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, 2015

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, 2015, there were 11,591,401 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, 2015 (Unaudited) and December 31, 2014	3
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2015 and 2014 (Unaudited)	4
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2015 and 2014 (Unaudited)	5
	Consolidated Statements of Changes in Equity for the Nine Months Ended September 30, 2015 and 2014 (Unaudited)	6
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2015 and 2014 (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	38
Part II. Other Information
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	39
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, 2015			December 31, 2014
		(Unaudited)
ASSETS
	Cash and due from banks	$	322		$	2,763
	Interest-earning demand deposits in other banks	6,889			14,450
	Total cash and cash equivalents	7,211			17,213
	Investment securities available-for-sale	138,756			134,037
	Investment securities held-to-maturity (fair value of $157,665 at September 30, 2015 and $170,854 at December 31, 2014)	156,099			170,172
	Loans, net of allowance for loan losses of $10,623 at September 30, 2015 and $10,730 at December 31, 2014	739,489			724,326
	Federal Home Loan Bank stock, at cost	4,986			6,015
	Bank-owned life insurance	25,471			15,027
	Premises and equipment, net	9,157			9,418
	Assets acquired through foreclosure	2,815			2,814
	Real estate held for investment	1,620			1,620
	Accrued interest receivable	3,174			3,147
	Mortgage servicing rights, net	98			111
	Deferred tax asset, net	4,451			4,561
	Other assets	5,470			6,155
	Total Assets	$	1,098,797		$	1,094,616
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
	Deposits	$	717,702		$	711,909
	Short-term borrowings	60,000			50,000
	Federal Home Loan Bank advances	110,000			120,000
	Other borrowed funds	30,000			30,000
	Advances from borrowers for taxes and insurance	1,025			1,447
	Accrued interest payable	310			311
	Accrued expenses and other liabilities	3,758			5,038
	Total Liabilities	922,795			918,705
STOCKHOLDERS’ EQUITY
	Preferred stock ($.01 par value; 1,000,000 shares authorized, none issued and outstanding at September 30, 2015 and December 31, 2014)	—			—
	Common stock ($.01 par value; 60,000,000 shares authorized, 11,591,401 shares outstanding at September 30, 2015 and 11,802,791 shares outstanding at December 31, 2014)	147			147
	Additional paid-in capital	140,805			139,177
	Treasury stock, at cost (3,141,201 shares at September 30, 2015 and 2,852,572 shares at December 31, 2014)	(44,468		)	(39,698		)
	Common stock acquired by benefit plans	(6,878		)	(8,056		)
	Retained earnings	86,012			84,225
	Accumulated other comprehensive income, net	384			116
	Total Stockholders’ Equity	176,002			175,911
	Total Liabilities and Stockholders’ Equity	$	1,098,797		$	1,094,616

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

4

FOX CHASE BANCORP, INC.

Consolidated Statements of Comprehensive Income

(In Thousands, Unaudited)

		Three Months Ended   September 30,						Nine Months Ended   September 30,
		2015			2014			2015			2014
Net income		$	2,328		$	1,816		$	7,763		$	6,087
Other comprehensive income (loss):
	Unrealized holding gains (losses) on investment securities	675			(320		)	253			6,160
	Tax effect	(230		)	109			(81		)	(2,174		)
	Net of tax amount	445			(211		)	172			3,986
	Accretion of unrealized loss on securities reclassified to held-to-maturity	59			16			151			16
	Tax effect	(21		)	(6		)	(55		)	(6		)
	Net of tax amount	38			10			96			10
Other comprehensive income (loss)		483			(201		)	268			3,996
Comprehensive income		$	2,811		$	1,615		$	8,031		$	10,083

5

FOX CHASE BANCORP, INC.

Consolidated Statements of Changes in Equity

Nine Months Ended September 30, 2015 and 2014

(In Thousands Except Share Data, Unaudited)

	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 (116,600 shares)	—		—			(1,902		)	—			—			—			(1,902		)
Stock based compensation expense	—		894			—			—			—			—			894
ESOP shares allocated to employees	—		353			—			468			—			—			821
Issuance of stock for vested equity awards	—		(651		)	—			589			62			—			—
Common stock issued for exercise of vested stock options	1		391			—			—			—			—			392
Excess tax benefit from exercise of stock options and vesting of restricted stock	—		83			—			—			—			—			83
Dividends paid ($0.48 per share)	—		—			—			—			(5,553		)	—			(5,553		)
Net income	—		—			—			—			6,087			—			6,087
Other comprehensive income	—		—			—			—			—			3,996			3,996
BALANCE - SEPTEMBER 30, 2014	$	147	$	138,663		$	(35,338	)	$	(8,215	)	$	83,481		$	(453	)	$	178,285
	Common Stock		Additional Paid-in Capital			Treasury Stock			Common Stock Acquired by Benefit Plans			Retained Earnings			Accumulated Other Comprehensive Income, net			Total Equity
BALANCE - DECEMBER 31, 2014	$	147	$	139,177		$	(39,698	)	$	(8,056	)	$	84,225		$	116		$	175,911
Purchase of treasury stock (288,629 shares)	—		—			(4,770		)	—			—			—			(4,770		)
Stock based compensation expense	—		1,042			—			—			—			—			1,042
ESOP shares allocated to employees	—		350			—			468			—			—			818
Issuance of stock for vested equity awards	—		(784		)	—			710			74			—			—
Common stock issued for exercise of vested stock options	—		932			—			—			—			—			932
Excess tax benefit from exercise of stock options and vesting of restricted stock	—		88			—			—			—			—			88
Dividends paid ($0.54 per share)	—		—			—			—			(6,050		)	—			(6,050		)
Net income	—		—			—			—			7,763			—			7,763
Other comprehensive income	—		—			—			—			—			268			268
BALANCE - SEPTEMBER 30, 2015	$	147	$	140,805		$	(44,468	)	$	(6,878	)	$	86,012		$	384		$	176,002

6

FOX CHASE BANCORP, INC.

Consolidated Statements of Cash Flows

(In Thousands, Unaudited)

	Nine Months Ended   September 30,
	2015			2014
Cash Flows From Operating Activities
Net income	$	7,763		$	6,087
Adjustments to reconcile net income to net cash provided by operating activities:
(Credit) provision for loan losses	(1,095		)	1,593
Valuation adjustment for assets acquired through foreclosure	137			282
Depreciation	479			533
Net amortization of securities premiums and discounts	1,295			1,430
Deferred income tax (benefit) expense	(25		)	1,992
Stock compensation from benefit plans	1,860			1,715
Net loss on sale of assets acquired through foreclosure	14			136
Income on bank-owned life insurance	(444		)	(358		)
Excess tax benefit from exercise of stock options and vesting of restricted stock	(88		)	(83		)
Decrease in mortgage servicing rights, net	13			26
Decrease in accrued interest receivable and other assets	1,105			303
Decrease in accrued interest payable, accrued expenses and other liabilities	(1,227		)	(737		)
Net Cash Provided by Operating Activities	9,787			12,919
Cash Flows from Investing Activities
Equity investment in unconsolidated entity	90			90
Investment securities - available-for-sale:
Purchases	(28,455		)	(2,830		)
Proceeds from maturities, calls and principal repayments	23,397			28,303
Investment securities - held-to-maturity:
Purchases	(5,823		)	(9,767		)
Proceeds from maturities, calls and principal repayments	19,375			9,665
Net decrease in loans	14,165			16,876
Purchases of loans and loan participations	(29,083		)	(9,371		)
Net decrease (increase) in Federal Home Loan Bank stock	1,029			(1,339		)
Purchase of bank-owned life insurance	(10,000		)	—
Purchases of premises and equipment	(218		)	(261		)
Additions to assets acquired through foreclosure	(83		)	(17		)
Proceeds from sales and payments on assets acquired through foreclosure	246			4,504
Net Cash (Used in) Provided by Investing Activities	(15,360		)	35,853
Cash Flows from Financing Activities
Net increase (decrease) in deposits	5,793			(9,987		)
Decrease in advances from borrowers for taxes and insurance	(422		)	(525		)
Proceeds from Federal Home Loan Bank advances	20,000			—
Principal payments on Federal Home Loan Bank advances	(30,000		)	(15,000		)
Net increase (decrease) in short-term borrowings	10,000			(20,500		)
Excess tax benefit from exercise of stock options and vesting of restricted stock	88			83
Proceeds from exercise of stock options	932			392
Purchase of treasury stock	(4,770		)	(1,902		)
Cash dividends paid	(6,050		)	(5,553		)
Net Cash Used in Financing Activities	(4,429		)	(52,992		)
Net Decrease in Cash and Cash Equivalents	(10,002		)	(4,220		)
Cash and Cash Equivalents – Beginning	17,213			11,947
Cash and Cash Equivalents – Ending	$	7,211		$	7,727
Supplemental Disclosure of Cash Flow Information
Interest paid	$	4,395		$	5,029
Income taxes paid	$	3,035		$	1,460
Transfers of loans to assets acquired through foreclosure	$	315		$	542
Net (recoveries) charge-offs	$	(988	)	$	2,023

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

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

The Bancorp and the Bank (collectively referred to as the "Company") provide a wide variety of financial products and services to individuals and businesses through the Bank’s ten branches in Philadelphia, Richboro, Willow Grove, Warminster, Lahaska, Hatboro, and West Chester, Pennsylvania, and Ocean City, Marmora and Egg Harbor Township, New Jersey.  The operations of the Company are managed as a single business segment.  The Bank also owns 46.15% of Philadelphia Mortgage Advisors ("PMA"), a mortgage banker located 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 sole purpose is to facilitate the Bank’s investment in PMA. 104 S. Oakland Ave., LLC is a New Jersey-chartered limited liability company formed to secure, manage and hold foreclosed real estate.  Davisville Associates, LLC is a Pennsylvania-chartered limited liability company formed to secure, manage and hold foreclosed real estate.  All material inter-company transactions and balances have been eliminated in consolidation.  Prior period amounts are reclassified, when necessary, to conform with the current year’s presentation.

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

These interim financial statements do not contain all necessary disclosures required by GAAP for complete financial statements and therefore should be read in conjunction with the audited financial statements and the notes thereto included in Fox Chase Bancorp, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the Securities and Exchange Commission on March 6, 2015.  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, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015 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.  Average unallocated shares in the ESOP and shares purchased to fund the Bancorp’s equity incentive plans are not included in either basic or diluted earnings per share.

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

	Three Months Ended   September 30,						Nine Months Ended   September 30,
	2015			2014			2015			2014
	(Dollars in thousands except per share data, Unaudited)
Net income	$	2,328		$	1,816		$	7,763		$	6,087
Weighted-average common shares outstanding (1)	11,581,257			12,075,448			11,661,023			12,110,185
Average common stock acquired by stock benefit plans:
ESOP shares unallocated	(448,395		)	(513,441		)	(464,495		)	(529,544		)
Shares purchased by trust	(213,953		)	(274,123		)	(235,200		)	(289,261		)
Weighted-average common shares used to calculate basic earnings per share	10,918,909			11,287,884			10,961,328			11,291,380
Dilutive effect of:
Restricted stock awards	32,370			42,294			40,489			50,477
Stock option awards	196,981			193,739			197,179			199,215
Weighted-average common shares used to calculate diluted earnings per share	11,148,260			11,523,917			11,198,996			11,541,072
Earnings per share - basic	$	0.21		$	0.16		$	0.71		$	0.54
Earnings per share - diluted	$	0.21		$	0.16		$	0.69		$	0.53
Outstanding common stock equivalents which are anti-dilutive	485,060			293,500			485,960			293,500
(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, 2015 and December 31, 2014 are summarized as follows: 

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

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, 2015 and December 31, 2014.

	September 30, 2015
	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:
Corporate securities	12,062		(30		)	—		—			12,062		(30		)
Agency residential mortgage related securities	$	23,424	$	(75	)	$	8,306	$	(73	)	$	31,730	$	(148	)
Total available-for-sale securities	$	35,486	$	(105	)	$	8,306	$	(73	)	$	43,792	$	(178	)
Held-to-Maturity Securities:
Corporate securities	1,771		(5		)	—		—			1,771		(5		)
Agency residential mortgage related securities	$	7,726	$	(34	)	$	10,258	$	(162	)	$	17,984	$	(196	)
Total held-to-maturity securities	$	9,497	$	(39	)	$	10,258	$	(162	)	$	19,755	$	(201	)
Total temporarily impaired securities	$	44,983	$	(144	)	$	18,564	$	(235	)	$	63,547	$	(379	)
	December 31, 2014
	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:
Agency residential mortgage related securities	$	8,229	$	(15	)	$	64,502	$	(657	)	$	72,731	$	(672	)
Total available-for-sale securities	$	8,229	$	(15	)	$	64,502	$	(657	)	$	72,731	$	(672	)
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	25,660	$	(110	)	$	27,182	$	(453	)	$	52,842	$	(563	)
Total held-to-maturity securities	$	25,660	$	(110	)	$	27,182	$	(453	)	$	52,842	$	(563	)
Total temporarily impaired securities	$	33,889	$	(125	)	$	91,684	$	(1,110	)	$	125,573	$	(1,235	)

During the three and nine month periods ended September 30, 2015 and 2014, no securities were sold. There were no net investment securities gains or losses in the consolidated statement of operations for the three and nine month periods ended September 30, 2015 or 2014.

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

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

11

NOTE 2 - INVESTMENT AND MORTGAGE RELATED SECURITIES (CONTINUED)

At September 30, 2015, 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
Securities transferred from available-for-sale	$	85,784	$	(1,625	)	$	(211	)	$	83,948
Other held-to-maturity securities	72,151		—			—			72,151
Total	$	157,935	$	(1,625	)	$	(211	)	$	156,099

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

The amortized cost and estimated fair value of investment securities available-for-sale and held-to-maturity at September 30, 2015 and December 31, 2014 by contractual maturity are as follows:

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
September 30, 2015(Unaudited)
Due in one year or less	$	2,525	$	2,542	$	—	$	—
Due after one year through five years	15,417		15,408		1,776		1,771
Due after five years through ten years	—		—		—		—
Due after ten years	—		—		—		—
Total mortgage related securities	118,807		120,806		154,323		155,894
	$	136,749	$	138,756	$	156,099	$	157,665
December 31, 2014
Due in one year or less	$	5,803	$	5,818	$	—	$	—
Due after one year through five years	2,550		2,570		—		—
Due after five years through ten years	—		—		—		—
Due after ten years	—		—		—		—
Total mortgage related securities	123,929		125,649		170,172		170,854
	$	132,282	$	134,037	$	170,172	$	170,854

Securities with a fair value of $40.6 million and $37.0 million at September 30, 2015 and December 31, 2014, respectively, were pledged to secure public deposits.

Securities with a fair value of $165.8 million and $169.7 million at September 30, 2015 and December 31, 2014, respectively, were used to secure FHLB advances, short-term borrowings, other borrowed funds and related unused borrowing capacities.  See Note 6.

Securities with a fair value of $931,000 and $1.1 million at September 30, 2015 and December 31, 2014, respectively, were used to secure derivative transactions. See Note 4.

12

NOTE 3 - LOANS

The composition of net loans at September 30, 2015 and December 31, 2014 is provided below:

	September 30, 2015			December 31, 2014
	(In thousands)
	(Unaudited)
Real estate loans:
One- to four-family	$	95,682		$	108,208
Multi-family and commercial	404,007			388,821
Construction	39,693			39,541
	539,382			536,570
Consumer loans	15,550			19,599
Commercial and industrial loans	195,427			179,181
Total loans	750,359			735,350
Deferred loan origination fees, net	(247		)	(294		)
Allowance for loan losses	(10,623		)	(10,730		)
Net loans	$	739,489		$	724,326

The following tables present changes in the allowance for loan losses by loan segment for the nine months ended September 30, 2015 and the nine months ended September 30, 2014.

	Nine Months Ended September 30, 2015
	One- to Four-Family			Multi-family and Commercial			Construction			Consumer			Commercial and Industrial			Unallocated		Total
	(In thousands, Unaudited)
Balance, beginning	$	405		$	5,990		$	1,038		$	184		$	2,753		$	360	$	10,730
Provision (credit) for loan losses	144			107			(664		)	(825		)	37			106		(1,095		)
Loans charged off	(174		)	(16		)	—			—			—			—		(190		)
Recoveries	—			63			295			815			5			—		1,178
Balance, ending	$	375		$	6,144		$	669		$	174		$	2,795		$	466	$	10,623
	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

13

NOTE 3 - LOANS (CONTINUED)

The following tables provide details of loans, and associated allowance for loan losses, which are individually or collectively evaluated for impairment as of September 30, 2015 and December 31, 2014.

	As of September 30, 2015
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Unallocated		Total
	(In thousands, Unaudited)
Allowance for Loan Losses:
Balance, ending: individually evaluated for impairment	$	3	$	537	$	126	$	38	$	54	$	—	$	758
Balance, ending: collectively evaluated for impairment	372		5,607		543		136		2,741		466		9,865
Total	$	375	$	6,144	$	669	$	174	$	2,795	$	466	$	10,623
Total Loans:
Balance, ending: individually evaluated for impairment	$	2,411	$	7,139	$	3,393	$	122	$	730	$	—	$	13,795
Balance, ending: collectively evaluated for impairment	93,271		396,868		36,300		15,428		194,697		—		736,564
Total	$	95,682	$	404,007	$	39,693	$	15,550	$	195,427	$	—	$	750,359
	As of December 31, 2014
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Unallocated		Total
	(In thousands)
Allowance for Loan Losses:
Balance, ending: individually evaluated for impairment	$	11	$	401	$	114	$	26	$	—	$	—	$	552
Balance, ending: collectively evaluated for impairment	394		5,589		924		158		2,753		360		10,178
Total	$	405	$	5,990	$	1,038	$	184	$	2,753	$	360	$	10,730
Total Loans:
Balance, ending: individually evaluated for impairment	$	2,629	$	5,849	$	2,723	$	256	$	75	$	—	$	11,532
Balance, ending: collectively evaluated for impairment	105,579		382,972		36,818		19,343		179,106		—		723,818
Total	$	108,208	$	388,821	$	39,541	$	19,599	$	179,181	$	—	$	735,350

14

NOTE 3 - LOANS (CONTINUED)

The following tables set forth the breakdown of impaired loans by loan segment as of September 30, 2015 and December 31, 2014.

September 30, 2015
	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	$	1,530	$	881	$	—	$	2,411	$	210	$	2,201
Multi-family and commercial	1,076		1,685		4,378		7,139		6,368		771
Construction	—		3,393		—		3,393		3,393		—
Consumer loans	110		12		—		122		46		76
Commercial and industrial	730		—		—		730		730		—
Total	$	3,446	$	5,971	$	4,378	$	13,795	$	10,747	$	3,048
December 31, 2014
	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	$	1,741	$	888	$	—	$	2,629	$	137	$	2,492
Multi-family and commercial	1,395		—		4,454		5,849		4,502		1,347
Construction	—		2,723		—		2,723		2,723		—
Consumer loans	243		13		—		256		82		174
Commercial and industrial	75		—		—		75		—		75
Total	$	3,454	$	3,624	$	4,454	$	11,532	$	7,444	$	4,088

There were no loans past due 90 days or more and still accruing interest at September 30, 2015 or December 31, 2014.

For the nine months ended September 30, 2015 and 2014, the average recorded investment in impaired loans was $13.9 million and $13.5 million, respectively.  The interest income recognized on these impaired loans was $631,000 and $384,000 for the nine months ended September 30, 2015 and 2014, respectively.

At September 30, 2015, two troubled debt restructurings ("TDRs") totaling $1.1 million are excluded from the accruing TDR column above as they are included in nonaccrual loans.  Of this amount, $1.0 million relates to one multi-family and commercial real estate loan and $93,000 relates to one residential loan.

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

15

NOTE 3 - LOANS (CONTINUED)

The following tables set forth the allowance for loan loss for impaired loans and general allowance by loan segment as of September 30, 2015 and December 31, 2014.

September 30, 2015	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	$	3	$	—	$	—	$	3	$	372	$	375
Multi-family and commercial	113		45		379		537		5,607		6,144
Construction	—		126		—		126		543		669
Consumer loans	38		—		—		38		136		174
Commercial and industrial	54		—		—		54		2,741		2,795
Unallocated	—		—		—		—		466		466
Total allowance for loan losses	$	208	$	171	$	379	$	758	$	9,865	$	10,623
December 31, 2014	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	$	11	$	—	$	—	$	11	$	394	$	405
Multi-family and commercial	10		—		391		401		5,589		5,990
Construction	—		114		—		114		924		1,038
Consumer loans	26		—		—		26		158		184
Commercial and industrial	—		—		—		—		2,753		2,753
Unallocated	—		—		—		—		360		360
Total allowance for loan losses	$	47	$	114	$	391	$	552	$	10,178	$	10,730

16

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, delayed repayment or extension, and/or principal forgiveness.

The following table sets forth a summary of the TDR activity for the three and nine month periods ended September 30, 2015 and 2014. 

	Three Months Ended September 30, 2015						Nine Months Ended September 30, 2015
	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	—	$	—	$	—		—	$	—	$	—
Multi-family and commercial	—	—		—			1	914		914		Delayed Repayment
Construction	—	—		—			—	—		—
Consumer loans	—	—		—			—	—		—
Commercial and industrial	—	—		—			1	771		771		Delayed Repayment
Total	—	$	—	$	—		2	$	1,685	$	1,685
	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 reduction
Multi-family and commercial	—	—		—			1	1,640		1,540		Principal reduction
Construction	—	—		—			—	—		—
Consumer loans	—	—		—			—	—		—
Commercial and industrial	—	—		—			—	—		—
Total	—	$	—	$	—		2	$	1,885	$	1,785

During the three and nine months ended September 30, 2015 and 2014, no TDRs defaulted that were restructured in the prior twelve months.

At September 30, 2015, the recorded investment of residential and consumer mortgage loans secured by residential real estate properties, for which formal foreclosure proceedings are in process, totaled $365,000.  At September 30, 2015, there were five foreclosed residential real estate properties, which were carried at $315,000.

17

NOTE 3 - LOANS (CONTINUED)

The following table sets forth past due loans by segment as of September 30, 2015 and December 31, 2014.

	September 30, 2015				December 31, 2014
	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	$	122	$	15	$	—	$	145
Multi-family and commercial real estate	350		92		—		—
Construction	—		—		—		—
Consumer	69		72		113		—
Commercial and industrial	—		—		—		—
Total	$	541	$	179	$	113	$	145

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, 2015 and December 31, 2014. 

	September 30, 2015
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Total
	(In thousands, Unaudited)
Pass and Pass watch	$	94,152	$	388,682	$	36,276	$	15,440	$	191,080	$	725,630
Special mention	—		13,898		—		—		2,498		16,396
Substandard	1,530		1,427		3,417		110		1,849		8,333
Doubtful	—		—		—		—		—		—
Total loans	$	95,682	$	404,007	$	39,693	$	15,550	$	195,427	$	750,359
	December 31, 2014
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Total
	(In thousands)
Pass and Pass watch	$	106,467	$	376,134	$	36,229	$	19,357	$	174,143	$	712,330
Special mention	—		8,406		2,723		—		3,012		14,141
Substandard	1,741		4,281		589		242		2,026		8,879
Doubtful	—		—		—		—		—		—
Total loans	$	108,208	$	388,821	$	39,541	$	19,599	$	179,181	$	735,350

18

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 $735,000, which is used to hedge a 15-year fixed rate loan that is earning interest at 7.43%.  The Company is receiving variable rate payments of 1-month LIBOR plus 224 basis points and is paying fixed rate payments of 7.43%.  The swap matures in April 2022 and had a fair value loss position of $107,000 and $116,000 at September 30, 2015 and December 31, 2014, respectively.  The interest rate swap is carried at fair value in accordance with FASB ASC 815 "Derivatives and Hedging."  The loan is carried at fair value under the fair value option as permitted by FASB ASC 825 "Financial Instruments."

On October 12, 2011, the Company entered into an interest rate swap with a current notional amount of $1.5 million, which is used to hedge a 10-year fixed rate loan that is earning interest at 5.83%.  The Company is receiving variable rate payments of 1-month LIBOR plus 350 basis points and is paying fixed rate payments of 5.83%.  The Company designated this relationship as a fair value hedge.  The swap matures in October 2021 and had a fair value loss position of $77,000 and $46,000 at September 30, 2015 and December 31, 2014, respectively.  The difference between changes in the fair values of the interest rate swap agreement and the hedged loan represents hedge ineffectiveness and is recorded in other non-interest income in the consolidated statements of operations. Hedge ineffectiveness resulted in expense of $3,000 and $2,000 for the three months ended September 30, 2015 and September 30, 2014, respectively.  Hedge ineffectiveness resulted in expense of $2,000 and $12,000 for the nine months ended September 30, 2015 and September 30, 2014, respectively.

Credit Derivatives

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

At September 30, 2015, there were four variable-rate to fixed-rate interest rate swap transactions between the third-party financial institution and our customers with a notional amount of $12.3 million, and remaining maturities ranging from four to seven years.  At December 31, 2014, there were four variable-rate to fixed-rate interest swap transactions between the third-party financial institution and our customers with a notional amount of $12.6 million, and remaining maturities ranging from five to eight years.  The fair value of the swaps to the customers was a (liability) asset of ($195,000) and $91,000 as of September 30, 2015 and December 31, 2014, respectively, and all swaps were in paying positions to the third-party financial institution at September 30, 2015.  As of September 30, 2015 and December 31, 2014, the fair value of the Company’s interest rate swap credit derivatives was a liability of $8,000 and $10,000, respectively.  During the three months ended September 30, 2015 and 2014, the Company recognized expense of $3,000 and $1,000, respectively, from interest rate swap credit derivatives. During the nine months ended September 30, 2015 and 2014, the Company recognized income (expense) of $3,000 and ($2,000), respectively, from interest rate swap credit derivatives.

At September 30, 2015, there were four foreign currency swap transactions between the third-party financial institution and our customers with a notional amount of $1.2 million, and remaining maturities ranging from one to three months.  At December 31, 2014, there were six foreign currency swap transactions between the third-party financial institution and our customers with a notional amount of $366,000 and remaining maturities ranging from one to four months.  The aggregate fair value of these swaps to the customers was a liability of $4,000 and $44,000 as of September 30, 2015 and December 31, 2014, respectively. At September 30, 2015 and December 31, 2014, the fair value of the Company’s credit derivatives was a liability of $2,000. During the three months ended September 30, 2015 and 2014, the Company recognized income of $1,000 and $2,000, respectively, from foreign currency swap credit derivatives. During the nine months ended September 30, 2015 and 2014, the Company recognized income of $3,000 and $4,000, respectively, from foreign currency swap credit derivatives.

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

19

NOTE 5 - DEPOSITS

Deposits and their respective weighted average interest rate at September 30, 2015 and December 31, 2014 consist of the following: 

	September 30, 2015				December 31, 2014
	Weighted Average Interest Rate		Amount		Weighted Average Interest Rate		Amount
	(Dollars in thousands)
	(Unaudited)
Noninterest-bearing demand accounts	—	%	$	137,382	—	%	$	168,791
NOW accounts	0.21		89,018		0.21		82,417
Money market accounts	0.22		79,057		0.22		73,802
Savings and club accounts	0.38		128,973		0.37		129,893
Brokered deposits	0.76		78,460		0.73		70,817
Certificates of deposit	0.83		204,812		0.87		186,189
	0.44	%	$	717,702	0.42	%	$	711,909

NOTE 6 - BORROWINGS

FHLB Advances

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

Maturity Date	Amount		Coupon Rate		Call Date	Rate if Called
	(In thousands, Unaudited)
March 2016	10,000		0.60	%	Not Applicable	Not Applicable
March 2016	10,000		0.62		Not Applicable	Not Applicable
September 2016	5,000		0.75		Not Applicable	Not Applicable
September 2016	10,000		1.04		Not Applicable	Not Applicable
June 2017	5,000		0.94		Not Applicable	Not Applicable
July 2017	10,000		0.92		Not Applicable	Not Applicable
November 2017	15,000		3.62		November 2015	3-month LIBOR + 0.10%
November 2017	15,000		3.87		November 2015	3-month LIBOR + 0.10%
December 2017	20,000		2.83		December 2015	3-month LIBOR + 0.11%
July 2018	10,000		1.32		Not Applicable	Not Applicable
	$	110,000	2.02	%

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

The Bank had a maximum borrowing capacity with the FHLB of Pittsburgh of approximately $470.4 million at September 30, 2015.  As of September 30, 2015, the Bank had qualifying collateral pledged against its advances consisting of loans in the amount of $587.4 million and securities in the amount of $68.8 million. Additionally, as of September 30, 2015, the Bank had a maximum borrowing capacity of $61.4 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 $62.3 million.

As a member of the FHLB of Pittsburgh, the Bank is required to acquire and hold shares of FHLB of Pittsburgh capital stock. The FHLB stock holding requirement is based on a percentage of the Bank's borrowings and a percentage of the Bank's "eligible assets" as defined by the FHLB. Percentages of borrowings and "eligible assets" used to determine the stock holding requirement are set by the FHLB from a defined range. Maximum percentages are 6.00% of its advances plus 1.00% of the Bank’s "eligible assets." Minimum percentages are 2.00% of its advances plus 0.05% of "eligible assets."  Current percentages are 4.00% of advances plus 0.10% of "eligible assets."  As of September 30, 2015, the Company had a minimum stock obligation of $2.5 million and a maximum stock obligation of $12.5 million.  The Company held $5.0 million in FHLB stock at that date.

20

NOTE 6 - BORROWINGS (CONTINUED)

Other Borrowed Funds

Other borrowed funds obtained from other commercial banks under security repurchase agreements totaled $30.0 million at September 30, 2015.  These borrowings contractually mature with dates ranging from October 2018 through November 2020. As disclosed in the table below, one of the borrowings may be called by the lender based on the underlying agreement.  Accordingly, the contractual maturity below may differ from actual maturity.

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

Mortgage backed securities with a fair value of $34.7 million at September 30, 2015 were used to secure these other borrowed funds. Changes in the fair value of pledged collateral may require the Company to pledge additional securities.

Short-term Borrowings

Short-term borrowings consist of overnight borrowings plus term borrowings with an original maturity of less than one year. Short-term borrowings are obtained from commercial banks, participants in the Federal Funds market and the FHLB. As of September 30, 2015, the Company had $60.0 million of short-term overnight borrowings with a weighted average rate of 0.36%.  As of December 31, 2014, the Company had $50.0 million of short-term borrowings consisting of $35.0 million of overnight borrowings and $15.0 million of short-term borrowings with weighted average rates of 0.31% and 0.33%, respectively.

NOTE 7 - STOCK BASED COMPENSATION

During the nine months ended September 30, 2015, the Company recorded $1.0 million of stock based compensation expense comprised of stock option expense of $348,000 and restricted stock expense of $694,000. This compares to $894,000 of stock based compensation expense for the nine months ended September 30, 2014 comprised of stock option expense of $328,000 and restricted stock expense of $566,000.

The following is a summary of the Bancorp’s stock option activity and related information for the nine months ended September 30, 2015.

	Number of Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
	(Unaudited)
Outstanding at December 31, 2014	1,100,520		$	12.96	5.3 years	$	4,172,000
Granted	130,500		16.99
Exercised	(77,239	)	12.08
Forfeited/Cancelled	(19,800	)	15.35
Outstanding at September 30, 2015	1,133,981		$	13.44	5.2 years	$	4,441,000
Exercisable at September 30, 2015	765,479		$	12.13	3.8 years	$	4,006,000

21

NOTE 7 - STOCK BASED COMPENSATION (CONTINUED)

The fair value of the options granted during the nine months ended September 30, 2015 was estimated to be $2.24 - $3.24.  The fair value was based on the following assumptions:

Expected Dividend Yield				4.00	%
Expected Volatility	22.45	%	-	29.86	%
Risk-Free Interest Rate	1.65	%	-	1.74	%
Expected Option Life in Years				6.5

The following is a summary of the Bancorp’s unvested options as of September 30, 2015 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, 2014	369,503		$	3.90
Granted	130,500		3.21
Vested	(111,701	)	3.82
Forfeited / Cancelled	(19,800	)	3.84
Unvested at September 30, 2015	368,502		$	3.68

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

The following is a summary of the status of the Bancorp’s restricted stock as of September 30, 2015 and changes therein during the nine months then ended.

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

Expected future compensation expense relating to the 177,503 restricted shares at September 30, 2015 is $2.2 million over a weighted average period of 2.9 years. 

Performance-based restricted shares granted in 2012 and 2013, as discussed in the following paragraph, 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, actual and growth rate, compared to peer group and (2) earnings per share growth rate compared to peer group ("performance criteria"). Each performance metric has a 50% weight. On the third anniversary of the grant date ("measurement date"), the Company's level of performance relative to the performance 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 is variable and 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.

22

NOTE 7 - STOCK BASED COMPENSATION (CONTINUED)

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

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

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

NOTE 8 - FAIR VALUE

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

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

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

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

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

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities.  Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.  The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments at September 30, 2015 and December 31, 2014:

Cash and Cash Equivalents

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

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

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

23

NOTE 8 - FAIR VALUE (CONTINUED)

Loans Receivable, Net

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

FHLB Stock

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

Mortgage Servicing Rights

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

Accrued Interest Receivable and Accrued Interest Payable

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

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.

24

NOTE 8 - FAIR VALUE (CONTINUED)

The estimated fair values of the Company’s financial instruments at September 30, 2015 and December 31, 2014 were as follows: 

		September 30, 2015				December 31, 2014
	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	$	7,211	$	7,211	$	17,213	$	17,213
Investment securities available-for-sale	Level 2	138,756		138,756		134,037		134,037
Investment securities held-to-maturity	Level 2	156,099		157,665		170,172		170,854
Loans receivable, net	Level 3	739,489		744,058		724,326		732,142
FHLB stock	NA	4,986		NA		6,015		NA
Accrued interest receivable	Level 2, 3	3,174		3,174		3,147		3,147
Mortgage servicing rights	Level 3	98		98		111		111
Financial liabilities:
Savings and club accounts	Level 2	128,973		128,973		129,893		129,893
Demand, NOW and money market deposits	Level 2	305,457		305,457		325,010		325,010
Brokered deposits	Level 2	78,460		78,497		70,817		70,600
Certificates of deposit	Level 2	204,812		204,955		186,189		186,154
Short-term borrowings	Level 2	60,000		60,000		50,000		50,000
FHLB advances	Level 2	110,000		112,794		120,000		123,189
Other borrowed funds	Level 2	30,000		31,918		30,000		32,017
Accrued interest payable	Level 2	310		310		311		311
Derivative contracts	Level 2, 3	193		193		174		174

The following financial instruments were classified as Level 3 and carried at fair value on a recurring basis as of September 30, 2015:

• 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 $172,000 at September 30, 2015 compared to $152,000 at December 31, 2014.

• Credit derivatives are valued based on creditworthiness of the underlying borrower which is a significant unobservable input.  The liability resulting from credit derivatives was $10,000 and $12,000 at September 30, 2015 and December 31, 2014, respectively.

25

NOTE 8 - FAIR VALUE (CONTINUED)

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

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

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

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

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

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

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

26

NOTE 8 - FAIR VALUE (CONTINUED)

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

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, 2014 to September 30, 2015 and December 31, 2013 to September 30, 2014. 

Nine Months Ended September 30, 2015
		Private Label Commercial Mortgage Related Securities			Derivative Contracts			Financial Assets Acquired from Debtors			Loans			Total
	(In thousands, Unaudited)
Beginning balance, December 31, 2014		$	—		$	(12	)	$	—		$	2,451		$	2,439
Purchases/additions		—			(2		)	—			—			(2		)
Sales		—			—			—			—			—
Payments received		—			—			—			(89		)	(89		)
Premium amortization, net		—			—			—			—			—
Increase (decrease) in value		—			4			—			19			23
Ending balance, September 30, 2015		$	—		$	(10	)	$	—		$	2,381		$	2,371
Nine Months Ended September 30, 2014
		Private 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

There were no transfers made between levels during the nine months ended September 30, 2015 or 2014.

27

NOTE 9 – NEW ACCOUNTING PRONOUNCEMENTS

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

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

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

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

Forward-Looking Statements

This quarterly report contains forward-looking statements that are based on assumptions and may describe future plans, strategies and expectations of the Company.  These forward-looking statements are generally identified by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project" or similar expressions.  The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain.  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, 2014, as filed with the Securities and Exchange Commission on March 6, 2015, 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 described in the Company's most recent Annual Report on Form 10-K. 

