Attached files
| file | filename |
|---|---|
| 8-K - 8-K - ROYAL BANCSHARES OF PENNSYLVANIA INC | form8k.htm |
Exhibit 99.1
 |
|
Customers. Shareholders. Co-workers. Community
|
July 26, 2017 08:45 ET
Royal Bancshares of Pennsylvania, Inc. Reports Second Quarter Profit Driven By Net Interest Margin Expansion and Continued Credit Quality Improvement
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.
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| · |
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.
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| · |
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.
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| · |
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.
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| · |
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.
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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
ended June 30,
|
For the six months
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
ended June 30,
|
For the six months
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
|
||||||||
|
Capital ratios (US GAAP):
|
At June 30,
2017
|
At December 31,
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
ended June 30,
|
For the six months
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,
2017
|
At December 31,
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
June 30, 2017
|
For the three months ended
June 30, 2016
|
|||||||||||||||||||||||
|
Average
Balance
|
Interest
|
Yield
|
Average
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
June 30, 2017
|
For the six months ended
June 30, 2016
|
|||||||||||||||||||||||
|
Average
Balance
|
Interest
|
Yield
|
Average
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 June 30,
2017
|
At March 31,
2017
|
At December 31,
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