<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
for the quarterly period ended: MARCH 31, 1998
[ ] 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 bank as specified in its charter)
PENNSYLVANIA 23-2812193
State or other jurisdiction of (IRS Employer
incorporated or organization) identification No.)
732 MONTGOMERY AVENUE, NARBERTH, PA 19072
(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 bank (1) has filed all reports required to be
filed by Section 13 of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the bank was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
------- -------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
<S> <C>
Class A Common Stock Outstanding at March 31, 1998
$2.00 PAR VALUE 6,813,645
Class B Common Stock Outstanding at March 31, 1998
$.10 PAR VALUE 1,587,921
</TABLE>
<PAGE> 2
ROYAL BANCSHARES OF PENNSYLVANIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
ASSETS MARCH 31, 1998 DEC 31, 1997
-------------- ------------
<S> <C> <C>
Cash and due from banks $ 10,068,582 $ 7,491,242
Federal funds sold 26,450,000 22,925,000
------------- -------------
Total cash and cash equivalents 36,518,582 30,416,242
------------- -------------
Interest bearing deposits in banks 100,030 300,030
Investment securities held to maturity (market value of $51,197,308 @
3/31/98 & $64,984,987 @ 12/31/97) 50,605,591 64,371,042
Investment securities available for sale - at market value 20,678,740 21,048,793
Total loans 292,904,622 290,897,048
Less allowance for loan losses 10,449,053 8,186,237
------------- -------------
Net loans 282,455,569 282,710,811
Premises and equipment, net 4,702,800 4,788,921
Accrued interest and other assets 12,335,752 12,962,240
------------- -------------
$ 407,397,064 $ 416,598,079
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Non-interest bearing $ 37,416,237 $ 37,712,928
Interest bearing (includes certificates of deposit in excess
of $100,000 of $35,551,377 at 3/31/98 and
$33,175,135 at 12/31/97) 234,805,686 227,650,506
------------- -------------
Total deposits 272,221,923 265,363,434
Federal funds -- 15,000,000
Accrued interest and other liabilities 13,399,923 15,095,998
Long -term borrowings 31,063,000 31,063,000
Mortgage payable 560,118 570,885
------------- -------------
Total liabilities 317,244,964 327,093,317
------------- -------------
Stockholders' equity
Common stock
Class A, par value $2 per share; authorized, 18,000,000 shares;
issued, 7,021,161 @ 3/31/98 & 7,015,721 @ 12/31/97 14,042,322 14,031,442
Class B, par value $.10 per share; authorized, 2,000,000 shares;
issued, 1,587,921 @3/31/98 & 1,592,859 @ 12/31/97 158,792 159,286
Capital surplus 38,797,618 38,797,618
Retained earnings 38,904,546 38,023,359
Accumulated unrealized gain (loss)on invest. securities available for
sale 393,907 638,142
------------- -------------
92,297,185 91,649,847
Treasury stock - at cost, shares of Class A, 207,516 @ 3/31/98,
207,516 @ 12/31/97 (2,145,085) (2,145,085)
------------- -------------
90,152,100 89,504,762
------------- -------------
$ 407,397,064 $ 416,598,079
============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 3
ROYAL BANCSHARES OF PENNSYLVANIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED, MARCH 31,
1998 1997
---- ----
<S> <C> <C>
Interest income
Loans, including fees $7,880,860 $5,483,171
Investment securities held to maturity
Taxable 934,490 1,582,767
Tax-exempt 54,075 14,750
Investment securities available for sale
Taxable 432,993 81,563
Tax-exempt -- --
Deposits in banks 10,742 26,031
Federal funds sold 199,148 246,459
---------- ----------
TOTAL INTEREST INCOME 9,512,308 7,434,741
---------- ----------
Interest expense
Deposits 2,780,069 2,406,256
Mortgage payable and other 499,874 57,361
Federal funds purchased -- --
---------- ----------
TOTAL INTEREST EXPENSE 3,279,943 2,463,617
---------- ----------
NET INTEREST INCOME 6,232,365 4,971,124
Increase in provision for loan losses 2,400,000 --
---------- ----------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 3,832,365 4,971,124
---------- ----------
Other income (expense)
Service charges and fees 223,612 249,568
Realized gains on sale of investment securities available
for sale -- --
