-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HqbVEYcyJMIm9ISWSl9bVYSrsJlZpEOL/dq/YM7HlgkyfUW2z9Kaw1LItCuHSoYU 06VszIEOvDUWVXZxgfSL0g== 0001193125-08-102443.txt : 20080505 0001193125-08-102443.hdr.sgml : 20080505 20080505165747 ACCESSION NUMBER: 0001193125-08-102443 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20080505 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20080505 DATE AS OF CHANGE: 20080505 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BROADWAY FINANCIAL CORP \DE\ CENTRAL INDEX KEY: 0001001171 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 954547287 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-27464 FILM NUMBER: 08803374 BUSINESS ADDRESS: STREET 1: 4800 WILSHIRE BLVD CITY: LOS ANGELES STATE: CA ZIP: 90010 BUSINESS PHONE: 2136341700 MAIL ADDRESS: STREET 1: 4800 WILSHIRE BLVD CITY: LOS ANGELES STATE: CA ZIP: 90010 8-K 1 d8k.htm FORM 8-K Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 5, 2008

 

 

BROADWAY FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   000-27464   95-4547287
(State of Incorporation)   (Commission File Number)   (IRS Employer Identification No.)

 

4800 Wilshire Boulevard, Los Angeles, California   90010
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (323) 634-1700

NOT APPLICABLE

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 2.02 Results of Operations and Financial Condition.

On May 5, 2008, Broadway Financial Corporation (the “Company”) issued a Press Release on earnings for the quarter ended March 31, 2008. A copy of the Press Release is attached as Exhibit 99.1.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

99.1   Press release dated May 5, 2008, announcing earnings for the quarter ended March 31, 2008.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    BROADWAY FINANCIAL CORPORATION
    (Registrant)
Date: May 5, 2008      
    By  

/s/ Samuel Sarpong

      Samuel Sarpong
      Chief Financial Officer
EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

News Release

 

FOR IMMEDIATE RELEASE

   Contact:   Paul C. Hudson, CEO
     Sam Sarpong, CFO
     (323) 634-1700
     www.broadwayfederalbank.com

Broadway Financial Corporation Reports 37% Increase in First Quarter Net Earnings

LOS ANGELES, CA – (BUSINESS WIRE) – May 5, 2008 – Broadway Financial Corporation (the “Company”) (NASDAQ Small-Cap: BYFC), parent company of Broadway Federal Bank, f.s.b. (the “Bank”), today reported first quarter net earnings of $607,000, or $0.32 per diluted share, up $163,000, or 36.71%, when compared with net earnings of $444,000, or $0.23 per diluted share, in the first quarter of 2007. The increase in net earnings was primarily due to increased interest-earning assets and a higher net interest margin.

Chief Executive Officer, Paul C. Hudson stated, “Bank earnings are benefiting from strong loan demand and increasing net interest margins.” He went on to state, “Going forward, we are focusing on deposit growth and asset credit quality.”

First Quarter Results:

 

   

Net interest income before provision for loan losses of $3.3 million in the first quarter of 2008 was up $622,000, or 22.89%, from the first quarter of 2007, primarily reflecting a higher level of average interest-earning assets which increased $64.3 million, or 22.02%.

 

   

Loan originations were $37.8 million for the first quarter of 2008, compared with loan originations of $21.6 million for the first quarter of 2007. We do not originate or purchase sub-prime loans and we have no sub-prime loans represented in our loan or investment portfolios.

 

   

Nonperforming assets at March 31, 2008 increased to 0.17% of total assets from 0.01% of total assets at year-end 2007.

 

   

The provision for loan losses for the first quarter of 2008 was up $138,000 from the first quarter of 2007 due to funding the allowance for loan losses for the growth of the loan portfolio.

 

   

Non-interest income in the first quarter of 2008 was down $21,000, or 6.62%, from the first quarter of 2007, primarily due to lower loan related fees which was partially offset by higher retail banking fees.

 

   

Non-interest expense in the first quarter of 2008 was up $197,000, or 8.56%, from the first quarter of 2007, primarily due to increases in occupancy expense and other expense.

Net Interest Income

Net interest income before provision for loan losses of $3.3 million in the first quarter of 2008 was up $622,000, or 22.89%, from the first quarter a year ago. The increase was attributable to interest-earning asset growth and net interest rate margin improvement. Interest-earning assets averaged $356.6 million in the current quarter, up $64.3 million, or 22.02%, from the same period a year ago. The annualized yield on average interest-earning assets increased 19 basis points to 6.92% in the current quarter from 6.73% a year ago. The annualized yield on average loans improved 12 basis points to 7.22% in the first quarter of 2008 from 7.10% for the same period in 2007.

