Royal Bancshares of Pennsylvania, Inc. (NASDAQ:RBPAA) Advance Following Release of Report

Parent company of Royal Bank America, Royal Bancshares of Pennsylvania, Inc. (NASDAQ:RBPAA), announced net profits in their Q3 report.

BALA CYNWYD, PA–(Marketwired – October 20, 2016) – Royal Bancshares of Pennsylvania, Inc. (“the Company”) (RBPAA), parent company of Royal Bank America (“Royal Bank”), is pleased to report net income attributable to the Company of $2.0 million, or $0.06 per diluted share, and $6.3 million, or $0.17 per diluted share, for the three and nine months ended September 30, 2016, respectively. Comparatively, net income was $1.5 million, or $0.04 per diluted share, and $4.6 million, or $0.11 per diluted share, for the three and nine months ended September 30, 2015, respectively.

The Company’s President and Chief Executive Officer, Kevin Tylus, noted, “Consistent quality loan growth and expense discipline drove our increase in earnings for the 2016 third quarter and year to date. We are achieving the goals for managing our balance sheet while meeting the challenges of low interest rates and local competition. The repurchase of another 2,651 shares of the Series A Preferred stock (“TARP”) and regulatory approval to repurchase or redeem the remaining outstanding Series A Preferred shares mean we will fully retire the $30.4 million in original principal by year end and avoid future dividends at a rate of 9%.”

“The renovations of our Narberth retail location is nearing completion, giving our customers a first class service experience. To meet the needs of our growing customer base, we are implementing the next phase of web and technology enhancements”, he added.

Highlights for the three and nine months ended September 30, 2016 included:

Balance Sheet Trends:

    Total assets were $811.4 million at September 30, 2016, an increase of $23.1 million, or 2.9%, from $788.3 million at December 31, 2015. Total assets were $816.5 million at June 30, 2016.

    Total loans were $575.8 million at September 30, 2016, an increase of $28.7 million, or 5.3%, from $547.1 million at June 30, 2016, and grew $76.7 million, or 15.4%, from $499.1 million at December 31, 2015. Increases were recognized in multiple commercial loan portfolio classes.

    Total deposits were $592.2 million at September 30, 2016, an increase of $14.3 million, or 2.5%, from $577.9 million at December 31, 2015. Total deposits were $599.2 million at June 30, 2016.

Asset Quality:

    The ratio of non-performing loans to total loans continues to show improvement and was 0.77%, 0.88%, and 1.10% at September 30, 2016, June 30, 2016, and December 31, 2015, respectfully. Excluding tax liens, the ratio of non-performing loans to total loans was 0.65%, 0.68%, and 0.88% at September 30, 2016, June 30, 2016, and December 31, 2015, respectively.

    Non-performing loans of $4.5 million at September 30, 2016 decreased $346 thousand, or 6.6%, from $4.8 million at June 30, 2016, and decreased $1.0 million, or 18.9%, from $5.5 million at December 31, 2015.

    The ratio of non-performing assets to total assets was 1.44%, 1.47%, and 1.64% at September 30, 2016, June 30, 2016, and December 31, 2015, respectively. Excluding tax lien assets, the ratio of non-performing assets to total assets was 0.49% at September 30, 2016, and June 30, 2016, and 0.59% at December 31, 2015.

    Non-performing assets of $11.7 million at September 30, 2016, decreased $318 thousand, or 2.6%, from $12.0 million at June 30, 2016, and decreased $1.2 million, or 9.6%, from $12.9 million at December 31, 2015.

    For the three and nine months ended September 30, 2016, the Company recorded a provision to the allowance for loan and lease losses of $578 thousand and $987 thousand, respectively, compared to credits of $216 thousand and $1.4 million for the same periods in 2015, respectively. The 2016 provision was primarily attributable to growth, specific reserves on the leasing portfolio, and net charge-off activity within the leasing and tax certificate portfolios.

Income Statement and Other Highlights:

    The return on average assets for the three and nine months ended September 30, 2016 increased to 0.99% and 1.04%, respectively, compared to 0.82% and 0.84% for the three and nine months ended September 30, 2015, respectively.

    The return on average equity for the three and nine months ended September 30, 2016 grew to 11.23% and 11.59%, respectively, compared to 9.24% and 9.45% for the three and nine months ended September 30, 2015.

