10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

_______________________________________________________________

FORM 10-Q

__________________________________________________

(Mark One)

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

For the quarterly period ended September 30, 2014

OR

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

For the transition period from  to

Commission file number: 000-54025

_________________________________________________________________ 

Fox Chase Bancorp, Inc.

(Exact name of registrant as specified in its charter)

_________________________________________________________________

Maryland	35-2379633
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4390 Davisville Road, Hatboro, Pennsylvania	19040
(Address of principal executive offices)	(Zip Code)

(215) 283-2900

(Registrant’s telephone number, including area code)

N/A

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

_______________________________________________________________

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

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

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

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

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

Yes  o    No  ý

As of October 31, 2014, there were 12,011,491 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 September 30, 2014 (Unaudited) and December 31, 2013	3
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2014 and 2013 (Unaudited)	4
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2014 and 2013 (Unaudited)	5
	Consolidated Statements of Changes in Equity for the Nine Months Ended September 30, 2014 and 2013 (Unaudited)	6
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2014 and 2013 (Unaudited)	7
	Notes to the Unaudited Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	37
Part II. Other Information
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	38
Signatures

2

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

FOX CHASE BANCORP, INC.

Consolidated Statements of Condition

(In Thousands, Except Share Data)

		September 30, 2014			December 31, 2013
		(Unaudited)
ASSETS
	Cash and due from banks	$	1,340		$	149
	Interest-earning demand deposits in other banks	6,387			11,798
	Total cash and cash equivalents	7,727			11,947
	Investment securities available-for-sale	8,433			10,489
	Mortgage related securities available-for-sale	130,809			246,068
	Mortgage related securities held-to-maturity (fair value of $163,727 at September 30, 2014 and $67,491 at December 31, 2013)	165,006			68,397
	Loans, net of allowance for loan losses of $11,099 at September 30, 2014 and $11,529 at December 31, 2013	710,220			720,490
	Federal Home Loan Bank stock, at cost	11,152			9,813
	Bank-owned life insurance	14,905			14,547
	Premises and equipment, net	9,542			9,814
	Assets acquired through foreclosure	1,889			6,252
	Real estate held for investment	1,620			1,620
	Accrued interest receivable	3,159			3,308
	Mortgage servicing rights, net	126			152
	Deferred tax asset, net	4,734			8,906
	Other assets	5,369			4,819
	Total Assets	$	1,074,691		$	1,116,622
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
	Deposits	$	663,728		$	673,715
	Short-term borrowings	60,000			80,500
	Federal Home Loan Bank advances	135,000			150,000
	Other borrowed funds	30,000			30,000
	Advances from borrowers for taxes and insurance	1,000			1,525
	Accrued interest payable	314			314
	Accrued expenses and other liabilities	6,364			7,101
	Total Liabilities	896,406			943,155
STOCKHOLDERS’ EQUITY
	Preferred stock ($.01 par value; 1,000,000 shares authorized, none issued and outstanding at September 30, 2014 and December 31, 2013)	—			—
	Common stock ($.01 par value; 60,000,000 shares authorized, 12,066,591 shares outstanding at September 30, 2014 and 12,147,803 shares outstanding at December 31, 2013)	147			146
	Additional paid-in capital	138,663			137,593
	Treasury stock, at cost (2,584,772 shares at September 30, 2014 and 2,468,172 shares at December 31, 2013)	(35,338		)	(33,436		)
	Common stock acquired by benefit plans	(8,215		)	(9,272		)
	Retained earnings	83,481			82,885
	Accumulated other comprehensive loss, net	(453		)	(4,449		)
	Total Stockholders’ Equity	178,285			173,467
	Total Liabilities and Stockholders’ Equity	$	1,074,691		$	1,116,622

3

FOX CHASE BANCORP, INC.

Consolidated Statements of Operations

(In Thousands, Except Per Share Data)

(Unaudited)

		Three Months Ended   September 30,					Nine Months Ended   September 30,
		2014			2013		2014			2013
INTEREST INCOME
	Interest and fees on loans	$	8,375		$	8,241	$	24,615		$	24,319
	Interest on mortgage related securities	1,633			1,807		5,235			5,296
	Interest and dividends on investment securities	144			92		437			221
	Other interest income	1			1		2			2
	Total Interest Income	10,153			10,141		30,289			29,838
INTEREST EXPENSE
	Deposits	760			1,055		2,455			3,373
	Short-term borrowings	45			45		100			94
	Federal Home Loan Bank advances	577			555		1,723			1,606
	Other borrowed funds	253			254		751			753
	Total Interest Expense	1,635			1,909		5,029			5,826
	Net Interest Income	8,518			8,232		25,260			24,012
	Provision for loan losses	1,493			675		1,593			532
	Net Interest Income after Provision for Loan Losses	7,025			7,557		23,667			23,480
NONINTEREST INCOME
	Service charges and other fee income	416			437		1,192			1,260
	Net (loss) gain on sale of assets acquired through foreclosure	(15		)	303		(136		)	484
	Income on bank-owned life insurance	121			118		358			351
	Equity in earnings of affiliate	91			135		125			470
	Net gain on sale of investment securities (includes $0 and $0 for the three and nine months ended September 30, 2014, respectively and $0 and $532 for the three and nine months ended September 30, 2013, respectively of accumulated other comprehensive income reclassifications for unrealized holdings gains)	—			—		—			532
	Other	29			36		76			125
	Total Noninterest Income	642			1,029		1,615			3,222
NONINTEREST EXPENSE
	Salaries, benefits and other compensation	3,510			3,644		10,670			10,629
	Occupancy expense	407			403		1,321			1,243
	Furniture and equipment expense	93			117		300			358
	Data processing costs	384			390		1,146			1,155
	Professional fees	271			474		1,086			1,250
	Marketing expense	54			59		156			167
	FDIC premiums	136			175		451			525
	Assets acquired through foreclosure expense	10			1,370		403			4,465
	Other	333			370		1,077			1,192
	Total Noninterest Expense	5,198			7,002		16,610			20,984
	Income Before Income Taxes	2,469			1,584		8,672			5,718
	Income tax provision (includes $0 and $0 for the three and nine months ended September 30, 2014, respectively and $0 and $186 for the three and nine months ended September 30, 2013, respectively of income tax (benefit) expense from reclassification items)	653			411		2,585			1,674
	Net Income	$	1,816		$	1,173	$	6,087		$	4,044
Earnings per share:
	Basic	$	0.16		$	0.10	$	0.54		$	0.36
	Diluted	$	0.16		$	0.10	$	0.53		$	0.35

4

FOX CHASE BANCORP, INC.

Consolidated Statements of Comprehensive Income

(In Thousands, Unaudited)

		Three Months Ended   September 30,						Nine Months Ended   September 30,
		2014			2013			2014			2013
Net income		$	1,816		$	1,173		$	6,087		$	4,044
Other comprehensive (loss) income:
	Unrealized holding (losses) gains on investment	(320		)	(175		)	6,160			(10,363		)
	Tax Effect	109			67			(2,174		)	3,652
	Net of Tax Amount	(211		)	(108		)	3,986			(6,711		)
	Reclassification adjustments for net investment securities gains included in net income	—			—			—			(532		)
	Tax Effect	—			—			—			186
	Net of Tax Amount	—			—			—			(346		)
	Accretion of unrealized loss on securities reclassified to held-to-maturity	16			—			16			—
	Tax Effect	(6		)	—			(6		)	—
	Net of Tax Amount	10			—			10			—
Other comprehensive (loss) income		(201		)	(108		)	3,996			(7,057		)
Comprehensive income (loss)		$	1,615		$	1,065		$	10,083		$	(3,013	)

5

FOX CHASE BANCORP, INC.

Consolidated Statements of Changes in Equity

Nine Months Ended September 30, 2014 and 2013

(In Thousands, Unaudited)

	Common Stock		Additional Paid-in Capital			Treasury Stock			Common Stock Acquired by Benefit Plans			Retained Earnings			Accumulated Other Comprehensive Income (Loss), net			Total Equity
BALANCE - DECEMBER 31, 2012	$	146	$	136,132		$	(29,733	)	$	(10,228	)	$	80,608		$	4,540		$	181,465
Purchase of treasury stock	—		—			(3,703		)	—			—			—			(3,703		)
Stock based compensation expense	—		811			—			—			—			—			811
Unallocated ESOP shares committed to employees	—		361			—			468			—			—			829
Issuance of stock for vested equity awards	—		(316		)	—			329			(13		)	—			—
Common stock issued for exercise of vested stock options	—		106			—			—			—			—			106
Tax benefit from exercise of stock options and vesting of restricted stock	—		58			—			—			—			—			58
Dividends paid ($0.20 per share)	—		—			—			—			(2,321		)	—			(2,321		)
Net income	—		—			—			—			4,044			—			4,044
Other comprehensive loss	—		—			—			—			—			(7,057		)	(7,057		)
BALANCE - SEPTEMBER 30, 2013	$	146	$	137,152		$	(33,436	)	$	(9,431	)	$	82,318		$	(2,517	)	$	174,232
	Common Stock		Additional Paid-in Capital			Treasury Stock			Common Stock Acquired by Benefit Plans			Retained Earnings			Accumulated Other Comprehensive (Loss) Income, net			Total Equity
BALANCE - DECEMBER 31, 2013	$	146	$	137,593		$	(33,436	)	$	(9,272	)	$	82,885		$	(4,449	)	$	173,467
Purchase of treasury stock	—		—			(1,902		)	—			—			—			(1,902		)
Stock based compensation expense	—		894			—			—			—			—			894
Unallocated ESOP shares committed to employees	—		353			—			468			—			—			821
Issuance of stock for vested equity awards	—		(651		)	—			589			62			—			—
Common stock issued for exercise of vested stock options	1		391			—			—			—			—			392
Tax benefit from exercise of stock options and vesting of restricted stock	—		83			—			—			—			—			83
Dividends paid ($0.48 per share)	—		—			—			—			(5,553		)	—			(5,553		)
Net income	—		—			—			—			6,087			—			6,087
Other comprehensive income	—		—			—			—			—			3,996			3,996
BALANCE - SEPTEMBER 30, 2014	$	147	$	138,663		$	(35,338	)	$	(8,215	)	$	83,481		$	(453	)	$	178,285

6

FOX CHASE BANCORP, INC.

Consolidated Statements of Cash Flows

(In Thousands, Unaudited)

	Nine Months Ended   September 30,
	2014			2013
Cash Flows From Operating Activities
Net income	$	6,087		$	4,044
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	1,593			532
Valuation adjustment for assets acquired through foreclosure	282			4,304
Depreciation	533			591
Net amortization of securities premiums and discounts	1,430			2,101
Proceeds from the sale of loans held for sale	—			3,157
Provision (credit) for deferred income taxes	1,992			(947		)
Stock compensation from benefit plans	1,715			1,640
Net loss (gain) on sale of assets acquired through foreclosure	136			(484		)
Net gain on sale of investment securities	—			(532		)
Income on bank-owned life insurance	(358		)	(351		)
Excess tax benefit from exercise of stock options and vesting of restricted stock	(83		)	(58		)
Decrease in mortgage servicing rights, net	26			13
Decrease (increase) in accrued interest receivable and other assets	393			(589		)
Decrease in accrued interest payable, accrued expenses and other liabilities	(737		)	(176		)
Net Cash Provided by Operating Activities	13,009			13,245
Cash Flows from Investing Activities
Investment securities available-for-sale:
Proceeds from maturities, calls and principal repayments	2,000			2,000
Mortgage related securities available-for-sale:
Purchases	(2,830		)	(49,821		)
Proceeds from sales	—			9,517
Proceeds from maturities, calls and principal repayments	26,303			53,192
Mortgage related securities held-to-maturity:
Purchases	(9,767		)	(51,420		)
Proceeds from maturities, calls and principal repayments	9,665			8,562
Net decrease (increase) in loans	16,876			(4,593		)
Purchases of loans and loan participations	(9,371		)	(20,544		)
Net increase in Federal Home Loan Bank stock	(1,339		)	(1,916		)
Purchases of premises and equipment	(261		)	(153		)
Additions to assets acquired through foreclosure	(17		)	(867		)
Proceeds from sales and payments on assets acquired through foreclosure	4,504			3,973
Net Cash Provided by (Used in) Investing Activities	35,763			(52,070		)
Cash Flows from Financing Activities
Net decrease in deposits	(9,987		)	(4,401		)
Decrease in advances from borrowers for taxes and insurance	(525		)	(689		)
Proceeds from Federal Home Loan Bank advances	—			40,000
Principal payments on Federal Home Loan Bank advances	(15,000		)	—
Net decrease in short-term borrowings	(20,500		)	(8,900		)
Tax benefit from exercise of stock options and vesting of restricted stock	83			58
Common stock issued for exercise of stock options	392			106
Purchase of treasury stock	(1,902		)	(3,703		)
Cash dividends paid	(5,553		)	(2,321		)
Net Cash (Used in) Provided by Financing Activities	(52,992		)	20,150
Net Decrease in Cash and Cash Equivalents	(4,220		)	(18,675		)
Cash and Cash Equivalents – Beginning	11,947			25,090
Cash and Cash Equivalents – Ending	$	7,727		$	6,415
Supplemental Disclosure of Cash Flow Information
Interest paid	$	5,029		$	5,842
Income taxes paid	$	1,460		$	2,400
Transfers of loans to assets acquired through foreclosure	$	542		$	4,990
Transfers of loans to loans held for sale	$	—		$	3,157
Net charge-offs	$	2,023		$	574

7

FOX CHASE BANCORP, INC

Notes to the Unaudited Consolidated Financial Statements

NOTE 1 - PRINCIPLES OF CONSOLIDATION AND PRESENTATION

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

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

The Bancorp and the Bank (collectively referred to as the "Company") provide a wide variety of financial products and services to individuals and businesses through the Bank’s ten branches in Philadelphia, Richboro, Willow Grove, Warminster, Lahaska, Hatboro, and West Chester, Pennsylvania, and Ocean City, Marmora and Egg Harbor Township, New Jersey.  The operations of the Company are managed as a single business segment.  The Bank also owns approximately 45% of Philadelphia Mortgage Advisors ("PMA"), a mortgage banker located in Plymouth Meeting, Pennsylvania and Ocean City, New Jersey.

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

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

The Company follows accounting principles and reporting practices that are in compliance with U.S. generally accepted accounting principles (“GAAP”).  The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclose contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  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, the evaluation of other-than-temporary impairment and the valuation of investment securities and the valuation of assets acquired through foreclosure.

These interim financial statements do not contain all necessary disclosures required by GAAP for complete financial statements and therefore should be read in conjunction with the audited financial statements and the notes thereto included in Fox Chase Bancorp, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the Securities and Exchange Commission on March 7, 2014.  These financial statements include all normal and recurring adjustments which management believes were necessary in order to conform to GAAP.  The results for the nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014 or any other period.

8

NOTE 1 - PRINCIPLES OF CONSOLIDATION AND PRESENTATION (CONTINUED)

Per Share Information

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

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

	Three Months Ended   September 30,						Nine Months Ended   September 30,
	2014			2013			2014			2013
	(Unaudited)
Net income	$	1,816,000		$	1,173,000		$	6,087,000		$	4,044,000
Weighted-average common shares outstanding (1)	12,075,448			12,143,880			12,110,185			12,217,289
Average common stock acquired by stock benefit plans:
ESOP shares unallocated	(513,441		)	(578,494		)	(529,544		)	(594,597		)
Shares purchased by trust	(274,123		)	(317,645		)	(289,261		)	(327,849		)
Weighted-average common shares used to calculate basic earnings per share	11,287,884			11,247,741			11,291,380			11,294,843
Dilutive effect of:
Restricted stock awards	42,294			43,087			50,477			34,586
Stock option awards	193,739			203,692			199,215			193,932
Weighted-average common shares used to calculate diluted earnings per share	11,523,917			11,494,520			11,541,072			11,523,361
Earnings per share - basic	$	0.16		$	0.10		$	0.54		$	0.36
Earnings per share - diluted	$	0.16		$	0.10		$	0.53		$	0.35
Outstanding common stock equivalents having no dilutive effect	1,052,408			1,102,810			1,038,749			1,121,071
(1) Excludes treasury stock.

9

NOTE 2 - INVESTMENT AND MORTGAGE RELATED SECURITIES

The amortized cost and fair value of securities available-for-sale and held-to-maturity as of September 30, 2014 and December 31, 2013 are summarized as follows: 

	September 30, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands, Unaudited)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	300	$	4	$	—		$	304
Corporate securities	8,077		52		—			8,129
	8,377		56		—			8,433
Private label commercial mortgage related securities	—		—		—			—
Agency residential mortgage related securities	129,937		2,418		(1,546		)	130,809
Total mortgage related securities	129,937		2,418		(1,546		)	130,809
Total available-for-sale securities	$	138,314	$	2,474	$	(1,546	)	$	139,242
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	165,006	$	714	$	(1,993	)	$	163,727
Total mortgage related securities	165,006		714		(1,993		)	163,727
Total held-to-maturity securities	$	165,006	$	714	$	(1,993	)	$	163,727
	December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	300	$	8	$	—		$	308
Corporate securities	10,145		54		(18		)	10,181
	10,445		62		(18		)	10,489
Private label commercial mortgage related securities	2,118		2		—			2,120
Agency residential mortgage related securities	250,851		2,655		(9,558		)	243,948
Total mortgage related securities	252,969		2,657		(9,558		)	246,068
Total available-for-sale securities	$	263,414	$	2,719	$	(9,576	)	$	256,557
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	68,397	$	514	$	(1,420	)	$	67,491
Total mortgage related securities	68,397		514		(1,420		)	67,491
Total held-to-maturity securities	$	68,397	$	514	$	(1,420	)	$	67,491

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

10

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 September 30, 2014 and December 31, 2013.

	September 30, 2014
	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands, Unaudited)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	—	$	—		$	—	$	—		$	—	$	—
Corporate securities	—		—			—		—			—		—
	—		—			—		—			—		—
Private label commercial mortgage related securities	—		—			—		—			—		—
Agency residential mortgage related securities	6,714		(20		)	87,700		(1,526		)	94,414		(1,546		)
Total mortgage related securities	6,714		(20		)	87,700		(1,526		)	94,414		(1,546		)
Total available-for-sale securities	$	6,714	$	(20	)	$	87,700	$	(1,526	)	$	94,414	$	(1,546	)
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	61,446	$	(574	)	$	71,624	$	(1,419	)	$	133,070	$	(1,993	)
Total mortgage related securities	61,446		(574		)	71,624		(1,419		)	133,070		(1,993		)
Total held-to-maturity securities	$	61,446	$	(574	)	$	71,624	$	(1,419	)	$	133,070	$	(1,993	)
Total temporarily impaired securities	$	68,160	$	(594	)	$	159,324	$	(2,945	)	$	227,484	$	(3,539	)
	December 31, 2013
	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	—	$	—		$	—	$	—		$	—	$	—
Corporate securities	—		—			2,982		(18		)	2,982		(18		)
	—		—			2,982		(18		)	2,982		(18		)
Private label commercial mortgage related securities	—		—			—		—			—		—
Agency residential mortgage related securities	180,448		(7,251		)	24,841		(2,307		)	205,289		(9,558		)
Total mortgage related securities	180,448		(7,251		)	24,841		(2,307		)	205,289		(9,558		)
Total available-for-sale securities	$	180,448	$	(7,251	)	$	27,823	$	(2,325	)	$	208,271	$	(9,576	)
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	40,615	$	(1,420	)	$	—	$	—		$	40,615	$	(1,420	)
Total mortgage related securities	40,615		(1,420		)	—		—			40,615		(1,420		)
Total held-to-maturity securities	$	40,615	$	(1,420	)	$	—	$	—		$	40,615	$	(1,420	)
Total temporarily impaired securities	$	221,063	$	(8,671	)	$	27,823	$	(2,325	)	$	248,886	$	(10,996	)

11

NOTE 2 - INVESTMENT AND MORTGAGE RELATED SECURITIES (CONTINUED)

During the three and nine month periods ended September 30, 2014, no securities were sold. There were no net investment securities gains (losses) in the consolidated statement of operations for the three and nine month periods ended September 30, 2014. During the three months ended September 30, 2013, no securities were sold. During the nine months ended September 30, 2013, the Company sold seven mortgage related securities with an amortized cost of $9.0 million and recognized gross gains of $532,000.

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

At September 30, 2014, gross unrealized losses totaled $3.5 million.  64 agency residential mortgage related securities, with a fair value of $159.3 million and an unrealized loss position of $2.9 million, had an unrealized loss position for twelve months or longer as of September 30, 2014.  Additionally, 33 agency residential mortgage related securities, with a fair value of $68.2 million and an unrealized loss position of $594,000, had an unrealized loss position for less than twelve months as of September 30, 2014. The fair value of these 97 agency residential mortgage related securities primarily fluctuates with changes in market conditions for the underlying securities and changes in the interest rate environment. The Company does not intend to sell the securities in an unrealized loss position and it is not more likely than not that it will be required to sell these securities before a recovery of fair value, which may be maturity.  Upon review of the attributes of the individual securities, the Company concluded these securities were not other-than-temporarily impaired.

During the three months ended September 30, 2014, 38 residential mortgage related securities with a fair value of $96.9 million were transferred from available-for-sale securities to held-to-maturity. The reclassification was permitted as the Company has appropriately determined the ability and intent to hold these securities as an investment until maturity. The securities transferred had an unrealized net loss of $1.6 million at the time of transfer which continues to be reflected in accumulated other comprehensive loss on the consolidated balance sheet, net of subsequent amortization, which is being recognized over the life of the securities.

At September 30, 2014, the amortized cost of held-to-maturity investments consisted of the following (in thousands):

	Original Cost		Unrealized Loss at Transfer			Post-transfer Accretion		Amortized Cost
Transferred securities	$	97,469	$	(1,625	)	$	16	$	95,860
Other held-to-maturity securities	69,146		—			—		69,146
Total	$	166,615	$	(1,625	)	$	16	$	165,006

As of December 31, 2013, the Company held two private label commercial mortgage related securities ("CMBS") with an amortized cost of $2.1 million. These securities were paid off at amortized cost during the nine months ended September 30, 2014.

12

NOTE 2 - INVESTMENT AND MORTGAGE RELATED SECURITIES (CONTINUED)

The amortized cost and estimated fair value of investment securities available-for-sale and held-to-maturity at September 30, 2014 and December 31, 2013 by contractual maturity are as follows:

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
September 30, 2014 (Unaudited)
Due in one year or less	$	5,819	$	5,845	$	—	$	—
Due after one year through five years	2,558		2,588		—		—
Due after five years through ten years	—		—		—		—
Due after ten years	—		—		—		—
Total mortgage related securities	129,937		130,809		165,006		163,727
	$	138,314	$	139,242	$	165,006	$	163,727
December 31, 2013
Due in one year or less	$	1,999	$	2,000	$	—	$	—
Due after one year through five years	8,446		8,489		—		—
Due after five years through ten years	—		—		—		—
Due after ten years	—		—		—		—
Total mortgage related securities	252,969		246,068		68,397		67,491
	$	263,414	$	256,557	$	68,397	$	67,491

Securities with a fair value of $37.9 million and $9.7 million at September 30, 2014 and December 31, 2013, respectively, were pledged to secure public deposits.

Securities with a fair value of $173.0 million and $197.6 million at September 30, 2014 and December 31, 2013, respectively, were used to secure FHLB advances, short-term borrowings, other borrowed funds and related unused borrowing capacities.  See Note 7.

Securities with a fair value of $626,000 and $702,000 at September 30, 2014 and December 31, 2013, respectively, were used to secure derivative transactions.

NOTE 3 - LOANS

The composition of net loans at September 30, 2014 and December 31, 2013 is provided below:

	September 30, 2014			December 31, 2013
	(In thousands)
	(Unaudited)
Real estate loans:
One- to four-family	$	112,227		$	127,501
Multi-family and commercial	418,456			408,365
Construction	31,341			5,904
	562,024			541,770
Consumer loans	19,456			22,478
Commercial and industrial loans	140,113			168,013
Total loans	721,593			732,261
Deferred loan origination fees, net	(274		)	(242		)
Allowance for loan losses	(11,099		)	(11,529		)
Net loans	$	710,220		$	720,490

13

NOTE 3 - LOANS (CONTINUED)

The following tables present changes in the allowance for loan losses by loan segment for the nine months ended September 30, 2014 and the nine months ended September 30, 2013.

	Nine Months Ended September 30, 2014
	One- to Four-Family			Multi-family and Commercial			Construction			Consumer			Commercial and Industrial			Unallocated			Total
	(In thousands, Unaudited)
Balance, beginning	$	403		$	7,141		$	324		$	153		$	3,051		$	457		$	11,529
(Credit) provision for loan losses	(209		)	(76		)	284			(21		)	1,590			25			1,593
Loans charged off	(3		)	(102		)	—			(6		)	(1,986		)	—			(2,097		)
Recoveries	29			12			—			33			—			—			74
Balance, ending	$	220		$	6,975		$	608		$	159		$	2,655		$	482		$	11,099
	Nine Months Ended September 30, 2013
	One- to Four-Family			Multi-family and Commercial			Construction			Consumer			Commercial and Industrial			Unallocated			Total
	(In thousands)
Balance, beginning	$	642		$	6,327		$	873		$	232		$	2,630		$	466		$	11,170
(Credit) provision for loan losses	(139		)	1,256			(487		)	(7		)	(45		)	(46		)	532
Loans charged off	(115		)	(463		)	—			(69		)	—			—			(647		)
Recoveries	35			12			—			26			—			—			73
Balance, ending	$	423		$	7,132		$	386		$	182		$	2,585		$	420		$	11,128

The following tables set forth the breakdown of impaired loans by loan segment as of September 30, 2014 and December 31, 2013.

September 30, 2014
	Nonaccrual Loans		Accruing TDRs		Other Impaired Loans		Total Impaired Loans		Impaired Loans with Allowance		Impaired Loans without Allowance
	(In thousands, Unaudited)
Real estate loans:
One- to four-family	$	1,684	$	733	$	—	$	2,417	$	770	$	1,647
Multi-family and commercial	1,772		1,523		4,479		7,774		7,770		4
Construction	—		3,235		—		3,235		3,235		—
Consumer loans	185		13		—		198		94		104
Commercial and industrial	—		—		—		—		—		—
Total	$	3,641	$	5,504	$	4,479	$	13,624	$	11,869	$	1,755
December 31, 2013
	Nonaccrual Loans		Accruing TDRs		Other Impaired Loans		Total Impaired Loans		Impaired Loans with Allowance		Impaired Loans without Allowance
	(In thousands)
Real estate loans:
One- to four-family	$	2,390	$	582	$	—	$	2,972	$	2,972	$	—
Multi-family and commercial	3,031		6,191		—		9,222		8,866		356
Construction	3,231		—		—		3,231		3,231		—
Consumer loans	128		13		—		141		141		—
Commercial and industrial	—		—		—		—		—		—
Total	$	8,780	$	6,786	$	—	$	15,566	$	15,210	$	356

14

NOTE 3 - LOANS (CONTINUED)

There were no loans past due 90 days or more and still accruing interest at September 30, 2014 or December 31, 2013.

For the nine months ended September 30, 2014 and 2013, the average recorded investment in impaired loans was $13.5 million and $17.4 million, respectively.  The interest income recognized on these impaired loans was $384,000 and $296,000 for the nine months ended September 30, 2014 and 2013, respectively.

At September 30, 2014, two troubled debt restructurings (“TDRs”) totaling $277,000 are excluded from the accruing TDR column above as they are included in nonaccrual loans.  At December 31, 2013, four TDRs totaling $3.5 million are excluded from the accruing TDR column as they are included in nonaccrual loans.

During the nine months ended September 30, 2014, one multi-family and commercial loan totaling $4.5 million was reclassified from an accruing TDR to an other impaired loan.  This reclassification was due to our annual assessment where TDRs that have performed in accordance with the new terms for six consecutive months, are in a current status, reflected a market rate of interest at the time of the restructuring and cross over a year end are considered cured and are no longer classified as TDRs.

