Royal Financial, Inc. Announces FY13 Earnings for the Six Months Ended December 31, 2012

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Feb 18, 2013, 03:16 ET

CHICAGO, Feb. 18, 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 six months ended December 31, 2012.

For the six months ended December 31, 2012, the Company reported net income of $247,000, or $0.10 per common share, compared to net income of $79,000, or $0.03 per common share, for the six months ended December 31, 2011. The net income for the six months ended December 31, 2012 was an increase of $168,000 from the same period in 2011. The increase in income was due to an increase in non-interest income of $369,000 and net interest income of $22,000 and a decrease in noninterest expense of $289,000, partially offset by an increase in the provision for loan losses of $500,000. 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 $110,000 and a decrease in foreclosed assets expense of $292,000, 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 December 2011, which was directly related to a recovery of previously charged off bad debt.

Comparison of Financial Condition at December 31, 2012 and June 30, 2012

The Company's total assets decreased $1.4 million, or 1.20%, to $114.0 million at December 31, 2012, from $115.4 million at June 30, 2012.

Securities available for sale decreased $20.3 million, or 37.05%, to $34.5 million at December 31, 2012 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 $18.2 million, or 37.92%, to $66.1 million at December 31, 2012, 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 $1.1 million to $2.6 million at December 31, 2012, 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 increase of $435,000, or 0.63%, to $69.9 million at December 31, 2012 from $69.5 million at June 30, 2012.

Federal Home Loan Bank advances decreased $3.2 million, or 12.00%, to $24.0 million at December 31, 2012 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 $429,000, or 2.40%, to $18.3 million at December 31, 2012 from $17.8 million at June 30, 2012. The increase is primarily a result of net income of $247,000 for the period and an increase in accumulated other comprehensive income of $169,000, net of deferred taxes.

The allowance for loan losses was $1.8 million, or 2.70% of total loans, at December 31, 2012, as compared to $1.8 million, or 3.66% of total loans, at June 30, 2012. The Company believes, as of December 31, 2012, its allowance for loan losses was adequate to cover probable incurred losses. Nonperforming assets were $5.6 million, or 4.95%, at December 31, 2012 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 December 31, 2012, the Bank exceeded each of its capital requirements with ratios of 13.40%, 24.63%, and 25.90%, respectively. At December 31, 2012, the book value per common share, shares outstanding 2,490,930, was $7.33 compared to June 30, 2012, the book value per common share, shares outstanding 2,487,756 was $7.16.

Consolidated Statements of Financial Condition
December 31, 2012 and June 30, 2012
(Unaudited)

	December 31, 2012	June 30, 2012
Assets
Cash and non-interest bearing balances in financial institutions	$ 900,115	$ 898,993
Interest bearing balances in financial institutions	2,933,472	1,108,376
Federal funds sold	-	19,988
Total cash and cash equivalents	3,833,587	2,027,357

Securities available for sale	34,493,447	54,796,381

Loans receivable, net of allowance for loan losses	66,087,944	47,917,818
Federal Home Loan Bank stock	1,750,000	1,357,500
Premises & equipment, net	4,303,576	4,426,150
Land available for sale, net of valuation allowance	265,000	433,350
Accrued interest receivable	496,717	499,354
Other real estate owned	2,647,811	3,797,105
Other assets	170,035	166,418
Total assets	$ 114,048,116	$ 115,421,433

Liabilities & Stockholders' Equity
Deposits	$ 69,896,735	$ 69,461,669
Advances from borrowers for taxes and insurance	723,987	452,686
Federal funds purchased	29,856	-
Federal Home Loan Bank advances and other borrowings	24,000,000	27,150,000
Accrued interest payable and other liabilities	1,146,840	534,901
Total liabilities	95,797,418	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
December 31, 2012 and June 30, 2012	26,450	26,450
Additional paid-in capital	23,987,444	24,021,570
Retained deficit	(5,800,766)	(6,047,643)
Treasury stock, 154,070 and 159,744 shares, at cost	(1,251,856)	(1,298,672)
Accumulated other comprehensive income (loss), net of tax	1,289,425	1,120,472
Total stockholders' equity	18,250,698	17,822,177

Total liabilities and stockholders' equity	$ 114,048,116	$ 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
Six months ended December 31, 2012 and 2011
(Unaudited)


	Six Months Ended
	December 31,

	2012	2011

Interest income
Loans	$ 1,514,816	$ 1,709,194
Securities	594,828	428,126
Federal funds sold and other	3,368	2,485
Total interest income	2,113,012	2,139,805

Interest expense
Deposits	75,601	147,772
Borrowings	26,227	2,817
Total interest expense	101,828	150,589

Net interest income	2,011,185	1,989,216

Provision/(Credit) provision for loan losses	75,000	(425,011)
Net interest income after provision for loan loss	1,936,185	2,414,227

Non-interest income
Service charges on deposit accounts	84,856	113,223
Secondary mortgage market fees	94,550	47,027
Income on other real estate owned	97,524	39,191
Gain on sale of investment securities	290,816	-
Other	501	13
Total non-interest income	568,247	199,454

Non-interest expense
Salaries and employee benefits	852,864	963,330
Occupancy and equipment	360,825	332,200
Data processing	176,686	141,259
Professional services	271,618	240,969
Director fees	29,850	66,200
Marketing	5,404	9,586
FDIC insurance expense	73,505	53,277
Insurance premiums	33,430	32,656
Foreclosed asset expense	107,866	399,643
Loss valuation on land available for sale	168,350	142,650
Other	165,157	152,771
Total non-interest expense	2,245,555	2,534,541

Income before income taxes	258,877	79,140
Provision for income taxes	12,000	-

Net income	$ 246,877	$ 79,140




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.