Royal Financial, Inc. Announces FY2014 Earnings for the Nine Months Ended March 31, 2014

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| Source: Royal Financial, Inc.

CHICAGO, May 22, 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 third quarter end of fiscal year 2014.

For the third quarter ended March 31, 2014, the Company reported net income of $173,000, or $0.07 per common share, and net income of $7.6 million for the nine months ended March 31, 2014, or $3.03 per common share, after a $6.9 million benefit from the reversal of the valuation against deferred tax assets.

Comparison of Financial Condition at March 31, 2014 and June 30, 2013

The Company's total assets increased $21.5 million, or 20.85%, to $124.7 million at March 31, 2014, from $103.2 million at June 30, 2013.

Cash and cash equivalents increased $963,000, or 29.48%, to $4.2 million at March 31, 2014, from $3.3 million at June 30, 2013.

Securities available for sale increased $9.4 million, or 41.80%, to $32.0 million at March 31, 2014 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 $4.7 million, or 6.80%, to $73.6 million at March 31, 2014, 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 income tax expense of $360,000, resulting in an increase in assets of $6.5 million for the period.

Total deposits increased $10.8 million, or 15.69%, to $79.7 million at March 31, 2014 from $68.9 million at June 30, 2013.

Federal Home Loan Bank advances increased $3.6 million, or 24.16%, to $18.5 million at March 31, 2014 from $14.9 million at June 30, 2013.

Total stockholders' equity increased $7.4 million, or 40.85%, to $25.5 million at March 31, 2014 from $18.1 million at June 30, 2013. The increase is primarily related to the deferred tax asset of $6.9 million net of $360,000 in estimated taxes and income of $1.1 million partially offset by a decrease in accumulated other comprehensive income of $248,000.

The allowance for loan losses was $1.4 million, or 1.81% of total loans, at March 31, 2014, as compared to $1.5 million, or 2.13% of total loans, at June 30, 2013. The Company believes, as of March 31, 2014, its allowance for loan losses was adequate to cover probable incurred losses.  Nonperforming assets were $3.3 million, or 2.66%, at March 31, 2014 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 March 31, 2014, the Bank exceeded each of its capital requirements with ratios of 16.55%, 27.00%, and 28.25%, respectively. At March 31, 2014, the book value per common share, shares outstanding 2,507,112, was $10.17 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 Nine Months Ended March 31, 2014 and 2013

The net income for the three months ended March 31, 2014 was $173,000, an increase in net income of $3,000, from the same period in 2013. The net income for the nine months ended March 31, 2014 was $7.6 million, an increase in net income of $7.2 million, from the same period in 2013.

The increase in net income for the three months ended March 31, 2014 resulted primarily from a decrease in non-interest expense of $63,000, a decrease in the provision for loan losses of $70,000, partially offset by a decrease in net interest income of $58,000, a decrease in non-interest income of $34,000 and an increase in provision for income taxes of $38,000.

The increase in the net income for the nine months ended March 31, 2014 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, net of current estimated state income tax of $360,000, a decrease in provision for loan losses of $500,000, a decrease of non-interest expense of $345,000, an increase in net interest income of $209,000, partially offset by a decrease in non-interest income of $372,000.

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 Financial Condition
March 31, 2014 and June 30, 2013
 
     
  March 31, 2014 June 30, 2013
  (Unaudited)  
Assets    
Cash and non-interest bearing balances in financial institutions  $ 878,187  $ 893,499
Interest bearing balances in financial institutions 3,297,435 2,274,266
Federal funds sold  51,887  97,148
Total cash and cash equivalents 4,227,509 3,264,913
     
Securities available for sale 32,038,786 22,594,623
Loans receivable, net of allowance for loan losses of $1,358,897 at March 2014 and $1,508,966 at June 2013 73,632,474  68,945,527
Federal Home Loan Bank stock, at cost 1,295,000  1,295,000
Premises & equipment, net 4,211,211 4,217,182
Land held for sale 265,000 265,000
Accrued interest receivable 511,898 447,888
Other real estate owned 1,795,000 1,895,000
Deferred tax asset 6,493,520  - 
Other assets  219,097  249,592
     
Total assets  $ 124,689,495  $ 103,174,725
     
Liabilities & Stockholders' Equity    
Deposits  $ 79,692,896  $ 68,886,926
Advances from borrowers for taxes and insurance 552,485  866,913
Federal Home Loan Bank advances 18,500,000 14,900,000
Accrued interest payable and other liabilities 449,403 419,710
Total liabilities  99,194,784  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 March 31, 2014 and June 30, 2013  26,450  26,450
Additional paid-in capital  23,793,145 23,759,673
Retained earnings (deficit)  2,420,799 (5,187,593)
Treasury stock, 137,888, at cost  (1,012,925) (1,012,924)
Accumulated other comprehensive income 267,242 515,570
Total stockholders' equity 25,494,711 18,101,176
     
Total liabilities and stockholders' equity  $ 124,689,495  $ 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.
 
 
Royal Financial, Inc and Subsidiary
Consolidated Statements of Operations
Three and Nine months ended March 31, 2014 and 2013
(Unaudited)
         
  Three Months Ended Nine Months Ended
  March 31, March 31,
  2014 2013 2014 2013
         
Interest income        
 Loans  $ 1,014,683  $ 1,051,994  $ 3,030,090 $ 2,566,810
 Securities  218,082  225,010  573,888  819,837
 Federal funds sold and other  2,617  2,273  7,125  5,642
 Total interest income  1,235,382  1,279,277  3,611,103  3,392,289
         
Interest expense        
 Deposits  51,539  35,560  138,027  111,109
 Borrowings  7,950  9,844  18,900  36,071
 Total interest expense  59,489  45,404  156,927  147,180
         
Net interest income  1,175,893  1,233,873  3,454,176  3,245,108
         
Provision/(Credit) for loan losses  -   70,000  (354,785)  145,000
         
Net interest income after provision/ (credit) for loan losses  1,175,893  1,163,873  3,808,961  3,100,108
         
Non-interest income        
 Service charges on deposit accounts  39,645  39,663  125,254  124,518
 Secondary mortgage market fees  5,768  19,347  63,694  113,897
 Income on other real estate owned  29,751  50,072  115,431  147,596
 Gain on sale of investment securities  -  -   -   290,816
 Other  448  260  849  761
 Total non-interest income  75,612  109,342  305,228  677,588
         
Non-interest expense        
 Salaries and employee benefits  379,900  350,495  1,236,642  1,203,359
 Occupancy and equipment  196,040  176,264  518,679  537,089
 Data processing  83,751  87,683  235,314  264,369
 Professional services  111,978  125,739  374,817  397,357
 Director fees  28,600  15,100  86,200  44,950
 Marketing  100  292  8,124  5,696
 FDIC insurance expense  16,685  16,438  79,055  109,726
 Insurance premiums  28,013  36,221  51,934  49,869
 Foreclosed asset expense  128,237  229,949  172,246  337,815
 Loss on property valuation  -   -   168,350
 Other  62,469  60,730  236,357  225,938
 Total non-interest expense  1,035,773  1,098,911  2,999,368  3,344,517
         
Income before income taxes  215,733  174,302  1,114,821  433,179
         
Provision (Benefit) for income taxes  42,500  4,000  (6,493,520)  16,000
Net income  $ 173,233  $ 170,302  $ 7,608,341  $ 417,179
         
Basic and diluted earnings per share  $ 0.07  $ 0.07  $ 3.03  $ 0.17
         
         
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: