0001104659-15-038075.txt : 20150514 0001104659-15-038075.hdr.sgml : 20150514 20150514132712 ACCESSION NUMBER: 0001104659-15-038075 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20150331 FILED AS OF DATE: 20150514 DATE AS OF CHANGE: 20150514 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-27464 FILM NUMBER: 15861770 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 10-Q 1 a15-7826_110q.htm 10-Q

Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

FORM 10-Q

 

(Mark One)

[X]                          QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2015

 

[  ]                              TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For transition period from__________ to___________

 

Commission file number      000-27464

 

BROADWAY FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware

95-4547287

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

 

5055 Wilshire Boulevard, Suite 500
Los Angeles, California

90036

(Address of principal executive offices)

(Zip Code)

 

(323) 634-1700

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 [ X ]   No [   ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [ X ]  No [   ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated, or a smaller reporting company.  See the definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

 

Large Accelerated Filer [   ]   Accelerated Filer [   ]   Non-Accelerated Filer [   ]   Smaller Reporting Company [ X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [   ]   No [ X]

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 

As of May 5, 2015, 21,405,188 shares of the Registrant’s voting common stock and 7,671,520 shares of the Registrant’s non-voting common stock were outstanding.

 

 


 


Table of Contents

 

TABLE OF CONTENTS

 

 

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

 

 

 

 

Consolidated Statements of Financial Condition as of March 31, 2015 (unaudited) and December 31, 2014

 

1

 

 

 

 

 

 

 

Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited) for the three months ended March 31, 2015 and 2014

 

2

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2015 and 2014

 

3

 

 

 

 

 

 

 

Notes to Unaudited Consolidated Financial Statements

 

4

 

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

20

 

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

28

 

 

 

 

 

 

Item 4.

Controls and Procedures

 

28

 

 

 

 

 

PART II.

OTHER INFORMATION

 

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

29

 

 

 

 

 

 

Item 1A.

Risk Factors

 

29

 

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

29

 

 

 

 

 

 

Item 3.

Defaults Upon Senior Securities

 

29

 

 

 

 

 

 

Item 4.

Mine Safety Disclosures

 

29

 

 

 

 

 

 

Item 5.

Other Information

 

29

 

 

 

 

 

 

Item 6.

Exhibits

 

29

 

 

 

 

 

 

Signatures

 

30

 



Table of Contents

 

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Financial Condition

(In thousands, except share and per share amounts)

 

 

 

March 31,
2015

 

 

December 31,
2014

 

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

4,819

 

 

$

5,740

 

 

Federal funds

 

23,730

 

 

15,050

 

 

Cash and cash equivalents

 

28,549

 

 

20,790

 

 

Securities available-for-sale, at fair value

 

16,486

 

 

17,075

 

 

Loans receivable held for sale, at lower of cost or fair value

 

19,813

 

 

19,481

 

 

Loans receivable held for investment, net of allowance of $7,671 and $8,465

 

272,514

 

 

276,643

 

 

Accrued interest receivable

 

1,172

 

 

1,216

 

 

Federal Home Loan Bank (FHLB) stock

 

3,972

 

 

4,254

 

 

Office properties and equipment, net

 

2,652

 

 

2,697

 

 

Real estate owned (REO)

 

2,479

 

 

2,082

 

 

Bank owned life insurance

 

2,836

 

 

2,821

 

 

Investment in affordable housing limited partnership

 

1,069

 

 

1,117

 

 

Other assets

 

2,497

 

 

2,687

 

 

Total assets

 

$

354,039

 

 

$

350,863

 

 

 

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

Deposits

 

$

222,092

 

 

$

217,867

 

 

FHLB advances

 

84,500

 

 

86,000

 

 

Junior subordinated debentures

 

5,100

 

 

5,100

 

 

Advance payments by borrowers for taxes and insurance

 

660

 

 

1,081

 

 

Accrued expenses and other liabilities

 

3,074

 

 

3,557

 

 

Total liabilities

 

315,426

 

 

313,605

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

 

Common stock, $.01 par value, voting, authorized 50,000,000 shares at March 31, 2015 and December 31, 2014; issued 21,509,179 shares at March 31, 2015 and December 31, 2014; outstanding 21,405,188 shares at March 31, 2015 and December 31, 2014

 

215

 

 

215

 

 

Common stock, $.01 par value, non-voting, authorized 25,000,000 shares at March 31, 2015 and December 31, 2014; issued and outstanding 7,671,520 shares at March 31, 2015 and December 31, 2014

 

77

 

 

77

 

 

Additional paid-in capital

 

44,669

 

 

44,669

 

 

Accumulated deficit

 

(5,241

)

 

(6,539

)

 

Accumulated other comprehensive income

 

222

 

 

165

 

 

Treasury stock-at cost, 103,991 shares at March 31, 2015 and December 31, 2014

 

(1,329

)

 

(1,329

)

 

Total stockholders’ equity

 

38,613

 

 

37,258

 

 

Total liabilities and stockholders’ equity

 

$

354,039

 

 

$

350,863

 

 

 

See accompanying notes to unaudited consolidated financial statements.

