**SECURITIES
        AND EXCHANGE COMMISSION**
 **WASHINGTON,
        D.C. 20549**
  **FORM
        10-QSB**
  (mark
        one)
  **ý** **QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
        SECURITIES**
 **EXCHANGE
        ACT OF 1934**
 **For
        the quarterly period ended September 30, 2006**
  or
  ** ̈** **TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE**
 **EXCHANGE
        ACT**
  For
        the
        transition period from _______to_______
  Commission
        File Number 000-51123
  **ROYAL
        FINANCIAL, INC.**
 (Exact
        name of small business issuer specified in its charter)
  **Delaware**
                
                (State
                  or other jurisdiction of incorporation or organization)
              **20-1636029**
                
                (I.R.S.
                  Employer Identification Number)**9226
                  S. Commercial Avenue**
                **Chicago,
                  Illinois 60617**
                (Address
                  of principal executive offices)
 
 **(773) 768-4800**
 (Issuer’s
        telephone number)
  **Not
        Applicable**
 (Former
        name, former address and former fiscal year,
 if
        changes since last report)
  Check
        whether the issuer (1) filed all reports required to be filed by
        Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
        such shorter period that the registrant was required to file such reports),
        and
        (2) has been subject to such filing requirements for the past 90 days. Yes ý No  ̈
  Indicate
        by a check mark whether the registrant is a shell company (as defined in
        Rule
        12b-2 of the Exchange Act). Yes  ̈ No ý
  State
        the
        number of shares outstanding of each of the issuer’s classes of common equity,
        as of the latest practicable date:
  **Class**
              **Outstanding
                  as of November 1, 2006**Common
                  Stock, $0.01 par value
              2,597,100
 
 Transitional
        Small Business Disclosure Format (check one): Yes  ̈ No ý
  
  **ROYAL
        FINANCIAL, INC. AND SUBSIDIARY**
  **FORM
        10-QSB**
  **For
        the quarterly period ended September 30, 2006**
  **TABLE
        OF CONTENTS**
  **Page****PART
                  I - FINANCIAL INFORMATION**Item
                  1. Financial StatementsConsolidated
                  Statements of Financial Condition as of September 30, 2006 and
                  June 30, 2006
              1Consolidated
                  Statements of Income (Loss) and Comprehensive Income (Loss) for
                  the three
                  months ended September 30, 2006 and 2005
              2Consolidated
                  Statements of Stockholders’ Equity for the three months ended
                  September 30, 2006 and 2005
              3Consolidated
                  Statements of Cash Flows for the three months ended September 30,
                  2006 and 2005
              4Notes
                  to Unaudited Financial Statements
              5Item
                  2. Management’s Discussion and Analysis of Financial Condition and Results
                  of Operations
              9Item
                  3. Controls and Procedures
              11**PART II
                  - OTHER INFORMATION**Item
                  1. Legal Proceedings
              14Item
                  2. Unregistered Sales of Equity Securities and Use of
                  Proceeds
              14Item
                  3. Defaults Upon Senior Securities
              14Item
                  4. Submission of Matters to a Vote of Security Holders
              14Item
                  5. Other Information
              14Item
                  6. Exhibits
              14**SIGNATURES**
              15**EXHIBIT INDEX**
   i
  **PART
        I. - FINANCIAL INFORMATION**
  **Item
        1.**  **Financial
        Statements** **.**
  **ROYAL
        FINANCIAL, INC. AND SUBSIDIARY**
 CONSOLIDATED
          STATEMENTS OF FINANCIAL CONDITION
 September 30,
        2006 and June 30, 2006 (Unaudited)
  **September 30,
                  2006**
              
              **June 30,
                  2006****ASSETS**Cash
                  and due from financial institutions
              
              $
              3,326,455
              
              $
              3,454,828Federal
                  funds sold
              
              
              22,152,377
              
              
              893,392Total
                  cash and cash equivalents
              
              
              25,478,832
              
              
              4,348,220Securities
                  available for sale
              
              
              19,056,128
              
              
              21,517,841Loans
                  receivable, net of allowance for loan losses of $430,000 at
                  September 30, 2006 and $400,000 at June 30, 2006
              
              
              75,748,430
              
              
              77,325,934Federal
                  Home Loan Bank stock, at cost
              
              
              345,913
              
              
              345,913Cash
                  surrender value of life insurance
              
              
              4,597,171
              
              
              4,553,721Premises
                  and equipment, net
              
              
              5,575,426
              
              
              5,402,419Accrued
                  interest receivable
              
              
              389,005
              
              
              446,591Other
                  assets
              
              
              346,994
              
              
              337,975Total
                  assets
              
              $
              131,537,899
              
              $
              114,278,614**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY**LiabilitiesDeposits
              
              $
              97,261,452
              
              $
              78,897,747Federal
                  funds purchased
              
              
              —
              
              
              1,225,404Advances
                  from borrowers for taxes and insurance
              
              
              305,935
              
              
              479,706Accrued
                  interest payable and other liabilities
              
              
              412,097
              
              
              302,502Common
                  stock in ESOP subject to contingent repurchase obligation
              
              
              639,032
              
              
              617,872Total
                  liabilities
              
              
              98,618,516
              
              
              81,523,231Stockholders’
                  equityPreferred
                  stock, $.01 par value per share, authorized 1,000,000 shares; no
                  issues
                  are outstanding
              
              
              —
              
              
              —Common
                  stock, $.01 par value per share, authorized 5,000,000 shares; 2,645,000
                  shares issued at September 30, 2006 and June 30,
                  2006
              
              
              26,450
              
              
              26,450Additional
                  paid-in capital
              
              
              23,886,157
              
              
              24,739,005Retained
                  earnings
              
              
              12,646,374
              
              
              12,822,013Treasury
                  stock, 47,900 shares and 52,900 shares, at cost
              
              
              (709,361
              )
              
              (783,611
              )Accumulated
                  other comprehensive loss, net of tax
              
              
              (217,772
              )
              
              (393,231
              )Unearned
                  RRP shares
              
              
              —
              
              
              (897,072
              )Unearned
                  ESOP shares
              
              
              (2,073,433
              )
              
