-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RYSFZjatExzw6gGYRBzyAdskuNLxZYhwRb7oEaKsVYWz+kNcDX+sJhFVKqZHxbF0 WbsrY1kW/+Ov38fy4TvY9A== 0001001171-04-000003.txt : 20040209 0001001171-04-000003.hdr.sgml : 20040209 20040209143139 ACCESSION NUMBER: 0001001171-04-000003 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20031231 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040209 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BROADWAY FINANCIAL CORP \DE\ CENTRAL INDEX KEY: 0001001171 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 954547287 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-27464 FILM NUMBER: 04577210 BUSINESS ADDRESS: STREET 1: 4800 WILSHIRE BLVD CITY: LOS ANGELES STATE: CA ZIP: 90010 BUSINESS PHONE: 2136341700 MAIL ADDRESS: STREET 1: 4800 WILSHIRE BLVD CITY: LOS ANGELES STATE: CA ZIP: 90010 8-K 1 prye03.txt PRESS RELEASE FOR 12/03 EARNINGS UNITED STATES SECURITITES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) February 5, 2004 Broadway Financial Corporation (Exact name of registrant as specified in its charter) Delaware 95-4547287 (State of Incorporation) (IRS Employer Identification No.) 4800 Wilshire Boulevard, Los Angeles, California 90010 (Address of Principal Executive Offices) (323) 634-1700 (Issuer's Telephone Number, Including Area Code) NOT APPLICABLE (Former name or former address, if changed since last report) 1 Item 7. Exhibits (c) Exhibit 99.1 Copy of Press Release on earnings for the quarter and year ended December 31, 2003. Item 12. Results of Operations and Financial Condition On February 5, 2004, Broadway Financial Corporation issued a Press Release on earnings for the quarter and year ended December 31, 2003. A copy of the Press Release is attached as Exhibit 99.1. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. BROADWAY FINANCIAL CORPORATION (Registrant) Date: February 9 2004 /s/ Alvin D. Kang (Signature) Name: Alvin D. Kang Chief Financial Officer 2 EXHIBIT INDEX Exhibit No. Exhibit Page No. 99.1 Press Release 4 3 News Release FOR IMMEDIATE RELEASE Contact: Paul C. Hudson, President/CEO Alvin D. Kang, CFO (323) 634-1700 www.broadwayfed.com Broadway Financial Corporation Reports Record Earnings LOS ANGELES, CA - (BUSINESS WIRE) - February 5, 2004 - Broadway Financial Corporation (the "Company") (NASDAQ Small-Cap: BYFC), the holding company of Broadway Federal Bank, f.s.b. (the "Bank"), today reported record net earnings of $1,549,000, or $0.77 per diluted share, for the year ended December 31, 2003, compared to $1,441,000, or $0.77 per diluted share, for the year ended December 31, 2002, an increase of 7.49%. Fourth quarter 2003 net earnings amounted to $450,000, or $0.22 per diluted share, compared to $353,000, or $0.18 per diluted share, for the fourth quarter of 2002, an increase of 27.48% President and CEO Paul C. Hudson stated, "Sound asset/liability management and solid loan growth were the keys to our success in 2003." Hudson also noted, "In our 2002 annual report, we stated that in 2003 we would focus on growing the loan portfolio, and managing our liabilities and expenses. We were successful in producing a 37% increase in loans, and a 15% increase in deposits, including a 22% increase in core deposits, which offset a 51 basis point decrease in the primary spread." During the year, management focused on managing the mix of assets and liabilities, and on increasing interest-earning assets to offset anticipated margin compression. The following was achieved: Net loans receivable increased $52.0 million or 37.14% from $140.1 million at December 31, 2002 to $192.1 million at December 31, 2003. Gross loan originations grew from $31.3 million in 2002 to $83.0 million in 2003, with fourth quarter gross loan originations growing from $10.9 million in 2002 to $45.2 in 2003. The record level of originations was tempered by the increase in loan repayments, which increased from $29.6 million in 2002 to $51.5 million in 2003. Management augmented loan originations in 2003 by purchasing loans amounting to $17.8 million. The weighted average interest rate ("WAIR") on loans decreased from 6.84% at December 31, 2002 to 6.04% at December 31, 2003, a decline of 80 basis points. Agency mortgage-backed securities ("MBS") decreased from $38.5 million at December 31, 2002 to $15.4 million at December 31, 2003. During 2002 hybrid adjustable rate loan MBS were purchased to put excess liquidity to work while the loan volume was being ramped up. During 2003, as loan volume increased, the MBS were sold and the proceeds were used to fund loan originations. MBS investments were primarily five and seven year hybrid adjustable rate securities that provided higher yields than other short term investments, and also generated net gains on sale of $99,000 in 2003. 