8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

August 19, 2010
Date of Report (Date of earliest event reported)

ROYAL BANCSHARES OF PENNSYLVANIA, INC.

(Exact name of registrant as specified in its charter)

Pennsylvania	0-26366	23-2812193
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Ident. No.)

732 Montgomery Avenue, Narberth, Pennsylvania
(Address of principal executive offices) 19072
(Zip Code)

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

N/A
(Former name or former address, if changed 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 Operation and Financial Condition.

          On August 19, 2010, Royal Bancshares of Pennsylvania, Inc. (“Royal”) issued a press release announcing its financial results for the period ending June 30, 2010. A copy of the press release is furnished as Exhibit 99.1 hereto.

     (d) Exhibits:

99.1 Press release dated August 19, 2010 regarding financial results for the period ending June 30, 2010.

SIGNATURES

          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.

Dated: August 25, 2010	ROYAL BANCSHARES OF PENNSYLVANIA, INC.
	By:	/s/ James J. McSwiggan, Jr.
		James J. McSwiggan, Jr.
		President and Chief Operating Officer

EX-99.1

SOURCE: Royal Bancshares of Pennsylvania

Aug 19, 2010 16:40 ET

Royal Bancshares of Pennsylvania, Inc. Announces Financial Results for Second Quarter Ended June 30, 2010

NARBERTH, PA—(Marketwire — August 19, 2010) — Royal Bancshares of Pennsylvania, Inc. (NASDAQ: RBPAA), today announced its financial results for the second quarter ended June 30, 2010. The net loss attributable to Royal Bancshares (“Royal”) was $4.5 million for the quarter, or 38 cents per common share, compared to a net loss of $12.1 million, or 95 cents per common share, in the quarter ended June 30, 2009.

The improved second quarter results were primarily due to an increase in net interest income of $1.4 million due to lower funding costs and a one-time adjustment to interest income of $905,000, a reduction in the allowance for loan losses of $2.7 million, and an improvement of $4.9 million in impairment losses on available for sale securities. These improvements were partially offset by a $2.5 million impairment on real estate joint ventures.

For the six months ended June 30, 2010, net loss attributable to Royal Bancshares was $5.6 million, or 50 cents per common share, compared to a net loss of $18.8 million or $1.47 per share in the first six months of 2009.

This improvement was due to a $2.4 million increase in net interest income mainly due to lower funding costs, a $3.6 million improvement in the provision for loan losses, and a $9.0 million reduction in impairment losses on available for sale securities, partially offset by a $2.5 million impairment on real estate joint ventures, and a $1.2 million increase in impairments on OREO properties.

Robert R. Tabas, Chairman and CEO, said, “We are navigating the challenging economic environment while working hard to recast our balance sheet, mitigate risk in the loan portfolio, and position our company for the future. We also continue to reduce our reliance on high-cost brokered deposits and Federal Home Loan Bank advances, and during the second quarter we made continued progress in this regard while also maintaining core consumer and commercial deposits through our branch network.”

Mr. Tabas concluded, “The credit environment continues to be a challenge. While we have seen improvements and good news in some segments of the loan portfolio, we’ve also had setbacks. During the second quarter we wrote off two loans totaling $3.5 million due to deterioration in collateral values. However, we had a successful auction of foreclosed real estate in New Jersey during the second quarter, and subsequent to quarter end we sold another property in Philadelphia. The auction proceeds will be reflected in both second and third quarter financial results.”

The following is an overview of key financial metrics for the quarter:

• Total assets were $1.18 billion at June 30, 2010, a decrease of 8.53% from $1.29 billion at December 31, 2009.

• Second quarter 2010 deposit levels were $791.8 million, down $90 million or 10.21% from $881.8 million at December 31, 2009 and down $34.4 million or 4.16% from $826.2 million at March 31, 2010. This was a planned reduction as the company is actively reducing its reliance on brokered deposits. We also continue to reduce other borrowings via allowing Federal Home Loan Bank advances to redeem at maturity. Royal continues to maintain its deposit base from consumer and commercial accounts, reflecting confidence in the brand throughout the marketplace as well as the bank’s competitive interest rates on deposit products.

• Net loans and leases at quarter end were $612.2 million, down 7.00% or $46.6 million compared to $658.8 million at December 31, 2009 (which includes loans held for sale) and down $18.2 million or 2.89% from $630.4 million at March 31, 2010.

