Search
Close this search box.

Sunday, July 21, 2024

Search

Bad Shore Loan Forces Bank to Increase Reserves

 

By Joe Hart

HATBORO, Pa. — A Pennsylvania-based bank with two branches in Cape May County is positioning itself to take a hit in part due to a multi-million dollar residential construction loan that’s not being paid.
Although not specified, a release from Fox Chase Bancorp, Inc. said the project was located “in the southern New Jersey shore area.”
Specifically, the release said the bank had to increase its loan loss provision and expected to sustain a loss in the fourth quarter. Fox Chase’s Chief Financial Officer Roger Deacon told the Herald it would be a “nominal” loss for the quarter of between $100,000 and $300,000.
“We’ve also increased reserves for potential losses on our loan portfolio,” Deacon said.
A release cited three factors in the company’s decision to increase those reserves:
• Downgrades to existing credits, primarily in the residential real estate development portfolio
• Increases to loss factors for classified loans and the construction loan portfolio due to a significant deterioration in economic environment during the fourth quarter
• Establishment of a specific reserve of $624,000 related to the aforementioned $3.5 million construction loan collateralized by a residential development located at the Jersey shore. The increase was “primarily related to this loan being placed on nonaccrual status,” the release stated.
Despite this setback, Fox Chase’s leadership remains upbeat.
“Even though the Bank remains well-capitalized and has experienced only minimal charge-offs, the deteriorating economic conditions and erosion of residential real estate values are adversely impacting our loan portfolio,” stated Thomas M. Petro, Fox Chase’s president and CEO, in a Jan. 20 release.
“We do not expect residential real estate market conditions to improve in the near term and anticipate continuing pressures in this segment of our business. We believe that our current level of reserves for troubled loans is appropriate given this adverse economic environment.”
In a Sept. 16, 2008 release, Fox Chase announced that the seizure of Frannie Mae and Feddie Mac by the U.S. Treasury would have no impact on the company’s operation or capital.
Is the bank still giving loans?
“Yes. We’re still lending, but we are also being appropriately cautious given the current economic environment,” Deacon told the Herald.
Fox Chase Bank, headquartered in Hatboro, Pa., has 10 branch offices including one at at 8 Route 9 South, Marmora, and another at 921 West Ave., Ocean City.
For more information visit www.foxchasebank.com.
Contact Hart at (609) 886-8600 Ext 35 or at: jhart@cmcherald.com

Spout Off

Stone Harbor – Great thing about this country is we are free to have our own thoughts and ideas. Not sure if I would fly the anti Biden flag but don’t think religion and politics mix. Biden is a so called…

Read More

Cape May County – Some Democrats are trying to do the same thing to Biden now some Republicans and Democrats tried to do to President Trump in 2016 and throughout his presidency. The American people vote for our…

Read More

Cape May County – Since I'm hearing of so many County owned and maintained properties going to hell, who do we need to contact at the state level to finally get these issues addressed? County employees and…

Read More

Most Read

Print Editions

Recommended Articles

Skip to content