10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2008
	OR
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: 001-32971

Fox Chase Bancorp, Inc.

(Exact name of registrant as specified in its charter)

United States	33-1145559
(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) 682-7400

(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  x    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 o     Accelerated Filer x

Non-Accelerated Filer o     Smaller Reporting Company o

(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  x

As of May 2, 2008, there were 14,321,550 shares of the registrant’s common stock outstanding.

FOX CHASE BANCORP, INC.

Table of Contents

		Page No.
Part I. Financial Information
Item 1.	Financial Statements	3
	Consolidated Statements of Condition at March 31, 2008 (unaudited) and December 31, 2007	3
	Consolidated Statements of Operations for the Three Months Ended March 31, 2008 and 2007 (unaudited)	4
	Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2008 (unaudited)	5
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2008 and 2007 (unaudited)	6
	Notes to Unaudited Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25
Part II. Other Information
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Submission of Matters to a Vote of Security Holders	26
Item 5.	Other Information	26
Item 6.	Exhibits	26
Signatures

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

FOX CHASE BANCORP, INC

Consolidated Statements of Condition

(In Thousands, Except Share Data)

	March 31, 2008			December 31, 2007
	(Unaudited)
ASSETS
Cash and due from banks	$	2,692		$	3,307
Interest-earning demand deposits in other banks	8,990			7,968
Money market funds	70,687			20,000
Total cash and cash equivalents	82,369			31,275
Investment securities available-for-sale	20,920			91,159
Mortgage related securities available-for-sale	264,156			205,145
Loans, net of allowance for loan losses of $3,540 and $3,376 at March 31, 2008 and December 31, 2007, respectively	458,464			447,035
Federal Home Loan Bank stock, at cost	7,621			5,875
Bank-owned life insurance	11,873			11,762
Premises and equipment	14,253			14,466
Accrued interest receivable	3,428			3,360
Mortgage servicing rights	1,032			1,066
Deferred tax asset, net	120			410
Other assets	1,181			1,366
Total Assets	$	865,417		$	812,919
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Deposits	$	597,982		$	585,560
Federal Home Loan Bank advances	119,368			80,000
Other borrowed funds	20,000			20,000
Advances from borrowers for taxes and insurance	2,077			2,374
Accrued interest payable	579			504
Accrued expenses and other liabilities	1,999			2,110
Total Liabilities	742,005			690,548
STOCKHOLDERS’ EQUITY
Preferred stock ($.01 par value; 1,000,000 shares authorized, none issued and outstanding at March 31, 2008 or December 31, 2007)	—			—
Common stock ($.01 par value; 35,000,000 shares authorized, 14,679,750 shares issued; 14,321,550 and 14,352,750 shares outstanding at March 31, 2008 and December 31, 2007, respectively)	147			147
Additional paid-in capital	63,154			62,909
Treasury stock (at cost, 358,200 and 327,000 shares at March 31, 2008 and December 31, 2007, respectively)	(4,276		)	(3,924		)
Common stock acquired by benefit plans	(8,636		)	(8,732		)
Retained earnings	71,820			71,475
Accumulated other comprehensive income, net	1,203			496
Total Stockholders’ Equity	123,412			122,371
Total Liabilities and Stockholders’ Equity	$	865,417		$	812,919

See accompanying notes to the unaudited consolidated financial statements.

3

FOX CHASE BANCORP, INC

Consolidated Statements of Operations

(In Thousands, Except Per Share Data)

	Three Months Ended March 31,
	2008		2007
	(Unaudited)
INTEREST INCOME
Interest and fees on loans	$	7,128	$	5,548
Interest on money market funds	275		—
Interest on mortgage related securities available-for-sale	2,904		1,818
Interest on investment securities available-for-sale:
Taxable	651		453
Nontaxable	168		245
Dividend income	58		66
Other interest income	70		1,457
Total Interest Income	11,254		9,587
INTEREST EXPENSE
Deposits	5,107		4,870
Federal Home Loan Bank advances	1,030		366
Other borrowed funds	182		—
Total Interest Expense	6,319		5,236
Net Interest Income	4,935		4,351
Provision for loan losses	175		—
Net Interest Income after Provision for Loan Losses	4,760		4,351
NONINTEREST INCOME
Service charges and other fee income	191		216
Net gain on sale of:
Securities available-for-sale	70		—
Loans	3		57
Income on bank-owned life insurance	111		107
Other	18		56
Total Noninterest Income	393		436
NONINTEREST EXPENSE
Salaries, benefits and other compensation	2,798		2,417
Occupancy expense	486		399
Furniture and equipment expense	216		232
Data processing costs	393		373
Professional fees	313		474
Marketing expense	95		121
FDIC premiums	30		20
Other	391		421
Total Noninterest Expense	4,722		4,457
Income Before Income Taxes	431		330
Income tax provision	86		37
Net Income	$	345	$	293
Earnings per share:
Basic	$	0.03	$	0.02
Diluted	$	0.03	$	0.02

See accompanying notes to the unaudited consolidated financial statements.

4

FOX CHASE BANCORP, INC

Consolidated Statements of Changes in Equity

Three Months Ended March 31, 2008

(In Thousands, Unaudited)

	Common Stock		Additional Paid in Capital		Treasury Stock			Common Stock Acquired by Benefit Plans			Retained Earnings		Accumulated Other Comprehensive Income, Net		Total Equity
BALANCE - DECEMBER 31, 2007	$	147	$	62,909	$	(3,924	)	$	(8,732	)	$	71,475	$	496	$	122,371
Purchase of treasury stock					(352		)								(352		)
Stock based compensation expense			208												208
Unallocated ESOP shares committed to employees			11					96							107
Shares allocated in long-term incentive plan			26												26
Net income											345				345
Other comprehensive income													707		707
BALANCE – MARCH 31, 2008	$	147	$	63,154	$	(4,276	)	$	(8,636	)	$	71,820	$	1,203	$	123,412

See accompanying notes to the unaudited consolidated financial statements.

5

FOX CHASE BANCORP, INC

Consolidated Statements of Cash Flows

(In Thousands)

	Three Months Ended March 31,
	2008			2007
	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	345		$	293
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	175			—
Depreciation	247			260
Net amortization of securities premiums and discounts	253			86
Provision (credit) for deferred income taxes	(80		)	43
Shares committed to be released to the ESOP	107			131
Shares earned in the long-term incentive plan	26			36
Stock based compensation expense	208			—
Origination of loans held for sale	(497		)	(5,557		)
Proceeds from sale of loans held for sale	502			5,422
Net gain on sales of securities	(70		)	—
Net gain on sales of loans	(3		)	(57		)
Earnings on investment in bank-owned life insurance	(111		)	(107		)
Decrease in mortgage servicing rights	34			27
Decrease in accrued interest receivable and other assets	115			109
Decrease in accrued interest payable, accrued expenses and other liabilities	(33		)	(660		)
Net Cash Provided by Operating Activities	1,218			26
CASH FLOWS FROM INVESTING ACTIVITIES
Investment securities available-for-sale:
Purchases	(12,360		)	(89		)
Proceeds from sales	72,398			—
Proceeds from maturities, calls and principal repayments	10,265			4,012
Mortgage related securities available-for-sale:
Purchases	(93,883		)	—
Proceeds from sales	18,653			—
Proceeds from maturities, calls and principal repayments	17,046			12,716
Net increase in loans	(7,629		)	(6,774		)
Purchase of loan participations	(3,975		)	(13,771		)
Net (increase) decrease in Federal Home Loan Bank stock	(1,746)			229
Purchases of premises and equipment	(34		)	(146		)
Net Cash Used in Investing Activities	(1,265		)	(3,823		)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits	12,422			(14,475		)
Decrease in advances from borrowers for taxes and insurance	(297		)	(514		)
Purchase of treasury stock	(352		)	—
Principal payments on Federal Home Loan Bank advances	(632		)	—
Federal Home Loan Bank advances	40,000			—
Net Cash Provided by (Used in) Financing Activities	51,141			(14,989		)
Net Increase (Decrease) in Cash and Cash Equivalents	51,094			(18,786		)
CASH AND CASH EQUIVALENTS – BEGINNING	31,275			134,441
CASH AND CASH EQUIVALENTS – ENDING	$	82,369		$	115,655
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid	$	6,251		$	5,446
Income taxes paid	$	283		$	—

See accompanying notes to the unaudited consolidated financial statements.

6

FOX CHASE BANCORP, INC

Notes to the Unaudited Consolidated Financial Statements

NOTE 1 - PRINCIPLES OF CONSOLIDATION AND PRESENTATION

Fox Chase Bancorp, Inc. (the “Bancorp”) was organized on September 29, 2006 under the laws of the United States for the purpose of being a holding company for Fox Chase Bank (the “Bank”), a stock savings bank also organized under the laws of the United States.  On September 29, 2006, the Bancorp completed its initial public offering in which it sold 6,395,835 shares, or 43.57%, of its outstanding common stock to the public, including 575,446 shares purchased by the Fox Chase Bank Employee Stock Ownership Plan (the “ESOP”).  An additional 8,148,915 shares, or 55.51% of the Bancorp’s outstanding stock, were issued to Fox Chase MHC, the Bancorp’s federally chartered mutual holding company. Net proceeds of the offering totaled $56.6 million.  Additionally, the Bancorp contributed $150,000 in cash and issued 135,000 shares, or 0.92% of its outstanding common stock, to the Fox Chase Bank Charitable Foundation.