The annualized cost of average interest-bearing liabilities increased 16 basis points to 3.32% in the current quarter from 3.16% a year ago. The annualized weighted average cost of FHLB borrowings increased 28 basis points to 4.07% in the first quarter of 2008 from 3.79% for the same period in 2007. The annualized weighted average cost of deposits decreased slightly to 2.88% in the first quarter of 2008 from 2.89% for the same period in 2007.


Annualized net interest rate margin increased 3 basis points to 3.75% in the current quarter from 3.72% a year ago. The annualized net interest rate spread increased 3 basis points to 3.60% in the current quarter from 3.57% a year ago.

Provision and Allowance for Loan Losses

During the first quarter of 2008, the provision for loan losses amounted to $158,000, compared to $20,000 a year ago. The increase was primarily due to increased loan originations/volume. At March 31, 2008, the allowance for loan losses was $2.2 million, or 0.69% of total gross loans receivable, excluding loans held for sale, compared to $2.1 million, or 0.68% of total gross loans receivable, excluding loans held for sale, at year-end 2007. Management believes that the allowance for loan losses is adequate to cover probable incurred losses in the loan portfolio as of March 31, 2008, but there can be no assurance that actual losses will not exceed the estimated amounts. In addition, the Office of Thrift Supervision (“OTS”) and the Federal Deposit Insurance Corporation periodically review the allowance for loan losses as an integral part of their examination process. These agencies may require an increase to the allowance for loan losses based on their judgments of the information available to them at the time of their examination.

Non-Interest Income

Non-interest income totaled $296,000 in the first quarter of 2008, down $21,000, or 6.62%, from the first quarter a year ago, primarily due to lower loan related fees. The decrease in loan related fees primarily resulted from lower loan referral fee income and loan service fee income. Partially offsetting this decrease was higher retail banking fees as our new branch became operational in February 2008.

Non-Interest Expense

Non-interest expense totaled $2.5 million in the first quarter of 2008, up $197,000, or 8.56%, from the first quarter a year ago. The increase in non-interest expense was primarily due to higher occupancy expense and other expense. Occupancy expense increased $73,000, or 28.08%, primarily due to the addition of the new branch. Other expense increased $111,000, or 58.42%, primarily due to increases in donations, sponsorships, promotion and FDIC insurance premiums. Partially offsetting the increases in occupancy expense and other expense was a $42,000, or 28.97%, decrease in professional services expenses, primarily attributable to additional costs incurred in the first quarter of 2007 related to staffing the new wealth management division.

Income Taxes

The effective income tax rate was 38.00% for the first quarter 2008 compared to 37.73% for the first quarter 2007.

Assets, Loan Originations, Deposits and Borrowings

At March 31, 2008, assets totaled $381.0 million, up $24.2 million, or 6.78%, from year-end 2007. During the current quarter, net loans, including loans held for sale, increased $24.1 million, cash and cash equivalents increased $1.4 million and FHLB stock increased $0.8 million, while securities held to maturity decreased $2.3 million.


Loan originations totaled $37.8 million in the current quarter, up $16.2 million, or 75.00%, from $21.6 million a year ago. Loan repayments, including loan sales, amounted to $13.8 million in the first quarter of 2008, down $5.2 million, or 27.37%, from $19.0 million in the first quarter of 2007.

Deposits totaled $235.1 million at March 31, 2008, up $6.3 million, or 2.77%, from year-end 2007. During the current quarter, our core deposits (NOW, demand, money market and passbook accounts) increased $8.9 million while our certificates of deposit decreased $2.6 million. At March 31, 2008, core deposits represented 43.32% of total deposits compared to 40.61% at December 31, 2007.

Since the end of 2007, FHLB borrowings increased $17.5 million, or 18.13%, to $114.0 million at March 31, 2008 from $96.5 million at December 31, 2007. The Company continued to utilize FHLB advances to fund loans as an additional alternative to retail deposits.

Asset Quality and Performance Ratios

Non-performing assets, consisting of non-accrual and delinquent loans 90 or more days past due, at March 31, 2008 were $645,000, or 0.17% of total assets, compared to $34,000, or 0.01% of total assets, at December 31, 2007. During the first quarter of 2008, two loans totaling $611,000 were placed on non-accrual status. The new non-accrual loans included a $601,000 loan secured by a 10-unit residential property located in Los Angeles, California and a $10,000 commercial line of credit. No significant losses are anticipated on these new non-accrual loans.

The annualized return on average equity for first quarter 2008 was 10.89%, compared to 8.66% for fourth quarter 2007 and 8.78% for first quarter 2007. The annualized return on average assets for first quarter 2008 was 0.66%, compared to 0.55% for fourth quarter 2007 and 0.59% for first quarter 2007. The efficiency ratio for first quarter 2008 was 68.72%, compared to 77.26% for fourth quarter 2007 and 75.84% for first quarter 2007. The improvement in our returns on average equity and average assets as well as our efficiency ratio was primarily due to higher net earnings in the first quarter of 2008 as a result of the strong growth in our interest earning assets which translated to higher net interest income.

