Royal Financial, Inc. Announces FY13 Earnings for the Nine Months Ended March 31, 2013

CHICAGO, May 22, 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 earnings for the nine months ended March 31, 2013.

For the nine months ended March 31, 2013, the Company reported net income of $417,000, or $0.17 per common share, compared to a net loss of $342,000, or $0.14 loss per common share, for the nine months ended March 31, 2012.  The net income for the nine months ended March 31, 2013 was an increase of $760,000 from the same period in 2012.  The increase in income was due to an increase in non-interest income of $363,000 and net interest income of $260,000 and a decrease in noninterest expense of $656,000, partially offset by an increase in the provision for loan losses of $570,000. The increase in noninterest income was primarily the result of a gain of $291,000 on the sale of securities from the investment portfolio. The decrease in noninterest expense was primarily the result of a decrease in salaries and employee benefits of $273,000 and a decrease in foreclosed assets expense of $460,000, partially offset by increases in various operating expenses. The increase in the provision for loan losses was primarily due to the recognition of a credit provision of $425,000 in the second quarter of fiscal 2012, which was directly related to a recovery of previously charged off bad debt.  

Comparison of Financial Condition at March 31, 2013 and June 30, 2012

The Company's total assets decreased $853,000, or 0.74%, to $114.6 million at March 31, 2013, from $115.4 million at June 30, 2012.

Securities available for sale decreased $20.3 million, or 36.96%, to $34.5 million at March 31, 2013 from $54.8 million at June 30, 2012.  The decrease in the securities portfolio was due to securities sold to provide liquidity to fund loan growth.

Loans, net of allowance, increased $19.3 million, or 40.31%, to $67.2 million at March 31, 2013, from $47.9 million at June 30, 2012.  The increase in loans was primarily a result of locally originated commercial loan growth, consisting of commercial real estate and multi-family properties.

Other real estate owned decreased $1.3 million to $2.5 million at March 31, 2013, from $3.8 million at June 30, 2012. The decrease was primarily due to the sale of a $1.6 million residential property in the western suburbs of Chicago, partially offset by a newly obtained residential property with a carrying value of $475,000.

Total deposits reflect a slight decrease of $292,000, or 0.42%, to $69.2 million at March 31, 2013 from $69.5 million at June 30, 2012.

Federal Home Loan Bank advances decreased $1.3 million, or 4.60%, to $25.9 million at March 31, 2013 from $27.2 million at June 30, 2012. FHLB advances were reduced using proceeds of investment securities sold during the period, in accordance with management's liquidity strategy.  

Total stockholders' equity increased $227,000, or 1.27%, to $18.0 million at March 31, 2013 from $17.8 million at June 30, 2012. The increase is primarily a result of net income of $417,000 for the period partially offset by a decrease in accumulated other comprehensive income of $209,000, net of deferred taxes.

The allowance for loan losses was $1.6 million, or 2.32% of total loans, at March 31, 2013, as compared to $1.8 million, or 3.66% of total loans, at June 30, 2012.  The Company believes, as of March 31, 2013, its allowance for loan losses was adequate to cover probable incurred losses. Nonperforming assets were $4.2 million, or 3.64%, at March 31, 2013 compared to $7.1 million, or 6.13%, at June 30, 2012.

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, 2013, the Bank exceeded each of its capital requirements with ratios of 14.49%, 24.57%, and 25.83%, respectively.  At March 31, 2013, the book value per common share, shares outstanding 2,493,430, was $7.43 compared to the book value per common share, shares outstanding 2,487,756, was $7.16 at June 30, 2012.

Submission of Matters to a Vote of Security Holders

At the Company's Annual Meeting of Stockholders held on February 19, 2013, the following matters were submitted to and approved by a vote of stockholders:

1)         The election of two Class II directors for a three-year term expiring at the Annual Meeting of Stockholders to be held in 2015:

Directors


Votes For


Votes Withheld

James A. Fitch, Jr.


