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 |
90036 |
(Address of principal executive offices) |
(Zip Code) |
(323) 634-1700
(Registrants 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 issuers classes of common stock, as of the latest practicable date:
As of May 5, 2015, 21,405,188 shares of the Registrants voting common stock and 7,671,520 shares of the Registrants non-voting common stock were outstanding.
|
|
|
|
Page |
PART I. |
FINANCIAL INFORMATION |
|
| |
|
|
|
|
|
|
Item 1. |
Financial Statements |
|
|
|
|
|
|
|
|
|
|
1 | |
|
|
|
|
|
|
|
|
2 | |
|
|
|
|
|
|
|
Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2015 and 2014 |
|
3 |
|
|
|
|
|
|
|
|
4 | |
|
|
|
|
|
|
Managements Discussion and Analysis of Financial Condition and Results of Operations |
|
20 | |
|
|
|
|
|
|
|
28 | ||
|
|
|
|
|
|
|
28 | ||
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
29 | ||
|
|
|
|
|
|
|
29 | ||
|
|
|
|
|
|
|
29 | ||
|
|
|
|
|
|
|
29 | ||
|
|
|
|
|
|
|
29 | ||
|
|
|
|
|
|
|
29 | ||
|
|
|
|
|
|
|
29 | ||
|
|
|
|
|
|
|
30 |
BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Financial Condition
(In thousands, except share and per share amounts)
|
|
March 31, |
|
|
December 31, |
|
| ||
|
|
(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.
BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
|
|
Three Months Ended |
| |||||
|
|
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.
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) |
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.
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 Companys 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 Entitys 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 entitys external auditor. Under the new guidance, management will be required to perform interim and annual assessments of an entitys ability to continue as a going concern within one year of the date of issuance of the entitys financial statements. Further, an entity must provide certain disclosures if there is substantial doubt about the entitys 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 Companys 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 Companys 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 Companys consolidated financial statements.
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, |
| ||||
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 |
|
Gross |
|
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 |
|
BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements (continued)
At March 31, 2015, the Banks 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 |
|
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 |
|
Multi- |
|
Commercial |
|
Church |
|
Construction |
|
Commercial |
|
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 |
|
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 |
|
Multi- |
|
Commercial |
|
Church |
|
Construction |
|
Commercial |
|
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 |
BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements (continued)
|
|
December 31, 2014 | ||||||||||||||||||||||
|
|
Real Estate |
|
|
|
|
|
| ||||||||||||||||
|
|
Single |
|
Multi- |
|
Commercial |
|
Church |
|
Construction |
|
Commercial |
|
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 |
|
Recorded |
|
Allowance |
|
Unpaid |
|
Recorded |
|
Allowance |
| ||||||
|
|
(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.
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 |
|
Cash Basis |
|
Average |
|
Cash Basis | ||||||||||||||||
|
|
(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 |
|
60-89 |
|
Greater than |
|
Total |
|
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 |
|
60-89 |
|
Greater than |
|
Total |
|
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 |
|
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 borrowers 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 managements close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institutions credit position at some future date.
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 |
|
$ |
- |
|
$ |
- |
|
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 companys 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 Companys 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.
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 |
|
Significant |
|
Significant |
|
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 |
|
Significant |
|
Significant |
|
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.
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 |
|
Unobservable |
|
Range | |
|
|
(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%) | |
BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements (continued)
|
|
December 31, 2014 | |||||||
|
|
Fair Value |
|
Valuation |
|
Unobservable |
|
Range | |
|
|
(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%) | |
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 |
|
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 |
|
$ |
- |
|
$ |