Royal Bancshares Posts Third Quarter Profit
$5.2 Million Improvement Compared to Third Quarter 2012
NARBERTH, PA--(Marketwired - Nov 12, 2013) - Royal Bancshares of
Pennsylvania, Inc. ("Company") (NASDAQ: RBPAA), parent company of
Royal Bank America ("Royal Bank"), today announced financial
results for the three and nine months ended September 30, 2013. The
Company recorded net income of $342,000 for the third quarter of
2013 compared to a net loss of $4.8 million for the comparable
period in 2012. Net loss for the nine months ended September 30,
2013 was $343,000 compared to a net loss of $7.6 million for the
nine months ended September 30, 2012. Excluding the resolution of
an outstanding legal issue in the second quarter, year to date
results would have been a profit of $647,000. The loss per
basic and diluted common share was 1 cent and 14 cents for the
three and nine months ended September 30, 2013, respectively,
compared to a loss of 40 cents and 69 cents for the comparable
periods in 2012, respectively.
Royal Bank recorded net income of $586,000 for the third quarter
of 2013 compared to a net loss of $4.7 million for the comparable
period in 2012. Net income for the nine months ended September
30, 2013 was $93,000 compared to a net loss of $6.4 million for the
nine months ended September 30, 2012.
Core business improves as recovery strengthens
For the three months ended September 30, 2013, net income
attributable to the Company was $342,000 compared to a net loss of
$4.8 million for the three months ended September 30,
2012. For the nine months ended September 30, 2013 and 2012,
the net loss was $343,000 and $7.6 million, respectively. The
quarter over quarter improvement of $5.2 million was mainly related
to a $2.6 million decrease in credit related expenses as the total
level of non-performing assets continues to decline, a $1.5 million
decline in provision for loan and lease losses due to the improving
credit quality of the loan portfolio, a $526,000 gain on the sale
of a Company owned parking lot, and a $401,000 increase in net
gains on sales of other real estate owned ("OREO"). The
Company continues to make progress on legacy credit and legal
issues, which has had a positive effect on financial results.
At September 30, 2013, loans and leases held for investment
totaled $377.3 million, which represents an increase of $33.2
million, or 9.6%, despite the runoff of tax liens of $9.2 million,
from the level at December 31, 2012. New business
relationships spurred the growth and further diversification of the
loan portfolio, improving the composition of interest earning
assets. Investment securities declined $57.9 million, or
16.6%, from the level at December 31, 2012 partially due to the
reinvestment of cash flows into loans. Total deposits declined
$32.3 million, or 5.8%, from $554.9 million at December 31, 2012 to
$522.6 million at September 30, 2013. The decline in deposits
was related to the strategic re-pricing of higher cost deposit
products including money market accounts and certificates of
deposit.
The $7.3 million improvement in net loss for the nine months
ended September 30, 2013 as compared to the nine months ended
September 30, 2012 was mainly related to a $3.8 million decrease in
credit related expenses as the total level of non-performing assets
continues to fall, a $3.6 million decline in provision for loan and
lease losses as a result of the improvement in the credit quality
of the loan portfolio, the absence of a net $1.2 million pre-tax
accrual related to the tax lien subsidiaries, a $1.3 million
decrease in professional and legal fees, $1.2 million in gains on
the sale of Company owned real estate, a $913,000 reduction in
employee salaries and benefits, an $864,000 increase in net gains
on sales of OREO, and an $859,000 decline in other-than-temporary
investment impairment. Partially offsetting these positive
items was a $2.5 million drop in net interest income, a $1.8
million decrease in gains on sales of loans and leases, and the
$1.65 million loss contingency accrual for a settlement of the
class action lawsuit related to the Company's tax lien
subsidiaries. After adjusting for the non-controlling interest, the
Company's 60% share of the loss contingency amounted to $990,000 on
a pre-tax basis. Excluding the loss contingency accrual the Company
would have recorded net income of $647,000 for the nine months
ended September 30, 2013. The Company's leasing subsidiary
continued to positively contribute to financial results for the
third quarter and year-to-date.
At September 30, 2013, based on capital levels calculated under
regulatory accounting principles, Royal Bank's Tier 1 leverage and
total risk-based capital ratios were 9.39% and 15.70%,
respectively, and continue to be above required regulatory minimum
ratios.
