AP NEWS

Royal Financial, Inc. Announces Earnings for First Quarter of Fiscal Year 2019

October 13, 2018

CHICAGO, Oct. 13, 2018 (GLOBE NEWSWIRE) -- Royal Financial, Inc. (the “Company”) (OTCQX: 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 2019.

Net Income for the first quarter of fiscal year 2019 was $968,000, or $0.39 per common share, compared to $1.4 million, or $0.54 per common share, in the same period of fiscal 2018.

The Company also reported total assets of $408.5 million and stockholders’ equity of $35.3 million as of September 30, 2018. As of the same date, the Company’s book value per share was $14.08 and tangible book value per share was $13.01.

Comparison of Results of Operation for the Three Months Ended September 30, 2018 and 2017

The Company reported net income of $968,000 for the first three months of fiscal 2019 compared to $1.4 million in the same period of fiscal 2018, a decrease of $387,000 (29%). The decrease was caused by the change in the State of Illinois tax rate having a positive effect on the Company’s Deferred Tax Asset (“DTA”) which provided a benefit for income taxes during the first quarter of fiscal year 2018.

Total interest income for the quarter ended September 30, 2018, increased $1.0 million (30%) from September 30, 2017. Total interest income for loans, including fees, for the quarter ended September 30, 2018, increased $968,000 (30%) from the quarter ended September 30, 2017. Total securities income increased $79,000 (41%) from September 30, 2017 due to the increase of securities in the portfolio from the prior year. This increase in interest income is offset by the increase in total interest expense due to higher cost of funds for borrowings and deposit accounts balances. Total deposit interest expense increased $399,000 (67%) from the prior year due to the rising rate environment and the addition of the Washington Federal Bank for Savings (“WashFed”) deposits from the failed Bank purchase on December 15, 2017. Total borrowing expense increased $146,000 (207%) due to the additional borrowings from CIBC Bank for the bank level capital injection for the acquisition of WashFed and additional borrowings from the Federal Home Loan Bank (“FHLB”) to fund loan growth.

Total non-interest income increased $30,000 (13%) from September 30, 2017. This increase was due to an increase of $45,000 (34%) in service charges on deposit accounts, an increase of $38,000 (280%) in secondary mortgage market fees, offset by a decrease of $53,000 (99%) in other income.

Total non-interest expense increased $158,000 (7%) from September 30, 2017. The increase in non-interest expense is due to the increase in occupancy and equipment of $114,000 (28%), an increase in data processing charges of $20,000 (13%), and an increase in professional services of $25,000 (15%). The increase in occupancy and equipment costs was the result of additional expense with the acquisition of two new branch locations from WashFed and an increase in real estate taxes. The increase in data processing charges was also related to the increase in customer base due to the WashFed acquisition. The increase in professional services is a result of hiring additional employees for the Company’s Commercial Lending team. These increases were offset by a decrease in other real estate owned (“OREO”) expenses of $46,000 (82%). The Company only has one OREO property at the end of the quarter.

The provision for loan losses at the quarter end of September 30, 2018, was $150,000, a decrease of $30,000 (17%) from the same period of fiscal 2018. In addition to the $150,000 provision, the Company experienced net recoveries of $26,000 during the first quarter of fiscal year 2019.

For quarter end September 30, 2018, the provision for income taxes was $427,000 compared to the benefit for income taxes of $511,000 for September 30, 2017. During the first quarter of fiscal year 2018, the State of Illinois enacted its first budget since 2015, which increased the corporate income tax rate from 5.25% to 7.00%. The Illinois replacement tax remains unchanged at 2.50%. Due to the State of Illinois tax changes, the Company recognized $809,000 (the DTA increased $909,000 which was offset by an increase to the DTA valuation allowance of $100,000) during the first quarter of fiscal year 2018.

Comparison of Financial Condition at September 30, 2018 and June 30, 2018

The Company’s total assets decreased $4.8 million (1%), to $408.5 million at September 30, 2018, from $413.3 million at June 30, 2018.