1,323,452


72,500

Roger L. Hupe


1,323,452


72,500

The following directors continue to serve after the Annual Meeting:

Continuing Director


Term Expires

John T. Dempsey


2013

Leonard Szwajkowski


2013

C. Michael McLaren


2014

Philip J. Timyan


2014

James A. Fitch, Jr.


2015

Roger L. Hupe


2015

2)         Ratification of the appointment of Crowe Horwath LLP as the Company's independent accountants for the fiscal year ending June 30, 2013:

Total votes for

1,364,042

Total votes against

37,041

Total votes abstaining

101

         


Consolidated Statements of Financial Condition

March 31, 2013 and June 30, 2012

(Unaudited)





March 31, 2013


June 30, 2012





Assets




Cash and non-interest bearing balances in financial institutions

$         902,302


$        898,993

Interest bearing balances in financial institutions

2,731,217


1,108,376

Federal funds sold

54,041


19,988

     Total cash and cash equivalents

3,687,561


2,027,357





Securities available for sale

34,544,147


54,796,381





Loans receivable, net of allowance for loan losses

67,231,798


47,917,818

Federal Home Loan Bank stock

1,295,000


1,357,500

Premises & equipment, net

4,270,141


4,426,150

Land available for sale, net of valuation allowance

265,000


433,350

Accrued interest receivable

564,521


499,354

Other real estate owned

2,481,000


3,797,105

Other assets

228,853


166,418

     Total assets

$  114,568,021


$ 115,421,433





Liabilities & Stockholders' Equity




Deposits

$    69,169,620


$   69,461,669

Advances from borrowers for taxes and insurance

456,039


452,686

Federal funds purchased

-


-

Federal Home Loan Bank advances and other borrowings

25,900,000


27,150,000

Accrued interest payable and other liabilities

993,469


534,901

     Total liabilities

96,519,127


97,599,256





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, 2013 and June 30, 2012

26,450


26,450

     Additional paid-in capital

23,956,384


24,021,570

     Retained deficit

(5,630,464)


(6,047,643)

     Treasury stock, 151,570 and 157,244 shares, at cost

(1,214,981)


(1,298,672)

     Accumulated other comprehensive income (loss), net of tax

911,504


1,120,472

          Total stockholders' equity

18,048,894


17,822,177





               Total liabilities and stockholders' equity

$  114,568,021


$ 115,421,433













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

Nine months ended March 31, 2013 and 2012

(Unaudited)













Nine Months Ended



March 31,








2013


2012






Interest income





     Loans


$ 2,566,810


$ 2,426,602

     Securities


819,837


702,323

     Federal funds sold and other


5,642


3,631

          Total interest income


3,392,289


3,132,556






Interest expense





     Deposits


111,109


206,354

     Borrowings


36,071


7,725

          Total interest expense


147,180


214,078






Net interest income


3,245,108


2,918,478






Provision/(Credit) provision for loan losses


145,000


(425,011)

Net interest income after provision for loan loss


3,100,108


3,343,489






Non-interest income





     Service charges on deposit accounts


124,518


152,057

     Secondary mortgage market fees


113,897


71,699

     Income on other real estate owned


147,596


90,919

     Gain on sale of investment securities


290,816


-

     Other


761


29

          Total non-interest income


677,588


314,704






Non-interest expense





     Salaries and employee benefits


1,203,359


1,476,354

     Occupancy and equipment


537,089


519,687

     Data processing


264,369


237,157

     Professional services


397,357


345,055

     Director fees


44,950


99,300

     Marketing


5,696


10,602

     FDIC insurance expense


109,726


79,247

     Insurance premiums


49,869


50,420

     Foreclosed asset expense


337,815


797,764

     Loss valuation on land available for sale


168,350


142,650

     Other


225,938


242,438

          Total non-interest expense


3,344,517


4,000,672






Income before income taxes


433,179


(342,479)

Provision for income taxes


16,000


-






     Net income


$    417,179


$  (342,479)
















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.

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

SOURCE Royal Financial, Inc.



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http://www.royal-bank.us

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