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.