Royal Bancshares of Pennsylvania, Inc. (NASDAQ: RBPAA) today
announced its financial results for the second quarter ended June
30, 2009.
The net loss attributable to Royal Bancshares ("Royal") was
$12.1 million for the quarter, or 95 cents loss per common share,
compared to net income of $152,000, or one cent per common share,
in the quarter ended June 30, 2008. Second quarter results included
a $7 million provision for loan and lease losses and $5.1 million
of net non-cash impairment losses on investment securities. In
addition, an industry-wide FDIC insurance special assessment charge
of approximately $600 thousand to replenish the FDIC Insurance Fund
negatively impacted earnings per share by approximately five cents
per share.
For the six months ended June 30, 2009, net loss attributable to
Royal Bancshares was $18.8 million, or $1.47 per common share,
compared to net income of $1.2 million, or 9 cents per share, in
the first six months of 2008. The results for the first half of
2009 included a $9.8 million provision for loan and lease losses;
$9.3 million of non-cash impairment losses on investment
securities; as well as the previously mentioned FDIC insurance
special assessment charge of approximately $600 thousand.
Robert Tabas, Chairman and CEO, said, "Second quarter results
were disappointing, as economic conditions and the overall
recessionary credit environment continued to negatively impact
Royal's earnings. However, as we continue to work through
challenges associated with our legacy real estate loans, we are
optimistic about the new business development environment. During
the second quarter, we continued to forge new relationships with
retail and commercial banking customers and posted strong deposit
growth at our branches and small business loan growth through our
SpurTheEconomy.com initiative."
Mr. Tabas continued, "We are pleased that our capital ratios for
Royal Bancshares and its banking subsidiaries exceed the regulatory
definitions for a well-capitalized bank at June 30, 2009. This
reflects the underlying strength of our balance sheet, despite the
significant challenges we have faced."
Royal's board of directors has determined to suspend the regular
quarterly cash dividends on the Series A Preferred Stock of $30.4
million issued to the United States Department of the Treasury as
part of the Capital Purchase Program. The Company's board of
directors took this action in consultation with the Federal Reserve
Bank of Philadelphia as required by recent regulatory policy
guidance. The board of directors also intends to suspend interest
payments on its $25.8 million of outstanding trust preferred
securities. Royal currently has sufficient capital and liquidity to
pay the scheduled dividends on its preferred stock and interest
payments on its trust preferred securities, but is taking these
actions to support its capital position in light of current
economic conditions.
The following is an overview of key financial metrics for the
quarter:
-- Total assets were $1.3 billion at June 30, 2009, an increase of 12.3%
from $1.2 billion at December 31, 2008.
-- Second quarter 2009 deposit levels were $876.7 million, up $116.6
million or 15.3% from $760.1 million at December 31, 2008 and up $64.6
million or 8% from $812.1 million at March 31, 2009.
-- Net loans and leases at quarter end were $687.8 million, up 2.4% or
$16 million compared to $671.8 million at December 31, 2008 and up $7.7
million or 1.1% from $680.1 million at March 31, 2009.
-- Net interest income was $6.9 million in the second quarter of 2009,
compared to $9.3 million for the same period in 2008. Net interest income
was $14 million for the six months ended June 30, 2009, compared to $19.1
million for the same period in 2008.
-- Net interest margin in the second quarter was 2.30%, down 124 basis
points from the comparable 2008 quarter of 3.54%. Net interest margin for
the six month period was 2.40%, down 114 basis points from 3.54% in the
comparable period of 2008. The decline for the quarter and the six month
period was driven by an increase in non performing loans, a reduction in
the prime rate by the Federal Reserve, and a reduction in the yield on
investment securities, as well as a strategic decision on the part of
management to maintain a larger position in cash and cash equivalents.
Partially offsetting these declines was a slight reduction in the cost of
interest bearing liabilities.
-- Non-accrual and impaired loans were $85.6 million at June 30, 2009,
compared to $85.8 million at December 31, 2008, a slight decrease of
$227,000. The decline was the result of loans becoming current and placed
back on accrual, loan payoffs, transfers to other real estate owned, and
charge-offs, net of additions. Royal has no troubled debt restructured
loans or loans past due 90 days or more on which it has continued to accrue
interest during the quarter.
