SOURCE: Royal Bancshares of Pennsylvania

Royal Bancshares of Pennsylvania

August 19, 2010 16:40 ET

Royal Bancshares of Pennsylvania, Inc. Announces Financial Results for Second Quarter Ended June 30, 2010

NARBERTH, PA--(Marketwire - August 19, 2010) - Royal Bancshares of Pennsylvania, Inc. (NASDAQ: RBPAA), today announced its financial results for the second quarter ended June 30, 2010. The net loss attributable to Royal Bancshares ("Royal") was $4.5 million for the quarter, or 38 cents per common share, compared to a net loss of $12.1 million, or 95 cents per common share, in the quarter ended June 30, 2009.

The improved second quarter results were primarily due to an increase in net interest income of $1.4 million due to lower funding costs and a one-time adjustment to interest income of $905,000, a reduction in the allowance for loan losses of $2.7 million, and an improvement of $4.9 million in impairment losses on available for sale securities. These improvements were partially offset by a $2.5 million impairment on real estate joint ventures.

For the six months ended June 30, 2010, net loss attributable to Royal Bancshares was $5.6 million, or 50 cents per common share, compared to a net loss of $18.8 million or $1.47 per share in the first six months of 2009.

This improvement was due to a $2.4 million increase in net interest income mainly due to lower funding costs, a $3.6 million improvement in the provision for loan losses, and a $9.0 million reduction in impairment losses on available for sale securities, partially offset by a $2.5 million impairment on real estate joint ventures, and a $1.2 million increase in impairments on OREO properties.

Robert R. Tabas, Chairman and CEO, said, "We are navigating the challenging economic environment while working hard to recast our balance sheet, mitigate risk in the loan portfolio, and position our company for the future. We also continue to reduce our reliance on high-cost brokered deposits and Federal Home Loan Bank advances, and during the second quarter we made continued progress in this regard while also maintaining core consumer and commercial deposits through our branch network."

Mr. Tabas concluded, "The credit environment continues to be a challenge. While we have seen improvements and good news in some segments of the loan portfolio, we've also had setbacks. During the second quarter we wrote off two loans totaling $3.5 million due to deterioration in collateral values. However, we had a successful auction of foreclosed real estate in New Jersey during the second quarter, and subsequent to quarter end we sold another property in Philadelphia. The auction proceeds will be reflected in both second and third quarter financial results."

The following is an overview of key financial metrics for the quarter:

   -- Total assets were $1.18 billion at June 30, 2010, a decrease
      of 8.53% from $1.29 billion at December 31, 2009.

   -- Second quarter 2010 deposit levels were $791.8 million, down $90
      million or 10.21% from $881.8 million at December 31, 2009 and down
      $34.4 million or 4.16% from $826.2 million at March 31, 2010.  This
      was a planned reduction as the company is actively reducing its
      reliance on brokered deposits. We also continue to reduce other
      borrowings via allowing Federal Home Loan Bank advances to redeem at
      maturity.  Royal continues to maintain its deposit base from
      consumer and commercial accounts, reflecting confidence in the brand
      throughout the marketplace as well as the bank's competitive
      interest rates on deposit products.

   -- Net loans and leases at quarter end were $612.2 million, down 7.00%
      or $46.6 million compared to $658.8 million at December 31, 2009
      (which includes loans held for sale) and down $18.2 million or 2.89%
      from $630.4 million at March 31, 2010.

   -- Net interest income increased to $8.3 million in the second quarter
      of 2010, from $6.9 million for the same period in 2009, largely due
      to a lower cost of funds compared to prior periods.  This also drove
      an increase in net interest income to $16.4 million for the six
      months ended June 30, 2010, compared to $14.0 million for the same
      period in 2009.

   -- Net interest margin in the second quarter was 3.01%, up 71 basis
      points from the comparable 2009 quarter of 2.30%.  Net interest
      margin for the six month period was 2.90%, up 50 basis points from
      2.40% in the comparable period of 2009.   Net interest margin was
      favorably impacted by 32 basis points in the quarter and 15 basis
      points for the six month period, due to the previously-mentioned
      income adjustment of $905,000.

   -- Non-accrual and impaired loans were $74.4 million at June 30, 2010,
      up slightly compared to $73.7 million at December 31, 2009.  An
      increase in nonaccrual loans since year end was mostly offset as a
      result of loans becoming current and placed back on accrual, loan
      payoffs, transfers to other real estate owned, and charge-offs.
      Royal has no troubled debt restructured loans or loans past due 90
      days or more on which it has continued to accrue interest during
      the quarter.

   -- At June 30, 2010, Royal Bank America had capital ratios above the
      level required to meet regulatory standards for a well-capitalized
      institution.  Total capital to risk-weighted assets was 14.57%;
      Tier I capital to risk-weighted assets was 13.30%: and Tier I
      capital to average assets was 8.83%.

