ROYAL BANCSHARES OF PENNSYLVANIA, INC. Commercial Loan and Customer Growth Produce Results Ahead of Last Year
Retail Strategy Boosted by Branch Acquisition Announcement
BALA CYNWYD, PA - - (Marketwired - July 21, 2015) - 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 $1.5 million, or $.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, compared to net income of $1.4 million, or $.04 per diluted share, and $2.9 million, or $0.10 per diluted share, for the three and six months ended June 30, 2014, respectively. Diluted earnings per share for 2015 were impacted by the increase in average common shares outstanding as a result of the private placement and shareholders' rights offering which closed in the third quarter of
2014.
Kevin Tylus, the Company's President and Chief Executive Officer, noted, 'Loan and customer growth, coupled with the continuing trend in improved credit quality, positively contributed to second quarter and 2015 year to date earnings. Portfolio growth from our leasing subsidiary also added to earnings. Our multi-faceted retail plan to attract and retain consumer deposits continued with the relocation from Jenkintown to the bustling new Willow Grove branch site. And upon regulatory approval of our entry into contiguous Delaware County, PA, the acquisition of our new branch in the county seat of Media will add approximately $38 million, or 7%, to our deposit base and
$10 million, or 2%, in commercial loans.'
The Company continues its focus on modernizing the ways customers can access its products and services. A new custom branded 'smart phone' application is now available and provides a simpler on-line banking experience, while on-line loan applications are increasing. The suite of cash management products, together with improved physical locations and the Princeton, NJ loan production office, are helping to drive the growth within the Company's attractive geography.
Highlights for the three and six months ended June 30, 2015 included:
Total loans were $447.6 million at June 30, 2015, an increase of $29.0 million, or 6.9%, from $418.7 million at March 31, 2015, and an increase of $32.5 million, or 7.8%, from $415.1 million at December 31 ,
2014. The majority of the increase was in the commercial real estate portfolio which grew $25.6 million, or 11.1%, from $230.5 million at March 31, 2015 to $256.1 million at June 30, 2015.
Non-performing loans of $5.4 million at June 30, 2015 decreased $3.0 million, or 35.5%, from $8.4 million at March 31, 2015 and decreased $4.4 million, or 45.1% from $9.8 million at December 31, 2014. The ratio of non-performing loans to total loans was 1.20%, 1.99%, and 2.36% at June 30, 2015, March 31, 2015, and December 31, 2014, respectively. Excluding tax liens, the ratio of non-performing loans to total loans was 0.99%, 1.82%, and 1.99% at June 30, 2015, March 31, 2015 and December 31, 2014, respectively.
Non-performing assets of $15.9 million at June 30, 2015 decreased $3.0 million, or 15.8%, from $18.9 million at March 31, 2015 and decreased $3.7 million, or 18.8%, from December 31, 2014. The ratio of non-performing assets to total assets was 2.19%, 2.61%, and 2.67% at June 30, 2015, March 31, 2015, and December 31, 2014, respectively. Excluding tax liens, the ratio of nonperforming assets to total assets was
0.67%, 1.11%, and 1.19% at June 30, 2015, March 31, 2015, and December 31, 2014, respectively. The purposeful downsizing of the tax lien business, which is not core to Royal Bank's strategy, has seen a
favorable reduction from a high of over $100 million in tax lien assets in 2009 to less than $18.0 million in assets at June 30, 2015.
The return on average assets for the three and six months ended June 30, 2015 was 0.81% and 0.85%, respectively, compared to 0.75% and 0.79% for the three and six months ended June 30, 2014.
The return on average equity for the three and six months ended June 30, 2015 was 9.03% and 9.56%, respectively, compared to 10.35% and 11.13% for the three and six months ended June 30, 2014. The return on average equity was impacted by the increase in average common equity as a result of the private placement and shareholders' rights offering which closed in the third quarter of 2014.
At June 30, 2015, the Company's Tier 1 leverage and Total Risk Based Capital ratios were 12.5% and
18.8%, respectively, compared to 11.9% and 19.2%, respectively, at December 31, 2014. The Common
Equity Tier 1 ratio was 9.2% at June 30, 2015.
Net interest income increased $76,000, or 0.7%, from $11.1 million for the six months ended June 30, 2014 to $11.2 million for the six months ended June 30, 2015, but declined $107,000, or 1.9%, from $5.6 million for the three months ended June 30, 2014 to $5.5 million for the three months ended June 30, 2015. The decrease in the quarterly net interest income was related to a decline in the average yields earned on average investment securities and average loans, which was partially offset by an increase in the average loan balances.
