-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AKxUM3ujr7KKnk3tGkO1Caoo9wamg8OHTlTDBguDEIv8S/a3c5TVmR7+wV4/IUqK UJXSn6pTgqe9/2Mdazv4hQ== 0000893220-98-000981.txt : 19980518 0000893220-98-000981.hdr.sgml : 19980518 ACCESSION NUMBER: 0000893220-98-000981 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROYAL BANCSHARES OF PENNSYLVANIA INC CENTRAL INDEX KEY: 0000922487 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 231627866 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-26366 FILM NUMBER: 98622803 BUSINESS ADDRESS: STREET 1: 732 MONTGOMERY AVE CITY: NARBERTH STATE: PA ZIP: 19072 BUSINESS PHONE: 6106684700 MAIL ADDRESS: STREET 1: 732 MONGTOMERY AVENUE CITY: NARBERTH STATE: PA ZIP: 19072 10-Q 1 FORM 10-Q ROYAL BANCSHARES OF PENNSYLVANIA, INC. 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended: MARCH 31, 1998 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from: ______ to ______ Commission file number: 0-26366 ROYAL BANCSHARES OF PENNSYLVANIA, INC. (Exact name of the bank as specified in its charter) PENNSYLVANIA 23-2812193 State or other jurisdiction of (IRS Employer incorporated or organization) identification No.) 732 MONTGOMERY AVENUE, NARBERTH, PA 19072 (Address of principal Executive Offices) (610) 668-4700 (Registrant's telephone number, including area code) N/A (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the bank (1) has filed all reports required to be filed by Section 13 of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the bank was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------- ------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class A Common Stock Outstanding at March 31, 1998 $2.00 PAR VALUE 6,813,645 Class B Common Stock Outstanding at March 31, 1998 $.10 PAR VALUE 1,587,921
2 ROYAL BANCSHARES OF PENNSYLVANIA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
ASSETS MARCH 31, 1998 DEC 31, 1997 -------------- ------------ Cash and due from banks $ 10,068,582 $ 7,491,242 Federal funds sold 26,450,000 22,925,000 ------------- ------------- Total cash and cash equivalents 36,518,582 30,416,242 ------------- ------------- Interest bearing deposits in banks 100,030 300,030 Investment securities held to maturity (market value of $51,197,308 @ 3/31/98 & $64,984,987 @ 12/31/97) 50,605,591 64,371,042 Investment securities available for sale - at market value 20,678,740 21,048,793 Total loans 292,904,622 290,897,048 Less allowance for loan losses 10,449,053 8,186,237 ------------- ------------- Net loans 282,455,569 282,710,811 Premises and equipment, net 4,702,800 4,788,921 Accrued interest and other assets 12,335,752 12,962,240 ------------- ------------- $ 407,397,064 $ 416,598,079 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Deposits Non-interest bearing $ 37,416,237 $ 37,712,928 Interest bearing (includes certificates of deposit in excess of $100,000 of $35,551,377 at 3/31/98 and $33,175,135 at 12/31/97) 234,805,686 227,650,506 ------------- ------------- Total deposits 272,221,923 265,363,434 Federal funds -- 15,000,000 Accrued interest and other liabilities 13,399,923 15,095,998 Long -term borrowings 31,063,000 31,063,000 Mortgage payable 560,118 570,885 ------------- ------------- Total liabilities 317,244,964 327,093,317 ------------- ------------- Stockholders' equity Common stock Class A, par value $2 per share; authorized, 18,000,000 shares; issued, 7,021,161 @ 3/31/98 & 7,015,721 @ 12/31/97 14,042,322 14,031,442 Class B, par value $.10 per share; authorized, 2,000,000 shares; issued, 1,587,921 @3/31/98 & 1,592,859 @ 12/31/97 158,792 159,286 Capital surplus 38,797,618 38,797,618 Retained earnings 38,904,546 38,023,359 Accumulated unrealized gain (loss)on invest. securities available for sale 393,907 638,142 ------------- ------------- 92,297,185 91,649,847 Treasury stock - at cost, shares of Class A, 207,516 @ 3/31/98, 207,516 @ 12/31/97 (2,145,085) (2,145,085) ------------- ------------- 90,152,100 89,504,762 ------------- ------------- $ 407,397,064 $ 416,598,079 ============= =============