    At September 30, 2016, the Company’s Tier 1 leverage and Total Risk Based Capital ratios were 11.22% and 16.36%, respectively, compared to 12.44% and 18.57%, respectively, at December 31, 2015. The Common Equity Tier 1 ratio was 8.97% at September 30, 2016 compared to 9.37% at December 31, 2015. Impacting the 2016 capital ratios is the repurchase of 6,651 shares of the Preferred Series A stock which occurred during the first nine months of 2016.

    Net interest income increased $396 thousand, or 6.43%, from $6.2 million for the three months ended September 30, 2015 to $6.6 million for the three months ended September 30, 2016. Net interest income increased $2.1 million, or 12.2%, from $17.4 million for the nine months ended September 30, 2015 to $19.5 million for the nine months ended September 30, 2016. The growth in net interest income was primarily related to an increase in interest income on average loan balances.

    The net interest margin for the third quarter of 2016 was 3.42% compared to 3.51% for the third quarter in 2015 and was 3.45% for the nine months ended September 30, 2016 compared to 3.39% for the nine months ended September 30, 2015. The decrease in net interest margin for the third quarter was directly related to an increase in the interest rate paid on average interest-bearing liabilities specifically due to average borrowings.

    Non-interest income for the third quarter of 2016 was $1.2 million and increased $612 thousand from $577 thousand for the third quarter of 2015. The quarterly improvement in non-interest income was impacted by a $273 thousand beneficiary payment from a bank owned life insurance policy and a $200 thousand increase in net gains on the sale of investment securities. Additionally, service charges and fees increased $98 thousand and were mostly related to the leasing portfolio.

    Non-interest income was $3.5 million for the nine months ended September 30, 2016 and grew $1.4 million from $2.1 million for the nine months ended September 30, 2015. Net gains on the sale of investment securities and income from Company owned life insurance increased $730 thousand and $475 thousand, respectively, from 2015. Additionally, the Company received a $273 thousand beneficiary payment from a life insurance policy. Partially offsetting these positive items was other-than-temporary impairment (“OTTI”) charges on the investment portfolio of $181 thousand. There was no OTTI charge in the 2015 period.

    Non-interest expense was $5.0 million for the quarter ended September 30, 2016 and declined $241 thousand from $5.2 million for the comparable period in 2015. Contributing to the decrease in non-interest expense for the third quarter of 2016 was the reversal of a $200 thousand contingency accrual related to an other real estate owned (“OREO”) property that was sold in a previous reporting period. As of September 30, 2016, Management determined that the contingency was no longer required. Additionally, in the 2016 quarter, loan collection expenses declined $117 thousand due to continued improvement in credit quality. Partially offsetting the decrease in non-interest expense was a planned increase of $55 thousand in salaries and benefits during the third quarter of 2016.

    Non-interest expense was $15.3 million for the nine months ended September 30, 2016 and decreased $440 thousand from $15.7 million for the comparable period in 2015. Contributing to the decrease in non-interest expense for 2016 was a $518 thousand decline in the provision for unfunded loan commitments and the reversal of a $200 thousand contingency accrual for the reasons mentioned previously. Year over year loan collection expenses and occupancy and equipment expenses declined $145 thousand and $119 thousand, respectively. Partially offsetting the decrease in non-interest expense was a planned increase of $211 thousand in salaries and benefits. Additionally, communications and data processing expenses and net OREO expenses increased $141 thousand and $98 thousand, respectively.

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 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.

Original Source

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Royal Bancshares of Pennsylvania, Inc. (NASDAQ:RBPAA) shares have moved +9.96% on the news thus far today and have traded in the range of $2.43 – 2.58 during the current session. In order to take a look at where the stock might be headed longer term, investors often look to research firms that cover the stock. Sell-side research firms currently have a consensus one-year price target of $0.00 on the stock.  This is according to brokerage analysts polled by Thomson Reuters First Call.  The sell-side analysts are projecting earnings per share of $0.00 for the next fiscal quarter.  For the current year, analysts are predicting earnings of $-0.95 per share according to First Call.

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In looking at where the stock is trading on a technical level, the stock is trading +7.02% away from its 50-day moving average of $2.37.  Based on the most recent available data, the equity is -23.26% off of its 52-week high of $3.31 and +37.30% away from its 52-week low which is $1.85.

In taking a look at the company’s valuation, the firm’s price to earnings ratio stands at 7.20.  Today, the stock opened at $2.50 and the last bid at the time of writing stood at $2.54.  During the session thus far, the equity dipped down to $2.43 and touched $2.58 as the high point.  Royal Bancshares of Pennsylvania, Inc. (NASDAQ:RBPAA) has a market cap of $76.42M and has seen an average daily volume of 14900 over the past three months.

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