BALA CYNWYD, PA--(Marketwired - July 26, 2017) - Royal Bancshares of Pennsylvania, Inc. ("Company") (NASDAQ: RBPAA), parent company of Royal Bank America ("Royal Bank"), is pleased to report net income attributable to the Company of $3.0 million, or $0.10 per diluted share, for the three months ended June 30, 2017 compared to $2.0 million, or $0.06 per diluted share, for the three months ended June 30, 2016. Excluding expenses directly related to the merger with Bryn Mawr Bank Corporation of $162 thousand, net income attributable to the Company was $3.2 million, or $0.11 per diluted share, for the three months ended June 30, 2017.
Net income attributable to the Company for the six months ended June 30, 2017 was $4.8 million, or $0.16 per diluted share, compared to $4.2 million, or $0.12 per diluted share, for the six months ended June 30, 2016. Excluding expenses directly related to the merger with Bryn Mawr Bank Corporation of $405 thousand, net income attributable to the Company was $5.2 million, or $0.17 per diluted share, for the six months ended June 30, 2017.
Kevin Tylus, the Company's President and Chief Executive Officer, noted, "The continued improvement in the net interest margin contributed to our second quarter results. We also significantly reduced our non-performing assets by 28% during the most recent quarter and 34% during 2017. While we are in the midst of our merger planning activities with Bryn Mawr Bank Corporation, we remain equally focused on the daily operations of the bank and serving our customers."
The merger with Bryn Mawr Bank Corporation was approved by the Company's shareholders on May 24, 2017. The merger is subject to certain additional closing conditions, including receipt of applicable regulatory approvals.
Highlights for the three and six months ended June 30, 2017 included:
Balance Sheet Trends:
- At June 30, 2017, total assets were $808.8 million and decreased $23.7 million, or 2.9%, from $832.5 million at December 31, 2016.
- Total loans were $605.7 million at June 30, 2017, an increase of $3.7 million, or 0.6%, from $602.0 million at December 31, 2016.
- Total deposits were $622.8 million at June 30, 2017, a decrease of $6.7 million, or 1.1%, from $629.5 million at December 31, 2016.
Asset Quality:
- The ratio of non-performing loans to total loans improved significantly and was 0.73% at June 30, 2017 compared to 1.08% at March 31, 2017 and 1.00% at December 31, 2016.
- Non-performing loans of $4.4 million at June 30, 2017 decreased $2.3 million, or 34.1%, from $6.7 million at March 31, 2017, and decreased $1.6 million, or 26.5%, from $6.0 million at December 31, 2016.
- The ratio of non-performing assets to total assets continues to improve and was 0.78% at June 30, 2017 compared to 1.05% at March 31, 2017 and 1.15% at December 31, 2016.
- Non-performing assets of $6.3 million at June 30, 2017 decreased $2.5 million, or 28.1%, from $8.8 million at March 31, 2017, and decreased $3.2 million, or 33.5% from $9.5 million at December 31, 2016. Other real estate owned ("OREO") has declined $1.6 million, or 45.4%, during the first six months of 2017 mostly due to sales of the properties.
- For the three and six months ended June 30, 2017, the Company recorded a provision to the allowance for loan and lease losses of $57 thousand and $354 thousand, respectively, compared to $197 thousand and $409 thousand for the same periods in 2016, respectively. The 2017 provision was primarily attributable to the leasing subsidiary.
Income Statement and Other Highlights:
- The return on average assets for the three and six months ended June 30, 2017 was 1.46% and 1.17%, respectively, compared to 1.02% and 1.06% for the three and six months ended June 30, 2016, respectively.
- The return on average equity for the three and six months ended June 30, 2017 was 21.51% and 17.16%, respectively, compared to 11.55% and 11.77% for the three and six months ended June 30, 2016, respectively.
- At June 30, 2017, the Company's Tier 1 leverage and Total Risk Based Capital ratios were 9.13% and 14.27%, respectively, compared to 8.49% and 13.30%, respectively, at December 31, 2016. The Common Equity Tier 1 ratio was 8.90% at June 30, 2017 compared to 7.99% at December 31, 2016.
