Exhibit 99.1
Royal Bank America Media Alert
For additional information:
Marc Sanders, Director of Marketing
610-668-4700 x269 - marcsanders@royalbankamerica.com
ROYAL BANK AMERICA PARENT CO. INCREASES CASH DIVIDEND 4 1/2
REPORTS 14% INCREASE IN CORE EARNINGS; LOANS UP 10%; DEPOSITS
UP 12%; ISSUES 46TH CONSECUTIVE QUARTERLY CASH DIVIDEND
NARBERTH, PA - October 18, 2006 - Royal Bank America President/CEO Joseph P.
Campbell announced net income core earnings (defined as net income less
non-recurring items) for the Bank's holding company, Royal Bancshares of
Pennsylvania, Inc. (NASDAQ: RBPAA) for the three months ended September 30, 2006
of $4.8 million or $0.38 basic earnings per share, compared to $4.2 million or
$0.33 basic earnings per share for the same period in 2005. Core earnings for
the nine months ended September 30, 2006 were $13.7 million or $1.07 basic
earnings per share, compared to $12.2 million or $0.95 basic earnings per share
for the same period in 2005. For the third quarter of 2006, non-recurring items
include: a $1.5 million prepayment fee, $643 thousand in exit fees collected on
two mezzanine loans and $480 thousand from the sale of other real estate owned.
For the third quarter of 2005, non recurring items include $275 thousand in exit
fees collected and $798 thousand from the sale of other real estate owned. For
the nine months ended September 30, 2006, non-recurring items include: a $1.5
million prepayment fee, $643 thousand in exit fees collected on two mezzanine
loans and $2.1 million from the sale of other real estate owned. For the nine
months ended September 30, 2005, there were $1.6 million in exit fees collected,
a $1.8 million equity distribution from a variable interest entity, $1.5 million
from the sale of other real estate owned and a $1.7 million reduction in tax
expense resulting from a reduction in a deferred tax valuation allowance. In
addition, a $930 thousand expense related to the company's pension plan was
recorded. A reconciliation of net income to core earnings, as well as related
per share amounts, is included in a later section of this release.
Net income (including non-recurring items) for the three months ended September
30, 2006 was $6.5 million or $0.51 basic earnings per share, compared to $4.9
million or $0.38 basic earnings per share for the same period in 2005. Net
income (including non-recurring items) for the nine months ended September 30,
2006 was $16.4 million or $1.28 basic earnings per share, compared to $16.5
million or $1.29 basic earnings per share for the same period in 2005.
For the third quarter of 2006, interest income was $25.4 million compared to
$19.6 million for the same quarter in 2005, an increase of $5.8 million. This
increase is primarily due to growth in the average loan balances along with
higher interest earned on our variable rate portfolio during the 3rd quarter as
compared to the same period in 2005. In addition there was a $1.5 million
prepayment fee and $643 thousand in exit fees resulting from two mezzanine loans
collected during the quarter. The amount of the increase attributable to loan
growth was $4.8 million and the amount attributable to interest rates on loans
was $1.2 million. These increases were partially offset by a decline in the
average balance of the investment portfolio, and hence a corresponding reduction
in income for investments. Net loans increased 10% or $56.1 million from
December 31, 2005 to $595.5 million at September 30, 2006. This increase is
primarily due to an increased demand for commercial and construction loan
products that are being offered at competitive rates
coupled with an increase in volume from the Royal Asian Bank division and the
Equity/Mezzanine division.
Interest expense increased $3.6 million to $12.4 million for the quarter ended
September 30, 2006 compared to the same period in 2005. For the nine-month
period ended September 30, 2006, interest expense increased $10.3 million to
$34.1 million compared to the same period in 2005. The increase in interest
expense was due to an increase in the average balance of deposits along with
higher interest rates paid on deposits and borrowings. Total deposits increased
12% at September 30, 2006 from December 31, 2005, primarily as a result of
attractive certificate of deposit rates being offered during the first nine
months of 2006. During this period, brokered deposits increased $19.3 million.
These funds were utilized to fund a portion of loan growth.
Net interest margin (less non-recurring items) was 3.90% for the third quarter
of 2006 compared to 3.93% for the third quarter of 2005. Net interest margin
(less non-recurring items) was 4.02% for the nine months ended September 30,
2006, compared to 3.91% for the same period in 2005.
During the third quarter of 2006, $303 thousand was recorded to increase the
allowance for loan losses. This additional provision reflects $472 thousand
related to specific loans which was partially offset by a reduction to the
reserve resulting from mezzanine loans payoffs, of approximately $11.5 million,
that had specific reserves. In addition there was a reduction in loan balances
of $17.7 million at quarter ended September 30, 2006 compared to June 30, 2006.
For the nine-month period ended September 30, 2006, $1.6 million was recorded to
increase the allowance, of which $1.0 million was related to specific loans and
the remainder was attributed to loan growth during 2006. Included in the
reserves are mezzanine loans, which generally provide higher yields but which
management has determined to have a higher level of risk compared to the
remainder of loan portfolio.
Consolidated total assets ended September 30, 2006 at $1.30 billion. Return on
assets for the nine-month period ended September 30, 2006 was 1.7%. Return on
equity for the nine-month period ended September 30, 2006 was 14.0%.