Comparison of Financial Condition at September 30, 2015 and December 31, 2014

Total assets were $1.10 billion and $1.09 billion at September 30, 2015 and December 31, 2014, respectively.  Total loans were $739.5 million at September 30, 2015, an increase of $15.2 million, or 2.1%, from $724.3 million at December 31, 2014.  Total commercial loans increased $31.6 million, or 5.2%, primarily comprised of increases of $16.2 million in commercial and industrial loans and $15.2 million in multi-family and commercial real estate loans. The increase in multi-family and commercial real estate loans was driven by originations and fundings exceeding amortization and paydowns. The increase in commercial and industrial loans was driven by originations, fundings and purchases of syndicated loans exceeding amortization and paydowns. During the nine months ended September 30, 2015, one- to four-family residential mortgage loans decreased $12.5 million and consumer loans decreased $4.0 million due to normal amortization exceeding new loans originated.

Investment securities available-for-sale increased $4.7 million from $134.0 million at December 31, 2014 to $138.8 million at September 30, 2015 due to purchases, including corporate bonds of $15.1 million, exceeding paydowns and maturities during the nine months ended September 30, 2015. Investment securities held-to-maturity decreased $14.1 million to $156.1 million at September 30, 2015 compared to $170.2 million at December 31, 2014 due to paydowns exceeding purchases during the nine months ended September 30, 2015.

Deposits increased $5.8 million, or 0.8%, from $711.9 million at December 31, 2014 to $717.7 million at September 30, 2015.  During the nine months ended September 30, 2015, non-brokered certificates of deposit increased $18.6 million, brokered deposits increased $7.6 million, NOW accounts increased $6.6 million and money market accounts increased $5.3 million. Offsetting these increases were decreases in noninterest-bearing demand accounts of $31.4 million and savings and club accounts of $920,000. The increases in non-brokered certificates of deposit and money market accounts and were primarily due to deposits obtained from certain municipal customers. The increase in brokered deposits reflects 2015 originations exceeding maturities. The decrease in noninterest-bearing demand accounts was driven by seasonality within our commercial deposit portfolio.

Short-term borrowings increased $10.0 million, or 20.0%, from $50.0 million at December 31, 2014 to $60.0 million at September 30, 2015. Federal Home Loan Bank advances decreased $10.0 million, or 8.3%, from $120.0 million at December 31, 2014 to $110.0 million at September 30, 2015.

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

29

Comparison of Operating Results for the Three and Nine Months Ended September 30, 2015 and 2014

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

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

Net Interest Income.  Net interest income decreased $117,000, or 1.4%, to $8.4 million for the three months ended September 30, 2015 compared to $8.5 million for the same period in 2014, due to a decrease in total interest income of $247,000, offset by a decrease in total interest expense of $130,000. The decrease in total interest income was primarily due to a reduction in yield on interest-earning assets from 3.85% to 3.79% and a $7.7 milliondecrease in the average balance of interest-earning assets. The yield on total loans decreased from 4.56% to 4.45%, primarily due to lower yields on commercial loan originations. The yield on investment securities decreased from 2.21% to 2.18%, primarily due to new purchases having lower yields in comparison to existing securities which continue to amortize. The decrease in the average balance of interest-earning assets was primarily due to a decrease in investment securities of $17.8 million, offset by a $5.5 millionincrease in total loans.  The decrease in total interest expense was primarily due to a $37.9 milliondecrease in the average balance of interest-bearing liabilities from $780.8 million to $743.0 million and a decrease in the cost of interest-bearing liabilities from 0.83% to 0.80%.  The decrease in the average balance of interest-bearing liabilities was primarily driven by a $57.8 milliondecrease in borrowings, offset by a $20.0 millionincrease in the average balance of interest-bearing deposits and a $44.6 millionincrease in noninterest-bearing deposits. The decrease in the average cost of interest-bearing liabilities was primarily due to a decrease in the average cost of certificates of deposit from 0.95% to 0.78%, offset by increased cost of borrowings from 1.52% to 1.76%.  The decrease in the average cost of certificates of deposit reflects the continued low interest rate environment combined with maturities of higher rate certificates of deposit. The increase in the average cost of borrowings was due to the maturity of certain shorter-term borrowings, which had lower costs, offset by the benefits realized from the the modification of four non-callable fixed rate borrowings totaling $25.0 million during the three months ended March 31, 2015. Prior to the modification, the borrowings had a weighted average fixed rate of 3.33%. Subsequent to the modification, the borrowings have a weighted average variable rate of 1-month LIBOR plus 1.79%.

Net interest income increased $466,000, or 1.8%, to $25.7 million for the nine months ended September 30, 2015 compared to $25.3 million for the same period in 2014, due to a decrease in total interest expense of $635,000, offset by a decrease in total interest income of $169,000. The decrease in total interest expense was primarily due to a $43.3 milliondecrease in the average balance of interest-bearing liabilities from $783.8 million to $740.5 million and a decrease in the cost of interest-bearing liabilities from 0.86% to 0.79%.  The decrease in the average balance of interest-bearing liabilities was primarily driven by a $49.4 milliondecrease in the average balance of borrowings. This decrease was offset by a $52.2 millionincrease in the average balance of noninterest-bearing deposits. The decrease in the average cost of interest-bearing liabilities was due to a decrease in the average cost of certificates of deposit from 1.08% to 0.78%, offset by an increase in the cost of borrowings from 1.55% to 1.71%.  The decrease in the average cost of certificates of deposit reflects the continued low interest rate environment combined with maturities of higher rate certificates of deposit. The increase in the average cost of borrowings was primarily due to the maturity of certain shorter-term borrowings, which had lower costs, offset by the benefits realized from the modification of four non-callable fixed rate borrowings totaling $25.0 million during the three months ended March 31, 2015. Prior to the modification, the borrowings had a weighted average fixed rate of 3.33%. Subsequent to the modification, the borrowings have a weighted average variable rate of 1-month LIBOR plus 1.79%. The decrease in total interest income was primarily due to a decrease in yield on interest-earning assets from 3.87% to 3.83%, offset by a $5.3 millionincrease in the average balance of interest-earning assets. The yield on total loans decreased from 4.57% to 4.46%, primarily due to lower yields on commercial loan originations. The yield on investment securities increased from 2.29% to 2.31% due to a special dividend totaling $254,000 from the FHLB during the first quarter of 2015, offset by new purchases having lower yields in comparison to existing securities. The increase in the average balance of interest-earning assets was primarily due to a $22.7 millionincrease in total loans, offset by a decrease in investment securities of $21.9 million. 

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

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

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

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

	September 30, 2015			December 31, 2014
	(Dollars in thousands)
Nonaccruing Loans:
One- to four-family real estate	$	1,530		$	1,741
Multi-family and commercial real estate	1,076			1,395
Construction	—			—
Consumer	110			243
Commercial and industrial	730			75
Total	3,446			3,454
Accruing Loans Past Due 90 Days or More:
Total	$	—		$	—
Nonperforming Loans	3,446			3,454
Assets Acquired Through Foreclosure	2,815			2,814
Total Nonperforming Assets	$	6,261		$	6,268
Total nonperforming loans to total loans	0.46		%	0.47		%
Total nonperforming assets to total assets	0.57			0.57
Impaired Loans:
Nonaccruing loans	$	3,446		$	3,454
Accruing troubled debt restructurings	5,971			3,624
Other impaired loans	4,378			4,454
Total impaired loans	$	13,795		$	11,532

At September 30, 2015, nonperforming assets were comprised of the following: 

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

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

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

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

• Assets acquired through foreclosure consisting of seven properties with a total carrying value of $2.8 million.

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

	Three Months Ended September 30,					$			%		Nine Months Ended September 30,						$		%
	2015		2014			Change			Change		2015			2014			Change		Change
	(Dollars in thousands)										(Dollars in thousands)
Service charges and other fee income	$	377	$	416		$	(39	)	(9.4	)%	$	1,200		$	1,192		$	8	0.7	%
Net gain (loss) on sale of assets acquired through foreclosure	1		(15		)	16			106.7		(14		)	(136		)	122		89.7
Income on bank-owned life insurance	202		121			81			66.9		444			358			86		24.0
Equity in earnings of affiliate	74		91			(17		)	(18.7	)	225			125			100		80.0
Other	67		29			38			131.0		133			76			57		75.0
Total Noninterest Income	$	721	$	642		$	79		12.3	%	$	1,988		$	1,615		$	373	23.1	%

Noninterest income increased $79,000 from $642,000 for the three months ended September 30, 2014 to $721,000 for the same period in 2015. Income on bank-owned life insurance increased $81,000 due to the purchase of policies totaling $10.0 million during the quarter ended September 30, 2015. Other noninterest income increased $38,000 primarily due to increased revenue from our cash management product line. Service charges and other fee income decreased $39,000 primarily due to decreases in loan-related fees of $33,000.

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

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

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

Noninterest expense increased $860,000 from $5.2 million for the three months ended September 30, 2014 to $6.1 million for the same period in 2015. The primary reason for this increase was the Company incurred $502,000 of one-time noninterest expenses during the three months ended September 30, 2015 related to its change in outsourced data processing systems. Salaries, benefits and other compensation expense increased $326,000 primarily as a result of annual merit increases, increased staffing costs and incremental compensation costs related to our change in our outsourced data processing systems. Data processing costs increased $292,000 and professional fees increased $99,000 primarily due to this initiative. Assets acquired through foreclosure expense increased $121,000 primarily due to valuation adjustments of $117,000 in 2015.

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

34

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

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

Liquidity and Capital Management

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

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

			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, 2015
Operating lease obligations (1)	$	145	$	145	$	—	$	—	$	—
FHLB advances and other borrowings (2)	207,098		97,856		78,661		25,572		5,009
Other long-term obligations (3)	10,414		1,734		3,310		2,774		2,596
Total	$	217,657	$	99,735	$	81,971	$	28,346	$	7,605

(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 providers and other vendors including obligations related to our change in outsourced data processing systems, which occurred in October 2015.

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

Our most liquid assets are cash and cash equivalents.  The levels of these assets depend on our operating, financing, lending and investing activities during any given period.  At September 30, 2015, cash and cash equivalents totaled $7.2 million.  Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $138.8 million at September 30, 2015.  In addition, at September 30, 2015, we had the ability to borrow a total of approximately $470.4 million from the FHLB, of which we had $110.0 million outstanding.  As of September 30, 2015, the Bank also had a maximum borrowing capacity of $61.4 million with the Federal Reserve Bank of Philadelphia, through the Discount Window.  Additionally, as of September 30, 2015, 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.

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

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

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

The Bancorp is a separate entity apart from the Bank and must provide for its own liquidity.  As of September 30, 2015, the Bancorp had $20.1 million in cash and cash equivalents compared to $20.3 million as of December 31, 2014. In addition to its operating expenses, the Bancorp may utilize its cash to pay dividends or to repurchase common stock, subject to applicable restrictions.  The Bancorp paid cash dividends totaling $0.54 per outstanding share of common stock and repurchased 288,629 shares of common stock during the nine months ended September 30, 2015. 

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

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

36

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, 2015 and December 31, 2014.

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

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

Off-Balance Sheet Arrangements

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

For the nine-month period ended September 30, 2015, 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, 2015, there was not any material change to the market risk disclosure contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

37

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, 2015 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.

Item 1A.  Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014, which could materially affect our business, financial condition or future results. As of September 30, 2015, 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

(a) Not applicable.

(b) Not applicable.

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

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, 2015 through July 31, 2015	2,500	$	16.93	2,500	834,172
August 1, 2015 through August 31, 2015	17,000	$	17.10	17,000	817,172
September 1, 2015 through September 30, 2015	—	$	—	—	817,172
Total	19,500	$	17.08	19,500

(1) In prior years, the Company announced repurchase programs under which it would repurchase, in the aggregate, up to 25% of the then-outstanding shares of the Company’s common stock from time to time, depending on market conditions.  On July 29, 2015, the Board of Directors approved an additional stock repurchase plan (the “July 2015 Plan”) under which it would repurchase up to 5% of the then-outstanding shares of the Company’s common stock (578,377 shares). Subject to market conditions and other factors, repurchases under the July 2015 Plan will begin subsequent to the completion of repurchases under the Company's existing repurchase plan. Under these plans, through September 30, 2015, the Company has purchased 3.1 million shares at a cost of $44.5 million. 

38

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, 2015, 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.

39

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 3, 2015	By:	/s/ Thomas M. Petro
			Thomas M. Petro
			President and Chief Executive Officer
			(principal executive officer)
Dated:	November 3, 2015	By:	/s/ Roger S. Deacon
			Roger S. Deacon
			Chief Financial Officer
			(principal financial officer)

40

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 3, 2015	/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 3, 2015	/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, 2015, 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 3, 2015
By:	/s/ Roger S. Deacon
	Roger S. Deacon
	Chief Financial Officer
	November 3, 2015

XML

LOANS (Past Due Loans by Segment) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
30-59 Days Past Due
Past due loans
Past due loans	$ 541	$ 113
30-59 Days Past Due | One- to four-family
Past due loans
Past due loans	122	0
30-59 Days Past Due | Multi-family and commercial
Past due loans
Past due loans	350	0
30-59 Days Past Due | Construction
Past due loans
Past due loans	0	0
30-59 Days Past Due | Consumer
Past due loans
Past due loans	69	113
30-59 Days Past Due | Commercial and industrial
Past due loans
Past due loans	0	0
60-89 Days Past Due
Past due loans
Past due loans	179	145
60-89 Days Past Due | One- to four-family
Past due loans
Past due loans	15	145
60-89 Days Past Due | Multi-family and commercial
Past due loans
Past due loans	92	0
60-89 Days Past Due | Construction
Past due loans
Past due loans	0	0
60-89 Days Past Due | Consumer
Past due loans
Past due loans	72	0
60-89 Days Past Due | Commercial and industrial
Past due loans
Past due loans	$ 0	$ 0

XML

FAIR VALUE (Estimated Fair Values of Financial Instruments) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Dec. 31, 2013
Financial assets:
Cash and cash equivalents	$ 7,211	$ 17,213	$ 7,727	$ 11,947
Investment securities available-for-sale	138,756	134,037
Investment securities held-to-maturity	157,665	170,854
FHLB stock	4,986	6,015
Accrued interest receivable	3,174	3,147
Mortgage servicing rights	98	111
Financial liabilities:
Savings and club accounts	128,973	129,893
Carrying Amount
Financial assets:
FHLB stock	4,986	6,015
Carrying Amount | Level 1
Financial assets:
Cash and cash equivalents	7,211	17,213
Carrying Amount | Level 2
Financial assets:
Investment securities available-for-sale	138,756	134,037
Investment securities held-to-maturity	156,099	170,172
Financial liabilities:
Savings and club accounts	128,973	129,893
Demand, NOW and money market deposits	305,457	325,010
Brokered deposits	78,460	70,817
Certificates of deposit	204,812	186,189
Short-term borrowings	60,000	50,000
FHLB advances	110,000	120,000
Other borrowed funds	30,000	30,000
Accrued interest payable	310	311
Carrying Amount | Level 3
Financial assets:
Loans receivable, net	739,489	724,326
Mortgage servicing rights	98	111
Carrying Amount | Level 2, 3
Financial assets:
Accrued interest receivable	3,174	3,147
Financial liabilities:
Derivative contracts	193	174
Estimated Fair Value | Level 1
Financial assets:
Cash and cash equivalents	7,211	17,213
Estimated Fair Value | Level 2
Financial assets:
Investment securities available-for-sale	138,756	134,037
Investment securities held-to-maturity	157,665	170,854
Financial liabilities:
Savings and club accounts	128,973	129,893
Demand, NOW and money market deposits	305,457	325,010
Brokered deposits	78,497	70,600
Certificates of deposit	204,955	186,154
Short-term borrowings	60,000	50,000
FHLB advances	112,794	123,189
Other borrowed funds	31,918	32,017
Accrued interest payable	310	311
Estimated Fair Value | Level 3
Financial assets:
Loans receivable, net	744,058	732,142
Mortgage servicing rights	98	111
Estimated Fair Value | Level 2, 3
Financial assets:
Accrued interest receivable	3,174	3,147
Financial liabilities:
Derivative contracts	$ 193	$ 174

XML

STOCK BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	9 Months Ended		12 Months Ended
	May. 31, 2015	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014	Dec. 31, 2013
STOCK BASED COMPENSATION
Stock based compensation expense		$ 1,000	$ 894
Stock options
STOCK BASED COMPENSATION
Stock based compensation expense		$ 348	328
Number of Stock Options
Outstanding at the beginning of the period (in shares)		1,100,520
Granted (in shares)		130,500
Exercised (in shares)		(77,239)
Forfeited / Cancelled (in shares)		(19,800)
Outstanding at the end of the period (in shares)		1,133,981		1,100,520
Exercisable at the end of the period (in shares)		765,479
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)		$ 12.96
Granted (in dollars per share)		16.99
Exercised (in dollars per share)		12.08
Forfeited / Cancelled (in dollars per share)		15.35
Outstanding at the end of the period (in dollars per share)		13.44		$ 12.96
Exercisable at the end of the period (in dollars per share)		$ 12.13
Weighted Average Remaining Contractual Life
Outstanding at the beginning of the period		5 years 2 months		5 years 3 months
Outstanding at the end of the period		5 years 2 months		5 years 3 months
Exercisable at the end of the period		3 years 9 months
Aggregate Intrinsic Value
Outstanding at the beginning of the period		$ 4,172
Outstanding at the end of the period		4,441		$ 4,172
Exercisable at the end of the period		$ 4,006
Assumptions used to determine fair value of options granted
Expected dividend yield (as a percent)		4.00%
Expected option life		6 years 6 months
Number of Stock Options, Unvested
Unvested at the beginning of the period (in shares)		369,503
Granted (in shares)		130,500
Vested (in shares)		(111,701)
Forfeited / Cancelled (in shares)		(19,800)
Unvested at the end of the period (in shares)		368,502		369,503
Weighted Average Grant Date Fair Value, Unvested
Unvested at the beginning of the period (in dollars per share)		$ 3.90
Granted (in dollars per share)		3.21
Vested (in dollars per share)		3.82
Forfeited / Cancelled (in dollars per share)		3.84
Unvested at the end of the period (in dollars per share)		$ 3.68		$ 3.90
Compensation cost not yet recognized
Expected future compensation expense, non-vested options		$ 1,100
Weighted average period		3 years
Stock options | Minimum
Assumptions used to determine fair value of options granted
Expected volatility (as a percent)		22.45%
Risk-free interest rate (as a percent)		1.65%
Weighted Average Grant Date Fair Value, Unvested
Granted (in dollars per share)		$ 2.24
Stock options | Maximum
Assumptions used to determine fair value of options granted
Expected volatility (as a percent)		29.86%
Risk-free interest rate (as a percent)		1.74%
Weighted Average Grant Date Fair Value, Unvested
Granted (in dollars per share)		$ 3.24
Restricted stock
STOCK BASED COMPENSATION
Stock based compensation expense		$ 694	$ 566
Compensation cost not yet recognized
Expected future compensation expense, restricted shares		$ 2,200
Weighted average period		2 years 11 months
Number of Restricted Shares
Unvested at the beginning of the period (in shares)		188,622
Granted (in shares)		51,755
Vested (in shares)		(55,724)
Forfeited / Cancelled (in shares)		(7,150)
Unvested at the end of the period (in shares)		177,503		188,622
Weighted Average Grant Date Fair Value
Unvested at the beginning of the period (in dollars per share)		$ 15.36
Granted (in dollars per share)		16.31
Vested (in dollars per share)		14.07
Forfeited / Cancelled (in dollars per share)		15.51
Unvested at the end of the period (in dollars per share)		$ 16.03		$ 15.36
Performance based restricted stock
Weighted Average Grant Date Fair Value
Granted (in dollars per share)	$ 13.11
Award vesting period		5 years
Metric weight percentage		50.00%
Additional shares granted	9,055
Percent of target shares	142.00%
Performance based restricted stock | Minimum
Weighted Average Grant Date Fair Value
Award vesting rights, percentage		0.00%
Performance based restricted stock | Maximum
Weighted Average Grant Date Fair Value
Award vesting rights, percentage		150.00%
Performance based restricted stock | Executive Officer
Number of Restricted Shares
Granted (in shares)	30,555	8,840			39,250
Unvested at the end of the period (in shares)		21,500
50% Vest at Year Three | Performance based restricted stock
Weighted Average Grant Date Fair Value
Award vesting rights, percentage		50.00%
25% Vest at Year Four | Performance based restricted stock
Weighted Average Grant Date Fair Value
Award vesting rights, percentage		25.00%
50% Vest at Measurement Date | Performance based restricted stock
Weighted Average Grant Date Fair Value
Award vesting rights, percentage		50.00%
50% Vest at Year Four | Performance based restricted stock
Weighted Average Grant Date Fair Value
Award vesting rights, percentage		50.00%
25% Vest At Year Five | Performance based restricted stock
Weighted Average Grant Date Fair Value
Award vesting rights, percentage		25.00%

