10-Q

+

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC  20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the quarterly period ended:           September 30, 2015         

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from: to

Commission file number:  0-26366

ROYAL BANCSHARES OF PENNSYLVANIA, INC.

(Exact name of the registrant as specified in its charter)

PENNSYLVANIA	23-2812193
(State or other jurisdiction of incorporation or organization)	(IRS  Employer identification No.)

One Bala Plaza, Suite 522, 231 St. Asaph’s Road, Bala Cynwyd, PA 19004

(Address of principal Executive Offices)

(610)  668-4700

(Registrant’s telephone number, including area code)

 N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐

Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding twelve months (or for such shorter period that the registrant was required to submit and post such files).  Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐ (do not check if a smaller reporting company)	Smaller reporting company ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ☒

Applicable only to corporate issuers:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class A Common Stock	Outstanding at October  31, 2015
$2.00 par value	27,828,849

Class B Common Stock	Outstanding at October 31, 2015
$0.10 par value	1,928,289

TABLE OF CONTENTS

		PAGE
PART I	FINANCIAL STATEMENTS
Item 1	Financial Statements
	Consolidated Balance Sheets-unaudited	2
	Consolidated Statements of Income-unaudited	3
	Statements of Consolidated Comprehensive Income-unaudited	4
	Consolidated Statements of Changes in Shareholders’ Equity-unaudited	5
	Consolidated Statements of Cash Flows-unaudited	7
	Notes to Consolidated Financial Statement (unaudited)	9
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	47
Item 3	Quantitative and Qualitative Disclosures about Market Risk	78
Item 4	Controls and Procedures	78
PART II	OTHER INFORMATION	78
Item 1	Legal Proceedings	78
Item 1A	Risk Factors	79
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	79
Item 3	Defaults Upon Senior Securities	79
Item 4	Mine Safety Disclosures	79
Item 5	Other Information	79
Item 6	Exhibits	80
	SIGNATURES	81

1

PART I — FINANCIAL STATEMENTS

Item 1.Financial Statements

ROYAL BANCSHARES OF PENNSYLVANIA, INC. AND SUBSIDIARIES

Consolidated Balance Sheets-unaudited

	September 30,		December 31,
	2015		2014
ASSETS	(Dollars in thousands, except share data)
Cash and due from banks	$	14,711	$	9,642
Interest bearing deposits		9,506		21,148
Total cash and cash equivalents		24,217		30,790
Investment securities available for sale (“AFS”), at fair value		230,612		250,368
Other investment, at cost		2,250		2,250
Federal Home Loan Bank (“FHLB”) stock		2,545		2,622
Loans and leases (“LHFI”)		471,216		415,132
Less allowance for loan and lease losses		9,806		11,708
Net loans and leases		461,410		403,424
Bank owned life insurance		16,008		15,636
Accrued interest receivable		4,336		5,270
Other real estate owned (“OREO”), net		8,844		9,779
Premises and equipment, net		5,202		5,201
Other assets		6,487		7,213
Total assets	$	761,911	$	732,553
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Deposits
Non-interest bearing	$	76,949	$	73,665
Interest bearing		476,815		456,760
Total deposits		553,764		530,425
Short-term borrowings		9,000		—
Long-term borrowings		82,084		92,426
Subordinated debentures		25,774		25,774
Accrued interest payable		2,168		726
Other liabilities		21,375		20,596
Total liabilities		694,165		669,947
Shareholders’ equity
Royal Bancshares of Pennsylvania, Inc. equity:
Preferred stock, Series A perpetual, $1,000 liquidation value, 500,000 shares authorized, 18,856 shares outstanding		18,856		18,856
Class A common stock, par value $2.00 per share, authorized 40,000,000 shares; issued, 28,200,269		56,400		56,400
Class B common stock, par value $0.10 per share; authorized 3,000,000 shares; issued, 1,931,692		193		193
Additional paid in capital		110,502		110,697
Accumulated deficit		(111,278)		(115,864)
Accumulated other comprehensive loss		(2,120)		(2,492)
Treasury stock - at cost, shares of Class A, 377,771 and 398,365 at September 30, 2015 and December 31, 2014, respectively		(5,283)		(5,571)
Total Royal Bancshares of Pennsylvania, Inc. shareholders’ equity		67,270		62,219
Noncontrolling interest		476		387
Total equity		67,746		62,606
Total liabilities and shareholders’ equity	$	761,911	$	732,553

The accompanying notes are an integral part of these consolidated financial statements.

2

ROYAL BANCSHARES OF PENNSYLVANIA, INC. AND SUBSIDIARIES

Consolidated Statements of Income-unaudited

	For the three months ended				For the nine months ended
	September 30,				September 30,
(In thousands, except per share data)	2015		2014		2015		2014
Interest Income
Loans and leases, including fees	$	6,456	$	5,451	$	17,878	$	15,925
Investment securities		1,334		1,734		4,250		5,610
Deposits in banks		8		6		21		16
Total Interest Income		7,798		7,191		22,149		21,551
Interest Expense
Deposits		968		900		2,796		2,712
Short-term borrowings		5		1		5		13
Long-term borrowings		663		722		1,997		2,145
Total Interest Expense		1,636		1,623		4,798		4,870
Net Interest Income		6,162		5,568		17,351		16,681
Credit for loan and lease losses		(216)		(51)		(1,382)		(765)
Net Interest Income after Credit for Loan and Lease Losses		6,378		5,619		18,733		17,446
Non-interest Income
Service charges and fees		298		248		832		779
Net gains on sales of loans and leases		—		80		—		223
Net gains on sales of other real estate owned		123		173		769		633
Income from bank owned life insurance		124		129		372		384
Gains on sales of premises and equipment		—		107		—		107
Net gains on the sale of AFS investment securities		80		238		652		330
Other income		75		229		205		336
Total Non-interest Income		700		1,204		2,830		2,792
Non-interest Expense
Employee salaries and benefits		2,655		2,704		7,825		7,505
Occupancy and equipment		736		614		2,212		1,865
Professional and legal fees		380		570		1,314		1,562
OREO expenses and impairment		386		154		1,140		892
Pennsylvania shares tax expense		113		138		338		406
FDIC and state assessments		158		261		533		770
Communications and data processing		214		166		607		485
(Credit) provision for credit losses on off-balance sheet credit exposures		(68)		14		282		5
Directors’ fees		114		129		349		360
Marketing and advertising		38		86		185		325
Insurance		78		89		244		289
Loan collection expenses		138		70		273		227
Other operating expenses		423		380		1,175		1,037
Total Non-interest Expense		5,365		5,375		16,477		15,728
Income Before Tax Expense		1,713		1,448		5,086		4,510
Income Tax Expense		—		—		—		—
Net Income	$	1,713	$	1,448	$	5,086	$	4,510
Less Net Income Attributable to Noncontrolling Interest	$	179	$	25	$	500	$	212
Net Income Attributable to Royal Bancshares of Pennsylvania, Inc.	$	1,534	$	1,423	$	4,586	$	4,298
Less Preferred Stock Series A Accumulated Dividend and Accretion	$	434	$	152	$	1,287	$	1,644
Net Income Available to Common Shareholders	$	1,100	$	1,271	$	3,299	$	2,654
Per Common Share Data:
Net Income — Basic and Diluted	$	0.04	$	0.05	$	0.11	$	0.15

The accompanying notes are an integral part of these consolidated financial statements.

3

ROYAL BANCSHARES OF PENNSYLVANIA, INC. AND SUBSIDIARIES

Statements of Consolidated Comprehensive Income-unaudited

	For the three months ended				For the nine months ended
	September 30,				September 30,
(In thousands)	2015		2014		2015		2014
Net income	$	1,713	$	1,448	$	5,086	$	4,510
Other comprehensive income (loss), net of tax
Unrealized gains (losses) on investment securities:
Unrealized holding gains (losses) arising during period, net of tax		1,190		(80)		1,320		4,469
Less reclassification adjustment for gains realized in net income, net of tax (1)		52		157		430		218
Unrealized gains (losses) on investment securities		1,138		(237)		890		4,251
Unrecognized benefit obligation:
Reclassification adjustment for amortization, net of tax (2)		(17)		(18)		(51)		(56)
Unrecognized benefit obligation expense		(17)		(18)		(51)		(56)
Unrealized loss on derivative instrument, net of tax		(282)		—		(467)		—
Other comprehensive income (loss)		839		(219)		372		4,307
Comprehensive income		2,552		1,229		5,458		8,817
Less net income attributable to noncontrolling interest		179		25		500		212
Comprehensive income attributable to Royal Bancshares of Pennsylvania, Inc.	$	2,373	$	1,204	$	4,958	$	8,605

1. Gross amounts are included in net gains on the sale of AFS investment securities on the Consolidated Statements of Income. See Note 15. Comprehensive Income (Loss).

2. Gross amounts are included in salaries and benefits on the Consolidated Statements of Income.See Note 15. Comprehensive Income (Loss).

The accompanying notes are an integral part of these consolidated financial statements.

4

ROYAL BANCSHARES OF PENNSYLVANIA, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Shareholders’ Equity

Nine months endedSeptember 30, 2015-unaudited

													Accumulated
	Preferred								Additional				other						Total
	stock		Class A common stock			Class B common stock			paid in		Accumulated		comprehensive		Treasury		Noncontrolling		Shareholders’
(In thousands, except share data)	Series A		Shares	Amount		Shares	Amount		capital		deficit		loss		stock		Interest		Equity
Balance January 1, 2015	$	18,856	28,200	$	56,400	1,932	$	193	$	110,697	$	(115,864)	$	(2,492)	$	(5,571)	$	387	$	62,606
Net income												4,586						500		5,086
Other comprehensive income, net of reclassifications and taxes														372						372
Distributions to noncontrolling interests																		(411)		(411)
Treasury shares issued for compensation (20,594 shares)										(252)						288				36
Stock option expense										57										57
Balance September 30,  2015	$	18,856	28,200	$	56,400	1,932	$	193	$	110,502	$	(111,278)	$	(2,120)	$	(5,283)	$	476	$	67,746

The accompanying notes are an integral part of these consolidated financial statements.

5

ROYAL BANCSHARES OF PENNSYLVANIA, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Shareholders’ Equity

Nine months endedSeptember 30,  2014-unaudited

													Accumulated
	Preferred								Additional				other						Total
	stock		Class A common stock			Class B common stock			paid in		Accumulated		comprehensive		Treasury		Noncontrolling		Shareholders’
(In thousands, except share data)	Series A		Shares	Amount		Shares	Amount		capital		deficit		loss		stock		Interest		Equity
Balance January 1, 2014	$	29,950	11,470	$	22,940	1,987	$	199	$	127,299	$	(120,396)	$	(6,122)	$	(6,336)	$	271	$	47,805
Net income												4,298						212		4,510
Other comprehensive income, net of reclassifications and taxes														4,307						4,307
Distributions to noncontrolling interests																		(208)		(208)
Common stock conversion from Class B to Class A			64		127	(55)		(6)				(121)								—
Redemption of 11,551 shares of preferred stock		(11,551)								(2,392)										(13,943)
Accretion of discount on preferred stock		457										(457)								—
Common shares issued			16,666		33,333					(13,333)										20,000
Treasury shares issued for compensation (25,498 shares)										(463)						541				78
Other adjustment to additional paid in capital										(28)										(28)
Stock option expense										12										12
Balance September 30,  2014	$	18,856	28,200	$	56,400	1,932	$	193	$	111,095	$	(116,676)	$	(1,815)	$	(5,795)	$	275	$	62,533

The accompanying notes are an integral part of these consolidated financial statements.

6

ROYAL BANCSHARES OF PENNSYLVANIA, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows-unaudited

Nine months endedSeptember 30,

(In thousands)	2015		2014
Cash flows from operating activities:
Net income attributable to Royal Bancshares of Pennsylvania, Inc.	$	4,586	$	4,298
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		459		348
Stock compensation expense		57		12
Credit for loan and lease losses		(1,382)		(765)
Impairment charge for OREO		659		399
Net amortization of AFS investment securities		1,164		1,495
Net accretion on loans		(471)		(303)
Net gains on sales of premises and equipment		—		(107)
Gains on sales of loans and leases		—		(223)
Net gains on sales of OREO		(769)		(633)
Net gains on sales of investment securities		(652)		(330)
Income from bank owned life insurance		(372)		(384)
Changes in assets and liabilities:
Decrease in accrued interest receivable		934		1,500
Decrease (increase) in other assets		275		(16)
Increase in accrued interest payable		1,442		1,340
Increase (decrease) in other liabilities		779		(1,334)
Net cash provided by operating activities		6,709		5,297
Cash flows from investing activities:
Proceeds from maturities, calls and paydowns of AFS investment securities		28,084		33,272
Proceeds from sales of AFS investment securities		33,653		55,290
Purchase of AFS investment securities		(41,134)		(40,150)
Redemption of Federal Home Loan Bank stock		77		526
Proceeds from sales of loans and leases		—		3,838
Net increase in loans		(59,106)		(37,001)
Additions to OREO		(418)		(1,292)
Proceeds from the sales of premises and equipment		—		303
Purchase of premises and equipment		(460)		(872)
Proceeds from sales of OREO		4,436		3,548
Net cash (used in) provided by investing activities		(34,868)		17,462

7

ROYAL BANCSHARES OF PENNSYLVANIA, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows-unaudited (continued)

Nine months endedSeptember 30,

	2015		2014
Cash flows from financing activities:
Increase in demand and NOW accounts	$	19,915	$	3,854
Increase (decrease) in money market and savings accounts		18,079		(952)
Decrease in certificates of deposit		(14,655)		(16,080)
Proceeds from short-term borrowings		9,000		—
Repayments of short-term borrowings		—		(10,000)
Repayments of long-term borrowings		(10,342)		(341)
Distributions to noncontrolling interest		(411)		(208)
Issuance of common stock, net		—		20,000
Redemption of preferred stock		—		(13,943)
Net cash provided by (used in) financing activities		21,586		(17,670)
Net (decrease) increase in cash and cash equivalents		(6,573)		5,089
Cash and cash equivalents at the beginning of the period		30,790		16,844
Cash and cash equivalents at the end of the period	$	24,217	$	21,933
Supplemental Disclosure:
Interest paid	$	3,356	$	3,530
Transfers from loans to OREO	$	3,968	$	1,998
Transfers from OREO to loans	$	995	$	—
Transfers to loans held for sale	$	—	$	3,187

The accompanying notes are an integral part of these consolidated financial statements.

8

ROYAL BANCSHARES OF PENNSYLVANIA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1.Summary of Significant Accounting Policies

Basis of Financial Presentation

The accompanying unaudited consolidated financial statements include the accounts of Royal Bancshares of Pennsylvania, Inc. (“Royal Bancshares”, the “Company”, “We” or “Our”) and its wholly-owned subsidiaries, Royal Investments of Delaware, Inc., including Royal Investments of Delaware, Inc.’s wholly owned subsidiary, Royal Preferred, LLC, and Royal Bank America (“Royal Bank”), including Royal Bank’s subsidiaries, Royal Real Estate of Pennsylvania, Inc., Royal Investments America, LLC, RBA Property LLC, Narberth Property Acquisition LLC, Rio Marina LLC, and Royal Tax Lien Services, LLC (“RTL”).  Royal Bank also has an 80% and 60% ownership interest in Crusader Servicing Corporation (“CSC”) and Royal Bank America Leasing, LP, respectively. The two Delaware trusts, Royal Bancshares Capital Trust I and Royal Bancshares Capital Trust II are not consolidated per requirements under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “Consolidation” (“ASC Topic 810”). These consolidated financial statements reflect the historical information of the Company. All significant intercompany transactions and balances have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Applications of the principles in our preparation of the consolidated financial statements in conformity with U.S. GAAP require management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes.  These estimates and assumptions are based on information available as of the date of the consolidated financial statements; therefore, actual results could differ from those estimates. The interim financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) that are, in the opinion of management, necessary to present a fair statement of the results for the interim periods.  These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014.  The results of operations for the three and ninemonth periods ended September 30, 2015 are not necessarily indicative of the results to be expected for the full year.

Reclassifications

Certain items in the 2014 consolidated financial statements and accompanying notes have been reclassified to conform to the current year’s presentation format.  There was no effect on net income for the periods presented herein as a result of the reclassification.

Accounting Policies Recently Adopted and Pending Accounting Pronouncements

In January 2014, FASB issued ASU No. 2014-04, Receivables (Topic 310): Troubled Debt Restructurings by Creditors (Subtopic 310-40) Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (“ASU 2014-04”). ASC Topic 310 includes guidance that states that a creditor should reclassify a collateralized mortgage loan such that the loan should be derecognized and the collateral asset recognized when it determines that there has been in substance a repossession or foreclosure by the creditor, that is, the creditor receives physical possession of the debtor’s assets regardless of whether formal foreclosure proceedings take place. However, the terms in substance a repossession or foreclosure and physical possession are not defined in the accounting literature and there is diversity about when a creditor should derecognize the loan receivable and recognize the real estate property. That diversity has been highlighted by recent extended foreclosure timelines and processes related to residential real estate properties.

The objectives in ASU 2014-04 are intended to reduce diversity in practice by clarifying when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan should be derecognized and the real estate

9

property recognized. Holding foreclosed real estate property presents different operational and economic risk to creditors compared with holding an impaired loan. Therefore, consistency in the timing of loan derecognition and presentation of foreclosed real estate properties is of qualitative significance to users of the creditor’s financial statements. Additionally, the disclosure of the amount of foreclosed residential real estate properties and of the recorded investment in consumer mortgage loans secured by residential real estate properties that are in the process of foreclosure is expected to provide decision-useful information to many users of the creditor’s financial statements. The amendments in ASU 2014-04 are effective for public companies for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. An entity can elect to adopt the amendments in ASU 2014-04 using either a modified retrospective transition method or a prospective transition method.  Early adoption was permitted. The adoption of ASU 2014-04 did not have a significant impact on the Company’s consolidated financial statements.

In June 2014, the FASB issued ASU No. 2014-12,  Compensation – Stock Compensation (Topic 718) - Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (“ASU 2014-12”).  The amendments in ASU 2014-12 require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718, Compensation – Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. The amendments in ASU 2014-12 are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted.Entities may apply the amendments in this ASU either: (a) prospectively to all awards granted or modified after the effective date; or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The adoption of ASU 2014-12 is not expected to have a significant impact on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03,  Interest—Imputation of Interest (Subtopic 835-30)Simplifying the Presentation of Debt Issuance Costs(“ASU 2015-03”).The amendments in ASU 2015-03 require that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. ASU 2015-03 is consistent with FASB Concepts Statement No.6, Elements of Financial Statements, which states that debt issuance costs are similar to a debt discount and in effect reduce the proceeds of borrowing, thereby increasing the effective interest rate.The recognition and measurement guidance for debt issuance costs would not be affected by the amendments in this ASU. For public business entities, the amendments in ASU 2015-03are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years.An entity should apply the new guidance on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance.Earlier adoption is permitted for financial statements that have not been previously issued.  The adoption of ASU 2015-03is not expected to have a material impact on the Company’s financial condition and results of operations.

In June 2015, the FASB issued ASU 2015-10, Technical Corrections and Improvements (“ASU 2015-10”). The amendments in ASU 2015-10affect a wide variety of Topics in the Codification and will apply to all reporting entities within the scope of the affected accounting guidance. ASU 2015-10includes amendments to clarify the Codification,

correct unintended application of guidance, or make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. Additionally, some of the amendments will make the Codification easier to understand and easier to apply by eliminating inconsistencies, providing needed clarifications, and improving the presentation of guidance in the Codification. The amendments in ASU 2015-10 are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Earlier adoption is permitted , including adoption in an interim period.  All other

10

amendments in ASU 2015-10 are effective upon the issuance of ASU 2015-10.  The adoption of ASU 2015-10 is not expected to have a material impact on the Company’s financial condition and results of operations.

Note 2.Regulatory Matters and Significant Risks or Uncertainties

Federal Reserve Agreement

In March 2010, we agreed to enter into a written agreement (the “Federal Reserve Agreement”) with the Federal Reserve Bank of Philadelphia (the “Federal Reserve Bank”).  In July 2013, the Board of Governors of the Federal Reserve System terminated the enforcement action under the Federal Reserve Agreement, and it was replaced with an informal non-public agreement, a memorandum of understanding (“MOU”), with the Federal Reserve Bank, effective July 17, 2013.  Included in this MOU are certain continued reporting requirements and a requirement that we receive the prior approval of the Federal Reserve Bank and the Director of Banking Supervision and Regulation of the Board of Governors of the Federal Reserve System prior to declaring or paying any dividends on our capital stock, making interest payments related to our outstanding trust preferred securities or subordinate securities, incurring or guaranteeing certain debt with an original maturity date greater than one year, and purchasing or redeeming any shares of stock. The MOU will remain in effect until stayed, modified, terminated or suspended in writing by the Federal Reserve Bank.

Dividend and Interest Restrictions

Due to the MOU, our ability to obtain lines of credit, to receive attractive collateral treatment from funding sources, and to pursue all attractive funding alternatives in this current low interest rate environment could be impacted and thereby limit liquidity alternatives. On August 13, 2009, the Company’s Board suspended the regular quarterly cash dividends on the 30,407 shares of Series A Preferred Stock.  We made the decision to suspend the preferred cash dividends in order to support the liquidity position of Royal Bank.  The dividend in arrears on the outstanding 18,856 shares of Series A preferred stock is approximately $8.3 million and includes additional dividends on arrearages.  In the event we declared the preferred dividend in arrears, our equity and capital ratios would be negatively affected; however, they would remain above the required minimum ratios.

Under the MOU, we may not declare or pay any dividends on our capital stock or make interest payments related to our outstanding trust preferred securities or subordinate securities without the prior written approval of the Federal Reserve Bank and the Director of the Division of Banking Supervision and Regulation of the Board of Governors of the Federal Reserve System. During the first three quarters of 2015, we received approval from the Federal Reserve Bank and paid the respective quarterly interest payments on the trust preferred securities in March, June, and September 2015.

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Note 3.Investment Securities

The carrying value and fair value of investment securities available-for-sale (“AFS”) at September 30, 2015 and December 31, 2014 are as follows:

As of September 30, 2015			Included in OCI*
			Gross		Gross
	Amortized		unrealized		unrealized
(In thousands)	cost		gains		losses		Fair value
U.S. government agencies	$	26,126	$	20	$	(239)	$	25,907
Mortgage-backed securities-residential		14,184		249		(15)		14,418
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		170,111		3,122		(488)		172,745
Non-agency		2,910		25		(8)		2,927
Corporate bonds		1,500		20		—		1,520
Municipal bonds		9,926		165		(19)		10,072
Other securities		2,198		823		(24)		2,997
Common stocks		26		—		—		26
Total available for sale	$	226,981	$	4,424	$	(793)	$	230,612

As of December 31, 2014			Included in OCI*
			Gross		Gross
	Amortized		unrealized		unrealized
(In thousands)	cost		gains		losses		Fair value
U.S. government agencies	$	26,123	$	—	$	(834)	$	25,289
Mortgage-backed securities-residential		22,073		375		(61)		22,387
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		167,711		2,350		(1,084)		168,977
Non-agency		3,738		7		(14)		3,731
Corporate bonds		15,617		144		(34)		15,727
Municipal bonds		10,117		91		(35)		10,173
Other securities		2,684		1,350		—		4,034
Common stocks		33		17		—		50
Total available for sale	$	248,096	$	4,334	$	(2,062)	$	250,368

*Other comprehensive income

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The amortized cost and fair value of investment securities at September 30, 2015, by contractual maturity, are shown below.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	As of September 30, 2015
	Amortized
(In thousands)	cost		Fair value
Within 1 year	$	—	$	—
After 1 but within 5 years		8,085		8,080
After 5 but within 10 years		20,354		20,382
After 10 years		9,113		9,037
Mortgage-backed securities-residential		14,184		14,418
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		170,111		172,745
Non-agency		2,910		2,927
Total available for sale debt securities		224,757		227,589
No contractual maturity		2,224		3,023
Total available for sale securities	$	226,981	$	230,612

Proceeds from the sales of AFS investments during the three months ended September 30, 2015 and 2014 were $9.2million and $19.3 million, respectively. Proceeds from the sales of AFS investments during the nine months ended September 30, 2015 and 2014 were $33.7 million and $55.3 million, respectively. The following table summarizes gross realized gains and losses on the sale of securities recognized in earnings in the periods indicated:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(In thousands)	2015		2014		2015		2014
Gross realized gains	$	104	$	446	$	676	$	1,143
Gross realized losses		(24)		(208)		(24)		(813)
Net realized gains	$	80	$	238	$	652	$	330

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The tables below indicate the length of time individual AFS securities have been in a continuous unrealized loss position at September 30, 2015 and December 31, 2014:

September 30, 2015	Less than 12 months					12 months or longer					Total
			Gross		Number			Gross		Number			Gross		Number
			unrealized		of			unrealized		of			unrealized		of
(In thousands)	Fair value		losses		positions	Fair value		losses		positions	Fair value		losses		positions
U.S. government agencies	$	—	$	—	—	$	19,149	$	(239)	6	$	19,149	$	(239)	6
Mortgage-backed securities-residential		—		—	—		2,691		(15)	1		2,691		(15)	1
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		15,253		(13)	5		26,704		(475)	9		41,957		(488)	14
Non-agency		1,184		(8)	1		—		—	—		1,184		(8)	1
Municipal bonds		3,557		(19)	4		—		—	—		3,557		(19)	4
Other securities		235		(24)	1		—		—	—		235		(24)	1
Total available for sale	$	20,229	$	(64)	11	$	48,544	$	(729)	16	$	68,773	$	(793)	27

December 31, 2014	Less than 12 months					12 months or longer					Total
			Gross		Number			Gross		Number			Gross		Number
			unrealized		of			unrealized		of			unrealized		of
(In thousands)	Fair value		losses		positions	Fair value		losses		positions	Fair value		losses		positions
U.S. government agencies	$	—	$	—	—	$	25,289	$	(834)	8	$	25,289	$	(834)	8
Mortgage-backed securities-residential		—		—	—		8,913		(61)	3		8,913		(61)	3
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		36,757		(204)	12		38,798		(880)	12		75,555		(1,084)	24
Non-agency		1,432		(14)	1		—		—	—		1,432		(14)	1
Corporate bonds		8,054		(25)	5		991		(9)	1		9,045		(34)	6
Municipal bonds		1,639		(7)	2		3,079		(28)	4		4,718		(35)	6
Total available for sale	$	47,882	$	(250)	20	$	77,070	$	(1,812)	28	$	124,952	$	(2,062)	48

We evaluate declines in the fair value of securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis.  We assess whether OTTI is present when the fair value of a security is less than its amortized cost.  Under ASC Topic 320, OTTI is considered to have occurred with respect to debt securities (1) if an entity intends to sell the security; (2) if it is more likely than not an entity will be required to sell the security before recovery of its amortized cost basis; or (3) the present value of the expected cash flows is not sufficient to recover the entire amortized cost basis. We did not record OTTI charges to earnings during the first threequarters of 2015 and 2014.  There was no credit-related impairment losses on debt securities held at September 30, 2015September 30, 2014 for which a portion of OTTI was recognized in other comprehensive income. 

For all debt security types discussed below the fair value is based on prices provided by brokers and safekeeping custodians.

U.S. government-sponsored agencies (“U.S. Agency”):  As of September 30, 2015, we had six U.S. Agency securities with a fair value of $19.1 million and gross unrealized losses of $239,000.  All six bonds had been in an unrealized loss position for twelve months or longer at September 30, 2015. Management believes that the unrealized losses on these debt securities are a function of changes in investment spreads.  Management expects to recover the entire amortized cost basis of these securities. We do not intend to sell these securities before recovery of their cost basis and have not determined

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that it is not more likely than not that we will be required to sell these securities before recovery of their cost basis.  Therefore, management has determined that these securities are not other-than-temporarily impaired at September 30, 2015.

Mortgage-backed securities issued by U.S. government agencies and U.S. government sponsored enterprises: As of September 30, 2015, we had one mortgage-backed security with a fair value of $2.7 million and a gross unrealized loss of $15,000.  This mortgage-backed security has been in an unrealized loss position for twelve months or longer. The unrealized loss is attributable to a combination of factors, including relative changes in interest rates since the time of purchase. The contractual cash flows for this security is guaranteed by a U.S. government-sponsored enterprise. Based on its assessment of these factors, management believes that the unrealized loss on this debt security is a function of changes in investment spreads and interest rate movements and not as a result of changes in credit quality.  Management expects to recover the entire amortized cost basis of this security. We do not intend to sell this security before recovery of its cost basis and have not determined that it is not more likely than not that we will be required to sell this security before recovery of its cost basis.  Therefore, management has determined that this security is not other-than-temporarily impaired at September 30, 2015.

U.S. government issued or sponsored collateralized mortgage obligations (“Agency CMOs”):  As of September 30, 2015, we had 14Agency CMOs with a fair value of $42.0 million and gross unrealized losses of $488,000.  Nine of the Agency CMOs have been in an unrealized loss position for twelve months or longer and the remaining fiveAgency CMOs have been in an unrealized loss position for less than twelve months.  The unrealized loss is attributable to a combination of factors, including relative changes in interest rates since the time of purchase.  The contractual cash flows for these securities are guaranteed by U.S. government agencies and U.S. government-sponsored enterprises. Based on its assessment of these factors, management believes that the unrealized losses on these debt securities are a function of changes in investment spreads and interest rate movements and not as a result of changes in credit quality.  Management expects to recover the entire amortized cost basis of these securities. We do not intend to sell these securities before recovery of their cost basis and have not determined that it is not more likely than not that we will be required to sell these securities before recovery of their cost basis.  Therefore, management has determined that these securities are not other-than-temporarily impaired at September 30, 2015.

Non-agency collateralized mortgage obligations (“Non-agency CMOs”):  As of September 30, 2015, the Company had one non-agency CMO with a fair value of $1.2 million and a gross unrealized loss of $8,000.  The bond has been in an unrealized loss position for less than twelve months.  The Company does not intend to sell this security before recovery of its cost basis, and it is not more likely than not that the Company be required to sell this security before recovery of its cost basis.  Therefore, management has determined that this security is not other-than-temporarily impaired at September 30, 2015.

Corporate bonds:  As of September 30, 2015, we had two corporate bonds with a fair value of $1.5 million and a  gross unrealized gain of $20,000. 

Municipal bonds:  As of September 30, 2015, we had fourmunicipal bonds with a fair value $3.6 million and gross unrealized losses of $19,000.  All four of the municipal bonds have been in an unrealized loss position for less than twelve months. Because we do not intend to sell the bonds and it is not more likely than not that we will be required to sell the bonds before recovery of their amortized cost basis, which may be maturity, we do not consider the bonds to be other-than-temporarily impaired at September 30, 2015.

Other securities:  As of September 30, 2015, we had five investments in private equity funds which were predominantly invested in real estate.  In determining whether or not OTTI exists, we review the funds’ financials, asset values, and near-term projections.  At September 30, 2015, one of the private equity fund investments had a fair value of $235,000 and an unrealized loss of $24,000.  OTTI charges were recorded in a prior period on this fund.  Management concluded that there was no additional impairment on this investment as of September 30, 2015.

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We will continue to monitor these investments to determine if the discounted cash flow analysis, continued negative trends, market valuations or credit defaults result in impairment that is other than temporary.

Note 4.Loans and Leases

Major classifications of loans are as follows:

	September 30,		December 31,
(In thousands)	2015		2014
Commercial real estate	$	210,883	$	175,038
Construction and land development		38,864		45,662
Commercial and industrial		82,414		76,489
Multi-family		15,222		13,823
Residential real estate		54,025		42,992
Leases		61,954		51,583
Tax certificates		5,294		7,191
Consumer		2,560		2,354
Total loans, net of unearned income	$	471,216	$	415,132

We use a nine point grading risk classification system commonly used in the financial services industry as the credit quality indicator.  The first four classifications are rated Pass.  The riskier classifications include Pass-Watch, Special Mention, Substandard, Doubtful and Loss. The risk rating is related to the underlying credit quality and probability of default.  These risk ratings are used in the calculation of the allowance for loan and lease losses.

· Pass: includes credits that demonstrate a low probability of default;

· Pass-watch: a classification which includes currently performing credits that are beginning to demonstrate above average risk through declining earnings, strained cash flows, increased leverage and/or weakening market fundamentals. This class may also include new loan originations which warrant approval but may contain certain risks that require closer than usual monitoring and supervision, such as construction loans;

· Special mention: includes credits that have potential weaknesses that if left uncorrected could weaken the credit or result in inadequate protection of our position at some future date. While potentially weak, credits in this classification are marginally acceptable and loss of principal or interest is not anticipated;

· Substandard accrual: includes credits that exhibit a well-defined weakness which currently jeopardizes the repayment of debt and liquidation of collateral even though they are currently performing. These credits are characterized by the distinct possibility that we may incur a loss in the future if these weaknesses are not corrected;

· Non-accrual (substandard non-accrual, doubtful, loss): includes credits that demonstrate serious problems to the point that it is probable that interest and principal will not be collected according to the contractual terms of the loan agreement.

All loans are assigned an initial loan risk rating by the Chief Credit Officer (“CCO”).  The initial loan risk rating is approved by another member of executive management or by the appropriate loan committee approving the loan request. From time to time, and at the general direction of any of the various loan committees, the ratings may be changed based on the findings of that committee. Items considered in assigning ratings include the financial strength of the borrower and/or guarantors, the type of collateral, the collateral lien position, the type of loan and loan structure, any potential risk inherent in the specific loan type, higher than normal monitoring of the loan or any other factor deemed appropriate by

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any of the various committees for changing the rating of the loan. Any such change in rating is reflected in the minutes of that committee.

The following tables present risk ratings for each loan portfolio classification at September 30, 2015 and December 31, 2014.

As of September 30, 2015
(In thousands)	Pass		Pass-Watch		Special Mention		Substandard		Non-accrual		Total
Commercial real estate	$	172,882	$	35,298	$	1,340	$	312	$	1,051	$	210,883
Construction and land development		5,305		33,269		—		—		290		38,864
Commercial and industrial		62,930		14,668		1,449		2,470		897		82,414
Multi-family		14,439		278		505		—		—		15,222
Residential real estate		53,107		—		—		—		918		54,025
Leases		60,576		534		108		—		736		61,954
Tax certificates		4,088		—		—		—		1,206		5,294
Consumer		2,467		93		—		—		—		2,560
Total loans, net of unearned income	$	375,794	$	84,140	$	3,402	$	2,782	$	5,098	$	471,216

As of December 31, 2014
(In thousands)	Pass		Pass-Watch		Special Mention		Substandard		Non-accrual		Total
Commercial real estate	$	140,045	$	27,229	$	2,512	$	1,568	$	3,684	$	175,038
Construction and land development		12,861		32,165		—		—		636		45,662
Commercial and industrial		60,500		8,527		1,608		3,337		2,517		76,489
Multi-family		12,995		310		518		—		—		13,823
Residential real estate		42,033		—		—		—		959		42,992
Leases		51,113		152		1		—		317		51,583
Tax certificates		5,491		—		—		—		1,700		7,191
Consumer		2,194		160		—		—		—		2,354
Total loans, net of unearned income	$	327,232	$	68,543	$	4,639	$	4,905	$	9,813	$	415,132

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The following tables present an aging analysis of past due payments for each loan portfolio classification at September 30, 2015 and December 31, 2014.

As of September 30, 2015	30-59 Days		60-89 Days		Accruing
(In thousands)	Past Due		Past Due		90+ Days		Non-accrual		Current		Total
Commercial real estate	$	—	$	983	$	—	$	1,051	$	208,849	$	210,883
Construction and land development		—		—		—		290		38,574		38,864
Commercial and industrial		657		191		—		897		80,669		82,414
Multi-family		—		—		—		—		15,222		15,222
Residential real estate		524		112		—		918		52,471		54,025
Leases		534		108		—		736		60,576		61,954
Tax certificates		—		—		—		1,206		4,088		5,294
Consumer		—		—		—		—		2,560		2,560
Total loans, net of unearned income	$	1,715	$	1,394	$	—	$	5,098	$	463,009	$	471,216

As of December 31, 2014	30-59 Days		60-89 Days		Accruing
(In thousands)	Past Due		Past Due		90+ Days		Non-accrual		Current		Total
Commercial real estate	$	311	$	533	$	—	$	3,684	$	170,510	$	175,038
Construction and land development		—		—		—		636		45,026		45,662
Commercial and industrial		92		449		—		2,517		73,431		76,489
Multi-family		—		—		—		—		13,823		13,823
Residential real estate		165		162		—		959		41,706		42,992
Leases		152		1		—		317		51,113		51,583
Tax certificates		—		—		—		1,700		5,491		7,191
Consumer		—		—		—		—		2,354		2,354
Total loans, net of unearned income	$	720	$	1,145	$	—	$	9,813	$	403,454	$	415,132

If interest had accrued on non-accrual loans, such income would have been approximately $142,000 and $539,000 for the three months and nine months ended September 30, 2015, respectively, and $290,000 and $830,000 for the three and nine months ended September 30, 2014, respectively.

Impaired Loans

Total cash collected on impaired loans during the nine months endedSeptember 30, 2015 and 2014 was $5.9 million and $5.0 million respectively, of which $4.8 million and $4.5 million was credited to the principal balance outstanding on such loans, respectively.

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Troubled Debt Restructurings (“TDRs”)

The following table details our TDRs that are on an accrual status and non-accrual status at September 30, 2015 and December 31, 2014.

	As of September 30, 2015
				Non-
	Number of	Accrual		Accrual
(In thousands)	loans	Status		Status		Total TDRs
Commercial real estate	3	$	2,818	$	—	$	2,818
Construction and land development	1		—		95		95
Commercial and industrial	4		2,722		—		2,722
Residential real estate	1		—		290		290
Total	9	$	5,540	$	385	$	5,925

	As of December 31, 2014
				Non-
	Number of	Accrual		Accrual
(In thousands)	loans	Status		Status		Total TDRs
Commercial real estate	3	$	2,883	$	—	$	2,883
Construction and land development	3		47		636		683
Commercial and industrial	5		3,643		1,448		5,091
Residential real estate	1		—		102		102
Total	12	$	6,573	$	2,186	$	8,759

At September 30, 2015, the one construction and land development TDR, cited in the above table, was not in compliance with its restructured terms due to payment defaults. We did not classify any loan modifications as TDRs during the first three quarters of 2015. The following table presents restructured loans that occurred during the nine months endedSeptember 30, 2014.

	Modifications by type for the nine months ended September 30, 2014
												Pre-		Post-
												Modification		Modification
												Outstanding		Outstanding
	Number of							Combination				Recorded		Recorded
(Dollars in thousands)	loans	Rate		Term		Payment		of types		Total		Investment		Investment
Commercial and industrial	3	$	—	$	233	$	—	$	28	$	261	$	262	$	262
Total	3	$	—	$	233	$	—	$	28	$	261	$	262	$	262

We may obtain physical possession of real estate collateralizing residential mortgage loans or home equity loans through or in lieu of, foreclosure.  As of September 30, 2015, we have a foreclosed residential real estate property with a carrying value of $40,000 as a result of physical possession.  In addition, as of September 30, 2015, we had residential mortgage loans with a carrying value of $228,000 collateralized by residential real estate property for which formal foreclosure proceedings were in process.

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Note 5.Allowance for Loan and Lease Losses

The following tables present the detail of the allowance and the loan portfolio disaggregated by loan portfolio classification as of September 30, 2015, December 31, 2014 and September 30, 2014.

Allowance for Loan and Lease Losses

As of and for the three months ended September 30, 2015

			Construction
	Commercial		and land		Commercial		Multi-		Residential				Tax
(In thousands)	real estate		development		and industrial		family		real estate		Leases		certificates		Consumer		Unallocated		Total
Beginning balance	$	4,208	$	1,358	$	1,705	$	300	$	584	$	1,405	$	317	$	35	$	124	$	10,036
Charge-offs		—		(39)		—		—		—		(138)		—		—		—		(177)
Recoveries		—		150		4		—		5		4		—		—		—		163
(Credit) provision		(344)		133		(301)		(113)		67		316		38		(6)		(6)		(216)
Ending balance	$	3,864	$	1,602	$	1,408	$	187	$	656	$	1,587	$	355	$	29	$	118	$	9,806
Ending balance: related to loans individually evaluated for impairment	$	—	$	145	$	—	$	—	$	28	$	131	$	18	$	—	$	—	$	322
Ending balance: related to loans collectively evaluated for impairment	$	3,864	$	1,457	$	1,408	$	187	$	628	$	1,456	$	337	$	29	$	118	$	9,484

Allowance for Loan and Lease Losses

As of and for the nine months endedSeptember 30, 2015

			Construction
	Commercial		and land		Commercial		Multi-		Residential				Tax
(In thousands)	real estate		development		and industrial		family		real estate		Leases		certificates		Consumer		Unallocated		Total
Beginning balance	$	4,452	$	2,292	$	1,780	$	285	$	616	$	1,429	$	667	$	38	$	149	$	11,708
Charge-offs		(231)		(119)		(541)		—		—		(315)		(433)		—		—		(1,639)
Recoveries		351		402		278		—		16		20		52		—		—		1,119
(Credit) provision		(708)		(973)		(109)		(98)		24		453		69		(9)		(31)		(1,382)
Ending balance	$	3,864	$	1,602	$	1,408	$	187	$	656	$	1,587	$	355	$	29	$	118	$	9,806
Ending balance: related to loans individually evaluated for impairment	$	—	$	145	$	—	$	—	$	28	$	131	$	18	$	—	$	—	$	322
Ending balance: related to loans collectively evaluated for impairment	$	3,864	$	1,457	$	1,408	$	187	$	628	$	1,456	$	337	$	29	$	118	$	9,484

Loans Evaluated for Impairment

At September 30, 2015

			Construction
	Commercial		and land		Commercial		Multi-		Residential				Tax
	real estate		development		and industrial		family		real estate		Leases		certificates		Consumer		Unallocated		Total
(In thousands)
Ending balance	$	210,883	$	38,864	$	82,414	$	15,222	$	54,025	$	61,954	$	5,294	$	2,560	$	—	$	471,216
Ending balance: individually evaluated for impairment	$	4,040	$	290	$	3,024	$	—	$	918	$	640	$	1,206	$	—	$	—	$	10,118
Ending balance: collectively evaluated for impairment	$	206,843	$	38,574	$	79,390	$	15,222	$	53,107	$	61,314	$	4,088	$	2,560	$	—	$	461,098

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Allowance for Loan and Lease Losses and Loans Evaluated for Impairment

As of and for the year ended December 31, 2014

			Construction
	Commercial		and land		Commercial		Multi-		Residential				Tax
(In thousands)	real estate		development		and industrial		family		real estate		Leases		certificates		Consumer		Unallocated		Total
Beginning balance	$	5,498	$	2,316	$	3,006	$	402	$	473	$	1,223	$	555	$	15	$	183	$	13,671
Charge-offs		(354)		(172)		(452)		—		—		(793)		(350)		—		—		(2,121)
Recoveries		—		940		27		—		15		42		1		—		—		1,025
(Credit) provision		(692)		(792)		(801)		(117)		128		957		461		23		(34)		(867)
Ending balance	$	4,452	$	2,292	$	1,780	$	285	$	616	$	1,429	$	667	$	38	$	149	$	11,708
Ending balance: related to loans individually evaluated for impairment	$	200	$	—	$	301	$	—	$	28	$	80	$	432	$	—	$	—	$	1,041
Ending balance: related to loans collectively evaluated for impairment	$	4,252	$	2,292	$	1,479	$	285	$	588	$	1,349	$	235	$	38	$	149	$	10,667
Loan Balances
Ending balance	$	175,038	$	45,662	$	76,489	$	13,823	$	42,992	$	51,583	$	7,191	$	2,354	$	—	$	415,132
Ending balance: individually evaluated for impairment	$	6,795	$	683	$	5,846	$	—	$	959	$	95	$	1,700	$	—	$	—	$	16,078
Ending balance: collectively evaluated for impairment	$	168,243	$	44,979	$	70,643	$	13,823	$	42,033	$	51,488	$	5,491	$	2,354	$	—	$	399,054

Allowance for Loan and Lease Losses

As of and for the three months ended September 30, 2014

			Construction
	Commercial		and land		Commercial		Multi-		Residential				Tax
(In thousands)	real estate		development		and industrial		family		real estate		Leases		certificates		Consumer		Unallocated		Total
Beginning balance	$	4,971	$	2,033	$	1,525	$	416	$	690	$	1,352	$	408	$	24	$	150	$	11,569
Charge-offs		—		—		—		—		—		(206)		(65)		—		—		(271)
Recoveries		—		205		12		—		5		13		—		—		—		235
Provision (credit)		(266)		3		(106)		(63)		25		325		29		9		(7)		(51)
Ending balance	$	4,705	$	2,241	$	1,431	$	353	$	720	$	1,484	$	372	$	33	$	143	$	11,482
Ending balance: related to loans individually evaluated for impairment	$	205	$	172	$	5	$	—	$	30	$	62	$	19	$	—	$	—	$	493
Ending balance: related to loans collectively evaluated for impairment	$	4,500	$	2,069	$	1,426	$	353	$	690	$	1,422	$	353	$	33	$	143	$	10,989

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Allowance for Loan and Lease Losses

As of and for the nine months endedSeptember 30, 2014

			Construction
	Commercial		and land		Commercial		Multi-		Residential				Tax
(In thousands)	real estate		development		and industrial		family		real estate		Leases		certificates		Consumer		Unallocated		Total
Beginning balance	$	5,498	$	2,316	$	3,006	$	402	$	473	$	1,223	$	555	$	15	$	183	$	13,671
Charge-offs		(349)		—		(452)		—		—		(568)		(330)		—		—		(1,699)
Recoveries		—		205		23		—		11		35		1		—		—		275
Provision (credit)		(444)		(280)		(1,146)		(49)		236		794		146		18		(40)		(765)
Ending balance	$	4,705	$	2,241	$	1,431	$	353	$	720	$	1,484	$	372	$	33	$	143	$	11,482
Ending balance: related to loans individually evaluated for impairment	$	205	$	172	$	5	$	—	$	30	$	62	$	19	$	—	$	—	$	493
Ending balance: related to loans collectively evaluated for impairment	$	4,500	$	2,069	$	1,426	$	353	$	690	$	1,422	$	353	$	33	$	143	$	10,989

Loans Evaluated for Impairment

At September 30, 2014

			Construction
	Commercial		and land		Commercial		Multi-		Residential				Tax
	real estate		development		and industrial		family		real estate		Leases		certificates		Consumer		Unallocated		Total
(In thousands)
Ending balance	$	164,522	$	41,676	$	70,743	$	16,893	$	44,261	$	48,588	$	8,230	$	2,263	$	—	$	397,176
Ending balance: individually evaluated for impairment	$	6,877	$	1,192	$	5,897	$	—	$	983	$	64	$	1,128	$	—	$	—	$	16,141
Ending balance: collectively evaluated for impairment	$	157,645	$	40,484	$	64,846	$	16,893	$	43,278	$	48,524	$	7,102	$	2,263	$	—	$	381,035

The following tables detail the loans that were evaluated for impairment by loan classification at September 30, 2015 and December 31, 2014.

	At September 30, 2015
	Unpaid
	principal		Recorded		Related
(In thousands)	balance		investment		allowance
With no related allowance recorded:
Commercial real estate	$	4,567	$	4,040	$	—
Commercial and industrial		5,303		3,024		—
Tax certificates		1,456		1,005		—
Total:	$	11,326	$	8,069	$	—

With an allowance recorded:
Construction and land development	$	546	$	290	$	145
Residential real estate		1,021		918		28
Leasing		640		640		131
Tax certificates		4,230		201		18
Total:	$	6,437	$	2,049	$	322

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	At and for the year ended December 31, 2014
	Unpaid						Average		Interest
	principal		Recorded		Related		recorded		income
(In thousands)	balance		investment		allowance		investment		recognized
With no related allowance recorded:
Commercial real estate	$	6,632	$	6,113	$	—	$	5,089	$	98
Construction and land development		894		683		—		2,233		71
Commercial and industrial		5,358		5,118		—		5,786		208
Tax certificates		1,120		890		—		867		—
Total:	$	14,004	$	12,804	$	—	$	13,975	$	377

With an allowance recorded:
Commercial real estate	$	926	$	682	$	200	$	529	$	—
Construction and land development		—		—		—		145		—
Commercial and industrial		2,500		728		301		688		—
Residential real estate		1,068		959		28		864		—
Leases		95		95		80		108		—
Tax certificates		4,835		810		432		145		—
Total:	$	9,424	$	3,274	$	1,041	$	2,479	$	—

The following tables present the average recorded investment in impaired loans and the related interest income recognized for the three and nine months ended September 30, 2015 and 2014.

