SOURCE: Royal Bancshares of Pennsylvania

January 19, 2006 11:33 ET

Earnings Eclipse $32 Million for Royal Bank America's Parent Co.

NARBERTH, PA -- (MARKET WIRE) -- January 19, 2006 --

--  191% INCREASE IN EARNINGS OVER 4Q 2004
    
--  60% INCREASE IN EARNINGS FOR YEAR
    
--  8TH STRAIGHT YEAR OF RECORD EARNINGS - TOTAL ASSETS TOP $1.3 BILLION
    
Royal Bank America President/CEO Joseph P. Campbell reports that consolidated earnings for the bank's holding company, Royal Bancshares of Pennsylvania, Inc. (NASDAQ: RBPAA) for the three-month period ended December 31, 2005 and 2004, were $15.6 million and $5.4 million, respectively. This represents an increase of 191%. Consolidated earnings for the twelve-month period ended December 31, 2005 were $32.1 million as compared to $20.0 million for the same twelve-month period ended December 31, 2004, an increase of 60%. Consolidated basic earnings per share for the twelve-month period ended December 31, 2005 and 2004, were $2.50 and $1.57, respectively.

Consolidated total assets increased 8% to $1.30 billion at December 31, 2005, as compared to $1.21 billion at December 31, 2004. Investment securities increased to $599 million at December 31, 2005, as compared to $584 million at December 31, 2004, an increase of 2%. Net Loans increased to $539 million at December 31, 2005, as compared to $455 million at December 31, 2004, an increase of 19%. Total consolidated shareholders' equity rose to $156 million for the period ending December 31, 2005, as compared to $141 million for the period ended December 31, 2004, a 10% increase.

On January 18, 2006, the Board of Directors of Royal Bancshares of Pennsylvania, Inc. declared its 43rd consecutive quarterly cash dividend. This dividend will be twenty-seven and five tenth cents ($.275) per share for holders of Class A common stock and thirty-one and six hundred twenty-five thousandths cents ($.31625) per share for holders of Class B common stock of Royal Bancshares of Pennsylvania, Inc. The record date is February 3, 2006, and the payment date is February 17, 2006.

Campbell noted specific growth in Mezzanine/Equity Lending, including a late October 2005 announcement of a $16.7 Million one-time pre-tax gain from the sale of two equity positions, helped contribute to this years record earnings. 2006 should see further development of the Royal Asian Bank and Royal Bank America Home Loan brands as well as the newly created Royal Bank America Leasing Division.

About Royal Bancshares Of Pennsylvania, Inc.

Royal Bancshares of Pennsylvania, headquartered in Narberth, Pennsylvania, operates sixteen full-service branch offices throughout southeastern Pennsylvania and southern New Jersey under the name Royal Bank America and four locations under the name Royal Asian Bank. Together, Royal Bank America and Royal Asian Bank offer a wide variety of products and services, including commercial real estate loans, residential mortgages, mezzanine/equity lending, high-yielding CDs & MMAs and Internet Banking solutions at www.royalbankamerica.com and www.royalasianbank.com.

The foregoing material is unaudited and 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 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.


ROYAL BANCSHARES OF PENNSYLVANIA
CONDENSED INCOME STATEMENT

                            Three Months              Twelve Months
                            Ended Dec. 31             Ended Dec. 31

(in thousands, except
 for earnings per
 share)                     2005         2004         2005         2004
                        ----------   ----------   ----------   ----------
                        (Unaudited)  (Unaudited)  (Unaudited)
Interest Income         $   20,281   $   16,990   $   76,460   $   67,541
Interest Expense             7,985        6,809       31,796       27,301
                        ----------   ----------   ----------   ----------
Net Interest Income         12,296       10,181       44,664       40,240
Provision for Loan
 Losses                          -            -            1            6
                        ----------   ----------   ----------   ----------
Net Interest Income
 after Provision            12,296       10,181       44,663       40,234

Non Interest Income (1)     15,039        2,691       24,826       13,160
Non Interest Expense         3,345        5,864       24,799       25,447
                        ----------   ----------   ----------   ----------
Income before Taxes         23,990        7,008       44,690       27,947
Income Taxes                 8,404        1,645       12,637        7,914
                        ----------   ----------   ----------   ----------
Net Income                  15,586        5,363       32,053       20,033
Earnings per share
 basic (2)                    1.22         0.42          2.5         1.57

SELECTED RATIOS:
Return on Average
 Assets                       4.80%        1.80%        2.50%        1.70%
Return on Average
 Equity                      40.40%       15.20%       22.00%       14.60%
Average Equity to
 Assets                      11.90%       11.80%       11.60%       11.50%
Book Value Per Share
 (3)                    $    12.15   $    11.02   $    12.15   $    11.02



CONDENSED BALANCE SHEET

(in thousands)                                 Dec. 31, 2005  Dec. 31, 2004
                                                 (unaudited)
Cash and Cash Equivalents                      $      30,895  $      27,109
Investment Securities                                598,730        584,261
Loans Held for Sale                                      803          2,204
Loans (net)                                          539,360        454,775
Premises and Equipment (net)                          66,581         72,433
Accrued Interest receivable                           14,843         15,634
Other Assets                                          49,807         48,858
                                               -------------  -------------
 Total Assets                                  $   1,301,019  $   1,205,274
                                               -------------  -------------

Deposits                                             697,409        742,382
Borrowings                                           401,356        278,249
Other Liabilities                                     18,485         14,338
Subordinated debentures                               25,774         25,774
Minority Interest                                      2,487          3,655
Shareholders Equity                                  155,508        140,876
                                               -------------  -------------
 Total Liabilities and Shareholders Equity     $   1,301,019  $   1,205,274
                                               -------------  -------------

The above financial statements include consolidation of Equity Real
 Estate Investments, owned by Royal Bancshares, which are required as a
 result of FIN 46® "Variable Interest Entities."
   (1) Reflects $16.7 million gain from equity sales offset by reduction
       of $3.5 million due to deconsolidation of VIE's that were sold
       during 4Q 2005.
   (2) Earnings per share for the three-months and twelve-months ended
       December 31, 2004 have been restated for a 2% stock dividend
       declared in 2005.
   (3) Book value per share reflects 2% stock dividend declared in 2005.

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