XML

LOANS (Allowance for Loan Losses by Loan Segment) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Changes in allowance for loan losses
Balance, beginning	$ 10,730	$ 11,529
Provision (credit) for loan losses	(1,095)	1,593
Loans charged off	(190)	(2,097)
Recoveries	1,178	74
Balance, ending	10,623	11,099
One- to four-family
Changes in allowance for loan losses
Balance, beginning	405	403
Provision (credit) for loan losses	144	(209)
Loans charged off	(174)	(3)
Recoveries	0	29
Balance, ending	375	220
Multi-family and commercial
Changes in allowance for loan losses
Balance, beginning	5,990	7,141
Provision (credit) for loan losses	107	(76)
Loans charged off	(16)	(102)
Recoveries	63	12
Balance, ending	6,144	6,975
Construction
Changes in allowance for loan losses
Balance, beginning	1,038	324
Provision (credit) for loan losses	(664)	284
Loans charged off	0	0
Recoveries	295	0
Balance, ending	669	608
Consumer
Changes in allowance for loan losses
Balance, beginning	184	153
Provision (credit) for loan losses	(825)	(21)
Loans charged off	0	(6)
Recoveries	815	33
Balance, ending	174	159
Commercial and industrial
Changes in allowance for loan losses
Balance, beginning	2,753	3,051
Provision (credit) for loan losses	37	1,590
Loans charged off	0	(1,986)
Recoveries	5	0
Balance, ending	2,795	2,655
Unallocated
Changes in allowance for loan losses
Balance, beginning	360	457
Provision (credit) for loan losses	106	25
Loans charged off	0	0
Recoveries	0	0
Balance, ending	$ 466	$ 482

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PRINCIPLES OF CONSOLIDATION AND PRESENTATION (Details)	9 Months Ended
	Sep. 30, 2015 branch loan
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of loans to the ESOP by Bancorp | loan	2
Number of branches	10
PMA
LOANS
Ownership (as a percent)	46.15%

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FAIR VALUE (Level 3 Rollforward) (Details) - Significant Other Unobservable Inputs (Level 3) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Roll forward of financial instruments which fair value is determined using Significant Other Unobservable Inputs (Level 3)
Beginning balance	$ 2,439	$ 6,589
Purchases/additions	(2)	(12)
Sales	0	(1,938)
Payments (received) made	(89)	(2,200)
Premium amortization, net	0	0
Increase (decrease) in value	23	6
Ending balance	2,371	2,445
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	0	2,120
Purchases/additions	0	0
Sales	0	0
Payments (received) made	0	(2,118)
Premium amortization, net	0	0
Increase (decrease) in value	0	(2)
Ending balance	0	0
Derivatives contracts
Roll forward of financial instruments which fair value is determined using Significant Other Unobservable Inputs (Level 3)
Beginning balance	(12)	(4)
Purchases/additions	(2)	(12)
Sales	0	0
Payments (received) made	0	0
Premium amortization, net	0	0
Increase (decrease) in value	4	2
Ending balance	(10)	(14)
Financial assets acquired from debtors
Roll forward of financial instruments which fair value is determined using Significant Other Unobservable Inputs (Level 3)
Beginning balance	0	1,938
Purchases/additions	0	0
Sales	0	(1,938)
Payments (received) made	0	0
Premium amortization, net	0	0
Increase (decrease) in value	0	0
Ending balance	0	0
Loans
Roll forward of financial instruments which fair value is determined using Significant Other Unobservable Inputs (Level 3)
Beginning balance	2,451	2,535
Purchases/additions	0	0
Sales	0	0
Payments (received) made	(89)	(82)
Premium amortization, net	0	0
Increase (decrease) in value	19	6
Ending balance	$ 2,381	$ 2,459

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DEPOSITS (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Weighted Average Interest Rate
NOW accounts	0.21%	0.21%
Money market accounts	0.22%	0.22%
Savings and club accounts	0.38%	0.37%
Brokered deposits	0.76%	0.73%
Certificates of deposit	0.83%	0.87%
Deposits	0.44%	0.42%
Amount
Noninterest-bearing demand accounts	$ 137,382	$ 168,791
NOW accounts	89,018	82,417
Money market accounts	79,057	73,802
Savings and club accounts	128,973	129,893
Brokered deposits	78,460	70,817
Certificates of deposit	204,812	186,189
Total deposits amount	$ 717,702	$ 711,909

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LOANS (Allowance for Loan Loss for Impaired Loans) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Dec. 31, 2013
Allowance for loan losses
Nonaccrual Loans	$ 208	$ 47
Accruing TDRs	171	114
Other Impaired Loans	379	391
Total Impaired Loans	758	552
General	9,865	10,178
Total	10,623	10,730	$ 11,099	$ 11,529
One- to four-family
Allowance for loan losses
Nonaccrual Loans	3	11
Accruing TDRs	0	0
Other Impaired Loans	0	0
Total Impaired Loans	3	11
General	372	394
Total	375	405	220	403
Multi-family and commercial
Allowance for loan losses
Nonaccrual Loans	113	10
Accruing TDRs	45	0
Other Impaired Loans	379	391
Total Impaired Loans	537	401
General	5,607	5,589
Total	6,144	5,990	6,975	7,141
Construction
Allowance for loan losses
Nonaccrual Loans	0	0
Accruing TDRs	126	114
Other Impaired Loans	0	0
Total Impaired Loans	126	114
General	543	924
Total	669	1,038	608	324
Consumer
Allowance for loan losses
Nonaccrual Loans	38	26
Accruing TDRs	0	0
Other Impaired Loans	0	0
Total Impaired Loans	38	26
General	136	158
Total	174	184	159	153
Commercial and industrial
Allowance for loan losses
Nonaccrual Loans	54	0
Accruing TDRs	0	0
Other Impaired Loans	0	0
Total Impaired Loans	54	0
General	2,741	2,753
Total	2,795	2,753	2,655	3,051
Unallocated
Allowance for loan losses
Nonaccrual Loans	0	0
Accruing TDRs	0	0
Other Impaired Loans	0	0
Total Impaired Loans	0	0
General	466	360
Total	$ 466	$ 360	$ 482	$ 457

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FAIR VALUE FAIR VALUE (Narrative) (Details)	9 Months Ended		12 Months Ended
	Sep. 30, 2015 USD ($) security loan adjustment external_pricing_service	Sep. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Number of external pricing service providers | external_pricing_service	1
Number of quotes per investment security obtained | security	1
Adjustments to the values obtained from the primary pricing service | adjustment	0
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
Loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Number of loans | loan	2
Loans | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Unrealized gain on loans	$ 172,000		$ 152,000
Loans | Non-recurring basis | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fully charged off loans balance sheet value	0
Derivatives contracts | Recurring basis | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities	$ 10,000		$ 12,000

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PRINCIPLES OF CONSOLIDATION AND PRESENTATION

9 Months Ended

Sep. 30, 2015

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

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

The Bancorp and the Bank (collectively referred to as the "Company") provide a wide variety of financial products and services to individuals and businesses through the Bank’s ten branches in Philadelphia, Richboro, Willow Grove, Warminster, Lahaska, Hatboro, and West Chester, Pennsylvania, and Ocean City, Marmora and Egg Harbor Township, New Jersey.  The operations of the Company are managed as a single business segment.  The Bank also owns 46.15% of Philadelphia Mortgage Advisors ("PMA"), a mortgage banker located 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 sole purpose is to facilitate the Bank’s investment in PMA. 104 S. Oakland Ave., LLC is a New Jersey-chartered limited liability company formed to secure, manage and hold foreclosed real estate.  Davisville Associates, LLC is a Pennsylvania-chartered limited liability company formed to secure, manage and hold foreclosed real estate.  All material inter-company transactions and balances have been eliminated in consolidation.  Prior period amounts are reclassified, when necessary, to conform with the current year’s presentation.

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

These interim financial statements do not contain all necessary disclosures required by GAAP for complete financial statements and therefore should be read in conjunction with the audited financial statements and the notes thereto included in Fox Chase Bancorp, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the Securities and Exchange Commission on March 6, 2015.  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, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015 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.  Average unallocated shares in the ESOP and shares purchased to fund the Bancorp’s equity incentive plans are not included in either basic or diluted earnings per share.

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

	Three Months Ended   September 30,						Nine Months Ended   September 30,
	2015			2014			2015			2014
	(Dollars in thousands except per share data, Unaudited)
Net income	$	2,328		$	1,816		$	7,763		$	6,087
Weighted-average common shares outstanding (1)	11,581,257			12,075,448			11,661,023			12,110,185
Average common stock acquired by stock benefit plans:
ESOP shares unallocated	(448,395		)	(513,441		)	(464,495		)	(529,544		)
Shares purchased by trust	(213,953		)	(274,123		)	(235,200		)	(289,261		)
Weighted-average common shares used to calculate basic earnings per share	10,918,909			11,287,884			10,961,328			11,291,380
Dilutive effect of:
Restricted stock awards	32,370			42,294			40,489			50,477
Stock option awards	196,981			193,739			197,179			199,215
Weighted-average common shares used to calculate diluted earnings per share	11,148,260			11,523,917			11,198,996			11,541,072
Earnings per share - basic	$	0.21		$	0.16		$	0.71		$	0.54
Earnings per share - diluted	$	0.21		$	0.16		$	0.69		$	0.53
Outstanding common stock equivalents which are anti-dilutive	485,060			293,500			485,960			293,500
(1) Excludes treasury stock.

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BORROWINGS (FHLB Advances) (Details) - USD ($)	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Borrowings
Federal Home Loan Bank advances	$ 110,000,000	$ 120,000,000
Fair value of investment securities pledged for borrowings	165,800,000	169,700,000
FHLB stock	4,986,000	$ 6,015,000
0.60% borrowing, due March 2016
Borrowings
Federal Home Loan Bank advances	10,000,000
0.62% borrowing, due March 2016
Borrowings
Federal Home Loan Bank advances	10,000,000
0.75% borrowing, due September 2016
Borrowings
Federal Home Loan Bank advances	5,000,000
1.04% borrowing, due September 2016
Borrowings
Federal Home Loan Bank advances	10,000,000
0.94% borrowing, due June 2017
Borrowings
Federal Home Loan Bank advances	5,000,000
0.92% borrowing, due July 2017
Borrowings
Federal Home Loan Bank advances	10,000,000
3.62% borrowing, due November 2017
Borrowings
Federal Home Loan Bank advances	$ 15,000,000
Reference rate, description	3-Month LIBOR
Interest rate added to reference rate (as a percent)	0.10%
3.87% borrowing, due November 2017
Borrowings
Federal Home Loan Bank advances	$ 15,000,000
Reference rate, description	3-Month LIBOR
Interest rate added to reference rate (as a percent)	0.10%
2.83% borrowing, due on December 2017
Borrowings
Federal Home Loan Bank advances	$ 20,000,000
Reference rate, description	3-Month LIBOR
Interest rate added to reference rate (as a percent)	0.11%
1.32% borrowing, due on July 2018
Borrowings
Federal Home Loan Bank advances	$ 10,000,000
Federal Home Loan Bank Advances
Borrowings
Maximum borrowing capacity	$ 470,400,000.0
Capital stock to be held as percentage of advances	4.00%
Capital stock to be held as percentage of eligible assets	0.10%
Federal Home Loan Bank Advances | Minimum
Borrowings
Capital stock to be held as percentage of advances	2.00%
Capital stock to be held as percentage of eligible assets	0.05%
Stock obligation	$ 2,500,000
Federal Home Loan Bank Advances | Maximum
Borrowings
Capital stock to be held as percentage of advances	6.00%
Capital stock to be held as percentage of eligible assets	1.00%
Stock obligation	$ 12,500,000
Federal Reserve Bank of Philadelphia
Borrowings
Maximum borrowing capacity	61,400,000
Fair value of investment securities pledged for borrowings	$ 62,300,000
FHLB advances
Borrowings
Interest rate (as a percent)	2.02%
Securities pledged as collateral	$ 587,400,000
FHLB advances | 0.60% borrowing, due March 2016
Borrowings
Interest rate (as a percent)	0.60%
FHLB advances | 0.62% borrowing, due March 2016
Borrowings
Interest rate (as a percent)	0.62%
FHLB advances | 0.75% borrowing, due September 2016
Borrowings
Interest rate (as a percent)	0.75%
FHLB advances | 1.04% borrowing, due September 2016
Borrowings
Interest rate (as a percent)	1.04%
FHLB advances | 0.94% borrowing, due June 2017
Borrowings
Interest rate (as a percent)	0.94%
FHLB advances | 0.92% borrowing, due July 2017
Borrowings
Interest rate (as a percent)	0.92%
FHLB advances | 3.62% borrowing, due November 2017
Borrowings
Interest rate (as a percent)	3.62%
FHLB advances | 3.87% borrowing, due November 2017
Borrowings
Interest rate (as a percent)	3.87%
FHLB advances | 2.83% borrowing, due on December 2017
Borrowings
Interest rate (as a percent)	2.83%
FHLB advances | 1.32% borrowing, due on July 2018
Borrowings
Interest rate (as a percent)	1.32%
Federal Home Loan Bank Advances
Borrowings
Fair value of investment securities pledged for borrowings	$ 68,800,000

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INVESTMENT AND MORTGAGE RELATED SECURITIES (Narrative) (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($) security	Sep. 30, 2014 USD ($) security	Sep. 30, 2015 USD ($) security	Sep. 30, 2014 USD ($) security	Dec. 31, 2014 USD ($)
Investment Holdings [Line Items]
Number of securities sold | security	0	0	0	0
Net investment gains (losses)	$ 0	$ 0	$ 0	$ 0
Gross unrealized losses	379,000		379,000		$ 1,235,000
Unrealized loss, fair value	18,564,000		18,564,000		91,684,000
Unrealized loss position	$ 235,000		$ 235,000		1,110,000
Number of agency residential mortgage related securities | security	34		34
Amortized cost	$ 136,749,000		$ 136,749,000		132,282,000
Carrying value of securities pledged to secure public deposits and for other purposes as required or permitted by law	40,600,000		40,600,000		37,000,000
Mortgage backed securities pledged as collateral for other borrowed funds	165,800,000		165,800,000		169,700,000
Carrying value of investment securities used to secure derivative transactions	$ 931,000		$ 931,000		1,100,000
Agency residential mortgage related securities
Investment Holdings [Line Items]
Number of mortgage related securities | security	10		10
Unrealized loss, fair value	$ 18,600,000		$ 18,600,000
Unrealized loss position	$ 235,000		$ 235,000
Number of mortgage related securities in a continuous unrealized loss position | security	18		18
Continuous unrealized loss position	$ 31,200,000		$ 31,200,000
Unrealized loss position for less than twelve months	109,000		109,000
Amortized cost	$ 118,807,000		$ 118,807,000		123,929,000
Corporate securities
Investment Holdings [Line Items]
Number of mortgage related securities in a continuous unrealized loss position | security	6		6
Continuous unrealized loss position	$ 13,800,000		$ 13,800,000
Unrealized loss position for less than twelve months	35,000		35,000
Amortized cost	$ 17,641,000		$ 17,641,000		8,053,000
Private label residential mortgage related securities
Investment Holdings [Line Items]
Number of debt securities held | security	1		1
Amortized cost	$ 2,700,000		$ 2,700,000		3,000,000
Gross unrealized gain (loss)	1,000		1,000		6,000
Agency debenture
Investment Holdings [Line Items]
Amortized cost	$ 301,000		$ 301,000		$ 300,000

