Royal Bancshares of Pennsylvania, Inc. Reports Increase in Third Quarter Profit Driven By Net Interest Margin
24 Ottobre 2017 - 2:30PM
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 $2.3
million, or $0.08 per diluted share, for the three months ended
September 30, 2017 compared to $2.0 million, or $0.06 per diluted
share, for the three months ended September 30, 2016.
Excluding expenses directly related to the merger with Bryn
Mawr Bank Corporation of $254 thousand, net income attributable to
the Company was $2.5 million, or $0.08 per diluted share, for the
three months ended September 30, 2017.
Net income attributable to the Company for the
nine months ended September 30, 2017 was $7.1 million, or $0.23 per
diluted share, compared to $6.3 million, or $0.17 per diluted
share, for the nine months ended September 30, 2016.
Excluding expenses directly related to the merger with Bryn Mawr
Bank Corporation of $659 thousand, net income attributable to the
Company was $7.8 million, or $0.26 per diluted share, for the nine
months ended September 30, 2017.
Kevin Tylus, the Company's President and Chief
Executive Officer, noted, "Our net interest margin, which increased
24 basis points from the comparable period in 2016, contributed to
the positive results for the third quarter. Credit quality
remains strong as we have been able to reduce non-performing assets
by 29% during 2017. While we move forward with our merger planning
activities with Bryn Mawr Bank Corporation, we continue to be
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. At this time,
the merger has been approved by the Pennsylvania Department of
Banking and Securities, one of the two required regulatory
agencies. The closing of the merger is expected to occur in
the fourth quarter of 2017, pending receipt of final regulatory
approval.
Highlights for the three and nine months ended
September 30, 2017 included:
Balance Sheet Trends:
- At September 30, 2017, total assets were $809.8 million a
decrease of $22.7 million, or 2.7%, from $832.5 million at December
31, 2016.
- Total loans were $594.6 million at September 30, 2017, a
decrease of $7.4 million, or 1.2%, from $602.0 million at December
31, 2016.
- Total deposits were $627.1 million at September 30, 2017, a
decrease of $2.4 million, or 0.4%, from $629.5 million at December
31, 2016.
Asset Quality:
- The ratio of non-performing loans to total loans was 0.85% at
September 30, 2017 compared to 1.00% at December 31,
2016.
- Non-performing loans of $5.1 million at September 30, 2017
decreased $925 thousand, or 15.4%, from $6.0 million at December
31, 2016.
- The ratio of non-performing assets to total assets was 0.84% at
September 30, 2017 compared to 1.15% at December 31,
2016.
- Non-performing assets of $6.8 million at September 30, 2017
decreased $2.8 million, or 29.1%, from $9.5 million at December 31,
2016. Other real estate owned (“OREO”) has declined $1.9 million,
or 52.5%, during the first nine months of 2017 mostly due to sales
of the properties.
- For the three and nine months ended September 30, 2017, the
Company recorded a provision to the allowance for loan and lease
losses of $159 thousand and $513 thousand, respectively, compared
to $578 thousand and $987 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 nine months
ended September 30, 2017 was 1.12% and 1.15%, respectively,
compared to 0.99% and 1.04% for the three and nine months ended
September 30, 2016, respectively.
- The return on average equity for the three and nine months
ended September 30, 2017 was 15.30% and 16.91%, respectively,
compared to 11.23% and 11.59% for the three and nine months ended
September 30, 2016, respectively.
- At September 30, 2017, the Company’s Tier 1 leverage and Total
Risk Based Capital ratios were 9.57% and 14.76%, respectively,
compared to 8.49% and 13.30%, respectively, at December 31, 2016.
The Common Equity Tier 1 ratio was 9.35% at September 30,
2017 compared to 7.99% at December 31, 2016.
- Net interest income increased $489 thousand, or 7.5%, from $6.6
million for the three months ended September 30, 2016 to $7.0
million for the three months ended September 30, 2017. Net
interest income increased $2.1 million, or 10.8%, from $19.5
million for the nine months ended September 30, 2016 to $21.6
million for the nine months ended September 30, 2017. For the
three months ended September 30, 2017 compared to the three months
ended September 30, 2016, the growth in net interest income was
impacted by an increase of 25 basis points in the yield on
interest-earning assets. For the nine months ended September
30, 2017 compared to the nine months ended September 30, 2016, the
growth in net interest income was impacted by an increase of 30
basis points in the yield on interest-earning assets coupled with
an increase of $25.4 million in average interest-earning
assets.