The net interest margin was 3.26% for the second quarter of 2015 compared to 3.25% for the comparable period in 2014 and was 3.33% for the six months ended June 30, 2015 compared to 3.24% for the six months ended June 30, 2014. The six month increase of 9 basis points was directly related to an increase in the yield on average interest-earning assets.
Non-interest income for the quarter ended June 30, 2015 was $1.3 million and increased $467,000, or
57.2%, from $816,000 for the quarter ended June 30, 2014. Non-interest income for the six months ended June 30, 2015 was $2.1 million and increased $542,000, or 34.1%, from $1.6 million for the six months ended June 30, 2014. The increases for the three and six month periods ended June 30, 2015 were related to increases of $293,000 and $480,000, respectively, in net gains on the sale of investment securities. During 2015, the Company sold investment securities to fund the loan growth.
Non-interest expense for the quarter ended June 30, 2015 was $5.7 million and increased $706,000, or
14.0%, from $5.0 million for the quarter ended June 30, 2014. Non-interest expense for the six months ended June 30, 2015 was $11.1 million and increased $759,000, or 7.3%, from $10.4 million for the six months ended June 30, 2014. The increases for the three and six month periods ended June 30, 2015 were related to increases of $138,000 and $369,000, respectively, in employee salaries and benefits and increases of $311,000 and $359,000, respectively, in the provision for unfunded loan commitments due to the growth
in such commitments.
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, 2014.
2015 2014 2015 2014
Interest income
$ 7,071 $
7,209 $
14,351 $
14,360
Interest expense 1,591 1,622 3,162 3,247
Net Interest Income 5,480 5,587 11,189 11,113
Credit for loan and lease losses (586) (75) (1,166) (714) Net interest income after credit for loan and lease losses 6,066 5,662 12,355 11,827
Non-interest income 1,283 816 2,130 1,588
Non-interest expense 5,737 5,031 11,112 10,353
Income before taxes 1,612 1,447 3,373 3,062
Income tax expense - - - - Net Income 1,612 1,447 3,373 3,062
Less net income attributable to noncontrolling interest 151 69 321 187
Net Income Attributable to Royal Bancshares
Less Preferred stock Series A accumulated dividend and accretion
Net income to common shareholders
Income Per Common Share - Basic and Diluted
$ 1,461
$ 429
$ 1,032
$ 0.03
$ 1,378
$ 829
$ 549
$ 0.04
$ 3,052
$ 853
$ 2,199
$ 0.07
$ 2,875
$ 1,493
$ 1,382
$ 0.10
SELECTED PERFORMANCE RATIOS: For the three months For the six months ended June 30, ended June 30,2015 2014 2015 2014
Return on Average Assets 0.81% 0.75% 0.85% 0.79% Return on Average Equity 9.03% 10.35% 9.56% 11.13% Average Equity to Average Assets 9.00% 7.22% 8.89% 7.07% Book Value Per Share $ 1.53 $ 1.84 $ 1.53 $ 1.84
Capital ratios (US GAAP): | At June 30, | At December 31, |
Capital ratios (US GAAP): | 2015 | 2014 |
Company Tier 1 Leverage | 12.5% | 11.9% |
Company Total Risk Based Capital | 18.8% | 19.2% |
Company Common Equity Tier 1 | 9.2% | NA |
(Unaudited, in thousands)
At June 30,Cash and cash equivalents | $ 28,015 | $ 30,790 |
Investment securities, at fair value | 212,022 | 250,368 |
Other investment, at cost | 2,250 | 2,250 |
Federal Home Loan Bank stock Loans and leases Commercial real estate and multi-family | 2,585 222,311 | 2,622 188,861 |
Construction and land development | 33,786 | 45,662 |
Commercial and industrial | 83,825 | 76,489 |
Residential real estate | 42,166 | 42,992 |
Leases | 58,090 | 51,583 |
Tax certificates | 4,804 | 7,191 |
Consumer | 2,665 | 2,354 |
Loans and leases | 447,647 | 415,132 |
Allowance for loan and lease losses | (10,036) | (11,708) |