The following tables set forth the allowance for loan loss for impaired loans and general allowance by loan segment as of September 30, 2014 and December 31, 2013.

September 30, 2014	Allowance for Loan Losses
	Impaired Loans
	Nonaccrual Loans		Accruing TDRs		Other Impaired Loans		Total Impaired Loans
									General		Total
	(In thousands, Unaudited)
Real estate loans:
One- to four-family	$	2	$	1	$	—	$	3	$	217	$	220
Multi-family and commercial	414		204		395		1,013		5,962		6,975
Construction	—		74		—		74		534		608
Consumer loans	26		—		—		26		133		159
Commercial and industrial	—		—		—		—		2,655		2,655
Unallocated	—		—		—		—		482		482
Total allowance for loan losses	$	442	$	279	$	395	$	1,116	$	9,983	$	11,099
December 31, 2013	Allowance for Loan Losses
	Impaired Loans
	Nonaccrual Loans		Accruing TDRs		Other Impaired Loans		Total Impaired Loans
									General		Total
	(In thousands)
Real estate loans:
One- to four-family	$	163	$	1	$	—	$	164	$	239	$	403
Multi-family and commercial	600		687		—		1,287		5,854		7,141
Construction	263		—		—		263		61		324
Consumer loans	6		—		—		6		147		153
Commercial and industrial	—		—		—		—		3,051		3,051
Unallocated	—		—		—		—		457		457
Total allowance for loan losses	$	1,032	$	688	$	—	$	1,720	$	9,809	$	11,529

15

NOTE 3 - LOANS (CONTINUED)

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

The following table sets forth a summary of the TDR activity for the three and nine month periods ended September 30, 2014 and 2013. 

	Three Months Ended September 30, 2014						Nine Months Ended September 30, 2014
	Restructured Current Period						Restructured Current Period
	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Type of Modification	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Type of Modification
	(Dollars in thousands, Unaudited)						(Dollars in thousands, Unaudited)
Real estate loans:
One- to four-family	—	$	—	$	—		1	$	245	$	245	Principal forgiveness
Multi-family and commercial	—	—		—			1	1,640		1,540		Principal forgiveness
Construction	—	—		—			—	—		—
Consumer loans	—	—		—			—	—		—
Commercial and industrial	—	—		—			—	—		—
Total	—	$	—	$	—		2	$	1,885	$	1,785
	Three Months Ended September 30, 2013						Nine Months Ended September 30, 2013
	Restructured Current Period						Restructured Current Period
	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Type of Modification	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Type of Modification
	(Dollars in thousands, Unaudited)						(Dollars in thousands, Unaudited)
Real estate loans:
One- to four-family	1	$	141	$	141	Delayed repayment	2	$	622	$	622	Delayed repayment
Multi-family and commercial	—	—		—			—	—		—
Construction	—	—		—			—	—		—
Consumer loans	—	—		—			—	—		—
Commercial and industrial	—	—		—			—	—		—
Total	1	$	141	$	141		2	$	622	$	622

During the three and nine months ended September 30, 2014, no TDRs defaulted that were restructured in the prior twelve months. During the three and nine months ended September 30, 2013, a $1.6 million multi-family and commercial real estate TDR which was restructured in the prior twelve months defaulted. This defaulted loan was current as to monetary payments, but was 90 days or more past maturity. Subsequent to the default, the loan was extended.

16

NOTE 3 - LOANS (CONTINUED)

The following table sets forth past due loans by segment as of September 30, 2014 and December 31, 2013.

	September 30, 2014				December 31, 2013
	30-59 Days Past Due		60-89 Days Past Due		30-59 Days Past Due		60-89 Days Past Due
	(In thousands)
	(Unaudited)
One- to four-family real estate	$	747	$	100	$	172	$	—
Multi-family and commercial real estate	—		—		—		—
Construction	—		—		—		—
Consumer	99		24		241		5
Commercial and industrial	93		—		—		—
Total	$	939	$	124	$	413	$	5

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

The following tables set forth criticized and classified loans by segment as of September 30, 2014 and December 31, 2013. 

	September 30, 2014
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Total
	(In thousands, Unaudited)
Pass and Pass watch	$	110,543	$	403,772	$	28,106	$	19,271	$	134,330	$	696,022
Special mention	—		10,004		3,235		—		5,025		18,264
Substandard	1,684		4,680		—		185		758		7,307
Doubtful	—		—		—		—		—		—
Total loans	$	112,227	$	418,456	$	31,341	$	19,456	$	140,113	$	721,593
	December 31, 2013
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Total
	(In thousands)
Pass and Pass watch	$	125,111	$	390,908	$	2,673	$	22,350	$	165,336	$	706,378
Special mention	—		12,414		—		—		2,677		15,091
Substandard	2,390		5,043		3,231		128		—		10,792
Doubtful	—		—		—		—		—		—
Total loans	$	127,501	$	408,365	$	5,904	$	22,478	$	168,013	$	732,261

17

NOTE 4 - DERIVATIVES AND HEDGING

Interest Rate Swaps

On November 3, 2006, the Company entered into an interest rate swap with a current notional amount of $819,000, which is used to hedge a 15-year fixed rate loan that is earning interest at 7.43%.  The Company is receiving variable rate payments of one-month LIBOR plus 224 basis points and is paying fixed rate payments of 7.43%.  The swap matures in April 2022 and had a fair value loss position of $116,000 and $132,000 at September 30, 2014 and December 31, 2013, respectively.  The interest rate swap is carried at fair value in accordance with FASB ASC 815 “Derivatives and Hedging.”  The loan is carried at fair value under the fair value option as permitted by FASB ASC 825 “Financial Instruments.”

On October 12, 2011, the Company entered into an interest rate swap with a current notional amount of $1.5 million, which is used to hedge a 10-year fixed rate loan that is earning interest at 5.83%.  The Company is receiving variable rate payments of one-month LIBOR plus 350 basis points and is paying fixed rate payments of 5.83%.  The Company designated this relationship as a fair value hedge.  The swap matures in October 2021 and had a fair value (loss) gain position of ($22,000) and $12,000 at September 30, 2014 and December 31, 2013, respectively.  The difference between changes in the fair values of the interest rate swap agreement and the hedged loan represents hedge ineffectiveness and is recorded in other non-interest income in the consolidated statements of operations. Hedge ineffectiveness resulted in (expense) income of ($2,000) and $1,000 for the three months ended September 30, 2014 and September 30, 2013, respectively.  Hedge ineffectiveness resulted in (expense) income of ($12,000) and $15,000 for the nine months ended September 30, 2014 and September 30, 2013, respectively.

Credit Derivatives

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

At September 30, 2014, there were five variable-rate to fixed-rate interest rate swap transactions between the third-party financial institution and our customers with a notional amount of $19.2 million, and remaining maturities ranging from five to eight years.  At December 31, 2013, there were five variable-rate to fixed-rate interest swap transactions between the third-party financial institution and our customers with a notional amount of $19.5 million, and remaining maturities ranging from six to nine years.  The fair value of the swaps to the customers was an asset of $534,000 and $969,000 as of September 30, 2014 and December 31, 2013, respectively, and all swaps were in receiving positions from the third-party financial institution at September 30, 2014.  As of September 30, 2014 and December 31, 2013, the fair value of the Company’s interest rate swap credit derivatives was a liability of $4,000 and $3,000, respectively.  During the three months ended September 30, 2014 and 2013, the Company recognized (expense) income of ($1,000) and $1,000, respectively, from interest rate swap credit derivatives. During the nine months ended September 30, 2014 and 2013, the Company recognized (expense) income of ($2,000) and $7,000, respectively, from interest rate swap credit derivatives.

At September 30, 2014, there were fourteen foreign currency swap transactions between the third-party financial institution and our customers with a notional amount aggregating approximately $1.9 million, and remaining maturities ranging from one to eight months.  The aggregate fair value of these swaps to the customers was a liability of $155,000 as of September 30, 2014.  At September 30, 2014, the fair value of the Company’s credit derivatives was $10,000.  At December 31, 2013, there were seven foreign currency swap transactions between the third-party financial institution and our customers with a notional amount of $517,000 and remaining maturities ranging from one to eleven months.  The aggregate fair value of these swaps to the customers was $0 as of December 31, 2013. At December 31, 2013, the fair value of the Company's credit derivative was a liability of $1,000. During the three months ended September 30, 2014 and 2013, the Company recognized income of $2,000 and $0, respectively, from foreign currency swap credit derivatives. During the nine months ended September 30, 2014 and 2013, the Company recognized income of $4,000 and $2,000, respectively, from foreign currency swap credit derivatives.

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

18

NOTE 5 - 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 $24.2 million, $27.7 million and $28.5 million at September 30, 2014, December 31, 2013 and September 30, 2013, respectively.  The Company received fees, net of amortization, from the servicing of loans of $18,000 and ($4,000) during the nine months ended September 30, 2014 and 2013, respectively.

The following table summarizes mortgage servicing rights activity for the nine months ended September 30, 2014 and 2013.

	Servicing Rights			Valuation Allowance			Net Carrying Value
	(In thousands, Unaudited)
Balance at December 31, 2013	$	255		$	(103	)	$	152
Reductions	—			6			6
Amortization	(32		)	—			(32		)
Balance at September 30, 2014	$	223		$	(97	)	$	126
Balance at December 31, 2012	$	325		$	(155	)	$	170
Reductions	—			50			50
Amortization	(63		)	—			(63		)
Balance at September 30, 2013	$	262		$	(105	)	$	157

At September 30, 2014, December 31, 2013 and September 30, 2013, the fair value of the mortgage servicing rights (“MSRs”) was $126,000, $152,000 and $157,000, 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 and current interest rates.  The discount rate used to determine the present value of future net servicing income 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 6 - DEPOSITS

Deposits and their respective weighted average interest rate at September 30, 2014 and December 31, 2013 consist of the following:

	September 30, 2014				December 31, 2013
	Weighted Average Interest Rate		Amount		Weighted Average Interest Rate		Amount
	(Dollars in thousands)
	(Unaudited)
Noninterest-bearing demand accounts	—	%	$	119,853	—	%	$	100,748
NOW accounts	0.21		82,868		0.21		84,569
Money market accounts	0.21		90,152		0.20		85,017
Savings and club accounts	0.27		112,821		0.22		108,183
Brokered deposits	0.81		64,280		0.56		71,334
Certificates of deposit	0.94		193,754		1.26		223,864
	0.45	%	$	663,728	0.56	%	$	673,715

19

NOTE 7 - BORROWINGS

FHLB Advances

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

Maturity Date	Amount		Coupon Rate		Call Date	Rate if Called
	(In thousands, Unaudited)
December 2014	$	15,000	0.43	%	Not Applicable	Not Applicable
March 2015	10,000		0.49		Not Applicable	Not Applicable
April 2015	10,000		0.45		Not Applicable	Not Applicable
August 2015	10,000		0.68		Not Applicable	Not Applicable
March 2016	10,000		0.60		Not Applicable	Not Applicable
March 2016	10,000		0.62		Not Applicable	Not Applicable
September 2016	5,000		0.75		Not Applicable	Not Applicable
September 2016	10,000		1.04		Not Applicable	Not Applicable
June 2017	5,000		0.94		Not Applicable	Not Applicable
November 2017	15,000		3.62		November 2014	LIBOR + 0.10%
November 2017	15,000		3.87		November 2014	LIBOR + 0.10%
December 2017	20,000		2.83		December 2014	LIBOR + 0.11%
	$	135,000	1.65	%

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

The Bank had a maximum borrowing capacity with the FHLB of Pittsburgh of approximately $411.8 million at September 30, 2014.  As of September 30, 2014, the Bank had qualifying collateral pledged against its advances consisting of loans in the amount of $468.6 million and securities in the amount of $77.8 million. Additionally, as of September 30, 2014, the Bank had a maximum borrowing capacity of $61.1 million with the Federal Reserve Bank of Philadelphia through the Discount Window. This borrowing capacity was generated by pledged securities with a fair value of $61.2 million.

As a member of the FHLB of Pittsburgh, the Bank is required to acquire and hold shares of capital stock in the FHLB of Pittsburgh in an amount equal to at least 4.00% of its advances plus 0.35% of the Bank’s “eligible assets,” as such term is defined by the FHLB; and a maximum amount of 6.00% of its advances plus 1.00% of the Bank’s “eligible assets.”  As of September 30, 2014, the Company had a minimum stock obligation of $8.9 million and a maximum stock obligation of $15.1 million.  The Company held $11.2 million in FHLB stock at that date.

Other Borrowed Funds

Other borrowed funds obtained from large commercial banks under security repurchase agreements totaled $30.0 million at September 30, 2014.  These borrowings contractually mature with dates ranging from September 2018 through November 2018. As disclosed in the table below, one of the borrowings may be called by the lender based on the underlying agreement.  Accordingly, the contractual maturity below may differ from actual maturity.

20

NOTE 7 - BORROWINGS (CONTINUED)

					Next Call Date	Subsequent Call Frequency
Maturity Date	Amount		Coupon Rate
	(In thousands, Unaudited)
September 2018	$	10,000	3.40	%	Not Applicable	Not Applicable
September 2018	5,000		3.20		Not Applicable	Not Applicable
October 2018	5,000		3.15		October 2014	Quarterly
October 2018	5,000		3.27		Not Applicable	Not Applicable
November 2018	5,000		3.37		Not Applicable	Not Applicable
	$	30,000	3.30	%

Mortgage backed securities with a fair value of $34.0 million at September 30, 2014 were used to secure these other borrowed funds.

Short-term Borrowings

Short-term borrowings consist of overnight borrowings plus term borrowings with an original maturity less than one year. Short-term borrowings are obtained from commercial banks, participants in the Federal Funds market and the FHLB. As of September 30, 2014, the Company had $60.0 million of short-term borrowings consisting of $45.0 million of overnight borrowings and $15.0 million of short-term borrowings with weighted average rates of 0.31% and 0.33%, respectively.  As of December 31, 2013, the Company had $80.5 million of short term borrowings consisting solely of overnight borrowings with a weighted average rate of 0.32%.

NOTE 8 - STOCK BASED COMPENSATION

During the nine months ended September 30, 2014, the Company recorded $894,000 of stock based compensation expense comprised of stock option expense of $328,000 and restricted stock expense of $566,000. This compares to $811,000 of stock based compensation expense comprised of stock option expense of $315,000 and restricted stock expense of $496,000 during the nine months ended September 30, 2013.

The following is a summary of the Bancorp’s stock option activity and related information for the nine months ended September 30, 2014. 

	Number of Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
	(Unaudited)
Outstanding at December 31, 2013	1,123,408		$	12.81	6.2 years	$	5,013,000
Granted	36,300		16.97
Exercised	(35,388	)	11.07
Forfeited/Cancelled	(23,100	)	15.52
Outstanding at September 30, 2014	1,101,220		$	12.95	5.5 years	$	3,895,000
Exercisable at September 30, 2014	733,648		$	11.73	4.3 years	$	3,395,000

The fair value of the options granted during the nine months ended September 30, 2014 was estimated to be $3.66.  The fair value was based on the following assumptions:

Expected Dividend Yield				3.53	%
Expected Volatility	30.85	%	-	31.04	%
Risk-Free Interest Rate	1.86	%	-	1.90	%
Expected Option Life in Years				6.5

Stock options vest over a five-year service period and expire ten years after grant date. The Company recognizes compensation expense for the fair values of stock options using the straight-line method over the requisite service period for the entire award.

21

NOTE 8 - STOCK BASED COMPENSATION (CONTINUED)

The following is a summary of the Bancorp’s unvested options as of September 30, 2014 and the changes therein during the nine months then ended. 

	Number of Stock Options		Weighted Average Grant Date Fair Value
	(Unaudited)
Unvested at December 31, 2013	475,524		$	3.85
Granted	36,300		3.66
Vested	(124,152	)	3.66
Forfeited / Cancelled	(20,100	)	3.91
Unvested at September 30, 2014	367,572		$	3.90

Expected future expense relating to the 367,572 non-vested options outstanding as of September 30, 2014 is $1.2 million over a weighted average period of 3.1 years.

The following is a summary of the status of the Bancorp’s restricted stock as of September 30, 2014 and changes therein during the nine months then ended.

	Number of Restricted Shares		Weighted Average Grant Date Fair Value
	(Unaudited)
Unvested at December 31, 2013	225,932		$	14.98
Granted	17,215		15.84
Vested	(47,276	)	13.78
Forfeited / Cancelled	(8,650	)	15.32
Unvested at September 30, 2014	187,221		$	15.34

Expected future compensation expense relating to the 187,221 restricted shares at September 30, 2014 is $2.3 million over a weighted average period of 3.2 years. 

Non-performance based restricted shares vest over a five-year service period. The Company recognizes compensation expense for the fair value of non-performance based restricted shares on a straight-line basis over the requisite service period for the entire award.

Performance-based restricted shares vest over a five-year period based on service and achievement of performance metrics. The performance metrics to be evaluated during the performance period are (1) return on assets compared to peer group and (2) earnings per share growth rate compared to peer group. On the third anniversary of the grant date, the Company's level of performance relative to the performance metrics are evaluated and, if such performance metrics have been achieved, an amount of shares that will vest at that time and over the following two years will be determined. The number of shares eligible to vest can range from 0% to 150% of the shares identified on grant date (the "target shares"). Of the shares that will vest, 50% of the shares vest on the third anniversary of the date of grant and 25% vest on each of the fourth and fifth anniversaries of the date of grant.

During August 2011, the Company granted 10,668 shares (the "target shares") of performance-based restricted stock. During August 2014, the Company awarded an additional 4,265 shares of performance-based restricted stock, which represented additional shares owed to participants under the August 2011 grant as the Company exceeded the performance targets under the 2011 award. This represented a total grant of 140% of the "target shares."  The 14,933 shares had a grant date fair value of $12.39. 

During 2013 and 2012, the Company granted 39,250 and 22,500 shares, respectively, of performance-based restricted stock to certain executive officers of the Company. For the purposes of the above table, the Company is assuming 100% of the "target shares" will be awarded. However, more or less shares may actually be awarded based on the performance of the Company at the applicable measurement date.

22

NOTE 9 - FAIR VALUE

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

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

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

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

Level 3—Valuations are 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 following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities.  Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.  The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments at September 30, 2014 and December 31, 2013:

Cash and Cash Equivalents

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

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

Fair values for investment securities and mortgage related securities are obtained from one external pricing service (“primary pricing service”) as the provider of pricing on the investment portfolio on a quarterly basis.  We generally obtain one quote per investment security.  If quoted market prices are not available, fair values are based on quoted market prices of comparable securities.  If quoted market prices are not available for comparable securities, fair value is based on quoted bids for the security or comparable securities.  We review the estimates of fair value provided by the primary pricing service to determine if they are representative of fair value based upon our general knowledge of market conditions and relative changes in interest rates and the credit environment.  The Company made no adjustments to the values obtained from the primary pricing service.

Loans Receivable, Net

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

FHLB Stock

The fair value of the FHLB stock is assumed to equal its cost, since the stock is nonmarketable but redeemable at its par value.

Mortgage Servicing Rights

The fair value of the MSRs 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.

23

NOTE 9 - FAIR VALUE (CONTINUED)

Financial Assets Acquired from Debtors

The fair value of financial assets acquired from debtors are determined using sales prices from executed sale agreements.

Accrued Interest Receivable and Accrued Interest Payable

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

Deposit Liabilities

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

Short-term Borrowings, FHLB Advances and Other Borrowed Funds

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

Derivative Contracts

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

The estimated fair values of the Company’s financial instruments at September 30, 2014 and December 31, 2013 were as follows: 

		September 30, 2014				December 31, 2013
	Fair Value Hierarchy Level	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
		(In thousands)
Financial assets:		(Unaudited)
Cash and cash equivalents	Level 1	$	7,727	$	7,727	$	11,947	$	11,947
Available-for-sale securities:
Investment securities available-for-sale	Level 2	8,433		8,433		10,489		10,489
Private label commercial mortgage related securities	Level 3	—		—		2,120		2,120
Agency residential mortgage related securities	Level 2	130,809		130,809		243,948		243,948
Held-to-maturity securities:
Agency mortgage related securities	Level 2	165,006		163,727		68,397		67,491
Loans receivable, net	Level 3	710,220		713,357		720,490		721,417
FHLB stock	Level 3	11,152		11,152		9,813		9,813
Accrued interest receivable	Level 2, 3	3,159		3,159		3,308		3,308
Mortgage servicing rights	Level 3	126		126		152		152
Financial assets acquired from debtors	Level 3	—		—		1,938		1,938
Financial liabilities:
Savings and club accounts	Level 2	112,821		112,821		108,183		108,183
Demand, NOW and money market deposits	Level 2	292,873		292,873		270,334		270,334
Brokered deposits	Level 2	64,280		63,958		71,334		71,020
Certificates of deposit	Level 2	193,754		193,974		223,864		225,357
Short-term borrowings	Level 2	60,000		60,001		80,500		80,500
FHLB advances	Level 2	135,000		138,292		150,000		154,069
Other borrowed funds	Level 2	30,000		31,922		30,000		32,178
Accrued interest payable	Level 2	314		314		314		314
Derivative contracts	Level 2, 3	152		152		124		124

24

NOTE 9 - FAIR VALUE (CONTINUED)

The following financial instruments were classified as Level 3 and carried at fair value on a recurring basis as of September 30, 2014:

• Two commercial loans, since lending credit risk is not an observable input for these loans (see interest rate swap discussion in Note 4).  The unrealized gain on the two loans was $133,000 at September 30, 2014 compared to $125,000 at December 31, 2013.

• Credit derivatives are valued based on creditworthiness of the underlying borrower which is a significant unobservable input.  The liability resulting from credit derivatives was $14,000 and $4,000 at September 30, 2014 and December 31, 2013, respectively.

The following measures were made on a recurring basis as of September 30, 2014 and December 31, 2013.

				Fair Value Measurements at Reporting Date Using
				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Other Unobservable Inputs
	As of
Description	September 30, 2014			(Level 1)		(Level 2)			(Level 3)
	(In thousands, Unaudited)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	304		$	—	$	304		$	—
Corporate securities	8,129			—		8,129			—
Agency residential mortgage related securities	130,809			—		130,809			—
Loans (1)	2,459			—		—			2,459
Derivative contracts (1)	(152		)	—		(138		)	(14		)
				Fair Value Measurements at Reporting Date Using
				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Other Unobservable Inputs
	As of
Description	December 31, 2013			(Level 1)		(Level 2)			(Level 3)
	(In thousands)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	308		$	—	$	308		$	—
Corporate securities	10,181			—		10,181			—
Private label commercial mortgage related securities	2,120			—		—			2,120
Agency residential mortgage related securities	243,948			—		243,948			—
Loans(1)	2,535			—		—			2,535
Financial assets acquired from debtors	1,938			—		—			1,938
Derivative contracts (1)	(124		)	—		(120		)	(4		)

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

The following measures were made on a non-recurring basis as of September 30, 2014 and December 31, 2013:

Loans, which were partially charged off at September 30, 2014 and December 31, 2013.  The loans’ fair values are based on Level 3 inputs, which are either an appraised value or a sales agreement, less costs to sell.  These amounts do not include fully charged-off loans, because we carry fully charged-off loans at zero on our balance sheet.

MSRs, the fair value of which was determined using a 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.

25

NOTE 9 - FAIR VALUE (CONTINUED)

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

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
	Balance		(Level 1)		(Level 2)		(Level 3)
September 30, 2014 (Unaudited)			(In thousands)
Loans	$	240	$	—	$	—	$	240
Mortgage servicing rights	126		—		—		126
Other real estate owned	1,889		—		—		1,889
Total	$	2,255	$	—	$	—	$	2,255
December 31, 2013
Loans	$	912	$	—	$	—	$	912
Mortgage servicing rights	152		—		—		152
Other real estate owned	4,314		—		—		4,314
Total	$	5,378	$	—	$	—	$	5,378

The following tables include a roll forward of the financial instruments which fair value is determined on a recurring basis using Significant Other Unobservable Inputs (Level 3) for the periods from December 31, 2013 to September 30, 2014 and December 31, 2012 to September 30, 2013. 

Nine Months Ended September 30, 2014
		Private Label Commercial Mortgage Related Securities			Derivative Contracts			Financial Assets Acquired from Debtors			Loans			Total
	(In thousands, Unaudited)
Beginning balance, December 31, 2013		$	2,120		$	(4	)	$	1,938		$	2,535		$	6,589
Purchases/additions		—			(12		)	—			—			(12		)
Sales		—			—			(1,938		)	—			(1,938		)
Payments received		(2,118		)	—			—			(82		)	(2,200		)
Premium amortization, net		—			—			—			—			—
(Decrease)/increase in value		(2		)	2			—			6			6
Ending balance, September 30, 2014		$	—		$	(14	)	$	—		$	2,459		$	2,445
Nine Months Ended September 30, 2013
		Private Label Commercial Mortgage Related Securities			Derivative Contracts			Financial Assets Acquired from Debtors			Loans			Total
	(In thousands, Unaudited)
Beginning balance, December 31, 2012		$	6,197		$	(12	)	$	3,714		$	2,806		$	12,705
Purchases/additions		—			—			1,994			—			1,994
Sales		—			—			—			—			—
Payments (received) made		(3,959		)	—			830			(77		)	(3,206		)
Premium amortization, net		(3		)	—			—			—			(3		)
(Decrease)/increase in value		(69		)	7			(4,480		)	(130		)	(4,672		)
Ending balance, September 30, 2013		$	2,166		$	(5	)	$	2,058		$	2,599		$	6,818

There were no transfers made between levels during the nine months ended September 30, 2014 or 2013.

26

NOTE 10 – ACCOUNTING PRONOUNCEMENTS

ASU No. 2013-11-Income Taxes (Topic 740) - Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force). As a result of applying this ASU, an unrecognized tax benefit should be presented as a reduction of a deferred tax asset for a net operating loss ("NOL") or other tax credit carryforward when settlement in this manner is available under the tax law. The assessment of whether settlement is available under the tax law would be based on facts and circumstances as of the balance sheet reporting date and would not consider future events (e.g., upcoming expiration of related NOL carryforwards). This classification should not affect an entity's analysis of the realization of its deferred tax assets. Gross presentation in the roll forward of unrecognized tax positions in the notes to the financial statements will still be required. For the Company, the update was effective prospectively for annual reporting periods beginning on or after January 1, 2014, and interim periods within those annual periods. Retrospective application is permitted. Adoption of this ASU did not have a material impact on the Company's consolidated financial statements.

ASU No. 2014-04 - Troubled Debt Restructuring by Creditors (Subtopic 310-40) - Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force). The amendments in this update apply to all creditors who obtain physical possession (resulting from an in substance repossession or foreclosure) of residential real estate property collateralizing a consumer mortgage loan in satisfaction of a receivable.  The objective of the amendments in this update is to reduce diversity by clarifying when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to requirements of the applicable jurisdiction.  The amendments in this update are effective for the Company for annual reporting periods beginning on or after January 1, 2015, and interim periods within those annual periods. Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.

ASU No. 2014-09 - Revenue from Contracts with Customers (Topic 660). This update requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

ASU No. 2014-11 - Transfers and Servicing (Topic 860) - Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The amendments in this update change the accounting for repurchase-to-maturity transactions and enhances the required disclosures for repurchase agreements and other similar transactions. Repurchase-to-maturity transactions will be accounted for as secured borrowings rather than sales of assets with separate forward repurchase or resale commitments. Transactions which include the initial transfer of financial assets and a repurchase financing involving the same or substantially the same asset with the same counterparty that are entered into contemporaneously with, or in contemplation of, one another will be accounted for as two separate transactions. This will result in the initial transfer being accounted for as a sale (if derecognition criteria are met) and a purchase by the counterparty and both parties accounting for the repurchase financing as a secured borrowing. The update also requires new disclosures for transactions similar to repurchases in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets. It also requires additional disclosures about the nature of collateral pledged in repurchases that are accounted for as secured borrowings. The accounting changes in the standard and the disclosures for transactions accounted for as sales are effective for the Company for interim and annual periods beginning on or after January 1, 2015. The disclosures for repurchases, securities lending transactions, and repurchases-to-maturity accounted for as secured borrowings are required for the Company for annual periods beginning on or after January 1, 2015, and interim periods beginning on or after April 1, 2015. Early application is prohibited. Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements, but is expected to result in additional disclosures related to the Company's secured borrowings.