The accompanying notes are an integral part of these statements. 3 ROYAL BANCSHARES OF PENNSYLVANIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED, MARCH 31, 1998 1997 ---- ---- Interest income Loans, including fees $7,880,860 $5,483,171 Investment securities held to maturity Taxable 934,490 1,582,767 Tax-exempt 54,075 14,750 Investment securities available for sale Taxable 432,993 81,563 Tax-exempt -- -- Deposits in banks 10,742 26,031 Federal funds sold 199,148 246,459 ---------- ---------- TOTAL INTEREST INCOME 9,512,308 7,434,741 ---------- ---------- Interest expense Deposits 2,780,069 2,406,256 Mortgage payable and other 499,874 57,361 Federal funds purchased -- -- ---------- ---------- TOTAL INTEREST EXPENSE 3,279,943 2,463,617 ---------- ---------- NET INTEREST INCOME 6,232,365 4,971,124 Increase in provision for loan losses 2,400,000 -- ---------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 3,832,365 4,971,124 ---------- ---------- Other income (expense) Service charges and fees 223,612 249,568 Realized gains on sale of investment securities available for sale -- -- Gain on sale of other real estate -- 180,394 Gain on sale of loans 3,640 5,525 Other income 2,500,439 65,516 ---------- ---------- 2,727,691 501,003 ---------- ---------- Other expenses Salaries & wages 1,228,024 1,147,444 Employee benefits 460,034 386,492 Occupancy and equipment 189,890 167,338 Other operating expenses 888,341 906,492 ---------- ---------- 2,766,289 2,607,766 ---------- ---------- INCOME BEFORE INCOME TAXES 3,793,767 2,864,361 Income taxes 1,174,747 750,237 ---------- ---------- NET INCOME $2,619,020 $2,114,124 ========== ========== Per share data Net income - basic $ .30 $ .26 ========== ========== Net income - diluted $ .29 $ .25 ========== ==========
The accompanying notes are an integral part of these statements. 4 ROYAL BANCSHARES OF PENNSYLVANIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
THREE MONTHS ENDED, MARCH 31, 1998 1997 ---- ---- Net income $ 2,619,020 $ 2,114,124 ----------- ----------- Other comprehensive income, net of tax Net unrealized gains (losses) on securities (168,522) (8,488) Reclassification adjustment: gain (loss) included in net income -- -- ----------- ----------- Comprehensive income $ 2,450,498 $ 2,105,636 =========== ===========
5 ROYAL BANCSHARES OF PENNSYLVANIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
Class A Common Stock Class B Common Stock Capital Shares Amount Shares Amount Surplus ------ ------ ------ ------ ------- Balance, January 1, 1998 7,015,721 $14,031,442 1,592,859 $159,286 $38,797,618 Net income for the three months ended March 31, - - - - Conversion of Class B common stock to Class A common stock 5,440 10,880 (4,938) (494) - Purchase of treasury stock - - - - - Cash dividends on common stock - - - - - Net unrealized loss on securities available for sale - - - - - --------- ----------- --------- -------- ----------- Balance, March 31, 1998 7,021,161 $14,042,322 1,587,921 $158,792 $38,797,618 ========= =========== ========= ======== ===========
Net unrealized (loss)/gain on securities Retained Treasury available Earnings stock for sale -------- ----- -------- Balance, January 1, 1998 $38,023,359 $(2,145,085) $ 638,142 Net income for the three months ended March 31, 2,619,020 - - Conversion of Class B common stock to Class A common stock (10,386) - - Purchase of treasury stock - - - Cash dividends on common stock (1,727,447) - - Net unrealized loss on securities available for sale - - (244,235) ----------- ----------- --------- Balance, March 31, 1998 $38,904,546 $(2,145,085) $ 393,907 =========== =========== =========
The accompanying notes are an integral part of this statement. 6 ROYAL BANCSHARES OF PENNSYLVANIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) THREE MONTHS ENDED MARCH 31,
1998 1997 ---- ---- Cash flows from operating activities Net income $ 2,619,020 $ 2,114,124 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 117,352 104,360 Provision (recovery )of loan loss reserve (credit) 2,400,000 -- Accretion of investment securities discount (16,892) (19,870) Amortization of investment securities premium 65,956 249,279 Amortization of deferred loan fees (48,054) (34,998) Accretion of discount on loans purchased (528,023) (96,535) (Benefit) provision for deferred income taxes (125,817) (5,909) (Gain) loss on other real estate -- (172,131) (Gain) on sale of loans (3,640) (5,525) (Gain) on sale of investment securities -- -- Changes in assets and liabilities: (Increase) decrease in accrued interest receivable 55,725 (243,984) (Increase) decrease in other assets 786,399 (543,264) Increase (decrease) in accrued interest payable 640,846 143,054 Increase in unearned income on loans 58,267 9,792 Increase (decrease) in other liabilities (2,336,921) 300,293 ------------ ------------ Net cash provided by operating activities 3,684,218 1,798,686 Cash flows from investing activities Net (decrease) in interest bearing balances in banks 200,000 -- Proceeds from calls and maturities of HTM invest securities 14,086,440 22,734,261 Purchase of investment securities held to maturity -- (637,577) Net decrease in loans (1,713,127) 3,338,904 Purchase of premises and equipment (31,231) (185,716) Proceeds from sale and payments on other real estate -- 210,997 ------------ ------------ Net cash (used in) provided by investing activities 12,542,082 