- The net interest margin was 3.66% for the third quarter of 2017
compared to 3.42% for the comparable period in 2016. The net
interest margin was 3.70% for the nine months ended September 30,
2017 compared to 3.45% for the nine months ended September 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.
- Non-interest income for the third quarter of 2017 was $431
thousand and decreased $758 thousand from $1.2 million for the
third quarter of 2016. Non-interest income for the nine
months ended September 30, 2017 was $1.9 million and decreased $1.6
million from $3.5 million for the nine months ended September 30,
2016. The decrease in non-interest income was primarily
related to net gains on the sales of investment securities which
declined $248 thousand quarter versus quarter and $1.1 million year
over year and income from company owned life insurance which
declined $73 thousand quarter versus quarter and $319 thousand year
over year.
- Non-interest expense was $4.9 million for the three months
ended September 30, 2017 compared to $5.0 million for the same
period in 2016 and decreased $135 thousand. Included in
non-interest expense for the third quarter of 2017 was $254
thousand in merger related expenses. Non-interest expense was
$15.4 million for the nine months ended September 30, 2017 compared
to $15.3 million for the same period in 2016 and increased $144
thousand. Included in non-interest expense for the nine
months ended September 30, 2017 was $659 thousand in merger related
expenses.
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. |
|
|
|
|
|
CONDENSED INCOME STATEMENT |
|
|
|
|
|
(unaudited, in thousands, except per share data) |
|
|
|
|
|
|
|
For the three months |
|
For the nine months |
|
|
ended September 30, |
|
ended September 30, |
|
|
2017 |
|
2016 |
|
|
2017 |
|
2016 |
Interest income |
|
$ |
8,992 |
|
$ |
8,460 |
|
|
$ |
27,412 |
|
$ |
24,855 |
Interest expense |
|
|
1,945 |
|
|
1,902 |
|
|
|
5,848 |
|
|
5,389 |
Net Interest
Income |
|
|
7,047 |
|
|
6,558 |
|
|
|
21,564 |
|
|
19,466 |
Provision for loan and
lease losses |
|
|
159 |
|
|
578 |
|
|
|
513 |
|
|
987 |
Net interest income
after provision for loan and lease losses |
|
|
6,888 |
|
|
5,980 |
|
|
|
21,051 |
|
|
18,479 |
Non-interest
income |
|
|
431 |
|
|
1,189 |
|
|
|
1,885 |
|
|
3,469 |
Non-interest
expense |
|
|
4,866 |
|
|
5,001 |
|
|
|
15,412 |
|
|
15,268 |
Income before
taxes |
|
|
2,453 |
|
|
2,168 |
|
|
|
7,524 |
|
|
6,680 |
Income tax expense |
|
|
80 |
|
|
25 |
|
|
|
132 |
|
|
85 |
Net Income |
|
|
2,373 |
|
|
2,143 |
|
|
|
7,392 |
|
|
6,595 |
Less net income
attributable to noncontrolling interest |
|
|
98 |
|
|
113 |
|
|
|
298 |
|
|
342 |
Net Income Attributable
to Royal Bancshares |
|
$ |
2,275 |
|
$ |
2,030 |
|
|
$ |
7,094 |
|
$ |
6,253 |
Less
Preferred stock Series A accumulated dividend and accretion |
|
$ |
- |
|
$ |
342 |
|
|
$ |
- |
|
$ |
1,014 |
Net income to common
shareholders |
|
$ |
2,275 |
|
$ |
1,688 |
|
|
$ |
7,094 |
|
$ |
5,239 |
Income Per Common Share
– Basic |