The Bancorp’s primary business has been that of holding the common stock of the Bank and making a loan to the ESOP.   Fox Chase Bancorp, Inc. is authorized to pursue other business activities permissible by laws and regulations for other savings and loan holding companies.

The Bancorp and the Bank (collectively referred to as the “Company”) provide a wide variety of financial products and services to individuals and businesses through the Bank’s eleven branches in Philadelphia, Richboro, Willow Grove, Warminster, Lahaska, Hatboro, Media 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 Company competes with other financial institutions and other companies that provide financial services.

The Company is subject to regulations of certain federal 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 them to further changes with respect to asset valuations, amounts of required 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 its wholly owned subsidiary, the Bank. The Bank’s operations include the accounts of its wholly owned subsidiary, Fox Chase Financial, Inc.  Fox Chase Financial, Inc. is a Delaware chartered investment holding company and its sole purpose is to manage and hold investment securities.  The financial statements do not include the transactions and balances of Fox Chase MHC.  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 which 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 disclosure of 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.  Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the valuation and realizability of deferred tax assets and the evaluation of other than temporary impairment of investments.  These financial statements do not contain all necessary disclosures required by GAAP 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, filed with the Securities and Exchange Commission on March 14, 2008.   These financial statements include all normal and recurring adjustments which management believes were necessary in order to conform to GAAP.  The results for the three months ended March 31, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008.

7

Per Share Information

The Company follows the provisions of SFAS No. 128, “Earnings Per Share.”  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.  Unallocated shares in the ESOP and shares purchased to fund the 2007 Equity Incentive Plan 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 EPS computations.

	Three Months Ended
	March 31,
	2008			2007
Net income	$	345,000		$	293,000
Weighted-average common shares outstanding	14,344,277			14,679,750
Average common stock acquired by stock benefit plans:
Unvested shares – long-term incentive plan	(25,114		)	(38,867		)
ESOP shares unallocated	(495,418		)	(533,780		)
Shares purchased by trust	(287,500		)	—
Weighted-average common shares used to calculate basic earnings per share	13,536,245			14,107,103
Dilutive effect of:
Unvested shares – long-term incentive plan	25,114			38,867
Restricted stock awards	4			—
Weighted-average common shares used to calculate diluted earnings per share	13,561,363			14,145,970
Earnings per share-basic	$	0.03		$	0.02
Earnings per share-diluted	$	0.03		$	0.02
Outstanding common stock equivalents having no dilutive effect	806,196			—

8

NOTE 2 - INVESTMENT AND MORTGAGE RELATED SECURITIES

The amortized cost and fair value of securities available-for-sale as of March 31, 2008 and December 31, 2007 are summarized as follows:

	March 31, 2008 (Unaudited)
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)
State and political subdivisions	$	15,901	$	168	$	(46	)	$	16,023
Corporate securities	4,842		55		—			4,897
	20,743		223		(46		)	20,920
Mortgage related securities	262,338		2,539		(721		)	264,156
Total securities	$	283,081	$	2,762	$	(767	)	$	285,076

	December 31, 2007
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)
Obligations of U.S. government agencies	$	10,000	$	16	$	—		$	10,016
State and political subdivisions	81,019		126		(2		)	81,143
	91,019		142		(2		)	91,159
Mortgage related securities	204,362		1,078		(295		)	205,145
Total securities	$	295,381	$	1,220	$	(297	)	$	296,304

9

NOTE 2 - 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 March 31, 2008 and December 31, 2007:

	March 31, 2008 (Unaudited)
	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In Thousands)
State and political subdivisions	$	1,735	$	(46	)	$	—	$	—		$	1,735	$	(46	)
Mortgage related securities	84,778		(702		)	7,171		(19		)	91,949		(721		)
Total securities	$	86,513	$	(748	)	$	7,171	$	(19	)	$	93,684	$	(767	)

	December 31, 2007
	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In Thousands)
State and political subdivisions	$	597	$	(1	)	$	672	$	(1	)	$	1,269	$	(2	)
Mortgage related securities	32,627		(78		)	25,977		(217		)	58,604		(295		)
Total securities	$	33,224	$	(79	)	$	26,649	$	(218	)	$	59,873	$	(297	)

10

NOTE 3 - LOANS

The composition of net loans at March 31, 2008, and December 31, 2007 is provided below (in thousands).

	March 31, 2008			December 31, 2007
	(Unaudited)
Real estate loans:
One-to four-family	$	219,093		$	215,817
Multi-family and commercial	80,260			76,287
Construction	49,647			46,471
	349,000			338,575
Consumer loans:
Home equity	66,254			68,431
Automobile	488			565
Lines of credit	9,753			9,642
Other	146			106
	76,641			78,744
Commercial loans	36,641			33,356
Total Loans	462,282			450,675
Deferred loan origination fees, net	(278		)	(264		)
Allowance for loan losses	(3,540		)	(3,376		)
Net Loans	$	458,464		$	447,035

The following table presents changes in the allowance for loan losses (in thousands):

	Three Months						Year
	Ended						Ended
	March 31,						December 31,
	2008			2007			2007
	(Unaudited)
Balance, beginning	$	3,376		$	2,949		$	2,949
Provision for loan losses	175			—			425
Loans charged off	(12		)	(1		)	(2		)
Recoveries	1			1			4
Balance, ending	$	3,540		$	2,949		$	3,376

As of March 31, 2008 and December 31, 2007, the Bank had one interest rate swap in the notional amount of $1.2 million to hedge a 15-year fixed rate loan, which was earning interest at 7.43%.  The Company is receiving a variable rate payment of three-month LIBOR plus 2.24% and is paying a fixed rate payment of 7.43%. The swap matures in April 2022 and had a market value loss position of $116,000 and $60,000 at March 31, 2008 and December 31, 2007, respectively.

Effective January 1, 2008, the Company adopted SFAS No. 159, “The Fair Value Option for Financial Assets and Liabilities - Including an Amendment of FASB Statement No. 115” (SFAS No. 159) which is further discussed in Note 9.  In conjunction with the adoption of SFAS No. 159, the Company identified two financial instruments to be designated for fair value reporting.  The identified instruments are the $1.2 million loan and the related swap discussed in the preceding paragraph.

As the loan is contractually current, the Company has determined the market value of the gain position of the loan is equal to the market value loss position of the swap as of both December 31, 2007 and March 31, 2008.  Accordingly, adopting SFAS No. 159 for these two financial instruments has no impact on the Company’s beginning of period retained earnings or the income statement for the three months ended March 31, 2008. The impact of adopting SFAS No. 159 had the balance sheet effect of increasing loans receivable and reducing other assets by $116,000 as of March 31, 2008.

The Company elected to adopt SFAS No. 159 for these two financial instruments as they represent the financial instruments associated with the Company’s only swap agreement.  The critical terms of the loan and the swap are a mirror image, except the loan includes a default interest rate clause.

11

NOTE 4 – MORTGAGE SERVICING ACTIVITY

Loans serviced for others are not included in the accompanying consolidated statements of condition. The unpaid principal balances of these loans were $114.3 million and $127.3 million at March 31, 2008 and 2007, respectively, and $118.1 million at December 31, 2007.

The following summarizes mortgage servicing rights for the three months ended March 31, 2008 and 2007 and the year ended December 31, 2007 (in thousands):

	Three Months Ended March 31,						Year Ended December 31,
	2008			2007			2007
	(Unaudited)
Balance, beginning	$	1,066		$	1,177		$	1,177
Mortgage servicing rights capitalized	—			1			1
Mortgage servicing rights amortized	(34		)	(28		)	(112		)
Balance, ending	$	1,032		$	1,150		$	1,066

At March 31, 2008, March 31, 2007 and December 31, 2007, the fair value of the mortgage servicing rights (“MSRs”) was $1.2 million (unaudited), $1.5 million (unaudited) and $1.3 million, respectively. The fair value at these dates was determined using a third-party 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. Mortgage loan prepayment speed is the annual rate at which borrowers are forecasted to repay their mortgage loan principal and is based on historical experience. The discount rate used to determine the present value of future net servicing income - another key assumption - is the required rate of return the market would expect for an asset with similar risk. Both assumptions can, and generally will, change quarterly valuations as market conditions and interest rates change.

NOTE 5 - DEPOSITS

Deposits and their respective weighted average interest rate at March 31, 2008 and December 31, 2007 consist of the following (dollars in thousands):

	March 31, 2008				December 31, 2007
	Weighted Average Rate		Amount		Weighted Average Rate		Amount
	(Unaudited)
Non-interest bearing demand accounts	—		$	46,986	—		$	43,462
NOW accounts	1.34	%	38,223		1.70	%	39,299
Money market accounts	2.96		59,478		3.13		50,568
Savings and club accounts	0.35		52,592		0.65		54,019
Certificates of deposit	4.48		400,703		4.71		398,212
Total Deposits	3.42	%	$	597,982	3.64	%	$	585,560

12

NOTE 6 – BORROWINGS

Federal Home Loan Bank Advances

Pursuant to collateral agreements with the Federal Home Loan Bank of Pittsburgh (the “FHLB”), advances are secured by qualifying first mortgage loans, qualifying fixed-income securities, FHLB stock and an interest-bearing demand deposit account with the FHLB. As of March 31, 2008, the Bank had $137.2 million in qualifying collateral pledged against its advances.

Maturity Date	Interest Rate		Strike Rate		Call Date	Amount
						(in thousands)
February 2010	2.84	%	—			$	10,000
August 2011	4.89	%	7.50	%		20,000
August 2011	4.87	%	7.50	%		10,000
January 2015	3.49	%	—			29,368
November 2017	3.62	%			November 2010	15,000
November 2017	3.87	%			November 2011	15,000
December 2017	2.83	%			June 2008	20,000
						$	119,368

For the borrowings that contractually mature in August 2011, if three-month LIBOR is greater than or equal to the Strike Rate, the FHLB can notify the Bank of its intention to convert the borrowing to an adjustable-rate advance equal to three-month LIBOR (2.69% at March 31, 2008) plus .2175% on a quarterly basis. The Bank has the option to repay these advances at each of the option dates without penalty. Accordingly, the contractual maturities above may differ from actual maturities.

The borrowing that contractually matures in January 2015 represents a seven-year amortizing borrowing and has equal monthly payments of $403,000.

The borrowings that contractually mature in November 2017 may be called by the FHLB on the call date disclosed in the above table. If the borrowing is called, the Bank has the option to pay off the borrowing without penalty.  If the Bank fails to do so, the borrowing’s fixed rate will reset to a variable rate of three-month LIBOR plus .10%. Subsequent to the call date, the borrowings are callable by the FHLB quarterly.  Accordingly, the contractual maturities above may differ from actual maturities.

The borrowing that contractually matures in December 2017 may be called by the FHLB on the call date disclosed in the above table. If the borrowing is called, the Bank has the option to pay off the borrowing without penalty.  If the Bank fails to do so, the borrowing’s fixed rate will reset to a variable rate of three-month LIBOR plus .11%.  Subsequent to the call date, the borrowing is 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 approximately $462.2 million at December 31, 2007, the latest date for which information is available.

Other Borrowed Funds

Other borrowed funds of $20.0 million carry an interest rate of 3.60%, contractually mature in November 2014 and may be called by the lender in November 2009.  Subsequent to the call date, the borrowing is callable by the lender quarterly. Accordingly, the contractual maturities above may differ from actual maturities.  Mortgage backed securities with a carrying value of $27.6 million at March 31, 2008 were pledged as collateral for these other borrowed funds.

13

NOTE 7 – STOCK BASED COMPENSATION

During the three months ended March 31, 2008, the Company recorded $208,000 of stock based compensation expense, comprised of stock option expense of $86,000 and restricted stock expense of $122,000.  The Company anticipates that the 287,500 shares purchased by a trust during 2007 will fund amounts earned under the restricted stock awards.

The following is a summary of the Company’s stock option activity and related information for the 2007 Equity Incentive Plan for the three months ended March 31, 2008:

	Number of Stock Options	Weighted Average Exercise Price
Outstanding at December 31, 2007	518,800	$	12.38
Granted	73,400	11.38
Exercised	—	—
Forfeited	—	—
Outstanding at March 31, 2008	592,200	$	12.26
Exercisable at March 31, 2008	—	—

The following is a summary of the Company’s unvested options as of March 31, 2008 and changes therein during the three months then ended:

	Number of Stock Options	Weighted Average Grant Date Fair Value
Unvested at December 31, 2007	518,800	$	3.40
Granted	73,400	2.73
Exercised	—	—
Forfeited	—	—
Unvested at March 31, 2008	592,200	$	3.32

Expected future expense relating to the 592,200 non-vested options outstanding as of March 31, 2008 is $1.7 million over a weighted average period of 4.5 years.

The following is a summary of the status of the Company’s restricted stock as of March 31, 2008 and changes therein during the three months then ended:

	Number of Restricted Shares	Weighted Average Grant Date Fair Value
Unvested at December 31, 2007	203,400	$	12.38
Granted	10,600	11.39
Vested	—	—
Forfeited	—	—
Unvested at March 31, 2008	214,000	$	12.33

Expected future compensation expense relating to the 214,000 restricted shares at March 31, 2008 is $2.2 million over a weighted average period of 4.4 years.

14

NOTE 8 - COMPREHENSIVE INCOME

Comprehensive income for the three months ended March 31, 2008, and 2007 is as follows (in thousands):

	Three Months Ended March 31,
	2008		2007
	(Unaudited)
Net income	$	345	$	293
Other comprehensive income:
Unrealized holding gains arising during the period, net of tax expense ($369 and $249 for the three months ended March 31, 2008 and 2007, respectively)	751		469
Less: Reclassification adjustment for gains included in net income, net of taxes ($24 and $0 for the three months ended March 31, 2008 and 2007, respectively)	46		—
Plus: Amortization of pension actuarial loss	2		—
Other comprehensive income	707		469
Comprehensive income	$	1,052	$	762

NOTE 9 – ACCOUNTING PRONOUNCEMENTS ADOPTED IN THREE MONTHS ENDED MARCH 31, 2008

Statement of Financial Accounting Standards No. 159

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115 (SFAS No. 159).” SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value and amends SFAS No. 115 to, among other things, require certain disclosures for amounts for which the fair value option is applied.  This Statement is effective as of the entity’s first fiscal year that begins after November 15, 2007.  Effective January 1, 2008, the Company adopted SFAS No. 159 for two financial instruments, which are identified and discussed in Note 3 to these consolidated financial statements.

Statement of Financial Accounting Standards No. 157

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurement” (SFAS No. 157).  This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements.  This statement applies under other accounting pronouncements that require or permit fair value measurements.   SFAS No. 157 became effective for the Company on January 1, 2008, including interim periods.

The standard describes three levels of inputs that may be used to measure fair value:

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 observed 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 Company classified two financial instruments as Level 3 as of March 31, 2008. The first instrument is a private label collateralized mortgage obligation (“CMO”) which, unlike U.S. agency mortgage related securities, the fair value of private label securities is more difficult to determine because they are not actively traded in securities markets.  The second instrument is a  loan, which was recorded at fair value when the Company adopted SFAS No. 159, since lending credit risk is not an observable input for this individual commercial loan.  The unrealized loss in the private label CMO was $59,000 at March 31, 2008 compared to an unrealized loss of $27,000 at January 1, 2008.  The unrealized gain on the loan was $116,000 at March 31, 2008 compared to an unrealized gain of $60,000 at January 1, 2008.

15

The following table of the Company’s fair value measurements at March 31, 2008 includes (1) investment securities and mortgage related securities available-for-sale; and  (2) the two financial instruments recorded at fair value in conjunction with the Company’s adoption of SFAS No. 159 in the first quarter of 2008:

				Fair Value Measurements at Reporting Date Using
Description	3/31/2008			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Other Unobservable Inputs (Level 3)
	(In Thousands)
State and Political Subdivisions	$	16,023		$	—	$	16,023		$	—
Corporate Securities	4,897			—		4,897			—
Mortgage Related Securities	264,156			—		263,147			1,009
Loans (1)	1,346			—		—			1,346
Other Assets – Swap Contract (1)	(116		)	—		(116		)	—
Total	$	286,306		$	—	$	283,951		$	2,355

(1) Such assets recorded at fair value in conjunction with adoption of SFAS No. 159.

The Company utilizes an external third-party pricing service to perform evaluations on its investment portfolio on at least a quarterly basis.  The Company will be evaluating the appropriateness of the identified Level 1, 2 or 3 classifications on a recurring basis. The Company has also adopted FASB Staff Position No. 157-2, which allowed it to defer the effective date of SFAS No. 157 for certain nonfinancial assets and liabilities until January 1, 2009.

Emerging Issues Task Force Issue No. 06-4

In Emerging Issues Task Force (“EITF”) Issue No. 06-4 “Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements”, the EITF concluded that an endorsement split dollar life insurance policy does not effectively settle an employer’s obligation to provide the post retirement benefit that the policy was designed to provide.  Therefore, some current expense recognition may need to be made for any endorsement split dollar plans with post retirement benefits.

This guidance applies to all post retirement endorsement split dollar arrangements.  This will not impact split dollar plans that only provide pre-retirement death benefits.

The accrual for the liability would be calculated in one of two ways:

·the actuarial present value of the future death benefit or

·the cost of insurance of the policy during the postretirement period.

Compliance with this EITF must be applied to fiscal years beginning after December 15, 2007 (January 1, 2008 for calendar year entities).  It can be made through a cumulative–effect adjustment to retained earnings in the year of adoption or as a change in accounting principles through retrospective application to all prior periods.  As required, the Company adopted this EITF in the first quarter of 2008. This did not have a material impact to the Company’s results of operations or financial position, accordingly no adjustment was made to prior year retained earnings.

NOTE 10 – OTHER ACCOUNTING PRONOUNCMENTS

In March 2008, the FASB issued SFAS No. 161 “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133” (SFAS No. 161).  SFAS No. 161 changes the disclosure requirements for derivative instruments and hedging activities.  Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows.  SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company is evaluating this statement and has not yet determined the impact on its required disclosures.  The Company does not intend to early adopt this statement.

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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. Factors which could have a material adverse effect on the operations of the Company and its subsidiary include, but are not limited to, 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 quality and composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand 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 the inability of third party service providers to perform their functions.  Additional factors that may affect our results are discussed in the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 14, 2008, 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.