25,460,869 Cash flows from financing activities: Net (decrease) in non-interest bearing and interest bearing demand deposits and savings accounts 3,055,797 (12,015,426) Net increase (decrease) in certificates of deposit 3,802,692 1,929,633 Mortgage payments (10,767) (10,289) Purchase of treasury stock -- (70,836) Net (decrease) increase in borrowings (15,000,000) (2,500,000) Cash dividends (1,727,447) (989,933) Issuance of common stock under stock option plans -- -- Other (244,235) (11,470) ------------ ------------ Net cash provided by (used in) financing activities (10,123,960) (13,668,321) NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS 6,102,340 13,591,234 Cash and cash equivalents at beginning of year 30,416,242 18,369,012 ------------ ------------ Cash and cash equivalents at end of period $ 36,518,582 $ 31,960,246 ============ ============
The accompanying notes are an integral part of these statements. 7 ROYAL BANCSHARES OF PENNSYLVANIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The accompanying unaudited consolidated financial statements include the accounts of Royal Bancshares of Pennsylvania, Inc. (the Company) and its wholly-owned subsidiaries: Royal Bank of Pennsylvania (the Bank), Royal Real Estate of Pennsylvania, Inc. and Royal Investments of Delaware, Inc. These financial statements reflect the historical information of the Company. All significant intercompany transactions and balances have been eliminated. 1. The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. The financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in opinion of management, necessary to present a fair statement of the results for the interim periods. For further information thereto included in the Annual Report on Form 10-K for the year ended December 31, 1997. 2. The results of operations for the three month period ended March 31, 1998 are not necessarily indicative of the results to be expected for the full year. 3. Per share data are based on the weighted average number of shares outstanding of 8,730,067 and 8,223,797 for the three months ended, March 31, 1998 and 1997, respectively. 4. Investment Securities: The carrying value and approximate market value of investment securities at March 31, 1998 are as follows:
AMORTIZED OR GROSS GROSS APPROXIMATE PURCHASED UNREALIZED UNREALIZED MARKET CARRYING COST GAINS LOSSES VALUE VALUE ---- ----- ------ ----- ----- AVAILABLE FOR SALE: Common stock securities $ 3,214,056 $ 15,434 $ -- $ 3,229,490 $ 3,229,490 Preferred stock securities 2,904,353 3,147 -- 2,907,500 2,907,500 Other securities 13,963,503 578,247 -- 14,541,750 14,541,750 ----------- -------- -------- ----------- ----------- $20,081,912 $596,828 $ -- $20,678,740 $20,678,740 =========== ======== ======== =========== =========== HELD TO MATURITY: US Treasury & agencies $ 9,730,504 $151,885 $ 82 $ 9,882,307 $ 9,730,504 Tax exempt securities 3,098,465 53,187 -- 3,151,652 3,098,465 Taxable debt securities 37,776,622 390,914 4,187 38,163,349 37,776,622 ----------- -------- -------- ----------- ----------- $50,605,591 $595,985 $ 4,269 $51,197,308 $50,605,591 =========== ======== ======== =========== ===========
8 5. Allowance for Credit Losses: Changes in the allowance for credit losses were as follows:
THREE MONTHS ENDED MARCH 31, 1998 1997 ---- ---- BALANCE AT JANUARY 1, $ 8,186,237 $ 9,084,153 Loans charged-off (227,005) (36,336) Recoveries 89,822 75,556 ------------ ------------ Net charge-offs and recoveries (137,183) 39,220 Provision for loan losses 2,400,000 -- ------------ ------------ BALANCE AT END OF PERIOD $ 10,449,053 $ 9,123,373 ============ ============
6. Loans on which the accrual of interest has been discontinued or reduced amounted to approximately $4,309,216 and $4,368,704 at March 31, 1998 and 1997, respectively. Although the Company has non-performing loans of approximately $4,309,216 at March 31, 1998, management believes it has adequate collateral to limit its credit risks. The balance of impaired loans was $1,058,551 at March 31, 1998. The Company identified a loan impaired when it is probable that interest and principal will not be collected according to the contractual terms of the loan agreements. The allowance for credit loss associated with impaired loans was $ -0- at March 31, 1998. The income recognized on impaired loans during the three month period ended March 31, 1998 was $1,395. The cash collected on impaired loans during this three month period was $175,043, of which $146,649 was credited to the principal balance outstanding on such loans. Interest that would have been accrued on impaired loans during this three month period in 1998 was $36,537. The Company's policy for interest income recognition on impaired loans is to recognize income on currently performing restructured loans under the accrual method. The Company recognizes income on non-accrual loans under the cash basis when the principal payments on the loans become current and the collateral on the loan is sufficient to cover the outstanding obligation to the Company. If these factors do not exist, the Company does not recognize income. 