8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934

January 27, 2008
Date of Report (Date of earliest event report)

ROYAL BANCSHARES OF PENNSYLVANIA, INC.

(Exact name of registrant as specified in its charter)

PENNSYLVANIA

(State or Other Jurisdiction of Incorporation)

0-26366	23-2812193
(Commission File Number)	(IRS Employer Identification Number)

732 Montgomery Avenue, Narberth, Pennsylvania	19072
(Address of Principal Executive Office)	(Zip Code)

610-668-4700
(Issuer’s telephone number, including area code)

N/A
(Former Name or Former Address, if Change Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition

On January 29, 2008, Royal Bancshares of Pennsylvania, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 2007 and the filing on January 29, 2008 of its Form 10-Q for the quarter ended September 30, 2007. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review

(a) As reported in Item 2.02 above, on January 29, 2008, the Company issued a press release announcing its financial results for the quarter ended September 30, 2007 and the filing on January 29, 2008 of its Form 10-Q for the quarter ended September 30, 2007 (the “Third Quarter 2007 Form 10-Q”).

As reported in the press release and the Third Quarter 2007 Form 10-Q, included in the operating results for the nine months ended September 30, 2007 is a $1.6 million reduction to net income related to the following accounting errors: $1.1 million reduction in net income resulting from an accounting error related to investments in real estate joint ventures (see footnote 12 of the notes to consolidated financial statements included in the Third Quarter 2007 Form 10-Q for a discussion of the investments in real estate joint ventures), a $900,000 reduction in net income associated with an accounting error related to the consolidation of an investment in real estate owned via an equity investment, and an increase in net income of $400,000 related to an error in the accounting for deferred loan costs per Statement of Financial Accounting Standards (“SFAS”) No. 91, “Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases.”

As a result of such errors, on January 27, 2008, the Audit Committee of the Company’s board of directors concluded that the Company’s previously issued financial statements as of and for the periods ended March 31, 2007 and June 30, 2007 and included in the Company’s Forms 10-Q for the quarters ended March 31, 2007 and June 30, 2007, respectively, should no longer be relied upon and that the Company’s financial statements as of and for such periods included in such Forms 10-Q will be restated.

Accordingly, the Company intends to file as soon as practicable amendments to its Forms 10-Q for the quarters ended March 31, 2007 and June 30, 2007. Of the $1.6 million total adjustment to net income relating to the accounting errors described above, approximately $1.0 million relates to 2006 and prior periods. In the opinion of the Company, adjustments to 2006 and prior years operating results are immaterial, and no restatements for 2006 or prior years are required. In the opinion of the Company, however, the $600,000 of adjustments relating to 2007 net income are material for the first and second quarters of 2007. Previously reported net income of $3.6 million for the first quarter of 2007 has been reduced by $1.3 million for a restated net income for the first quarter of 2007 of $2.3 million. The adjustment for the first quarter of 2007 includes the $1.0 million relating to 2006 and prior years. Previously reported net income of $4.3 million for the quarter ended June 30, 2007 has been reduced by $300,000 for a restated net income for the second quarter of 2007 of $4.0 million. The cumulative effects of such adjustments, which

will be included in the amended Forms 10-Q for the quarters ended March 31, 2007 and June 30, 2007 when filed, are reflected in the Third Quarter 2007 Form 10-Q filed on January 29, 2008.

The Audit Committee of the Company’s board of directors discussed these matters with Beard Miller Company LLP, the Company’s independent auditors at a meeting held on January 27, 2008.

Item 9.01 — Financial Statements and Exhibits

(d.) Exhibits

Exhibit Number		Description of Document
	99.1	Press Release dated January 29, 2008.

SIGNATURE

     Pursuant to 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 hereunto duly authorized.