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INVESTMENT AND MORTGAGE RELATED SECURITIES (Gross Unrealized Losses and Fair Value of Securities) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Available-for-sale securities:
Fair Value, Less than 12 Months	$ 35,486	$ 8,229
Unrealized Losses, Less than 12 Months	(105)	(15)
Fair Value, 12 Months or More	8,306	64,502
Unrealized Losses, 12 Months or More	(73)	(657)
Fair Value, Total	43,792	72,731
Unrealized Losses, Total	(178)	(672)
Held-to-maturity Securities:
Fair Value, Less than 12 Months	9,497	25,660
Unrealized Losses, Less than 12 Months	(39)	(110)
Fair Value, 12 Months or More	10,258	27,182
Unrealized Losses, 12 Months or more	(162)	(453)
Unrealized Losses, Total	(201)	(563)
Fair Value, Total	19,755	52,842
Temporarily Impaired Securities
Fair Value, Less than 12 Months	44,983	33,889
Unrealized Losses, Less than 12 Months	(144)	(125)
Fair Value, 12 Months or More	18,564	91,684
Unrealized Losses Plus OTTI in AOCI, 12 Months or More	(235)	(1,110)
Fair Value, Total	63,547	125,573
Unrealized Losses, Total	(379)	(1,235)
Corporate securities
Available-for-sale securities:
Fair Value, Less than 12 Months	12,062
Unrealized Losses, Less than 12 Months	(30)
Fair Value, 12 Months or More	0
Unrealized Losses, 12 Months or More	0
Fair Value, Total	12,062
Unrealized Losses, Total	(30)
Held-to-maturity Securities:
Fair Value, Less than 12 Months	1,771
Unrealized Losses, Less than 12 Months	(5)
Fair Value, 12 Months or More	0
Unrealized Losses, 12 Months or more	0
Unrealized Losses, Total	(5)
Fair Value, Total	1,771
Agency residential mortgage related securities
Available-for-sale securities:
Fair Value, Less than 12 Months	23,424	8,229
Unrealized Losses, Less than 12 Months	(75)	(15)
Fair Value, 12 Months or More	8,306	64,502
Unrealized Losses, 12 Months or More	(73)	(657)
Fair Value, Total	31,730	72,731
Unrealized Losses, Total	(148)	(672)
Held-to-maturity Securities:
Fair Value, Less than 12 Months	7,726	25,660
Unrealized Losses, Less than 12 Months	(34)	(110)
Fair Value, 12 Months or More	10,258	27,182
Unrealized Losses, 12 Months or more	(162)	(453)
Unrealized Losses, Total	(196)	(563)
Fair Value, Total	17,984	$ 52,842
Temporarily Impaired Securities
Fair Value, 12 Months or More	18,600
Unrealized Losses Plus OTTI in AOCI, 12 Months or More	$ (235)

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BORROWINGS (Other Borrowed Funds) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Other Borrowed Funds
Amount of other borrowings	$ 30,000	$ 30,000
Mortgage backed securities pledged as collateral for other borrowed funds	165,800	$ 169,700
3.15% other borrowings, due October 2018
Other Borrowed Funds
Amount of other borrowings	$ 5,000
Interest rate (as a percent)	3.15%
Other Borrowings 1-month LIBOR plus 2.03 Percent Due December 2018 [Member] [Domain]
Other Borrowed Funds
Amount of other borrowings	$ 5,000
Reference rate, description	1-Month LIBOR
Interest rate added to reference rate (as a percent)	2.03%
Other Borrowings 1-month LIBOR plus 1.89 Percent DUe September 2019 [Member] [Domain]
Other Borrowed Funds
Amount of other borrowings	$ 10,000
Reference rate, description	1-Month LIBOR
Interest rate added to reference rate (as a percent)	1.89%
Other Borrowings 1-month LIBOR plus 1.56 Percent Due September 2020 [Domain]
Other Borrowed Funds
Amount of other borrowings	$ 5,000
Reference rate, description	1-Month LIBOR
Interest rate added to reference rate (as a percent)	1.56%
Other Borrowings 1-month LIBOR plus 1.58 Percent Due November 2020 [Domain]
Other Borrowed Funds
Amount of other borrowings	$ 5,000
Reference rate, description	1-Month LIBOR
Interest rate added to reference rate (as a percent)	1.58%
Other long-term borrowings
Other Borrowed Funds
Mortgage backed securities pledged as collateral for other borrowed funds	$ 34,700

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INVESTMENT AND MORTGAGE RELATED SECURITIES (Held-to-Maturity Investments) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Investment Holdings [Line Items]
Held-to-maturity securities, amortized cost before other than temporary impairment	$ 156,099	$ 170,172
Held-to-maturity securities, amortized cost excluding transfer loss	157,935
Unrealized Loss at Transfer	(1,625)
Post-transfer Accretion	(211)
Transferred Securities from Available-for-Sale
Investment Holdings [Line Items]
Held-to-maturity securities, amortized cost before other than temporary impairment, transferred securities	85,784
Held-to-maturity securities, amortized cost before other than temporary impairment	83,948
Unrealized Loss at Transfer	(1,625)
Post-transfer Accretion	(211)
Held-to-Maturity, Excluding Transferred Securities
Investment Holdings [Line Items]
Held-to-maturity securities, amortized cost before other than temporary impairment	$ 72,151

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INVESTMENT AND MORTGAGE RELATED SECURITIES (Amortized Cost and Estimated Fair Value of Investment Securities) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Available for Sale, Amortized Cost
Due in one year or less	$ 2,525	$ 5,803
Due after one year through five years	15,417	2,550
Due after five years through ten years	0	0
Due after ten years	0	0
Total mortgage related securities	118,807	123,929
Amortized Cost	136,749	132,282
Available for Sale, Fair Value
Due in one year or less	2,542	5,818
Due after one year through five years	15,408	2,570
Due after five years through ten years	0	0
Due after ten years	0	0
Total mortgage related securities	120,806	125,649
Total Fair Value	138,756	134,037
Held to Maturity, Amortized Cost
Due in one year or less	0	0
Due after one year through five years	1,776	0
Due after five years through ten years	0	0
Due after ten years	0	0
Total mortgage related securities	154,323	170,172
Total Amortized Cost	156,099	170,172
Held to Maturity, Fair Value
Due in one year or less	0	0
Due after one year through five years	1,771	0
Due after five years through ten years	0	0
Due after ten years	0	0
Total mortgage related securities	155,894	170,854
Total Fair Value	$ 157,665	$ 170,854

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Statement of Cash Flows [Abstract]
Net income	$ 7,763	$ 6,087
Adjustments to reconcile net income to net cash provided by operating activities:
(Credit) provision for loan losses	(1,095)	1,593
Valuation adjustment for assets acquired through foreclosure	137	282
Depreciation	479	533
Net amortization of securities premiums and discounts	1,295	1,430
Deferred income tax (benefit) expense	(25)	1,992
Stock compensation from benefit plans	1,860	1,715
Net loss on sale of assets acquired through foreclosure	14	136
Income on bank-owned life insurance	(444)	(358)
Excess tax benefit from exercise of stock options and vesting of restricted stock	(88)	(83)
Decrease in mortgage servicing rights, net	13	26
Decrease in accrued interest receivable and other assets	1,105	303
Decrease in accrued interest payable, accrued expenses and other liabilities	(1,227)	(737)
Net Cash Provided by Operating Activities	9,787	12,919
Cash Flows from Investing Activities
Equity investment in unconsolidated entity	90	90
Investment securities - available-for-sale:
Purchases	(28,455)	(2,830)
Proceeds from maturities, calls and principal repayments	23,397	28,303
Investment securities - held-to-maturity:
Purchases	(5,823)	(9,767)
Proceeds from maturities, calls and principal repayments	19,375	9,665
Net decrease in loans	14,165	16,876
Purchases of loans and loan participations	(29,083)	(9,371)
Net decrease (increase) in Federal Home Loan Bank stock	1,029	(1,339)
Purchase of bank-owned life insurance	(10,000)	0
Purchases of premises and equipment	(218)	(261)
Additions to assets acquired through foreclosure	(83)	(17)
Proceeds from sales and payments on assets acquired through foreclosure	246	4,504
Net Cash (Used in) Provided by Investing Activities	(15,360)	35,853
Cash Flows from Financing Activities
Net increase (decrease) in deposits	5,793	(9,987)
Decrease in advances from borrowers for taxes and insurance	(422)	(525)
Proceeds from Federal Home Loan Bank advances	20,000	0
Principal payments on Federal Home Loan Bank advances	(30,000)	(15,000)
Net increase (decrease) in short-term borrowings	10,000	(20,500)
Excess tax benefit from exercise of stock options and vesting of restricted stock	88	83
Proceeds from exercise of stock options	932	392
Purchase of treasury stock	(4,770)	(1,902)
Cash dividends paid	(6,050)	(5,553)
Net Cash Used in Financing Activities	(4,429)	(52,992)
Net Decrease in Cash and Cash Equivalents	(10,002)	(4,220)
Cash and Cash Equivalents – Beginning	17,213	11,947
Cash and Cash Equivalents – Ending	7,211	7,727
Supplemental Disclosure of Cash Flow Information
Interest paid	4,395	5,029
Income taxes paid	3,035	1,460
Transfers of loans to assets acquired through foreclosure	315	542
Net (recoveries) charge-offs	$ (988)	$ 2,023

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LOANS (Composition of Net Loans) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Dec. 31, 2013
LOANS
Total loans	$ 750,359	$ 735,350
Deferred loan origination cost, net	(247)	(294)
Allowance for loan losses	(10,623)	(10,730)	$ (11,099)	$ (11,529)
Net loans	739,489	724,326
Real estate loans:
LOANS
Total loans	539,382	536,570
One- to four-family
LOANS
Total loans	95,682	108,208
Allowance for loan losses	(375)	(405)	(220)	(403)
Multi-family and commercial
LOANS
Total loans	404,007	388,821
Allowance for loan losses	(6,144)	(5,990)	(6,975)	(7,141)
Construction
LOANS
Total loans	39,693	39,541
Allowance for loan losses	(669)	(1,038)	(608)	(324)
Consumer loans
LOANS
Total loans	15,550	19,599
Allowance for loan losses	(174)	(184)	(159)	(153)
Commercial and industrial loans
LOANS
Total loans	195,427	179,181
Allowance for loan losses	$ (2,795)	$ (2,753)	$ (2,655)	$ (3,051)

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LOANS (Criticized and Classified Loans by Segment) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Criticized and classified loans by segment
Total criticized and classified loans	$ 750,359	$ 735,350
One- to four-family
Criticized and classified loans by segment
Total criticized and classified loans	95,682	108,208
Multi-family and commercial
Criticized and classified loans by segment
Total criticized and classified loans	404,007	388,821
Construction
Criticized and classified loans by segment
Total criticized and classified loans	39,693	39,541
Consumer
Criticized and classified loans by segment
Total criticized and classified loans	15,550	19,599
Commercial and industrial
Criticized and classified loans by segment
Total criticized and classified loans	195,427	179,181
Pass and Pass watch
Criticized and classified loans by segment
Total criticized and classified loans	725,630	712,330
Pass and Pass watch | One- to four-family
Criticized and classified loans by segment
Total criticized and classified loans	94,152	106,467
Pass and Pass watch | Multi-family and commercial
Criticized and classified loans by segment
Total criticized and classified loans	388,682	376,134
Pass and Pass watch | Construction
Criticized and classified loans by segment
Total criticized and classified loans	36,276	36,229
Pass and Pass watch | Consumer
Criticized and classified loans by segment
Total criticized and classified loans	15,440	19,357
Pass and Pass watch | Commercial and industrial
Criticized and classified loans by segment
Total criticized and classified loans	191,080	174,143
Special mention loans
Criticized and classified loans by segment
Total criticized and classified loans	16,396	14,141
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	13,898	8,406
Special mention loans | Construction
Criticized and classified loans by segment
Total criticized and classified loans	0	2,723
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	2,498	3,012
Substandard loans
Criticized and classified loans by segment
Total criticized and classified loans	8,333	8,879
Substandard loans | One- to four-family
Criticized and classified loans by segment
Total criticized and classified loans	1,530	1,741
Substandard loans | Multi-family and commercial
Criticized and classified loans by segment
Total criticized and classified loans	1,427	4,281
Substandard loans | Construction
Criticized and classified loans by segment
Total criticized and classified loans	3,417	589
Substandard loans | Consumer
Criticized and classified loans by segment
Total criticized and classified loans	110	242
Substandard loans | Commercial and industrial
Criticized and classified loans by segment
Total criticized and classified loans	1,849	2,026
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	Sep. 30, 2015	Dec. 31, 2014
ASSETS
Cash and due from banks	$ 322	$ 2,763
Interest-earning demand deposits in other banks	6,889	14,450
Total cash and cash equivalents	7,211	17,213
Investment securities available-for-sale	138,756	134,037
Investment securities held-to-maturity (fair value of $157,665 at September 30, 2015 and $170,854 at December 31, 2014)	156,099	170,172
Loans, net of allowance for loan losses of $10,623 at September 30, 2015 and $10,730 at December 31, 2014	739,489	724,326
Federal Home Loan Bank stock, at cost	4,986	6,015
Bank-owned life insurance	25,471	15,027
Premises and equipment, net	9,157	9,418
Assets acquired through foreclosure	2,815	2,814
Real estate held for investment	1,620	1,620
Accrued interest receivable	3,174	3,147
Mortgage servicing rights, net	98	111
Deferred tax asset, net	4,451	4,561
Other assets	5,470	6,155
Total Assets	1,098,797	1,094,616
LIABILITIES
Deposits	717,702	711,909
Short-term borrowings	60,000	50,000
Federal Home Loan Bank advances	110,000	120,000
Other borrowed funds	30,000	30,000
Advances from borrowers for taxes and insurance	1,025	1,447
Accrued interest payable	310	311
Accrued expenses and other liabilities	3,758	5,038
Total Liabilities	922,795	918,705
STOCKHOLDERS’ EQUITY
Preferred stock ($.01 par value; 1,000,000 shares authorized, none issued and outstanding at September 30, 2015 and December 31, 2014)	0	0
Common stock ($.01 par value; 60,000,000 shares authorized, 11,591,401 shares outstanding at September 30, 2015 and 11,802,791 shares outstanding at December 31, 2014)	147	147
Additional paid-in capital	140,805	139,177
Treasury stock, at cost (3,141,201 shares at September 30, 2015 and 2,852,572 shares at December 31, 2014)	(44,468)	(39,698)
Common stock acquired by benefit plans	(6,878)	(8,056)
Retained earnings	86,012	84,225
Accumulated other comprehensive income, net	384	116
Total Stockholders’ Equity	176,002	175,911
Total Liabilities and Stockholders’ Equity	$ 1,098,797	$ 1,094,616

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BORROWINGS (Short-term Borrowings) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Short-term Debt [Line Items]
Short-term borrowings	$ 60,000	$ 50,000
Overnight Borrowings
Short-term Debt [Line Items]
Short-term borrowings		$ 35,000
Blended weighted average interest rate (as a percent)	0.36%	0.31%
Short-term Debt other than Overnight
Short-term Debt [Line Items]
Short-term borrowings		$ 15,000
Blended weighted average interest rate (as a percent)		0.33%

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Consolidated Statements of Changes in Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Treasury Stock	Common Stock Acquired by Benefit Plans	Retained Earnings	Accumulated Other Comprehensive (Loss) Income, net
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)			(1,902)
Stock based compensation expense	894		894
ESOP shares allocated to employees	821		353		468
Issuance of stock for vested equity awards	0		(651)		589	62
Common stock issued for exercise of vested stock options	392	1	391
Excess tax benefit from exercise of stock options and vesting of restricted stock	83		83
Dividends paid	(5,553)					(5,553)
Net income	6,087					6,087
Other comprehensive income (loss)	3,996						3,996
BALANCE at Sep. 30, 2014	178,285	147	138,663	(35,338)	(8,215)	83,481	(453)
BALANCE at Dec. 31, 2014	175,911	147	139,177	(39,698)	(8,056)	84,225	116
Increase (Decrease) in Stockholders' Equity
Purchase of treasury stock	(4,770)			(4,770)
Stock based compensation expense	1,042		1,042
ESOP shares allocated to employees	818		350		468
Issuance of stock for vested equity awards	0		(784)		710	74
Common stock issued for exercise of vested stock options	932		932
Excess tax benefit from exercise of stock options and vesting of restricted stock	88		88
Dividends paid	(6,050)					(6,050)
Net income	7,763					7,763
Other comprehensive income (loss)	268						268
BALANCE at Sep. 30, 2015	$ 176,002	$ 147	$ 140,805	$ (44,468)	$ (6,878)	$ 86,012	$ 384

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LOANS (Impaired Loans by Loan Segment) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Financing Receivable, Impaired [Line Items]
Nonaccrual Loans	$ 3,446	$ 3,454
Accruing TDRs	5,971	3,624
Other Impaired Loans	4,378	4,454
Total Impaired Loans	13,795	11,532
Impaired Loans with Allowance	10,747	7,444
Impaired Loans without Allowance	3,048	4,088
One- to four-family
Financing Receivable, Impaired [Line Items]
Nonaccrual Loans	1,530	1,741
Accruing TDRs	881	888
Other Impaired Loans	0	0
Total Impaired Loans	2,411	2,629
Impaired Loans with Allowance	210	137
Impaired Loans without Allowance	2,201	2,492
Multi-family and commercial
Financing Receivable, Impaired [Line Items]
Nonaccrual Loans	1,076	1,395
Accruing TDRs	1,685	0
Other Impaired Loans	4,378	4,454
Total Impaired Loans	7,139	5,849
Impaired Loans with Allowance	6,368	4,502
Impaired Loans without Allowance	771	1,347
Construction
Financing Receivable, Impaired [Line Items]
Nonaccrual Loans	0	0
Accruing TDRs	3,393	2,723
Other Impaired Loans	0	0
Total Impaired Loans	3,393	2,723
Impaired Loans with Allowance	3,393	2,723
Impaired Loans without Allowance	0	0
Consumer
Financing Receivable, Impaired [Line Items]
Nonaccrual Loans	110	243
Accruing TDRs	12	13
Other Impaired Loans	0	0
Total Impaired Loans	122	256
Impaired Loans with Allowance	46	82
Impaired Loans without Allowance	76	174
Commercial and industrial
Financing Receivable, Impaired [Line Items]
Nonaccrual Loans	730	75
Accruing TDRs	0	0
Other Impaired Loans	0	0
Total Impaired Loans	730	75
Impaired Loans with Allowance	730	0
Impaired Loans without Allowance	$ 0	$ 75

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BORROWINGS (Tables)

9 Months Ended

Sep. 30, 2015

BORROWINGS

Schedule of FHLB advances

Maturity Date	Amount		Coupon Rate		Call Date	Rate if Called
	(In thousands, Unaudited)
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
July 2017	10,000		0.92		Not Applicable	Not Applicable
November 2017	15,000		3.62		November 2015	3-month LIBOR + 0.10%
November 2017	15,000		3.87		November 2015	3-month LIBOR + 0.10%
December 2017	20,000		2.83		December 2015	3-month LIBOR + 0.11%
July 2018	10,000		1.32		Not Applicable	Not Applicable
	$	110,000	2.02	%

