EXHIBIT
      10.3




**SEPARATION
      AGREEMENT AND RELEASE**




This
      Separation Agreement and Release (“Agreement”) is entered into this 26th day of
      September, 2007 between DONALD A. MOLL (“Employee”) on one hand, and ROYAL
      FINANCIAL, INC. and ROYAL SAVINGS BANK (collectively, the “Company”) on the
      other hand.  Employee and Companycollectively are referred to herein as the “Parties.”  This Agreement
      is made for good and valuable consideration, the receipt and sufficiency of
      which is acknowledged by the Parties.




**RECITALS**




WHEREAS,
      Employee has been employed as the Chief Executive Officer/President, and has
      served as a member of the Board of Directors, of the Company pursuant to an
      Executive Employment Agreement dated January 20, 2005 (“Employment
      Agreement”);




WHEREAS,
      on June 18, 2007, the Company suspended Employee with pay as a result of
      and pending the conclusion of an internal investigation regarding alleged
      irregularities with respect to the Company’s internal controls and allegations
      of misconduct on the part of Employee raised by other executive officers of
      the
      Company; and




WHEREAS,
      to avoid the potential cost involved with and uncertainty of litigation, the
      Parties wish to resolve their dispute as to Employee’s employment with the
      Company and have mutually agreed to terminate the Employment Agreement whereby
      Employee will resign all positions of employment he currently holds with the
      Company, his membership on the Board of Directors of each of Royal Financial,
      Inc. and Royal Savings Bank, and any positions with any affiliates of the
      Company, under the terms set forth in this Agreement.




NOW
      THEREFORE, the Parties, desiring to resolve the matters at issue, agree as
      follows:




**AGREEMENT**




1.           Employee’s
      Resignation and Termination of Employment Agreement.  Employee
      hereby agrees to resign as President/Chief Executive Officer and member of
      the
      Board of Directors of each of Royal Financial, Inc. and Royal Savings Bank
      and
      any and all positions with any affiliates of the Company (*see*
      Schedule A attached hereto), effective eight (8) days after he executes
      this Agreement, assuming he does not revoke this Agreement during that
      timeframe.  Employee’s Employment Agreement shall terminate on the
      date Employee so resigns, and upon such termination, the Employee and Company
      shall have no further rights and obligations under the Employment Agreement
      except for those rights and obligations as specifically set forth
      herein.  Specifically, the vesting rights relating to any and all
      stock options and shares of restricted stock granted to Employee pursuant to
      the
      terms of the 2005 Royal Financial, Inc. Stock Option Plan and the 2005 Royal
      Financial, Inc. Recognition and Retention Plan and Trust Agreement,
      respectively, shall cease on the effective date of his resignation; provided,
      however, Employee shall retain such rights to any stock options and shares
      of
      restricted stock that have previously vested up to the effective date of his
      resignation.




2.           Confidentiality.  Except
      as necessary to comply with the Company’s reporting obligations to the
      Securities and Exchange Commission (“SEC”) or any state or federal
      banking











regulators,
      to provide relevant information to investors and potential investors, or to
      disclose as necessary to its accountants, attorneys and officers and directors
      with a need to know, Company agrees to keep the terms of this Agreement in
      strict confidence from all persons not a party to this
      Agreement.  Likewise, Employee agrees to keep the terms of this
      Agreement in strict confidence from all persons not a party to this Agreement,
      except that Employee may disclose the contents of this Agreement to his
      immediate family members, attorney(s), accountant(s), and financial advisor(s),
      who also agree to keep this information confidential.




3.           Non-disparagement.  Employee
      agrees that he shall not disparage the Company nor the Company’s business, nor
      any of its officers, directors or employees, nor otherwise seek to reduce the
      goodwill of the Company or diminish or negatively impact the reputation of
      the
      Company, its officers, directors, or employees.  The Company, on
      behalf of its directors and executive officers, agrees not to disparage Employee
      or to act in any way to diminish or negatively impact Employee’s
      reputation.  Notwithstanding this provision, the Company and Employee
      retain all rights of communication with respect to Company’s ongoing
      investigation of: (a) Employee’s alleged misconduct, and (b) the
      conversion of the Company to a publicly traded entity.  The Company
      also retains all rights of communication with respect to its reporting
      requirements to the SEC and any state and federal banking
      regulators.




4.           Releases.  (a) In
      consideration of the payments and promises made by the Company to Employee
      herein, Employee on behalf of Employee and his spouse, heirs, executors,
      administrators, children and assigns hereby fully releases and discharges the
      Company, its officers, directors, shareholders, parents, subsidiaries, benefit
      plans and their administrators, affiliates, supervisors, managers, employees,
      agents, representatives, fiduciaries, insurers and attorneys, and its and their
      predecessors, successors, heirs, executors, administrators, and assigns
      (“Released Parties”) from any and all claims, actions, causes of actions,
      grievances, suits, charges, or complaints of any kind or nature whatsoever,
      that
      he ever had or now has, whether fixed or contingent, liquidated or unliquidated,
      know or unknown, and whether arising in tort, contract, statute, or equity,
      before any federal, state, local, or private court, agency, arbitrator,
      mediator, or other entity, regardless of the relief or remedy, related to his
      employment with the Company, the termination of his employment with the Company,
      the termination of his Employment Agreement, any claim for attorneys’ fees and
      costs related to his present disputes with the Company, and any related claims
      arising from acts occurring before, during or after his suspension on
      June 18, 2007.  Without limitation, this release specifically
      includes any and all claims for violation of Title VII of the Civil Rights
      Act
      of 1964, as amended, the Rehabilitation Act of 1973, as amended, the Employee
      Retirement Income Security Act of 1974, as amended, the Civil Rights Act of
      1991, the Age Discrimination in Employment Act, the Americans With Disabilities
      Act, the Family and Medical Leave Act, the Illinois Human Rights Act, and for
      defamation, intentional infliction of emotional distress, invasion of privacy,
      breach of contract, and any other statutory claim or common-law
      claim.  This release does not affect claims that arise in the future
      after the date on which Employee’s right to revoke this Agreement
      expires.  Notwithstanding the terms set forth above in this paragraph
      4(a), Employee does not release any claims, actions, causes of actions,
      grievances, suits, charges, or complaints of any kind or nature whatsoever
      arising out of the Company’s ongoing investigation of Employee’s alleged
      misconduct and the conversion of the Company to a publicly traded entity,
      including, but not limited to, any third-party action, including any action
      instituted by any state or federal regulatory agency such as the
      SEC.   Nothing contained in this paragraph 4(a) shall limit or
      impair any of Employee’s rights or vested benefits under any of the






2




Company’s
      existing benefit plans up to and including the effective date of his
      resignation.




(b) The
      Company hereby releases and discharges the Employee, and his heirs, executors
      and administrators, from any and all claims, actions, causes of actions,
      grievances, suits, charges, or complaints of any kind or nature whatsoever,
      that
      it has ever had or now has, whether fixed or contingent, liquidated or
      unliquidated, and whether arising in tort, contract, statute, or equity, before
      any federal, state, local, or private court, agency, arbitrator, mediator,
      or
      other entity, regardless of the relief or remedy.  Notwithstanding the
      terms set forth above in this paragraph 4(b), the Company does not release
      any
      claims, actions, causes of actions, grievances, suits, charges, or complaints
      of
      any kind or nature whatsoever arising out of the Company’s ongoing investigation
      of Employee’s alleged misconduct and of the conversion of the Company to a
      publicly traded entity, including, but not limited to, any third-party action,
      including any action instituted by any state or federal regulatory agency such
      as the SEC.




5.           Payment
      and Health Insurance.  In exchange for the considerations set
      forth herein, the Company agrees to: (a) pay Employee the total amount of
      Forty-Eight Thousand Seventy-Seven Dollars and Fifteen Cents ($48,077.15),
      minus
      federal or state tax withholdings, on the 14th day after
      Employee
      has executed (and not revoked) this Agreement; and (b) reimburse the
      Employee for the cost of COBRA medical insurance coverage (including the
      administrative fee) for Employee and any eligible dependents, for the period
      from the effective date of his resignation with the Company through
      January 20, 2008, assuming Employee is eligible for and elects COBRA
      coverage for that period and he is not otherwise eligible for medical insurance
      coverage during that period under any other employer’s group health insurance
      plan.  The COBRA reimbursement payments referenced above will be made
      directly to the Employee assuming the Employee provides proof of his election
      of
      COBRA and proof of payment of the COBRA payments to the Company’s group medical
      insurer.  Employee will remain responsible for complying with all the
      other requirements of COBRA, including continuing to pay for his medical
      insurance after the Company is no longer obligated to provide reimbursement
      of
      such payments.




6.           No
      Admission of Liability.   This Agreement includes a
      settlement of any employment-related claims Employee may have against the
      Released Parties, and the Released Parties do not admit any liability to
      Employee with respect to any such claims.  The Parties intend to avoid
      any future litigation with respect to all such claims released under this
      Agreement.




