,~~408~~506		1,776		1,~~771~~810
Due after five years through ten years	—		—		—		—
Due after ten years	—		—		—		—
Total mortgage related securities	~~118~~115,~~807~~592		~~120~~117,~~806~~805		~~154~~142,~~323~~752		~~155~~144,~~894~~845
	$	~~136~~133,~~749~~501	$	~~138~~135,~~756~~826	$	~~156~~144,~~099~~528	$	~~157~~146,~~665~~655
December 31, 2014
December 31, 2015
Due in one year or less	$	52,~~803~~517	$	52,~~818~~526	$	—	$	—
Due after one year through five years	215,~~550~~409		215,~~570~~314		—1,776		—1,765
Due after five years through ten years	—		—		—		—
Due after ten years	—		—		—		—
Total mortgage related securities	~~123~~121,~~929~~195		~~125~~121,~~649~~911		~~170~~148,~~172~~414		~~170~~148,~~854~~085
	$	~~132~~139,~~282~~121	$	~~134~~139,~~037~~751	$	~~170~~150,~~172~~190	$	~~170~~149,~~854~~850

Securities with a fair value of $4065.6 million and $3748.07 million at ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015, respectively, were pledged to secure public deposits.

Securities with a fair value of $~~165~~156.80 million and $~~169~~161.7 million at ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015, respectively, were used to secure FHLB advances, short-term borrowings, other borrowed funds and related unused borrowing capacities. See Note 67.

Securities with a fair value of $~~931,000 and $~~1.16 million and $900,000 at ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015, respectively, were used to secure derivative transactions. See Note 45.

Table of Contents

NOTE 34 - LOANS

The composition of net loans at ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015 is provided below:

	September 30, 2015			December 31, 2014
	March 31, 2016			December 31, 2015
	(In thousands)
	(Unaudited)
Real estate loans:
One- to four-family	$	9586,~~682~~393		$	~~108~~90,~~208~~339
Multi-family and commercial	~~404~~449,~~007~~581			~~388~~442,~~821~~612
Construction	3943,~~693~~130			3935,~~541~~794
	539,382			536,570
	579,104			568,745
Consumer loans	1513,~~550~~906			1914,~~599~~711
Commercial and industrial loans	~~195~~194,~~427~~570			~~179~~195,~~181~~078
Total loans	~~750~~787,~~359~~580			~~735~~778,~~350~~534
Deferred loan origination fees, net	(~~247~~341		)	(~~294~~289		)
Allowance for loan losses	(10,~~623~~570		)	(10,~~730~~562		)
Net loans	$	~~739~~776,~~489~~669		$	~~724~~767,~~326~~683

The following tables present changes in the allowance for loan losses by loan segment for the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016 and the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015.

	Nine Months Ended September 30, 2015
	Three Months Ended March 31, 2016
	One- toFour-Family			Multi-familyandCommercial			Construction			Consumer			CommercialandIndustrial			Unallocated			Total
	(In thousands, Unaudited)
Balance, beginning	$	~~405~~362		$	56,~~990~~464		$	~~1,038~~580		$	~~184~~134		$	2,~~753~~672		$	~~360~~350		$	10,~~730~~562
Provision (credit) for loan losses	144			107			(664		)	(825		)	37			106			(1,095		)
(Credit) provision for loan losses	(23		)	28			70			(12		)	108			(126		)	45
Loans charged off	~~(174~~—		)	~~(16~~—		)	—			—(54		)	—			—			(~~190~~54		)
Recoveries	—			637			~~295~~—			~~815~~10			5—			—			~~1,178~~17
Balance, ending	$	~~375~~339		$	6,~~144~~499		$	~~669~~650		$	~~174~~78		$	2,~~795~~780		$	~~466~~224		$	10,~~623~~570
	Nine Months Ended September 30, 2014
	Three Months Ended March 31, 2015
	One- toFour-Family			Multi-familyandCommercial			Construction			Consumer			CommercialandIndustrial			Unallocated			Total
	(In thousands, Unaudited)
Balance, beginning	$	~~403~~405		$	75,~~141~~990		$	~~324~~1,038		$	~~153~~184		$	32,~~051~~753		$	~~457~~360		$	1110,~~529~~730
(Credit) provision for loan losses	(209		)	(76		)	284			(21		)	1,590			25			1,593
Provision (credit) for loan losses	26			111			22			(47		)	349			11			472
Loans charged off	(344		)	~~(102~~—		)	—			(6—		)	~~(1,986~~—		)	—			(~~2,097~~44		)
Recoveries	29—			123			—			3317			—			—			7420
Balance, ending	$	~~220~~387		$	6,~~975~~104		$	~~608~~1,060		$	~~159~~154		$	23,~~655~~102		$	~~482~~371		$	11,~~099~~178

Table of Contents

NOTE 34 - LOANS (CONTINUED)

The following tables provide details of loans, and associated allowance for loan losses, which are individually or collectively evaluated for impairment as of ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015.

	As of September 30, 2015
	As of March 31, 2016
	One- toFour-Family		Multi-familyandCommercial		Construction		Consumer		CommercialandIndustrial		Unallocated		Total
	(In thousands, Unaudited)
Allowance for Loan Losses:
Balance, ending: individually evaluated for impairment	$	3—	$	~~537~~533	$	~~126~~135	$	38—	$	5453	$	—	$	~~758~~721
Balance, ending: collectively evaluated for impairment	~~372~~339		5,~~607~~966		~~543~~515		~~136~~78		2,~~741~~727		~~466~~224		9,~~865~~849
Total	$	~~375~~339	$	6,~~144~~499	$	~~669~~650	$	~~174~~78	$	2,~~795~~780	$	~~466~~224	$	10,~~623~~570
Total Loans:
Balance, ending: individually evaluated for impairment	$	21,~~411~~635	$	7,~~139~~076	$	3,~~393~~829	$	~~122~~177	$	~~730~~702	$	—	$	13,~~795~~419
Balance, ending: collectively evaluated for impairment	9384,~~271~~758		~~396~~442,~~868~~505		3639,~~300~~301		1513,~~428~~729		~~194~~193,~~697~~868		—		~~736~~774,~~564~~161
Total	$	9586,~~682~~393	$	~~404~~449,~~007~~581	$	3943,~~693~~130	$	1513,~~550~~906	$	~~195~~194,~~427~~570	$	—	$	~~750~~787,~~359~~580
	As of December 31, 2014
	As of December 31, 2015
	One- toFour-Family		Multi-familyandCommercial		Construction		Consumer		CommercialandIndustrial		Unallocated		Total
	(In thousands)
Allowance for Loan Losses:
Balance, ending: individually evaluated for impairment	$	113	$	~~401~~539	$	~~114~~135	$	2656	$	—54	$	—	$	~~552~~787
Balance, ending: collectively evaluated for impairment	~~394~~359		5,~~589~~925		~~924~~445		~~158~~78		2,~~753~~618		~~360~~350		109,~~178~~775
Total	$	~~405~~362	$	56,~~990~~464	$	~~1,038~~580	$	~~184~~134	$	2,~~753~~672	$	~~360~~350	$	10,~~730~~562
Total Loans:
Balance, ending: individually evaluated for impairment	$	21,~~629~~460	$	57,~~849~~111	$	23,~~723~~866	$	~~256~~171	$	75718	$	—	$	1113,~~532~~326
Balance, ending: collectively evaluated for impairment	~~105~~88,~~579~~879		~~382~~435,~~972~~501		3631,~~818~~928		1914,~~343~~540		~~179~~194,~~106~~360		—		~~723~~765,~~818~~208
Total	$	~~108~~90,~~208~~339	$	~~388~~442,~~821~~612	$	3935,~~541~~794	$	1914,~~599~~711	$	~~179~~195,~~181~~078	$	—	$	~~735~~778,~~350~~534

Table of Contents

NOTE 34 - LOANS (CONTINUED)

The following tables set forth the breakdown of impaired loans by loan segment as of ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015.

September 30, 2015

March 31, 2016

NonaccrualLoans

AccruingTDRs

OtherImpaired Loans

TotalImpaired Loans

Impaired LoanswithAllowance

Impaired LoanswithoutAllowance

(In thousands, Unaudited)

Real estate loans:

One- to four-family

~~1,530~~759

~~881~~876

—

21,~~411~~635

~~210~~—

21,~~201~~635

Multi-family and commercial

1,~~076~~066

1,685

4,~~378~~325

7,~~139~~076

6,~~368~~305

771

Construction

—

3,~~393~~829

—

3,~~393~~829

—

Consumer loans

~~110~~79

1298

—

~~122~~177

46—

76177

Commercial and industrial

~~730~~702

—

~~730~~702

—

Total

32,~~446~~606

56,~~971~~488

4,~~378~~325

13,~~795~~419

10,~~747~~836

32,~~048~~583

December 31, 2014

December 31, 2015

NonaccrualLoans

AccruingTDRs

OtherImpaired Loans

TotalImpaired Loans

Impaired LoanswithAllowance

Impaired LoanswithoutAllowance

(In thousands)

Real estate loans:

One- to four-family

~~1,741~~583

~~888~~877

—

21,~~629~~460

~~137~~117

21,~~492~~343

Multi-family and commercial

1,~~395~~074

—1,685

4,~~454~~352

57,~~849~~111

46,~~502~~340

~~1,347~~771

Construction

—

23,~~723~~866

—

23,~~723~~866

—

Consumer loans

~~243~~159

1312

—

~~256~~171

8257

~~174~~114

Commercial and industrial

75718

—

75718

—718

75—

Total

32,~~454~~534

36,~~624~~440

4,~~454~~352

1113,~~532~~326

711,~~444~~098

42,~~088~~228

There were no loans past due 90 days or more and still accruing interest at ~~September~~March 3031, ~~2015~~2016 or December 31, ~~2014~~2015.

For the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015, the average recorded investment in impaired loans was $13.96 million and $1312.54 million, respectively. The interest income recognized on these impaired loans was $~~631~~163,000 and $~~384~~141,000 for the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015, respectively.

At ~~September~~both December 3031, 2015 and March 31, 2016, two troubled debt restructurings ("TDRs") totaling $1.1 million are excluded from the accruing TDR column above as they are included in nonaccrual loans. Of this amount, $1.0 million relates to one multi-family and commercial real estate loan and $93,000 relates to one residential loan.

At December 31, 2014, four TDRs totaling $1.4 million are excluded from the accruing TDR column as they are included in nonaccrual loans. Of this amount, $1.1 million relates to one multi-family and commercial real estate loan and $336,000 relates to three residential loans.

Table of Contents

NOTE 34 - LOANS (CONTINUED)

The following tables set forth the allowance for loan loss for impaired loans and general allowance by loan segment as of ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015.

September 30, 2015	Allowance for Loan Losses
March 31, 2016	Allowance for Loan Losses
	Impaired Loans
	NonaccrualLoans		AccruingTDRs		OtherImpaired Loans		TotalImpaired Loans
									General		Total
	(In thousands, Unaudited)
Real estate loans:
One- to four-family	$	3—	$	—	$	—	$	3—	$	~~372~~339	$	~~375~~339
Multi-family and commercial	~~113~~118		4546		~~379~~369		~~537~~533		5,~~607~~966		6,~~144~~499
Construction	—		~~126~~135		—		~~126~~135		~~543~~515		~~669~~650
Consumer loans	38—		—		—		38—		~~136~~78		~~174~~78
Commercial and industrial	5453		—		—		5453		2,~~741~~727		2,~~795~~780
Unallocated	—		—		—		—		~~466~~224		~~466~~224
Total allowance for loan losses	$	~~208~~171	$	~~171~~181	$	~~379~~369	$	~~758~~721	$	9,~~865~~849	$	10,~~623~~570
December 31, 2014	Allowance for Loan Losses
December 31, 2015	Allowance for Loan Losses
	Impaired Loans
	NonaccrualLoans		AccruingTDRs		OtherImpaired Loans		TotalImpaired Loans
									General		Total
	(In thousands)
Real estate loans:
One- to four-family	$	113	$	—	$	—	$	113	$	~~394~~359	$	~~405~~362
Multi-family and commercial	10119		—46		~~391~~374		~~401~~539		5,~~589~~925		56,~~990~~464
Construction	—		~~114~~135		—		~~114~~135		~~924~~445		~~1,038~~580
Consumer loans	2656		—		—		2656		~~158~~78		~~184~~134
Commercial and industrial	—54		—		—		—54		2,~~753~~618		2,~~753~~672
Unallocated	—		—		—		—		~~360~~350		~~360~~350
Total allowance for loan losses	$	47232	$	~~114~~181	$	~~391~~374	$	~~552~~787	$	109,~~178~~775	$	10,~~730~~562

Table of Contents

NOTE 34 - LOANS (CONTINUED)

The Company may, under certain circumstances, restructure loans as a concession to borrowers who have experienced financial difficulty, which results in a TDR. TDRs are impaired loans. TDRs typically result from the Company’s loss mitigation activities, which, among other activities, could include extension of maturity, rate reductions, delayed repayment or extension, and/or principal forgiveness.

The following table sets forth a summary of the TDR activity for the three ~~and nine~~ month periods ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015.

	Three Months Ended September 30, 2015						Nine Months Ended September 30, 2015
	Three Months Ended March 31, 2016
	Restructured Current Period						~~Restructured Current Period~~
	Numberof Loans	Pre-ModificationOutstandingRecorded Investment		Post-ModificationOutstandingRecorded Investment		Type ~~of Modification~~ofModification	~~Numberof Loans~~	~~Pre-ModificationOutstandingRecorded Investment~~		~~Post-ModificationOutstandingRecorded Investment~~		~~Type ofModification~~
	(Dollars in thousands, Unaudited)						~~(Dollars in thousands, Unaudited)~~
Real estate loans:
One- to four-family	—	$	—	$	—		—	$	—	$	—
Multi-family and commercial	—	—		—			1	~~914~~		~~914~~		~~Delayed Repayment~~
Construction	—	—		—			—	—		—
Consumer loans	—1	—86		—86		Delayed repayment	—	—		—
Commercial and industrial	—	—		—			1	~~771~~		~~771~~		~~Delayed Repayment~~
Total	—1	$	—86	$	—86		2	$	~~1,685~~	$	~~1,685~~
	Three Months Ended September 30, 2014						Nine Months Ended September 30, 2014
	Three Months Ended March 31, 2015
	Restructured Current Period						~~Restructured Current Period~~
	Numberof Loans	Pre-ModificationOutstandingRecorded Investment		Post-ModificationOutstandingRecorded Investment		Type ~~of Modification~~ofModification	~~Numberof Loans~~	~~Pre-ModificationOutstandingRecorded Investment~~		~~Post-ModificationOutstandingRecorded Investment~~		~~Type ofModification~~
	(Dollars in thousands, Unaudited)						~~(Dollars in thousands, Unaudited)~~
Real estate loans:
One- to four-family	—	$	—	$	—		1	$	~~245~~	$	~~245~~	~~Principal reduction~~
Multi-family and commercial	—1	—914		—914		Delayed repayment	1	~~1,640~~		~~1,540~~		~~Principal reduction~~
Construction	—	—		—			—	—		—
Consumer loans	—	—		—			—	—		—
Commercial and industrial	—	—		—			—	—		—
Total	—1	$	—914	$	—914		2	$	~~1,885~~	$	~~1,785~~

During the three ~~and nine~~ months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015, no TDRs defaulted that were restructured in the prior twelve months.

At ~~September~~March 3031, 2016 and December 31, 2015, the recorded investment of residential and consumer mortgage loans secured by residential real estate properties, for which formal foreclosure proceedings are in process, totaled $~~365~~277,000 and $364,000, respectively. At ~~September~~March 3031, 2016 and December 31, 2015, there were ~~five~~three foreclosed residential real estate properties, which were carried at $~~315~~106,000 and $122,000, respectively.

Table of Contents

NOTE 34 - LOANS (CONTINUED)

The following table sets forth past due loans by segment as of ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015.

	September 30, 2015				December 31, 2014
	March 31, 2016				December 31, 2015
	30-59DaysPast Due		60-89DaysPast Due		30-59DaysPast Due		60-89DaysPast Due
	(In thousands)
	(Unaudited)
One- to four-family real estate	$	~~122~~286	$	15—	$	—865	$	~~145~~685
Multi-family and commercial real estate	~~350~~—		92—		—		—
Construction	—		—		—		—
Consumer	69126		7270		~~113~~156		—
Commercial and industrial	—		—		—		—
Total	$	~~541~~412	$	~~179~~70	$	~~113~~1,021	$	~~145~~685

We use six primary classifications for loans: pass, pass watch, special mention, substandard, doubtful and loss, of which three classifications are for problem loans: substandard, doubtful and loss. "Substandard loans" must have one or more well defined weaknesses and are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. "Doubtful loans" have the weaknesses of substandard loans with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss. A loan classified "loss" is considered uncollectible and of such little value that continuance as a loan of the institution is not warranted. We also maintain a "special mention" category, described as loans which do not currently expose us to a sufficient degree of risk to warrant classification but do possess credit deficiencies or potential weaknesses deserving our close attention. If we classify an asset as loss, it is recorded as a loan charged off in the current period.

The following tables set forth criticized and classified loans by segment as of ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015.

September 30, 2015

March 31, 2016

One- toFour-Family

Multi-familyandCommercial

Construction

Consumer

CommercialandIndustrial

Total

(In thousands, Unaudited)

Pass and Pass watch

9485,~~152~~634

~~388~~433,~~682~~186

3639,~~276~~301

1513,~~440~~827

~~191~~190,~~080~~528

~~725~~762,~~630~~476

Special mention

—

1314,~~898~~376

—

2,~~498~~295

16,~~396~~671

Substandard

~~1,530~~759

12,~~427~~019

3,~~417~~829

~~110~~79

1,~~849~~747

8,~~333~~433

Doubtful

—

Total loans

9586,~~682~~393

~~404~~449,~~007~~581

3943,~~693~~130

1513,~~550~~906

~~195~~194,~~427~~570

~~750~~787,~~359~~580

December 31, 2014

December 31, 2015

One- toFour-Family

Multi-familyandCommercial

Construction

Consumer

CommercialandIndustrial

Total

(In thousands)

Pass and Pass watch

~~106~~89,~~467~~756

~~376~~427,~~134~~393

3631,~~229~~927

1914,~~357~~552

~~174~~191,~~143~~496

~~712~~755,~~330~~124

Special mention

—

813,~~406~~958

~~2,723~~—

—

31,~~012~~799

1415,~~141~~757

Substandard

~~1,741~~583

41,~~281~~261

~~589~~3,867

~~242~~159

21,~~026~~783

87,~~879~~653

Doubtful

—

Total loans

~~108~~90,~~208~~339

~~388~~442,~~821~~612

3935,~~541~~794

1914,~~599~~711

~~179~~195,~~181~~078

~~735~~778,~~350~~534

Table of Contents

NOTE 45 - DERIVATIVES AND HEDGING

Interest Rate Swaps

On November 3, 2006, the Company entered into an interest rate swap with a current notional amount of $~~735~~691,000, which is used to hedge a 15-year fixed rate loan that is earning interest at 7.43%. The Company is receiving variable rate payments of 1-month LIBOR plus 224 basis points and is paying fixed rate payments of 7.43%. The swap matures in April 2022 and had a fair value loss position of $~~107~~97,000 and $~~116~~92,000 at ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015, respectively. The interest rate swap is carried at fair value in accordance with FASB ASC 815 "Derivatives and Hedging." The loan is carried at fair value under the fair value option as permitted by FASB ASC 825 "Financial Instruments."

On October 12, 2011, the Company entered into an interest rate swap with a current notional amount of $1.5 million, which is used to hedge a 10-year fixed rate loan that is earning interest at 5.83%. The Company is receiving variable rate payments of 1-month LIBOR plus 350 basis points and is paying fixed rate payments of 5.83%. The Company designated this relationship as a fair value hedge. The swap matures in October 2021 and had a fair value loss position of $7792,000 and $4656,000 at ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015, respectively. The difference between changes in the fair values of the interest rate swap agreement and the hedged loan represents hedge ineffectiveness and is recorded in other non-interest income in the consolidated statements of operations. Hedge ineffectiveness resulted in expense of $31,000 and $23,000 for the three months ended ~~September~~March 3031, ~~2015~~2016 and ~~September~~March 3031, ~~2014, respectively. Hedge ineffectiveness resulted in expense of $2,000 and $12,000 for the nine months ended September 30,~~ 2015 ~~and September 30~~, ~~2014,~~ respectively.

Credit Derivatives

We have entered into agreements with a third-party financial institution whereby the financial institution enters into interest rate derivative contracts and foreign currency swap contracts with customers referred to them by us. By the terms of the agreements, the financial institution has recourse to the Company for any exposure created under each swap contract in the event the customer defaults on the swap agreement and the agreement is in a paying position to the third-party financial institution. These transactions represent credit derivatives and are a customary arrangement that allows financial institutions like ours to provide access to interest rate and foreign currency swap transactions for our customers without creating the swap ourselves. The Company records the fair value of credit derivatives in other liabilities on the consolidated statement of condition. The Company recognizes changes in the fair value of credit derivatives, net of any fees received, as service charges and other fee income in the consolidated statements of operations.

At ~~September~~March 3031, ~~2015~~2016, there were four variable-rate to fixed-rate interest rate swap transactions between the third-party financial institution and our customers with a notional amount of $12.31 million, and remaining maturities ranging from ~~four~~three to seven years. At December 31, ~~2014~~2015, there were four variable-rate to fixed-rate interest swap transactions between the third-party financial institution and our customers with a notional amount of $12.62 million, and remaining maturities ranging from ~~five~~four to ~~eight~~seven years. The fair value of the swaps to the customers was a (liability) ~~asset~~ of ($~~195~~360,000) and $9153,000 as of ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015, respectively, and all swaps were in paying positions to the third-party financial institution at ~~September~~March 3031, ~~2015~~2016. As of ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015, the fair value of the Company’s interest rate swap credit derivatives was a liability of $8,000 and $106,000, respectively. During the three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014, the Company recognized expense of $3,000 and $1,000, respectively, from interest rate swap credit derivatives. During the nine months ended September 30,~~ 2015 ~~and 2014~~, the Company recognized ~~income~~ (expense) income of ($32,000) and ($23,000), respectively, from interest rate swap credit derivatives.

At ~~September~~March 3031, ~~2015,~~2016 ~~there were four foreign currency swap transactions between the third-party financial institution~~ and ~~our customers with a notional amount of $1.2 million, and remaining maturities ranging from one to three months. At~~ December 31, ~~2014~~2015, there were ~~six~~no foreign currency swap transactions between the third-party financial institution and our customers ~~with a notional amount of $366,000 and remaining maturities ranging from one to four months~~. The aggregate fair value of these swaps to the customers was a liability of $4,000 and $44,000 as of September 30, 2015 and December 31, 2014, respectively. At September 30, 2015 and December 31, 2014, the fair value of the Company’s credit derivatives was a liability of $2,000. During the three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015, the Company recognized income of $~~1,000~~0 and $2,000, respectively, from foreign currency swap credit derivatives. ~~During~~ ~~the nine months ended September 30, 2015 and 2014, the Company recognized income of $3,000 and $4,000, respectively, from foreign currency swap credit derivatives.~~

The maximum potential payments by the Company to the financial institution under these credit derivatives are not estimable as they are contingent on future interest rates and exchange rates, and the agreement does not provide for a limitation of the maximum potential payment amount.

Table of Contents

NOTE 56 - DEPOSITS

Deposits and their respective weighted average interest rate at ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015 consist of the following:

	September 30, 2015				December 31, 2014
	March 31, 2016				December 31, 2015
	WeightedAverageInterest Rate		Amount		WeightedAverageInterest Rate		Amount
	(Dollars in thousands)
	(Unaudited)
Noninterest-bearing demand accounts	—	%	$	~~137~~225,~~382~~083	—	%	$	~~168~~170,~~791~~327
NOW accounts	0.2120		8998,~~018~~019		0.2120		8297,~~417~~838
Money market accounts	0.2226		79105,~~057~~184		0.2228		7393,~~802~~325
Savings and club accounts	0.3845		~~128~~145,~~973~~110		0.3745		~~129~~142,~~893~~966
Brokered deposits	0.7691		7852,~~460~~378		0.7376		7078,~~817~~481
Certificates of deposit	0.8386		~~204~~189,~~812~~934		0.8788		~~186~~182,~~189~~037
	0.44	%	$	717,702	0.42	%	$	711,909
	0.40	%	$	815,708	0.43	%	$	764,974

NOTE 67 - BORROWINGS

FHLB Advances

Pursuant to collateral agreements with the FHLB of Pittsburgh, advances are secured by qualifying first mortgage loans, qualifying fixed-income securities, FHLB stock and an interest-bearing demand deposit account with the FHLB.

Maturity Date	Amount		Coupon Rate		Call Date	Rate if Called
	(In thousands, Unaudited)
March 2016	10,000		0.60	%	Not Applicable	Not Applicable
September 2016	$	5,000	0.75	%	Not Applicable	Not Applicable
March 2016	10,000		0.62		Not Applicable	Not Applicable
September 2016	5,000		0.75		Not Applicable	Not Applicable
September 2016	10,000		1.04		Not Applicable	Not Applicable
June 2017	5,000		0.94		Not Applicable	Not Applicable
July 2017	10,000		0.92		Not Applicable	Not Applicable
November 2017	15,000		3.62		~~November~~May ~~2015~~2016	3-month LIBOR + 0.10%
November 2017	15,000		3.87		~~November~~May ~~2015~~2016	3-month LIBOR + 0.10%
December 2017	20,000		2.83		~~December~~June ~~2015~~2016	3-month LIBOR + 0.11%
July 2018	10,000		1.32		Not Applicable	Not Applicable
	$	~~110~~90,000	2.0234	%

For the borrowings which have a "Call Date" disclosed in the above table, if the borrowing is called, the Bank has the option to either pay off the borrowing without penalty or the borrowings' fixed rate resets to a variable 3-month LIBOR based rate, as noted in the above table. Subsequent to the call date, the borrowings are callable by the FHLB quarterly. Accordingly, the contractual maturities above may differ from actual maturities.

The Bank had a maximum borrowing capacity with the FHLB of Pittsburgh of approximately $~~470~~496.41 million at ~~September~~March 3031, ~~2015~~2016. As of ~~September~~March 3031, ~~2015~~2016, the Bank had qualifying collateral pledged against its advances consisting of loans in the amount of $~~587~~632.40 million and securities in the amount of $6863.87 million. Additionally, as of ~~September~~March 3031, ~~2015~~2016, the Bank had a maximum borrowing capacity of $6157.46 million with the Federal Reserve Bank of Philadelphia through the Discount Window. This borrowing capacity was generated by pledged securities with a fair value of $6258.34 million.

As a member of the FHLB of Pittsburgh, the Bank is required to acquire and hold shares of FHLB of Pittsburgh capital stock. The FHLB stock holding requirement is based on a percentage of the Bank's borrowings and a percentage of the Bank's "eligible assets" as defined by the FHLB. Percentages of borrowings and "eligible assets" used to determine the stock holding requirement are set by the FHLB from a defined range. Maximum percentages are 6.00% of its advances plus 1.00% of the Bank’s "eligible assets." Minimum percentages are 2.00% of its advances plus 0.05% of "eligible assets." Current percentages are 4.00% of advances plus 0.10% of "eligible assets." As of ~~September~~March 3031, ~~2015~~2016, the Company had a minimum stock obligation of $2.52 million and a maximum stock obligation of $1211.56 million. The Company held $56.02 million in FHLB stock at that date.

Table of Contents

NOTE 67 - BORROWINGS (CONTINUED)

Other Borrowed Funds

Other borrowed funds obtained from other commercial banks under security repurchase agreements totaled $30.0 million at ~~September~~March 3031, ~~2015~~2016. These borrowings contractually mature with dates ranging from October 2018 through November 2020. As disclosed in the table below, one of the borrowings may be called by the lender based on the underlying agreement. Accordingly, the contractual maturity below may differ from actual maturity.

				Next Call Date	Subsequent Call Frequency
Maturity Date	Amount		Coupon Rate
	(In thousands, Unaudited)
October 2018	$	5,000	3.15%	~~October~~April ~~2015~~2016	Quarterly
December 2018	5,000		1-month LIBOR + 2.03%	Not Applicable	Not Applicable
September 2019	10,000		1-month LIBOR + 1.89%	Not Applicable	Not Applicable
September 2020	5,000		1-month LIBOR + 1.56%	Not Applicable	Not Applicable
November 2020	5,000		1-month LIBOR + 1.58%	Not Applicable	Not Applicable
	$	30,000

Mortgage backed securities with a fair value of $3433.79 million at ~~September~~March 3031, ~~2015~~2016 were used to secure these other borrowed funds. Changes in the fair value of pledged collateral may require the Company to pledge additional securities.

Short-term Borrowings

Short-term borrowings consist of overnight borrowings plus term borrowings with an original maturity of less than one year. Short-term borrowings are obtained from commercial banks, participants in the Federal Funds market and the FHLB. As of ~~September~~March 3031, ~~2015~~2016, the Company had $6015.0 million of ~~short-term~~ overnight borrowings with a weighted average rate of 0.3652% . As of December 31, ~~2014~~2015, the Company had $5038.05 million of ~~short-term borrowings consisting of $35.0 million of~~ overnight borrowings ~~and $15.0 million of short-term borrowings~~ with a weighted average ~~rates~~rate of 0.3143% ~~and 0~~.~~33%, respectively.~~

NOTE 78 - STOCK BASED COMPENSATION

During the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016, the Company recorded $~~1.0~~349,000 ~~million~~ of stock based compensation expense comprised of stock option expense of $~~348~~115,000 and restricted stock expense of $~~694~~234,000. This compares to $~~894~~310,000 of stock based compensation expense for the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2015 comprised of stock option expense of $~~328~~112,000 and restricted stock expense of $~~566~~198,000.

The following is a summary of the Bancorp’s stock option activity and related information for the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016.

	Number ofStock Options		Weighted AverageExercise Price		Weighted AverageRemainingContractual Life	AggregateIntrinsic Value
	(Unaudited)
Outstanding at December 31, 2014	1,100,520		$	12.96	5.3 years	$	4,172,000
Outstanding at December 31, 2015	715,554		$	14.45	6.1 years	$	4,182,000
Granted	~~130,500~~—		~~16.99~~—
Exercised	~~(77,239~~—	)	~~12.08~~—
Forfeited/Cancelled	~~(19,800~~—	)	~~15.35~~—
Outstanding at September 30, 2015	1,133,981		$	13.44	5.2 years	$	4,441,000
Outstanding at March 31, 2016	715,554		$	14.45	5.9 years	$	3,488,000
Exercisable at September 30, 2015	765,479		$	12.13	3.8 years	$	4,006,000
Exercisable at March 31, 2016	428,292		$	13.40	4.8 years	$	2,537,000

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NOTE 78 - STOCK BASED COMPENSATION (CONTINUED)

The ~~fair~~following ~~value~~is a summary of the ~~options~~Bancorp’s ~~granted~~unvested ~~during~~options ~~the~~as ~~nine~~of ~~months ended September~~March 3031, ~~2015~~2016 ~~was~~and ~~estimated~~the tochanges betherein ~~$2.24~~during -the ~~$3.24. The~~three ~~fair~~months ~~value~~then ~~was based on the following assumptions:~~ended.

Expected Dividend Yield				4.00	%
		Number ofStock Options			Weighted AverageGrant DateFair Value
Expected Volatility	22.45	%	-	29.86	%
		(Unaudited)
Risk-Free Interest Rate	1.65	%	-	1.74	%
Unvested at December 31, 2015		366,362			$	3.68
Expected Option Life in Years				6.5
Granted		—			—
Vested		(79,100	)		3.88
Forfeited / Cancelled		—			—
Unvested at March 31, 2016		287,262			$	3.63

~~The~~Expected ~~following~~future isexpense arelating ~~summary~~to of the ~~Bancorp’s~~287,262 ~~unvested~~non-vested options outstanding as of ~~September~~March 3031, ~~2015~~2016 ~~and~~is ~~the~~$900,000 ~~changes~~over ~~therein~~a ~~during~~weighted ~~the~~average ~~nine~~period ~~months~~of ~~then~~2.6 ~~ended~~years.

	Number ofStock Options		Weighted AverageGrant DateFair Value
	(Unaudited)
Unvested at December 31, 2014	369,503		$	3.90
Granted	130,500		3.21
Vested	(111,701	)	3.82
Forfeited / Cancelled	(19,800	)	3.84
Unvested at September 30, 2015	368,502		$	3.68

The following is a summary of the status of the Bancorp’s restricted stock as of March 31, 2016 and changes therein during the three months then ended.

Expected future expense relating to the 368,502 non-vested options outstanding as of September 30, 2015 is $1.1 million over a weighted average period of 3.0 years.



	Number of Restricted Shares		Weighted Average Grant Date Fair Value
	(Unaudited)
Unvested at December 31, 2015	177,073		$	16.04
Granted	18,608		17.00
Vested	(54,397	)	16.79
Forfeited / Cancelled	—		—
Unvested at March 31, 2016	141,284		$	15.87

~~The~~Expected ~~following~~future iscompensation aexpense ~~summary~~relating ofto the ~~status~~141,284 ~~of the Bancorp’s~~ restricted ~~stock~~shares asat ~~of September~~March 3031, ~~2015~~2016 ~~and~~is ~~changes~~$1.9 ~~therein~~million ~~during~~over ~~the~~a ~~nine~~weighted ~~months~~average ~~then~~period ~~ended~~of 2.4 years.

	Number ofRestricted Shares		Weighted AverageGrant DateFair Value
	(Unaudited)
Unvested at December 31, 2014	188,622		$	15.36
Granted	51,755		16.31
Vested	(55,724	)	14.07
Forfeited / Cancelled	(7,150	)	15.51
Unvested at September 30, 2015	177,503		$	16.03

Performance-based restricted shares granted in 2013, as discussed in the following paragraph, vest over a five-year period based on continued service with the Bank and the achievement of performance metrics. The performance metrics to be evaluated during the performance period are (1) return on assets, actual and growth rate, compared to a predetermined peer group and (2) earnings per share growth rate compared to peer group ("performance criteria"). Each performance metric has a 50% weight. On the third anniversary of the grant date ("measurement date"), the Company's level of performance relative to the performance criteria are evaluated and the number of shares that will vest at that time and over the following two years will be determined. The number of shares eligible to vest is variable and can range from 0% to 150% of the shares identified on the grant date (the "target shares"). Of the shares that will vest, 50% of the shares vest on the measurement date and 25% vest on each of the fourth and fifth anniversaries of the date of grant.

~~Expected~~During ~~future~~March ~~compensation~~2013, ~~expense~~the ~~relating~~Company granted performance-based restricted stock to certain executive officers of the ~~177~~Company,~~503~~ ~~restricted~~of which 39,250 shares remained outstanding at ~~September 30~~the measurement date. During March 2016, ~~2015~~the isCompany ~~$2.2~~awarded ~~million~~an ~~over~~additional 18,608 shares of performance-based restricted stock, which represented additional shares owed to participants under the March 2013 grant as the Company exceeded the performance targets under the 2013 award. This represented a ~~weighted~~total ~~average~~grant ~~period~~of 147.4% of 2the "target shares.9" The ~~years~~57,858 shares had a grant date fair value of $17. 00.

~~Performance-based~~During ~~restricted shares granted in 2012 and 2013~~2015, ~~as discussed in~~ the ~~following~~Company ~~paragraph~~granted 8,840 ~~vest~~shares ~~over~~of ~~a five~~performance-~~year~~based ~~period~~restricted ~~based~~stock onto ~~service~~certain ~~and~~executive ~~achievement~~officers of ~~performance~~the ~~metrics~~Company. ~~The~~Performance-based ~~performance~~restricted ~~metrics~~shares togranted bein ~~evaluated~~2015 ~~during~~utilize ~~the~~similar performance ~~period~~criteria ~~are~~and ~~(1) return~~measurement ondate ~~assets,~~as ~~actual~~outlined ~~and~~above ~~growth~~for ~~rate,~~the ~~compared~~2012 ~~to peer group~~ and ~~(2) earnings~~2013 ~~per~~performance ~~share~~based ~~growth~~grants. However, ~~rate~~the ~~compared~~2015 toawards ~~peer~~vest ~~group~~50% ~~("performance~~at ~~criteria"). Each~~measurement ~~performance~~date ~~metric~~and ~~has a~~ 50% ~~weight. On~~on the ~~third~~fourth anniversary of the ~~grant~~ date ~~("measurement~~of ~~date"),~~ the ~~Company's~~grant. For ~~level~~the purposes of ~~performance relative to~~ the ~~performance~~above ~~metrics are evaluated and~~table, ~~if such performance metrics have been achieved, an amount of shares that will vest at that time and over~~ the ~~following~~Company ~~two years will be determined. The number of shares eligible to vest~~ is ~~variable~~assuming ~~and can range from 0~~100% ~~to 150%~~ of the ~~shares identified on grant date (the~~ "target shares"~~). Of~~ ~~the shares that~~ will ~~vest~~be awarded. However, ~~50%~~more ofor ~~the~~less shares ~~vest~~may onactually ~~the~~be ~~third~~awarded ~~anniversary~~based ofon the ~~date~~performance of ~~grant~~the ~~and~~Company ~~25%~~at ~~vest on each of~~ the ~~fourth~~applicable ~~and~~measurement ~~fifth~~date, ~~anniversaries~~which ofis ~~the~~March ~~date~~13, ~~of grant~~2018.

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NOTE 79 - ~~STOCK~~FAIR ~~BASED COMPENSATION (CONTINUED)~~VALUE

During May 2012, the Company granted performance-based restricted stock to certain executive officers of the Company, of which 21,500 remained outstanding at the measurement date. During May 2015, the Company awarded an additional 9,055 shares of performance-based restricted stock, which represented additional shares owed to participants under the May 2012 grant as the Company exceeded the performance targets under the 2012 award. This represented a total grant of 142% of the "target shares." The 30,555 shares had a grant date fair value of $13.11.

During 2013, the Company granted 39,250 shares of performance-based restricted stock to certain executive officers of the Company. For the purposes of the above table, the Company is assuming 100% of the "target shares" will be awarded. More or less shares may actually be awarded based on the performance of the Company at the applicable measurement date, which is March 7, 2016.

During 2015, the Company granted 8,840 shares of performance-based restricted stock to certain executive officers of the Company. Performance-based restricted shares granted in 2015 utilize similar performance criteria and measurement date as outlined above for the 2012 and 2013 performance based grants. However, the 2015 awards vest 50% at measurement date and 50% on the fourth anniversary of the date of the grant. For the purposes of the above table, the Company is assuming 100% of the "target shares" will be awarded. More or less shares may actually be awarded based on the performance of the Company at the applicable measurement date, which is March 18, 2018.

NOTE 8 - FAIR VALUE

Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction on the dates indicated. The estimated fair value amounts have been measured as of the respective quarter ends, and have not been reevaluated or updated for purposes of these consolidated financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each reporting date.

The Company determines the fair value of financial instruments using three levels of input:

Level 1—Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that are accessible at the measurement date.

Level 2—Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Valuations are derived from unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments at ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015:

Cash and Cash Equivalents

The carrying amounts of cash and cash equivalents approximate their fair value.

Investment Securities—Available-for-Sale and Held-to-Maturity

Fair values for investment securities are obtained from one external pricing service ("primary pricing service") as the provider of pricing on the investment portfolio on a quarterly basis. We generally obtain one quote per investment security. If quoted market prices are not available, fair values are based on quoted market prices of comparable securities. If quoted market prices are not available for comparable securities, fair value is based on quoted bids for the security or comparable securities. The Company made no adjustments to the values obtained from the primary pricing service.

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NOTE 8 - FAIR VALUE (CONTINUED)

Loans Receivable, Net

To determine the fair values of loans that are not impaired, we employ discounted cash flow analyses that use interest rates and terms similar to those currently being offered to borrowers. We record fair value adjustments to impaired loans on a nonrecurring basis to reflect full and partial charge-offs due to impairment. For impaired loans, we use a variety of techniques to measure fair value, such as using the current appraised value of the collateral, agreements of sale, discounting the contractual cash flows, and analyzing market data that we may adjust due to specific characteristics of the loan or collateral. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

FHLB Stock

It is not practical to determine the fair value of FHLB stock due to restriction placed on its transferability.

Mortgage Servicing Rights

The fair value of the mortgage servicing rights ("MSRs") was determined using a valuation model that calculates the present value of estimated future servicing income. The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds and discount rates.

Accrued Interest Receivable and Accrued Interest Payable

The carrying amount of accrued interest receivable and accrued interest payable approximates fair value.

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NOTE 9 - FAIR VALUE (CONTINUED)

Deposit Liabilities

Fair values for demand deposits (including NOW accounts), savings and club accounts and money market deposits are, by definition, equal to the amount payable on demand at the reporting date. Fair values of fixed-maturity certificates of deposit, including brokered deposits, are estimated using a discounted cash flow calculation that applies interest rates currently being offered on similar instruments with similar maturities.

Short-term Borrowings, FHLB Advances and Other Borrowed Funds

Fair values of short-term borrowings, FHLB advances and other borrowed funds are estimated using discounted cash flow analyses, based on rates currently available to the Bank for advances with similar terms and remaining maturities.

Derivative Contracts

The fair values of derivative contracts are based upon the estimated amount the Company would receive or pay to terminate the contracts or agreements, taking into account underlying interest rates, creditworthiness of underlying customers for credit derivatives and, when appropriate, the creditworthiness of the counterparties.

The estimated fair values of the Company’s financial instruments at March 31, 2016 and December 31, 2015 were as follows:



		March 31, 2016				December 31, 2015
	Fair Value Hierarchy Level	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
		(In thousands)
Financial assets:		(Unaudited)
Cash and cash equivalents	Level 1	$	9,112	$	9,112	$	7,798	$	7,798
Investment securities available-for-sale	Level 2	135,826		135,826		139,751		139,751
Investment securities held-to-maturity	Level 2	144,528		146,655		150,190		149,850
Loans receivable, net	Level 3	776,669		779,947		767,683		768,516
FHLB stock	NA	6,186		NA		6,734		NA
Accrued interest receivable	Level 2, 3	3,348		3,348		3,145		3,145
Mortgage servicing rights	Level 3	97		97		104		104
Financial liabilities:
Savings and club accounts	Level 2	145,110		145,110		142,966		142,966
Demand, NOW and money market deposits	Level 2	428,286		428,286		361,490		361,490
Brokered deposits	Level 2	52,378		52,377		78,481		78,219
Certificates of deposit	Level 2	189,934		189,921		182,037		181,422
Short-term borrowings	Level 2	15,000		15,000		38,496		38,496
FHLB advances	Level 2	90,000		92,012		110,000		111,985
Other borrowed funds	Level 2	30,000		31,604		30,000		31,692
Accrued interest payable	Level 2	302		302		319		319
Derivative contracts	Level 2, 3	197		197		154		154

The following financial instruments were classified as Level 3 and carried at fair value on a recurring basis as of the dates indicated below:


•	Two commercial loans, since lending credit risk is not an observable input for these loans (see interest rate swap discussion in Note 5). The unrealized gain on the two loans was $177,000 at March 31, 2016 compared to $137,000 at December 31, 2015.


•	Credit derivatives are valued based on creditworthiness of the underlying borrower which is a significant unobservable input. The liability resulting from credit derivatives was $8,000 and $6,000 at March 31, 2016 and December 31, 2015, respectively.

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NOTE 89 - FAIR VALUE (CONTINUED)

The ~~estimated~~following ~~fair~~measures ~~values~~were ofmade ~~the~~on ~~Company’s~~a ~~financial~~recurring ~~instruments~~basis atas ~~September~~of March 3031, ~~2015~~2016 and December 31, ~~2014 were as follows:~~ 2015.