Schedule of other long-term borrowings

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

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LOANS (Narrative) (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($) loan property	Sep. 30, 2014 loan	Sep. 30, 2015 USD ($) loan classification weakness property	Sep. 30, 2014 USD ($) loan	Dec. 31, 2014 USD ($) loan
Financing Receivable, Impaired [Line Items]
Loans past due 90 days or more and still accruing interest	$ 0		$ 0		$ 0
Average recorded investment in impaired loans			13,900,000	$ 13,500,000
Interest income recognized on impaired loans			$ 631,000	$ 384,000
Number of troubled debt restructurings, included in nonaccrual status and total impaired loans | loan	2		2		4
Troubled debt restructurings excluded from accruing TDR	$ 1,100,000		$ 1,100,000		$ 1,400,000
Number of loans classified as TDRs | loan	0	0	0	0
Foreclosure proceedings in process	$ 365,000		$ 365,000
Number of foreclosed properties | property	5		5
Foreclosed residential real estate property	$ 315,000		$ 315,000
Number of primary classification for loans | classification			6
Number of classifications for problem loans | classification			3
Minimum number of defined weaknesses for substandard loans | weakness			1
Multi-family and commercial
Financing Receivable, Impaired [Line Items]
Troubled debt restructurings excluded from accruing TDR	$ 1,000,000		$ 1,000,000		$ 1,100,000
Number of contracts classified as nonaccrual | loan	1		1		1
One- to four-family
Financing Receivable, Impaired [Line Items]
Troubled debt restructurings excluded from accruing TDR	$ 93,000		$ 93,000		$ 336,000
Number of contracts classified as nonaccrual | loan	1		1		3

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FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Fair value of financial instruments

The estimated fair values of the Company’s financial instruments at September 30, 2015 and December 31, 2014 were as follows: 

		September 30, 2015				December 31, 2014
	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	$	7,211	$	7,211	$	17,213	$	17,213
Investment securities available-for-sale	Level 2	138,756		138,756		134,037		134,037
Investment securities held-to-maturity	Level 2	156,099		157,665		170,172		170,854
Loans receivable, net	Level 3	739,489		744,058		724,326		732,142
FHLB stock	NA	4,986		NA		6,015		NA
Accrued interest receivable	Level 2, 3	3,174		3,174		3,147		3,147
Mortgage servicing rights	Level 3	98		98		111		111
Financial liabilities:
Savings and club accounts	Level 2	128,973		128,973		129,893		129,893
Demand, NOW and money market deposits	Level 2	305,457		305,457		325,010		325,010
Brokered deposits	Level 2	78,460		78,497		70,817		70,600
Certificates of deposit	Level 2	204,812		204,955		186,189		186,154
Short-term borrowings	Level 2	60,000		60,000		50,000		50,000
FHLB advances	Level 2	110,000		112,794		120,000		123,189
Other borrowed funds	Level 2	30,000		31,918		30,000		32,017
Accrued interest payable	Level 2	310		310		311		311
Derivative contracts	Level 2, 3	193		193		174		174

Schedule of fair value measurements on a recurring basis

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

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

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

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, 2015(Unaudited)			(In thousands)
Loans	$	1,240	$	—	$	—	$	1,240
Mortgage servicing rights	98		—		—		98
Other real estate owned	2,815		—		—		2,815
Total	$	4,153	$	—	$	—	$	4,153
December 31, 2014
Loans	$	1,654	$	—	$	—	$	1,654
Mortgage servicing rights	111		—		—		111
Other real estate owned	2,814		—		—		2,814
Total	$	4,579	$	—	$	—	$	4,579

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, 2014 to September 30, 2015 and December 31, 2013 to September 30, 2014. 

Nine Months Ended September 30, 2015
		Private Label Commercial Mortgage Related Securities			Derivative Contracts			Financial Assets Acquired from Debtors			Loans			Total
	(In thousands, Unaudited)
Beginning balance, December 31, 2014		$	—		$	(12	)	$	—		$	2,451		$	2,439
Purchases/additions		—			(2		)	—			—			(2		)
Sales		—			—			—			—			—
Payments received		—			—			—			(89		)	(89		)
Premium amortization, net		—			—			—			—			—
Increase (decrease) in value		—			4			—			19			23
Ending balance, September 30, 2015		$	—		$	(10	)	$	—		$	2,381		$	2,371
Nine Months Ended September 30, 2014
		Private 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

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Consolidated Statements of Changes in Equity (Parenthetical) - $ / shares	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Statement of Stockholders' Equity [Abstract]
Treasury stock, shares	288,629	116,600
Dividends paid (in dollars per share)	$ 0.54	$ 0.48

XML

Consolidated Statements of Condition (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Investment securities held to maturity, fair value	$ 157,665	$ 170,854
Loans, allowance for loan losses	$ 10,623	$ 10,730
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	11,591,401	11,802,791
Common stock, shares outstanding	11,591,401	11,802,791
Treasury stock, shares	3,141,201	2,852,572

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NEW ACCOUNTING PRONOUNCEMENTS

9 Months Ended

Sep. 30, 2015

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

NEW ACCOUNTING PRONOUNCEMENTS

NEW ACCOUNTING PRONOUNCEMENTS

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

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

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

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Oct. 31, 2015
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, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Entity Common Stock, Shares Outstanding		11,591,401

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PRINCIPLES OF CONSOLIDATION AND PRESENTATION (Tables)

9 Months Ended

Sep. 30, 2015

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,
	2015			2014			2015			2014
	(Dollars in thousands except per share data, Unaudited)
Net income	$	2,328		$	1,816		$	7,763		$	6,087
Weighted-average common shares outstanding (1)	11,581,257			12,075,448			11,661,023			12,110,185
Average common stock acquired by stock benefit plans:
ESOP shares unallocated	(448,395		)	(513,441		)	(464,495		)	(529,544		)
Shares purchased by trust	(213,953		)	(274,123		)	(235,200		)	(289,261		)
Weighted-average common shares used to calculate basic earnings per share	10,918,909			11,287,884			10,961,328			11,291,380
Dilutive effect of:
Restricted stock awards	32,370			42,294			40,489			50,477
Stock option awards	196,981			193,739			197,179			199,215
Weighted-average common shares used to calculate diluted earnings per share	11,148,260			11,523,917			11,198,996			11,541,072
Earnings per share - basic	$	0.21		$	0.16		$	0.71		$	0.54
Earnings per share - diluted	$	0.21		$	0.16		$	0.69		$	0.53
Outstanding common stock equivalents which are anti-dilutive	485,060			293,500			485,960			293,500
(1) Excludes treasury stock.

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

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DERIVATIVES AND HEDGING

9 Months Ended

Sep. 30, 2015

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 $735,000, which is used to hedge a 15-year fixed rate loan that is earning interest at 7.43%.  The Company is receiving variable rate payments of 1-month LIBOR plus 224 basis points and is paying fixed rate payments of 7.43%.  The swap matures in April 2022 and had a fair value loss position of $107,000 and $116,000 at September 30, 2015 and December 31, 2014, respectively.  The interest rate swap is carried at fair value in accordance with FASB ASC 815 "Derivatives and Hedging."  The loan is carried at fair value under the fair value option as permitted by FASB ASC 825 "Financial Instruments."

On October 12, 2011, the Company entered into an interest rate swap with a current notional amount of $1.5 million, which is used to hedge a 10-year fixed rate loan that is earning interest at 5.83%.  The Company is receiving variable rate payments of 1-month LIBOR plus 350 basis points and is paying fixed rate payments of 5.83%.  The Company designated this relationship as a fair value hedge.  The swap matures in October 2021 and had a fair value loss position of $77,000 and $46,000 at September 30, 2015 and December 31, 2014, respectively.  The difference between changes in the fair values of the interest rate swap agreement and the hedged loan represents hedge ineffectiveness and is recorded in other non-interest income in the consolidated statements of operations. Hedge ineffectiveness resulted in expense of $3,000 and $2,000 for the three months ended September 30, 2015 and September 30, 2014, respectively.  Hedge ineffectiveness resulted in expense of $2,000 and $12,000 for the nine months ended September 30, 2015 and September 30, 2014, respectively.

Credit Derivatives

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

At September 30, 2015, there were four variable-rate to fixed-rate interest rate swap transactions between the third-party financial institution and our customers with a notional amount of $12.3 million, and remaining maturities ranging from four to seven years.  At December 31, 2014, there were four variable-rate to fixed-rate interest swap transactions between the third-party financial institution and our customers with a notional amount of $12.6 million, and remaining maturities ranging from five to eight years.  The fair value of the swaps to the customers was a (liability) asset of ($195,000) and $91,000 as of September 30, 2015 and December 31, 2014, respectively, and all swaps were in paying positions to the third-party financial institution at September 30, 2015.  As of September 30, 2015 and December 31, 2014, the fair value of the Company’s interest rate swap credit derivatives was a liability of $8,000 and $10,000, respectively.  During the three months ended September 30, 2015 and 2014, the Company recognized expense of $3,000 and $1,000, respectively, from interest rate swap credit derivatives. During the nine months ended September 30, 2015 and 2014, the Company recognized income (expense) of $3,000 and ($2,000), respectively, from interest rate swap credit derivatives.

At September 30, 2015, there were four foreign currency swap transactions between the third-party financial institution and our customers with a notional amount of $1.2 million, and remaining maturities ranging from one to three months.  At December 31, 2014, there were six foreign currency swap transactions between the third-party financial institution and our customers with a notional amount of $366,000 and remaining maturities ranging from one to four months.  The aggregate fair value of these swaps to the customers was a liability of $4,000 and $44,000 as of September 30, 2015 and December 31, 2014, respectively. At September 30, 2015 and December 31, 2014, the fair value of the Company’s credit derivatives was a liability of $2,000. During the three months ended September 30, 2015 and 2014, the Company recognized income of $1,000 and $2,000, respectively, from foreign currency swap credit derivatives. During the nine months ended September 30, 2015 and 2014, the Company recognized income of $3,000 and $4,000, respectively, from foreign currency swap credit derivatives.

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

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LOANS

9 Months Ended

Sep. 30, 2015

Receivables [Abstract]

LOANS

LOANS

The composition of net loans at September 30, 2015 and December 31, 2014 is provided below:

	September 30, 2015			December 31, 2014
	(In thousands)
	(Unaudited)
Real estate loans:
One- to four-family	$	95,682		$	108,208
Multi-family and commercial	404,007			388,821
Construction	39,693			39,541
	539,382			536,570
Consumer loans	15,550			19,599
Commercial and industrial loans	195,427			179,181
Total loans	750,359			735,350
Deferred loan origination fees, net	(247		)	(294		)
Allowance for loan losses	(10,623		)	(10,730		)
Net loans	$	739,489		$	724,326

The following tables present changes in the allowance for loan losses by loan segment for the nine months ended September 30, 2015 and the nine months ended September 30, 2014.

	Nine Months Ended September 30, 2015
	One- to Four-Family			Multi-family and Commercial			Construction			Consumer			Commercial and Industrial			Unallocated		Total
	(In thousands, Unaudited)
Balance, beginning	$	405		$	5,990		$	1,038		$	184		$	2,753		$	360	$	10,730
Provision (credit) for loan losses	144			107			(664		)	(825		)	37			106		(1,095		)
Loans charged off	(174		)	(16		)	—			—			—			—		(190		)
Recoveries	—			63			295			815			5			—		1,178
Balance, ending	$	375		$	6,144		$	669		$	174		$	2,795		$	466	$	10,623
	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

NOTE 3 - LOANS (CONTINUED)

The following tables provide details of loans, and associated allowance for loan losses, which are individually or collectively evaluated for impairment as of September 30, 2015 and December 31, 2014.

	As of September 30, 2015
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Unallocated		Total
	(In thousands, Unaudited)
Allowance for Loan Losses:
Balance, ending: individually evaluated for impairment	$	3	$	537	$	126	$	38	$	54	$	—	$	758
Balance, ending: collectively evaluated for impairment	372		5,607		543		136		2,741		466		9,865
Total	$	375	$	6,144	$	669	$	174	$	2,795	$	466	$	10,623
Total Loans:
Balance, ending: individually evaluated for impairment	$	2,411	$	7,139	$	3,393	$	122	$	730	$	—	$	13,795
Balance, ending: collectively evaluated for impairment	93,271		396,868		36,300		15,428		194,697		—		736,564
Total	$	95,682	$	404,007	$	39,693	$	15,550	$	195,427	$	—	$	750,359
	As of December 31, 2014
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Unallocated		Total
	(In thousands)
Allowance for Loan Losses:
Balance, ending: individually evaluated for impairment	$	11	$	401	$	114	$	26	$	—	$	—	$	552
Balance, ending: collectively evaluated for impairment	394		5,589		924		158		2,753		360		10,178
Total	$	405	$	5,990	$	1,038	$	184	$	2,753	$	360	$	10,730
Total Loans:
Balance, ending: individually evaluated for impairment	$	2,629	$	5,849	$	2,723	$	256	$	75	$	—	$	11,532
Balance, ending: collectively evaluated for impairment	105,579		382,972		36,818		19,343		179,106		—		723,818
Total	$	108,208	$	388,821	$	39,541	$	19,599	$	179,181	$	—	$	735,350

NOTE 3 - LOANS (CONTINUED)

The following tables set forth the breakdown of impaired loans by loan segment as of September 30, 2015 and December 31, 2014.

September 30, 2015
	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	$	1,530	$	881	$	—	$	2,411	$	210	$	2,201
Multi-family and commercial	1,076		1,685		4,378		7,139		6,368		771
Construction	—		3,393		—		3,393		3,393		—
Consumer loans	110		12		—		122		46		76
Commercial and industrial	730		—		—		730		730		—
Total	$	3,446	$	5,971	$	4,378	$	13,795	$	10,747	$	3,048
December 31, 2014
	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	$	1,741	$	888	$	—	$	2,629	$	137	$	2,492
Multi-family and commercial	1,395		—		4,454		5,849		4,502		1,347
Construction	—		2,723		—		2,723		2,723		—
Consumer loans	243		13		—		256		82		174
Commercial and industrial	75		—		—		75		—		75
Total	$	3,454	$	3,624	$	4,454	$	11,532	$	7,444	$	4,088

There were no loans past due 90 days or more and still accruing interest at September 30, 2015 or December 31, 2014.

For the nine months ended September 30, 2015 and 2014, the average recorded investment in impaired loans was $13.9 million and $13.5 million, respectively.  The interest income recognized on these impaired loans was $631,000 and $384,000 for the nine months ended September 30, 2015 and 2014, respectively.

At September 30, 2015, two troubled debt restructurings ("TDRs") totaling $1.1 million are excluded from the accruing TDR column above as they are included in nonaccrual loans.  Of this amount, $1.0 million relates to one multi-family and commercial real estate loan and $93,000 relates to one residential loan.

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

NOTE 3 - LOANS (CONTINUED)

The following tables set forth the allowance for loan loss for impaired loans and general allowance by loan segment as of September 30, 2015 and December 31, 2014.

September 30, 2015	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	$	3	$	—	$	—	$	3	$	372	$	375
Multi-family and commercial	113		45		379		537		5,607		6,144
Construction	—		126		—		126		543		669
Consumer loans	38		—		—		38		136		174
Commercial and industrial	54		—		—		54		2,741		2,795
Unallocated	—		—		—		—		466		466
Total allowance for loan losses	$	208	$	171	$	379	$	758	$	9,865	$	10,623
December 31, 2014	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	$	11	$	—	$	—	$	11	$	394	$	405
Multi-family and commercial	10		—		391		401		5,589		5,990
Construction	—		114		—		114		924		1,038
Consumer loans	26		—		—		26		158		184
Commercial and industrial	—		—		—		—		2,753		2,753
Unallocated	—		—		—		—		360		360
Total allowance for loan losses	$	47	$	114	$	391	$	552	$	10,178	$	10,730

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, delayed repayment or extension, and/or principal forgiveness.

The following table sets forth a summary of the TDR activity for the three and nine month periods ended September 30, 2015 and 2014. 

	Three Months Ended September 30, 2015						Nine Months Ended September 30, 2015
	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	—	$	—	$	—		—	$	—	$	—
Multi-family and commercial	—	—		—			1	914		914		Delayed Repayment
Construction	—	—		—			—	—		—
Consumer loans	—	—		—			—	—		—
Commercial and industrial	—	—		—			1	771		771		Delayed Repayment
Total	—	$	—	$	—		2	$	1,685	$	1,685
	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 reduction
Multi-family and commercial	—	—		—			1	1,640		1,540		Principal reduction
Construction	—	—		—			—	—		—
Consumer loans	—	—		—			—	—		—
Commercial and industrial	—	—		—			—	—		—
Total	—	$	—	$	—		2	$	1,885	$	1,785

During the three and nine months ended September 30, 2015 and 2014, no TDRs defaulted that were restructured in the prior twelve months.

At September 30, 2015, the recorded investment of residential and consumer mortgage loans secured by residential real estate properties, for which formal foreclosure proceedings are in process, totaled $365,000.  At September 30, 2015, there were five foreclosed residential real estate properties, which were carried at $315,000.

NOTE 3 - LOANS (CONTINUED)

The following table sets forth past due loans by segment as of September 30, 2015 and December 31, 2014.

	September 30, 2015				December 31, 2014
	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	$	122	$	15	$	—	$	145
Multi-family and commercial real estate	350		92		—		—
Construction	—		—		—		—
Consumer	69		72		113		—
Commercial and industrial	—		—		—		—
Total	$	541	$	179	$	113	$	145

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, 2015 and December 31, 2014. 

	September 30, 2015
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Total
	(In thousands, Unaudited)
Pass and Pass watch	$	94,152	$	388,682	$	36,276	$	15,440	$	191,080	$	725,630
Special mention	—		13,898		—		—		2,498		16,396
Substandard	1,530		1,427		3,417		110		1,849		8,333
Doubtful	—		—		—		—		—		—
Total loans	$	95,682	$	404,007	$	39,693	$	15,550	$	195,427	$	750,359
	December 31, 2014
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Total
	(In thousands)
Pass and Pass watch	$	106,467	$	376,134	$	36,229	$	19,357	$	174,143	$	712,330
Special mention	—		8,406		2,723		—		3,012		14,141
Substandard	1,741		4,281		589		242		2,026		8,879
Doubtful	—		—		—		—		—		—
Total loans	$	108,208	$	388,821	$	39,541	$	19,599	$	179,181	$	735,350

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STOCK BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2015

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, 2015.

	Number of Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
	(Unaudited)
Outstanding at December 31, 2014	1,100,520		$	12.96	5.3 years	$	4,172,000
Granted	130,500		16.99
Exercised	(77,239	)	12.08
Forfeited/Cancelled	(19,800	)	15.35
Outstanding at September 30, 2015	1,133,981		$	13.44	5.2 years	$	4,441,000
Exercisable at September 30, 2015	765,479		$	12.13	3.8 years	$	4,006,000

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, 2015 was estimated to be $2.24 - $3.24.  The fair value was based on the following assumptions:

Expected Dividend Yield				4.00	%
Expected Volatility	22.45	%	-	29.86	%
Risk-Free Interest Rate	1.65	%	-	1.74	%
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, 2015 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, 2014	369,503		$	3.90
Granted	130,500		3.21
Vested	(111,701	)	3.82
Forfeited / Cancelled	(19,800	)	3.84
Unvested at September 30, 2015	368,502		$	3.68

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, 2015 and changes therein during the nine months then ended.