ASU No. 2014-12 - Compensation-Stock Compensation (Topic 718) - Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period a consensus of the FASB Emerging Issues Task Force. The amendments in this update require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the

27

NOTE 10 – ACCOUNTING PRONOUNCEMENTS (CONTINUED)

remaining requisite service period. The amendments in this update are effective for the Company for annual periods and interim periods beginning on or after January 1, 2016. Earlier adoption is permitted. Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.

ASU No. 2014-13 - Consolidation (Topic 810) - Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity. This update clarifies the measurement of the financial assets and the financial liabilities of a consolidated collateralized financing entity, such as a collateralized debt obligation (CDO) or collateralized loan obligation (CLO) entity. The amendments in this update are effective for the Company for annual periods and interim periods beginning on or after January 1, 2016. Earlier adoption is permitted. Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements as the Company does not have consolidated collateralized financing entities.

ASU No. 2014-14 - Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40) - Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure a Consensus of the FASB Emerging Issues Task Force. The objective of this update is to reduce the diversity in classification of government-guaranteed mortgage loans, including FHA or VA guaranteed loans, upon foreclosure. The amendments in this update are effective for the Company for annual periods and interim periods beginning on or after January 1, 2016. Earlier adoption is permitted. Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements as the Company does not hold any government-guaranteed mortgage loans.

ASU No. 2014-15 - Presentation of Financial Statements - Going Concern (Subtopic 205-40) - Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments in this update require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this update are effective for the Company for the annual period ending December 31, 2016 and annual and interim periods thereafter. Earlier application is permitted. Application of this ASU is not expected to have a material impact on the Company's consolidated financial statements.

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 subsidiaries 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 credit quality and composition of the loan and investment portfolios, valuation of assets acquired through foreclosure, deposit flows, competition, demand for loan products and for financial services in the Company's market area, changes in real estate market values in the Company's market area, changes in relevant accounting principles and guidelines and inability of third party service providers to perform as required. Additional factors that may affect our results are discussed in the sections titled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the Securities and Exchange Commission on March 7, 2014, and its other Securities and Exchange Commission reports.

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

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

28

Critical Accounting Policies

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

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

• Allowance for Loan Losses

• Deferred Income Taxes

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

• Valuation of Assets Acquired Through Foreclosure

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

Comparison of Financial Condition at September 30, 2014 and December 31, 2013

Total assets were $1.07 billion at September 30, 2014 compared to $1.12 billion at December 31, 2013.  Total loans were $710.2 million at September 30, 2014, a decrease of $10.3 million, or 1.4%, from $720.5 million at December 31, 2013.  Total commercial loans increased $7.6 million, or 1.3%, comprised of increases of $25.4 million in commercial construction loans and $10.1 million in multi-family and commercial real estate loans, partially offset by a decrease of $27.9 million in commercial and industrial loans. The increase in commercial construction loans was a result of the Bank increasing this type of lending activity as the economy recovers. The increase in multi-family and commercial real estate loans was driven by originations and fundings exceeding normal amortization and paydowns. The decrease in commercial and industrial loans was primarily due to seasonal utilization of lines of credit at December 31, 2013, which paid down during the first nine months of 2014.  During the nine months ended September 30, 2014, one- to four-family residential mortgage loans decreased $15.3 million and consumer loans decreased $3.0 million due to normal amortization exceeding new loans originated.

During the nine months ended September 30, 2014, mortgage related securities available-for-sale decreased $115.3 million from $246.1 million at December 31, 2013 to $130.8 million at September 30, 2014 and mortgage related securities held-to-maturity increased $96.6 million from $68.4 million at December 31, 2013 to $165.0 million at September 30, 2014. These changes are largely driven by the transfer of 38 residential mortgage related securities with a fair value of $96.9 million from available-for-sale securities to held-to-maturity during the three months ended September 30, 2014.

Deposits decreased $10.0 million, or 1.5%, from $673.7 million at December 31, 2013 to $663.7 million at September 30, 2014.  During the nine months ended September 30, 2014, non-brokered certificates of deposit decreased $30.1 million, brokered deposits decreased $7.1 million and NOW accounts decreased $1.7 million. Offsetting these decreases were increases in noninterest-bearing demand accounts of $19.1 million, money market accounts of $5.1 million and savings and club accounts of $4.6 million.  The decreases in non-brokered certificates of deposit and brokered deposits were due to maturities during the period exceeding new issuances. The increase in noninterest-bearing demand accounts was primarily due to deposits obtained from commercial borrowing relationships. The increase in money market accounts was primarily due to a large deposit from a municipal customer. The increase in savings and club accounts was primarily due to promotional offerings within the Advantage Savings product line. Short-term borrowings decreased $20.5 million, or 25.5%, from $80.5 million at December 31, 2013 to $60.0 million at September 30, 2014. Federal Home Loan Bank advances decreased $15.0 million, or 10.0%, from $150.0 million at December 31, 2013 to $135.0 million at September 30, 2014.

Stockholders’ equity increased $4.8 million to $178.3 million at September 30, 2014 compared to $173.5 million at December 31, 2013 primarily due to net income of $6.1 million, other comprehensive income of $4.0 million and stock based compensation activity (which includes proceeds received from the exercise of stock options) of $2.2 million, offset by dividends paid of $5.6 million and $1.9 million of common stock repurchased during the nine months ended September 30, 2014.

29

Comparison of Operating Results for the Three and Nine Months Ended September 30, 2014 and 2013

General. Net income increased $643,000, or 54.8%, to $1.8 million for the three months ended September 30, 2014, compared to $1.2 million for the three months ended September 30, 2013.  The increase in net income was due to an increase in net interest income of $286,000 and a decrease in noninterest expenses of $1.8 million, offset by an increase in the provision for loan losses of $818,000, a decrease in noninterest income of $387,000 and an increase in income tax provision of $242,000.

Net income increased $2.0 million, or 50.5%, to $6.1 million for the nine months ended September 30, 2014, compared to $4.0 million for the nine months ended September 30, 2013.  The increase in net income was due to an increase in net interest income of $1.2 million, a decrease in noninterest expenses of $4.4 million, offset by an increase in the provision for loan losses of $1.1 million, a decrease in noninterest income of $1.6 million and an increase in income tax provision of $911,000.

Net Interest Income.  Net interest income increased $286,000, or 3.5%, to $8.5 million for the three months ended September 30, 2014 compared to $8.2 million for the same period in 2013, due to an increase in total interest income of $12,000 and a decrease in total interest expense of $274,000. The increase in total interest income was driven by increased yields on interest-earning assets from 3.81% to 3.85%, offset by an $11.0 million reduction in the average balance of interest-earning assets. The yield on investment securities increased from 1.74% to 2.93% due to an increased dividend from the FHLB. The yield on total loans decreased from 4.63% to 4.56%, primarily due to lower yields on commercial loan originations. The yield on mortgage related securities was 2.16% for both periods. The decrease in the average balance of interest-earning assets was primarily due to a decrease in mortgage related securities of $32.3 million, offset by a $22.2 million increase in total loans. The decrease in total interest expense was due to a decrease in the cost of interest-bearing liabilities from 0.94% to 0.83%, and a $20.7 million decrease in average interest-bearing liabilities.  The decrease in the average cost of interest-bearing liabilities was due to a decrease in the average cost of interest-bearing deposits from 0.74% to 0.55%, offset by an increase in the average cost of borrowings from 1.44% to 1.52%.  The decrease in the average cost of interest-bearing deposits reflects the continued low interest rate environment combined with maturities of higher rate certificates of deposit. The increase in the average cost of borrowings was primarily due to reduced average short-term borrowings which have a lower cost. 

Net interest income increased $1.2 million, or 5.2%, to $25.3 million for the nine months ended September 30, 2014 compared to $24.0 million for the same period in 2013, primarily due to an increase in total interest income of $451,000 and a decrease in total interest expense of $797,000. The increase in total interest income was primarily due to a $4.8 million increase in the average balance of interest-earning assets and increased yields on interest-earning assets from 3.79% to 3.87%. The increase in the average balance of interest-earning assets was primarily due to a $24.2 million increase in total loans, offset by a decrease in mortgage related securities of $18.6 million.  The yield on mortgage-related securities increased from 2.14% to 2.24%, primarily due to slower security prepayments resulting in reduced premium amortization. The yield on investment securities increased from 1.41% to 3.06% due to an increased dividend from the FHLB. The yield on total loans decreased from 4.67% to 4.57%, primarily due to lower yields on commercial loan originations. The decrease in total interest expense was primarily due to a decrease in the cost of interest-bearing liabilities from 0.99% to 0.86%.  The decrease in the average cost of interest-bearing liabilities was due to decreases in the average cost of interest-bearing deposits from 0.78% to 0.58% and borrowings from 1.58% to 1.55%.  The decrease in the average cost of interest-bearing deposits reflects the continued low interest rate environment combined with maturities of higher rate certificates of deposit. The decrease in the average cost of borrowings was primarily due to the continued low interest rate environment.

30

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

	Three Months Ended September 30,														Nine Months Ended September 30,
	2014							2013							2014							2013
	Average Balance			Interest and Dividends		Yield/ Cost		Average Balance			Interest and Dividends		Yield/ Cost		Average Balance			Interest and Dividends		Yield/ Cost		Average Balance			Interest and Dividends		Yield/ Cost
Assets:	(Dollars in thousands)														(Dollars in thousands)
Interest-earning assets:
Interest-earning demand deposits	$	6,815		$	1	0.06	%	$	5,652		$	1	0.03	%	$	6,794		$	2	0.05	%	$	5,540		$	2	0.04	%
Mortgage related securities
Available-for-sale	198,318			1,140		2.30	%	264,635			1,472		2.23	%	227,425			3,989		2.34	%	283,912			4,642		2.18	%
Held-to-maturity	104,244			493		1.89	%	70,248			335		1.91	%	83,775			1,246		1.98	%	45,876			654		1.90	%
Total mortgage related securities	302,562			1,633		2.16	%	334,883			1,807		2.16	%	311,200			5,235		2.24	%	329,788			5,296		2.14	%
Investment securities	19,616			144		2.93	%	21,012			92		1.74	%	19,011			437		3.06	%	20,899			221		1.41	%
Loans:
Residential loans	116,692			1,382		4.74	%	136,963			1,618		4.73	%	121,949			4,320		4.72	%	146,303			5,144		4.69	%
Commercial loans	593,847			6,754		4.51	%	547,250			6,326		4.59	%	577,010			19,542		4.53	%	522,996			18,210		4.66	%
Consumer loans	19,871			239		4.81	%	23,964			297		4.97	%	20,920			753		4.80	%	26,383			965		4.88	%
Total Loans	730,410			8,375		4.56	%	708,177			8,241		4.63	%	719,879			24,615		4.57	%	695,682			24,319		4.67	%
Allowance for loan losses	(11,541		)					(10,854		)					(11,566		)					(11,420		)
Net loans	718,869			8,375				697,323			8,241				708,313			24,615				684,262			24,319
Total interest-earning assets	1,047,862			10,153		3.85	%	1,058,870			10,141		3.81	%	1,045,318			30,289		3.87	%	1,040,489			29,838		3.79	%
Noninterest-earning assets	41,403							50,589							44,496							49,905
Total assets	$	1,089,265						$	1,109,459						$	1,089,814						$	1,090,394
Liabilities and equity:
Interest-bearing liabilities:
NOW and money market deposit accounts	$	182,448		$	99	0.21	%	$	167,691		$	88	0.21	%	$	184,542		$	295	0.21	%	$	165,711		$	258	0.21	%
Savings accounts	107,633			54		0.20	%	97,209			33		0.13	%	107,415			159		0.20	%	98,042			99		0.14	%
Brokered deposits	64,037			131		0.81	%	62,112			95		0.61	%	61,286			321		0.70	%	63,253			279		0.59	%
Certificates of deposit	197,954			476		0.95	%	239,733			839		1.39	%	208,757			1,680		1.08	%	249,048			2,737		1.47	%
Total interest-bearing deposits	552,072			760		0.55	%	566,745			1,055		0.74	%	562,000			2,455		0.58	%	576,054			3,373		0.78	%
Short-term borrowings	54,590			45		0.32	%	64,672			45		0.28	%	43,758			100		0.30	%	46,792			94		0.27	%
FHLB advances	144,147			577		1.59	%	140,111			555		1.57	%	148,048			1,723		1.56	%	131,076			1,606		1.64	%
Other borrowed funds	30,000			253		3.34	%	30,000			254		3.36	%	30,000			751		3.35	%	30,000			753		3.36	%
Total borrowings	228,737			875		1.52	%	234,783			854		1.44	%	221,806			2,574		1.55	%	207,868			2,453		1.58	%
Total interest-bearing liabilities	780,809			1,635		0.83	%	801,528			1,909		0.94	%	783,806			5,029		0.86	%	783,922			5,826		0.99	%
Noninterest-bearing deposits	123,709							128,437							121,770							121,778
Other noninterest-bearing liabilities	6,407							6,080							7,437							7,115
Total liabilities	910,925							936,045							913,013							912,815
Stockholders’ equity	178,984							176,915							178,382							176,893
Accumulated comprehensive income	(644		)					(3,501		)					(1,581		)					686
Total stockholders' equity	178,340							173,414							176,801							177,579
Total liabilities and stockholders’ equity	$	1,089,265						$	1,109,459						$	1,089,814						$	1,090,394
Net interest income				$	8,518						$	8,232						$	25,260						$	24,012
Interest rate spread						3.02	%						2.87	%						3.01	%						2.80	%
Net interest margin						3.20	%						3.06	%						3.19	%						3.05	%
Average interest-earning assets to average interest-bearing liabilities						134.20	%						132.11	%						133.36	%						132.73	%

31

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. 

	Three Months Ended   September 30, 2014									Nine Months Ended   September 30, 2014
	Compared to									Compared to
	Three Months Ended   September 30, 2013									Nine Months Ended   September 30, 2013
	Increase (Decrease)									Increase (Decrease)
	Due to									Due to
	Rate			Volume			Net			Rate			Volume			Net
Interest Income:	(In thousands)
Interest-earning demand deposits	$	—		$	—		$	—		$	—		$	—		$	—
Mortgage related securities
Available-for-sale	36			(368		)	(332		)	270			(923		)	(653		)
Held-to-maturity	(4		)	162			158			51			541			592
Total mortgage related securities	32			(206		)	(174		)	321			(382		)	(61		)
Investment securities	58			(6		)	52			236			(20		)	216
Loans:
Residential loans	3			(239		)	(236		)	31			(855		)	(824		)
Commercial loans	(111		)	539			428			(548		)	1,880			1,332
Consumer loans	(8		)	(50		)	(58		)	(13		)	(199		)	(212		)
Total loans	(116		)	250			134			(530		)	826			296
Total interest-earning assets	(26		)	38			12			27			424			451
Interest Expense:
NOW and money market deposits	3			8			11			7			30			37
Savings accounts	18			3			21			51			9			60
Brokered deposits	32			4			36			51			(9		)	42
Certificates of deposit	(217		)	(146		)	(363		)	(615		)	(442		)	(1,057		)
Total interest-bearing deposits	(164		)	(131		)	(295		)	(506		)	(412		)	(918		)
Short-term borrowings	6			(6		)	—			12			(6		)	6
FHLB advances	6			16			22			(91		)	208			117
Other borrowed funds	(1		)	—			(1		)	(2		)	—			(2		)
Total borrowings	11			10			21			(81		)	202			121
Total interest-bearing liabilities	(153		)	(121		)	(274		)	(587		)	(210		)	(797		)
Net change in net interest income	$	127		$	159		$	286		$	614		$	634		$	1,248

32

Provision for Loan Losses. The Company recorded a provision for loan losses of $1.5 million and $1.6 million for the three and nine month periods ended September 30, 2014, respectively, compared to $675,000 and $532,000 for the three and nine months ended September 30, 2013, respectively. The provision for loan losses for the three and nine months ended September 30, 2014 was primarily driven by one commercial and industrial loan which defaulted during the three months ended September 30, 2014. The Company recorded a $2.0 million charge-off and the remainder of the loan was paid off during the three months ended September 30, 2014.

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

	September 30, 2014			December 31, 2013
	(Dollars in thousands)
Nonaccruing Loans:
One- to four-family real estate	$	1,684		$	2,390
Multi-family and commercial real estate	1,772			3,031
Construction	—			3,231
Consumer	185			128
Commercial and industrial	—			—
Total	3,641			8,780
Accruing Loans Past Due 90 Days or More:
Total	$	—		$	—
Nonperforming Loans	3,641			8,780
Assets Acquired Through Foreclosure	1,889			6,252
Total Nonperforming Assets	$	5,530		$	15,032
Total nonperforming loans to total loans	0.50		%	1.20		%
Total nonperforming assets to total assets	0.51			1.35
Impaired Loans:
Nonaccruing loans	$	3,641		$	8,780
Accruing troubled debt restructurings	5,504			6,786
Other impaired loans	4,479			—
Total impaired loans	$	13,624		$	15,566

At September 30, 2014, nonperforming assets were comprised of the following: 

• Six multi-family and commercial real estate loans, the largest of which is secured by multi-use rental properties located in Montgomery County, Pennsylvania. 

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

• Three consumer loans which are secured by second or third lien mortgage positions. 

• Assets acquired through foreclosure consisting of two commercial properties and one residential property.

33

Noninterest Income.  The following table summarizes noninterest income for the three and nine months ended September 30, 2014 and 2013. 

	Three Months Ended September 30,					$			%		Nine Months Ended September 30,					$			%
	2014			2013		Change			Change		2014			2013		Change			Change
	(Dollars in thousands)										(Dollars in thousands)
Service charges and other fee income	$	416		$	437	$	(21	)	(4.8	)%	$	1,192		$	1,260	$	(68	)	(5.4	)%
Net (loss) gain on sale of assets acquired through foreclosure	(15		)	303		(318		)	(105.0	)	(136		)	484		(620		)	128.1
Income on bank-owned life insurance	121			118		3			2.5		358			351		7			2.0
Equity in earnings of affiliate	91			135		(44		)	(32.6	)	125			470		(345		)	(73.4	)
Net gain on sale of investment securities	—			—		—			—		—			532		(532		)	(100.0	)
Other	29			36		(7		)	(19.4	)	76			125		(49		)	(39.2	)
Total Noninterest Income	$	642		$	1,029	$	(387	)	(37.6	)%	$	1,615		$	3,222	$	(1,607	)	(49.9	)%

Noninterest income decreased $387,000 from the three months ended September 30, 2013 compared to the same period in 2014. Net (loss) gain on sale of assets acquired through foreclosuredecreased $318,000 due to two properties being sold with a combined loss on sale of $15,000 compared to three sales during 2013 which resulted in a gain on sale of $303,000. Equity in earnings of affiliates decreased $44,000 due to decreased income on the Bank’s investment in PMA due to lower mortgage loan volume for the 2014 period. Service charges and other fee income decreased $21,000, primarily due to decreases in deposit related fees.

Noninterest income decreased $1.6 million from the nine months ended September 30, 2013 compared to the same period in 2014. Net (loss) gain on sale of assets acquired through foreclosuredecreased $620,000 due to three properties being sold with a combined loss on sale of $136,000 in 2014 compared to eleven sales during 2013 which resulted in a gain on sale of $484,000. Net gain on sale of investment securities decreased $532,000 due to the sale of investment securities with an amortized cost of $9.0 million during the nine months ended September 30, 2013. No securities were sold during the nine months ended September 30, 2014. Equity in earnings of affiliates decreased $345,000 due to decreased income on the Bank’s investment in PMA due to lower mortgage loan volume for the 2014 period.  Service charges and other fee income decreased $68,000, due to decreases in loan-related fees and deposit-related fees.

Noninterest Expense.  The following table summarizes noninterest expense for the three and nine months ended September 30, 2014 and 2013. 

	Three Months Ended September 30,				$			%		Nine Months Ended September 30,				$			%
	2014		2013		Change			Change		2014		2013		Change			Change
	(Dollars in thousands)									(Dollars in thousands)
Salaries, benefits and other compensation	$	3,510	$	3,644	$	(134	)	(3.7	)%	$	10,670	$	10,629	$	41		0.4	%
Occupancy expense	407		403		4			1.0		1,321		1,243		78			6.3
Furniture and equipment expense	93		117		(24		)	(20.5	)	300		358		(58		)	(16.2	)
Data processing costs	384		390		(6		)	(1.5	)	1,146		1,155		(9		)	(0.8	)
Professional fees	271		474		(203		)	(42.8	)	1,086		1,250		(164		)	(13.1	)
Marketing expense	54		59		(5		)	(8.5	)	156		167		(11		)	(6.6	)
FDIC premiums	136		175		(39		)	(22.3	)	451		525		(74		)	(14.1	)
Assets acquired through foreclosure expense	10		1,370		(1,360		)	(99.3	)	403		4,465		(4,062		)	(91.0	)
Other	333		370		(37		)	(10.0	)	1,077		1,192		(115		)	(9.6	)
Total Noninterest Expense	$	5,198	$	7,002	$	(1,804	)	(25.8	)%	$	16,610	$	20,984	$	(4,374	)	(20.8	)%

Noninterest expense decreased $1.8 million from the three months ended September 30, 2013 compared to the same period in 2014. Assets acquired through foreclosure expense decreased $1.4 million due to decreased valuation adjustments on assets acquired through foreclosure, which totaled $1.3 million for the three months ended September 30, 2013. No valuation adjustments were recognized during the three months ended September 30, 2014. Professional fees decreased $203,000 primarily due to decreased loan workout costs. Salaries, benefits and other compensation decreased $134,000, primarily as a result of decreased benefit costs and stock based compensation expenses.  

34

Noninterest expense decreased $4.4 million from the nine months ended September 30, 2013 compared to the same period in 2014. Assets acquired through foreclosure expense decreased $4.1 million due to decreased valuation adjustments on assets acquired through foreclosure, which totaled $4.3 million for the nine months ended September 30, 2013. Valuation adjustments of $282,000 were recognized during the nine months ended September 30, 2014. Professional fees decreased $164,000 primarily due to decreased loan workout costs. FDIC premiums decreased $74,000 due to a reduced assessment. Occupancy expense increased $78,000, primarily due to increased snow removal and utilities expense. Other noninterest expense decreased $115,000 primarily due to decreased regulatory assessments.

Income Taxes. The income tax provision for the three and nine months ended September 30, 2014 was $653,000 and $2.6 million, respectively, compared to $411,000 and $1.7 million, respectively for the three and nine months ended September 30, 2013.  The Company’s effective income tax rate was 26.4% and 29.8% for the three and nine months ended September 30, 2014, respectively, compared to 25.9% and 29.3% for the three and nine months ended September 30, 2013, respectively.  These rates reflect the Company’s levels of tax-exempt income relative to the overall level of taxable income.

Liquidity and Capital Management

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

The following table presents certain of our contractual obligations as of September 30, 2014.

			Payments Due by Period
			Less Than One Year		One to Three Years		Three to Five Years		More Than Five Years
Contractual Obligations	Total
	(In thousands)
September 30, 2014
Operating lease obligations (1)	$	570	$	425	$	145	$	—	$	—
FHLB advances and other borrowings (2)	235,205		108,174		45,720		81,311		—
Other long-term obligations (3)	2,313		1,737		576		—		—
Total	$	238,088	$	110,336	$	46,441	$	81,311	$	—

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

Our most liquid assets are cash and cash equivalents.  The levels of these assets depend on our operating, financing, lending and investing activities during any given period.  At September 30, 2014, cash and cash equivalents totaled $7.7 million.  Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $139.2 million at September 30, 2014.  In addition, at September 30, 2014, we had the ability to borrow a total of approximately $411.8 million from the FHLB, of which we had $150.0 million outstanding.  As of September 30, 2014, the Bank also had a maximum borrowing capacity of $61.1 million with the Federal Reserve Bank of Philadelphia, through the Discount Window.  Additionally, as of September 30, 2014, the Bank had overnight borrowing facilities with the FHLB of Pittsburgh and the Federal Reserve Bank as well as federal funds lines of credit with three other commercial banks.

At September 30, 2014, we had $195.0 million in unfunded commitments, which consisted of $13.5 million in home equity and consumer loan commitments, $166.5 million in commercial loan commitments, $14.4 million in standby letters of credit and $606,000 in commercial letters of credit.

35

Certificates of deposit due within one year of September 30, 2014 totaled $143.0 million, including $35.9 million of brokered deposits, representing 55.4% of certificates of deposit at September 30, 2014, a decrease from 60.6% at December 31, 2013.  We believe the large percentage of certificates of deposit that mature within one year reflect customers’ hesitancy to invest their funds for long periods in the current low interest rate environment.  If these maturing deposits do not remain with us, we will be required to seek other sources of funds, including other certificates of deposit and borrowings.  Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before September 30,2015.

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

The Bancorp is a separate entity apart from the Bank and must provide for its own liquidity.  As of September 30, 2014, the Bancorp had $24.9 million in cash and cash equivalents compared to $26.0 million as of December 31, 2013. In addition to its operating expenses, the Bancorp may utilize its cash position for the payment of dividends or to repurchase common stock, subject to applicable restrictions.  The Bancorp paid cash dividends totaling $0.48 per outstanding share of common stock and repurchased 116,600 shares of common stock during the nine months ended September 30, 2014.

The Bancorp can receive dividends from the Bank.  Payment of such dividends to the Bancorp by the Bank is limited under applicable law. Dividends may be declared and paid only out of accumulated net earnings and may be paid in cash or property other than its own shares. Dividends may not be declared or paid unless stockholders' equity is at least equal to contributed capital. During the nine months ended September 30, 2014, the Bank paid a cash dividend of $5.8 million to the Bancorp.

Capital Management.  The Bancorp and Bank are subject to various regulatory capital requirements administered by their respective regulators, including a risk-based capital measure.  The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. At September 30, 2014, the Bancorp and Bank exceeded all applicable regulatory capital requirements. We are considered “well capitalized” under regulatory guidelines.

The following table presents the Bancorp's and the Bank’s capital ratios and the minimum capital requirements to be considered ‘‘well capitalized” under applicable regulatory guidelines as of September 30, 2014 and December 31, 2013.

September 30, 2014	Ratio		Minimum to be Well Capitalized
Total risk-based capital (to risk-weighted assets)
Bancorp	24.48	%	10.0	%
Bank	20.22		10.0
Tier 1 capital (to risk-weighted assets)
Bancorp	23.44		6.0
Bank	19.18		6.0
Tier 1 capital (to adjusted assets)
Bancorp	16.39		5.0
Bank	13.35		5.0
December 31, 2013	Ratio		Minimum to be Well Capitalized
Total risk-based capital (to risk-weighted assets)
Bancorp	23.67	%	10.0	%
Bank	19.48		10.0
Tier 1 capital (to risk-weighted assets)
Bancorp	22.63		6.0
Bank	18.44		6.0
Tier 1 capital (to adjusted assets)
Bancorp	16.18		5.0
Bank	13.12		5.0

36

Total stockholders’ equity to total assets was 16.6% at September 30, 2014 and 15.5% at December 31, 2013.  As a result of the mutual-to-stock conversion completed in June 2010, the Company has significant capital.  The Company’s financial condition and results of operations have been enhanced by the capital from the offering, resulting in increased net interest-earning assets.  However, the large increase in equity resulting from the capital raised in the conversion has and will continue to have an adverse impact on our return on equity until such funds can be deployed into higher-yielding assets.  The Company may rely on capital management tools such as cash dividends and share repurchases as well as improving operating income to increase its return on equity.

