SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2013

SEGMENT INFORMATION [Abstract]

SEGMENT INFORMATION

NOTE 21 – 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 (“CEO”) and the Chief Administrative and Risk Officer (“CARO”). The Company has identified its reportable operating segments as “Community Banking” and “Tax Liens”.

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.

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 the on sale of foreclosed properties.

Selected segment information and reconciliations to consolidated financial information are as follows:

(In thousands)	Community			Tax Lien
December 31, 2013	Banking			Operation			Consolidated
Total assets	$	707,022		$	26,228		$	733,250
Total deposits		528,964			-			528,964
Interest income	$	25,097		$	2,427		$	27,524
Interest expense		5,899			1,458			7,357
Net interest income		19,198			969			20,167
(Credit) provision for loan and lease losses		(1,459	)		587			(872	)
Total non-interest income		5,476			1,388			6,864
Total non-interest expenses		21,959			4,371			26,330
Income tax (benefit) expense		42			-			42
Net income (loss)	$	4,132		$	(2,601	)	$	1,531
Noncontrolling interest		462			(1,040	)		(578	)
Net income (loss) attributable to Royal Bancshares	$	3,670		$	(1,561	)	$	2,109

(In thousands)	Community			Tax Lien
December 31, 2012	Banking			Operation			Consolidated
Total assets	$	732,137		$	37,318		$	769,455
Total deposits		554,917			-			554,917
Interest income	$	26,956		$	5,025		$	31,981
Interest expense		7,202			2,697			9,899
Net interest income		19,754			2,328			22,082
Provision for loan and lease losses		5,177			820			5,997
Total non-interest income		2,868			741			3,609
Total non-interest expenses		31,118			5,206			36,324
Income tax (benefit) expense		(28	)		28			-
Net loss	$	(13,645	)	$	(2,985	)	$	(16,630	)
Noncontrolling interest		189			(1,194	)		(1,005	)
Net loss attributable to Royal Bancshares	$	(13,834	)	$	(1,791	)	$	(15,625	)

Interest income earned by the Community Banking segment related to the Tax Lien Operation was approximately $1.5 million and $2.7 million for the years ended December 31, 2013 and 2012, respectively.