Broadway Financial Corporation (the “Company”) (NASDAQ Capital
Market: BYFC), parent company of Broadway Federal Bank, f.s.b. (the
“Bank”), today reported a net loss of $69 thousand, or less than
$0.01 per share, for the fourth quarter of 2019 compared to net
income of $275 thousand, or $0.01 per diluted share, for the fourth
quarter of 2018.
During the fourth quarter of 2019, the Bank reported increases
in net interest income of $336 thousand, service charges on
deposits of $25 thousand, and miscellaneous fee income of $34
thousand compared to the fourth quarter of 2018. Results for the
fourth quarter of 2019 were impacted, however, by a loan loss
provision of $294 thousand, resulting from growth in the Bank’s
loan portfolio, whereas results for the fourth quarter of 2018
included a loan loss provision recapture of $254 thousand. Also,
during the fourth quarter of 2019, the Company did not sell any
loans and therefore did not report any gain on sale of loans,
whereas during the fourth quarter of 2018, the Bank recorded a gain
on sale of loans of $50 thousand. In addition, certain
non-recurring professional expenses contributed to an increase of
$45 thousand in non-interest expense in the fourth quarter of 2019
compared to the fourth quarter of 2018.
For the year ended December 31, 2019, the Company reported a net
loss of $206 thousand, or ($0.01) per diluted share, compared to
net earnings of $815 thousand, or $0.03 per diluted share for the
year ended December 31, 2018. The decrease in net earnings was
attributable to a decline in the loan loss provision recapture of
$1.25 million from the prior year. Also, non-interest expense
increased by $515 thousand during 2019 compared to 2018, primarily
due to higher professional services fees of $491 thousand and
higher compensation costs of $302 thousand, offset by lower REO
costs of $166 and lower marketing costs of $88 thousand. These
items were partially offset by higher net interest income of $153
thousand and higher gain on sale of loans of $134 thousand during
2019 compared to 2018.
Chief Executive Officer, Wayne Bradshaw, commented, “Overall,
our results for 2019 reflected the difficult interest rate
environment that persisted throughout the year. In addition,
non-recurring professional fees of $437 thousand incurred during
2019 created an additional constraint on profitability. Despite
these headwinds, we were able to improve our net interest margin by
27 basis points during the fourth quarter compared to the fourth
quarter of 2018, while increasing the total loan portfolio by over
$36 million, or 10%, for the year. As a result, we increased the
Bank’s net interest income for the fourth quarter and the full
year.”
“Moreover, during 2019 Broadway completed a transition from a
banking institution that has generated a substantial portion of its
income through loan recaptures and recoveries, created by cleansing
the loan portfolio, to a financial organization that has its
profits tied to loan growth, net interest margins, and operating
efficiency. This transition reflects, in part, our success in
lowering non-performing assets, which we were able to decrease to
0.10% of total assets by year end, representing a decrease of 77%
from the end of 2018.”
“I am also pleased to report that we increased originations to
over $114 million for 2019, representing 16% growth for the year.
As part of this loan growth, we increased our originations of
commercial real estate and construction loans by 289%; typically,
these loans generate higher yields than are available from single
family and multi-family residential loans. Also, these products
help us leverage our existing lending relationships and expertise,
and increase Broadway’s ability to address the unrelenting demand
for affordable housing, particularly within the Bank’s target
market of low to moderate income communities in Southern
California.”
“Going forward we will continue leveraging our loan origination
capabilities, which we believe are best in class, while remaining
vigilant in maintaining the quality of our loan portfolio. In
addition, after examining all facets of our business during the
past few quarters we are now beginning to implement changes that
will reduce non-interest expenses and improve our operating
efficiency, leverage, and profitability.”
“Finally, I wish to thank our employees for their dedication to
building value, and our stockholders for their continuing support
of our mission, which remains focused on serving the real estate,
business, and financial needs of customers in underserved urban
communities in Southern California.”
Net Interest Income
Net interest income for the fourth quarter of 2019 totaled $2.8
million, compared to $2.5 million for the fourth quarter of 2018.
The increase of $336 thousand in net interest income primarily
resulted from higher interest income and fees on loans receivable,
which were partially offset by lower interest income on other
interest earning assets and higher interest expense on deposits.
The net interest margin increased to 2.70% for the fourth quarter
of 2019 from 2.43% for the fourth quarter of 2018.
Interest and fee income on loans increased by $493 thousand for
the fourth quarter of 2019 compared to the fourth quarter of 2018.