Gain on sale of other real estate -- 180,394
Gain on sale of loans 3,640 5,525
Other income 2,500,439 65,516
---------- ----------
2,727,691 501,003
---------- ----------
Other expenses
Salaries & wages 1,228,024 1,147,444
Employee benefits 460,034 386,492
Occupancy and equipment 189,890 167,338
Other operating expenses 888,341 906,492
---------- ----------
2,766,289 2,607,766
---------- ----------
INCOME BEFORE INCOME TAXES 3,793,767 2,864,361
Income taxes 1,174,747 750,237
---------- ----------
NET INCOME $2,619,020 $2,114,124
========== ==========
Per share data
Net income - basic $ .30 $ .26
========== ==========
Net income - diluted $ .29 $ .25
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 4
ROYAL BANCSHARES OF PENNSYLVANIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED, MARCH 31,
1998 1997
---- ----
<S> <C> <C>
Net income $ 2,619,020 $ 2,114,124
----------- -----------
Other comprehensive income, net of tax
Net unrealized gains (losses) on securities (168,522) (8,488)
Reclassification adjustment: gain (loss) included in net income -- --
----------- -----------
Comprehensive income $ 2,450,498 $ 2,105,636
=========== ===========
</TABLE>
<PAGE> 5
ROYAL BANCSHARES OF PENNSYLVANIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Class A Common Stock Class B Common Stock Capital
Shares Amount Shares Amount Surplus
------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1998 7,015,721 $14,031,442 1,592,859 $159,286 $38,797,618
Net income for the three months ended March 31, - - - -
Conversion of Class B common stock to Class A
common stock 5,440 10,880 (4,938) (494) -
Purchase of treasury stock - - - - -
Cash dividends on common stock - - - - -
Net unrealized loss on securities available for
sale - - - - -
--------- ----------- --------- -------- -----------
Balance, March 31, 1998 7,021,161 $14,042,322 1,587,921 $158,792 $38,797,618
========= =========== ========= ======== ===========
</TABLE>
<TABLE>
<CAPTION>
Net
unrealized
(loss)/gain
on
securities
Retained Treasury available
Earnings stock for sale
-------- ----- --------
<S> <C> <C> <C>
Balance, January 1, 1998 $38,023,359 $(2,145,085) $ 638,142
Net income for the three months ended March 31, 2,619,020 - -
Conversion of Class B common stock to Class A
common stock (10,386) - -
Purchase of treasury stock - - -
Cash dividends on common stock (1,727,447) - -
Net unrealized loss on securities available for
sale - - (244,235)
----------- ----------- ---------
Balance, March 31, 1998 $38,904,546 $(2,145,085) $ 393,907
=========== =========== =========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 6
ROYAL BANCSHARES OF PENNSYLVANIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31,
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities
Net income $ 2,619,020 $ 2,114,124
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation 117,352 104,360
Provision (recovery )of loan loss reserve (credit) 2,400,000 --
Accretion of investment securities discount (16,892) (19,870)
Amortization of investment securities premium 65,956 249,279
Amortization of deferred loan fees (48,054) (34,998)
Accretion of discount on loans purchased (528,023) (96,535)
(Benefit) provision for deferred income taxes (125,817) (5,909)
(Gain) loss on other real estate -- (172,131)
(Gain) on sale of loans (3,640) (5,525)
(Gain) on sale of investment securities -- --
Changes in assets and liabilities:
(Increase) decrease in accrued interest receivable 55,725 (243,984)
(Increase) decrease in other assets 786,399 (543,264)
Increase (decrease) in accrued interest payable 640,846 143,054
Increase in unearned income on loans 58,267 9,792
Increase (decrease) in other liabilities (2,336,921) 300,293
------------ ------------
Net cash provided by operating activities 3,684,218 1,798,686
Cash flows from investing activities
Net (decrease) in interest bearing balances in banks 200,000 --
Proceeds from calls and maturities of HTM invest
securities 14,086,440 22,734,261
Purchase of investment securities held to maturity -- (637,577)
Net decrease in loans (1,713,127) 3,338,904
Purchase of premises and equipment (31,231) (185,716)
Proceeds from sale and payments on other real estate -- 210,997
------------ ------------