9 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS The following discussion and analysis is intended to assist in understanding and evaluating the major changes in the financial condition and earnings performance of the Company and its wholly owned subsidiaries for the three month period ended March 31, 1998. FINANCIAL CONDITION Total consolidated assets as of March 31, 1998 were $407.4 million, a decrease of $9.2 million from the $416.6 million reported at year end, December 31, 1997. This decrease is primarily due to a $14.1 million decrease in investment securities, partially offset by a $6.1 million increase in cash and cash equivalents. Liabilities decreased $9.8 million primarily due to a decrease in Federal funds purchased of $15 million from December 31, 1997, partially offset by a $6.9 million increase in deposits. This $14.1 million decrease in investment securities is comprised mostly of a decrease in held to maturity ("HTM") investment securities of $13.8 million. The decrease in HTM investment securities is primarily due to scheduled maturities in the first three months of 1998. HTM investment securities are primarily comprised of taxable corporate debt securities which are "A" rated or better by Moodys and/or Standard & Poor at the time of purchase, with maturities in the three to five year range. Net loans changed little from the $282.7 million level at December 31, 1997 declining $.3 million to $282.4 million at March 31, 1998. Average net loans was $285.1 million for the first quarter of 1998. The allowance for loan loss increased $2.3 million to $10.4 million at March 31, 1998. The level of allowance for loan loss reserve represents 3.6% of total loans at March 31, 1998 versus 2.8% at December 31, 1997. This increase in allowance was primarily due to the increase in loans due to the purchase of a $75 million loan portfolio from the FDIC in December of 1997. This loan portfolio is comprised of approximately 175 commercial loans secured primarily by land, retail, and office properties in the mid-Atlantic and northeast regions. Total deposits, the primary source of funds, increased $6.9 million to $272.2 million at March 31,1998, from $265.4 million at December 31, 1997. Average deposits was $279.9 million for the first quarter of 1998. This increase in deposits is primarily due to increases experienced in certificates of deposits of $3.8 million, in addition to a $2.9 million increase in NOW and money market deposits. Federal funds purchased balance of $15 million at December 31, 1997 was paid down completely on January 2, 1998. Federal Home Loan Bank ("FHLB") advances did not change from its December 31, 1997 level of $31.1 million. This $31.1 million balance is comprised of three FHLB advances with an weighted average interest rate of approximately 6.3%. Consolidated stockholder's equity increased $.7 million to $90.2 million at March 31, 1998 from $89.5 million at December 31, 1997. This increase is primarily due to net income of $2.6 million for the first quarter period of 1998, partially offset by a quarterly cash dividend $1.7 million. On January 14th, 1998, the Board of Directors declared a cash dividend of twenty cents 10 ($.20) per share for holders of Class A common stock and twenty three cents ($.23) per share for holders of Class B common stock. The record date for the cash dividend was January 30, 1998 and the payment date was February 13th, 1998. Additionally, the change in market value of available for sale investment securities in the first quarter caused a downward adjustment to the accumulated unrealized gain of $244 thousand. RESULTS OF OPERATIONS Consolidated net income for the three months ended, March 31, 1998 was $2,619,020 or $.30 basic earnings per share, as compared to net income of $2,114,124 or $.26 basic earnings per share, for the same three month period in 1997. This increase is primarily due to a 25% increase in net interest income in 1998. Net interest income before provision for loan loss reserve increased $1.3 million, or 25%, to $6.2 million for the first quarter of 1998, as compared to $4.9 million for the same quarter ended in 1997. This increase in net interest income is primarily due to a $83.9 million increase in the average balance of net loans to $281.9 million for the first quarter of 