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 1, 2011

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	19072
(Address of principal executive offices)	(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 1, 2011, Royal Bancshares of Pennsylvania, Inc. (“Royal”) issued a press release announcing its financial results for the period ended September 30, 2011.  A copy of the press release is furnished as Exhibit 99.1 hereto.

(d) Exhibits:

99.1 Press release dated November 1, 2011 regarding financial results for the period ended September 30, 2011.

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 2, 2011	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, Inc. Announces Third Quarter 2011 Results

NARBERTH, PA—(Marketwire – November 1, 2011) – Royal Bancshares of Pennsylvania, Inc. (NASDAQ: RBPAA) (“Royal”), parent company of Royal Bank America, a community bank actively empowering small businesses and individuals to achieve their financial goals, today announced its consolidated financial results for the period ended September 30, 2011.

For the three month period ended September 30, 2011, net loss attributable to Royal was $1.9 million, or 18 cents per basic and diluted common share, resulting in an improvement of $902 thousand compared to the net loss of $2.8 million, or 25 cents per basic and diluted common share reported for the three month period ended September 30, 2010.  The year over year favorable change in the net loss for the current quarter was primarily attributable to a $1.8 million reduction in the provision for loan and lease losses and a $2.2 million decline in other expenses, which were partially offset by a decline in net interest income of $730 thousand and a reduction of $1.8 million in other income, largely due to a $1.4 million impairment charge on one investment security, which has now been completely written off.

For the nine month period ended September 30, 2011, net loss attributable to Royal was $7.6 million, or 69 cents per basic and diluted common share, resulting in an improvement of $777 thousand compared to the net loss of $8.4 million or 75 cents per basic and diluted common share reported for the nine month period ended September 30, 2010.  The year over year favorable change in the net loss for the nine month period was primarily attributable to a $2.8 million reduction in the provision for loan and lease losses and a decline in other expenses of $3.6 million, which were partially offset by a decline in net interest income of $4.4 million and a reduction of $622 thousand in other income.

Royal Chairman and CEO Robert R. Tabas commented, “Clearly we are turning the corner. Our financial results underscore strengths in executing our strategic plan and provide opportunities for cautious optimism.  In fact, in dissecting our results for the quarter one should note that the overwhelming majority of the loss, $1.4 million of the $1.9 million loss, was due to impairment on an investment security within our trust-preferred portfolio not related to our core business.”

“We continue to work aggressively to reduce non-performing loans and our focus in this area, as well as in reducing total classified assets, has resulted in a continuation of a decidedly positive trend.  Non-performing loans (including loans held for sale) decreased to $58.2 million at September 30, 2011, a reduction of $27.6 million or 32.2% from December 31, 2008.  Total classified assets (including loans held for sale) decreased to $93.3 million at September 30, 2011, a reduction of $69 million or 42.5% from March 31, 2010.”

Non-Performing Loans (at date noted)

September 30, 2011	December 31, 2010	December 31, 2009	December 31, 2008
$58.2 million	$65.8 million	$73.7 million	$85.8 million

Total Classified Assets (at date noted)

September 30, 2011	December 31, 2010	March 31, 2010
$93.3 million	$129.9 million	$162.3 million

“Continued improvements in areas of our business, as well as our ongoing pursuit of a deleveraging strategy, have enabled us to maintain solid capital ratios which, despite difficult economic conditions, have strengthened as the year has progressed.”

Royal Bank America Capital Ratios (as reported under Regulatory Accounting Principles (RAP) and assuming recognition of revenue from Royal's tax lien business on a cash and not an accrual basis at date noted)

Total capital (to risk-weighted assets)
September 30, 2011	December 31, 2010
14.62%	13.76%

Tier I capital (to risk-weighted assets)
September 30, 2011	December 31, 2010
13.35%	12.49%

Tier I capital (to average assets, leverage)
September 30, 2011	December 31, 2010
8.85%	8.03%

The following is an overview of certain key financial metrics:

For the three month period ended September 30, 2011, Net Interest Margin improved 48 basis points to 3.36% as compared to 2.88% from the comparable period in 2010 due to redemptions of higher cost brokered CDs and maturing FHLB advances.

Provision for loan and lease losses was $428 thousand and $5.6 million for the three and nine month periods ended September 30, 2011, respectively, compared to $2.2 million and $8.4 million for the three and nine month periods ended September 30, 2010, respectively.  This decline was attributable to a reduction in classified loans as well as a reduction in the overall size of the loan portfolio.

About Royal Bancshares of Pennsylvania, Inc.

Royal Bancshares of Pennsylvania, Inc., headquartered in Narberth, Pennsylvania, is the parent company of Royal Bank America, which for the past nearly 50 years has played a lead role in the growth and development of our region by empowering small businesses, entrepreneurs and individuals to achieve their financial goals and enrich our communities. More information on Royal Bancshares of Pennsylvania, Inc., Royal Bank America and its subsidiaries can be found 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, 2010.

ROYAL BANCSHARES OF PENNSYLVANIA, INC.

CONDENSED INCOME STATEMENT

	Three Months						Nine Months
	Ended Sept. 30th						Ended Sept. 30th
(in thousands, except for earnings per common share)	2011			2010			2011			2010
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Interest Income	$	10,049		$	13,719		$	30,623		$	44,515
Interest Expense		3,217			6,157			11,076			20,601
Net Interest Income		6,832			7,562			19,547			23,914
Provision for Loan Losses		428			2,194			5,568			8,387
Net Interest Income after Provision		6,404			5,368			13,979			15,527
Non Interest Income		73			1,823			4,224			4,846
Non Interest Expense		8,109			10,333			24,863			28,425
Loss before Taxes		(1,632	)		(3,142	)		(6,660	)		(8,052	)
Income Taxes		0			0			0			0
Net Loss		(1,632	)		(3,142	)		(6,660	)		(8,052	)
Less Net Income attributable to noncontrolling interest		261			(347	)		969			354
Net Loss attributable to Royal Bancshares	$	(1,893	)	$	(2,795	)	$	(7,629	)	$	(8,406	)
Loss per common share – basic	$	(0.18	)	$	(0.25	)	$	(0.69	)	$	(0.75	)
SELECTED RATIOS:
Return on Average Assets		-0.8	%		-1.0	%		-1.1	%		-0.9	%
Return on Average Equity		-9.4	%		-10.6	%		-12.4	%		-10.7	%
Average Equity to Assets		9.0	%		9.1	%		8.9	%		8.7	%
Book Value Per Share	$	3.26		$	5.11		$	3.26		$	5.11

CONDENSED BALANCE SHEET

(in thousands)	Sept. 30, 2011		Dec. 31, 2010
	(unaudited)		(unaudited)
Cash and Cash Equivalents	$	32,293	$	51,733
Investment Securities		319,657		327,560
Loans & Leases (net)		429,238		505,346
Premises and Equipment (net)		8,327		12,529
Accrued Interest receivable		15,994		16,864
Other Assets		51,854		66,594
Total Assets	$	857,363	$	980,626
Deposits		577,891		693,913
Borrowings		149,758		154,949
Other Liabilities		25,949		21,897
Subordinated debentures		25,774		25,774
Royal Bancshares Shareholders’ Equity		73,621		80,692
Noncontrolling Interest		4,370		3,401
Total Equity		77,991		84,093
Total Liabilities and Equity	$	857,363	$	980,626

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 ASU 2009-17.