-- Capital levels at June 30, 2009 exceed the regulatory minimum
requirements for "well capitalized" at both the subsidiary and holding
company level:
As of June 30, 2009
--------------------------------------------------
To be well
capitalized
For capital under prompt
adequacy corrective
Actual purposes action provision
---------------- ---------------- ----------------
(Dollars in thousands) Amount Ratio Amount Ratio Amount Ratio
--------- ----- --------- ----- --------- -----
Total capital (to
risk-weighted assets)
Company (consolidated) $ 154,878 14.71% $ 84,216 8.00% N/A N/A
Royal Bank 116,583 12.21% 76,404 8.00% $ 95,505 10.00%
Royal Asian 14,465 16.34% 7,083 8.00% 8,853 10.00%
Tier I capital (to
risk-weighted assets)
Company (consolidated) $ 141,531 13.44% $ 42,108 4.00% N/A N/A
Royal Bank 104,469 10.94% 38,202 4.00% $ 57,303 6.00%
Royal Asian 13,354 15.08% 3,541 4.00% 5,312 6.00%
Tier I Capital (to
average assets,
leverage)
Company (consolidated) $ 141,531 10.88% $ 39,017 3.00% N/A N/A
Royal Bank 104,469 8.81% 35,554 3.00% $ 59,257 5.00%
Royal Asian 13,354 11.38% 3,520 3.00% 5,867 5.00%
Robert Tabas concluded, "The small business niche has proven to
be fruitful for our business development efforts, and our loan
growth this quarter reflects our continued success in repositioning
our lending focus. Our deposit growth reflects customers underlying
satisfaction with our customer service, convenience, and stability.
We are building a foundation for future growth and believe we are
making solid progress."
About Royal Bancshares of Pennsylvania, Inc.
Royal Bancshares of Pennsylvania, Inc., headquartered in
Narberth, Pennsylvania, is a two-bank holding company operating the
Royal Bank America and Royal Asian Bank brands throughout
Pennsylvania, New Jersey and New York. Royal Bank America has
played a lead role in the growth and development of our area for
the past 40+ years. Royal Asian Bank enjoys a distinctive niche
serving the financing and banking needs of the growing
Asian-American population. More information on Royal Bancshares of
Pennsylvania, our banks and subsidiaries is available 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, 2008.
ROYAL BANCSHARES OF PENNSYLVANIA, INC.
CONDENSED INCOME STATEMENT
Three Months Six Months
(in thousands, except for Ended June 30th Ended June 30th
earnings per share) 2009 2008 2009 2008
---------- ---------- ---------- ----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest Income $ 16,570 $ 17,702 $ 32,924 $ 37,774
Interest Expense 9,681 8,452 18,966 18,625
---------- ---------- ---------- ----------
Net Interest Income 6,889 9,250 13,958 19,149
Provision for Loan Losses 6,956 4,531 9,753 7,812
---------- ---------- ---------- ----------
Net Interest (Loss) Income
after Provision (67) 4,719 4,205 11,337
Non Interest (Loss)/Income (3,404) 2,452 (6,988) 3,744
Non Interest Expense 8,319 7,041 15,544 13,645
---------- ---------- ---------- ----------
(Loss)/Income before Taxes (11,790) 130 (18,327) 1,436
Income Tax Expense
(Benefit) 0 (185) 0 (69)
---------- ---------- ---------- ----------
Net (Loss)/Income (11,790) 315 (18,327) 1,505
Less Net Income
attributable to
noncontrolling interest 264 163 480 310
Net (Loss)/Income
attributable to Royal
Bancshares ($ 12,054) $ 152 ($ 18,807) $ 1,195
========== ========== ========== ==========
(Loss) Earnings per share -
basic ($ 0.95) $ 0.01 ($ 1.47) $ 0.09
========== ========== ========== ==========
SELECTED RATIOS:
Return on Average Assets -3.9% 0.1% -6.2% 0.2%
Return on Average Equity -45.5% 0.4% -75.3% 1.7%
Average Equity to Assets 8.5% 12.3% 8.3% 12.1%
Book Value Per Share $ 5.74 $ 10.35 $ 5.74 $ 10.35
CONDENSED BALANCE SHEET
(in thousands) June 30, 2009 Dec. 31, 2008
(unaudited) (unaudited)
Cash and Cash Equivalents $ 54,208 $ 14,259
Investment Securities 425,497 361,254
Loans & Leases (net) 690,264 672,081
Premises and Equipment (net) 25,531 25,853
Accrued Interest receivable 13,455 13,580
Other Assets 111,690 88,559
-------------- --------------
Total Assets $ 1,320,645 $ 1,175,586
-------------- --------------
Deposits 876,689 760,068
Borrowings 283,935 288,031
Other Liabilities 25,423 20,128
Subordinated debentures 25,774 25,774
Royal Bancshares Shareholders' Equity 106,446 79,687
Noncontrolling Interest 2,378 1,898
-------------- --------------
Total Equity 108,824 81,585
-------------- --------------
Total Liabilities and Equity $ 1,320,645 $ 1,175,586
-------------- --------------
The above condensed financial information includes consolidation of
Equity Real Estate Investments, owned by Royal Bancshares of
Pennsylvania, Inc., which are required as a result of FIN 46(R)
"Variable Interest Entities."
Media Contact: Joseph Crivelli Senior Vice President Gregory FCA
Communications Office: 610-228-2100 Cell: 610-299-6700 Company
Contact: Marc Sanders Director of Marketing Royal Bank America
Office: 610-668-4700 Cell: 484-802-1944
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