• Net interest income increased to $8.3 million in the second quarter of 2010, from $6.9 million for the same period in 2009, largely due to a lower cost of funds compared to prior periods. This also drove an increase in net interest income to $16.4 million for the six months ended June 30, 2010, compared to $14.0 million for the same period in 2009.

• Net interest margin in the second quarter was 3.01%, up 71 basis points from the comparable 2009 quarter of 2.30%. Net interest margin for the six month period was 2.90%, up 50 basis points from 2.40% in the comparable period of 2009. Net interest margin was favorably impacted by 32 basis points in the quarter and 15 basis points for the six month period, due to the previously-mentioned income adjustment of $905,000.

• Non-accrual and impaired loans were $74.4 million at June 30, 2010, up slightly compared to $73.7 million at December 31, 2009. An increase in nonaccrual loans since year end was mostly offset as a result of loans becoming current and placed back on accrual, loan payoffs, transfers to other real estate owned, and charge-offs. Royal has no troubled debt restructured loans or loans past due 90 days or more on which it has continued to accrue interest during the quarter.

• At June 30, 2010, Royal Bank America had capital ratios above the level required to meet regulatory standards for a well-capitalized institution. Total capital to risk-weighted assets was 14.57%; Tier I capital to risk-weighted assets was 13.30%: and Tier I capital to average assets was 8.83%.

About Royal Bancshares of Pennsylvania, Inc.

Royal Bancshares of Pennsylvania, Inc., headquartered in Narberth, Pennsylvania, is a two-bank holding company operating the Royal Bank America and Royal Asian Bank brands in Pennsylvania, New Jersey and New York. For the past 40+ years, Royal has played a lead role in the growth and development of our region, empowering small businesses, entrepreneurs and individuals to achieve their financial goals and enrich our communities. More information on Royal Bancshares of Pennsylvania, our banks and subsidiaries is available 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, 2009.

ROYAL BANCSHARES OF PENNSYLVANIA, INC.
CONDENSED INCOME STATEMENT

	Three Months						Six Months
(in thousands, except for	Ended Jun. 30th						Ended Jun. 30th
earnings per common share)	2010			2009			2010			2009
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Interest Income	$	15,173		$	16,570		$	30,796		$	32,924
Interest Expense		6,839			9,681			14,442			18,966
Net Interest Income		8,334			6,889			16,354			13,958
Provision for Loan Losses		4,290			6,956			6,193			9,753
Net Interest Income (Loss) after Provision		4,044			(67	)		10,161			4,205
Non Interest Income/(Loss)		1,718			(3,404	)		3,023			(6,988	)
Non Interest Expense		10,041			8,319			18,094			15,544
Loss before Taxes		(4,279	)		(11,790	)		(4,910	)		(18,327	)
Income Taxes		0			0			0			0
Net Loss		(4,279	)		(11,790	)		(4,910	)		(18,327	)
Less Net Income attributable to noncontrolling interest		259			264			701			480
Net Loss attributable to Royal Bancshares	$	(4,538	)	$	(12,054	)	$	(5,611	)	$	(18,807	)
Loss per common share — basic	$	(0.38	)	$	(0.95	)	$	(0.50	)	$	(1.47	)
SELECTED RATIOS:
Return on Average Assets		-1.5	%		-3.9	%		-0.9	%		-6.2	%
Return on Average Equity		-17.2	%		-45.5	%		-10.7	%		-75.3	%
Average Equity to Assets		8.7	%		8.5	%		8.5	%		8.3	%
Book Value Per Share	$	5.26		$	5.74		$	5.26		$	5.74

CONDENSED BALANCE SHEET

	Jun. 30, 2010		Dec. 31, 2009
(in thousands)	(unaudited)		(unaudited)
Cash and Cash Equivalents	$	114,831	$	58,298
Investment Securities		349,771		449,671
Loans & Leases (net)		612,197		658,787
Premises and Equipment (net)		16,716		18,798
Accrued Interest receivable		15,985		14,942
Other Assets		73,978		92,230
Total Assets	$	1,183,478	$	1,292,726
Deposits		791,827		881,755
Borrowings		236,566		257,827
Other Liabilities		25,306		23,056
Subordinated debentures		25,774		25,774
Royal Bancshares Shareholders’ Equity		100,146		101,156
Noncontrolling Interest		3,859		3,158
Total Equity		104,005		104,314
Total Liabilities and Equity	$	1,183,478	$	1,292,726

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.”

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Company Contact:
Marc Sanders
Director of Marketing
Royal Bank America
Office: 610-668-4700
Cell: 484-802-1944