In December 2010, the Basel Committee on Banking Supervision, an international forum for cooperation on banking supervisory matters, announced the “Basel III” capital standards, which substantially revised the existing capital requirements for banking organizations. On July 2, 2013, the Federal Reserve adopted a final rule for the Basel III capital framework. The requirements in the rule will begin to phase in on January 1, 2015 for the Company. The requirements in the rule will be fully phased in by January 1, 2019. The rule imposes higher risk-based capital and leverage requirements than those currently in place. Specifically, the rule imposes the following minimum capital requirements: (1) a new common equity Tier 1 risk-based capital ratio of 4.5%; (2) a Tier 1 risk-based capital ratio of 6% (increased from the current 4% requirement); (3) a total risk-based capital ratio of 8% (unchanged from current requirements); and (4) a leverage ratio of 4%.

Off-Balance Sheet Arrangements

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

For the nine-month period ended September 30, 2014, we did not engage in any off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations or cash flows.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

At September 30, 2014, there has not been any material change to the market risk disclosure contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

Item 4.  Controls and Procedures

The Company’s management, including the Company’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”): (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.  In addition, no change in the Company’s internal control over financial reporting occurred during the quarter ended September 30, 2014 that has materially affected, or is reasonably likely to materially effect, Company’s internal control over financial reporting.

1

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.

37

Item 1A.  Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013, which could materially affect our business, financial condition or future results. As of September 30, 2014, the risk factors of the Company have not changed materially from those reported in the Company’s Annual Report on Form 10-K. The risks described in our Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

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

The following table provides certain information with regard to shares repurchased by the Company in the third quarter of 2014.

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (1)
July 1, 2014 through July 31, 2014	46,600	$	16.21	46,600	795,224
August 1, 2014 through August 31, 2014	—	$	—	—	795,224
September 1, 2014 through September 30, 2014	—	$	—	—	795,224
Total	46,600	$	16.21	46,600

(1) In prior years, the Company announced repurchase programs under which it would repurchase, in the aggregate, up to 20% of the then-outstanding shares of the Company’s common stock from time to time, depending on market conditions.  On July 30, 2014, the Board of Directors approved an additional stock repurchase plan (the “July 2014 Plan”) under which it would repurchase up to 5% of the then-outstanding shares of the Company’s common stock (603,295 shares).  Subject to market conditions and other factors, repurchases under the July 2014 Plan will begin subsequent to the completion of repurchases under the Company's existing repurchase plans. Under these plans, through September 30, 2014, the Company has purchased 2.6 million shares at a cost of $35.3 million. 

Item 3.  Defaults upon Senior Securities

Not applicable.

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5.  Other Information

Not applicable.

Item 6.  Exhibits

3.1		Articles of Incorporation of Fox Chase Bancorp, Inc. (1)
3.2		Bylaws of Fox Chase Bancorp, Inc. (1)
4.0		Stock Certificate of Fox Chase Bancorp, Inc. (1)
31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.0		Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
101.0		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Condition, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to the Unaudited Consolidated Financial Statements.
(1)	Incorporated by reference to this document from the exhibits to the Company’s Registration Statement on Form S-1 as initially filed with the Securities and Exchange Commission on March 12, 2010.

38

SIGNATURES

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

		FOX CHASE BANCORP, INC.
Dated:	November 4, 2014	By:	/s/ Thomas M. Petro
			Thomas M. Petro
			President and Chief Executive Officer
			(principal executive officer)
Dated:	November 4, 2014	By:	/s/ Roger S. Deacon
			Roger S. Deacon
			Chief Financial Officer
			(principal financial officer)

39

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 13a-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:	November 4, 2014	/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 13a-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:	November 4, 2014	/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 September 30, 2014, 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
	November 4, 2014
By:	/s/ Roger S. Deacon
	Roger S. Deacon
	Chief Financial Officer
	November 4, 2014

XML

LOANS (Details 6) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Past due loans
30 - 59 Days Past Due	$ 939	$ 413
60 - 89 Days Past Due	124	5
One- to four-family
Past due loans
30 - 59 Days Past Due	747	172
60 - 89 Days Past Due	100	0
Multi-family and commercial
Past due loans
30 - 59 Days Past Due	0	0
60 - 89 Days Past Due	0	0
Construction
Past due loans
30 - 59 Days Past Due	0	0
60 - 89 Days Past Due	0	0
Consumer
Past due loans
30 - 59 Days Past Due	99	241
60 - 89 Days Past Due	24	5
Commercial and industrial
Past due loans
30 - 59 Days Past Due	93	0
60 - 89 Days Past Due	$ 0	$ 0

XML

FAIR VALUE (Details 2) (USD $)						9 Months Ended						12 Months Ended	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2014 Loans loan	Sep. 30, 2014 Significant Other Unobservable Inputs (Level 3)	Sep. 30, 2013 Significant Other Unobservable Inputs (Level 3)	Sep. 30, 2014 Significant Other Unobservable Inputs (Level 3) Private label commercial mortgage related securities	Sep. 30, 2013 Significant Other Unobservable Inputs (Level 3) Private label commercial mortgage related securities	Sep. 30, 2014 Significant Other Unobservable Inputs (Level 3) Loans	Sep. 30, 2013 Significant Other Unobservable Inputs (Level 3) Loans	Dec. 31, 2013 Significant Other Unobservable Inputs (Level 3) Loans	Sep. 30, 2014 Significant Other Unobservable Inputs (Level 3) Financial assets acquired from debtors	Sep. 30, 2013 Significant Other Unobservable Inputs (Level 3) Financial assets acquired from debtors	Sep. 30, 2014 Significant Other Unobservable Inputs (Level 3) Derivatives contracts	Sep. 30, 2013 Significant Other Unobservable Inputs (Level 3) Derivatives contracts	Dec. 31, 2013 Recurring basis Balance	Sep. 30, 2014 Recurring basis Balance Obligations of U.S. government agencies	Dec. 31, 2013 Recurring basis Balance Obligations of U.S. government agencies	Sep. 30, 2014 Recurring basis Balance Corporate securities	Dec. 31, 2013 Recurring basis Balance Corporate securities	Dec. 31, 2013 Recurring basis Balance Private label commercial mortgage related securities	Sep. 30, 2014 Recurring basis Balance Agency residential mortgage related securities	Dec. 31, 2013 Recurring basis Balance Agency residential mortgage related securities	Sep. 30, 2014 Recurring basis Balance Loans	Dec. 31, 2013 Recurring basis Balance Loans	Sep. 30, 2014 Recurring basis Balance Derivatives contracts	Dec. 31, 2013 Recurring basis Balance Derivatives contracts	Dec. 31, 2013 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1)	Sep. 30, 2014 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Obligations of U.S. government agencies	Dec. 31, 2013 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Obligations of U.S. government agencies	Sep. 30, 2014 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Corporate securities	Dec. 31, 2013 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Corporate securities	Dec. 31, 2013 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Private label commercial mortgage related securities	Sep. 30, 2014 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Agency residential mortgage related securities	Dec. 31, 2013 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Agency residential mortgage related securities	Sep. 30, 2014 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Loans	Dec. 31, 2013 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Loans	Sep. 30, 2014 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Derivatives contracts	Dec. 31, 2013 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Derivatives contracts	Dec. 31, 2013 Recurring basis Significant Other Observable Inputs (Level 2)	Sep. 30, 2014 Recurring basis Significant Other Observable Inputs (Level 2) Obligations of U.S. government agencies	Dec. 31, 2013 Recurring basis Significant Other Observable Inputs (Level 2) Obligations of U.S. government agencies	Sep. 30, 2014 Recurring basis Significant Other Observable Inputs (Level 2) Corporate securities	Dec. 31, 2013 Recurring basis Significant Other Observable Inputs (Level 2) Corporate securities	Dec. 31, 2013 Recurring basis Significant Other Observable Inputs (Level 2) Private label commercial mortgage related securities	Sep. 30, 2014 Recurring basis Significant Other Observable Inputs (Level 2) Agency residential mortgage related securities	Dec. 31, 2013 Recurring basis Significant Other Observable Inputs (Level 2) Agency residential mortgage related securities	Sep. 30, 2014 Recurring basis Significant Other Observable Inputs (Level 2) Loans	Dec. 31, 2013 Recurring basis Significant Other Observable Inputs (Level 2) Loans	Sep. 30, 2014 Recurring basis Significant Other Observable Inputs (Level 2) Derivatives contracts	Dec. 31, 2013 Recurring basis Significant Other Observable Inputs (Level 2) Derivatives contracts	Dec. 31, 2013 Recurring basis Significant Other Unobservable Inputs (Level 3)	Sep. 30, 2014 Recurring basis Significant Other Unobservable Inputs (Level 3) Obligations of U.S. government agencies	Dec. 31, 2013 Recurring basis Significant Other Unobservable Inputs (Level 3) Obligations of U.S. government agencies	Sep. 30, 2014 Recurring basis Significant Other Unobservable Inputs (Level 3) Corporate securities	Dec. 31, 2013 Recurring basis Significant Other Unobservable Inputs (Level 3) Corporate securities	Dec. 31, 2013 Recurring basis Significant Other Unobservable Inputs (Level 3) Private label commercial mortgage related securities	Sep. 30, 2014 Recurring basis Significant Other Unobservable Inputs (Level 3) Agency residential mortgage related securities	Dec. 31, 2013 Recurring basis Significant Other Unobservable Inputs (Level 3) Agency residential mortgage related securities	Sep. 30, 2014 Recurring basis Significant Other Unobservable Inputs (Level 3) Loans	Dec. 31, 2013 Recurring basis Significant Other Unobservable Inputs (Level 3) Loans	Sep. 30, 2014 Recurring basis Significant Other Unobservable Inputs (Level 3) Derivatives contracts	Dec. 31, 2013 Recurring basis Significant Other Unobservable Inputs (Level 3) Derivatives contracts	Sep. 30, 2014 Non-recurring basis Balance	Dec. 31, 2013 Non-recurring basis Balance	Sep. 30, 2014 Non-recurring basis Balance Loans	Dec. 31, 2013 Non-recurring basis Balance Loans	Sep. 30, 2014 Non-recurring basis Balance Other real estate owned	Dec. 31, 2013 Non-recurring basis Balance Other real estate owned	Sep. 30, 2014 Non-recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1)	Dec. 31, 2013 Non-recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1)	Sep. 30, 2014 Non-recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Loans	Dec. 31, 2013 Non-recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Loans	Sep. 30, 2014 Non-recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Other real estate owned	Dec. 31, 2013 Non-recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Other real estate owned	Sep. 30, 2014 Non-recurring basis Significant Other Observable Inputs (Level 2)	Dec. 31, 2013 Non-recurring basis Significant Other Observable Inputs (Level 2)	Sep. 30, 2014 Non-recurring basis Significant Other Observable Inputs (Level 2) Loans	Dec. 31, 2013 Non-recurring basis Significant Other Observable Inputs (Level 2) Loans	Sep. 30, 2014 Non-recurring basis Significant Other Observable Inputs (Level 2) Other real estate owned	Dec. 31, 2013 Non-recurring basis Significant Other Observable Inputs (Level 2) Other real estate owned	Sep. 30, 2014 Non-recurring basis Significant Other Unobservable Inputs (Level 3)	Dec. 31, 2013 Non-recurring basis Significant Other Unobservable Inputs (Level 3)	Sep. 30, 2014 Non-recurring basis Significant Other Unobservable Inputs (Level 3) Loans	Dec. 31, 2013 Non-recurring basis Significant Other Unobservable Inputs (Level 3) Loans	Sep. 30, 2014 Non-recurring basis Significant Other Unobservable Inputs (Level 3) Other real estate owned	Dec. 31, 2013 Non-recurring basis Significant Other Unobservable Inputs (Level 3) Other real estate owned
Fair value measurement
Number of loans					2
Unrealized gain on loans										$ 133,000		$ 125,000
Losses resulting from changes in fair value						6,000	(4,672,000)	(2,000)	(69,000)	6,000	(130,000)		0	(4,480,000)	2,000	7,000
Liabilities																											(152,000)	(124,000)											0	0											(138,000)	(120,000)											(14,000)	(4,000)
Fully charged off loans balance sheet value																																																																																					0
Investment securities available-for-sale	139,242,000	256,557,000																304,000	308,000	8,129,000	10,181,000	2,120,000	130,809,000	243,948,000						0	0	0	0	0	0	0						304,000	308,000	8,129,000	10,181,000	0	130,809,000	243,948,000						0	0	0	0	2,120,000	0	0
Financial assets acquired from debtors																	1,938,000												0												0												1,938,000
Assets																									2,459,000	2,535,000											0	0											0	0											2,459,000	2,535,000			2,255,000	5,378,000	240,000	912,000	1,889,000	4,314,000	0	0	0	0	0	0	0	0	0	0	0	0	2,255,000	5,378,000	240,000	912,000	1,889,000	4,314,000
Mortgage servicing rights	$ 126,000	$ 152,000	$ 157,000	$ 170,000																																																													$ 126,000	$ 152,000					$ 0	$ 0					$ 0	$ 0					$ 126,000	$ 152,000

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STOCK BASED COMPENSATION (Details) (USD $)	9 Months Ended				12 Months Ended	9 Months Ended							1 Months Ended	9 Months Ended	12 Months Ended		1 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 Stock options	Sep. 30, 2013 Stock options	Dec. 31, 2013 Stock options	Sep. 30, 2014 Stock options Minimum	Sep. 30, 2014 Stock options Maximum	Sep. 30, 2014 Restricted stock	Sep. 30, 2013 Restricted stock	Sep. 30, 2014 Performance based restricted stock	Sep. 30, 2014 Performance based restricted stock Minimum	Sep. 30, 2014 Performance based restricted stock Maximum	Aug. 31, 2011 Performance based restricted stock Executive Officer [Member]	Sep. 30, 2014 Performance based restricted stock Executive Officer [Member]	Dec. 31, 2013 Performance based restricted stock Executive Officer [Member]	Dec. 31, 2012 Performance based restricted stock Executive Officer [Member]	Aug. 31, 2014 performance shares measurement date adjustment Executive Officer [Member]	Sep. 30, 2014 Performance Shares including Measurement Date Adjustment [Member] Executive Officer [Member]	Sep. 30, 2014 Twenty-five Percent Vest At Year Five [Member] Performance based restricted stock	Sep. 30, 2014 Fifty Percent Vest at Year Three [Member] Performance based restricted stock	Sep. 30, 2014 Twenty-five Percent Vest at Year Four [Member] Performance based restricted stock
STOCK BASED COMPENSATION
Stock based compensation expense	$ 894,000	$ 811,000	$ 328,000	$ 315,000				$ 566,000	$ 496,000
Number of Stock Options
Outstanding at the beginning of the period (in shares)			1,123,408
Granted (in shares)			36,300
Exercised (in shares)			(35,388)
Forfeited / Cancelled (in shares)			(23,100)
Outstanding at the end of the period (in shares)			1,101,220		1,123,408
Exercisable at the end of the period (in shares)			733,648
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)			$ 12.81
Granted (in dollars per share)			$ 16.97
Exercised (in dollars per share)			$ 11.07
Forfeited / Cancelled (in dollars per share)			$ 15.52
Outstanding at the end of the period (in dollars per share)			$ 12.95		$ 12.81
Exercisable at the end of the period (in dollars per share)			$ 11.73
Weighted Average Remaining Contractual Life
Outstanding at the beginning of the period			5 years 6 months		6 years 2 months
Outstanding at the end of the period			5 years 6 months		6 years 2 months
Exercisable at the end of the period			4 years 4 months
Aggregate Intrinsic Value
Outstanding at the beginning of the period			5,013,000
Outstanding at the end of the period			3,895,000		5,013,000
Exercisable at the end of the period			3,395,000
Assumptions used to determine fair value of options granted
Expected dividend yield (as a percent)			3.53%
Expected volatility (as a percent)						30.85%	31.04%
Risk-free interest rate (as a percent)						1.86%	1.90%
Expected option life			6 years 6 months
Compensation cost not yet recognized, nonvested awards
Expected future compensation expense, non-vested options			1,200,000
Weighted average period			3 years 1 month					3 years 2 months
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period								5 years 0 months		5 years 0 months
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage											0.00%	150.00%							25000.00%	50.00%	25.00%
Number of Stock Options, Unvested
Unvested at the beginning of the period (in shares)			475,524
Granted (in shares)			36,300
Vested (in shares)			(124,152)
Forfeited / Cancelled (in shares)			(20,100)
Unvested at the end of the period (in shares)			367,572		475,524
Weighted Average Grant Date Fair Value, Unvested
Unvested at the beginning of the period (in dollars per share)			$ 3.85
Granted (in dollars per share)			$ 3.66
Vested (in dollars per share)			$ 3.66
Forfeited / Cancelled (in dollars per share)			$ 3.91
Unvested at the end of the period (in dollars per share)			$ 3.90		$ 3.85
Number of Restricted Shares
Unvested at the beginning of the period (in shares)								225,932
Granted (in shares)								17,215					10,668		39,250	22,500	4,265	14,933
Share Based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options Variable Payout Percentage	140.00%
Vested (in shares)								(47,276)
Forfeited / Cancelled (in shares)								(8,650)
Unvested at the end of the period (in shares)								187,221
Weighted Average Grant Date Fair Value
Unvested at the beginning of the period (in dollars per share)								$ 14.98
Granted (in dollars per share)								$ 15.84						$ 12.39
Vested (in dollars per share)								$ 13.78
Forfeited / Cancelled (in dollars per share)								$ 15.32
Unvested at the end of the period (in dollars per share)								$ 15.34
Expected future compensation expense, restricted shares								$ 2,300,000

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INVESTMENT AND MORTGAGE RELATED SECURITIES (Details 4) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Available for Sale, Amortized Cost
Due in one year or less	$ 5,819,000	$ 1,999,000
Due after one year through five years	2,558,000	8,446,000
Due after five years through ten years	0	0
Due after ten years	0	0
Total mortgage related securities	129,937,000	252,969,000
Total Amortized Cost	138,314,000	263,414,000
Available for Sale, Fair Value
Due in one year or less	5,845,000	2,000,000
Due after one year through five years	2,588,000	8,489,000
Due after five years through ten years	0	0
Due after ten years	0	0
Total mortgage related securities	130,809,000	246,068,000
Total Fair Value	139,242,000	256,557,000
Held to Maturity, Amortized Cost
Total mortgage related securities	165,006,000	68,397,000
Total Amortized Cost	165,006,000	68,397,000
Held to Maturity, Fair Value
Total Fair Value	163,727,000	67,491,000
Total mortgage related securities	163,727,000	67,491,000
Carrying value of securities pledged to secure public deposits and for other purposes as required or permitted by law	37,900,000	9,700,000
Securities pledged as collateral for other borrowed funds	173,000,000	197,600,000
Carrying value of investment securities used to secure derivative transactions	$ 626,000	$ 702,000

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BORROWINGS (Tables)

9 Months Ended

Sep. 30, 2014

BORROWINGS

Schedule of FHLB advances

Maturity Date	Amount		Coupon Rate		Call Date	Rate if Called
	(In thousands, Unaudited)
December 2014	$	15,000	0.43	%	Not Applicable	Not Applicable
March 2015	10,000		0.49		Not Applicable	Not Applicable
April 2015	10,000		0.45		Not Applicable	Not Applicable
August 2015	10,000		0.68		Not Applicable	Not Applicable
March 2016	10,000		0.60		Not Applicable	Not Applicable
March 2016	10,000		0.62		Not Applicable	Not Applicable
September 2016	5,000		0.75		Not Applicable	Not Applicable
September 2016	10,000		1.04		Not Applicable	Not Applicable
June 2017	5,000		0.94		Not Applicable	Not Applicable
November 2017	15,000		3.62		November 2014	LIBOR + 0.10%
November 2017	15,000		3.87		November 2014	LIBOR + 0.10%
December 2017	20,000		2.83		December 2014	LIBOR + 0.11%
	$	135,000	1.65	%

Schedule of other long-term borrowings

					Next Call Date	Subsequent Call Frequency
Maturity Date	Amount		Coupon Rate
	(In thousands, Unaudited)
September 2018	$	10,000	3.40	%	Not Applicable	Not Applicable
September 2018	5,000		3.20		Not Applicable	Not Applicable
October 2018	5,000		3.15		October 2014	Quarterly
October 2018	5,000		3.27		Not Applicable	Not Applicable
November 2018	5,000		3.37		Not Applicable	Not Applicable
	$	30,000	3.30	%

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MORTGAGE SERVICING ACTIVITY (Details) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Mortgage servicing activity
Unpaid principal balances of loans serviced for others	$ 24,200,000	$ 28,500,000	$ 27,700,000
Fees, net of amortization, from the servicing of loans	18,000	(4,000)
Servicing Rights
Balance at the beginning of the period	255,000	325,000
Amortization	(32,000)	(63,000)
Balance at the end of the period	223,000	262,000
Valuation Allowance
Balance at the beginning of the period	(103,000)	(155,000)
Reductions/(Additions)	6,000	50,000
Balance at the end of the period	(97,000)	(105,000)
Net Carrying Value
Balance at the beginning of the period	152,000	170,000
(Reductions)/Additions	6,000	50,000
Amortization	(32,000)	(63,000)
Balance at the end of the period	126,000	157,000
Mortgage servicing rights
Net Carrying Value
Fair value of MSRs	$ 126,000	$ 157,000	$ 152,000

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LOANS (Details 4) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014 loan	Sep. 30, 2013 loan	Sep. 30, 2014 loan	Sep. 30, 2013 loan	Dec. 31, 2013 loan
TDR activity
Number of Loans	0	1	2	2
Pre-Modification Outstanding Recorded Investment	$ 0	$ 141,000	$ 1,885,000	$ 622,000
Post-Modification Outstanding Recorded Investment	0	141,000	1,785,000	622,000
TDRs additional disclosure
Number of troubled debt restructurings, included in nonaccrual status and total impaired loans	2		2		4
Troubled debt restructurings excluded from accruing TDR	277,000		277,000		3,500,000
Number of loans classified as TDRs	0	1	0	1
Principle and Interest on loans
Loans on which accrual of interest has been discontinued	3,641,000		3,641,000		8,780,000
Loans past due 90 days or more and still accruing interest	0		0		0
Financing Receivable, Modifications, Number of Contracts Reclassified from Accruing TDR to Other Impaired Loans			1
Financing Receivable, Modifications, Reclassified from Accruing TDR to other Impaired Loans			4,500,000
Financing Receivables Modifications Subsequent Default Recorded Investment		1,600,000		1,600,000
One- to four-family
TDR activity
Number of Loans	0	1	1	2
Pre-Modification Outstanding Recorded Investment	0	141,000	245,000	622,000
Post-Modification Outstanding Recorded Investment	0	141,000	245,000	622,000
Principle and Interest on loans
Loans on which accrual of interest has been discontinued	1,684,000		1,684,000		2,390,000
Multi-family and commercial
TDR activity
Number of Loans	0	0	1	0
Pre-Modification Outstanding Recorded Investment	0	0	1,640,000	0
Post-Modification Outstanding Recorded Investment	0	0	1,540,000	0
Principle and Interest on loans
Loans on which accrual of interest has been discontinued	1,772,000		1,772,000		3,031,000
Construction
TDR activity
Number of Loans	0	0	0	0
Pre-Modification Outstanding Recorded Investment	0	0	0	0
Post-Modification Outstanding Recorded Investment	0	0	0	0
Principle and Interest on loans
Loans on which accrual of interest has been discontinued	0		0		3,231,000
Consumer
TDR activity
Number of Loans	0	0	0	0
Pre-Modification Outstanding Recorded Investment	0	0	0	0
Post-Modification Outstanding Recorded Investment	0	0	0	0
Principle and Interest on loans
Loans on which accrual of interest has been discontinued	185,000		185,000		128,000
Commercial and industrial
TDR activity
Number of Loans	0	0	0	0
Pre-Modification Outstanding Recorded Investment	0	0	0	0
Post-Modification Outstanding Recorded Investment	0	0	0	0
Principle and Interest on loans
Loans on which accrual of interest has been discontinued	$ 0		$ 0		$ 0

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FAIR VALUE (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014 adjustment quote external_pricing_service	Dec. 31, 2013	Sep. 30, 2013	Dec. 31, 2012
Fair Value Disclosures [Abstract]
Number of external pricing service providers	1
Number of quotes per investment security obtained	1
Adjustments to the values obtained from the primary pricing service	0
Financial assets:
Cash and cash equivalents	$ 7,727	$ 11,947	$ 6,415	$ 25,090
Investment securities available-for-sale	139,242	256,557
Mortgage related securities	130,809	246,068
Held to maturity securities	163,727	67,491
Federal Home Loan Bank stock	11,152	9,813
Accrued interest receivable	3,159	3,308
Mortgage servicing rights	126	152	157	170
Financial liabilities:
Savings and club accounts	112,821	108,183
Private label commercial mortgage related securities
Financial assets:
Investment securities available-for-sale	0	2,120
Agency residential mortgage related securities
Financial assets:
Investment securities available-for-sale	130,809	243,948
Carrying Amount | Level 1
Financial assets:
Cash and cash equivalents	7,727	11,947
Carrying Amount | Level 2
Financial assets:
Investment securities available-for-sale	8,433	10,489
Financial liabilities:
Savings and club accounts	112,821	108,183
Demand, NOW and money market deposits	292,873	270,334
Brokered deposits	64,280	71,334
Certificates of deposit	193,754	223,864
Short-term borrowings	60,000	80,500
Federal Home Loan Bank advances	135,000	150,000
Other borrowed funds	30,000	30,000
Accrued interest payable	314	314
Carrying Amount | Level 3
Financial assets:
Loans receivable, net	710,220	720,490
Federal Home Loan Bank stock	11,152	9,813
Mortgage servicing rights	126	152
Financial assets acquired from debtors	0	1,938
Carrying Amount | Level 2, 3
Financial assets:
Accrued interest receivable	3,159	3,308
Financial liabilities:
Derivative contracts	152	124
Carrying Amount | Private label commercial mortgage related securities | Level 3
Financial assets:
Mortgage related securities	0	2,120
Carrying Amount | Agency residential mortgage related securities | Level 2
Financial assets:
Mortgage related securities	130,809	243,948
Held to maturity securities	165,006	68,397
Estimated Fair Value | Level 1
Financial assets:
Cash and cash equivalents	7,727	11,947
Estimated Fair Value | Level 2
Financial assets:
Investment securities available-for-sale	8,433	10,489
Financial liabilities:
Savings and club accounts	112,821	108,183
Demand, NOW and money market deposits	292,873	270,334
Brokered deposits	63,958	71,020
Certificates of deposit	193,974	225,357
Short-term borrowings	60,001	80,500
Federal Home Loan Bank advances	138,292	154,069
Other borrowed funds	31,922	32,178
Accrued interest payable	314	314
Estimated Fair Value | Level 3
Financial assets:
Loans receivable, net	713,357	721,417
Federal Home Loan Bank stock	11,152	9,813
Mortgage servicing rights	126	152
Financial assets acquired from debtors	0	1,938
Estimated Fair Value | Level 2, 3
Financial assets:
Accrued interest receivable	3,159	3,308
Financial liabilities:
Derivative contracts	152	124
Estimated Fair Value | Private label commercial mortgage related securities | Level 3
Financial assets:
Mortgage related securities	0	2,120
Estimated Fair Value | Agency residential mortgage related securities | Level 2
Financial assets:
Mortgage related securities	130,809	243,948
Held to maturity securities	$ 163,727	$ 67,491