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

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INVESTMENT AND MORTGAGE RELATED SECURITIES (Tables)

9 Months Ended

Sep. 30, 2015

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, 2015 and December 31, 2014 are summarized as follows: 

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

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, 2015 and December 31, 2014.

	September 30, 2015
	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:
Corporate securities	12,062		(30		)	—		—			12,062		(30		)
Agency residential mortgage related securities	$	23,424	$	(75	)	$	8,306	$	(73	)	$	31,730	$	(148	)
Total available-for-sale securities	$	35,486	$	(105	)	$	8,306	$	(73	)	$	43,792	$	(178	)
Held-to-Maturity Securities:
Corporate securities	1,771		(5		)	—		—			1,771		(5		)
Agency residential mortgage related securities	$	7,726	$	(34	)	$	10,258	$	(162	)	$	17,984	$	(196	)
Total held-to-maturity securities	$	9,497	$	(39	)	$	10,258	$	(162	)	$	19,755	$	(201	)
Total temporarily impaired securities	$	44,983	$	(144	)	$	18,564	$	(235	)	$	63,547	$	(379	)
	December 31, 2014
	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:
Agency residential mortgage related securities	$	8,229	$	(15	)	$	64,502	$	(657	)	$	72,731	$	(672	)
Total available-for-sale securities	$	8,229	$	(15	)	$	64,502	$	(657	)	$	72,731	$	(672	)
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	25,660	$	(110	)	$	27,182	$	(453	)	$	52,842	$	(563	)
Total held-to-maturity securities	$	25,660	$	(110	)	$	27,182	$	(453	)	$	52,842	$	(563	)
Total temporarily impaired securities	$	33,889	$	(125	)	$	91,684	$	(1,110	)	$	125,573	$	(1,235	)

Schedule of amortized cost of held-to-maturity investments

At September 30, 2015, 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
Securities transferred from available-for-sale	$	85,784	$	(1,625	)	$	(211	)	$	83,948
Other held-to-maturity securities	72,151		—			—			72,151
Total	$	157,935	$	(1,625	)	$	(211	)	$	156,099

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, 2015 and December 31, 2014 by contractual maturity are as follows:

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
September 30, 2015(Unaudited)
Due in one year or less	$	2,525	$	2,542	$	—	$	—
Due after one year through five years	15,417		15,408		1,776		1,771
Due after five years through ten years	—		—		—		—
Due after ten years	—		—		—		—
Total mortgage related securities	118,807		120,806		154,323		155,894
	$	136,749	$	138,756	$	156,099	$	157,665
December 31, 2014
Due in one year or less	$	5,803	$	5,818	$	—	$	—
Due after one year through five years	2,550		2,570		—		—
Due after five years through ten years	—		—		—		—
Due after ten years	—		—		—		—
Total mortgage related securities	123,929		125,649		170,172		170,854
	$	132,282	$	134,037	$	170,172	$	170,854

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STOCK BASED COMPENSATION

9 Months Ended

Sep. 30, 2015

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

STOCK BASED COMPENSATION

STOCK BASED COMPENSATION

During the nine months ended September 30, 2015, the Company recorded $1.0 million of stock based compensation expense comprised of stock option expense of $348,000 and restricted stock expense of $694,000. This compares to $894,000 of stock based compensation expense for the nine months ended September 30, 2014 comprised of stock option expense of $328,000 and restricted stock expense of $566,000.

The following is a summary of the Bancorp’s stock option activity and related information for the nine months ended September 30, 2015.

	Number of Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
	(Unaudited)
Outstanding at December 31, 2014	1,100,520		$	12.96	5.3 years	$	4,172,000
Granted	130,500		16.99
Exercised	(77,239	)	12.08
Forfeited/Cancelled	(19,800	)	15.35
Outstanding at September 30, 2015	1,133,981		$	13.44	5.2 years	$	4,441,000
Exercisable at September 30, 2015	765,479		$	12.13	3.8 years	$	4,006,000

NOTE 7 - STOCK BASED COMPENSATION (CONTINUED)

The fair value of the options granted during the nine months ended September 30, 2015 was estimated to be $2.24 - $3.24.  The fair value was based on the following assumptions:

Expected Dividend Yield				4.00	%
Expected Volatility	22.45	%	-	29.86	%
Risk-Free Interest Rate	1.65	%	-	1.74	%
Expected Option Life in Years				6.5

The following is a summary of the Bancorp’s unvested options as of September 30, 2015 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, 2014	369,503		$	3.90
Granted	130,500		3.21
Vested	(111,701	)	3.82
Forfeited / Cancelled	(19,800	)	3.84
Unvested at September 30, 2015	368,502		$	3.68

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

The following is a summary of the status of the Bancorp’s restricted stock as of September 30, 2015 and changes therein during the nine months then ended.

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

Expected future compensation expense relating to the 177,503 restricted shares at September 30, 2015 is $2.2 million over a weighted average period of 2.9 years. 

Performance-based restricted shares granted in 2012 and 2013, as discussed in the following paragraph, 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, actual and growth rate, compared to peer group and (2) earnings per share growth rate compared to peer group ("performance criteria"). Each performance metric has a 50% weight. On the third anniversary of the grant date ("measurement date"), the Company's level of performance relative to the performance 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 is variable and 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.

NOTE 7 - STOCK BASED COMPENSATION (CONTINUED)

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

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

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

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DEPOSITS

9 Months Ended

Sep. 30, 2015

Banking and Thrift [Abstract]

DEPOSITS

DEPOSITS

Deposits and their respective weighted average interest rate at September 30, 2015 and December 31, 2014 consist of the following: 

	September 30, 2015				December 31, 2014
	Weighted Average Interest Rate		Amount		Weighted Average Interest Rate		Amount
	(Dollars in thousands)
	(Unaudited)
Noninterest-bearing demand accounts	—	%	$	137,382	—	%	$	168,791
NOW accounts	0.21		89,018		0.21		82,417
Money market accounts	0.22		79,057		0.22		73,802
Savings and club accounts	0.38		128,973		0.37		129,893
Brokered deposits	0.76		78,460		0.73		70,817
Certificates of deposit	0.83		204,812		0.87		186,189
	0.44	%	$	717,702	0.42	%	$	711,909

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BORROWINGS

9 Months Ended

Sep. 30, 2015

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)
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
July 2017	10,000		0.92		Not Applicable	Not Applicable
November 2017	15,000		3.62		November 2015	3-month LIBOR + 0.10%
November 2017	15,000		3.87		November 2015	3-month LIBOR + 0.10%
December 2017	20,000		2.83		December 2015	3-month LIBOR + 0.11%
July 2018	10,000		1.32		Not Applicable	Not Applicable
	$	110,000	2.02	%

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

The Bank had a maximum borrowing capacity with the FHLB of Pittsburgh of approximately $470.4 million at September 30, 2015.  As of September 30, 2015, the Bank had qualifying collateral pledged against its advances consisting of loans in the amount of $587.4 million and securities in the amount of $68.8 million. Additionally, as of September 30, 2015, the Bank had a maximum borrowing capacity of $61.4 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 $62.3 million.

As a member of the FHLB of Pittsburgh, the Bank is required to acquire and hold shares of FHLB of Pittsburgh capital stock. The FHLB stock holding requirement is based on a percentage of the Bank's borrowings and a percentage of the Bank's "eligible assets" as defined by the FHLB. Percentages of borrowings and "eligible assets" used to determine the stock holding requirement are set by the FHLB from a defined range. Maximum percentages are 6.00% of its advances plus 1.00% of the Bank’s "eligible assets." Minimum percentages are 2.00% of its advances plus 0.05% of "eligible assets."  Current percentages are 4.00% of advances plus 0.10% of "eligible assets."  As of September 30, 2015, the Company had a minimum stock obligation of $2.5 million and a maximum stock obligation of $12.5 million.  The Company held $5.0 million in FHLB stock at that date.

NOTE 6 - BORROWINGS (CONTINUED)

Other Borrowed Funds

Other borrowed funds obtained from other commercial banks under security repurchase agreements totaled $30.0 million at September 30, 2015.  These borrowings contractually mature with dates ranging from October 2018 through November 2020. As disclosed in the table below, one of the borrowings may be called by the lender based on the underlying agreement.  Accordingly, the contractual maturity below may differ from actual maturity.

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

Mortgage backed securities with a fair value of $34.7 million at September 30, 2015 were used to secure these other borrowed funds. Changes in the fair value of pledged collateral may require the Company to pledge additional securities.

Short-term Borrowings

Short-term borrowings consist of overnight borrowings plus term borrowings with an original maturity of less than one year. Short-term borrowings are obtained from commercial banks, participants in the Federal Funds market and the FHLB. As of September 30, 2015, the Company had $60.0 million of short-term overnight borrowings with a weighted average rate of 0.36%.  As of December 31, 2014, the Company had $50.0 million of short-term borrowings consisting of $35.0 million of overnight borrowings and $15.0 million of short-term borrowings with weighted average rates of 0.31% and 0.33%, respectively.

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FAIR VALUE

9 Months Ended

Sep. 30, 2015

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

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities.  Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.  The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments at September 30, 2015 and December 31, 2014:

Cash and Cash Equivalents

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

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

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

NOTE 8 - FAIR VALUE (CONTINUED)

Loans Receivable, Net

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

FHLB Stock

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

Mortgage Servicing Rights

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

Accrued Interest Receivable and Accrued Interest Payable

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

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.

NOTE 8 - FAIR VALUE (CONTINUED)

The estimated fair values of the Company’s financial instruments at September 30, 2015 and December 31, 2014 were as follows: 

		September 30, 2015				December 31, 2014
	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	$	7,211	$	7,211	$	17,213	$	17,213
Investment securities available-for-sale	Level 2	138,756		138,756		134,037		134,037
Investment securities held-to-maturity	Level 2	156,099		157,665		170,172		170,854
Loans receivable, net	Level 3	739,489		744,058		724,326		732,142
FHLB stock	NA	4,986		NA		6,015		NA
Accrued interest receivable	Level 2, 3	3,174		3,174		3,147		3,147
Mortgage servicing rights	Level 3	98		98		111		111
Financial liabilities:
Savings and club accounts	Level 2	128,973		128,973		129,893		129,893
Demand, NOW and money market deposits	Level 2	305,457		305,457		325,010		325,010
Brokered deposits	Level 2	78,460		78,497		70,817		70,600
Certificates of deposit	Level 2	204,812		204,955		186,189		186,154
Short-term borrowings	Level 2	60,000		60,000		50,000		50,000
FHLB advances	Level 2	110,000		112,794		120,000		123,189
Other borrowed funds	Level 2	30,000		31,918		30,000		32,017
Accrued interest payable	Level 2	310		310		311		311
Derivative contracts	Level 2, 3	193		193		174		174

The following financial instruments were classified as Level 3 and carried at fair value on a recurring basis as of September 30, 2015:

• 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 $172,000 at September 30, 2015 compared to $152,000 at December 31, 2014.

• Credit derivatives are valued based on creditworthiness of the underlying borrower which is a significant unobservable input.  The liability resulting from credit derivatives was $10,000 and $12,000 at September 30, 2015 and December 31, 2014, respectively.

NOTE 8 - FAIR VALUE (CONTINUED)

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

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

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

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

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

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

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

NOTE 8 - FAIR VALUE (CONTINUED)

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

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, 2014 to September 30, 2015 and December 31, 2013 to September 30, 2014. 

Nine Months Ended September 30, 2015
		Private Label Commercial Mortgage Related Securities			Derivative Contracts			Financial Assets Acquired from Debtors			Loans			Total
	(In thousands, Unaudited)
Beginning balance, December 31, 2014		$	—		$	(12	)	$	—		$	2,451		$	2,439
Purchases/additions		—			(2		)	—			—			(2		)
Sales		—			—			—			—			—
Payments received		—			—			—			(89		)	(89		)
Premium amortization, net		—			—			—			—			—
Increase (decrease) in value		—			4			—			19			23
Ending balance, September 30, 2015		$	—		$	(10	)	$	—		$	2,381		$	2,371
Nine Months Ended September 30, 2014
		Private 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

There were no transfers made between levels during the nine months ended September 30, 2015 or 2014.

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LOANS (Loans and Allowance for Loan Losses, Individually or Collectively Evaluated for Impairment) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Dec. 31, 2013
Allowance for Loan Losses:
Balance, ending: individually evaluated for impairment	$ 758	$ 552
Balance, ending: collectively evaluated for impairment	9,865	10,178
Total	10,623	10,730	$ 11,099	$ 11,529
Total Loans:
Balance, ending: individually evaluated for impairment	13,795	11,532
Balance, ending: collectively evaluated for impairment	736,564	723,818
Total	750,359	735,350
One- to four-family
Allowance for Loan Losses:
Balance, ending: individually evaluated for impairment	3	11
Balance, ending: collectively evaluated for impairment	372	394
Total	375	405	220	403
Total Loans:
Balance, ending: individually evaluated for impairment	2,411	2,629
Balance, ending: collectively evaluated for impairment	93,271	105,579
Total	95,682	108,208
Multi-family and commercial
Allowance for Loan Losses:
Balance, ending: individually evaluated for impairment	537	401
Balance, ending: collectively evaluated for impairment	5,607	5,589
Total	6,144	5,990	6,975	7,141
Total Loans:
Balance, ending: individually evaluated for impairment	7,139	5,849
Balance, ending: collectively evaluated for impairment	396,868	382,972
Total	404,007	388,821
Construction
Allowance for Loan Losses:
Balance, ending: individually evaluated for impairment	126	114
Balance, ending: collectively evaluated for impairment	543	924
Total	669	1,038	608	324
Total Loans:
Balance, ending: individually evaluated for impairment	3,393	2,723
Balance, ending: collectively evaluated for impairment	36,300	36,818
Total	39,693	39,541
Consumer
Allowance for Loan Losses:
Balance, ending: individually evaluated for impairment	38	26
Balance, ending: collectively evaluated for impairment	136	158
Total	174	184	159	153
Total Loans:
Balance, ending: individually evaluated for impairment	122	256
Balance, ending: collectively evaluated for impairment	15,428	19,343
Total	15,550	19,599
Commercial and industrial
Allowance for Loan Losses:
Balance, ending: individually evaluated for impairment	54	0
Balance, ending: collectively evaluated for impairment	2,741	2,753
Total	2,795	2,753	2,655	3,051
Total Loans:
Balance, ending: individually evaluated for impairment	730	75
Balance, ending: collectively evaluated for impairment	194,697	179,106
Total	195,427	179,181
Unallocated
Allowance for Loan Losses:
Balance, ending: individually evaluated for impairment	0	0
Balance, ending: collectively evaluated for impairment	466	360
Total	466	360	$ 482	$ 457
Total Loans:
Balance, ending: individually evaluated for impairment	0	0
Balance, ending: collectively evaluated for impairment	0	0
Total	$ 0	$ 0

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DEPOSITS (Tables)

9 Months Ended

Sep. 30, 2015

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, 2015 and December 31, 2014 consist of the following: 

	September 30, 2015				December 31, 2014
	Weighted Average Interest Rate		Amount		Weighted Average Interest Rate		Amount
	(Dollars in thousands)
	(Unaudited)
Noninterest-bearing demand accounts	—	%	$	137,382	—	%	$	168,791
NOW accounts	0.21		89,018		0.21		82,417
Money market accounts	0.22		79,057		0.22		73,802
Savings and club accounts	0.38		128,973		0.37		129,893
Brokered deposits	0.76		78,460		0.73		70,817
Certificates of deposit	0.83		204,812		0.87		186,189
	0.44	%	$	717,702	0.42	%	$	711,909

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PRINCIPLES OF CONSOLIDATION AND PRESENTATION (Earnings Per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Earnings per share:
Net income	$ 2,328	$ 1,816	$ 7,763	$ 6,087
Weighted-average common shares outstanding (in shares)	11,581,257	12,075,448	11,661,023	12,110,185
Average common stock acquired by stock benefit plans:
ESOP shares unallocated (shares)	(448,395)	(513,441)	(464,495)	(529,544)
Shares purchased by trust (shares)	(213,953)	(274,123)	(235,200)	(289,261)
Weighted-average common shares used to calculate basic earnings per share (in shares)	10,918,909	11,287,884	10,961,328	11,291,380
Dilutive effect of:
Restricted stock awards (shares)	32,370	42,294	40,489	50,477
Stock option awards (shares)	196,981	193,739	197,179	199,215
Weighted-average common shares used to calculate diluted earnings per share (in shares)	11,148,260	11,523,917	11,198,996	11,541,072
Earnings per share-basic (in dollars per share)	$ 0.21	$ 0.16	$ 0.71	$ 0.54
Earnings per share-diluted (in dollars per share)	$ 0.21	$ 0.16	$ 0.69	$ 0.53
Outstanding common stock equivalents which are anti-dilutive (in shares)	485,060	293,500	485,960	293,500

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FAIR VALUE (Recurring and Nonrecurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	$ 138,756	$ 134,037
Mortgage servicing rights, net	98	111
Balance | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	138,756	134,037
Balance | Significant Other Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage servicing rights, net	98	111
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Obligations of U.S. government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	0	0
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	0	0
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Agency residential mortgage related securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	0	0
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans	0	0
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Derivatives contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative contracts	0	0
Recurring basis | Significant Other Observable Inputs (Level 2) | Obligations of U.S. government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	304	302
Recurring basis | Significant Other Observable Inputs (Level 2) | Corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	17,646	8,086
Recurring basis | Significant Other Observable Inputs (Level 2) | Agency residential mortgage related securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	120,806	125,649
Recurring basis | Significant Other Observable Inputs (Level 2) | Loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans	0	0
Recurring basis | Significant Other Observable Inputs (Level 2) | Derivatives contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative contracts	(183)	(162)
Recurring basis | Significant Other Unobservable Inputs (Level 3) | Obligations of U.S. government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	0	0
Recurring basis | Significant Other Unobservable Inputs (Level 3) | Corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	0	0
Recurring basis | Significant Other Unobservable Inputs (Level 3) | Agency residential mortgage related securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	0	0
Recurring basis | Significant Other Unobservable Inputs (Level 3) | Loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans	2,381	2,451
Recurring basis | Significant Other Unobservable Inputs (Level 3) | Derivatives contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative contracts	(10)	(12)
Recurring basis | Balance | Obligations of U.S. government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	304	302
Recurring basis | Balance | Corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	17,646	8,086
Recurring basis | Balance | Agency residential mortgage related securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available-for-sale	120,806	125,649
Recurring basis | Balance | Loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans	2,381	2,451
Recurring basis | Balance | Derivatives contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative contracts	(193)	(174)
Non-recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans	0	0
Mortgage servicing rights, net	0	0
Non-recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans	0	0
Non-recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Other real estate owned
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans	0	0
Non-recurring basis | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans	0	0
Mortgage servicing rights, net	0	0
Non-recurring basis | Significant Other Observable Inputs (Level 2) | Loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans	0	0
Non-recurring basis | Significant Other Observable Inputs (Level 2) | Other real estate owned
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans	0	0
Non-recurring basis | Significant Other Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans	4,153	4,579
Mortgage servicing rights, net	98	111
Non-recurring basis | Significant Other Unobservable Inputs (Level 3) | Loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans	1,240	1,654
Non-recurring basis | Significant Other Unobservable Inputs (Level 3) | Other real estate owned
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans	2,815	2,814
Non-recurring basis | Balance
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans	4,153	4,579
Mortgage servicing rights, net	98	111
Non-recurring basis | Balance | Loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans	1,240	1,654
Non-recurring basis | Balance | Other real estate owned
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans	$ 2,815	$ 2,814