              (2,140,299
              )Reclassification
                  of ESOP shares
              
              
              (639,032
              )
              
              (617,872
              )Total
                  stockholders’ equity
              
              
              32,919,383
              
              
              32,755,383Total
                  liabilities and stockholders’ equity
              
              $
              131,537,899
              
              $
              114,278,614
 
 See
        accompanying notes to these unaudited consolidated financial
        statements.
  1
 
 **ROYAL
        FINANCIAL, INC. AND SUBSIDIARY**
 CONSOLIDATED
          STATEMENTS OF INCOME (LOSS)
 AND
          COMPREHENSIVE INCOME (LOSS)
 Three
        months ended September 30, 2006 and 2005
 (Unaudited)
  **Three
                  Months Ended**
                **September 30,****2006**
              
              **2005**Interest
                  incomeLoans
              
              $
              1,404,442
              
              $
              923,570SecuritiesTaxable
              
              
              194,729
              
              
              291,168Federal
                  funds sold and other
              
              
              136,873
              
              
              103,188Total
                  interest income
              
              
              1,736,044
              
              
              1,317,926Interest
                  expenseDeposits
              
              
              566,202
              
              
              305,020Federal
                  funds purchased
              
              
              2,151
              
              
              —Total
                  interest expense
              
              
              568,353
              
              
              305,020**Net
                  interest income**
              
              
              1,167,691
              
              
              1,012,906Provision
                  for loan losses
              
              
              30,000
              
              
              30,000**Net
                  interest income after provision for loan losses**
              
              
              1,137,691
              
              
              982,906Noninterest
                  incomeService
                  charges on deposit accounts
              
              
              66,322
              
              
              56,984Gain
                  on sales of securities, net
              
              
              —
              
              
              16,945Earnings
                  on bank-owned life insurance
              
              
              43,450
              
              
              54,509Other
                  income
              
              
              29,826
              
              
              18,553Total
                  noninterest income
              
              
              139,598
              
              
              146,991Noninterest
                  expenseSalaries
                  and employee benefits
              
              
              720,931
              
              
              529,637Occupancy
                  and equipment
              
              
              318,067
              
              
              207,616Data
                  processing
              
              
              75,060
              
              
              102,457Professional
                  services
              
              
              160,820
              
              
              171,320Director
                  fees
              
              
              34,200
              
              
              31,800Supplies
              
              
              41,327
              
              
              19,702Advertising
              
              
              69,332
              
              
              12,588Insurance
                  premiums
              
              
              17,825
              
              
              21,640Other
              
              
              121,366
              
              
              49,541Total
                  noninterest expense
              
              
              1,558,928
              
              
              1,146,301**Loss
                  before income tax expense**
              
              
              (281,639
              )
              
              (16,404
              )Income
                  tax benefit
              
              
              (106,000
              )
              
              (6,600
              )Net
                  loss
              
              $
              (175,639
              )
              $
              (9,804
              )Basic
                  and diluted loss per share
              
              $
              (0.07
              )
              $
              0.00Comprehensive
                  loss
              
              $
              (180
              )
              $
              (127,979
              )
 
 See
        accompanying notes to these unaudited consolidated financial
        statements.
  2
  **ROYAL
        FINANCIAL, INC. AND SUBSIDIARY**
 CONSOLIDATED
          STATEMENTS OF STOCKHOLDERS’ EQUITY
 Three
        months ended September 30, 2006 and 2005
 (Unaudited)
  **Common
                  Stock**
              
              **Additional
                  Paid-In Capital**
              
              **Retained
                  Earnings**
              
              **Accumulated
                  Other Compre-hensive Income (Loss)**
              
              **Unearned
                  ESOP Shares**
              
              **Amount
                  Reclassi-fied on ESOP Shares**
              
              **Treasury
                  Stock**
              
              **Unearned
                  RRP Shares**
              
              **Total****2005**Balance
                  at July 1, 2005
              
              $
              26,450
              
              $
              24,764,553
              
              $
              12,268,336
              
              $
              (113,322
              )
              $
              (2,406,726
              )
              $
              (272,964
              )
              $
              —
              
              $
              —
              
              $
              34,266,327Comprehensive
                  income (loss)Net
                  loss
              
              
              —
              
              
              —
              
              
              (9,804
              )
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (9,804
              )Change
                  in fair value of securities available-for-sale, net
              
              
              —
              
              
              —
              
              
              —
              
              
              (118,175
              )
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (118,175
              )Total
                  comprehensive loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (127,979
              )Reclassification
                  due to change in fair value of common stock in ESOP subject to
                  contingent
                  repurchase obligation
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (20,102
              )
              
              —
              
              
              —
              
              
              —ESOP
                  shares earned
              
              
              —
              
              
              6,935
              
              
              —
              
              
              —
              
              
              64,321
              
              
              —
              
              
              —
              
              
              —
              
              
              71,256Balance
                  at September 30, 2005
              
              $
              26,450
              
              $
              24,771,488
              
              $
              12,258,532
              
              $
              (231,497
              )
              $
              (2,342,405
              )
              $
              (293,066
              )
              $
              —
              
              $
              —
              
              $
              34,189,502**2006**Balance
                  at July 1, 2006
              
              $
              26,450
              
              $
              24,739,005
              
              $
              12,822,013
              
              $
              (393,231
              )
              $
              (2,140,299
              )
              $
              (617,872
              )
              $
              (783,611
              )
              $
              (897,072
              )
              $
              32,755,383Comprehensive
                  incomeNet
                  loss
              
              
              —
              
              
              —
              
              
              (175,639
              )
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (175,639
              )Change
                  in fair value of securities available-for-sale, net
              
              
              —
              
              
              —
              
              
              —
              
              
              175,459
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              175,459Total
                  comprehensive loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (180
              )Reclassification
                  due to release and change in fair value of common stock in ESOP
                  subject to
                  contingent repurchase obligation of ESOP shares
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (21,160
              )
              
              —
              
              
              —
              
              
              (21,160
              )Release
                  of 5,290 of unearned ESOP shares
              
