Segment Information

3 Months Ended

Mar. 31, 2016

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 consists of commercial and retail banking and equipment leasing. The community banking business segment includes Royal Bank and Royal Bank Leasing and generates revenue from a variety of products and services provided by those entities.  Royal Bank and Royal Bank Leasing have similar economic characterisitcs in that earnings are predominantly derived from net interest income.   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 March 31, 2016, 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 is liquidating its assets under an orderly, long term plan.  RTL ceased acquiring tax certificates at public auctions in 2010.

The following tables present selected financial information for reportable business segments for the three months ended March 31, 2016 and 2015.

	Three months ended  March 31, 2016
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	784,797	$	13,751	$	798,548
Total deposits	$	589,331	$	—	$	589,331
Interest income	$	8,133	$	81	$	8,214
Interest expense		1,568		155		1,723
Net interest income (expense)	$	6,565	$	(74)	$	6,491
Provision (credit) for loan and lease losses		303		(91)		212
Total non-interest income		1,190		17		1,207
Total non-interest expense		4,839		382		5,221
Income tax expense		—		—		—
Net income (loss)	$	2,613	$	(348)	$	2,265
Noncontrolling interest	$	96	$	(20)	$	76
Net income (loss) attributable to Royal Bancshares	$	2,517	$	(328)	$	2,189

	Three months ended  March 31, 2015
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	706,252	$	18,953	$	725,205
Total deposits	$	520,286	$	—	$	520,286
Interest income	$	7,037	$	243	$	7,280
Interest expense		1,344		227		1,571
Net interest income	$	5,693	$	16	$	5,709
(Credit) provision for loan and lease losses		(661)		81		(580)
Total non-interest income		513		54		567
Total non-interest expense		4,850		245		5,095
Income tax expense		—		—		—
Net income (loss)	$	2,017	$	(256)	$	1,761
Noncontrolling interest	$	189	$	(19)	$	170
Net income (loss) attributable to Royal Bancshares	$	1,828	$	(237)	$	1,591

Interest income earned by the community banking segment related to the tax liens segment was approximately $155 thousand and $227 thousand for the three month periods ended March 31, 2016 and 2015,  respectively.