Critical Accounting Policies

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, and other-than-temporary impairment of securities.

Allowance for Loan Losses. The allowance for loan losses is maintained at a level representing management’s best estimate of known and inherent losses in the loan portfolio, based on management’s evaluation of the portfolio’s collectibility. The allowance is established through the provision for loan losses, which is charged against income. Determining the amount of the allowance for loan losses necessarily involves a high degree of judgment. Among the material estimates required to establish the allowance are: loss exposure at default; the amount and timing of future cash flows on impacted loans; value of collateral; and determination of loss factors to be applied to the various elements of the portfolio. All of these estimates are susceptible to significant change. Management reviews the level of the allowance on a quarterly basis and establishes the provision for loan losses based upon an evaluation of the size and composition of the portfolio, loss experience in particular segments of the portfolio, trends and absolute levels of classified and criticized loans, trends and absolute levels in delinquent loans, trends in risk ratings, trends in industry charge-offs by particular segments and changes in existing general economic and business conditions affecting our lending areas and the national economy.  Although we believe that we use the best information available to establish the allowance for loan losses, future adjustments to the allowance may be necessary if economic conditions differ substantially from the assumptions used in making the evaluation. In addition, the Office of Thrift Supervision, as an integral part of its examination process, periodically reviews our allowance for loan losses. Such agency may require us to recognize adjustments to the allowance based on its judgments about information available to it at the time of its examination. A large loss could deplete the allowance and require increased provisions to replenish the allowance, which would negatively affect earnings.

Deferred Income Taxes. We use the asset and liability method of accounting for income taxes as prescribed in Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes.” Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. If current available information raises doubt as to the realization of the deferred tax assets, a valuation allowance is established. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting tax liabilities and assets. These judgments require us to make projections of future taxable income. The judgments and estimates we make in determining our deferred tax assets, which are inherently subjective, are reviewed on a continual basis as regulatory and business factors change. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets. Specifically, the Company had a charitable contribution carryover of $1.4 million as of March 31, 2008, resulting in a deferred tax asset of $467,000.  Utilization of this carryover is limited to 10% of taxable income on an annual basis. Such carryover will expire on December 31, 2011, if not utilized. If the Company is unable to generate sufficient taxable income to utilize this carryover it may require us to record a valuation allowance against this deferred tax asset.  Any valuation allowance would result in additional income tax expense in the period, which would negatively affect earnings.

17

Other-Than-Temporary Impairment of Securities. Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” and FASB Staff Position FAS 115-1and 124-1 “The Meaning of Other Than Temporary Impairment and Its Application to Certain Investments,” require companies to perform periodic reviews of individual securities in their investment portfolios to determine whether a decline in the value of a security is other than temporary. A review of other-than-temporary impairment requires companies to make certain judgments regarding the nature of the decline, its effect on the financial statements and the probability, extent and timing of a valuation recovery and the company’s intent and ability to hold the security. Pursuant to these requirements, we assess valuation declines to determine the extent to which such changes are attributable to (1) fundamental factors specific to the issuer, such as financial condition, business prospects or other factors, or (2) market-related factors, such as interest rates or equity market declines. If the decline in the market value of a security is determined to be other than temporary, we reduce the book value of such security to its current market value, recognizing the decline as a realized loss on the income statement.

Comparison of Financial Condition at March 31, 2008 and December 31, 2007

Total assets increased $52.5 million, or 6.5%, to $865.4 million at March 31, 2008, compared to $812.9 million at December 31, 2007.  Loans increased $11.4 million from December 31, 2007 to March 31, 2008 as we continued to implement our strategic initiative to increase commercial loans. Mortgage related securities increased $59.0 million, due to a leverage strategy implemented during the first quarter of 2008.  Investment securities available-for-sale decreased $70.2 million primarily due to the Bank liquidating $60.0 million in short-term auction rate bonds and municipal securities during the first quarter of 2008 and reinvesting such funds in short-term money market accounts, which increased by $50.7 million during the three months ended March 31, 2008.  The decision to liquidate the short-term auction bonds was based on the deteriorating market conditions for such securities that occurred during the first quarter of 2008.

Deposits increased $12.4 million, or 2.1%, from $585.6 at December 31, 2007 to $598.0 million at March 31, 2008 as the Bank continued its marketing initiatives to increase core deposits. Federal Home Loan Bank advances increased $39.4 million, or 49.2%, to help fund the leverage strategy mentioned above.

Stockholders’ equity increased $1.0 million to $123.4 million at March 31, 2008 compared to $122.4 million at December 31, 2007 primarily due to net income and unrealized gain on investment portfolio, offset by the repurchase of 31,200 shares of common stock at a cost of $352,000.

Comparison of Operating Results for the Three Months Ended March 31, 2008 and 2007

General. Net income increased $52,000, or 17.7%, to $345,000 for the three months ended March 31, 2008 compared to $293,000 for the three months ended March 31, 2007, primarily due to a $584,000 increase in net interest income offset by a decrease in other noninterest income of $43,000, an increase in noninterest expense of $265,000, a provision for loan losses of $175,000 and an increase in tax expense of  $49,000.

Net Interest Income. Net interest income increased $584,000, or 13.4%, to $4.9 million for the three months ended March 31, 2008 compared the same period in 2007 primarily due to an increase in the average balances on earning assets of $107.7 million and an increase in the average yield on interest-earning assets from 5.39% to 5.48%.  These changes were offset by an increase in the average balances on interest-bearing liabilities of $104.8 million as well as an increase in the average cost on interest-bearing liabilities from 3.70% to 3.73%.  The increase in the average balances of interest-earning assets was primarily due to an increase in the average balance of loans of approximately $85.1 million year over year primarily related to the implementation of the Company’s focus on increasing its levels of commercial lending.  The increase in the average balance of interest-bearing liabilities was primarily due to an increase in the average balance of FHLB advances of $77.9 million to fund a leverage strategy.

18

The following table summarizes average balances and average yields and costs of interest-earning assets and interest-bearing liabilities for the three months ended March 31, 2008 and 2007. Yields are not presented on a tax-equivalent basis. Any adjustments necessary to present yields on a tax-equivalent basis are insignificant.

	Three Months Ended March 31,
	2008							2007
	Average Balance			Interest and Dividends		Yield/ Cost		Average Balance			Interest and Dividends		Yield/ Cost
	(Dollars in thousands)
Assets:
Interest-earning assets:
Interest-earning demand deposits	$	13,259		$	70	2.11	%	$	113,803		$	1,457	5.12	%
Money market funds	29,915			275		3.70		—			—		—
Mortgage related securities	237,640			2,904		4.89		152,549			1,818		4.77
Taxable securities	63,217			709		4.48		47,457			519		4.38
Nontaxable securities	16,950			168		3.96		24,143			245		4.06
Loans:
Residential loans	217,444			3,068		5.64		208,223			2,921		5.61
Commercial loans	162,706			2,910		7.08		81,203			1,420		6.99
Consumer loans	78,278			1,150		5.88		83,861			1,207		5.76
Total loans	458,428			7,128		6.19		373,287			5,548		5.95
Allowance for loan losses	(3,420		)	—		—		(2,970		)	—		—
Net loans	455,008			7,128		—		370,317			5,548		5.95
Total interest-earning assets	815,989			11,254		5.48		708,269			9,587		5.39
Noninterest-earning assets	36,485							36,132
Total assets	$	852,474						$	744,401
Liabilities and equity:
Interest-bearing liabilities:
NOW and money market deposits	$	94,169		538		2.30		$	76,111		395		2.11
Savings accounts	53,637			58		0.43		63,142			114		0.73
Certificates of deposit	402,810			4,511		4.50		404,481			4,361		4.37
Total interest-bearing deposits	550,616			5,107		3.73		543,734			4,870		3.63
FHLB advances	107,938			1,030		3.78		30,000			366		4.88
Other borrowed funds	20,000			182		3.60		—			—		—
Total borrowings	127,938			1,212		3.75		30,000			366		4.88
Total interest-bearing liabilities	678,554			6,319		3.73		573,734			5,236		3.70
Noninterest-bearing deposits	44,417							39,896
Other non-interest bearing liabilities	6,416							5,695
Total liabilities	729,387							619,325
Retained earnings	121,810							126,080
Accumulated comprehensive income	1,277							(1,004		)
Total stockholders’ equity	$	123,087						$	125,076
Total liabilities and stockholders’ equity	$	852,474						$	744,401
Net interest income				$	4,935						$	4,351
Interest rate spread						1.75	%						1.69	%
Net interest margin						2.39	%						2.45	%
Average interest-earning assets to average interest-bearing liabilities						120.25	%						123.45	%

(1)Nonperforming loans are included in average balance computations

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Rate/Volume Analysis.  The following table sets forth the effects of changing rates and volumes on our net interest income.  The rate column shows the effects attributable to changes in rate (changes in rate multiplied by current volume).  The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate).  The net column represents the sum of the prior columns.  For purposes of this table, changes attributable to changes in both rate and volume that cannot be segregated have been allocated proportionally based on the changes due to rate and the changes due to volume.

	Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007
	Increase (Decrease) Due to
	Rate			Volume			Net
	(In Thousands)
Interest and dividend income:
Interest-earning demand deposits	$	(102	)	$	(1,285	)	$	(1,387	)
Money market funds	—			275			275
Mortgage related securities	72			1,014			1,086
Taxable securities	17			173			190
Nontaxable securities	(4		)	(73		)	(77		)
Loans:
Residential loans	17			130			147
Commercial loans	33			1,457			1,490
Consumer loans	24			(81		)	(57		)
Total loans	74			1,506			1,580
Total interest-earning assets	$	57		$	1,610		$	1,667
Interest expense:
NOW and money market deposits	$	44		$	99		$	143
Savings accounts	(40		)	(16		)	(56		)
Certificates of deposit	120			30			150
Total interest-bearing deposits	124			113			237
FHLB advances	(301		)	965			664
Other borrowed funds	—			182			182
Total borrowings	(301		)	1,147			846
Total interest-bearing liabilities	(177		)	1,260			1,083
Net change in net interest income	$	234		$	350		$	584

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Provision for Loan Losses. The Bank recorded a provision for loan losses of $175,000 for the three months ended March 31, 2008 compared to $0 for the three months ending March 31, 2007.  The increase in the provision reflected continued loan growth, primarily in commercial loans.

The following table provides information with respect to the Bank’s nonperforming assets at the dates indicated. There were no troubled debt restructurings as of the dates presented.

	At March 31, 2008			At December 31, 2007
	(Dollars in thousands)
Nonaccrual loans:
One- to four-family	$	615		$	155
Consumer	54			—
Multi-family and commercial real estate	105			105
Total	774			260
Accruing loans past due 90 days or more:
One- to four-family	—			559
Total	—			559
Total of nonaccrual loans and accruing loans 90 days or more past due	$	774		$	819
Real estate owned	—			—
Total nonperforming assets	$	774		$	819
Total nonperforming loans to total loans	0.17		%	0.18		%
Total nonperforming loans to total assets	0.09			0.10
Total nonperforming assets to total assets	0.09			0.10

The increase in nonaccrual loans to $774,000 at March 31, 2008 from $260,000 at December 31, 2007 was a result of a $505,000 residential mortgage and a $54,000 home equity loan to one borrower, both of which were placed on non accrual during the three month period ended March 31, 2008.  The loans were previously included in the 90 days past due and still accruing category as of December 31, 2007.  The loans are secured by a residential property in southern New Jersey.

21

Noninterest Income. The following table summarizes other income for the three months ended March 31, 2008, and 2007.

	Three Months
	Ended March 31,
	2008		2007		$  Change			% Change
	(Dollars in thousands)
Service charges and other fee income	$	191	$	216	$	(25	)	(11.6	)%
Net gain on sale of:
Securities available-for-sale	70		—		70			100.0	%
Loans	3		57		(54		)	(94.7	)%
Income on bank-owned life insurance	111		107		4			3.7	%
Other	18		56		(38		)	(67.9	)%
Total	$	393	$	436	$	(43	)	(9.9	)%

Service charges and other fee income decreased by $25,000 due to reduced loan-servicing income in connection with the Bank servicing a reduced level of mortgages for others and reduced deposit service charge income as the Bank modified certain fee policies related to deposit accounts. Gain on sale of loans decreased $54,000 as the Company discontinued selling residential mortgage loans during the second quarter 2007. Gain on sale of investment securities increased $70,000 during the first quarter of 2008 as the Company took advantage of the steepening yield curve to liquidate certain securities at a gain and reinvest the proceeds in higher-yielding securities.  Other income decreased $38,000 as a result of the Bank receiving a reduced rate on the funds held at a third party check processor.

Noninterest Expense. The following table summarizes noninterest expense for the three months ended March 31, 2008 and 2007.

	Three Months
	Ended March 31,
	2008		2007		$ Change			% Change
	(Dollars in thousands)
Salaries, benefits and other compensation	$	2,798	$	2,417	$	381		15.8	%
Occupancy expense	486		399		87			21.8	%
Furniture and equipment expense	216		232		(16		)	(6.9	)%
Data processing costs	393		373		20			5.4	%
Professional fees	313		474		(161		)	(34.0	)%
Marketing expense	95		121		(26		)	(21.5	)%
FDIC premiums	30		20		10			50.0	%
Other	391		421		(30		)	(7.1	)%
Total	$	4,722	$	4,457	$	265		5.9	%

Salaries and benefits costs rose $381,000 between three month periods primarily due to $208,000 of expense associated with the equity awards granted under the 2007 Equity Incentive Plan, costs associated with the opening of the Bank’s West Chester, Pennsylvania branch in October 2007 and annual merit increases. Professional fees decreased $161,000 primarily due to legal fees paid in the first quarter of 2007 in relation to the litigation with the Bank’s former Chief Executive Officer, which was settled in the fourth quarter of 2007, and a decrease in consulting fees in connection with the Company’s first year of becoming Sarbanes Oxley compliant in 2007.  Occupancy expense increased $87,000 primarily due to higher costs associated with the Company’s move to a leased operations center during the second quarter 2007 and the new West Chester branch.

Income Taxes. The income tax provision for the three months ended March 31, 2008 was $86,000 compared to $37,000 for the three months ended March 31, 2007.   The Company’s effective income tax rate was 20.0% and 11.2% for the three-month periods ended March 31, 2008 and 2007, respectively.  These rates reflect the Company’s levels of tax-exempt income for both periods relative to the overall level of taxable income.

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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, securities repayments, maturities and sales. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loans and securities prepayments are greatly influenced by general interest rates, economic conditions and competition.

The following table presents certain of our contractual obligations as of March 31, 2008 and December 31, 2007.

			Payments Due by period
Contractual Obligations	Total		Less than One Year		One to Three Years		Three to Five Years		More Than Five Years
					(In thousands)
At March 31, 2008
Operating lease obligations (1)	$	2,026	$	499	$	905	$	622	$	—
FHLB advances and other borrowings (2)	170,050		9,053		27,772		45,165		88,060
Other long-term obligations (3)	3,209		1,926		1,283		—		—
Total	$	175,285	$	11,478	$	29,960	$	45,787	$	88,060
At December 31, 2007
Operating lease obligations (1)	$	2,192	$	494	$	963	$	735	$	—
FHLB advances and other borrowings (2)	127,460		3,939		7,859		35,861		79,801
Other long-term obligations (3)	3,481		1,910		1,571		—		—
Total	$	133,133	$	6,343	$	10,393	$	36,596	$	79,801

(1)Represents lease obligations for operations center, one commercial loan production office and equipment.

(2)Includes principal and projected interest payments.

(3)Represents obligations to the Company’s third party data processing provider and other vendors.

We regularly adjust our investments in liquid assets based upon our assessment of: (1) expected loan demands; (2) expected deposit flows; (3) yields available on interest-earning deposits and securities; and (4) 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 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 March 31, 2008, cash and cash equivalents totaled $82.4 million. Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $285.1 million at March 31, 2008. In addition, at December 31, 2007, the latest date available, we had the ability to borrow a total of approximately $462.2 million from the FHLB. On March 31, 2008, we had $119.4 million of borrowings outstanding with the FHLB as well as  $20.0 million of borrowings outstanding with another financial institution.

At March 31, 2008, we had $103.0 million in loan commitments outstanding, which consisted of $4.4 million of mortgage loan commitments, $21.4 million in unused home equity lines of credit, $1.1 million in consumer loans, $74.4 million in commercial loan commitments and $1.7 million standby letters of credit. Certificates of deposit due within one year of March 31, 2008 totaled $250.2 million, or 62.4%, of total certificates of deposit at March 31, 2008. We believe the large percentage of certificates of deposit that mature within one year reflects customers’ hesitancy to invest their funds for long periods in the current 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, 2009. We believe, however, based on past experience, that a significant portion of these certificates of deposit will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.

Our primary investing activities are the origination and sale of loans and the purchase and sale of securities. Our primary financing activities consist of activity in deposit accounts and FHLB advances.  Deposit flows are affected by the overall level 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.

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The following table presents our primary investing and financing activities during the periods indicated and does not include loans originated and held for sale.

	Three Months Ended March 31, 2008			Year Ended December 31, 2007
Investing activities:
Loan originations	$	(30,053	)	$	(193,870	)
Other decreases in loans	22,424			134,091
Purchase of loan participations	(3,975		)	(32,064		)
Security purchases	(106,243		)	(187,984		)
Security sales	91,051			36,268
Security maturities, calls and principal repayments	27,311			86,128
Financing activities:
Increase (decrease) in deposits	12,422			(10,974		)
Increase in FHLB advances, net	39,368			50,000
Increase in other borrowings	—			20,000

Capital Management. The Bank is subject to various regulatory capital requirements administered by the Office of Thrift Supervision, 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. At March 31, 2008, the Bank exceeded all of regulatory capital requirements and was considered a “well capitalized” institution under regulatory guidelines.