The Board of Directors of Royal Bancshares of Pennsylvania, Inc. declared its
46th consecutive quarterly cash dividend on October 18, 2006. This dividend will
be twenty-eight and seventy-five hundredths cents ($.2875) per share for holders
of Class A common stock and thirty-three and six hundred twenty five ten
thousandths cents ($.330625) per share for holders of Class B common stock of
Royal Bancshares of Pennsylvania, Inc. The record date is November 1, 2006, and
the payment date is November 15, 2006.
ABOUT ROYAL BANCSHARES OF PENNSYLVANIA, INC.
Royal Bancshares of Pennsylvania, Inc. headquartered in Narberth, Pennsylvania,
operates seventeen full-service branch offices throughout southeastern
Pennsylvania and New Jersey under the name Royal Bank America and four locations
under the name Royal Asian Bank. Together, Royal Bank America and Royal Asian
Bank offer a wide variety of products and services, including commercial real
estate loans, asset based lending, structured financing, equipment leasing,
equity/mezzanine lending, high-yielding CDs & MMAs and Internet Banking
solutions at www.royalbankamerica.com and www.royalasianbank.com.
The foregoing material is unaudited and 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.
ROYAL BANCSHARES OF PENNSYLVANIA, INC.
CONDENSED INCOME STATEMENT
THREE MONTHS NINE MONTHS
ENDED SEPT. 30TH ENDED SEPT. 30TH
(dollars in thousands, except for ------------------------- -------------------------
earnings per share) 2006 2005 2006 2005
- ----------------------------------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
Interest Income $25,430 $19,645 $69,531 $56,179
Interest Expense 12,385 8,751 34,093 23,812
------- ------- ------- -------
Net Interest Income 13,045 10,894 35,438 32,367
Provision for Loan Losses 303 0 1,601 1
------- ------- ------- -------
Net Interest Income after Provision 12,742 10,894 33,837 32,366
Non Interest Income 3,936 3,294 9,834 9,787
Non Interest Expense 7,061 7,527 19,657 21,455
------- ------- ------- -------
Income before Taxes 9,617 6,661 24,014 20,698
Income Taxes 3,102 1,758 7,567 4,232
------- ------- ------- -------
Net Income 6,515 4,903 16,447 16,466
Earnings per share -basic $ .51 $ .38 $ 1.28 $ 1.29
SELECTED RATIOS:
Return on Average Assets 2.0% 1.5% 1.7% 1.8%
Return on Average Equity 16.2% 13.3% 14.0% 15.4%
Average Equity to Assets 12.1% 11.5% 11.9% 11.4%
Book Value Per Share $ 12.66 $ 11.34
CONDENSED BALANCE SHEET
(in thousands) SEPT. 30, 2006 DEC. 31, 2005
- -------------------------------------------- -------------- -------------
(UNAUDITED)
Cash and Cash Equivalents $ 14,170 $ 30,895
Investment Securities 576,534 598,730
Loans Held for Sale 980 803
Loans (net) 595,475 539,360
Premises and Equipment (net) 52,510 66,581
Accrued Interest receivable 16,783 14,843
Other Assets 45,217 49,807
---------- ----------
Total Assets $1,301,669 $1,301,019
---------- ----------
Deposits 782,708 697,409
Borrowings 306,030 401,356
Other Liabilities 21,713 18,485
Subordinated debentures 25,774 25,774
Minority Interest 2,764 2,487
Shareholders' Equity 162,680 155,508
---------- ----------
Total Liabilities and Shareholders' Equity $1,301,669 $1,301,019
---------- ----------
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."
NOTE: This press release contains financial information determined by methods
other than in accordance with U.S. Generally Accepted Accounting Principles
("GAAP"). Management uses the non-GAAP measure of core earnings from core
earnings or operating earnings in its analysis of the company's performance.
This measure, as used by the company, adjusts net income determined in
accordance with GAAP to exclude the effects of certain non-recurring special
items, including significant gains or losses that are unusual in nature. Because
certain of these items and their impact on the company's performance are
difficult to predict, management believes presentation of financial measures
excluding the impact of such items provides useful supplemental information in
evaluating the operating results of the company's core businesses. These
disclosures should not be viewed as a substitute for net income determined in
accordance with GAAP, nor are they necessarily comparable to non-GAAP
performance measures that may be presented by other companies. The following
table reconciles our GAAP net income to core earnings for the periods presented:
FOR THE THREE FOR THE NINE
MONTHS ENDED MONTHS ENDED
SEPT. 30TH SEPT. 30TH
(UNAUDITED) (UNAUDITED)
---------------- -----------------
(amounts in thousands, except for per share data) 2006 2005 2006 2005
------- ------ ------- -------
Net Income $ 6,515 $4,903 $16,447 $16,466
Changes
Loan exit fees (643) (275) (643) (1,568)
Prepayment fees (1,500) -- (1,500) --
Gains from variable interest entities -- -- -- (1,792)
Pension plan expense -- -- -- 930
Gains on other real estate owned (480) (798) (2,054) (1,491)
------- ------ ------- -------
Total Changes (2,623) (1,073) (4,197) (3,921)
Tax effect 918 376 1,469 1,372
Reduction tax expense -- -- -- (1,700)
Net impact of changes (1,705) (697) (2,728) (4,249)
------- ------ ------- -------
Net income adjusted $ 4,810 $4,206 $13,719 $12,217
======= ====== ======= =======
Basic earnings per share $ 0.51 $ 0.38 $ 1.28 $ 1.29
Adjusted earnings per share $ 0.38 $ 0.33 $ 1.07 $ 0.95