For Royal Bancshares of Pennsylvania, being sold to Bryn Mawr Bank means more than just the healthy premium it will deliver to shareholders.
The $128 million stock transaction also caps a turnaround that many people thought improbable just a few years earlier. That the $832 million-asset company is selling for 247% of its tangible book value seems even more remarkable.
Executives at the $3.4 billion-asset Bryn Mawr, meanwhile, are excited about a transaction that positions their bank in downtown Philadelphia and markets in New Jersey. The company, which had been evaluating potential deals since its January 2015 acquisition of Continental Bank, took notice when it learned Royal was available.
“It immediately distinguished itself as an opportunity that deserved a closer look,” Frank Leto, Bryn Mawr’s president and CEO, said during a conference call Tuesday to discuss the deal.
A number of insiders familiar with the deal, including Leto and his predecessor Ted Peters, said that Kevin Tylus, Royal’s CEO, made the transaction possible. Royal had lost $119 million in the six years before Tylus arrived in February 2013. Since then, it has recorded four straight years of profitability, including net income of $10.1 million in 2016.
Tylus “has done a terrific job of turning Royal Bank around and making it a vibrant institution,” Peters said.
Over his tenure, Tylus presided over the phased liquidation of assets from a disastrous foray into tax lien investing that predated his appointment, the retirement of more than $30 million in preferred stock issued under the Troubled Asset Relief Program and private placements that yielded $20 million in capital.
Nonperforming loans also fell, from $23 million at the end of 2012 to $6 million today.
Those efforts “put us in a position to move well beyond a turnaround,” Tylus said in an interview Tuesday.
“I think they just did a great job of turning the bank around and getting it on track,” said Robert Kafafian, president and CEO of Kafafian Group in Parsippany, N.J. He credited Tylus and his team for “recognizing problems and putting the right people in place to make it work.”
Tylus said Robert Tabas, Royal’s chairman, played a role in the company's makeover. Tabas, whose family controls a majority of Royal’s shares, made the decision in 2012 to cede family control to an independent board.
“They recruited me and gave me free rein to assemble the team that put Royal on the map,” Tylus said.
Tylus, who was president of Yardville National Bancorp in Hamilton, N.J., before its 2007 sale to PNC Financial Services Group, will become Bryn Mawr’s director of new markets after the deal closes.
“We’re hoping to build out in central to northern New Jersey, and Kevin has a lot of contacts there,” Leto said. “That’s where he began his career. … We think he’s a great asset.”
Royal entered New Jersey in 2015 by opening a loan production office in Princeton.
“Princeton has been so meaningful to Royal Bank, and I think it will be an excellent market for Bryn Mawr,” Tylus said.
The deal closes the book on Royal's revival.
“I know that there was some interest at some point in seeing if there was a way to maximize value," Kafafian said. "I think they took advantage of it when a market opportunity became available.”