2014

Royal Financial, Inc. Announces First Quarter Net Income of $7.2 Million, Reversal of Deferred Tax Asset Valuation and Annual Meeting Results

CHICAGO, Nov. 1, 2013 /PRNewswire/ -- Royal Financial, Inc. (the "Company") (OTCBB: RYFL.OB), 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 first quarter end of fiscal year 2014.

For the first quarter ended September 30, 2013, the Company reported net income of $7.2 million, or $2.87 per common share, after a $6.9 million benefit from the reversal of the valuation against deferred tax assets. Income before taxes for the quarter, reflecting the benefit of a $370,000 reversal in loan loss reserve, totaled $614,000.

The Company reported income of $614,000 for the first three months of fiscal 2014 (excluding the reversal of the valuation allowance against the deferred tax assets, net of the tax accrual for the current quarter), compared to $140,000 in the same period of fiscal 2013. The increase in income was due to an increase in net interest income of $152,000 and a credit provision for loan losses of $370,000, partially offset by a decrease in non-interest income of $22,000 and an increase in non-interest expense of $34,000. The decrease in non-interest income is primarily due to a decrease of $20,000 in secondary mortgage market fees. The increase in noninterest expense is primarily the result of an increase in professional services of $52,000, partially offset by a decrease in occupancy expense of $33,000 and foreclosed asset expense of $14,000. The decrease in the provision for loan losses was related to the recognition of a credit provision of $370,000, which was directly related to a recovery of previously charged off bad debt.  

Comparison of Financial Condition at September 30, 2013 and June 30, 2013

The Company's total assets increased $10.4 million, or 10.12%, to $113.6 million at September 30, 2013, from $103.2 million at June 30, 2013.

Securities available for sale increased $1.8 million, or 7.78%, to $24.4 million at September 30, 2013 from $22.6 million at June 30, 2013.  The increase in the securities portfolio was due to the purchase of an additional government sponsored agency bond.

Loans, net of allowance, increased $1.8 million, or 2.55%, to $70.7 million at September 30, 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 current taxes due of $267,000, resulting in an increase in assets of $6.6 million for the period.

Total deposits increased $4.8 million, or 4.80%, to $73.6 million at September 30, 2013 from $68.9 million at June 30, 2013.

Federal Home Loan Bank advances decreased $1.0 million, or 6.71%, to $13.9 million at September 30, 2013 from $14.9 million at June 30, 2013.  

Total stockholders' equity increased $6.9 million, or 37.96%, to $25.0 million at September 30, 2013 from $18.1 million at June 30, 2013. The increase is primarily a result of the $6.9 million reversal of the valuation allowance against the deferred tax assets, net income of $347,000, partially offset by a decrease in accumulated other comprehensive income of $342,000, net of deferred taxes.

The allowance for loan losses was $1.3 million, or 1.86% of total loans, at September 30, 2013, as compared to $1.5 million, or 2.13% of total loans, at June 30, 2013.  The Company believes, as of September 30, 2013, its allowance for loan losses was adequate to cover probable incurred losses.  Nonperforming assets were $3.7 million, or 3.16%, at September 30, 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 September 30, 2013, the Bank exceeded each of its capital requirements with ratios of 18.41%, 27.90%, and 29.16%, respectively.  At September 30, 2013, the book value per common share, shares outstanding 2,507,112, was $9.96 compared to the book value per common share, shares outstanding 2,507,112, was $7.22 at June 30, 2013.