Net cash (used in) provided by investing
activities 12,542,082 25,460,869
Cash flows from financing activities:
Net (decrease) in non-interest bearing and
interest bearing demand deposits and savings accounts 3,055,797 (12,015,426)
Net increase (decrease) in certificates of deposit 3,802,692 1,929,633
Mortgage payments (10,767) (10,289)
Purchase of treasury stock -- (70,836)
Net (decrease) increase in borrowings (15,000,000) (2,500,000)
Cash dividends (1,727,447) (989,933)
Issuance of common stock under stock option plans -- --
Other (244,235) (11,470)
------------ ------------
Net cash provided by (used in) financing
activities (10,123,960) (13,668,321)
NET (DECREASE) INCREASE IN
CASH AND CASH EQUIVALENTS 6,102,340 13,591,234
Cash and cash equivalents at beginning of year 30,416,242 18,369,012
------------ ------------
Cash and cash equivalents at end of period $ 36,518,582 $ 31,960,246
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 7
ROYAL BANCSHARES OF PENNSYLVANIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The accompanying unaudited consolidated financial statements include the
accounts of Royal Bancshares of Pennsylvania, Inc. (the Company) and its
wholly-owned subsidiaries: Royal Bank of Pennsylvania (the Bank), Royal Real
Estate of Pennsylvania, Inc. and Royal Investments of Delaware, Inc. These
financial statements reflect the historical information of the Company. All
significant intercompany transactions and balances have been eliminated.
1. The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information. The financial information included
herein is unaudited; however, such information reflects all adjustments
(consisting solely of normal recurring adjustments) which are, in
opinion of management, necessary to present a fair statement of the
results for the interim periods. For further information thereto
included in the Annual Report on Form 10-K for the year ended December
31, 1997.
2. The results of operations for the three month period ended March 31,
1998 are not necessarily indicative of the results to be expected for
the full year.
3. Per share data are based on the weighted average number of shares
outstanding of 8,730,067 and 8,223,797 for the three months ended,
March 31, 1998 and 1997, respectively.
4. Investment Securities:
The carrying value and approximate market value of investment
securities at March 31, 1998 are as follows:
<TABLE>
<CAPTION>
AMORTIZED
OR GROSS GROSS APPROXIMATE
PURCHASED UNREALIZED UNREALIZED MARKET CARRYING
COST GAINS LOSSES VALUE VALUE
---- ----- ------ ----- -----
<S> <C> <C> <C> <C> <C>
AVAILABLE FOR SALE:
Common stock securities $ 3,214,056 $ 15,434 $ -- $ 3,229,490 $ 3,229,490
Preferred stock securities 2,904,353 3,147 -- 2,907,500 2,907,500
Other securities 13,963,503 578,247 -- 14,541,750 14,541,750
----------- -------- -------- ----------- -----------
$20,081,912 $596,828 $ -- $20,678,740 $20,678,740
=========== ======== ======== =========== ===========
HELD TO MATURITY:
US Treasury & agencies $ 9,730,504 $151,885 $ 82 $ 9,882,307 $ 9,730,504
Tax exempt securities 3,098,465 53,187 -- 3,151,652 3,098,465
Taxable debt securities 37,776,622 390,914 4,187 38,163,349 37,776,622
----------- -------- -------- ----------- -----------
$50,605,591 $595,985 $ 4,269 $51,197,308 $50,605,591
=========== ======== ======== =========== ===========
</TABLE>
<PAGE> 8
5. Allowance for Credit Losses: Changes in the allowance for credit losses were
as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1998 1997
---- ----
<S> <C> <C> <C>
BALANCE AT JANUARY 1, $ 8,186,237 $ 9,084,153
Loans charged-off (227,005) (36,336)
Recoveries 89,822 75,556
------------ ------------
Net charge-offs and recoveries (137,183) 39,220
Provision for loan losses 2,400,000 --
------------ ------------
BALANCE AT END OF PERIOD $ 10,449,053 $ 9,123,373
============ ============
</TABLE>
6. Loans on which the accrual of interest has been discontinued or reduced
amounted to approximately $4,309,216 and $4,368,704 at March 31, 1998
and 1997, respectively. Although the Company has non-performing loans
of approximately $4,309,216 at March 31, 1998, management believes it
has adequate collateral to limit its credit risks.
