CHICAGO, Sept. 17, 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 earnings for the fiscal year ended June 30, 2014.
For the fiscal year ended June 30, 2014 the Company reported net income of $7.7 million, or $3.07 per common share, an increase of $6.8 million compared to the net income of the last fiscal year ended June 30, 2013 of $860,000, or $0.35 per common share. The increase in net income for the period was primarily related to the decrease in the provision for income taxes of $6.3 million, a direct result of the reversal of the valuation allowance against deferred tax assets of $6.9 million, net of current estimated taxes, an increase in net interest income of $299,000, a decrease in provision for loan loss of $380,000, a decrease in non-interest expense of $254,000, partially offset by a decrease in non-interest income of $460,000. The decrease in non-interest income was due to a decrease of $369,000 in gains related to the sale of securities from the investment portfolio, a decrease of $74,000 in secondary mortgage market fees, a decrease of $20,000 in income from other real estate owned, partially offset by an increase of $3,000 in deposit service charges. The decrease in noninterest expense was primarily the result of a decrease in foreclosed assets expense of $248,000, a decrease of $168,000 in loss on property valuation, a decrease of $56,000 in FDIC insurance expense, a decrease of $27,000 in data processing expense, partially offset by an increase of $148,000 in salaries and employee benefits, an increase of $58,000 in director fees and other increases in various operating expenses. The decrease in the provision for loan losses was primarily due to the recognition of a credit provision of $370,000 in the first quarter of fiscal 2014, which was directly related to a recovery of previously charged off bad debt.
Comparison of Financial Condition at June 30, 2014 and June 30, 2013
The Company's total assets increased $24.8 million, or 24.07%, to $128 million at June 30, 2014, from $103.2 million at June 30, 2013.
Securities available for sale increased $9.6 million, or 42.54%, to $32.2 million at June 30, 2014 from $22.6 million at June 30, 2013. The increase in the securities portfolio is a result of purchasing government sponsored agency bonds and small blocks of various taxable general obligation municipal bonds.
Loans, net of allowance, increased $10.3 million, or 14.96%, to $79.3 million at June 30, 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.
Total deposits increased $12.9 million, or 18.72%, to $81.8 million at June 30, 2014 from $68.9 million at June 30, 2013. The increase in deposits is primarily a result of acquiring local public funds and utilizing internet deposit services.
Federal Home Loan Bank advances increased $4.1 million, or 27.52%, to $19 million at June 30, 2014 from $14.9 million at June 30, 2013. FHLB advances are all short term, not exceeding three months.
Total stockholders' equity increased $7.7 million, or 42.4%, to $25.8 million at June 30, 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 estimated taxes, and pre-tax income of $1.3 million for the period, partially offset by a decrease in accumulated other comprehensive income of $65,000, net of deferred taxes.
The allowance for loan losses was $1.4 million, or 1.75% of total loans, at June 30, 2014, as compared to $1.5 million, or 2.13% of total loans, at June 30, 2013. The Company believes, as of June 30, 2014, its allowance for loan losses was adequate to cover probable incurred losses. Nonperforming assets were $3.3 million, or 2.51%, at June 30, 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 June 30, 2014, the Bank exceeded each of its capital requirements with ratios of 16.63%, 25.83%, and 27.08%, respectively. At June 30, 2014 and 2013, the book value per common share, shares outstanding 2,507,112, was $10.25 and $7.22, respectively.
The complete audited consolidated financial statements for 2014 and 2013 are available at www.royal-bank.us, under Royal Financial.
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 | ||
| June 30, 2014 and 2013 | ||
| 2014 | 2013 | |
| Assets | ||
| Cash and non-interest bearing balances in financial institutions | $ 871,687 | $ 893,499 |
| Interest bearing balances in financial institutions | 743,302 | 2,274,266 |
| Federal funds sold | 180,281 | 97,148 |
| Total cash and cash equivalents | 1,795,270 | 3,264,913 |
| Securities available for sale | 32,205,458 | 22,594,623 |
| Loans receivable, net of allowance for loan losses of $1,416,899 in 2014 and $1,508,966 in 2013 | 79,259,804 | 68,945,527 |
| Federal Home Loan Bank stock, at cost | 975,000 | 1,295,000 |
| Premises & equipment, net | 4,443,309 | 4,217,182 |
| Land held for sale | 265,000 | 265,000 |
| Accrued interest receivable | 500,561 | 447,888 |
| Other real estate owned | 1,986,850 | 1,895,000 |
| Deferred tax asset | 6,349,020 | -- |
| Other assets | 226,574 | 249,592 |
| Total assets | $ 128,006,846 | $ 103,174,725 |
| Liabilities & Stockholders' Equity | ||
| Deposits | $ 81,782,980 | $ 68,886,926 |
| Advances from borrowers for taxes and insurance | 976,456 | 866,913 |
| Federal Home Loan Bank advances | 19,000,000 | 14,900,000 |
| Accrued interest payable and other liabilities | 545,559 | 419,710 |
| Total liabilities | 102,304,995 | 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 June 30, 2014 and 2013 | 26,450 | 26,450 |
| Additional paid-in capital | 23,801,866 | 23,759,673 |
| Retained deficit | 2,510,488 | (5,187,593) |
| Treasury stock, 137,888 shares, at cost | (1,012,924) | (1,012,924) |
| Accumulated other comprehensive income | 375,971 | 515,570 |
| Total stockholders' equity | 25,701,851 | 18,101,176 |
| Total liabilities and stockholders' equity | $ 128,006,846 | $ 103,174,725 |
| Royal Financial, Inc. and Subsidiary | ||
| Consolidated Statements of Operations | ||
| Years ended June 30, 2014 and 2013 | ||
| 2014 | 2013 | |
| Interest income | ||
| Loans | $ 4,054,316 | $ 3,500,338 |
| Securities | 793,380 | 1,003,834 |
| Federal funds sold and other | 11,028 | 7,976 |
| Total interest income | 4,858,724 | 4,512,148 |
| Interest expense | ||
| Deposits | 207,232 | 143,463 |
| Borrowings | 27,714 | 44,338 |
| Total interest expense | 234,946 | 187,801 |
| Net interest income | 4,623,778 | 4,324,347 |
| Provision/(Credit) for loan losses | (234,785) | 145,000 |
| Net interest income after provision/ (credit) for loan losses | 4,858,563 | 4,179,347 |
| Non-interest income | ||
| Service charges on deposit accounts | 171,070 | 167,959 |
| Secondary mortgage market fees | 71,323 | 145,772 |
| Income on other real estate owned | 170,069 | 189,724 |
| Gain on sale of investment securities | 188,484 | 557,849 |
| Other | 1,323 | 1,034 |
| Total non-interest income | 602,269 | 1,062,338 |
| Non-interest expense | ||
| Salaries and employee benefits | 1,725,616 | 1,577,231 |
| Occupancy and equipment | 695,289 | 686,386 |
| Data processing | 333,461 | 360,258 |
| Professional services | 548,375 | 535,032 |
| Director fees | 115,000 | 57,251 |
| Marketing | 10,379 | 5,846 |
| FDIC insurance expense | 90,818 | 146,536 |
| Insurance premiums | 67,046 | 64,860 |
| Foreclosed asset expense | 208,858 | 456,476 |
| Loss on property valuation | -- | 168,350 |
| Other | 316,929 | 307,409 |
| Total non-interest expense | 4,111,771 | 4,365,635 |
| Income before income taxes | 1,349,061 | 876,050 |
| Provision for income taxes | (6,349,020) | 16,000 |
| Net income | $ 7,698,081 | $ 860,050 |
| Basic and diluted earnings per share | $ 3.07 | $ 0.35 |