SOURCE: Royal Bancshares of Pennsylvania

July 21, 2005 16:07 ET

Royal Bank America's Parent Company Reports 65% Earnings Increase

41st Consecutive Quarterly Cash Dividend Declared - Awarded Bauer 5-Star Superior Rating

NARBERTH, PA -- (MARKET WIRE) -- July 21, 2005 -- 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 quarter ended June 30, 2005, were $7.2 million as compared to $4.4 million for the same three-month period ended June 30, 2004, a 65% increase. Consolidated basic earnings per share for the three-months ended June 30, 2005 and 2004, were $0.58 and $0.35 respectively.

Two events contributed to the 65% increase in earnings during the second quarter of 2005. The first, a $1.8 million gain realized by Royal Investments America on one of the company's equity real estate investments, significantly increased non-interest income for the quarter. The second, an approximate $1.7 million decrease in tax expense, resulted from the completion of an IRS audit, with respect to a valuation allowance against the deferred tax asset derived from net operating loss carryovers.

Consolidated earnings for the six-month period ending June 30, 2005 were $11.6 million or $0.92 per basic share as compared to $9.6 million or $0.76 per basic share for six-month period ended June 30, 2004, a 21% increase.

Consolidated total assets increased 5% to $1.26 billion at June 30, 2005, as compared to $1.21 billion at December 31, 2004. Investment securities increased to $613 million at June 30, 2005, as compared to $584 million at December 31, 2004, an increase of 5%. Total consolidated capital rose to $145.8 million for the period ended June 30, 2005, as compared to $140.9 million for the period ended December 31, 2004.

On July 20, 2005, the Board of Directors of Royal Bancshares of Pennsylvania, Inc. declared its 41st consecutive quarterly cash dividend. This dividend is twenty-five cents ($.25) per share for holders of Class A common stock and twenty-eight and seventy-five hundredths cents ($.2875) per share for holders of Class B common stock of Royal Bancshares of Pennsylvania, Inc. The record date is August 5, 2005, and the payment date is August 19, 2005.

Additionally, Royal Bank America has been awarded BauerFinancial™'s highest rating, Superior 5-Stars. Bauer determines this rating through calculations based on profitability/loss trend, evaluating the level of delinquent loans and repossessed assets, the market versus book value of the investment portfolio, regulatory supervisory agreements, the community reinvestment rating (CRA), and liquidity. Consumers and investors commonly use Bauer ratings to determine the soundness of a financial institution.

Royal Bancshares of Pennsylvania, headquartered in Narberth, Pennsylvania, operates sixteen full-service branches under the name Royal Bank America and five 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, deposit accounts 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 STATEMENTS

                              Three Months Ended       Six Months Ended
(in thousands, except               JUNE 30                JUNE 30
 for earnings per share)        2005       2004        2005       2004
                              -------     -------     -------     -------
                            (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest Income               $19,330     $16,508     $36,534     $34,036
Interest Expense                7,695       6,969      15,061      13,699
                              -------     -------     -------     -------
Net Interest Income            11,635       9,539      21,473      20,337
Provision for Loan Losses           0           4           1           5
                              -------     -------     -------     -------
Net Interest Income after
 Provision                     11,635       9,535      21,472      20,332
Non Interest Income             3,880       3,464       6,493       6,647
Non Interest Expense            7,569       6,782      13,928      13,358
                              -------     -------     -------     -------
Income before Taxes             7,946       6,217      14,037      13,621
Income Taxes                      704       1,823       2,474       4,063
                              -------     -------     -------     -------
Net Income                    $ 7,242     $ 4,394     $11,563     $ 9,558
                              =======     =======     =======     =======
Earnings per share -basic     $  0.58     $  0.35     $  0.92     $  0.76

SELECTED RATIOS:
Return on Average Assets          2.3%        1.5%       1.9%         1.6%
Return on Average Equity         20.4%       13.3%      16.5%        14.2%
Average Equity to Assets         11.4%       11.1%      11.4%        11.3%
Book Value Per Share          $ 11.62     $ 10.81


CONDENSED BALANCE SHEETS                    June 30,        Dec. 31,
(in thousands)                                2005            2004
                                           (unaudited)
Cash and Cash Equivalents                  $   28,270     $   27,109
Investment Securities                         613,068        584,261
Loans Held for Sale                             1,062          2,204
Loans (net)                                   501,702        454,775
Premises and Equipment (net)                   54,067         72,433
Accrued Interest receivable                    14,574         15,634
Other Assets                                   50,956         48,858
                                           ----------     ----------
Total Assets                               $1,263,699     $1,205,274
                                           ----------     ----------

Deposits                                   $  701,119     $  742,382
Borrowings                                    373,265        278,249
Other Liabilities                              14,634         14,338
Subordinated debentures                        25,774         25,774
Minority Interest                               3,122          3,655
Shareholders' Equity                          145,785        140,876
                                           ----------     ----------
Total Liabilities and Shareholders Equity  $1,263,699     $1,205,274
                                           ----------     ----------

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