			September 30, 2015						December 31, 2014
					Fair Value Measurements at Reporting Date Using
	Fair ValueHierarchyLevel		CarryingAmount			EstimatedFairValue			CarryingAmount			EstimatedFairValue
					Quoted Prices in Active Marketsfor Identical Assets			Significant OtherObservable Inputs			Significant OtherUnobservable Inputs
			(In thousands)
		As of
Financial assets:			(Unaudited)
Description		March 31, 2016			(Level 1)			(Level 2)			(Level 3)
Cash and cash equivalents	Level 1		$	7,211		$	7,211		$	17,213		$	17,213
		(In thousands, Unaudited)
Investment securities available-for-sale	Level 2		138,756			138,756			134,037			134,037
Available-for-Sale Securities:
Investment securities held-to-maturity	Level 2		156,099			157,665			170,172			170,854
Obligations of U.S. government agencies		$	306		$	—		$	306		$	—
Loans receivable, net	Level 3		739,489			744,058			724,326			732,142
Corporate securities		17,715			—			17,715			—
FHLB stock	NA		4,986			NA			6,015			NA
Agency residential mortgage related securities		117,805			—			117,805			—
Accrued interest receivable	Level 2, 3		3,174			3,174			3,147			3,147
Loans (1)		2,324			—			—			2,324
Mortgage servicing rights	Level 3		98			98			111			111
Derivative contracts (1)		(197		)	—			(189		)	(8		)
Financial liabilities:
					Fair Value Measurements at Reporting Date Using
Savings and club accounts	Level 2		128,973			128,973			129,893			129,893
					Quoted Prices in Active Marketsfor Identical Assets			Significant OtherObservable Inputs			Significant OtherUnobservable Inputs
Demand, NOW and money market deposits	Level 2		305,457			305,457			325,010			325,010
		As of
Brokered deposits	Level 2		78,460			78,497			70,817			70,600
Description		December 31, 2015			(Level 1)			(Level 2)			(Level 3)
Certificates of deposit	Level 2		204,812			204,955			186,189			186,154
		(In thousands)
Short-term borrowings	Level 2		60,000			60,000			50,000			50,000
Available-for-Sale Securities:
FHLB advances	Level 2		110,000			112,794			120,000			123,189
Obligations of U.S. government agencies		$	299		$	—		$	299		$	—
Other borrowed funds	Level 2		30,000			31,918			30,000			32,017
Corporate securities		17,541			—			17,541			—
Accrued interest payable	Level 2		310			310			311			311
Agency residential mortgage related securities		121,911			—			121,911			—
Derivative contracts	Level 2, 3		193			193			174			174
Loans (1)		2,315			—			—			2,315
Derivative contracts (1)		(154		)	—			(148		)	(6		)

~~The~~(1) Such ~~following~~ financial instruments ~~were~~are ~~classified~~recorded ~~as Level 3 and carried~~ at fair value onas afurther ~~recurring~~described ~~basis~~in asNote ~~of September 30, 2015:~~5.

•The ~~Two~~following ~~commercial~~measures ~~loans,~~were ~~since~~made ~~lending credit risk is not an observable input for these loans (see interest rate swap discussion in Note 4). The unrealized gain~~ on ~~the~~a ~~two~~non-recurring ~~loans~~basis ~~was~~as ~~$172,000~~of ~~at September 30~~March 31, ~~2015~~2016 ~~compared~~and ~~to $152,000 at~~ December 31, ~~2014.~~2015:

•Loans, ~~Credit~~which ~~derivatives~~were ~~are~~partially ~~valued~~charged off at March 31, 2016 and December 31, 2015. The loans’ fair values are based on ~~creditworthiness~~Level of3 ~~the~~inputs, ~~underlying~~which ~~borrower~~are ~~which~~either isan appraised value or a ~~significant~~sales ~~unobservable~~agreement, ~~input.~~less ~~The~~costs ~~liability~~to ~~resulting~~sell. These ~~from~~amounts ~~credit~~do ~~derivatives~~not ~~was~~include ~~$10,000~~fully ~~and~~charged-off ~~$12~~loans,~~000~~ atbecause ~~September~~we ~~30,~~carry ~~2015~~fully ~~and~~charged-off ~~December~~loans ~~31,~~at ~~2014,~~zero ~~respectively~~on our balance sheet.

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NOTE 8 - FAIR VALUE (CONTINUED)

The following measures were made on a recurring basis as of September 30, 2015 and December 31, 2014.

				Fair Value Measurements at Reporting Date Using
				Quoted Prices in Active Marketsfor Identical Assets		Significant OtherObservable Inputs			Significant OtherUnobservable Inputs
	As of
Description	September 30, 2015			(Level 1)		(Level 2)			(Level 3)
	(In thousands, Unaudited)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	304		$	—	$	304		$	—
Corporate securities	17,646			—		17,646			—
Agency residential mortgage related securities	120,806			—		120,806			—
Loans (1)	2,381			—		—			2,381
Derivative contracts (1)	(193		)	—		(183		)	(10		)
				Fair Value Measurements at Reporting Date Using
				Quoted Prices in Active Marketsfor Identical Assets		Significant OtherObservable Inputs			Significant OtherUnobservable Inputs
	As of
Description	December 31, 2014			(Level 1)		(Level 2)			(Level 3)
	(In thousands)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	302		$	—	$	302		$	—
Corporate securities	8,086			—		8,086			—
Agency residential mortgage related securities	125,649			—		125,649			—
Loans (1)	2,451			—		—			2,451
Derivative contracts (1)	(174		)	—		(162		)	(12		)

(1) Such financial instruments are recorded at fair value as further described in Note 4.

The following measures were made on a non-recurring basis as of September 30, 2015 and December 31, 2014:

Loans, which were partially charged off at September 30, 2015 and December 31, 2014. The loans’ fair values are based on Level 3 inputs, which are either an appraised value or a sales agreement, less costs to sell. These amounts do not include fully charged-off loans, because we carry fully charged-off loans at zero on our balance sheet.

MSRs, the fair value of which was determined using a valuation model that calculates the present value of estimated future servicing income. The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds and discount rates.

Other real estate owned, for which we used Level 3 inputs, which consist of appraisals, agreements of sale or letters of intent.

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NOTE 9 - FAIR VALUE (CONTINUED)



			Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
	Balance		(Level 1)		(Level 2)		(Level 3)
March 31, 2016 (Unaudited)			(In thousands)
Loans	$	1,113	$	—	$	—	$	1,113
Mortgage servicing rights	97		—		—		97
Other real estate owned	2,615		—		—		2,615
Total	$	3,825	$	—	$	—	$	3,825

December 31, 2015
Loans	$	1,239	$	—	$	—	$	1,239
Mortgage servicing rights	104		—		—		104
Other real estate owned	2,623		—		—		2,623
Total	$	3,966	$	—	$	—	$	3,966

The following tables include a roll forward of the financial instruments which fair value is determined on a recurring basis using Significant Other Unobservable Inputs (Level 3) for the periods from December 31, 2015 to March 31, 2016 and December 31, 2014 to March 31, 2015.



Three Months Ended March 31, 2016
	Derivative Contracts			Loans			Total

Beginning balance, December 31, 2015	$	(6	)	$	2,315		$	2,309
Purchases/additions	—			—			—
Sales	—			—			—
Payments received	—			(31		)	(31		)
Premium amortization, net	—			—			—
(Decrease) increase in value	(2		)	40			38
Ending balance, March 31, 2016	$	(8	)	$	2,324		$	2,316

Three Months Ended March 31, 2015
	Derivative Contracts			Loans			Total

Beginning balance, December 31, 2014	$	(12	)	$	2,451		$	2,439
Purchases/additions	(1		)	—			(1		)
Sales	—			—			—
Payments received	—			(30		)	(30		)
Premium amortization, net	—			—			—
Increase in value	5			20			25
Ending balance, March 31, 2015	$	(8	)	$	2,441		$	2,433

There were no transfers made between levels during the three months ended March 31, 2016 or 2015.

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NOTE 810 -– ~~FAIR~~NEW ~~VALUE~~ACCOUNTING ~~(CONTINUED)~~PRONOUNCEMENTS

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Marketsfor Identical Assets		Significant OtherObservable Inputs		Significant OtherUnobservable Inputs
	Balance		(Level 1)		(Level 2)		(Level 3)
September 30, 2015 (Unaudited)			(In thousands)
Loans	$	1,240	$	—	$	—	$	1,240
Mortgage servicing rights	98		—		—		98
Other real estate owned	2,815		—		—		2,815
Total	$	4,153	$	—	$	—	$	4,153
December 31, 2014
Loans	$	1,654	$	—	$	—	$	1,654
Mortgage servicing rights	111		—		—		111
Other real estate owned	2,814		—		—		2,814
Total	$	4,579	$	—	$	—	$	4,579

Accounting Standards Update (ASU) No. 2016-01 Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This new guidance requires all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee). The amendments in this update also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. For the Company, this guidance is effective for fiscal years and interim periods beginning after December 31, 2017. The Company is currently evaluating this guidance to determine the impact on its consolidated financial statements.

~~The~~ASU ~~following~~No. ~~tables~~2016-02 ~~include~~- aLeases ~~roll~~(Topic ~~forward~~842). This ofnew ~~the~~guidance ~~financial~~requires ~~instruments~~lessees ~~which~~to ~~fair~~recognize ~~value~~assets isand ~~determined~~liabilities related to certain operating leases on athe ~~recurring~~balance ~~basis~~sheet. ~~using~~The ~~Significant~~new ~~Other~~guidance ~~Unobservable~~also ~~Inputs~~requires ~~(Level~~additional 3)disclosures ~~for~~by ~~the~~lessees ~~periods~~and ~~from~~contains ~~December 31,~~targeted ~~2014~~changes to ~~September 30~~accounting by lessors. For the Company, ~~2015~~this guidance is effective for fiscal years and interim periods beginning after December 31, ~~2013~~2018 and interim periods within those fiscal years. The Company is currently evaluating this guidance to ~~September 30,~~determine ~~2014~~the impact on its consolidated financial statements.

Nine Months Ended September 30, 2015
		Private LabelCommercial MortgageRelated Securities			DerivativeContracts			Financial AssetsAcquiredfrom Debtors			Loans			Total
	(In thousands, Unaudited)
Beginning balance, December 31, 2014		$	—		$	(12	)	$	—		$	2,451		$	2,439
Purchases/additions		—			(2		)	—			—			(2		)
Sales		—			—			—			—			—
Payments received		—			—			—			(89		)	(89		)
Premium amortization, net		—			—			—			—			—
Increase (decrease) in value		—			4			—			19			23
Ending balance, September 30, 2015		$	—		$	(10	)	$	—		$	2,381		$	2,371
Nine Months Ended September 30, 2014
		Private LabelCommercial MortgageRelated Securities			DerivativeContracts			Financial AssetsAcquiredfrom Debtors			Loans			Total
	(In thousands, Unaudited)
Beginning balance, December 31, 2013		$	2,120		$	(4	)	$	1,938		$	2,535		$	6,589
Purchases/additions		—			(12		)	—			—			(12		)
Sales		—			—			(1,938		)	—			(1,938		)
Payments received		(2,118		)	—			—			(82		)	(2,200		)
Premium amortization, net		—			—			—			—			—
(Decrease) increase in value		(2		)	2			—			6			6
Ending balance, September 30, 2014		$	—		$	(14	)	$	—		$	2,459		$	2,445

ASU No. 2016-06 - Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments (a consensus of the Emerging Issues Task Force). This new guidance requires embedded derivatives to be separated from the host contract and accounted for separately as derivatives if certain criteria are met, including the “clearly and closely related” criterion. The amendments in this Update clarify the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment under the amendments is required to assess the embedded call (put) options solely in accordance with the four-step decision sequence. For the Company, this guidance is effective for fiscal years and interim periods beginning after December 31, 2016 and interim periods within those fiscal years. The Company is currently evaluating this guidance to determine the impact on its consolidated financial statements.

~~There~~ASU ~~were~~No. no2016-09 ~~transfers~~- ~~made~~Compensation-Stock ~~between~~Compensation ~~levels~~(Topic ~~during~~718): Improvements to Employee Share-Based Payment Accounting. This new guidance eliminates the ~~nine~~APIC ~~months~~pool ~~ended~~for ~~September 30~~excess tax benefits and requires that all excess tax benefits and tax deficiencies be recognized as an income tax benefit or expense in the income statement. All excess tax benefits and deficiencies are to be recognized in the period they are deducted on the income tax return. They shall not be anticipated when determining the annual estimated effective tax rate. Instead, ~~2015~~they are discrete items in the reporting period in which they occur. With regards to forfeitures, entities can elect to continue to apply current U.S. GAAP or ~~2014~~to reverse compensation cost of forfeited awards when they occur. With regards to tax withholdings and award classification, entities can withhold up to the maximum individual statutory tax rate in the applicable jurisdiction and classify the entire award as equity. For the Company, this guidance is effective for fiscal years and interim periods beginning after December 31, 2016 and interim periods within those fiscal years. The Company is currently evaluating this guidance to determine the impact on its consolidated financial statements.

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NOTE 9 – NEW ACCOUNTING PRONOUNCEMENTS

Accounting Standards Update (ASU) No. 2015-01 - Income Statement—Extraordinary and Unusual Items (Subtopic 225-20) - Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. The objective of this update is to simplify the income statement presentation requirements in Subtopic 225-20 by eliminating the concept of extraordinary items. Extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. Eliminating the extraordinary classification simplifies income statement presentation by altogether removing the concept of extraordinary items from consideration. The amendments in this update are effective for the Company for annual and interim periods beginning on or after January 1, 2016. The Company has not yet concluded whether this update will have an impact on the Company’s consolidated financial statements.

ASU No. 2015-02 - Consolidation (Topic 810) - Amendments to the Consolidation Analysis. The amendments in this update affect reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments: (1) Modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities, (2) Eliminate the presumption that a general partner should consolidate a limited partnership, (3) Affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships, (4) Provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. The amendments in this update are effective for the Company for annual and interim periods beginning on or after January 1, 2016. The Company has not yet concluded whether this update will have an impact on the Company’s consolidated financial statements.

ASU No. 2015-05 - Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) - Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The amendments in this Update provide guidance to software customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance does not change generally accepted accounting principles for a customer’s accounting for service contracts. The amendments in this update are effective for the Company for annual and interim periods beginning on or after January 1, 2016, however early adoption is permitted. The Company adopted this update effective with its issuance. Pursuant to the this guidance, agreements related to the change in our outsourced data processing systems during October 2015 are accounted for as service contracts.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This quarterly report contains forward-looking statements that are based on assumptions and may describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project" or similar expressions. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. This includes statements regarding the planned merger of Fox Chase Bancorp, Inc. ("Fox Chase") with and into Univest Corporation of Pennsylvania (“Univest”), with Univest surviving the merger as the surviving corporation (the “Merger"). Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to: the inability to obtain requisite approvals and/or meet the other closing conditions required to close the Merger in a timely manner, changes in interest rates, national and regional economic conditions, legislative and regulatory changes, monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board, the credit quality and composition of the loan and investment portfolios, valuation of assets acquired through foreclosure, deposit flows, competition, demand for loan products and for financial services in the Company's market area, changes in real estate market values in the Company's market area, changes in relevant accounting principles and guidelines and inability of third party service providers to perform as required. Additional factors that may affect our results are discussed in the sections titled "Risk Factors" in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2014~~2015, as filed with the Securities and Exchange Commission on March 64, ~~2015~~2016, and its other Securities and Exchange Commission reports.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Except as required by applicable law or regulation, the Company does not undertake, and specifically disclaims any obligation, to release publicly the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

~~Unless the context indicates otherwise, all references in this Form 10-Q to "Company," "we," "us" and "our" refer to Fox Chase Bancorp, Inc. and its subsidiary.~~27

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disclaims any obligation, to release publicly the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

Unless the context indicates otherwise, all references in this Form 10-Q to the "Company," "we," "us" and "our" refer to Fox Chase Bancorp, Inc. and its subsidiary.