Loans and leases, net | 437,611 | 403,424 |
Bank owned life insurance | 15,884 | 15,636 |
Other real estate owned, net | 10,531 | 9,779 |
Premises and equipment, net | 5,279 | 5,201 |
Accrued interest receivable | 4,459 | 5,270 |
Other assets | 8,568 | 7,213 |
Total Assets | $ 727,204 | $ 732,553 |
Deposits | $ 531,510 | $ 530,425 |
Borrowings | 82,198 | 92,426 |
Other liabilities | 22,435 | 21,322 |
Subordinated debentures | 25,774 | 25,774 |
Royal Bancshares shareholders' equity | 64,869 | 62,219 |
Noncontrolling interest | 418 | 387 |
Total Equity | 65,287 | 62,606 |
Total Liabilities and Equity | $ 727,204 | $ 732,553 |
(Unaudited, in thousands, except percentages)
For the three months ended For the three months ended June 30, 2015 June 30, 2014Average
Balance Interest Yield
Average
Balance Interest Yield
Cash and cash equivalents
$ 20,278 $ 8
0.16%
$ 8,284 $ 5
0.24%
Investment securities 223,012 1,340 2.41% 312,118 1,954 2.51% Loans 431,957 5,723 5.31% 370,116 5,250 5.69% Total interest-earning assets 675,247 7,071 4.20% 690,518 7,209 4.19%
Non-interest earning assets 46,056 49,365
Total average assets
Interest-bearing deposits
NOW and money markets
$ 721,303
$ 201,292 $
168
0.33%
$ 739,883
$ 211,381 $
166
0.31%
Savings 22,268 10 0.18% 18,520 7 0.15% Certificates of deposit 220,376 742 1.35% 229,906 726 1.27% Total interest-bearing deposits 443,936 920 0.83% 459,807 899 0.78% Borrowings 117,493 671 2.29% 137,441 723 2.11% Total interest-bearing liabilities 561,429 1,591 1.14% 597,248 1,622 1.09%
Non-interest bearing deposits 73,831 64,702
Other liabilities 21,135 24,517
Shareholders' equity 64,908 53,416
Total average liabilities and equity
Net interest income
$ 721,303
$ 5,480
$ 739,883
$ 5,587
Net interest margin 3.26% 3.25%
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, 2015 June 30, 2014Average
Balance Interest Yield
Average
Balance Interest Yield
Cash and cash equivalents
$ 16,028 $ 13
0.16%
$ 7,344 $ 10
0.27%
Investment securities 236,253 2,916 2.49% 315,128 3,876 2.48% Loans 425,826 11,422 5.41% 368,152 10,474 5.74% Total interest-earning assets 678,107 14,351 4.27% 690,624 14,360 4.19%
Non-interest earning assets 45,971 46,014
Total average assets
Interest-bearing deposits
NOW and money markets
$ 724,078
$ 203,102 $
326
0.32%
$ 736,638
$ 210,810 $
333
0.32%
Savings 20,788 18 0.17% 18,199 16 0.18% Time deposits 222,552 1,484 1.34% 233,233 1,463 1.26% Total interest-bearing deposits 446,442 1,828 0.83% 462,242 1,812 0.79% Borrowings 117,823 1,334 2.28% 133,863 1,435 2.16% Total interest-bearing liabilities 564,265 3,162 1.13% 596,105 3,247 1.10%
Non-interest bearing deposits 73,413 64,310
Other liabilities 22,031 24,137
Shareholders' equity 64,369 52,086
Total average liabilities and equity
Net interest income
$ 724,078
$ 11,189
$ 736,638
$ 11,113
Net interest margin 3.33% 3.24%
ASSET QUALITY TRENDS(Unaudited, in thousands, except percentages)
At June 30, 2015 | At March 31, 2015 | At December 31, 2014 | |
Non-performing loans | $ 4,371 | $ 7,518 | $ 8,113 |
Non-performing tax certificates | 1,013 | 834 | 1,700 |
Total nonperforming loans | 5,384 | 8,352 | 9,813 |
Other real estate owned-loans | 356 | 328 | 349 |
Other real estate owned-tax certificates | 10,175 | 10,213 | 9,430 |
Total other real estate owned | 10,531 | 10,541 | 9,779 |
Total nonperforming assets $ 15,915 $ 18,893 $ 19,592 | |||
Ratio of non-performing loans to total loans | 1.20% | 1.99% | 2.36% |
Ratio of non-performing assets to total assets | 2.19% | 2.61% | 2.67% |
Ratio of allowance for loan and lease losses to total loans | 2.24% | 2.60% | 2.82% |
Ratio of allowance for loan and lease losses to non-performing loans | 186.40% | 130.47% | 119.31% |
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