|
$ |
0.08 |
|
$ |
0.06 |
|
|
$ |
0.24 |
|
$ |
0.17 |
Income Per Common
Share – Diluted |
|
$ |
0.08 |
|
$ |
0.06 |
|
|
$ |
0.23 |
|
$ |
0.17 |
SELECTED
PERFORMANCE RATIOS: |
|
|
|
|
|
For the three months |
For the nine months |
|
ended September 30, |
ended September 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
Return on Average Assets |
|
1.12 |
% |
|
0.99 |
% |
|
1.15 |
% |
|
1.04 |
% |
Return on Average Equity |
|
15.30 |
% |
|
11.23 |
% |
|
16.91 |
% |
|
11.59 |
% |
Average Equity to Average Assets |
|
7.33 |
% |
|
8.86 |
% |
|
6.82 |
% |
|
8.98 |
% |
Book
Value Per Share |
$ |
1.99 |
|
$ |
1.90 |
|
$ |
1.99 |
|
$ |
1.90 |
|
|
|
|
|
|
|
At |
At |
|
|
|
September 30, |
December 31, |
|
|
Capital ratios (US GAAP): |
2017 |
2016 |
|
|
Company Tier 1 Leverage |
|
9.57 |
% |
|
8.49 |
% |
|
|
Company Total Risk Based Capital |
|
14.76 |
% |
|
13.30 |
% |
|
|
Company Common Equity Tier 1 |
|
9.35 |
% |
|
7.99 |
% |
|
|
|
|
|
|
|
NON-GAAP
MEASURES: |
|
|
|
|
|
|
|
(unaudited, dollars in
thousands, except per share data) |
|
|
|
|
|
|
|
|
For the three months |
|
For the nine months |
|
ended September 30, |
|
ended September 30, |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Net income attributable
to Royal Bancshares |
$ |
2,275 |
|
|
$ |
2,030 |
|
|
$ |
7,094 |
|
|
$ |
6,253 |
|
Merger expenses |
|
254 |
|
|
|
- |
|
|
|
659 |
|
|
|
- |
|
Net income attributable
to Royal Bancshares (non-GAAP) |
$ |
2,529 |
|
|
$ |
2,030 |
|
|
$ |
7,753 |
|
|
$ |
6,253 |
|
Less Preferred stock
Series A accumulated dividend and accretion |
$ |
- |
|
|
$ |
342 |
|
|
$ |
- |
|
|
$ |
1,014 |
|
Net income to common
shareholders (non-GAAP) |
$ |
2,529 |
|
|
$ |
1,688 |
|
|
$ |
7,753 |
|
|
$ |
5,239 |
|
Income per common share
– basic and diluted (non-GAAP) |
$ |
0.08 |
|
|
$ |
0.06 |
|
|
$ |
0.26 |
|
|
$ |
0.17 |
|
|
|
|
|
|
|
|
|
Return on Average
Assets |
|
1.25 |
% |
|
|
0.99 |
% |
|
|
1.26 |
% |
|
|
1.04 |
% |
Return on Average
Equity |
|
17.01 |
% |
|
|
11.23 |
% |
|
|
18.48 |
% |
|
|
11.59 |
% |
ROYAL BANCSHARES OF PENNSYLVANIA, INC. |
|
|
CONDENSED BALANCE SHEET |
|
|
|
(unaudited, in thousands) |
|
|
|
|
At Sept. 30,2017 |
|
At December 31,2016 |
Cash
and cash equivalents |
$ |
25,108 |
|
|
$ |
21,230 |
|
Investment securities, at fair value |
|
155,508 |
|
|
|
169,854 |
|
Other
investment, at cost |
|
2,250 |
|
|
|
2,250 |
|
Federal Home Loan Bank stock |
|
2,036 |
|
|
|
3,216 |
|
Loans
and leases |
|
|
|
Commercial real estate and multi-family |
|
290,203 |
|
|
|
284,950 |
|
Construction and land development |
|
78,388 |
|
|
|
83,369 |
|
Commercial and industrial |
|
110,861 |
|
|
|
108,146 |
|
Residential real estate |
|
55,643 |
|
|
|
56,899 |
|
Leases |
|
55,270 |
|
|
|
61,838 |
|
Tax
certificates |
|
1,290 |
|
|
|
3,705 |
|
Consumer |
|
2,910 |
|
|
|
3,102 |
|
Loans
and leases |
|
594,565 |
|
|
|
602,009 |
|
Allowance for loan and
lease losses |
|
(10,123 |
) |
|
|
(10,420 |
) |
Loans
and leases, net |
|
584,442 |
|
|
|
591,589 |
|
Company owned life insurance |