Critical Accounting Policies

The discussion and analysis of the financial condition and results of operations are based on our consolidated financial statements, which are prepared in conformity with generally accepted accounting principles in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of income and expenses. The estimates and assumptions that we use are based on historical experience and various other factors and are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations.

We consider accounting policies involving significant judgments and assumptions by management that have, or could have, a material impact on the carrying value of certain assets or on income to be critical accounting policies. We consider the following to be our critical accounting policies.


•	Allowance for Loan Losses


•	Deferred Income Taxes


•	Valuation and Other-Than-Temporary Impairment of Investment Securities


•	Valuation of Assets Acquired Through Foreclosure

A discussion of these critical accounting policies is located in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operation—Critical Accounting Policies" in the Company's Annual Report on 10-K. There have been no material changes in the Company’s critical accounting policies, judgments and estimates, including assumptions or estimation techniques utilized, as described in the Company's most recent Annual Report on Form 10-K.

Comparison of Financial Condition at ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015

Total assets were $1.~~10 billion and $~~1~~.09~~ billion at ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014, respectively~~2015. ~~Total~~Net loans were $~~739~~776.57 million at ~~September~~March 3031, ~~2015~~2016, an increase of $159.20 million, or 2.1.2%, from $~~724~~767.37 million at December 31, ~~2014~~2015. Total commercial loans increased $3113.68 million, or 5.2.0%, primarily comprised of increases of $167.23 million in ~~commercial~~construction ~~and industrial~~ loans and $157.20 million in multi-family and commercial real estate loans~~. The~~, ~~increase~~offset by a $508,000 decrease in ~~multi-family~~commercial and ~~commercial~~industrial ~~real~~loans. The ~~estate~~increase in construction loans was primarily driven by originations ~~and~~during ~~fundings~~the ~~exceeding~~quarter ~~amortization~~ended March 31, 2016, as the Company continues to offer financing for retail, multi-family and ~~paydowns~~residential projects. The increase in ~~commercial~~multi-family and ~~industrial~~commercial real estate loans was driven by originations, ~~fundings~~ and ~~purchases~~fundings ~~of syndicated loans~~ exceeding amortization and paydowns. During the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016, one- to four-family residential mortgage loans decreased $123.59 million and consumer loans decreased $~~4.0~~805,000 ~~million~~ due to normal amortization exceeding ~~new~~originations, ~~loans~~as ~~originated~~the Company does not currently emphasize these types of lending.

Investment securities available-for-sale ~~increased~~decreased $43.79 million from $~~134~~139.08 million at December 31, ~~2014~~2015 to $~~138~~135.8 million at ~~September~~March 3031, ~~2015~~2016 due to ~~purchases, including corporate bonds of $15.1 million, exceeding~~ paydowns ~~and maturities~~ during the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016. Investment securities held-to-maturity decreased $145.17 million to $~~156~~144.15 million at ~~September~~March 3031, ~~2015~~2016 compared to $~~170~~150.2 million at December 31, ~~2014~~2015 due to paydowns ~~exceeding~~during the three months ended March 31, 2016. There were no purchases of investment securities during the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016.

Deposits increased $550.87 million, or 06.86%, from $~~711~~765.90 million at December 31, ~~2014~~2015 to $~~717~~815.7 million at ~~September~~March 3031, ~~2015~~2016. During the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016, ~~non~~noninterest-~~brokered~~bearing ~~certificates~~demand ofaccounts ~~deposit~~increased $54.8 million, money market accounts increased $1811.69 million, non-brokered ~~deposits~~certificates of deposit increased $7.69 million, ~~NOW~~savings and club accounts increased $62.61 million and ~~money~~NOW ~~market~~ accounts increased $5181,000.~~3 million.~~ Offsetting these increases ~~were~~was ~~decreases~~a decrease in brokered deposits of $26.1 million. The increase in noninterest-bearing demand accounts ofwas ~~$31.4~~primarily ~~million~~due ~~and~~to ~~savings~~a ~~and~~short-term ~~club~~deposit ~~accounts~~from ofa ~~$920,000~~commercial customer relationship. The ~~increases~~increase in money market accounts and non-brokered certificates of deposit ~~and money market accounts and~~ were primarily due to deposits obtained from certain municipal and commercial customers. The ~~increase~~decrease in brokered deposits reflects ~~2015~~the ~~originations~~Company's ~~exceeding~~decision ~~maturities. The~~to ~~decrease~~not inreplace ~~noninterest-bearing~~maturities ~~demand~~with ~~accounts~~new ~~was driven by seasonality within our commercial deposit portfolio~~issuances.

Short-term borrowings ~~increased~~decreased $1023.05 million, or 2061.0%, from $5038.05 million at December 31, ~~2014~~2015 to $6015.0 million at ~~September~~March 3031, ~~2015~~2016. Federal Home Loan Bank advances decreased $1020.0 million, or 818.32%, from $~~120~~110.0 million at December 31, ~~2014~~2015 to $~~110~~90.0 million at ~~September~~March 3031, ~~2015.~~2016 due to the Company's decision to not replace such term borrowings.

Stockholders’ equity increased $91,000 to $176.0 million at September 30, 2015 compared to $175.9 million at December 31, 2014 primarily due to net income of $7.8 million and stock based compensation activity (which includes proceeds received from the exercise of stock options) of $2.9 million, offset by dividends paid of $6.1 million, common stock repurchased of $4.8 million and other comprehensive income of $268,000 during the nine months ended September 30, 2015.28

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Stockholders’ equity increased $926,000 to $177.8 million at March 31, 2016 compared to $176.9 million at December 31, 2015 primarily due to net income of $2.2 million, stock based compensation activity of $713,000 and other comprehensive income of $1.1 million, offset by dividends paid of $3.2 million during the three months ended March 31, 2016.

Comparison of Operating Results for the Three Months Ended March 31, 2016 and 2015

General. Net income decreased $30,000, or 1.3%, to $2.2 million for the three months ended March 31, 2016, compared to $2.3 million for the three months ended March 31, 2015. The decrease in net income was due to a decrease in net interest income of $128,000 and increases in noninterest expense of $120,000 and income tax provision of $304,000, offset by a decrease in the provision for loan losses of $427,000 and an increase in noninterest income of $95,000. During the three months ended March 31, 2016, the Company incurred $346,000 ($320,000 after-tax) of professional fees related to the previously announced merger with Univest.

During the three months ended March 31, 2015, the Company incurred $230,000 in costs associated with the change in our outsourced data processing systems, of which $165,000 is included in data processing costs and $65,000 is included in professional fees. The Company also received a special dividend totaling $254,000 from the FHLB and reversed a $182,000 valuation allowance on certain deferred state tax assets. The total impact of these items was an after-tax increase in net income of $199,000 during the three months ended March 31, 2015.

Net Interest Income. Net interest income decreased $128,000, or 1.5%, to $8.5 million for the three months ended March 31, 2016 compared to $8.7 million for the same period in 2015, due to an increase in total interest expense of $151,000, offset by an increase in total interest income of $23,000.

The increase in total interest expense was primarily due to a $33.3 million increase in the average balance of interest-bearing liabilities from $736.6 million to $769.9 million and an increase in the cost of interest-bearing liabilities from 0.80% to 0.84%. The increase in the average balance of interest-bearing liabilities was primarily driven by a $45.4 million increase in interest-bearing deposits offset by a $12.0 million decrease in the average balance of borrowings. The increase in the average cost of interest-bearing liabilities was due to an increase in the cost of borrowings from 1.57% to 1.80% and an increase in the average cost of interest-bearing deposits from 0.53% to 0.55%. The increase in the average cost of borrowings was primarily due to the maturity of certain term borrowings and FHLB advances, which had lower rates, as well as the 25 basis point increase in the Federal Funds rate in December 2015, which increased the cost of variable rate short-term borrowings and other borrowed funds. The slight increase in the average cost of interest-bearing deposits reflects the current interest rate environment, competition for deposits and the maturity of certificates of deposit with lower rates than current pricing.

The increase in total interest income was primarily due to a $19.9 million increase in the average balance of interest-earning assets offset by a decrease in yield on interest-earning assets from 3.88% to 3.80%. The increase in the average balance of interest-earning assets was primarily due to a $39.3 million increase in total loans offset by a decrease in investment securities of $18.5 million. The yield on total loans decreased from 4.44% to 4.37% primarily due to lower yields on commercial loan originations, partially offset by the impact of the 25 basis point increase in the Federal Funds rate in December 2015. The yield on investment securities decreased from 2.55% to 2.23% primarily due to a special dividend of $254,000 from the FHLB during the first quarter of 2015.

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~~Comparison~~Average Balances and Yields. The following table presents information regarding average balances of ~~Operating~~assets ~~Results~~and ~~for~~liabilities, the ~~Three~~total dollar amounts of interest income and ~~Nine~~dividends ~~Months~~from ~~Ended~~average ~~September 30~~interest-earning assets, ~~2015~~the total dollar amounts of interest expense on average interest-bearing liabilities, and ~~2014~~the resulting annualized average yields and costs. The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented. Net loan origination fees and costs are included in interest income on loans and are insignificant. Yields are not presented on a tax-equivalent basis. Any adjustments necessary to present yields on a tax-equivalent basis are insignificant.

General. Net income increased $512,000, or 28.2%, to $2.3 million for the three months ended September 30, 2015, compared to $1.8 million for the three months ended September 30, 2014. The increase in net income was due to a decrease in the provision for loan losses of $1.8 million, an increase in noninterest income of $79,000, offset by increases in noninterest expense of $860,000 and income tax provision of $383,000 and a decrease in net interest income of $117,000. During the three months ended September 30, 2015, the Company incurred $502,000 in one-time costs associated with changing our outsourced data processing systems, of which $251,000 was included in data processing costs, $150,000 was included in professional fees, $36,000 was included in salaries, benefits and other compensation and $65,000 was included in other non-interest expense.



	Three Months Ended March 31,
	2016							2015
	Average Balance			Interest and Dividends		Yield/ Cost		Average Balance			Interest and Dividends		Yield/ Cost
Assets:	(Dollars in thousands)
Interest-earning assets:
Interest-earning demand deposits	$	10,417		$	9	0.34	%	$	11,550		$	3	0.10	%
Investment securities
Available-for-sale	144,788			857		2.37	%	140,485			1,092		3.11	%
Held-to-maturity	147,765			775		2.10	%	170,564			890		2.09	%
Total investment securities	292,553			1,632		2.23	%	311,049			1,982		2.55	%
Loans:
Residential loans	88,751			1,024		4.62	%	107,302			1,251		4.66	%
Commercial loans	678,099			7,315		4.34	%	615,474			6,669		4.39	%
Consumer loans	14,499			167		4.60	%	19,229			219		4.57	%
Total Loans	781,349			8,506		4.37	%	742,005			8,139		4.44	%
Allowance for loan losses	(10,563		)					(10,777		)
Net loans	770,786			8,506				731,228			8,139
Total interest-earning assets	1,073,756			10,147		3.80	%	1,053,827			10,124		3.88	%
Noninterest-earning assets	53,961							42,702
Total assets	$	1,127,717						$	1,096,529
Liabilities and equity:
Interest-bearing liabilities:
NOW and money market deposit accounts	$	194,028		$	111	0.23	%	$	164,508		$	90	0.22	%
Savings accounts	143,641			161		0.45	%	130,354			120		0.37	%
Brokered deposits	68,651			136		0.80	%	64,266			125		0.79	%
Certificates of deposit	185,519			399		0.87	%	187,337			380		0.82	%
Total interest-bearing deposits	591,839			807		0.55	%	546,465			715		0.53	%
Short-term borrowings	41,615			59		0.57	%	41,097			32		0.32	%
FHLB advances	106,483			557		2.10	%	119,032			539		1.84	%
Other borrowed funds	30,000			180		2.41	%	30,000			166		2.24	%
Total borrowings	178,098			796		1.80	%	190,129			737		1.57	%
Total interest-bearing liabilities	769,937			1,603		0.84	%	736,594			1,452		0.80	%
Noninterest-bearing deposits	175,527							176,389
Other noninterest-bearing liabilities	4,645							7,442
Total liabilities	950,109							920,425
Stockholders’ equity	177,444							175,552
Accumulated comprehensive income	164							552
Total stockholders' equity	177,608							176,104
Total liabilities and stockholders’ equity	$	1,127,717						$	1,096,529
Net interest income				$	8,544						$	8,672
Interest rate spread						2.96	%						3.08	%
Net interest margin						3.16	%						3.29	%
Average interest-earning assets to average interest-bearing liabilities						139.46	%						143.07	%

Net income increased $1.7 million, or 27.5%, to $7.8 million for the nine months ended September 30, 2015, compared to $6.1 million for the nine months ended September 30, 2014. The increase in net income was due to a decrease in the provision for loan losses of $2.7 million and increases in net interest income of $466,000 and noninterest income of $373,000, offset by increases in noninterest expense of $1.2 million and income tax provision of $615,000. During the nine months ended September 30, 2015, the Company incurred $979,000 in one-time costs associated with changing our outsourced data processing systems, of which $498,000 was included in data processing costs, $296,000 was included in professional fees, $106,000 was included in salaries, benefits and other compensation and $79,000 was included in other non-interest expense.

Net Interest Income. Net interest income 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 same period in 2014, due to a decrease in total interest income of $247,000, offset by a decrease in total interest expense of $130,000. The decrease in total interest income was primarily due to a reduction in yield on interest-earning assets from 3.85% to 3.79% and a $7.7 million decrease in the average balance of interest-earning assets. The yield on total loans decreased from 4.56% to 4.45%, primarily due to lower yields on commercial loan originations. The yield on investment securities decreased from 2.21% to 2.18%, primarily due to new purchases having lower yields in comparison to existing securities which continue to amortize. The decrease in the average balance of interest-earning assets was primarily due to a decrease in investment securities of $17.8 million, offset by a $5.5 million increase in total loans. The decrease in total interest expense was primarily due to a $37.9 million decrease in the average balance of interest-bearing liabilities from $780.8 million to $743.0 million and a decrease in the cost of interest-bearing liabilities from 0.83% to 0.80%. The decrease in the average balance of interest-bearing liabilities was primarily driven by a $57.8 million decrease in borrowings, offset by a $20.0 million increase in the average balance of interest-bearing deposits and a $44.6 million increase in noninterest-bearing deposits. The decrease in the average cost of interest-bearing liabilities was primarily due to a decrease in the average cost of certificates of deposit from 0.95% to 0.78%, offset by increased cost of borrowings from 1.52% to 1.76%. The decrease in the average cost of certificates of deposit reflects the continued low interest rate environment combined with maturities of higher rate certificates of deposit. The increase in the average cost of borrowings was due to the maturity of certain shorter-term borrowings, which had lower costs, offset by the benefits realized from the the modification of four non-callable fixed rate borrowings totaling $25.0 million during the three months ended March 31, 2015. Prior to the modification, the borrowings had a weighted average fixed rate of 3.33%. Subsequent to the modification, the borrowings have a weighted average variable rate of 1-month LIBOR plus 1.79%.

