BALA CYNWYD, PA--(Marketwired - July 20, 2016) - 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 $2.0 million, or $0.06 per diluted share, and $4.2 million, or $0.12 per diluted share, for the three and six months ended June 30, 2016, respectively. Net income attributable to the Company was $1.5 million, or $0.03 per diluted share, and $3.1 million, or $0.07 per diluted share, for the three and six months ended June 30, 2015, respectively.
The Company's President and Chief Executive Officer, Kevin Tylus, noted, "Consistent quality loan and deposit growth drove our increase in the second quarter and 2016 year to date earnings. Our financial performance is based on lending and customer strategies focused within our local communities. We are successfully managing our balance sheet growth while faced with the challenges of low interest rates, local competition, and volatility in domestic and global markets. We continue to meet our commitment of providing a wide range of consumer and commercial products as we recently added first position residential mortgages through a new arrangement with a local mortgage company experienced in providing and servicing residential mortgages for community banks."
Highlights for the three and six months ended June 30, 2016 included:
Balance Sheet Trends:
- Total assets were $816.5 million at June 30, 2016, an increase of $17.9 million, or 2.2%, from $798.5 million at March 31, 2016, and grew $28.2 million, or 3.6%, from $788.3 million at December 31, 2015.
- Total loans were $547.1 million at June 30, 2016, an increase of $15.9 million, or 3.0%, from $531.1 million at March 31, 2016, and grew $48.0 million, or 9.6%, from $499.1 million at December 31, 2015. Increases were recognized in multiple commercial loan portfolio classes and the leasing portfolio.
- Total deposits were $599.2 million at June 30, 2016, an increase of $9.9 million, or 1.7%, from $589.3 million at March 31, 2016, and grew $21.4 million, or 3.7%, from $577.9 million at December 31, 2015.
Asset Quality:
- The ratio of non-performing loans to total loans continues to show improvement and was 0.88%, 0.98%, and 1.10% at June 30, 2016, March 31, 2016, and December 31, 2015, respectfully. Excluding tax liens, the ratio of non-performing loans to total loans was 0.68%, 0.80% and 0.88% at June 30, 2016, March 31, 2016, and December 31, 2015, respectively.
- Non-performing loans of $4.8 million at June 30, 2016 decreased $422 thousand, or 8.1%, from $5.2 million at March 31, 2016, and decreased $691 thousand, or 12.6%, from $5.5 million at December 31, 2015.
- The ratio of non-performing assets to total assets was 1.47%, 1.54%, and 1.64% at June 30, 2016, March 31, 2016, and December 31, 2015, respectively. Excluding tax lien assets, the ratio of non-performing assets to total assets was 0.49%, 0.56%, and 0.59% at June 30, 2016, March 31, 2016, and December 31, 2015, respectively.
- Non-performing assets of $12.0 million at June 30, 2016, decreased $310 thousand, or 2.5%, from $12.3 million at March 31, 2016, and decreased $918 thousand, or 7.1%, from $12.9 million at December 31, 2015.
- For the three and six months ended June 30, 2016, the Company recorded a provision to the allowance for loan and lease losses of $197 thousand and $409 thousand, respectively, compared to credits of $586 thousand and $1.2 million for same periods in 2015, respectively. The 2016 provision was primarily attributable to growth, specific reserves on the tax lien and leasing portfolios, and net charge-off activity within the leasing portfolio.
Income Statement and Other Highlights:
- The return on average assets for the three and six months ended June 30, 2016 increased to 1.02% and 1.06%, respectively, compared to 0.81% and 0.85% for the three and six months ended June 30, 2015, respectively.
- The return on average equity for the three and six months ended June 30, 2016 grew to 11.54% and 11.77%, respectively, compared to 9.03% and 9.56% for the three and six months ended June 30, 2015.
- At June 30, 2016, the Company's Tier 1 leverage and Total Risk Based Capital ratios were 11.70% and 17.39%, respectively, compared to 12.44% and 18.57%, respectively, at December 31, 2015. The Common Equity Tier 1 ratio was 9.28% at June 30, 2016 compared to 9.37% at December 31, 2015.
- Net interest income increased $937 thousand, or 17.1%, from $5.5 million for the three months ended June 30, 2015 to $6.4 million for the three months ended June 30, 2016. Net interest income increased $1.7 million, or 15.4%, from $11.2 million for the six months ended June 30, 2015 to $12.9 million for the six months ended June 30, 2016. The growth in net interest income was primarily related to an increase in interest income on loans and the average yield earned on average interest-earning assets.
- The net interest margin grew to 3.41% for the second quarter of 2016 compared to 3.26% for the second quarter in 2015 and was 3.46% for the six months ended June 30, 2016 compared to 3.33% for the six months ended June 30, 2015. The increase in net interest margin was directly related to an increase in the yield on average interest-earning assets due to a significant change in the composition of such assets.
- Non-interest income for the second quarter of 2016 was $1.1 million and increased $156 thousand from $917 thousand for the second quarter of 2015. The quarterly improvement in non-interest income was impacted by a $350 thousand increase in net gains on the sale of investment securities and was partially offset by total other-than-temporary impairment ("OTTI") charges on investment securities of $146 thousand.