              
              —
              
              
              13,013
              
              
              —
              
              
              —
              
              
              66,866
              
              
              —
              
              
              —
              
              
              —
              
              
              79,879Reclassification
                  of RRPs in conjunction with adoption of SFAS 123(R)
              
              
              —
              
              
              (897,072
              )
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              897,072
              
              
              —Issuance
                  of 5,000 shares to RRP plan
              
              
              —
              
              
              (74,250
              )
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              74,250
              
              
              —
              
              
              —Stock-based
                  compensation
              
              
              —
              
              
              105,461
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              105,461Balance
                  at September 30, 2006
              
              $
              26,450
              
              $
              23,886,157
              
              $
              12,646,374
              
              $
              (217,772
              )
              $
              (2,073,433
              )
              $
              (639,032
              )
              $
              (709,361
              )
              $
              —
              
              $
              32,919,383
 
 See
        accompanying notes to these unaudited consolidated financial
        statements.
  3
  **ROYAL
        FINANCIAL, INC. AND SUBSIDIARY**
 CONSOLIDATED
          STATEMENTS OF CASH FLOWS
 Three
        months ended September 30, 2006 and 2005
 (Unaudited)
  
 **2006**
              
              **2005****Cash
                  flows from operating activities**Net
                  loss
              
              $
              (175,639
              )
              $
              (9,804
              )Adjustments
                  to reconcile net loss to net cash from operating
                  activities:Depreciation
              
              
              90,524
              
              
              69,748Provision
                  for loan losses
              
              
              30,000
              
              
              30,000ESOP
                  expense
              
              
              79,879
              
              
              71,256Gain
                  on sales of securities, net
              
              
              —
              
              
              (16,945
              )Federal
                  Home Loan Bank stock dividend
              
              
              —
              
              
              (4,500
              )Stock-based
                  compensation
              
              
              105,461
              
              
              —Earnings
                  on bank-owned life insurance
              
              
              (43,450
              )
              
              (54,509
              )Change
                  in accrued interest receivable and other assets
              
              
              48,567
              
              
              (139,818
              )Change
                  in other accrued interest payable and liabilities
              
              
              109,595
              
              
              224,418Net
                  cash from operating activities
              
              
              244,937
              
              
              169,846**Cash
                  flows from investing activities**Proceeds
                  from sales, maturities, calls, and paydowns of securities available
                  for
                  sale
              
              
              2,637,172
              
              
              3,223,842Purchases
                  of securities available for sale
              
              
              —
              
              
              (2,000,000
              )Change
                  in loans receivable
              
              
              1,547,504
              
              
              (5,123,579
              )Purchase
                  of loan participations
              
              
              —
              
              
              (3,851,000
              )Purchase
                  of premises and equipment
              
              
              (263,531
              )
              
              (24,112
              )Net
                  cash from investing activities
              
              
              3,921,145
              
              
              (7,774,849
              )**Cash
                  flows from financing activities**Net
                  increase (decrease) in deposits
              
              
              18,363,705
              
              
              (140,004
              )Net
                  decrease in federal funds purchased
              
              
              (1,225,404
              )
              
              —Net
                  increase (decrease) in advances from borrowers for taxes and
                  insurance
              
              
              (173,771
              )
              
              205,300Net
                  cash from financing activities
              
              
              16,964,530
              
              
              65,296Net
                  change in cash and cash equivalents
              
              
              21,130,612
              
              
              (7,539,707
              )Cash
                  and cash equivalentsBeginning
                  of the year
              
              
              4,348,220
              
              
              17,021,696End
                  of period
              
              $
              25,478,832
              
              $
              9,481,989
 
 See
        accompanying notes to these unaudited consolidated financial
        statements.
  4
  **ROYAL
        FINANCIAL, INC. AND SUBSIDIARY**
 **NOTES
          TO UNAUDITED FINANCIAL STATEMENTS**
  **Note
        1 - Nature of Business**
  Royal
        Financial, Inc. was incorporated under the laws of Delaware on
        September 15, 2004, for the purpose of serving as the holding company of
        Royal Savings Bank (the “Bank”) as part of the Bank’s conversion from a mutual
        to stock form of organization.
  **Note
        2 - Basis of Presentation**
  The
        accompanying unaudited consolidated financial statements include the accounts
        of
        Royal Financial, Inc. (the “Company”) and its wholly owned subsidiary, the Bank,
        as of and for the three-month period ended September 30, 2006 and 2005.
        Significant intercompany accounts and transactions have been eliminated in
        consolidation.
  The
        accompanying unaudited interim consolidated financial statements have been
        prepared pursuant to the rules and regulations for reporting on Form 10-QSB.
        Accordingly, certain disclosures required by U.S. generally accepted accounting
        principles (GAAP) are not included herein. These interim financial statements
        should be read in conjunction with the audited financial statements and
        accompanying notes of the Company for the fiscal years ended June 30, 2006
        and 2005. The results of the Company’s operations for any interim period are not
        necessarily indicative of the results of the Company’s operations for any other
        interim period or for a full fiscal year.
  Interim
        statements are subject to possible adjustment in connection with the annual
        audit of the Company’s financial statements for the fiscal year ending
        June 30, 2006. In the opinion of management of the Company, the
        accompanying unaudited interim consolidated financial statements reflect
        all
        adjustments (consisting of normal recurring adjustments) necessary for a
        fair
        presentation of the consolidated financial position and consolidated results
        of
        operations for the periods presented.
  **Note
        3 - Use of Estimates and Significant Accounting Policies**
  The
        preparation of the consolidated financial statements in conformity with GAAP
        requires management to make estimates and assumptions that affect amounts
        reported in the consolidated financial statements. Changes in these estimates
        and assumptions are considered reasonably possible and may have a material
        impact on the consolidated financial statements and thus actual results could
        differ from the amounts reported and disclosed herein. The Company considers
        the
        allowance for loan losses and income taxes to be critical accounting
        estimates.
  Beginning
        July 1, 2006, the effective date of the Company's adoption of Statement on
        Financial Account Standard No. 123R, the Company was required to record
        compensation expense related to the nonvested portion of stock options
        outstanding.  The
        impact on current quarter earnings and estimated effect on future earnings
        are
        discussed in Note 6.
  **Note
        4 - Earnings Per Share**
  The
        following table presents a reconciliation of the components used to compute
        basic and diluted earnings (loss) per share for the three-month period ended
        September 30, 2006. Weighted average common shares outstanding excludes
        unallocated ESOP shares.
  5
  **Three
                  Months Ended**
                **September 30,
                  2006**
              