- Net interest income increased $1.1 million, or 16.9%, from $6.4 million for the three months ended June 30, 2016 to $7.5 million for the three months ended June 30, 2017. Net interest income increased $1.6 million, or 12.5%, from $12.9 million for the six months ended June 30, 2016 to $14.5 million for the six months ended June 30, 2017. The growth in net interest income was impacted by the growth in average interest-earning assets coupled with interest received from the redemption of a non-performing tax certificate and was partially offset by an increase in the average rate paid on average interest-bearing deposits and borrowings.
- The net interest margin was 3.84% for the second quarter of 2017 compared to 3.41% for the comparable period in 2016. The net interest margin was 3.72% for the six months ended June 30, 2017 compared to 3.46% for the six months ended June 30, 2016. The increase in net interest margin was directly related to an increase in the yield on average interest-earning assets due to a change in the composition of such assets coupled with interest received from the redemption of a non-performing tax certificate.
- Non-interest income for the second quarter of 2017 was $943 thousand and decreased $130 thousand from $1.1 million for the second quarter of 2016. Non-interest income for the six months ended June 30, 2017 was $1.5 million and decreased $826 thousand from $2.3 million for the six months ended June 30, 2016. The decrease in non-interest income was primarily related to net gains on the sales of investment securities which declined $459 thousand quarter versus quarter and $826 thousand year over year.
- Non-interest expense was $5.2 million for the three months ended June 30, 2017 compared to $5.0 million for the same period in 2016 and increased $124 thousand. Contributing to the increase in non-interest expense for the second quarter of 2017 was $162 thousand in merger related expenses. Non-interest expense was $10.5 million for the six months ended June 30, 2017 compared to $10.3 million for the same period in 2016 and increased $279 thousand. Contributing to the increase in non-interest expense for the six months ended June 30, 2017 was $405 thousand in merger related expenses.
About Royal Bancshares of Pennsylvania, Inc.
Royal Bancshares of Pennsylvania, Inc., headquartered in Bala Cynwyd, Pennsylvania, is the parent company of Royal Bank America, which is headquartered in Narberth, Pennsylvania. Royal Bank serves growing small and middle market businesses, commercial real estate investors, consumers, and depositors principally in Montgomery, Delaware, Chester, Bucks, Philadelphia and Berks counties in Pennsylvania, central and southern New Jersey, and Delaware. Established in 1963, Royal Bank provides an array of financial products and services through a comprehensive suite of cash management services and twelve branches and two loan production offices. More information on Royal Bancshares of Pennsylvania, Inc., Royal Bank America, and its subsidiaries can be found 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, 2016.
ROYAL BANCSHARES OF PENNSYLVANIA, INC.
CONSOLIDATED INCOME STATEMENTS
(Unaudited, dollars in thousands, except per share data)
For the three months For the six months
ended June 30, ended June 30,
2017 2016 2017 2016
-------------- ------------------ ---------- ----------
Interest income $ 9,462 $ 8,181 $ 18,420 $ 16,395
Interest expense 1,962 1,764 3,903 3,487
-------------- ------------------ ---------- ----------
Net Interest Income 7,500 6,417 14,517 12,908
Provision for loan
and lease losses 57 197 354 409
-------------- ------------------ ---------- ----------
Net interest income
after provision for
loan and lease
losses 7,443 6,220 14,163 12,499
Non-interest income 943 1,073 1,454 2,280
Non-interest expense 5,170 5,046 10,546 10,267
-------------- ------------------ ---------- ----------
Income before taxes 3,216 2,247 5,071 4,512
Income tax expense 52 60 52 60
-------------- ------------------ ---------- ----------
Net Income 3,164 2,187 5,019 4,452
Less net income
attributable to
noncontrolling
interest 157 153 200 229
-------------- ------------------ ---------- ----------
Net Income
Attributable to
Royal Bancshares $ 3,007 $ 2,034 $ 4,819 $ 4,223
============== ================== ========== ==========
Less Preferred
stock Series A
accumulated
dividend and
accretion $ - $ 338 $ - $ 672
============== ================== ========== ==========
Net income to common
shareholders $ 3,007 $ 1,696 $ 4,819 $ 3,551
============== ================== ========== ==========
Income Per Common
Share - Basic and
Diluted $ 0.10 $ 0.06 $ 0.16 $ 0.12
============== ================== ========== ==========
SELECTED PERFORMANCE
RATIOS
For the three months For the six months
ended June 30, ended June 30,
2017 2016 2017 2016
-------------- ------------------ ---------- ----------
Return on Average
Assets 1.46% 1.02% 1.17% 1.06%
Return on Average
Equity 21.51% 11.55% 17.16% 11.77%
Average Equity to
Average Assets 6.77% 8.82% 6.80% 9.05%
Book Value Per Share $ 1.91 $ 1.91 $ 1.91 $ 1.91
At June 30, At December 31,
Capital ratios (US
GAAP): 2017 2016
-------------- ------------------
Company Tier 1
Leverage 9.13% 8.49%
Company Total Risk
Based Capital 14.27% 13.30%
Company Common
Equity Tier 1 8.90% 7.99%
NON-GAAP MEASURES:
(Unaudited, dollars in thousands, except per share data)
For the three months For the six months
ended June 30, ended June 30,
2017 2016 2017 2016
---------- ---------- ---------- ----------
Net income attributable to Royal
Bancshares $ 3,007 $ 2,034 $ 4,819 $ 4,223
Merger expenses 162 - 405 -
---------- ---------- ---------- ----------
Net income attributable to Royal
Bancshares (non-GAAP) $ 3,169 $ 2,034 $ 5,224 $ 4,223
========== ========== ========== ==========
Less Preferred stock Series A
accumulated dividend and
accretion $ - $ 338 $ - $ 672
========== ========== ========== ==========
Net income to common
shareholders (non-GAAP) $ 3,169 $ 1,696 $ 5,224 $ 3,551
===================== =====================
Income per common share - basic
and diluted (non-GAAP) $ 0.11 $ 0.06 $ 0.17 $ 0.12
========== ========== ========== ==========
Return on Average Assets 1.53% 1.02% 1.27% 1.06%
Return on Average Equity 22.66% 11.55% 18.60% 11.77%
ROYAL BANCSHARES OF PENNSYLVANIA, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
CONDENSED BALANCE SHEET
At June 30, At December 31,
2017 2016
------------ ----------------
Cash and cash equivalents $ 31,711 $ 21,230
Investment securities, at fair value 135,935 169,854
Other investment, at cost 2,250 2,250
Federal Home Loan Bank stock 2,276 3,216
Loans and leases
Commercial real estate and multi-family 287,692 284,950
Construction and land development 84,910 83,369
Commercial and industrial 116,200 108,146
Residential real estate 56,363 56,899
Leases 56,258 61,838
Tax certificates 1,378 3,705
Consumer 2,892 3,102
------------ ----------------
Loans and leases 605,693 602,009
Allowance for loan and lease losses (10,262) (10,420)
------------ ----------------
Loans and leases, net 595,431 591,589
Company owned life insurance 20,909 20,781
Other real estate owned, net 1,932 3,536
Premises and equipment, net 4,873 5,398
Accrued interest receivable 3,277 3,968
Other assets 10,161 10,663
------------ ----------------
Total Assets $ 808,755 $ 832,485
============ ================
Deposits $ 622,821 $ 629,546
Borrowings 81,000 104,000
Other liabilities 20,834 20,892
Subordinated debentures 25,774 25,774
Royal Bancshares shareholders' equity 57,669 51,648
Noncontrolling interest 657 625
------------ ----------------
Total Equity 58,326 52,273
------------ ----------------
Total Liabilities and Equity $ 808,755 $ 832,485
============ ================
ROYAL BANCSHARES OF PENNSYLVANIA, INC.
