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.