The Company's Chief Executive Officer Kevin Tylus noted, "We are
now three full quarters into what has been an all-encompassing
review and refresh of our business model and I am encouraged by the
positive traction gained from some of our most significant changes.
Positive quarterly results for both the bank and holding company
reflect a diverse number of factors including continued quality
loan growth, progress reducing non-performing assets and
improvements in organizational efficiencies, brand reputation and
management of strategic real estate assets -- all of which continue
to push us further towards our goal of returning our company to
consistent profitability. Much of this progress is attributable to
the quality of new relationships which have helped us expand our
customer base and pursue opportunities to grow our brand
strategically."
Tylus added, "Efforts to reposition and reinvigorate our retail
branch network continue to gather steam and we expect to hire in
the 4th quarter a highly experienced retail banker to fill the
newly configured Chief Retail Banking Officer position to lead
account penetration, product expansion and retail sales
teams. Plans are also being finalized for the relocation in
the next 60-120 days of three branches to more convenient,
high-traffic locations within the same markets. With the further
adoption of new technologies as well as new commercial and consumer
solutions, our expectations from our retail network in the months
and years to come have been significantly raised."
Profitability Improvement Plan ("Plan") continues to reduce
expenses and improve efficiency
Strategic efforts continued during the third quarter, including
the effectuation of a unique transfer of certain employees to a key
servicing vendor that will help accelerate the handling of our
non-performing assets. This, coupled with other efforts throughout
2013, has resulted in a nearly 21% reduction in the workforce and
an annualized reduction of approximately 10%, or $300,000, of
discretionary expenses. Enhancements in products and recent
automation have resulted in new revenue and improved efficiencies.
The expense reductions and revenue growth, combined, are intended
to bring core performance more in line with our peers.
As a result of the Plan, the Company recorded $230,000 in
restructuring charges during the first nine months of 2013. As
mentioned previously, credit related expenses (including OREO),
professional and legal fees, and salaries and benefits declined
$3.8 million, $1.3 million, and $913,000, respectively, year over
year.
Credit quality continues positive trend
At September 30, 2013, non-performing loans were $13.5
million, or 3.6%, of total loans, a decrease of $9.5
million from $23.0 million at December 31, 2012, reflecting a
continuation of a trend as non-performing loans have decreased by
73.8% and non-performing assets decreased by 62.2% since December
31, 2011. As a result, the provision for loan and lease losses has
declined by $3.6 million for the nine-month period ended September
30, 2013 compared to the nine-month period ended September 30,
2012.
|
|
|
|
|
|
At September 30, |
|
At December 31, |
|
(in thousands except percentages) |
|
2013 |
|
|
2012 |
|
|
2011 |
|
Non-performing loans |
|
$ |
13,468 |
|
|
$ |
23,004 |
|
|
$ |
51,324 |
|
Non-performing assets (which includes OREO) |
|
$ |
27,374 |
|
|
$ |
36,439 |
|
|
$ |
72,340 |
|
Percentage of non-accrual loans to total loans |
|
|
3.6 |
% |
|
|
6.7 |
% |
|
|
12.0 |
% |
Percentage of non-performing assets to total assets |
|
|
3.7 |
% |
|
|
4.7 |
% |
|
|
8.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Margin
The quarter over quarter net interest income decline of $312,000
was primarily attributed to a reduction in interest-earning assets
coupled with a decline in the yield on loans. Additionally
during the third quarter of 2013, the Company paid the $3.1 million
accrued interest in arrears on the trust preferred securities which
included a $174,000 interest penalty that negatively impacted net
interest income. Despite the decline in net interest income, the
net interest margin in the third quarter of 2013 of 2.94% grew 6
basis points from the comparable quarter of 2012.
Net interest income for the nine months ended September 30, 2013
declined $2.5 million from the comparable period in 2012. The
decrease was primarily attributed to a reduction in
interest-earning assets coupled with a decline in the yield on
loans and investments year over year. To mitigate the decline
in net interest income the Company has reduced funding costs
through the redemption and lower re-pricing of maturing retail CDs
and the re-pricing of FHLB advances, and is continuing efforts to
improve the mix of interest earning assets. The net interest margin
of 2.86% for the nine month period ended September 30, 2013,
declined 17 basis points from the comparable period of 2012. The
decline in the yield on interest-earning assets was driven by lower
yields on average loan balances mainly due to the planned
significant decline of the higher yielding tax liens and the
decrease in investment securities year over year.
