Segment Information

6 Months Ended

Jun. 30, 2014

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.  The Company’s chief operating decision makers are the CEO and the Chief Administrative and Risk Officer (“CARO”). The Company has identified its reportable operating segments as “Community Banking” and “Tax Liens”.

Community banking

The Company’s community banking segment which includes Royal 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.

Tax liens

At June 30, 2014, Royal Bank’s tax liens segment includes its 80% and 100% ownership interest in CSC and RTL, respectively.  At June 30, 2013, Royal Bank’s ownership interest in CSC and RTL was 60%.  The Company’s 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 table presents selected financial information for reportable business segments for the three and six months period ended June 30, 2014 and 2013.

	Threemonths ended June 30, 2014
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	704,313	$	22,899	$	727,212
Total deposits	$	526,917	$	—	$	526,917
Interest income	$	6,864	$	345	$	7,209
Interest expense		1,343		279		1,622
Net interest income	$	5,521	$	66	$	5,587
(Credit) provision for loan and lease losses		(95)		20		(75)
Total non-interest income		466		350		816
Total non-interest expense		4,368		663		5,031
Income tax expense (benefit)		—		—		—
Net income (loss)	$	1,714	$	(267)	$	1,447
Noncontrolling interest	$	111	$	(42)	$	69
Net income (loss) attributable to Royal Bancshares	$	1,603	$	(225)	$	1,378

	Three months ended June 30, 2013
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	717,315	$	31,286	$	748,601
Total deposits	$	525,670	$	—	$	525,670
Interest income	$	6,077	$	666	$	6,743
Interest expense		1,415		382		1,797
Net interest income	$	4,662	$	284	$	4,946
(Credit) provision for loan and lease losses		(431)		268		(163)
Total non-interest income		550		411		961
Total non-interest expense		5,054		2,513		7,567
Income tax expense (benefit)		—		—		—
Net income (loss)	$	589	$	(2,086)	$	(1,497)
Noncontrolling interest	$	140	$	(834)	$	(694)
Net income (loss) attributable to Royal Bancshares	$	449	$	(1,252)	$	(803)

	Six months ended June 30, 2014
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	704,313	$	22,899	$	727,212
Total deposits	$	526,917	$	—	$	526,917
Interest income	$	13,660	$	700	$	14,360
Interest expense		2,663		584		3,247
Net interest income	$	10,997	$	116	$	11,113
(Credit) provision for loan and lease losses		(832)		118		(714)
Total non-interest income		1,032		556		1,588
Total non-interest expense		9,305		1,048		10,353
Income tax expense (benefit)		—		—		—
Net income (loss)	$	3,556	$	(494)	$	3,062
Noncontrolling interest	$	268	$	(81)	$	187
Net income (loss) attributable to Royal Bancshares	$	3,288	$	(413)	$	2,875

	Sixmonths ended June 30, 2013
	Community
(In thousands)	Banking		Tax Liens		Consolidated
Total assets	$	717,315	$	31,286	$	748,601
Total deposits	$	525,670	$	—	$	525,670
Interest income	$	12,026	$	1,469	$	13,495
Interest expense		2,965		812		3,777
Net interest income	$	9,061	$	657	$	9,718
(Credit) provision for loan and lease losses		(741)		327		(414)
Total non-interest income		1,712		657		2,369
Total non-interest expense		10,665		3,042		13,707
Income tax expense (benefit)		—		—		—
Net income (loss)	$	849	$	(2,055)	$	(1,206)
Noncontrolling interest	$	301	$	(822)	$	(521)
Net income (loss) attributable to Royal Bancshares	$	548	$	(1,233)	$	(685)

Interest income earned by the community banking segment related to the tax liens segment was approximately $279,000 and $382,000 for the three month periods ended June 30, 2014 and 2013, respectively and$584,000 and $812,000 for the six months ended June 30, 2014 and 2013, respectively.