The following table presents the Bank’s capital ratios and the minimum capital requirements to be considered ‘‘well capitalized” by the OTS as of March 31, 2008 and December 31, 2007:

	Ratio		Minimum to be Well Capitalized
March 31, 2008:
Total risk-based capital (to risk-weighted assets)	22.53	%	>	10.0	%
Tier 1 capital (to risk-weighted assets)	21.75	%	>	6.0	%
Tier 1 capital (to adjusted assets)	11.39	%	>	5.0	%
December 31, 2007:
Total risk-based capital (to risk-weighted assets)	22.54	%	>	10.0	%
Tier 1 capital (to risk-weighted assets)	21.78	%	>	6.0	%
Tier 1 capital (to adjusted assets)	12.03	%	>	5.0	%

The capital from the offering significantly increased our liquidity and capital resources.  Over time, this initial level of liquidity will be reduced as net proceeds from the stock offering are used for general corporate purposes, including the funding of lending activities.  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 offering has had an adverse impact on our return on equity.  The Company may use capital management tools such as cash dividends and share repurchases as well as improve operating income to increase its return on equity.

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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 period ended March 31, 2008, 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.

There has not been any material change to the market risk disclosure from that contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

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.

While no change in the Company’s internal control over financial reporting occurred during the quarter ended March 31, 2008 that has materially affected, or is reasonably likely to affect, the Company’s internal control over financial reporting, effective April 1, 2008, Roger S. Deacon, former Chief Accounting Officer was appointed Chief Financial Officer and Jerry D. Holbrook, former Chief Financial Officer, was appointed Chief Operating Officer.

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.

Item 1A. Risk Factors

As of March 31, 2008, the risk factors of the Company have not changed materially from those reported in the Company’s Annual Report on Form 10-K.  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, 2007, which could materially affect our business, financial condition or future results.  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.

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

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
January 1, 2008 through January 31, 2008	—	—		—	—
February 1, 2008 through February 28, 2008	—	—		—	—
March 1, 2008 through March 31, 2008	31,200	$	11.28	31,200	295,800
Total	31,200	$	11.28	31,200	295,800

(1)  On February 7, 2008, the Company announced that the Board of Directors had approved a stock repurchase program authorizing the Company to repurchase up to 327,000 shares of the Company’s common stock. The repurchase program will continue until it is completed or terminated by the Board of Directors.

Item 3. Defaults upon Senior Securities

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.

Item 5. Other Information

Effective April 23, 2008, the Company amended Article III, Section 2 of the Company’s Bylaws to increase the size of the Board of Directors from seven to eight seats.

Item 6. Exhibits

3.1	Charter of Fox Chase Bancorp, Inc. (1)
3.2	Bylaws of Fox Chase Bancorp, Inc.
4.1	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

(1)Incorporated by reference to this document from the exhibits to the Company’s Registration Statement on Form S-1 (File No. 333-134160), as amended, initially filed with the Securities and Exchange Commission on May 16, 2006.

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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: May 9, 2008	By:	/s/ Thomas M. Petro
		Thomas M. Petro
		President and Chief Executive Officer
		(principal executive officer)
Dated: May 9, 2008	By:	/s/ Roger S. Deacon
		Roger S. Deacon
		Chief Financial Officer
		(principal accounting and financial officer)

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EX-3.2

Exhibit 3.2

BYLAWS

OF

FOX CHASE BANCORP, INC.

ARTICLE I. Home Office

The home office of Fox Chase Bancorp (the “Subsidiary Holding Company”) is 4390 Davisville Road, in the City of Hatboro, in the County of Montgomery, in the Commonwealth of Pennsylvania.

ARTICLE II. Shareholders

Section l. Place of Meetings. All annual and special meetings of shareholders shall be held at the home office of the Subsidiary Holding Company or at such other convenient place as the board of directors may determine.

Section 2. Annual Meeting. A meeting of the shareholders of the Subsidiary Holding Company for the election of directors and for the transaction of any other business of the Subsidiary Holding Company shall be held annually within 150 days after the end of the Subsidiary Holding Company’s fiscal year on such date as the board of directors may determine.

Section 3. Special Meetings. Special meetings of the shareholders for any purpose or purposes, unless otherwise prescribed by the regulations of the Office of Thrift Supervision (“Office”) or the Federal MHC Subsidiary Holding Company Charter, may be called at any time by the chairman of the board, the president or a majority of the board of directors, and shall be called by the chairman of the board, the president or the secretary upon the written request of the holders of not less than one-tenth of all of the outstanding capital stock of the Subsidiary Holding Company entitled to vote at the meeting. Such written request shall state the purpose or purposes of the meeting and shall be delivered to the home office of the Subsidiary Holding Company addressed to the chairman of the board, the president or the secretary.

Section 4. Conduct of Meetings. Annual and special meetings shall be conducted by the person designated by the board of directors to preside at such meetings in accordance with the written procedures agreed to by the board of directors. These written procedures will be available to stockholders at the annual or special meeting to which the procedures apply. The board of directors shall designate, when present, either the chairman of the board or such other person as designated by the board of directors to preside at such meetings.

Section 5. Notice of Meetings. Written notice stating the place, day and hour of the meeting and the purpose(s) for which the meeting is called shall be delivered not fewer than 20 nor more than 50 days before the date of the meeting, either personally or by mail, by or at the direction of the chairman of the board, the president, the secretary or the directors calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the mail, addressed to the shareholder at the address as it appears on the stock transfer books or records of the Subsidiary Holding Company

as of the record date prescribed in Section 6 of this Article II, with postage prepaid. When any shareholders’ meeting, either annual or special, is adjourned for 30 days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. It shall not be necessary to give any notice of the time and place of any meeting adjourned for less than 30 days or of the business to be transacted at the meeting, other than an announcement at the meeting at which such adjournment is taken.

Section 6. Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the board of directors shall fix in advance a date as the record date for any such determination of shareholders. Such date in any case shall be not more than 60 days and, in case of a meeting of shareholders, not fewer than 10 days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment.

Section 7. Voting Lists. At least 20 days before each meeting of the shareholders, the officer or agent having charge of the stock transfer books for shares of the Subsidiary Holding Company shall make a complete list of the shareholders entitled to vote at such meeting, or any adjournment thereof, arranged in alphabetical order, with the address and the number of shares held by each. This list of shareholders shall be kept on file at the home office of the Subsidiary Holding Company and shall be subject to inspection by any shareholder of record or the shareholder’s agent at any time during usual business hours, for a period of 20 days prior to such meeting. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to inspection by any shareholder of record or the shareholder’s agent during the entire time of the meeting. The original stock transfer book shall constitute prima facie evidence of the shareholders entitled to examine such list or transfer books or to vote at any meeting of shareholders.

In lieu of making the shareholder list available for inspection by shareholders as provided in the preceding paragraph, the board of directors may elect to follow the procedures prescribed in §552.6(d) of the Office’s regulations as now or hereafter in effect.

Section 8. Quorum. A majority of the outstanding shares of the Subsidiary Holding Company entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. If less than a majority of the outstanding shares is represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to constitute less than a quorum. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders, unless the vote of a greater number of shareholders voting together or voting by

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classes is required by law or the charter of the Subsidiary Holding Company. Directors, however, are elected by a plurality of the votes cast at an election of directors.

Section 9. Proxies. At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or by his duly authorized attorney in fact. Proxies may be given telephonically or electronically as long as the holder uses a procedure for verifying the identity of the shareholder. Proxies solicited on behalf of the management shall be voted as directed by the shareholder or, in the absence of such direction, as determined by a majority of the board of directors. No proxy shall be valid more than eleven months from the date of its execution except for a proxy coupled with an interest.

Section 10. Voting of Shares in the Name of Two or More Persons. When ownership stands in the name of two or more persons, in the absence of written directions to the Subsidiary Holding Company to the contrary, at any meeting of the shareholders of the Subsidiary Holding Company any one or more of such shareholders may cast, in person or by proxy, all votes to which such ownership is entitled. In the event an attempt is made to cast conflicting votes, in person or by proxy, by the several persons in whose names shares of stock stand, the vote or votes to which those persons are entitled shall be cast as directed by a majority of those holding such and present in person or by proxy at such meeting, but no votes shall be cast for such stock if a majority cannot agree.

Section 11. Voting of Shares by Certain Holders. Shares standing in the name of another corporation may be voted by any officer, agent or proxy as the bylaws of such corporation may prescribe, or, in the absence of such provision, as the board of directors of such corporation may determine. Shares held by an administrator, executor, guardian, or conservator may be voted by him or her, either in person or by proxy, without a transfer of such shares into his or her name. Shares standing in the name of a trustee may be voted by him or her, either in person or by proxy, but no trustee shall be entitled to vote shares held by him or her without a transfer of such shares into his or her name. Shares held in trust in an IRA or Keogh Account, however, may be voted by the Subsidiary Holding Company if no other instructions are received. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his or her name if authority to do so is contained in an appropriate order of the court or other public authority by which such receiver was appointed.

A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred.

Neither treasury shares of its own stock held by the Subsidiary Holding Company nor shares held by another corporation, if a majority of the shares entitled to vote for the election of directors of such other corporation are held by the Subsidiary Holding Company, shall be voted at any meeting or counted in determining the total number of outstanding shares at any given time for purposes of any meeting.

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Section 12. Inspectors of Election. In advance of any meeting of shareholders, the board of directors may appoint any persons other than nominees for office as inspectors of election to act at such meeting or any adjournment. The number of inspectors shall be either one or three. Any such appointment shall not be altered at the meeting. If inspectors of election are not so appointed, the chairman of the board or the president may, or on the request of not fewer than 10 percent of the votes represented at the meeting shall, make such appointment at the meeting. If appointed at the meeting, the majority of the votes present shall determine whether one or three inspectors are to be appointed. In case any person appointed as inspector fails to appear or fails or refuses to act, the vacancy may be filled by appointment by the board of directors in advance of the meeting, or at the meeting by the chairman of the board or the president.