              **Three
                  Months Ended**
                **September 30,
                  2005**Basic
                  and diluted loss per shareNet
                  loss as reported
              
              $
              (175,639
              )
              $
              (9,804
              )Weighted
                  average common shares outstanding
              
              
              2,356,748
              
              
              2,457,205Basic
                  and diluted loss per share
              
              $
              (0.07
              )
              $
              0.00
 
 **Note
        5 - Employee Stock Ownership Plan**
  On
        January 20, 2005, the Company adopted an employee stock ownership plan
        (“ESOP”) for the benefit of substantially all employees. The ESOP borrowed $2.7
        million from the Company and used those funds to acquire 211,000 shares of
        the
        Company’s stock at an average price of $12.62 per share.
  Shares
        purchased by the ESOP are allocated to ESOP participants based on principal
        and
        interest repayments made by the ESOP on the loan from the Company. The loan
        is
        secured by shares purchased with the loan proceeds and will be repaid by
        the
        ESOP with funds from the Company’s discretionary contributions to the ESOP and
        earnings on ESOP assets.
  The
        $2.7
        million loan from the Company to the ESOP requires annual principal payments
        of
        approximately $267,000, plus interest at 7.25%.
  As
        shares
        are released from collateral, the Company will report compensation expense
        equal
        to the current market price of the shares and the shares will become outstanding
        for earnings-per-share (“EPS”) computations.
  Upon
        termination of their employment, participants in the ESOP who elect to receive
        their benefit distributions in the form of Company common stock may require
        the
        Company to purchase the common stock distributed at fair value. This contingent
        repurchase obligation is reflected in the Company’s financial statements as
“Common stock in ESOP subject to contingent repurchase obligation” and reduces
        stockholders’ equity by an amount that represents the market value of all the
        Company’s common stock held by the ESOP and allocated to participants, without
        regard to whether it is likely that the shares would be distributed or that
        the
        recipients of the shares would be likely to exercise their right to require
        the
        Company to purchase the shares.
  **Note
        6 — Stock-Based
        Compensation**
  In
        October 2005, the Company’s stockholders approved the Royal Financial, Inc. 2005
        Stock Option Plan (“SOP”) and the Royal Financial, Inc. 2005 Management
        Recognition and Retention Plan (“RRP”). The SOP provides for issue of up to
        264,500 options to directors, officers, and key employees. The options become
        exercisable in equal installments over a five-year period from the date of
        grant. The options expire ten years from the date of grant. As of September
        30,
        2006, there are 56,125 shares available for future grants under the Plan.
        Option
        activity under the Plan is as follows:
  6
  **Number
                    of**
                  **shares**
                
                **Weighted**
                  **Average**
                  **Exercise
                    Price**
                
                **Weighted**
                  **Average**
                  **Contractual**
                  **Life**
                
                **Aggregate**
                  **Intrinsic**
                  **Value**Outstanding
                    at July 1, 2006
                
                
                198,375
                
                $
                13.94Granted
                
                
                10,000
                
                
                14.60Exercised
                
                
                —
                
                
                —Forfeited
                
                
                —
                
                
                —Outstanding
                    at September 30, 2006
                
                
                208,375
                
                $
                13.97
                
                
                9.13
                
                $
                235,115Exercisable
                    at September 30, 2006(1)
                
                
                13,225
                
                $
                13.90
                
                
                9.08
                
                $
                15,870
 (1) 
        The vesting of the exerciseable options was accelerated due to the death
        of the
        Company's former chief financial officer.


The
        weighted average grant-date fair value of options granted for the three
        months  ended
        September 30, 2006 was $5.33. As the SOP had not been approved until October
        26,
        2005, there were no options granted during the three months ended September
        30,
        2005.
  A
        summary
        of the status of the Company’s nonvested shares as of September 30, 2006 and
        changes during the three months ended September 30, 2006, is presented
        below:
  **Shares**
                
                **Grant
                    Date**
                  **Fair
                    Value**Unvested
                    at July 1, 2006
                
                
                185,150
                
                $
                4.83Granted
                
                
                10,000
                
                
                5.33Exercised
                
                
                —
                
                
                —Forfeited
                
                
                —
                
                
                —Unvested
                    at September 30, 2006
                
                
                195,150
                
                $
                4.85
 As
        of
        September 30, 2006, there was $785,000 of total unrecognized compensation
        cost
        related to nonvested share-based compensation arrangements granted under
        the
        SOP. That cost is expected to be recognized over a weighted-average period
        of
        approximately 4.44 years. None of the stock options vested during the three
        months ended September 30, 2006 .
  Prior
        to
        July 1, 2006, the Company accounted for stock-based awards to employees using
        the intrinsic value method in accordance with Accounting Principles Board
        (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees.” No
        compensation expense was recognized in the financial statements for stock
        option
        arrangements, as the Company’s stock option plan provides for the issuance of
        options at a price of no less than the fair market value at the date of the
        grant.
  7
  Statement
        of Financial Accounting Standards ("Statement") No. 123, “Accounting for
        Stock-Based Compensation,” requires the disclosure of pro forma net income and
        earnings per share had the Company adopted the fair value method at the grant
        date of all stock options. Under Statement 123, the fair value of stock-based
        awards is calculated through the use of option pricing models, even though
        such
        models were developed to estimate the fair value of freely tradable, fully
        transferable options without vesting restrictions, which differ significantly
        from the Company's stock option awards. These models also require subjective
        assumptions, which affect the calculated values.
  In
        December 2004, the FASB issued Statement 123 (revised 2004), "Share-Based
        Payment" ("FAS
        123(R)"). This Statement requires that compensation costs related to
        share-based payment transactions be recognized in the financial statements.
        Measurement of the cost of employee service is based on the grant-date fair
        value of the equity or liability instruments issued. That cost is recognized
        over the period during which an employee is required to provide service in
        exchange for the award.
  The
        Company adopted FAS 123(R) on July 1, 2006, which has resulted in compensation
        expense of $50,000 for the three months ended September 30, 2006. The Company
        elected the modified prospective method, under which prior periods are not
        revised for comparative purposes. The
        Company did not calculate pro forma net loss or loss per common share for
        the
        three months ended September 30, 2005 as the Company’s stockholders had not yet
        approved the plan.
  The
        fair
        value of each option grant is estimated on the date of grant using the
        Black-Scholes option pricing model using the following assumptions:
  **2006**Risk-free
                  interest rate
              