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 same period in 2014, due to a decrease in total interest expense of $635,000, offset by a decrease in total interest income of $169,000. The decrease in total interest expense was primarily due to a $43.3 million decrease in the average balance of interest-bearing liabilities from $783.8 million to $740.5 million and a decrease in the cost of interest-bearing liabilities from 0.86% to 0.79%. The decrease in the average balance of interest-bearing liabilities was primarily driven by a $49.4 million decrease in the average balance of borrowings. This decrease was offset by a $52.2 million increase in the average balance of noninterest-bearing deposits. The decrease in the average cost of interest-bearing liabilities was due to a decrease in the average cost of certificates of deposit from 1.08% to 0.78%, offset by an increase in the cost of borrowings from 1.55% to 1.71%. The decrease in the average cost of certificates of deposit reflects the continued low interest rate environment combined with maturities of higher rate certificates of deposit. The increase in the average cost of borrowings was primarily due to the maturity of certain shorter-term borrowings, which had lower costs, offset by the benefits realized from the modification of four non-callable fixed rate borrowings totaling $25.0 million during the three months ended March 31, 2015. Prior to the modification, the borrowings had a weighted average fixed rate of 3.33%. Subsequent to the modification, the borrowings have a weighted average variable rate of 1-month LIBOR plus 1.79%. The decrease in total interest income was primarily due to a decrease in yield on interest-earning assets from 3.87% to 3.83%, offset by a $5.3 million increase in the average balance of interest-earning assets. The yield on total loans decreased from 4.57% to 4.46%, primarily due to lower yields on commercial loan originations. The yield on investment securities increased from 2.29% to 2.31% due to a special dividend totaling $254,000 from the FHLB during the first quarter of 2015, offset by new purchases having lower yields in comparison to existing securities. The increase in the average balance of interest-earning assets was primarily due to a $22.7 million increase in total loans, offset by a decrease in investment securities of $21.9 million.

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~~Average~~Rate/Volume ~~Balances and Yields~~Analysis. The following table ~~presents~~sets ~~information~~forth ~~regarding average balances of assets and liabilities,~~ the ~~total~~effects ~~dollar amounts~~ of ~~interest~~changing ~~income~~rates and ~~dividends~~volumes ~~from~~on ~~average~~our ~~interest-earning~~net ~~assets, the total dollar amounts of~~ interest ~~expense on average interest-bearing liabilities, and the resulting annualized average yields and costs~~income. The ~~yields~~rate ~~and~~column ~~costs~~shows ~~for~~ the ~~periods~~effects ~~indicated~~attributable ~~are~~to ~~derived~~changes byin ~~dividing~~rate ~~income~~(changes orin ~~expense~~rate multiplied by ~~the~~current ~~average~~volume). The ~~balances~~volume ofcolumn ~~assets~~shows ~~or liabilities, respectively, for~~ the ~~periods~~effects ~~presented. Net~~attributable ~~loan~~to ~~origination~~changes ~~fees~~in ~~and~~volume ~~costs~~(changes ~~are included~~ in ~~interest~~volume ~~income~~multiplied onby ~~loans~~prior ~~and are insignificant~~rate). ~~Yields are not presented on a tax-equivalent basis.~~ ~~Any~~The ~~adjustments~~net ~~necessary~~column torepresents ~~present~~the ~~yields~~sum onof athe ~~tax-equivalent~~prior ~~basis are insignificant~~columns.

	Three Months Ended September 30,																Nine Months Ended September 30,
	Three Months Ended March 31, 2016
	2015									2014							2015							2014
	Compared to
	AverageBalance			Interest andDividends			Yield/Cost			AverageBalance			Interest andDividends		Yield/Cost		AverageBalance			Interest andDividends		Yield/Cost		AverageBalance			Interest andDividends		Yield/Cost
	Three Months Ended March 31, 2015
Assets:	(Dollars in thousands)																(Dollars in thousands)
	Increase (Decrease)
Interest-earning assets:
	Due to
Interest-earning demand deposits	$	10,586		$	4		0.16	%		$	6,815		$	1	0.06	%	$	10,807		$	10	0.13	%	$	6,794		$	2	0.05	%
	Rate			Volume			Net
Investment securities
Interest Income:	(In thousands)
Available-for-sale	144,447			846			2.34	%		217,934			1,284		2.36	%	142,490			2,784		2.60	%	246,436			4,426		2.39	%
Interest-earning demand deposits	$	—		$	6		$	6
Held-to-maturity	159,939			813			2.03	%		104,244			493		1.89	%	165,849			2,553		2.05	%	83,775			1,246		1.98	%
Investment securities
Total investment securities	304,386			1,659			2.18	%		322,178			1,777		2.21	%	308,339			5,337		2.31	%	330,211			5,672		2.29	%
Available-for-sale	(269		)	34			(235		)
Loans:
Held-to-maturity	5			(120		)	(115		)
Residential loans	97,710			1,155			4.73	%		116,692			1,382		4.74	%	102,351			3,563		4.64	%	121,949			4,320		4.72	%
Total investment securities	(264		)	(86		)	(350		)
Commercial loans	621,942			6,890			4.40	%		593,847			6,754		4.51	%	622,664			20,584		4.42	%	577,010			19,542		4.53	%
Loans
Consumer loans	16,220			198			4.87	%		19,871			239		4.81	%	17,609			626		4.74	%	20,920			753		4.80	%
Residential loans	(10		)	(217		)	(227		)
Total Loans	735,872			8,243			4.45	%		730,410			8,375		4.56	%	742,624			24,773		4.46	%	719,879			24,615		4.57	%
Commercial loans	(33		)	679			646
Allowance for loan losses	(10,731		)							(11,541		)					(11,142		)					(11,566		)
Consumer loans	1			(53		)	(52		)
Net loans	725,141			8,243						718,869			8,375				731,482			24,773				708,313			24,615
Total loans	(42		)	409			367
Total interest-earning assets	~~1,040,113~~(306		)	~~9,906~~329			~~3.79~~23	%		~~1,047,862~~			~~10,153~~		~~3.85~~	%	~~1,050,628~~			~~30,120~~		~~3.83~~	%	~~1,045,318~~			~~30,289~~		~~3.87~~	%
Noninterest-earning assets	51,792									41,403							45,631							44,496
Interest Expense:
Total assets	$	1,091,905								$	1,089,265						$	1,096,259						$	1,089,814
NOW and money market deposits	5			16			21
Liabilities and equity:
Savings accounts	29			12			41
Interest-bearing liabilities:
Brokered deposits	3			8			11
NOW and money market deposit accounts	$	176,258		$	98		0.22	%		$	182,448		$	99	0.21	%	$	178,925		$	298	0.22	%	$	184,542		$	295	0.21	%
Certificates of deposit	23			(4		)	19
Savings accounts	128,302			116			0.36	%		107,633			54		0.20	%	129,518			353		0.36	%	107,415			159		0.20	%
Total interest-bearing deposits	60			32			92
Brokered deposits	61,639			129			0.83	%		64,037			131		0.81	%	61,318			376		0.82	%	61,286			321		0.70	%
Short-term borrowings	26			1			27
Certificates of deposit	205,829			402			0.78	%		197,954			476		0.95	%	198,367			1,161		0.78	%	208,757			1,680		1.08	%
FHLB advances	75			(57		)	18
Total interest-bearing deposits	572,028			745			0.52	%		552,072			760		0.55	%	568,128			2,188		0.51	%	562,000			2,455		0.58	%
Other borrowed funds	14			—			14
Short-term borrowings	28,665			25			0.34	%		54,590			45		0.32	%	31,964			79		0.33	%	43,758			100		0.30	%
Total borrowings	115			(56		)	59
FHLB advances	112,258			568			2.01	%		144,147			577		1.59	%	110,430			1,630		1.97	%	148,048			1,723		1.56	%
Total interest-bearing liabilities	175			(24		)	151
Other borrowed funds	30,000			167			2.21	%		30,000			253		3.34	%	30,000			497		2.22	%	30,000			751		3.35	%
Net change in net interest income	$	(481	)	$	353		$	(128	)
Total borrowings	170,923			760			1.76	%		228,737			875		1.52	%	172,394			2,206		1.71	%	221,806			2,574		1.55	%
Total interest-bearing liabilities	742,951			1,505			0.80	%		780,809			1,635		0.83	%	740,522			4,394		0.79	%	783,806			5,029		0.86	%
Noninterest-bearing deposits	168,357									123,709							173,989							121,770
Other noninterest-bearing liabilities	5,505									6,407							6,433							7,437
Total liabilities	916,813									910,925							920,944							913,013
Stockholders’ equity	175,047									178,984							174,934							178,382
Accumulated comprehensive income	45									(644		)					381							(1,581		)
Total stockholders' equity	175,092									178,340							175,315							176,801
Total liabilities and stockholders’ equity	$	1,091,905								$	1,089,265						$	1,096,259						$	1,089,814
Net interest income				$	8,401								$	8,518						$	25,726						$	25,260
Interest rate spread							2.99	%							3.02	%						3.04	%						3.01	%
Net interest margin							3.18	%							3.20	%						3.24	%						3.19	%
Average interest-earning assets to average interest-bearing liabilities							140.00	%							134.20	%						141.88	%						133.36	%

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~~Rate/Volume~~Provision ~~Analysis. The~~for ~~following~~Loan ~~table sets forth the effects of changing rates and volumes on our net interest income~~Losses. The ~~rate~~Company ~~column~~recorded ~~shows~~a ~~the~~provision ~~effects~~for ~~attributable~~loan tolosses ~~changes~~of in$45,000 ~~rate~~for ~~(changes~~the inthree ~~rate~~month ~~multiplied~~period byended ~~current~~March 31, ~~volume). The~~2016 ~~volume~~compared ~~column shows the effects attributable~~ to ~~changes~~a inprovision ~~volume~~for ~~(changes~~loan inlosses ~~volume~~of ~~multiplied~~$472,000 byfor ~~prior rate). The net column represents~~ the ~~sum~~three ofmonth ~~the~~period ~~prior~~ended ~~columns~~March 31, 2015.

	Three Months Ended September 30, 2015									Nine Months Ended September 30, 2015
	Compared to									Compared to
	Three Months Ended September 30, 2014									Nine Months Ended September 30, 2014
	Increase (Decrease)									Increase (Decrease)
	Due to									Due to
	Rate			Volume			Net			Rate			Volume			Net
Interest Income:	(In thousands)
Interest-earning demand deposits	$	—		$	3		$	3		$	6		$	2		$	8
Investment securities
Available-for-sale	(5		)	(433		)	(438		)	225			(1,867		)	(1,642		)
Held-to-maturity	56			264			320			86			1,221			1,307
Total investment securities	51			(169		)	(118		)	311			(646		)	(335		)
Loans
Residential loans	(2		)	(225		)	(227		)	(62		)	(695		)	(757		)
Commercial loans	(183		)	319			136			(504		)	1,546			1,042
Consumer loans	2			(43		)	(41		)	(8		)	(119		)	(127		)
Total loans	(183		)	51			(132		)	(574		)	732			158
Total interest-earning assets	(132		)	(115		)	(247		)	(257		)	88			(169		)
Interest Expense:
NOW and money market deposits	2			(3		)	(1		)	12			(9		)	3
Savings accounts	51			11			62			161			33			194
Brokered deposits	3			(5		)	(2		)	55			—			55
Certificates of deposit	(93		)	19			(74		)	(435		)	(84		)	(519		)
Total interest-bearing deposits	(37		)	22			(15		)	(207		)	(60		)	(267		)
Short-term borrowings	2			(22		)	(20		)	6			(27		)	(21		)
FHLB advances	118			(127		)	(9		)	344			(437		)	(93		)
Other borrowed funds	(86		)	—			(86		)	(254		)	—			(254		)
Total borrowings	34			(149		)	(115		)	96			(464		)	(368		)
Total interest-bearing liabilities	(3		)	(127		)	(130		)	(111		)	(524		)	(635		)
Net change in net interest income	$	(129	)	$	12		$	(117	)	$	(146	)	$	612		$	466

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Provision for Loan Losses. The Company recorded a credit to the provision for loan losses of $300,000 and $1.1 million for the three and nine month periods ended September 30, 2015, respectively, compared to a provision for loan losses of $1.5 million and $1.6 million for the three and nine month periods ended September 30, 2014, respectively. The credits for loan losses for the three and nine months ended September 30, 2015 are primarily due to recoveries of $317,000 and $1.2 million, respectively, related to previously charged-off loans.

The following table provides information with respect to our nonperforming assets and impaired loans at the dates indicated.

	September 30, 2015			December 31, 2014
	March 31, 2016			December 31, 2015
	(Dollars in thousands)
Nonaccruing Loans:
One- to four-family real estate	$	~~1,530~~759		$	~~1,741~~583
Multi-family and commercial real estate	1,~~076~~066			1,~~395~~074
Construction	—			—
Consumer	~~110~~79			~~243~~159
Commercial and industrial	~~730~~702			75718
Total	32,~~446~~606			32,~~454~~534
Accruing Loans Past Due 90 Days or More:
Total	$	—		$	—
Nonperforming Loans	32,~~446~~606			32,~~454~~534
Assets Acquired Through Foreclosure	2,~~815~~615			2,~~814~~623
Total Nonperforming Assets	$	65,~~261~~221		$	65,~~268~~157
Total nonperforming loans to total loans	0.4633		%	0.4733		%
Total nonperforming assets to total assets	0.5746			0.5746
Impaired Loans:
Nonaccruing loans	$	32,~~446~~606		$	32,~~454~~534
Accruing troubled debt restructurings	56,~~971~~488			36,~~624~~440
Other impaired loans	4,~~378~~325			4,~~454~~352
Total impaired loans	$	13,~~795~~419		$	1113,~~532~~326

At ~~September~~March 3031, ~~2015~~2016, nonperforming assets were comprised of the following:

• Two multi-family and commercial real estate loans, the largest of which is secured by rental properties located in the ~~Greater~~greater Philadelphia Area.


•	One commercial and industrial loan relationship secured by the assets of a professional services firm in the greater Philadelphia area.


•	Six one- to four-family loans, the largest of which is secured by a single-family home located in Montgomery County, Pennsylvania.