Cash and cash equivalents decreased $4.4 million (31%) to $9.8 million at September 30, 2018, from $14.2 million at June 30, 2018, due to the pay-down of FHLB advances.

Loans, net of allowance, increased $1.0 million to $323.9 million at September 30, 2018, from $322.9 million at June 30, 2018, primarily due to an increase in commercial loan growth.

The allowance for loan losses was $2.6 million, or 0.78% of total loans, at September 30, 2018, as compared to $2.4 million, or 0.73% of total loans, at June 30, 2018. In addition to the allowance for loan losses, net purchase discount on acquired loans was $938,000 at September 30, 2018 compared to $1.0 million at June 30, 2018. Individual loan discounts are being accreted into interest income over the life of the loans; however, they can offset loan losses upon loan default. Nonperforming loans totaled $465,000, or 0.14% of outstanding loans, at September 30, 2018 compared to $899,000 or 0.28%, at June 30, 2018.

OREO increased to $308,000 at September 30, 2018, from $305,000 at June 30, 2018. The property is recorded at fair value, less estimated costs to sell.

The DTA decreased $400,000 (4%) to $10.0 million at September 30, 2018, from $10.4 million at June 30, 2018. The Bank has a $200,000 valuation allowance for the State of Illinois DTA as of September 30, 2018.

Total deposits increased $3.7 million (1%) to $345.0 million at September 30, 2018, from $341.2 million at June 30, 2018. The increase was primarily due to the increase in money market accounts, offset by a decrease in time deposits.

FHLB advances decreased $7.0 million (37%), to $12.0 million at September 30, 2018, from $19.0 million at June 30, 2018. All FHLB advances are limited to short term maturities. Notes payable decreased $500,000 due to principal repayments on holding company debt, which totaled $13.0 million at quarter end. The loan is structured to amortize in full over eight years with quarterly payments of $450,000 in principal reduction and interest at the rate of 0.15% below the Wall Street Journal Prime Rate. An additional payment of $50,000 was made in efforts to pay-down the loan.

Total stockholders’ equity increased $764,000 (2%), to $35.3 million at September 30, 2018, from $34.5 million at June 30, 2018, which was primarily a result of the net income of $968,000 earned in the period, offset by the unrealized loss in equity of $219,000.

In the quarter ended September 30, 2018, the Bank paid a cash dividend to the Company of $952,000.

The Bank is “well capitalized” under prompt corrective action regulations. This classification requires the Bank to maintain regulatory capital that meets or exceeds the following ratios: Tier 1 Capital leverage of 5.00%, Common Equity Tier 1 Capital of 6.50%, Tier 1 Capital of 8.00%, and Total Capital of 10.00%. At September 30, 2018, the Bank exceeded each of these requirements with ratios of 9.54%, 14.34%, 14.34% and 15.31%, respectively.

At September 30, 2018, the book value per common share was $14.08 compared to the book value per common share of $13.77 at June 30, 2018, for shares outstanding of 2,507,112 for both periods. The tangible book value per share was $13.01 at September 30, 2018, compared to tangible book value per share of $12.69 at June 30, 2018.

The complete audited consolidated financial statements for 2018 and 2017 are available at www.royalbankweb.com

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 Chicagoland area since 1887, and currently has nine branches and lending centers in Homewood and St. Charles, Illinois. Visit Royal Financial, Inc. and Royal Savings Bank at www.royalbankweb.com.

Safe–Harbor 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.