7.           Restrictive
      Covenants.  The Company and Employee hereby agree that the rights
      and obligations set forth in paragraphs 12, 13 and 14 of Employee’s Employment
      Agreement shall remain in full force and effect, and are incorporated by
      reference in this Agreement as if fully set forth herein. Specifically, Employee
      renews his commitment to strictly honor the restrictive covenants set forth
      in
      paragraphs 12 and 13 of his Employment Agreement.  Employee further
      agrees that the Company shall maintain any and all its enforcement rights and
      remedies set forth in paragraph 14 of Employee’s Employment
      Agreement.




8.           Parties’
      Representations.  The Parties agree, represent and warrant as
      follows:




a.
            The
                Employee and the Company are the sole and only real Parties in interest
                with respect to any claims the Parties have agreed to release hereunder,
                and Employee and the Company have not assigned or transferred, or
                purported to assign or






3




transfer
                to any person or entity whatsoever, any of the claims released under
                this
                Agreement; b.
            Each
                party has read this Agreement and knows and understands its contents
                fully.  The Parties understand that they are giving up any
                claims released hereunder against the other party, and that they
                may never
                bring an arbitration or lawsuit to recover for such
                claims;




c.
            Each
                party to this Agreement has received independent legal advice from
                its or
                his attorney with respect to the legal consequences of making the
                settlement provided for herein and with respect to the execution
                of this
                Agreement.  Each party voluntarily executes this Agreement,
                after consulting with counsel and without being pressured or influenced
                by
                any statement or representation of any person acting on behalf of
                any
                other party, including any other party’s officers, directors,
                shareholders, partners, employees, agents, insurers, successors,
                assigns
                and attorneys; and




d.
            Each
                signatory is fully authorized to sign this
                Agreement.




9.           Joint
      Drafting.  The Parties have jointly participated in the drafting
      of this Agreement.  No one party shall be deemed to be the draftsman
      of this Agreement.  The provisions of this Agreement are to be
      construed fairly and reasonably, and not strictly for or against any
      party.




10.         Execution.  This
      Agreement may be signed in multiple counterparts and each counterpart or a
      telefacsimile copy of the Agreement, which shall be considered an original
      for
      all purposes, when taken with the other executed counterpart, shall constitute
      a
      binding agreement among the Parties executed as of the date first written
      above.




11.         No
      Reinstatement.  Employee waives any right to reinstatement and
      agrees not to apply for reemployment with the Company.




12.         Older
      Workers’ Benefits Protection Act Provisions.




a.
            Employee
                acknowledges that he has been advised in writing to consult with
                an
                attorney about this Agreement, and that he is represented by his
                attorney
                of choice, George Collins, Esq., with respect to his consideration
                of this
                Agreement.




b.
            Employee
                acknowledges that he was given the opportunity to review and consider
                this
                Agreement for a period of up to twenty-one (21)
                days.




c.
            After
                he signs this Agreement, Employee shall have seven (7) days in which
                to
                change his mind and revoke his acceptance of this
                Agreement.




13.           Governing
      Law/Jurisdiction/Prevailing Party.  For purposes of interpretation
      of this Agreement, the Parties agree that Illinois law shall apply, and that
      any
      action to enforce, construe or interpret this Agreement shall be brought in
      the
      state court of the State of Illinois, County of Cook.  If any such
      action is instituted, the prevailing party in any such action shall be






4




entitled
      to reimbursement from the other party of his/its reasonable attorneys’ fees and
      costs incurred in such action.




14.           Entire
      Agreement.  This Agreement shall be the sole and exclusive
      agreement among the Parties related to the subject matter herein.




**ROYAL
                FINANCIAL, INC.**
              
              
              By:  /s/
                Leonard Szwajkowski
              Leonard Szwajkowski
            **DONALD
                A. MOLL**
              
              
              By:  /s/
                Donald A. Moll
              
              Dated:  September 26,
                2007Its:  Chief
                Financial Officer and Acting Chief
              Executive
                Officer
              
              Dated: 
                September 26, 2007**ROYAL
                SAVINGS BANK**
              
              By:  /s/
                Leonard Szwajkowski
              Leonard Szwajkowski
              
              Its:  Chief
                Financial Officer and Acting Chief
              Executive
                Officer
              
              Dated: 
                September 26, 2007




5




**Schedule A**




·
            Royal
                Financial, Inc. – President and Chief Executive Officer, and
                Director




·
            Royal
                Savings Bank – President and Chief Executive Officer, and
                Director




·
            Royal
                Charitable Foundation – President and
                Director




·
            Royal
                Financial, Inc. – Employee Stock Ownership Plan Committee
                Member