 

1



Table of Contents

 

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

 

 

 

Three Months Ended
March 31,

 

 

 

2015

 

 

2014

 

 

 

(In thousands, except per share)

 

 

 

 

 

 

 

 

Interest income:

 

 

 

 

 

 

Interest and fees on loans receivable

 

$

3,724

 

 

$

3,626

 

Interest on mortgage-backed and other securities

 

94

 

 

64

 

Other interest income

 

87

 

 

106

 

Total interest income

 

3,905

 

 

3,796

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

Interest on deposits

 

415

 

 

461

 

Interest on borrowings

 

531

 

 

537

 

Total interest expense

 

946

 

 

998

 

 

 

 

 

 

 

 

Net interest income before recapture of loan losses

 

2,959

 

 

2,798

 

Recapture of loan losses

 

750

 

 

1,082

 

Net interest income after recapture of loan losses

 

3,709

 

 

3,880

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

Service charges

 

106

 

 

118

 

Net gain on sale of loans

 

134

 

 

-

 

Net gain (loss) on sale of REOs

 

8

 

 

(7

)

CDFI grant

 

355

 

 

200

 

Other

 

34

 

 

18

 

Total non-interest income

 

637

 

 

329

 

 

 

 

 

 

 

 

Non-interest expense:

 

 

 

 

 

 

Compensation and benefits

 

1,768

 

 

1,588

 

Occupancy expense, net

 

299

 

 

284

 

Information services

 

217

 

 

219

 

Professional services

 

270

 

 

424

 

Office services and supplies

 

81

 

 

102

 

FDIC assessments

 

80

 

 

174

 

REO expenses

 

30

 

 

44

 

Corporate insurance

 

94

 

 

112

 

Amortization of investment in affordable housing limited partnership

 

48

 

 

48

 

Other

 

159

 

 

222

 

Total non-interest expense

 

3,046

 

 

3,217

 

 

 

 

 

 

 

 

Income before income taxes

 

1,300

 

 

992

 

Income tax expense

 

2

 

 

3

 

Net income

 

$

1,298

 

 

$

989

 

 

 

 

 

 

 

 

Other comprehensive income, net of tax:

 

 

 

 

 

 

Change in unrealized gain (loss) on securities available-for-sale

 

$

57

 

 

$

(21

)

Income tax effect

 

-

 

 

-

 

Other comprehensive income (loss), net of tax

 

57

 

 

(21

)

 

 

 

 

 

 

 

Comprehensive income

 

$

1,355

 

 

$

968

 

 

 

 

 

 

 

 

Earnings per common share-basic

 

$

0.04

 

 

$

0.05

 

Earnings per common share-diluted

 

$

0.04

 

 

$

0.05

 

 

See accompanying notes to unaudited consolidated financial statements.

 

2



Table of Contents

 

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Cash Flows

(Unaudited)

 

 

Three Months Ended March 31,

 

2015

 

2014

 

(In thousands)

 

 

 

 

Cash flows from operating activities:

 

 

 

Net income

      $     1,298

 

      $        989

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

Recapture of loan losses

(750)

 

(1,082)

Depreciation

59

 

55

Net amortization of deferred loan origination costs

91

 

34

Net amortization of premiums on mortgage-backed securities

16

 

5

Amortization of investment in affordable housing limited partnership

48

 

48

Stock-based compensation expense

-

 

11

Earnings on bank owned life insurance

(15)

 

(16)

Originations of loans receivable held for sale

(12,562)

 

-

Net gain on sale of loans

(134)

 

-

Net (gain) loss on sale of REO

(8)

 

7

Amortization of deferred gain on debt restructuring

-

 

(38)

Net change in accrued interest receivable

44

 

(42)

Net change in other assets

190

 

(703)

Net change in advance payments by borrowers for taxes and insurance

(421)

 

(397)

Net change in accrued expenses and other liabilities

(483)

 

295

Net cash used in operating activities

(12,627)

 

(834)

 

 

 

 

Cash flows from investing activities:

 

 

 

Net change in loans receivable held for investment

3,945

 

(2,630)

Proceeds from sales of loans receivable held for sale

12,292

 

-

Principal repayments on loans receivable held for sale

72

 

-

Available-for-sale securities:

 

 

 

Maturities, prepayments and calls

630

 

468

Purchases

-

 

(3,970)

Proceeds from sales of REO

454

 

1,166

Redemption of FHLB stock

470

 

-

Purchase of FHLB stock

(188)

 

-

Additions to office properties and equipment

(14)

 

(172)

Net cash provided by (used in) investing activities

17,661

 

(5,138)

 

 

 

 

Cash flows from financing activities:

 

 

 

Net change in deposits

4,225

 

(4,734)

Proceeds from FHLB advances

-

 

8,000

Repayments on FHLB advances

(1,500)

 

(8,000)

Net cash provided by (used in) financing activities

2,725

 

(4,734)

 

 

 

 

Net change in cash and cash equivalents

7,759

 

(10,706)

Cash and cash equivalents at beginning of the period

20,790

 

58,196

Cash and cash equivalents at end of the period

      $   28,549

 

      $   47,490

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

Cash paid for interest

      $        972

 

      $        984

Cash paid for income taxes

-

 

-

 

 

 

 

 

 

 

 

Supplemental disclosures of non-cash investing and financing activities:

 

 

 

Transfers of loans receivable held for investment to REO

      $        843

 

      $     1,571

   Payable for purchases of securities

-

 

6,493

 

See accompanying notes to unaudited consolidated financial statements.