              
              5.10
              %Expected
                  option life
              
              
              7
                  yearsExpected
                  stock price volatility
              
              
              20.00
              %Dividend
                  yield
              
              
              0.00
              %
 
 Forfeitures
        for options granted prior to 2006 were recognized as they occurred. Beginning
        July 1, 2006, the Company is estimating the impact of future forfeitures
        consistent with the provisions of FAS 123(R).
  A
        Recognition and Retention Plan ("RRP") provides for issue of shares to
        directors, officers, and employees. Compensation expense is recognized over
        the
        vesting period of the shares based onthe market value of the Company's common stock at the issue date.
        Pursuant to the RRP, the Company can award up to 105,800 shares of restricted
        stock. These shares vest over a five-year period. Prior to July 1, 2006,
        the
        unamortized cost of shares not yet earned (vested) was reported as a reduction
        of shareholders' equity. Upon adoption of FAS 123(R), the unamortized cost
        of
        shares not yet earned was reclassified to additional paid-in capital. During
        the
        quarter ended September 30, 2006, 5,000 shares were granted. As of September
        30,
        2006, 21,450 shares could still be granted under the plan. Compensation expense
        for outstanding restricted stock awards totaled approximately $55,000 for
        the
        three months ended September 30, 2006. There was no compensation expense
        in 2005
        as the plan had not been approved as of September 30, 2005.
  8
  **Item
        2.**  **Management’s
        Discussion and Analysis of Financial Condition and Results of
        Operations** **.**
  ***Forward-Looking
        Information***
  This
        report includes forward-looking statements, including statements regarding
        our
        strategy, effectiveness of investment programs, evaluations of future interest
        rate trends and liquidity, expectations as to growth in assets, deposits
        and
        results of operations, future operations, market position, financial position,
        and prospects, plans and objectives of management. 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; legislative/regulatory provisions; 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; deposit flows; competition; demand for financial
        services in the Company’s market area; and 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.
  ***Comparison
        of Financial Condition at September 30, 2006 and June 30,
        200*** ***6***
  The
        Company’s total assets increased $17.3 million, or 15.1%, to $131.5 million at
        September 30, 2006, from $114.3 million at June 30, 2006.
  Cash
        and
        cash equivalents increased $21.1 million to $25.5 million at September 30,
        2006 from $4.3 million at June 30, 2006, as
        aresult of an
        increase in Fed Funds sold in an effort to increase the Company's liquidity
        position giventhe current interest rate environment.
  Securities
        available for sale decreased $2.5 million, or 11.4%, to $19.1 million at
        September 30, 2006 from $21.5 million at June 30, 2006. The decrease
is
        the result of$2.6 million in
        securities maturing during the current quarter and a decrease in
        unrealized losses on securities available for sale compared
        to the prior quarter.
  Loans
        decreased $1.6 million, or 2.0%, to $75.7 million at September 30, 2006,
        from $77.3 million at June 30, 2006. The decrease in loans was the result
        of unusually large loanprepayments during the period and the leveling off of loan demand
        as a
        result of an
        increase inmarket interest rates.
  Total
        deposits increased $18.4 million, or 23.3%, to $97.3 million at
        September 30, 2006 from $78.9 million at June 30, 2006 as a result of
        the opening of two new branches during the period and a certificate of deposit
        promotion offering
        above-market deposit rates on certain CD balances.
  Total
        stockholders’ equity remained relatively stable during the period at $32.9 and
        $32.8 million at both September 30, 2006, and June 30, 2006,
        respectively.
  ***Comparison
        of Results of Operation for the Three Months Ended September 30, 2006 and
        200*** ***5***
  *General* .
        Net
        loss for the three months ended September 30, 2006 was $176,000, compared
        to a net loss of $10,000recorded for the same period in 2005. The
        increase in net loss resulted primarily from an increase in noninterest expense
        of $413,000, partially offset by an increase in net
  9
  interest
        income of $155,000 and an increase in income tax benefit of $99,000. The
        opening
        of our two new branch locations contributed approximately
        $140,000 tothe increase in noninterest expense.
  *Interest
        Income* .
        Total
        interest income increased $418,000 to $1.7 million for the three months ended
        September 30, 2006 from $1.3 million for the three months ended
        September 30, 2005. For the three months ended September 30, 2006,
        average interest-bearing assets increased to $117.6 million from $99.7 million
        for the same period in 2005. The increase was the result of an increase in
        Federal funds sold as the Company continued to increaseits liquidity position. 
        The yield on interest-earning assets for the three month period ended
        September 30, 2006 was 6.4% compared to 5.3% for the comparable period in
        2005.
  *Net
        Interest Income* .
        Net
        interest income increased by $155,000 to $1.2 million for the three months
        ended
        September 30, 2006, from $1.0 million for the same period in 2005. The net
        interest rate spread was 3.8% for the three months ended September 30,
        2006, as compared to 3.7% for the same period in 2005. The net interest margin
        was 4.0% for the three month period ended September 30, 2006, a decrease
        from 4.3% for the same period in 2005.
  *Interest
        Expense* .
        Total
        interest expense increased $263,000 to $568,000 for the three months ended
        September 30, 2006 from $305,000 for the same period in 2005. The average
        cost of deposits increased to 2.8% for the three months ended September 30,
        2006 from 1.4% for the same period in 2005. This increase was the result
        of
        promotional rates offered on certificates of deposit to stimulate deposit
        activity at the two new branches.
  *Provision
        for Loan Losses* .
        Provisions for loan losses are charged to earnings to bring the total allowance
        for loan losses to a level considered adequate by management to cover probable
        incurred credit losses in the loan portfolio. In evaluating the level of
        the
        allowance for loan losses, management considers historical loss experience,
        the
        types of loans and the amount of loans in the loan portfolio, overall portfolio
        mix, the level of past due or classified loans, the status of past due principal
        and interest payments, loan-to-value ratios, adverse situations that may
        affect
        the borrower’s ability to repay, estimated value of any underlying collateral,
        and prevailing economic conditions, and other factors related to the
        collectibility of the loan portfolio. Groups of smaller balance homogenous
        loans, such as residential real estate, small commercial real estate, and
        home
        equity and consumer loans, are evaluated in the aggregate using historical
        loss
        factors and peer group data adjusted for current economic conditions. Large
        more
        complex loans, such as multi-family or commercial real estate loans, are
        evaluated individually for impairment.
  This
        evaluation is inherently subjective, as it requires estimates that are
        susceptible to significant revision, as more information becomes available
        or as
        projected events change. The allowance for loan losses as a percentage of
        gross
        loans outstanding increased to 0.56%
        at September 30, 2006, from 0.51%
        at June 30, 2006. There were no nonperforming loans at September 30,
        2006 or June 30, 2006.
  Management
        assesses the allowance for loan losses quarterly. While management uses
        available information to recognize losses on loans, future loan loss provisions
        may be necessary based on changes in economic conditions. In addition,
        regulatory agencies, as an integral part of their examination process,
        periodically review the allowance for loan losses and may require us to
        recognize additional provisions based on their judgment of information available
        to them at the time of their examination. A provision of $30,000 was recorded
        during the three months ended September 30, 2006 to represent management’s
        estimate of probable incurred losses in the portfolio, which was reflective
        of
        the changing economic conditions and change in the composition of the loan
        portfolio as management continues to emphasize
        growth in commercial and commercial real estate loans.
  10
  *Noninterest
        Income* .
        Noninterest income decreased $7,000 to $140,000 for the three month period
        ended
        September 30, 2006, compared to the same period in 2005. The decrease in
        the three month period was primarily the result of a $17,000 decrease in
        gain on
        sales of securities, a $10,000 decrease in earnings on bank-owned life
