CHICAGO, Oct. 28, 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 first quarter end of fiscal year 2015.
For the first quarter ended September 30, 2014, the Company reported net income of $141,000, or $0.06 per common share.
The Company reported net income of $141,000 for the first three months of fiscal 2015, compared to $7.2 million in the same period of fiscal 2014, primarily related to a one-time recognition of the reversal of the valuation allowance against the deferred tax assets of $6.9 million. For comparative purposes, the Company reported pre-tax income of $233,000 for the first three months of fiscal 2015, compared to $614,000 pre-tax income for the same period of fiscal 2014. The decrease of $381,000 in income was primarily due a decrease in credit for loan losses, as no credit was recognized in the current period, and an increase in non-interest expense of $132,000, partially offset by an increase in net interest income of $84,000 and increase in non-interest income of $37,000. The increase in non-interest income is primarily due to a gain of $46,000 recognized on the sale of investment securities, partially offset by a decrease in secondary mortgage market fees of $28,000. The increase in non-interest expense is primarily the result of an increase in salaries and employee benefits of $78,000, an increase in occupancy expense of $50,000 and an increase in professional services of $36,000, partially offset by a decrease in FDIC insurance expense of $16,000. The decrease in the provision for loan losses was related to the recognition of a credit provision of $370,000 in fiscal 2014, which was directly related to a recovery of previously charged off bad debt.
On September 15, 2014, the Bank opened a new micro-branch in a large neighborhood grocery store, approximately one mile south of the current southeast location. The Bank executed a five year operating lease with two five year renewal options. The leasehold improvement for the micro-branch totaled approximately $250,000, which was recorded as a capitalized asset. The purchase contract for the existing branch sale is in the final due diligence phase. Upon closure of the outdated branch location, expected to occur in the third fiscal quarter, annual cost savings are estimated to be $150,000.
Comparison of Financial Condition at September 30, 2014 and June 30, 2014
The Company's total assets increased $10.2 million, or 8.0%, to $138.2 million at September 30, 2014, from $128.0 million at June 30, 2014.
Securities available for sale increased $6.1 million, or 19.0%, to $38.3 million at September 30, 2014 from $32.2 million at June 30, 2014. The increase in the securities portfolio was due to the purchase of $8.0 million in government sponsored agency bonds, partially offset by the sale of $2.0 million of municipal securities which were sold to shorten the duration of the portfolio.
Loans, net of allowance, increased $3.0 million, or 3.8%, to $82.2 million at September 30, 2014, from $79.3 million at June 30, 2014. The loan portfolio continues to increase as a result funding loans that are locally originated commercial loan growth, consisting of commercial real estate and multi-family properties.
Total deposits increased $4.4 million, or 5.4%, to $86.2 million at September 30, 2014 from $81.8 million at June 30, 2014. The increase in deposits is primarily a result of acquiring deposits through internet deposit services.
Federal Home Loan Bank advances increased $6.0 million, or 31.6%, to $25.0 million at September 30, 2014 from $19.0 million at June 30, 2014. FHLB advances are all short term, not exceeding three months.
Total stockholders' equity increased $144,000, or 0.5%, to $25.8 million at September 30, 2014 from $25.7 million at June 30, 2014. The increase is primarily a result of net income of $141,000.
For the quarter ended September 30, 2014, the Bank paid a cash dividend to the Company of $120,000. The dividend will be held in cash at the Company pending further future actions.
The allowance for loan losses was $1.4 million, or 1.65% of total loans, at September 30, 2014, as compared to $1.4 million, or 1.75% of total loans, at June 30, 2014. The Company believes, as of September 30, 2014, its allowance for loan losses was adequate to cover probable incurred losses. Nonperforming assets were $3.2 million, or 2.33%, at September 30, 2014 compared to $3.3 million, or 2.51%, at June 30, 2014.
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 September 30, 2014, the Bank exceeded each of its capital requirements with ratios of 15.10%, 25.14%, and 26.40%, respectively. At September 30, 2014, the book value per common share, shares outstanding 2,507,112, was $10.31 compared to the book value per common share, shares outstanding 2,507,112, was $10.25 at June 30, 2014.
The complete audited consolidated financial statements for 2014 and 2013 are available at www.royal-bank.us.
For liquidity enhancement, Royal Financial, Inc. has been approved to establish a $4.0 million line of credit with The PrivateBank, Chicago, IL, and is currently in process of finalizing the agreement.
Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Stockholders held on October 28, 2014, the following matters were submitted to and approved by a vote of stockholders:
1) The election of two Class I directors for a three-year term expiring at the Annual Meeting of Stockholders to be held in 2017:
| Directors | Votes For | Votes Withheld |
| C. Michael McLaren | 1,261,296 | 312,033 |
| Philip J. Timyan | 1,262,496 | 310,833 |
The following directors continue to serve after the Annual Meeting:
| Continuing Director | Term Expires |
| James A. Fitch, Jr. | 2015 |
| Roger L. Hupe | 2015 |
| John T. Dempsey | 2016 |
| Leonard Szwajkowski | 2016 |
2) Ratification of the appointment of Crowe Horwath LLP as the Company's independent accountants for the fiscal year ending June 30, 2015:
| Total votes for | 2,208,409 |
| Total votes against | 79,667 |
| Total votes abstaining | 12,325 |
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 three 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 | ||
| Consolidated Statements of Financial Condition | ||
| September 30, 2014 and June 30, 2014 | ||
| (Unaudited) | ||
| September 30, 2014 | June 30, 2014 | |
| Assets | ||
| Cash and non-interest bearing balances in financial institutions | $ 1,186,543 | $ 871,687 |
| Interest bearing balances in financial institutions | 1,292,635 | 743,302 |
| Federal funds sold | 33,706 | 180,281 |
| Total cash and cash equivalents | 2,512,884 | 1,795,270 |
| Securities available for sale | 38,308,457 | 32,205,458 |
| Loans receivable, net of allowance for loan losses of $1,383,894 at September 30, 2014, $1,416,899 at June 30, 2014 | 82,246,494 | 79,259,804 |
| Federal Home Loan Bank stock, at cost | 1,350,000 | 975,000 |
| Premises & equipment, net | 4,647,338 | 4,443,309 |
| Land held for sale | 265,000 | 265,000 |
| Accrued interest receivable | 573,173 | 500,561 |
| Other real estate owned | 1,877,250 | 1,986,850 |
| Deferred tax asset | 6,256,920 | 6,349,020 |
| Other assets | 174,937 | 226,574 |
| Total assets | $ 138,212,453 | $ 128,006,846 |
| Liabilities & Stockholders' Equity | ||
| Deposits | $ 86,219,821 | $ 81,782,980 |
| Advances from borrowers for taxes and insurance | 651,587 | 976,456 |
| Federal Home Loan Bank advances | 25,000,000 | 19,000,000 |
| Accrued interest payable and other liabilities | 495,548 | 545,559 |
| Total liabilities | 112,366,957 | 102,304,995 |
| 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 | 26,450 | 26,450 |
| Additional paid-in capital | 23,809,909 | 23,801,866 |
| Retained earnings | 2,651,282 | 2,510,488 |
| Treasury stock, 137,888 shares, at cost | (1,012,924) | (1,012,924) |
| Accumulated other comprehensive income | 370,779 | 375,971 |
| Total stockholders' equity | 25,845,496 | 25,701,851 |
| Total liabilities and stockholders' equity | $ 138,212,453 | $ 128,006,846 |
| 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 | ||
| Consolidated Statements of Operations | ||
| Three Months Ended September 30, 2014 and 2013 | ||
| (Unaudited) | ||
| 2014 | 2013 | |
| Interest income | ||
| Loans | $ 1,068,635 | $ 1,003,718 |
| Securities | 220,756 | 162,619 |
| Federal funds sold and other | 3,335 | 1,761 |
| Total interest income | 1,292,726 | 1,168,098 |
| Interest expense | ||
| Deposits | 72,257 | 36,664 |
| Borrowings | 10,362 | 5,797 |
| Total interest expense | 82,620 | 42,461 |
| Net interest income | 1,210,107 | 1,125,637 |
| Provision/(Credit) for loan losses | -- | (369,785) |
| Net interest income after provision/ (credit) for loan losses | 1,210,107 | 1,495,422 |
| Non-interest income | ||
| Service charges on deposit accounts | 49,967 | 42,869 |
| Secondary mortgage market fees | 5,001 | 33,428 |
| Income on other real estate owned | 54,976 | 43,251 |
| Gain on sale of investment securities | 46,345 | -- |
| Other | 267 | 227 |
| Total non-interest income | 156,557 | 119,775 |
| Non-interest expense | ||
| Salaries and employee benefits | 495,386 | 417,095 |
| Occupancy and equipment | 197,680 | 147,600 |
| Data processing | 91,593 | 86,015 |
| Professional services | 182,924 | 146,783 |
| Director fees | 32,400 | 28,800 |
| Marketing | 428 | 4,675 |
| FDIC insurance expense | 16,501 | 32,759 |
| Insurance premiums | 16,358 | 17,457 |
| Foreclosed asset expense | 25,077 | 20,460 |
| Other | 75,422 | 99,917 |
| Total non-interest expense | 1,133,769 | 1,001,561 |
| Income before income taxes | 232,894 | 613,636 |
| Provision (Benefit) for income taxes | 92,100 | (6,586,820) |
| Net income | $ 140,794 | $ 7,200,456 |
| Basic and diluted earnings per share | $ 0.06 | $ 2.87 |
| 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. | ||