Contact: Mr. Leonard SzwajkowskiPresident and CEOTelephone: (773) 382-2111E-mail: lszwajkowski@royal-bank.us

Royal Financial, Inc. and Subsidiary Consolidated Statements of Financial Condition September 30, 2018 and June 30, 2018 (Unaudited) September 30, June 30, 2018 2018 Assets Cash and non-interest bearing balances in financial institutions $ 3,359,990 $ 2,825,543 Interest Bearing Financial Institutions 6,323,275 11,357,538 Federal Funds Sold 130,884 45,159 ------------- ------------- Total Cash and Cash Equivalents $ 9,814,149 $ 14,228,240 - ----------- - ----------- Investment Certificates of Deposit $ 1,844,000 $ 1,844,000 Securities available for sale 42,466,391 42,863,407 Loans Receivable, net of Allowance for loan losses 323,873,557 322,859,548 of $2,564,189 at September 30, 2018, $2,388,428 at June 30, 2018 Federal Home Loan Bank Stock 724,100 724,100 Premises & Equipment, net 14,668,877 14,810,797 Accrued Interest Receivable 1,485,198 1,354,267 Other Real Estate Owned 308,099 305,311 Deferred Tax Asset 10,006,732 10,406,528 Core Deposit Intangible 1,108,298 1,143,504 Goodwill 1,572,344 1,572,344 Other Assets 600,340 1,116,626 Total Assets $ 408,472,085 $ 413,228,672 - ----------- - ----------- Liabilities & Stockholders Equity Total Deposits $ 344,967,287 $ 341,228,412 Advances from Borrowers for Taxes and Insurance 2,082,958 3,691,202 FHLB Advances 12,000,000 19,000,000 Notes Payable 13,000,000 13,500,000 Accrued Interest Payable and Other Liabilities 1,126,939 1,277,951 Total Liabilities $ 373,177,184 $ 378,697,565 Stockholder’s Equity Common Stock $ 26,450 $ 26,450 Additional Paid-In Capital 24,027,340 24,012,821 Retained Earnings 13,576,892 12,609,097 Treasury Stock (1,012,924) (1,012,924) Unrealized G/L in Equity (1,322,857) (1,104,337) Total Capital $ 35,294,901 $ 34,531,107 Total Liabilities and Stockholder’s Equity $ 408,472,085 $ 413,228,672 - ----------- - ----------- This report has not been prepared in accordance with Securities and Exchange Commission (“SEC”) rules applicableto SEC registrant companies and is not intended to comply with such rules.

Royal Financial, Inc. and Subsidiary Consolidated Statements of Operations Three Months Ended September 30, 2018 and 2017 (Unaudited) 2018 2017 ----------- ----------- Interest income Loans, including fees $ 4,232,844 $ 3,264,457 Securities 269,713 191,142 Federal funds sold and other 16,342 16,923 ----------- ----------- Total interest income $ 4,518,899 $ 3,472,523 Interest expense Deposits 628,095 375,240 Borrowings 216,206 70,405 ----------- ----------- Total interest expense $ 844,301 $ 445,644 Net interest income $ 3,674,598 $ 3,026,878 Provision/(Credit) for loan losses 150,000 180,000 ----------- ----------- Net interest income after provision/ (credit) for loan losses $ 3,524,598 $ 2,846,878 Non-interest income Service charges on deposit accounts $ 179,668 $ 134,419 Secondary mortgage market fees 51,411 13,530 Rental Income 31,371 31,691 Other 292 53,283 Total non-interest income $ 223,957 $ 232,924 Non-interest expense Salaries and employee benefits $ 1,116,804 $ 1,121,826 Occupancy and equipment 513,172 399,650 Data processing 174,279 154,351 Professional services 188,786 163,472 Director fees 46,200 36,000 Marketing 16,870 18,288 FDIC insurance expense 38,275 30,667 Insurance premiums 23,994 25,848 Other Real Estate Owned Expense (income), net 9,821 60,003 Acquisition Expense 7,510 2,954 Core Deposit Intangibles Amortization 35,207 26,499 Other 222,098 195,787 Total non-interest expense $ 2,393,015 $ 2,235,345 Income before income taxes $ 1,394,325 $ 844,457 Provision (Benefit) for income taxes 426,530 (510,636) ----------- ----------- Net Income (Loss) $ 967,795 $ 1,355,093 - --------- - --------- Basic earnings per share $ 0.39 $ 0.54 Diluted earnings per share $ 0.38 $ 0.53 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.

AP RADIO
Update hourly