SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2011

SEGMENT INFORMATION [Abstract]

SEGMENT INFORMATION

NOTE 21 – 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.  The Company's chief operating decision makers are the Chief Executive Officer and the President. The Company has identified its reportable operating segments as “Community Banking” and “Tax Liens”.  In previous years, the Company reflected “Equity Investments” and “Leasing” as operating segments.  Management has determined that the operating results and assets related to Equity Investments and Leasing should be reflected under the Community Banking segment.  The determination related to Equity Investments was based on the deconsolidation of the VIE as a result of the substantial completion of the project and minimal assets remaining. The determination related to Leasing was based on not meeting the quantitative thresholds for requiring disclosure. For additional discussion on the VIE, please refer to “Note 1- Summary of Significant Accounting Policies” to the Consolidated Financial Statements.

Community banking

The Company's Community Banking segment, which includes Royal Bank and in the prior period Royal Asian Bank, consists of commercial and retail banking and 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.  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.  While Royal Bank makes very few consumer loans, cash needed to make such loans would be funded similarly to commercial loans.

Royal Asian assets of $102.4 million and deposits of $89.3 million were included in “Community Banking” in the segment table for the year ended December 31, 2009.  Royal Asian recorded a net loss of $953,000 and $838,000 for 2010 and 2009, respectively.

Tax lien operation

The Company's Tax Lien Operation consists 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 lien operation earns income based on interest rates (determined at auction) and penalties assigned by the municipality, along with gains the on sale of foreclosed properties.

Selected segment information and reconciliations to consolidated financial information are as follows:

(In thousands)	Community			Tax Lien
December 31, 2011	Banking			Operation		Consolidated
Total assets	$	777,561		$	70,887	$	848,448
Total deposits		575,916			-	$	575,916
Interest income	$	31,882		$	7,495	$	39,377
Interest expense		11,624			2,462		14,086
Net interest income		20,259			5,032		25,291
Provision for loan and lease losses		6,644			1,084		7,728
Total other income		6,270			548		6,818
Total other expenses		30,365			1,704		32,069
Income tax (benefit) expense		(1,086	)		1,086		-
Net (loss) income	$	(9,395	)	$	1,707	$	(7,688	)
Noncontrolling interest		192			683		875
Net (loss) income attributable to Royal Bancshares	$	(9,587	)	$	1,024	$	(8,563	)

(In thousands)	Community			Tax Lien
December 31, 2010	Banking			Operation		Consolidated
Total assets	$	880,025		$	100,601	$	980,626
Total deposits		693,913			-		693,913
Interest income	$	47,000		$	10,262	$	57,262
Interest expense		22,557			3,437		25,994
Net interest income		24,443			6,825		31,268
Provision for loan and lease losses		22,011			129		22,140
Total other income		7,376			389		7,765
Total other expenses		34,598			1,993		36,591
Impairment -real estate joint venture		1,552			-		1,552
Impairment -real estate owned via equity investment		2,600			-		2,600
Income tax (benefit) expense		(2,068	)		2,068		-
Net (loss) income	$	(26,874	)	$	3,024	$	(23,850	)
Noncontrolling interest		(967	)		1,210		243
Net (loss) income attributable to Royal Bancshares	$	(25,907	)	$	1,814	$	(24,093	)

(In thousands)	Community			Tax Lien
December 31, 2009	Banking			Operation		Consolidated
Total assets	$	1,187,706		$	105,020	$	1,292,726
Total deposits		881,755			-	$	881,755
Interest income	$	55,619		$	10,424	$	66,043
Interest expense		33,433			4,006		37,439
Net interest income		22,186			6,418		28,604
Provision for loan and lease losses		19,981			624		20,605
Total other income		(2,039	)		313		(1,726	)
Total other expenses		34,330			3,326		37,656
Income tax (benefit) expense		(607	)		1,081		474
Net (loss) income	$	(33,557	)	$	1,700	$	(31,857	)
Noncontrolling interest		722			680		1,402
Net (loss) income attributable to Royal Bancshares	$	(34,279	)	$	1,020	$	(33,259	)

Interest income earned by the Community Banking segment related to the Tax Lien Operation was approximately $2.5 million, $3.4 million, and $4.0 million for the years ended December 31, 2011, 2010, and 2009, respectively.