Royal Financial, Inc. Announces FY2014 Earnings for the Six Months Ended December 31, 2013

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| Source: Royal Financial, Inc.

CHICAGO, Feb. 25, 2014 (GLOBE NEWSWIRE) -- Royal Financial, Inc. (the "Company") (OTCBB:RYFL), incorporated under the laws of Delaware on December 15, 2004, for the purpose of serving as the holding company of Royal Savings Bank (the "Bank"), announced the financial results for the second quarter end of fiscal year 2014.

For the second quarter ended December 31, 2013, the Company reported net income of $235,000, or $0.09 per common share, and net income of $7.4 million for the six months ended December 31, 2013, or $2.97 per common share, after a $6.9 million benefit from the reversal of the valuation against deferred tax assets.

Comparison of Financial Condition at December 31, 2013 and June 30, 2013

The Company's total assets increased $17.5 million, or 16.95%, to $120.7 million at December 31, 2013, from $103.2 million at June 30, 2013.

Cash and cash equivalents decreased $1.5 million, or 44.35%, to $1.8 million at December 31, 2013, from $3.3 million at June 30, 2013.

Securities available for sale increased $7.2 million, or 31.73%, to $29.8 million at December 31, 2013 from $22.6 million at June 30, 2013. The increase in the securities portfolio was related to purchases of government sponsored agency bonds and small diversified investment grade blocks of taxable general obligation municipal bonds.

Loans, net of allowance, increased $5.2 million, or 7.59%, to $74.2 million at December 31, 2013, from $68.9 million at June 30, 2013. The increase in loans was primarily a result of locally originated commercial loan growth, consisting of commercial real estate and multi-family properties.

The Company recorded a $6.9 million reversal of the valuation allowance against the deferred tax assets, partially offset by estimated tax expense of $318,000, resulting in an increase in assets of $6.5 million for the period.

Total deposits increased $6.3 million, or 9.15%, to $75.2 million at December 31, 2013 from $68.9 million at June 30, 2013.

Federal Home Loan Bank advances increased $4.2 million, or 28.19%, to $19.1 million at December 31, 2013 from $14.9 million at June 30, 2013.

Total stockholders' equity increased $7.0 million, or 38.49%, to $25.1 million at December 31, 2013 from $18.1 million at June 30, 2013. The increase is primarily related to the deferred tax asset of $6.9 million net of $318,000 in estimated taxes and income of $899,000 partially offset by a decrease in accumulated other comprehensive income of $516,000.

The allowance for loan losses was $1.4 million, or 1.80% of total loans, at December 31, 2013, as compared to $1.5 million, or 2.13% of total loans, at June 30, 2013. The Company believes, as of December 31, 2013, its allowance for loan losses was adequate to cover probable incurred losses. Nonperforming assets were $3.5 million, or 2.90%, at December 31, 2013 compared to $3.6 million, or 3.48%, at June 30, 2013.

The Bank is required to maintain regulatory capital sufficient to meet Tier 1 leverage, Tier 1 risk-based and total risk-based capital ratios of at least 4.0%, 4.0%, and 8.0%, respectively. At December 31, 2013, the Bank exceeded each of its capital requirements with ratios of 16.75%, 26.51%, and 27.77%, respectively. At December 31, 2013, the book value per common share, shares outstanding 2,507,112, was $10.00 compared to the book value per common share, shares outstanding 2,507,112, was $7.22 at June 30, 2013.

Comparison of Results of Operation for the Three and Six Months Ended December 31, 2013 and 2012

The net income for the three months ended December 31, 2013 was $235,000, an increase in net income of $128,000, from the same period in 2012. The net income for the six months ended December 31, 2013 was $7.4 million, an increase in net income of $7.2 million, from the same period in 2012.

The increase in the net income for the three months ended December 31, 2013 resulted primarily from a decrease in non-interest expense of $315,000, an increase in net interest income of $116,000 and a decrease in the provision for loan losses of $60,000, partially offset by a decrease in non-interest income of $316,000 and an increase in provision for income taxes of $47,000.

The increase in the net income for the six months ended December 31, 2013 resulted primarily from the decrease in the provision for income taxes of $6.5 million, a direct result of the reversal of the valuation allowance against deferred tax assets of $6.9 million, a decrease in provision for loan losses of $430,000, a decrease of non-interest expense of $282,000, an increase in net interest income of $267,000, partially offset by a decrease in non-interest income of $339,000.

The complete audited consolidated financial statements for 2013 and 2012 are available at www.royal-bank.us.

Royal Savings Bank offers a range of checking and savings products and a full line of home and commercial lending solutions. Royal Savings Bank has been operating continuously in the south and southeast communities of Chicago since 1887, and currently has two branches in Chicago, with lending centers in Homewood and St. Charles Illinois. Visit Royal Financial, Inc. and Royal Savings Bank at www.royal-bank.us

Forward Looking Statements: This press release may include forward-looking statements. These forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," or similar expressions. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain and actual results may differ materially from those predicted in such forward-looking statements. Factors that could have a material adverse effect on the operations and future prospects of the Company and the Bank include, but are not limited to, changes in interest rates; the economic health of the local real estate market; general economic conditions; continued credit deterioration in our loan portfolio that would cause us to further increase our allowance for loan losses; legislative/regulatory changes; monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality or composition of the loan and securities portfolios; demand for loan products in our market areas; deposit flows; competition; demand for financial services in our market areas; and changes in accounting principles, policies, and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements, and undue reliance should not be placed on such statements.