The increase in interest and fee income on loans primarily resulted
from an interest recovery of $270 thousand on a non-accrual loan,
an increase of 5 basis points in average yield on loans, which
increased interest income by $156 thousand, and an increase of $6.7
million in the average balance of loans receivable, which increased
interest income by $67 thousand.
Interest income on securities decreased by $24 thousand for the
fourth quarter of 2019 compared to the fourth quarter of 2018. The
decrease in interest income on securities primarily resulted from a
decrease of $3.5 million in the average balance of securities.
There was no change in the average interest rate earned on
securities during the fourth quarter of 2019 compared to the fourth
quarter of 2018.
Other interest income decreased by $37 thousand for the fourth
quarter of 2019 compared to the fourth quarter of 2018. The
decrease was primarily due to a non-recurring dividend of $47
thousand received from the Federal Home Loan Bank of San Francisco
(“FHLB”) during the fourth quarter of 2018, and a decrease of 11
basis points in the average rate earned on interest-bearing
deposits, which decreased interest income by $19 thousand, offset
by an increase of $6.0 million in the average interest-earning
deposit balance, which increased interest income by $29
thousand.
Interest expense on deposits increased by $95 thousand for the
fourth quarter of 2019 compared to the fourth quarter of 2018. The
increase in interest expense on deposits primarily resulted from an
increase of 11 basis points in the average cost of deposits, which
increased interest expense by $71 thousand, and an increase of $4.9
million in the average interest-bearing deposit balance, which
increased interest expense by $24 thousand.
Interest expense on borrowings increased by $1 thousand for the
fourth quarter of 2019 compared to the fourth quarter of 2018. The
higher interest expense on borrowings reflected a net increase of
$2.3 million in average borrowings, due to an increase of $2.8
million in the average balance of FHLB advances offset by a
decrease of $513 thousand in the average balance of the Company’s
junior subordinated debentures. The net change in borrowings
increased interest expense by $10 thousand, which was mostly offset
by a decrease of 7 basis points in the overall cost of borrowings,
which decreased interest expense by $9 thousand.
For the year ended December 31, 2019, net interest income
increased by $153 thousand to $10.5 million compared to $10.3
million for the year ended December 31, 2018. The increase in net
interest income primarily resulted from higher interest earned on
loans, which offset lower interest on other interest-earning assets
and higher interest expense on deposits and borrowings. The net
interest margin decreased by 3 basis points to 2.54% for the year
ended December 31, 2019 from 2.57% for the same period in 2018.
Interest and fees on loans receivable increased by $1.6 million
for the year ended December 31, 2019 compared to the same period a
year ago. The increase was primarily due to an increase of 19 basis
points in the average yield on loans receivable, which increased
loan interest income by $677 thousand, an increase of $542 thousand
in interest recoveries on non-accrual loans, and an increase of
$8.8 million in the average balance of loans receivable, which
increased interest income by $347 thousand.
Interest income on securities decreased by $54 thousand for the
year ended December 31, 2019 compared to the prior year due to a
decrease of $2.5 million in the average securities balance, which
decreased interest income by $66 thousand, offset by an increase of
7 basis points in the average yield on securities, which increased
interest income by $12 thousand.
Other interest income increased by $98 thousand for the year
ended December 31, 2019 compared to the prior year. The increase in
other interest income primarily resulted from a net increase in the
average balance of interest earning cash deposits in other banks of
$4.0 million, which increased interest income by $84 thousand, and
an increase of 36 basis points in the deposit rate, which increased
interest income by $61 thousand. These increases were partially
offset by a decrease of $47 thousand in dividends on FHLB stock
during the year ended December 31, 2019 because the Bank received a
special dividend during the fourth quarter of 2018.
Interest expense on deposits increased by $1.2 million for the
year ended December 31, 2019 compared to the prior year, primarily
due to an increase of 39 basis points in the average cost of
deposits, which increased interest expense by $1.0 million, and an
increase of $6.6 million in the average balance of deposits, which
increased interest expense by $174 thousand.