At March 31, 2008, the Bank’s Total Risk-Based Capital ratio was 10.23% and the Bank met the capital requirements necessary to be deemed “well-capitalized” for regulatory purposes, but fell short of management’s goal to keep the Total Risk-Based Capital ratio above 11.00%. In April 2008, the Company invested an additional $1.5 million into the Bank, increasing the Bank’s Total Risk-Based Capital ratio.

Forward-Looking Statements

Certain matters discussed in this news release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, expectations regarding the business environment in which the Company operates, projections of future performance, perceived opportunities in the market, and statements regarding strategic objectives. These forward-looking statements are based upon current management expectations, and involve risks and uncertainties. Actual results or performance may differ materially from those suggested, expressed, or implied by forward-looking statements due to a wide range of factors including, but not limited to, the general business environment, the real estate market, competitive conditions in the business and geographic areas in which the Company conducts its business, regulatory actions or changes and other risks detailed in the Company’s reports filed with the Securities and Exchange Commission, including the Company’s Annual Reports on Form 10-KSB and Quarterly Reports on Form 10-QSB.


About Broadway Federal Bank

Broadway Federal Bank, f.s.b. is a community-oriented savings bank, which primarily originates residential and commercial mortgage loans and conducts funds acquisition in the geographic areas known as Mid-City and South Los Angeles. The Bank operates five full service branches, four in the city of Los Angeles, and one located in the nearby city of Inglewood, California.

Shareholders, analysts and others seeking information about the Company are invited to write to: Broadway Financial Corporation, Investor Relations, 4800 Wilshire Blvd., Los Angeles, CA 90010, or visit our website at www.broadwayfederalbank.com.


BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(Dollars in thousands)

 

     March 31,
2008
(Unaudited)
    December 31,
2007
 

ASSETS

    

Cash

   $ 5,695     $ 4,331  

Securities available for sale, at fair value

     4,605       4,763  

Securities held to maturity

     26,894       29,184  

Loans receivable held for sale, at fair value at March 31, 2008 and at lower of cost or fair value at December 31, 2007

     12,601       3,554  

Loans receivable, net of allowance of $2,205 and $2,051

     315,087       300,024  

Accrued interest receivable

     2,068       1,867  

Federal Home Loan Bank (FHLB) stock, at cost

     5,358       4,536  

Office properties and equipment, net

     5,718       5,678  

Bank owned life insurance

     2,251       2,227  

Other assets

     720       643  
                

Total assets

   $ 380,997     $ 356,807  
                

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Deposits

   $ 235,062     $ 228,727  

Federal Home Loan Bank advances

     114,000       96,500  

Junior subordinated debentures

     6,000       6,000  

Advance payments by borrowers for taxes and insurance

     119       512  

Deferred income taxes

     941       926  

Other liabilities

     2,325       2,093  
                

Total liabilities

     358,447       334,758  
                

Stockholders’ Equity:

    

Preferred, non-cumulative and non-voting stock, $.01 par value, authorized 1,000,000 shares; issued and outstanding 55,199 shares of Series A, 100,000 shares of Series B and 76,950 shares of Series C at March 31, 2008 and December 31, 2007

     2       2  

Common stock, $.01 par value, authorized 3,000,000 shares; issued 2,013,942 shares at March 31, 2008 and December 31, 2007; outstanding 1,758,589 shares at March 31, 2008 and 1,761,778 shares at December 31, 2007

     20       20  

Additional paid-in capital

     12,217       12,212  

Accumulated other comprehensive income, net of taxes of $19 and $3

     29       6  

Retained earnings-substantially restricted

     13,650       13,152  

Treasury stock-at cost, 255,353 shares at March 31, 2008 and 252,164 shares at December 31, 2007

     (3,368 )     (3,343 )
                

Total stockholders’ equity

     22,550       22,049  
                

Total liabilities and stockholders’ equity

   $ 380,997     $ 356,807  
                


BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations and Comprehensive Earnings

(Dollars in thousands, except per share amounts)

(Unaudited)

 

     Three Months ended March 31,  
     2008     2007  

Interest and fees on loans receivable

   $ 5,684     $ 4,405  

Interest on mortgage-backed securities

     369       401  

Interest on investment securities

     16       25  

Other interest income

     100       84  
                

Total interest income

     6,169       4,915  
                

Interest on deposits

     1,667       1,608  

Interest on borrowings

     1,163       590  
                

Total interest expense

     2,830       2,198  
                

Net interest income before provision for loan losses

     3,339       2,717  

Provision for loan losses

     158       20  
                

Net interest income after provision for loan losses

     3,181       2,697  
                

Non-interest income:

    

Service charges

     249       275  

Net gains on mortgage banking activities

     14       6  

Other

     33       36  
                

Total non-interest income

     296       317  
                

Non-interest expense:

    

Compensation and benefits

     1,447       1,428  

Occupancy expense, net

     333       260  

Information services

     172       161  

Professional services

     103       145  

Office services and supplies

     142       117  

Other

     301       190  
                

Total non-interest expense

     2,498       2,301  
                

Earnings before income taxes

     979       713  

Income taxes

     372       269  
                

Net earnings

   $ 607     $ 444  
                

Other comprehensive income (loss), net of tax:

    

Unrealized gain (loss) on securities available for sale

   $ 39     $ (7 )

Income tax effect

     (16 )     3  
                

Other comprehensive income (loss), net of tax

     23       (4 )
                

Comprehensive earnings

   $ 630     $ 440  
                

Net earnings

   $ 607     $ 444  

Dividends paid on preferred stock

     (20 )     (32 )
                

Earnings available to common shareholders

   $ 587     $ 412  
                

Earnings per share-basic

   $ 0.33     $ 0.25  

Earnings per share-diluted

   $ 0.32     $ 0.23  

Dividends declared per share-common stock

   $ 0.05     $ 0.05  

Basic weighted average shares outstanding

     1,760,054       1,637,438  

Diluted weighted average shares outstanding

     1,810,966       1,774,831  


BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Selected Ratios and Data

(Dollars in thousands)

 

     As of March 31,        
     2008           2007        

Regulatory Capital Ratios:

        

Core Capital

     7.03 %       8.01 %  

Tangible Capital

     7.03 %       8.01 %  

Tier 1 Risk-Based Ratio

     9.46 %       11.25 %  

Total Risk-Based Capital

     10.23 %       12.04 %  

Asset Quality Ratios and Data:

        

Non-performing loans as a percentage of total gross loans, excluding loans held for sale

     0.20 %       0.01 %  

Non-performing assets as a percentage of total assets

     0.17 %       0.01 %  

Allowance for loan losses as a percentage of total gross loans, excluding loans held for sale

     0.69 %       0.70 %  

Allowance for loan losses as a percentage of non-performing loans

     341.86 %       5,147.06 %  

Allowance for losses as a percentage of non-performing assets

     341.86 %       5,147.06 %  

Non-performing assets:

        

Non-accrual loans

   $ 645       $ 34    
                    

Total non-performing assets

   $ 645       $ 34    
                    
     Three Months ended March 31,        
     2008           2007        

Performance Ratios:

        

Return on average assets

     0.66 %   (A )     0.59 %   (A )

Return on average equity

     10.89 %   (A )     8.78 %   (A )

Average equity to average assets

     6.06 %       6.69 %  

Non-interest expense to average assets

     2.72 %   (A )     3.04 %   (A )

Efficiency ratio (1)

     68.72 %       75.84 %  

Net interest rate spread (2)

     3.60 %   (A )     3.57 %   (A )

Net interest rate margin (3)

     3.75 %   (A )     3.72 %   (A )

 

(1) Efficiency ratio represents non-interest expense divided by net interest income plus non-interest income.
(2) Net interest rate spread represents the difference between yield on average interest-earning assets and the cost of interest-bearing liabilities.
(3) Net interest rate margin represents net interest income as a percentage of average interest-earning assets.
(A) Annualized


BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Support for Calculations

(Dollars in thousands)

 

     Three Months ended March 31,  
     2008     2007  

Total assets

   $ 380,997     $ 304,693  

Total gross loans, excluding loans held for sale

   $ 317,292     $ 251,370  

Total equity

   $ 22,550     $ 20,392  

Average assets

   $ 367,941     $ 302,463  

Average loans

   $ 315,016     $ 248,009  

Average equity

   $ 22,293     $ 20,224  

Average interest-earning assets

   $ 356,555     $ 292,206  

Average interest-bearing liabilities

   $ 341,412     $ 278,561  

Net income

   $ 607     $ 444  

Total income

   $ 3,635     $ 3,034  

Non-interest expense

   $ 2,498     $ 2,301  

Efficiency ratio

     68.72 %     75.84 %

Non-accrual loans

   $ 645     $ 34  

REO, net

   $ —       $ —    

ALLL

   $ 2,205     $ 1,750  

REO-Allowance

   $ —       $ —    

Interest income

   $ 6,169     $ 4,915  

Interest expense

   $ 2,830     $ 2,198  

Net interest income

   $ 3,339     $ 2,717  
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