	For the three months ended September 30, 2015				For the nine months ended September 30, 2015
	Average		Interest		Average		Interest
	recorded		income		recorded		income
(In thousands)	investment		recognized		investment		recognized
Commercial real estate	$	4,256	$	130	$	5,599	$	329
Construction and land development		471		—		562		—
Commercial and industrial		3,570		44		4,740		142
Residential real estate		927		—		952		—
Leasing		289		—		146		—
Tax certificates		1,109		—		1,078		—
Total:	$	10,622	$	174	$	13,077	$	471

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	For the three months ended September 30, 2014				For the nine months ended September 30, 2014
	Average		Interest		Average		Interest
	recorded		income		recorded		income
(In thousands)	investment		recognized		investment		recognized
Commercial real estate	$	5,571	$	33	$	5,258	$	65
Construction and land development		1,673		11		2,823		68
Commercial and industrial		6,085		52		6,658		159
Residential real estate		993		—		833		—
Leasing		75		—		112		—
Tax certificates		1,134		—		918		—
Total:	$	15,531	$	96	$	16,602	$	292

Note 6.Other Real Estate Owned

At September 30, 2015, OREO was comprised of five real estate properties acquired through, or in lieu of foreclosure in settlement of loans and 70 real estate properties acquired through foreclosure related to tax liens.  Set forth below are tables which detail the changes in OREO from January 1, 2015 to September 30, 2015 and January 1, 2014 to December 31, 2014.

	For the nine months ended September 30, 2015
(In thousands)	Loans		Tax Liens		Total
Beginning balance	$	349	$	9,430	$	9,779
Net proceeds from sales		(1,569)		(2,867)		(4,436)
Net gains on sales		61		708		769
Transfers in		1,672		2,296		3,968
Cash additions		—		418		418
Transfer to loans		—		(995)		(995)
Impairment charge		(125)		(534)		(659)
Ending balance	$	388	$	8,456	$	8,844

	For the year ended December 31, 2014
(In thousands)	Loans		Tax Liens		Total
Beginning balance	$	1,725	$	7,892	$	9,617
Net proceeds from sales		(1,336)		(2,970)		(4,306)
Net gain on sales		59		684		743
Transfers in		—		2,919		2,919
Cash additions		—		1,330		1,330
Impairment charge		(99)		(425)		(524)
Ending balance	$	349	$	9,430	$	9,779

At September 30, 2015, OREO was comprised of $319,000 in land, $8.4 million in tax liens, and $69,000in residential real estate related to a condominium construction project in Minneapolis, Minnesota in which the Company is a participant and a single family home.  The properties acquired through the tax lien portfolio were primarily located in New Jersey. 

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Note 7.Deposits

Our deposit composition as of September 30, 2015 and December 31, 2014 is presented below:

	September 30,		December 31,
(In thousands)	2015		2014
Noninterest-bearing checking	$	76,949	$	73,665
NOW		38,146		46,515
Interest-bearing brokered deposits		25,000		—
Money Market		164,583		166,224
Savings		38,441		18,721
Time deposits (over $100)		85,884		87,209
Time deposits (under $100)		124,761		138,091
Total deposits	$	553,764	$	530,425

Note 8.Borrowings and Subordinated Debentures

1. Advances from the Federal Home Loan Bank

As of September 30, 2015, Royal Bank had $212.6 million of available borrowing capacity at the FHLB, which is based on qualifying collateral.  Total advances from the FHLB were $54.0 million and $55.0 million at September 30, 2015 and December 31, 2014.  The advances and the line of credit are collateralized by FHLB stock, government agency securities and mortgage-backed securities.  As of September 30, 2015, investment securities with a market value of $34.0 million were pledged as collateral to the FHLB.

Presented below are the Company’s FHLB borrowings allocated by the year in which they mature with their corresponding weighted average rates:

	As of				As of
	September 30, 2015				December 31, 2014
(Dollars in thousands)	Amount		Rate		Amount		Rate
Advances maturing in
2015	$	9,000	0.35	%	$	10,000	0.71	%
2016		10,000	1.11	%		10,000	1.11	%
2017		25,000	1.46	%		25,000	1.46	%
2018		10,000	2.01	%		10,000	2.01	%
Total FHLB borrowings	$	54,000			$	55,000

2. Other borrowings

We have a note payable with PNC Bank (“PNC”) at September 30, 2015 in the amount of $2.1 million compared to $2.4 million at December 31, 2014.  The note’s maturity date is August 25, 2016.  The interest rate is a variable rate equal to one month LIBOR + 15 basis points and adjusts monthly.  The interest rate at September 30, 2015 was 0.35%.

At September 30, 2015 and December 31, 2014, we had additional borrowings of $35.0 million from PNC which will mature on January 7, 2018.  These borrowings have a weighted average interest rate of 3.65%. The note payable and the borrowings are secured by government agency securities and mortgage-backed securities.

Royal Bank has an additional $20.0 million in lines of credit with a with two local financial institutions, of which $0was outstanding at September 30, 2015 and December 31, 2014, respectively.

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3. Subordinated debentures

We have outstanding $25.0 million of Trust Preferred Securities issued through two Delaware trust affiliates, Royal Bancshares Capital Trust I (“Trust I”) and Royal Bancshares Capital Trust II (“Trust II”) (collectively, the “Trusts”).  We issued an aggregate principal amount of $12.9 million of floating rate junior subordinated debt securities to Trust I and an aggregate principal amount of $12.9 million of fixed/floating rate junior subordinated debt securities to Trust II.  Both debt securities bear an interest rate of 2.49% at September 30, 2015, and reset quarterly at 3-month LIBOR plus 2.15%.

Each of Trust I and Trust II issued an aggregate principal amount of $12.5 million of capital securities initially bearing fixed and/or fixed/floating interest rates corresponding to the debt securities held by each trust to an unaffiliated investment vehicle and issued an aggregate principal amount of $387,000 of common securities bearing fixed and/or fixed/floating interest rates corresponding to the debt securities held by each trust to the Company.  We have fully and unconditionally guaranteed all of the obligations of the Trusts, including any distributions and payments on liquidation or redemption of the capital securities.

Under the MOU as described in “Note 2 — Regulatory Matters and Significant Risks or Uncertainties” to the Consolidated Financial Statements, the Company and its non-bank subsidiaries may not make any distributions of interest, principal, or other sums on subordinated debentures or trust preferred securities without the prior written approval of the Federal Reserve Bank and the Director of the Division of Banking Supervision and Regulation of the Board of Governors of the Federal Reserve System.  We received approval and paid the required interest payment in March, June, and September of 2015.

Note 9.Derivative Instruments and Hedging Activity

In the fourth quarter of 2014, we entered into a forward-starting interest rate swap agreement to hedge the risk of variability in cash flowsattributable to changes in the 3 month LIBOR rate. This particular hedging objective was to reduce the interest rate risk associated with our forecasted issuances of 3 month fixed rate debt arising from a rollover strategy of an FHLB advance, which is scheduled to mature in June 2016 and will continue to rollover through the swap expiration of June 2021. This derivative was used as part of the asset/liability management process, is linked to a specific liabilityand has a high correlation between the contract and the underlying item being hedged, both at inception and throughout the hedge period. The derivative was designated as a cash flow hedge with the change in fair value recorded as an adjustment through other comprehensive income (loss) until the underlying forecasted transactions occur, at which time the deferred gains and losses are recognized in earnings.

The effects of the derivative instrument on the Consolidated Financial Statements at September 30, 2015 and December 31, 2014 and for the three and nine months ended September 30, 2015 were as follows:

	As of September 30, 2015
	Notional
	Contract				Balance Sheet	Expiration
(In thousands)	Amount		Fair Value		Location	Date
Derivatives designated as hedging instruments
Interest rate swaps:
Effective June 24, 2016	$	15,000	$	(708)	Other liabilities	June 24, 2021
Total:	$	15,000	$	(708)

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	As of December 31, 2014
	Notional
	Contract				Balance Sheet	Expiration
(In thousands)	Amount		Fair Value		Location	Date
Derivatives designated as hedging instruments
Interest rate swaps:
Effective June 24, 2016	$	15,000	$	(187)	Other liabilities	June 24, 2021
Total:	$	15,000	$	(187)

	For the three months ended September 30, 2015
	Amount of Loss		Location of Loss	Amount of Loss
	Recognized		Recognized	Recognized
		in OCI	in Income	in Income
	on Derivatives		on Derivatives	on Derivatives
(In thousands)	(Effective Portion)		(Ineffective Portion)	(Ineffective Portion)
Derivatives designated as hedging instruments
Interest rate swaps:
Effective June 24, 2016	$	(282)	Not Applicable	$	—
Total:	$	(282)		$	—

	For the nine months ended September 30, 2015
	Amount of Loss		Location of Loss	Amount of Loss
	Recognized		Recognized	Recognized
		in OCI	in Income	in Income
	on Derivatives		on Derivatives	on Derivatives
(In thousands)	(Effective Portion)		(Ineffective Portion)	(Ineffective Portion)
Derivatives designated as hedging instruments
Interest rate swaps:
Effective June 24, 2016	$	(467)	Not Applicable	$	—
Total:	$	(467)		$	—

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	For the year ended December 31, 2014
	Amount of Loss		Location of Loss	Amount of Loss
	Recognized		Recognized	Recognized
		in OCI	in Income	in Income
	on Derivatives		on Derivatives	on Derivatives
(In thousands)	(Effective Portion)		(Ineffective Portion)	(Ineffective Portion)
Derivatives designated as hedging instruments
Interest rate swaps:
Effective June 24, 2016	$	(187)	Not Applicable	$	—
Total:	$	(187)		$	—

Note 10.Commitments, Contingencies, and Concentrations

We are a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of our customers.  These financial instruments include commitments to extend credit and standby letters of credit.  Such financial instruments are recorded in the financial statements when they become payable. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.  The contract amounts of those instruments reflect the extent of involvement we have in particular classes of financial instruments.

Our exposure to credit loss in the event of non-performance by the other party to commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments.  We use the same credit policies in making commitments and conditional obligations as we do for on-balance-sheet instruments.

The contract amounts are as follows:

	September 30,		December 31,
(In thousands)	2015		2014
Financial instruments whose contract amounts represent credit risk:
Open-end lines of credit	$	64,044	$	48,929
Commitments to extend credit		23,118		6,430
Standby letters of credit and financial guarantees written		416		371

Legal Proceedings

From time to time, we are a party to routine legal proceedings within the normal course of business.  Such routine legal proceedings in the aggregate are believed by management to be immaterial to our financial condition or results of operations.

Note 11.Shareholders’ Equity

1. Preferred Stock

On February 20, 2009, as part of the Capital Purchase Program (“CPP”) established by the U.S. Department of the Treasury (“Treasury”),  we issued to Treasury 30,407 shares of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A, without par value per share (the “Series A Preferred Stock”), and a liquidation preference of $1,000 per share.  In conjunction with the purchase of the Series A Preferred Stock, Treasury received a warrant to purchase 1,104,370 shares

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of our Class A common stock.  The aggregate purchase price for the Series A Preferred Stock and warrant was $30.4 million in cash.  The Series A Preferred Stock qualifies as Tier 1 capital and originally paid cumulative dividends at a rate of 5% per annum.  In February 2014, the cumulative dividend rate on the Series A Preferred Stock increased to 9% per annum.  The Series A Preferred Stock may generally be redeemed by the Company at any time following consultation with its primary banking regulators.  The warrant issued to Treasury has a 10-year term and is immediately exercisable upon its issuance, with an exercise price, subject to anti-dilution adjustments, equal to $4.13 per share of the common stock.  As a result of the shareholders’ rights offering described below,the number of warrants to purchase the Company’s Class A common stock adjusted to 1,368,040 and the warrant exercise price decreased to $3.33 per share of the common stock.

We received approval from the Federal Reserve Bank to bid up to $14.0 million, which was raised in a private placement, to purchase shares of the Series A Preferred Stock in an auction of such shares conducted by the Treasury.  The auction closed on June 19, 2014.  The Series A Preferred Stock was priced in the auction at $1,207.11 per share for all 30,407 shares of Series A Preferred Stock outstanding. We were allocated 11,551 shares of Series A Preferred Stock for repurchase at the clearing price of $1,207.11. Closing for the sale of the Series A Preferred Stock by the Treasury, including the repurchase of 11,551 shares of Series A Preferred Stock by the Company, occurred on July 2, 2014. As part of this redemption, we eliminated nearly $3.5 million in preferred dividends in arrears.

2. Common Stock

Our Class A common stock trades on the NASDAQ Global Market under the symbol RBPAA.  There is no market for our Class B common stock.  The Class B shares may not be transferred in any manner except to the holder’s immediate family.  Class B shares may be converted to Class A shares at the rate of 1.15 to 1.  Shareholders are entitled to one vote for each Class A share and ten votes for each Class B share held.  Holders of either class of common stock are entitled to conversion equivalent per share dividends when declared.

To fund the purchase of the Series A Preferred Stock, as described above, we sold 11,666,667  shares of our Class A common stock in a private placement transaction at a price of $1.20 per share. Additionally, during the third quarter of 2014, weconducted a shareholder rights offering to existing shareholders to limit their ownership dilution from the sale of Class A common stock to the other investors in the private placement. We issued approximately 5.0 million shares at a price of $1.20 per share and received gross proceeds of approximately $6.0 million.

3. Payment of Dividends

Under the Pennsylvania Business Corporation Law, the Company may pay dividends only if it is solvent and would not be rendered insolvent by the dividend payment. There are also restrictions set forth in the Pennsylvania Banking Code of 1965 (the “Code”) and in the Federal Deposit Insurance Act (“FDIA”) affecting the payment of dividends to the Company by Royal Bank.  Under the Code, no dividends may be paid by a bank except from “accumulated net earnings” (generally retained earnings).  In addition, dividends paid by Royal Bank to the Company would be prohibited if the effect thereof would cause Royal Bank’s capital to be reduced below applicable minimum capital requirements.

On August 13, 2009, the Company’s Board suspended the regular quarterly cash dividends on the Series A Preferred Stock.  The Company’s Board took this action in consultation with the Federal Reserve Bank of Philadelphia as required by regulatory policy guidance.  In February 2014, the preferred cumulative dividend rate prospectively increased to 9% per annum.As a result of the Company’s repurchase of 11,551 shares of Series A Preferred Stock, approximately $3.5 million of the Series A Preferred stockdividend in arrears was eliminated.As of September 30, 2015, the Series A Preferred stock dividend in arrears, which includes additional dividends on arrearages, was approximately $8.3million and has not been recognized in the consolidated financial statements.  In the event we declared the preferred dividend in arrearsour capital ratios would be negatively affected; however, they would remain above the required minimum ratios.  Under the Federal Reserve Bank MOU as described in “Note 2 — Regulatory Matters and Significant Risks or Uncertainties” to the Consolidated Financial Statements, the Company may not declare or pay any dividends without the prior written approval of the Federal Reserve Bank and the Director of the Division of Banking Supervision and Regulation of the Board of Governors of the Federal Reserve System.

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Note 12.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 our financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our 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. 

In July 2013, the federal bank regulatory agencies adopted final rules to revise the agencies’ capital adequacy guidelines and prompt corrective action rules, which were designed to enhance such requirements and implement the revised standards of the Basel Committee on Banking Supervision, commonly referred to as Basel III. The July 2013 final rules generally implement higher minimum capital requirements, add a new common equity tier 1 capital requirement, and establish criteria that instruments must meet to be considered common equity tier 1 capital, additional tier 1 capital or tier 2 capital. The new minimum capital to risk-adjusted assets requirements are a common equity tier 1 capital ratio of 4.5% (6.5% to be considered “well capitalized”) and a tier 1 capital ratio of 6.0%, increased from 4.0% (and increased from 6.0% to 8.0% to be considered “well capitalized”); the total capital ratio remains at 8.0% under the new rules (10.0% to be considered “well capitalized”).

Under the new rules, in order to avoid limitations on capital distributions (including dividend payments and certain discretionary bonus payments to executive officers), a banking organization must hold a capital conservation buffer comprised of common equity tier 1 capital above its minimum risk-based capital requirements in an amount greater than 2.5% of total risk-weighted assets. The new minimum capital requirements were effective on January 1, 2015. The capital contribution buffer requirements phase in over a three-year period beginning January 1, 2016. As of September 30, 2015, the Company and Royal Bank satisfied 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 regulatory accounting principles (“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 September 30, 2015 and the previous 20 quarters in accordance with U.S. GAAP.  The change in the method 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.  The resolution of this matter will be decided by additional joint regulatory agency guidance which includes the Federal Reserve Bank, the FDIC, and the OCC.

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

	At September 30, 2015
									To be well capitalized
					For capital				under prompt corrective
	Actual				adequacy purposes				action provision
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital (to risk-weighted assets)	$	84,720	15.99	%	$	42,386	8.00	%	$	52,983	10.00	%
Tier 1 capital (to risk-weighted assets)	$	78,058	14.73	%	$	31,790	6.00	%	$	42,386	8.00	%
Tier 1 capital (to average assets, leverage)	$	78,058	10.65	%	$	29,307	4.00	%	$	36,634	5.00	%
Common equity Tier 1 (to risk-weighted assets)	$	58,622	11.06	%	$	23,842	4.50	%	$	34,439	6.50	%

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

	For the nine
	months ended
(In thousands)	September 30, 2015
RAP net income	$	2,403
Tax lien adjustment, net of noncontrolling interest		2,208
U.S. GAAP net income	$	4,611

	At September 30, 2015
	As reported		As adjusted
	under RAP		for U.S. GAAP
Total capital (to risk-weighted assets)	15.99	%	16.35	%
Tier 1 capital (to risk-weighted assets)	14.73	%	15.09	%
Tier 1 capital (to average assets, leverage)	10.65	%	10.93	%
Common equity Tier 1 (to risk-weighted assets)	11.06	%	11.02	%

The tables below reflect the Company’s capital ratios:

	At September 30, 2015
										To be well capitalized
					For capital					under the Federal
	Actual				adequacy purposes				Reserve's regulations
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital (to risk-weighted assets)	$	101,091	18.96	%	$	42,643	8.00	%	$	53,304	10.00	%
Tier 1 capital (to risk-weighted assets)	$	92,664	17.38	%	$	31,982	6.00	%	$	31,982	6.00	%
Tier 1 capital (to average assets, leverage)	$	92,664	12.52	%	$	29,609	4.00	%		N/A	N/A
Common equity Tier 1 (to risk-weighted assets)	$	50,057	9.39	%	$	23,987	4.50	%		N/A	N/A

The Company has filed the Consolidated Financial Statements for Bank Holding Companies-FR Y-9C (“FR Y-9C”) as of September 30, 2015 consistent with U.S. GAAP and the FR Y-9C instructions.  In the event that 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 nine
	months ended
(In thousands)	September 30, 2015
U.S. GAAP net income	$	4,586
Tax lien adjustment, net of noncontrolling interest		(2,208)
RAP net income	$	2,378

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	At September 30, 2015
	As reported		As adjusted
	under U.S. GAAP		for RAP
Total capital (to risk-weighted assets)	18.96	%	18.62	%
Tier 1 capital (to risk-weighted assets)	17.38	%	16.90	%
Tier 1 capital (to average assets, leverage)	12.52	%	12.16	%
Common equity Tier 1 (to risk-weighted assets)	9.39	%	9.43	%

Note 13.Pension Plan

We have a noncontributory nonqualified defined benefit pension plan (“Pension Plan”) covering certain eligible employees.  Our Pension Plan provides retirement benefits under pension trust agreements.  The benefits are based on years of service and the employee’s compensation during the highest three consecutive years during the last 10 years of employment.

Net periodic defined benefit pension expense for the three and nine months ended September 30, 2015 and 2014 included the following components:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(In thousands)	2015		2014		2015		2014
Service cost	$	17	$	15	$	49	$	45
Interest cost		135		155		403		466
Amortization of prior service cost		22		22		68		66
Amortization of actuarial loss		46		32		140		96
Net periodic benefit cost	$	220	$	224	$	660	$	673

We have unfunded pension plan obligations of $15.4 million as of September 30, 2015 compared to $15.3 million at December 31, 2014.  We plan to fund a substantial portion of the pension plan obligations through existing Company owned life insurance policies.

Note 14.Earnings Per Common Share

We follow the provisions of FASB ASC Topic 260, “Earnings per Share” (“ASC Topic 260”).  Basic earnings per share (“EPS”) excludes dilution and is computed by dividing income available to common shareholders by the weighted average common shares outstanding during the period.  We have two classes of common stock currently outstanding. The classes are A and B, of which one share of Class B is convertible into 1.15 shares of Class A.  Diluted EPS takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock using the if-converted method. For the three and nine months ended September 30, 2015,  269,743and 285,097 options to purchase shares of common stock, respectively, were anti-dilutive in the computation of diluted EPS, as the exercise price exceeded average market price in each of those periods.  For the three and nine months ended September 30, 2014, 168,907 options to purchase shares of common stock, respectively, were anti-dilutive in the computation of diluted EPS, as the exercise price exceeded average market price in each of those periods.  Additionally warrants to purchase 1,368,040 shares of Class A common stock were also anti-dilutive.

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Basic and diluted EPS are calculated as follows:

	Three months ended  September 30, 2015
	Income		Average shares	Per share
(In thousands, except for per share data)	(numerator)		(denominator)	Amount
Basic EPS
Income available to common shareholders	$	1,100	30,043	$	0.04
Diluted EPS
Income available to common shareholders	$	1,100	30,074	$	0.04

	Three months ended  September 30, 2014
	Income		Average shares	Per share
(In thousands, except for per share data)	(numerator)		(denominator)	Amount
Basic and Diluted EPS
Income available to common shareholders	$	1,271	27,329	$	0.05

	Nine months ended September 30, 2015
	Income		Average shares	Per share
(In thousands, except for per share data)	(numerator)		(denominator)	Amount
Basic EPS
Income available to common shareholders	$	3,299	30,040	$	0.11
Diluted EPS
Income available to common shareholders	$	3,299	30,055	$	0.11

	Nine months ended September 30, 2014
	Income		Average shares	Per share
(In thousands, except for per share data)	(numerator)		(denominator)	Amount
Basic and Diluted EPS
Income available to common shareholders	$	2,654	18,042	$	0.15

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Note 15.Comprehensive Income (Loss)

FASB ASC Topic 220, “Comprehensive Income” (“ASC Topic 220”), requires the reporting of all changes in equity during the reporting period except investments from and distributions to shareholders.  Net income is a component of comprehensive income (loss) with all other components referred to in the aggregate as other comprehensive income.  Unrealized gains and losses on AFS securities is an example of another comprehensive income (loss) component.

	For the nine months ended September 30, 2015
			Tax
	Before tax		expense		Net of tax
(In thousands)	amount		(benefit)		amount
Unrealized gains on investment securities:
Unrealized holding gains arising during period	$	2,011	$	691	$	1,320
Less reclassification adjustment for gains
realized in net income		652		222		430
Unrealized gains on investment securities		1,359		469		890
Unrecognized benefit obligation expense:
Less reclassification adjustment for amortization		(51)		—		(51)
Unrecognized benefit obligation		(51)		—		(51)
Unrealized loss on derivative instrument		(708)		(241)		(467)
Other comprehensive income, net	$	600	$	228	$	372

	For the nine months ended September 30, 2014
			Tax
	Before tax		expense		Net of tax
(In thousands)	amount		(benefit)		amount
Unrealized gains on investment securities:
Unrealized holding gains arising during period	$	6,570	$	2,101	$	4,469
Less reclassification adjustment for gains
realized in net income		330		112		218
Unrealized gains on investment securities		6,240		1,989		4,251
Unrecognized benefit obligation expense:
Reclassification adjustment for amortization		85		29		56
Unrecognized benefit obligation		85		29		56
Other comprehensive income, net	$	6,325	$	2,018	$	4,307

The other components of accumulated other comprehensive loss included in shareholders’ equity at September 30, 2015 and December 31, 2014 are as follows:

	September 30,		December 31,
(In thousands)	2015		2014
Unrecognized benefit obligation	$	(4,076)	$	(4,025)
Unrealized gains (losses) on AFS investments		2,423		1,720
Unrealized loss on derivative instrument		(467)		(187)
Accumulated other comprehensive loss	$	(2,120)	$	(2,492)

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Note 16.Fair Value of Financial Instruments

Under FASB ASC Topic 820 “Fair Value Measurements and Disclosures” (“ASC Topic 820”), fair values are based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When available, management uses quoted market prices to determine fair value.  If quoted prices are not available, fair value is based upon valuation techniques such as matrix pricing or other models that use, where possible, current market-based or independently sourced market parameters, such as interest rates. If observable market-based inputs are not available, we use unobservable inputs to determine appropriate valuation adjustments using discounted cash flow methodologies.

Management uses its best judgment in estimating the fair value of our financial instruments; however, there are inherent weaknesses in any estimation technique.  Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts we could have realized in a sales transaction on the dates indicated.  The estimated fair value amounts have been measured as of their respective period end and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates.  As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period-end.

ASC Topic 820 provides guidance for estimating fair value when the volume and level of activity for an asset or liability has significantly declined and for identifying circumstances when a transaction is not orderly. ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  The three levels of the fair value hierarchy under ASC Topic 820 are as follows:

Level 1:	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2:	Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability. Level 2 includes debt securities with quoted prices that are traded less frequently then exchange-traded instruments. Valuation techniques include matrix pricing which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices.
Level 3:	Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.  We did not have transfers of financial instruments within the fair value hierarchy during the three and nine months ended September 30, 2015 and 2014.

Items Measured on a Recurring Basis

Our available for sale investment securities are recorded at fair value on a recurring basis.

Fair value for Level 1 securities are determined by obtaining quoted market prices on nationally recognized securities exchanges.  Level 1 securities include common stocks.

Level 2 securities include obligations of U.S. government-sponsored agencies and debt securities with quoted prices, which are traded less frequently than exchange-traded instruments, whose value is determined using matrix pricing with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.  The prices

35

were obtained from third party vendors.  This category generally includes our mortgage-backed securities and CMOs issued by U.S. government and government-sponsored agencies, non-agency CMOs, and corporate and municipal bonds.  Our interest rate swap is recorded at fair value on a recurring basis and is classified as Level 2 due to the readily observable market data.

Level 3 securities include investments in five private equity funds which are predominantly invested in real estate.  The value of the private equity funds are derived from the funds’ financials and K-1 filings.  We also review the funds’ asset values and its near-term projections.

For financial assets and liabilities measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2015 and December 31, 2014 are as follows:

	Fair Value Measurements Using:
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
As of September 30, 2015	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Fair Value
Assets:
Investment securities available for sale
U.S. government agencies	$	—	$	25,907	$	—	$	25,907
Mortgage-backed securities-residential		—		14,418		—		14,418
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		—		172,745		—		172,745
Non-agency		—		2,927		—		2,927
Corporate bonds		—		1,520		—		1,520
Municipal bonds		—		10,072		—		10,072
Other securities		—		—		2,997		2,997
Common stocks		26		—		—		26
Total investment securities available for sale	$	26	$	227,589	$	2,997	$	230,612
Liabilities:
Derivative instruments
Interest rate swaps	$	—	$	708	$	—	$	708

36

	Fair Value Measurements Using:
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
As of December 31, 2014	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Fair Value
Assets:
Investment securities available for sale
U.S. government agencies	$	—	$	25,289	$	—	$	25,289
Mortgage-backed securities-residential		—		22,387		—		22,387
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		—		168,977		—		168,977
Non-agency		—		3,731		—		3,731
Corporate bonds		—		15,727		—		15,727
Municipal bonds		—		10,173		—		10,173
Other securities		—		—		4,034		4,034
Common stocks		50		—		—		50
Total investment securities available for sale	$	50	$	246,284	$	4,034	$	250,368
Liabilities:
Derivative instruments
Interest rate swaps	$	—	$	187	$	—	$	187

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The following tables present additional information about assets measured at fair value on a recurring basis and for which the Company has utilized Level 3 inputs to determine fair value for the three and nine months endedSeptember 30, 2015 and 2014:

(In thousands)	Other securities
Investment Securities Available for Sale	2015		2014
Beginning balance July 1,	$	3,006	$	4,619
Total gains/(losses) - (realized/unrealized):
Included in earnings-gain on sale		4		191
Included in other comprehensive income		(9)		11
Purchases		—		14
Sales and calls		(4)		(445)
Transfers in and/or out of Level 3		—		—
Ending balance September 30,	$	2,997	$	4,390

(In thousands)	Other securities
Investment Securities Available for Sale	2015		2014
Beginning balance January 1,	$	4,034	$	4,625
Total gains/(losses) - (realized/unrealized):
Included in earnings-gain on sale		319		251
Included in other comprehensive income		(551)		299
Purchases		4		14
Sales and calls		(809)		(799)
Transfers in and/or out of Level 3		—		—
Ending balance September 30,	$	2,997	$	4,390

Items Measured on a Nonrecurring Basis

Non-accrual loans and TDRs are evaluated for impairment on an individual basis under FASB ASC Topic 310 “Receivables”.  The impairment analysis includes current collateral values, known relevant factors that may affect loan collectability, and risks inherent in different kinds of lending.  When the collateral value or discounted cash flows less costs to sell is less than the carrying value of the loan a specific reserve (valuation allowance) is established. Loans held for sale are carried at the lower of cost or fair value. OREO is carried at the lower of cost or fair value.  Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the real estate.  Additionally, for collateral acquired from tax liens, fair value may be established using brokers opinions due to their lower carrying value.  These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

38

For financial assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2015 and December 31, 2014 are as follows:

	Fair Value Measurements Using:
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
As of September 30, 2015	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Fair Value
Assets
Impaired loans and leases	$	—	$	—	$	3,657	$	3,657
Other real estate owned		—		—		1,957		1,957

	Fair Value Measurements Using:
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
As of December 31, 2014	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Fair Value
Assets
Impaired loans and leases	$	—	$	—	$	2,812	$	2,812
Other real estate owned		—		—		3,418		3,418

The following tables present additional quantitative information about assets measured at fair value on a nonrecurring basis and for which we have utilized Level 3 inputs to determine fair value at September 30, 2015 and December 31, 2014:

	Qualitative Information about Level 3 Fair Value Measurements
As of September 30, 2015			Valuation		Range
(In thousands)	Fair Value		Techniques	Unobservable Input	(WeightedAverage)
Impaired loans and leases	$	3,657	Appraisal of	Appraisal adjustments	0.0%	-	-62.3%	(-28.7%)
			collateral (1)	Liquidation expenses	0.0%	-	-23.2%	(-6.6%)
Other real estate owned		1,957	Appraisal of	Appraisal adjustments	0.0%	-	-84.2%	(-30.2%)
			collateral (1)	Liquidation expenses	0.0%		-14.7%	(-3.6%)

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	Qualitative Information about Level 3 Fair Value Measurements
As of December 31, 2014			Valuation		Range
(In thousands)	Fair Value		Techniques	Unobservable Input	(WeightedAverage)
Impaired loans and leases	$	2,812	Appraisal of	Appraisal adjustments	0.0%	-	-20.0%	(-20.0%)
			collateral (1)	Liquidation expenses	0.0%	-	-24.0%	(-7.8%)
Other real estate owned		3,418	Appraisal of	Appraisal adjustments	0.0%	-	-68.6%	(-14.5%)
			collateral (1)	Liquidation expenses	0.0%	-	-14.7%	(-14.7%)

(1) Appraisals may be adjusted for qualitative factors such as interior condition of the property and liquidation expenses.

The following methods and assumptions were used to estimate the fair values of our financial instruments at September 30, 2015 and December 31, 2014. The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of our assets and liabilities.  Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between  our disclosures and those of other companies may not be meaningful.  The methodologies for estimating the fair value of financial instruments that are measured on a recurring or nonrecurring basis are discussed above.

Cash and cash equivalents (carried at cost):

The carrying amounts reported in the balance sheet for cash and short-term instruments approximate those assets’ fair values.

Securities:

Management uses quoted market prices to determine fair value of securities (level 1).  If quoted prices are not available, fair value is based upon valuation techniques such as matrix pricing or other models that use, where possible, current market-based or independently sourced market parameters, such as interest rates (level 2). If observable market-based inputs are not available, we use unobservable inputs to determine appropriate valuation adjustments by reviewing the private equities funds’ financials and K-1 filings (level 3).

Other Investment (carried at cost):

This investment includes the Solomon Hess SBA Loan Fund, which we invested in to partially satisfy Royal Bank’s community reinvestment requirement.  Shares in this fund are not publicly traded and therefore have no readily determinable fair market value.  An investor can have its investment in the Fund redeemed for the balance of its capital account at any quarter end with 60 days notice to the Fund.  The investment in this Fund is recorded at cost.  We do not record this investment at fair value on a recurring basis, as this investment’s carrying amount approximates fair value.

Restricted investment in bank stock (carried at cost):

The carrying amount of restricted investment in bank stock approximates fair value, and considers the limited marketability of such securities.

Loans receivable (carried at cost):

The fair values of loans are estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the loans.  Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal.   Generally, for variable rate loans that re-price frequently and with no significant change in credit risk, fair values are based on carrying values.

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Impaired loans (generally carried at fair value):

Impaired loans are accounted for under ASC Topic 310. Impaired loans are those in which we have measured impairment generally based on the fair value of the loan’s collateral.  Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based on the expected proceeds.  These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

Accrued interest receivable and payable (carried at cost):

The carrying amount of accrued interest receivable and accrued interest payable approximates its fair value.

Deposit liabilities (carried at cost):

The fair values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts).  Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Long-term debt (carried at cost):

Fair values of FHLB advances and other long-term borrowings are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity.  These prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party.

Subordinated debt (carried at cost):

Fair values of junior subordinated debt are estimated using discounted cash flow analysis, based on market rates currently offered on such debt with similar credit risk characteristics, terms and remaining maturity.

Derivative instruments:

We have contracted with a third party vendor to provide periodic valuations for its interest rate derivatives to determine the fair value of its interest rate swaps. The vendor utilizes standard valuation methodologies applicable to interest rate derivatives such as discounted cash flow analysis and extensions of the Black-Scholes model. Such valuations are based upon readily observable market data and are therefore considered Level 2 valuations by the Company.

Off-balance sheet financial instruments (disclosed at cost):

Fair values of our off-balance sheet financial instruments (lending commitments and letters of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account, the remaining terms of the agreements and the counterparties’ credit standing.  They are not shown in the table because the amounts are immaterial.

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The tables below indicate the fair value of our financial instruments at September 30, 2015 and December 31, 2014.

					Fair Value Measurements
					At September 30, 2015
					Quoted Prices
					in Active		Significant
					Markets for		Other		Significant
					Identical		Observable		Unobservable
	Carrying		Estimated		Assets		Inputs		Inputs
(In thousands)	amount		fair value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	24,217	$	24,217	$	24,217	$	—	$	—
Investment securities available for sale		230,612		230,612		26		227,589		2,997
Other investment		2,250		2,250		—		—		2,250
Federal Home Loan Bank stock		2,545		2,545		—		—		2,545
Loans, net		461,410		456,718		—		—		456,718
Accrued interest receivable		4,336		4,336		—		4,336		—
Financial Liabilities:
Demand deposits		76,949		76,949		—		76,949		—
NOW and money markets		202,729		202,729		—		202,729		—
Interest-bearing brokered deposits		25,000		25,000				25,000
Savings		38,441		38,441		—		38,441		—
Time deposits		210,645		208,869		—		208,869		—
Short-term borrowings		9,000		9,000		9,000		—		—
Long-term borrowings		82,084		79,698		—		79,698		—
Subordinated debt		25,774		26,696		—		26,696		—
Accrued interest payable		2,168		2,168		—		2,168		—
Derivative Instruments:
Interest rate swaps		708		708		—		708		—

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					Fair Value Measurements
					At December 31, 2014
					Quoted Prices
					in Active		Significant
					Markets for		Other		Significant
					Identical		Observable		Unobservable
	Carrying		Estimated		Assets		Inputs		Inputs
(In thousands)	amount		fair value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	30,790	$	30,790	$	30,790	$	—	$	—
Investment securities available for sale		250,368		250,368		50		246,284		4,034
Other investment		2,250		2,250		—		—		2,250
Federal Home Loan Bank stock		2,622		2,622		—		—		2,622
Loans, net		403,424		400,979		—		—		400,979
Accrued interest receivable		5,270		5,270		—		5,270		—
Financial Liabilities:
Demand deposits		73,665		73,665		—		73,665		—
NOW and money markets		212,739		212,739		—		212,739		—
Savings		18,721		18,721		—		18,721		—
Time deposits		225,300		223,788		—		223,788		—
Long-term borrowings		92,426		90,022		—		90,022		—
Subordinated debt		25,774		25,091		—		25,091		—
Accrued interest payable		726		726		—		726		—
Derivative Instruments:
Interest rate swaps		187		187		—		187		—

Limitations

The fair value estimates are made at a discrete point in time based on relevant market information and information about the financial instruments.  Fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors.

These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.  Further, the foregoing estimates may not reflect the actual amount that could be realized if all or substantially all of the financial instruments were offered for sale.  This is due to the fact that no market exists for a sizable portion of the loan, deposit and off balance sheet instruments.

In addition, the fair value estimates are based on existing on-and-off balance sheet financial instruments without attempting to value anticipated future business and the value of assets and liabilities that are not considered financial instruments.  Other significant assets that are not considered financial assets include premises and equipment.  In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates.

Finally, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates which must be made given the absence of active secondary markets for many

43

of the financial instruments.  This lack of uniform valuation methodologies introduces a greater degree of subjectivity to these estimated fair values.

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 September 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 nine months ended September 30, 2015 and 2014.

	Three months ended  September 30, 2015
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	745,853	$	16,058	$	761,911
Total deposits	$	553,764	$	—	$	553,764
Interest income	$	7,625	$	173	$	7,798
Interest expense		1,447		189		1,636
Net interest income (expense)	$	6,178	$	(16)	$	6,162
(Credit) provision for loan and lease losses		(254)		38		(216)
Total non-interest income		538		162		700
Total non-interest expense		4,932		433		5,365
Income tax expense		—		—		—
Net income (loss)	$	2,038	$	(325)	$	1,713
Noncontrolling interest	$	179	$	—	$	179
Net income (loss) attributable to Royal Bancshares	$	1,859	$	(325)	$	1,534

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	Three months ended  September 30, 2014
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	701,803	$	21,666	$	723,469
Total deposits	$	515,786	$	—	$	515,786
Interest income	$	6,889	$	302	$	7,191
Interest expense		1,367		256		1,623
Net interest income	$	5,522	$	46	$	5,568
(Credit) provision for loan and lease losses		(79)		28		(51)
Total non-interest income		987		217		1,204
Total non-interest expense		4,916		459		5,375
Income tax expense		—		—		—
Net income (loss)	$	1,672	$	(224)	$	1,448
Noncontrolling interest	$	69	$	(44)	$	25
Net income (loss) attributable to Royal Bancshares	$	1,603	$	(180)	$	1,423

	Nine months ended September 30, 2015
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	745,853	$	16,058	$	761,911
Total deposits	$	553,764	$	—	$	553,764
Interest income	$	21,642	$	507	$	22,149
Interest expense		4,169		629		4,798
Net interest income (expense)	$	17,473	$	(122)	$	17,351
(Credit) provision for loan and lease losses		(1,451)		69		(1,382)
Total non-interest income		1,924		906		2,830
Total non-interest expense		14,880		1,597		16,477
Income tax expense		—		—		—
Net income (loss)	$	5,968	$	(882)	$	5,086
Noncontrolling interest	$	551	$	(51)	$	500
Net income (loss) attributable to Royal Bancshares	$	5,417	$	(831)	$	4,586

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	Nine months ended September 30, 2014
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	701,803	$	21,666	$	723,469
Total deposits	$	515,786	$	—	$	515,786
Interest income	$	20,549	$	1,002	$	21,551
Interest expense		4,030		840		4,870
Net interest income	$	16,519	$	162	$	16,681
(Credit) provision for loan and lease losses		(911)		146		(765)
Total non-interest income		2,019		773		2,792
Total non-interest expense		14,221		1,507		15,728
Income tax expense		—		—		—
Net income (loss)	$	5,228	$	(718)	$	4,510
Noncontrolling interest	$	337	$	(125)	$	212
Net income (loss) attributable to Royal Bancshares	$	4,891	$	(593)	$	4,298

Interest income earned by the community banking segment related to the tax liens segment was approximately $189,000 and $256,000 for the three month periods ended September 30, 2015 and 2014, respectively and $629,000 and $840,000 for the nine months endedSeptember 30, 2015 and 2014, respectively.

Note 18.Federal Home Loan Bank Stock

As a member of the FHLB, we are required to purchase and hold stock in the FHLB to satisfy membership and borrowing requirements.  The stock can only be sold to the FHLB or to another member institution, and all sales of FHLB stock must be at par. As a result of these restrictions, there is no active market for the FHLB stock. AtSeptember 30, 2015 and December 31, 2014, FHLB stock totaled$2.5 million and $2.6 million, respectively.

FHLB stock is held as a long-term investment and its value is determined based on the ultimate recoverability of the par value. We evaluate impairment quarterly. The decision of whether impairment exists is a matter of judgment that reflects management’s view of the FHLB’s long-term performance, which includes factors such as the following: (1) its operating performance, (2) the severity and duration of declines in the fair value of its net assets related to its capital stock amount, (3) its liquidity position, and (4) the impact of legislative and regulatory changes on the FHLB.  Based on the capital adequacy and the liquidity position of the FHLB, management believes that the par value of its investment in FHLB stock will be recovered.  Accordingly, there is no other-than-temporary impairment related to the carrying amount of our FHLB stock as of September 30, 2015.

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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is intended to assist in understanding and evaluating the changes in the financial condition and earnings performance of the Company and its subsidiaries for the the three and nine months ended September 30, 2015 and 2014. This discussion and analysis should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2014, included in the Company’s Form 10-K for the year ended December 31, 2014.

FORWARD-LOOKING STATEMENTS

From time to time, Royal Bancshares of Pennsylvania, Inc. (the “Company”, “We”, “Our’) may include forward-looking statements relating to such matters as anticipated financial performance, business prospects, technological developments, new products, and similar matters in this and other filings with the Securities and Exchange Commission. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. When we use words such as “believes,” “expects,” “anticipates” or similar expressions, we are making forward-looking statements. In order to comply with the terms of the safe harbor, we note that a variety of factors could causeour actual results and experience to differ materially from the anticipated results or other expectations expressed in our forward-looking statements. The risks and uncertainties that may affect the operations, performance, development and results of our business include the following: general economic conditions, including their impact on capital expenditures; interest rate fluctuations; business conditions in the banking industry; the regulatory environment: the nature, extent, and timing of governmental actions and reforms; rapidly changing technology and evolving banking industry standards; competitive factors, including increased competition with community, regional and national financial institutions; changes in generally accepted accounting principles; new service and product offerings by competitors and price pressures and similar items.

All forward-looking statements contained in this report are based on information available as of the date of this report.  These statements speak only as of the date of this report, even if subsequently made available by us on our website, or otherwise.  We expressly disclaim any obligation to update any forward-looking statement to reflect future events or developments.

CRITICAL ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America and general practices within the financial services industry.  Applications of the principles in preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes.  These estimates and assumptions are based on information available as of the date of the consolidated financial statements; therefore, actual results could differ from those estimates.

Note 1 to the Company’s Consolidated Financial Statements (included in Item 8 of the Form 10-K for the year ended December 31, 2014) lists significant accounting policies used in the development and presentation of our consolidated financial statements.  The following discussion and analysis, the significant accounting policies, and other financial statement disclosures identify and address key variables and other quantitative and qualitative factors that are necessary for an understanding and evaluation of the Company and its results of operations.  We completed an internal review of this financial information.  This review requires substantive judgment and estimation. As disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, we have identified other-than-temporary impairment on investment securities, accounting for allowance for loan and lease losses, the valuation of other real estate owned, the valuation allowance of deferred tax assets, fair value measurements, and the pension benefit obligation as among the most critical accounting policies and estimates.  These critical accounting policies and estimates are important to the presentation of our financial condition and results of operations, and they require difficult, subjective or complex judgments as a result of the need to make estimates.

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Financial Highlights and Business Results

The principal activities of the Company are supervising Royal Bank America (“Royal Bank”), which engages in a general banking business principally in Montgomery, Chester, Bucks, Philadelphia and Berks counties in Pennsylvania and in central and southern New Jersey and Delaware. The Company also has a wholly owned non-bank subsidiary, Royal Investments of Delaware, Inc., which is engaged in investment activities.

Our results of operations depend primarily on net interest income, which is the difference between interest income earned on interest-earning assets and interest expense paid on interest-bearing liabilities.  Interest-earning assets consist principally of loans and investment securities, while interest-bearing liabilities consist primarily of deposits and borrowings. Refer to the “Net Interest Income and Net Interest Margin” sections below for additional information on interest yield and cost. Royal Bank principally generates commercial real estate loans primarily secured by first mortgage liens, commercial and industrial loans, construction loans for commercial real estate projects and residential home development, land development loans, tax liens and leases. At September 30, 2015, commercial real estate and multi-family loans, commercial and industrial loans, leases, and construction and land development loans comprised 48%, 17%, 13%, and 8%, respectively, of the total loan portfolio. Construction loans and land development loans can have more risk associated with them,  especially during the construction phase of the project, and require specific monitoring.   Net income is also affected by the provision for loan and lease losses and the level of non-interest income as well as by non-interest expenses, including salary and benefits, occupancy expenses and other operating expenses.

The financial results for the first nine months of 2015 illustrate further progress onour goal of consistent profitability and serving our four key constituents: customers, shareholders, co-workers, and community.A key strategic initiative in 2014 was to refresh Royal Bank’s commercial and consumer products and services and the branch network to build the platform for future growth and opportunities.  This initiative included the reorganizationof our retail division to better serve existing customers and the further development of our retail sales teams to attain new customers.  In 2014, we relocated four of our branches to more visible, high-traffic locations within their markets and we opened a limited service office in Princeton, New Jersey to more effectively work with our commercial customers in central New Jersey.During the second quarter of 2015, we relocated our Jenkintown branch to a new attractive location in Willow Grove.  

As a community bank we have been experiencing the same external headwinds as our competitors for high quality commercial loans and less expensive core deposits.  We have developed a multi-faceted plan to attract, expand and retain existing and new customer relationships.A newly implemented public funds strategy is serving as a cost effective component of our deposit plan. In January 2015, we hired our new Chief Lending Officer, who has extensive experience in lending and credit underwriting with community and larger banks in our market area.  We have seen improvement in our risk profile as illustrated by our ratio of non-performing loans to total loans, which is below 2% at September 30, 2015.  Additionally, the purposeful downsizing of the tax lien business, which is not core to Royal Bank’s strategy, has seen a planned reduction from a high of over $100 million in tax lien assets in 2009 to $16.1million in assets at September 30, 2015.  The Company continues its focus on modernizing the ways customers can access its products and services.  A new custom branded “smart phone” application is now available and provides a simpler online banking experience, while online loan applications are increasing.  The suite of cash management products, together with improved physical locations and the Princeton, NJ limited service office, are helping to drive the growth within our attractive geography. 

Consolidated Net Income

Net income attributable to the Company was $1.5 million, or $0.04 per diluted share, and $4.6 million, or $0.11 per diluted share, for the three and nine months ended September 30, 2015, respectively, compared to  net income of $1.4 million, or $0.05 per diluted share, and $4.3 million, or $0.15 per diluted share, for the three and nine months ended  September 30, 2014, respectively.The basic and diluted earnings per share for 2015 were impacted by the increase in average common shares outstanding as a result of a private placement and shareholders’ rights offering which closed in the third quarter of 2014. Factors that positively contributed to the net income results for the three months ended September 30, 2015 as compared to the three months ended September 30,2014 were:

· Net interest income increased $594,000, or 10.7%, due to an increase of $17.5 million in average interest-earning assets and a shift from investment securities into higher-yielding loans.