- Non-interest income was $2.3 million for the six months ended June 30, 2016 and grew $796 thousand from $1.5 million for the six months ended June 30, 2015. Net gains on the sale of investment securities and income from Company owned life insurance increased $530 thousand and $407 thousand, respectively, from 2015. Partially offsetting these positive items was a $146 thousand OTTI charge. There was no OTTI charge in the 2015 period.
- Non-interest expense was $5.0 million for the quarter ended June 30, 2016 and declined $325 thousand from $5.4 million for the comparable period in 2015. Contributing to the decrease in non-interest expense for the second quarter of 2016 was a $244 decline in the provision for unfunded loan commitments due to a decline in the historical loss rates applied in the calculation of the reserve for unfunded loan commitments. Additionally, net other real estate owned ("OREO") expenses and occupancy and equipment expenses declined $72 thousand and $56 thousand, respectively. Partially offsetting the decrease in non-interest expense was a planned increase of $49 thousand in salaries and benefits during the second quarter of 2016.
- Non-interest expense was $10.3 million for the six months ended June 30, 2016 and decreased $199 thousand from $10.5 million for the comparable period in 2015. Contributing to the decrease in non-interest expense for 2016 was a $521 thousand decline in the provision for unfunded loan commitments for the reason mentioned previously and a decrease of $88 thousand in occupancy and equipment expenses. Partially offsetting the decrease in non-interest expense was a planned increase of $156 thousand in salaries and benefits. Additionally, net OREO expenses and communications and data processing expenses increased $105 thousand and $98 thousand.
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 thirteen 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, 2015.
ROYAL BANCSHARES OF PENNSYLVANIA, INC.
CONSOLIDATED INCOME STATEMENTS
(Unaudited, dollars in thousands, except per share data)
For the three For the six
months ended months ended
June 30, June 30,
---------------- ----------------
2016 2015 2016 2015
------- -------- ------- --------
Interest income $ 8,181 $ 7,071 $16,395 $14,351
Interest expense 1,764 1,591 3,487 3,162
------- -------- ------- --------
Net Interest Income 6,417 5,480 12,908 11,189
Provision (credit) for loan and lease
losses 197 (586) 409 (1,166)
------- -------- ------- --------
Net interest income after provision
(credit) for loan and lease losses 6,220 6,066 12,499 12,355
Non-interest income 1,073 917 2,280 1,484
Non-interest expense 5,046 5,371 10,267 10,466
------- -------- ------- --------
Income before taxes 2,247 1,612 4,512 3,373
Income tax expense 60 - 60 -
------- -------- ------- --------
Net Income 2,187 1,612 4,452 3,373
Less net income attributable to
noncontrolling interest 153 151 229 321
------- -------- ------- --------
Net Income Attributable to Royal
Bancshares $ 2,034 $ 1,461 $ 4,223 $ 3,052
======= ======== ======= ========
Less Preferred stock Series A
accumulated dividend and accretion $ 338 $ 429 $ 672 $ 853
======= ======== ======= ========
Net income to common shareholders $ 1,696 $ 1,032 $ 3,551 $ 2,199
======= ======== ======= ========
Income Per Common Share - Basic and
Diluted $ 0.06 $ 0.03 $ 0.12 $ 0.07
======= ======== ======= ========
SELECTED PERFORMANCE RATIOS:
For the three For the six
months months
ended June 30, ended June 30,
---------------- ----------------
2016 2015 2016 2015
------- ------- ------- -------
Return on Average Assets 1.02% 0.81% 1.06% 0.85%
Return on Average Equity 11.54% 9.03% 11.77% 9.56%
Average Equity to Average Assets 8.82% 9.00% 9.05% 8.89%
Book Value Per Share $ 1.91 $ 1.53 $ 1.91 $ 1.53
At June 30, At December 31,
Capital ratios (US GAAP): 2016 2015
---------------- ----------------
Company Tier 1 Leverage 11.70% 12.44%
Company Total Risk Based Capital 17.39% 18.57%
Company Common Equity Tier 1 9.28% 9.37%
ROYAL BANCSHARES OF PENNSYLVANIA, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
At December 31,
At June 30, 2016 2015
-------------------- --------------------
Cash and cash equivalents $ 26,603 $ 25,420
Investment securities, at fair
value 204,058 224,067
Other investment, at cost 2,250 2,250
Federal Home Loan Bank stock 2,778 2,545
Loans and leases
Commercial real estate and
multi-family 260,786 241,928
Construction and land
development 65,385 47,984
Commercial and industrial 97,270 85,980
Residential real estate 50,104 51,588
Leases 66,898 64,341
Tax certificates 4,390 4,755
Consumer 2,254 2,527
-------------------- --------------------
Loans and leases 547,087 499,103
Allowance for loan and lease
losses (10,008) (9,689)
-------------------- --------------------
Loans and leases, net 537,079 489,414
Bank owned life insurance 16,370 16,133
Premises and equipment, net 4,346 3,959
Other real estate owned, net 7,208 7,435
Accrued interest receivable 4,065 4,149
Other assets 11,695 12,911
-------------------- --------------------
Total Assets $ 816,452 $ 788,283
==================== ====================
Deposits $ 599,244 $ 577,892
Borrowings 95,744 90,970
Other liabilities 22,743 21,349
Subordinated debentures 25,774 25,774
Royal Bancshares shareholders'
equity 72,427 71,904
Noncontrolling interest 520 394
-------------------- --------------------
Total Equity 72,947 72,298
-------------------- --------------------
Total Liabilities and Equity $ 816,452 $ 788,283
==================== ====================
ROYAL BANCSHARES OF PENNSYLVANIA, INC.