• ~~Seven~~Two consumer ~~loans~~loan relationships, which are secured by second or third lien mortgage positions.

• Assets acquired through foreclosure consisting of ~~seven~~five properties with a total carrying value of $2.86 million.

3332

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Noninterest Income. The following table summarizes noninterest income for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015.

	Three Months Ended September 30,						$			%		Nine Months Ended September 30,						$		%
	Three Months Ended March 31,						$			%
	2015			2014			Change			Change		2015			2014			Change		Change
	2016			2015			Change			Change
	(Dollars in thousands)											~~(Dollars in thousands)~~
Service charges and other fee income	$	~~377~~362		$	~~416~~384		$	(3922	)	(95.47	)%	$	~~1,200~~		$	~~1,192~~		$	8	~~0.7~~	%
Net gain (loss) on sale of assets acquired through foreclosure	1			(15		)	16			106.7		(14		)	(136		)	122		89.7
Income on bank-owned life insurance	215			120			95			79.2
Income on bank-owned life insurance	202			121			81			66.9		444			358			86		24.0
Equity in earnings of affiliate	(5		)	40			(45		)	(112.5	)
Equity in earnings of affiliate	74			91			(17		)	(18.7	)	225			125			100		80.0
Other	94			27			67			248.1
Other	67			29			38			131.0		133			76			57		75.0
Total Noninterest Income	$	666		$	571		$	95		16.6	%
Total Noninterest Income	$	721		$	642		$	79		12.3	%	$	1,988		$	1,615		$	373	23.1	%

Noninterest income increased $7995,000 from $~~642~~571,000 for the three months ended ~~September~~March 3031, ~~2014~~2015 to $~~721~~666,000 for the same period in ~~2015~~2016. Income on bank-owned life insurance increased $8195,000 due to the purchase of policies totaling $10.0 million during the quarter ended September 30, 2015. Other noninterest income increased $3867,000 primarily due to increased ~~revenue~~ ~~from~~merchant ~~our~~services ~~cash~~revenue. Equity ~~management~~in ~~product~~earnings ~~line.~~of ~~Service~~affiliates ~~charges~~decreased ~~and~~$45,000 ~~other~~due ~~fee~~to decreased income ~~decreased~~on ~~$39,000~~the ~~primarily~~Bank’s investment in PMA due to ~~decreases~~lower inmortgage loan~~-related~~ ~~fees~~volume offor ~~$33,000~~the 2016 period.

Noninterest ~~income~~Expense. The ~~increased~~following ~~$373,000~~table ~~from~~summarizes ~~$1.6~~noninterest ~~million~~expense for the ~~nine~~three months ended ~~September~~March 3031, ~~2014~~2016 toand ~~$2.0 million for the same period in~~ 2015. Net loss on sale of assets acquired through foreclosure decreased $122,000 due to two properties being sold at a net loss of $14,000 in 2015 compared to three properties being sold at a combined loss of $136,000 during 2014. Equity in earnings of affiliates increased $100,000 due to increased income on the Bank’s investment in PMA due to higher mortgage loan volume for the 2015 period. Income on bank-owned life insurance increased $86,000 due the purchase of policies totaling $10.0 million during the quarter ended September 30, 2015. Other noninterest income increased $57,000 primarily due to increased revenue from our cash management product line.

Noninterest Expense. The following table summarizes noninterest expense for the three and nine months ended September 30, 2015 and 2014.



	Three Months Ended March 31,				$			%
	2016		2015		Change			Change
	(Dollars in thousands)
Salaries, benefits and other compensation	$	3,943	$	3,719	$	224		6.0	%
Occupancy expense	430		477		(47		)	(9.9	)
Furniture and equipment expense	77		83		(6		)	(7.2	)
Data processing costs	408		573		(165		)	(28.8	)
Professional fees	538		363		175			48.2
Marketing expense	24		41		(17		)	(41.5	)
FDIC premiums	134		119		15			12.6
Assets acquired through foreclosure expense	30		30		—			—
Other	301		360		(59		)	(16.4	)
Total Noninterest Expense	$	5,885	$	5,765	$	120		2.1	%

	Three Months Ended September 30,				$			%		Nine Months Ended September 30,				$			%
	2015		2014		Change			Change		2015		2014		Change			Change
	(Dollars in thousands)									(Dollars in thousands)
Salaries, benefits and other compensation	$	3,836	$	3,510	$	326		9.3	%	$	11,498	$	10,670	$	828		7.8	%
Occupancy expense	391		407		(16		)	(3.9	)	1,288		1,321		(33		)	(2.5	)
Furniture and equipment expense	81		93		(12		)	(12.9	)	263		300		(37		)	(12.3	)
Data processing costs	676		384		292			76.0		1,751		1,146		605			52.8
Professional fees	370		271		99			36.5		1,147		1,086		61			5.6
Marketing expense	35		54		(19		)	(35.2	)	133		156		(23		)	(14.7	)
FDIC premiums	124		136		(12		)	(8.8	)	384		451		(67		)	(14.9	)
Assets acquired through foreclosure expense	131		10		121			1,210.0		223		403		(180		)	(44.7	)
Other	414		333		81			24.3		1,159		1,077		82			7.6
Total Noninterest Expense	$	6,058	$	5,198	$	860		16.5	%	$	17,846	$	16,610	$	1,236		7.4	%

Noninterest expense increased $120,000 from $5.8 million for the three months ended March 31, 2015 to $5.9 million for the same period in 2016. Salaries, benefits and other compensation expense increased $224,000 primarily as a result of annual merit increases, increased staffing costs and increased benefits costs. Professional fees increased $175,000 primarily due to $346,000 in costs related to the previously announced merger with Univest, offset by decreased loan workout costs and one-time costs incurred during 2015 in conjunction with the change of our outsourced data processing systems. Data processing costs decreased $165,000 primarily due to one-time costs incurred during 2015 for this initiative.

~~Noninterest~~Income ~~expense~~Taxes. The ~~increased~~income ~~$860,000~~tax ~~from~~provision ~~$5.2 million~~ for the three months ended ~~September~~March 3031, ~~2014~~2016 towas $6.1.0 million, compared to $727,000 for the ~~same~~three ~~period~~months inended March 31, 2015. The ~~primary~~Company’s ~~reason~~effective ~~for~~income ~~this~~tax ~~increase~~rate was 31.4% for the ~~Company~~three ~~incurred~~months ~~$502~~ended March 31,~~000~~ of2016, ~~one-time~~compared ~~noninterest~~to ~~expenses~~24.2% ~~during~~for the three months ended ~~September~~March 3031, 2015. The ~~related~~increase toin ~~its~~effective ~~change~~tax inrate ~~outsourced~~for ~~data~~the ~~processing~~three ~~systems. Salaries~~months ended March 31, ~~benefits~~2016 ~~and~~reflects ~~other~~non-deductible ~~compensation~~merger-related ~~expense~~expenses ~~increased~~of $~~326~~269,000. Additionally, ~~primarily~~during asthe athree ~~result~~months ofended ~~annual~~March 31, ~~merit increases~~2015, ~~increased~~the ~~staffing~~Company ~~costs~~reversed ~~and~~a ~~incremental~~$182,000 ~~compensation~~valuation ~~costs~~allowance ~~related~~on tocertain ~~our~~state ~~change~~deferred intax ~~our~~assets, ~~outsourced~~as ~~data~~management ~~processing~~determined ~~systems. Data~~it ~~processing~~is ~~costs~~more ~~increased~~likely ~~$292,000~~than ~~and~~not ~~professional~~the ~~fees~~deferred ~~increased~~tax ~~$99,000~~assets ~~primarily~~will ~~due~~be ~~to this initiative~~realized. ~~Assets~~The ~~acquired~~effective ~~through~~tax ~~foreclosure~~rate ~~expense~~for ~~increased~~the ~~$121,000~~three ~~primarily~~months ~~due~~ended toMarch 31, ~~valuation~~2015, ~~adjustments~~excluding ofthis ~~$117~~discrete event,~~000~~ inwas ~~2015~~30. 3%.

Noninterest expense increased $1.2 million from $16.6 million for the nine months ended September 30, 2014 to $17.8 million for the same period in 2015. The primary reason for this increase was the Company incurred $979,000 of one-time noninterest expenses during the nine months ended September 30, 2015 related to its change in outsourced data processing systems. Salaries, benefits

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and other compensation expense increased $828,000 primarily as a result of annual merit increases, increased staffing costs, increased benefits costs and incremental compensation costs related to our change in our outsourced data processing systems. Data processing costs also increased $605,000 primarily due to this initiative. Professional fees increased $61,000 primarily due to $296,000 in costs associated with our change in outsourced data processing systems, offset by decreased loan workout costs. Assets acquired through foreclosure expense decreased $180,000 primarily due to decreased valuation adjustments on assets acquired through foreclosure, which totaled $137,000 for the nine months ended September 30, 2015 compared to $282,000 for the nine months ended September 30, 2014. FDIC premiums decreased $67,000 due to a reduced assessment.

Income Taxes. The income tax provision for the three and nine months ended September 30, 2015 was $1.0 million and $3.2 million, respectively, compared to $653,000 and $2.6 million for the three and nine months ended September 30, 2014, respectively. The Company’s effective income tax rate was 30.8% and 29.2% for the three and nine months ended September 30, 2015, respectively, compared to 26.4% and 29.8% for the three and nine months ended September 30, 2014, respectively. The decrease in effective tax rate for the nine months ended September 30, 2015 reflects the reversal of a $182,000 valuation allowance on certain state deferred tax assets during the three months ended March 31, 2015, as management determined it is more likely than not the deferred tax assets will be realized. The effective tax rate for the nine months ended September 30, 2015, excluding this discrete event, was 30.8%.

Liquidity and Capital Management

Liquidity Management. Liquidity is the ability to meet current and future financial obligations of a short-term nature. Our primary sources of funds consist of deposit inflows, loan repayments and sales, security repayments, maturities and sales, and funds available from the FHLB, Federal Reserve Bank and commercial banks. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loans and securities sales and prepayments are greatly influenced by general interest rates, economic conditions and competition.

~~The following table presents certain of our contractual obligations as of September 30, 2015.~~33

			Payments Due by Period
			Less ThanOne Year		One toThree Years		Three toFive Years		More ThanFive Years
Contractual Obligations	Total
	(In thousands)
September 30, 2015
Operating lease obligations (1)	$	145	$	145	$	—	$	—	$	—
FHLB advances and other borrowings (2)	207,098		97,856		78,661		25,572		5,009
Other long-term obligations (3)	10,414		1,734		3,310		2,774		2,596
Total	$	217,657	$	99,735	$	81,971	$	28,346	$	7,605

Table of Contents

~~(1) Represents~~The ~~lease~~following ~~obligations~~table ~~for~~presents ~~operations~~certain ~~center~~of ~~and~~our ~~equipment~~contractual obligations as of March 31, 2016.



			Payments Due by Period
			Less Than One Year		One to Three Years		Three to Five Years		More Than Five Years
Contractual Obligations	Total		Less Than One Year		One to Three Years		Three to Five Years		More Than Five Years
	(In thousands)
March 31, 2016
Operating lease obligations⁽¹⁾	$	290	$	290	$	—	$	—	$	—
FHLB advances and other borrowings⁽²⁾	140,877		32,783		87,681		20,413		—
Other long-term obligations⁽³⁾	8,431		1,573		2,745		2,377		1,736
Total	$	149,598	$	34,646	$	90,426	$	22,790	$	1,736

(1) Represents lease obligations for operations center and equipment. This includes obligations under the operating lease for our Blue Bell location, which expires on November 30, 2016.

(2) Includes principal and projected interest payments.

(3) Represents obligations to the Company’s third-party data processing ~~providers~~provider and other vendors ~~including obligations related to our change in outsourced data processing systems, which occurred in October 2015~~.

We regularly adjust our investments in liquid assets and our short-term borrowing position based upon our assessment of: (1) expected loan demand; (2) expected deposit flows; (3) cash flows on our loans and investments; (4) yields available on interest-earning deposits and securities; and (5) the objectives of our asset/liability management policy. We use a variety of measures to assess our liquidity needs, which are provided to our Asset/Liability Management Committee on a regular basis. Our policy is to maintain net liquidity of at least 50% of our funding obligations over the next month. Additionally, our policy is to maintain an amount of cash and short-term marketable securities equal to at least 15% of net deposits and liabilities that will mature in one year or less.

Our most liquid assets are cash and cash equivalents. The levels of these assets depend on our operating, financing, lending and investing activities during any given period. At ~~September~~March 3031, ~~2015~~2016, cash and cash equivalents totaled $79.21 million. Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $~~138~~135.8 million at ~~September~~March 3031, ~~2015~~2016. In addition, at ~~September~~March 3031, ~~2015~~2016, we had the ability to borrow a total of approximately $~~470~~496.41 million from the FHLB, of which we had $~~110~~95.0 million outstanding. As of ~~September~~March 3031, ~~2015~~2016, the Bank also had a maximum borrowing capacity of $6157.46 million with the Federal Reserve Bank of Philadelphia, through the Discount Window. Additionally, as of ~~September~~March 3031, ~~2015~~2016, the Bank had ~~overnight borrowing facilities with the FHLB of Pittsburgh and the Federal Reserve Bank as well as~~ federal funds lines of credit with ~~three~~ other commercial banks.

35At March 31, 2016, we had $198.3 million in commitments outstanding, which consisted of $4.5 million in home equity and consumer loan commitments, $178.3 million in commercial loan commitments, $15.0 million in standby letters of credit and $440,000 in commercial letters of credit.

~~Table~~Certificates of ~~Contents~~deposit due within one year of March 31, 2016 totaled $131.9 million, including $36.2 million of brokered deposits, representing 54.5% of certificates of deposit at March 31, 2016, an increase from 52.1% at December 31, 2015. We believe the large percentage of certificates of deposit that mature within one year reflect customers’ hesitancy to invest their funds for long periods in the current low interest rate environment. If these maturing deposits do not remain with us, we will be required to seek other sources of funds, including other certificates of deposit and borrowings. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before March 31, 2017.

At September 30, 2015, we had $214.5 million in unfunded commitments, which consisted of $6.9 million in home equity and consumer loan commitments, $190.5 million in commercial loan commitments, $16.7 million in standby letters of credit and $407,000 in commercial letters of credit.

Certificates of deposit due within one year of September 30, 2015 totaled $138.2 million, including $34.0 million of brokered deposits, representing 48.8% of certificates of deposit at September 30, 2015, a decrease from 53.6% at December 31, 2014. We believe the large percentage of certificates of deposit that mature within one year reflect customers’ hesitancy to invest their funds for long periods in the current low interest rate environment. If these maturing deposits do not remain with us, we will be required to seek other sources of funds, including other certificates of deposit and borrowings. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before September 30, 2016.

Our primary investing activities are the origination of loans and the purchase and sale of securities. Our primary financing activities consist of activity in deposit accounts and borrowed funds. Deposit flows are affected by the overall levels of interest rates, the interest rates and products offered by us and our local competitors and other factors. We generally manage the pricing of our deposits to be competitive and to increase core deposit relationships. Occasionally, we offer promotional rates on certain deposit products to attract deposits.

The Bancorp is a separate entity apart from the Bank and must provide for its own liquidity. As of ~~September~~March 3031, ~~2015~~2016, the Bancorp had $2016.13 million in cash and cash equivalents compared to $20.32 million as of December 31, ~~2014~~2015. In addition to its operating expenses, the Bancorp may utilize its cash to pay dividends or to repurchase common stock, subject to applicable restrictions. The Bancorp paid cash dividends totaling $0.5428 per outstanding share of common stock. No ~~and repurchased 288,629~~ shares of common stock were purchased during the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016.

The Bancorp can receive dividends from the Bank. Payment of such dividends to the Bancorp by the Bank is limited under applicable law. Dividends may be declared and paid only out of accumulated net earnings and may be paid in cash or property other than its own shares. Dividends may not be declared or paid unless stockholders' equity is at least equal to contributed capital. During the nine months ended September 30, 2015, the Bank paid a cash dividend of $8.5 million to the Bancorp.34

Capital Management. The Bancorp and Bank are subject to various regulatory capital requirements administered by their respective regulators, including a risk-based capital measure. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. In December 2010, the Basel Committee on Banking Supervision, an international forum for cooperation on banking supervisory matters, announced the "Basel III" capital standards, which substantially revised the existing capital requirements for banking organizations. In July 2013, the Federal Deposit Insurance Corporation and Federal Reserve adopted a final rule for the Basel III capital framework. The requirements in the rule began to phase in on January 1, 2015 for the Company and will be fully phased in by January 1, 2019. The rule imposes higher risk-based capital and leverage requirements than those currently in place. Specifically, the rule imposes the following minimum capital requirements: (1) a new common equity Tier 1 capital ratio of 4.5%; (2) a Tier 1 capital ratio of 6% (increased from 4%); (3) a total capital ratio of 8% (unchanged from prior rules); and (4) a Tier 1 leverage ratio of 4% for all institutions (unchanged from prior rules). At September 30, 2015, the Bancorp and Bank exceeded all applicable regulatory capital requirements under this new rule and are considered "well capitalized" under regulatory guidelines.

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The ~~following~~Bancorp ~~table~~can ~~presents~~receive dividends from the Bank. Payment of such dividends to the Bancorp's ~~and~~by the Bank’s ~~capital~~is ~~ratios~~limited under applicable law. Dividends may be declared and ~~the~~paid ~~minimum~~only ~~capital~~out ~~requirements~~of toaccumulated net earnings and may be ~~considered~~paid ~~"well~~in ~~capitalized"~~cash ~~under~~or ~~applicable~~property ~~regulatory~~other ~~guidelines~~than asits ofown ~~September 30,~~shares. Dividends ~~2015~~may ~~and~~not ~~December~~be declared or paid unless stockholders' equity is at least equal to contributed capital. During the three months ended March 31, ~~2014~~2016, the Bank did not pay a dividend to the Bancorp.

September 30, 2015 (Basel III)	Ratio		Minimum to beWell Capitalized
Common Equity Tier 1 Capital Ratio (to risk-weighted assets)
Bancorp	19.87	%	6.5	%
Bank	16.93		6.5
Tier 1 Capital Ratio (to risk-weighted assets)
Bancorp	19.87		8.0
Bank	16.93		8.0
Total Capital Ratio (to risk-weighted assets)
Bancorp	20.89		10.0
Bank	17.95		10.0
Tier 1 Leverage Ratio (to adjusted average assets)
Bancorp	16.10		5.0
Bank	13.64		5.0
December 31, 2014	Ratio		Minimum to beWell Capitalized
Total Risk-Based Capital (to risk-weighted assets)
Bancorp	23.45	%	10.0	%
Bank	20.02		10.0
Tier 1 Capital (to risk-weighted assets)
Bancorp	22.41		6.0
Bank	18.97		6.0
Tier 1 Capital (to adjusted assets)
Bancorp	16.58		5.0
Bank	13.99		5.0

Capital Management. The Bancorp and Bank are subject to various regulatory capital requirements administered by their respective regulators, including a risk-based capital measure. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. In December 2010, the Basel Committee on Banking Supervision, an international forum for cooperation on banking supervisory matters, announced the "Basel III" capital standards, which substantially revised the existing capital requirements for banking organizations. In July 2013, the Federal Deposit Insurance Corporation and Federal Reserve adopted a final rule for the Basel III capital framework. The requirements in the rule began to phase in on January 1, 2015 for the Company and will be fully phased in by January 1, 2019. The rule imposes higher risk-based capital and leverage requirements than those currently in place. Specifically, the rule imposes the following minimum capital requirements: (1) a new common equity Tier 1 capital ratio of 4.5%; (2) a Tier 1 capital ratio of 6% (increased from 4%); (3) a total capital ratio of 8% (unchanged from prior rules); and (4) a Tier 1 leverage ratio of 4% for all institutions (unchanged from prior rules). In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of risk-weighted assets above the amount necessary to meet its minimum common equity Tier 1 capital, tier 1 capital and total capital requirements. The capital conservation buffer requirement is being phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and increasing each year until fully implemented at 2.5% on January 1, 2019. At March 31, 2016, the Bancorp and Bank exceeded all applicable regulatory capital requirements under this new rule and are considered "well capitalized" under regulatory guidelines.

~~Total~~The ~~stockholders’~~following ~~equity~~table topresents ~~total~~the ~~assets~~Bancorp's ~~was 16.0% at September 30, 2015~~ and ~~16.1% at December 31, 2014. As a result of~~ the ~~mutual-to-stock conversion completed in June 2010, the Company has significant capital. The Company~~Bank’s ~~financial~~capital ~~condition~~ratios and ~~results of operations have been enhanced by~~ the ~~capital~~minimum ~~from the offering, resulting in increased net interest-earning assets. However, the large increase in equity resulting from the~~ capital ~~raised~~requirements ~~in the conversion has and will continue~~ to ~~have an adverse impact on our return on equity until such funds can~~ be ~~deployed~~considered ~~into~~"well ~~higher-yielding~~capitalized" ~~assets. The~~under ~~Company~~applicable ~~may~~regulatory ~~rely~~guidelines ~~on capital management tools such~~ as ~~cash~~of ~~dividends~~March 31, 2016 and ~~share~~December 31, ~~repurchases as well as improving operating income to increase its return on equity~~2015.



	Ratio		Minimum to be Well Capitalized
March 31, 2016
Common Equity Tier 1 Capital Ratio (to risk-weighted assets)
Bancorp	19.07	%	6.5	%
Bank	16.66		6.5
Tier 1 Capital Ratio (to risk-weighted assets)
Bancorp	19.07		8.0
Bank	16.66		8.0
Total Capital Ratio (to risk-weighted assets)
Bancorp	20.03		10.0
Bank	17.63		10.0
Tier 1 Leverage Ratio (to adjusted average assets)
Bancorp	15.73		5.0
Bank	13.74		5.0
December 31, 2015
Common Equity Tier 1 Capital Ratio (to risk-weighted assets)
Bancorp	19.50	%	6.5	%
Bank	16.69		6.5
Tier 1 Capital Ratio (to risk-weighted assets)
Bancorp	19.50		8.0
Bank	16.69		8.0
Total Capital Ratio (to risk-weighted assets)
Bancorp	20.48		10.0
Bank	17.68		10.0
Tier 1 Leverage Ratio (to adjusted average assets)
Bancorp	15.85		5.0
Bank	13.52		5.0

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Total stockholders’ equity to total assets was 15.7% at March 31, 2016 and December 31, 2015. As a result of the mutual-to-stock conversion completed in June 2010, the Company continues to have significant capital. The Company’s financial condition and results of operations have been enhanced by the capital from the offering, resulting in increased net interest-earning assets. However, the large increase in equity resulting from the capital raised in the conversion has and will continue to have an adverse impact on our return on equity until such funds can be deployed into higher-yielding assets. The Company may rely on capital management tools such as cash dividends and share repurchases as well as improving operating income to increase its return on equity.

Off-Balance Sheet Arrangements

In the normal course of operations, we engage in a variety of financial transactions that, in accordance with U.S. generally accepted accounting principles, are not recorded in our financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments, letters of credit and lines of credit.

For the ~~nine~~three-month period ended ~~September~~March 3031, ~~2015~~2016, we did not engage in any off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations or cash flows.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

At ~~September~~March 3031, ~~2015~~2016, there was not any material change to the market risk disclosure contained in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2014~~2015.

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Item 4. Controls and Procedures

The Company’s management, including the Company’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”): (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. In addition, no change in the Company’s internal control over financial reporting occurred during the quarter ended ~~September~~March 3031, ~~2015~~2016 that has materially affected, or is reasonably likely to materially effect, Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Periodically, there have been various claims and lawsuits against us, such as claims to enforce liens, condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real property loans and other issues incident to our business. We are not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows other than as described below.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2014~~2015, which could materially affect our business, financial condition or future results. As of ~~September~~March 3031, ~~2015~~2016, except as detailed below, the risk factors of the Company have not changed materially from those reported in the Company’s Annual Report on Form 10-K. The risks described in our Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Litigation relating to the merger could require us to incur significant costs and suffer management distraction, as well as delay and/or enjoin the merger.

Fox Chase received two letters from attorneys representing a purported shareholder demanding that the Fox Chase board remedy alleged breaches of fiduciary duties in connection with the merger and alleged failures to make all required material disclosures necessary for Fox Chase shareholders to make a fully informed voting decision on the merger. The letters assert that the proposed transaction

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undervalues Fox Chase and that Fox Chase’s directors breached their fiduciary duties by allegedly refusing to adequately shop the company and maximize shareholder value, and that the registration statement initially filed on February 26, 2016 fails to make all material disclosures and contains misleading statements about the merger. The letters demand that Fox Chase’s board, among other things: (i) undertake all appropriate methods to maximize shareholder value and remove alleged conflicts of interest; (ii) remedy alleged disclosure violations that do not allow Fox Chase shareholders to make a fully informed voting decision; (iii) revise the merger agreement to eliminate certain deal protection devices; and (iv) refrain from completing the merger.

On February 19, 2016, the Fox Chase board of directors established a special committee of independent directors to review and investigate the allegations in the demand letters, and to make recommendations to the board regarding what actions Fox Chase should take as a result of the demand letters. The committee has retained an independent law firm as its legal counsel.

On or about March 17, 2016, the purported Fox Chase shareholder identified in the letters filed a purported class action and derivative complaint in the Court of Common Pleas of Montgomery County, Pennsylvania captioned Michael Rubin v. Roger H. Ballou, et al, No. 2016-05079-0. The lawsuit names as defendants each current member of Fox Chase’s board of directors and Univest, and also names Fox Chase as a nominal defendant. The lawsuit alleges that the Fox Chase directors breached their fiduciary duties by agreeing to the transaction, that the directors and executive officers have conflicts of interest related to the transaction, that the registration filed on February 26, 2016 failed to disclose material information relating to the transaction, and that Univest aided and abetted the alleged breaches of fiduciary duty. The complaint seeks injunctive relief to prevent consummation of the transaction, rescission of any terms of the transaction to the extent already implemented, and monetary damages resulting from the alleged wrongful misconduct of the defendants. In response to the lawsuit, Fox Chase and each of its directors has filed Preliminary Objections to the complaint and a Motion to Stay the proceedings with the Court of Common Pleas of Montgomery County, Pennsylvania. The Motion to Stay was granted on May 5, 2016.

A negative outcome in this matter could have a material adverse effect on Fox Chase if it results in preliminary or permanent injunctive relief or rescission of the merger agreement. Such actions may also create additional uncertainty relating to the merger, and responding to such demands and defending such actions may be costly and distracting to management. Fox Chase is not currently able to predict the outcome of any lawsuit arising out of or relating to the proposed transaction. If additional letters are received or complaints are filed, absent new or different allegations that are material, Fox Chase will not necessarily announce such additional matters.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Not applicable.

(b) Not applicable.

(c) The following table provides certain information with regard to shares repurchased by the Company in the ~~third~~first quarter of ~~2015~~2016.

Period	TotalNumber ofSharesPurchased	AveragePrice PaidPer Share		Total Number ofShares Purchasedas Part of PubliclyAnnounced Plansor Programs (1)	MaximumNumber of Sharesthat May Yet bePurchased Under thePlans or Programs (1)
July 1, 2015 through July 31, 2015	2,500	$	16.93	2,500	834,172
January 1, 2016 through January 31, 2016	—	$	—	—	817,172
August 1, 2015 through August 31, 2015	17,000	$	17.10	17,000	817,172
February 1, 2016 through February 29, 2016	—	$	—	—	817,172
September 1, 2015 through September 30, 2015	—	$	—	—	817,172
March 1, 2016 through March 31, 2016	—	$	—	—	817,172
Total	~~19,500~~—	$	~~17.08~~—	~~19,500~~—

(1) In prior years, the Company announced repurchase programs under which it would repurchase, in the aggregate, up to 25% of the then-outstanding shares of the Company’s common stock from time to time, depending on market conditions. On July 29, 2015, the Board of Directors approved an additional stock repurchase plan (the “July 2015 Plan”) under which it would repurchase up to 5% of the then-outstanding shares of the Company’s common stock (578,377 shares). ~~Subject~~The toCompany ~~market~~does ~~conditions~~not ~~and~~intend ~~other~~to ~~factors,~~repurchase ~~repurchases~~shares ~~under~~of ~~the~~its ~~July~~common ~~2015~~stock ~~Plan~~during ~~will begin subsequent to~~ the ~~completion~~pendency of ~~repurchases~~its ~~under~~merger ~~the~~with ~~Company's existing repurchase plan~~Univest. Under these plans, through ~~September~~March 3031, ~~2015~~2016, the Company has ~~purchased~~repurchased 3.1 million shares at a cost of $44.5 million.

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Item 3. Defaults upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

3.1		Articles of Incorporation of Fox Chase Bancorp, Inc. (1)
3.2		Bylaws of Fox Chase Bancorp, Inc. (1)
4.0		Stock Certificate of Fox Chase Bancorp, Inc. (1)
31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.0		Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
101.0		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~March 3031, ~~2015~~2016, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Condition, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to the Unaudited Consolidated Financial Statements.
(1)	Incorporated by reference to this document from the exhibits to the Company’s Registration Statement on Form S-1 as initially filed with the Securities and Exchange Commission on March 12, 2010.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		FOX CHASE BANCORP, INC.
Dated:	~~November~~May 310, ~~2015~~2016	By:	/s/ Thomas M. Petro
			Thomas M. Petro
			President and Chief Executive Officer
			(principal executive officer)
Dated:	~~November~~May 310, ~~2015~~2016	By:	/s/ Roger S. Deacon
			Roger S. Deacon
			Chief Financial Officer
			(principal financial officer)

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