REGULATORY CAPITAL REQUIREMENTS

12 Months Ended

Dec. 31, 2012

REGULATORY CAPITAL REQUIREMENTS [Abstract]

REGULATORY CAPITAL REQUIREMENTS

NOTE 15 – REGULATORY CAPITAL REQUIREMENTS

The Company and Royal Bank are subject to various regulatory capital requirements administered by the federal banking agencies.  Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company's assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company's and Royal Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.  At December 31, 2012, the Company and Royal Bank met all capital adequacy requirements to which it is subject.  Under the informal agreement referenced in "Note 2 – Regulatory Matters and Significant Risks And Uncertainties" to the Consolidated Financial Statements, Royal Bank is required to maintain a minimum Tier 1 leverage ratio of 8% and a Total risk-based capital ratio of 12% during the term of the agreement.  Royal Bank met these requirements as of December 31, 2012.  To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based and Tier I leverage ratios as set forth in the table.  As of December 31, 2012, Royal Bank met the criteria for a well capitalized institution.

In connection with a prior bank regulatory examination, the FDIC concluded, based upon its interpretation of the Call Report instructions and under RAP, that income from Royal Bank's tax lien business should be recognized on a cash basis, not an accrual basis.  Royal Bank's current accrual method is in accordance with U.S. GAAP.  Royal Bank disagrees with the FDIC's conclusion and filed the Call Report for December 31, 2012 and the previous nine quarters in accordance with U.S. GAAP.  However, a change in the manner of revenue recognition for the tax lien business for regulatory accounting purposes affects Royal Bank's and the Company's capital ratios as shown below.  Royal Bank is in discussions with the FDIC to resolve the matter.

The table below sets forth Royal Bank's capital ratios under RAP based on the FDIC's interpretation of the Call Report instructions:

											To be well capitalized
						For capital					capitalized under prompt
	Actual					adequacy purposes					corrective action provision
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total capital (to risk-weighted assets)
At December 31, 2012	$	71,891		16.10	%	$	35,732		8.00	%	$	45,169		10.00	%
At December 31, 2011	$	82,375		15.04	%	$	43,803		8.00	%	$	54,754		10.00	%
Tier I capital (to risk-weighted assets)
At December 31, 2012	$	66,164		14.81	%	$	17,866		4.00	%	$	27,101		6.00	%
At December 31, 2011	$	75,413		13.77	%	$	21,902		4.00	%	$	32,852		6.00	%
Tier I capital (to average assets, leverage)
At December 31, 2012	$	66,164		8.53	%	$	31,012		4.00	%	$	38,765		5.00	%
At December 31, 2011	$	75,413		9.09	%	$	33,189		4.00	%	$	41,486		5.00	%

The tables below reflect the adjustments to the net loss as well as the capital ratios for Royal Bank under U.S. GAAP:

	For the years ended December 31,
(In thousands)	2012			2011
RAP net loss	$	(17,974	)	$	(15,626	)
Tax lien adjustment, net of noncontrolling interest		4,731			7,738
U.S. GAAP net loss	$	(13,243	)	$	(7,888	)

	At December 31, 2012						At December 31, 2011
	As reported			As adjusted			As reported			As adjusted
	under RAP			for U.S. GAAP			under RAP			for U.S. GAAP
Total capital (to risk-weighted assets)		16.10	%		17.57	%		15.04	%		17.02	%
Tier I capital (to risk-weighted assets)		14.81	%		16.29	%		13.77	%		15.75	%
Tier I capital (to average assets, leverage)		8.53	%		9.45	%		9.09	%		10.48	%

The tables below reflect the Company's capital ratios:

											To be well capitalized
						For capital					capitalized under prompt
	Actual					adequacy purposes					corrective action provision
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total capital (to risk-weighted assets)
At December 31, 2012	$	88,838		19.33	%	$	36,774		8.00	%		N/A		N/A
At December 31, 2011	$	106,745		18.82	%	$	45,386		8.00	%		N/A		N/A
Tier I capital (to risk-weighted assets)
At December 31, 2012	$	77,450		16.85	%	$	18,387		4.00	%		N/A		N/A
At December 31, 2011	$	99,539		17.55	%	$	22,693		4.00	%		N/A		N/A
Tier I Capital (to average assets, leverage)
At December 31, 2012	$	77,450		9.80	%	$	31,614		4.00	%		N/A		N/A
At December 31, 2011	$	99,539		11.64	%	$	34,209		4.00	%		N/A		N/A

The Company has filed the Consolidated Financial Statements for Bank Holding Companies-FR Y-9C ("FR Y-9C") as of December 31, 2012 consistent with U.S. GAAP and the FR Y-9C instructions.  In the event a similar adjustment for RAP purposes would be required by the Federal Reserve on the holding company level, the adjusted ratios are shown in the table below. 

	For the years ended December 31,
(In thousands)	2012			2011
U.S. GAAP net loss	$	(15,625	)	$	(8,563	)
Tax lien adjustment, net of noncontrolling interest		(4,731	)		(7,738	)
RAP net loss	$	(20,356	)	$	(16,301	)

	At December 31, 2012						At December 31, 2011
	As reported			As adjusted			As reported			As adjusted
	under U.S. GAAP			for RAP			under U.S. GAAP			for RAP
Total capital (to risk-weighted assets)		19.33	%		17.90	%		18.82	%		16.90	%
Tier I capital (to risk-weighted assets)		16.85	%		14.82	%		17.55	%		15.63	%
Tier I capital (to average assets, leverage)		9.80	%		8.56	%		11.64	%		10.29	%