 

3



Table of Contents

 

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

March 31, 2015

 

 

NOTE (1) – Basis of Financial Statement Presentation

 

The accompanying unaudited consolidated financial statements include Broadway Financial Corporation (the “Company”) and its wholly owned subsidiary, Broadway Federal Bank, f.s.b. (the “Bank”).  Also included in the unaudited consolidated financial statements is Broadway Service Corporation, a wholly owned subsidiary of the Bank.  All significant intercompany balances and transactions have been eliminated in consolidation.

 

The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for quarterly reports on Form 10-Q.  These unaudited consolidated financial statements do not include all disclosures associated with the Company’s consolidated annual financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2014 and, accordingly, should be read in conjunction with such audited consolidated financial statements.  In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included.  Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

 

Some items in the consolidated financial statements for the prior period were reclassified to conform to the current presentation.  Reclassifications had no effect on prior period consolidated net income or loss or stockholders’ equity.

 

Recent Accounting Pronouncements

 

In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40) - Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”.  ASU 2014-15 incorporates into U.S. GAAP a requirement that management complete a going concern evaluation similar to that performed by an entity’s external auditor.  Under the new guidance, management will be required to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date of issuance of the entity’s financial statements.  Further, an entity must provide certain disclosures if there is substantial doubt about the entity’s ability to continue as a going concern.  ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods thereafter.  Early adoption is permitted. Adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

 

In January 2015, the FASB issued ASU 2015-01, “Income Statement - Extraordinary and Unusual Items (Subtopic 225-20) - Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items”.  ASU 2015-01 eliminates from U.S. GAAP the concept of extraordinary items, which, among other things, required an entity to segregate extraordinary items considered to be unusual and infrequent from the results of ordinary operations and show the item separately in the income statement, net of tax, after income from continuing operations.  ASU 2015-01 is effective for annual periods ending after December 15, 2015, and interim periods thereafter.  Early adoption is permitted. Adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

 

In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs”.  Under ASU 2015-03, the Company will present debt issuance costs in the balance sheet as a reduction from the related debt liability rather than as an asset.  Amortization of such costs will continue to be reported as interest expense.  ASU 2015-03 is effective for annual periods ending after December 15, 2015, and interim periods thereafter.  Early adoption is permitted.  Retrospective adoption is required.  Adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

 

4



Table of Contents

 

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

 

 

NOTE (2)  Earnings Per Share of Common Stock

 

Basic earnings per share of common stock is computed by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding for the period.  Diluted earnings per share of common stock is computed by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding for the period, increased for the dilutive effect of common stock equivalents.

 

The following table shows how the Company computed basic and diluted earnings per share of common stock for the three months ended March 31, 2015 and 2014:

 

 

 

Three Months Ended March 31,

 

 

 

2015

 

2014

 

 

 

(Dollars in thousands,
except share and per share)

 

Basic

 

 

 

 

 

Net income

 

  $

1,298

 

  $

989

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

29,076,708

 

20,224,684

 

 

 

 

 

 

 

Earnings per common share - basic

 

  $

0.04

 

  $

0.05

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

Net income

 

  $

1,298

 

  $

989

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

29,076,708

 

20,224,684

 

Add: dilutive effects of assumed exercises of stock options

 

-

 

-

 

Weighted average common shares - fully dilutive

 

29,076,708

 

20,224,684

 

 

 

 

 

 

 

Earnings per common share - diluted

 

  $

0.04

 

  $

0.05

 

 

Stock options for 93,750 shares of common stock were not considered in computing diluted earnings per common share for the three months ended March 31, 2015 and 2014 because they were anti-dilutive.

 

 

NOTE (3)  Securities

 

The following table summarizes the amortized cost and fair value of the available-for-sale investment securities portfolios at March 31, 2015 and December 31, 2014 and the corresponding amounts of unrealized gains and losses which are recognized in accumulated other comprehensive income (loss):

 

 

 

Amortized Cost

 

Gross
Unrealized
Gains

 

Gross
Unrealized
Losses

 

Fair Value

 

 

 

(In thousands)

 

March 31, 2015:

 

 

 

 

 

 

 

 

 

Residential mortgage-backed

 

$

13,929

 

$

574

 

$

-

 

$

14,503

 

U.S. Government and federal agency

 

1,935

 

48

 

-

 

1,983

 

Total available-for-sale securities

 

$

15,864

 

$

622

 

$

-

 

$

16,486

 

December 31, 2014:

 

 

 

 

 

 

 

 

 

Residential mortgage-backed

 

$

14,578

 

$

540

 

$

-

 

$

15,118

 

U.S. Government and federal agency

 

1,932

 

25

 

-

 

1,957

 

Total available-for-sale securities

 

$

16,510

 

$

565

 

$

-

 

$

17,075

 

 

5



Table of Contents

 

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

 

 

At March 31, 2015, the Bank’s investment portfolio had an estimated remaining life of 4.1 years.  The amortized cost and fair value of the investment securities portfolio are shown by contractual maturity at March 31, 2015.  Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.  Securities not due at a single maturity date, primarily residential mortgage-backed securities, are shown separately.