1998, primarily due to the acquisition of a $75 million loan portfolio from the FDIC in December, 1997, in addition to internally generated loan growth experienced in 1997 of approximately 9%. Total interest expense on deposits and borrowings increased $.8 million to $3.3 million for the first quarter of 1998. These increases were primarily the result of higher average balances of deposits and borrowings of $27.3 million and $29.3 million, respectively, for the first quarter of 1998. These increases in average balances were due to the funding of the purchase of the FDIC loan portfolio in December 1997 discussed previously. Provision for loan loss was $2.4 million for the first three months of 1998 as compared to $-0- for the same period in 1997. Due to the increase in loans, a $2.4 million provision for loan loss was recorded in January, 1998. Chargeoffs and recoveries were $227 and $90 thousand, respectively, for the three month period ended March 31, 1998 versus $36 and $76 thousand, respectively, for the same period in 1997. Overall, Management considers the current level of allowance for loan loss to be adequate at March 31, 1998. Total non interest income for the three months ended March 31, 1998 was $2.7 million as compared to $.5 million for the same three month period in 1997. This increase is primarily due to a $2.4 million increase in other income, the result of a reversal of a legal accrual due to the settlement of litigation in January 1998. This increase was partially offset by $.2 million decrease in gains on sale of other real estate. Total non interest expense for the three months ended March 31, 1998 was $2.8 million, an increase of $.2 million, as compared to $2.6 million for the same period in 1997. This increase is primarily attributable to an increase in salaries and employee benefits expense in 1998. 11 CAPITAL ADEQUACY The company is required to maintain minimum amounts of capital to total "risk weighted" assets and a minimum Tier 1 leverage ratio, as defined by the banking regulators. At March 31, 1998, the Company was required to have a minimum Tier 1 and total capital ratios of 4% and 8%, respectively, and a minimum Tier 1 leverage ratio of 3% plus an additional cushion of 100 to 200 basis points. The table below provides a comparison of Royal Bancshares of Pennsylvania's risk-based capital ratios and leverage ratios:
MARCH 31, 1998 DECEMBER 31, 1997 -------------- ----------------- CAPITAL LEVELS Tier 1 leverage ratio 22.0% 25.6% Tier 1 risk-based ratio 26.0% 25.1% Total risk-based ratio 27.3% 26.4% CAPITAL PERFORMANCE Return on average assets 2.7%(1) 2.7% Return on average equity 11.9%(1) 10.8% (1) annualized
The Company's ratios compare favorably to the minimum required amounts of Tier 1 and total capital to "risk weighted" assets and the minimum Tier 1 leverage ratio, as defined by banking regulators. The Company currently meets the criteria for a well capitalized institution, and management believes that the Company will continue to meets its minimum capital requirements. At present, the Company has no commitments for significant capital expenditures. The Company is not under any agreement with regulatory authorities nor is the Company aware of any current recommendations by the regulatory authorities which, if such recommendations were implemented, would have a material effect on liquidity, capital resources or operations of the Company. LIQUIDITY & INTEREST RATE SENSITIVITY Liquidity is the ability to ensure that adequate funds will be available to meet its financial commitments as they become due. In managing its liquidity position, all sources of funds are evaluated, the largest of which is deposits. Also taken into consideration is the repayment of loans. These sources provide alternatives to meet its short term liquidity needs. Longer liquidity needs may be met by issuing longer term deposits and by raising additional capital. The liquidity ratio is generally maintained equal to or greater than 25% of deposits and short term liabilities. The liquidity ratio of the Company remains strong at approximately 39% and exceeds the Company's peer group levels and target ratio set forth in the Asset/Liability Policy. The Company's level of liquidity is provided by funds invested primarily in corporate bonds, US 12 Treasuries and agencies, and to a lesser extent, obligations of state and political subdivisions and federal funds sold. The overall liquidity position is monitored on a monthly basis. Interest rate sensitivity is a function of the repricing characteristics of the Company's assets and liabilities. These include the volume of assets and liabilities repricing, the timing of the repricing, and the interest rate sensitivity gaps is a continual challenge in a changing rate environment. The following table shows separately the interest sensitivity of each category of interest earning assets and interest bearing liabilities as of March 31, 1998: INTEREST RATE SENSITIVITY (in millions)
