Segment Information

6 Months Ended

Jun. 30, 2017

Segment Information [Abstract]

Segment Information

Note 16.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 characteristics 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 June 30, 2017, 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 and six months ended June 30, 2017 and 2016.

	For the three months ended June 30, 2017
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	804,652	$	4,103	$	808,755
Total deposits	$	622,821	$	—	$	622,821
Interest income	$	9,062	$	400	$	9,462
Interest expense		1,940		22		1,962
Net interest income	$	7,122	$	378	$	7,500
Provision (credit) for loan and lease losses		66		(9)		57
Total non-interest income (loss)		1,101		(158)		943
Total non-interest expense		4,982		188		5,170
Income tax expense		52		—		52
Net income	$	3,123	$	41	$	3,164
Noncontrolling interest	$	77	$	80	$	157
Net income (loss) attributable to Royal Bancshares	$	3,046	$	(39)	$	3,007

	For the three months ended June 30, 2016
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	803,262	$	13,190	$	816,452
Total deposits	$	599,244	$	—	$	599,244
Interest income	$	8,112	$	69	$	8,181
Interest expense		1,613		151		1,764
Net interest income (expense)	$	6,499	$	(82)	$	6,417
Provision for loan and lease losses		72		125		197
Total non-interest income		1,055		18		1,073
Total non-interest expense		4,775		271		5,046
Income tax expense		60		—		60
Net income (loss)	$	2,647	$	(460)	$	2,187
Noncontrolling interest	$	174	$	(21)	$	153
Net income (loss) attributable to Royal Bancshares	$	2,473	$	(439)	$	2,034

	For the six months ended June 30, 2017
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	804,652	$	4,103	$	808,755
Total deposits	$	622,821	$	—	$	622,821
Interest income	$	17,880	$	540	$	18,420
Interest expense		3,806		97		3,903
Net interest income	$	14,074	$	443	$	14,517
Provision (credit) for loan and lease losses		418		(64)		354
Total non-interest income (loss)		1,649		(195)		1,454
Total non-interest expense		10,474		72		10,546
Income tax expense		52		—		52
Net income	$	4,779	$	240	$	5,019
Noncontrolling interest	$	124	$	76	$	200
Net income attributable to Royal Bancshares	$	4,655	$	164	$	4,819

	For the six months ended June 30, 2016
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	803,262	$	13,190	$	816,452
Total deposits	$	599,244	$	—	$	599,244
Interest income	$	16,245	$	150	$	16,395
Interest expense		3,181		306		3,487
Net interest income (expense)	$	13,064	$	(156)	$	12,908
Provision for loan and lease losses		375		34		409
Total non-interest income		2,245		35		2,280
Total non-interest expense		9,614		653		10,267
Income tax expense		60		—		60
Net income (loss)	$	5,260	$	(808)	$	4,452
Noncontrolling interest	$	270	$	(41)	$	229
Net income (loss) attributable to Royal Bancshares	$	4,990	$	(767)	$	4,223

Interest income earned by the community banking segment related to the tax liens segment was approximately $22 thousand and $151 thousand for the three month periods ended June 30, 2017 and 2016, respectively and approximately $97 thousand and $306 thousand for the six month periods ended June 30, 2017 and 2016, respectively.