Royal Financial, Inc and Subsidiary
Consolidated Statements of Operations
Three and Six months ended December 31, 2013 and 2012
(Unaudited)
         
  Three Months Ended Six Months Ended
  December 31, December 31,
  2013 2012 2013 2012
         
Interest income        
Loans  $ 1,011,689  $ 795,960  $ 2,015,407  $ 1,514,816
Securities  193,187  289,740  355,805  594,828
Federal funds sold and other  2,745  2,037  4,508  3,368
Total interest income  1,207,621  1,087,737  2,375,720  2,113,012
         
Interest expense        
Deposits  49,825  36,066  86,489  75,857
Borrowings  5,151  14,799  10,949  26,227
Total interest expense  54,976  50,865  97,438  102,084
         
Net interest income  1,152,645  1,036,872  2,278,282  2,010,928
         
Provision/(Credit) for loan losses  15,000  75,000  (354,785)  75,000
         
Net interest income after provision/ (credit) for loan losses  1,137,645  961,872  2,633,067  1,935,928
         
Non-interest income        
Service charges on deposit accounts  42,740  43,142  85,609  84,856
Secondary mortgage market fees  24,497  40,899  57,926  94,550
Income on other real estate owned  42,429  51,247  85,680  97,524
Gain on sale of investment securities  --   290,816  --   290,816
Other  174  224  401  501
Total non-interest income  109,840  426,328  229,616  568,247
         
Non-interest expense        
Salaries and employee benefits  439,647  438,413  856,742  852,864
Occupancy and equipment  175,039  180,579  322,639  360,825
Data processing  65,548  88,778  151,563  176,686
Professional services  116,057  177,690  262,839  271,618
Director fees  28,800  14,050  57,600  29,850
Marketing  3,299  1,270  8,024  6,214
FDIC insurance expense  18,282  42,214  51,041  73,505
Insurance premiums  17,792  16,883  35,250  33,430
Foreclosed asset expense  23,548  73,179  44,008  107,866
Loss on property valuation  --   168,350  --   168,350
Other  74,020  76,011  173,888  164,091
Total non-interest expense  962,032  1,277,417  1,963,595  2,245,298
         
Income before income taxes  285,453  110,783  899,088  258,877
         
Provision (Benefit) for income taxes  50,800  4,000  (6,536,020)  12,000
Net income  $ 234,653  $ 106,783  $ 7,435,108  $ 246,877
         
Basic and diluted earnings per share  $ 0.09  $ 0.04  $ 2.97  $ 0.10
         
         
This report has not been prepared in accordance with Securities and Exchange Commission ("SEC") rules applicable to SEC registrant companies and is not intended to comply with such rules.
     
Royal Financial, Inc and Subsidiary
Consolidated Statements of Financial Condition
December 31, 2013 and June 30, 2013
     
     
  December 31, 2013 June 30, 2013
  (Unaudited)  
Assets    
Cash and non-interest bearing balances in financial institutions  $ 1,077,403  $ 893,499
Interest bearing balances in financial institutions 659,250 2,274,266
Federal funds sold  80,364  97,148
Total cash and cash equivalents 1,817,017 3,264,913
     
Securities available for sale 29,763,084 22,594,623
Loans receivable, net of allowance for loan losses of $1,360,986 at December 2013 and $1,508,966 at June 2013 74,180,119  68,945,527
Federal Home Loan Bank stock, at cost 1,295,000  1,295,000
Premises & equipment, net 4,217,424 4,217,182
Land held for sale 265,000 265,000
Accrued interest receivable 475,055 447,888
Other real estate owned 1,895,000 1,895,000
Deferred tax asset 6,536,020  -- 
Other assets  217,161  249,592
     
Total assets  $ 120,660,879  $ 103,174,725
     
Liabilities & Stockholders' Equity    
Deposits  $ 75,187,467  $ 68,886,926
Advances from borrowers for taxes and insurance 893,770  866,913
Federal Home Loan Bank advances 19,100,000 14,900,000
Accrued interest payable and other liabilities 411,340 419,710
Total liabilities  95,592,577  85,073,549
     
Stockholders' equity    
Preferred stock $0.01 par value per share, authorized 1,000,000 shares, no issues are outstanding  --   -- 
Common stock, $0.01 par value per share, authorized 5,000,000 shares, 2,645,000 shares issued at December 31, 2013 and June 30, 2013  26,450  26,450
Additional paid-in capital  23,784,424 23,759,673
Retained earnings (deficit)  2,247,516 (5,187,593)
Treasury stock, 137,888, at cost  (1,012,924) (1,012,924)
Accumulated other comprehensive income 22,836 515,570
Total stockholders' equity 25,068,302 18,101,176
     
Total liabilities and stockholders' equity  $ 120,660,879  $ 103,174,725
     
This report has not been prepared in accordance with Securities and Exchange Commission ("SEC") rules applicable to SEC registrant companies and is not intended to comply with such rules.
Mr. Leonard Szwajkowski
President and CEO
Telephone: (773) 382-2111
E-mail: