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

November 15, 2010
Date of Report (Date of earliest event reported)

ROYAL BANCSHARES OF PENNSYLVANIA, INC.

(Exact name of registrant as specified in its charter)

Pennsylvania
(State or other jurisdiction
of incorporation) 0-26366
(Commission
File Number) 23-2812193
(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 November 15, 2010, Royal Bancshares of Pennsylvania, Inc. (“Royal”) issued a press release announcing its financial results for the period ended September 30, 2010. A copy of the press release is furnished as Exhibit 99.1 hereto.

(d) Exhibits:

99.1 Press release dated November 15, 2010 regarding financial results for the period ended September 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.

	ROYAL BANCSHARES OF PENNSYLVANIA, INC.
Dated: November 16, 2010
	By:	/s/ James J. McSwiggan, Jr.
		James J. McSwiggan, Jr.
		President and Chief Operating Officer

EX-99.1

Exhibit 99.1

Royal Bancshares of Pennsylvania Announces Financial Results for Third Quarter Ended September 30, 2010

NARBERTH, PA—(Marketwire — November 15, 2010) — Royal Bancshares of Pennsylvania, Inc. (NASDAQ: RBPAA) announced its financial results for the third quarter ended September 30, 2010. The net loss attributable to Royal Bancshares (“Royal”) was $2.8 million for the quarter, or 25 cents per common share, compared to a net loss of $4.4 million, or 37 cents per common share, in the quarter ended September 30, 2009.

The improved results for the third quarter were primarily due to a $1.5 million reduction in the provision for loan and lease losses, a $628 thousand reduction in net income attributable to noncontrolling interests, a reduction of $474 thousand in income tax expense related to the surrender of bank owned life insurance in 2009 and a $333 thousand increase in net interest income as a result of a 52 basis point increase in net interest margin mainly due to lower funding costs. Partially offsetting these improvements was a $1.7 million increase in impairment of real estate owned via equity investments and an $830 thousand increase in impairments of other real estate owned. Excluding these impairments, other operating expenses decreased $2.0 million.

For the nine months ended September 30, 2010, net loss attributable to Royal Bancshares was $8.4 million, or 75 cents per common share, compared to a net loss of $23.2 million or $1.84 per share in the first nine months of 2009.

The improved results for the nine month period were due to a $9.4 million reduction in impairment losses on available for sale securities, a $5.1 million reduction in the provision for loan and lease losses, a $2.7 million increase in net interest income mainly due to a 51 basis point increase in net interest margin as a result of lower funding costs and a reduction of $474 thousand in income tax expense related to the surrender of bank owned life insurance in 2009. Partially offsetting these improvements was a $2.0 million increase in impairment of other real estate owned, a $1.7 million increase in impairment of real estate owned via equity investments and a $1.6 million increase in impairment of real estate joint ventures. Excluding these items, other operating expenses decreased $2.2 million.

Robert R. Tabas, Chairman and CEO, commented, “Although we continue to face significant pressure, our balance sheet has begun to reflect the positive impact of our strategic plan, including efforts to deleverage our balance sheet, increase small business lending and minimize risks in our investment portfolio.”

In a statement echoed in a letter to shareholders dated November 15, 2010, Tabas noted, “(Our) management team is working diligently to navigate Royal through the unprecedented economic times that we face. We are making progress positioning Royal to operate successfully in the new economic reality, and serve our community — and our shareholders — for the long haul.”

A digital version of the letter to shareholders is available online at www.royalbankamerica.com/investor.php

The following is an overview of key financial metrics:

Net interest income increased to $7.6 million in the third quarter of 2010, from $7.2 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 $23.9 million for the nine months ended September 30, 2010, compared to $21.2 million for the same period in 2009.

Net interest margin in the third quarter was 2.88%, up 52 basis points from the comparable 2009 quarter of 2.36%. Net interest margin for the nine month period was 2.89%, up 51 basis points from 2.38% in the comparable period of 2009.