At September 30, 2013, lower-yielding investment securities
declined $57.9 million and higher-yielding loans, led by an influx
of new customers and expanding relationships, grew $33.2 million
from year-end 2012 leading to a net interest margin improvement of
23 basis points for the nine months ended September 30, 2013
compared to the net interest margin of 2.63% for the quarter ended
December 31, 2012.
About Royal Bancshares of Pennsylvania, Inc.
Royal Bancshares of Pennsylvania, Inc., headquartered in
Narberth, Pennsylvania, is the parent company of Royal Bank
America, which for the past 50 years has played a lead role in the
growth and development of our region by empowering small
businesses, entrepreneurs and individuals to achieve their
financial goals and enrich our communities. 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, 2012.
|
|
ROYAL BANCSHARES OF PENNSYLVANIA, INC. |
|
CONDENSED INCOME STATEMENT |
|
|
|
Three months |
|
|
Nine months |
|
|
|
ended Sep 30, |
|
|
ended Sep 30, |
|
(in thousands, except for loss per common share) |
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
Interest Income |
|
$ |
6,960 |
|
|
$ |
7,761 |
|
|
$ |
20,455 |
|
|
$ |
24,990 |
|
Interest Expense |
|
|
1,890 |
|
|
|
2,379 |
|
|
|
5,667 |
|
|
|
7,709 |
|
Net Interest Income |
|
|
5,070 |
|
|
|
5,382 |
|
|
|
14,788 |
|
|
|
17,281 |
|
Provision (Credit) for Loan and Lease Losses |
|
|
218 |
|
|
|
1,761 |
|
|
|
(196 |
) |
|
|
3,360 |
|
Net Interest Income after Provision |
|
|
4,852 |
|
|
|
3,621 |
|
|
|
14,984 |
|
|
|
13,921 |
|
Non Interest Income |
|
|
1,937 |
|
|
|
1,151 |
|
|
|
4,306 |
|
|
|
3,757 |
|
Non Interest Expense |
|
|
6,290 |
|
|
|
9,409 |
|
|
|
19,997 |
|
|
|
26,068 |
|
Income (Loss) before Taxes |
|
|
499 |
|
|
|
(4,637 |
) |
|
|
(707 |
) |
|
|
(8,390 |
) |
Income Taxes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net Income (Loss) |
|
|
499 |
|
|
|
(4,637 |
) |
|
|
(707 |
) |
|
|
(8,390 |
) |
Less Net Income (Loss) Attributable to Noncontrolling
Interest |
|
|
157 |
|
|
|
175 |
|
|
|
(364 |
) |
|
|
(759 |
) |
Net Income (Loss) Attributable to Royal Bancshares |
|
$ |
342 |
|
|
$ |
(4,812 |
) |
|
$ |
(343 |
) |
|
$ |
(7,631 |
) |
|
Less
Preferred Stock Series A Accumulated Dividend and Accretion |
|
$ |
520 |
|
|
$ |
511 |
|
|
$ |
1,553 |
|
|
$ |
1,525 |
|
Net Loss to Common Shareholders |
|
$ |
(178 |
) |
|
$ |
(5,323 |
) |
|
$ |
(1,896 |
) |
|
$ |
(9,156 |
) |
Loss Per Common Share - Basic and Diluted |
|
$ |
(0.01 |
) |
|
$ |
(0.40 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.69 |
) |
SELECTED RATIOS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on Average Assets |
|
|
0.2 |
% |
|
|
-2.3 |
% |
|
|
-0.1 |
% |
|
|
-1.2 |
% |
Return on Average Equity |
|
|
2.6 |
% |
|
|
-26.3 |
% |
|
|
-0.8 |
% |
|
|
-13.7 |
% |
Average Equity to Assets |
|
|
7.1 |
% |
|
|
8.9 |
% |
|
|
7.5 |
% |
|
|
8.9 |
% |
Book Value Per Share |
|
$ |
1.38 |
|
|
$ |
2.60 |
|
|
$ |
1.38 |
|
|
$ |