NET INTEREST INCOME AND MARGIN
(Unaudited, in thousands, except percentages)
For the three months For the three months
ended June 30, 2016 ended June 30, 2015
------------------------ ------------------------
Average Average
Balance Interest Yield Balance Interest Yield
-------- -------- ------ -------- -------- ------
Cash and cash equivalents $ 15,183 $ 17 0.45% $ 20,278 $ 8 0.16%
Investment securities 202,857 1,206 2.39% 223,012 1,340 2.41%
Loans 537,862 6,958 5.20% 431,957 5,723 5.31%
-------- -------- -------- --------
Total interest-earning
assets 755,902 8,181 4.35% 675,247 7,071 4.20%
Non-interest earning
assets 47,463 46,056
-------- --------
Total average assets $803,365 $721,303
======== ========
Interest-bearing deposits
NOW and money markets $226,286 $ 204 0.36% $201,292 $ 168 0.33%
Savings 72,752 128 0.71% 22,268 10 0.18%
Certificates of deposit 207,825 735 1.42% 220,376 742 1.35%
-------- -------- -------- --------
Total interest-bearing
deposits 506,863 1,067 0.85% 443,936 920 0.83%
Borrowings 116,973 697 2.40% 117,493 671 2.29%
-------- -------- -------- --------
Total interest-bearing
liabilities 623,836 1,764 1.14% 561,429 1,591 1.14%
Non-interest bearing
deposits 87,212 73,831
Other liabilities 21,468 21,135
Shareholders' equity 70,849 64,908
-------- --------
Total average liabilities
and equity $803,365 $721,303
======== ========
Net interest income $ 6,417 $ 5,480
======== ========
Net interest margin 3.41% 3.26%
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, 2016 June 30, 2015
------------------------ ------------------------
Average Average
Balance Interest Yield Balance Interest Yield
-------- -------- ------ -------- -------- ------
Cash and cash equivalents $ 13,823 $ 33 0.48% $ 16,028 $ 13 0.16%
Investment securities 210,267 2,540 2.43% 236,253 2,916 2.49%
Loans 525,399 13,822 5.29% 425,826 11,422 5.41%
-------- -------- -------- --------
Total interest-earning
assets 749,489 16,395 4.40% 678,107 14,351 4.27%
Non-interest earning
assets 48,222 45,971
-------- --------
Total average assets $797,711 $724,078
======== ========
Interest-bearing deposits
NOW and money markets $227,228 $ 409 0.36% $203,102 $ 326 0.32%
Savings 67,334 235 0.70% 20,788 18 0.18%
Certificates of deposit 207,929 1,463 1.41% 222,552 1,484 1.34%
-------- -------- -------- --------
Total interest-bearing
deposits 502,491 2,107 0.84% 446,442 1,828 0.83%
Borrowings 116,243 1,380 2.39% 117,823 1,334 2.28%
-------- -------- -------- --------
Total interest-bearing
liabilities 618,734 3,487 1.13% 564,265 3,162 1.13%
Non-interest bearing
deposits 84,390 73,413
Other liabilities 22,413 22,031
Shareholders' equity 72,174 64,369
-------- --------
Total average liabilities
and equity $797,711 $724,078
======== ========
Net interest income $ 12,908 $ 11,189
======== ========
Net interest margin 3.46% 3.33%
ROYAL BANCSHARES OF PENNSYLVANIA, INC.
ASSET QUALITY TRENDS
(Unaudited, in thousands, except percentages)
At June At March At December 31,
30, 2016 31, 2016 2015
--------- --------- ---------------
Non-performing loans $ 3,691 $ 4,185 $ 4,367
Non-performing tax certificates 1,110 1,038 1,125
--------- --------- ---------------
Total non-performing loans 4,801 5,223 5,492
Other real estate owned-loans 243 243 220
Other real estate owned-tax certificates 6,965 6,853 7,215
--------- --------- ---------------
Total other real estate owned 7,208 7,096 7,435
--------- --------- ---------------
Total non-performing assets $ 12,009 $ 12,319 $ 12,927
========= ========= ===============
Ratio of non-performing loans to total
loans 0.88% 0.98% 1.10%
Ratio of non-performing assets to total
assets 1.47% 1.54% 1.64%
Ratio of allowance for loan and lease
losses to total loans 1.83% 1.87% 1.94%
Ratio of allowance for loan and lease
losses to non-performing loans 208.46% 190.33% 176.42%
Michael Thompson
Executive Vice President and Chief Financial Officer
mthompson@royalbankamerica.com