 

 

 

Available-for-Sale

 

Maturity

 

Amortized Cost

 

Fair Value

 

 

 

(In thousands)

 

Within one year

 

$

-

 

$

-

 

One to five years

 

1,935

 

1,983

 

Five to ten years

 

-

 

-

 

Beyond ten years

 

-

 

-

 

Residential mortgage-backed

 

13,929

 

14,503

 

Total

 

$

15,864

 

$

16,486

 

 

At March 31, 2015 and December 31, 2014, securities pledged to secure public deposits had a carrying amount of $1.2 million.  At March 31, 2015 and December 31, 2014, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity.

 

There were no sales of securities during the three months ended March 31, 2015 and 2014.

 

 

NOTE (4)  Loans Receivable Held for Sale

 

Loans receivable held for sale at March 31, 2015 and December 31, 2014 totaled $19.8 million and $19.5 million, respectively, and consisted of multi-family loans.  During the three months ended March 31, 2015, multi-family loans originated for sale totaled $12.6 million and sales of multi-family loans totaled $12.3 million.

 

 

NOTE (5)  Loans Receivable Held for Investment

 

Loans at March 31, 2015 and December 31, 2014 were as follows:

 

 

March 31, 2015

 

December 31, 2014

 

 

(In thousands)

 

Real estate:

 

 

 

 

 

 

 

Single family

 

$

35,866

 

 

 

$

40,055

 

Multi-family

 

180,430

 

 

 

173,550

 

Commercial real estate

 

13,718

 

 

 

16,719

 

Church

 

49,545

 

 

 

54,127

 

Construction

 

376

 

 

 

387

 

Commercial – other

 

239

 

 

 

261

 

Consumer

 

11

 

 

 

9

 

Gross loans receivable

 

280,185

 

 

 

285,108

 

Allowance for loan losses

 

(7,671

)

 

 

(8,465

)

Loans receivable, net

 

$

272,514

 

 

 

$

276,643

 

 

6



Table of Contents

 

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

 

 

The following tables present the activity in the allowance for loan losses by loan type for the three months ended March 31, 2015 and 2014:

 

 

 

Three Months Ended March 31, 2015

 

 

Real Estate

 

 

 

 

 

 

 

 

Single
family

 

Multi-
family

 

Commercial
real estate

 

Church

 

Construction

 

Commercial
- other

 

Consumer

 

Total

 

 

(In thousands)

Beginning balance

 

  $

1,174

 

 $

2,726

 

 $

496

 

 $

4,047

 

 $

7

 

 $

12

 

 $

3

 

 $

8,465

Provision for (recapture of) loan losses

 

(10)

 

15

 

(60)

 

(689)

 

(3)

 

(1)

 

(2)

 

(750)

Recoveries

 

-

 

-

 

-

 

6

 

-

 

-

 

-

 

6

Loans charged off

 

-

 

-

 

-

 

(50)

 

-

 

-

 

-

 

(50)

Ending balance

 

  $

1,164

 

 $

2,741

 

 $

436

 

 $

3,314

 

 $

4

 

 $

11

 

 $

1

 

 $

7,671

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2014

 

 

Real Estate

 

 

 

 

 

 

 

 

Single

family

 

Multi-

family

 

Commercial

real estate

 

Church

 

Construction

 

Commercial
- other

 

Consumer

 

Total

 

 

(In thousands)

Beginning balance

 

  $

 1,930

 

 $

 1,726

 

 $

 1,473

 

 $

 4,949

 

 $

 7

 

 $

 55

 

 $

 6

 

 $

10,146

Provision for (recapture of) loan losses

 

(55)

 

381

 

(252)

 

(55)

 

-

 

(1,099)

 

(2)

 

(1,082)

Recoveries

 

2

 

-

 

-

 

156

 

-

 

1,082

 

-

 

1,240

Loans charged off

 

(3)

 

-

 

(9)

 

(183)

 

-

 

(18)

 

-

 

(213)

Ending balance

 

  $

 1,874

 

 $

 2,107

 

 $

 1,212

 

 $

 4,867

 

 $

 7

 

 $

 20

 

 $

 4

 

 $

10,091

 

The following tables present the balance in the allowance for loan losses and the recorded investment by loan type and based on impairment method as of March 31, 2015 and December 31, 2014:

 

 

 

March 31, 2015

 

 

Real Estate

 

 

 

 

 

 

 

 

Single
family

 

Multi-
family

 

Commercial
real estate

 

Church

 

Construction

 

Commercial
- other

 

Consumer

 

Total

 

 

(In thousands)

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending allowance balance attributable to loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

  $

140

 

 $

85

 

 $

112

 

 $

1,198

 

 $

-

 

 $

9

 

 $

-

 

 $

1,544

Collectively evaluated for impairment

 

1,024

 

2,656

 

324

 

2,116

 

4

 

2

 

1

 

6,127

Total ending allowance balance

 

  $

1,164

 

 $

2,741

 

 $

436

 

 $

3,314

 

 $

4

 

 $

11

 

 $

1

 

 $

7,671

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually evaluated for impairment

 

  $

1,377

 

