CHICAGO, Jan. 15, 2016 (GLOBE NEWSWIRE) -- Royal Financial, Inc. (“Royal Financial”) (OTCQX:RYFL) and Park Bancorp, Inc. (“Park Bancorp”) (OTC-Pink:PFED) jointly announced today that they have entered into a definitive agreement and plan of merger pursuant to which Park Bancorp, the holding company and parent of Park Federal Savings Bank (“Park Federal”) will merge with and into Royal Financial, the holding company for Royal Savings Bank (“Royal Savings”). Park Federal, which operates three banking offices in Chicago and one in Westmont, Illinois, will merge with and into Royal Savings.
Under the terms of the definitive agreement, which has been unanimously approved by the Boards of Directors of both companies, shareholders of Park Bancorp will be entitled to receive a total of approximately $240,000 in cash in exchange for the outstanding common shares of Park Bancorp; provided that such amount will be reduced to the extent that Park Bancorp’s consolidated stockholder’s equity is below a specified threshold as of the closing. As of September 30, 2015, Park Bancorp had $146 million in total assets, $78 million in total loans and $112 million in total deposits. Royal Financial expects the acquisition to close in the second quarter of calendar year 2016 following receipt of all required regulatory approvals and fulfillment of other customary closing conditions, including approval of the stockholders of Park Bancorp. On a combined basis, Royal Financial is expected to have approximately $308 million in assets, $205 million in loans and $264 million in deposits. Royal intends to file the necessary bank merger applications with federal and state banking regulators in the near term seeking their approval of the proposed acquisition.
The transaction is projected to be accretive to Royal Financial in the first full year of combined operations. The combined company will be structured to support enhanced financial return targets while maintaining well-capitalized status in terms of regulatory capital ratios. Royal Financial intends to restructure the acquired balance sheet of Park Bancorp by selling off certain performing and non-performing loans, other real estate owned and other bank properties and to also prepay certain higher costing borrowings of Park Federal with the Federal Home Loan Bank of Chicago.
“We are excited to welcome Park Bancorp’s customers and staff to Royal Financial. The transaction is attractive and fits Royal Financial’s strategy to enhance the value of our franchise,” said Jim Fitch, Chairman of Royal Financial. “This acquisition continues to expand Royal Financial’s ability to serve the Chicago banking market while also providing economies of scale and maintaining our strong balance sheet. In both our recent acquisition of PNA Bank and this agreement to acquire Park Bancorp, our management team has demonstrated great skill and agility.”
“We will continue to provide the highest quality customer service to our new and existing customers throughout the combined service area,” added Leonard Szwajkowski, President and CEO of Royal Financial.
“The Board of Directors of Park Bancorp is pleased that the Company will be joining the Royal Financial family,” said David A. Remijas, President and Chief Executive Officer of Park Bancorp. “The Board believes this is a great opportunity for Park Federal to be a part of an organization with deeper resources, operational scale and a steady stream of core earnings.”
Royal Financial was advised in the transaction by RP Financial, LC. as financial advisor and Howard & Howard as legal counsel. Park Bancorp, Inc. was advised by Vedder Price P.C. as legal counsel. The definitive agreement can be accessed on Royal’s website, under “Royal Financial”, at www.royal-bank.us or from the OTC Markets’ website at www.otcmarkets.com under the ticker RYFL.
Royal Savings offers a range of checking and savings products and a full line of home and commercial lending solutions. Royal Savings has been operating continuously in the south and southeast communities of Chicago since 1887, and currently operates four office locations 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 Royal Financial’s future plans, strategies and expectations, can generally be identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar expressions. Royal Financial’s 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 Royal Financial and Royal Savings 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 Royal Savings’ loan portfolio that would cause Royal Savings to further increase its 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 Royal Financial’s market areas; Royal Financial’s ability to integrate the operations of Park successfully and cost-effectively; 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.