NET INTEREST INCOME AND MARGIN
(Unaudited, in thousands, except percentages)
For the three months ended For the three months ended
June 30, 2017 June 30, 2016
--------------------------- ---------------------------
Average Average
Balance Interest Yield Balance Interest Yield
--------- --------- ------- --------- --------- -------
Cash and cash
equivalents $ 4,458 $ 17 1.53% $ 15,183 $ 17 0.45%
Investment
securities 163,192 956 2.35% 202,857 1,206 2.39%
Loans 616,446 8,489 5.52% 537,862 6,958 5.20%
--------- --------- --------- ---------
Total interest-
earning assets 784,096 9,462 4.84% 755,902 8,181 4.35%
Non-interest earning
assets 44,042 47,463
--------- ---------
Total average
assets $ 828,138 $ 803,365
========= =========
Interest-bearing
deposits
NOW and money
markets $ 201,292 $ 262 0.52% $ 226,286 $ 204 0.36%
Savings 87,587 133 0.61% 72,752 128 0.71%
Certificates of
deposit 245,296 774 1.27% 207,825 735 1.42%
--------- --------- --------- ---------
Total interest-
bearing deposits 534,175 1,169 0.88% 506,863 1,067 0.85%
Borrowings 116,653 793 2.73% 116,973 697 2.40%
--------- --------- --------- ---------
Total interest-
bearing liabilities 650,828 1,962 1.21% 623,836 1,764 1.14%
Non-interest bearing
deposits 97,702 87,212
Other liabilities 23,524 21,468
Shareholders' equity 56,084 70,849
--------- ---------
Total average
liabilities and
equity $ 828,138 $ 803,365
========= =========
Net interest
income $ 7,500 $ 6,417
========= =========
Net interest
margin 3.84% 3.41%
ROYAL BANCSHARES OF PENNSYLVANIA, INC.
NET INTEREST INCOME AND MARGIN
(Unaudited, in thousands, except percentages)
For the six months ended For the six months ended
June 30, 2017 June 30, 2016
--------------------------- ---------------------------
Average Average
Balance Interest Yield Balance Interest Yield
--------- --------- ------- --------- --------- -------
Cash and cash
equivalents $ 4,962 $ 33 1.34% $ 13,823 $ 33 0.48%
Investment
securities 168,745 1,982 2.37% 210,267 2,540 2.43%
Loans 613,563 16,405 5.39% 525,399 13,822 5.29%
--------- --------- --------- ---------
Total interest-
earning assets 787,270 18,420 4.72% 749,489 16,395 4.40%
Non-interest earning
assets 45,101 48,222
--------- ---------
Total average
assets $ 832,371 $ 797,711
========= =========
Interest-bearing
deposits
NOW and money
markets $ 212,858 $ 497 0.47% $ 227,228 $ 409 0.36%
Savings 85,283 255 0.60% 67,334 235 0.70%
Time deposits 240,152 1,534 1.29% 207,929 1,463 1.41%
--------- --------- --------- ---------
Total interest-
bearing deposits 538,293 2,286 0.86% 502,491 2,107 0.84%
Borrowings 125,979 1,617 2.59% 116,243 1,380 2.39%
--------- --------- --------- ---------
Total interest-
bearing liabilities 664,272 3,903 1.18% 618,734 3,487 1.13%
Non-interest bearing
deposits 89,775 84,390
Other liabilities 21,689 22,413
Shareholders' equity 56,635 72,174
--------- ---------
Total average
liabilities and
equity $ 832,371 $ 797,711
========= =========
Net interest
income $ 14,517 $ 12,908
========= =========
Net interest
margin 3.72% 3.46%
ROYAL BANCSHARES OF PENNSYLVANIA, INC.
ASSET QUALITY TRENDS
(Unaudited, in thousands, except percentages)
At March At December
At June 30, 31, 31,
2017 2017 2016
------------ ------------ ------------
Non-performing loans $ 3,912 $ 4,756 $ 4,100
Non-performing loans held for sale - 205 -
Non-performing tax certificates 502 1,734 1,907
------------ ------------ ------------
Total nonperforming loans 4,414 6,695 6,007
Other real estate owned-loans 182 208 236
Other real estate owned-tax
certificates 1,750 1,923 3,300
------------ ------------ ------------
Total other real estate owned 1,932 2,131 3,536
------------ ------------ ------------
Total nonperforming assets $ 6,346 $ 8,826 $ 9,543
============ ============ ============
Ratio of non-performing loans to
total loans 0.73% 1.08% 1.00%
Ratio of non-performing assets to
total assets 0.78% 1.05% 1.15%
Ratio of allowance for loan and lease
losses to total loans 1.69% 1.71% 1.73%
Ratio of allowance for loan and lease
losses to non-performing loans 232.49% 157.70% 173.46%
Contact Information
Michael Thompson
Executive Vice President and Chief Financial Officer
mthompson@royalbankamerica.com