|
21,030 |
|
|
|
20,781 |
|
Other
real estate owned, net |
|
1,680 |
|
|
|
3,536 |
|
Premises and equipment, net |
|
4,748 |
|
|
|
5,398 |
|
Accrued interest receivable |
|
2,975 |
|
|
|
3,968 |
|
Other
assets |
|
10,057 |
|
|
|
10,663 |
|
Total Assets |
$ |
809,834 |
|
|
$ |
832,485 |
|
|
|
|
|
Deposits |
$ |
627,066 |
|
|
$ |
629,546 |
|
Borrowings |
|
75,000 |
|
|
|
104,000 |
|
Other
liabilities |
|
21,419 |
|
|
|
20,892 |
|
Subordinated debentures |
|
25,774 |
|
|
|
25,774 |
|
Royal
Bancshares shareholders’ equity |
|
59,876 |
|
|
|
51,648 |
|
Noncontrolling interest |
|
699 |
|
|
|
625 |
|
Total Equity |
|
60,575 |
|
|
|
52,273 |
|
Total Liabilities and Equity |
$ |
809,834 |
|
|
$ |
832,485 |
|
|
|
|
|
ROYAL BANCSHARES OF PENNSYLVANIA, INC. |
|
|
|
|
|
|
|
|
|
|
NET
INTEREST INCOME AND MARGIN |
|
|
|
|
|
|
|
|
|
|
(unaudited, in
thousands, except percentages) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
For the three months ended |
|
|
September 30, 2017 |
|
September 30, 2016 |
|
|
AverageBalance |
|
Interest |
|
Yield |
|
AverageBalance |
|
Interest |
|
Yield |
Cash and cash
equivalents |
|
$ |
17,446 |
|
$ |
57 |
|
1.30 |
% |
|
$ |
12,107 |
|
$ |
15 |
|
0.49 |
% |
Investment
securities |
|
|
143,825 |
|
|
827 |
|
2.28 |
% |
|
|
188,194 |
|
|
1,099 |
|
2.32 |
% |
Loans |
|
|
601,966 |
|
|
8,108 |
|
5.34 |
% |
|
|
561,904 |
|
|
7,346 |
|
5.20 |
% |
Total interest-earning
assets |
|
|
763,237 |
|
|
8,992 |
|
4.67 |
% |
|
|
762,205 |
|
|
8,460 |
|
4.42 |
% |
Non-interest earning
assets |
|
|
41,067 |
|
|
|
|
|
|
49,734 |
|
|
|
|
Total
average assets |
|
$ |
804,304 |
|
|
|
|
|
$ |
811,939 |
|
|
|
|
Interest-bearing
deposits |
|
|
|
|
|
|
|
|
|
|
|
|
NOW and
money markets |
|
$ |
197,465 |
|
$ |
278 |
|
0.56 |
% |
|
$ |
213,926 |
|
$ |
185 |
|
0.34 |
% |
Savings |
|
|
84,004 |
|
|
127 |
|
0.60 |
% |
|
|
79,851 |
|
|
143 |
|
0.71 |
% |
Certificates of deposit |
|
|
244,893 |
|
|
782 |
|
1.27 |
% |
|
|
208,902 |
|
|
758 |
|
1.44 |
% |
Total interest-bearing
deposits |
|
|
526,362 |
|
|
1,187 |
|
0.89 |
% |
|
|
502,679 |
|
|
1,086 |
|
0.86 |
% |
Borrowings |
|
|
100,904 |
|
|
758 |
|
2.98 |
% |
|
|
122,432 |
|
|
816 |
|
2.65 |
% |
Total interest-bearing
liabilities |
|
|
627,266 |
|
|
1,945 |
|
1.23 |
% |
|
|
625,111 |
|
|
1,902 |
|
1.21 |
% |
Non-interest bearing
deposits |
|
|
96,648 |
|
|
|
|
|
|
89,749 |
|
|
|
|
Other liabilities |
|
|
21,411 |
|
|
|
|
|
|
25,171 |
|
|
|
|
Shareholders'
equity |
|
|
58,979 |
|
|
|
|
|
|
71,908 |
|
|
|
|
Total
average liabilities and equity |
|
$ |
804,304 |
|
|
|
|
|
$ |
811,939 |
|
|
|
|
Net
interest income |
|
|
|
$ |
7,047 |
|
|
|
|
|
$ |
6,558 |
|
|
Net
interest margin |
|
|
|
|
|
3.66 |
% |
|
|
|
|
|
3.42 |
% |
ROYAL BANCSHARES OF PENNSYLVANIA, INC. |
|
|
|
|
|
|
|
|
|
|
NET
INTEREST INCOME AND MARGIN |
|
|
|
|
|
|
|
|
|
|
(unaudited, in
thousands, except percentages) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended |
|
For the nine months ended |
|
|
September 30, 2017 |
|
September 30, 2016 |
|
|
AverageBalance |
