Segment Information

6 Months Ended

Jun. 30, 2012

Segment Information [Abstract]

Segment Information

Note 17.                      Segment Information

FASB ASC Topic 280, "Segment Reporting" ("ASC Topic 280") established standards for public business enterprises to report information about operating segments in their annual financial statements and requires that those enterprises report selected information about operating segments in subsequent interim financial reports issued to shareholders.  It also established standards for related disclosure about products and services, geographic areas, and major customers.  Operating segments are components of an enterprise, which are evaluated regularly by the chief operating decision makers in deciding how to allocate and assess resources and performance.  The Company's chief operating decision makers are the Chief Executive Officer and the Chief Financial Officer. The Company has identified its reportable operating segments as "Community Banking" and "Tax Liens".  In previous years, the Company reflected "Equity Investments" and "Leasing" as operating segments.  Management has determined that the operating results and assets related to Equity Investments and Leasing should be reflected under the Community Banking segment.  The determination related to Equity Investments was based on the deconsolidation of the VIE as a result of the completion of the project. The determination related to Leasing was based on not meeting the quantitative thresholds for requiring disclosure.

Community banking

The Company's Community Banking segment which includes Royal Bank consists of commercial and retail banking and leasing. The Community Banking business segment is managed as a single strategic unit which generates revenue from a variety of products and services provided by Royal Bank.  For example, commercial lending is dependent upon the ability of Royal Bank to fund cash needed to make loans with retail deposits and other borrowings and to manage interest rate and credit risk.  While Royal Bank makes very few consumer loans, cash needed to make such loans would be funded similarly to commercial loans.

Tax lien operation

The Company's Tax Lien Operation consists of purchasing delinquent tax certificates from local municipalities at auction and then processing those liens to either encourage the property holder to pay off the lien, or to foreclose and sell the property.   The tax lien operation earns income based on interest rates (determined at auction) and penalties assigned by the municipality along with gains on sale of foreclosed properties.

The following tables present selected financial information for reportable business segments for the three and six month periods ended June 30, 2012 and 2011.

	Three months ended June 30, 2012
	Community			Tax Lien
(In thousands)	Banking			Operation			Consolidated
Total assets	$	779,932		$	50,694		$	830,626
Total deposits	$	582,292		$	-		$	582,292
Interest income	$	7,074		$	1,349		$	8,423
Interest expense		1,811			706			2,517
Net interest income	$	5,263		$	643		$	5,906
Provision for loan and lease losses		1,334			181			1,515
Total other  income		1,797			148			1,945
Total other expenses		6,811			1,781			8,592
Income tax expense (benefit)		306			(306	)		-
Net loss	$	(1,392	)	$	(864	)	$	(2,256	)
Noncontrolling interest	$	40		$	(346	)	$	(306	)
Net (loss) income attributable to Royal Bancshares	$	(1,432	)	$	(518	)	$	(1,950	)

	Three months ended June 30, 2011
	Community			Tax Lien
(In thousands)	Banking			Operation		Consolidated
Total assets	$	824,344		$	85,340	$	909,684
Total deposits	$	628,961		$	-	$	628,961
Interest income	$	8,162		$	1,838	$	10,000
Interest expense		3,197			643		3,840
Net interest income	$	4,965		$	1,195	$	6,160
Provision for loan and lease losses		2,863			193		3,056
Total other  income		2,755			32		2,787
Total other expenses		9,259			526		9,785
Income tax (benefit) expense		(196	)		196		-
Net (loss) income	$	(4,206	)	$	312	$	(3,894	)
Noncontrolling interest	$	206		$	125	$	331
Net (loss) income attributable to Royal Bancshares	$	(4,412	)	$	187	$	(4,225	)

	Six months ended June 30, 2012
	Community			Tax Lien
(In thousands)	Banking			Operation			Consolidated
Total assets	$	779,932		$	50,694		$	830,626
Total deposits	$	582,292		$	-		$	582,292
Interest income	$	14,291		$	2,938		$	17,229
Interest expense		3,712			1,618			5,330
Net interest income	$	10,579		$	1,320		$	11,899
Provision for loan and lease losses		1,443			156			1,599
Total other income		2,586			20			2,606
Total other expenses		12,583			4,076			16,659
Income tax expense (benefit)		357			(357	)		-
Net loss	$	(1,218	)	$	(2,535	)	$	(3,753	)
Noncontrolling interest	$	80		$	(1,014	)	$	(934	)
Net (loss) income attributable to Royal Bancshares	$	(1,298	)	$	(1,521	)	$	(2,819	)

	Six months ended June 30, 2011
	Community			Tax Lien
(In thousands)	Banking			Operation		Consolidated
Total assets	$	824,344		$	85,340	$	909,684
Total deposits	$	628,961		$	-	$	628,961
Interest income	$	16,347		$	4,227	$	20,574
Interest expense		6,503			1,356		7,859
Net interest income	$	9,844		$	2,871	$	12,715
Provision for loan and lease losses		4,836			304		5,140
Total other income		3,665			486		4,151
Total other expenses		15,824			930		16,754
Income tax (benefit) expense		(830	)		830		-
Net (loss) income	$	(6,321	)	$	1,293	$	(5,028	)
Noncontrolling interest	$	190		$	518	$	708
Net (loss) income attributable to Royal Bancshares	$	(6,511	)	$	775	$	(5,736	)

Interest income earned by the Community Banking segment related to the Tax Lien Operation was approximately $706,000 and $643,000 for the three month periods ended June 30, 2012 and 2011, respectively and $1.6 million and $1.4 million for the six months ended June 30, 2012 and 2011, respectively.