Segment Information

6 Months Ended

Jun. 30, 2015

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.  Our chief operating decision makers are the CEO and the CFO. We have identified our reportable operating segments as “Community Banking” and “Tax Liens”.

Community banking

Our community banking segment, which includes Royal Bank, consists of commercial and retail banking and equipment 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 and Royal Bank Leasing.  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 liens

At June 30, 2015, Royal Bank’s tax liens segment includes its 80% and 100% ownership interest in CSC and RTL, respectively. Our tax liens segment consisted 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 liens segment earns income based on interest rates (determined at auction) and penalties assigned by the municipality along with gains on sale of foreclosed properties. CSC has been liquidating its assets under an orderly, long term plan.  RTL ceased acquiring tax certificates at public auctions in 2010.

The following table presents selected financial information for reportable business segments for the three and six months ended June 30, 2015 and 2014.

	Three months ended  June 30, 2015
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	709,612	$	17,592	$	727,204
Total deposits	$	531,510	$	—	$	531,510
Interest income	$	6,980	$	91	$	7,071
Interest expense		1,378		213		1,591
Net interest income	$	5,602	$	(122)	$	5,480
(Credit) provision for loan and lease losses		(536)		(50)		(586)
Total non-interest income		868		415		1,283
Total non-interest expense		5,093		644		5,737
Income tax expense		—		—		—
Net income (loss)	$	1,913	$	(301)	$	1,612
Noncontrolling interest	$	183	$	(32)	$	151
Net income (loss) attributable to Royal Bancshares	$	1,730	$	(269)	$	1,461

	Three months ended  June 30, 2014
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	704,313	$	22,899	$	727,212
Total deposits	$	526,917	$	—	$	526,917
Interest income	$	6,864	$	345	$	7,209
Interest expense		1,343		279		1,622
Net interest income	$	5,521	$	66	$	5,587
(Credit) provision for loan and lease losses		(95)		20		(75)
Total non-interest income		466		350		816
Total non-interest expense		4,368		663		5,031
Income tax expense		—		—		—
Net income (loss)	$	1,714	$	(267)	$	1,447
Noncontrolling interest	$	111	$	(42)	$	69
Net income (loss) attributable to Royal Bancshares	$	1,603	$	(225)	$	1,378

	Six months ended June 30, 2015
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	709,612	$	17,592	$	727,204
Total deposits	$	531,510	$	—	$	531,510
Interest income	$	14,017	$	334	$	14,351
Interest expense		2,722		440		3,162
Net interest income	$	11,295	$	(106)	$	11,189
(Credit) provision for loan and lease losses		(1,197)		31		(1,166)
Total non-interest income		1,386		744		2,130
Total non-interest expense		9,948		1,164		11,112
Income tax expense		—		—		—
Net income (loss)	$	3,930	$	(557)	$	3,373
Noncontrolling interest	$	372	$	(51)	$	321
Net income (loss) attributable to Royal Bancshares	$	3,558	$	(506)	$	3,052

	Six months ended June 30, 2014
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	704,313	$	22,899	$	727,212
Total deposits	$	526,917	$	—	$	526,917
Interest income	$	13,660	$	700	$	14,360
Interest expense		2,663		584		3,247
Net interest income	$	10,997	$	116	$	11,113
(Credit) provision for loan and lease losses		(832)		118		(714)
Total non-interest income		1,032		556		1,588
Total non-interest expense		9,305		1,048		10,353
Income tax expense		—		—		—
Net income (loss)	$	3,556	$	(494)	$	3,062
Noncontrolling interest	$	268	$	(81)	$	187
Net income (loss) attributable to Royal Bancshares	$	3,288	$	(413)	$	2,875

Interest income earned by the community banking segment related to the tax liens segment was approximately $213,000 and $279,000 for the three month periods ended June 30, 2015 and 2014,  respectively and $440,000 and $584,000 for the six month periods ended June 30, 2015 and 2014, respectively.