|
Interest |
|
Yield |
|
AverageBalance |
|
Interest |
|
Yield |
Cash and cash
equivalents |
|
$ |
9,169 |
|
$ |
90 |
|
1.31 |
% |
|
$ |
13,246 |
|
$ |
48 |
|
0.48 |
% |
Investment
securities |
|
|
160,347 |
|
|
2,809 |
|
2.34 |
% |
|
|
202,856 |
|
|
3,639 |
|
2.40 |
% |
Loans |
|
|
609,655 |
|
|
24,513 |
|
5.38 |
% |
|
|
537,656 |
|
|
21,168 |
|
5.26 |
% |
Total interest-earning
assets |
|
|
779,171 |
|
|
27,412 |
|
4.70 |
% |
|
|
753,758 |
|
|
24,855 |
|
4.40 |
% |
Non-interest earning
assets |
|
|
43,741 |
|
|
|
|
|
|
48,730 |
|
|
|
|
Total
average assets |
|
$ |
822,912 |
|
|
|
|
|
$ |
802,488 |
|
|
|
|
Interest-bearing
deposits |
|
|
|
|
|
|
|
|
|
|
|
|
NOW and
money markets |
|
$ |
207,671 |
|
$ |
775 |
|
0.50 |
% |
|
$ |
222,761 |
|
$ |
595 |
|
0.36 |
% |
Savings |
|
|
84,852 |
|
|
382 |
|
0.60 |
% |
|
|
71,537 |
|
|
377 |
|
0.70 |
% |
Time
deposits |
|
|
241,749 |
|
|
2,316 |
|
1.28 |
% |
|
|
208,256 |
|
|
2,221 |
|
1.42 |
% |
Total interest-bearing
deposits |
|
|
534,272 |
|
|
3,473 |
|
0.87 |
% |
|
|
502,554 |
|
|
3,193 |
|
0.85 |
% |
Borrowings |
|
|
117,529 |
|
|
2,375 |
|
2.70 |
% |
|
|
118,321 |
|
|
2,196 |
|
2.48 |
% |
Total interest-bearing
liabilities |
|
|
651,801 |
|
|
5,848 |
|
1.20 |
% |
|
|
620,875 |
|
|
5,389 |
|
1.16 |
% |
Non-interest bearing
deposits |
|
|
92,091 |
|
|
|
|
|
|
86,189 |
|
|
|
|
Other liabilities |
|
|
22,921 |
|
|
|
|
|
|
23,339 |
|
|
|
|
Shareholders'
equity |
|
|
56,099 |
|
|
|
|
|
|
72,085 |
|
|
|
|
Total
average liabilities and equity |
|
$ |
822,912 |
|
|
|
|
|
$ |
802,488 |
|
|
|
|
Net
interest income |
|
|
|
$ |
21,564 |
|
|
|
|
|
$ |
19,466 |
|
|
Net
interest margin |
|
|
|
|
|
3.70 |
% |
|
|
|
|
|
3.45 |
% |
ROYAL
BANCSHARES OF PENNSYLVANIA, INC. |
|
|
|
ASSET QUALITY TRENDS |
|
(unaudited, in
thousands, except percentages) |
|
|
|
|
|
|
|
|
At September
30,2017 |
|
At December
31,2016 |
|
|
|
|
Non-performing
loans |
$ |
4,613 |
|
|
$ |
4,100 |
|
Non-performing tax
certificates |
|
469 |
|
|
|
1,907 |
|
Total nonperforming
loans |
|
5,082 |
|
|
|
6,007 |
|
|
|
|
|
Other real estate
owned-loans |
|
- |
|
|
|
236 |
|
Other real estate
owned-tax certificates |
|
1,680 |
|
|
|
3,300 |
|
Total other real estate
owned |
|
1,680 |
|
|
|
3,536 |
|
Total nonperforming
assets |
$ |
6,762 |
|
|
$ |
9,543 |
|
|
|
|
|
Ratio of non-performing
loans to total loans |
|
0.85 |
% |
|
|
1.00 |
% |
Ratio of non-performing
assets to total assets |
|
0.84 |
% |
|
|
1.15 |
% |
Ratio of allowance for
loan and lease losses to total loans |
|
1.70 |
% |
|
|
1.73 |
% |
Ratio of allowance for
loan and lease losses to non-performing loans |
|
199.18 |
% |
|
|
173.46 |
% |
Contact Information
Michael ThompsonExecutive Vice President and Chief Financial
Officer(610) 677-2216mthompson@royalbankamerica.com
Grafico Azioni Royal Bancshares of Pennsylvania, Inc. (NASDAQ:RBPAA)
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Grafico Azioni Royal Bancshares of Pennsylvania, Inc. (NASDAQ:RBPAA)
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