2.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED BALANCE SHEET |
|
|
|
|
|
|
|
|
(in thousands) |
|
At Sep 30, 2013 |
|
|
At Dec 31, 2012 |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
Cash and Cash Equivalents |
|
$ |
18,854 |
|
|
$ |
28,802 |
|
Investment Securities |
|
|
297,959 |
|
|
|
357,464 |
|
Loans and leases held for sale ("LHFS") |
|
|
- |
|
|
|
1,572 |
|
Loans and Leases |
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
|
169,901 |
|
|
|
178,871 |
|
|
Construction and land development |
|
|
39,594 |
|
|
|
37,215 |
|
|
Commercial and industrial |
|
|
86,401 |
|
|
|
40,560 |
|
|
Residential real estate |
|
|
24,830 |
|
|
|
24,981 |
|
|
Leases |
|
|
40,408 |
|
|
|
37,347 |
|
|
Tax certificates |
|
|
15,364 |
|
|
|
24,569 |
|
|
Other |
|
|
831 |
|
|
|
622 |
|
Loans and Leases |
|
|
377,329 |
|
|
|
344,165 |
|
Allowance for loan and lease losses |
|
|
(14,679 |
) |
|
|
(17,261 |
) |
Loans and Leases (net) |
|
|
362,650 |
|
|
|
326,904 |
|
Premises and Equipment (net) |
|
|
4,770 |
|
|
|
5,232 |
|
Other Real Estate Owned (net) |
|
|
13,906 |
|
|
|
13,435 |
|
Accrued Interest receivable |
|
|
7,869 |
|
|
|
10,256 |
|
Other Assets |
|
|
30,992 |
|
|
|
30,051 |
|
|
|
Total
Assets |
|
$ |
737,000 |
|
|
$ |
773,716 |
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
522,620 |
|
|
|
554,917 |
|
Borrowings |
|
|
111,994 |
|
|
|
108,333 |
|
Other Liabilities |
|
|
24,490 |
|
|
|
26,277 |
|
Subordinated debentures |
|
|
25,774 |
|
|
|
25,774 |
|
Royal Bancshares Shareholders' Equity |
|
|
48,808 |
|
|
|
54,555 |
|
Noncontrolling Interest |
|
|
3,314 |
|
|
|
3,860 |
|
|
|
Total
Equity |
|
|
52,122 |
|
|
|
58,415 |
|
|
|
Total
Liabilities and Equity |
|
$ |
737,000 |
|
|
$ |
773,716 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INTEREST INCOME AND MARGIN |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
For the three months ended |
|
|
|
September 30, 2013 |
|
|
September 30, 2012 |
|
(In thousands, except percentages) |
|
Average Balance |
|
Interest |
|
Yield |
|
|
Average Balance |
|
Interest |
|
Yield |
|
Cash equivalents |
|
$ |
6,072 |
|
$ |
6 |
|
0.39 |
% |
|
$ |
24,381 |
|
$ |
10 |
|
0.16 |
% |
Investment securities |
|
|
305,152 |
|
|
1,528 |
|
1.99 |
% |
|
|
352,336 |
|
|
1,453 |
|
1.64 |
% |
Loans |
|
|
373,722 |
|
|
5,426 |
|
5.76 |
% |
|
|
367,664 |
|
|
6,298 |
|
6.81 |
% |
Total interest-earning assets |
|
|
684,946 |
|
|
6,960 |
|
4.03 |
% |
|
|
744,381 |
|
|
7,761 |
|
4.15 |
% |
Non-earning assets |
|
|
52,532 |
|
|
|
|
|
|
|
|
73,323 |
|
|
|
|
|
|
|
|
Total
average assets |
|
$ |
737,478 |
|
|
|
|
|
|
|
$ |
817,704 |
|
|
|
|
|
|
Interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOW and money markets |
|
$ |
203,189 |
|
$ |
149 |
|
0.29 |
% |
|
$ |
224,898 |
|
$ |
292 |
|
0.52 |
% |
|
Savings |
|
|
17,958 |
|
|
9 |
|
0.20 |
% |
|
|
16,901 |
|
|
14 |
|
0.33 |
% |
|
Time deposits |
|
|
237,689 |
|
|
825 |
|
1.38 |
% |
|
|
277,878 |
|
|
1,134 |
|
1.62 |
% |