The balance of impaired loans was $1,058,551 at March 31, 1998. The
Company identified a loan impaired when it is probable that interest
and principal will not be collected according to the contractual terms
of the loan agreements. The allowance for credit loss associated with
impaired loans was $ -0- at March 31, 1998. The income recognized on
impaired loans during the three month period ended March 31, 1998 was
$1,395. The cash collected on impaired loans during this three month
period was $175,043, of which $146,649 was credited to the principal
balance outstanding on such loans. Interest that would have been
accrued on impaired loans during this three month period in 1998 was
$36,537. The Company's policy for interest income recognition on
impaired loans is to recognize income on currently performing
restructured loans under the accrual method. The Company recognizes
income on non-accrual loans under the cash 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, the Company does not recognize income.
<PAGE> 9
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT
OF OPERATIONS
The following discussion and analysis is intended to assist in
understanding and evaluating the major changes in the financial condition and
earnings performance of the Company and its wholly owned subsidiaries for the
three month period ended March 31, 1998.
FINANCIAL CONDITION
Total consolidated assets as of March 31, 1998 were $407.4 million, a
decrease of $9.2 million from the $416.6 million reported at year end, December
31, 1997. This decrease is primarily due to a $14.1 million decrease in
investment securities, partially offset by a $6.1 million increase in cash and
cash equivalents. Liabilities decreased $9.8 million primarily due to a decrease
in Federal funds purchased of $15 million from December 31, 1997, partially
offset by a $6.9 million increase in deposits.
This $14.1 million decrease in investment securities is comprised
mostly of a decrease in held to maturity ("HTM") investment securities of $13.8
million. The decrease in HTM investment securities is primarily due to scheduled
maturities in the first three months of 1998. HTM investment securities are
primarily comprised of taxable corporate debt securities which are "A" rated or
better by Moodys and/or Standard & Poor at the time of purchase, with maturities
in the three to five year range.
Net loans changed little from the $282.7 million level at December 31,
1997 declining $.3 million to $282.4 million at March 31, 1998. Average net
loans was $285.1 million for the first quarter of 1998. The allowance for loan
loss increased $2.3 million to $10.4 million at March 31, 1998. The level of
allowance for loan loss reserve represents 3.6% of total loans at March 31, 1998
versus 2.8% at December 31, 1997. This increase in allowance was primarily due
to the increase in loans due to the purchase of a $75 million loan portfolio
from the FDIC in December of 1997. This loan portfolio is comprised of
approximately 175 commercial loans secured primarily by land, retail, and office
properties in the mid-Atlantic and northeast regions.
Total deposits, the primary source of funds, increased $6.9 million to
$272.2 million at March 31,1998, from $265.4 million at December 31, 1997.
Average deposits was $279.9 million for the first quarter of 1998. This increase
in deposits is primarily due to increases experienced in certificates of
deposits of $3.8 million, in addition to a $2.9 million increase in NOW and
money market deposits. Federal funds purchased balance of $15 million at
December 31, 1997 was paid down completely on January 2, 1998. Federal Home Loan
Bank ("FHLB") advances did not change from its December 31, 1997 level of $31.1
million. This $31.1 million balance is comprised of three FHLB advances with an
weighted average interest rate of approximately 6.3%.
Consolidated stockholder's equity increased $.7 million to $90.2
million at March 31, 1998 from $89.5 million at December 31, 1997. This increase
is primarily due to net income of $2.6 million for the first quarter period of
1998, partially offset by a quarterly cash dividend $1.7 million. On January
14th, 1998, the Board of Directors declared a cash dividend of twenty cents
<PAGE> 10
($.20) per share for holders of Class A common stock and twenty three cents
($.23) per share for holders of Class B common stock. The record date for the
cash dividend was January 30, 1998 and the payment date was February 13th, 1998.
Additionally, the change in market value of available for sale investment
securities in the first quarter caused a downward adjustment to the accumulated
unrealized gain of $244 thousand.
RESULTS OF OPERATIONS
Consolidated net income for the three months ended, March 31, 1998 was
$2,619,020 or $.30 basic earnings per share, as compared to net income of
$2,114,124 or $.26 basic earnings per share, for the same three month period in
1997. This increase is primarily due to a 25% increase in net interest income in
1998.