 $

2,720

 

 $

3,161

 

 $

13,537

 

 $

-

 

 $

89

 

 $

-

 

 $

20,884

Loans collectively evaluated for impairment

 

34,489

 

177,710

 

10,557

 

36,008

 

376

 

150

 

11

 

259,301

Total ending loans balance

 

  $

35,866

 

 $

180,430

 

 $

13,718

 

 $

49,545

 

 $

376

 

 $

239

 

 $

11

 

 $

280,185

 

7



Table of Contents

 

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

 

 

 

 

December 31, 2014

 

 

Real Estate

 

 

 

 

 

 

 

 

Single
family

 

Multi-
family

 

Commercial
real estate

 

Church

 

Construction

 

Commercial
- other

 

Consumer

 

Total

 

 

(In thousands)

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending allowance balance attributable to loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

  $

132

 

 $

115

 

 $

161

 

 $

1,088

 

 $

-

 

 $

10

 

 $

-

 

 $

1,506

Collectively evaluated for impairment

 

1,042

 

2,611

 

335

 

2,959

 

7

 

2

 

3

 

6,959

Total ending allowance balance

 

  $

1,174

 

 $

2,726

 

 $

496

 

 $

4,047

 

 $

7

 

 $

12

 

 $

3

 

 $

8,465

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually evaluated for impairment

 

  $

1,414

 

 $

2,765

 

 $

4,636

 

 $

14,602

 

 $

-

 

 $

102

 

 $

-

 

 $

23,519

Loans collectively evaluated for impairment

 

38,641

 

170,785

 

12,083

 

39,525

 

387

 

159

 

9

 

261,589

Total ending loans balance

 

  $

40,055

 

 $

173,550

 

 $

16,719

 

 $

54,127

 

 $

387

 

 $

261

 

 $

9

 

 $

285,108

 

 

The following table presents information related to loans individually evaluated for impairment by loan type as of March 31, 2015 and December 31, 2014:

 

 

 

March 31, 2015

 

December 31, 2014

 

 

 

Unpaid
Principal
Balance

 

Recorded
Investment

 

Allowance
for Loan
Losses
Allocated

 

Unpaid
Principal
Balance

 

Recorded
Investment

 

Allowance
for Loan
Losses
Allocated

 

 

 

(In thousands)

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

Single family

 

$

1,442

 

$

703

 

$

-

 

$

1,448

 

$

736

 

$

-

 

Multi-family

 

1,769

 

1,580

 

-

 

1,384

 

1,263

 

-

 

Commercial real estate

 

4,827

 

1,123

 

-

 

4,836

 

1,174

 

-

 

Church

 

5,956

 

4,076

 

-

 

6,234

 

4,350

 

-

 

Commercial - other

 

21

 

21

 

-

 

34

 

34

 

-

 

With an allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

Single family

 

674

 

674

 

140

 

678

 

678

 

132

 

Multi-family

 

1,140

 

1,140

 

85

 

1,541

 

1,502

 

115

 

Commercial real estate

 

2,048

 

2,038

 

112

 

3,473

 

3,462

 

161

 

Church

 

9,842

 

9,461

 

1,198

 

10,751

 

10,252

 

1,088

 

Commercial -other

 

68

 

68

 

9

 

68

 

68

 

10

 

Total

 

$

27,787

 

$

20,884

 

$

1,544

 

$

30,447

 

$

23,519

 

$

1,506

 

 

The recorded investment in loans excludes accrued interest receivable due to immateriality.  For purposes of this disclosure, the unpaid principal balance is not reduced for net charge-offs.

 

8



Table of Contents

 

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

 

 

The following tables present the monthly average of loans individually evaluated for impairment by loan type and the related interest income for the three months ended March 31, 2015 and 2014.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2015

 

Three Months Ended March 31, 2014

 

 

Average
Recorded
Investment

 

Cash Basis
Interest
Income
Recognized

 

Average
Recorded
Investment

 

Cash Basis
Interest
Income
Recognized

 

 

(In thousands)

Single family

 

 

$

1,382

 

 

 

$

7

 

 

 

$

3,000

 

 

 

$

17

 

Multi-family

 

 

2,740

 

 

 

16

 

 

 

3,861

 

 

 

23

 

Commercial real estate

 

 

4,264

 

 

 

106

 

 

 

4,881

 

 

 

93

 

Church

 

 

14,603

 

 

 

142

 

 

 

19,719

 

 

 

141

 

Commercial -other

 

 

95

 

 

 

2

 

 

 

144

 

 

 

3

 

Total

 

 

$

23,084

 

 

 

$

273

 

 

 

$

31,605

 

 

 

$

277

 

 

Cash-basis interest income recognized represents cash received for interest payments on accruing impaired loans.  Interest payments collected on non-accrual loans are characterized as payments of principal rather than payments of the outstanding accrued interest on the loans until the remaining principal on the non-accrual loans is considered to be fully collectible.  Foregone interest income that would have been recognized had loans performed in accordance with their original terms amounted to $284 thousand and $493 thousand for the three months ended March 31, 2015 and 2014, respectively, and were not included in the consolidated results of operations.

