Royal Bancshares of Pennsylvania Cutting Costs After '12 Loss

Royal Bancshares of Pennsylvania (RBPAA) is planning to aggressively cut expenses after its losses deepened in the fourth quarter.

Royal lost $8 million in the fourth quarter, compared to a $1 million loss a year earlier, the $774 million-asset company said Wednesday.

The company said that this year it has cut its workforce by 9%, to approximately 138 employees, and plans cut discretionary expenses by 10%. Royal closed a branch in King of Prussia, Pa., leaving 14 branches, a spokesman said. The company also shifted the responsibilities and titles of several executives and plans to eliminate certain employee benefits.

Royal is planning to introduce some new products, including a mobile application and a system that lets customers apply online for loans. The company could introduce those products as early as next week, the spokesman said.

Royal's fourth-quarter loss was largely because of writedowns. The company increased impairments it recorded on property by $2.4 million, on loans held for sale by $1.1 million, and on one private equity security by $1.5 million. Net interest income fell 16% compared to a year earlier, to $4.8 million. Noninterest expenses rose by 42% from a year earlier, to $10.3 million.

The company's 2012 loss ballooned 81% from a year earlier, to $15.6 million, because of lower income and higher impairment charges.

Royal also paid a $2 million fine to the Department of Justice over alleged bid-rigging at tax-lien auctions in New Jersey by unit Crusader Servicing Corp. In September 2012, Crusader pleaded guilty to charges of conspiracy to commit bid rigging. A judge approved the fine in December. In February 2012, a former president of the unit pleaded guilty to conspiring to rigging bids from 1998 through 2009.

Royal Bancshares has overhauled management in the last year. In December, it hired F. Kevin Tylus, a former executive at PNC Financial Services (PNC), to become its chief executive. Former CEO Robert Tabas and several other executives retired at the end of last year. The company also promoted three executives to new roles in October.