Net interest income before provision for loan loss reserve increased
$1.3 million, or 25%, to $6.2 million for the first quarter of 1998, as compared
to $4.9 million for the same quarter ended in 1997. This increase in net
interest income is primarily due to a $83.9 million increase in the average
balance of net loans to $281.9 million for the first quarter of 1998, primarily
due to the acquisition of a $75 million loan portfolio from the FDIC in
December, 1997, in addition to internally generated loan growth experienced in
1997 of approximately 9%. Total interest expense on deposits and borrowings
increased $.8 million to $3.3 million for the first quarter of 1998. These
increases were primarily the result of higher average balances of deposits and
borrowings of $27.3 million and $29.3 million, respectively, for the first
quarter of 1998. These increases in average balances were due to the funding of
the purchase of the FDIC loan portfolio in December 1997 discussed previously.
Provision for loan loss was $2.4 million for the first three months of
1998 as compared to $-0- for the same period in 1997. Due to the increase in
loans, a $2.4 million provision for loan loss was recorded in January, 1998.
Chargeoffs and recoveries were $227 and $90 thousand, respectively, for the
three month period ended March 31, 1998 versus $36 and $76 thousand,
respectively, for the same period in 1997. Overall, Management considers the
current level of allowance for loan loss to be adequate at March 31, 1998.
Total non interest income for the three months ended March 31, 1998 was
$2.7 million as compared to $.5 million for the same three month period in 1997.
This increase is primarily due to a $2.4 million increase in other income, the
result of a reversal of a legal accrual due to the settlement of litigation in
January 1998. This increase was partially offset by $.2 million decrease in
gains on sale of other real estate.
Total non interest expense for the three months ended March 31, 1998
was $2.8 million, an increase of $.2 million, as compared to $2.6 million for
the same period in 1997. This increase is primarily attributable to an increase
in salaries and employee benefits expense in 1998.
<PAGE> 11
CAPITAL ADEQUACY
The company is required to maintain minimum amounts of capital to total
"risk weighted" assets and a minimum Tier 1 leverage ratio, as defined by the
banking regulators. At March 31, 1998, the Company was required to have a
minimum Tier 1 and total capital ratios of 4% and 8%, respectively, and a
minimum Tier 1 leverage ratio of 3% plus an additional cushion of 100 to 200
basis points.
The table below provides a comparison of Royal Bancshares of
Pennsylvania's risk-based capital ratios and leverage ratios:
<TABLE>
<CAPTION>
MARCH 31, 1998 DECEMBER 31, 1997
-------------- -----------------
<S> <C> <C> <C>
CAPITAL LEVELS
Tier 1 leverage ratio 22.0% 25.6%
Tier 1 risk-based ratio 26.0% 25.1%
Total risk-based ratio 27.3% 26.4%
CAPITAL PERFORMANCE
Return on average assets 2.7%(1) 2.7%
Return on average equity 11.9%(1) 10.8%
(1) annualized
</TABLE>
The Company's ratios compare favorably to the minimum required amounts
of Tier 1 and total capital to "risk weighted" assets and the minimum Tier 1
leverage ratio, as defined by banking regulators. The Company currently meets
the criteria for a well capitalized institution, and management believes that
the Company will continue to meets its minimum capital requirements. At present,
the Company has no commitments for significant capital expenditures.
The Company is not under any agreement with regulatory authorities nor
is the Company aware of any current recommendations by the regulatory
authorities which, if such recommendations were implemented, would have a
material effect on liquidity, capital resources or operations of the Company.
LIQUIDITY & INTEREST RATE SENSITIVITY
Liquidity is the ability to ensure that adequate funds will be
available to meet its financial commitments as they become due. In managing its
liquidity position, all sources of funds are evaluated, the largest of which is
deposits. Also taken into consideration is the repayment of loans. These sources
provide alternatives to meet its short term liquidity needs. Longer liquidity
needs may be met by issuing longer term deposits and by raising additional
capital. The liquidity ratio is generally maintained equal to or greater than
25% of deposits and short term liabilities.
The liquidity ratio of the Company remains strong at approximately 39%
and exceeds the Company's peer group levels and target ratio set forth in the
Asset/Liability Policy. The Company's level of liquidity is provided by funds
invested primarily in corporate bonds, US
<PAGE> 12
Treasuries and agencies, and to a lesser extent, obligations of state and
political subdivisions and federal funds sold. The overall liquidity position is
monitored on a monthly basis.