Unless otherwise prescribed by regulations of the Office, the duties of such inspectors shall include:  determining the number of shares and the voting power of each share, the shares represented at the meeting, the existence of a quorum, and the authenticity, validity and effect of proxies; receiving votes, ballots, or consents; hearing and determining all challenges and questions in any way arising in connection with the rights to vote; counting and tabulating all votes or consents; determining the result; and such acts as may be proper to conduct the election or vote with fairness to all shareholders.

Section 13. Nominating Committee. The board of directors shall appoint a nominating committee of the board, consisting of not less than three members of the board of directors. Except in the case of a nominee substituted as a result of the death or other incapacity of a management nominee, the nominating committee shall deliver written nominations to the secretary at least 20 days prior to the date of the annual meeting. Upon delivery, such nominations shall be posted in a conspicuous place in each office of the Subsidiary Holding Company. No nominations for directors except those made by the nominating committee shall be voted upon at the annual meeting unless other nominations by shareholders are made in writing and delivered to the secretary of the Subsidiary Holding Company at least 30 days prior to the date of the annual meeting; provided, however, that in the event that less than 40 days notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder must be received not later than the close of business on the 10th day following the day on which notice of the date of the annual meeting was mailed or such public disclosure was made. Upon delivery, such nominations shall be posted in a conspicuous place in each office of the Subsidiary Holding Company. Ballots bearing the names of all persons nominated by the nominating committee and by shareholders shall be provided for use at the annual meeting. However, if the nominating committee shall fail or refuse to act at least 20 days prior to the annual meeting, nominations for directors may be made at the annual meeting by any shareholder entitled to vote and shall be voted upon.

Section 14. New Business. Any new business to be taken up at the annual meeting shall be stated in writing and filed with the secretary at least 30 days before the date of the annual meeting; provided, however, that in the event that less than 40 days notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder must be received not later than the close of business on the 10th day following the day on which notice of the date of the annual meeting was mailed or such public disclosure was made, and all other business so stated, proposed and filed shall be considered at the annual meeting so long as

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such business relates to a proper subject matter for shareholder action; but no other proposal shall be acted upon at the annual meeting. Any shareholder may make any other proposal at the annual meeting and the same may be discussed and considered, but unless stated in writing and filed with the secretary at least 30 days before the meeting, such proposal shall be laid over for action at an adjourned, special or annual meeting of the shareholders taking place 30 days or more thereafter. A shareholder’s notice to the secretary shall set forth as to each matter the shareholder proposed to bring before the annual meeting (a) a brief description of the proposal desired to be brought before the annual meeting and (b) the name and address of such shareholder and the class and number of shares of the Subsidiary Holding Company which are owned of record or beneficially by such shareholder. This provision shall not prevent the consideration and approval or disapproval at the annual meeting of reports of officers, directors and committees; but in connection with such reports, no new business shall be acted upon at such annual meeting unless stated and filed as herein provided.

Section 15. Informal Action by Shareholders. Any action required to be taken at a meeting of shareholders, or any other action which may be taken at a meeting of shareholders, may be taken without a meeting if consent in writing, setting forth the action so taken, shall be given by all of the shareholders entitled to vote with respect to the subject matter thereof.

ARTICLE III. Board of Directors

Section l. General Powers. The business and affairs of the Subsidiary Holding Company shall be under the direction of its board of directors. The board of directors shall annually elect a chairman of the board from among its members and, when present, the chairman of the board shall preside at its meetings. If the chairman of the board is not present, the board shall select one of its members to preside at its meeting.

Section 2. Number and Term. The board of directors shall consist of eight (8) members and shall be divided into three classes as nearly equal in number as possible. The members of each class shall be elected for a term of three years and until their successors are elected and qualified. One class shall be elected by ballot annually.

Section 3. Regular Meetings. A regular meeting of the board of directors shall be held without other notice than this bylaw following the annual meeting of shareholders. The board of directors may provide, by resolution, the time and place, for the holding of additional regular meetings without other notice than such resolution. Directors may participate in a meeting by means of a conference telephone or similar communications device through which all persons participating can hear each other at the same time. Participation by such means shall constitute presence in person for all purposes.

Section 4. Qualification. Each director shall at all times be the beneficial owner of not less than 100 shares of capital stock of the Subsidiary Holding Company unless the Subsidiary Holding Company is a wholly owned subsidiary of a holding company.

Section 5. Special Meetings. Special meetings of the board of directors may be called by or at the request of the chairman of the board or by one-third of the directors. The persons

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authorized to call special meetings of the board of directors may fix any place as the place for holding any special meeting of the board of directors called by such persons.

Members of the board of directors may participate in special meetings by means of conference telephone or similar communications equipment by which all persons participating in the meeting can hear and speak to each other. Such participation shall constitute presence in person for all purposes.

Section 6. Notice. Written notice of any special meeting shall be given to each director at least 24 hours prior thereto when delivered personally or by telegram or at least five days prior thereto when delivered by mail at the address at which the director is most likely to be reached. Such notice shall be deemed to be delivered when deposited in the mail so addressed, with postage prepaid if mailed, when delivered to the telegraph company if sent by telegram, or when the Subsidiary Holding Company receives notice of delivery if electronically transmitted. Any director may waive notice of any meeting by a writing filed with the secretary. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting of the board of directors need be specified in the notice or waiver of notice of such meeting.

Section 7. Quorum. A majority of the number of directors fixed by Section 2 of this Article III shall constitute a quorum for the transaction of business at any meeting of the board of directors; but if less than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time. Notice of any adjourned meeting shall be given in the same manner as prescribed by Section 6 of this Article III.

Section 8. Manner of Acting. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors, unless a greater number is prescribed by regulation of the Office or by these bylaws.

Section 9. Action Without a Meeting. Any action required or permitted to be taken by the board of directors at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors.

Section 10. Resignation. Any director may resign at any time by sending a written notice of such resignation to the home office of the Subsidiary Holding Company addressed to the chairman of the board. Unless otherwise specified, such resignation shall take effect upon receipt by the chairman of the board. More than three consecutive absences from regular meetings of the board of directors, unless excused by resolution of the board of directors, shall automatically constitute a resignation, effective when such resignation is accepted by the board of directors.

Section 11. Vacancies. Any vacancy occurring on the board of directors may be filled by the affirmative vote of a majority of the remaining directors, although less than a quorum of the board of directors. A director elected to fill a vacancy shall be elected to serve only until the

6

next election of directors by the shareholders. Any directorship to be filled by reason of an increase in the number of directors may be filled by election by the board of directors for a term of office continuing only until the next election of directors by the shareholders.

Section 12. Compensation. Directors, as such, may receive compensation for their services. By resolution of the board of directors, a reasonable fixed sum, and reasonable expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the board of directors. Members of either standing or special committees may be allowed such compensation for attendance at committee meetings as the board of directors may determine.

Section 13. Presumption of Assent. A director of the Subsidiary Holding Company who is present at a meeting of the board of directors at which action on any Subsidiary Holding Company matter is taken shall be presumed to have assented to the action taken unless his or her dissent or abstention shall be entered in the minutes of the meeting or unless he or she shall file a written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the Subsidiary Holding Company within five days after the date a copy of the minutes of the meeting is received. Such right to dissent shall not apply to a director who voted in favor of such action.

Section 14. Removal of Directors. At a meeting of shareholders called expressly for that purpose, any director may be removed only for cause by a vote of the holders of a majority of the shares then entitled to vote at an election of directors. Whenever the holders of the shares of any class are entitled to elect one or more directors by the provisions of the charter or supplemental sections thereto, the provisions of this section shall apply, in respect to the removal of a director or directors so elected, to the vote of the holders of the outstanding shares of that class and not to the vote of the outstanding shares as a whole.

Section 15. Integrity of Directors. A person is not qualified to serve as director if he or she: (1) is under indictment for, or has ever been convicted of, a criminal offense involving dishonesty or breach of trust and the penalty for such offense could be imprisonment for more than one year, or (2) is a person against who a banking agency has, within the past ten years, issued a cease and desist order for conduct involving dishonesty or breach of trust and that order is final and not subject to appeal, or (3) has been found either by a regulatory agency whose decision is final and not subject to appeal or by a court to have (i) breached a fiduciary duty involving personal profit or (ii) committed a willful violation of any law, rule or regulation governing banking, securities, commodities or insurance, or any final cease and desist order issued by a banking, securities, commodities or insurance regulatory agency.

ARTICLE IV. Executive and Other Committees

Section l. Appointment. The board of directors, by resolution adopted by a majority of the full board, may designate the chief executive officer and two or more of the other directors to constitute an executive committee. The designation of any committee pursuant to this Article IV and the delegation of authority shall not operate to relieve the board of directors, or any director, of any responsibility imposed by law or regulation.

