Royal Bancshares of Pennsylvania Inc. in Narberth, Pa., said Monday it earned $4.6 million in the second quarter - which is either an 11% increase or a 37% drop from a year earlier, depending on whether nonrecurring items are excluded.
Earnings per share were 36 cents, the $1.4 billion-asset company said.
For the second quarter last year, three major nonrecurring items boosted income: a $1.3 million exit fee collected on a mezzanine loan, a $1.8 million equity distribution from a variable interest entity, and a $1.7 million reduction in tax expense resulting from a deferred tax valuation. Those items were offset by a $900,000 expense related to the company's pension plan.
Net income for the year-earlier period was $4.1 million excluding those items and $7.2 million including them.
Interest income in the second quarter rose about 18% from a year earlier, to $22.7 million. About $1.7 million of that was from loan growth and $1.6 million from higher interest earned after Federal Reserve rate hikes, said Joseph P. Campbell, the president and chief executive of Royal Bank America, one of the company's two banks. (The other is Royal Asian Bank.)
Because of higher demand for commercial, construction, and mezzanine loans, net loans rose 15%, to $84.9 million. But net interest expenses jumped about 50%, to $11.6 million, as the company borrowed more to fund loan growth and paid higher deposit rates to stay competitive.
Its net interest margin, excluding the nonrecurring items, was 3.69% for the second quarter, down from 3.76% a year earlier.