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Statement of Cash Flows [Abstract]
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	$ 6,087	$ 4,044
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	1,593	532
Valuation adjustment for assets acquired through foreclosure	282	4,304
Depreciation	533	591
Net amortization of securities premiums and discounts	1,430	2,101
Proceeds from the sale of loans held for sale	0	3,157
Provision (credit) for deferred income taxes	1,992	(947)
Stock compensation from benefit plans	1,715	1,640
Net loss (gain) on sale of assets acquired through foreclosure	136	(484)
Net gain on sale of investment securities	0	(532)
Income on bank-owned life insurance	(358)	(351)
Excess tax benefit from exercise of stock options and vesting of restricted stock	(83)	(58)
Decrease in mortgage servicing rights, net	26	13
Decrease (increase) in accrued interest receivable and other assets	393	(589)
Decrease in accrued interest payable, accrued expenses and other liabilities	(737)	(176)
Net Cash Provided by Operating Activities	13,009	13,245
Investment securities available-for-sale:
Proceeds from maturities, calls and principal repayments	2,000	2,000
Mortgage related securities available-for-sale:
Purchases	(2,830)	(49,821)
Proceeds from sales	0	9,517
Proceeds from maturities, calls and principal repayments	26,303	53,192
Mortgage related securities held-to-maturity:
Purchases	(9,767)	(51,420)
Proceeds from maturities, calls and principal repayments	9,665	8,562
Net decrease (increase) in loans	16,876	(4,593)
Purchases of loans and loan participations	(9,371)	(20,544)
Net increase in Federal Home Loan Bank stock	(1,339)	(1,916)
Purchases of premises and equipment	(261)	(153)
Additions to assets acquired through foreclosure	(17)	(867)
Proceeds from sales and payments on assets acquired through foreclosure	4,504	3,973
Net Cash Provided by (Used in) Investing Activities	35,763	(52,070)
Cash Flows from Financing Activities
Net decrease in deposits	(9,987)	(4,401)
Decrease in advances from borrowers for taxes and insurance	(525)	(689)
Proceeds from Federal Home Loan Bank advances	0	40,000
Principal payments on Federal Home Loan Bank advances	(15,000)	0
Net decrease in short-term borrowings	(20,500)	(8,900)
Tax benefit from exercise of stock options and vesting of restricted stock	83	58
Common stock issued for exercise of stock options	392	106
Purchase of treasury stock	(1,902)	(3,703)
Cash dividends paid	(5,553)	(2,321)
Net Cash (Used in) Provided by Financing Activities	(52,992)	20,150
Net Decrease in Cash and Cash Equivalents	(4,220)	(18,675)
Cash and Cash Equivalents – Beginning	11,947	25,090
Cash and Cash Equivalents – Ending	7,727	6,415
Supplemental Disclosure of Cash Flow Information
Interest paid	5,029	5,842
Income taxes paid	1,460	2,400
Transfers of loans to assets acquired through foreclosure	542	4,990
Transfer of Portfolio Loans and Leases to Held-for-sale	0	3,157
Net charge-offs	$ 2,023	$ 574

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DEPOSITS (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Weighted Average Interest Rate
NOW accounts	0.21%	0.21%
Money market accounts	0.21%	0.20%
Savings and club accounts	0.27%	0.22%
Brokered deposits	0.81%	0.56%
Certificates of deposit	0.94%	1.26%
Deposits	0.45%	0.56%
Deposits
Noninterest-bearing demand accounts	$ 119,853	$ 100,748
NOW accounts	82,868	84,569
Money market accounts	90,152	85,017
Savings and club accounts	112,821	108,183
Brokered deposits	64,280	71,334
Certificates of deposit	193,754	223,864
Total deposits amount	$ 663,728	$ 673,715

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PRINCIPLES OF CONSOLIDATION AND PRESENTATION (Details 2) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Earnings per share:
Net income	$ 1,816	$ 1,173	$ 6,087	$ 4,044
Weighted-average common shares outstanding (in shares)	12,075,448	12,143,880	12,110,185	12,217,289
Average common stock acquired by stock benefit plans:
ESOP shares unallocated	(513,441)	(578,494)	(529,544)	(594,597)
Shares purchased by trust	(274,123)	(317,645)	(289,261)	(327,849)
Weighted-average common shares used to calculate basic earnings per share (in shares)	11,287,884	11,247,741	11,291,380	11,294,843
Dilutive effect of:
Restricted stock awards	42,294	43,087	50,477	34,586
Stock option awards	193,739	203,692	199,215	193,932
Weighted-average common shares used to calculate diluted earnings per share (in shares)	11,523,917	11,494,520	11,541,072	11,523,361
Earnings per share-basic (in dollars per share)	$ 0.16	$ 0.10	$ 0.54	$ 0.36
Earnings per share-diluted (in dollars per share)	$ 0.16	$ 0.10	$ 0.53	$ 0.35
Outstanding common stock equivalents having no dilutive effect (in shares)	1,052,408	1,102,810	1,038,749	1,121,071

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PRINCIPLES OF CONSOLIDATION AND PRESENTATION (Details)	9 Months Ended
	Sep. 30, 2014 loan branch
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of loans to the ESOP by Bancorp	2
Number of branches	10
PMA
LOANS
Ownership (as a percent)	45.00%

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BORROWINGS (Details) (USD $)												9 Months Ended				9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2014 0.43% borrowing, due December 2014	Sep. 30, 2014 0.49% borrowing, due March 2015	Sep. 30, 2014 0.45% borrowing, due April 2015	Sep. 30, 2014 Borrowings 0.60 Percent Due March 2016 [Member]	Sep. 30, 2014 0.68% borrowing, due August 2015	Sep. 30, 2014 0.62% borrowing, due March 2016	Sep. 30, 2014 0.75% borrowing, due September 2016	Sep. 30, 2014 1.04% borrowing, due September 2016	Sep. 30, 2014 0.94% borrowing, due June 2017	Sep. 30, 2014 3.62% borrowing, due November 2017	Sep. 30, 2014 3.87% borrowing, due November 2017	Sep. 30, 2014 2.83% borrowing, due on December 2017	Sep. 30, 2014 FHLB of Pittsburgh	Sep. 30, 2014 FHLB of Pittsburgh Minimum	Sep. 30, 2014 FHLB of Pittsburgh Maximum	Sep. 30, 2014 Federal Reserve Bank of Philadelphia	Sep. 30, 2014 FHLB advances	Sep. 30, 2014 FHLB advances 0.43% borrowing, due December 2014	Sep. 30, 2014 FHLB advances 0.49% borrowing, due March 2015	Sep. 30, 2014 FHLB advances 0.45% borrowing, due April 2015	Sep. 30, 2014 FHLB advances Borrowings 0.60 Percent Due March 2016 [Member]	Sep. 30, 2014 FHLB advances 0.68% borrowing, due August 2015	Sep. 30, 2014 FHLB advances 0.62% borrowing, due March 2016	Sep. 30, 2014 FHLB advances 0.75% borrowing, due September 2016	Sep. 30, 2014 FHLB advances 1.04% borrowing, due September 2016	Sep. 30, 2014 FHLB advances 0.94% borrowing, due June 2017	Sep. 30, 2014 FHLB advances 3.62% borrowing, due November 2017	Sep. 30, 2014 FHLB advances 3.87% borrowing, due November 2017	Sep. 30, 2014 FHLB advances 2.83% borrowing, due on December 2017
Borrowings
Federal Home Loan Bank advances	$ 135,000,000	$ 150,000,000	$ 15,000,000	$ 10,000,000	$ 10,000,000	$ 10,000,000	$ 10,000,000	$ 10,000,000	$ 5,000,000	$ 10,000,000	$ 5,000,000	$ 15,000,000	$ 15,000,000	$ 20,000,000
Interest rate (as a percent)																			1.65%	0.43%	0.49%	0.45%	0.60%	0.68%	0.62%	0.75%	1.04%	0.94%	3.62%	3.87%	2.83%
Reference rate, description												LIBOR	LIBOR	LIBOR
Interest rate added to reference rate (as a percent)												0.10%	0.10%	0.11%
Securities pledged as collateral																			468,600,000
Available-for-sale Securities Pledged as Collateral																		61,200,000	77,800,000
Maximum borrowing capacity															411,800,000			61,100,000
Capital stock to be held as percentage of advances																4.00%	6.00%
Capital stock to be held as percentage of eligible assets																0.35%	1.00%
Stock obligation																8,900,000	15,100,000
FHLB stock	$ 11,152,000	$ 9,813,000
Short-term Debt, Weighted Average Interest Rate	0.31%	0.33%

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INVESTMENT AND MORTGAGE RELATED SECURITIES (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Available-for-Sale Securities:
Amortized Cost	$ 138,314	$ 263,414
Gross Unrealized Gains	2,474	2,719
Gross Unrealized Losses	(1,546)	(9,576)
Fair Value	139,242	256,557
Held-to-maturity Securities:
Amortized Cost	165,006	68,397
Gross Unrealized Gains	714	514
Gross Unrealized Losses	(1,993)	(1,420)
Fair Value	163,727	67,491
Available-for-sale securities:
Fair Value, Less than 12 Months	6,714	180,448
Unrealized Losses, Less than 12 Months	(20)	(7,251)
Fair Value, 12 Months or More	87,700	27,823
Unrealized Losses, 12 Months or More	(1,526)	(2,325)
Fair Value, Total	94,414	208,271
Unrealized Losses, Total	(1,546)	(9,576)
Held-to-maturity Securities:
Fair Value, Less than 12 Months	61,446	40,615
Unrealized Losses, Less than 12 Months	(574)	(1,420)
Fair Value, 12 Months or More	71,624	0
Unrealized Losses Plus OTTI in AOCI, 12 Months or More	(1,419)	0
Fair Value, Total	133,070	40,615
Unrealized Losses, Total	(1,993)	(1,420)
Temporarily Impaired Securities
Fair Value, Less than 12 Months	68,160	221,063
Unrealized Losses, Less than 12 Months	(594)	(8,671)
Fair Value, 12 Months or More	159,324	27,823
Unrealized Losses Plus OTTI in AOCI, 12 Months or More	(2,945)	(2,325)
Fair Value, Total	227,484	248,886
Unrealized Losses, Total	(3,539)	(10,996)
Debt securities excluding mortgage related securities
Available-for-Sale Securities:
Amortized Cost	8,377	10,445
Gross Unrealized Gains	56	62
Gross Unrealized Losses	0	(18)
Fair Value	8,433	10,489
Available-for-sale securities:
Fair Value, Less than 12 Months	0	0
Unrealized Losses, Less than 12 Months	0	0
Fair Value, 12 Months or More	0	2,982
Unrealized Losses, 12 Months or More	0	(18)
Fair Value, Total	0	2,982
Unrealized Losses, Total	0	(18)
Obligations of U.S. government agencies
Available-for-Sale Securities:
Amortized Cost	300	300
Gross Unrealized Gains	4	8
Gross Unrealized Losses	0	0
Fair Value	304	308
Available-for-sale securities:
Fair Value, Less than 12 Months	0	0
Unrealized Losses, Less than 12 Months	0	0
Fair Value, 12 Months or More	0	0
Unrealized Losses, 12 Months or More	0	0
Fair Value, Total	0	0
Unrealized Losses, Total	0	0
Corporate securities
Available-for-Sale Securities:
Amortized Cost	8,077	10,145
Gross Unrealized Gains	52	54
Gross Unrealized Losses	0	(18)
Fair Value	8,129	10,181
Available-for-sale securities:
Fair Value, Less than 12 Months	0	0
Unrealized Losses, Less than 12 Months	0	0
Fair Value, 12 Months or More	0	2,982
Unrealized Losses, 12 Months or More	0	(18)
Fair Value, Total	0	2,982
Unrealized Losses, Total	0	(18)
Mortgage related securities
Available-for-Sale Securities:
Amortized Cost	129,937	252,969
Gross Unrealized Gains	2,418	2,657
Gross Unrealized Losses	(1,546)	(9,558)
Fair Value	130,809	246,068
Held-to-maturity Securities:
Amortized Cost	165,006	68,397
Gross Unrealized Gains	714	514
Gross Unrealized Losses	(1,993)	(1,420)
Fair Value	163,727	67,491
Available-for-sale securities:
Fair Value, Less than 12 Months	6,714	180,448
Unrealized Losses, Less than 12 Months	(20)	(7,251)
Fair Value, 12 Months or More	87,700	24,841
Unrealized Losses, 12 Months or More	(1,526)	(2,307)
Fair Value, Total	94,414	205,289
Unrealized Losses, Total	(1,546)	(9,558)
Held-to-maturity Securities:
Fair Value, Less than 12 Months	61,446	40,615
Unrealized Losses, Less than 12 Months	(574)	(1,420)
Fair Value, 12 Months or More	71,624	0
Unrealized Losses Plus OTTI in AOCI, 12 Months or More	(1,419)	0
Fair Value, Total	133,070	40,615
Unrealized Losses, Total	(1,993)	(1,420)
Private label commercial mortgage related securities
Available-for-Sale Securities:
Amortized Cost	0	2,118
Gross Unrealized Gains	0	2
Gross Unrealized Losses	0	0
Fair Value	0	2,120
Available-for-sale securities:
Fair Value, Less than 12 Months	0	0
Unrealized Losses, Less than 12 Months	0	0
Fair Value, 12 Months or More	0	0
Unrealized Losses, 12 Months or More	0	0
Fair Value, Total	0	0
Unrealized Losses, Total	0	0
Agency residential mortgage related securities
Available-for-Sale Securities:
Amortized Cost	129,937	250,851
Gross Unrealized Gains	2,418	2,655
Gross Unrealized Losses	(1,546)	(9,558)
Fair Value	130,809	243,948
Available-for-sale securities:
Fair Value, Less than 12 Months	6,714	180,448
Unrealized Losses, Less than 12 Months	(20)	(7,251)
Fair Value, 12 Months or More	87,700	24,841
Unrealized Losses, 12 Months or More	(1,526)	(2,307)
Fair Value, Total	94,414	205,289
Unrealized Losses, Total	(1,546)	(9,558)
Held-to-maturity Securities:
Fair Value, Less than 12 Months	61,446	40,615
Unrealized Losses, Less than 12 Months	(574)	(1,420)
Fair Value, 12 Months or More	71,624	0
Unrealized Losses Plus OTTI in AOCI, 12 Months or More	(1,419)	0
Fair Value, Total	133,070	40,615
Unrealized Losses, Total	(1,993)	(1,420)
Temporarily Impaired Securities
Fair Value, 12 Months or More	159,300
Unrealized Losses Plus OTTI in AOCI, 12 Months or More	$ (2,900)

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INVESTMENT AND MORTGAGE RELATED SECURITIES (Details 2) (USD $)	3 Months Ended	9 Months Ended			3 Months Ended	9 Months Ended
	Sep. 30, 2014 security	Sep. 30, 2014 security	Sep. 30, 2013	Dec. 31, 2013	Sep. 30, 2013 Mortgage related securities security	Sep. 30, 2013 Mortgage related securities security	Sep. 30, 2014 Mortgage related securities	Dec. 31, 2013 Mortgage related securities	Sep. 30, 2014 Agency residential mortgage related securities security	Dec. 31, 2013 Agency residential mortgage related securities	Sep. 30, 2014 Private label commercial mortgage related securities	Dec. 31, 2013 Private label commercial mortgage related securities security
INVESTMENT AND MORTGAGE RELATED SECURITIES
Number of securities sold	0	0			0	7
Net Gains (Losses)	$ 0	$ 0	$ 532,000
Number of Mortgage Related Securities, Continuous Unrealized Loss Position, Less than Twelve Months									33
Temporarily Impaired Investments Continuous Unrealized Loss Position Aggregate Losses 1	3,539,000	3,539,000		10,996,000
Number of Mortgage Related Securities									64
Number of Agency Residential Mortgage Related Securities									97
Mortgage Related Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value									68,200,000
Mortgage Related Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Gross Unrealized Loss									594,000
Number of securities held												2
Amortized Cost	138,314,000	138,314,000		263,414,000			129,937,000	252,969,000	129,937,000	250,851,000	0	2,118,000
Available For Sale Debt Securities Sold Amortized Cost Basis						$ 9,000,000

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Consolidated Statements of Changes in Equity (Parenthetical) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Statement of Stockholders' Equity [Abstract]
Dividends paid (in dollars per share)	$ 0.48	$ 0.20

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INVESTMENT AND MORTGAGE RELATED SECURITIES (Details 3) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014 security	Sep. 30, 2013	Sep. 30, 2014 security	Sep. 30, 2013	Dec. 31, 2013
INVESTMENT AND MORTGAGE RELATED SECURITIES
Number of securities sold	0		0
Fair Value of Securities Transferred From Available For Sale To Held To Maturity	$ 96,900,000
Held To Maturity Securities Amortized Cost	166,615,000		166,615,000
Number of securities transferred	38
Other Comprehensive Income Loss Transfers From Available For Sale Securities To Held To Maturity			(1,625,000)
Accretion of unrealized loss on securities reclassified to held-to-maturity	16,000	0	16,000	0
Held-to-maturity securities, amortized cost before other than temporary impairment, transferred securities	97,469,000		97,469,000
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment	165,006,000		165,006,000		68,397,000
Transferred Securities from Available-for-Sale [Member]
INVESTMENT AND MORTGAGE RELATED SECURITIES
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment	95,860,000		95,860,000
Held-to-Maturity, Excluding Transferred Securities [Member]
INVESTMENT AND MORTGAGE RELATED SECURITIES
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment	69,146,000		69,146,000
Mortgage related securities
INVESTMENT AND MORTGAGE RELATED SECURITIES
Number of securities sold		0		7
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment	$ 165,006,000		$ 165,006,000		$ 68,397,000

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LOANS (Details 7) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014 classification	Dec. 31, 2013
Criticized and classified loans by segment
Total criticized and classified loans	$ 721,593	$ 732,261
Number of primary classification for loans	6
Number of classifications for problem loans	3
Minimum number of defined weaknesses for substandard loans	1
One- to four-family
Criticized and classified loans by segment
Total criticized and classified loans	112,227	127,501
Multi-family and commercial
Criticized and classified loans by segment
Total criticized and classified loans	418,456	408,365
Construction
Criticized and classified loans by segment
Total criticized and classified loans	31,341	5,904
Consumer
Criticized and classified loans by segment
Total criticized and classified loans	19,456	22,478
Commercial and industrial
Criticized and classified loans by segment
Total criticized and classified loans	140,113	168,013
Pass and Pass watch
Criticized and classified loans by segment
Total criticized and classified loans	696,022	706,378
Pass and Pass watch | One- to four-family
Criticized and classified loans by segment
Total criticized and classified loans	110,543	125,111
Pass and Pass watch | Multi-family and commercial
Criticized and classified loans by segment
Total criticized and classified loans	403,772	390,908
Pass and Pass watch | Construction
Criticized and classified loans by segment
Total criticized and classified loans	28,106	2,673
Pass and Pass watch | Consumer
Criticized and classified loans by segment
Total criticized and classified loans	19,271	22,350
Pass and Pass watch | Commercial and industrial
Criticized and classified loans by segment
Total criticized and classified loans	134,330	165,336
Special mention loans
Criticized and classified loans by segment
Total criticized and classified loans	18,264	15,091
Special mention loans | One- to four-family
Criticized and classified loans by segment
Total criticized and classified loans	0	0
Special mention loans | Multi-family and commercial
Criticized and classified loans by segment
Total criticized and classified loans	10,004	12,414
Special mention loans | Construction
Criticized and classified loans by segment
Total criticized and classified loans	3,235	0
Special mention loans | Consumer
Criticized and classified loans by segment
Total criticized and classified loans	0	0
Special mention loans | Commercial and industrial
Criticized and classified loans by segment
Total criticized and classified loans	5,025	2,677
Substandard loans
Criticized and classified loans by segment
Total criticized and classified loans	7,307	10,792
Substandard loans | One- to four-family
Criticized and classified loans by segment
Total criticized and classified loans	1,684	2,390
Substandard loans | Multi-family and commercial
Criticized and classified loans by segment
Total criticized and classified loans	4,680	5,043
Substandard loans | Construction
Criticized and classified loans by segment
Total criticized and classified loans	0	3,231
Substandard loans | Consumer
Criticized and classified loans by segment
Total criticized and classified loans	185	128
Substandard loans | Commercial and industrial
Criticized and classified loans by segment
Total criticized and classified loans	758	0
Doubtful loans
Criticized and classified loans by segment
Total criticized and classified loans	0	0
Doubtful loans | One- to four-family
Criticized and classified loans by segment
Total criticized and classified loans	0	0
Doubtful loans | Multi-family and commercial
Criticized and classified loans by segment
Total criticized and classified loans	0	0
Doubtful loans | Construction
Criticized and classified loans by segment
Total criticized and classified loans	0	0
Doubtful loans | Consumer
Criticized and classified loans by segment
Total criticized and classified loans	0	0
Doubtful loans | Commercial and industrial
Criticized and classified loans by segment
Total criticized and classified loans	$ 0	$ 0

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Consolidated Statements of Condition (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
ASSETS
Cash and due from banks	$ 1,340	$ 149
Interest-earning demand deposits in other banks	6,387	11,798
Total cash and cash equivalents	7,727	11,947
Investment securities available-for-sale	8,433	10,489
Mortgage related securities available-for-sale	130,809	246,068
Mortgage related securities held-to-maturity (fair value of $163,727 at September 30, 2014 and $67,491 at December 31, 2013)	165,006	68,397
Loans, net of allowance for loan losses of $11,099 at September 30, 2014 and $11,529 at December 31, 2013	710,220	720,490
Federal Home Loan Bank stock, at cost	11,152	9,813
Bank-owned life insurance	14,905	14,547
Premises and equipment, net	9,542	9,814
Assets acquired through foreclosure	1,889	6,252
Real estate held for investment	1,620	1,620
Accrued interest receivable	3,159	3,308
Mortgage servicing rights, net	126	152
Deferred tax asset, net	4,734	8,906
Other assets	5,369	4,819
Total Assets	1,074,691	1,116,622
LIABILITIES
Deposits	663,728	673,715
Short-term borrowings	60,000	80,500
Federal Home Loan Bank advances	135,000	150,000
Other borrowed funds	30,000	30,000
Advances from borrowers for taxes and insurance	1,000	1,525
Accrued interest payable	314	314
Accrued expenses and other liabilities	6,364	7,101
Total Liabilities	896,406	943,155
STOCKHOLDERS' EQUITY
Preferred stock ($.01 par value; 1,000,000 shares authorized, none issued and outstanding at September 30, 2014 and December 31, 2013)	0	0
Common stock ($.01 par value; 60,000,000 shares authorized, 12,066,591 shares outstanding at September 30, 2014 and 12,147,803 shares outstanding at December 31, 2013)	147	146
Additional paid-in capital	138,663	137,593
Treasury stock, at cost (2,584,772 shares at September 30, 2014 and 2,468,172 shares at December 31, 2013)	(35,338)	(33,436)
Common stock acquired by benefit plans	(8,215)	(9,272)
Retained earnings	83,481	82,885
Accumulated other comprehensive loss, net	(453)	(4,449)
Total Stockholders’ Equity	178,285	173,467
Total Liabilities and Stockholders’ Equity	$ 1,074,691	$ 1,116,622

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BORROWINGS (Details 2) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Other Borrowed Funds
Amount of other borrowings	$ 30,000,000	$ 30,000,000
Interest rate (as a percent)	3.30%
Short-term borrowings	60,000,000	80,500,000
Federal Funds Purchased	45,000,000
Federal Home Loan Bank, Advances, Short-term	15,000,000
Blended weighted average interest rate (as a percent)	0.31%	0.33%
3.40% other borrowings, due September 2018
Other Borrowed Funds
Amount of other borrowings	10,000,000
Interest rate (as a percent)	3.40%
3.20% other borrowings, due September 2018
Other Borrowed Funds
Amount of other borrowings	5,000,000
Interest rate (as a percent)	3.20%
3.15% other borrowings, due October 2018
Other Borrowed Funds
Amount of other borrowings	5,000,000
Interest rate (as a percent)	3.15%
3.27% other borrowings, due October 2018
Other Borrowed Funds
Amount of other borrowings	5,000,000
Interest rate (as a percent)	3.27%
3.37% other borrowings, due November 2018
Other Borrowed Funds
Amount of other borrowings	5,000,000
Interest rate (as a percent)	3.37%
Other long-term borrowings
Other Borrowed Funds
Mortgage backed securities pledged as collateral for other borrowed funds	$ 34,000,000

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Statement of Comprehensive Income [Abstract]
Net income	$ 1,816	$ 1,173	$ 6,087	$ 4,044
Other comprehensive (loss) income:
Unrealized holding (losses) gains on investment	(320)	(175)	6,160	(10,363)
Tax Effect	109	67	(2,174)	3,652
Net of Tax Amount	(211)	(108)	3,986	(6,711)
Reclassification adjustments for net investment securities gains included in net income	0	0	0	(532)
Tax Effect	0	0	0	186
Net of Tax Amount	0	0	0	(346)
Accretion of unrealized loss on securities reclassified to held-to-maturity	16	0	16	0
Tax Effect	(6)	0	(6)	0
Net of Tax Amount	10	0	10	0
Other comprehensive (loss) income	(201)	(108)	3,996	(7,057)
Comprehensive income (loss)	$ 1,615	$ 1,065	$ 10,083	$ (3,013)

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LOANS (Details 2) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Changes in allowance for loan losses
Balance, beginning	$ 11,529	$ 11,170
Provision for loan losses	1,593	532
Loans charged off	(2,097)	(647)
Recoveries	(74)	(73)
Balance, ending	11,099	11,128
One- to four-family
Changes in allowance for loan losses
Balance, beginning	403	642
Provision for loan losses	(209)	(139)
Loans charged off	(3)	(115)
Recoveries	(29)	(35)
Balance, ending	220	423
Multi-family and commercial
Changes in allowance for loan losses
Balance, beginning	7,141	6,327
Provision for loan losses	(76)	1,256
Loans charged off	(102)	(463)
Recoveries	(12)	(12)
Balance, ending	6,975	7,132
Construction
Changes in allowance for loan losses
Balance, beginning	324	873
Provision for loan losses	284	(487)
Loans charged off	0	0
Recoveries	0	0
Balance, ending	608	386
Consumer
Changes in allowance for loan losses
Balance, beginning	153	232
Provision for loan losses	(21)	(7)
Loans charged off	(6)	(69)
Recoveries	(33)	(26)
Balance, ending	159	182
Commercial and industrial
Changes in allowance for loan losses
Balance, beginning	3,051	2,630
Provision for loan losses	1,590	(45)
Loans charged off	(1,986)	0
Recoveries	0	0
Balance, ending	2,655	2,585
Unallocated
Changes in allowance for loan losses
Balance, beginning	457	466
Provision for loan losses	25	(46)
Loans charged off	0	0
Recoveries	0	0
Balance, ending	$ 482	$ 420

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LOANS (Tables)

9 Months Ended

Sep. 30, 2014

Receivables [Abstract]

Schedule of composition of net loans

The composition of net loans at September 30, 2014 and December 31, 2013 is provided below:

	September 30, 2014			December 31, 2013
	(In thousands)
	(Unaudited)
Real estate loans:
One- to four-family	$	112,227		$	127,501
Multi-family and commercial	418,456			408,365
Construction	31,341			5,904
	562,024			541,770
Consumer loans	19,456			22,478
Commercial and industrial loans	140,113			168,013
Total loans	721,593			732,261
Deferred loan origination fees, net	(274		)	(242		)
Allowance for loan losses	(11,099		)	(11,529		)
Net loans	$	710,220		$	720,490

Schedule of changes in allowance for loan losses by loan segment

The following tables present changes in the allowance for loan losses by loan segment for the nine months ended September 30, 2014 and the nine months ended September 30, 2013.

	Nine Months Ended September 30, 2014
	One- to Four-Family			Multi-family and Commercial			Construction			Consumer			Commercial and Industrial			Unallocated			Total
	(In thousands, Unaudited)
Balance, beginning	$	403		$	7,141		$	324		$	153		$	3,051		$	457		$	11,529
(Credit) provision for loan losses	(209		)	(76		)	284			(21		)	1,590			25			1,593
Loans charged off	(3		)	(102		)	—			(6		)	(1,986		)	—			(2,097		)
Recoveries	29			12			—			33			—			—			74
Balance, ending	$	220		$	6,975		$	608		$	159		$	2,655		$	482		$	11,099
	Nine Months Ended September 30, 2013
	One- to Four-Family			Multi-family and Commercial			Construction			Consumer			Commercial and Industrial			Unallocated			Total
	(In thousands)
Balance, beginning	$	642		$	6,327		$	873		$	232		$	2,630		$	466		$	11,170
(Credit) provision for loan losses	(139		)	1,256			(487		)	(7		)	(45		)	(46		)	532
Loans charged off	(115		)	(463		)	—			(69		)	—			—			(647		)
Recoveries	35			12			—			26			—			—			73
Balance, ending	$	423		$	7,132		$	386		$	182		$	2,585		$	420		$	11,128

Schedule of breakdown of impaired loans by loan segment

The following tables set forth the breakdown of impaired loans by loan segment as of September 30, 2014 and December 31, 2013.