Interest expense on borrowings increased by $270 thousand for
the year ended December 31, 2019 compared to the prior year,
primarily due to an increase of $272 thousand in interest expense
on FHLB advances. The interest expense on FHLB advances increased
due to an increase of 29 basis points in the average cost of FHLB
borrowings, which increased interest expense by $221 thousand and
an increase of $2.3 million in the average balance of FHLB
advances, which increased interest expense by $51 thousand. The
increase in interest expense on FHLB advances was offset by a
decrease of $2 thousand in interest expense on the Company’s junior
subordinated debentures. Interest expense on the junior
subordinated debentures decreased because the average balance of
such junior subordinated debentures decreased by $209 thousand,
which decreased interest expense by $10 thousand, offset by the
effects of an increase of 17 basis points in the average interest
rate for the junior subordinated debentures, which increased
interest expense by $8 thousand.
Loan Loss Provision/Recapture
The Bank recorded a loan loss provision of $294 thousand for the
fourth quarter of 2019 compared to a loan loss provision recapture
of $254 thousand for the fourth quarter of 2018. The loan loss
provision recorded in the fourth quarter of 2019 was primarily due
to growth in the multi-family portfolio, while the loan loss
provision recapture for the fourth quarter of 2018 was primarily
due to the removal of a specific allowance of $183 thousand upon
the payoff of an impaired loan and improvement in historical loss
factors.
For calendar year 2019, the Bank recorded a net loan loss
provision recapture of $7 thousand, which was comprised of a loan
loss provision recapture of $348 thousand in the first quarter,
offset by loan loss provisions of $47 thousand in the third quarter
and $294 thousand in the fourth quarter due to growth in the loan
portfolio. The Bank recorded a loan loss provision recapture of
$1.3 million for calendar year 2018 due to an overall improvement
in the environmental factors used in the Company’s analysis of the
allowance for loan and lease losses (“ALLL”).
Loan loss recoveries totaled $260 thousand during the year ended
December 31, 2019, compared to $114 thousand during 2018. There
were no charge-offs during the years ended December 31, 2019 and
December 31, 2018.
At December 31, 2019, the ALLL was $3.2 million, or 0.79% of the
Bank’s gross loans receivable held for investment, compared to $2.9
million, or 0.82% of gross loans receivable held for investment at
December 31, 2018. Due to a reduction in non-performing loans from
$911 thousand at the end of 2018 to $424 thousand at the end of
2019, ALLL, as a percentage of non-performing loans, increased to
750.5% at the end 2019 from 321.5% at the end of 2018.
Non-interest Income
Non-interest income for the fourth quarter of 2019 totaled $193
thousand compared to $184 thousand for the fourth quarter of 2018.
The increase in non-interest income of $9 thousand reflected higher
service charges on deposits of $25 thousand and higher
miscellaneous fees of $34 thousand, offset by a decrease in gain on
sale of loans of $50 thousand as the Bank did not have any loan
sales in the fourth quarter of 2019.
For the year ended December 31, 2019, non-interest income
totaled $1.1 million compared to $865 thousand for the same period
a year ago. The increase of $187 thousand in non-interest income
was primarily due to an increase of $134 thousand in gain on sale
of loans, an increase of $42 thousand in service charges on
deposits, and an increase in miscellaneous fees of $11 thousand
during 2019 compared to 2018.
Non-interest Expense
Non-interest expense for the fourth quarter of 2019 and 2018
totaled $2.8 million. Increases in professional services expense,
compensation and benefits expense and information services expenses
were offset by decreases in REO expense and FDIC insurance
costs.
For the year ended December 31, 2019, non-interest expense
totaled $12.1 million compared to $11.6 million for the same period
a year ago. The increase of $515 thousand in non-interest expense
was primarily due to increases of $491 thousand in professional
services expense, which included $437 thousand of expenses related
to non-recurring matters in 2019, $302 thousand in compensation and
benefits expense and $66 thousand in information services expenses,
offset primarily by decreases of $166 thousand in REO expense, $88
thousand in marketing expense, and $68 thousand in FDIC insurance
expense (primarily due to $56 thousand of Small Bank Assessment
credits that the Bank received due to FDIC excess reserves).
Professional services expense increased by $491 thousand during
the year ended December 31, 2019 compared to the year ended
December 31, 2018 primarily due to $375 thousand in legal and
consulting fees related to strategic matters and $116 thousand in
outsourced internal audit services.
Compensation and benefits expense increased by $302 thousand
during the year ended December 31, 2019 compared to the year ended
December 31, 2018 primarily due to increases of $281 thousand in
stock-related salary costs, and $46 thousand in salary
increases.
Income Taxes
The Company recorded an income tax benefit of $83 thousand for
the fourth quarter of 2019 and $345 thousand for calendar year 2019
compared to an income tax benefit of $179 thousand for the fourth
quarter of 2018 and an income tax expense of $56 thousand calendar
year 2018. The tax benefits included low income housing tax credits
of $49 thousand for the fourth quarter and $198 thousand for
calendar 2019.
The Company evaluated and determined no valuation allowance on
its deferred tax assets was necessary. Net deferred tax assets
totaled $5.2 million at December 31, 2019 and $5.0 million at
December 31, 2018.
Balance Sheet Summary
Total assets increased by $31.0 million to $440.4 million at
December 31, 2019 from $409.4 million at December 31, 2018. The
growth in total assets was primarily comprised of an increase of
$42.3 million in net loans receivable held for investment offset by
decreases of $6.2 million in loans receivable held for sale, $3.7
million in securities available for sale, $1.1 million in
interest-bearing cash in other banks and $833 thousand in REO. The
Bank had no REO as of December 31, 2019.
The Bank had no loans held for sale as of December 31, 2019
compared to $6.2 million as of December 31, 2018. During 2019, the
Bank originated $15.1 million in loans held for sale, transferred
$1.5 million to loans held for sale from loans held for investment,
sold $22.7 million in loans held for sale, and received $115
thousand in loan repayments. During 2018, the Bank originated $20.2
million in loans held for sale, transferred $16.9 million to loans
held for investment, sold $19.3 million in loans held for sale and
received $159 thousand in loan repayments.
Loans receivable held for investment, net of the allowance for
loan losses, totaled $397.8 million at December 31, 2019, compared
to $355.6 million at December 31, 2018. During 2019, the Bank
originated $114.4 million in new loans, $103.1 million of which
were multi-family loans, $9.5 million of which were commercial real
estate loans, $1.7 million of which were construction loans, and
$49 thousand of which were commercial loans. Of the multi-family
loans originated, we allocated $88.0 million, or 85%, to loans held
for investment and $15.1 million, or 15%, to loans held for sale.
In addition, we transferred net loans of $1.5 million to loans held
for sale from loans held for investment during 2019. During 2018,
the Bank originated $99.0 million in new loans, $96.0 million of
which were multi-family loans. Of the multi-family loans originated
during 2018, we allocated $75.8 million, or 79%, to loans held for
investment and $20.2 million, or 21%, to loans held for sale. We
transferred $16.9 million of loans to loans held for investment
from loans held for sale during 2018.
Deposits increased by $16.3 million to $297.7 million at
December 31, 2019 from $281.4 million at December 31, 2018. The
growth in deposits primarily consisted of increases of $13.8
million in certificates of deposit accounts, $8.1 million in
one-way CDARS and $6.3 million in reciprocal CDARS. These increases
were offset by decreases of $9.9 million in brokered deposits, $1.4
million in liquid deposits (NOW, demand, money market and passbook
accounts) and $650 thousand in deposits gathered from a deposit
listing service.
Total borrowings at December 31, 2019 consisted of advances to
the Bank from the FHLB of $84.0 million, and junior subordinated
debentures issued by the Company of $4.3 million, compared to
advances from the FHLB of $70.0 million and junior subordinated
debentures of $5.1 million at December 31, 2018. During 2019, the
Bank paid off $8.0 million in maturing FHLB advances and borrowed
$18.0 million in new advances from the FHLB. In addition, the Bank
had one overnight advance from FHLB for $4 million outstanding as
of December 31, 2019. The Company made scheduled principal payments
of $765 thousand on its junior subordinated debentures during
2019.
Stockholders' equity was $48.8 million, or 11.09% of the
Company’s total assets, at December 31, 2019, compared to $48.4
million, or 11.83% of the Company’s total assets, at December 31,
2018. The Company’s book value was $1.75 per share as of December
31, 2019, compared to $1.77 per share as of December 31, 2018.
At December 31, 2019, the Bank’s Total Capital ratio (Total
Capital to Total Risk-Weighted Assets) was 18.29% and its Leverage
ratio (Tier 1 Capital to Adjusted Total Assets) was 11.56%,
compared to a Total Capital ratio of 20.48% and a Leverage ratio of
12.03% at December 31, 2018.
About Broadway Financial Corporation
Broadway Financial Corporation conducts its operations through
its wholly-owned subsidiary, Broadway Federal Bank, f.s.b., which
is the leading community-oriented savings bank in Southern
California serving low-to-moderate income communities. We offer a
variety of residential and commercial real estate loan products for
consumers, businesses, and non-profit organizations, other loan
products, and a variety of deposit products, including checking,
savings and money market accounts, certificates of deposits and
retirement accounts. The Bank operates three full service branches,
two in the city of Los Angeles, California, and one located in the
nearby city of Inglewood, California.