	Royal Bancshares of Pennsylvania, Inc.
Dated: January 29, 2008	/s/ Gregg J. Wagner
	Gregg J. Wagner
	Chief Financial Officer

EX-99.1

Royal Bancshares of Pennsylvania, Inc. Announces 3Q 2007 Results

NARBERTH, PA — Royal Bancshares of Pennsylvania, Inc. (NASDAQ:RBPAA), parent company of Royal Bank America and Royal Asian Bank, announced that it has filed its Form 10-Q for the quarter ended September 30, 2007.

Net loss for the three months ended September 30, 2007 was $9.2 million or $0.69 basic and diluted loss per share, compared to net income of $6.5 million or $0.48 basic and diluted earnings per share for the same period in 2006. Net loss for the nine months ended September 30, 2007 was $2.9 million or $0.21 basic and diluted loss per share, compared to net income of $16.4 million or $1.22 basic earnings per share and $1.21 diluted earnings per share for the same period in 2006. Consolidated total assets ended September 30, 2007 were $1.28 billion, compared to $1.30 billion at September 30, 2006.

Comments from Joseph P. Campbell, President/CEO of Royal Bancshares of Pennsylvania, Inc. regarding quarterly results:

Our third quarter 2007 results show that we were not immune to the unprecedented pressures that beset the financial sector. As noted in our November 15^th press release regarding the delay in releasing third quarter 2007 results, the Company engaged independent third parties to assist in the review of specified loans to determine whether additional reserves were appropriate. Results of this analysis led to an increase in the loan loss provision for the quarter of $6.6 million compared to the same period in 2006, a $6.0 million charge in recognition of an impairment in an equity investment in a condominium project and a $5.9 million impairment charge for an investment in a real estate joint venture.

Comments regarding delay in quarterly results:

Our decision to delay our quarterly results was a difficult one, but we felt the extra time was necessary to analyze our portfolio and allowed us to develop and implement policies and procedures which will position us well in light of the continued market disharmony.

Comments on loan loss provisions:

With respect to additional loan loss provisions made this quarter, the Company intends to diligently pursue all remedies for recovery and are hopeful that we can achieve similar results in reversing reserves and recovering charge-offs as those achieved in past downturns in real estate cycles.

Comments on Form 8-K filing regarding restatement of 1^st and 2^nd Quarter 2007 results:

During the portfolio review process undertaken with independent third parties, accounting errors were identified relating to investments in real estate joint ventures and

consolidation of an investment in real estate owned via an equity investment. Operating results for the nine-month period ended September 30, 2007 include a reduction in net income due to these factors of $1.1 million and $900,000 respectively. An increase in income of $400,000 was noted relating to an error in the accounting of deferred loan costs per Statement of Financial Accounting Standards No. 91. Total reductions to net income related to these accounting errors are $1.6 million and will be reflected in the revised 1^st and 2^nd Quarter 2007 results.

Comments on measures taken to mitigate future lending risk:

In light of the volatile situation in the real estate and commercial development markets, we have undertaken three key steps to strengthen internal controls and credit quality processes:

1. We have appointed a new head of our Special Assets Division, the division responsible for management of impaired loans.

2. We have hired a Chief Credit Officer. This new position will have primary responsibility for the credit function in conjunction with our lending activities.

3. We have engaged an independent third party consultant to assist in the review of loan and lease policies and procedures.

Comments on the plan to return to profitability:

Despite our disappointing third quarter results, we are well capitalized, have ample liquidity, and thanks to our dedicated team of veteran leaders and strength in market reputation, we believe our Company is positioned to weather this storm and return to profitability in future quarters.

About Royal Bancshares of Pennsylvania, Inc.

Royal Bancshares of Pennsylvania, Inc., headquartered in Narberth, Pennsylvania, operates sixteen full-service branch offices throughout southeastern Pennsylvania and New Jersey under the name Royal Bank America and six locations in metro-Philadelphia, Northern New Jersey and New York under the name Royal Asian Bank. Together, Royal Bank America and Royal Asian Bank, along with Royal’s other affiliates, offer a wide variety of products and services, including commercial real estate loans, asset based lending, structured financing, equipment leasing, 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.