        insurance, offset by increases in service charges on deposit accounts of
        $9,000
        and other income of $11,000.
  *Noninterest
        Expense* .
        Noninterest expense increased $413,000 to $1.6 million for the three months
        ended September 30, 2006 from $1.1 million for the three months ended
        September 30, 2005.  Noninterest
        expense was
        primarilyaffected by the opening of our new branch locations in
        Frankfort and Schererville. Salaries and employee benefits increased $191,000.
        Besides the increased personnel costs at the new branches, the Company also
        recognized $50,000 of compensation expense relating
        to outstanding unvested stock optionsin adopting SFASStatement No. 123(R) and $55,000 of compensation expensefor stock
        awards under the Company's RRP plan. Occupancy and equipment increased by
        $110,000 due to rent expense for the new facilities and increased depreciation
        for new furniture and equipment. Other expenses increased $72,000, of which
        $56,000 related to increased marketing expenses.
  *Provision
        for Income Taxes* .
        The
        income tax benefit increased $99,000 for the three months ended
        September 30, 2006 from the comparable period in 2005. The fluctuation
        between periods was due to the increase in taxable net loss. For both quarters
        ended September 30, 2006 and 2005, the taxable loss includes $43,000 and
        $55,000
        of nontaxable income from bank-owned life insurance. A valuation allowance
        has
        not been established for the deferred tax asset related to federal net operating
        loss carryforwards as the Company believes it is more likely than not that
        they
        will be realized.
  ***Liquidity
        and Capital Resources***
  *Liquidity* .
        Liquidity management is measured and monitored on both a short- and long-term
        basis, allowing management to better understand and react to emerging balance
        sheet trends. After assessing actual and projected cash flow needs, management
        seeks to obtain funding at the most economical cost. Our primary sources
        of
        funds are deposits, principal and interest payments on loans, proceeds from
        maturities and calls of securities and FHLB advances, and funds provided
        from
        operations. While maturities and scheduled amortization of loans and securities
        are relatively predictable sources of funds, deposit flows and loan repayments
        are greatly influenced by general interest rates, economic conditions, and
        competition. We invest excess funds in short-term interest-earning assets,
        which
        enable us to meet lending requirements. We utilize FHLB advances as needed.
        At
        September 30, 2006 there were no FHLB advances outstanding.
  The
        Company’s cash flows are comprised of three primary classifications: cash flows
        from operating activities, investing activities, and financing activities.
        Net
        cash from operating activities were $242,000 and $170,000 for September 30,
        2006 and 2005, respectively. Net cash from investing activities consisted
        primarily of disbursements for loan originations and participation interests
        and
        the purchase of securities, offset by principal collections on loans, proceeds
        from maturing securities and paydowns on mortgage-backed securities. Net
        cash
        from investing activities was$3.9 million and ($7.8) million for September 30, 2006, and 2005,
        respectively. Net cash from financing activities consisted primarily of the
        increasein deposit accounts. The net cash from financing activities was $17.0
        million at September 30, 2006 and $65,296 at September 30,
        2005.
  From
        June 30, 2006 through September 30, 2006, the Company received
        proceeds of $2.6 million from maturities, calls and paydowns of available
        for
        sale securities. These proceeds were primarily reinvested in federal funds
        in
        order to fund future loan growth.
  At
        September 30, 2006, the Company had outstanding commitments to originate
        $5.4 million in loans, unfunded lines of credit and participation loans of
        $4.0
        million and $1.4 million, respectively, and
  11
  letters
        of credit outstanding of $147,000. In addition, as of September 30, 2006,
        the total amount of certificates of deposit that were scheduled to mature
        in the
        next 12 months equaled $47.6 million. The Company believes that it has adequate
        resources to fund all of its commitments and that it can adjust the rates
        paid
        on certificates of deposit to retain deposits in changing interest rate
        environments. If the Company requires funds beyond its internal funding
        capabilities, advances from the FHLB are available as an additional source
        of
        funds. As of September 30, 2006, the Bank had $6.9 million of available
        credit from the FHLB.
  *Capital* .
        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 September 30, 2006, the Bank exceeded
        each of its capital requirements with ratios of 19.54%, 28.97% and 29.49%,
        respectively.
  ***Critical
        Accounting Policies and Estimates***
  The
        accounting and reporting policies of the Company are in accordance with U.S.
        generally accepted accounting principles and conform to general practices
        within
        the banking industry. Accounting and reporting policies for the allowance
        for
        loan losses and income tax are deemed critical because they involve the use
        of
        estimates and require significant management judgments.
  *Allowance
        for Loan Losses* .
        The
        allowance for loan losses is an amount that management believes will be adequate
        to absorb probable incurred losses in existing loans, taking into consideration
        such factors as past loss experience, changes in the nature and volume of
        the
        portfolio, overall portfolio quality, loan concentrations, specific problem
        loans, and current economic conditions that affect the borrower’s ability to
        pay. Determination of the allowance is inherently subjective due to the above
        mentioned reasons. Loan losses are charged off against the allowance when
        management believes that the full collectability of the loan is unlikely.
        Recoveries of amounts previously charged-off are credited to the allowance.
        Allowances established to provide for losses under commitments to extend
        credit,
        or recourse provisions under loan sales agreements or servicing agreements
        are
        classified with other liabilities.
  A
        loan is
        considered impaired when it is probable that not all principal and interest
        amounts will be collected according to the loan contract. Residential mortgage,
        installment and other consumer loans are collectively evaluated for impairment.
        Individual commercial loans are evaluated for impairment. Impaired loans
        are
        recorded at the loan’s fair value by the establishment of a specific allowance
        where necessary. The fair value of collateral-dependent loans is determined
        by
        the fair value of the underlying collateral. The fair value of
        noncollateral-dependent loans is determined by discounting expected future
        interest and principal payments at the loan’s effective interest
        rate.
  The
        Company maintains the allowance for loan losses at a level adequate to absorb
        management’s estimate of probable losses inherent in the loan portfolio.
        Management believes that it uses the best information available to determine
        the
        adequacy of the allowance for loan losses. However, future adjustments to
        the
        allowance may be necessary and the results of operations could be significantly
        and adversely affected if circumstances differ substantially from the
        assumptions used in making the determinations.
  *Income
        Taxes* .
        Accounting for income taxes is a critical accounting policy due to the
        subjective nature of certain estimates that are involved in the calculation.
        The
        Company uses an asset/liability method of accounting for income taxes in
        which
        deferred tax assets and liabilities are established for temporary differences
        between the financial reporting basis and the tax basis of the Company’s assets
        and liabilities. The Company must assess the realization of the deferred
        tax
        asset quarterly, and to the extent that management believes that recovery
        is not
        likely, a valuation allowance is established. This
  12
  assessment
        is impacted by various factors, including taxable income and the composition
        of
        the investment securities portfolio. Material changes to these items can
        cause
        an adjustment to the valuation allowance. An adjustment to increase or decrease
        the valuation allowance is charged or credited, respectively,
        to income tax expense.
  ***Recent
        Accounting Pronouncements***
  In
        July
        2006, FASB issued Interpretation No. 48, *Accounting
        for Uncertainty in Income Taxes* ,
        ("FIN
        48"). FIN 48 is effective for fiscal years beginning after December 15, 2006.
        FIN 48 applies to all income tax positions subject to FASB Statement No.
        109, *Accounting
        for Income Taxes* ("SFAS
        109"),
        including tax positions considered to be routine and those with a high degree
        of
        uncertainty. The Company is evaluating the potential impact of this guidance
        on
        future periods.
 
