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. | ||||