Days 1 to 5 over 5 Non-rate Assets (1) 0 - 90 91 - 365 years years sensitive Total ------ -------- ----- ----- --------- ----- Interest-bearing deposits in banks $ 0.6 $ -- $ -- $ -- $ -- $ 0.6 Federal funds sold 26.5 -- -- -- 26.5 Investment securities: Available for sale 20.7 -- -- -- -- 20.7 Held to maturity 7.0 26.4 8.0 9.2 -- 50.6 -------------------------------------------------------------------------------- Total investment securities 27.7 26.4 8.0 9.2 -- 71.3 Loans:(2) Fixed rate (3) 8.0 11.7 105.2 36.6 -- 161.6 Variable rate 33.4 19.0 65.6 23.5 -- 141.6 -------------------------------------------------------------------------------- Total loans 41.5 30.8 170.7 60.2 -- 303.1 Other assets(4) -- -- -- -- 5.9 5.9 -------------------------------------------------------------------------------- Total Assets $ 96.3 $ 57.2 $ 178.7 $ 69.4 $ 5.9 $ 407.4 ================================================================================ LIABILITIES & CAPITAL Deposits: Non interest bearing deposits $ -- $ -- $ -- $ -- $ 38.0 $ 38.0 Interest bearing deposits(5) 23.2 26.7 -- -- -- 90.5 Certificate of deposits 63.8 43.4 46.4 31.4 -- 144.4 -------------------------------------------------------------------------------- Total deposits 87.0 70.1 46.4 31.4 38.0 272.8 Short term borrowings -- -- -- -- -- -- Mortgage and long term borrowings 0.6 0.6 30.4 -- -- 31.6 Other liabilities -- -- -- -- 12.8 12.8 Capital -- -- -- -- 90.2 90.2 -------------------------------------------------------------------------------- Total liabilities & capital $ 87.6 $ 70.7 $ 76.8 $ 31.4 $ 141.0 $ 407.4 ================================================================================ Net interest rate GAP $ 8.7 ($ 13.5) $ 101.9 $ 38.0 ($ 135.0) ================================================================== Cumulative interest rate GAP $ 8.7 ($ 4.8) $ 97.1 $ 135.0 -- ================================================================== GAP to total assets 2% (3%) ====================== GAP to total equity 14% (22%) ====================== Cumulative GAP to total assets 2% (1%) ====================== Cumulative GAP to total equity 14% (8%) ======================
(1) Interest earning assets are included in the period in which the balances are expected to be repaid and/or repriced as a result of anticipated prepayments, scheduled rate adjustments, and contractual maturities. (2) Reflects principal maturing within the specified periods for fixed and variable rate loans and includes nonperforming loans. (3) Fixed rate loans include a portion of variable rate loans whose floors are in effect at March 31, 1998. (4) For purposes of gap analysis, other assets include the allowance for possible loan loss, unamortized discount on purchased loans and deferred fees on loans. (5) Based on historical analysis, Money market and Savings deposits are assumed to have rate sensitivity of 1 month; NOW account deposits are assumed to have a rate sensitivity of 4 months. 13 The Company's exposure to interest rate risk is mitigated somewhat by a portion of the Company's loan portfolio consisting of floating rate loans, which are tied to the prime lending rate but which have interest rate floors and no interest rate ceilings. Although the Company is originating fixed rate loans, a portion of the loan portfolio continues to be comprised of floating rate loans with interest rate floors. 14 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO VOTE SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibit 27. Financial Data Schedule 15 SIGNATURES Pursuant to the requirements of the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ROYAL BANCSHARES OF PENNSYLVANIA, INC. (Registrant) Dated: May 14th, 1998 /s/ James J. McSwiggan ---------------------------------------------- James J. McSwiggan, Chief Financial Officer and Treasurer Dated: May 14th, 1998 /s/ David J. Greenfield ---------------------------------------------- David J. Greenfield, Controller EX-27 2 FINANCIAL DATA SCHEDULE
9 1 3-MOS DEC-31-1998 MAR-31-1998 10,068,582 100,030 26,450,000 0 20,678,740 50,605,591 51,197,308 292,904,622 10,449,053 407,397,064 272,221,923 698,000 13,399,923 30,925,000 0 0 14,201,114 75,950,986 407,397,064 7,880,860 1,631,448 0 9,512,308 2,780,069 3,279,943 6,232,365 2,400,000 0 2,766,289 3,793,767 0 0 0 2,619,020 .30 .29 6.30 4,309,216 0 1,078,823 1,058,551 8,186,237 227,005 89,822 10,449,053 0 0 0
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