September 30, 2014
	Nonaccrual Loans		Accruing TDRs		Other Impaired Loans		Total Impaired Loans		Impaired Loans with Allowance		Impaired Loans without Allowance
	(In thousands, Unaudited)
Real estate loans:
One- to four-family	$	1,684	$	733	$	—	$	2,417	$	770	$	1,647
Multi-family and commercial	1,772		1,523		4,479		7,774		7,770		4
Construction	—		3,235		—		3,235		3,235		—
Consumer loans	185		13		—		198		94		104
Commercial and industrial	—		—		—		—		—		—
Total	$	3,641	$	5,504	$	4,479	$	13,624	$	11,869	$	1,755
December 31, 2013
	Nonaccrual Loans		Accruing TDRs		Other Impaired Loans		Total Impaired Loans		Impaired Loans with Allowance		Impaired Loans without Allowance
	(In thousands)
Real estate loans:
One- to four-family	$	2,390	$	582	$	—	$	2,972	$	2,972	$	—
Multi-family and commercial	3,031		6,191		—		9,222		8,866		356
Construction	3,231		—		—		3,231		3,231		—
Consumer loans	128		13		—		141		141		—
Commercial and industrial	—		—		—		—		—		—
Total	$	8,780	$	6,786	$	—	$	15,566	$	15,210	$	356

Schedule of allowance for loan loss for impaired loans and general allowance by loan segment

The following tables set forth the allowance for loan loss for impaired loans and general allowance by loan segment as of September 30, 2014 and December 31, 2013.

September 30, 2014	Allowance for Loan Losses
	Impaired Loans
	Nonaccrual Loans		Accruing TDRs		Other Impaired Loans		Total Impaired Loans
									General		Total
	(In thousands, Unaudited)
Real estate loans:
One- to four-family	$	2	$	1	$	—	$	3	$	217	$	220
Multi-family and commercial	414		204		395		1,013		5,962		6,975
Construction	—		74		—		74		534		608
Consumer loans	26		—		—		26		133		159
Commercial and industrial	—		—		—		—		2,655		2,655
Unallocated	—		—		—		—		482		482
Total allowance for loan losses	$	442	$	279	$	395	$	1,116	$	9,983	$	11,099
December 31, 2013	Allowance for Loan Losses
	Impaired Loans
	Nonaccrual Loans		Accruing TDRs		Other Impaired Loans		Total Impaired Loans
									General		Total
	(In thousands)
Real estate loans:
One- to four-family	$	163	$	1	$	—	$	164	$	239	$	403
Multi-family and commercial	600		687		—		1,287		5,854		7,141
Construction	263		—		—		263		61		324
Consumer loans	6		—		—		6		147		153
Commercial and industrial	—		—		—		—		3,051		3,051
Unallocated	—		—		—		—		457		457
Total allowance for loan losses	$	1,032	$	688	$	—	$	1,720	$	9,809	$	11,529

Summary of TDR activity for the periods

The following table sets forth a summary of the TDR activity for the three and nine month periods ended September 30, 2014 and 2013. 

	Three Months Ended September 30, 2014						Nine Months Ended September 30, 2014
	Restructured Current Period						Restructured Current Period
	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Type of Modification	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Type of Modification
	(Dollars in thousands, Unaudited)						(Dollars in thousands, Unaudited)
Real estate loans:
One- to four-family	—	$	—	$	—		1	$	245	$	245	Principal forgiveness
Multi-family and commercial	—	—		—			1	1,640		1,540		Principal forgiveness
Construction	—	—		—			—	—		—
Consumer loans	—	—		—			—	—		—
Commercial and industrial	—	—		—			—	—		—
Total	—	$	—	$	—		2	$	1,885	$	1,785
	Three Months Ended September 30, 2013						Nine Months Ended September 30, 2013
	Restructured Current Period						Restructured Current Period
	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Type of Modification	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Type of Modification
	(Dollars in thousands, Unaudited)						(Dollars in thousands, Unaudited)
Real estate loans:
One- to four-family	1	$	141	$	141	Delayed repayment	2	$	622	$	622	Delayed repayment
Multi-family and commercial	—	—		—			—	—		—
Construction	—	—		—			—	—		—
Consumer loans	—	—		—			—	—		—
Commercial and industrial	—	—		—			—	—		—
Total	1	$	141	$	141		2	$	622	$	622

Schedule of past due loans by segment

The following table sets forth past due loans by segment as of September 30, 2014 and December 31, 2013.

	September 30, 2014				December 31, 2013
	30-59 Days Past Due		60-89 Days Past Due		30-59 Days Past Due		60-89 Days Past Due
	(In thousands)
	(Unaudited)
One- to four-family real estate	$	747	$	100	$	172	$	—
Multi-family and commercial real estate	—		—		—		—
Construction	—		—		—		—
Consumer	99		24		241		5
Commercial and industrial	93		—		—		—
Total	$	939	$	124	$	413	$	5

Schedule of criticized and classified loans by segment

The following tables set forth criticized and classified loans by segment as of September 30, 2014 and December 31, 2013. 

	September 30, 2014
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Total
	(In thousands, Unaudited)
Pass and Pass watch	$	110,543	$	403,772	$	28,106	$	19,271	$	134,330	$	696,022
Special mention	—		10,004		3,235		—		5,025		18,264
Substandard	1,684		4,680		—		185		758		7,307
Doubtful	—		—		—		—		—		—
Total loans	$	112,227	$	418,456	$	31,341	$	19,456	$	140,113	$	721,593
	December 31, 2013
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Total
	(In thousands)
Pass and Pass watch	$	125,111	$	390,908	$	2,673	$	22,350	$	165,336	$	706,378
Special mention	—		12,414		—		—		2,677		15,091
Substandard	2,390		5,043		3,231		128		—		10,792
Doubtful	—		—		—		—		—		—
Total loans	$	127,501	$	408,365	$	5,904	$	22,478	$	168,013	$	732,261

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LOANS (Details 3) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Impaired loans by loan segment
Nonaccrual Loans	$ 3,641,000		$ 8,780,000
Accruing TDRs	5,504,000		6,786,000
Other Impaired Loans	4,479,000		0
Total Impaired Loans	13,624,000		15,566,000
Impaired Loans with Allowance	11,869,000		15,210,000
Impaired Loans without Allowance	1,755,000		356,000
Average recorded investment in impaired loans	13,500,000	17,400,000
Interest income recognized on impaired loans	384,000	296,000
One- to four-family
Impaired loans by loan segment
Nonaccrual Loans	1,684,000		2,390,000
Accruing TDRs	733,000		582,000
Other Impaired Loans	0		0
Total Impaired Loans	2,417,000		2,972,000
Impaired Loans with Allowance	770,000		2,972,000
Impaired Loans without Allowance	1,647,000		0
Multi-family and commercial
Impaired loans by loan segment
Nonaccrual Loans	1,772,000		3,031,000
Accruing TDRs	1,523,000		6,191,000
Other Impaired Loans	4,479,000		0
Total Impaired Loans	7,774,000		9,222,000
Impaired Loans with Allowance	7,770,000		8,866,000
Impaired Loans without Allowance	4,000		356,000
Construction
Impaired loans by loan segment
Nonaccrual Loans	0		3,231,000
Accruing TDRs	3,235,000		0
Other Impaired Loans	0		0
Total Impaired Loans	3,235,000		3,231,000
Impaired Loans with Allowance	3,235,000		3,231,000
Impaired Loans without Allowance	0		0
Consumer
Impaired loans by loan segment
Nonaccrual Loans	185,000		128,000
Accruing TDRs	13,000		13,000
Other Impaired Loans	0		0
Total Impaired Loans	198,000		141,000
Impaired Loans with Allowance	94,000		141,000
Impaired Loans without Allowance	104,000		0
Commercial and industrial
Impaired loans by loan segment
Nonaccrual Loans	0		0
Accruing TDRs	0		0
Other Impaired Loans	0		0
Total Impaired Loans	0		0
Impaired Loans with Allowance	0		0
Impaired Loans without Allowance	$ 0		$ 0

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DEPOSITS (Tables)

9 Months Ended

Sep. 30, 2014

Banking and Thrift [Abstract]

Schedule of components of weighted average interest rate and balance of deposits

Deposits and their respective weighted average interest rate at September 30, 2014 and December 31, 2013 consist of the following:

	September 30, 2014				December 31, 2013
	Weighted Average Interest Rate		Amount		Weighted Average Interest Rate		Amount
	(Dollars in thousands)
	(Unaudited)
Noninterest-bearing demand accounts	—	%	$	119,853	—	%	$	100,748
NOW accounts	0.21		82,868		0.21		84,569
Money market accounts	0.21		90,152		0.20		85,017
Savings and club accounts	0.27		112,821		0.22		108,183
Brokered deposits	0.81		64,280		0.56		71,334
Certificates of deposit	0.94		193,754		1.26		223,864
	0.45	%	$	663,728	0.56	%	$	673,715

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Consolidated Statements of Changes in Equity (USD $) In Thousands, unless otherwise specified	Total	Common Stock	Additional Paid in Capital	Treasury Stock	Common Stock Acquired by Benefit Plans	Retained Earnings	Accumulated Other Comprehensive Income, net
BALANCE at Dec. 31, 2012	$ 181,465	$ 146	$ 136,132	$ (29,733)	$ (10,228)	$ 80,608	$ 4,540
Increase (Decrease) in Stockholders' Equity
Purchase of treasury stock	(3,703)	0	0	(3,703)	0	0	0
Stock based compensation expense	811	0	811	0	0	0	0
Unallocated ESOP shares committed to employees	829	0	361	0	468	0	0
Issuance of stock for vested equity awards	0	0	(316)	0	329	(13)	0
Common stock issued for exercise of vested stock options	106	0	106	0	0	0	0
Tax benefit from exercise of stock options and vesting of restricted stock	58	0	58	0	0	0	0
Dividends paid	(2,321)	0	0	0	0	(2,321)	0
Net income	4,044	0	0	0	0	4,044	0
Other comprehensive loss	(7,057)	0	0	0	0	0	(7,057)
BALANCE at Sep. 30, 2013	174,232	146	137,152	(33,436)	(9,431)	82,318	(2,517)
BALANCE at Dec. 31, 2013	173,467	146	137,593	(33,436)	(9,272)	82,885	(4,449)
Increase (Decrease) in Stockholders' Equity
Purchase of treasury stock	(1,902)	0	0	(1,902)	0	0	0
Stock based compensation expense	894	0	894	0	0	0	0
Unallocated ESOP shares committed to employees	821	0	353	0	468	0	0
Issuance of stock for vested equity awards	0	0	(651)	0	589	62	0
Common stock issued for exercise of vested stock options	392	1	391	0	0	0	0
Tax benefit from exercise of stock options and vesting of restricted stock	83	0	83	0	0	0	0
Dividends paid	(5,553)	0	0	0	0	(5,553)	0
Net income	6,087	0	0	0	0	6,087	0
Other comprehensive loss	3,996	0	0	0	0	0	3,996
BALANCE at Sep. 30, 2014	$ 178,285	$ 147	$ 138,663	$ (35,338)	$ (8,215)	$ 83,481	$ (453)

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Consolidated Statements of Condition (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Statement of Financial Position [Abstract]
Mortgage related securities held-to-maturity, fair value (in dollars)	$ 163,727	$ 67,491
Loans, allowance for loan losses (in dollars)	$ 11,099	$ 11,529
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	60,000,000	60,000,000
Common stock, shares issued	12,066,591	12,147,803
Common stock, shares outstanding	12,066,591	12,147,803
Treasury stock, shares	2,584,772	2,468,172

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STOCK BASED COMPENSATION

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK BASED COMPENSATION

STOCK BASED COMPENSATION

During the nine months ended September 30, 2014, the Company recorded $894,000 of stock based compensation expense comprised of stock option expense of $328,000 and restricted stock expense of $566,000. This compares to $811,000 of stock based compensation expense comprised of stock option expense of $315,000 and restricted stock expense of $496,000 during the nine months ended September 30, 2013.

The following is a summary of the Bancorp’s stock option activity and related information for the nine months ended September 30, 2014. 

	Number of Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
	(Unaudited)
Outstanding at December 31, 2013	1,123,408		$	12.81	6.2 years	$	5,013,000
Granted	36,300		16.97
Exercised	(35,388	)	11.07
Forfeited/Cancelled	(23,100	)	15.52
Outstanding at September 30, 2014	1,101,220		$	12.95	5.5 years	$	3,895,000
Exercisable at September 30, 2014	733,648		$	11.73	4.3 years	$	3,395,000

The fair value of the options granted during the nine months ended September 30, 2014 was estimated to be $3.66.  The fair value was based on the following assumptions:

Expected Dividend Yield				3.53	%
Expected Volatility	30.85	%	-	31.04	%
Risk-Free Interest Rate	1.86	%	-	1.90	%
Expected Option Life in Years				6.5

Stock options vest over a five-year service period and expire ten years after grant date. The Company recognizes compensation expense for the fair values of stock options using the straight-line method over the requisite service period for the entire award.

NOTE 8 - STOCK BASED COMPENSATION (CONTINUED)

The following is a summary of the Bancorp’s unvested options as of September 30, 2014 and the changes therein during the nine months then ended. 

	Number of Stock Options		Weighted Average Grant Date Fair Value
	(Unaudited)
Unvested at December 31, 2013	475,524		$	3.85
Granted	36,300		3.66
Vested	(124,152	)	3.66
Forfeited / Cancelled	(20,100	)	3.91
Unvested at September 30, 2014	367,572		$	3.90

Expected future expense relating to the 367,572 non-vested options outstanding as of September 30, 2014 is $1.2 million over a weighted average period of 3.1 years.

The following is a summary of the status of the Bancorp’s restricted stock as of September 30, 2014 and changes therein during the nine months then ended.

	Number of Restricted Shares		Weighted Average Grant Date Fair Value
	(Unaudited)
Unvested at December 31, 2013	225,932		$	14.98
Granted	17,215		15.84
Vested	(47,276	)	13.78
Forfeited / Cancelled	(8,650	)	15.32
Unvested at September 30, 2014	187,221		$	15.34

Expected future compensation expense relating to the 187,221 restricted shares at September 30, 2014 is $2.3 million over a weighted average period of 3.2 years. 

Non-performance based restricted shares vest over a five-year service period. The Company recognizes compensation expense for the fair value of non-performance based restricted shares on a straight-line basis over the requisite service period for the entire award.

Performance-based restricted shares vest over a five-year period based on service and achievement of performance metrics. The performance metrics to be evaluated during the performance period are (1) return on assets compared to peer group and (2) earnings per share growth rate compared to peer group. On the third anniversary of the grant date, the Company's level of performance relative to the performance metrics are evaluated and, if such performance metrics have been achieved, an amount of shares that will vest at that time and over the following two years will be determined. The number of shares eligible to vest can range from 0% to 150% of the shares identified on grant date (the "target shares"). Of the shares that will vest, 50% of the shares vest on the third anniversary of the date of grant and 25% vest on each of the fourth and fifth anniversaries of the date of grant.

During August 2011, the Company granted 10,668 shares (the "target shares") of performance-based restricted stock. During August 2014, the Company awarded an additional 4,265 shares of performance-based restricted stock, which represented additional shares owed to participants under the August 2011 grant as the Company exceeded the performance targets under the 2011 award. This represented a total grant of 140% of the "target shares."  The 14,933 shares had a grant date fair value of $12.39. 

During 2013 and 2012, the Company granted 39,250 and 22,500 shares, respectively, of performance-based restricted stock to certain executive officers of the Company. For the purposes of the above table, the Company is assuming 100% of the "target shares" will be awarded. However, more or less shares may actually be awarded based on the performance of the Company at the applicable measurement date.

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Oct. 31, 2014
Document and Entity Information
Entity Registrant Name	Fox Chase Bancorp Inc
Entity Central Index Key	0001485176
Document Type	10-Q
Document Period End Date	Sep. 30, 2014
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Entity Common Stock, Shares Outstanding		12,011,491

XML

FAIR VALUE

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

FAIR VALUE

FAIR VALUE

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

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

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

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

Level 3—Valuations are 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 following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities.  Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.  The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments at September 30, 2014 and December 31, 2013:

Cash and Cash Equivalents

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

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

Fair values for investment securities and mortgage related securities are obtained from one external pricing service (“primary pricing service”) as the provider of pricing on the investment portfolio on a quarterly basis.  We generally obtain one quote per investment security.  If quoted market prices are not available, fair values are based on quoted market prices of comparable securities.  If quoted market prices are not available for comparable securities, fair value is based on quoted bids for the security or comparable securities.  We review the estimates of fair value provided by the primary pricing service to determine if they are representative of fair value based upon our general knowledge of market conditions and relative changes in interest rates and the credit environment.  The Company made no adjustments to the values obtained from the primary pricing service.

Loans Receivable, Net

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

FHLB Stock

The fair value of the FHLB stock is assumed to equal its cost, since the stock is nonmarketable but redeemable at its par value.

Mortgage Servicing Rights

The fair value of the MSRs 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.

NOTE 9 - FAIR VALUE (CONTINUED)

Financial Assets Acquired from Debtors

The fair value of financial assets acquired from debtors are determined using sales prices from executed sale agreements.

Accrued Interest Receivable and Accrued Interest Payable

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

Deposit Liabilities

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

Short-term Borrowings, FHLB Advances and Other Borrowed Funds

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

Derivative Contracts

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

The estimated fair values of the Company’s financial instruments at September 30, 2014 and December 31, 2013 were as follows: 

		September 30, 2014				December 31, 2013
	Fair Value Hierarchy Level	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
		(In thousands)
Financial assets:		(Unaudited)
Cash and cash equivalents	Level 1	$	7,727	$	7,727	$	11,947	$	11,947
Available-for-sale securities:
Investment securities available-for-sale	Level 2	8,433		8,433		10,489		10,489
Private label commercial mortgage related securities	Level 3	—		—		2,120		2,120
Agency residential mortgage related securities	Level 2	130,809		130,809		243,948		243,948
Held-to-maturity securities:
Agency mortgage related securities	Level 2	165,006		163,727		68,397		67,491
Loans receivable, net	Level 3	710,220		713,357		720,490		721,417
FHLB stock	Level 3	11,152		11,152		9,813		9,813
Accrued interest receivable	Level 2, 3	3,159		3,159		3,308		3,308
Mortgage servicing rights	Level 3	126		126		152		152
Financial assets acquired from debtors	Level 3	—		—		1,938		1,938
Financial liabilities:
Savings and club accounts	Level 2	112,821		112,821		108,183		108,183
Demand, NOW and money market deposits	Level 2	292,873		292,873		270,334		270,334
Brokered deposits	Level 2	64,280		63,958		71,334		71,020
Certificates of deposit	Level 2	193,754		193,974		223,864		225,357
Short-term borrowings	Level 2	60,000		60,001		80,500		80,500
FHLB advances	Level 2	135,000		138,292		150,000		154,069
Other borrowed funds	Level 2	30,000		31,922		30,000		32,178
Accrued interest payable	Level 2	314		314		314		314
Derivative contracts	Level 2, 3	152		152		124		124

NOTE 9 - FAIR VALUE (CONTINUED)

The following financial instruments were classified as Level 3 and carried at fair value on a recurring basis as of September 30, 2014:

• Two commercial loans, since lending credit risk is not an observable input for these loans (see interest rate swap discussion in Note 4).  The unrealized gain on the two loans was $133,000 at September 30, 2014 compared to $125,000 at December 31, 2013.

• Credit derivatives are valued based on creditworthiness of the underlying borrower which is a significant unobservable input.  The liability resulting from credit derivatives was $14,000 and $4,000 at September 30, 2014 and December 31, 2013, respectively.

The following measures were made on a recurring basis as of September 30, 2014 and December 31, 2013.

				Fair Value Measurements at Reporting Date Using
				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Other Unobservable Inputs
	As of
Description	September 30, 2014			(Level 1)		(Level 2)			(Level 3)
	(In thousands, Unaudited)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	304		$	—	$	304		$	—
Corporate securities	8,129			—		8,129			—
Agency residential mortgage related securities	130,809			—		130,809			—
Loans (1)	2,459			—		—			2,459
Derivative contracts (1)	(152		)	—		(138		)	(14		)
				Fair Value Measurements at Reporting Date Using
				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Other Unobservable Inputs
	As of
Description	December 31, 2013			(Level 1)		(Level 2)			(Level 3)
	(In thousands)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	308		$	—	$	308		$	—
Corporate securities	10,181			—		10,181			—
Private label commercial mortgage related securities	2,120			—		—			2,120
Agency residential mortgage related securities	243,948			—		243,948			—
Loans(1)	2,535			—		—			2,535
Financial assets acquired from debtors	1,938			—		—			1,938
Derivative contracts (1)	(124		)	—		(120		)	(4		)

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

The following measures were made on a non-recurring basis as of September 30, 2014 and December 31, 2013:

Loans, which were partially charged off at September 30, 2014 and December 31, 2013.  The loans’ fair values are based on Level 3 inputs, which are either an appraised value or a sales agreement, less costs to sell.  These amounts do not include fully charged-off loans, because we carry fully charged-off loans at zero on our balance sheet.

MSRs, the fair value of which was determined using a 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.

NOTE 9 - FAIR VALUE (CONTINUED)

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

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
	Balance		(Level 1)		(Level 2)		(Level 3)
September 30, 2014 (Unaudited)			(In thousands)
Loans	$	240	$	—	$	—	$	240
Mortgage servicing rights	126		—		—		126
Other real estate owned	1,889		—		—		1,889
Total	$	2,255	$	—	$	—	$	2,255
December 31, 2013
Loans	$	912	$	—	$	—	$	912
Mortgage servicing rights	152		—		—		152
Other real estate owned	4,314		—		—		4,314
Total	$	5,378	$	—	$	—	$	5,378

The following tables include a roll forward of the financial instruments which fair value is determined on a recurring basis using Significant Other Unobservable Inputs (Level 3) for the periods from December 31, 2013 to September 30, 2014 and December 31, 2012 to September 30, 2013. 

Nine Months Ended September 30, 2014
		Private Label Commercial Mortgage Related Securities			Derivative Contracts			Financial Assets Acquired from Debtors			Loans			Total
	(In thousands, Unaudited)
Beginning balance, December 31, 2013		$	2,120		$	(4	)	$	1,938		$	2,535		$	6,589
Purchases/additions		—			(12		)	—			—			(12		)
Sales		—			—			(1,938		)	—			(1,938		)
Payments received		(2,118		)	—			—			(82		)	(2,200		)
Premium amortization, net		—			—			—			—			—
(Decrease)/increase in value		(2		)	2			—			6			6
Ending balance, September 30, 2014		$	—		$	(14	)	$	—		$	2,459		$	2,445
Nine Months Ended September 30, 2013
		Private Label Commercial Mortgage Related Securities			Derivative Contracts			Financial Assets Acquired from Debtors			Loans			Total
	(In thousands, Unaudited)
Beginning balance, December 31, 2012		$	6,197		$	(12	)	$	3,714		$	2,806		$	12,705
Purchases/additions		—			—			1,994			—			1,994
Sales		—			—			—			—			—
Payments (received) made		(3,959		)	—			830			(77		)	(3,206		)
Premium amortization, net		(3		)	—			—			—			(3		)
(Decrease)/increase in value		(69		)	7			(4,480		)	(130		)	(4,672		)
Ending balance, September 30, 2013		$	2,166		$	(5	)	$	2,058		$	2,599		$	6,818

There were no transfers made between levels during the nine months ended September 30, 2014 or 2013.

XML

Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
INTEREST INCOME
Interest and fees on loans	$ 8,375	$ 8,241	$ 24,615	$ 24,319
Interest on mortgage related securities	1,633	1,807	5,235	5,296
Interest on investment securities available-for-sale
Interest and dividends on investment securities	144	92	437	221
Other interest income	1	1	2	2
Total Interest Income	10,153	10,141	30,289	29,838
INTEREST EXPENSE
Deposits	760	1,055	2,455	3,373
Short-term borrowings	45	45	100	94
Federal Home Loan Bank advances	577	555	1,723	1,606
Other borrowed funds	253	254	751	753
Total Interest Expense	1,635	1,909	5,029	5,826
Net Interest Income	8,518	8,232	25,260	24,012
Provision for loan losses	1,493	675	1,593	532
Net Interest Income after Provision for Loan Losses	7,025	7,557	23,667	23,480
NONINTEREST INCOME
Service charges and other fee income	416	437	1,192	1,260
Net (loss) gain on sale of assets acquired through foreclosure	(15)	303	(136)	484
Income on bank-owned life insurance	121	118	358	351
Equity in earnings of affiliate	91	135	125	470
Net gain on sale of investment securities (includes $0 and $0 for the three and nine months ended September 30, 2014, respectively and $0 and $532 for the three and nine months ended September 30, 2013, respectively of accumulated other comprehensive income reclassifications for unrealized holdings gains)	0	0	0	532
Other	29	36	76	125
Total Noninterest Income	642	1,029	1,615	3,222
NONINTEREST EXPENSE
Salaries, benefits and other compensation	3,510	3,644	10,670	10,629
Occupancy expense	407	403	1,321	1,243
Furniture and equipment expense	93	117	300	358
Data processing costs	384	390	1,146	1,155
Professional fees	271	474	1,086	1,250
Marketing expense	54	59	156	167
FDIC premiums	136	175	451	525
Assets acquired through foreclosure expense	10	1,370	403	4,465
Other	333	370	1,077	1,192
Total Noninterest Expense	5,198	7,002	16,610	20,984
Income Before Income Taxes	2,469	1,584	8,672	5,718
Income tax provision (includes $0 and $0 for the three and nine months ended September 30, 2014, respectively and $0 and $186 for the three and nine months ended September 30, 2013, respectively of income tax (benefit) expense from reclassification items)	653	411	2,585	1,674
Net Income	$ 1,816	$ 1,173	$ 6,087	$ 4,044
Earnings per share:
Basic (in dollars per share)	$ 0.16	$ 0.10	$ 0.54	$ 0.36
Diluted (in dollars per share)	$ 0.16	$ 0.10	$ 0.53	$ 0.35

XML

LOANS

9 Months Ended

Sep. 30, 2014

Receivables [Abstract]

LOANS

LOANS

The composition of net loans at September 30, 2014 and December 31, 2013 is provided below:

	September 30, 2014			December 31, 2013
	(In thousands)
	(Unaudited)
Real estate loans:
One- to four-family	$	112,227		$	127,501
Multi-family and commercial	418,456			408,365
Construction	31,341			5,904
	562,024			541,770
Consumer loans	19,456			22,478
Commercial and industrial loans	140,113			168,013
Total loans	721,593			732,261
Deferred loan origination fees, net	(274		)	(242		)
Allowance for loan losses	(11,099		)	(11,529		)
Net loans	$	710,220		$	720,490

NOTE 3 - LOANS (CONTINUED)

The following tables present changes in the allowance for loan losses by loan segment for the nine months ended September 30, 2014 and the nine months ended September 30, 2013.

	Nine Months Ended September 30, 2014
	One- to Four-Family			Multi-family and Commercial			Construction			Consumer			Commercial and Industrial			Unallocated			Total
	(In thousands, Unaudited)
Balance, beginning	$	403		$	7,141		$	324		$	153		$	3,051		$	457		$	11,529
(Credit) provision for loan losses	(209		)	(76		)	284			(21		)	1,590			25			1,593
Loans charged off	(3		)	(102		)	—			(6		)	(1,986		)	—			(2,097		)
Recoveries	29			12			—			33			—			—			74
Balance, ending	$	220		$	6,975		$	608		$	159		$	2,655		$	482		$	11,099
	Nine Months Ended September 30, 2013
	One- to Four-Family			Multi-family and Commercial			Construction			Consumer			Commercial and Industrial			Unallocated			Total
	(In thousands)
Balance, beginning	$	642		$	6,327		$	873		$	232		$	2,630		$	466		$	11,170
(Credit) provision for loan losses	(139		)	1,256			(487		)	(7		)	(45		)	(46		)	532
Loans charged off	(115		)	(463		)	—			(69		)	—			—			(647		)
Recoveries	35			12			—			26			—			—			73
Balance, ending	$	423		$	7,132		$	386		$	182		$	2,585		$	420		$	11,128

The following tables set forth the breakdown of impaired loans by loan segment as of September 30, 2014 and December 31, 2013.