Total assets were $1.1 billion at September 30, 2010, a decrease of $175 million or 13.5% from $1.3 billion at December 31, 2009.

At September 30, 2010, Royal Bank America had capital ratios above the level required to meet regulatory standards for a well-capitalized institution.

Third quarter 2010 deposit levels were $743.5 million (including Royal Asian Bank deposits held for sale), down $138.3 million or 15.68% from $881.8 million at December 31, 2009 and down $48.3 million or 6.1% from $791.8 million at June 30, 2010. This was primarily due to

the continuation of the bank’s previously outlined strategy to reduce reliance on brokered deposits (down $45.2 million for the quarter and $108.0 million for the nine month period) and instead focus on more competitively priced branch deposits.

Net loans and leases at quarter end were $595.5 million (including Royal Asian Bank loans held for sale), down 9.3% or $61.0 million compared to $656.5 million at December 31, 2009 and down $16.7 million or 2.7% from $612.2 million at June 30, 2010.

Non-accrual and impaired loans were $83.0 million at September 30, 2010, compared to $73.7 million at December 31, 2009. An increase in new non-accrual loans since year end was partially offset by loans becoming current and placed back on accrual status, 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.

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						Nine Months
	Ended Sept. 30th						Ended Sept. 30th
(in thousands, except for earnings per share)	2010			2009			2010			2009
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Interest Income	$	13,719		$	16,799		$	44,515		$	49,723
Interest Expense		6,157			9,570			20,601			28,536
Net Interest Income		7,562			7,229			23,914			21,187
Provision for Loan Losses		2,194			3,716			8,387			13,469
Net Interest Income after Provision		5,368			3,513			15,527			7,718
Non Interest Income/(Loss)		1,823			2,705			4,846			(4,283	)
Non Interest Expense		10,333			9,829			28,425			25,373
Loss before Taxes		(3,142	)		(3,611	)		(8,052	)		(21,938	)
Income Tax Expense		0			474			0			474
Net Loss		(3,142	)		(4,085	)		(8,052	)		(22,412	)
Less Net (Loss)/Income attributable to noncontrolling interest		(347	)		281			354			761
Net Loss attributable to Royal Bancshares		($2,795	)		($4,366	)		($8,406	)		($23,173	)
Loss per common share — basic		($0.25	)		($0.37	)		($0.75	)		($1.84	)
SELECTED RATIOS:

	Three Months						Nine Months
	Ended Sept. 30th						Ended Sept. 30th
(in thousands, except for earnings per share)	2010			2009			2010			2009
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Return on Average Assets		-1.0	%		-1.3	%		-0.9	%		-2.4	%
Return on Average Equity		-10.6	%		-15.4	%		-10.7	%		-29.3	%
Average Equity to Average Assets		9.1	%		8.3	%		8.7	%		8.2	%
Book Value Per Share	$	5.11		$	6.07		$	5.11		$	6.07

CONDENSED BALANCE SHEET

(in thousands)	Sept. 30, 2010		Dec. 31, 2009
	(unaudited)		(unaudited)
Cash and Cash Equivalents	$	74,634	$	58,298
Investment Securities		332,651		449,671
Loans & Leases (net)		534,547		658,787
Assets Held for Sale		79,188		—
Premises and Equipment (net)		14,247		18,798
Accrued Interest receivable		16,775		14,942
Other Assets		65,647		92,230
Total Assets	$	1,117,689	$	1,292,726
Deposits		676,695		881,755
Liabilities Held for Sale		67,137		—
Borrowings		214,152		257,827
Other Liabilities		32,242		23,056
Subordinated debentures		25,774		25,774
Royal Bancshares Shareholders’ Equity		98,177		101,156
Noncontrolling Interest		3,512		3,158
Total Equity		101,689		104,314
Total Liabilities and Equity	$	1,117,689	$	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.”

Contact:

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