The complete audited consolidated financial statements for 2013 and 2012 remain available at www.royal-bank.us

Submission of Matters to a Vote of Security Holders

At the Company's Annual Meeting of Stockholders held on October 29, 2013, the following matters were submitted to and approved by a vote of stockholders:

1) The election of two Class III directors for a three-year term expiring at the Annual Meeting of Stockholders to be held in 2016:

Directors

Votes For

Votes Withheld

John T. Dempsey

1,471,129

26,727

Leonard Szwajkowski

1,471,030

26,826

 

The following directors continue to serve after the Annual Meeting:

Continuing Director

Term Expires

C. Michael McLaren

2014

Philip J. Timyan

2014

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, 2014:

Total votes for

2,010,500

Total votes against

63,981

Total votes abstaining

16,412

 

Contact: Mr. Leonard Szwajkowski
President and CEO
Telephone: (773) 382-2111
E-mail: lszwajkowski@royal-bank.us

 

Consolidated Statements of Financial Condition

September 30, 2013 and June 30, 2013

(Unaudited)






September 30, 2013


June 30, 2013





Assets




Cash and non-interest bearing balances in financial institutions

$              1,008,689


$             893,499

Interest bearing balances in financial institutions

2,525,927


2,274,266

Federal funds sold

79,699


97,148

     Total cash and cash equivalents

3,614,315


3,264,913





Securities available for sale

24,352,739


22,594,623

Loans receivable, net of allowance for loan losses of




$1,345,380 at September 30, 2013, $1,508,966 at June 30, 2013

70,706,695


68,945,527

Federal Home Loan Bank stock, at cost

1,295,000


1,295,000

Premises & equipment, net

4,277,320


4,217,182

Land held for sale

265,000


265,000

Accrued interest receivable

450,928


447,888

Other real estate owned

1,895,000


1,895,000

Deferred tax asset

6,586,820


-

Other assets

174,261


249,592





     Total assets

$          113,618,079


$      103,174,725





Liabilities & Stockholders' Equity




Deposits

$            73,648,888


$        68,886,926

Advances from borrowers for taxes and insurance

617,569


866,913

Federal Home Loan Bank advances

13,900,000


14,900,000

Accrued interest payable and other liabilities

478,443


419,710

     Total liabilities

88,644,900


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

26,450


26,450

     Additional paid-in capital

23,773,360


23,759,673

     Retained earnings (deficit)

2,012,863


(5,187,593)

     Treasury stock, 137,888, at cost

(1,012,924)


(1,012,924)

      Accumulated other comprehensive income

173,431


515,570

          Total stockholders' equity

24,973,180


18,101,176





               Total liabilities and stockholders' equity

$          113,618,079


$      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.




Consolidated Statements of Operations

Three Months Ended September 30, 2013 and 2012

(Unaudited)



Three Months Ended


September 30


2013


2012

Interest income




     Loans

$      1,003,718


$718,855

     Securities

162,619


305,087

     Federal funds sold and other

1,761


1,333

          Total interest income

1,168,098


1,025,275





Interest expense




     Deposits

36,664


39,638

     Borrowings

5,797


11,581

          Total interest expense

42,461


51,219





Net interest income

1,125,637


974,056





Provision/(Credit) for loan losses

(369,785)


-





Net interest income after provision/ (credit) for loan losses

1,495,422


974,056





Non-interest income




     Service charges on deposit accounts

42,869


41,713

     Secondary mortgage market fees

33,428


53,651

     Income on other real estate owned

43,251


46,277

     Gain on sale of investment securities

-


-

     Other

227


277

          Total non-interest income

119,775


141,918





Non-interest expense




     Salaries and employee benefits

417,095


414,450

     Occupancy and equipment

147,600


180,246

     Data processing

86,015


87,908

     Professional services

146,783


93,928

     Director fees

28,800


15,800

     Marketing

4,675


4,717

     FDIC insurance expense

32,759


31,291

     Insurance premiums

17,457


16,548

     Foreclosed asset expense

20,460


34,688

     Other

99,917


88,304

          Total non-interest expense

1,001,561


967,880





Income before income taxes

613,636


148,094





Provision (Benefit) for income taxes

(6,586,820)


8,000

Net income

$      7,200,456


$         140,094





Basic and diluted earnings per share

$               2.87


$               0.06

















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.

 

SOURCE Royal Financial, Inc.



RELATED LINKS
http://www.royal-bank.us

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