Interest rate sensitivity is a function of the repricing
characteristics of the Company's assets and liabilities. These include the
volume of assets and liabilities repricing, the timing of the repricing, and the
interest rate sensitivity gaps is a continual challenge in a changing rate
environment. The following table shows separately the interest sensitivity of
each category of interest earning assets and interest bearing liabilities as of
March 31, 1998:
INTEREST RATE SENSITIVITY
(in millions)
<TABLE>
<CAPTION>
Days 1 to 5 over 5 Non-rate
Assets (1) 0 - 90 91 - 365 years years sensitive Total
------ -------- ----- ----- --------- -----
<S> <C> <C> <C> <C> <C> <C>
Interest-bearing deposits in banks $ 0.6 $ -- $ -- $ -- $ -- $ 0.6
Federal funds sold 26.5 -- -- -- 26.5
Investment securities:
Available for sale 20.7 -- -- -- -- 20.7
Held to maturity 7.0 26.4 8.0 9.2 -- 50.6
--------------------------------------------------------------------------------
Total investment securities 27.7 26.4 8.0 9.2 -- 71.3
Loans:(2)
Fixed rate (3) 8.0 11.7 105.2 36.6 -- 161.6
Variable rate 33.4 19.0 65.6 23.5 -- 141.6
--------------------------------------------------------------------------------
Total loans 41.5 30.8 170.7 60.2 -- 303.1
Other assets(4) -- -- -- -- 5.9 5.9
--------------------------------------------------------------------------------
Total Assets $ 96.3 $ 57.2 $ 178.7 $ 69.4 $ 5.9 $ 407.4
================================================================================
LIABILITIES & CAPITAL
Deposits:
Non interest bearing deposits $ -- $ -- $ -- $ -- $ 38.0 $ 38.0
Interest bearing deposits(5) 23.2 26.7 -- -- -- 90.5
Certificate of deposits 63.8 43.4 46.4 31.4 -- 144.4
--------------------------------------------------------------------------------
Total deposits 87.0 70.1 46.4 31.4 38.0 272.8
Short term borrowings -- -- -- -- -- --
Mortgage and long term borrowings 0.6 0.6 30.4 -- -- 31.6
Other liabilities -- -- -- -- 12.8 12.8
Capital -- -- -- -- 90.2 90.2
--------------------------------------------------------------------------------
Total liabilities & capital $ 87.6 $ 70.7 $ 76.8 $ 31.4 $ 141.0 $ 407.4
================================================================================
Net interest rate GAP $ 8.7 ($ 13.5) $ 101.9 $ 38.0 ($ 135.0)
==================================================================
Cumulative interest rate GAP $ 8.7 ($ 4.8) $ 97.1 $ 135.0 --
==================================================================
GAP to total assets 2% (3%)
======================
GAP to total equity 14% (22%)
======================
Cumulative GAP to total assets 2% (1%)
======================
Cumulative GAP to total equity 14% (8%)
======================
</TABLE>
(1) Interest earning assets are included in the period in which the balances
are expected to be repaid and/or repriced as a result of anticipated
prepayments, scheduled rate adjustments, and contractual maturities.
(2) Reflects principal maturing within the specified periods for fixed and
variable rate loans and includes nonperforming loans.
(3) Fixed rate loans include a portion of variable rate loans whose floors are
in effect at March 31, 1998.
(4) For purposes of gap analysis, other assets include the allowance for
possible loan loss, unamortized discount on purchased loans and deferred
fees on loans.
(5) Based on historical analysis, Money market and Savings deposits are assumed
to have rate sensitivity of 1 month; NOW account deposits are assumed to
have a rate sensitivity of 4 months.
<PAGE> 13
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.
<PAGE> 14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO VOTE SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27. Financial Data Schedule
<PAGE> 15
SIGNATURES
Pursuant to the requirements of 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: May 14th, 1998 /s/ James J. McSwiggan
----------------------------------------------
James J. McSwiggan, Chief Financial Officer
and Treasurer
Dated: May 14th, 1998 /s/ David J. Greenfield
----------------------------------------------
David J. Greenfield, Controller
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
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0
0
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