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Section 2. Authority. The executive committee, when the board of directors is not in session, shall have and may exercise all of the authority of the board of directors except to the extent, if any, that such authority shall be limited by the resolution appointing the executive committee; and except also that the executive committee shall not have the authority of the board of directors with reference to:  the declaration of dividends; the amendment of the charter or bylaws of the Subsidiary Holding Company, or recommending to the shareholders a plan of merger, consolidation, or conversion; the sale, lease or other disposition of all or substantially all of the property and assets of the Subsidiary Holding Company otherwise than in the usual and regular course of its business; a voluntary dissolution of the Subsidiary Holding Company; a revocation of any of the foregoing; or the approval of a transaction in which any member of the executive committee, directly or indirectly, has any material beneficial interest.

Section 3. Tenure. Subject to the provisions of Section 8 of this Article IV, each member of the executive committee shall hold office until the next regular annual meeting of the board of directors following his or her designation and until a successor is designated as a member of the executive committee.

Section 4. Meetings. Regular meetings of the executive committee may be held without notice at such times and places as the executive committee may fix from time to time by resolution. Special meetings of the executive committee may be called by any member thereof upon not less than one day’s notice stating the place, date and hour of the meeting, which notice may be written or oral. Any member of the executive committee may waive notice of any meeting and no notice of any meeting need be given to any member thereof who attends in person. The notice of a meeting of the executive committee need not state the business proposed to be transacted at the meeting.

Section 5. Quorum. A majority of the members of the executive committee shall constitute a quorum for the transaction of business at any meeting thereof, and action of the executive committee must be authorized by the affirmative vote of a majority of the members present at a meeting at which a quorum is present.

Section 6. Action Without a Meeting. Any action required or permitted to be taken by the executive committee at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the members of the executive committee.

Section 7. Vacancies. Any vacancy in the executive committee may be filled by a resolution adopted by a majority of the full board of directors.

Section 8. Resignations and Removal. Any member of the executive committee may be removed at any time with or without cause by resolution adopted by a majority of the full board of directors. Any member of the executive committee may resign from the executive committee at any time by giving written notice to the president or secretary of the Subsidiary Holding Company. Unless otherwise specified, such resignation shall take effect upon its receipt; the acceptance of such resignation shall not be necessary to make it effective.

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Section 9. Procedure. The executive committee shall elect a presiding officer from its members and may fix its own rules of procedure which shall not be inconsistent with these bylaws. It shall keep regular minutes of its proceedings and report the same to the board of directors for its information at the meeting held next after the proceedings shall have occurred.

Section 10. Other Committees. The board of directors may by resolution establish an audit, loan, or other committees composed of directors as they may determine to be necessary or appropriate for the conduct of the business of the Subsidiary Holding Company and may prescribe the duties, constitution and procedures thereof.

ARTICLE V. Officers

Section l. Positions. The officers of the Subsidiary Holding Company shall be a chief executive officer, a president, one or more vice presidents, a secretary and a treasurer or comptroller, each of whom shall be elected by the board of directors. The board of directors may also designate the chairman of the board as an officer. The offices of the secretary and treasurer or comptroller may be held by the same person and a vice president may also be either the secretary or the treasurer or comptroller. The board of directors may designate one or more vice presidents as executive vice president or senior vice president. The board of directors may also elect or authorize the appointment of such other officers as the business of the Subsidiary Holding Company may require. The officers shall have such authority and perform such duties as the board of directors may from time to time authorize or determine. In the absence of action by the board of directors, the officers shall have such powers and duties as generally pertain to their respective offices.

Section 2. Election and Term of Office. The officers of the Subsidiary Holding Company shall be elected annually at the first meeting of the board of directors held after each annual meeting of the shareholders. If the election of officers is not held at such meeting, such election shall be held as soon thereafter as possible. Each officer shall hold office until a successor has been duly elected and qualified or until the officer’s death, resignation or removal in the manner hereinafter provided. Election or appointment of an officer, employee, or agent shall not of itself create contractual rights. The board of directors may authorize the Subsidiary Holding Company to enter into an employment contract with any officer in accordance with regulations of the Office; but no such contract shall impair the right of the board of directors to remove any officer at any time in accordance with Section 3 of this Article V.

Section 3. Removal. Any officer may be removed by the board of directors whenever in its judgment the best interests of the Subsidiary Holding Company will be served thereby, but such removal, other than for cause, shall be without prejudice to the contractual rights, if any, of the person so removed.

Section 4. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the board of directors for the unexpired portion of the term.

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Section 5. Remuneration. The remuneration of the officers shall be fixed from time to time by the board of directors by employment contracts or otherwise.

ARTICLE VI. Contracts, Loans, Checks and Deposits

Section l. Contracts. To the extent permitted by regulations of the Office, and except as otherwise prescribed by these bylaws with respect to certificates for shares, the board of directors may authorize any officer, employee, or agent of the Subsidiary Holding Company to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Subsidiary Holding Company. Such authority may be general or confined to specific instances.

Section 2. Loans. No loans shall be contracted on behalf of the Subsidiary Holding Company and no evidence of indebtedness shall be issued in its name unless authorized by the board of directors. Such authority may be general or confined to specific instances.

Section 3. Checks, Drafts, Etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Subsidiary Holding Company shall be signed by one or more officers, employees or agents of the Subsidiary Holding Company in such manner as shall from time to time be determined by the board of directors.

Section 4. Deposits. All funds of the Subsidiary Holding Company not otherwise employed shall be deposited from time to time to the credit of the Subsidiary Holding Company in any duly authorized depositories as the board of directors may select.

ARTICLE VII. Certificates for Shares and Their Transfer

Section l. Certificates for Shares. Certificates representing shares of capital stock of the Subsidiary Holding Company shall be in such form as shall be determined by the board of directors and approved by the Office. Such certificates shall be signed by the chief executive officer or by any other officer of the Subsidiary Holding Company authorized by the board of directors, attested by the secretary or an assistant secretary, and sealed with the corporate seal or a facsimile thereof. The signatures of such officers upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent or a registrar other than the Subsidiary Holding Company itself or one of its employees. Each certificate for shares of capital stock shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Subsidiary Holding Company. All certificates surrendered to the Subsidiary Holding Company for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares has been surrendered and cancelled, except that in case of a lost or destroyed certificate, a new certificate may be issued upon such terms and indemnity to the Subsidiary Holding Company as the board of directors may prescribe.

Section 2. Transfer of Shares. Transfer of shares of capital stock of the Subsidiary Holding Company shall be made only on its stock transfer books. Authority for such transfer shall be given only by the holder of record or by his or her legal representative, who shall furnish proper evidence of such authority, or by his or her attorney authorized by a duly executed power

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of attorney and filed with the Subsidiary Holding Company. Such transfer shall be made only on surrender for cancellation of the certificate for such shares. The person in whose name shares of capital stock stand on the books of the Subsidiary Holding Company shall be deemed by the Subsidiary Holding Company to be the owner for all purposes.

ARTICLE VIII. Fiscal Year

The fiscal year of the Subsidiary Holding Company shall end on December 31 of each year. The appointment of accountants shall be subject to annual ratification by the shareholders.

ARTICLE IX. Dividends

Subject to the terms of the Subsidiary Holding Company’s charter and the regulations and orders of the Office, the board of directors may, from time to time, declare, and the Subsidiary Holding Company may pay, dividends on its outstanding shares of capital stock.

ARTICLE X. Corporate Seal

The board of directors shall provide a Subsidiary Holding Company seal, which shall be two concentric circles between which shall be the name of the Subsidiary Holding Company. The year of incorporation or an emblem may appear in the center.

ARTICLE XI. Amendments

These bylaws may be amended in a manner consistent with regulations of the Office and shall be effective after:  (i) approval of the amendment by a majority vote of the authorized board of directors, or by a majority vote of the votes cast by the shareholders of the Subsidiary Holding Company at any legal meeting, and (ii) receipt of any applicable regulatory approval. When the Subsidiary Holding Company fails to meet its quorum requirements, solely due to vacancies on the board, then the affirmative vote of a majority of the sitting board will be required to amend the bylaws.

ARTICLE XII. Indemnification

The Subsidiary Holding Company shall indemnify all officers, directors and employees of the Subsidiary Holding Company, and their heirs, executors and administrators, to the fullest extent permitted under federal law against all expenses and liabilities reasonably incurred by them in connection with or arising out of any action, suit or proceeding in which they may be involved by reason of their having been a director or officer of the Subsidiary Holding Company, whether or not they continue to be a director or officer at the time of incurring such expenses or liabilities, such expenses and liabilities to include, but not be limited to, judgments, court costs and attorneys’ fees and the cost of reasonable settlements.

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EX-31.1

Exhibit 31.1

Certification

I, Thomas M. Petro, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Fox Chase Bancorp, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting  (as defined in Exchange Act Rules 13 a-15 (f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and in preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2008	/s/ Thomas M. Petro
	Thomas M. Petro
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification

I, Roger S. Deacon, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Fox Chase Bancorp, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting  (as defined in Exchange Act Rules 13 a-15 (f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and in preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2008	/s/ Roger S. Deacon
	Roger S. Deacon
	Chief Financial Officer

EX-32.0

Exhibit 32.0

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Fox Chase Bancorp, Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2008, as filed with the Securities and Exchange Commission (the “Report”), I hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company as of and for the period covered by the Report.

By:	/s/ Thomas M. Petro
	Thomas M. Petro
	President and Chief Executive Officer
	May 9, 2008
By:	/s/ Roger S. Deacon
	Roger S. Deacon
	Chief Financial Officer
	May 9, 2008