 

The following tables present the aging of the recorded investment in past due loans as of March 31, 2015 and December 31, 2014 by loan type:

 

 

 

March 31, 2015

 

 

30-59
Days
Past Due

 

60-89
Days
Past Due

 

Greater than
90 Days

Past Due

 

Total
Past Due

 

Current

 

 

(In thousands)

Loans receivable held for investment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Single family

 

 

$

-

 

 

 

$

-

 

 

 

$

-

 

 

 

$

-

 

 

 

$

35,866

 

Multi-family

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

180,430

 

Commercial real estate

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

13,718

 

Church

 

 

-

 

 

 

-

 

 

 

258

 

 

 

258

 

 

 

49,287

 

Construction

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

376

 

Commercial - other

 

 

21

 

 

 

-

 

 

 

-

 

 

 

21

 

 

 

218

 

Consumer

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

11

 

Total

 

 

$

21

 

 

 

$

-

 

 

 

$

258

 

 

 

$

279

 

 

 

$

279,906

 

 

 

 

December 31, 2014

 

 

30-59
Days
Past Due

 

60-89
Days
Past Due

 

Greater than
90 Days

Past Due

 

Total
Past Due

 

Current

 

 

(In thousands)

Loans receivable held for investment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Single family

 

 

$

-

 

 

 

$

-

 

 

 

$

-

 

 

 

$

-

 

 

 

$

40,055

 

Multi-family

 

 

455

 

 

 

-

 

 

 

-

 

 

 

455

 

 

 

173,095

 

Commercial real estate

 

 

856

 

 

 

-

 

 

 

-

 

 

 

856

 

 

 

15,863

 

Church

 

 

-

 

 

 

180

 

 

 

987

 

 

 

1,167

 

 

 

52,960

 

Construction

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

387

 

Commercial - other

 

 

34

 

 

 

-

 

 

 

-

 

 

 

34

 

 

 

227

 

Consumer

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9

 

Total

 

 

$

1,345

 

 

 

$

180

 

 

 

$

987

 

 

 

$

2,512

 

 

 

$

282,596

 

 

9



Table of Contents

 

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

 

 

The following table presents the recorded investment in non-accrual loans by loan type as of March 31, 2015 and December 31, 2014:

 

 

 

March 31, 2015

 

December 31, 2014

 

 

(In thousands)

Loans receivable held for investment:

 

 

 

 

 

 

 

 

 

 

Single family

 

 

$

703

 

 

 

$

736

 

Multi-family

 

 

1,580

 

 

 

1,618

 

Commercial real estate

 

 

1,123

 

 

 

1,174

 

Church

 

 

4,217

 

 

 

5,232

 

Commercial - other

 

 

89

 

 

 

102

 

Total non-accrual loans

 

 

$

7,712

 

 

 

$

8,862

 

 

There were no loans 90 days or more delinquent that were accruing interest as of March 31, 2015 or December 31, 2014.

 

Troubled Debt Restructurings

 

At March 31, 2015, loans classified as troubled debt restructurings (“TDRs”) totaled $18.4 million, of which $5.2 million were included in non-accrual loans and $13.2 million were on accrual status.  At December 31, 2014, loans classified as TDRs totaled $20.2 million, of which $5.5 million were included in non-accrual loans and $14.7 million were on accrual status.  The Company has allocated $1.5 million and $1.3 million of specific reserves for accruing TDRs as of March 31, 2015 and December 31, 2014, respectively.  TDRs on accrual status are comprised of loans that were accruing at the time of restructuring or loans that have complied with the terms of their restructured agreements for a satisfactory period of time, and for which the Bank anticipates full repayment of both principal and interest.  TDRs that are on non-accrual status can be returned to accrual status after a period of sustained performance, generally determined to be six months of timely payments as modified.  A well-documented credit analysis that supports a return to accrual status based on the borrower’s financial condition and prospects for repayment under the revised terms is also required.  As of March 31, 2015 and December 31, 2014, the Company had no commitment to lend additional amounts to customers with outstanding loans that are classified as TDRs.  No loans were modified during the three months ended March 31, 2015 and 2014.

 

Credit Quality Indicators

 

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as:  current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.  For single family residential, consumer and other smaller balance homogenous loans, a credit grade is established at inception, and generally only adjusted based on performance.  Information about payment status is disclosed elsewhere herein.  The Company analyzes all other loans individually by classifying the loans as to credit risk.  This analysis is performed at least on a quarterly basis.  The Company uses the following definitions for risk ratings:

 

·                  Watch.  Loans classified as watch exhibit weaknesses that could threaten the current net worth and paying capacity of the obligors.  Watch graded loans are generally performing and are not more than 59 days past due. A watch rating is used when a material deficiency exists but correction is anticipated within an acceptable time frame.

 

·                  Special Mention.  Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

 

10



Table of Contents

 

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

 

 

·                  Substandard.  Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

 

·                  Doubtful.  Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

 

·                  Loss.  Loans classified as loss are considered uncollectible and of such little value that to continue to carry the loan as an active asset is no longer warranted.