1 Total deposits grew by $23.8 million, from $156.1 million at December 31, 2002 to $179.9 million at December 31, 2003. Core deposits (NOW, money market, and passbook accounts) increased by $15.2 million, while Jumbo certificates of deposit (CDs) increased by $1.4 million, and other CDs increased by $7.2 million. Management focused on extending CD maturities in the current low interest rate environment, and was able to increase the weighted average term of CD maturities from 18 months at year-end 2002 to 25 months at year-end 2003. The WAIR on deposits decreased from 2.12% at December 31, 2002 to 1.72% at December 31, 2003, a decline of 40 basis points. FHLB advances remained flat as this facility was used primarily for short-term needs since deposit growth and MBS sales were sufficient to fund loan growth. The WAIR decreased from 2.67% at December 31, 2002 to 2.46% at December 31, 2003 a 21 basis point decrease. Our asset/liability management strategies described above, resulted in the following: Net interest income before recovery of loan losses increased from $7.9 million in 2002 to $8.4 million in 2003. The increase of $0.5 million resulted from a $1.2 million increase in net interest income attributable to the effect of a $29.4 million increase in average net interest earning assets, offset by a $0.7 million decrease in net interest income attributable to a 35 basis point decrease in the WAIR spread from 4.24% during 2002 compared to 3.89% during 2003. Average interest-earning assets increased by $29.4 million or 16.37%, from $179.6 million in 2002 to $209.0 million in 2003, due to increasing loan originations and an increase in purchased mortgage-backed securities. Deposit cost of funds declined more slowly than the yield on the loan portfolio in the low interest rate environment experienced in 2003, resulting in a decrease in the primary spread (WAIR on loans minus WAIR on deposits) from 5.32% during 2002 to 4.81% during 2003, a decrease of 51 basis points. The WAIR on deposits decreased from 2.42% during 2002 to 1.83% during 2003, a decline of 59 basis points. The WAIR on loans decreased from 7.74% during 2002 to 6.64% during 2003, a decline of 110 basis points. The WAIR on MBS decreased from 5.34% during 2002 to 3.78% during 2003, a decline of 156 basis points. The WAIR on other investments increased from 3.99% during 2002 to 4.08% during 2003, an increase of 9 basis points. The WAIR on FHLB advances decreased from 5.41% during 2002 to 2.49% during 2003, or 292 basis points. The allowance for loan losses as a percentage of total loans decreased from 0.98% at December 31, 2002 to 0.67% at December 31, 2003. During 2003 and 2002 no additional provisions for loan losses were considered necessary based on periodic analyses of the credit quality of the loan portfolio. During the fourth quarter of 2003, $826,000 of loans classified as substandard, were paid in full. As a primary result, classified assets decreased from $1,046,000 at December 31, 2002 to $94,000 at December 31, 2003. The Bank had no foreclosed real estate assets at December 31, 2003 and 2002. 2 Non-performing assets to total assets improved from 0.07 % at December 31, 2002, to 0.03% at December 31, 2003. Total non-performing assets at December 31, 2003 were $80,000 compared to $135,000 at December 31, 2002. Delinquent loans 60 or more days past due were $80,000 at December 31, 2003 compared to $149,000 at December 31, 2002. The return on average equity decreased from 9.32% in 2002 to 9.08% in 2003, due in part to the Company's issuance of $1 million in Series B non-cumulative, non-voting Preferred Stock to Fannie Mae in the fourth quarter of 2002. The return on average assets decreased from 0.77% in 2002 to 0.71% in 2003 as average assets increased 15.98%. The efficiency ratio decreased from 74.35% in 2002 to 74.01% in 2003. The