 In
        September 2006, the Securities Exchange Commission (SEC) issued Staff Accounting
        Bulletin (SAB) 108, which was issued to address diversity in practice in
        quantifying financial statement misstatements and the potential under current
        practice for the build up of improper amounts on the balance sheet. The Company
        is evaluating the potential impact of this guidance on future
        periods.
 
 Under
        EITF 06-4 : Accounting for deferred compensation and postretirement benefit
        aspects of endorsement split dollar life insurance arrangements, the EITF
        reached a consensus that requires the recognition of a liability related
        to the
        postretirement benefits covered by an endorsement split-dollar life insurance
        arrangement. As of September 20, 2006, the FASB board ratified the above.
        It is
        applicable for fiscal years beginning after December 15, 2006. The Company
        has
        evaluated the impact of the pronouncement and believes there would be no
        impact
        to the Company’s financial position and results of operations as
        a
        result of the adoption of this standard.
 
 Under
        EITF 06-5: Accounting for Purchases of Life Insurance - Determining the Amount
        That Could be Realized in Accordance with FASB Technical Bulletin No. 85-4,
        "Accounting for Purchases of Life Insurance", the Task Force reached a consensus
        that a policyholder should consider any additional amounts included in the
        contractual terms of the policy in determining the amount that could be realized
        under the insurance contract. The task forces agreed that contractual
        limitations should be considered when determining the realizable amounts.
        The
        issue should be effective for fiscal years beginning after December 15, 2006,
        but early adoption is permitted. The Company is currently evaluating the
        impact
        of this interpretation on its financial condition and results of
        operations.
  **Item
        3.**  **Controls
        and Procedures** **.**
  The
        Company maintains disclosure controls and procedures that are designed to
        ensure
        that information required to be disclosed in the Company’s reports that it files
        or submits under the Securities Exchange Act of 1934 is recorded, processed,
        summarized and reported within the time periods specified in the Securities
        and
        Exchange Commission’s rules and forms, and that such information is accumulated
        and communicated to the Company’s management, including its Chief Executive
        Officer and Chief Financial Officer, as appropriate to allow timely decisions
        regarding required disclosure. As of the end of the period covered by this
        report, the Company carried out an evaluation, with the participation of
        management, including its Chief Executive Officer and Chief Financial Officer,
        of the effectiveness of the design and operation of its disclosure controls
        and
        procedures pursuant to the Exchange Act Rule 13a-15. Based upon, and as of
        the date of that evaluation, the Chief Executive Officer and Chief Financial
        Officer concluded that our disclosure controls and procedures were not effective
        as of September 30, 2006, because of the material weakness disclosed below.
  13
  In
        connection with its audit of the Company’s consolidated financial statements for
        the year ended June 30, 2006, Crowe Chizek and Company LLC (“Crowe Chizek”), the
        Company’s independent registered public accounting firm, advised the Board of
        Directors, the Audit Committee and management of certain significant internal
        control deficiencies that they considered to be, in the aggregate, a material
        weakness. A material weakness is a significant deficiency, or combination
        of
        significant deficiencies, that results in more than a remote likelihood that
        a
        material misstatement of the annual or interim financial statements will
        not be
        prevented or detected.
 