 

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.  Pass rated loans are generally well protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral.  Pass rated loans are not more than 59 days past due and are generally performing in accordance with the loan terms.  Based on the most recent analysis performed, the risk category of loans by loan type as of March 31, 2015 and December 31, 2014 is as follows:

 

 

 

March 31, 2015

 

 

 

Pass

 

Watch

 

Special Mention

 

Substandard

 

Doubtful

 

Loss

 

 

 

(In thousands)

 

Single family

 

  $

 31,711

 

  $

 -

 

  $

 3,448

 

  $

 707

 

  $

 -

 

  $

 -

 

Multi-family

 

177,266

 

-

 

969

 

2,195

 

-

 

-

 

Commercial real estate

 

10,274

 

-

 

283

 

3,161

 

-

 

-

 

Church

 

38,138

 

786

 

1,449

 

9,172

 

-

 

-

 

Construction

 

376

 

-

 

-

 

-

 

-

 

-

 

Commercial - other

 

150

 

-

 

-

 

89

 

-

 

-

 

Consumer

 

11

 

-

 

-

 

-

 

-

 

-

 

Total

 

  $

 257,926

 

  $

 786

 

  $

 6,149

 

  $

 15,324

 

  $

 -

 

  $

 -

 

 

 

 

 

 

 

December 31, 2014

 

 

 

Pass

 

Watch

 

Special Mention

 

Substandard

 

Doubtful

 

Loss

 

 

 

(In thousands)

 

Single family

 

  $

 35,850

 

  $

 -

 

  $

 3,465

 

  $

740

 

  $

 -

 

  $

 -

 

Multi-family

 

170,700

 

-

 

613

 

2,237

 

-

 

-

 

Commercial real estate

 

13,218

 

-

 

284

 

3,217

 

-

 

-

 

Church

 

41,716

 

-

 

2,202

 

10,209

 

-

 

-

 

Construction

 

387

 

-

 

-

 

-

 

-

 

-

 

Commercial - other

 

159

 

-

 

-

 

102

 

-

 

-

 

Consumer

 

9

 

-

 

-

 

-

 

-

 

-

 

Total

 

  $

 262,039

 

  $

 -

 

  $

 6,564

 

  $

16,505

 

  $

 -

 

  $

 -

 

 

11



Table of Contents

 

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

 

 

NOTE (6)  Junior Subordinated Debentures

 

On March 17, 2004, the Company issued $6.0 million of Floating Rate Junior Subordinated Debentures (the “Debentures”) in a private placement to a trust that was capitalized to purchase subordinated debt and preferred stock of multiple community banks.  Interest on the Debentures is payable quarterly at a rate per annum equal to the 3-Month LIBOR plus 2.54%.  The interest rate is determined as of each March 17, June 17, September 17, and December 17, and was 2.81% at March 31, 2015.  On October 16, 2014, the Company made payments of $900 thousand of principal on Debentures, executed a Supplemental Indenture for the Debentures that extended the maturity of the Debentures to March 17, 2024, and modified the payment terms of the remaining $5.1 million principal amount thereof.  The modified terms of the Debentures require quarterly payments of interest only for the next five years at the original rate of 3-Month LIBOR plus 2.54%.  Starting in June 2019, the Company will be required to make quarterly payments of equal amounts of principal, plus interest, until the Debentures are fully amortized on March 17, 2024.  The Debentures may be called for redemption at any time by the Company.

 

NOTE (7)  Fair Value

 

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  There are three levels of inputs that may be used to measure fair values:

 

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

 

Level 2: Significant observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

 

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

 

The Company used the following methods and significant assumptions to estimate fair value:

 

The fair values of securities available-for-sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

 

The Company’s loans receivable held for sale are carried at the lower of cost or fair value. The fair value of loans receivable held for sale is determined by pricing for comparable assets or by outstanding commitments from third party investors, resulting in a Level 2 classification.

 

The fair value of impaired loans that are collateral dependent is generally based upon the fair value of the collateral which is obtained from recent real estate appraisals.  These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.  Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.  Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.  Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

 

Assets acquired through or by transfer in lieu of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis.  These assets are subsequently accounted for at the lower of cost or fair value less estimated costs to sell.  Fair value is commonly based on recent real estate appraisals which are updated every nine months.  These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.  Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.  Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.  Real estate owned properties are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

 

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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

 

 

Appraisals for collateral-dependent impaired loans and real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company.  Once received, an independent third-party licensed appraiser reviews the appraisals for accuracy and reasonableness, reviewing the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics.

 

Assets Measured on a Recurring Basis

 

Assets measured at fair value on a recurring basis are summarized below:

 

 

 

Fair Value Measurements at March 31, 2015

 

 

Quoted Prices
in Active
Markets for
Identical
Assets

(Level 1)

 

Significant
Other
Observable
Inputs

(Level 2)

 

Significant
Unobservable
Inputs

(Level 3)

 

Total

 

 

(In thousands)

Assets:

 

 

 

 

 

 

 

 

Securities available-for-sale - residential mortgage-backed

 

$

-

 

$

14,503

 

$

-

 

$

14,503

Securities available-for-sale - U.S. Government and federal agency

 

1,983

 

-

 

-

 

1,983

 

 

 

Fair Value Measurements at December 31, 2014

 

 

Quoted Prices
in Active
Markets for
Identical
Assets

(Level 1)

 

Significant
Other
Observable
Inputs

(Level 2)

 

Significant
Unobservable
Inputs

(Level 3)

 

Total

 

 

(In thousands)

Assets:

 

 

 

 

 

 

 

 

Securities available-for-sale - residential mortgage-backed

 

$

-

 

$

15,118

 

$

-

 

$

15,118

Securities available-for-sale - U.S. Government and federal agency

 

 

1,957

 

 

-

 

 

-

 

 

1,957

 

There were no transfers between Level 1, Level 2, or Level 3 during the three months ended March 31, 2015 and 2014.