Shareholders, analysts and others seeking information about the
Company are invited to write to: Broadway Financial Corporation,
Investor Relations, 5055 Wilshire Blvd., Suite 500, Los Angeles, CA
90036, or visit our website at www.broadwayfederalbank.com.
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are based upon our
management’s current expectations, and involve risks and
uncertainties. Actual results or performance may differ materially
from those suggested, expressed, or implied by the forward-looking
statements due to a wide range of factors including, but not
limited to, the general business environment, the real estate
market, competitive conditions in the business and geographic areas
in which the Company conducts its business, regulatory actions or
changes, and other risks detailed in the Company’s reports filed
with the Securities and Exchange Commission, including the
Company’s Annual Reports on Form 10-K and Quarterly Reports on Form
10-Q. The Company undertakes no obligation to revise any
forward-looking statement to reflect any future events or
circumstances, except to the extent required by law.
BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY Selected
Financial Data and Ratios (Unaudited) (Dollars in thousands,
except per share data) December 31, 2019
December 31, 2018 Selected Financial Condition Data and
Ratios: Cash and cash equivalents
$
15,566
$
16,651
Securities available-for-sale, at fair value
11,006
14,722
Loans receivable held for sale
-
6,231
Loans receivable held for investment
401,029
358,485
Allowance for loan losses
(3,182
)
(2,929
)
Loans receivable held for investment, net of allowance
397,847
355,556
Total assets
440,369
409,397
Deposits
297,724
281,414
FHLB advances
84,000
70,000
Junior subordinated debentures
4,335
5,100
Total stockholders' equity
48,848
48,436
Book value per share
$
1.75
$
1.77
Equity to total assets
11.09
%
11.83
%
Asset Quality Ratios: Non-accrual loans to total
loans
0.11
%
0.25
%
Non-performing assets to total assets
0.10
%
0.43
%
Allowance for loan losses to total gross loans
0.79
%
0.82
%
Allowance for loan losses to total delinquent loans
12238.46
%
8368.57
%
Allowance for loan losses to non-performing loans
750.47
%
321.51
%
Non-Performing Assets: Non-accrual loans
$
424
$
911
Loans delinquent 90 days or more and still accruing
-
-
Real estate acquired through foreclosure
-
833
Total non-performing assets
$
424
$
1,744
Three Months Ended December 31,
Twelve Months Ended December 31, Selected Operating Data
and Ratios:
2019
2018
2019
2018
Interest income
$
4,374
$
3,942
$
16,847
$
15,237
Interest expense
1,580
1,484
6,386
4,929
Net interest income
2,794
2,458
10,461
10,308
Loan loss provision (recapture)
294
(254
)
(7
)
(1,254
)
Net interest income after loan loss provision recapture
2,500
2,712
10,468
11,562
Non-interest income
193
184
1,052
865
Non-interest expense
(2,845
)
(2,800
)
(12,071
)
(11,556
)
(Loss) income before income taxes
(152
)
96
(551
)
871
Income tax (benefit) expense
(83
)
(179
)
(345
)
56
Net (loss) income
$
(69
)
$
275
$
(206
)
$
815
(Loss) earnings per common share-diluted
$
-
$
0.01
$
(0.01
)
$
0.03
Loan originations (1)
$
54,602
$
21,170
$
114,374
$
98,960
Net recoveries to average loans
(0.00
)%
(2
)
(0.00
)%
(2
)
(0.07
)%
(2
)
(0.03
)%
(2
)
Return on average assets
-0.07
%
(2
)
0.27
%
(2
)
-0.05
%
(2
)
0.20
%
(2
)
Return on average equity
-0.57
%
(2
)
2.29
%
(2
)
-0.42
%
(2
)
1.71
%
(2
)
Net interest margin
2.70
%
(2
)
2.43
%
(2
)
2.54
%
(2
)
2.57
%
(2
)
(1)
Does not include net deferred origination costs.
(2)
Annualized
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200227005730/en/
Brenda J. Battey, Chief
Financial Officer, (323) 556-3264; or
investor.relations@broadwayfederalbank.com
Broadway Financial (NASDAQ:BYFC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Broadway Financial (NASDAQ:BYFC)
Historical Stock Chart
From Sep 2023 to Sep 2024