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· The credit to the allowance for loan and lease losses was $216,000, an increase of $165,000, due to a decline in historical loss rates and recoveries on impaired loans.

· Professional and legal expenses declined $190,000, or 33.3%.

Partially offsetting these positive items were decreases of $158,000, $107,000, and $80,000 in net gains on the sale of investment securities, gains on sales of premises and equipment, and net gains on the sale of loans and leases, respectively.  Additional negative items were increases of $232,000, $122,000, and $68,000in other real estate owned (“OREO”) expenses and impairment,occupancy and equipment expenses, and loan collection expenses, respectively.

Factors that contributed to the $288,000 improvement in net income attributable to the Company for the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014 were:

· Net interest income increased $670,000, or 4.0%, due to investment securities being sold to fund higher-yielding loans.

· The credit to the allowance for loan and lease losses was $1.4 million in 2015, an increase of $617,000 from 2014, due to a decline in historical loss rates and recoveries on impaired loans.

· Gains on the sale of investment securities were $652,000 in 2015, an increase of $322,000,  from 2014.

· Gains on the sale of OREO were $769,000, an increase of $136,000, or 21.5%, from 2014.

Partially offsetting these positive items were increases of $347,000, $320,000, $277,000, and $248,000 in occupancy and equipment expenses,  employee salaries and benefits,  the provision for unfunded loan commitments, and OREO expenses and impairment,respectively.  Additionally, net gains on the sales of loans and leases decreased $223,000.

Interest Income

Total interest income of $7.8 million for the third quarter of 2015increased $607,000, or 8.4%, from the comparable quarter of 2014.  The growthin interest income was related to a $17.5 million increase in average interest-earning assets along with a 24 basis point increase in the average yield on such assets.  Additionally, the composition in average interest-earning assets shifted significantly from investment securities to loans and leases.  Average interest-earning assets amounted to $696.5 million in the third quarter of 2015 compared to $679.0 million for the third quarter of 2014. Quarter over quarter, interest income on loans and leases increased $1.0 million while interest income on investment securities decreased $400,000. Included in interest income on loans for the third quarter of 2015 was approximately $97,000 in interest income collected upon the payoff of a non-accrual loan.  Average loans and leases grew $73.2 million, or 19.0%, to $459.5 million, while average investment securities dropped $61.8 million, or 22.0%, to $218.8million from the quarter ended September 30, 2014.  Average cash equivalents increased $6.0 million quarter over quarter. We  have strategically sold investment securities with lower yields, shorter maturities, or extension risk in a rising rate environment. Additionally in the third quarter of 2015, we sold the majority of the corporate bonds to minimize the credit risk within our portfolio.  The cash flows from these transactions along with principal and interest payments on the investment portfolio were reinvested in loans and leases and government sponsored mortgage-backed securities and collateralized mortgage obligations (“CMOs”).

Total interest income was $22.1 million for the nine months ended September 30, 2015and increased $598,000 from $21.6 million from September 30, 2014.Year over year, interest income on loans and leases increased $2.0 million while interest income on investment securities decreased $1.4 million and was directly related to the change in asset composition.  For 2015,  interest income on loans included $232,000 thatwas receivedupon the payoff of two non-accrual loans.  Average interest-earning assets amounted to $684.3 million for the nine months ended September 30, 2015, which resulted in a decrease of $2.4 million, or 0.4%, from the level of $686.7 million in the comparable period in 2014. Average loans and leases grew $62.9 million, or 16.8%, to $437.2 million, while average investment securities declined  $73.1 million, or 24.1%, to $230.4 million from the nine months ended September 30, 2014.  Average cash equivalents increased $7.8 million year over year. During the past year, we sold investment securities with lower yields, shorter maturities, or extension risk in a rising rate environment.  As mentioned previously in the third quarter of 2015, we sold the majority of the corporate bonds to minimize the credit risk within our portfolio.  During the first three quarters of 2015, we recorded gains on these sales of $652,000. The cash flows from these transactions along with principal and interest payments on the investment portfolio were reinvested in loans and leases and government sponsored mortgage-backed securities and

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CMOs, and paid back a $10.0 million matured Federal Home Loan Bank (“FHLB”) borrowing in the second quarter of 2015.

For the third quarter of 2015, the yield on average interest-earning assets of 4.44% amounted to an increase of24 basis points from the yield of 4.20% for the prior year’s third quarter. Despite the increase in interest income on loans, the average yield on loans declined three basis points (5.57% in 2015 versus 5.60% in 2014). The decrease in loan yield reflects the competitive pricing environment we are experiencing for high quality loans. The average yield on investments declined three basis points quarter over quarter (2.42% in 2015 versus 2.45% in 2014).

For the nine months ended September 30, 2015, the yield on average interest-earning assets increased 13 basis points to 4.33% from the yield of 4.20% for the comparable period in 2014. Although interest income earned on loans increased, the average yield on loans declined 22 basis points (5.47% in 2015 versus 5.69% in 2014). As mentioned previously, the decrease in loan yield reflects the competitive pricing environment we are experiencing for high quality loans. Despite the decline in average investment securities, the average yield on investments was static at 2.47% for both 2015 and 2014. During the first quarter of 2015, the FHLB of Pittsburgh declared and paid a special dividend based on the 2014 average stock outstanding for each shareholder.  We received approximately $94,000 as a result of this special dividend, which had a positive impact on the average investment yield for 2015.

Interest Expense

Total interest expense of $1.6 million in the third quarter of 2015 increased  $13,000, or 0.8%, from the comparable quarter of 2014. The small increase in interest expense was primarily associated with an increase in interest expense on average interest-bearing deposits which was partially offset by a decline in interest expense on average borrowings.  For the third quarter of 2015, average interest-bearing liabilities of $573.7 million decreased $2.9 million, or 0.5%, from $576.6 million for the comparable period in 2014.  For the three months ended September 30, 2015, average interest bearing deposits increased $7.0 million, or 1.6%, to $459.9 million, while average borrowings decreased $10.0 million, or 8.1%, to $113.8 million from the comparable quarter of 2014.  Average NOW and money market accounts and savings accounts grew $2.9 million and $13.1 million to $210.7 million and $32.6 million, respectively, quarter over quarter. Average certificates of deposit (“CDs”) amounted to $216.7 million, which represented a decrease of $9.0 million, or 4.0% from the comparable quarter of 2014. For the third  quarter of 2015, the interest paid on the average interest-bearing deposits increased $68,000, or 7.6%,while the interest paid on average borrowings declined $55,000, or 7.6% from the comparable quarter of 2014.  

Total interest expense for the first three quarters of 2015 was  $4.8 million and declined $72,000, or 1.5%, from the comparable period of 2014. The reduction in interest expense was primarily associated with a decline in interest expense on average borrowings as a result of the lower average balances, which was partially offset by an increase in interest expense on interest-bearing deposits.  For the nine months ended September 30, 2015, average interest-bearing liabilities of $567.4 million decreased $22.1 million, or 3.7%, from $589.5 million for the comparable period in 2014.  For the nine months ended September 30, 2015, average borrowings amounted to $116.5 million which reflected a decline of $14.0 million, or 10.7% from 2014.  The decline in this average balance resulted in a decrease in interest expense of $156,000. Average CDs amounted to $220.6 million, which represented a decrease of $10.1 million, or 4.4% from the comparable period in 2014.  Additionally, NOW and money market accounts declined $4.1 million, or 2.0%, from the comparable period in 2014.  Partially offsetting these declines in interest-bearing deposit products was an increase of $6.1 million, or 33.0%, in savings accounts.  For the firstnine months of  2015, the interest paid on the average interest-bearing depositsgrew$84,000,  or 3.1%,from the comparable period of 2014.  

The average interest rate paid on average total interest-bearing liabilities during the thirdquarter of 2015 amounted to 1.13% compared to 1.12% for the comparable quarter of 2014. During the third quarter of 2015 the average interest rate paid on average interest-bearing deposits was 0.84% compared to 0.79% during the comparable quarter of 2014. Despite the decline in average balances for CDs quarter versus quarter, the average rate paid on this deposit classification increased nine basis points (1.38% in 2015 versus 1.29% in 2014).  Additionally, the average rates paid on savings and NOW and money market accounts increased 27 basis points (0.43% in 2015 versus 0.16% in 2014) and three basis points (0.34% in 2015 versus 0.31% in 2014), respectively.  The increases in the average rates paid on average interest-bearing deposits reflect the competitive pricing in our market area for all deposit product types.  During the third quarter, we successfully

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promoted a savings account campaign.  The average interest rate paid for borrowings during the third quarter of 2015 was 2.33%, which amounted to an increase of one basis point from the average rate paid of 2.32% during the third quarter of 2014. 

The average interest rate paid on average total interest-bearing liabilities during the first nine months of 2015 amounted to 1.13%  compared to 1.10% for the comparable periodin2014. During the firstthreequarters of 2015 the average interest rate paid on average interest-bearing deposits was 0.83%  compared to 0.79% for the comparable period in 2014.  Despite the decline in average balances for CDs year over year, the average rate paid on this deposit classification increased nine basis points  (1.36% in 2015 versus 1.27% in 2014) and reflects the competitive pricing in our market area.  The average rates paid on savings accounts increased 11 basis points (0.28% in 2015 versus 0.17% in 2014)and NOW and money market accountsincreased two basis points (0.33% in 2015 versus 0.31% in 2014). The average interest rate paid for borrowings during the firstthree quarters of 2015 was 2.30%, which amounted to an increase of nine basis points from the average rate paid of 2.21% during the firstthreequarters of 2014. 

Net Interest Income and Margin

Net interest income for the quarter ended September 30, 2015 amounted to $6.2 million, resulting in anincrease of $594,000, or 10.7%, from the comparable quarter of 2014. The growth in net interest income wasimpacted by the growth in average interest-earning assets and the change in the average interest-earning asset composition.   Quarter over quarter, average loans outstanding increased $73.2 million, or 19.0%, while average investments declined $61.8 million, or 22.0%. The change in the average asset mix contributed an additional $607,000 in interest income.  

Net interest income for the nine months ended September 30, 2015 amounted to $17.4 million, resulting in an increase of $670,000, or 4.0%, from the comparable period in 2014. The improvement in net interest income wasdirectly related to the change in the composition of average interest-earning assets coupled with a$72,000 reduction in interest expense on average interest-bearing liabilities.  The average yield on investment securities remained flat at 2.47% despite a $73.1 million decline in average balances.As mentioned previously the FHLB special dividend positively affected the average yield. Although average loans outstanding increased $62.9 million year over year, the average yield earned on such loans declined 22 basis points and reflects the pricing competition for quality loans.

The net interest margin for the third quarter of 2015 was 3.51%, which grew 26 basis points from 3.25% for the comparable quarter of 2014. The average yield on interest-earning assets for the third quarter of 2015  was 4.44% compared to 4.20% for the same period in 2014.  Funding costs slightly increased from an average interest rate paid of 1.12% for thethird quarter of 2014 to 1.13% for the third quarter of 2015.  During the third quarter of 2015, we saw an increase in average rates paid on all interest-bearing deposit product types.  The average rates paid on average savings, CDs, and NOW and money market accounts went up by 27, nine,  and three basis points, respectively.We have been experiencing competitive pricing pressure in our market area to retain deposits.  Additionally, the average rate paid on average borrowings increased one basis point despite a $10.0 million decline in the average balance.

The net interest margin for the first nine months of 2015 was 3.39%, which grew 14 basis points from 3.25% for the comparable period in 2014. The average yield on interest-earning assets for the nine months ended September 30, 2015 was 4.33% compared to 4.20% for the same period in 2014.  Both the FHLB special dividend of approximately $94,000 and the collection of approximately  $232,000 in interest income upon the payoff of two non-accrual loanscontributed to the improvement in the average yield on interest-earning assets.The average yield on investment securities remained 2.47%despite the $73.1 million declinein the average balance.  Funding costs increased from an average interest rate paid of 1.10% for the first nine months of 2014 to 1.13% for the first nine months of 2015.  The increase in average interest rates paid occurred in all interest-bearing segments or products. We have been experiencing competitive pricing pressure in our market area to retain deposits.

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The following tables represent the average daily balances of assets, liabilities and shareholders’ equity and the respective interest-earning assets and interest-bearing liabilities, as well as average rates for the periods indicated.  The loans outstanding include non-accruing loans.  The yields are presented on an annualized basis.

	For the three months ended						For the three months ended
	September 30, 2015						September 30, 2014
(In thousands, except percentages)	Average Balance		Interest		Yield/Rate			Average Balance		Interest	Yield/Rate
Cash equivalents	$	18,184	$	8	0.17	%	$	12,152	$	6	0.20	%
Investment securities		218,767		1,334	2.42	%		280,579		1,734	2.45	%
Loans		459,543		6,456	5.57	%		386,308		5,451	5.60	%
Total interest earning assets		696,494		7,798	4.44	%		679,039		7,191	4.20	%
Non-earning assets		43,722						45,335
Total average assets	$	740,216					$	724,374
Interest-bearing deposits
NOW and money markets	$	210,652	$	182	0.34	%	$	207,731	$	161	0.31	%
Savings		32,589		35	0.43	%		19,449		8	0.16	%
Certificates of deposit		216,653		751	1.38	%		225,679		731	1.29	%
Total interest bearing deposits		459,894		968	0.84	%		452,859		900	0.79	%
Borrowings		113,767		668	2.33	%		123,743		723	2.32	%
Total interest bearing liabilities		573,661		1,636	1.13	%		576,602		1,623	1.12	%
Non-interest bearing deposits		79,791						66,251
Other liabilities		20,889						23,150
Shareholders' equity		65,875						58,371
Total average liabilities and equity	$	740,216					$	724,374
Net interest income			$	6,162					$	5,568
Net interest margin					3.51	%					3.25	%

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	For the nine months ended						For the nine months ended
	September 30, 2015						September 30, 2014
(In thousands, except percentages)	Average Balance		Interest		Yield			Average Balance		Interest	Yield
Cash equivalents	$	16,754	$	21	0.17	%	$	8,964	$	16	0.24	%
Investment securities		230,361		4,250	2.47	%		303,485		5,610	2.47	%
Loans		437,188		17,878	5.47	%		374,270		15,925	5.69	%
Total interest earning assets		684,303		22,149	4.33	%		686,719		21,551	4.20	%
Non-earning assets		45,214						46,165
Total average assets	$	729,517					$	732,884
Interest-bearing deposits
NOW and money markets	$	205,646	$	508	0.33	%	$	209,772	$	494	0.31	%
Savings		24,765		52	0.28	%		18,620		24	0.17	%
Certificates of deposit		220,564		2,236	1.36	%		230,688		2,194	1.27	%
Total interest bearing deposits		450,975		2,796	0.83	%		459,080		2,712	0.79	%
Borrowings		116,456		2,002	2.30	%		130,452		2,158	2.21	%
Total interest bearing liabilities		567,431		4,798	1.13	%		589,532		4,870	1.10	%
Non-interest bearing deposits		75,563						64,832
Other liabilities		21,646						24,316
Shareholders' equity		64,877						54,204
Total average liabilities and equity	$	729,517					$	732,884
Net interest income			$	17,351					$	16,681
Net interest margin					3.39	%					3.25	%

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Rate Volume Analysis

The following table sets forth a rate/volume analysis, which segregates in detail the major factors contributing to the change in net interest income forthe three and nine months ended September 30, 2015, as compared to the respective period in 2014, into amounts attributable to both rates and volume variances.

	For the three months ended							For the nine months ended
	September 30,							September 30,
	2015 vs. 2014							2015 vs. 2014
		Increase (decrease)						Increase (decrease)
(In thousands)	Volume		Rate		Total			Volume		Rate		Total
Interest income
Interest-bearing deposits	$	2	$	—	$	2	$	9	$	(4)	$	5
Total short term earning assets		2		—		2		9		(4)		5
Investment securities		(509)		109		(400)		(1,485)		125		(1,360)
Loans
Commercial demand loans		125		74		199		68		(100)		(32)
Commercial mortgages		11		558		569		1,061		527		1,588
Residential and home equity loans		(207)		250		43		273		(21)		252
Leases receivables		(183)		457		274		734		(68)		666
Tax certificates		201		(329)		(128)		(421)		(74)		(495)
Consumer loans		(11)		14		3		29		(4)		25
Loan fees		45		—		45		(51)		—		(51)
Total loans		(19)		1,024		1,005		1,693		260		1,953
Total (decrease) increase in interest income	$	(526)	$	1,133	$	607	$	217	$	381	$	598
Interest expense
Deposits
NOW and money market	$	2	$	19	$	21	$	(10)	$	24	$	14
Savings		7		20		27		10		18		28
Certificates of deposit		(30)		50		20		(99)		141		42
Total deposits		(21)		89		68		(99)		183		84
Borrowings
Borrowings		(57)		(2)		(59)		(233)		70		(163)
Subordinated debentures		—		4		4		—		7		7
Total borrowings		(57)		2		(55)		(233)		77		(156)
Total (decrease) increase in interest expense	$	(78)	$	91	$	13	$	(332)	$	260	$	(72)
Total increase in net interest income	$	(448)	$	1,042	$	594	$	549	$	121	$	670

Credit for Loan and Lease Losses

We recorded credits to the allowance for loan and lease losses of $216,000 and $1.4 million for the three and nine months ended September 30, 2015,  respectively, compared to credits of$51,000 and $765,000 for the corresponding periods in 2014.  For the nine months ended September 30, 2015,charge-offswere $1.6 million compared to $1.7 million for the first nine months of 2014.  The charge-offs in both periods were mostly related to specific reserves on impaired loans.  During the first three quarters of 2015, we recorded recoveries of $1.1 million compared to $275,000 for the same period in 2014.  The $904,000improvement in net charge-offs,  the reduction in the overall historical loss rates, and the continued improvementin overall credit quality combined to positively impact the credit to the allowance for loan and lease losses in 2015.

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Non-interest Income

Non-interest income for the third quarter of 2015 was $700,000 compared to $1.2 million for the comparable quarter of 2014 resulting in a decrease of $504,000. Net gains on the sale of AFS investment securities declined $158,000 to  $80,000 for the three months ended September 30, 2015 compared to $238,000 for the comparable period in 2014.  Additionally, we saw declines in gains on the sale of premises and equipment ($0 in 2015 versus $107,000 in 2014), gains on sales of loans and leases ($0 in 2015 versus $80,000 in 2014),  and net gains in the sale of OREO ($123,000 in 2015 versus $173,000 in 2014). Partially offsetting these declines was a $50,000 increase in service charges and fees ($298,000 in 2015 versus $248,000 in 2014) and was predominantly related to RBA Leasing activity. 

Non-interest income for the first nine months of 2015 and 2014 was $2.8 million and increased  $38,000 year over year.  Net gains on the sale of AFS investment securities were $652,000 for the nine months ended September 30, 2015 compared to $330,000 for the comparable period in 2014.  Because the 10-year US Treasury rate has retreated during the year, the Company was able to sell certain investment securities which had extension risk in a rising interest rate environment for a net gain, reinvest the proceeds into loans and pay off a $10.0 million FHLB borrowing.  Additionally in the third quarter of 2015, we sold the majority of the corporate bonds to minimize the credit risk within our portfolio. Net gains on the sale of OREO increased $136,000 ($769,000 in 2015 versus $633,000 in 2014).  Partially offsetting these increases was a decrease of $223,000 in net gains on the sales of loans and leases ($0 in 2015 versus $223,000 in 2014).

Non-interest Expense

Non-interest expense was $5.4 million for the third quarter in 2015 and 2014 and slightly decreased $10,000, or 0.2%, quarter over quarter.  OREO expenses and impairment increased $232,000 ($386,000 in 2015 versus $154,000 in 2014)and was mostly related to impairment charges.  OREO impairment charges were $304,000 in the third quarter of 2015 compared to $61,000 for the same period in 2014.  During the third quarter of 2015, we recorded $125,000 in impairment charges on two land parcels which were based on agreements of sale.  The remainder of the increase was related to OREO properties withinthe tax lien portfolio.Additionally, we recorded increases of $122,000 in occupancy and equipment ($736,000 in 2015 versus $614,000 in 2014) and $68,000 in loan collection expenses ($138,000 in 2015 versus $70,000 in 2014). Rent expense and depreciation costs increased $125,000 due to the branch relocations in 2014 and 2015 and the consolidation of non-retail personnel in the Bala Cynwyd Customer Center, each designed for improved marketability and future efficiency. The increase inoccupancy and equipment expenses  was fully integrated into our budget.  The increase in loan collection expenses was related to the expenses associated with impaired loans.  Partially mitigating these increases was a decline of $190,000 in professional and legal fees($380,000 in 2015 versus $570,000 in 2014), which was largely due to the resolution of problem assets, a $103,000reduction in FDIC andstate assessments due to the termination of an informal agreement with the FDIC in the first quarter of 2015 ($158,000 in 2015 versus $261,000 in 2014) and an $82,000 reduction in the provision for unfunded loan commitments.  During the third quarter of 2015, the unfunded loan commitments related to construction loans declined $5.5 million due to construction advances on those commitments.

Non-interest expense increased $749,000, or 4.8%, from $15.7 million for the first threequarters of 2014 to $16.5 million for the first threequarters of 2015. We recorded increases of $347,000 in occupancy and equipment ($2.2 million in 2015 versus $1.9 million in 2014), $320,000 in employee salaries and benefits ($7.8 million in 2015 versus $7.5 million in 2014), $277,000 in the provision for credit losses on off-balance sheet credit exposures ($282,000 in 2015 versus $5,000 in 2014), and $248,000 in OREO expenses and impairment ($1.1 million in 2015 versus $892,000 in 2014).  As stated previously, we relocated a few of our retail branches and consolidated non-retail personnel in the Bala Cynwyd Customer Center. As a result,  rent expense and depreciation costs increased $470,000, while expenses associated with utilities and maintenance declined $95,000.Additionally, in the first nine months of 2014, we benefited from approximately $66,000 in rent abatements. To attract and retain employees, wereinstated the 401(k) match program in the fourth quarter of 2014 and revised our employeeincentive program.  Both increases in occupancy and equipment expensesand salaries and benefits were fully integrated into our strategic plan.  Unfunded loan commitments grew approximately $15.0 million to $64.0 million at September 30, 2015.  Partially mitigating these increases was a decline of $248,000 in professional and legal fees ($1.3 million in 2015 versus $1.6 million in 2014) and $237,000 in the FDIC and state assessments($533,000 in 2015 versus $770,000 in 2014) for the reasons cited in the previous paragraph.

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Income Tax Expense

Total income tax expense for the three and nine months ended September 30, 2015 and the comparable periods in2014 was $0. Despite net income of $1.5 million and $4.6 million for the third quarter and the first nine months of 2015, the Company did not record a tax expense due to the utilization of net operating loss carryforwards from prior years. 

As of September 30, 2015 and December 31, 2014 after weighing all available positive and negative evidence, management concluded there still exists uncertainty as to whether or not the deferred tax asset (“DTA”) would be fully realized.  We will continue to evaluate the evidence on a quarterly basis. For the first threequarters of 2015 and 2014, we had valuation allowances on DTAs which were a result of the net operating losses and the portion of the future tax benefit that more likely than not will not be utilized in the future. As of September 30, 2015 and December 31, 2014 the valuation allowance for the net DTA totaled $36.4 million and $39.1 million, respectively.  

In time, the DTA valuation allowance may be reversed based on our analysis of the positive and negative evidence, and is dependent on the amount of viable tax planning strategies available to the Company,  the Company’s financial position, and results of projected future earnings, among other factors. There can be no assurance, however, as to when we could be in a position to recapture our valuation allowance on the DTA.

The Company’s effective tax rate is the provision for federal income taxes expressed as a percentage of income or loss before federal income taxes. The effective tax rate for the first nine months of both 2015 and 2014 was 0%. In general our effective tax rate is different from the federal statutory rate primarily due to theutilization of net operating loss carryforwardsmentioned previously.

Results of Operations by Business Segments

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 Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”).  We have identified two reportable operating segments, “Community Banking” and “Tax Liens”. 

	Three months ended  September 30, 2015
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	745,853	$	16,058	$	761,911
Total deposits	$	553,764	$	—	$	553,764
Interest income	$	7,625	$	173	$	7,798
Interest expense		1,447		189		1,636
Net interest income (expense)	$	6,178	$	(16)	$	6,162
(Credit) provision for loan and lease losses		(254)		38		(216)
Total non-interest income		538		162		700
Total non-interest expense		4,932		433		5,365
Income tax expense		—		—		—
Net income (loss)	$	2,038	$	(325)	$	1,713
Noncontrolling interest	$	179	$	—	$	179
Net income (loss) attributable to Royal Bancshares	$	1,859	$	(325)	$	1,534

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	Three months ended  September 30, 2014
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	701,803	$	21,666	$	723,469
Total deposits	$	515,786	$	—	$	515,786
Interest income	$	6,889	$	302	$	7,191
Interest expense		1,367		256		1,623
Net interest income	$	5,522	$	46	$	5,568
(Credit) provision for loan and lease losses		(79)		28		(51)
Total non-interest income		987		217		1,204
Total non-interest expense		4,916		459		5,375
Income tax expense		—		—		—
Net income (loss)	$	1,672	$	(224)	$	1,448
Noncontrolling interest	$	69	$	(44)	$	25
Net income (loss) attributable to Royal Bancshares	$	1,603	$	(180)	$	1,423

	Nine months ended September 30, 2015
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	745,853	$	16,058	$	761,911
Total deposits	$	553,764	$	—	$	553,764
Interest income	$	21,642	$	507	$	22,149
Interest expense		4,169		629		4,798
Net interest income (expense)	$	17,473	$	(122)	$	17,351
(Credit) provision for loan and lease losses		(1,451)		69		(1,382)
Total non-interest income		1,924		906		2,830
Total non-interest expense		14,880		1,597		16,477
Income tax expense		—		—		—
Net income (loss)	$	5,968	$	(882)	$	5,086
Noncontrolling interest	$	551	$	(51)	$	500
Net income (loss) attributable to Royal Bancshares	$	5,417	$	(831)	$	4,586

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	Nine months ended September 30, 2014
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	701,803	$	21,666	$	723,469
Total deposits	$	515,786	$	—	$	515,786
Interest income	$	20,549	$	1,002	$	21,551
Interest expense		4,030		840		4,870
Net interest income	$	16,519	$	162	$	16,681
(Credit) provision for loan and lease losses		(911)		146		(765)
Total non-interest income		2,019		773		2,792
Total non-interest expense		14,221		1,507		15,728
Income tax expense		—		—		—
Net income (loss)	$	5,228	$	(718)	$	4,510
Noncontrolling interest	$	337	$	(125)	$	212
Net income (loss) attributable to Royal Bancshares	$	4,891	$	(593)	$	4,298

Community Bank Segment

Royal Bank America

Royal Bank commenced operation as a Pennsylvania state-chartered bank in 1963. Royal Bank is the successor of the Bank of King of Prussia, the principal ownership of which was acquired by the Tabas family in 1980. The deposits of Royal Bank are insured by the FDIC to the highest amount permitted by law.  Royal Real Estate of Pennsylvania, Inc., RBA Property LLC, Narberth Property Acquisition LLC, and Rio Marina LLC are wholly owned subsidiaries of Royal Bank.  Royal Bank also has an 80% and 60% ownership interest in Crusader Servicing Corporation (“CSC”) and Royal Bank America Leasing, LP, respectively.  CSC and Royal Bank’s wholly owned subsidiary Royal Tax Lien Services, LLC, were formed to purchase and service delinquent tax liens. 

Royal Bank derives its income principally from interest charged on loans and leases, interest earned on investment securities, and fees received in connection with the origination of loans and other services.  Royal Bank’s principal expenses are interest expense on deposits and borrowings and operating expenses.  Operating revenues, deposit growth, principal payments on and maturities and sales of investment securities, loan and OREO sales and the repayment of outstanding loans provide the majority of funds for activities.

Royal Bank conducts business operations as a commercial bank offering traditional consumer and business deposit products and services (excluding trust) and commercial and consumer loans, including home equity and SBA loans. Fee income services such as a suite of cash management products, remote deposit capture, mobile deposits, and payroll and merchant services have been greatly improved or expanded. Services may be added or deleted from time to time. Royal Bank’s business and services are not subject to significant seasonal fluctuations.

Service Area: Royal Bank’s primary service area includes Pennsylvania, primarily Montgomery, Chester, Bucks, Delaware, Berks and Philadelphia counties, and central and southern New Jersey. This area includes residential areas and industrial and commercial businesses of the type usually found within a major metropolitan area. Royal Bank serves this area from two loan production offices and thirteen retail branches located throughout Montgomery, Philadelphia, Delaware and Berks counties and Camden County, New Jersey. Royal Bank also considers New York, Maryland, and Delaware as a part of its service area for certain products and services. In the past, Royal Bank had frequently conducted business with clients located outside of its service area. Royal Bank has loans in 17 states and Washington, DC via loan originations

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with service area borrowers and/or participations with other lenders who have broad experience in those respective markets. Royal Bank’s headquarters are located at 732 Montgomery Avenue, Narberth, Pennsylvania 19072.

Competition:  The financial services industry in our service area is extremely competitive. Competitors within our service area include banks and bank holding companies with greater resources. Many competitors have substantially higher legal lending limits. In addition, savings banks, savings and loan associations, credit unions, money market and other mutual funds, brokerage firms, mortgage companies, leasing companies, finance companies and other financial services companies offer products and services similar to those offered by Royal Bank, on competitive terms.

Employees: Royal Bank employed approximately 118 people on a full-time equivalent basis as of September 30, 2015.

Deposits: At September 30, 2015, total deposits of Royal Bank were distributed among demand deposits (16%), money market, savings and NOW accounts (47%) and time deposits (37%). At September 30, 2015, deposits of $564.8 million increased $26.6 million from $538.2 million at year end 2014. Included in Royal Bank’s deposits are approximately $11.0 million of intercompany deposits that are eliminated through consolidation.

Lending: At September 30, 2015, Royal Bank, including its subsidiaries, had a totalnet loan and lease portfolio of $461.4 million, representing 62% of total assets. The loan portfolio is categorized into commercial and industrial, commercial mortgages, residential mortgages (including home equity lines of credit), construction, tax certificates, small business leases and consumer loans.  At September 30, 2015, net loans and leases increased $58.0 million, or 14.4%, from year end 2014 due to new loan originations, loan participation purchases,loan purchases, and a decline in the allowance for loan and lease losses, which were partially offset by pay downs, payoffs, charge-offs, and transfers to OREO.

Business results: Total assets of Royal Bank were $757.3 million at September 30, 2015 compared to $724.1 million at year end 2014.  Royal Bank recorded net income of $1.6 million and $4.6 million for the three and nine months ended September 30, 2015, respectively.Net income for the three and nine months ended September 30, 2014 was $1.3 million and $4.2 million, respectively. Royal Bank’s total interest income for the quarter and nine months ended September 30, 2015 was $7.8 million and $22.1 million, respectively, compared to $7.2 million and $21.5 million for the quarter and nine months ended September 30, 2014. The increase in interest income was primarily attributed to an increase in average interest-earning assets and a change in its composition. Quarter over quarter the average balance for investments declined $61.2 million whileaverage loans outstanding, which typically earn a higher yield than investment securities, increased $73.2 million. Interest expense was $1.6 million and $4.8 million for the three and nine months ended September 30, 2015, respectively, compared to $1.6 million and $4.9 million for the three and nine months ended September 30,  2014, respectively.

The $283,000 improvement in net income quarter versus quarter was mainly attributable to increases of $599,000 and  $165,000 in net interest income and the credit to allowance for loan and lease losses, respectively. Partially offsetting these items was a $232,000 increase in OREO expenses and impairment, an anticipated increase of $118,000 in occupancy and equipment costs, a $107,000 decline in gains on the sale  of premises and equipment, and an $80,000 decline in gains on the sale of loans and leases.  The $372,000 improvement in net income year over year was mainly attributable to increases of $677,000,  $617,000, $399,000and $136,000 in net interest income, the credit to allowance for loan and lease losses, net gains on the sale of investments, and net gains on the sale of OREO, respectively. Partially offsetting these items were anticipated increases of $355,000 and $320,000 in occupancy and equipment costs and employee salaries and benefits, respectively.  Additionally, we saw increases of  $277,000 and $248,000 in the provision for unfunded loan commitments due to loan growth and OREO expenses and impairment and a $223,000 reduction in gains on the sale of loans and leases. The above amounts reflect the consolidated totals for Royal Bank and its subsidiaries.  The subsidiaries included in these amounts are Royal Investments America, Royal Real Estate, Royal Bank America Leasing, Royal Tax Lien Services, Crusader Servicing Corporation, RBA Property LLC, Narberth Property Acquisitions, and Rio Marina LLC.

Royal Investments of Delaware

On June 30, 1995, the Company established a special purpose Delaware investment company, Royal Investments of Delaware (“RID”), as a wholly owned subsidiary. Legal headquarters are at 1105 N. Market Street, Suite 1300, Wilmington, Delaware. RID buys, holds and sells investment securities.

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Business results: For the three and nine months endedSeptember 30, 2015, RID reported net income of $160,000 and $691,000 respectively, compared to net income of $362,000 and $718,000 for the three and nine months endedSeptember 30, 2014. The quarter versus quarter decrease was primarily related to a 219,000 decrease in gains on the sale of investment securities.  The year over year decrease was attributed to a $76,000 decline in gains on the sale of investment securities, which was partially offset by $49,000 reduction in non-interest expense mostly associated with private equity funds.  At September 30, 2015 total assets of RID were $31.2 million, of which $10.5 million was held both in cash and cash equivalents and in investment securities. The amounts shown above include the activity related to RID’s wholly owned subsidiary Royal Preferred LLC.  Royal Bank previously extended loans to RID, secured by securities and as per the provisions of Regulation W.  At September 30, 2015 no loans were outstanding.

Royal Preferred LLC

On June 16, 2006, the Company, through its wholly owned subsidiary RID, established Royal Preferred LLC as a wholly owned subsidiary. Royal Preferred LLC was formed to purchase a subordinated debenture from Royal Bank America.  At September 30, 2015, Royal Preferred LLC had total assets of $22.0 million. 

Royal Bancshares Capital Trust I and II

On October 27, 2004, the Company formed two Delaware trust affiliates, Royal Bancshares Capital Trust I and Royal Bancshares Capital Trust II, in connection with the sale of an aggregate of $25.0 million of a private placement of trust preferred securities. The interest rates for the debt securities associated with the Trusts at September 30, 2015 were 2.49%.

Under the MOU as described in “Note 2 – Regulatory Matters and Significant Risks or Uncertainties” to the Consolidated Financial Statements, the Company and its non-bank subsidiaries may not make any distributions of interest, principal, or other sums on subordinated debentures or trust preferred securities without the prior written approval of the Reserve Bank and the Director of the Division of Banking Supervision and Regulation of the Board of Governors of the Federal Reserve System.  We received approval and paid the required interest payment in the first, second, and thirdquarters of 2015.

Royal Bank America Leasing, LP

On July 25, 2005, the Company, through its wholly owned subsidiary Royal Bank, formed Royal Bank America Leasing, LP (“Royal Leasing”). Royal Bank holds a 60% ownership interest in Royal Leasing. Legal headquarters are at 550 Township Line Road, Blue Bell, Pennsylvania. Royal Leasing was formed to originate small business financing leases. Royal Leasing originates the leases through its internal sales staff and through independent brokers located throughout its business area. In general, Royal Leasing will portfolio individual leases in amounts up to $250,000. Leases originated in amounts in excess of $250,000 are held in the portfolio, sold or brokered to other leasing companies.

Business results: At September 30, 2015, total assets of Royal Leasing were $63.5 million, and includes $63.4 million in net leases.  Total assets were $51.8 million at December 31, 2014.  For the quarter ended September 30, 2015, Royal Leasing had net income prior to partner distributions of $725,000, an increase of $354,000 from $371,000 for the third quarter of 2014. Contributing to the favorable increase in net income was an increase in net interest income of $170,000 ($847,000 in 2015 versus $677,000 in 2014), an increase of $38,000 in commissions on brokered leases ($125,000 in 2015 versus $87,000 in 2014) and a $135,000 reduction in non-interest expenses.  The increase in net interest income was related to the $13.4 million increase in average leases quarter over quarter.For the nine months ended September 30, 2015, Royal Leasing had net income prior to partner distributions of $2.2 million,which grew $942,000 from  $1.3 million for the comparable period in 2014.Impacting the improvement in net income was an increase in net interest income of $402,000 ($2.4 million in 2015 versus $2.0 million in 2014) due to an $11.3 million increase in average leases and a $340,000 decline in the provision for lease losses ($453,000 for 2015 versus $793,000 for 2014) due to a decline in the historical loss rate of the lease portfolio.

Royal Bank has extended loans to RBA Leasing at market interest rates, secured by the lease portfolio of RBA Leasing and as per the provisions of Regulation W. At September 30, 2015, the amount due Royal Bank from RBA Leasing was $57.3 million.

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Royal Investments America

On June 23, 2003, the Company, through its wholly owned subsidiary Royal Bank, established Royal Investments America, LLC (“RIA”) as a wholly owned subsidiary. Legal headquarters are at 732 Montgomery Avenue, Narberth, Pennsylvania. RIA was formed to invest in equity real estate ventures subject to limitations imposed by the FDIC and Pennsylvania Department of Banking by regulation.

Business results: At September 30, 2015 and December 31, 2014, total assets of RIA were $6.0 million and $5.9 million, respectively.  For the quarter and nine months ended September 30, 2015, RIA had net income of $5,000 and $115,000, respectively.  The net income for 2015 was predominantly related to gains on the sale of investment securities of $116,000.  For the three and nine months ended September 30, 2014, RIA recordeda  net loss of $6,000 and  $9,000, respectively.  There were no gains on the sale of investment securities realized in 2014.  Royal Bank had previously extended loans to RIA at market interest rates, secured by the loan portfolio of RIA and as per the provisions of Regulation W. At September 30, 2015, there were no outstanding loans from Royal Bank to RIA.

Tax Lien Segment

Crusader Servicing Corporation

The Company, through its wholly owned subsidiary Royal Bank, holds an 80% ownership interest in Crusader Servicing Corporation (“CSC”). Its legal headquarters are at 732 Montgomery Avenue, Narberth, Pennsylvania.  CSC acquired, through auction, delinquent property tax liens in various jurisdictions, assuming a lien position that is generally superior to any mortgage liens on the property, and obtaining certain foreclosure rights as defined by local statute. CSC is currently being liquidated under an orderly, long term plan adopted by CSC management. 

Business results:  CSC recorded net losses of $2,000 and $256,000 for the three and nine months ended September 30, 2015compared to $219,000 and $625,000 for the comparable periods, respectively, in 2014. CSC had net interest expense of $61,000 and $230,000 for the quarter and nine months ended September 30, 2015 compared to $59,000 and $219,000 for the comparable periods in 2014,  respectively.  The $217,000 quarter over quarter improvement in net loss was primarily related to a $154,000 reduction in OREO expenses and impairment and a $73,000 decrease in professional and legal expenses.  CSC recovered $125,000 in OREO expenses from a legal settlement related to an OREO property that was transferred back to tax certificates. The $369,000 year over year improvement in net loss was associated with a $153,000 reduction in OREO expenses and impairment, an increase of $102,000 in net gains on the sales of OREO, a $89,000 decline in the provision for lien losses, and a $41,000 decrease in professional and legal expenses.  At September 30, 2015, total assets of CSC were $4.6 million, of which $1.5 million was held in tax liens and $3.1 million was in OREO, while at December 31, 2014 total assets were $4.9 million, of which $567,000 was held in tax liens and $4.2 million was held in OREO. Royal Bank has extended loans to CSC at market interest rates, secured by the tax lien portfolio of CSC and as per the provisions of Regulation W.  At September 30, 2015, the amount due Royal Bank from CSC was $5.4 million.

Royal Tax Lien Services, LLC

The Company, through its wholly owned subsidiary Royal Bank, wholly owns Royal Tax Lien Services, LLC (“RTL”). Its legal headquarters is located at 732 Montgomery Avenue, Narberth, Pennsylvania 19072.  RTL was formed to purchase and service delinquent tax certificates.  RTL typically acquired delinquent property tax liens through public auctions in various jurisdictions, assuming a lien position that is generally superior to any mortgage liens that are on the property, and obtaining certain foreclosure rights as defined by local statute.  RTL ceased acquiring tax certificates at public auctions in 2010.

Business results:  RTL recorded net losses of $323,000 and $626,000 for the three and nine months ended September 30, 2015, respectively, compared to $5,000 and $92,000 for the comparable periods, respectively, in 2014.RTL had net interest incomeof $46,000 and $108,000 for the quarter and nine months ended September 30, 2015 comparedto net interest income of  $105,000 and $381,000 for the same periods in 2014.  The net interest income reductions are related to the decline in average lien balances. The $318,000 quarter over quarter increase in net loss was primarily related toa $229,000 increase in OREO expenses and impairments and an $82,000 decrease in net gains on the sales of OREO. The

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$534,000 year over year increase in net loss was primarily related to a $571,000 increase in on OREO expenses and impairment, which was partially mitigated by a $79,000 increase in the rental income from OREO.  At September 30, 2015, total assets of RTL were $11.4 million, of which $3.8 million was held in tax liens and $5.3 million was held in OREO as compared to total assets at December 31, 2014 of $15.2 million, of which $6.6 million was held in tax liens and $5.2 million was held in OREO.

Royal Bank has extended loans to RTL at market interest rates, secured by the tax lien portfolio of RTL and as per the provisions of Regulation W.  At September 30, 2015, the amount due Royal Bank from RTL was $5.5 million.

FINANCIAL CONDITION

Consolidated Assets

Total consolidated assets at September 30, 2015 were $761.9 million, anincrease of $29.3 million, or 4.0%, from December 31, 2014.  This growth was mainly attributed to a $56.1 million increase in loans and leases that was partially offset by reductions of $19.8 million and $6.6 million in investment securities and cash and due from banks, respectively.  Cash flows from investment securities sales and payments were reinvested in loans and leases and also utilized to buy additional government issued or sponsored mortgage-backed securities or CMOs.

Cash and Cash Equivalents

Total cash and cash equivalents of $24.2 million at September 30, 2015declined $6.6 million from  $30.8 million atDecember 31, 2014due to new loan originations. It is anticipated that a portion of the cash will continue to be utilized to fund new loan originations.

Investment Securities

AFS investment securities of $230.6 million at September 30, 2015, dropped  $19.8 million, or 8.0%, from the level at December 31, 2014.  The decline was primarily due to the sales of investment securities to fund loan growth and to pay a matured $10.0 million FHLB borrowing.  FHLB stock was $2.5 million at September 30, 2015 compared to $2.6 millionDecember 31, 2014. 

The net unrealized gain in the AFS investment portfolio increased $1.3 million from $2.3 million at December 31, 2014 to $3.6 million at September 30, 2015.  The improvement in the net unrealized gain was directly related to a $1.4 million increase in the net unrealized gain on U.S. Agency CMOs.Additionally in 2015,  we were able to sell some bonds with either lower yields or extension risk, which also contributed to the improvement in the net unrealized gain.We also sold the majority of our corporate bonds to further reduce any credit risk within the portfolio. We realized net gains of $652,000 upon the sale of these investment securities. There was no OTTI impairment for any of the investmentsecurities during the first three quarters of 2015 or 2014. 

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The carrying value and fair value of investment securities available-for-sale (“AFS”) at September 30, 2015 and December 31, 2014 are as follows:

As of September 30, 2015			Included in OCI*
			Gross		Gross
	Amortized		unrealized		unrealized
(In thousands)	cost		gains		losses		Fair value
U.S. government agencies	$	26,126	$	20	$	(239)	$	25,907
Mortgage-backed securities-residential		14,184		249		(15)		14,418
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		170,111		3,122		(488)		172,745
Non-agency		2,910		25		(8)		2,927
Corporate bonds		1,500		20		—		1,520
Municipal bonds		9,926		165		(19)		10,072
Other securities		2,198		823		(24)		2,997
Common stocks		26		—		—		26
Total available for sale	$	226,981	$	4,424	$	(793)	$	230,612

As of December 31, 2014			Included in OCI*
			Gross		Gross
	Amortized		unrealized		unrealized
(In thousands)	cost		gains		losses		Fair value
U.S. government agencies	$	26,123	$	—	$	(834)	$	25,289
Mortgage-backed securities-residential		22,073		375		(61)		22,387
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		167,711		2,350		(1,084)		168,977
Non-agency		3,738		7		(14)		3,731
Corporate bonds		15,617		144		(34)		15,727
Municipal bonds		10,117		91		(35)		10,173
Other securities		2,684		1,350		—		4,034
Common stocks		33		17		—		50
Total available for sale	$	248,096	$	4,334	$	(2,062)	$	250,368

* Other Comprehensive Income

Investment securities within the AFS portfolio are marked to market quarterly and any resulting gains or losses are recorded in other comprehensive income, net of taxes, within the equity section of the balance sheet as shown in “Note 15 - Comprehensive Income (Loss)” to the Consolidated Financial Statements. When a loss is deemed to be other-than-temporary but we do not intend to sell the security and it is not more likely than not that we will have to sell the security before recovery of its cost basis, we will recognize the credit component of an OTTI charge in earnings and the remaining portion in other comprehensive income.

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Loans and Leases

We originate loans primarily in the greater Philadelphia metropolitan area as well as selected locations throughout the Mid-Atlantic region. We also have participated with other financial institutions in selected construction and land development loans outside these geographic areas. We have a concentration of credit risk in commercial real estate and construction and land development loans at September 30, 2015.  

The loans receivable portfolio is segmented into commercial loans, construction and development loans, residential loans, leases, tax certificates, and consumer loans. The commercial loan segment consists of the following classes: commercial real estate loans, multi-family real estate loans, and other commercial loans, which are also generally known as commercial and industrial loans or commercial business loans. The construction and development loan segment consists of the following classes: residential construction and commercial construction loans. Residential construction loans are made for the acquisition of and/or construction on a lot or lots on which a residential dwelling is to be built. Commercial construction loans are made for the purpose of acquiring, developing and/or constructing a commercial structure. The residential loan segment consists of the following classes: one- to four-family first lien residential mortgage loans, home equity lines of credit, and home equity loans. We classify our leases as finance leases, in accordance with FASB ASC Topic 840, “Leases”. The difference between our gross investment in the lease and the cost or carrying amount of the leased property, if different, is recorded as unearned income, which is amortized to income over the lease term by the interest method. The tax certificate segment includes delinquent property tax certificates that have been acquired through public auctions in various jurisdictions. The tax certificates assume a lien position that is generally superior to any mortgage liens that are on the property and have certain foreclosure rights as defined by state law. The tax certificates are predominantly in New Jersey. We ceased acquiring new tax certificates in 2010. Consumer loans includes cash secured and unsecured loans and lines of credit.

Commercial Loans: The commercial real estate loan portfolio consists primarily of loans secured by office buildings, retail and industrial use buildings, strip shopping centers, mixed-use and other properties used for commercial purposes primarily located in our market area. Although terms for commercial real estate and multi-family loans vary, the underwriting standards generally allow for terms up to 10 years with the interest rate being reset in the sixth year and with monthly amortization not greater than 25 years and loan-to-value ratios of not more than 80%. Interest rates are either fixed or adjustable and are based upon the prime rate or a borrowing rate from the Federal Home Loan Bank of Pittsburgh plus a margin. Prepayment fees are charged on most loans in the event of early repayment. Generally, the personal guarantees of the principals are obtained as additional collateral for commercial real estate and multi-family real estate loans.

Commercial and multi-family real estate loans generally present a higher level of risk than loans secured by one- to four-family residences. This greater risk is due to several factors, including the concentration of principal in a limited number of loans and borrowers, the effect of general economic conditions on income producing properties and the increased difficulty of evaluating and monitoring these types of loans. Furthermore, the repayment of loans secured by commercial and multi-family real estate is typically dependent upon the successful operation of the related real estate project. If the cash flow from the project is reduced (for example, if leases are not obtained or renewed, a bankruptcy court modifies a lease term, or a major tenant is unable to fulfill its lease obligations), the borrower’s ability to repay the loan may be impaired.

Our commercial business loans generally have been made to small to mid-sized businesses predominantly located in our market area. The commercial business loans are either a revolving line of credit or for a fixed term of generally 10 years or less. Interest rates are adjustable, indexed to a published prime rate of interest, or fixed. Generally, equipment, machinery, real property or other corporate assets secure such loans. Personal guarantees from the business principals are generally obtained as additional collateral. Generally, commercial business loans are characterized as having higher risks associated with them than single-family residential loans.

Our underwriting procedures include evaluations of the stability of the property’s cash flow history, future operating projections, current and projected occupancy levels, location and physical condition. Generally, we require a debt service ratio (the ratio of net cash flows from operations before the payment of debt service to debt service) of not less than 120%. We also evaluate the credit and financial condition of the borrower, and if applicable, the guarantor. Appraisal reports

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prepared by independent appraisers are obtained on each loan to substantiate the property’s market value, and are reviewed prior to the closing of the loan.

Construction and Development Loans:We originate construction loans to builders and developers predominantly in our market area. Construction and development loans are riskier than other loan types because they are more speculative in nature. Deteriorating economic or environmental conditions can negatively affect a project. Construction loans are also more difficult to evaluate and monitor. In order to mitigate some of the risks inherent in construction lending, limits are placed on the number of units that can be built on a speculative basis based upon the reputation and financial position of the builder, his/her present obligations, the location of the property and prior sales in the development and the surrounding area. Additionally, the construction budget is reviewed prior to loan origination and the properties under construction are inspected. During the construction phase of a real estate project, the loan requires interest payments only. Construction loans generally are for 12 to 18 months with loan-to-value ratios of not more than 75%.

Residential Loans:Our residential mortgages were acquired in recent years in pool purchases and are secured primarily by properties located in our primary market and surrounding areas. We generally originate home equity loans and home equity lines of credit in our market area with a maximum amount of $250,000. The collateral must be the borrower’s primary residence and the loan-to-value does not exceed 80%. Home equity lines of credit are variable rate and are indexed to the prime rate. Our home equity loans are either first or second liens and have a fixed rate.

Consumer Loans:We originate cash-secured and unsecured loans and lines of credit to individuals. Unsecured loans and lines of credit have a maximum amount of $15,000. Unsecured consumer loans generally have a higher interest rate than residential loans because they have additional credit risk associated with them.

Total loans and leases held for investment of $471.2 million increased $56.1 millionfrom the level at December 31, 2014.  The following table represents loan balances by type:

	September 30,		December 31,
(In thousands)	2015		2014
Commercial real estate	$	210,883	$	175,038
Construction and land development		38,864		45,662
Commercial and industrial		82,414		76,489
Multi-family		15,222		13,823
Residential real estate		54,025		42,992
Leases		61,954		51,583
Tax certificates		5,294		7,191
Consumer		2,560		2,354
Total loans, net of unearned income	$	471,216	$	415,132

Credit Classification Process and Credit Risk Management

We use a nine point grading risk classification system commonly used in the financial services industry. The first four classifications are rated Pass. The riskier classifications include Pass-Watch, Special Mention, Substandard, Doubtful and Loss. During the underwriting process, the Chief Credit Officer (“CCO”) assigns each loan with an initial risk rating, which is approved by the appropriate loan committee. From time to time, and at the general direction of any of the various loan committees, the ratings may be changed based on the findings of that committee. Items considered in assigning ratings include the financial strength of the borrower and/or guarantors, the type of collateral, the collateral lien position, the type of loan and loan structure, any potential risk inherent in the specific loan type, higher than normal monitoring of the loan or any other factor deemed appropriate by any of the various committees for changing the rating of the loan. Any such change in rating is reflected in the minutes of that committee.

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The loan review function is outsourced to a third party vendor which examines credit quality and portfolio management. The loan review vendor applies our loan rating system to specific credits and reviews approximately 50% of the total commercial loan portfolio. Emphasis is on the larger new and seasoned loan relationships and includes criticized and classified loans. Additionally, the loan review vendor ensures that all critical industry segments are adequately represented in their review. The loan review vendor will also review loans specifically requested by management. Upon completion of a loan review, a copy of any review receiving an adverse classification by the reviewer is presented to the Classified, Charge-off and Impairment Committee (“CCIC”) for discussion. The CCO is the primary bank officer dealing with the third party vendor during the reviews.

Loans on the Company’s Special Assets Committee list are also subject to loan review even though they are receiving the daily attention of an assigned officer and monthly attention of the Special Assets Committee.  A watch list is maintained and reviewed at each meeting of CCIC. CCIC was formed to formalize the process and documentation required to classify, remove from classification, impair or charge-off a loan. The CCIC, which is comprised of the CEO, CFO, CCO, and CLO meet as required and provide regular updated reports to the Board of Directors. Loans are added to the watch list, even though the loans may be current or less than 30 days delinquent if they exhibit elements of substandard creditworthiness. The watch list contains a statement for each loan as to why it merits special attention, and this list is distributed to the Board of Directors on a monthly basis. Loans may be removed from the watch list if the CCIC determines that exception items have been resolved or creditworthiness has improved. Additionally, if loans become serious collection matters and are listed on the Company’s monthly delinquent loan or Special Assets Committee lists, they may be removed from the watch list.  Minutes outlining the CCIC’s findings and recommendations are issued after each meeting for follow-up by individual loan officers.

Non-accrual Loans

The composition of non-accrual loans is as follows:

	As of September 30, 2015				As of December 31, 2014
	Loan		Specific		Loan		Specific
(In thousands)	balance		reserves		balance		reserves
Non-accrual loans
Commercial real estate	$	1,051	$	—	$	3,684	$	200
Construction and land development		290		145		636		—
Commercial and industrial		897		—		2,517		301
Residential real estate		918		28		959		28
Leases		736		131		317		80
Tax certificates		1,206		18		1,700		432
Total non-accrual loans	$	5,098	$	322	$	9,813	$	1,041

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Non-accrual loan activity for the first threequarters of 2015 is set forth below:

	For the nine months ended September 30, 2015
					Payments
	Beginning				and other				Transfers to		Ending
(In thousands)	balance		Additions		decreases		Charge-offs		OREO		balance
Commercial real estate	$	3,684	$	403	$	(1,388)	$	(231)	$	(1,417)	$	1,051
Construction and land development		636		—		(12)		(119)		(215)		290
Commercial and industrial		2,517		620		(1,699)		(541)		—		897
Residential real estate		959		54		(55)		—		(40)		918
Leases		317		764		(30)		(315)		—		736
Tax certificates		1,700		2,615		(380)		(433)		(2,296)		1,206
Total non-accrual loans	$	9,813	$	4,456	$	(3,564)	$	(1,639)	$	(3,968)	$	5,098

Total non-accrual loans at September 30, 2015 were $5.1 million compared to  $9.8 million at December 31, 2014.  The decline of $4.7 million was the result of $4.0million in transfers to OREO, a $3.6 million reduction in existing non-accrual loan balances through payments and payoffs, and $1.6 million in charge-offs mostly related to specific reserves,  which were partially offset by additions to non-accrual loans of $4.5 million. During the firstthreequarters of 2015,  the majority of the additions to non-accrual were in the tax certificate portfolio, which included $2.6 million in new non-accrual tax liens.  The tax certificate portfolio accounted for approximately 58% of the transfers to OREO. 

Typically, loans are restored to accrual status when the loan is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Impaired Loans

We identify a loan as impaired when it is probable that interest and principal will not be collected according to the contractual terms of the loan agreement. Impaired loans include troubled debt restructurings (“TDRs”). We do not accrue interest income on impaired non-accrual loans. Excess proceeds received over the principal amounts due on impaired non-accrual loans are recognized as income on a cash basis.  We recognize income under the accrual basis when the principal payments on the loans become current and the collateral on the loan is sufficient to cover the outstanding obligation to the Company. If these factors do not exist, we do not recognize interest income. If interest had accrued on non-accrual loans, such income would have been approximately $142,000 and $539,000 for the three months and nine months ended September 30, 2015, respectively, and $290,000 and $830,000 for the three and nine months ended September 30, 2014, respectively. At September 30, 2015,  we did not have any loans past due 90 days or more on which interest continues to accrue.

The following is a summary of information pertaining to impaired loans and leases:

	September 30,		December 31,
(In thousands)	2015		2014
Impaired loans with a valuation allowance	$	2,049	$	3,274
Impaired loans without a valuation allowance		8,069		12,804
Total impaired loans and leases	$	10,118	$	16,078
Valuation allowance related to impaired loans	$	322	$	1,041

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	For the nine months ended
	September 30,
(In thousands)	2015		2014
Average investment in impaired loans and leases	$	13,077	$	17,412
Interest income recognized on impaired loans and leases	$	471	$	292
Interest income recognized on a cash basis on impaired loans and leases	$	232	$	292

Troubled Debt Restructurings

A loan modification is deemed a TDR when two conditions are met: 1) the borrower is experiencing financial difficulty and 2) concessions are made by the Company that would not otherwise be considered for a borrower or collateral with similar credit risk characteristics.  All loans classified as TDRs are considered to be impaired.  TDRs are returned to an accrual status when the loan is brought current, has performed in accordance with the contractual restructured terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual restructured principal and interest is no longer in doubt.  At September 30, 2015,  we had nine TDRs, with a total carrying value of $5.7 million. At December 31, 2014, we had 12 TDRs with a total carrying value of $8.8 million.  The reduction in TDRs was partially related to the payoffs of two TDRs which had a carrying value of $1.5 million at December 31, 2014.  Additionally during the third quarter of 2015, one non-accrual TDR for $215,000 was transferred to OREO after recording a $39,000 charge-off.  Our policy for TDRs is to recognize income on currently performing restructured loans under the accrual method.

	As of September 30, 2015
				Non-
	Number of	Accrual		Accrual
(In thousands)	loans	Status		Status		Total TDRs
Commercial real estate	3	$	2,818	$	—	$	2,818
Construction and land development	1		—		95		95
Commercial and industrial	4		2,722		—		2,722
Residential real estate	1		—		290		290
Total	9	$	5,540	$	385	$	5,925

Allowance for Loan and Lease Losses

Our loan and lease portfolio (the “credit portfolio”) is subject to varying degrees of credit risk. We maintain an allowance for loan and lease losses (the “allowance”) to absorb losses in the loan and lease portfolio.  The allowance is based on the review and evaluation of the loan and lease portfolio, along with ongoing, quarterly assessments of the probable losses inherent in that portfolio. The allowance represents an estimation made pursuant to FASB ASC Topic 450, “Contingencies” (“ASC Topic 450”) or FASB ASC Topic 310, “Receivables” (“ASC Topic 310”).  The adequacy of the allowance is determined through evaluation of the credit portfolio, and involves consideration of a number of factors, as outlined below, to establish a prudent level.

Determination of the allowance is inherently subjective and requires significant estimates, including estimated losses on pools of homogeneous loans and leases based on historical loss experience and consideration of current economic trends, which may be susceptible to significant change. Loans and leases deemed uncollectible are charged against the allowance, while recoveries are credited to the allowance. Management adjusts the level of the allowance through the provision for loan and lease losses, which is recorded as a current period expense. Our systematic methodology for assessing the appropriateness of the allowance includes: (1) general reserves reflecting historical loss rates by loan type, (2) specific reserves for risk-rated credits based on probable losses on an individual or portfolio basis and (3) qualitative reserves based upon current economic conditions and other risk factors.

The loan portfolio is stratified into loan classifications that have similar risk characteristics. The general allowance is based upon historical loss rates using a weighted three-year rolling average of the historical loss experienced within each loan

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classification. The qualitative factors used to adjust the historical loss experience address various risk characteristics of our loan and lease portfolio include evaluating: (1) trends in delinquencies and other non-performing loans, (2) changes in the risk profile related to large loans in the portfolio, (3) changes in the growth trends of categories of loans comprising the loan and lease portfolio, (4) concentrations of loans and leases to specific industry segments, and (5) changes in economic conditions on both a local and national level, (6) quality of loan review and board oversight, (7) changes in lending policies and procedures, and (8) changes in lending staff.  Each factor is assigned a value to reflect improving, stable or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation. Adjustments to the factors are supported through documentation of changes in conditions in a report accompanying the allowance calculation. 

The specific reserves are determined utilizing standards required under ASC Topic 310. A loan is considered impaired when it is probable that interest and principal will not be collected according to the contractual terms of the loan agreement. Non-accrual loans and loans restructured under a troubled debt restructuring are evaluated for impairment on an individual basis considering all known relevant factors that may affect loan collectability such as the borrower’s overall financial condition, resources and payment record, support available from financial guarantors and the sufficiency of current collateral values (current appraisals or rent rolls for income producing properties), and risks inherent in different kinds of lending (such as source of repayment, quality of borrower and concentration of credit quality). Non-accrual loans that experience insignificant payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed.

Impairment is measured on a loan by loan basis for commercial and industrial loans, commercial real estate loans and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent.  The estimated fair values of substantially all of our impaired loans are measured based on the estimated fair value of the loan’s collateral. We obtain third-party appraisals on the fair value of real estate collateral.  Appraised values are discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include estimated costs to sell the property. For commercial and industrial loans secured by non-real estate collateral, such as accounts receivable, inventory and equipment, estimated fair values are determined based on the borrower’s financial statements, inventory reports, accounts receivable aging or equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Once a loan is determined to be impaired it will be deducted from the portfolio and the net remaining balance will be used in the general and qualitative analysis.  A specific reserve is established for an impaired loan if its carrying value exceeds its estimated fair value.

The amount of the allowance is reviewed and approved by the CFO, CLO, CCO and Chief Risk Officer (“CRO”) on at least a quarterly basis. Management believes that the allowance at September 30, 2015 is adequate. However, its determination requires significant judgment, and estimates of probable losses inherent in the credit portfolio can vary significantly from the amounts actually observed. While management uses available information to recognize probable losses, future changes to the allowance may be necessary based on changes in the credits comprising the portfolio and changes in the financial condition of borrowers, such as may result from changes in economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the credit portfolio and the allowance. Such review may result in additional provisions based on their judgment of information available at the time of each examination.

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Changes in the allowance were as follows:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(In thousands)	2015		2014		2015		2014
Balance at period beginning	$	10,036	$	11,569	$	11,708	$	13,671
Charge-offs
Commercial real estate		—		—		(231)		(349)
Construction and land development		(39)		—		(119)		—
Commercial and industrial		—		—		(541)		(452)
Residential real estate		—		—		—		—
Leases		(138)		(206)		(315)		(568)
Tax certificates		—		(65)		(433)		(330)
Total charge-offs		(177)		(271)		(1,639)		(1,699)
Recoveries
Commercial real estate		—		—		351		—
Construction and land development		150		205		402		205
Commercial and industrial		4		12		278		23
Residential real estate		5		5		16		11
Leases		4		13		20		35
Tax certificates		—		—		52		1
Total recoveries		163		235		1,119		275
Net charge offs		(14)		(36)		(520)		(1,424)
Credit for loan and lease losses		(216)		(51)		(1,382)		(765)
Balance at period end	$	9,806	$	11,482	$	9,806	$	11,482

An analysis of the allowance by loan type is set forth below:

	At September 30, 2015				At December 31, 2014
			Percent of				Percent of
			outstanding				outstanding
			loans in each				loans in each
	Allowance		category to		Allowance		category to
(In thousands, except percentages)	amount		total loans		amount		total loans
Commercial real estate	$	3,864	44.8	%	$	4,452	42.2	%
Construction and land development		1,602	8.3	%		2,292	11.0	%
Commercial and industrial		1,408	17.5	%		1,780	18.4	%
Multi-family		187	3.2	%		285	3.3	%
Residential real estate		656	11.5	%		616	10.4	%
Leases		1,587	13.1	%		1,429	12.4	%
Tax certificates		355	1.1	%		667	1.7	%
Consumer		29	0.5	%		38	0.6	%
Unallocated		118	—	%		149	—	%
Total allowance	$	9,806	100.00	%	$	11,708	100.0	%

The allowance decreased $1.9 million from $11.7 million at December 31, 2014 to $9.8 million at September 30, 2015. The decline in the allowance was directly related to a $1.4 million credit to the provision and $520,000 in net charge-offs, mostly related to specific reserves.  The credit to the provision was positively impacted by a decline in the historical loss

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rates and the decline in impaired loans during the nine months ended September 30, 2015.  The allowance was 2.08% of total loans and leases at September 30, 2015 compared to 2.82% at December 31, 2014. 

Other Real Estate Owned

OREO decreased $935,000 from $9.8 million at December 31, 2014to $8.8 million atSeptember 30, 2015.  OREO is comprised of five real estate properties acquired through, or in lieu of foreclosure in settlement of loans and 70 real estate properties acquired through foreclosure related to tax liens.  Set forth below is a table which details the changes in OREO from December 31, 2014 to September 30, 2015.

	For the nine months ended September 30, 2015
(In thousands)	Loans		Tax Liens		Total
Beginning balance	$	349	$	9,430	$	9,779
Net proceeds from sales		(1,569)		(2,867)		(4,436)
Net gains on sales		61		708		769
Transfers in		1,672		2,296		3,968
Cash additions		—		418		418
Transfer to loans		—		(995)		(995)
Impairment charge		(125)		(534)		(659)
Ending balance	$	388	$	8,456	$	8,844

At September 30, 2015, OREO was comprised of $319,000 in land, $8.4 million in tax liens, and $69,000 in residential real estate related to a condominium construction project in Minneapolis, Minnesota in which the Company is a participant and a single family home.  During the first threequarters of 2015,  we sold nine condominiums related to the construction project. We received our pro rata share of net proceeds in the amount of $145,000 and recorded net gains of $54,000. During the second quarter of 2015, we transferred and sold a commercial real property valued at $1.4 million and recorded a gain of $7,000.  Also during the second quarter we foreclosed on and transferred to OREO a single family home with a value of $39,000.  During the third quarter of 2015, we foreclosed on a land parcel in New Jersey and transferred the carrying value of $215,000 from loans to OREO.  Additionally, during the third quarter we reached agreements to sell two land parcels which are expected to settle during the fourth quarter. As a result of these agreements we recorded a total of $125,000 in additional impairment.

During the first ninemonths of 2015,  we transferred tax liens of $2.3 million to OREO which represented27 properties and added $418,000 in lien redemptions on existing properties.  During the same period we sold 33 tax lien properties, received proceeds of $2.9 million, and recorded net gains of $708,000 as a result of these sales. Additionally, we recorded impairment charges of $534,000 during the first nine months of 2015 related to the tax lien properties. During the third quarter of 2015, we reached an agreement with a tax payer, which was settled through a bankruptcy court.  Under the agreement the tax payer is required to pay us monthly interest payments and annual principal reduction payments for the next three years. In exchange we transferred title to the property back to the tax payerwhile maintaining a lien on the property. After receiving a principal reduction payment of $250,000, we transferred the remaining balance of $995,000 to tax liens.  No gain or loss was recorded on this transaction.  At December 31, 2014, OREO assets acquired through the tax lien portfolio were $9.4 million and were comprised of 79 properties.

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Non-performing Assets

The following table presents the principal amounts of non-accrual loans and other real estate owned:

	At September 30,			At December 31,
(Amounts in thousands)	2015			2014
Non-accrual loans	$	3,892		$	8,113
Non-accrual tax certificates		1,206			1,700
Total non-accrual loans (1)		5,098			9,813
Other real estate owned-loans		388			349
Other real estate owned-tax certificates		8,456			9,430
Total other real estate owned		8,844			9,779
Total nonperforming assets	$	13,942		$	19,592
Nonperforming assets to total assets		1.83	%		2.67	%
Total non-accrual loans to total loans		1.08	%		2.36	%
ALLL to total non-accrual loans		192.35	%		119.31	%
ALLL to total loans		2.08	%		2.82	%

(1) Generally, a loan is placed on non-accruing status when it has been delinquent for a period of 90 days or more.

Deposits

Total deposits, our primary source of funds, was $553.8 million at September 30, 2015 and increased $23.3 million, or 4.4%, from $530.4 million at December 31, 2014.  The increase in deposits reflects a focused change in the composition of deposits.  Demand deposits and savings accounts increased $3.3 millionand $19.7 million, respectively. Certificates of deposit, NOWs and money market accountsdeclined $14.7 million, $8.4 million and $1.6 million, respectively.The increase in deposits reflects the initial results of our newly implementedpublic funds strategy and is serving as a cost effective component of our deposit plan.  Additionally, in the third quarter of 2015, we entered into a $25.0 million brokered checking deposit arrangement with a regional financial institution.

The following table represents ending deposit balances by type:

	September 30,		December 31,
(In thousands)	2015		2014
Noninterest-bearing checking	$	76,949	$	73,665
NOW		38,146		46,515
Interest-bearing brokered deposits		25,000		—
Money Market		164,583		166,224
Savings		38,441		18,721
Time deposits (over $100)		85,884		87,209
Time deposits (under $100)		124,761		138,091
Total deposits	$	553,764	$	530,425

Borrowings

Total borrowings, which include trust preferred securities, amounted to $116.9 million at September 30, 2015 compared to $118.2 million at December 31, 2014. The $1.3 million decline is attributable to the redemption of a matured $10.0 million FHLB advance andpayments made on an amortizing loan with another financial institution and was mostly offset with a short-term borrowing of $9.0 million.

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Shareholders’ Equity

Shareholders’ equity attributable to the Company increased $5.1 million, or 8.1%, from $62.2 million at December 31, 2014 to $67.3 million at September 30, 2015. The increase was related to net income of $4.6 million for the first threequarters of 2015 and a reduction in other comprehensive loss of $372,000.  The improvement in other comprehensive loss wasmostly related to anincrease in the valuation of the investment portfolio which was partially offset by a decline in the value of our interest rate swap.

CAPITAL ADEQUACY

We 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 our financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our 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.

In July 2013, the federal bank regulatory agencies adopted final rules to revise the agencies’ capital adequacy guidelines and prompt corrective action rules, which were designed to enhance such requirements and implement the revised standards of the Basel Committee on Banking Supervision, commonly referred to as Basel III. The July 2013 final rules generally implement higher minimum capital requirements, add a new common equity tier 1 capital requirement, and establish criteria that instruments must meet to be considered common equity tier 1 capital, additional tier 1 capital or tier 2 capital. The new minimum capital to risk-adjusted assets requirements are a common equity tier 1 capital ratio of 4.5% (6.5% to be considered “well capitalized”) and a tier 1 capital ratio of 6.0%, increased from 4.0% (and increased from 6.0% to 8.0% to be considered “well capitalized”); the total capital ratio remains at 8.0% under the new rules (10.0% to be considered “well capitalized”).

Under the new rules, in order to avoid limitations on capital distributions (including dividend payments and certain discretionary bonus payments to executive officers), a banking organization must hold a capital conservation buffer comprised of common equity tier 1 capital above its minimum risk-based capital requirements in an amount greater than 2.5% of total risk-weighted assets. The new minimum capital requirements were effective on January 1, 2015. The capital contribution buffer requirements phase in over a three-year period beginning January 1, 2016.

In December 2013, Federal banking regulators issued rules for complying with the Volcker Rule provision of the Dodd-Frank Act. Royal Bank does not engage in, and does not expect to engage in, any transactions that are considered “covered activities” as defined by the Volcker Rule. Therefore, Royal Bank does not have any additional compliance obligations under the Volcker Rule.

At September 30, 2015 and December 31, 2014, the Company and Royal Bank met and compared favorably to the minimum capital adequacy requirements of Tier 1 and total capital to risk-weighted assets and the minimum Tier 1 leverage ratio, as defined by banking regulation.  Royal Bank also met the criteria for a well-capitalized institution. Management believes that, under current regulations, we will continue to meet its minimum capital requirements in the foreseeable future.

In connection with a prior bank regulatory examination, the FDIC concluded, based upon its interpretation of the Consolidated Reports of Condition and Income (the “Call Report”) instructions and under regulatory accounting principles (“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 September 30, 2015 and the previous 20 quarters in accordance with U.S. GAAP.  A change in the method of revenue recognition for the tax lien business for regulatory accounting purposes affects Royal Bank’s capital ratios as shown below.  The resolution of this matter will be decided by additional joint regulatory agency guidance which includes the Federal Reserve Bank, the FDIC, and the OCC.

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

	Actual				For capital adequacy purposes				To be well capitalized under prompt corrective action provision
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital (to risk-weighted assets)
At September 30, 2015	$	84,720	15.99	%	$	42,386	8.00	%	$	52,983	10.00	%
At December 31, 2014	$	78,582	15.89	%	$	39,573	8.00	%	$	49,466	10.00	%
Tier 1 capital (to risk-weighted assets)
At September 30, 2015	$	78,058	14.73	%	$	31,790	6.00	%	$	42,386	8.00	%
At December 31, 2014	$	72,330	14.62	%	$	19,787	4.00	%	$	29,680	6.00	%
Tier 1 capital (to average assets, leverage)
At September 30, 2015	$	78,058	10.65	%	$	29,307	4.00	%	$	36,634	5.00	%
At December 31, 2014	$	72,330	10.12	%	$	28,585	4.00	%	$	35,731	5.00	%
Common equity Tier 1 (to risk-weighted assets)
At September 30, 2015	$	58,622	11.06	%	$	23,842	4.50	%	$	34,439	6.50	%

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 nine months ended		For the year ended
(In thousands)	September 30, 2015		December 31, 2014
RAP net income	$	2,403	$	1,924
Tax lien adjustment, net of noncontrolling interest		2,208		3,170
U.S. GAAP net income	$	4,611	$	5,094

	At September 30, 2015				At December 31, 2014
	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)	15.99	%	16.35	%	15.89	%	16.44	%
Tier 1 capital (to risk-weighted assets)	14.73	%	15.09	%	14.62	%	15.17	%
Tier 1 capital (to average assets, leverage)	10.65	%	10.93	%	10.12	%	10.52	%
Common equity Tier 1 (to risk-weighted assets)	11.06	%	11.02	%	NA		NA

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The tables below reflect the Company’s capital ratios:

	Actual				For capital adequacy purposes				To be well capitalized under the Federal Reserve's regulations
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital (to risk-weighted assets)
At September 30, 2015	$	101,091	18.96	%	$	42,643	8.00	%	$	53,304	10.00	%
At December 31, 2014	$	95,944	19.20	%	$	39,986	8.00	%	$	49,983	10.00	%
Tier 1 capital (to risk-weighted assets)
At September 30, 2015	$	92,664	17.38	%	$	31,982	6.00	%	$	31,982	6.00	%
At December 31, 2014	$	86,329	17.27	%	$	19,993	4.00	%	$	29,990	6.00	%
Tier 1 capital (to average assets, leverage)
At September 30, 2015	$	92,664	12.52	%	$	29,609	4.00	%		N/A	N/A
At December 31, 2014	$	86,329	11.88	%	$	29,056	4.00	%		N/A	N/A
Common equity Tier 1 (to risk-weighted assets)
At September 30, 2015	$	50,057	9.39	%	$	23,987	4.50	%		N/A	N/A

The Company has filed the Consolidated Financial Statements for Bank Holding Companies-FR Y-9C (“FR Y-9C”) as of September 30, 2015 consistent with U.S. GAAP and the FR Y-9C instructions.  In the event that 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 nine months ended		For the year ended
(In thousands)	September 30, 2015		December 31, 2014
U.S. GAAP net income	$	4,586	$	5,110
Tax lien adjustment, net of noncontrolling interest		(2,208)		(3,170)
RAP net income	$	2,378	$	1,940

	At September 30, 2015				At December 31, 2014
	As reported under U.S. GAAP		As adjusted for RAP		As reported under U.S. GAAP		As adjusted for RAP
Total capital (to risk-weighted assets)	18.96	%	18.62	%	19.20	%	18.67	%
Tier 1 capital (to risk-weighted assets)	17.38	%	16.90	%	17.27	%	16.74	%
Tier 1 capital (to average assets, leverage)	12.52	%	12.16	%	11.88	%	11.49	%
Common equity Tier 1 (to risk-weighted assets)	9.39	%	9.43	%	NA		NA

LIQUIDITY & INTEREST RATE SENSITIVITY

Liquidity is the ability to ensure that adequate funds will be available to meet our financial commitments as they become due.  In managing our liquidity position, all sources of funds are evaluated, the largest of which is deposits.  Also taken into consideration are securities maturing in one year or less, other short-term investments and the repayment of loans. These sources provide alternatives to meet our short-term liquidity needs.  Longer liquidity needs may be met by issuing longer-term deposits and by raising additional capital.  The liquidity ratios are specifically defined as the ratio of net cash, available FHLB and other lines of credit, and unpledged marketable securities relative to both total deposits and total liabilities.  Our policy is to maintain a liquidity ratio equal to or greater than 12% and 10% of total deposits and total liabilities, respectively.  At September 30, 2015,  our liquidity ratios were more than five times the policy minimums. 

Our funding decisions can be influenced by unplanned events, which include, but are not limited to, the inability to fund asset growth, difficulty renewing or replacing funds that mature, the ability to maintain or draw down lines of credit with other

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financial institutions, significant customer withdrawals of deposits, and market disruptions. We have a liquidity contingency plan in the event liquidity falls below an acceptable level, however, events could arise that may render sources of liquid funds unavailable in the future when required.  Our Asset and Liability Committee(“ALCO”) meets monthly to monitor liquidity management. 

On August 13, 2009, the Company’s Board of Directors suspended the regular quarterly cash dividends on the Series A Preferred Stock. The Company’s Board of Directors took this action in consultation with the Federal Reserve Bank of Philadelphia as required by recent regulatory policy guidance. As of September 30, 2015 the Series A Preferred stock outstanding. The dividend in arrears, which includes additional dividends on arrearages, was approximately $8.3 million and has not been recognized in the consolidated financial statements.

Interest rate sensitivity is a function of the re-pricing characteristics of our assets and liabilities.  These include the volume of assets and liabilities re-pricing, the timing of re-pricing, and the interest rate sensitivity gaps, which are a continual challenge in a changing rate environment.  In managing its interest rate sensitivity positions, we seek to develop and implement strategies to control exposure of net interest income to risks associated with interest rate movements.  The interest rate sensitivity report examines the positioning of the interest rate risk exposure in a changing interest rate environment.  Ideally, the rate sensitive assets and liabilities will be maintained in a matched position to minimize interest rate risk.  The interest rate sensitivity analysis is an important management tool; however, it does have some inherent shortcomings.  It is a “static” analysis.  Although certain assets and liabilities may have similar maturities or re-pricing, they may react in different degrees to changes in market interest rates.  Additionally, re-pricing characteristics of certain assets and liabilities may vary substantially within a given period.

The following table summarizes re-pricing intervals for interest earning assets and interest bearing liabilities as of September 30, 2015, and the difference or “gap” between them on an actual and cumulative basis for the periods indicated. A gap is considered positive when the amount of interest rate sensitive assets exceeds the amount of interest rate sensitive liabilities.  During a period of falling interest rates, a positive gap would tend to adversely affect net interest income, while a negative gap would tend to result in an increase in net interest income.  During a period of rising interest rates, a positive gap would tend to result in an increase in net interest income while a negative gap would tend to affect net interest income adversely.  At September 30, 2015,  we were in an asset sensitive position of $1.1 million, which indicates that within one year the re-pricing of assets is sooner than the re-pricing of liabilities.  Additionally, the Company has exposure to rising rates as $162.9 million in assets re-price after five years.

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(In millions)	Days						1 to 5		Over 5		Non-rate
Assets (1)	0 – 90			91 – 365			Years		Years		Sensitive		Total
Interest-earning deposits in banks	$	9.5		$	—		$	—	$	—	$	14.7	$	24.2
Investment securities AFS		22.3			34.4			118.7		51.5		3.7		230.6
Loans: (2)
Fixed rate		18.5			47.9			184.8		111.4		(9.8)		352.8
Variable rate		105.7			—			2.9		—		—		108.6
Total loans		124.2			47.9			187.7		111.4		(9.8)		461.4
Other assets (3)		—			20.3			—		—		25.4		45.7
Total Assets	$	156.0		$	102.6		$	306.4	$	162.9	$	34.0	$	761.9
Liabilities & Capital
Deposits:
Non-interest bearing deposits	$	—		$	—		$	—	$	—	$	76.9	$	76.9
Interest bearing deposits		29.1			87.4			149.7		—		—		266.2
Certificate of deposits		30.8			73.4			96.6		9.9		—		210.7
Total deposits		59.9			160.8			246.3		9.9		76.9		553.8
Borrowings		36.9			—			80.0		—		—		116.9
Other liabilities		—			—			—		—		23.5		23.5
Capital		—			—			—		—		67.7		67.7
Total liabilities & capital	$	96.8		$	160.8		$	326.3	$	9.9	$	168.1	$	761.9
Net  interest rate  GAP	$	59.2		$	(58.2)		$	(19.9)	$	153.0	$	(134.1)
Cumulative interest rate  GAP	$	59.2		$	1.0		$	(18.9)	$	134.1
GAP to total  assets		8	%		(8)	%
GAP to total equity		87	%		(86)	%
Cumulative GAP to total assets		8	%		0	%
Cumulative GAP to total equity		87	%		1	%

(1) Interest earning assets are included in the period in which the balances are expected to be repaid and/or re-priced as a result of anticipated prepayments, scheduled rate adjustments, and contractual maturities.

(2) Reflects principal maturing within the specified periods for fixed rate loans and re-pricing for variable rate loans; includes non-performing loans.

(3) Includes FHLB stock.

The method of analysis of interest rate sensitivity in the table above has a number of limitations.  Certain assets and liabilities may react differently to changes in interest rates even though they re-price or mature in the same time periods. The interest rates on certain assets and liabilities may change at different times than changes in market interest rates, with some changes in advance of changes in market rates and some lagging behind changes in market rates.  Also, certain assets have provisions, which limit changes in interest rates each time the interest rate changes and for the entire term of the loan.  Prepayments and withdrawals experienced in the event of a change in interest rates may deviate significantly from those assumed in the interest rate sensitivity table.  Additionally, the ability of some borrowers to service their debt may decrease in the event of an interest rate increase.

The Company’s exposure to interest rate risk is mitigated somewhat by a portion of the Company’s loan portfolio consisting of floating rate loans, which are tied to the prime lending rate but which have interest rate floors and no interest rate ceilings.  Although the Company is originating fixed rate loans, a portion of the loan portfolio continues to be comprised of floating rate loans with interest rate floors. At September 30, 2015, floating rate loans with floors and without floors were $85.3 million and $23.3 million, respectively.

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REGULATORY ACTIONS

Federal Reserve Memorandum of Understanding

As previously disclosed, in March 2010, the Company agreed to enter into a written agreement (the “Federal Reserve Agreement”) with the Federal Reserve Bank of Philadelphia (the “Federal Reserve Bank”).  Effective July 17, 2013, the Board of Governors of the Federal Reserve System terminated the enforcement action under the Federal Reserve Agreement, and it was replaced with an informal non-public agreement, a memorandum of understanding (“MOU”), with the Federal Reserve Bank.  Included in the MOU are certain continued reporting requirements and a requirement that the Company receive the prior approval of the Federal Reserve Bank prior to declaring or paying any dividends on the Company’s capital stock, making interest payments related to the Company’s outstanding trust preferred securities or subordinate securities, incurring or guaranteeing certain debt with an original maturity date greater than one year, and purchasing or redeeming any shares of stock.  The MOU will remain in effect until stayed, modified, terminated or suspended in writing by the Federal Reserve Bank.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information presented in the Liquidity and Interest Rate Sensitivity section of the Management’s Discussion and Analysis of Financial Condition and Results Operations of this Report is incorporated herein by reference.

ITEM 4 – CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

The Company maintains a set of disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Securities Exchange Commission’s rules and forms. As of the end of the period covered by this report, the Company evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act. Based on that evaluation, our CEO and CFO concluded, subject to the limitations on effectiveness described in Item 9A in our Annual Report on Form 10-K for the year ended December 31, 2014, that the Company’s disclosure controls and procedures were effective at September 30, 2015.

(b) Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the thirdquarter of 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

There are inherent limitations to the effectiveness of any controls system. A controls system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that its objectives are met. Further, the design of a control system must reflect the fact that there are limits on resources, and the benefits of controls must be considered relative to their costs and their impact on the business model. We intend to continue to improve and refine our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.Legal Proceedings.

From time to time, the Company is a party to routine legal proceedings within the normal course of business.  Such routine legal proceedings in the aggregate are believed by management to be immaterial to the Company's financial condition or

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results of operations.  All non-routine legal proceedings are described in Item 3 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Item 1A.Risk Factors.

There have been no material changes from risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3.Defaults Upon Senior Securities.

None

Item 4.Mine Safety Disclosures.

None

Item 5.Other Information.

None

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Item 6.Exhibits.

(a)

3.1	Articles of Incorporation of the Company. (Incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2013.)
3.21	Bylaws of the Company (Incorporated by reference to Exhibit 3(ii) to the Company’s Annual Report on Form 10-K filed with the Commission on March 30, 2009.)
10.1	Amended and Restated Employment Agreement, dated March 4, 2015, between Royal Bank America and F. Kevin Tylus. (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 13, 2015.)
10.2	Form of Change in Control Agreement, dated March 5, 2015, between Royal Bank America and each of Michael Thompson, Lars Eller, Kathryn McDonald, and Mark Biedermann. (Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 13, 2015.)
31.1	Section 302 Certification Pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934 signed by F. Kevin Tylus, Principal Executive Officer of Royal Bancshares of Pennsylvania on November 12, 2015.
31.2	Section 302 Certification Pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934 signed by Michael S. Thompson, Principal Financial Officer of Royal Bancshares of Pennsylvania on November 12, 2015.
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by F. Kevin Tylus, Principal Executive Officer of Royal Bancshares of Pennsylvania on November 12, 2015.
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Michael S. Thompson, Principal Financial Officer of Royal Bancshares of Pennsylvania on November 12, 2015.
101	Interactive Data File

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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 thereunto duly authorized.

ROYAL BANCSHARES OF PENNSYLVANIA, INC

(Registrant)

Dated: November  12, 2015

/s/ Michael S. Thompson

Michael S. Thompson

Principal Financial and Accounting Officer

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, F. Kevin Tylus, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Royal Bancshares of Pennsylvania, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the consolidated financial  statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal  control over financial reporting to be designed under our supervision, to provide a reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The  registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 12, 2015

/s/ F. Kevin Tylus

Principal Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Michael S. Thompson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Royal Bancshares of Pennsylvania, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the consolidated financial  statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal  control over financial reporting to be designed under our supervision, to provide a reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The  registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 12, 2015

/s/ Michael S. Thompson

Principal Financial and Accounting Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADDED BY

SECTION 906 OF THE SARBANES-OXLEY ACT 2002

In connection with this Quarterly Report of Royal Bancshares of Pennsylvania, Inc. (“Royal”) on Form 10-Q for the period endedSeptember 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, F. Kevin Tylus, Principal Executive Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) as applicable of the Securities Exchange Act of 1934, as amended; and

2. The information  contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Royal as of the dates and for the periods expressed in the Report.

The foregoing certification is being furnish solely pursuant to 18 U.S. C. Section 1350 and is not being filed as part of this Report or as a separate disclosure document.

/s/ F. Kevin Tylus

F. Kevin Tylus

Principal Executive Officer

November 12, 2015

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADDED BY

SECTION 906 OF THE SARBANES-OXLEY ACT 2002

In connection with this Quarterly Report of Royal Bancshares of Pennsylvania, Inc. (“Royal”) on Form 10-Q for the period endedSeptember 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael S. Thompson, Principal Financial and Accounting Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) as applicable of the Securities Exchange Act of 1934, as amended; and

2.The information  contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Royal as of the dates and for the periods expressed in the Report.

The foregoing certification is being furnish solely pursuant to 18 U.S. C. Section 1350 and is not being filed as part of this Report or as a separate disclosure document.

/s/ Michael S. Thompson

Michael S. Thompson

Principal Financial and Accounting Officer

November 12, 2015

XML

Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2015

Fair Value of Financial Instruments [Abstract]

Schedule of Financial Assets Measured at Fair Value on Recurring Basis

	Fair Value Measurements Using:
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
As of September 30, 2015	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Fair Value
Assets:
Investment securities available for sale
U.S. government agencies	$	—	$	25,907	$	—	$	25,907
Mortgage-backed securities-residential		—		14,418		—		14,418
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		—		172,745		—		172,745
Non-agency		—		2,927		—		2,927
Corporate bonds		—		1,520		—		1,520
Municipal bonds		—		10,072		—		10,072
Other securities		—		—		2,997		2,997
Common stocks		26		—		—		26
Total investment securities available for sale	$	26	$	227,589	$	2,997	$	230,612
Liabilities:
Derivative instruments
Interest rate swaps	$	—	$	708	$	—	$	708

	Fair Value Measurements Using:
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
As of December 31, 2014	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Fair Value
Assets:
Investment securities available for sale
U.S. government agencies	$	—	$	25,289	$	—	$	25,289
Mortgage-backed securities-residential		—		22,387		—		22,387
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		—		168,977		—		168,977
Non-agency		—		3,731		—		3,731
Corporate bonds		—		15,727		—		15,727
Municipal bonds		—		10,173		—		10,173
Other securities		—		—		4,034		4,034
Common stocks		50		—		—		50
Total investment securities available for sale	$	50	$	246,284	$	4,034	$	250,368
Liabilities:
Derivative instruments
Interest rate swaps	$	—	$	187	$	—	$	187

Additional Information About Assets Measured at Fair Value on a Recurring Basis, Level 3 Inputs

(In thousands)	Other securities
Investment Securities Available for Sale	2015		2014
Beginning balance July 1,	$	3,006	$	4,619
Total gains/(losses) - (realized/unrealized):
Included in earnings-gain on sale		4		191
Included in other comprehensive income		(9)		11
Purchases		—		14
Sales and calls		(4)		(445)
Transfers in and/or out of Level 3		—		—
Ending balance September 30,	$	2,997	$	4,390

(In thousands)	Other securities
Investment Securities Available for Sale	2015		2014
Beginning balance January 1,	$	4,034	$	4,625
Total gains/(losses) - (realized/unrealized):
Included in earnings-gain on sale		319		251
Included in other comprehensive income		(551)		299
Purchases		4		14
Sales and calls		(809)		(799)
Transfers in and/or out of Level 3		—		—
Ending balance September 30,	$	2,997	$	4,390

Financial Assets Measured at Fair Value on Nonrecurring Basis

	Fair Value Measurements Using:
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
As of September 30, 2015	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Fair Value
Assets
Impaired loans and leases	$	—	$	—	$	3,657	$	3,657
Other real estate owned		—		—		1,957		1,957

	Fair Value Measurements Using:
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
As of December 31, 2014	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Fair Value
Assets
Impaired loans and leases	$	—	$	—	$	2,812	$	2,812
Other real estate owned		—		—		3,418		3,418

Schedule of quantitative information about assets measured at fair value on nonrecurring basis

	Qualitative Information about Level 3 Fair Value Measurements
As of September 30, 2015			Valuation		Range
(In thousands)	Fair Value		Techniques	Unobservable Input	(WeightedAverage)
Impaired loans and leases	$	3,657	Appraisal of	Appraisal adjustments	0.0%	-	-62.3%	(-28.7%)
			collateral (1)	Liquidation expenses	0.0%	-	-23.2%	(-6.6%)
Other real estate owned		1,957	Appraisal of	Appraisal adjustments	0.0%	-	-84.2%	(-30.2%)
			collateral (1)	Liquidation expenses	0.0%		-14.7%	(-3.6%)

	Qualitative Information about Level 3 Fair Value Measurements
As of December 31, 2014			Valuation		Range
(In thousands)	Fair Value		Techniques	Unobservable Input	(WeightedAverage)
Impaired loans and leases	$	2,812	Appraisal of	Appraisal adjustments	0.0%	-	-20.0%	(-20.0%)
			collateral (1)	Liquidation expenses	0.0%	-	-24.0%	(-7.8%)
Other real estate owned		3,418	Appraisal of	Appraisal adjustments	0.0%	-	-68.6%	(-14.5%)
			collateral (1)	Liquidation expenses	0.0%	-	-14.7%	(-14.7%)

(1) Appraisals may be adjusted for qualitative factors such as interior condition of the property and liquidation expenses.

Fair Value by Balance Sheet Grouping Instruments

					Fair Value Measurements
					At September 30, 2015
					Quoted Prices
					in Active		Significant
					Markets for		Other		Significant
					Identical		Observable		Unobservable
	Carrying		Estimated		Assets		Inputs		Inputs
(In thousands)	amount		fair value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	24,217	$	24,217	$	24,217	$	—	$	—
Investment securities available for sale		230,612		230,612		26		227,589		2,997
Other investment		2,250		2,250		—		—		2,250
Federal Home Loan Bank stock		2,545		2,545		—		—		2,545
Loans, net		461,410		456,718		—		—		456,718
Accrued interest receivable		4,336		4,336		—		4,336		—
Financial Liabilities:
Demand deposits		76,949		76,949		—		76,949		—
NOW and money markets		202,729		202,729		—		202,729		—
Interest-bearing brokered deposits		25,000		25,000				25,000
Savings		38,441		38,441		—		38,441		—
Time deposits		210,645		208,869		—		208,869		—
Short-term borrowings		9,000		9,000		9,000		—		—
Long-term borrowings		82,084		79,698		—		79,698		—
Subordinated debt		25,774		26,696		—		26,696		—
Accrued interest payable		2,168		2,168		—		2,168		—
Derivative Instruments:
Interest rate swaps		708		708		—		708		—

					Fair Value Measurements
					At December 31, 2014
					Quoted Prices
					in Active		Significant
					Markets for		Other		Significant
					Identical		Observable		Unobservable
	Carrying		Estimated		Assets		Inputs		Inputs
(In thousands)	amount		fair value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	30,790	$	30,790	$	30,790	$	—	$	—
Investment securities available for sale		250,368		250,368		50		246,284		4,034
Other investment		2,250		2,250		—		—		2,250
Federal Home Loan Bank stock		2,622		2,622		—		—		2,622
Loans, net		403,424		400,979		—		—		400,979
Accrued interest receivable		5,270		5,270		—		5,270		—
Financial Liabilities:
Demand deposits		73,665		73,665		—		73,665		—
NOW and money markets		212,739		212,739		—		212,739		—
Savings		18,721		18,721		—		18,721		—
Time deposits		225,300		223,788		—		223,788		—
Long-term borrowings		92,426		90,022		—		90,022		—
Subordinated debt		25,774		25,091		—		25,091		—
Accrued interest payable		726		726		—		726		—
Derivative Instruments:
Interest rate swaps		187		187		—		187		—

XML

Deposits (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014
Deposits [Abstract]
Demand	$ 76,949	$ 73,665
NOW	38,146	46,515
Money Market	164,583	166,224
Deposits, Savings Deposits	38,441	18,721
Time deposits (over $100)	85,884	87,209
Time deposits (under $100)	124,761	138,091
Brokered deposits	25,000
Total deposits	$ 553,764	$ 530,425	$ 515,786

XML

Loans and Leases - Troubled Debt Restructuring (Details)	9 Months Ended
	Sep. 30, 2014 USD ($) contract	Sep. 30, 2015 USD ($) loan	Dec. 31, 2014 USD ($) loan
Financing Receivable, Modifications [Line Items]
Number of loans | loan		9,000	12
Total TDRs		$ 5,925,000	$ 8,759,000
Financing Receivable New Modifications for the Period [Abstract]
Number of loans | contract	3
Term	$ 233,000
Combination of types	28,000
Total	261,000
Pre-Modification Outstanding Recorded Investment	262,000
Post-Modification Outstanding Recorded Investment	$ 262,000
Mortgage Loans in Process of Foreclosure, Amount		228,000
Accrual Status [Member]
Financing Receivable, Modifications [Line Items]
Total TDRs		5,540,000	6,573,000
Non Accrual Status [Member]
Financing Receivable, Modifications [Line Items]
Total TDRs		$ 385,000	$ 2,186,000
Commercial real estate [Member]
Financing Receivable, Modifications [Line Items]
Number of loans | loan		3,000	3
Total TDRs		$ 2,818,000	$ 2,883,000
Commercial real estate [Member] | Accrual Status [Member]
Financing Receivable, Modifications [Line Items]
Total TDRs		$ 2,818,000	$ 2,883,000
Construction and land development [Member]
Financing Receivable, Modifications [Line Items]
Number of loans | loan		1,000	3
Total TDRs		$ 95,000	$ 683,000
Construction and land development [Member] | Accrual Status [Member]
Financing Receivable, Modifications [Line Items]
Total TDRs			47,000
Construction and land development [Member] | Non Accrual Status [Member]
Financing Receivable, Modifications [Line Items]
Total TDRs		$ 95,000	$ 636,000
Commercial and industrial [Member]
Financing Receivable, Modifications [Line Items]
Number of loans | loan		4,000	5
Total TDRs		$ 2,722,000	$ 5,091,000
Financing Receivable New Modifications for the Period [Abstract]
Number of loans | contract	3
Term	$ 233,000
Combination of types	28,000
Total	261,000
Pre-Modification Outstanding Recorded Investment	262,000
Post-Modification Outstanding Recorded Investment	$ 262,000
Commercial and industrial [Member] | Accrual Status [Member]
Financing Receivable, Modifications [Line Items]
Total TDRs		$ 2,722,000	3,643,000
Commercial and industrial [Member] | Non Accrual Status [Member]
Financing Receivable, Modifications [Line Items]
Total TDRs			$ 1,448,000
Residential real estate [Member]
Financing Receivable, Modifications [Line Items]
Number of loans | loan		1,000	1
Total TDRs		$ 290,000	$ 102,000
Residential real estate [Member] | Non Accrual Status [Member]
Financing Receivable, Modifications [Line Items]
Total TDRs		$ 290,000	$ 102,000

XML

Segment Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Selected Segment Information and Reconciliations to Consolidated Financial Information [Abstract]
Total assets	$ 761,911,000	$ 723,469,000	$ 761,911,000	$ 723,469,000	$ 732,553,000
Total deposits	553,764,000	515,786,000	553,764,000	515,786,000	$ 530,425,000
Interest income	7,798,000	7,191,000	22,149,000	21,551,000
Interest expense	1,636,000	1,623,000	4,798,000	4,870,000
Net Interest Income	6,162,000	5,568,000	17,351,000	16,681,000
(Credit) provision for loan and lease losses	(216,000)	(51,000)	(1,382,000)	(765,000)
Total non-interest Income	700,000	1,204,000	2,830,000	2,792,000
Noninterest Expense	5,365,000	5,375,000	16,477,000	15,728,000
Net Income	1,713,000	1,448,000	5,086,000	4,510,000
Noncontrolling interest	179,000	25,000	500,000	212,000
Net Income Attributable to Royal Bancshares of Pennsylvania, Inc.	$ 1,534,000	1,423,000	4,586,000	4,298,000
Royal Bank [Member]
Selected Segment Information and Reconciliations to Consolidated Financial Information [Abstract]
Net Income Attributable to Royal Bancshares of Pennsylvania, Inc.			$ 4,611,000
Royal Bank [Member] | Crusader Servicing Corporation [Member]
Segment Reporting Information [Line Items]
Ownership interest (as a percent)	80.00%		80.00%
Community Banking Segment [Member]
Selected Segment Information and Reconciliations to Consolidated Financial Information [Abstract]
Total assets	$ 745,853,000	701,803,000	$ 745,853,000	701,803,000
Total deposits	553,764,000	515,786,000	553,764,000	515,786,000
Interest income	7,625,000	6,889,000	21,642,000	20,549,000
Interest expense	1,447,000	1,367,000	4,169,000	4,030,000
Net Interest Income	6,178,000	5,522,000	17,473,000	16,519,000
(Credit) provision for loan and lease losses	(254,000)	(79,000)	(1,451,000)	(911,000)
Total non-interest Income	538,000	987,000	1,924,000	2,019,000
Noninterest Expense	4,932,000	4,916,000	14,880,000	14,221,000
Net Income	2,038,000	1,672,000	5,968,000	5,228,000
Noncontrolling interest	179,000	69,000	551,000	337,000
Net Income Attributable to Royal Bancshares of Pennsylvania, Inc.	1,859,000	1,603,000	5,417,000	4,891,000
Tax Lien Segment [Member]
Selected Segment Information and Reconciliations to Consolidated Financial Information [Abstract]
Total assets	16,058,000	21,666,000	16,058,000	21,666,000
Interest income	173,000	302,000	507,000	1,002,000
Interest expense	189,000	256,000	629,000	840,000
Net Interest Income	(16,000)	46,000	(122,000)	162,000
(Credit) provision for loan and lease losses	38,000	28,000	69,000	146,000
Total non-interest Income	162,000	217,000	906,000	773,000
Noninterest Expense	433,000	459,000	1,597,000	1,507,000
Net Income	(325,000)	(224,000)	(882,000)	(718,000)
Noncontrolling interest		(44,000)	(51,000)	(125,000)
Net Income Attributable to Royal Bancshares of Pennsylvania, Inc.	$ (325,000)	(180,000)	$ (831,000)	(593,000)
Tax Lien Segment [Member] | Royal Bank [Member] | Crusader Servicing Corporation [Member]
Segment Reporting Information [Line Items]
Ownership interest (as a percent)	80.00%		80.00%
Tax Lien Segment [Member] | Royal Bank [Member] | Royal Tax Lien [Member]
Segment Reporting Information [Line Items]
Ownership interest (as a percent)	100.00%		100.00%
Intersegment Eliminations [Member]
Selected Segment Information and Reconciliations to Consolidated Financial Information [Abstract]
Interest income	$ 189,000	$ 256,000	$ 629,000	$ 840,000

XML

Borrowings and Subordinated Debentures (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Advances from the Federal Home Loan Bank [Abstract]
Line of credit with federal home loan bank, amount	$ 212,600
Federal Home Loan Bank, advances, general debt obligations, disclosures, collateral pledged	34,000
Amount [Abstract]
Advances maturing in 2015	9,000		$ 10,000
Advances maturing in 2016	10,000		10,000
Advances maturing in 2017	25,000		25,000
Advances maturing in 2018	10,000		10,000
Total FHLB borrowings	$ 54,000		$ 55,000
Rate [Abstract]
Advances maturing in 2015 (as a percent)	0.35%		0.71%
Advances maturing in 2016 (as a percent)	1.11%		1.11%
Advances maturing in 2017 (as a percent)	1.46%		1.46%
Advances maturing in 2018 (as a percent)	2.01%		2.01%
Repayments of Long-term Debt	$ 10,342	$ 341
Line of credit maximum borrowing capacity	20,000
Notes payable [Member] | Notes Payable To PNCBank Due August2016 Member
Rate [Abstract]
Notes payable with PNC Bank	$ 2,100		$ 2,400
Description of variable rate basis on notes payable	one month LIBOR
Interest rate on notes payable (as a percent)	0.35%
Notes payable [Member] | Notes PayableTo PNCBank Due January2018 Member
Rate [Abstract]
Notes payable with PNC Bank	$ 35,000		$ 35,000
Weighted average interest rate on other borrowings from PNC Bank (as a percent)	3.65%
Notes payable [Member] | London Interbank Offered Rate (LIBOR) [Member] | Notes Payable To PNCBank Due August2016 Member
Rate [Abstract]
Trust preferred securities basis spread on variable rate (as a percent)	0.15%

XML

Loans and Leases - Aging Analysis of Past Due Payments for Each Loan Portfolio Segment (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Aging analysis of past due payments for each loan portfolio segment [Abstract]
Non-accrual	$ 5,098,000		$ 5,098,000		$ 9,813,000
Current	463,009,000		463,009,000		403,454,000
Total	471,216,000	$ 397,176,000	471,216,000	$ 397,176,000	415,132,000
Interest income lost on non-accrual loans	142,000	290,000	539,000	830,000
Financing Receivables, 30 to 59 Days Past Due [Member]
Aging analysis of past due payments for each loan portfolio segment [Abstract]
Financing Receivable, Recorded Investment, Past Due	1,715,000		1,715,000		720,000
Financing Receivables, 60 to 89 Days Past Due [Member]
Aging analysis of past due payments for each loan portfolio segment [Abstract]
Financing Receivable, Recorded Investment, Past Due	1,394,000		1,394,000		1,145,000
Commercial real estate [Member]
Aging analysis of past due payments for each loan portfolio segment [Abstract]
Non-accrual	1,051,000		1,051,000		3,684,000
Current	208,849,000		208,849,000		170,510,000
Total	210,883,000	164,522,000	210,883,000	164,522,000	175,038,000
Commercial real estate [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Aging analysis of past due payments for each loan portfolio segment [Abstract]
Financing Receivable, Recorded Investment, Past Due					311,000
Commercial real estate [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Aging analysis of past due payments for each loan portfolio segment [Abstract]
Financing Receivable, Recorded Investment, Past Due	983,000		983,000		533,000
Construction and land development [Member]
Aging analysis of past due payments for each loan portfolio segment [Abstract]
Non-accrual	290,000		290,000		636,000
Current	38,574,000		38,574,000		45,026,000
Total	38,864,000	41,676,000	38,864,000	41,676,000	45,662,000
Commercial and industrial [Member]
Aging analysis of past due payments for each loan portfolio segment [Abstract]
Non-accrual	897,000		897,000		2,517,000
Current	80,669,000		80,669,000		73,431,000
Total	82,414,000	70,743,000	82,414,000	70,743,000	76,489,000
Commercial and industrial [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Aging analysis of past due payments for each loan portfolio segment [Abstract]
Financing Receivable, Recorded Investment, Past Due	657,000		657,000		92,000
Commercial and industrial [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Aging analysis of past due payments for each loan portfolio segment [Abstract]
Financing Receivable, Recorded Investment, Past Due	191,000		191,000		449,000
Multi-family [Member]
Aging analysis of past due payments for each loan portfolio segment [Abstract]
Current	15,222,000		15,222,000		13,823,000
Total	15,222,000	16,893,000	15,222,000	16,893,000	13,823,000
Residential real estate [Member]
Aging analysis of past due payments for each loan portfolio segment [Abstract]
Non-accrual	918,000		918,000		959,000
Current	52,471,000		52,471,000		41,706,000
Total	54,025,000	44,261,000	54,025,000	44,261,000	42,992,000
Residential real estate [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Aging analysis of past due payments for each loan portfolio segment [Abstract]
Financing Receivable, Recorded Investment, Past Due	524,000		524,000		165,000
Residential real estate [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Aging analysis of past due payments for each loan portfolio segment [Abstract]
Financing Receivable, Recorded Investment, Past Due	112,000		112,000		162,000
Leases [Member]
Aging analysis of past due payments for each loan portfolio segment [Abstract]
Non-accrual	736,000		736,000		317,000
Current	60,576,000		60,576,000		51,113,000
Total	61,954,000	48,588,000	61,954,000	48,588,000	51,583,000
Leases [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Aging analysis of past due payments for each loan portfolio segment [Abstract]
Financing Receivable, Recorded Investment, Past Due	534,000		534,000		152,000
Leases [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Aging analysis of past due payments for each loan portfolio segment [Abstract]
Financing Receivable, Recorded Investment, Past Due	108,000		108,000		1,000
Tax certificates [Member]
Aging analysis of past due payments for each loan portfolio segment [Abstract]
Non-accrual	1,206,000		1,206,000		1,700,000
Current	4,088,000		4,088,000		5,491,000
Total	5,294,000	8,230,000	5,294,000	8,230,000	7,191,000
Consumer [Member]
Aging analysis of past due payments for each loan portfolio segment [Abstract]
Current	2,560,000		2,560,000		2,354,000
Total	$ 2,560,000	$ 2,263,000	$ 2,560,000	$ 2,263,000	$ 2,354,000

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Derivative Instruments and Hedging Activity (Tables)

9 Months Ended

Sep. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Interest rate swap, designated as cash flow hedge, effects of derivative in balance sheet

	As of September 30, 2015
	Notional
	Contract				Balance Sheet	Expiration
(In thousands)	Amount		Fair Value		Location	Date
Derivatives designated as hedging instruments
Interest rate swaps:
Effective June 24, 2016	$	15,000	$	(708)	Other liabilities	June 24, 2021
Total:	$	15,000	$	(708)

Interest rate swap, designated as cash flow hedge, effects of derivative in OCI

	For the three months ended September 30, 2015
	Amount of Loss		Location of Loss	Amount of Loss
	Recognized		Recognized	Recognized
		in OCI	in Income	in Income
	on Derivatives		on Derivatives	on Derivatives
(In thousands)	(Effective Portion)		(Ineffective Portion)	(Ineffective Portion)
Derivatives designated as hedging instruments
Interest rate swaps:
Effective June 24, 2016	$	(282)	Not Applicable	$	—
Total:	$	(282)		$	—

	For the nine months ended September 30, 2015
	Amount of Loss		Location of Loss	Amount of Loss
	Recognized		Recognized	Recognized
		in OCI	in Income	in Income
	on Derivatives		on Derivatives	on Derivatives
(In thousands)	(Effective Portion)		(Ineffective Portion)	(Ineffective Portion)
Derivatives designated as hedging instruments
Interest rate swaps:
Effective June 24, 2016	$	(467)	Not Applicable	$	—
Total:	$	(467)		$	—

	For the year ended December 31, 2014
	Amount of Loss		Location of Loss	Amount of Loss
	Recognized		Recognized	Recognized
		in OCI	in Income	in Income
	on Derivatives		on Derivatives	on Derivatives
(In thousands)	(Effective Portion)		(Ineffective Portion)	(Ineffective Portion)
Derivatives designated as hedging instruments
Interest rate swaps:
Effective June 24, 2016	$	(187)	Not Applicable	$	—
Total:	$	(187)		$	—

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Derivative Instruments and Hedging Activity (Details) - Designated as Hedging Instrument - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Derivatives, Fair Value [Line Items]
Notional contract amount	$ 15,000	$ 15,000
Derivative liabilities	(708)	(187)
Interest Rate Swap | Other Liabilities [Member]
Derivatives, Fair Value [Line Items]
Notional contract amount	15,000	15,000
Derivative liabilities	$ (708)	$ (187)

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Federal Home Loan Bank Stock (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Federal Home Loan Bank Stock [Abstract]
Total FHLB stock	$ 2,545	$ 2,622

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Federal Home Loan Bank Stock

9 Months Ended

Sep. 30, 2015

Federal Home Loan Bank Stock [Abstract]

Federal Home Loan Bank Stock

Note 18.Federal Home Loan Bank Stock

As a member of the FHLB, we are required to purchase and hold stock in the FHLB to satisfy membership and borrowing requirements.  The stock can only be sold to the FHLB or to another member institution, and all sales of FHLB stock must be at par. As a result of these restrictions, there is no active market for the FHLB stock. At September 30, 2015 and December 31, 2014, FHLB stock totaled $2.5 million and $2.6 million, respectively.

FHLB stock is held as a long-term investment and its value is determined based on the ultimate recoverability of the par value. We evaluate impairment quarterly. The decision of whether impairment exists is a matter of judgment that reflects management’s view of the FHLB’s long-term performance, which includes factors such as the following: (1) its operating performance, (2) the severity and duration of declines in the fair value of its net assets related to its capital stock amount, (3) its liquidity position, and (4) the impact of legislative and regulatory changes on the FHLB.  Based on the capital adequacy and the liquidity position of the FHLB, management believes that the par value of its investment in FHLB stock will be recovered.  Accordingly, there is no other-than-temporary impairment related to the carrying amount of our FHLB stock as of September 30, 2015.

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Allowance for Loan and Lease Losses - Loans that were Evaluated for Impairment by Loan Segment (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2014	Sep. 30, 2015
Unpaid principal balance [Abstract]
With no related allowance recorded	$ 14,004	$ 11,326
With an allowance recorded	9,424	6,437
Recorded investment [Abstract]
With no related allowance recorded	12,804	8,069
With an allowance recorded	3,274	2,049
Related allowance [Abstract]
Related allowance	1,041	322
Average recorded investment [Abstract]
With no related allowance recorded	13,975
With an allowance recorded	2,479
Interest income recognized [Abstract]
With no related allowance recorded	377
Commercial real estate [Member]
Unpaid principal balance [Abstract]
With no related allowance recorded	6,632	4,567
With an allowance recorded	926
Recorded investment [Abstract]
With no related allowance recorded	6,113	4,040
With an allowance recorded	682
Related allowance [Abstract]
Related allowance	200
Average recorded investment [Abstract]
With no related allowance recorded	5,089
With an allowance recorded	529
Interest income recognized [Abstract]
With no related allowance recorded	98
Construction and land development [Member]
Unpaid principal balance [Abstract]
With no related allowance recorded	894
With an allowance recorded		546
Recorded investment [Abstract]
With no related allowance recorded	683
With an allowance recorded		290
Related allowance [Abstract]
Related allowance		145
Average recorded investment [Abstract]
With no related allowance recorded	2,233
With an allowance recorded	145
Interest income recognized [Abstract]
With no related allowance recorded	71
Commercial and industrial [Member]
Unpaid principal balance [Abstract]
With no related allowance recorded	5,358	5,303
With an allowance recorded	2,500
Recorded investment [Abstract]
With no related allowance recorded	5,118	3,024
With an allowance recorded	728
Related allowance [Abstract]
Related allowance	301
Average recorded investment [Abstract]
With no related allowance recorded	5,786
With an allowance recorded	688
Interest income recognized [Abstract]
With no related allowance recorded	208
Residential real estate [Member]
Unpaid principal balance [Abstract]
With an allowance recorded	1,068	1,021
Recorded investment [Abstract]
With an allowance recorded	959	918
Related allowance [Abstract]
Related allowance	28	28
Average recorded investment [Abstract]
With an allowance recorded	864
Leases [Member]
Unpaid principal balance [Abstract]
With an allowance recorded	95	640
Recorded investment [Abstract]
With an allowance recorded	95	640
Related allowance [Abstract]
Related allowance	80	131
Average recorded investment [Abstract]
With an allowance recorded	108
Tax certificates [Member]
Unpaid principal balance [Abstract]
With no related allowance recorded	1,120	1,456
With an allowance recorded	4,835	4,230
Recorded investment [Abstract]
With no related allowance recorded	890	1,005
With an allowance recorded	810	201
Related allowance [Abstract]
Related allowance	432	$ 18
Average recorded investment [Abstract]
With no related allowance recorded	867
With an allowance recorded	$ 145

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Regulatory Matters and Significant Risks or Uncertainties - Dividend and Interest Restrictions (Details) - USD ($)		9 Months Ended
	Aug. 13, 2009	Sep. 30, 2015	Dec. 31, 2014	Jun. 19, 2014
Class of Stock [Line Items]
Preferred stock, shares outstanding (in shares)		18,856	18,856
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Series A Preferred stock on which quarterly dividend suspended	$ 30,407
Preferred stock, shares outstanding (in shares)				30,407
Preferred stock dividend in arrears		$ 8,300,000

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Earnings Per Common Share (Tables)

9 Months Ended

Sep. 30, 2015

Income (Loss) Per Common Share [Abstract]

Schedule of computation of basic and diluted earning per share

Basic and diluted EPS are calculated as follows:

	Three months ended  September 30, 2015
	Income		Average shares	Per share
(In thousands, except for per share data)	(numerator)		(denominator)	Amount
Basic EPS
Income available to common shareholders	$	1,100	30,043	$	0.04
Diluted EPS
Income available to common shareholders	$	1,100	30,074	$	0.04

	Three months ended  September 30, 2014
	Income		Average shares	Per share
(In thousands, except for per share data)	(numerator)		(denominator)	Amount
Basic and Diluted EPS
Income available to common shareholders	$	1,271	27,329	$	0.05

	Nine months ended September 30, 2015
	Income		Average shares	Per share
(In thousands, except for per share data)	(numerator)		(denominator)	Amount
Basic EPS
Income available to common shareholders	$	3,299	30,040	$	0.11
Diluted EPS
Income available to common shareholders	$	3,299	30,055	$	0.11

	Nine months ended September 30, 2014
	Income		Average shares	Per share
(In thousands, except for per share data)	(numerator)		(denominator)	Amount
Basic and Diluted EPS
Income available to common shareholders	$	2,654	18,042	$	0.15

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Other Real Estate Owned - Changes in OREO (Details) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2015 USD ($) property	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) property	Sep. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)
Foreclosed Property [Roll Forward]
Beginning balance			$ 9,779	$ 9,617	$ 9,617
Net proceeds from sales			(4,436)	(3,548)	(4,306)
Net gains (losses) on sales	$ 123	$ 173	769	633	743
Transfers in			3,968	1,998	2,919
Cash additions			418	1,292	1,330
OREO Transfers to Loans			(995)
Impairment charge			(659)	(399)	(524)
Ending balance	$ 8,844		$ 8,844		9,779
Loans [Member]
Real Estate Owned Disclosure [Line Items]
Number of Real Estate Properties | property	5		5
Foreclosed Property [Roll Forward]
Beginning balance			$ 349	1,725	1,725
Net proceeds from sales			(1,569)		(1,336)
Net gains (losses) on sales			61		59
Transfers in			1,672
Impairment charge			(125)		(99)
Ending balance	$ 388		$ 388		349
Tax Lien [Member]
Real Estate Owned Disclosure [Line Items]
Number of Real Estate Properties | property	70		70
Foreclosed Property [Roll Forward]
Beginning balance			$ 9,430	$ 7,892	7,892
Net proceeds from sales			(2,867)		(2,970)
Net gains (losses) on sales			708		684
Transfers in			2,296		2,919
Cash additions			418		1,330
OREO Transfers to Loans			(995)
Impairment charge			(534)		(425)
Ending balance	$ 8,456		$ 8,456		$ 9,430

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Fair Value of Financial Instruments - Measurement (Details) - Nonrecurring [Member] - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans and leases	$ 3,657	$ 2,812
Other real estate owned	1,957	3,418
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans and leases	3,657	2,812
Other real estate owned	$ 1,957	$ 3,418

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Regulatory Capital Requirements (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($) item	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) item	Sep. 30, 2014 USD ($)
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Number of previous quarters for which the call report is filed in accordance with U.S.GAAP | item	20		20
Capital actual amount under regulations [Abstract]
Total capital (to risk-weighted assets)	$ 101,091		$ 101,091
Tier I capital (to risk-weighted assets)	92,664		92,664
Tier I capital (to average assets, leverage)	92,664		92,664
Common equity Tier 1 (to risk-weighted assets)	$ 50,057		$ 50,057
Actual Ratio Under RAP [Abstract]
Total capital (to risk-weighted assets) (as a percent)	18.96%		18.96%
Tier I capital (to risk-weighted assets) (in hundredths)	17.38%		17.38%
Tier I capital (to average assets, leverage) (as a percent)	12.52%		12.52%
Common equity Tier 1 (to risk-weighted assets) (in hundredths)	9.39%		9.39%
For capital adequacy purposes, amount [Abstract]
Total capital (to risk-weighted assets)	$ 42,643		$ 42,643
Tier I capital (to risk-weighted assets)	31,982		31,982
Tier I capital (to average assets, leverage)	29,609		29,609
Common equity Tier 1 (to risk-weighted assets)	$ 23,987		$ 23,987
For capital adequacy purposes, ratio [Abstract]
Total capital (to risk-weighted assets) (in hundredths)	8.00%		8.00%
Tier I capital (to risk-weighted assets) (in hundredths)	6.00%		6.00%
Tier I capital (to average assets, leverage) (in hundredths)	4.00%		4.00%
Common equity Tier 1 (to risk-weighted assets) (in hundredths)	4.50%		4.50%
To be well capitalized under prompt corrective action provision, amount [Abstract]
Total capital (to risk-weighted assets)	$ 53,304		$ 53,304
Tier I capital (to risk-weighted assets)	$ 31,982		$ 31,982
To be well capitalized under prompt corrective action provision, ratio [Abstract]
Total capital (to risk-weighted assets) (in hundredths)	10.00%		10.00%
Tier I capital (to risk-weighted assets) (in hundredths)	6.00%		6.00%
To be well capitalized under the Federal Reserve's regulations, amount
Total capital (to risk-weighted assets)	$ 53,304		$ 53,304
Tier I capital (to risk-weighted assets)	$ 31,982		$ 31,982
To be well capitalized under the Federal Reserve's regulations, ratio
Total capital (to risk-weighted assets) (in hundredths)	10.00%		10.00%
Tier I capital (to risk-weighted assets) (in hundredths)	6.00%		6.00%
Adjustments to net loss as well as the capital ratios [Abstract]
RAP net loss			$ 2,378
Tax lien adjustment, net of noncontrolling interest			2,208
Net income	$ 1,534	$ 1,423	$ 4,586	$ 4,298
Actual Ratio Under US GAAP [Abstract]
Total capital (to risk-weighted assets) (in hundredths)	18.96%		18.96%
Tier I capital (to risk-weighted assets) (in hundredths)	17.38%		17.38%
Tier I capital (to average assets, leverage) (in hundredths)	12.52%		12.52%
Common equity Tier 1 (to risk-weighted assets) (in hundredths)	9.39%		9.39%
Ratios As Adjusted Under RAP [Abstract]
Total capital (to risk-weighted assets) (in hundredths)	18.62%		18.62%
Tier I capital (to risk-weighted assets) (in hundredths)	16.90%		16.90%
Tier I capital (to average assets, leverage) (in hundredths)	12.16%		12.16%
Common equity Tier 1 (to risk-weighted assets) (in hundredths)	9.43%		9.43%
Royal Bank [Member]
Capital actual amount under regulations [Abstract]
Total capital (to risk-weighted assets)	$ 84,720		$ 84,720
Tier I capital (to risk-weighted assets)	78,058		78,058
Tier I capital (to average assets, leverage)	78,058		78,058
Common equity Tier 1 (to risk-weighted assets)	$ 58,622		$ 58,622
Actual Ratio Under RAP [Abstract]
Total capital (to risk-weighted assets) (as a percent)	15.99%		15.99%
Tier I capital (to risk-weighted assets) (in hundredths)	14.73%		14.73%
Tier I capital (to average assets, leverage) (as a percent)	10.65%		10.65%
Common equity Tier 1 (to risk-weighted assets) (in hundredths)	11.06%		11.06%
For capital adequacy purposes, amount [Abstract]
Total capital (to risk-weighted assets)	$ 42,386		$ 42,386
Tier I capital (to risk-weighted assets)	31,790		31,790
Tier I capital (to average assets, leverage)	29,307		29,307
Common equity Tier 1 (to risk-weighted assets)	$ 23,842		$ 23,842
For capital adequacy purposes, ratio [Abstract]
Total capital (to risk-weighted assets) (in hundredths)	8.00%		8.00%
Tier I capital (to risk-weighted assets) (in hundredths)	6.00%		6.00%
Tier I capital (to average assets, leverage) (in hundredths)	4.00%		4.00%
Common equity Tier 1 (to risk-weighted assets) (in hundredths)	4.50%		4.50%
To be well capitalized under prompt corrective action provision, amount [Abstract]
Total capital (to risk-weighted assets)	$ 52,983		$ 52,983
Tier I capital (to risk-weighted assets)	42,386		42,386
Tier I capital (to average assets, leverage)	36,634		36,634
Common equity Tier 1 (to risk-weighted assets)	$ 34,439		$ 34,439
To be well capitalized under prompt corrective action provision, ratio [Abstract]
Total capital (to risk-weighted assets) (in hundredths)	10.00%		10.00%
Tier I capital (to risk-weighted assets) (in hundredths)	8.00%		8.00%
Tier I capital (to average assets, leverage) (in hundredths)	5.00%		5.00%
Common equity Tier 1 (to risk-weighted assets) (in hundredths)	6.50%		6.50%
To be well capitalized under the Federal Reserve's regulations, amount
Total capital (to risk-weighted assets)	$ 52,983		$ 52,983
Tier I capital (to risk-weighted assets)	$ 42,386		$ 42,386
To be well capitalized under the Federal Reserve's regulations, ratio
Total capital (to risk-weighted assets) (in hundredths)	10.00%		10.00%
Tier I capital (to risk-weighted assets) (in hundredths)	8.00%		8.00%
Adjustments to net loss as well as the capital ratios [Abstract]
RAP net loss			$ 2,403
Tax lien adjustment, net of noncontrolling interest			2,208
Net income			$ 4,611
As adjusted for U.S. GAAP
Total capital (to risk-weighted assets) (in hundredths)	16.35%		16.35%
Tier 1 capital (to risk-weighted assets) (in hundredths)	15.09%		15.09%
Tier 1 capital (to average assets, leverage) (in hundredths)	10.93%		10.93%
Common equity Tier 1 (to risk-weighted assets) (in hundredths)	11.02%		11.02%

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Loans and Leases - Impaired Loans (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Impaired Loans [Abstract]
Cash collected on non accrual and impaired loan			$ 5,900	$ 5,000
Amount credited to principal balance outstanding			4,800	4,500
Summary of impaired loans [Abstract]
Impaired loans with a valuation allowance	$ 2,049		2,049		$ 3,274
Impaired loans without a valuation allowance	8,069		8,069		12,804
Valuation allowance related to impaired loans	322		322		$ 1,041
Average recorded investment [Abstract]
Average investment in impaired loans and leases	10,622	$ 15,531	13,077	16,602
Interest income recognized on a cash basis on impaired loans and leases	$ 174	$ 96	$ 471	$ 292

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Regulatory Matters and Significant Risks or Uncertainties

9 Months Ended

Sep. 30, 2015

Regulatory Matters and Significant Risks or Uncertainties [Abstract]

Regulatory Matters and Significant Risks or Uncertainties

Note 2.Regulatory Matters and Significant Risks or Uncertainties

Federal Reserve Agreement

In March 2010, we agreed to enter into a written agreement (the “Federal Reserve Agreement”) with the Federal Reserve Bank of Philadelphia (the “Federal Reserve Bank”).  In July 2013, the Board of Governors of the Federal Reserve System terminated the enforcement action under the Federal Reserve Agreement, and it was replaced with an informal non-public agreement, a memorandum of understanding (“MOU”), with the Federal Reserve Bank, effective July 17, 2013.  Included in this MOU are certain continued reporting requirements and a requirement that we receive the prior approval of the Federal Reserve Bank and the Director of Banking Supervision and Regulation of the Board of Governors of the Federal Reserve System prior to declaring or paying any dividends on our capital stock, making interest payments related to our outstanding trust preferred securities or subordinate securities, incurring or guaranteeing certain debt with an original maturity date greater than one year, and purchasing or redeeming any shares of stock. The MOU will remain in effect until stayed, modified, terminated or suspended in writing by the Federal Reserve Bank.

Dividend and Interest Restrictions

Due to the MOU, our ability to obtain lines of credit, to receive attractive collateral treatment from funding sources, and to pursue all attractive funding alternatives in this current low interest rate environment could be impacted and thereby limit liquidity alternatives. On August 13, 2009, the Company’s Board suspended the regular quarterly cash dividends on the 30,407 shares of Series A Preferred Stock.  We made the decision to suspend the preferred cash dividends in order to support the liquidity position of Royal Bank.  The dividend in arrears on the outstanding 18,856 shares of Series A preferred stock is approximately $8.3 million and includes additional dividends on arrearages.  In the event we declared the preferred dividend in arrears, our equity and capital ratios would be negatively affected; however, they would remain above the required minimum ratios.

Under the MOU, we may not declare or pay any dividends on our capital stock or make interest payments related to our outstanding trust preferred securities or subordinate securities without the prior written approval of the Federal Reserve Bank and the Director of the Division of Banking Supervision and Regulation of the Board of Governors of the Federal Reserve System. During the first three quarters of 2015, we received approval from the Federal Reserve Bank and paid the respective quarterly interest payments on the trust preferred securities in March,  June, and September 2015.

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Pension Plan (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Pension Plan [Abstract]
Highest consecutive years of employee compensation used to compute benefit			3 years
Years of employment used in benefit computation			10 years
Net Pension Cost [Abstract]
Service cost	$ 17	$ 15	$ 49	$ 45
Interest cost	135	155	403	466
Amortization of prior service cost	22	22	68	66
Amortization of acturial loss	46	32	140	96
Net periodic benefit cost	220	$ 224	660	$ 673
Unfunded pension plan obligations	$ 15,400		$ 15,400		$ 15,300

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Investment Securities (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($) item	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) item	Sep. 30, 2014 USD ($)	Dec. 31, 2014 USD ($) item
Carrying value and fair value of available for sale investment securities [Abstract]
Total available for sale securities	$ 226,981		$ 226,981		$ 248,096
Gross unrealized gains	4,424		4,424		4,334
Gross unrealized losses	(793)		(793)		(2,062)
Available-for-sale Securities, Total	230,612		230,612		250,368
Amortized cost [Abstract]
After 1 but within 5 years	8,085		8,085
After 5 but within 10 years	20,354		20,354
After 10 years	9,113		9,113
Total available for sale debt securities	224,757		224,757
Available-for-sale Equity Securities, Amortized Cost Basis	2,224		2,224
Total available for sale securities	226,981		226,981		248,096
Fair value [Abstract]
After 1 but within 5 years	8,080		8,080
After 5 but within 10 years	20,382		20,382
After 10 years	9,037		9,037
Total available for sale debt securities	227,589		227,589
No contractual maturity	3,023		3,023
Fair value	230,612		230,612		250,368
Proceeds from sales of AFS investment securities	9,200	$ 19,300	33,653	$ 55,290
Gross realized gains and losses on the sale of securities recognized in earnings [Abstract]
Gross realized gains	104	446	676	1,143
Gross realized losses	(24)	(208)	(24)	(813)
Net realized gains	80	$ 238	652	$ 330
Available for sale securities, continuous unrealized loss position [Abstract]
Less than 12 months, Fair value	20,229		20,229		47,882
12 months or longer, Fair value	48,544		48,544		77,070
Total, Fair value	68,773		68,773		124,952
Less than 12 months, Gross unrealized losses	(64)		(64)		(250)
12 months or longer, Gross unrealized losses	(729)		(729)		(1,812)
Total, Gross unrealized losses	$ (793)		$ (793)		$ (2,062)
Less than 12 months, number of positions | item	11		11		20
12 months or longer, number of positions | item	16		16		28
Total , number of positions | item	27		27		48
Fair value	$ 230,612		$ 230,612		$ 250,368
Number of securities in an unrealized loss position for less than twelve months | item	11		11		20
Number of securities in an unrealized loss position for more than twelve months | item	16		16		28
U.S. Government Agencies [Member]
Carrying value and fair value of available for sale investment securities [Abstract]
Total available for sale securities	$ 26,126		$ 26,126		$ 26,123
Gross unrealized gains	20		20
Gross unrealized losses	(239)		(239)		(834)
Available-for-sale Securities, Total	25,907		25,907		25,289
Amortized cost [Abstract]
Total available for sale securities	26,126		26,126		26,123
Fair value [Abstract]
Fair value	25,907		25,907		25,289
Available for sale securities, continuous unrealized loss position [Abstract]
12 months or longer, Fair value	19,149		19,149		25,289
Total, Fair value	19,149		19,149		25,289
12 months or longer, Gross unrealized losses	(239)		(239)		(834)
Total, Gross unrealized losses	$ (239)		$ (239)		$ (834)
12 months or longer, number of positions | item	6		6		8
Total , number of positions | item	6		6		8
Fair value	$ 25,907		$ 25,907		$ 25,289
Number of securities in an unrealized loss position for more than twelve months | item	6		6		8
Mortgage-backed Securities-residential [Member]
Carrying value and fair value of available for sale investment securities [Abstract]
Total available for sale securities	$ 14,184		$ 14,184		$ 22,073
Gross unrealized gains	249		249		375
Gross unrealized losses	(15)		(15)		(61)
Available-for-sale Securities, Total	14,418		14,418		22,387
Amortized cost [Abstract]
Available for sale securities Debt maturities, amortized cost basis	14,184		14,184
Total available for sale securities	14,184		14,184		22,073
Fair value [Abstract]
Available-for-sale Securities, Debt Maturities, without Single Maturity Date, Fair Value	14,418		14,418
Fair value	14,418		14,418		22,387
Available for sale securities, continuous unrealized loss position [Abstract]
12 months or longer, Fair value	2,691		2,691		8,913
Total, Fair value	2,691		2,691		8,913
12 months or longer, Gross unrealized losses	(15)		(15)		(61)
Total, Gross unrealized losses	$ (15)		$ (15)		$ (61)
12 months or longer, number of positions | item	1		1		3
Total , number of positions | item	1		1		3
Fair value	$ 14,418		$ 14,418		$ 22,387
Number of securities in an unrealized loss position for more than twelve months | item	1		1		3
Collateralized Mortgage Obligations, Issued or Guaranteed by U.S. Government Agencies [Member]
Carrying value and fair value of available for sale investment securities [Abstract]
Total available for sale securities	$ 170,111		$ 170,111		$ 167,711
Gross unrealized gains	3,122		3,122		2,350
Gross unrealized losses	(488)		(488)		(1,084)
Available-for-sale Securities, Total	172,745		172,745		168,977
Amortized cost [Abstract]
Available for sale securities Debt maturities, amortized cost basis	170,111		170,111
Total available for sale securities	170,111		170,111		167,711
Fair value [Abstract]
Available-for-sale Securities, Debt Maturities, without Single Maturity Date, Fair Value	172,745		172,745
Fair value	172,745		172,745		168,977
Available for sale securities, continuous unrealized loss position [Abstract]
Less than 12 months, Fair value	15,253		15,253		36,757
12 months or longer, Fair value	26,704		26,704		38,798
Total, Fair value	41,957		41,957		75,555
Less than 12 months, Gross unrealized losses	(13)		(13)		(204)
12 months or longer, Gross unrealized losses	(475)		(475)		(880)
Total, Gross unrealized losses	$ (488)		$ (488)		$ (1,084)
Less than 12 months, number of positions | item	5		5		12
12 months or longer, number of positions | item	9		9		12
Total , number of positions | item	14		14		24
Fair value	$ 172,745		$ 172,745		$ 168,977
Number of securities in an unrealized loss position for less than twelve months | item	5		5		12
Number of securities in an unrealized loss position for more than twelve months | item	9		9		12
Mortgage-backed Securities, Issued by Private Enterprises [Member]
Carrying value and fair value of available for sale investment securities [Abstract]
Total available for sale securities	$ 2,910		$ 2,910		$ 3,738
Gross unrealized gains	25		25		7
Gross unrealized losses	(8)		(8)		(14)
Available-for-sale Securities, Total	2,927		2,927		3,731
Amortized cost [Abstract]
Available for sale securities Debt maturities, amortized cost basis	2,910		2,910
Total available for sale securities	2,910		2,910		3,738
Fair value [Abstract]
Available-for-sale Securities, Debt Maturities, without Single Maturity Date, Fair Value	2,927		2,927
Fair value	2,927		2,927		3,731
Available for sale securities, continuous unrealized loss position [Abstract]
Less than 12 months, Fair value	1,184		1,184		1,432
Total, Fair value	1,184		1,184		1,432
Less than 12 months, Gross unrealized losses	(8)		(8)		(14)
Total, Gross unrealized losses	$ (8)		$ (8)		$ (14)
Less than 12 months, number of positions | item	1		1		1
Total , number of positions | item	1		1		1
Fair value	$ 2,927		$ 2,927		$ 3,731
Number of securities in an unrealized loss position for less than twelve months | item	1		1		1
Corporate Bonds [Member]
Carrying value and fair value of available for sale investment securities [Abstract]
Total available for sale securities	$ 1,500		$ 1,500		$ 15,617
Gross unrealized gains	20		20		144
Gross unrealized losses					(34)
Available-for-sale Securities, Total	1,520		1,520		15,727
Amortized cost [Abstract]
Total available for sale securities	1,500		1,500		15,617
Fair value [Abstract]
Fair value	1,520		1,520		15,727
Available for sale securities, continuous unrealized loss position [Abstract]
Less than 12 months, Fair value					8,054
12 months or longer, Fair value					991
Total, Fair value					9,045
Less than 12 months, Gross unrealized losses					(25)
12 months or longer, Gross unrealized losses					(9)
Total, Gross unrealized losses					$ (34)
Less than 12 months, number of positions | item					5
12 months or longer, number of positions | item					1
Total , number of positions | item					6
Fair value	1,520		1,520		$ 15,727
Number of securities in an unrealized loss position for less than twelve months | item					5
Number of securities in an unrealized loss position for more than twelve months | item					1
Municipal Bonds [Member]
Carrying value and fair value of available for sale investment securities [Abstract]
Total available for sale securities	9,926		9,926		$ 10,117
Gross unrealized gains	165		165		91
Gross unrealized losses	(19)		(19)		(35)
Available-for-sale Securities, Total	10,072		10,072		10,173
Amortized cost [Abstract]
Total available for sale securities	9,926		9,926		10,117
Fair value [Abstract]
Fair value	10,072		10,072		10,173
Available for sale securities, continuous unrealized loss position [Abstract]
Less than 12 months, Fair value	3,557		3,557		1,639
12 months or longer, Fair value					3,079
Total, Fair value	3,557		3,557		4,718
Less than 12 months, Gross unrealized losses	(19)		(19)		(7)
12 months or longer, Gross unrealized losses					(28)
Total, Gross unrealized losses	$ (19)		$ (19)		$ (35)
Less than 12 months, number of positions | item	4		4		2
12 months or longer, number of positions | item					4
Total , number of positions | item	4		4		6
Fair value	$ 10,072		$ 10,072		$ 10,173
Number of securities in an unrealized loss position for less than twelve months | item	4		4		2
Number of securities in an unrealized loss position for more than twelve months | item					4
Private Equity Funds [Member]
Carrying value and fair value of available for sale investment securities [Abstract]
Total available for sale securities	$ 2,198		$ 2,198		$ 2,684
Gross unrealized gains	823		823		1,350
Gross unrealized losses	(24)		(24)
Available-for-sale Securities, Total	2,997		2,997		4,034
Amortized cost [Abstract]
Total available for sale securities	2,198		2,198		2,684
Fair value [Abstract]
Fair value	2,997		2,997		4,034
Available for sale securities, continuous unrealized loss position [Abstract]
Less than 12 months, Fair value	235		235
Total, Fair value	235		235
Less than 12 months, Gross unrealized losses	(24)		(24)
Total, Gross unrealized losses	$ (24)		$ (24)
Less than 12 months, number of positions | item	1		1
Total , number of positions | item	1		1
Fair value	$ 2,997		$ 2,997		4,034
Number of securities in an unrealized loss position for less than twelve months | item	1		1
Common Stock [Member]
Carrying value and fair value of available for sale investment securities [Abstract]
Total available for sale securities	$ 26		$ 26		33
Gross unrealized gains					17
Available-for-sale Securities, Total	26		26		50
Amortized cost [Abstract]
Total available for sale securities	26		26		33
Fair value [Abstract]
Fair value	26		26		50
Available for sale securities, continuous unrealized loss position [Abstract]
Fair value	$ 26		$ 26		$ 50

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Allowance for Loan and Lease Losses (Tables)

9 Months Ended

Sep. 30, 2015

Allowance for Loan and Lease Losses [Abstract]

Detail of the allowance and loan portfolio disaggregated by loan portfolio segment

Allowance for Loan and Lease Losses

As of and for the three months ended September 30, 2015

			Construction
	Commercial		and land		Commercial		Multi-		Residential				Tax
(In thousands)	real estate		development		and industrial		family		real estate		Leases		certificates		Consumer		Unallocated		Total
Beginning balance	$	4,208	$	1,358	$	1,705	$	300	$	584	$	1,405	$	317	$	35	$	124	$	10,036
Charge-offs		—		(39)		—		—		—		(138)		—		—		—		(177)
Recoveries		—		150		4		—		5		4		—		—		—		163
(Credit) provision		(344)		133		(301)		(113)		67		316		38		(6)		(6)		(216)
Ending balance	$	3,864	$	1,602	$	1,408	$	187	$	656	$	1,587	$	355	$	29	$	118	$	9,806
Ending balance: related to loans individually evaluated for impairment	$	—	$	145	$	—	$	—	$	28	$	131	$	18	$	—	$	—	$	322
Ending balance: related to loans collectively evaluated for impairment	$	3,864	$	1,457	$	1,408	$	187	$	628	$	1,456	$	337	$	29	$	118	$	9,484

Allowance for Loan and Lease Losses

As of and for the nine months endedSeptember 30, 2015

			Construction
	Commercial		and land		Commercial		Multi-		Residential				Tax
(In thousands)	real estate		development		and industrial		family		real estate		Leases		certificates		Consumer		Unallocated		Total
Beginning balance	$	4,452	$	2,292	$	1,780	$	285	$	616	$	1,429	$	667	$	38	$	149	$	11,708
Charge-offs		(231)		(119)		(541)		—		—		(315)		(433)		—		—		(1,639)
Recoveries		351		402		278		—		16		20		52		—		—		1,119
(Credit) provision		(708)		(973)		(109)		(98)		24		453		69		(9)		(31)		(1,382)
Ending balance	$	3,864	$	1,602	$	1,408	$	187	$	656	$	1,587	$	355	$	29	$	118	$	9,806
Ending balance: related to loans individually evaluated for impairment	$	—	$	145	$	—	$	—	$	28	$	131	$	18	$	—	$	—	$	322
Ending balance: related to loans collectively evaluated for impairment	$	3,864	$	1,457	$	1,408	$	187	$	628	$	1,456	$	337	$	29	$	118	$	9,484

Loans Evaluated for Impairment

At September 30, 2015

			Construction
	Commercial		and land		Commercial		Multi-		Residential				Tax
	real estate		development		and industrial		family		real estate		Leases		certificates		Consumer		Unallocated		Total
(In thousands)
Ending balance	$	210,883	$	38,864	$	82,414	$	15,222	$	54,025	$	61,954	$	5,294	$	2,560	$	—	$	471,216
Ending balance: individually evaluated for impairment	$	4,040	$	290	$	3,024	$	—	$	918	$	640	$	1,206	$	—	$	—	$	10,118
Ending balance: collectively evaluated for impairment	$	206,843	$	38,574	$	79,390	$	15,222	$	53,107	$	61,314	$	4,088	$	2,560	$	—	$	461,098

Allowance for Loan and Lease Losses and Loans Evaluated for Impairment

As of and for the year ended December 31, 2014

			Construction
	Commercial		and land		Commercial		Multi-		Residential				Tax
(In thousands)	real estate		development		and industrial		family		real estate		Leases		certificates		Consumer		Unallocated		Total
Beginning balance	$	5,498	$	2,316	$	3,006	$	402	$	473	$	1,223	$	555	$	15	$	183	$	13,671
Charge-offs		(354)		(172)		(452)		—		—		(793)		(350)		—		—		(2,121)
Recoveries		—		940		27		—		15		42		1		—		—		1,025
(Credit) provision		(692)		(792)		(801)		(117)		128		957		461		23		(34)		(867)
Ending balance	$	4,452	$	2,292	$	1,780	$	285	$	616	$	1,429	$	667	$	38	$	149	$	11,708
Ending balance: related to loans individually evaluated for impairment	$	200	$	—	$	301	$	—	$	28	$	80	$	432	$	—	$	—	$	1,041
Ending balance: related to loans collectively evaluated for impairment	$	4,252	$	2,292	$	1,479	$	285	$	588	$	1,349	$	235	$	38	$	149	$	10,667
Loan Balances
Ending balance	$	175,038	$	45,662	$	76,489	$	13,823	$	42,992	$	51,583	$	7,191	$	2,354	$	—	$	415,132
Ending balance: individually evaluated for impairment	$	6,795	$	683	$	5,846	$	—	$	959	$	95	$	1,700	$	—	$	—	$	16,078
Ending balance: collectively evaluated for impairment	$	168,243	$	44,979	$	70,643	$	13,823	$	42,033	$	51,488	$	5,491	$	2,354	$	—	$	399,054

Allowance for Loan and Lease Losses

As of and for the three months ended September 30,2014

			Construction
	Commercial		and land		Commercial		Multi-		Residential				Tax
(In thousands)	real estate		development		and industrial		family		real estate		Leases		certificates		Consumer		Unallocated		Total
Beginning balance	$	4,971	$	2,033	$	1,525	$	416	$	690	$	1,352	$	408	$	24	$	150	$	11,569
Charge-offs		—		—		—		—		—		(206)		(65)		—		—		(271)
Recoveries		—		205		12		—		5		13		—		—		—		235
Provision (credit)		(266)		3		(106)		(63)		25		325		29		9		(7)		(51)
Ending balance	$	4,705	$	2,241	$	1,431	$	353	$	720	$	1,484	$	372	$	33	$	143	$	11,482
Ending balance: related to loans individually evaluated for impairment	$	205	$	172	$	5	$	—	$	30	$	62	$	19	$	—	$	—	$	493
Ending balance: related to loans collectively evaluated for impairment	$	4,500	$	2,069	$	1,426	$	353	$	690	$	1,422	$	353	$	33	$	143	$	10,989

Allowance for Loan and Lease Losses

As of and for the nine months endedSeptember 30,  2014

			Construction
	Commercial		and land		Commercial		Multi-		Residential				Tax
(In thousands)	real estate		development		and industrial		family		real estate		Leases		certificates		Consumer		Unallocated		Total
Beginning balance	$	5,498	$	2,316	$	3,006	$	402	$	473	$	1,223	$	555	$	15	$	183	$	13,671
Charge-offs		(349)		—		(452)		—		—		(568)		(330)		—		—		(1,699)
Recoveries		—		205		23		—		11		35		1		—		—		275
Provision (credit)		(444)		(280)		(1,146)		(49)		236		794		146		18		(40)		(765)
Ending balance	$	4,705	$	2,241	$	1,431	$	353	$	720	$	1,484	$	372	$	33	$	143	$	11,482
Ending balance: related to loans individually evaluated for impairment	$	205	$	172	$	5	$	—	$	30	$	62	$	19	$	—	$	—	$	493
Ending balance: related to loans collectively evaluated for impairment	$	4,500	$	2,069	$	1,426	$	353	$	690	$	1,422	$	353	$	33	$	143	$	10,989

Loans Evaluated for Impairment

At September 30, 2014

			Construction
	Commercial		and land		Commercial		Multi-		Residential				Tax
	real estate		development		and industrial		family		real estate		Leases		certificates		Consumer		Unallocated		Total
(In thousands)
Ending balance	$	164,522	$	41,676	$	70,743	$	16,893	$	44,261	$	48,588	$	8,230	$	2,263	$	—	$	397,176
Ending balance: individually evaluated for impairment	$	6,877	$	1,192	$	5,897	$	—	$	983	$	64	$	1,128	$	—	$	—	$	16,141
Ending balance: collectively evaluated for impairment	$	157,645	$	40,484	$	64,846	$	16,893	$	43,278	$	48,524	$	7,102	$	2,263	$	—	$	381,035

Financing receivable evaluated for impairment by portfolio segment

The following tables detail the loans that were evaluated for impairment by loan classification at September 30, 2015 and December 31, 2014.

	At September 30, 2015
	Unpaid
	principal		Recorded		Related
(In thousands)	balance		investment		allowance
With no related allowance recorded:
Commercial real estate	$	4,567	$	4,040	$	—
Commercial and industrial		5,303		3,024		—
Tax certificates		1,456		1,005		—
Total:	$	11,326	$	8,069	$	—

With an allowance recorded:
Construction and land development	$	546	$	290	$	145
Residential real estate		1,021		918		28
Leasing		640		640		131
Tax certificates		4,230		201		18
Total:	$	6,437	$	2,049	$	322

	At and for the year ended December 31, 2014
	Unpaid						Average		Interest
	principal		Recorded		Related		recorded		income
(In thousands)	balance		investment		allowance		investment		recognized
With no related allowance recorded:
Commercial real estate	$	6,632	$	6,113	$	—	$	5,089	$	98
Construction and land development		894		683		—		2,233		71
Commercial and industrial		5,358		5,118		—		5,786		208
Tax certificates		1,120		890		—		867		—
Total:	$	14,004	$	12,804	$	—	$	13,975	$	377

With an allowance recorded:
Commercial real estate	$	926	$	682	$	200	$	529	$	—
Construction and land development		—		—		—		145		—
Commercial and industrial		2,500		728		301		688		—
Residential real estate		1,068		959		28		864		—
Leases		95		95		80		108		—
Tax certificates		4,835		810		432		145		—
Total:	$	9,424	$	3,274	$	1,041	$	2,479	$	—

The following tables present the average recorded investment in impaired loans and the related interest income recognized for the three and nine months ended September 30, 2015 and 2014.

	For the three months ended September 30, 2015				For the nine months ended September 30, 2015
	Average		Interest		Average		Interest
	recorded		income		recorded		income
(In thousands)	investment		recognized		investment		recognized
Commercial real estate	$	4,256	$	130	$	5,599	$	329
Construction and land development		471		—		562		—
Commercial and industrial		3,570		44		4,740		142
Residential real estate		927		—		952		—
Leasing		289		—		146		—
Tax certificates		1,109		—		1,078		—
Total:	$	10,622	$	174	$	13,077	$	471

	For the three months ended September 30, 2014				For the nine months ended September 30, 2014
	Average		Interest		Average		Interest
	recorded		income		recorded		income
(In thousands)	investment		recognized		investment		recognized
Commercial real estate	$	5,571	$	33	$	5,258	$	65
Construction and land development		1,673		11		2,823		68
Commercial and industrial		6,085		52		6,658		159
Residential real estate		993		—		833		—
Leasing		75		—		112		—
Tax certificates		1,134		—		918		—
Total:	$	15,531	$	96	$	16,602	$	292

XML

Loans and Leases (Tables)

9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Loans and Leases [Abstract]

Major classifications of loans held for investment

	September 30,		December 31,
(In thousands)	2015		2014
Commercial real estate	$	210,883	$	175,038
Construction and land development		38,864		45,662
Commercial and industrial		82,414		76,489
Multi-family		15,222		13,823
Residential real estate		54,025		42,992
Leases		61,954		51,583
Tax certificates		5,294		7,191
Consumer		2,560		2,354
Total loans, net of unearned income	$	471,216	$	415,132

Risk ratings for loan portfolio segment

As of September 30, 2015
(In thousands)	Pass		Pass-Watch		Special Mention		Substandard		Non-accrual		Total
Commercial real estate	$	172,882	$	35,298	$	1,340	$	312	$	1,051	$	210,883
Construction and land development		5,305		33,269		—		—		290		38,864
Commercial and industrial		62,930		14,668		1,449		2,470		897		82,414
Multi-family		14,439		278		505		—		—		15,222
Residential real estate		53,107		—		—		—		918		54,025
Leases		60,576		534		108		—		736		61,954
Tax certificates		4,088		—		—		—		1,206		5,294
Consumer		2,467		93		—		—		—		2,560
Total loans, net of unearned income	$	375,794	$	84,140	$	3,402	$	2,782	$	5,098	$	471,216

As of December 31, 2014
(In thousands)	Pass		Pass-Watch		Special Mention		Substandard		Non-accrual		Total
Commercial real estate	$	140,045	$	27,229	$	2,512	$	1,568	$	3,684	$	175,038
Construction and land development		12,861		32,165		—		—		636		45,662
Commercial and industrial		60,500		8,527		1,608		3,337		2,517		76,489
Multi-family		12,995		310		518		—		—		13,823
Residential real estate		42,033		—		—		—		959		42,992
Leases		51,113		152		1		—		317		51,583
Tax certificates		5,491		—		—		—		1,700		7,191
Consumer		2,194		160		—		—		—		2,354
Total loans, net of unearned income	$	327,232	$	68,543	$	4,639	$	4,905	$	9,813	$	415,132

Aging analysis of past due payments for loan portfolio segment

As of September 30, 2015	30-59 Days		60-89 Days		Accruing
(In thousands)	Past Due		Past Due		90+ Days		Non-accrual		Current		Total
Commercial real estate	$	—	$	983	$	—	$	1,051	$	208,849	$	210,883
Construction and land development		—		—		—		290		38,574		38,864
Commercial and industrial		657		191		—		897		80,669		82,414
Multi-family		—		—		—		—		15,222		15,222
Residential real estate		524		112		—		918		52,471		54,025
Leases		534		108		—		736		60,576		61,954
Tax certificates		—		—		—		1,206		4,088		5,294
Consumer		—		—		—		—		2,560		2,560
Total loans, net of unearned income	$	1,715	$	1,394	$	—	$	5,098	$	463,009	$	471,216

As of December 31, 2014	30-59 Days		60-89 Days		Accruing
(In thousands)	Past Due		Past Due		90+ Days		Non-accrual		Current		Total
Commercial real estate	$	311	$	533	$	—	$	3,684	$	170,510	$	175,038
Construction and land development		—		—		—		636		45,026		45,662
Commercial and industrial		92		449		—		2,517		73,431		76,489
Multi-family		—		—		—		—		13,823		13,823
Residential real estate		165		162		—		959		41,706		42,992
Leases		152		1		—		317		51,113		51,583
Tax certificates		—		—		—		1,700		5,491		7,191
Consumer		—		—		—		—		2,354		2,354
Total loans, net of unearned income	$	720	$	1,145	$	—	$	9,813	$	403,454	$	415,132

Troubled debt restructurings that are on an accrual status and a non-accrual status

	As of September 30, 2015
				Non-
	Number of	Accrual		Accrual
(In thousands)	loans	Status		Status		Total TDRs
Commercial real estate	3	$	2,818	$	—	$	2,818
Construction and land development	1		—		95		95
Commercial and industrial	4		2,722		—		2,722
Residential real estate	1		—		290		290
Total	9	$	5,540	$	385	$	5,925

	As of December 31, 2014
				Non-
	Number of	Accrual		Accrual
(In thousands)	loans	Status		Status		Total TDRs
Commercial real estate	3	$	2,883	$	—	$	2,883
Construction and land development	3		47		636		683
Commercial and industrial	5		3,643		1,448		5,091
Residential real estate	1		—		102		102
Total	12	$	6,573	$	2,186	$	8,759

Newly restructured loans

	Modifications by type for the nine months ended September 30, 2014
												Pre-		Post-
												Modification		Modification
												Outstanding		Outstanding
	Number of							Combination				Recorded		Recorded
(Dollars in thousands)	loans	Rate		Term		Payment		of types		Total		Investment		Investment
Commercial and industrial	3	$	—	$	233	$	—	$	28	$	261	$	262	$	262
Total	3	$	—	$	233	$	—	$	28	$	261	$	262	$	262

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Borrowings and Subordinated Debentures , Subordinated Debentures (Details)	9 Months Ended
	Sep. 30, 2015 USD ($) trust	Sep. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)
Borrowings and Subordinated Debentures
Junior subordinated debenture owed to unconsolidated subsidiary trust	$ 25,774,000		$ 25,774,000
Number of Delaware trust affiliates | trust	2
Aggregate principal amount, common securities		$ 20,000,000
Royal Bancshares Capital Trust I [Member] | Common Stock [Member]
Borrowings and Subordinated Debentures
Aggregate principal amount, common securities	$ 387,000
Royal Bancshares Capital Trust I [Member] | Trust Preferred Securities [Member]
Borrowings and Subordinated Debentures
Aggregate principal amount, capital securities	12,500,000
Trust I [Member]
Borrowings and Subordinated Debentures
Junior subordinated debenture owed to unconsolidated subsidiary trust	$ 12,900,000
Interest rate on notes payable (as a percent)	2.49%
Trust I [Member] | London Interbank Offered Rate (LIBOR) [Member]
Borrowings and Subordinated Debentures
Description of variable rate basis on notes payable	3-month LIBOR
Trust preferred securities basis spread on variable rate (as a percent)	2.15%
Trust II [Member]
Borrowings and Subordinated Debentures
Junior subordinated debenture owed to unconsolidated subsidiary trust	$ 12,900,000
Interest rate on notes payable (as a percent)	2.44%
Trust II [Member] | London Interbank Offered Rate (LIBOR) [Member]
Borrowings and Subordinated Debentures
Description of variable rate basis on notes payable	3-month LIBOR

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Loans and Leases - Major classifications of LHFI (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2015	Dec. 31, 2014
Major classifications of loans held for investment [Abstract]
Total LHFI, net of unearned income	$ 397,176	$ 471,216	$ 415,132
Proceeds from sales of loans and leases	3,838
Commercial real estate [Member]
Major classifications of loans held for investment [Abstract]
Total LHFI, net of unearned income	164,522	210,883	175,038
Construction and land development [Member]
Major classifications of loans held for investment [Abstract]
Total LHFI, net of unearned income	41,676	38,864	45,662
Commercial and industrial [Member]
Major classifications of loans held for investment [Abstract]
Total LHFI, net of unearned income	70,743	82,414	76,489
Multi-family [Member]
Major classifications of loans held for investment [Abstract]
Total LHFI, net of unearned income	16,893	15,222	13,823
Residential real estate [Member]
Major classifications of loans held for investment [Abstract]
Total LHFI, net of unearned income	44,261	54,025	42,992
Leases [Member]
Major classifications of loans held for investment [Abstract]
Total LHFI, net of unearned income	48,588	61,954	51,583
Tax certificates [Member]
Major classifications of loans held for investment [Abstract]
Total LHFI, net of unearned income	8,230	5,294	7,191
Consumer [Member]
Major classifications of loans held for investment [Abstract]
Total LHFI, net of unearned income	$ 2,263	$ 2,560	$ 2,354

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Other Real Estate Owned (Tables)

9 Months Ended

Sep. 30, 2015

Other Real Estate Owned [Abstract]

Details of changes in other real estate owned

	For the nine months ended September 30, 2015
(In thousands)	Loans		Tax Liens		Total
Beginning balance	$	349	$	9,430	$	9,779
Net proceeds from sales		(1,569)		(2,867)		(4,436)
Net gains on sales		61		708		769
Transfers in		1,672		2,296		3,968
Cash additions		—		418		418
Transfer to loans		—		(995)		(995)
Impairment charge		(125)		(534)		(659)
Ending balance	$	388	$	8,456	$	8,844

	For the year ended December 31, 2014
(In thousands)	Loans		Tax Liens		Total
Beginning balance	$	1,725	$	7,892	$	9,617
Net proceeds from sales		(1,336)		(2,970)		(4,306)
Net gain on sales		59		684		743
Transfers in		—		2,919		2,919
Cash additions		—		1,330		1,330
Impairment charge		(99)		(425)		(524)
Ending balance	$	349	$	9,430	$	9,779

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Deposits (Tables)

9 Months Ended

Sep. 30, 2015

Deposits [Abstract]

Deposits summary

	September 30,		December 31,
(In thousands)	2015		2014
Noninterest-bearing checking	$	76,949	$	73,665
NOW		38,146		46,515
Interest-bearing brokered deposits		25,000		—
Money Market		164,583		166,224
Savings		38,441		18,721
Time deposits (over $100)		85,884		87,209
Time deposits (under $100)		124,761		138,091
Total deposits	$	553,764	$	530,425

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2015

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 1.Summary of Significant Accounting Policies

Basis of Financial Presentation

The accompanying unaudited consolidated financial statements include the accounts of Royal Bancshares of Pennsylvania, Inc. (“Royal Bancshares”, the “Company”, “We” or “Our”) and its wholly-owned subsidiaries, Royal Investments of Delaware, Inc., including Royal Investments of Delaware, Inc.’s wholly owned subsidiary, Royal Preferred, LLC, and Royal Bank America (“Royal Bank”), including Royal Bank’s subsidiaries, Royal Real Estate of Pennsylvania, Inc., Royal Investments America, LLC, RBA Property LLC, Narberth Property Acquisition LLC, Rio Marina LLC, and Royal Tax Lien Services, LLC (“RTL”).  Royal Bank also has an 80% and 60% ownership interest in Crusader Servicing Corporation (“CSC”) and Royal Bank America Leasing, LP, respectively. The two Delaware trusts, Royal Bancshares Capital Trust I and Royal Bancshares Capital Trust II are not consolidated per requirements under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “Consolidation” (“ASC Topic 810”). These consolidated financial statements reflect the historical information of the Company. All significant intercompany transactions and balances have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Applications of the principles in our preparation of the consolidated financial statements in conformity with U.S. GAAP require management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes.  These estimates and assumptions are based on information available as of the date of the consolidated financial statements; therefore, actual results could differ from those estimates. The interim financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) that are, in the opinion of management, necessary to present a fair statement of the results for the interim periods.  These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014.  The results of operations for the three and nine month periods ended September 30, 2015 are not necessarily indicative of the results to be expected for the full year.

Reclassifications

Certain items in the 2014 consolidated financial statements and accompanying notes have been reclassified to conform to the current year’s presentation format.  There was no effect on net income for the periods presented herein as a result of the reclassification.

Accounting Policies Recently Adopted and Pending Accounting Pronouncements

In January 2014, FASB issued ASU No. 2014-04, Receivables (Topic 310): Troubled Debt Restructurings by Creditors (Subtopic 310-40) Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (“ASU 2014-04”). ASC Topic 310 includes guidance that states that a creditor should reclassify a collateralized mortgage loan such that the loan should be derecognized and the collateral asset recognized when it determines that there has been in substance a repossession or foreclosure by the creditor, that is, the creditor receives physical possession of the debtor’s assets regardless of whether formal foreclosure proceedings take place. However, the terms in substance a repossession or foreclosure and physical possession are not defined in the accounting literature and there is diversity about when a creditor should derecognize the loan receivable and recognize the real estate property. That diversity has been highlighted by recent extended foreclosure timelines and processes related to residential real estate properties.

The objectives in ASU 2014-04 are intended to reduce diversity in practice by clarifying when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan should be derecognized and the real estate property recognized. Holding foreclosed real estate property presents different operational and economic risk to creditors compared with holding an impaired loan. Therefore, consistency in the timing of loan derecognition and presentation of foreclosed real estate properties is of qualitative significance to users of the creditor’s financial statements. Additionally, the disclosure of the amount of foreclosed residential real estate properties and of the recorded investment in consumer mortgage loans secured by residential real estate properties that are in the process of foreclosure is expected to provide decision-useful information to many users of the creditor’s financial statements. The amendments in ASU 2014-04 are effective for public companies for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. An entity can elect to adopt the amendments in ASU 2014-04 using either a modified retrospective transition method or a prospective transition method.  Early adoption was permitted. The adoption of ASU 2014-04 did not have a significant impact on the Company’s consolidated financial statements.

In June 2014, the FASB issued ASU No. 2014-12,  Compensation – Stock Compensation (Topic 718) - Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (“ASU 2014-12”).  The amendments in ASU 2014-12 require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718, Compensation – Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. The amendments in ASU 2014-12 are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted.Entities may apply the amendments in this ASU either: (a) prospectively to all awards granted or modified after the effective date; or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The adoption of ASU 2014-12 is not expected to have a significant impact on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). The amendments in ASU 2015-03 require that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. ASU 2015-03 is consistent with FASB Concepts Statement No.6, Elements of Financial Statements, which states that debt issuance costs are similar to a debt discount and in effect reduce the proceeds of borrowing, thereby increasing the effective interest rate. The recognition and measurement guidance for debt issuance costs would not be affected by the amendments in this ASU. For public business entities, the amendments in ASU 2015-03 are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. An entity should apply the new guidance on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. Earlier adoption is permitted for financial statements that have not been previously issued. The adoption of ASU 2015-03 is not expected to have a material impact on the Company’s financial condition and results of operations.

In June 2015, the FASB issued ASU 2015-10, Technical Corrections and Improvements (“ASU 2015-10”). The amendments in ASU 2015-10 affect a wide variety of Topics in the Codification and will apply to all reporting entities within the scope of the affected accounting guidance. ASU 2015-10 includes amendments to clarify the Codification,

correct unintended application of guidance, or make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. Additionally, some of the amendments will make the Codification easier to understand and easier to apply by eliminating inconsistencies, providing needed clarifications, and improving the presentation of guidance in the Codification. The amendments in ASU 2015-10 are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Earlier adoption is permitted , including adoption in an interim period. All other amendments in ASU 2015-10 are effective upon the issuance of ASU 2015-10.  The adoption of ASU 2015-10 is not expected to have a material impact on the Company’s financial condition and results of operations.

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Borrowings and Subordinated Debentures (Tables)

9 Months Ended

Sep. 30, 2015

Borrowings and Subordinated Debentures

FHLB borrowings allocated by the year in which they mature with their corresponding weighted average rates

	As of				As of
	September 30, 2015				December 31, 2014
(Dollars in thousands)	Amount		Rate		Amount		Rate
Advances maturing in
2015	$	9,000	0.35	%	$	10,000	0.71	%
2016		10,000	1.11	%		10,000	1.11	%
2017		25,000	1.46	%		25,000	1.46	%
2018		10,000	2.01	%		10,000	2.01	%
Total FHLB borrowings	$	54,000			$	55,000

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2015

Segment Information [Abstract]

Selected segment information and reconciliations to consolidated financial information

	Three months ended  September 30, 2015
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	745,853	$	16,058	$	761,911
Total deposits	$	553,764	$	—	$	553,764
Interest income	$	7,625	$	173	$	7,798
Interest expense		1,447		189		1,636
Net interest income (expense)	$	6,178	$	(16)	$	6,162
(Credit) provision for loan and lease losses		(254)		38		(216)
Total non-interest income		538		162		700
Total non-interest expense		4,932		433		5,365
Income tax expense		—		—		—
Net income (loss)	$	2,038	$	(325)	$	1,713
Noncontrolling interest	$	179	$	—	$	179
Net income (loss) attributable to Royal Bancshares	$	1,859	$	(325)	$	1,534

	Three months ended  September 30, 2014
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	701,803	$	21,666	$	723,469
Total deposits	$	515,786	$	—	$	515,786
Interest income	$	6,889	$	302	$	7,191
Interest expense		1,367		256		1,623
Net interest income	$	5,522	$	46	$	5,568
(Credit) provision for loan and lease losses		(79)		28		(51)
Total non-interest income		987		217		1,204
Total non-interest expense		4,916		459		5,375
Income tax expense		—		—		—
Net income (loss)	$	1,672	$	(224)	$	1,448
Noncontrolling interest	$	69	$	(44)	$	25
Net income (loss) attributable to Royal Bancshares	$	1,603	$	(180)	$	1,423

	Nine months ended September 30, 2015
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	745,853	$	16,058	$	761,911
Total deposits	$	553,764	$	—	$	553,764
Interest income	$	21,642	$	507	$	22,149
Interest expense		4,169		629		4,798
Net interest income (expense)	$	17,473	$	(122)	$	17,351
(Credit) provision for loan and lease losses		(1,451)		69		(1,382)
Total non-interest income		1,924		906		2,830
Total non-interest expense		14,880		1,597		16,477
Income tax expense		—		—		—
Net income (loss)	$	5,968	$	(882)	$	5,086
Noncontrolling interest	$	551	$	(51)	$	500
Net income (loss) attributable to Royal Bancshares	$	5,417	$	(831)	$	4,586

	Nine months ended September 30, 2014
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	701,803	$	21,666	$	723,469
Total deposits	$	515,786	$	—	$	515,786
Interest income	$	20,549	$	1,002	$	21,551
Interest expense		4,030		840		4,870
Net interest income	$	16,519	$	162	$	16,681
(Credit) provision for loan and lease losses		(911)		146		(765)
Total non-interest income		2,019		773		2,792
Total non-interest expense		14,221		1,507		15,728
Income tax expense		—		—		—
Net income (loss)	$	5,228	$	(718)	$	4,510
Noncontrolling interest	$	337	$	(125)	$	212
Net income (loss) attributable to Royal Bancshares	$	4,891	$	(593)	$	4,298

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Other Real Estate Owned - Composition and Other Information (Details) - USD ($)	Sep. 30, 2015	Dec. 31, 2014	Dec. 31, 2013
Composition of OREO
Other real estate owned ("OREO"), net	$ 8,844,000	$ 9,779,000	$ 9,617,000
Loans [Member]
Composition of OREO
Other real estate owned ("OREO"), net	388,000	349,000	1,725,000
Loans, Land [Member]
Composition of OREO
Other real estate owned ("OREO"), net	319,000
Loans, Residential Real Estate [Member]
Composition of OREO
Other real estate owned ("OREO"), net	69,000
Tax Lien [Member]
Composition of OREO
Other real estate owned ("OREO"), net	$ 8,456,000	$ 9,430,000	$ 7,892,000

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Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
ASSETS
Cash and due from banks	$ 14,711	$ 9,642
Interest bearing deposits	9,506	21,148
Total cash and cash equivalents	24,217	30,790
Investment securities available for sale (“AFS”), at fair value	230,612	250,368
Other investment, at cost	2,250	2,250
Federal Home Loan Bank ("FHLB") stock	2,545	2,622
Loans and leases ("LHFI")	471,216	415,132
Less allowance for loan and lease losses	9,806	11,708
Net loans and leases	461,410	403,424
Bank owned life insurance	16,008	15,636
Accrued interest receivable	4,336	5,270
Other real estate owned ("OREO"), net	8,844	9,779
Premises and equipment, net	5,202	5,201
Other assets	6,487	7,213
Total assets	761,911	732,553
Deposits
Non-interest bearing	76,949	73,665
Interest bearing	476,815	456,760
Total deposits	553,764	530,425
Short-term borrowings	9,000
Long-term borrowings	82,084	92,426
Subordinated debentures	25,774	25,774
Accrued interest payable	2,168	726
Other liabilities	21,375	20,596
Total liabilities	694,165	669,947
Royal Bancshares of Pennsylvania, Inc. equity:
Preferred stock, Series A perpetual, $1,000 liquidation value, 500,000 shares authorized, 18,856 shares outstanding	18,856	18,856
Additional paid in capital	110,502	110,697
Accumulated deficit	(111,278)	(115,864)
Accumulated other comprehensive loss	(2,120)	(2,492)
Treasury stock - at cost, shares of Class A, 377,771 and 398,365 at September 30, 2015 and December 31, 2014, respectively	(5,283)	(5,571)
Total Royal Bancshares of Pennsylvania, Inc. shareholders’ equity	67,270	62,219
Noncontrolling interest	476	387
Total equity	67,746	62,606
Total liabilities and shareholders' equity	761,911	732,553
Class A - Common stock
Royal Bancshares of Pennsylvania, Inc. equity:
Common stock	56,400	56,400
Total equity	56,400	56,400
Class B - Common stock
Royal Bancshares of Pennsylvania, Inc. equity:
Common stock	193	193
Total equity	$ 193	$ 193

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Loans and Leases - Risk Ratings for Each Loan Portfolio Segment (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	$ 471,216	$ 415,132	$ 397,176
Commercial real estate [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	210,883	175,038	164,522
Construction and land development [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	38,864	45,662	41,676
Commercial and industrial [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	82,414	76,489	70,743
Multi-family [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	15,222	13,823	16,893
Residential real estate [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	54,025	42,992	44,261
Leases [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	61,954	51,583	48,588
Tax certificates [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	5,294	7,191	8,230
Consumer [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	2,560	2,354	$ 2,263
Pass [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	375,794	327,232
Pass [Member] | Commercial real estate [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	172,882	140,045
Pass [Member] | Construction and land development [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	5,305	12,861
Pass [Member] | Commercial and industrial [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	62,930	60,500
Pass [Member] | Multi-family [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	14,439	12,995
Pass [Member] | Residential real estate [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	53,107	42,033
Pass [Member] | Leases [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	60,576	51,113
Pass [Member] | Tax certificates [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	4,088	5,491
Pass [Member] | Consumer [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	2,467	2,194
Pass Watch [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	84,140	68,543
Pass Watch [Member] | Commercial real estate [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	35,298	27,229
Pass Watch [Member] | Construction and land development [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	33,269	32,165
Pass Watch [Member] | Commercial and industrial [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	14,668	8,527
Pass Watch [Member] | Multi-family [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	278	310
Pass Watch [Member] | Leases [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	534	152
Pass Watch [Member] | Consumer [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	93	160
Special Mention [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	3,402	4,639
Special Mention [Member] | Commercial real estate [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	1,340	2,512
Special Mention [Member] | Commercial and industrial [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	1,449	1,608
Special Mention [Member] | Multi-family [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	505	518
Special Mention [Member] | Leases [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	108	1
Substandard [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	2,782	4,905
Substandard [Member] | Commercial real estate [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	312	1,568
Substandard [Member] | Commercial and industrial [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	2,470	3,337
Nonperforming Financing Receivable [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	5,098	9,813
Nonperforming Financing Receivable [Member] | Commercial real estate [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	1,051	3,684
Nonperforming Financing Receivable [Member] | Construction and land development [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	290	636
Nonperforming Financing Receivable [Member] | Commercial and industrial [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	897	2,517
Nonperforming Financing Receivable [Member] | Residential real estate [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	918	959
Nonperforming Financing Receivable [Member] | Leases [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	736	317
Nonperforming Financing Receivable [Member] | Tax certificates [Member]
Risk Ratings for Each Loan Portfolio Segment [Abstract]
Total LHFI, net of unearned income	$ 1,206	$ 1,700

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Consolidated Statement of Changes in Shareholders' Equity - USD ($) $ in Thousands	Preferred Stock Series A [Member]	Additional Paid In Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Treasury Stock [Member]	Noncontrolling Interest [Member]	Class A - Common stock	Class B - Common stock	Total
Balance at Dec. 31, 2013	$ 29,950	$ 127,299	$ (120,396)	$ (6,122)	$ (6,336)	$ 271	$ 22,940	$ 199	$ 47,805
Balance (in shares) at Dec. 31, 2013							11,470	1,987
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)			4,298			212			4,510
Other comprehensive income, net of reclassifications and taxes				4,307					4,307
Distributions to non controlling interests						(208)			(208)
Common stock conversion from Class B to Class A			(121)				$ 127	$ (6)
Common stock conversion from Class B to Class A (in shares)							64	(55)
Redemption of 11,551 shares of preferred stock	11,551	2,392							13,943
Accretion of discount on preferred stock	457		(457)
Common shares issued		(13,333)					$ 33,333		20,000
Common stock issued (in shares)							16,666
Treasury shares issued for compensation		(463)			$ 541				78
Treasury shares issued for compensation (in shares)					25,498
Other adjustment to additional paid in capital		(28)							(28)
Stock option expense		12							12
Balance at Sep. 30, 2014	18,856	111,095	(116,676)	(1,815)	$ (5,795)	275	$ 56,400	$ 193	62,533
Balance (in shares) at Sep. 30, 2014							28,200	1,932
Balance at Dec. 31, 2014	18,856	110,697	(115,864)	(2,492)	(5,571)	387	$ 56,400	$ 193	62,606
Balance (in shares) at Dec. 31, 2014							28,200	1,932
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)			4,586			500			5,086
Other comprehensive income, net of reclassifications and taxes				372					372
Distributions to non controlling interests						(411)			(411)
Treasury shares issued for compensation		(252)			$ 288				36
Treasury shares issued for compensation (in shares)					(20,594)
Stock option expense		57							57
Balance at Sep. 30, 2015	$ 18,856	$ 110,502	$ (111,278)	$ (2,120)	$ (5,283)	$ 476	$ 56,400	$ 193	$ 67,746
Balance (in shares) at Sep. 30, 2015							28,200	1,932

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Commitments, Contingencies, and Concentrations (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Unused lines of Credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Financial instruments whose contract amounts represent credit risk	$ 64,044	$ 48,929
Commitments to Extend Credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Financial instruments whose contract amounts represent credit risk	23,118	6,430
Standby letters of credit and financial guarantees written [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Financial instruments whose contract amounts represent credit risk	$ 416	$ 371

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Regulatory Capital Requirements (Tables)

9 Months Ended

Sep. 30, 2015

Regulatory Capital Requirements [Abstract]

Royal Bank's capital ratios

	At September 30, 2015
									To be well capitalized
					For capital				under prompt corrective
	Actual				adequacy purposes				action provision
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital (to risk-weighted assets)	$	84,720	15.99	%	$	42,386	8.00	%	$	52,983	10.00	%
Tier 1 capital (to risk-weighted assets)	$	78,058	14.73	%	$	31,790	6.00	%	$	42,386	8.00	%
Tier 1 capital (to average assets, leverage)	$	78,058	10.65	%	$	29,307	4.00	%	$	36,634	5.00	%
Common equity Tier 1 (to risk-weighted assets)	$	58,622	11.06	%	$	23,842	4.50	%	$	34,439	6.50	%

Adjustments to net loss as well as the capital ratios

	For the nine
	months ended
(In thousands)	September 30, 2015
RAP net income	$	2,403
Tax lien adjustment, net of noncontrolling interest		2,208
U.S. GAAP net income	$	4,611

	At September 30, 2015
	As reported		As adjusted
	under RAP		for U.S. GAAP
Total capital (to risk-weighted assets)	15.99	%	16.35	%
Tier 1 capital (to risk-weighted assets)	14.73	%	15.09	%
Tier 1 capital (to average assets, leverage)	10.65	%	10.93	%
Common equity Tier 1 (to risk-weighted assets)	11.06	%	11.02	%

Company capital ratios

	At September 30, 2015
										To be well capitalized
					For capital					under the Federal
	Actual				adequacy purposes				Reserve's regulations
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital (to risk-weighted assets)	$	101,091	18.96	%	$	42,643	8.00	%	$	53,304	10.00	%
Tier 1 capital (to risk-weighted assets)	$	92,664	17.38	%	$	31,982	6.00	%	$	31,982	6.00	%
Tier 1 capital (to average assets, leverage)	$	92,664	12.52	%	$	29,609	4.00	%		N/A	N/A
Common equity Tier 1 (to risk-weighted assets)	$	50,057	9.39	%	$	23,987	4.50	%		N/A	N/A

Adjustment to Company's capital ratio under RAP

	For the nine
	months ended
(In thousands)	September 30, 2015
U.S. GAAP net income	$	4,586
Tax lien adjustment, net of noncontrolling interest		(2,208)
RAP net income	$	2,378

	At September 30, 2015
	As reported		As adjusted
	under U.S. GAAP		for RAP
Total capital (to risk-weighted assets)	18.96	%	18.62	%
Tier 1 capital (to risk-weighted assets)	17.38	%	16.90	%
Tier 1 capital (to average assets, leverage)	12.52	%	12.16	%
Common equity Tier 1 (to risk-weighted assets)	9.39	%	9.43	%

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Fair Value of Financial Instruments (Details) $ in Thousands	Sep. 30, 2015 USD ($) item	Dec. 31, 2014 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	$ 230,612	$ 250,368
U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	25,907	25,289
Mortgage-backed Securities-residential [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	14,418	22,387
Collateralized Mortgage Obligations, Issued or Guaranteed by U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	172,745	168,977
Mortgage-backed Securities, Issued by Private Enterprises [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	2,927	3,731
Corporate Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	1,520	15,727
Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	10,072	10,173
Private Equity Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	2,997	4,034
Common Stock [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	26	50
Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	230,612	250,368
Recurring [Member] | Interest Rate Swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	708	187
Recurring [Member] | U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	25,907	25,289
Recurring [Member] | Mortgage-backed Securities-residential [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	14,418	22,387
Recurring [Member] | Collateralized Mortgage Obligations, Issued or Guaranteed by U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	172,745	168,977
Recurring [Member] | Mortgage-backed Securities, Issued by Private Enterprises [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	2,927	3,731
Recurring [Member] | Corporate Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	1,520	15,727
Recurring [Member] | Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	10,072	10,173
Recurring [Member] | Private Equity Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	2,997	4,034
Recurring [Member] | Common Stock [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	26	50
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	26	50
Level 1 [Member] | Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	26	50
Level 1 [Member] | Recurring [Member] | Common Stock [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	26	50
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	227,589	246,284
Level 2 [Member] | Interest Rate Swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	708	187
Level 2 [Member] | Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	227,589	246,284
Level 2 [Member] | Recurring [Member] | Interest Rate Swap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities	708	187
Level 2 [Member] | Recurring [Member] | U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	25,907	25,289
Level 2 [Member] | Recurring [Member] | Mortgage-backed Securities-residential [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	14,418	22,387
Level 2 [Member] | Recurring [Member] | Collateralized Mortgage Obligations, Issued or Guaranteed by U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	172,745	168,977
Level 2 [Member] | Recurring [Member] | Mortgage-backed Securities, Issued by Private Enterprises [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	2,927	3,731
Level 2 [Member] | Recurring [Member] | Corporate Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	1,520	15,727
Level 2 [Member] | Recurring [Member] | Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	$ 10,072	10,173
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Number of investments in private equity funds | item	5
Investment securities available for sale (“AFS”), at fair value	$ 2,997	4,034
Level 3 [Member] | Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	2,997	4,034
Level 3 [Member] | Recurring [Member] | Private Equity Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale (“AFS”), at fair value	$ 2,997	$ 4,034

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Comprehensive Income (Loss)

9 Months Ended

Sep. 30, 2015

Comprehensive Income (Loss) [Abstract]

Comprehensive Income (Loss) Note [Text Block]

Note 15.Comprehensive Income (Loss)

FASB ASC Topic 220, “Comprehensive Income” (“ASC Topic 220”), requires the reporting of all changes in equity during the reporting period except investments from and distributions to shareholders.  Net income is a component of comprehensive income (loss) with all other components referred to in the aggregate as other comprehensive income.  Unrealized gains and losses on AFS securities is an example of another comprehensive income (loss) component.

	For the nine months ended September 30, 2015
			Tax
	Before tax		expense		Net of tax
(In thousands)	amount		(benefit)		amount
Unrealized gains on investment securities:
Unrealized holding gains arising during period	$	2,011	$	691	$	1,320
Less reclassification adjustment for gains
realized in net income		652		222		430
Unrealized gains on investment securities		1,359		469		890
Unrecognized benefit obligation expense:
Less reclassification adjustment for amortization		(51)		—		(51)
Unrecognized benefit obligation		(51)		—		(51)
Unrealized loss on derivative instrument		(708)		(241)		(467)
Other comprehensive income, net	$	600	$	228	$	372

	For the nine months ended September 30, 2014
			Tax
	Before tax		expense		Net of tax
(In thousands)	amount		(benefit)		amount
Unrealized gains on investment securities:
Unrealized holding gains arising during period	$	6,570	$	2,101	$	4,469
Less reclassification adjustment for gains
realized in net income		330		112		218
Unrealized gains on investment securities		6,240		1,989		4,251
Unrecognized benefit obligation expense:
Reclassification adjustment for amortization		85		29		56
Unrecognized benefit obligation		85		29		56
Other comprehensive income, net	$	6,325	$	2,018	$	4,307

The other components of accumulated other comprehensive loss included in shareholders’ equity at September 30, 2015 and December 31, 2014 are as follows:

	September 30,		December 31,
(In thousands)	2015		2014
Unrecognized benefit obligation	$	(4,076)	$	(4,025)
Unrealized gains (losses) on AFS investments		2,423		1,720
Unrealized loss on derivative instrument		(467)		(187)
Accumulated other comprehensive loss	$	(2,120)	$	(2,492)

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Pension Plan (Tables)

9 Months Ended

Sep. 30, 2015

Pension Plan [Abstract]

Schedule of Net Benefit Costs [Table Text Block]

	For the three months ended				For the nine months ended
	September 30,				September 30,
(In thousands)	2015		2014		2015		2014
Service cost	$	17	$	15	$	49	$	45
Interest cost		135		155		403		466
Amortization of prior service cost		22		22		68		66
Amortization of actuarial loss		46		32		140		96
Net periodic benefit cost	$	220	$	224	$	660	$	673

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Segment Information

9 Months Ended

Sep. 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 September 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 nine months ended September 30, 2015 and 2014.

	Three months ended  September 30, 2015
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	745,853	$	16,058	$	761,911
Total deposits	$	553,764	$	—	$	553,764
Interest income	$	7,625	$	173	$	7,798
Interest expense		1,447		189		1,636
Net interest income (expense)	$	6,178	$	(16)	$	6,162
(Credit) provision for loan and lease losses		(254)		38		(216)
Total non-interest income		538		162		700
Total non-interest expense		4,932		433		5,365
Income tax expense		—		—		—
Net income (loss)	$	2,038	$	(325)	$	1,713
Noncontrolling interest	$	179	$	—	$	179
Net income (loss) attributable to Royal Bancshares	$	1,859	$	(325)	$	1,534

	Three months ended  September 30, 2014
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	701,803	$	21,666	$	723,469
Total deposits	$	515,786	$	—	$	515,786
Interest income	$	6,889	$	302	$	7,191
Interest expense		1,367		256		1,623
Net interest income	$	5,522	$	46	$	5,568
(Credit) provision for loan and lease losses		(79)		28		(51)
Total non-interest income		987		217		1,204
Total non-interest expense		4,916		459		5,375
Income tax expense		—		—		—
Net income (loss)	$	1,672	$	(224)	$	1,448
Noncontrolling interest	$	69	$	(44)	$	25
Net income (loss) attributable to Royal Bancshares	$	1,603	$	(180)	$	1,423

	Nine months ended September 30, 2015
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	745,853	$	16,058	$	761,911
Total deposits	$	553,764	$	—	$	553,764
Interest income	$	21,642	$	507	$	22,149
Interest expense		4,169		629		4,798
Net interest income (expense)	$	17,473	$	(122)	$	17,351
(Credit) provision for loan and lease losses		(1,451)		69		(1,382)
Total non-interest income		1,924		906		2,830
Total non-interest expense		14,880		1,597		16,477
Income tax expense		—		—		—
Net income (loss)	$	5,968	$	(882)	$	5,086
Noncontrolling interest	$	551	$	(51)	$	500
Net income (loss) attributable to Royal Bancshares	$	5,417	$	(831)	$	4,586

	Nine months ended September 30, 2014
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	701,803	$	21,666	$	723,469
Total deposits	$	515,786	$	—	$	515,786
Interest income	$	20,549	$	1,002	$	21,551
Interest expense		4,030		840		4,870
Net interest income	$	16,519	$	162	$	16,681
(Credit) provision for loan and lease losses		(911)		146		(765)
Total non-interest income		2,019		773		2,792
Total non-interest expense		14,221		1,507		15,728
Income tax expense		—		—		—
Net income (loss)	$	5,228	$	(718)	$	4,510
Noncontrolling interest	$	337	$	(125)	$	212
Net income (loss) attributable to Royal Bancshares	$	4,891	$	(593)	$	4,298

Interest income earned by the community banking segment related to the tax liens segment was approximately $189,000 and $256,000 for the three month periods ended September 30, 2015 and 2014,  respectively and $629,000 and $840,000 for the nine months endedSeptember 30, 2015 and 2014, respectively.

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Fair Value of Financial Instruments - Quantitative Information (Details) - Appraisal of collateral valuation technique [Member] - Level 3 [Member] - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Impaired loans and leases [Member]
Additional quantitative information about assets measured at fair value on a nonrecurring basis [Abstract]
Impaired Loans And Leases Fair Value	$ 3,657	$ 2,812
Other real estate owned [Member]
Additional quantitative information about assets measured at fair value on a nonrecurring basis [Abstract]
Foreclosed Properties Valued On Nonrecurring Basis	$ 1,957	$ 3,418
Maximum [Member] | Impaired loans and leases [Member]
Additional quantitative information about assets measured at fair value on a nonrecurring basis [Abstract]
Range (Weighted Average) of Appraisal adjustments (in hundredths)	(62.30%)	(20.00%)
Range (Weighted Average) of Liquidation expenses (in hundredths	(23.20%)	(24.00%)
Maximum [Member] | Other real estate owned [Member]
Additional quantitative information about assets measured at fair value on a nonrecurring basis [Abstract]
Range (Weighted Average) of Appraisal adjustments (in hundredths)	(84.20%)	(68.60%)
Range (Weighted Average) of Liquidation expenses (in hundredths	(14.70%)	(14.70%)
Weighted Average [Member] | Impaired loans and leases [Member]
Additional quantitative information about assets measured at fair value on a nonrecurring basis [Abstract]
Range (Weighted Average) of Appraisal adjustments (in hundredths)	(28.70%)	(20.00%)
Range (Weighted Average) of Liquidation expenses (in hundredths	(6.60%)	(7.80%)
Weighted Average [Member] | Other real estate owned [Member]
Additional quantitative information about assets measured at fair value on a nonrecurring basis [Abstract]
Range (Weighted Average) of Appraisal adjustments (in hundredths)	(30.20%)	(14.50%)
Range (Weighted Average) of Liquidation expenses (in hundredths	(3.60%)	(14.70%)

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Net Cash Provided by (Used in) Operating Activities, Continuing Operations [Abstract]
Net income attributable to Royal Bancshares of Pennsylvania, Inc.	$ 4,586	$ 4,298
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	459	348
Stock compensation expense	57	12
Credit for loan and lease losses	(1,382)	(765)
Impairment charge for OREO	659	399
Net amortization of AFS investment securities	1,164	1,495
Net accretion on loans	(471)	(303)
Net gains on sales of premises and equipment		(107)
Gains on sales of loans and leases		(223)
Net gains on sales of OREO	(769)	(633)
Net gains on sales of investment securities	(652)	(330)
Income from bank owned life insurance	(372)	(384)
Changes in assets and liabilities:
Decrease in accrued interest receivable	934	1,500
Decrease in other assets	275	(16)
Decrease in accrued interest payable	1,442	1,340
Decrease in other liabilities	779	(1,334)
Net cash provided by operating activities	6,709	5,297
Cash flows from investing activities:
Proceeds from maturities, calls and paydowns of AFS investment securities	28,084	33,272
Proceeds from sales of AFS investment securities	33,653	55,290
Purchase of AFS investment securities	(41,134)	(40,150)
Redemption of Federal Home Loan Bank stock	77	526
Proceeds from sales of loans and leases		3,838
Net increase in loans	(59,106)	(37,001)
Additions to OREO	(418)	(1,292)
Proceeds from the sales of premises and equipment		303
Purchase of premises and equipment	(460)	(872)
Proceeds from sales of OREO	4,436	3,548
Net cash provided by investing activities	(34,868)	17,462
Cash flows from financing activities:
Increase in demand and NOW accounts	19,915	3,854
Increase (decrease) in money market and savings accounts	18,079	(952)
Decrease in certificates of deposit	(14,655)	(16,080)
Proceeds from short-term borrowings	9,000
Repayments of short-term borrowings		(10,000)
Repayments of long-term borrowings	(10,342)	(341)
Distributions to noncontrolling interest	(411)	(208)
Issuance of common stock, net		20,000
Redemption of preferred stock		(13,943)
Net cash used in financing activities	21,586	(17,670)
Net increase (decrease) in cash and cash equivalents	(6,573)	5,089
Cash and cash equivalents at the beginning of the period	30,790	16,844
Cash and cash equivalents at the end of the period	24,217	21,933
Supplemental Disclosure
Interest paid	3,356	3,530
Transfers to OREO	3,968	1,998
OREO Transfers to Loans	$ 995
Transfers to LHFS		$ 3,187

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Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2015	Dec. 31, 2014
Royal Bancshares of Pennsylvania, Inc. equity:
Preferred stock, liquidation value (in dollars per share)	$ 1,000	$ 1,000
Preferred stock, shares authorized (in shares)	500,000	500,000
Preferred stock, shares outstanding (in shares)	18,856	18,856
Class A - Common stock
Royal Bancshares of Pennsylvania, Inc. equity:
Common stock, par value (in dollars per share)	$ 2.00	$ 2.00
Common stock, shares authorized (in shares)	40,000,000	40,000,000
Common stock, shares issued (in shares)	28,200,269	28,200,269
Treasury stock, shares (in shares)	377,771	398,365
Class B - Common stock
Royal Bancshares of Pennsylvania, Inc. equity:
Common stock, par value (in dollars per share)	$ 0.10	$ 0.10
Common stock, shares authorized (in shares)	3,000,000	3,000,000
Common stock, shares issued (in shares)	1,931,692	1,931,692

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Commitments, Contingencies, and Concentrations

9 Months Ended

Sep. 30, 2015

Commitments, Contingencies, and Concentrations [Abstract]

Commitments, Contingencies, and Concentrations

Note 10.Commitments, Contingencies, and Concentrations

We are a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of our customers.  These financial instruments include commitments to extend credit and standby letters of credit.  Such financial instruments are recorded in the financial statements when they become payable. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.  The contract amounts of those instruments reflect the extent of involvement we have in particular classes of financial instruments.

Our exposure to credit loss in the event of non-performance by the other party to commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments.  We use the same credit policies in making commitments and conditional obligations as we do for on-balance-sheet instruments.