September 30, 2014
	Nonaccrual Loans		Accruing TDRs		Other Impaired Loans		Total Impaired Loans		Impaired Loans with Allowance		Impaired Loans without Allowance
	(In thousands, Unaudited)
Real estate loans:
One- to four-family	$	1,684	$	733	$	—	$	2,417	$	770	$	1,647
Multi-family and commercial	1,772		1,523		4,479		7,774		7,770		4
Construction	—		3,235		—		3,235		3,235		—
Consumer loans	185		13		—		198		94		104
Commercial and industrial	—		—		—		—		—		—
Total	$	3,641	$	5,504	$	4,479	$	13,624	$	11,869	$	1,755
December 31, 2013
	Nonaccrual Loans		Accruing TDRs		Other Impaired Loans		Total Impaired Loans		Impaired Loans with Allowance		Impaired Loans without Allowance
	(In thousands)
Real estate loans:
One- to four-family	$	2,390	$	582	$	—	$	2,972	$	2,972	$	—
Multi-family and commercial	3,031		6,191		—		9,222		8,866		356
Construction	3,231		—		—		3,231		3,231		—
Consumer loans	128		13		—		141		141		—
Commercial and industrial	—		—		—		—		—		—
Total	$	8,780	$	6,786	$	—	$	15,566	$	15,210	$	356

NOTE 3 - LOANS (CONTINUED)

There were no loans past due 90 days or more and still accruing interest at September 30, 2014 or December 31, 2013.

For the nine months ended September 30, 2014 and 2013, the average recorded investment in impaired loans was $13.5 million and $17.4 million, respectively.  The interest income recognized on these impaired loans was $384,000 and $296,000 for the nine months ended September 30, 2014 and 2013, respectively.

At September 30, 2014, two troubled debt restructurings (“TDRs”) totaling $277,000 are excluded from the accruing TDR column above as they are included in nonaccrual loans.  At December 31, 2013, four TDRs totaling $3.5 million are excluded from the accruing TDR column as they are included in nonaccrual loans.

During the nine months ended September 30, 2014, one multi-family and commercial loan totaling $4.5 million was reclassified from an accruing TDR to an other impaired loan.  This reclassification was due to our annual assessment where TDRs that have performed in accordance with the new terms for six consecutive months, are in a current status, reflected a market rate of interest at the time of the restructuring and cross over a year end are considered cured and are no longer classified as TDRs.

The following tables set forth the allowance for loan loss for impaired loans and general allowance by loan segment as of September 30, 2014 and December 31, 2013.

September 30, 2014	Allowance for Loan Losses
	Impaired Loans
	Nonaccrual Loans		Accruing TDRs		Other Impaired Loans		Total Impaired Loans
									General		Total
	(In thousands, Unaudited)
Real estate loans:
One- to four-family	$	2	$	1	$	—	$	3	$	217	$	220
Multi-family and commercial	414		204		395		1,013		5,962		6,975
Construction	—		74		—		74		534		608
Consumer loans	26		—		—		26		133		159
Commercial and industrial	—		—		—		—		2,655		2,655
Unallocated	—		—		—		—		482		482
Total allowance for loan losses	$	442	$	279	$	395	$	1,116	$	9,983	$	11,099
December 31, 2013	Allowance for Loan Losses
	Impaired Loans
	Nonaccrual Loans		Accruing TDRs		Other Impaired Loans		Total Impaired Loans
									General		Total
	(In thousands)
Real estate loans:
One- to four-family	$	163	$	1	$	—	$	164	$	239	$	403
Multi-family and commercial	600		687		—		1,287		5,854		7,141
Construction	263		—		—		263		61		324
Consumer loans	6		—		—		6		147		153
Commercial and industrial	—		—		—		—		3,051		3,051
Unallocated	—		—		—		—		457		457
Total allowance for loan losses	$	1,032	$	688	$	—	$	1,720	$	9,809	$	11,529

NOTE 3 - LOANS (CONTINUED)

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

The following table sets forth a summary of the TDR activity for the three and nine month periods ended September 30, 2014 and 2013. 

	Three Months Ended September 30, 2014						Nine Months Ended September 30, 2014
	Restructured Current Period						Restructured Current Period
	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Type of Modification	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Type of Modification
	(Dollars in thousands, Unaudited)						(Dollars in thousands, Unaudited)
Real estate loans:
One- to four-family	—	$	—	$	—		1	$	245	$	245	Principal forgiveness
Multi-family and commercial	—	—		—			1	1,640		1,540		Principal forgiveness
Construction	—	—		—			—	—		—
Consumer loans	—	—		—			—	—		—
Commercial and industrial	—	—		—			—	—		—
Total	—	$	—	$	—		2	$	1,885	$	1,785
	Three Months Ended September 30, 2013						Nine Months Ended September 30, 2013
	Restructured Current Period						Restructured Current Period
	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Type of Modification	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Type of Modification
	(Dollars in thousands, Unaudited)						(Dollars in thousands, Unaudited)
Real estate loans:
One- to four-family	1	$	141	$	141	Delayed repayment	2	$	622	$	622	Delayed repayment
Multi-family and commercial	—	—		—			—	—		—
Construction	—	—		—			—	—		—
Consumer loans	—	—		—			—	—		—
Commercial and industrial	—	—		—			—	—		—
Total	1	$	141	$	141		2	$	622	$	622

During the three and nine months ended September 30, 2014, no TDRs defaulted that were restructured in the prior twelve months. During the three and nine months ended September 30, 2013, a $1.6 million multi-family and commercial real estate TDR which was restructured in the prior twelve months defaulted. This defaulted loan was current as to monetary payments, but was 90 days or more past maturity. Subsequent to the default, the loan was extended.

NOTE 3 - LOANS (CONTINUED)

The following table sets forth past due loans by segment as of September 30, 2014 and December 31, 2013.

	September 30, 2014				December 31, 2013
	30-59 Days Past Due		60-89 Days Past Due		30-59 Days Past Due		60-89 Days Past Due
	(In thousands)
	(Unaudited)
One- to four-family real estate	$	747	$	100	$	172	$	—
Multi-family and commercial real estate	—		—		—		—
Construction	—		—		—		—
Consumer	99		24		241		5
Commercial and industrial	93		—		—		—
Total	$	939	$	124	$	413	$	5

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

The following tables set forth criticized and classified loans by segment as of September 30, 2014 and December 31, 2013. 

	September 30, 2014
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Total
	(In thousands, Unaudited)
Pass and Pass watch	$	110,543	$	403,772	$	28,106	$	19,271	$	134,330	$	696,022
Special mention	—		10,004		3,235		—		5,025		18,264
Substandard	1,684		4,680		—		185		758		7,307
Doubtful	—		—		—		—		—		—
Total loans	$	112,227	$	418,456	$	31,341	$	19,456	$	140,113	$	721,593
	December 31, 2013
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Total
	(In thousands)
Pass and Pass watch	$	125,111	$	390,908	$	2,673	$	22,350	$	165,336	$	706,378
Special mention	—		12,414		—		—		2,677		15,091
Substandard	2,390		5,043		3,231		128		—		10,792
Doubtful	—		—		—		—		—		—
Total loans	$	127,501	$	408,365	$	5,904	$	22,478	$	168,013	$	732,261

XML

INVESTMENT AND MORTGAGE RELATED SECURITIES

9 Months Ended

Sep. 30, 2014

Investments, Debt and Equity Securities [Abstract]

INVESTMENT AND MORTGAGE RELATED SECURITIES

INVESTMENT AND MORTGAGE RELATED SECURITIES

The amortized cost and fair value of securities available-for-sale and held-to-maturity as of September 30, 2014 and December 31, 2013 are summarized as follows: 

	September 30, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands, Unaudited)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	300	$	4	$	—		$	304
Corporate securities	8,077		52		—			8,129
	8,377		56		—			8,433
Private label commercial mortgage related securities	—		—		—			—
Agency residential mortgage related securities	129,937		2,418		(1,546		)	130,809
Total mortgage related securities	129,937		2,418		(1,546		)	130,809
Total available-for-sale securities	$	138,314	$	2,474	$	(1,546	)	$	139,242
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	165,006	$	714	$	(1,993	)	$	163,727
Total mortgage related securities	165,006		714		(1,993		)	163,727
Total held-to-maturity securities	$	165,006	$	714	$	(1,993	)	$	163,727
	December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	300	$	8	$	—		$	308
Corporate securities	10,145		54		(18		)	10,181
	10,445		62		(18		)	10,489
Private label commercial mortgage related securities	2,118		2		—			2,120
Agency residential mortgage related securities	250,851		2,655		(9,558		)	243,948
Total mortgage related securities	252,969		2,657		(9,558		)	246,068
Total available-for-sale securities	$	263,414	$	2,719	$	(9,576	)	$	256,557
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	68,397	$	514	$	(1,420	)	$	67,491
Total mortgage related securities	68,397		514		(1,420		)	67,491
Total held-to-maturity securities	$	68,397	$	514	$	(1,420	)	$	67,491

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

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 September 30, 2014 and December 31, 2013.

	September 30, 2014
	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands, Unaudited)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	—	$	—		$	—	$	—		$	—	$	—
Corporate securities	—		—			—		—			—		—
	—		—			—		—			—		—
Private label commercial mortgage related securities	—		—			—		—			—		—
Agency residential mortgage related securities	6,714		(20		)	87,700		(1,526		)	94,414		(1,546		)
Total mortgage related securities	6,714		(20		)	87,700		(1,526		)	94,414		(1,546		)
Total available-for-sale securities	$	6,714	$	(20	)	$	87,700	$	(1,526	)	$	94,414	$	(1,546	)
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	61,446	$	(574	)	$	71,624	$	(1,419	)	$	133,070	$	(1,993	)
Total mortgage related securities	61,446		(574		)	71,624		(1,419		)	133,070		(1,993		)
Total held-to-maturity securities	$	61,446	$	(574	)	$	71,624	$	(1,419	)	$	133,070	$	(1,993	)
Total temporarily impaired securities	$	68,160	$	(594	)	$	159,324	$	(2,945	)	$	227,484	$	(3,539	)
	December 31, 2013
	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	—	$	—		$	—	$	—		$	—	$	—
Corporate securities	—		—			2,982		(18		)	2,982		(18		)
	—		—			2,982		(18		)	2,982		(18		)
Private label commercial mortgage related securities	—		—			—		—			—		—
Agency residential mortgage related securities	180,448		(7,251		)	24,841		(2,307		)	205,289		(9,558		)
Total mortgage related securities	180,448		(7,251		)	24,841		(2,307		)	205,289		(9,558		)
Total available-for-sale securities	$	180,448	$	(7,251	)	$	27,823	$	(2,325	)	$	208,271	$	(9,576	)
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	40,615	$	(1,420	)	$	—	$	—		$	40,615	$	(1,420	)
Total mortgage related securities	40,615		(1,420		)	—		—			40,615		(1,420		)
Total held-to-maturity securities	$	40,615	$	(1,420	)	$	—	$	—		$	40,615	$	(1,420	)
Total temporarily impaired securities	$	221,063	$	(8,671	)	$	27,823	$	(2,325	)	$	248,886	$	(10,996	)

NOTE 2 - INVESTMENT AND MORTGAGE RELATED SECURITIES (CONTINUED)

During the three and nine month periods ended September 30, 2014, no securities were sold. There were no net investment securities gains (losses) in the consolidated statement of operations for the three and nine month periods ended September 30, 2014. During the three months ended September 30, 2013, no securities were sold. During the nine months ended September 30, 2013, the Company sold seven mortgage related securities with an amortized cost of $9.0 million and recognized gross gains of $532,000.

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

At September 30, 2014, gross unrealized losses totaled $3.5 million.  64 agency residential mortgage related securities, with a fair value of $159.3 million and an unrealized loss position of $2.9 million, had an unrealized loss position for twelve months or longer as of September 30, 2014.  Additionally, 33 agency residential mortgage related securities, with a fair value of $68.2 million and an unrealized loss position of $594,000, had an unrealized loss position for less than twelve months as of September 30, 2014. The fair value of these 97 agency residential mortgage related securities primarily fluctuates with changes in market conditions for the underlying securities and changes in the interest rate environment. The Company does not intend to sell the securities in an unrealized loss position and it is not more likely than not that it will be required to sell these securities before a recovery of fair value, which may be maturity.  Upon review of the attributes of the individual securities, the Company concluded these securities were not other-than-temporarily impaired.

During the three months ended September 30, 2014, 38 residential mortgage related securities with a fair value of $96.9 million were transferred from available-for-sale securities to held-to-maturity. The reclassification was permitted as the Company has appropriately determined the ability and intent to hold these securities as an investment until maturity. The securities transferred had an unrealized net loss of $1.6 million at the time of transfer which continues to be reflected in accumulated other comprehensive loss on the consolidated balance sheet, net of subsequent amortization, which is being recognized over the life of the securities.

At September 30, 2014, the amortized cost of held-to-maturity investments consisted of the following (in thousands):

	Original Cost		Unrealized Loss at Transfer			Post-transfer Accretion		Amortized Cost
Transferred securities	$	97,469	$	(1,625	)	$	16	$	95,860
Other held-to-maturity securities	69,146		—			—		69,146
Total	$	166,615	$	(1,625	)	$	16	$	165,006

As of December 31, 2013, the Company held two private label commercial mortgage related securities ("CMBS") with an amortized cost of $2.1 million. These securities were paid off at amortized cost during the nine months ended September 30, 2014.

NOTE 2 - INVESTMENT AND MORTGAGE RELATED SECURITIES (CONTINUED)

The amortized cost and estimated fair value of investment securities available-for-sale and held-to-maturity at September 30, 2014 and December 31, 2013 by contractual maturity are as follows:

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
September 30, 2014 (Unaudited)
Due in one year or less	$	5,819	$	5,845	$	—	$	—
Due after one year through five years	2,558		2,588		—		—
Due after five years through ten years	—		—		—		—
Due after ten years	—		—		—		—
Total mortgage related securities	129,937		130,809		165,006		163,727
	$	138,314	$	139,242	$	165,006	$	163,727
December 31, 2013
Due in one year or less	$	1,999	$	2,000	$	—	$	—
Due after one year through five years	8,446		8,489		—		—
Due after five years through ten years	—		—		—		—
Due after ten years	—		—		—		—
Total mortgage related securities	252,969		246,068		68,397		67,491
	$	263,414	$	256,557	$	68,397	$	67,491

Securities with a fair value of $37.9 million and $9.7 million at September 30, 2014 and December 31, 2013, respectively, were pledged to secure public deposits.

Securities with a fair value of $173.0 million and $197.6 million at September 30, 2014 and December 31, 2013, respectively, were used to secure FHLB advances, short-term borrowings, other borrowed funds and related unused borrowing capacities.  See Note 7.

Securities with a fair value of $626,000 and $702,000 at September 30, 2014 and December 31, 2013, respectively, were used to secure derivative transactions.

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MORTGAGE SERVICING ACTIVITY (Tables)

9 Months Ended

Sep. 30, 2014

MORTGAGE SERVICING ACTIVITY

Summary of activity of mortgage servicing rights for the period ended

The following table summarizes mortgage servicing rights activity for the nine months ended September 30, 2014 and 2013.

	Servicing Rights			Valuation Allowance			Net Carrying Value
	(In thousands, Unaudited)
Balance at December 31, 2013	$	255		$	(103	)	$	152
Reductions	—			6			6
Amortization	(32		)	—			(32		)
Balance at September 30, 2014	$	223		$	(97	)	$	126
Balance at December 31, 2012	$	325		$	(155	)	$	170
Reductions	—			50			50
Amortization	(63		)	—			(63		)
Balance at September 30, 2013	$	262		$	(105	)	$	157

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ACCOUNTING PRONOUNCEMENTS

9 Months Ended

Sep. 30, 2014

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

ACCOUNTING PRONOUNCEMENTS

ACCOUNTING PRONOUNCEMENTS

ASU No. 2013-11-Income Taxes (Topic 740) - Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force). As a result of applying this ASU, an unrecognized tax benefit should be presented as a reduction of a deferred tax asset for a net operating loss ("NOL") or other tax credit carryforward when settlement in this manner is available under the tax law. The assessment of whether settlement is available under the tax law would be based on facts and circumstances as of the balance sheet reporting date and would not consider future events (e.g., upcoming expiration of related NOL carryforwards). This classification should not affect an entity's analysis of the realization of its deferred tax assets. Gross presentation in the roll forward of unrecognized tax positions in the notes to the financial statements will still be required. For the Company, the update was effective prospectively for annual reporting periods beginning on or after January 1, 2014, and interim periods within those annual periods. Retrospective application is permitted. Adoption of this ASU did not have a material impact on the Company's consolidated financial statements.

ASU No. 2014-04 - Troubled Debt Restructuring by Creditors (Subtopic 310-40) - Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force). The amendments in this update apply to all creditors who obtain physical possession (resulting from an in substance repossession or foreclosure) of residential real estate property collateralizing a consumer mortgage loan in satisfaction of a receivable.  The objective of the amendments in this update is to reduce diversity by clarifying when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to requirements of the applicable jurisdiction.  The amendments in this update are effective for the Company for annual reporting periods beginning on or after January 1, 2015, and interim periods within those annual periods. Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.

ASU No. 2014-09 - Revenue from Contracts with Customers (Topic 660). This update requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

ASU No. 2014-11 - Transfers and Servicing (Topic 860) - Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The amendments in this update change the accounting for repurchase-to-maturity transactions and enhances the required disclosures for repurchase agreements and other similar transactions. Repurchase-to-maturity transactions will be accounted for as secured borrowings rather than sales of assets with separate forward repurchase or resale commitments. Transactions which include the initial transfer of financial assets and a repurchase financing involving the same or substantially the same asset with the same counterparty that are entered into contemporaneously with, or in contemplation of, one another will be accounted for as two separate transactions. This will result in the initial transfer being accounted for as a sale (if derecognition criteria are met) and a purchase by the counterparty and both parties accounting for the repurchase financing as a secured borrowing. The update also requires new disclosures for transactions similar to repurchases in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets. It also requires additional disclosures about the nature of collateral pledged in repurchases that are accounted for as secured borrowings. The accounting changes in the standard and the disclosures for transactions accounted for as sales are effective for the Company for interim and annual periods beginning on or after January 1, 2015. The disclosures for repurchases, securities lending transactions, and repurchases-to-maturity accounted for as secured borrowings are required for the Company for annual periods beginning on or after January 1, 2015, and interim periods beginning on or after April 1, 2015. Early application is prohibited. Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements, but is expected to result in additional disclosures related to the Company's secured borrowings.

ASU No. 2014-12 - Compensation-Stock Compensation (Topic 718) - Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period a consensus of the FASB Emerging Issues Task Force. The amendments in this update require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the

NOTE 10 – ACCOUNTING PRONOUNCEMENTS (CONTINUED)

remaining requisite service period. The amendments in this update are effective for the Company for annual periods and interim periods beginning on or after January 1, 2016. Earlier adoption is permitted. Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.

ASU No. 2014-13 - Consolidation (Topic 810) - Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity. This update clarifies the measurement of the financial assets and the financial liabilities of a consolidated collateralized financing entity, such as a collateralized debt obligation (CDO) or collateralized loan obligation (CLO) entity. The amendments in this update are effective for the Company for annual periods and interim periods beginning on or after January 1, 2016. Earlier adoption is permitted. Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements as the Company does not have consolidated collateralized financing entities.

ASU No. 2014-14 - Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40) - Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure a Consensus of the FASB Emerging Issues Task Force. The objective of this update is to reduce the diversity in classification of government-guaranteed mortgage loans, including FHA or VA guaranteed loans, upon foreclosure. The amendments in this update are effective for the Company for annual periods and interim periods beginning on or after January 1, 2016. Earlier adoption is permitted. Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements as the Company does not hold any government-guaranteed mortgage loans.

ASU No. 2014-15 - Presentation of Financial Statements - Going Concern (Subtopic 205-40) - Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments in this update require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this update are effective for the Company for the annual period ending December 31, 2016 and annual and interim periods thereafter. Earlier application is permitted. Application of this ASU is not expected to have a material impact on the Company's consolidated financial statements.

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DEPOSITS

9 Months Ended

Sep. 30, 2014

Banking and Thrift [Abstract]

DEPOSITS

DEPOSITS

Deposits and their respective weighted average interest rate at September 30, 2014 and December 31, 2013 consist of the following:

	September 30, 2014				December 31, 2013
	Weighted Average Interest Rate		Amount		Weighted Average Interest Rate		Amount
	(Dollars in thousands)
	(Unaudited)
Noninterest-bearing demand accounts	—	%	$	119,853	—	%	$	100,748
NOW accounts	0.21		82,868		0.21		84,569
Money market accounts	0.21		90,152		0.20		85,017
Savings and club accounts	0.27		112,821		0.22		108,183
Brokered deposits	0.81		64,280		0.56		71,334
Certificates of deposit	0.94		193,754		1.26		223,864
	0.45	%	$	663,728	0.56	%	$	673,715

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DERIVATIVES AND HEDGING

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES AND HEDGING

DERIVATIVES AND HEDGING

Interest Rate Swaps

On November 3, 2006, the Company entered into an interest rate swap with a current notional amount of $819,000, which is used to hedge a 15-year fixed rate loan that is earning interest at 7.43%.  The Company is receiving variable rate payments of one-month LIBOR plus 224 basis points and is paying fixed rate payments of 7.43%.  The swap matures in April 2022 and had a fair value loss position of $116,000 and $132,000 at September 30, 2014 and December 31, 2013, respectively.  The interest rate swap is carried at fair value in accordance with FASB ASC 815 “Derivatives and Hedging.”  The loan is carried at fair value under the fair value option as permitted by FASB ASC 825 “Financial Instruments.”

On October 12, 2011, the Company entered into an interest rate swap with a current notional amount of $1.5 million, which is used to hedge a 10-year fixed rate loan that is earning interest at 5.83%.  The Company is receiving variable rate payments of one-month LIBOR plus 350 basis points and is paying fixed rate payments of 5.83%.  The Company designated this relationship as a fair value hedge.  The swap matures in October 2021 and had a fair value (loss) gain position of ($22,000) and $12,000 at September 30, 2014 and December 31, 2013, respectively.  The difference between changes in the fair values of the interest rate swap agreement and the hedged loan represents hedge ineffectiveness and is recorded in other non-interest income in the consolidated statements of operations. Hedge ineffectiveness resulted in (expense) income of ($2,000) and $1,000 for the three months ended September 30, 2014 and September 30, 2013, respectively.  Hedge ineffectiveness resulted in (expense) income of ($12,000) and $15,000 for the nine months ended September 30, 2014 and September 30, 2013, respectively.

Credit Derivatives

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

At September 30, 2014, there were five variable-rate to fixed-rate interest rate swap transactions between the third-party financial institution and our customers with a notional amount of $19.2 million, and remaining maturities ranging from five to eight years.  At December 31, 2013, there were five variable-rate to fixed-rate interest swap transactions between the third-party financial institution and our customers with a notional amount of $19.5 million, and remaining maturities ranging from six to nine years.  The fair value of the swaps to the customers was an asset of $534,000 and $969,000 as of September 30, 2014 and December 31, 2013, respectively, and all swaps were in receiving positions from the third-party financial institution at September 30, 2014.  As of September 30, 2014 and December 31, 2013, the fair value of the Company’s interest rate swap credit derivatives was a liability of $4,000 and $3,000, respectively.  During the three months ended September 30, 2014 and 2013, the Company recognized (expense) income of ($1,000) and $1,000, respectively, from interest rate swap credit derivatives. During the nine months ended September 30, 2014 and 2013, the Company recognized (expense) income of ($2,000) and $7,000, respectively, from interest rate swap credit derivatives.

At September 30, 2014, there were fourteen foreign currency swap transactions between the third-party financial institution and our customers with a notional amount aggregating approximately $1.9 million, and remaining maturities ranging from one to eight months.  The aggregate fair value of these swaps to the customers was a liability of $155,000 as of September 30, 2014.  At September 30, 2014, the fair value of the Company’s credit derivatives was $10,000.  At December 31, 2013, there were seven foreign currency swap transactions between the third-party financial institution and our customers with a notional amount of $517,000 and remaining maturities ranging from one to eleven months.  The aggregate fair value of these swaps to the customers was $0 as of December 31, 2013. At December 31, 2013, the fair value of the Company's credit derivative was a liability of $1,000. During the three months ended September 30, 2014 and 2013, the Company recognized income of $2,000 and $0, respectively, from foreign currency swap credit derivatives. During the nine months ended September 30, 2014 and 2013, the Company recognized income of $4,000 and $2,000, respectively, from foreign currency swap credit derivatives.

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

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MORTGAGE SERVICING ACTIVITY

9 Months Ended

Sep. 30, 2014

MORTGAGE SERVICING ACTIVITY

MORTGAGE SERVICING ACTIVITY

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 $24.2 million, $27.7 million and $28.5 million at September 30, 2014, December 31, 2013 and September 30, 2013, respectively.  The Company received fees, net of amortization, from the servicing of loans of $18,000 and ($4,000) during the nine months ended September 30, 2014 and 2013, respectively.

The following table summarizes mortgage servicing rights activity for the nine months ended September 30, 2014 and 2013.

	Servicing Rights			Valuation Allowance			Net Carrying Value
	(In thousands, Unaudited)
Balance at December 31, 2013	$	255		$	(103	)	$	152
Reductions	—			6			6
Amortization	(32		)	—			(32		)
Balance at September 30, 2014	$	223		$	(97	)	$	126
Balance at December 31, 2012	$	325		$	(155	)	$	170
Reductions	—			50			50
Amortization	(63		)	—			(63		)
Balance at September 30, 2013	$	262		$	(105	)	$	157

At September 30, 2014, December 31, 2013 and September 30, 2013, the fair value of the mortgage servicing rights (“MSRs”) was $126,000, $152,000 and $157,000, 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 and current interest rates.  The discount rate used to determine the present value of future net servicing income 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.

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BORROWINGS

9 Months Ended

Sep. 30, 2014

BORROWINGS

BORROWINGS

BORROWINGS

FHLB Advances

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

Maturity Date	Amount		Coupon Rate		Call Date	Rate if Called
	(In thousands, Unaudited)
December 2014	$	15,000	0.43	%	Not Applicable	Not Applicable
March 2015	10,000		0.49		Not Applicable	Not Applicable
April 2015	10,000		0.45		Not Applicable	Not Applicable
August 2015	10,000		0.68		Not Applicable	Not Applicable
March 2016	10,000		0.60		Not Applicable	Not Applicable
March 2016	10,000		0.62		Not Applicable	Not Applicable
September 2016	5,000		0.75		Not Applicable	Not Applicable
September 2016	10,000		1.04		Not Applicable	Not Applicable
June 2017	5,000		0.94		Not Applicable	Not Applicable
November 2017	15,000		3.62		November 2014	LIBOR + 0.10%
November 2017	15,000		3.87		November 2014	LIBOR + 0.10%
December 2017	20,000		2.83		December 2014	LIBOR + 0.11%
	$	135,000	1.65	%

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

The Bank had a maximum borrowing capacity with the FHLB of Pittsburgh of approximately $411.8 million at September 30, 2014.  As of September 30, 2014, the Bank had qualifying collateral pledged against its advances consisting of loans in the amount of $468.6 million and securities in the amount of $77.8 million. Additionally, as of September 30, 2014, the Bank had a maximum borrowing capacity of $61.1 million with the Federal Reserve Bank of Philadelphia through the Discount Window. This borrowing capacity was generated by pledged securities with a fair value of $61.2 million.