ratio of non-interest expense to average assets decreased from 3.53% in 2002 to 3.28% in 2003. Comparing fourth quarter 2003 and 2002, the performance ratios all improved, with the return on average equity improving to 9.84% from 8.76%, and the efficiency ratio improving to 71.52% from 75.09%. At December 31, 2003, the Bank met the capital requirements necessary to be deemed "well capitalized" for regulatory capital purposes. Broadway Federal Bank, f.s.b. is a community-oriented savings bank, which primarily originates residential mortgage loans and conducts funds acquisition in the geographic areas known as Mid-City and South Los Angeles. The Bank operates four full service branches, three in the city of Los Angeles, and one located in the nearby city of Inglewood, California. Certain matters discussed in this news release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, expectations regarding the business environment in which the Company operates, projections of future performance, perceived opportunities in the market, and statements regarding strategic objectives. These forward-looking statements are based upon current management expectations, and involve risks and uncertainties. Actual results or performance may differ materially from those suggested, expressed, or implied by 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-KSB and Quarterly Reports on Form 10-QSB. Shareholders, analysts and others seeking information about the Company are invited to write to: Broadway Financial Corporation, Investor Relations, 4800 Wilshire Blvd., Los Angeles, CA 90010, or visit our website at www.broadwayfed.com. 3 BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (Dollars in thousands, except share amounts) (Unaudited)
December 31, December 31, 2003 2002 Assets: Cash $ 5,029 $ 3,859 Fed funds sold 2,600 1,500 Interest bearing deposits - 1,028 Investment securities available for sale - 5,007 Investment securities held to maturity 3,996 2,000 Mortgage-backed securities available for sale 9,122 27,697 Mortgage-backed securities held to maturity 6,317 10,843 Loans receivable held for sale, at lower of cost or fair value 1,671 3,770 Loans receivable, net 192,116 140,085 Accrued interest receivable 883 995 Investments in capital stock of Federal Home Loan Bank, at cost 1,789 1,561 Office properties and equipment, net 5,603 5,811 Other assets 689 750 Total assets $ 229,815 $ 204,906 Liabilities and stockholders' equity Deposits $ 179,907 $ 156,148 Advances from Federal Home Loan Bank 28,502 28,724 Advance payments by borrowers for taxes and insurance 324 311 Deferred income taxes 846 931 Other liabilities 2,045 1,871 Total liabilities 211,624 187,985 Stockholders' Equity: Preferred non-convertible, non-cumulative, and non-voting stock, $.01 par value, authorized 1,000,000 shares; issued and outstanding 155,199 shares at December 31, 2003 and December 31, 2002 2 2 Common stock, $.01 par value, authorized 3,000,000 shares; issued and outstanding 1,832,507 shares at December 31, 2003 and 1,815,294 shares at December 31, 2002 10 10 Additional paid-in capital 10,507 10,512 Accumulated other comprehensive gain (loss), net of taxes (68) 57 Retained earnings-substantially restricted 8,207 7,005 Treasury stock-at cost, 36,435 shares at December 31, 2003 and 53,684 shares at December 31, 2002 (375) (520) Unearned Employee Stock Ownership Plan shares (92) (145) Total stockholders' equity 18,191 16,921 Total liabilities and stockholders' equity $ 229,815 $ 204,906
4 BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (Dollars in thousands, except per share amounts) (Unaudited)
Three Months Ended Year Ended December 31, December 31, 2003 2002 2003 2002 Interest on loans receivable $ 2,757 $ 2,564 $ 10,426 $ 10,784 Interest on investment securities 58 98 194 409 Interest on mortgage-backed securities 286 497 1,438 1,109 Other interest income 8 36 111 167 Total interest income 3,109 3,195 12,169 12,469 Interest on deposits 746 852 3,061 3,752 Interest on borrowings 185 431 741 817 Total interest expense 931 1,283 3,802 4,569 Net interest income before recovery of loan losses 2,178 1,912 8,367 7,900 Recovery of loan losses (117) (142) (117) (142) Net interest income after recovery of loan losses 2,295 2,054 8,484 8,042 Non-interest income: Service charges 248 171 1,021 