The contract amounts are as follows:

	September 30,		December 31,
(In thousands)	2015		2014
Financial instruments whose contract amounts represent credit risk:
Open-end lines of credit	$	64,044	$	48,929
Commitments to extend credit		23,118		6,430
Standby letters of credit and financial guarantees written		416		371

Legal Proceedings

From time to time, we are a party to routine legal proceedings within the normal course of business.  Such routine legal proceedings in the aggregate are believed by management to be immaterial to our financial condition or results of operations.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Oct. 31, 2015
Entity Information [Line Items]
Entity Registrant Name	ROYAL BANCSHARES OF PENNSYLVANIA INC
Entity Central Index Key	0000922487
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2015
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2015
Entity Current Reporting Status	Yes
Document Fiscal Period Focus	Q3
Entity Filer Category	Smaller Reporting Company
Class A - Common stock
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		27,828,849
Class B - Common stock
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		1,928,289

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Shareholders’ Equity

9 Months Ended

Sep. 30, 2015

Shareholders' Equity [Abstract]

Shareholders' Equity

Note 11.Shareholders’ Equity

1. Preferred Stock

On February 20, 2009, as part of the Capital Purchase Program (“CPP”) established by the U.S. Department of the Treasury (“Treasury”), we issued to Treasury 30,407 shares of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A, without par value per share (the “Series A Preferred Stock”), and a liquidation preference of $1,000 per share.  In conjunction with the purchase of the Series A Preferred Stock, Treasury received a warrant to purchase 1,104,370 shares of our Class A common stock.  The aggregate purchase price for the Series A Preferred Stock and warrant was $30.4 million in cash.  The Series A Preferred Stock qualifies as Tier 1 capital and originally paid cumulative dividends at a rate of 5% per annum.  In February 2014, the cumulative dividend rate on the Series A Preferred Stock increased to 9% per annum.  The Series A Preferred Stock may generally be redeemed by the Company at any time following consultation with its primary banking regulators.  The warrant issued to Treasury has a 10-year term and is immediately exercisable upon its issuance, with an exercise price, subject to anti-dilution adjustments, equal to $4.13 per share of the common stock.  As a result of the shareholders’ rights offering described below, the number of warrants to purchase the Company’s Class A common stock adjusted to 1,368,040 and the warrant exercise price decreased to $3.33 per share of the common stock.

We received approval from the Federal Reserve Bank to bid up to $14.0 million, which was raised in a private placement, to purchase shares of the Series A Preferred Stock in an auction of such shares conducted by the Treasury.  The auction closed on June 19, 2014.  The Series A Preferred Stock was priced in the auction at $1,207.11 per share for all 30,407 shares of Series A Preferred Stock outstanding. We were allocated 11,551 shares of Series A Preferred Stock for repurchase at the clearing price of $1,207.11. Closing for the sale of the Series A Preferred Stock by the Treasury, including the repurchase of 11,551 shares of Series A Preferred Stock by the Company, occurred on July 2, 2014. As part of this redemption, we eliminated nearly $3.5 million in preferred dividends in arrears.

2. Common Stock

Our Class A common stock trades on the NASDAQ Global Market under the symbol RBPAA.  There is no market for our Class B common stock.  The Class B shares may not be transferred in any manner except to the holder’s immediate family.  Class B shares may be converted to Class A shares at the rate of 1.15 to 1.  Shareholders are entitled to one vote for each Class A share and ten votes for each Class B share held.  Holders of either class of common stock are entitled to conversion equivalent per share dividends when declared.

To fund the purchase of the Series A Preferred Stock, as described above, we sold 11,666,667 shares of our Class A common stock in a private placement transaction at a price of $1.20 per share.  Additionally, during the third quarter of 2014, we conducted a shareholder rights offering to existing shareholders to limit their ownership dilution from the sale of Class A common stock to the other investors in the private placement. We issued approximately 5.0 million shares at a price of $1.20 per share and received gross proceeds of approximately $6.0 million.

3. Payment of Dividends

Under the Pennsylvania Business Corporation Law, the Company may pay dividends only if it is solvent and would not be rendered insolvent by the dividend payment. There are also restrictions set forth in the Pennsylvania Banking Code of 1965 (the “Code”) and in the Federal Deposit Insurance Act (“FDIA”) affecting the payment of dividends to the Company by Royal Bank.  Under the Code, no dividends may be paid by a bank except from “accumulated net earnings” (generally retained earnings).  In addition, dividends paid by Royal Bank to the Company would be prohibited if the effect thereof would cause Royal Bank’s capital to be reduced below applicable minimum capital requirements. 

On August 13, 2009, the Company’s Board suspended the regular quarterly cash dividends on the Series A Preferred Stock.  The Company’s Board took this action in consultation with the Federal Reserve Bank of Philadelphia as required by regulatory policy guidance.  In February 2014, the preferred cumulative dividend rate prospectively increased to 9%per annum.  As a result of the Company’s repurchase of 11,551 shares of Series A Preferred Stock, approximately $3.5 million of the Series A Preferred stockdividend in arrears was eliminated. As of September 30, 2015, the Series A Preferred stock dividend in arrears, which includes additional dividends on arrearages, was approximately $8.3 million and has not been recognized in the consolidated financial statements.  In the event we declared the preferred dividend in arrears our capital ratios would be negatively affected; however, they would remain above the required minimum ratios.  Under the Federal Reserve Bank MOU as described in “Note 2 — Regulatory Matters and Significant Risks or Uncertainties” to the Consolidated Financial Statements, the Company may not declare or pay any dividends without the prior written approval of the Federal Reserve Bank and the Director of the Division of Banking Supervision and Regulation of the Board of Governors of the Federal Reserve System.

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Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Interest Income
Loans and leases, including fees	$ 6,456	$ 5,451	$ 17,878	$ 15,925
Investment securities AFS	1,334	1,734	4,250	5,610
Deposits in banks	8	6	21	16
Total Interest Income	7,798	7,191	22,149	21,551
Interest Expense
Deposits	968	900	2,796	2,712
Short-term borrowings	5	1	5	13
Long-term borrowings	663	722	1,997	2,145
Total Interest Expense	1,636	1,623	4,798	4,870
Net Interest Income	6,162	5,568	17,351	16,681
Credit for loan and lease losses	(216)	(51)	(1,382)	(765)
Net Interest Income after Credit for Loan and Lease Losses	6,378	5,619	18,733	17,446
Non-interest Income
Service charges and fees	298	248	832	779
Net gains on sales of loans and leases		80		223
Net gains on sales of other real estate owned	123	173	769	633
Gain on sale of premises and equipment		107		107
Income from bank owned life insurance	124	129	372	384
Net gains on the sale of AFS investment securities	80	238	652	330
Other income	75	229	205	336
Total Non-interest Income	700	1,204	2,830	2,792
Non-interest Expense
Employee salaries and benefits	2,655	2,704	7,825	7,505
Occupancy and equipment	736	614	2,212	1,865
Professional and legal fees	380	570	1,314	1,562
OREO expenses and impairment	386	154	1,140	892
Pennsylvania Shares Tax	113	138	338	406
FDIC and state assessments	158	261	533	770
Communications and data processing	214	166	607	485
Provision for credit losses on off-balance sheet credit exposures	(68)	14	282	5
Directors' fees	114	129	349	360
Marketing and advertising	38	86	185	325
Insurance	78	89	244	289
Loan collection expense	138	70	273	227
Other operating expenses	423	380	1,175	1,037
Total Non-interest Expense	5,365	5,375	16,477	15,728
Income Before Tax (Benefit) Expense	1,713	1,448	5,086	4,510
Net Income	1,713	1,448	5,086	4,510
Less Net Income (Loss) Attributable to Noncontrolling Interest	179	25	500	212
Net Income Attributable to Royal Bancshares of Pennsylvania, Inc.	1,534	1,423	4,586	4,298
Less Preferred Stock Series A Accumulated Dividend and Accretion	434	152	1,287	1,644
Net Income Available to Common Shareholders	$ 1,100	$ 1,271	$ 3,299	$ 2,654
Per Common Share Data
Net Income - Basic and Diluted	$ 0.04	$ 0.05	$ 0.11	$ 0.15

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Allowance for Loan and Lease Losses

9 Months Ended

Sep. 30, 2015

Allowance for Loan and Lease Losses [Abstract]

Allowance for Loan and Lease Losses

Note 5.Allowance for Loan and Lease Losses

The following tables present the detail of the allowance and the loan portfolio disaggregated by loan portfolio classification as of September 30, 2015,  December 31, 2014 and September 30,2014.

Allowance for Loan and Lease Losses

As of and for the three months ended September 30, 2015

			Construction
	Commercial		and land		Commercial		Multi-		Residential				Tax
(In thousands)	real estate		development		and industrial		family		real estate		Leases		certificates		Consumer		Unallocated		Total
Beginning balance	$	4,208	$	1,358	$	1,705	$	300	$	584	$	1,405	$	317	$	35	$	124	$	10,036
Charge-offs		—		(39)		—		—		—		(138)		—		—		—		(177)
Recoveries		—		150		4		—		5		4		—		—		—		163
(Credit) provision		(344)		133		(301)		(113)		67		316		38		(6)		(6)		(216)
Ending balance	$	3,864	$	1,602	$	1,408	$	187	$	656	$	1,587	$	355	$	29	$	118	$	9,806
Ending balance: related to loans individually evaluated for impairment	$	—	$	145	$	—	$	—	$	28	$	131	$	18	$	—	$	—	$	322
Ending balance: related to loans collectively evaluated for impairment	$	3,864	$	1,457	$	1,408	$	187	$	628	$	1,456	$	337	$	29	$	118	$	9,484

Allowance for Loan and Lease Losses

As of and for the nine months endedSeptember 30, 2015

			Construction
	Commercial		and land		Commercial		Multi-		Residential				Tax
(In thousands)	real estate		development		and industrial		family		real estate		Leases		certificates		Consumer		Unallocated		Total
Beginning balance	$	4,452	$	2,292	$	1,780	$	285	$	616	$	1,429	$	667	$	38	$	149	$	11,708
Charge-offs		(231)		(119)		(541)		—		—		(315)		(433)		—		—		(1,639)
Recoveries		351		402		278		—		16		20		52		—		—		1,119
(Credit) provision		(708)		(973)		(109)		(98)		24		453		69		(9)		(31)		(1,382)
Ending balance	$	3,864	$	1,602	$	1,408	$	187	$	656	$	1,587	$	355	$	29	$	118	$	9,806
Ending balance: related to loans individually evaluated for impairment	$	—	$	145	$	—	$	—	$	28	$	131	$	18	$	—	$	—	$	322
Ending balance: related to loans collectively evaluated for impairment	$	3,864	$	1,457	$	1,408	$	187	$	628	$	1,456	$	337	$	29	$	118	$	9,484

Loans Evaluated for Impairment

At September 30, 2015

			Construction
	Commercial		and land		Commercial		Multi-		Residential				Tax
	real estate		development		and industrial		family		real estate		Leases		certificates		Consumer		Unallocated		Total
(In thousands)
Ending balance	$	210,883	$	38,864	$	82,414	$	15,222	$	54,025	$	61,954	$	5,294	$	2,560	$	—	$	471,216
Ending balance: individually evaluated for impairment	$	4,040	$	290	$	3,024	$	—	$	918	$	640	$	1,206	$	—	$	—	$	10,118
Ending balance: collectively evaluated for impairment	$	206,843	$	38,574	$	79,390	$	15,222	$	53,107	$	61,314	$	4,088	$	2,560	$	—	$	461,098

Allowance for Loan and Lease Losses and Loans Evaluated for Impairment

As of and for the year ended December 31, 2014

			Construction
	Commercial		and land		Commercial		Multi-		Residential				Tax
(In thousands)	real estate		development		and industrial		family		real estate		Leases		certificates		Consumer		Unallocated		Total
Beginning balance	$	5,498	$	2,316	$	3,006	$	402	$	473	$	1,223	$	555	$	15	$	183	$	13,671
Charge-offs		(354)		(172)		(452)		—		—		(793)		(350)		—		—		(2,121)
Recoveries		—		940		27		—		15		42		1		—		—		1,025
(Credit) provision		(692)		(792)		(801)		(117)		128		957		461		23		(34)		(867)
Ending balance	$	4,452	$	2,292	$	1,780	$	285	$	616	$	1,429	$	667	$	38	$	149	$	11,708
Ending balance: related to loans individually evaluated for impairment	$	200	$	—	$	301	$	—	$	28	$	80	$	432	$	—	$	—	$	1,041
Ending balance: related to loans collectively evaluated for impairment	$	4,252	$	2,292	$	1,479	$	285	$	588	$	1,349	$	235	$	38	$	149	$	10,667
Loan Balances
Ending balance	$	175,038	$	45,662	$	76,489	$	13,823	$	42,992	$	51,583	$	7,191	$	2,354	$	—	$	415,132
Ending balance: individually evaluated for impairment	$	6,795	$	683	$	5,846	$	—	$	959	$	95	$	1,700	$	—	$	—	$	16,078
Ending balance: collectively evaluated for impairment	$	168,243	$	44,979	$	70,643	$	13,823	$	42,033	$	51,488	$	5,491	$	2,354	$	—	$	399,054

Allowance for Loan and Lease Losses

As of and for the three months ended September 30,2014

			Construction
	Commercial		and land		Commercial		Multi-		Residential				Tax
(In thousands)	real estate		development		and industrial		family		real estate		Leases		certificates		Consumer		Unallocated		Total
Beginning balance	$	4,971	$	2,033	$	1,525	$	416	$	690	$	1,352	$	408	$	24	$	150	$	11,569
Charge-offs		—		—		—		—		—		(206)		(65)		—		—		(271)
Recoveries		—		205		12		—		5		13		—		—		—		235
Provision (credit)		(266)		3		(106)		(63)		25		325		29		9		(7)		(51)
Ending balance	$	4,705	$	2,241	$	1,431	$	353	$	720	$	1,484	$	372	$	33	$	143	$	11,482
Ending balance: related to loans individually evaluated for impairment	$	205	$	172	$	5	$	—	$	30	$	62	$	19	$	—	$	—	$	493
Ending balance: related to loans collectively evaluated for impairment	$	4,500	$	2,069	$	1,426	$	353	$	690	$	1,422	$	353	$	33	$	143	$	10,989

Allowance for Loan and Lease Losses

As of and for the nine months endedSeptember 30,  2014

			Construction
	Commercial		and land		Commercial		Multi-		Residential				Tax
(In thousands)	real estate		development		and industrial		family		real estate		Leases		certificates		Consumer		Unallocated		Total
Beginning balance	$	5,498	$	2,316	$	3,006	$	402	$	473	$	1,223	$	555	$	15	$	183	$	13,671
Charge-offs		(349)		—		(452)		—		—		(568)		(330)		—		—		(1,699)
Recoveries		—		205		23		—		11		35		1		—		—		275
Provision (credit)		(444)		(280)		(1,146)		(49)		236		794		146		18		(40)		(765)
Ending balance	$	4,705	$	2,241	$	1,431	$	353	$	720	$	1,484	$	372	$	33	$	143	$	11,482
Ending balance: related to loans individually evaluated for impairment	$	205	$	172	$	5	$	—	$	30	$	62	$	19	$	—	$	—	$	493
Ending balance: related to loans collectively evaluated for impairment	$	4,500	$	2,069	$	1,426	$	353	$	690	$	1,422	$	353	$	33	$	143	$	10,989

Loans Evaluated for Impairment

At September 30, 2014

			Construction
	Commercial		and land		Commercial		Multi-		Residential				Tax
	real estate		development		and industrial		family		real estate		Leases		certificates		Consumer		Unallocated		Total
(In thousands)
Ending balance	$	164,522	$	41,676	$	70,743	$	16,893	$	44,261	$	48,588	$	8,230	$	2,263	$	—	$	397,176
Ending balance: individually evaluated for impairment	$	6,877	$	1,192	$	5,897	$	—	$	983	$	64	$	1,128	$	—	$	—	$	16,141
Ending balance: collectively evaluated for impairment	$	157,645	$	40,484	$	64,846	$	16,893	$	43,278	$	48,524	$	7,102	$	2,263	$	—	$	381,035

The following tables detail the loans that were evaluated for impairment by loan classification at September 30, 2015 and December 31, 2014.

	At September 30, 2015
	Unpaid
	principal		Recorded		Related
(In thousands)	balance		investment		allowance
With no related allowance recorded:
Commercial real estate	$	4,567	$	4,040	$	—
Commercial and industrial		5,303		3,024		—
Tax certificates		1,456		1,005		—
Total:	$	11,326	$	8,069	$	—

With an allowance recorded:
Construction and land development	$	546	$	290	$	145
Residential real estate		1,021		918		28
Leasing		640		640		131
Tax certificates		4,230		201		18
Total:	$	6,437	$	2,049	$	322

	At and for the year ended December 31, 2014
	Unpaid						Average		Interest
	principal		Recorded		Related		recorded		income
(In thousands)	balance		investment		allowance		investment		recognized
With no related allowance recorded:
Commercial real estate	$	6,632	$	6,113	$	—	$	5,089	$	98
Construction and land development		894		683		—		2,233		71
Commercial and industrial		5,358		5,118		—		5,786		208
Tax certificates		1,120		890		—		867		—
Total:	$	14,004	$	12,804	$	—	$	13,975	$	377

With an allowance recorded:
Commercial real estate	$	926	$	682	$	200	$	529	$	—
Construction and land development		—		—		—		145		—
Commercial and industrial		2,500		728		301		688		—
Residential real estate		1,068		959		28		864		—
Leases		95		95		80		108		—
Tax certificates		4,835		810		432		145		—
Total:	$	9,424	$	3,274	$	1,041	$	2,479	$	—

The following tables present the average recorded investment in impaired loans and the related interest income recognized for the three and nine months ended September 30, 2015 and 2014.

	For the three months ended September 30, 2015				For the nine months ended September 30, 2015
	Average		Interest		Average		Interest
	recorded		income		recorded		income
(In thousands)	investment		recognized		investment		recognized
Commercial real estate	$	4,256	$	130	$	5,599	$	329
Construction and land development		471		—		562		—
Commercial and industrial		3,570		44		4,740		142
Residential real estate		927		—		952		—
Leasing		289		—		146		—
Tax certificates		1,109		—		1,078		—
Total:	$	10,622	$	174	$	13,077	$	471

	For the three months ended September 30, 2014				For the nine months ended September 30, 2014
	Average		Interest		Average		Interest
	recorded		income		recorded		income
(In thousands)	investment		recognized		investment		recognized
Commercial real estate	$	5,571	$	33	$	5,258	$	65
Construction and land development		1,673		11		2,823		68
Commercial and industrial		6,085		52		6,658		159
Residential real estate		993		—		833		—
Leasing		75		—		112		—
Tax certificates		1,134		—		918		—
Total:	$	15,531	$	96	$	16,602	$	292

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Loans and Leases

9 Months Ended

Sep. 30, 2015

Loans and Leases [Abstract]

Loans and Leases

Note 4.Loans and Leases

Major classifications of loans are as follows:

	September 30,		December 31,
(In thousands)	2015		2014
Commercial real estate	$	210,883	$	175,038
Construction and land development		38,864		45,662
Commercial and industrial		82,414		76,489
Multi-family		15,222		13,823
Residential real estate		54,025		42,992
Leases		61,954		51,583
Tax certificates		5,294		7,191
Consumer		2,560		2,354
Total loans, net of unearned income	$	471,216	$	415,132

We use a nine point grading risk classification system commonly used in the financial services industry as the credit quality indicator.  The first four classifications are rated Pass.  The riskier classifications include Pass-Watch, Special Mention, Substandard, Doubtful and Loss. The risk rating is related to the underlying credit quality and probability of default.  These risk ratings are used in the calculation of the allowance for loan and lease losses.

· Pass: includes credits that demonstrate a low probability of default;

· Pass-watch: a classification which includes currently performing credits that are beginning to demonstrate above average risk through declining earnings, strained cash flows, increased leverage and/or weakening market fundamentals. This class may also include new loan originations which warrant approval but may contain certain risks that require closer than usual monitoring and supervision, such as construction loans;

· Special mention: includes credits that have potential weaknesses that if left uncorrected could weaken the credit or result in inadequate protection of our position at some future date. While potentially weak, credits in this classification are marginally acceptable and loss of principal or interest is not anticipated;

· Substandard accrual: includes credits that exhibit a well-defined weakness which currently jeopardizes the repayment of debt and liquidation of collateral even though they are currently performing. These credits are characterized by the distinct possibility that we may incur a loss in the future if these weaknesses are not corrected;

· Non-accrual (substandard non-accrual, doubtful, loss): includes credits that demonstrate serious problems to the point that it is probable that interest and principal will not be collected according to the contractual terms of the loan agreement.

All loans are assigned an initial loan risk rating by the Chief Credit Officer (“CCO”).  The initial loan risk rating is approved by another member of executive management or by the appropriate loan committee approving the loan request. From time to time, and at the general direction of any of the various loan committees, the ratings may be changed based on the findings of that committee. Items considered in assigning ratings include the financial strength of the borrower and/or guarantors, the type of collateral, the collateral lien position, the type of loan and loan structure, any potential risk inherent in the specific loan type, higher than normal monitoring of the loan or any other factor deemed appropriate by any of the various committees for changing the rating of the loan. Any such change in rating is reflected in the minutes of that committee.

The following tables present risk ratings for each loan portfolio classification at September 30, 2015 and December 31, 2014.

As of September 30, 2015
(In thousands)	Pass		Pass-Watch		Special Mention		Substandard		Non-accrual		Total
Commercial real estate	$	172,882	$	35,298	$	1,340	$	312	$	1,051	$	210,883
Construction and land development		5,305		33,269		—		—		290		38,864
Commercial and industrial		62,930		14,668		1,449		2,470		897		82,414
Multi-family		14,439		278		505		—		—		15,222
Residential real estate		53,107		—		—		—		918		54,025
Leases		60,576		534		108		—		736		61,954
Tax certificates		4,088		—		—		—		1,206		5,294
Consumer		2,467		93		—		—		—		2,560
Total loans, net of unearned income	$	375,794	$	84,140	$	3,402	$	2,782	$	5,098	$	471,216

As of December 31, 2014
(In thousands)	Pass		Pass-Watch		Special Mention		Substandard		Non-accrual		Total
Commercial real estate	$	140,045	$	27,229	$	2,512	$	1,568	$	3,684	$	175,038
Construction and land development		12,861		32,165		—		—		636		45,662
Commercial and industrial		60,500		8,527		1,608		3,337		2,517		76,489
Multi-family		12,995		310		518		—		—		13,823
Residential real estate		42,033		—		—		—		959		42,992
Leases		51,113		152		1		—		317		51,583
Tax certificates		5,491		—		—		—		1,700		7,191
Consumer		2,194		160		—		—		—		2,354
Total loans, net of unearned income	$	327,232	$	68,543	$	4,639	$	4,905	$	9,813	$	415,132

The following tables present an aging analysis of past due payments for each loan portfolio classification at September 30, 2015 and December 31, 2014.

As of September 30, 2015	30-59 Days		60-89 Days		Accruing
(In thousands)	Past Due		Past Due		90+ Days		Non-accrual		Current		Total
Commercial real estate	$	—	$	983	$	—	$	1,051	$	208,849	$	210,883
Construction and land development		—		—		—		290		38,574		38,864
Commercial and industrial		657		191		—		897		80,669		82,414
Multi-family		—		—		—		—		15,222		15,222
Residential real estate		524		112		—		918		52,471		54,025
Leases		534		108		—		736		60,576		61,954
Tax certificates		—		—		—		1,206		4,088		5,294
Consumer		—		—		—		—		2,560		2,560
Total loans, net of unearned income	$	1,715	$	1,394	$	—	$	5,098	$	463,009	$	471,216

As of December 31, 2014	30-59 Days		60-89 Days		Accruing
(In thousands)	Past Due		Past Due		90+ Days		Non-accrual		Current		Total
Commercial real estate	$	311	$	533	$	—	$	3,684	$	170,510	$	175,038
Construction and land development		—		—		—		636		45,026		45,662
Commercial and industrial		92		449		—		2,517		73,431		76,489
Multi-family		—		—		—		—		13,823		13,823
Residential real estate		165		162		—		959		41,706		42,992
Leases		152		1		—		317		51,113		51,583
Tax certificates		—		—		—		1,700		5,491		7,191
Consumer		—		—		—		—		2,354		2,354
Total loans, net of unearned income	$	720	$	1,145	$	—	$	9,813	$	403,454	$	415,132

If interest had accrued on non-accrual loans, such income would have been approximately $142,000 and $539,000 for the three months and nine months ended September 30, 2015, respectively, and $290,000 and $830,000 for the three and nine months ended September 30, 2014, respectively.

Impaired Loans

Total cash collected on impaired loans during the nine months endedSeptember 30, 2015 and 2014 was $5.9 million and $5.0 million respectively, of which $4.8 million and $4.5 million was credited to the principal balance outstanding on such loans, respectively.

Troubled Debt Restructurings (“TDRs”)

The following table details our TDRs that are on an accrual status and non-accrual status at September 30, 2015 and December 31, 2014.

	As of September 30, 2015
				Non-
	Number of	Accrual		Accrual
(In thousands)	loans	Status		Status		Total TDRs
Commercial real estate	3	$	2,818	$	—	$	2,818
Construction and land development	1		—		95		95
Commercial and industrial	4		2,722		—		2,722
Residential real estate	1		—		290		290
Total	9	$	5,540	$	385	$	5,925

	As of December 31, 2014
				Non-
	Number of	Accrual		Accrual
(In thousands)	loans	Status		Status		Total TDRs
Commercial real estate	3	$	2,883	$	—	$	2,883
Construction and land development	3		47		636		683
Commercial and industrial	5		3,643		1,448		5,091
Residential real estate	1		—		102		102
Total	12	$	6,573	$	2,186	$	8,759

At September 30, 2015, the one construction and land development TDR, cited in the above table, was not in compliance with its restructured terms due to payment defaults. We did not classify any loan modifications as TDRs during the first three quarters of 2015. The following table presents restructured loans that occurred during the nine months endedSeptember 30, 2014.

	Modifications by type for the nine months ended September 30, 2014
												Pre-		Post-
												Modification		Modification
												Outstanding		Outstanding
	Number of							Combination				Recorded		Recorded
(Dollars in thousands)	loans	Rate		Term		Payment		of types		Total		Investment		Investment
Commercial and industrial	3	$	—	$	233	$	—	$	28	$	261	$	262	$	262
Total	3	$	—	$	233	$	—	$	28	$	261	$	262	$	262

We may obtain physical possession of real estate collateralizing residential mortgage loans or home equity loans through or in lieu of, foreclosure.  As of September 30, 2015, we have a foreclosed residential real estate property with a carrying value of $40,000 as a result of physical possession.  In addition, as of September 30, 2015, we had residential mortgage loans with a carrying value of $228,000 collateralized by residential real estate property for which formal foreclosure proceedings were in process.

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2015

Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Instruments

Note 16.Fair Value of Financial Instruments

Under FASB ASC Topic 820 “Fair Value Measurements and Disclosures” (“ASC Topic 820”), fair values are based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When available, management uses quoted market prices to determine fair value.  If quoted prices are not available, fair value is based upon valuation techniques such as matrix pricing or other models that use, where possible, current market-based or independently sourced market parameters, such as interest rates. If observable market-based inputs are not available, we use unobservable inputs to determine appropriate valuation adjustments using discounted cash flow methodologies.

Management uses its best judgment in estimating the fair value of our financial instruments; however, there are inherent weaknesses in any estimation technique.  Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts we could have realized in a sales transaction on the dates indicated.  The estimated fair value amounts have been measured as of their respective period end and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates.  As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period-end.

ASC Topic 820 provides guidance for estimating fair value when the volume and level of activity for an asset or liability has significantly declined and for identifying circumstances when a transaction is not orderly. ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  The three levels of the fair value hierarchy under ASC Topic 820 are as follows:

Level 1:	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2:	Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability. Level 2 includes debt securities with quoted prices that are traded less frequently then exchange-traded instruments. Valuation techniques include matrix pricing which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices.
Level 3:	Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.  We did not have transfers of financial instruments within the fair value hierarchy during the three and nine months ended September 30, 2015 and 2014.

Items Measured on a Recurring Basis

Our available for sale investment securities are recorded at fair value on a recurring basis.

Fair value for Level 1 securities are determined by obtaining quoted market prices on nationally recognized securities exchanges.  Level 1 securities include common stocks.

Level 2 securities include obligations of U.S. government-sponsored agencies and debt securities with quoted prices, which are traded less frequently than exchange-traded instruments, whose value is determined using matrix pricing with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.  The prices were obtained from third party vendors.  This category generally includes our mortgage-backed securities and CMOs issued by U.S. government and government-sponsored agencies, non-agency CMOs, and corporate and municipal bonds.  Our interest rate swap is recorded at fair value on a recurring basis and is classified as Level 2 due to the readily observable market data.

Level 3 securities include investments in five private equity funds which are predominantly invested in real estate.  The value of the private equity funds are derived from the funds’ financials and K-1 filings.  We also review the funds’ asset values and its near-term projections.

For financial assets and liabilities measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2015 and December 31, 2014 are as follows:

	Fair Value Measurements Using:
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
As of September 30, 2015	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Fair Value
Assets:
Investment securities available for sale
U.S. government agencies	$	—	$	25,907	$	—	$	25,907
Mortgage-backed securities-residential		—		14,418		—		14,418
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		—		172,745		—		172,745
Non-agency		—		2,927		—		2,927
Corporate bonds		—		1,520		—		1,520
Municipal bonds		—		10,072		—		10,072
Other securities		—		—		2,997		2,997
Common stocks		26		—		—		26
Total investment securities available for sale	$	26	$	227,589	$	2,997	$	230,612
Liabilities:
Derivative instruments
Interest rate swaps	$	—	$	708	$	—	$	708

	Fair Value Measurements Using:
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
As of December 31, 2014	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Fair Value
Assets:
Investment securities available for sale
U.S. government agencies	$	—	$	25,289	$	—	$	25,289
Mortgage-backed securities-residential		—		22,387		—		22,387
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		—		168,977		—		168,977
Non-agency		—		3,731		—		3,731
Corporate bonds		—		15,727		—		15,727
Municipal bonds		—		10,173		—		10,173
Other securities		—		—		4,034		4,034
Common stocks		50		—		—		50
Total investment securities available for sale	$	50	$	246,284	$	4,034	$	250,368
Liabilities:
Derivative instruments
Interest rate swaps	$	—	$	187	$	—	$	187

The following tables present additional information about assets measured at fair value on a recurring basis and for which the Company has utilized Level 3 inputs to determine fair value for the three and nine months endedSeptember 30, 2015 and 2014:

(In thousands)	Other securities
Investment Securities Available for Sale	2015		2014
Beginning balance July 1,	$	3,006	$	4,619
Total gains/(losses) - (realized/unrealized):
Included in earnings-gain on sale		4		191
Included in other comprehensive income		(9)		11
Purchases		—		14
Sales and calls		(4)		(445)
Transfers in and/or out of Level 3		—		—
Ending balance September 30,	$	2,997	$	4,390

(In thousands)	Other securities
Investment Securities Available for Sale	2015		2014
Beginning balance January 1,	$	4,034	$	4,625
Total gains/(losses) - (realized/unrealized):
Included in earnings-gain on sale		319		251
Included in other comprehensive income		(551)		299
Purchases		4		14
Sales and calls		(809)		(799)
Transfers in and/or out of Level 3		—		—
Ending balance September 30,	$	2,997	$	4,390

Items Measured on a Nonrecurring Basis

Non-accrual loans and TDRs are evaluated for impairment on an individual basis under FASB ASC Topic 310 “Receivables”.  The impairment analysis includes current collateral values, known relevant factors that may affect loan collectability, and risks inherent in different kinds of lending.  When the collateral value or discounted cash flows less costs to sell is less than the carrying value of the loan a specific reserve (valuation allowance) is established. Loans held for sale are carried at the lower of cost or fair value. OREO is carried at the lower of cost or fair value.  Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the real estate.  Additionally, for collateral acquired from tax liens, fair value may be established using brokers opinions due to their lower carrying value.  These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

For financial assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2015 and December 31, 2014 are as follows:

	Fair Value Measurements Using:
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
As of September 30, 2015	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Fair Value
Assets
Impaired loans and leases	$	—	$	—	$	3,657	$	3,657
Other real estate owned		—		—		1,957		1,957

	Fair Value Measurements Using:
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
As of December 31, 2014	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Fair Value
Assets
Impaired loans and leases	$	—	$	—	$	2,812	$	2,812
Other real estate owned		—		—		3,418		3,418

The following tables present additional quantitative information about assets measured at fair value on a nonrecurring basis and for which we have utilized Level 3 inputs to determine fair value at September 30, 2015 and December 31, 2014:

	Qualitative Information about Level 3 Fair Value Measurements
As of September 30, 2015			Valuation		Range
(In thousands)	Fair Value		Techniques	Unobservable Input	(WeightedAverage)
Impaired loans and leases	$	3,657	Appraisal of	Appraisal adjustments	0.0%	-	-62.3%	(-28.7%)
			collateral (1)	Liquidation expenses	0.0%	-	-23.2%	(-6.6%)
Other real estate owned		1,957	Appraisal of	Appraisal adjustments	0.0%	-	-84.2%	(-30.2%)
			collateral (1)	Liquidation expenses	0.0%		-14.7%	(-3.6%)

	Qualitative Information about Level 3 Fair Value Measurements
As of December 31, 2014			Valuation		Range
(In thousands)	Fair Value		Techniques	Unobservable Input	(WeightedAverage)
Impaired loans and leases	$	2,812	Appraisal of	Appraisal adjustments	0.0%	-	-20.0%	(-20.0%)
			collateral (1)	Liquidation expenses	0.0%	-	-24.0%	(-7.8%)
Other real estate owned		3,418	Appraisal of	Appraisal adjustments	0.0%	-	-68.6%	(-14.5%)
			collateral (1)	Liquidation expenses	0.0%	-	-14.7%	(-14.7%)

(1) Appraisals may be adjusted for qualitative factors such as interior condition of the property and liquidation expenses.

The following methods and assumptions were used to estimate the fair values of our financial instruments at September 30, 2015 and December 31, 2014. The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of our assets and liabilities.  Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between  our disclosures and those of other companies may not be meaningful.  The methodologies for estimating the fair value of financial instruments that are measured on a recurring or nonrecurring basis are discussed above.

Cash and cash equivalents (carried at cost):

The carrying amounts reported in the balance sheet for cash and short-term instruments approximate those assets’ fair values.

Securities:

Management uses quoted market prices to determine fair value of securities (level 1).  If quoted prices are not available, fair value is based upon valuation techniques such as matrix pricing or other models that use, where possible, current market-based or independently sourced market parameters, such as interest rates (level 2). If observable market-based inputs are not available, we use unobservable inputs to determine appropriate valuation adjustments by reviewing the private equities funds’ financials and K-1 filings (level 3).

Other Investment (carried at cost):

This investment includes the Solomon Hess SBA Loan Fund, which we invested in to partially satisfy Royal Bank’s community reinvestment requirement.  Shares in this fund are not publicly traded and therefore have no readily determinable fair market value.  An investor can have its investment in the Fund redeemed for the balance of its capital account at any quarter end with 60 days notice to the Fund.  The investment in this Fund is recorded at cost.  We do not record this investment at fair value on a recurring basis, as this investment’s carrying amount approximates fair value.

Restricted investment in bank stock (carried at cost):

The carrying amount of restricted investment in bank stock approximates fair value, and considers the limited marketability of such securities.

Loans receivable (carried at cost):

The fair values of loans are estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the loans.  Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal.   Generally, for variable rate loans that re-price frequently and with no significant change in credit risk, fair values are based on carrying values.

Impaired loans (generally carried at fair value):

Impaired loans are accounted for under ASC Topic 310. Impaired loans are those in which we have measured impairment generally based on the fair value of the loan’s collateral.  Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based on the expected proceeds.  These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

Accrued interest receivable and payable (carried at cost):

The carrying amount of accrued interest receivable and accrued interest payable approximates its fair value.

Deposit liabilities (carried at cost):

The fair values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts).  Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Long-term debt (carried at cost):

Fair values of FHLB advances and other long-term borrowings are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity.  These prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party.

Subordinated debt (carried at cost):

Fair values of junior subordinated debt are estimated using discounted cash flow analysis, based on market rates currently offered on such debt with similar credit risk characteristics, terms and remaining maturity.

Derivative instruments:

We have contracted with a third party vendor to provide periodic valuations for its interest rate derivatives to determine the fair value of its interest rate swaps. The vendor utilizes standard valuation methodologies applicable to interest rate derivatives such as discounted cash flow analysis and extensions of the Black-Scholes model. Such valuations are based upon readily observable market data and are therefore considered Level 2 valuations by the Company.

Off-balance sheet financial instruments (disclosed at cost):

Fair values of our off-balance sheet financial instruments (lending commitments and letters of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account, the remaining terms of the agreements and the counterparties’ credit standing.  They are not shown in the table because the amounts are immaterial.

The tables below indicate the fair value of our financial instruments at September 30, 2015 and December 31, 2014.

					Fair Value Measurements
					At September 30, 2015
					Quoted Prices
					in Active		Significant
					Markets for		Other		Significant
					Identical		Observable		Unobservable
	Carrying		Estimated		Assets		Inputs		Inputs
(In thousands)	amount		fair value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	24,217	$	24,217	$	24,217	$	—	$	—
Investment securities available for sale		230,612		230,612		26		227,589		2,997
Other investment		2,250		2,250		—		—		2,250
Federal Home Loan Bank stock		2,545		2,545		—		—		2,545
Loans, net		461,410		456,718		—		—		456,718
Accrued interest receivable		4,336		4,336		—		4,336		—
Financial Liabilities:
Demand deposits		76,949		76,949		—		76,949		—
NOW and money markets		202,729		202,729		—		202,729		—
Interest-bearing brokered deposits		25,000		25,000				25,000
Savings		38,441		38,441		—		38,441		—
Time deposits		210,645		208,869		—		208,869		—
Short-term borrowings		9,000		9,000		9,000		—		—
Long-term borrowings		82,084		79,698		—		79,698		—
Subordinated debt		25,774		26,696		—		26,696		—
Accrued interest payable		2,168		2,168		—		2,168		—
Derivative Instruments:
Interest rate swaps		708		708		—		708		—

					Fair Value Measurements
					At December 31, 2014
					Quoted Prices
					in Active		Significant
					Markets for		Other		Significant
					Identical		Observable		Unobservable
	Carrying		Estimated		Assets		Inputs		Inputs
(In thousands)	amount		fair value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	30,790	$	30,790	$	30,790	$	—	$	—
Investment securities available for sale		250,368		250,368		50		246,284		4,034
Other investment		2,250		2,250		—		—		2,250
Federal Home Loan Bank stock		2,622		2,622		—		—		2,622
Loans, net		403,424		400,979		—		—		400,979
Accrued interest receivable		5,270		5,270		—		5,270		—
Financial Liabilities:
Demand deposits		73,665		73,665		—		73,665		—
NOW and money markets		212,739		212,739		—		212,739		—
Savings		18,721		18,721		—		18,721		—
Time deposits		225,300		223,788		—		223,788		—
Long-term borrowings		92,426		90,022		—		90,022		—
Subordinated debt		25,774		25,091		—		25,091		—
Accrued interest payable		726		726		—		726		—
Derivative Instruments:
Interest rate swaps		187		187		—		187		—

Limitations

The fair value estimates are made at a discrete point in time based on relevant market information and information about the financial instruments.  Fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors.

These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.  Further, the foregoing estimates may not reflect the actual amount that could be realized if all or substantially all of the financial instruments were offered for sale.  This is due to the fact that no market exists for a sizable portion of the loan, deposit and off balance sheet instruments.

In addition, the fair value estimates are based on existing on-and-off balance sheet financial instruments without attempting to value anticipated future business and the value of assets and liabilities that are not considered financial instruments.  Other significant assets that are not considered financial assets include premises and equipment.  In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates.

Finally, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates which must be made given the absence of active secondary markets for many of the financial instruments.  This lack of uniform valuation methodologies introduces a greater degree of subjectivity to these estimated fair values.

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Regulatory Capital Requirements

9 Months Ended

Sep. 30, 2015

Regulatory Capital Requirements [Abstract]

Regulatory Capital Requirements

Note 12.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 our financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our 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. 

In July 2013, the federal bank regulatory agencies adopted final rules to revise the agencies’ capital adequacy guidelines and prompt corrective action rules, which were designed to enhance such requirements and implement the revised standards of the Basel Committee on Banking Supervision, commonly referred to as Basel III. The July 2013 final rules generally implement higher minimum capital requirements, add a new common equity tier 1 capital requirement, and establish criteria that instruments must meet to be considered common equity tier 1 capital, additional tier 1 capital or tier 2 capital. The new minimum capital to risk-adjusted assets requirements are a common equity tier 1 capital ratio of 4.5% (6.5% to be considered “well capitalized”) and a tier 1 capital ratio of 6.0%, increased from 4.0% (and increased from 6.0% to 8.0% to be considered “well capitalized”); the total capital ratio remains at 8.0% under the new rules (10.0% to be considered “well capitalized”).

Under the new rules, in order to avoid limitations on capital distributions (including dividend payments and certain discretionary bonus payments to executive officers), a banking organization must hold a capital conservation buffer comprised of common equity tier 1 capital above its minimum risk-based capital requirements in an amount greater than 2.5% of total risk-weighted assets. The new minimum capital requirements were effective on January 1, 2015. The capital contribution buffer requirements phase in over a three-year period beginning January 1, 2016. As of September 30, 2015, the Company and Royal Bank satisfied 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 regulatory accounting principles (“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 September 30, 2015 and the previous 20 quarters in accordance with U.S. GAAP.  The change in the method 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.  The resolution of this matter will be decided by additional joint regulatory agency guidance which includes the Federal Reserve Bank, the FDIC, and the OCC.

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

	At September 30, 2015
									To be well capitalized
					For capital				under prompt corrective
	Actual				adequacy purposes				action provision
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital (to risk-weighted assets)	$	84,720	15.99	%	$	42,386	8.00	%	$	52,983	10.00	%
Tier 1 capital (to risk-weighted assets)	$	78,058	14.73	%	$	31,790	6.00	%	$	42,386	8.00	%
Tier 1 capital (to average assets, leverage)	$	78,058	10.65	%	$	29,307	4.00	%	$	36,634	5.00	%
Common equity Tier 1 (to risk-weighted assets)	$	58,622	11.06	%	$	23,842	4.50	%	$	34,439	6.50	%

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

	For the nine
	months ended
(In thousands)	September 30, 2015
RAP net income	$	2,403
Tax lien adjustment, net of noncontrolling interest		2,208
U.S. GAAP net income	$	4,611

	At September 30, 2015
	As reported		As adjusted
	under RAP		for U.S. GAAP
Total capital (to risk-weighted assets)	15.99	%	16.35	%
Tier 1 capital (to risk-weighted assets)	14.73	%	15.09	%
Tier 1 capital (to average assets, leverage)	10.65	%	10.93	%
Common equity Tier 1 (to risk-weighted assets)	11.06	%	11.02	%

The tables below reflect the Company’s capital ratios:

	At September 30, 2015
										To be well capitalized
					For capital					under the Federal
	Actual				adequacy purposes				Reserve's regulations
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital (to risk-weighted assets)	$	101,091	18.96	%	$	42,643	8.00	%	$	53,304	10.00	%
Tier 1 capital (to risk-weighted assets)	$	92,664	17.38	%	$	31,982	6.00	%	$	31,982	6.00	%
Tier 1 capital (to average assets, leverage)	$	92,664	12.52	%	$	29,609	4.00	%		N/A	N/A
Common equity Tier 1 (to risk-weighted assets)	$	50,057	9.39	%	$	23,987	4.50	%		N/A	N/A

The Company has filed the Consolidated Financial Statements for Bank Holding Companies-FR Y-9C (“FR Y-9C”) as of September 30, 2015 consistent with U.S. GAAP and the FR Y-9C instructions.  In the event that 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 nine
	months ended
(In thousands)	September 30, 2015
U.S. GAAP net income	$	4,586
Tax lien adjustment, net of noncontrolling interest		(2,208)
RAP net income	$	2,378

	At September 30, 2015
	As reported		As adjusted
	under U.S. GAAP		for RAP
Total capital (to risk-weighted assets)	18.96	%	18.62	%
Tier 1 capital (to risk-weighted assets)	17.38	%	16.90	%
Tier 1 capital (to average assets, leverage)	12.52	%	12.16	%
Common equity Tier 1 (to risk-weighted assets)	9.39	%	9.43	%

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Borrowings and Subordinated Debentures

9 Months Ended

Sep. 30, 2015

Borrowings and Subordinated Debentures

Borrowings and Subordinated Debentures

Note 8.Borrowings and Subordinated Debentures

1. Advances from the Federal Home Loan Bank

As of September 30, 2015, Royal Bank had $212.6 million of available borrowing capacity at the FHLB, which is based on qualifying collateral.  Total advances from the FHLB were $54.0 million and $55.0 million at September 30, 2015 and December 31, 2014.  The advances and the line of credit are collateralized by FHLB stock, government agency securities and mortgage-backed securities.  As of September 30, 2015, investment securities with a market value of $34.0 million were pledged as collateral to the FHLB.

Presented below are the Company’s FHLB borrowings allocated by the year in which they mature with their corresponding weighted average rates:

	As of				As of
	September 30, 2015				December 31, 2014
(Dollars in thousands)	Amount		Rate		Amount		Rate
Advances maturing in
2015	$	9,000	0.35	%	$	10,000	0.71	%
2016		10,000	1.11	%		10,000	1.11	%
2017		25,000	1.46	%		25,000	1.46	%
2018		10,000	2.01	%		10,000	2.01	%
Total FHLB borrowings	$	54,000			$	55,000

2. Other borrowings

We have a note payable with PNC Bank (“PNC”) at September 30, 2015 in the amount of $2.1 million compared to $2.4 million at December 31, 2014.  The note’s maturity date is August 25, 2016.  The interest rate is a variable rate equal to one month LIBOR + 15 basis points and adjusts monthly.  The interest rate at September 30, 2015 was 0.35%.

At September 30, 2015 and December 31, 2014, we had additional borrowings of $35.0 million from PNC which will mature on January 7, 2018.  These borrowings have a weighted average interest rate of 3.65%. The note payable and the borrowings are secured by government agency securities and mortgage-backed securities.

Royal Bank has an additional $20.0 million in lines of credit with a with two local financial institutions, of which $0was outstanding at September 30, 2015 and December 31, 2014, respectively.

3. Subordinated debentures

We have outstanding $25.0 million of Trust Preferred Securities issued through two Delaware trust affiliates, Royal Bancshares Capital Trust I (“Trust I”) and Royal Bancshares Capital Trust II (“Trust II”) (collectively, the “Trusts”).  We issued an aggregate principal amount of $12.9 million of floating rate junior subordinated debt securities to Trust I and an aggregate principal amount of $12.9 million of fixed/floating rate junior subordinated debt securities to Trust II.  Both debt securities bear an interest rate of 2.49% at September 30, 2015, and reset quarterly at 3-month LIBORplus 2.15%.

Each of Trust I and Trust II issued an aggregate principal amount of $12.5 million of capital securities initially bearing fixed and/or fixed/floating interest rates corresponding to the debt securities held by each trust to an unaffiliated investment vehicle and issued an aggregate principal amount of $387,000 of common securities bearing fixed and/or fixed/floating interest rates corresponding to the debt securities held by each trust to the Company.  We have fully and unconditionally guaranteed all of the obligations of the Trusts, including any distributions and payments on liquidation or redemption of the capital securities.

Under the MOU as described in “Note 2 — Regulatory Matters and Significant Risks or Uncertainties” to the Consolidated Financial Statements, the Company and its non-bank subsidiaries may not make any distributions of interest, principal, or other sums on subordinated debentures or trust preferred securities without the prior written approval of the Federal Reserve Bank and the Director of the Division of Banking Supervision and Regulation of the Board of Governors of the Federal Reserve System.  We received approval and paid the required interest payment in March, June, and September of 2015.