As a member of the FHLB of Pittsburgh, the Bank is required to acquire and hold shares of capital stock in the FHLB of Pittsburgh in an amount equal to at least 4.00% of its advances plus 0.35% of the Bank’s “eligible assets,” as such term is defined by the FHLB; and a maximum amount of 6.00% of its advances plus 1.00% of the Bank’s “eligible assets.”  As of September 30, 2014, the Company had a minimum stock obligation of $8.9 million and a maximum stock obligation of $15.1 million.  The Company held $11.2 million in FHLB stock at that date.

Other Borrowed Funds

Other borrowed funds obtained from large commercial banks under security repurchase agreements totaled $30.0 million at September 30, 2014.  These borrowings contractually mature with dates ranging from September 2018 through November 2018. As disclosed in the table below, one of the borrowings may be called by the lender based on the underlying agreement.  Accordingly, the contractual maturity below may differ from actual maturity.

NOTE 7 - BORROWINGS (CONTINUED)

					Next Call Date	Subsequent Call Frequency
Maturity Date	Amount		Coupon Rate
	(In thousands, Unaudited)
September 2018	$	10,000	3.40	%	Not Applicable	Not Applicable
September 2018	5,000		3.20		Not Applicable	Not Applicable
October 2018	5,000		3.15		October 2014	Quarterly
October 2018	5,000		3.27		Not Applicable	Not Applicable
November 2018	5,000		3.37		Not Applicable	Not Applicable
	$	30,000	3.30	%

Mortgage backed securities with a fair value of $34.0 million at September 30, 2014 were used to secure these other borrowed funds.

Short-term Borrowings

Short-term borrowings consist of overnight borrowings plus term borrowings with an original maturity less than one year. Short-term borrowings are obtained from commercial banks, participants in the Federal Funds market and the FHLB. As of September 30, 2014, the Company had $60.0 million of short-term borrowings consisting of $45.0 million of overnight borrowings and $15.0 million of short-term borrowings with weighted average rates of 0.31% and 0.33%, respectively.  As of December 31, 2013, the Company had $80.5 million of short term borrowings consisting solely of overnight borrowings with a weighted average rate of 0.32%.

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LOANS (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013	Dec. 31, 2012
LOANS
Total loans	$ 721,593	$ 732,261
Deferred loan origination cost, net	(274)	(242)
Allowance for loan losses	(11,099)	(11,529)	(11,128)	(11,170)
Net loans	710,220	720,490
Real estate loans:
LOANS
Total loans	562,024	541,770
One- to four-family
LOANS
Total loans	112,227	127,501
Allowance for loan losses	(220)	(403)	(423)	(642)
Multi-family and commercial
LOANS
Total loans	418,456	408,365
Allowance for loan losses	(6,975)	(7,141)	(7,132)	(6,327)
Construction
LOANS
Total loans	31,341	5,904
Allowance for loan losses	(608)	(324)	(386)	(873)
Consumer
LOANS
Total loans	19,456	22,478
Allowance for loan losses	(159)	(153)	(182)	(232)
Commercial and industrial
LOANS
Total loans	140,113	168,013
Allowance for loan losses	$ (2,655)	$ (3,051)	$ (2,585)	$ (2,630)

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INVESTMENT AND MORTGAGE RELATED SECURITIES (Tables)

9 Months Ended

Sep. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Schedule of amortized cost and fair value of securities available-for-sale and held-to-maturity

The amortized cost and fair value of securities available-for-sale and held-to-maturity as of September 30, 2014 and December 31, 2013 are summarized as follows: 

	September 30, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands, Unaudited)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	300	$	4	$	—		$	304
Corporate securities	8,077		52		—			8,129
	8,377		56		—			8,433
Private label commercial mortgage related securities	—		—		—			—
Agency residential mortgage related securities	129,937		2,418		(1,546		)	130,809
Total mortgage related securities	129,937		2,418		(1,546		)	130,809
Total available-for-sale securities	$	138,314	$	2,474	$	(1,546	)	$	139,242
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	165,006	$	714	$	(1,993	)	$	163,727
Total mortgage related securities	165,006		714		(1,993		)	163,727
Total held-to-maturity securities	$	165,006	$	714	$	(1,993	)	$	163,727
	December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	300	$	8	$	—		$	308
Corporate securities	10,145		54		(18		)	10,181
	10,445		62		(18		)	10,489
Private label commercial mortgage related securities	2,118		2		—			2,120
Agency residential mortgage related securities	250,851		2,655		(9,558		)	243,948
Total mortgage related securities	252,969		2,657		(9,558		)	246,068
Total available-for-sale securities	$	263,414	$	2,719	$	(9,576	)	$	256,557
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	68,397	$	514	$	(1,420	)	$	67,491
Total mortgage related securities	68,397		514		(1,420		)	67,491
Total held-to-maturity securities	$	68,397	$	514	$	(1,420	)	$	67,491

Schedule of 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

The following tables show gross unrealized losses and fair value of securities, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2014 and December 31, 2013.

	September 30, 2014
	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands, Unaudited)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	—	$	—		$	—	$	—		$	—	$	—
Corporate securities	—		—			—		—			—		—
	—		—			—		—			—		—
Private label commercial mortgage related securities	—		—			—		—			—		—
Agency residential mortgage related securities	6,714		(20		)	87,700		(1,526		)	94,414		(1,546		)
Total mortgage related securities	6,714		(20		)	87,700		(1,526		)	94,414		(1,546		)
Total available-for-sale securities	$	6,714	$	(20	)	$	87,700	$	(1,526	)	$	94,414	$	(1,546	)
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	61,446	$	(574	)	$	71,624	$	(1,419	)	$	133,070	$	(1,993	)
Total mortgage related securities	61,446		(574		)	71,624		(1,419		)	133,070		(1,993		)
Total held-to-maturity securities	$	61,446	$	(574	)	$	71,624	$	(1,419	)	$	133,070	$	(1,993	)
Total temporarily impaired securities	$	68,160	$	(594	)	$	159,324	$	(2,945	)	$	227,484	$	(3,539	)
	December 31, 2013
	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	—	$	—		$	—	$	—		$	—	$	—
Corporate securities	—		—			2,982		(18		)	2,982		(18		)
	—		—			2,982		(18		)	2,982		(18		)
Private label commercial mortgage related securities	—		—			—		—			—		—
Agency residential mortgage related securities	180,448		(7,251		)	24,841		(2,307		)	205,289		(9,558		)
Total mortgage related securities	180,448		(7,251		)	24,841		(2,307		)	205,289		(9,558		)
Total available-for-sale securities	$	180,448	$	(7,251	)	$	27,823	$	(2,325	)	$	208,271	$	(9,576	)
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	40,615	$	(1,420	)	$	—	$	—		$	40,615	$	(1,420	)
Total mortgage related securities	40,615		(1,420		)	—		—			40,615		(1,420		)
Total held-to-maturity securities	$	40,615	$	(1,420	)	$	—	$	—		$	40,615	$	(1,420	)
Total temporarily impaired securities	$	221,063	$	(8,671	)	$	27,823	$	(2,325	)	$	248,886	$	(10,996	)

Schedule of amortized cost of held-to-maturity investments

At September 30, 2014, the amortized cost of held-to-maturity investments consisted of the following (in thousands):

	Original Cost		Unrealized Loss at Transfer			Post-transfer Accretion		Amortized Cost
Transferred securities	$	97,469	$	(1,625	)	$	16	$	95,860
Other held-to-maturity securities	69,146		—			—		69,146
Total	$	166,615	$	(1,625	)	$	16	$	165,006

Schedule of amortized cost and estimated fair value of investment securities available-for-sale and held-to-maturity by contractual maturity

The amortized cost and estimated fair value of investment securities available-for-sale and held-to-maturity at September 30, 2014 and December 31, 2013 by contractual maturity are as follows:

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
September 30, 2014 (Unaudited)
Due in one year or less	$	5,819	$	5,845	$	—	$	—
Due after one year through five years	2,558		2,588		—		—
Due after five years through ten years	—		—		—		—
Due after ten years	—		—		—		—
Total mortgage related securities	129,937		130,809		165,006		163,727
	$	138,314	$	139,242	$	165,006	$	163,727
December 31, 2013
Due in one year or less	$	1,999	$	2,000	$	—	$	—
Due after one year through five years	8,446		8,489		—		—
Due after five years through ten years	—		—		—		—
Due after ten years	—		—		—		—
Total mortgage related securities	252,969		246,068		68,397		67,491
	$	263,414	$	256,557	$	68,397	$	67,491

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STOCK BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of stock option activity and related information

The following is a summary of the Bancorp’s stock option activity and related information for the nine months ended September 30, 2014. 

	Number of Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
	(Unaudited)
Outstanding at December 31, 2013	1,123,408		$	12.81	6.2 years	$	5,013,000
Granted	36,300		16.97
Exercised	(35,388	)	11.07
Forfeited/Cancelled	(23,100	)	15.52
Outstanding at September 30, 2014	1,101,220		$	12.95	5.5 years	$	3,895,000
Exercisable at September 30, 2014	733,648		$	11.73	4.3 years	$	3,395,000

Schedule of assumptions to determine the fair value of the options

The fair value of the options granted during the nine months ended September 30, 2014 was estimated to be $3.66.  The fair value was based on the following assumptions:

Expected Dividend Yield				3.53	%
Expected Volatility	30.85	%	-	31.04	%
Risk-Free Interest Rate	1.86	%	-	1.90	%
Expected Option Life in Years				6.5

Summary of unvested options and changes during the period

The following is a summary of the Bancorp’s unvested options as of September 30, 2014 and the changes therein during the nine months then ended. 

	Number of Stock Options		Weighted Average Grant Date Fair Value
	(Unaudited)
Unvested at December 31, 2013	475,524		$	3.85
Granted	36,300		3.66
Vested	(124,152	)	3.66
Forfeited / Cancelled	(20,100	)	3.91
Unvested at September 30, 2014	367,572		$	3.90

Summary of the status of the Company's restricted stock activity and balances

The following is a summary of the status of the Bancorp’s restricted stock as of September 30, 2014 and changes therein during the nine months then ended.

	Number of Restricted Shares		Weighted Average Grant Date Fair Value
	(Unaudited)
Unvested at December 31, 2013	225,932		$	14.98
Granted	17,215		15.84
Vested	(47,276	)	13.78
Forfeited / Cancelled	(8,650	)	15.32
Unvested at September 30, 2014	187,221		$	15.34

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FAIR VALUE (Details 3) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Roll forward of financial instruments which fair value is determined using Significant Other Unobservable Inputs (Level 3)
Liabilities transferred between the three levels of the fair value hierarchy	$ 0	$ 0
Assets transferred between the three levels of the fair value hierarchy	0	0
Significant Other Unobservable Inputs (Level 3)
Roll forward of financial instruments which fair value is determined using Significant Other Unobservable Inputs (Level 3)
Beginning balance	(6,589,000)	(12,705,000)
Purchases/ additions	(12,000)	1,994,000
Sales	(1,938,000)	0
Payments (received) made	(2,200,000)	(3,206,000)
Premium amortization, net	0	(3,000)
Increase/(decrease) in value	6,000	(4,672,000)
Ending balance	(2,445,000)	(6,818,000)
Significant Other Unobservable Inputs (Level 3) | Private label commercial mortgage related securities
Roll forward of financial instruments which fair value is determined using Significant Other Unobservable Inputs (Level 3)
Beginning balance	(2,120,000)	(6,197,000)
Purchases/ additions	0	0
Sales	0	0
Payments (received) made	(2,118,000)	(3,959,000)
Premium amortization, net	0	(3,000)
Increase/(decrease) in value	(2,000)	(69,000)
Ending balance	0	(2,166,000)
Significant Other Unobservable Inputs (Level 3) | Derivatives contracts
Roll forward of financial instruments which fair value is determined using Significant Other Unobservable Inputs (Level 3)
Beginning balance	(4,000)	(12,000)
Purchases/ additions	(12,000)	0
Sales	0	0
Payments (received) made	0	0
Premium amortization, net	0	0
Increase/(decrease) in value	2,000	7,000
Ending balance	(14,000)	(5,000)
Significant Other Unobservable Inputs (Level 3) | Financial assets acquired from debtors
Roll forward of financial instruments which fair value is determined using Significant Other Unobservable Inputs (Level 3)
Beginning balance	(1,938,000)	(3,714,000)
Purchases/ additions	0	1,994,000
Sales	(1,938,000)	0
Payments (received) made	0	830,000
Premium amortization, net	0	0
Increase/(decrease) in value	0	(4,480,000)
Ending balance	0	(2,058,000)
Significant Other Unobservable Inputs (Level 3) | Loans
Roll forward of financial instruments which fair value is determined using Significant Other Unobservable Inputs (Level 3)
Beginning balance	(2,535,000)	(2,806,000)
Purchases/ additions	0	0
Sales	0	0
Payments (received) made	(82,000)	(77,000)
Premium amortization, net	0	0
Increase/(decrease) in value	6,000	(130,000)
Ending balance	$ (2,459,000)	$ (2,599,000)

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DERIVATIVES AND HEDGING (Details) (USD $) In Thousands, unless otherwise specified	0 Months Ended			0 Months Ended	3 Months Ended		9 Months Ended			3 Months Ended		9 Months Ended		12 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Nov. 03, 2006 Interest rate swap maturing in April 2022	Sep. 30, 2014 Interest rate swap maturing in April 2022	Dec. 31, 2013 Interest rate swap maturing in April 2022	Oct. 12, 2011 Interest rate swap maturing in October 2021	Sep. 30, 2014 Interest rate swap maturing in October 2021	Sep. 30, 2013 Interest rate swap maturing in October 2021	Sep. 30, 2014 Interest rate swap maturing in October 2021	Sep. 30, 2013 Interest rate swap maturing in October 2021	Dec. 31, 2013 Interest rate swap maturing in October 2021	Sep. 30, 2014 Credit Derivatives (Interest Rate Swap Underlyings) transaction	Sep. 30, 2013 Credit Derivatives (Interest Rate Swap Underlyings)	Sep. 30, 2014 Credit Derivatives (Interest Rate Swap Underlyings) transaction	Sep. 30, 2013 Credit Derivatives (Interest Rate Swap Underlyings)	Dec. 31, 2013 Credit Derivatives (Interest Rate Swap Underlyings) transaction	Sep. 30, 2014 Credit Derivatives (Foreign Currency Swap Underlyings) transaction	Sep. 30, 2013 Credit Derivatives (Foreign Currency Swap Underlyings)	Sep. 30, 2014 Credit Derivatives (Foreign Currency Swap Underlyings) transaction	Sep. 30, 2013 Credit Derivatives (Foreign Currency Swap Underlyings)	Dec. 31, 2013 Credit Derivatives (Foreign Currency Swap Underlyings) transaction
Derivative
Derivative, Notional Amount		$ 819			$ 1,500		$ 1,500
Fixed rate loan term	15 years			10 years
Interest rate on loans receivable	7.43%			5.83%
Fixed interest rate to be paid under hedge (as a percent)	7.43%			5.83%
Variable interest rate basis	one-month LIBOR			one-month LIBOR
Fair value loss position on interest rate swap derivative		116	132		(22)		(22)		12
Gain (Loss) on Fair Value Hedge Ineffectiveness, Net					(2)	1	(12)	15
Number of derivative transactions										5		5		5	14		14		7
Notional amount of credit swap derivative (protection sold)										19,200		19,200		19,500	1,900		1,900		517
Remaining maturity period, minimum												5 years		6 years			1 month		1 month
Remaining maturity period, maximum												8 years		9 years			8 months		11 months
Fair value of swap asset (liability)										534		534		969	155		155		0
Recognized income										(1)	1	(2)	7		2	0	4	2
Margin added to derivative interest rate (as a percent)	2.24%			3.50%
Derivative liability										$ 4		$ 4		$ 3	$ 10		$ 10		$ 1

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Consolidated Statements of Operations (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Statement [Abstract]
Accumulated other comprehensive income reclassification for unrealized holdings gains	$ 0	$ 0	$ 0	$ 532
Income tax expense from reclassification items	$ 0	$ 0	$ 0	$ 186

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PRINCIPLES OF CONSOLIDATION AND PRESENTATION

9 Months Ended

Sep. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

PRINCIPLES OF CONSOLIDATION AND PRESENTATION

PRINCIPLES OF CONSOLIDATION AND PRESENTATION

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

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

The Bancorp and the Bank (collectively referred to as the "Company") provide a wide variety of financial products and services to individuals and businesses through the Bank’s ten branches in Philadelphia, Richboro, Willow Grove, Warminster, Lahaska, Hatboro, and West Chester, Pennsylvania, and Ocean City, Marmora and Egg Harbor Township, New Jersey.  The operations of the Company are managed as a single business segment.  The Bank also owns approximately 45% of Philadelphia Mortgage Advisors ("PMA"), a mortgage banker located in Plymouth Meeting, Pennsylvania and Ocean City, New Jersey.

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

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

The Company follows accounting principles and reporting practices that are in compliance with U.S. generally accepted accounting principles (“GAAP”).  The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclose contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  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, the evaluation of other-than-temporary impairment and the valuation of investment securities and the valuation of assets acquired through foreclosure.

These interim financial statements do not contain all necessary disclosures required by GAAP for complete financial statements and therefore should be read in conjunction with the audited financial statements and the notes thereto included in Fox Chase Bancorp, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the Securities and Exchange Commission on March 7, 2014.  These financial statements include all normal and recurring adjustments which management believes were necessary in order to conform to GAAP.  The results for the nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014 or any other period.

NOTE 1 - PRINCIPLES OF CONSOLIDATION AND PRESENTATION (CONTINUED)

Per Share Information

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

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

	Three Months Ended   September 30,						Nine Months Ended   September 30,
	2014			2013			2014			2013
	(Unaudited)
Net income	$	1,816,000		$	1,173,000		$	6,087,000		$	4,044,000
Weighted-average common shares outstanding (1)	12,075,448			12,143,880			12,110,185			12,217,289
Average common stock acquired by stock benefit plans:
ESOP shares unallocated	(513,441		)	(578,494		)	(529,544		)	(594,597		)
Shares purchased by trust	(274,123		)	(317,645		)	(289,261		)	(327,849		)
Weighted-average common shares used to calculate basic earnings per share	11,287,884			11,247,741			11,291,380			11,294,843
Dilutive effect of:
Restricted stock awards	42,294			43,087			50,477			34,586
Stock option awards	193,739			203,692			199,215			193,932
Weighted-average common shares used to calculate diluted earnings per share	11,523,917			11,494,520			11,541,072			11,523,361
Earnings per share - basic	$	0.16		$	0.10		$	0.54		$	0.36
Earnings per share - diluted	$	0.16		$	0.10		$	0.53		$	0.35
Outstanding common stock equivalents having no dilutive effect	1,052,408			1,102,810			1,038,749			1,121,071
(1) Excludes treasury stock.

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FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Fair value of financial instruments

The estimated fair values of the Company’s financial instruments at September 30, 2014 and December 31, 2013 were as follows: 

		September 30, 2014				December 31, 2013
	Fair Value Hierarchy Level	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
		(In thousands)
Financial assets:		(Unaudited)
Cash and cash equivalents	Level 1	$	7,727	$	7,727	$	11,947	$	11,947
Available-for-sale securities:
Investment securities available-for-sale	Level 2	8,433		8,433		10,489		10,489
Private label commercial mortgage related securities	Level 3	—		—		2,120		2,120
Agency residential mortgage related securities	Level 2	130,809		130,809		243,948		243,948
Held-to-maturity securities:
Agency mortgage related securities	Level 2	165,006		163,727		68,397		67,491
Loans receivable, net	Level 3	710,220		713,357		720,490		721,417
FHLB stock	Level 3	11,152		11,152		9,813		9,813
Accrued interest receivable	Level 2, 3	3,159		3,159		3,308		3,308
Mortgage servicing rights	Level 3	126		126		152		152
Financial assets acquired from debtors	Level 3	—		—		1,938		1,938
Financial liabilities:
Savings and club accounts	Level 2	112,821		112,821		108,183		108,183
Demand, NOW and money market deposits	Level 2	292,873		292,873		270,334		270,334
Brokered deposits	Level 2	64,280		63,958		71,334		71,020
Certificates of deposit	Level 2	193,754		193,974		223,864		225,357
Short-term borrowings	Level 2	60,000		60,001		80,500		80,500
FHLB advances	Level 2	135,000		138,292		150,000		154,069
Other borrowed funds	Level 2	30,000		31,922		30,000		32,178
Accrued interest payable	Level 2	314		314		314		314
Derivative contracts	Level 2, 3	152		152		124		124

Schedule of fair value measurements on a recurring basis

The following measures were made on a recurring basis as of September 30, 2014 and December 31, 2013.

				Fair Value Measurements at Reporting Date Using
				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Other Unobservable Inputs
	As of
Description	September 30, 2014			(Level 1)		(Level 2)			(Level 3)
	(In thousands, Unaudited)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	304		$	—	$	304		$	—
Corporate securities	8,129			—		8,129			—
Agency residential mortgage related securities	130,809			—		130,809			—
Loans (1)	2,459			—		—			2,459
Derivative contracts (1)	(152		)	—		(138		)	(14		)
				Fair Value Measurements at Reporting Date Using
				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Other Unobservable Inputs
	As of
Description	December 31, 2013			(Level 1)		(Level 2)			(Level 3)
	(In thousands)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	308		$	—	$	308		$	—
Corporate securities	10,181			—		10,181			—
Private label commercial mortgage related securities	2,120			—		—			2,120
Agency residential mortgage related securities	243,948			—		243,948			—
Loans(1)	2,535			—		—			2,535
Financial assets acquired from debtors	1,938			—		—			1,938
Derivative contracts (1)	(124		)	—		(120		)	(4		)

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

Schedule of fair value measurements on a non-recurring basis

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
	Balance		(Level 1)		(Level 2)		(Level 3)
September 30, 2014 (Unaudited)			(In thousands)
Loans	$	240	$	—	$	—	$	240
Mortgage servicing rights	126		—		—		126
Other real estate owned	1,889		—		—		1,889
Total	$	2,255	$	—	$	—	$	2,255
December 31, 2013
Loans	$	912	$	—	$	—	$	912
Mortgage servicing rights	152		—		—		152
Other real estate owned	4,314		—		—		4,314
Total	$	5,378	$	—	$	—	$	5,378

Rollforward of Level 3 Fair Value Financial Instruments

The following tables include a roll forward of the financial instruments which fair value is determined on a recurring basis using Significant Other Unobservable Inputs (Level 3) for the periods from December 31, 2013 to September 30, 2014 and December 31, 2012 to September 30, 2013. 

Nine Months Ended September 30, 2014
		Private Label Commercial Mortgage Related Securities			Derivative Contracts			Financial Assets Acquired from Debtors			Loans			Total
	(In thousands, Unaudited)
Beginning balance, December 31, 2013		$	2,120		$	(4	)	$	1,938		$	2,535		$	6,589
Purchases/additions		—			(12		)	—			—			(12		)
Sales		—			—			(1,938		)	—			(1,938		)
Payments received		(2,118		)	—			—			(82		)	(2,200		)
Premium amortization, net		—			—			—			—			—
(Decrease)/increase in value		(2		)	2			—			6			6
Ending balance, September 30, 2014		$	—		$	(14	)	$	—		$	2,459		$	2,445
Nine Months Ended September 30, 2013
		Private Label Commercial Mortgage Related Securities			Derivative Contracts			Financial Assets Acquired from Debtors			Loans			Total
	(In thousands, Unaudited)
Beginning balance, December 31, 2012		$	6,197		$	(12	)	$	3,714		$	2,806		$	12,705
Purchases/additions		—			—			1,994			—			1,994
Sales		—			—			—			—			—
Payments (received) made		(3,959		)	—			830			(77		)	(3,206		)
Premium amortization, net		(3		)	—			—			—			(3		)
(Decrease)/increase in value		(69		)	7			(4,480		)	(130		)	(4,672		)
Ending balance, September 30, 2013		$	2,166		$	(5	)	$	2,058		$	2,599		$	6,818

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LOANS (Details 5) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013	Dec. 31, 2012
Allowance for loan losses
Nonaccrual Loans, Allowance for Loan Losses	$ 442	$ 1,032
Accruing TDRs, Allowance for Loan Losses	279	688
Other Impaired Loans, Allowance for Loan Loss	395	0
Total Impaired Loans, Allowance for Loan Losses	1,116	1,720
General Allowance for Loan Losses	9,983	9,809
Total	11,099	11,529	11,128	11,170
One- to four-family
Allowance for loan losses
Nonaccrual Loans, Allowance for Loan Losses	2	163
Accruing TDRs, Allowance for Loan Losses	1	1
Other Impaired Loans, Allowance for Loan Loss	0	0
Total Impaired Loans, Allowance for Loan Losses	3	164
General Allowance for Loan Losses	217	239
Total	220	403	423	642
Multi-family and commercial
Allowance for loan losses
Nonaccrual Loans, Allowance for Loan Losses	414	600
Accruing TDRs, Allowance for Loan Losses	204	687
Other Impaired Loans, Allowance for Loan Loss	395	0
Total Impaired Loans, Allowance for Loan Losses	1,013	1,287
General Allowance for Loan Losses	5,962	5,854
Total	6,975	7,141	7,132	6,327
Construction
Allowance for loan losses
Nonaccrual Loans, Allowance for Loan Losses	0	263
Accruing TDRs, Allowance for Loan Losses	74	0
Other Impaired Loans, Allowance for Loan Loss	0	0
Total Impaired Loans, Allowance for Loan Losses	74	263
General Allowance for Loan Losses	534	61
Total	608	324	386	873
Consumer
Allowance for loan losses
Nonaccrual Loans, Allowance for Loan Losses	26	6
Accruing TDRs, Allowance for Loan Losses	0	0
Other Impaired Loans, Allowance for Loan Loss	0	0
Total Impaired Loans, Allowance for Loan Losses	26	6
General Allowance for Loan Losses	133	147
Total	159	153	182	232
Commercial and industrial
Allowance for loan losses
Nonaccrual Loans, Allowance for Loan Losses	0	0
Accruing TDRs, Allowance for Loan Losses	0	0
Other Impaired Loans, Allowance for Loan Loss	0	0
Total Impaired Loans, Allowance for Loan Losses	0	0
General Allowance for Loan Losses	2,655	3,051
Total	2,655	3,051	2,585	2,630
Unallocated
Allowance for loan losses
Nonaccrual Loans, Allowance for Loan Losses	0	0
Accruing TDRs, Allowance for Loan Losses	0	0
Other Impaired Loans, Allowance for Loan Loss	0	0
Total Impaired Loans, Allowance for Loan Losses	0	0
General Allowance for Loan Losses	482	457
Total	$ 482	$ 457	$ 420	$ 466

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PRINCIPLES OF CONSOLIDATION AND PRESENTATION (Tables)

9 Months Ended

Sep. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of the reconciliation of the numerators and denominators of the basic and diluted earnings per share computations

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

	Three Months Ended   September 30,						Nine Months Ended   September 30,
	2014			2013			2014			2013
	(Unaudited)
Net income	$	1,816,000		$	1,173,000		$	6,087,000		$	4,044,000
Weighted-average common shares outstanding (1)	12,075,448			12,143,880			12,110,185			12,217,289
Average common stock acquired by stock benefit plans:
ESOP shares unallocated	(513,441		)	(578,494		)	(529,544		)	(594,597		)
Shares purchased by trust	(274,123		)	(317,645		)	(289,261		)	(327,849		)
Weighted-average common shares used to calculate basic earnings per share	11,287,884			11,247,741			11,291,380			11,294,843
Dilutive effect of:
Restricted stock awards	42,294			43,087			50,477			34,586
Stock option awards	193,739			203,692			199,215			193,932
Weighted-average common shares used to calculate diluted earnings per share	11,523,917			11,494,520			11,541,072			11,523,361
Earnings per share - basic	$	0.16		$	0.10		$	0.54		$	0.36
Earnings per share - diluted	$	0.16		$	0.10		$	0.53		$	0.35
Outstanding common stock equivalents having no dilutive effect	1,052,408			1,102,810			1,038,749			1,121,071
(1) Excludes treasury stock.