745 Gain on sale of loans and mortgage-backed securities 23 66 126 80 Other 4 5 31 53 Total non-interest income 275 242 1,178 878 Non-interest expense: Compensation and benefits 1,014 937 4,000 3,654 Occupancy expense, net 237 261 1,032 1,026 Information services 154 154 588 626 Professional services 97 133 469 455 Office services and supplies 93 80 408 375 Other 243 159 654 496 Total non-interest expense 1,838 1,724 7,151 6,632 Earnings before income taxes 732 572 2,511 2,288 Income taxes 282 219 962 847 Net earnings $ 450 $ 353 $ 1,549 $ 1,441 Other comprehensive income (loss): Unrealized gain (loss) on securities available for sale $ (163) $ 15 $ (304) $ 4 Reclassification of realized net gains included in net earnings 9 66 94 90 Income tax benefit (expense) 60 (34) 85 (39) Other comprehensive income (loss) (94) 47 (125) 55 Comprehensive earnings $ 356 $ 400 $ 1,424 $ 1,496 Net earnings 450 353 1,549 1,441 Dividends paid on preferred stock (19) (19) (78) (40) Earnings available to common shareholders $ 431 $ 334 $ 1,471 $ 1,401 Earnings per share-basic $ 0.24 $ 0.19 $0.82 $ 0.79 Earnings per share-diluted $ 0.22 $ 0.18 $0.77 $ 0.77 Dividend declared per share-common stock $ 0.04 $ 0.04 $0.15 $ 0.11 Basic weighted average shares outstanding 1,813,527 1,783,600 1,799,465 1,780,617 Diluted weighted average shares outstanding 1,918,989 1,845,276 1,900,794 1,820,351
5 BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES Selected Ratios and Data (Dollars in thousands)
As of December 31, Well-Capitalized 2003 2002 Requirement Broadway Federal Bank, f.s.b. Regulatory Capital Ratios: Tangible capital 7.52% 7.01% 5.00% Core capital 7.52% 7.01% 6.00% Total Risk-Based Capital 11.92% 13.15% 10.00% Asset Quality Ratios and Data: Non-performing loans as a percentage of total gross loans 0.04% 0.09% Non-performing assets as a percentage of total assets 0.03% 0.07% Allowance for loan losses as a percentage of total gross loans 0.67% 0.98% Allowance for loan losses as a percentage of non-performing loans 1640.00% 1058.52% Allowance for losses as a percentage of non-performing assets 1640.00% 1058.52% Non-performing assets: Non-accrual loans $ 80 $ 135 Real estate acquired through foreclosure - - Total non-performing assets $ 80 $ 135
Three Months Ended Year Ended December 31 December 31 2003 2002 2003 2002 Performance Ratios: Return on average assets 0.79% 0.68% 0.71% 0.77% Return on average equity 9.84% 8.76% 9.08% 9.32% Average equity to average assets 7.99% 7.78% 7.83% 8.23% Non-interest expense to average assets 3.21% 3.33% 3.28% 3.53% Efficiency ratio (3) 71.52% 75.09% 74.01% 74.35% Net interest rate spread (1) 3.87% 3.65% 3.89% 4.24% Effective net interest rate spread (2) 3.99% 3.84% 4.00% 4.40% (1) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of interest-bearing liabilities before recovery of loan losses. (2) Effective net interest rate spread represents net interest income before recovery of loan losses as a percentage of average interest-earning assets. (3) Efficiency ratio represents non-interest expense divided by net interest income after recovery of loan losses plus non-interest income.
6 BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES Support for Calculations (Dollars in thousands)
Three Months Ended Year Ended December 31 December 31 2003 2002 2003 2002 Total assets $ 229,815 $ 204,906 $ 229,815 $ 204,906 Total gross loans $ 195,691 $ 146,455 $ 195,691 $ 146,455 Total equity $ 18,191 $ 16,921 $ 18,191 $ 16,921 Average assets $ 228,772 $ 207,385 $ 217,799 $ 187,789 Average loans $ 173,224 $ 140,204 $ 156,902 $ 139,349 Average equity $ 18,285 $ 16,126 $ 17,051 $ 15,454 Average interest-earning assets $ 218,386 $ 199,394 $ 209,003 $ 179,609 Average interest-bearing liabilities $ 204,372 $ 186,116 $ 196,629 $ 169,076 Net income $ 450 $ 353 $ 1,549 $ 1,441 Total income $ 2,570 $ 2,296 $ 9,662 $ 8,920 Non-interest expense $ 1,838 $ 1,724 $ 7,151 $ 6,632 Efficiency ratio 71.52% 75.09% 74.01% 74.35% Non-accrual loans $ 80 $ 135 $ 80 $ 135 REO, net $ - $ - $ - $ - ALLL $ 1,312 $ 1,429 $ 1,312 $ 1,429 REO-Allowance $ - $ - $ - $ - Interest income $ 3,109 $ 3,195 $ 12,169 $ 12,469 Interest expense $ 931 $ 1,283 $ 3,802 $ 4,569 Net interest income before provision $ 2,178 $ 1,912 $ 8,367 $ 7,900
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