Total interest-bearing deposits |
|
|
458,836 |
|
|
983 |
|
0.85 |
% |
|
|
519,677 |
|
|
1,440 |
|
1.10 |
% |
Borrowings |
|
|
134,186 |
|
|
907 |
|
2.68 |
% |
|
|
135,864 |
|
|
939 |
|
2.75 |
% |
Total interest-bearing liabilities |
|
|
593,022 |
|
|
1,890 |
|
1.26 |
% |
|
|
655,541 |
|
|
2,379 |
|
1.44 |
% |
Non-interest bearing deposits |
|
|
61,513 |
|
|
|
|
|
|
|
|
56,963 |
|
|
|
|
|
|
Other liabilities |
|
|
30,669 |
|
|
|
|
|
|
|
|
32,461 |
|
|
|
|
|
|
Shareholders' equity |
|
|
52,274 |
|
|
|
|
|
|
|
|
72,739 |
|
|
|
|
|
|
|
|
Total
average liabilities and equity |
|
$ |
737,478 |
|
|
|
|
|
|
|
$ |
817,704 |
|
|
|
|
|
|
|
|
Net
interest margin |
|
|
|
|
$ |
5,070 |
|
2.94 |
% |
|
|
|
|
$ |
5,382 |
|
2.88 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended |
|
|
For the nine months ended |
|
|
|
September 30, 2013 |
|
|
September 30, 2012 |
|
(In thousands, except percentages) |
|
Average Balance |
|
Interest |
|
Yield |
|
|
Average Balance |
|
Interest |
|
Yield |
|
Cash equivalents |
|
$ |
12,083 |
|
$ |
21 |
|
0.23 |
% |
|
$ |
22,091 |
|
$ |
28 |
|
0.17 |
% |
Investment securities |
|
|
316,474 |
|
|
4,103 |
|
1.73 |
% |
|
|
343,622 |
|
|
5,196 |
|
2.02 |
% |
Loans |
|
|
363,909 |
|
|
16,331 |
|
6.00 |
% |
|
|
396,526 |
|
|
19,766 |
|
6.66 |
% |
Total interest-earning assets |
|
|
692,466 |
|
|
20,455 |
|
3.95 |
% |
|
|
762,239 |
|
|
24,990 |
|
4.38 |
% |
Non-earning assets |
|
|
55,782 |
|
|
|
|
|
|
|
|
72,340 |
|
|
|
|
|
|
|
|
Total
average assets |
|
$ |
748,248 |
|
|
|
|
|
|
|
$ |
834,579 |
|
|
|
|
|
|
Interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOW and money markets |
|
$ |
211,529 |
|
$ |
464 |
|
0.29 |
% |
|
$ |
227,008 |
|
$ |
1,126 |
|
0.66 |
% |
|
Savings |
|
|
17,911 |
|
|
28 |
|
0.21 |
% |
|
|
16,911 |
|
|
57 |
|
0.45 |
% |
|
Time deposits |
|
|
239,460 |
|
|
2,569 |
|
1.43 |
% |
|
|
279,154 |
|
|
3,458 |
|
1.65 |
% |
Total interest-bearing deposits |
|
|
468,900 |
|
|
3,061 |
|
0.87 |
% |
|
|
523,073 |
|
|
4,641 |
|
1.19 |
% |
Borrowings |
|
|
134,068 |
|
|
2,606 |
|
2.60 |
% |
|
|
154,533 |
|
|
3,068 |
|
2.65 |
% |
Total interest-bearing liabilities |
|
|
602,968 |
|
|
5,667 |
|
1.26 |
% |
|
|
677,606 |
|
|
7,709 |
|
1.52 |
% |
Non-interest bearing deposits |
|
|
59,595 |
|
|
|
|
|
|
|
|
54,663 |
|
|
|
|
|
|
Other liabilities |
|
|
29,579 |
|
|
|
|
|
|
|
|
27,723 |
|
|
|
|
|
|
Shareholders' equity |
|
|
56,106 |
|
|
|
|
|
|
|
|
74,587 |
|
|
|
|
|
|
|
|
Total
average liabilities and equity |
|
$ |
748,248 |
|
|
|
|
|
|
|
$ |
834,579 |
|
|
|
|
|
|
|
|
Net
interest margin |
|
|
|
|
$ |
14,788 |
|
2.86 |
% |
|
|
|
|
$ |
17,281 |
|
3.03 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Contact: Marc Sanders Vice President - Marketing
610.668.4700 Email Contact
Royal Bancshares of Pennsylvania, Inc. (NASDAQ:RBPAA)
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From Jun 2024 to Jul 2024
Royal Bancshares of Pennsylvania, Inc. (NASDAQ:RBPAA)
Historical Stock Chart
From Jul 2023 to Jul 2024