XML

DERIVATIVES AND HEDGING (Details) $ in Thousands			3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 12, 2011	Nov. 03, 2006	Sep. 30, 2015 USD ($) transaction	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) transaction	Sep. 30, 2014 USD ($)	Dec. 31, 2014 USD ($) transaction
Interest rate swap maturing in April 2022
Interest Rate Swaps
Notional amount			$ 735		$ 735
Fixed rate loan term		15 years
Interest rate on loans receivable		7.43%
Interest rate derivative activities		1-month LIBOR
Margin added to derivative interest rate (as a percent)		2.24%
Fixed interest rate to be paid under hedge (as a percent)		7.43%
Fair value loss position on interest rate swap derivative			107		107		$ 116
Interest rate swap maturing in October 2021
Interest Rate Swaps
Notional amount			1,500		1,500
Fixed rate loan term	10 years
Interest rate on loans receivable	5.83%
Interest rate derivative activities	1-month LIBOR
Margin added to derivative interest rate (as a percent)	3.50%
Fixed interest rate to be paid under hedge (as a percent)	5.83%
Fair value loss position on interest rate swap derivative			77		77		$ 46
Gain (loss) on fair value hedge ineffectiveness			$ (3)	$ (2)	$ (2)	$ (12)
Credit Derivatives (Interest Rate Swap Underlyings)
Credit Derivatives
Number of derivative transactions | transaction			4		4		4
Notional amount of credit swap derivative (protection sold)			$ 12,300		$ 12,300		$ 12,600
Remaining maturity period, minimum					4 years		5 years
Remaining maturity period, maximum					7 years		8 years
Fair value of swap asset (liability)			(195)		$ (195)		$ 91
Derivative liability			8		8		$ 10
Recognized income			$ (3)	(1)	$ 3	(2)
Credit Derivatives (Foreign Currency Swap Underlyings)
Credit Derivatives
Number of derivative transactions | transaction			4		4		6
Notional amount of credit swap derivative (protection sold)			$ 1,200		$ 1,200		$ 366
Remaining maturity period, minimum					1 month		1 month
Remaining maturity period, maximum					3 months		4 months
Fair value of swap asset (liability)			4		$ 4		$ 44
Derivative liability			2		2		$ 2
Recognized income			$ 1	$ 2	$ 3	$ 4

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Statement of Comprehensive Income [Abstract]
Net income	$ 2,328	$ 1,816	$ 7,763	$ 6,087
Other comprehensive income (loss):
Unrealized holding gains (losses) on investment securities	675	(320)	253	6,160
Tax effect	(230)	109	(81)	(2,174)
Net of tax amount	445	(211)	172	3,986
Accretion of unrealized loss on securities reclassified to held-to-maturity	59	16	151	16
Tax effect	(21)	(6)	(55)	(6)
Net of tax amount	38	10	96	10
Other comprehensive income (loss)	483	(201)	268	3,996
Comprehensive income	$ 2,811	$ 1,615	$ 8,031	$ 10,083

XML

INVESTMENT AND MORTGAGE RELATED SECURITIES

9 Months Ended

Sep. 30, 2015

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, 2015 and December 31, 2014 are summarized as follows: 

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

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, 2015 and December 31, 2014.

	September 30, 2015
	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:
Corporate securities	12,062		(30		)	—		—			12,062		(30		)
Agency residential mortgage related securities	$	23,424	$	(75	)	$	8,306	$	(73	)	$	31,730	$	(148	)
Total available-for-sale securities	$	35,486	$	(105	)	$	8,306	$	(73	)	$	43,792	$	(178	)
Held-to-Maturity Securities:
Corporate securities	1,771		(5		)	—		—			1,771		(5		)
Agency residential mortgage related securities	$	7,726	$	(34	)	$	10,258	$	(162	)	$	17,984	$	(196	)
Total held-to-maturity securities	$	9,497	$	(39	)	$	10,258	$	(162	)	$	19,755	$	(201	)
Total temporarily impaired securities	$	44,983	$	(144	)	$	18,564	$	(235	)	$	63,547	$	(379	)
	December 31, 2014
	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:
Agency residential mortgage related securities	$	8,229	$	(15	)	$	64,502	$	(657	)	$	72,731	$	(672	)
Total available-for-sale securities	$	8,229	$	(15	)	$	64,502	$	(657	)	$	72,731	$	(672	)
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	25,660	$	(110	)	$	27,182	$	(453	)	$	52,842	$	(563	)
Total held-to-maturity securities	$	25,660	$	(110	)	$	27,182	$	(453	)	$	52,842	$	(563	)
Total temporarily impaired securities	$	33,889	$	(125	)	$	91,684	$	(1,110	)	$	125,573	$	(1,235	)

During the three and nine month periods ended September 30, 2015 and 2014, no securities were sold. There were no net investment securities gains or losses in the consolidated statement of operations for the three and nine month periods ended September 30, 2015 or 2014.

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

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

NOTE 2 - INVESTMENT AND MORTGAGE RELATED SECURITIES (CONTINUED)

At September 30, 2015, 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
Securities transferred from available-for-sale	$	85,784	$	(1,625	)	$	(211	)	$	83,948
Other held-to-maturity securities	72,151		—			—			72,151
Total	$	157,935	$	(1,625	)	$	(211	)	$	156,099

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

The amortized cost and estimated fair value of investment securities available-for-sale and held-to-maturity at September 30, 2015 and December 31, 2014 by contractual maturity are as follows:

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
September 30, 2015(Unaudited)
Due in one year or less	$	2,525	$	2,542	$	—	$	—
Due after one year through five years	15,417		15,408		1,776		1,771
Due after five years through ten years	—		—		—		—
Due after ten years	—		—		—		—
Total mortgage related securities	118,807		120,806		154,323		155,894
	$	136,749	$	138,756	$	156,099	$	157,665
December 31, 2014
Due in one year or less	$	5,803	$	5,818	$	—	$	—
Due after one year through five years	2,550		2,570		—		—
Due after five years through ten years	—		—		—		—
Due after ten years	—		—		—		—
Total mortgage related securities	123,929		125,649		170,172		170,854
	$	132,282	$	134,037	$	170,172	$	170,854

Securities with a fair value of $40.6 million and $37.0 million at September 30, 2015 and December 31, 2014, respectively, were pledged to secure public deposits.

Securities with a fair value of $165.8 million and $169.7 million at September 30, 2015 and December 31, 2014, respectively, were used to secure FHLB advances, short-term borrowings, other borrowed funds and related unused borrowing capacities.  See Note 6.

Securities with a fair value of $931,000 and $1.1 million at September 30, 2015 and December 31, 2014, respectively, were used to secure derivative transactions. See Note 4.

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INVESTMENT AND MORTGAGE RELATED SECURITIES (Amortized Cost and Fair Value of Securities) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Available-for-Sale Securities:
Amortized Cost	$ 136,749	$ 132,282
Gross Unrealized Gains	2,185	2,427
Gross Unrealized Losses	(178)	(672)
Fair Value	138,756	134,037
Held-to-Maturity Securities:
Amortized Cost	156,099	170,172
Gross Unrealized Gains	1,767	1,245
Gross Unrealized Losses	(201)	(563)
Investment securities held to maturity, fair value	157,665	170,854
Obligations of U.S. government agencies
Available-for-Sale Securities:
Amortized Cost	301	300
Gross Unrealized Gains	3	2
Gross Unrealized Losses	0	0
Fair Value	304	302
Corporate securities
Available-for-Sale Securities:
Amortized Cost	17,641	8,053
Gross Unrealized Gains	35	33
Gross Unrealized Losses	(30)	0
Fair Value	17,646	8,086
Held-to-Maturity Securities:
Amortized Cost	1,776
Gross Unrealized Gains	0
Gross Unrealized Losses	(5)
Investment securities held to maturity, fair value	1,771
Private label residential mortgage related securities
Available-for-Sale Securities:
Amortized Cost	2,700	3,000
Held-to-Maturity Securities:
Amortized Cost	2,652	2,979
Gross Unrealized Gains	1	6
Gross Unrealized Losses	0	0
Investment securities held to maturity, fair value	2,653	2,985
Agency residential mortgage related securities
Available-for-Sale Securities:
Amortized Cost	118,807	123,929
Gross Unrealized Gains	2,147	2,392
Gross Unrealized Losses	(148)	(672)
Fair Value	120,806	125,649
Held-to-Maturity Securities:
Amortized Cost	151,671	167,193
Gross Unrealized Gains	1,766	1,239
Gross Unrealized Losses	(196)	(563)
Investment securities held to maturity, fair value	$ 153,241	$ 167,869

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LOANS (TDR Activity) (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($) loan	Sep. 30, 2014 USD ($) loan	Sep. 30, 2015 USD ($) loan	Sep. 30, 2014 USD ($) loan
TDR activity
Number of Loans | loan	0	0	2	2
Pre-Modification Outstanding Recorded Investment	$ 0	$ 0	$ 1,685	$ 1,885
Post-Modification Outstanding Recorded Investment	$ 0	$ 0	$ 1,685	$ 1,785
One- to four-family
TDR activity
Number of Loans | loan	0	0	0	1
Pre-Modification Outstanding Recorded Investment	$ 0	$ 0	$ 0	$ 245
Post-Modification Outstanding Recorded Investment	$ 0	$ 0	$ 0	$ 245
Multi-family and commercial
TDR activity
Number of Loans | loan	0	0	1	1
Pre-Modification Outstanding Recorded Investment	$ 0	$ 0	$ 914	$ 1,640
Post-Modification Outstanding Recorded Investment	$ 0	$ 0	$ 914	$ 1,540
Construction
TDR activity
Number of Loans | loan	0	0	0	0
Pre-Modification Outstanding Recorded Investment	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	$ 0	$ 0	$ 0	$ 0
Consumer loans
TDR activity
Number of Loans | loan	0	0	0	0
Pre-Modification Outstanding Recorded Investment	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	$ 0	$ 0	$ 0	$ 0
Commercial and industrial
TDR activity
Number of Loans | loan	0	0	1	0
Pre-Modification Outstanding Recorded Investment	$ 0	$ 0	$ 771	$ 0
Post-Modification Outstanding Recorded Investment	$ 0	$ 0	$ 771	$ 0

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LOANS (Tables)

9 Months Ended

Sep. 30, 2015

Receivables [Abstract]

Schedule of composition of net loans

The composition of net loans at September 30, 2015 and December 31, 2014 is provided below:

	September 30, 2015			December 31, 2014
	(In thousands)
	(Unaudited)
Real estate loans:
One- to four-family	$	95,682		$	108,208
Multi-family and commercial	404,007			388,821
Construction	39,693			39,541
	539,382			536,570
Consumer loans	15,550			19,599
Commercial and industrial loans	195,427			179,181
Total loans	750,359			735,350
Deferred loan origination fees, net	(247		)	(294		)
Allowance for loan losses	(10,623		)	(10,730		)
Net loans	$	739,489		$	724,326

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, 2015 and the nine months ended September 30, 2014.

	Nine Months Ended September 30, 2015
	One- to Four-Family			Multi-family and Commercial			Construction			Consumer			Commercial and Industrial			Unallocated		Total
	(In thousands, Unaudited)
Balance, beginning	$	405		$	5,990		$	1,038		$	184		$	2,753		$	360	$	10,730
Provision (credit) for loan losses	144			107			(664		)	(825		)	37			106		(1,095		)
Loans charged off	(174		)	(16		)	—			—			—			—		(190		)
Recoveries	—			63			295			815			5			—		1,178
Balance, ending	$	375		$	6,144		$	669		$	174		$	2,795		$	466	$	10,623
	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

Loans and allowance for loan losses individually or collectively evaluated for impairment

The following tables provide details of loans, and associated allowance for loan losses, which are individually or collectively evaluated for impairment as of September 30, 2015 and December 31, 2014.

	As of September 30, 2015
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Unallocated		Total
	(In thousands, Unaudited)
Allowance for Loan Losses:
Balance, ending: individually evaluated for impairment	$	3	$	537	$	126	$	38	$	54	$	—	$	758
Balance, ending: collectively evaluated for impairment	372		5,607		543		136		2,741		466		9,865
Total	$	375	$	6,144	$	669	$	174	$	2,795	$	466	$	10,623
Total Loans:
Balance, ending: individually evaluated for impairment	$	2,411	$	7,139	$	3,393	$	122	$	730	$	—	$	13,795
Balance, ending: collectively evaluated for impairment	93,271		396,868		36,300		15,428		194,697		—		736,564
Total	$	95,682	$	404,007	$	39,693	$	15,550	$	195,427	$	—	$	750,359
	As of December 31, 2014
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Unallocated		Total
	(In thousands)
Allowance for Loan Losses:
Balance, ending: individually evaluated for impairment	$	11	$	401	$	114	$	26	$	—	$	—	$	552
Balance, ending: collectively evaluated for impairment	394		5,589		924		158		2,753		360		10,178
Total	$	405	$	5,990	$	1,038	$	184	$	2,753	$	360	$	10,730
Total Loans:
Balance, ending: individually evaluated for impairment	$	2,629	$	5,849	$	2,723	$	256	$	75	$	—	$	11,532
Balance, ending: collectively evaluated for impairment	105,579		382,972		36,818		19,343		179,106		—		723,818
Total	$	108,208	$	388,821	$	39,541	$	19,599	$	179,181	$	—	$	735,350

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, 2015 and December 31, 2014.

September 30, 2015
	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	$	1,530	$	881	$	—	$	2,411	$	210	$	2,201
Multi-family and commercial	1,076		1,685		4,378		7,139		6,368		771
Construction	—		3,393		—		3,393		3,393		—
Consumer loans	110		12		—		122		46		76
Commercial and industrial	730		—		—		730		730		—
Total	$	3,446	$	5,971	$	4,378	$	13,795	$	10,747	$	3,048
December 31, 2014
	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	$	1,741	$	888	$	—	$	2,629	$	137	$	2,492
Multi-family and commercial	1,395		—		4,454		5,849		4,502		1,347
Construction	—		2,723		—		2,723		2,723		—
Consumer loans	243		13		—		256		82		174
Commercial and industrial	75		—		—		75		—		75
Total	$	3,454	$	3,624	$	4,454	$	11,532	$	7,444	$	4,088

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, 2015 and December 31, 2014.

September 30, 2015	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	$	3	$	—	$	—	$	3	$	372	$	375
Multi-family and commercial	113		45		379		537		5,607		6,144
Construction	—		126		—		126		543		669
Consumer loans	38		—		—		38		136		174
Commercial and industrial	54		—		—		54		2,741		2,795
Unallocated	—		—		—		—		466		466
Total allowance for loan losses	$	208	$	171	$	379	$	758	$	9,865	$	10,623
December 31, 2014	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	$	11	$	—	$	—	$	11	$	394	$	405
Multi-family and commercial	10		—		391		401		5,589		5,990
Construction	—		114		—		114		924		1,038
Consumer loans	26		—		—		26		158		184
Commercial and industrial	—		—		—		—		2,753		2,753
Unallocated	—		—		—		—		360		360
Total allowance for loan losses	$	47	$	114	$	391	$	552	$	10,178	$	10,730

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, 2015 and 2014. 

	Three Months Ended September 30, 2015						Nine Months Ended September 30, 2015
	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	—	$	—	$	—		—	$	—	$	—
Multi-family and commercial	—	—		—			1	914		914		Delayed Repayment
Construction	—	—		—			—	—		—
Consumer loans	—	—		—			—	—		—
Commercial and industrial	—	—		—			1	771		771		Delayed Repayment
Total	—	$	—	$	—		2	$	1,685	$	1,685
	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 reduction
Multi-family and commercial	—	—		—			1	1,640		1,540		Principal reduction
Construction	—	—		—			—	—		—
Consumer loans	—	—		—			—	—		—
Commercial and industrial	—	—		—			—	—		—
Total	—	$	—	$	—		2	$	1,885	$	1,785

Schedule of past due loans by segment

The following table sets forth past due loans by segment as of September 30, 2015 and December 31, 2014.

	September 30, 2015				December 31, 2014
	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	$	122	$	15	$	—	$	145
Multi-family and commercial real estate	350		92		—		—
Construction	—		—		—		—
Consumer	69		72		113		—
Commercial and industrial	—		—		—		—
Total	$	541	$	179	$	113	$	145

Schedule of criticized and classified loans by segment

The following tables set forth criticized and classified loans by segment as of September 30, 2015 and December 31, 2014. 

	September 30, 2015
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Total
	(In thousands, Unaudited)
Pass and Pass watch	$	94,152	$	388,682	$	36,276	$	15,440	$	191,080	$	725,630
Special mention	—		13,898		—		—		2,498		16,396
Substandard	1,530		1,427		3,417		110		1,849		8,333
Doubtful	—		—		—		—		—		—
Total loans	$	95,682	$	404,007	$	39,693	$	15,550	$	195,427	$	750,359
	December 31, 2014
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Total
	(In thousands)
Pass and Pass watch	$	106,467	$	376,134	$	36,229	$	19,357	$	174,143	$	712,330
Special mention	—		8,406		2,723		—		3,012		14,141
Substandard	1,741		4,281		589		242		2,026		8,879
Doubtful	—		—		—		—		—		—
Total loans	$	108,208	$	388,821	$	39,541	$	19,599	$	179,181	$	735,350