 In
        particular, in connection with the audit for the year ended June 30, 2006,
        Crowe
        Chizek identified several adjustments and corrections that had to be
        incorporated into the consolidated financial statements as a result of Crowe
        Chizek’s audit. These adjustments encompassed various areas, including deferred
        loan costs, income taxes, professional fees, and the employee stock ownership
        plan. According to Crowe Chizek, these adjustments and corrections indicated
        that management’s internal review process over financial reporting was not
        appropriately designed and implemented. Specifically, Crowe Chizek advised
        the
        Board of Directors, the Audit Committee and management that: (a) a formal
        procedure was not in place to ensure that entries were recorded in accordance
        with United States generally accepted accounting principles and that the
        posting
        of these entries was appropriately reviewed; and (b) when there were departures
        from United States generally accepted accounting principles, a formal procedure
        was not in place to ensure that an analysis of the potential differences
        was
        completed, conclusions as to materiality documented and remediation steps
        determined on a quarterly and annual basis.
 
 As
          previously discussed in the Company’s Annual Report on Form 10-KSB for the
          fiscal year ended June 30, 2006, in order to remediate the material weakness
          identified by Crowe Chizek at year end and to improve the effectiveness
          of the
          Company’s disclosure controls and procedures, management is in the process of
          designing, implementing and continuing to enhance its disclosure controls,
          including implementing appropriate oversight and review procedures. To
          specifically address this material weakness, we expanded our accounting
          staff
          through the addition on August 7, 2006, of a full time controller with
          over 20
          years of bank controller experience and who is also a certified public
          accountant. We are also in the process of converting all of our part-time
          accounting staff positions to full-time positions. In addition, during
          the
          quarter, we implemented new balancing procedures and profit center accounting
          procedures. Finally, we conducted a core processor deposit audit and also
          plan
          to conduct a core processor loan audit in the coming quarter. Management
          will
          continue to evaluate the Company’s financial accounting staff levels and
          expertise, and monitor, evaluate and test the operating effectiveness of
          its
          controls. We believe that we are taking the necessary actions to eliminate
          the
          material weakness.
  Except
          as
          noted above, there were no changes in our internal control over financial
          reporting identified in connection with our evaluation of it that occurred
          during our last fiscal quarter that materially affected, or are reasonably
          likely to materially affect, our internal control over financial
          reporting.
     
 14
  **PART II. -
        OTHER INFORMATION**
  **Item
            1.**  **Legal
            Proceedings** **.**
  The
          Company is not involved in any pending legal proceedings other than routine
          legal proceedings occurring in the ordinary course of business that, in
          the
          aggregate, are believed by management to be immaterial to the Company’s
          business, financial condition, results of operations and cash
          flows.
  **Item
        2.**  **Unregistered
        Sales of Equity Securities and Use of Proceeds** **.**
  **Period**
                
                **(a)**
                  **Total
                    Number of Shares Purchased**
                
                **(b)**
                  **Average
                    Price paid per Share**
                
                **(c)**
                  **Total
                    Number of Shares Purchased as part of publicly announced Plans
                    or
                    Programs**
                
                **(d)**
                  **Maximum
                    Number of Shares that may be purchased under the
                    Plans/**
                  **Program
                    (1)**07/01/06-07/31/06
                
                
                —
                
                
                —
                
                
                —
                
                
                —08/01/06-08/31/06
                
                
                —
                
                
                —
                
                
                —
                
                
                —09/01/06-09/30/06
                
                
                —
                
                
                —
                
                
                —
                
                
                125,637Total
                
                
                —
                
                
                —
                
                
                —
                
                
                125,637
 ____________________
 (1)
                  In
                      September 2006, the Company’s Board of Directors approved the repurchase
                      of up to 5% of the Company’s then currently outstanding shares of common
                      stock, or 125,637 shares (the “Program”). Unless terminated earlier by the
                      Company’s Board of Directors, the Program will expire when the Company
                      has
                      repurchased all shares authorized for repurchase
                      thereunder.
 **Item
        3.**  **Defaults
        Upon Senior Securities** ***.***
  None
  **Item
        4.**  **Submission
        of Matters to a Vote of Security Holders** **.**
  None
  **Item
        5.**  **Other
        Information** **.**
  None
  **Item
        6.**  **Exhibits** **.**
  (a)  The
        exhibits filed as part of this Form 10-QSB are listed in the Exhibit Index,
        which is incorporated herein by reference.
  15
  **SIGNATURES**
  Pursuant
        to the requirements of the Securities Exchange Act of 1934, as amended, the
        Registrant has duly caused this report to be signed on its behalf by the
        undersigned, thereunto duly authorized.
  **ROYAL
                    FINANCIAL, INC.**Date:
                    November
                    14, 2006
                  By:
                  /s/
                    Donald A. Moll
 Donald
                    A. MollPresident
                    and Chief Executive Officer
 Date:
                          November
                          14, 2006
                      By:
                      /s/
                        Leonard Szwajkowski
  Leonard
                        SzwajkowskiSenior
                        Vice President, Chief Financial Officer and
                        Treasurer
 16
 **EXHIBIT INDEX**
  31.1
              Certification
                  of Chief Executive Officer pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002.31.2
              Certification
                  of Chief Financial Officer pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002.32.1
              Certification
                  of Chief Executive Officer and Chief Financial Officer pursuant
                  to 18
                  U.S.C. Section 1350, as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.