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Shareholders’ Equity (Details) $ / shares in Units, $ in Thousands				1 Months Ended	9 Months Ended
	Jul. 01, 2014 $ / shares shares	Jun. 19, 2014 $ / shares shares	Feb. 20, 2014	Aug. 31, 2014 USD ($) shares	Sep. 30, 2015 USD ($) Vote $ / shares shares	Sep. 30, 2014 USD ($) shares	Dec. 31, 2014 $ / shares shares	Jul. 02, 2014 USD ($)	Feb. 28, 2014	Feb. 20, 2009 USD ($) $ / shares shares
Preferred Stock [Abstract]
Preferred stock, liquidation value (in dollars per share) | $ / shares					$ 1,000		$ 1,000
Preferred stock, shares outstanding (in shares)					18,856		18,856
Preferred stock cumulative dividend rate percentage for first five years (as a percent)			5.00%
Common Stock [Abstract]
Proceeds from issuance of common stock | $						$ 20,000
Warrant To Purchase Class A Common Stock [Member]
Preferred Stock [Abstract]
Number of shares to be purchased by warrant (in shares)										1,104,370
Number of years for warrant issued to treasury					10 years
Warrants, exercise price (in dollars per share) | $ / shares					$ 4.13
Series A Preferred Stock [Member]
Preferred Stock [Abstract]
Preferred stock, shares issued (in shares)										30,407
Preferred stock, liquidation value (in dollars per share) | $ / shares										$ 1,000
Preferred stock cumulative dividend rate percentage beginning February 2014 (as a percent)									9.00%
Amount of approved purchase of preferred shares | $						$ 14,000
Preferred stock dividend in arrears | $					$ 8,300
Share price (in dollars per share) | $ / shares		$ 1,207.11
Preferred stock, shares outstanding (in shares)		30,407
Shares allocated for repurchase (in shares)		11,551
Dividends in arrears eliminated | $								$ 3,500
Class A - Common stock
Preferred Stock [Abstract]
Share price (in dollars per share) | $ / shares	$ 1.20
Common Stock [Abstract]
Number of vote for class of shares held | Vote					1
Common stock sold (in shares)	11,666,667			5,000,000		16,666
Proceeds from issuance of common stock | $				$ 6,000
Class B - Common stock
Common Stock [Abstract]
Number of shares received after conversion, per share					1.15
Number of vote for class of shares held | Vote					10
Scenario, Adjustment [Member] | Warrant To Purchase Class A Common Stock [Member]
Preferred Stock [Abstract]
Number of shares to be purchased by warrant (in shares)					1,368,040
Warrants, exercise price (in dollars per share) | $ / shares					$ 3.33
Capital Unit Preferred Stock And Warrant Member
Preferred Stock [Abstract]
Aggregate purchase price | $										$ 30,400

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Other Real Estate Owned

9 Months Ended

Sep. 30, 2015

Other Real Estate Owned [Abstract]

Other real estate owned

Note 6.Other Real Estate Owned

At September 30, 2015, OREO was comprised of five real estate properties acquired through, or in lieu of foreclosure in settlement of loans and 70 real estate properties acquired through foreclosure related to tax liens.  Set forth below are tables which detail the changes in OREO from January 1, 2015 to September 30, 2015 and January 1, 2014 to December 31, 2014.

	For the nine months ended September 30, 2015
(In thousands)	Loans		Tax Liens		Total
Beginning balance	$	349	$	9,430	$	9,779
Net proceeds from sales		(1,569)		(2,867)		(4,436)
Net gains on sales		61		708		769
Transfers in		1,672		2,296		3,968
Cash additions		—		418		418
Transfer to loans		—		(995)		(995)
Impairment charge		(125)		(534)		(659)
Ending balance	$	388	$	8,456	$	8,844

	For the year ended December 31, 2014
(In thousands)	Loans		Tax Liens		Total
Beginning balance	$	1,725	$	7,892	$	9,617
Net proceeds from sales		(1,336)		(2,970)		(4,306)
Net gain on sales		59		684		743
Transfers in		—		2,919		2,919
Cash additions		—		1,330		1,330
Impairment charge		(99)		(425)		(524)
Ending balance	$	349	$	9,430	$	9,779

At September 30, 2015, OREO was comprised of $319,000 in land, $8.4 million in tax liens, and $69,000in residential real estate related to a condominium construction project in Minneapolis, Minnesota in which the Company is a participant and a single family home.  The properties acquired through the tax lien portfolio were primarily located in New Jersey. 

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Deposits

9 Months Ended

Sep. 30, 2015

Deposits [Abstract]

Deposits

Note 7.Deposits

Our deposit composition as of September 30, 2015 and December 31, 2014 is presented below:

	September 30,		December 31,
(In thousands)	2015		2014
Noninterest-bearing checking	$	76,949	$	73,665
NOW		38,146		46,515
Interest-bearing brokered deposits		25,000		—
Money Market		164,583		166,224
Savings		38,441		18,721
Time deposits (over $100)		85,884		87,209
Time deposits (under $100)		124,761		138,091
Total deposits	$	553,764	$	530,425

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Derivative Instruments and Hedging Activity

9 Months Ended

Sep. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITY

Note 9.Derivative Instruments and Hedging Activity

In the fourth quarter of 2014, we entered into a forward-starting interest rate swap agreement to hedge the risk of variability in cash flowsattributable to changes in the 3 month LIBOR rate. This particular hedging objective was to reduce the interest rate risk associated with our forecasted issuances of 3 month fixed rate debt arising from a rollover strategy of an FHLB advance, which is scheduled to mature in June 2016 and will continue to rollover through the swap expiration of June 2021. This derivative was used as part of the asset/liability management process, is linked to a specific liability and has a high correlation between the contract and the underlying item being hedged, both at inception and throughout the hedge period. The derivative was designated as a cash flow hedge with the change in fair value recorded as an adjustment through other comprehensive income (loss) until the underlying forecasted transactions occur, at which time the deferred gains and losses are recognized in earnings.

The effects of the derivative instrument on the Consolidated Financial Statements at September 30, 2015 and December 31, 2014 and for the three and nine months ended September 30, 2015 were as follows:

	As of September 30, 2015
	Notional
	Contract				Balance Sheet	Expiration
(In thousands)	Amount		Fair Value		Location	Date
Derivatives designated as hedging instruments
Interest rate swaps:
Effective June 24, 2016	$	15,000	$	(708)	Other liabilities	June 24, 2021
Total:	$	15,000	$	(708)

	As of December 31, 2014
	Notional
	Contract				Balance Sheet	Expiration
(In thousands)	Amount		Fair Value		Location	Date
Derivatives designated as hedging instruments
Interest rate swaps:
Effective June 24, 2016	$	15,000	$	(187)	Other liabilities	June 24, 2021
Total:	$	15,000	$	(187)

	For the three months ended September 30, 2015
	Amount of Loss		Location of Loss	Amount of Loss
	Recognized		Recognized	Recognized
		in OCI	in Income	in Income
	on Derivatives		on Derivatives	on Derivatives
(In thousands)	(Effective Portion)		(Ineffective Portion)	(Ineffective Portion)
Derivatives designated as hedging instruments
Interest rate swaps:
Effective June 24, 2016	$	(282)	Not Applicable	$	—
Total:	$	(282)		$	—

	For the nine months ended September 30, 2015
	Amount of Loss		Location of Loss	Amount of Loss
	Recognized		Recognized	Recognized
		in OCI	in Income	in Income
	on Derivatives		on Derivatives	on Derivatives
(In thousands)	(Effective Portion)		(Ineffective Portion)	(Ineffective Portion)
Derivatives designated as hedging instruments
Interest rate swaps:
Effective June 24, 2016	$	(467)	Not Applicable	$	—
Total:	$	(467)		$	—

	For the year ended December 31, 2014
	Amount of Loss		Location of Loss	Amount of Loss
	Recognized		Recognized	Recognized
		in OCI	in Income	in Income
	on Derivatives		on Derivatives	on Derivatives
(In thousands)	(Effective Portion)		(Ineffective Portion)	(Ineffective Portion)
Derivatives designated as hedging instruments
Interest rate swaps:
Effective June 24, 2016	$	(187)	Not Applicable	$	—
Total:	$	(187)		$	—

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Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended		12 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Unrealized gains on investment securities, before tax [Abstract]
Unrealized holding gains arising during period, before tax				$ 2,011	$ 6,570
Less reclassification adjustment for gains realized in net income, before tax				652	330
Unrealized gains on investment securities, before tax				1,359	6,240
Unrecognized benefit obligation expense, before tax [Abstract]
Less reclassification adjustment for amortization, before tax				(51)	(85)
Unrecognized benefit obligation				(51)	85
Unrealized loss on derivative instrument, before tax				(708)
Other comprehensive income net, before tax				600	6,325
Unrealized gains on investment securities, tax [Abstract]
Unrealized holding gains arising during period, tax				691	2,101
Less reclassification adjustment for gains realized in net income, tax				222	112
Unrealized gains on investment securities, tax				469	1,989
Unrecognized benefit obligation expense, tax [Abstract]
Less reclassification adjustment for amortization, tax					(29)
Unrecognized benefit obligation, tax					(29)
Unrealized loss on derivative instrument, tax				(241)
Other comprehensive income net, tax				228	2,018
Unrealized gains on investment securities [Abstract]
Unrealized holding gains arising during period, net of tax		$ 1,190	$ (80)	1,320	4,469
Less reclassification adjustment for gains realized in net income, net of tax	[1]	52	157	430	218
Unrealized gains (losses) on investment securities, net of tax		1,138	(237)	890	4,251
Unrecognized benefit obligation expense [Abstract]
Less reclassification adjustment for amortization, net of tax	[2]	(17)	(18)	(51)	(56)
Unrecognized benefit obligation expense		(17)	(18)	(51)	(56)
Unrealized loss on derivative instrument, net of tax		(282)		(467)		$ (187)
Other comprehensive income (loss)		839	$ (219)	372	$ 4,307
Unrecognized benefit obligation		(4,076)		(4,076)		(4,025)
Unrealized gains (losses) on AFS investments		2,423		2,423		1,720
Accumulated other comprehensive loss		$ (2,120)		$ (2,120)		$ (2,492)

[1] Gross amounts are included in net gains on the sale of AFS investment securities on the Consolidated Statements of Income. See Note 15. C

[2] Gross amounts are included in salaries and benefits on the Consolidated Statements of Income. See Note 15. Comprehensive Income (Loss).

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Fair Value of Financial Instruments - Unobservable Input Reconciliation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Assets measured at fair value on recurring basis Level 3 inputs [Roll Forward]
Beginning balance	$ 3,006	$ 4,619
Fair Value Assets and Liabilities Measured on Recurring Basis Gain Loss Included in Earnings [Abstract]
Included in earnings	4	191
Included in other comprehensive income	(9)	11
Purchases		14
Sales and calls	(4)	(445)
Ending balance	2,997	4,390	$ 2,997	$ 4,390
Private Equity Funds [Member]
Assets measured at fair value on recurring basis Level 3 inputs [Roll Forward]
Beginning balance			4,034	4,625
Fair Value Assets and Liabilities Measured on Recurring Basis Gain Loss Included in Earnings [Abstract]
Included in earnings			319	251
Included in other comprehensive income			(551)	299
Purchases			4	14
Sales and calls			(809)	(799)
Ending balance	$ 2,997	$ 4,390	$ 2,997	$ 4,390

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Earnings Per Common Share (Details) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($) $ / shares shares	Sep. 30, 2014 USD ($) $ / shares shares	Sep. 30, 2015 USD ($) item $ / shares shares	Sep. 30, 2014 USD ($) $ / shares shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of classes of common stock outstanding | item			2
Earnings Per Share, Basic [Abstract]
Income (loss) available to common shareholders (numerator) | $	$ 1,100	$ 1,271	$ 3,299	$ 2,654
Average shares (denominator) (in shares)	30,043,000		30,040,000
Per share Amount (in dollars per share) | $ / shares	$ 0.04		$ 0.11
Earnings Per Share, Diluted [Abstract]
Income (loss) available to common shareholders (numerator) | $	$ 1,100		$ 3,299
Average shares (denominator) (in shares)	30,074,000		30,055,000
Per share Amount (in dollars per share) | $ / shares	$ 0.04		$ 0.11
Basic and Diluted EPS [Abstract]
Income (loss) available to common shareholders (numerator) | $	$ 1,100	$ 1,271	$ 3,299	$ 2,654
Average shares (denominator) (in shares)		27,329,000		18,042,000
Net Income - Basic and Diluted | $ / shares	$ 0.04	$ 0.05	$ 0.11	$ 0.15
Stock Options [Member]
Basic and Diluted EPS [Abstract]
Number of antidilutive common share (in shares)	269,743	168,907	285,097	168,907
Warrant To Purchase Class A Common Stock [Member]
Basic and Diluted EPS [Abstract]
Number of antidilutive common share (in shares)			1,368,040
Class B - Common stock
Basic and Diluted EPS [Abstract]
Number of shares received after conversion, per share			1.15

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Commitments, Contingencies, and Concentrations (Tables)

9 Months Ended

Sep. 30, 2015

Commitments, Contingencies, and Concentrations [Abstract]

Contracts of financial instruments represent credit risk

	September 30,		December 31,
(In thousands)	2015		2014
Financial instruments whose contract amounts represent credit risk:
Open-end lines of credit	$	64,044	$	48,929
Commitments to extend credit		23,118		6,430
Standby letters of credit and financial guarantees written		416		371

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Allowance for Loan and Lease Losses - Impaired LHFI - Average Recorded Investment and Interest Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Average recorded investment [Abstract]
Average recorded investment	$ 10,622	$ 15,531	$ 13,077	$ 16,602
Interest income recognized [Abstract]
Interest income recognized	174	96	471	292
Commercial real estate [Member]
Average recorded investment [Abstract]
Average recorded investment	4,256	5,571	5,599	5,258
Interest income recognized [Abstract]
Interest income recognized	130	33	329	65
Construction and land development [Member]
Average recorded investment [Abstract]
Average recorded investment	471	1,673	562	2,823
Interest income recognized [Abstract]
Interest income recognized		11		68
Commercial and industrial [Member]
Average recorded investment [Abstract]
Average recorded investment	3,570	6,085	4,740	6,658
Interest income recognized [Abstract]
Interest income recognized	44	52	142	159
Residential real estate [Member]
Average recorded investment [Abstract]
Average recorded investment	927	993	952	833
Leases [Member]
Average recorded investment [Abstract]
Average recorded investment	289	75	146	112
Tax certificates [Member]
Average recorded investment [Abstract]
Average recorded investment	$ 1,109	$ 1,134	$ 1,078	$ 918

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Earnings Per Common Share

9 Months Ended

Sep. 30, 2015

Income (Loss) Per Common Share [Abstract]

Earnings per common share

Note 14.Earnings Per Common Share

We follow the provisions of FASB ASC Topic 260, “Earnings per Share” (“ASC Topic 260”).  Basic earnings per share (“EPS”) excludes dilution and is computed by dividing income available to common shareholders by the weighted average common shares outstanding during the period.  We have two classes of common stock currently outstanding. The classes are A and B, of which one share of Class B is convertible into 1.15 shares of Class A.  Diluted EPS takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock using the if-converted method. For the three and nine months ended September 30, 2015,  269,743 and 285,097options to purchase shares of common stock, respectively, were anti-dilutive in the computation of diluted EPS, as the exercise price exceeded average market price in each of those periods.  For the three and nine months ended September 30, 2014, 168,907 options to purchase shares of common stock, respectively, were anti-dilutive in the computation of diluted EPS, as the exercise price exceeded average market price in each of those periods.  Additionally warrants to purchase 1,368,040 shares of Class A common stock were also anti-dilutive.

Basic and diluted EPS are calculated as follows:

	Three months ended  September 30, 2015
	Income		Average shares	Per share
(In thousands, except for per share data)	(numerator)		(denominator)	Amount
Basic EPS
Income available to common shareholders	$	1,100	30,043	$	0.04
Diluted EPS
Income available to common shareholders	$	1,100	30,074	$	0.04

	Three months ended  September 30, 2014
	Income		Average shares	Per share
(In thousands, except for per share data)	(numerator)		(denominator)	Amount
Basic and Diluted EPS
Income available to common shareholders	$	1,271	27,329	$	0.05

	Nine months ended September 30, 2015
	Income		Average shares	Per share
(In thousands, except for per share data)	(numerator)		(denominator)	Amount
Basic EPS
Income available to common shareholders	$	3,299	30,040	$	0.11
Diluted EPS
Income available to common shareholders	$	3,299	30,055	$	0.11

	Nine months ended September 30, 2014
	Income		Average shares	Per share
(In thousands, except for per share data)	(numerator)		(denominator)	Amount
Basic and Diluted EPS
Income available to common shareholders	$	2,654	18,042	$	0.15

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2015

Summary of Significant Accounting Policies [Abstract]

Basis of Financial Presentation

Basis of Financial Presentation

The accompanying unaudited consolidated financial statements include the accounts of Royal Bancshares of Pennsylvania, Inc. (“Royal Bancshares”, the “Company”, “We” or “Our”) and its wholly-owned subsidiaries, Royal Investments of Delaware, Inc., including Royal Investments of Delaware, Inc.’s wholly owned subsidiary, Royal Preferred, LLC, and Royal Bank America (“Royal Bank”), including Royal Bank’s subsidiaries, Royal Real Estate of Pennsylvania, Inc., Royal Investments America, LLC, RBA Property LLC, Narberth Property Acquisition LLC, Rio Marina LLC, and Royal Tax Lien Services, LLC (“RTL”).  Royal Bank also has an 80% and 60% ownership interest in Crusader Servicing Corporation (“CSC”) and Royal Bank America Leasing, LP, respectively. The two Delaware trusts, Royal Bancshares Capital Trust I and Royal Bancshares Capital Trust II are not consolidated per requirements under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “Consolidation” (“ASC Topic 810”). These consolidated financial statements reflect the historical information of the Company. All significant intercompany transactions and balances have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Applications of the principles in our preparation of the consolidated financial statements in conformity with U.S. GAAP require management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes.  These estimates and assumptions are based on information available as of the date of the consolidated financial statements; therefore, actual results could differ from those estimates. The interim financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) that are, in the opinion of management, necessary to present a fair statement of the results for the interim periods.  These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014.  The results of operations for the three and nine month periods ended September 30, 2015 are not necessarily indicative of the results to be expected for the full year.

Reclassifications

Reclassifications

Certain items in the 2014 consolidated financial statements and accompanying notes have been reclassified to conform to the current year’s presentation format.  There was no effect on net income for the periods presented herein as a result of the reclassification.

Recent Accounting Pronouncements

Accounting Policies Recently Adopted and Pending Accounting Pronouncements

In January 2014, FASB issued ASU No. 2014-04, Receivables (Topic 310): Troubled Debt Restructurings by Creditors (Subtopic 310-40) Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (“ASU 2014-04”). ASC Topic 310 includes guidance that states that a creditor should reclassify a collateralized mortgage loan such that the loan should be derecognized and the collateral asset recognized when it determines that there has been in substance a repossession or foreclosure by the creditor, that is, the creditor receives physical possession of the debtor’s assets regardless of whether formal foreclosure proceedings take place. However, the terms in substance a repossession or foreclosure and physical possession are not defined in the accounting literature and there is diversity about when a creditor should derecognize the loan receivable and recognize the real estate property. That diversity has been highlighted by recent extended foreclosure timelines and processes related to residential real estate properties.

The objectives in ASU 2014-04 are intended to reduce diversity in practice by clarifying when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan should be derecognized and the real estate property recognized. Holding foreclosed real estate property presents different operational and economic risk to creditors compared with holding an impaired loan. Therefore, consistency in the timing of loan derecognition and presentation of foreclosed real estate properties is of qualitative significance to users of the creditor’s financial statements. Additionally, the disclosure of the amount of foreclosed residential real estate properties and of the recorded investment in consumer mortgage loans secured by residential real estate properties that are in the process of foreclosure is expected to provide decision-useful information to many users of the creditor’s financial statements. The amendments in ASU 2014-04 are effective for public companies for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. An entity can elect to adopt the amendments in ASU 2014-04 using either a modified retrospective transition method or a prospective transition method.  Early adoption was permitted. The adoption of ASU 2014-04 did not have a significant impact on the Company’s consolidated financial statements.

In June 2014, the FASB issued ASU No. 2014-12,  Compensation – Stock Compensation (Topic 718) - Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (“ASU 2014-12”).  The amendments in ASU 2014-12 require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718, Compensation – Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. The amendments in ASU 2014-12 are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted.Entities may apply the amendments in this ASU either: (a) prospectively to all awards granted or modified after the effective date; or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The adoption of ASU 2014-12 is not expected to have a significant impact on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). The amendments in ASU 2015-03 require that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. ASU 2015-03 is consistent with FASB Concepts Statement No.6, Elements of Financial Statements, which states that debt issuance costs are similar to a debt discount and in effect reduce the proceeds of borrowing, thereby increasing the effective interest rate. The recognition and measurement guidance for debt issuance costs would not be affected by the amendments in this ASU. For public business entities, the amendments in ASU 2015-03 are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. An entity should apply the new guidance on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. Earlier adoption is permitted for financial statements that have not been previously issued. The adoption of ASU 2015-03 is not expected to have a material impact on the Company’s financial condition and results of operations.

In June 2015, the FASB issued ASU 2015-10, Technical Corrections and Improvements (“ASU 2015-10”). The amendments in ASU 2015-10 affect a wide variety of Topics in the Codification and will apply to all reporting entities within the scope of the affected accounting guidance. ASU 2015-10 includes amendments to clarify the Codification,

correct unintended application of guidance, or make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. Additionally, some of the amendments will make the Codification easier to understand and easier to apply by eliminating inconsistencies, providing needed clarifications, and improving the presentation of guidance in the Codification. The amendments in ASU 2015-10 are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Earlier adoption is permitted , including adoption in an interim period. All other amendments in ASU 2015-10 are effective upon the issuance of ASU 2015-10.  The adoption of ASU 2015-10 is not expected to have a material impact on the Company’s financial condition and results of operations.

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Allowance for Loan and Lease Losses - Changes in Allowance for Loan and Lease Losses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	$ 10,036	$ 11,569	$ 11,708	$ 13,671	$ 13,671
Charge-offs	(177)	(271)	(1,639)	(1,699)	(2,121)
Recoveries	163	235	1,119	275	1,025
(Credit) provision	(216)	(51)	(1,382)	(765)	(867)
Ending balance	9,806	11,482	9,806	11,482	11,708
Ending balance: related to loans individually evaluated for impairment	322	493	322	493	1,041
Ending balance: related to loans collectively evaluated for impairment	9,484	10,989	9,484	10,989	10,667
LHFI [Abstract]
Ending balance	471,216	397,176	471,216	397,176	415,132
Ending balance: individually evaluated for impairment	10,118	16,141	10,118	16,141	16,078
Ending balance: collectively evaluated for impairment	461,098	381,035	461,098	381,035	399,054
Commercial real estate [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	4,208	4,971	4,452	5,498	5,498
Charge-offs			(231)	(349)	(354)
Recoveries			351
(Credit) provision	(344)	(266)	(708)	(444)	(692)
Ending balance	3,864	4,705	3,864	4,705	4,452
Ending balance: related to loans individually evaluated for impairment		205		205	200
Ending balance: related to loans collectively evaluated for impairment	3,864	4,500	3,864	4,500	4,252
LHFI [Abstract]
Ending balance	210,883	164,522	210,883	164,522	175,038
Ending balance: individually evaluated for impairment	4,040	6,877	4,040	6,877	6,795
Ending balance: collectively evaluated for impairment	206,843	157,645	206,843	157,645	168,243
Construction and land development [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	1,358	2,033	2,292	2,316	2,316
Charge-offs	(39)		(119)		(172)
Recoveries	150	205	402	205	940
(Credit) provision	133	3	(973)	(280)	(792)
Ending balance	1,602	2,241	1,602	2,241	2,292
Ending balance: related to loans individually evaluated for impairment	145	172	145	172
Ending balance: related to loans collectively evaluated for impairment	1,457	2,069	1,457	2,069	2,292
LHFI [Abstract]
Ending balance	38,864	41,676	38,864	41,676	45,662
Ending balance: individually evaluated for impairment	290	1,192	290	1,192	683
Ending balance: collectively evaluated for impairment	38,574	40,484	38,574	40,484	44,979
Commercial and industrial [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	1,705	1,525	1,780	3,006	3,006
Charge-offs			(541)	(452)	(452)
Recoveries	4	12	278	23	27
(Credit) provision	(301)	(106)	(109)	(1,146)	(801)
Ending balance	1,408	1,431	1,408	1,431	1,780
Ending balance: related to loans individually evaluated for impairment		5		5	301
Ending balance: related to loans collectively evaluated for impairment	1,408	1,426	1,408	1,426	1,479
LHFI [Abstract]
Ending balance	82,414	70,743	82,414	70,743	76,489
Ending balance: individually evaluated for impairment	3,024	5,897	3,024	5,897	5,846
Ending balance: collectively evaluated for impairment	79,390	64,846	79,390	64,846	70,643
Multi-family [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	300	416	285	402	402
(Credit) provision	(113)	(63)	(98)	(49)	(117)
Ending balance	187	353	187	353	285
Ending balance: related to loans collectively evaluated for impairment	187	353	187	353	285
LHFI [Abstract]
Ending balance	15,222	16,893	15,222	16,893	13,823
Ending balance: collectively evaluated for impairment	15,222	16,893	15,222	16,893	13,823
Residential real estate [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	584	690	616	473	473
Recoveries	5	5	16	11	15
(Credit) provision	67	25	24	236	128
Ending balance	656	720	656	720	616
Ending balance: related to loans individually evaluated for impairment	28	30	28	30	28
Ending balance: related to loans collectively evaluated for impairment	628	690	628	690	588
LHFI [Abstract]
Ending balance	54,025	44,261	54,025	44,261	42,992
Ending balance: individually evaluated for impairment	918	983	918	983	959
Ending balance: collectively evaluated for impairment	53,107	43,278	53,107	43,278	42,033
Leases [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	1,405	1,352	1,429	1,223	1,223
Charge-offs	(138)	(206)	(315)	(568)	(793)
Recoveries	4	13	20	35	42
(Credit) provision	316	325	453	794	957
Ending balance	1,587	1,484	1,587	1,484	1,429
Ending balance: related to loans individually evaluated for impairment	131	62	131	62	80
Ending balance: related to loans collectively evaluated for impairment	1,456	1,422	1,456	1,422	1,349
LHFI [Abstract]
Ending balance	61,954	48,588	61,954	48,588	51,583
Ending balance: individually evaluated for impairment	640	64	640	64	95
Ending balance: collectively evaluated for impairment	61,314	48,524	61,314	48,524	51,488
Tax certificates [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	317	408	667	555	555
Charge-offs		(65)	(433)	(330)	(350)
Recoveries			52	1	1
(Credit) provision	38	29	69	146	461
Ending balance	355	372	355	372	667
Ending balance: related to loans individually evaluated for impairment	18	19	18	19	432
Ending balance: related to loans collectively evaluated for impairment	337	353	337	353	235
LHFI [Abstract]
Ending balance	5,294	8,230	5,294	8,230	7,191
Ending balance: individually evaluated for impairment	1,206	1,128	1,206	1,128	1,700
Ending balance: collectively evaluated for impairment	4,088	7,102	4,088	7,102	5,491
Consumer [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	35	24	38	15	15
(Credit) provision	(6)	9	(9)	18	23
Ending balance	29	33	29	33	38
Ending balance: related to loans collectively evaluated for impairment	29	33	29	33	38
LHFI [Abstract]
Ending balance	2,560	2,263	2,560	2,263	2,354
Ending balance: collectively evaluated for impairment	2,560	2,263	2,560	2,263	2,354
Unallocated [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	124	150	149	183	183
(Credit) provision	(6)	(7)	(31)	(40)	(34)
Ending balance	118	143	118	143	149
Ending balance: related to loans collectively evaluated for impairment	$ 118	$ 143	$ 118	$ 143	$ 149

XML

Summary of Significant Accounting Policies (Details)	9 Months Ended
	Sep. 30, 2015 trust
Noncontrolling Interest [Line Items]
Number of Delaware trust affiliates	2
Royal Bank [Member] | Crusader Servicing Corporation [Member]
Noncontrolling Interest [Line Items]
Total percentage of ownership interest (in hundredths)	80.00%
Royal Bank [Member] | Royal Bank America Leasing LP
Noncontrolling Interest [Line Items]
Total percentage of ownership interest (in hundredths)	60.00%

XML

Statements of Consolidated Comprehensive Income - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Statements of Consolidated Comprehensive Income - (unaudited) [Abstract]
Net income		$ 1,713	$ 1,448	$ 5,086	$ 4,510
Unrealized gains (losses) on investment securities:
Unrealized holding gains (losses) arising during period, net of tax effect		1,190	(80)	1,320	4,469
Less reclassification adjustment for gains realized in net income (1)	[1]	52	157	430	218
Unrealized gains (losses) on investment securities, net of tax		1,138	(237)	890	4,251
Unrecognized benefit obligation expense:
Reclassification adjustment for amortization (2)	[2]	(17)	(18)	(51)	(56)
Unrecognized benefit obligation, net of tax		17	18	51	56
Unrealized loss on derivative instrument, net of tax effect		(282)		(467)
Other comprehensive income (loss)		839	(219)	372	4,307
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total		2,552	1,229	5,458	8,817
Less net income (loss) attributable to noncontrolling interest		179	25	500	212
Comprehensive income (loss) attributable to Royal Bancshares of Pennsylvania, Inc.		$ 2,373	$ 1,204	$ 4,958	$ 8,605

[1] Gross amounts are included in net gains on the sale of AFS investment securities on the Consolidated Statements of Income. See Note 15. C

[2] Gross amounts are included in salaries and benefits on the Consolidated Statements of Income. See Note 15. Comprehensive Income (Loss).

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Investment Securities

9 Months Ended

Sep. 30, 2015

Investment Securities [Abstract]

Investment Securities

Note 3.Investment Securities

The carrying value and fair value of investment securities available-for-sale (“AFS”) at September 30, 2015 and December 31, 2014 are as follows:

As of September 30, 2015			Included in OCI*
			Gross		Gross
	Amortized		unrealized		unrealized
(In thousands)	cost		gains		losses		Fair value
U.S. government agencies	$	26,126	$	20	$	(239)	$	25,907
Mortgage-backed securities-residential		14,184		249		(15)		14,418
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		170,111		3,122		(488)		172,745
Non-agency		2,910		25		(8)		2,927
Corporate bonds		1,500		20		—		1,520
Municipal bonds		9,926		165		(19)		10,072
Other securities		2,198		823		(24)		2,997
Common stocks		26		—		—		26
Total available for sale	$	226,981	$	4,424	$	(793)	$	230,612

As of December 31, 2014			Included in OCI*
			Gross		Gross
	Amortized		unrealized		unrealized
(In thousands)	cost		gains		losses		Fair value
U.S. government agencies	$	26,123	$	—	$	(834)	$	25,289
Mortgage-backed securities-residential		22,073		375		(61)		22,387
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		167,711		2,350		(1,084)		168,977
Non-agency		3,738		7		(14)		3,731
Corporate bonds		15,617		144		(34)		15,727
Municipal bonds		10,117		91		(35)		10,173
Other securities		2,684		1,350		—		4,034
Common stocks		33		17		—		50
Total available for sale	$	248,096	$	4,334	$	(2,062)	$	250,368

*Other comprehensive income

The amortized cost and fair value of investment securities at September 30, 2015, by contractual maturity, are shown below.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	As of September 30, 2015
	Amortized
(In thousands)	cost		Fair value
Within 1 year	$	—	$	—
After 1 but within 5 years		8,085		8,080
After 5 but within 10 years		20,354		20,382
After 10 years		9,113		9,037
Mortgage-backed securities-residential		14,184		14,418
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		170,111		172,745
Non-agency		2,910		2,927
Total available for sale debt securities		224,757		227,589
No contractual maturity		2,224		3,023
Total available for sale securities	$	226,981	$	230,612

Proceeds from the sales of AFS investments during the three months ended September 30, 2015 and 2014 were $9.2 million and $19.3 million, respectively. Proceeds from the sales of AFS investments during the nine months ended September 30, 2015 and 2014 were $33.7 million and $55.3 million, respectively. The following table summarizes gross realized gains and losses on the sale of securities recognized in earnings in the periods indicated:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(In thousands)	2015		2014		2015		2014
Gross realized gains	$	104	$	446	$	676	$	1,143
Gross realized losses		(24)		(208)		(24)		(813)
Net realized gains	$	80	$	238	$	652	$	330

The tables below indicate the length of time individual AFS securities have been in a continuous unrealized loss position at September 30, 2015 and December 31, 2014:

September 30, 2015	Less than 12 months					12 months or longer					Total
			Gross		Number			Gross		Number			Gross		Number
			unrealized		of			unrealized		of			unrealized		of
(In thousands)	Fair value		losses		positions	Fair value		losses		positions	Fair value		losses		positions
U.S. government agencies	$	—	$	—	—	$	19,149	$	(239)	6	$	19,149	$	(239)	6
Mortgage-backed securities-residential		—		—	—		2,691		(15)	1		2,691		(15)	1
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		15,253		(13)	5		26,704		(475)	9		41,957		(488)	14
Non-agency		1,184		(8)	1		—		—	—		1,184		(8)	1
Municipal bonds		3,557		(19)	4		—		—	—		3,557		(19)	4
Other securities		235		(24)	1		—		—	—		235		(24)	1
Total available for sale	$	20,229	$	(64)	11	$	48,544	$	(729)	16	$	68,773	$	(793)	27

December 31, 2014	Less than 12 months					12 months or longer					Total
			Gross		Number			Gross		Number			Gross		Number
			unrealized		of			unrealized		of			unrealized		of
(In thousands)	Fair value		losses		positions	Fair value		losses		positions	Fair value		losses		positions
U.S. government agencies	$	—	$	—	—	$	25,289	$	(834)	8	$	25,289	$	(834)	8
Mortgage-backed securities-residential		—		—	—		8,913		(61)	3		8,913		(61)	3
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		36,757		(204)	12		38,798		(880)	12		75,555		(1,084)	24
Non-agency		1,432		(14)	1		—		—	—		1,432		(14)	1
Corporate bonds		8,054		(25)	5		991		(9)	1		9,045		(34)	6
Municipal bonds		1,639		(7)	2		3,079		(28)	4		4,718		(35)	6
Total available for sale	$	47,882	$	(250)	20	$	77,070	$	(1,812)	28	$	124,952	$	(2,062)	48

We evaluate declines in the fair value of securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis.  We assess whether OTTI is present when the fair value of a security is less than its amortized cost.  Under ASC Topic 320, OTTI is considered to have occurred with respect to debt securities (1) if an entity intends to sell the security; (2) if it is more likely than not an entity will be required to sell the security before recovery of its amortized cost basis; or (3) the present value of the expected cash flows is not sufficient to recover the entire amortized cost basis. We did not record OTTI charges to earnings during the first three quarters of 2015 and 2014.  There was no credit-related impairment losses on debt securities held at September 30, 2015September 30,2014 for which a portion of OTTI was recognized in other comprehensive income. 

For all debt security types discussed below the fair value is based on prices provided by brokers and safekeeping custodians.

U.S. government-sponsored agencies (“U.S. Agency”):  As of September 30, 2015, we had six U.S. Agency securities with a fair value of $19.1 million and gross unrealized losses of $239,000.  Allsix bonds had been in an unrealized loss position for twelve months or longer at September 30, 2015. Management believes that the unrealized losses on these debt securities are a function of changes in investment spreads.  Management expects to recover the entire amortized cost basis of these securities. We do not intend to sell these securities before recovery of their cost basis and have not determined that it is not more likely than not that we will be required to sell these securities before recovery of their cost basis.  Therefore, management has determined that these securities are not other-than-temporarily impaired at September 30, 2015.

Mortgage-backed securities issued by U.S. government agencies and U.S. government sponsored enterprises: As of September 30, 2015, we had one mortgage-backed security with a fair value of $2.7 million and a gross unrealized loss of $15,000.  This mortgage-backed security has been in an unrealized loss position for twelve months or longer. The unrealized loss is attributable to a combination of factors, including relative changes in interest rates since the time of purchase. The contractual cash flows for this security is guaranteed by a U.S. government-sponsored enterprise. Based on its assessment of these factors, management believes that the unrealized loss on this debt security is a function of changes in investment spreads and interest rate movements and not as a result of changes in credit quality.  Management expects to recover the entire amortized cost basis of this security. We do not intend to sell this security before recovery of its cost basis and have not determined that it is not more likely than not that we will be required to sell this security before recovery of its cost basis.  Therefore, management has determined that this security is not other-than-temporarily impaired at September 30, 2015.

U.S. government issued or sponsored collateralized mortgage obligations (“Agency CMOs”):  As of September 30, 2015, we had 14 Agency CMOs with a fair value of $42.0 million and gross unrealized losses of $488,000.  Nine of the Agency CMOs have been in an unrealized loss position for twelve months or longer and the remaining five Agency CMOs have been in an unrealized loss position for less than twelve months.  The unrealized loss is attributable to a combination of factors, including relative changes in interest rates since the time of purchase.  The contractual cash flows for these securities are guaranteed by U.S. government agencies and U.S. government-sponsored enterprises. Based on its assessment of these factors, management believes that the unrealized losses on these debt securities are a function of changes in investment spreads and interest rate movements and not as a result of changes in credit quality.  Management expects to recover the entire amortized cost basis of these securities. We do not intend to sell these securities before recovery of their cost basis and have not determined that it is not more likely than not that we will be required to sell these securities before recovery of their cost basis.  Therefore, management has determined that these securities are not other-than-temporarily impaired at September 30, 2015.

Non-agency collateralized mortgage obligations (“Non-agency CMOs”):  As of September 30, 2015, the Company had one non-agency CMO with a fair value of $1.2 million and a gross unrealized loss of $8,000.  The bond has been in an unrealized loss position for less than twelve months.  The Company does not intend to sell this security before recovery of its cost basis, and it is not more likely than not that the Company be required to sell this security before recovery of its cost basis.  Therefore, management has determined that this security is not other-than-temporarily impaired at September 30, 2015.

Corporate bonds:  As of September 30, 2015, we had two corporate bonds with a fair value of $1.5 million and a gross unrealized gain of $20,000. 

Municipal bonds:  As of September 30, 2015, we had fourmunicipal bonds with a fair value $3.6 million and gross unrealized losses of $19,000.  All four of the municipal bonds have been in an unrealized loss position for less than twelve months. Because we do not intend to sell the bonds and it is not more likely than not that we will be required to sell the bonds before recovery of their amortized cost basis, which may be maturity, we do not consider the bonds to be other-than-temporarily impaired at September 30, 2015.

Other securities:  As of September 30, 2015, we had five investments in private equity funds which were predominantly invested in real estate.  In determining whether or not OTTI exists, we review the funds’ financials, asset values, and near-term projections.  At September 30, 2015,  one of the private equity fund investments had a fair value of $235,000 and an unrealized loss of $24,000.  OTTI charges were recorded in a prior period on this fund.  Management concluded that there was no additional impairment on this investment as of September 30, 2015.

We will continue to monitor these investments to determine if the discounted cash flow analysis, continued negative trends, market valuations or credit defaults result in impairment that is other than temporary.

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Derivative Instruments and Hedging Activity (Details 2) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2015	Dec. 31, 2014
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Loss Recognized in OCI	$ (282)
Designated as Hedging Instrument
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Loss Recognized in OCI		$ (467)	$ (187)
Interest Rate Swap | Designated as Hedging Instrument
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Loss Recognized in OCI		$ (467)	$ (187)

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Fair Value of Financial Instruments - Balance Sheet Grouping (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Financial Assets [Abstract]
Available-for-sale Securities	$ 230,612	$ 250,368
Level 1 [Member]
Financial Assets [Abstract]
Cash and cash equivalents	24,217	30,790
Available-for-sale Securities	26	50
Financial Liabilities
Short-term borrowings	9,000
Level 2 [Member]
Financial Assets [Abstract]
Available-for-sale Securities	227,589	246,284
Accrued interest receivable	4,336	5,270
Financial Liabilities
Demand deposits	76,949	73,665
NOW and money markets	202,729	212,739
Interest-bearing brokered deposits	25,000
Savings	38,441	18,721
Time deposits	208,869	223,788
Long-term borrowings	79,698	90,022
Subordinated debt	26,696	25,091
Accrued interest payable	2,168	726
Level 3 [Member]
Financial Assets [Abstract]
Available-for-sale Securities	2,997	4,034
Other investment	2,250	2,250
Federal Home Loan Bank stock	2,545	2,622
Loans, net	456,718	400,979
Carrying Amount [Member]
Financial Assets [Abstract]
Cash and cash equivalents	24,217	30,790
Available-for-sale Securities	230,612	250,368
Other investment	2,250	2,250
Federal Home Loan Bank stock	2,545	2,622
Loans, net	461,410	403,424
Accrued interest receivable	4,336	5,270
Financial Liabilities
Demand deposits	76,949	73,665
NOW and money markets	202,729	212,739
Interest-bearing brokered deposits	25,000
Savings	38,441	18,721
Time deposits	210,645	225,300
Short-term borrowings	9,000
Long-term borrowings	82,084	92,426
Subordinated debt	25,774	25,774
Accrued interest payable	2,168	726
Estimated Fair Value [Member]
Financial Assets [Abstract]
Cash and cash equivalents	24,217	30,790
Available-for-sale Securities	230,612	250,368
Other investment	2,250	2,250
Federal Home Loan Bank stock	2,545	2,622
Loans, net	456,718	400,979
Accrued interest receivable	4,336	5,270
Financial Liabilities
Demand deposits	76,949	73,665
NOW and money markets	202,729	212,739
Interest-bearing brokered deposits	25,000
Savings	38,441	18,721
Time deposits	208,869	223,788
Short-term borrowings	9,000
Long-term borrowings	79,698	90,022
Subordinated debt	26,696	25,091
Accrued interest payable	2,168	726
Interest Rate Swap | Level 2 [Member]
Financial Liabilities
Derivative Liability	708	187
Interest Rate Swap | Carrying Amount [Member]
Financial Liabilities
Derivative Liability	708	187
Interest Rate Swap | Estimated Fair Value [Member]
Financial Liabilities
Derivative Liability	$ 708	$ 187

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Investment Securities (Tables)

9 Months Ended

Sep. 30, 2015

Investment Securities [Abstract]

Amortized cost, gross unrealized gains and losses, and fair value of available-for-sale investment securities

As of September 30, 2015			Included in OCI*
			Gross		Gross
	Amortized		unrealized		unrealized
(In thousands)	cost		gains		losses		Fair value
U.S. government agencies	$	26,126	$	20	$	(239)	$	25,907
Mortgage-backed securities-residential		14,184		249		(15)		14,418
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		170,111		3,122		(488)		172,745
Non-agency		2,910		25		(8)		2,927
Corporate bonds		1,500		20		—		1,520
Municipal bonds		9,926		165		(19)		10,072
Other securities		2,198		823		(24)		2,997
Common stocks		26		—		—		26
Total available for sale	$	226,981	$	4,424	$	(793)	$	230,612

As of December 31, 2014			Included in OCI*
			Gross		Gross
	Amortized		unrealized		unrealized
(In thousands)	cost		gains		losses		Fair value
U.S. government agencies	$	26,123	$	—	$	(834)	$	25,289
Mortgage-backed securities-residential		22,073		375		(61)		22,387
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		167,711		2,350		(1,084)		168,977
Non-agency		3,738		7		(14)		3,731
Corporate bonds		15,617		144		(34)		15,727
Municipal bonds		10,117		91		(35)		10,173
Other securities		2,684		1,350		—		4,034
Common stocks		33		17		—		50
Total available for sale	$	248,096	$	4,334	$	(2,062)	$	250,368

*Other comprehensive income

Amortized cost and fair value of investment securities, by contractual maturity

	As of September 30, 2015
	Amortized
(In thousands)	cost		Fair value
Within 1 year	$	—	$	—
After 1 but within 5 years		8,085		8,080
After 5 but within 10 years		20,354		20,382
After 10 years		9,113		9,037
Mortgage-backed securities-residential		14,184		14,418
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		170,111		172,745
Non-agency		2,910		2,927
Total available for sale debt securities		224,757		227,589
No contractual maturity		2,224		3,023
Total available for sale securities	$	226,981	$	230,612

Gross realized gains and losses realized on sale of securities

	For the three months ended				For the nine months ended
	September 30,				September 30,
(In thousands)	2015		2014		2015		2014
Gross realized gains	$	104	$	446	$	676	$	1,143
Gross realized losses		(24)		(208)		(24)		(813)
Net realized gains	$	80	$	238	$	652	$	330

Investment securities in a continuous unrealized loss position

September 30, 2015	Less than 12 months					12 months or longer					Total
			Gross		Number			Gross		Number			Gross		Number
			unrealized		of			unrealized		of			unrealized		of
(In thousands)	Fair value		losses		positions	Fair value		losses		positions	Fair value		losses		positions
U.S. government agencies	$	—	$	—	—	$	19,149	$	(239)	6	$	19,149	$	(239)	6
Mortgage-backed securities-residential		—		—	—		2,691		(15)	1		2,691		(15)	1
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		15,253		(13)	5		26,704		(475)	9		41,957		(488)	14
Non-agency		1,184		(8)	1		—		—	—		1,184		(8)	1
Municipal bonds		3,557		(19)	4		—		—	—		3,557		(19)	4
Other securities		235		(24)	1		—		—	—		235		(24)	1
Total available for sale	$	20,229	$	(64)	11	$	48,544	$	(729)	16	$	68,773	$	(793)	27

December 31, 2014	Less than 12 months					12 months or longer					Total
			Gross		Number			Gross		Number			Gross		Number
			unrealized		of			unrealized		of			unrealized		of
(In thousands)	Fair value		losses		positions	Fair value		losses		positions	Fair value		losses		positions
U.S. government agencies	$	—	$	—	—	$	25,289	$	(834)	8	$	25,289	$	(834)	8
Mortgage-backed securities-residential		—		—	—		8,913		(61)	3		8,913		(61)	3
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		36,757		(204)	12		38,798		(880)	12		75,555		(1,084)	24
Non-agency		1,432		(14)	1		—		—	—		1,432		(14)	1
Corporate bonds		8,054		(25)	5		991		(9)	1		9,045		(34)	6
Municipal bonds		1,639		(7)	2		3,079		(28)	4		4,718		(35)	6
Total available for sale	$	47,882	$	(250)	20	$	77,070	$	(1,812)	28	$	124,952	$	(2,062)	48

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Comprehensive Income (Loss) (Tables)

9 Months Ended

Sep. 30, 2015

Comprehensive Income (Loss) [Abstract]

Comprehensive Income (Loss) [Abstract]

	For the nine months ended September 30, 2015
			Tax
	Before tax		expense		Net of tax
(In thousands)	amount		(benefit)		amount
Unrealized gains on investment securities:
Unrealized holding gains arising during period	$	2,011	$	691	$	1,320
Less reclassification adjustment for gains
realized in net income		652		222		430
Unrealized gains on investment securities		1,359		469		890
Unrecognized benefit obligation expense:
Less reclassification adjustment for amortization		(51)		—		(51)
Unrecognized benefit obligation		(51)		—		(51)
Unrealized loss on derivative instrument		(708)		(241)		(467)
Other comprehensive income, net	$	600	$	228	$	372

	For the nine months ended September 30, 2014
			Tax
	Before tax		expense		Net of tax
(In thousands)	amount		(benefit)		amount
Unrealized gains on investment securities:
Unrealized holding gains arising during period	$	6,570	$	2,101	$	4,469
Less reclassification adjustment for gains
realized in net income		330		112		218
Unrealized gains on investment securities		6,240		1,989		4,251
Unrecognized benefit obligation expense:
Reclassification adjustment for amortization		85		29		56
Unrecognized benefit obligation		85		29		56
Other comprehensive income, net	$	6,325	$	2,018	$	4,307

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	September 30,		December 31,
(In thousands)	2015		2014
Unrecognized benefit obligation	$	(4,076)	$	(4,025)
Unrealized gains (losses) on AFS investments		2,423		1,720
Unrealized loss on derivative instrument		(467)		(187)
Accumulated other comprehensive loss	$	(2,120)	$	(2,492)

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Pension Plan

9 Months Ended

Sep. 30, 2015

Pension Plan [Abstract]

Pension Plan

Note 13.Pension Plan

We have a noncontributory nonqualified defined benefit pension plan (“Pension Plan”) covering certain eligible employees.  Our Pension Plan provides retirement benefits under pension trust agreements.  The benefits are based on years of service and the employee’s compensation during the highest three consecutive years during the last 10 years of employment.

Net periodic defined benefit pension expense for the three and nine months ended September 30, 2015 and 2014 included the following components:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(In thousands)	2015		2014		2015		2014
Service cost	$	17	$	15	$	49	$	45
Interest cost		135		155		403		466
Amortization of prior service cost		22		22		68		66
Amortization of actuarial loss		46		32		140		96
Net periodic benefit cost	$	220	$	224	$	660	$	673

We have unfunded pension plan obligations of $15.4 million as of September 30, 2015 compared to $15.3 million at December 31, 2014.  We plan to fund a substantial portion of the pension plan obligations through existing Company owned life insurance policies.