About Royal Bancshares of Pennsylvania, Inc.

Royal Bancshares of Pennsylvania, Inc., headquartered in Narberth, Pennsylvania, is a two-bank holding company operating the Royal Bank America and Royal Asian Bank brands in Pennsylvania, New Jersey and New York. For the past 40+ years, Royal has played a lead role in the growth and development of our region, empowering small businesses, entrepreneurs and individuals to achieve their financial goals and enrich our communities. More information on Royal Bancshares of Pennsylvania, our banks and subsidiaries is available at www.royalbankamerica.com.

Forward Looking Statements

The foregoing material may contain forward-looking statements. We caution that such statements may be subject to a number of uncertainties, and actual results could differ materially; therefore, readers should not place undue reliance on any forward-looking statements. Royal Bancshares of Pennsylvania, Inc. does not undertake, and specifically disclaims, any obligation to publicly release the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. For a discussion of the factors that could cause actual results to differ from the results discussed in any such forward-looking statements, see the filings made by Royal Bancshares of Pennsylvania, Inc. with the Securities and Exchange Commission, including its Annual Report - Form 10-K for the year ended December 31, 2009.

ROYAL BANCSHARES OF PENNSYLVANIA, INC.
CONDENSED INCOME STATEMENT

                                 Three Months             Six Months
                                Ended Jun. 30th         Ended Jun. 30th
(in thousands, except for
 earnings per common share)    2010        2009        2010        2009
                            ----------  ----------  ----------  ----------
                            (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest Income             $   15,173  $   16,570  $   30,796  $   32,924
Interest Expense                 6,839       9,681      14,442      18,966
                            ----------  ----------  ----------  ----------
Net Interest Income              8,334       6,889      16,354      13,958
Provision for Loan Losses        4,290       6,956       6,193       9,753
                            ----------  ----------  ----------  ----------
Net Interest Income (Loss)
 after Provision                 4,044         (67)     10,161       4,205
Non Interest Income/(Loss)       1,718      (3,404)      3,023      (6,988)
Non Interest Expense            10,041       8,319      18,094      15,544
                            ----------  ----------  ----------  ----------
Loss before Taxes               (4,279)    (11,790)     (4,910)    (18,327)
Income Taxes                         0           0           0           0
                            ----------  ----------  ----------  ----------
Net Loss                        (4,279)    (11,790)     (4,910)    (18,327)
Less Net Income
 attributable to
 noncontrolling interest           259         264         701         480
Net Loss attributable to
 Royal Bancshares           $   (4,538) $  (12,054) $   (5,611) $  (18,807)
                            ==========  ==========  ==========  ==========
Loss per common share -
 basic                      $    (0.38) $    (0.95)$     (0.50)$     (1.47)
                            ==========  ==========  ==========  ==========
SELECTED RATIOS:
Return on Average Assets          -1.5%       -3.9%       -0.9%       -6.2%
Return on Average Equity         -17.2%      -45.5%      -10.7%      -75.3%
Average Equity to Assets           8.7%        8.5%        8.5%        8.3%
Book Value Per Share        $     5.26  $     5.74  $     5.26  $     5.74




CONDENSED BALANCE SHEET

                                                     Jun. 30,    Dec. 31,
(in thousands)                                         2010        2009
                                                    (unaudited) (unaudited)
Cash and Cash Equivalents                           $   114,831 $    58,298
Investment Securities                                   349,771     449,671
Loans & Leases (net)                                    612,197     658,787
Premises and Equipment (net)                             16,716      18,798
Accrued Interest receivable                              15,985      14,942
Other Assets                                             73,978      92,230
                                                    ----------- -----------
    Total Assets                                    $ 1,183,478 $ 1,292,726
                                                    ----------- -----------

Deposits                                                791,827     881,755
Borrowings                                              236,566     257,827
Other Liabilities                                        25,306      23,056
Subordinated debentures                                  25,774      25,774
Royal Bancshares Shareholders' Equity                   100,146     101,156
Noncontrolling Interest                                   3,859       3,158
                                                    ----------- -----------
    Total Equity                                        104,005     104,314
                                                    ----------- -----------
    Total Liabilities and Equity                    $ 1,183,478 $ 1,292,726
                                                    ----------- -----------

     The above condensed financial information includes consolidation of
     Equity Real Estate Investments, owned by Royal Bancshares of
     Pennsylvania, Inc., which are required as a result of FIN 46(R)
     "Variable Interest Entities."

Contact Information

  • Company Contact:
    Marc Sanders
    Director of Marketing
    Royal Bank America
    Office: 610-668-4700
    Cell: 484-802-1944