 

Assets Measured on a Non-Recurring Basis

 

Assets are considered to be reflected at fair value on a non-recurring basis if the fair value measurement of the instrument does not necessarily result in a change in the amount recorded on the balance sheet.  Generally, a non-recurring valuation is the result of the application of other accounting pronouncements that require assets to be assessed for impairment or recorded at the lower of cost or fair value.

 

The following table provides information regarding the carrying values of our assets measured at fair value on a non-recurring basis at the dates indicated.  The fair value measurement for all of these assets falls within Level 3 of the fair value hierarchy, except for loans receivable held for sale which is a Level 2 classification.

 

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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

 

 

 

 

March 31, 2015

 

December 31, 2014

 

 

 

(In thousands)

 

Assets:

 

 

 

 

 

Loans receivable held for sale:

 

 

 

 

 

Multi-family

 

$

19,982

 

$

19,679

 

Impaired loans carried at fair value of collateral:

 

 

 

 

 

Single family

 

521

 

549

 

Multi-family

 

-

 

323

 

Commercial real estate

 

1,126

 

1,177

 

Church

 

2,874

 

3,779

 

Real estate owned:

 

 

 

 

 

Church

 

2,479

 

2,082

 

 

The following tables present quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at March 31, 2015 and December 31, 2014:

 

 

 

March 31, 2015

 

 

Fair Value

 

Valuation
Technique(s)

 

Unobservable
Input(s)

 

Range
(Weighted
Average)

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

Impaired loans – single family

 

$

521

 

Sales comparison approach

 

Adjustment for differences between the comparable sales

 

-9% to -3%

(-6%)

 

 

 

 

 

 

 

 

 

Impaired loans – commercial real estate

 

1,126

 

Sales comparison approach

 

Adjustment for differences between the comparable sales

 

0% to 1%

(0%)

 

 

 

 

Income approach

 

Capitalization rate

 

4.75% to 7.25%

(6.57%)

 

 

 

 

 

 

 

 

 

Impaired loans – church

 

2,874

 

Sales comparison approach

 

Adjustment for differences between the comparable sales

 

-12% to 18%

(5%)

 

 

 

 

 

 

 

 

 

Real estate owned – church

 

2,479

 

Sales comparison approach

 

Adjustment for differences between the comparable sales

 

-2% to -1%

(-1%)

 

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Table of Contents

 

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

 

 

 

 

December 31, 2014

 

 

Fair Value

 

Valuation
Technique(s)

 

Unobservable
Input(s)

 

Range
(Weighted
Average)

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

Impaired loans – single family

 

$

549

 

Sales comparison approach

 

Adjustment for differences between the comparable sales

 

-1% to 9%

(-4%)

 

 

 

 

 

 

 

 

 

Impaired loans – multi-family

 

323

 

Sales comparison approach

 

Adjustment for differences between the comparable sales

 

-18%

 

 

 

 

 

 

 

 

 

 

 

 

 

Income approach

 

Capitalization rate

 

7%

 

 

 

 

 

 

 

 

 

Impaired loans – commercial real estate

 

1,177

 

Sales comparison approach

 

Adjustment for differences between the comparable sales

 

0% to 1%

(0%)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income approach

 

Capitalization rate

 

5% to 7.25%

(6.64%)

 

 

 

 

 

 

 

 

 

Impaired loans – church

 

3,779

 

Sales comparison approach

 

Adjustment for differences between the comparable sales

 

-12% to 18%

(5%)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income approach

 

Capitalization rate

 

6%

 

 

 

 

 

 

 

 

 

Real estate owned – church

 

2,082

 

Sales comparison approach

 

Adjustment for differences between the comparable sales

 

-1% to 2%

(0%)

 

15



Table of Contents

 

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

 

 

Fair Values of Financial Instruments

 

The carrying amounts and estimated fair values of financial instruments, at March 31, 2015 and December 31, 2014 were as follows:

 

 

 

 

 

Fair Value Measurements at March 31, 2015

 

 

 

Carrying
Value

 

Level 1

 

Level 2

 

Level 3

 

Total

 

 

 

(In thousands)

 

Financial Assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

  $

28,549

 

  $

28,549

 

  $

-

 

  $

-

 

  $

28,549

 

Securities available-for-sale

 

16,486

 

1,983

 

14,503

 

-

 

16,486

 

Loans receivable held for sale

 

19,813

 

-

 

19,982

 

-

 

19,982

 

Loans receivable held for investment

 

272,514

 

-

 

-

 

272,864

 

272,864

 

Accrued interest receivable

 

1,172

 

12

 

37

 

1,123

 

1,172

 

Federal Home Loan Bank stock

 

3,972

 

-

 

-

 

-

 

N/A

 

Financial Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

  $

222,092

 

  $

-

 

  $