Originated over $50 million of Loans during
the Quarter
Broadway Financial Corporation (the “Company”) (NASDAQ Capital
Market: BYFC), parent company of Broadway Federal Bank, f.s.b. (the
“Bank”), today reported net income of $1.2 million, or $0.05
per diluted share, for the first quarter of 2017, compared to
net income of $633 thousand, or $0.02 per diluted share, for
the first quarter of 2016.
The higher earnings during the first quarter of 2017 compared to
the first quarter of 2016 primarily resulted from an increase of
$408 thousand in net interest income, an increase of $816 thousand
in non-interest income, and an increase of $50 thousand in loan
loss provision recaptures. These increases were partially offset by
an increase of $164 thousand in non-interest expense, and an
increase in tax expense of $511 thousand, reflecting normalized tax
expense after the elimination of the valuation allowance against
deferred tax assets in 2016.
Chief Executive Officer, Wayne Bradshaw commented, “I am pleased
to announce Broadway’s results for the first quarter, which
demonstrate the strength of our franchise, and validate the Bank’s
strategy of focusing on originating loans secured by well-managed,
multi-family, residential properties located within low-to-moderate
income communities within Southern California. During the quarter,
we originated over $50 million in new multi-family loans, grew
assets and interest income, improved net interest margin, and
maintained asset quality and strong capital ratios.
“Looking ahead in 2017, we expect to originate a combination of
loans for investment and loans for sale as we balance our loan
growth with the loan concentration guidelines established by the
Bank’s primary regulator. Regardless of the mix, we will continue
to leverage our lending team’s expertise, experience, and customer
relationships to drive growth in assets and earnings, and remain
committed to being a leading lender that is focused on addressing
the chronic need for affordable housing in Southern California. We
remain confident in our ability to successfully execute this
strategy for creating additional value for our stockholders.”
Net Interest Income
For the first quarter of 2017, net interest income increased by
$408 thousand, or 15.3%, from the first quarter of 2016.
During the first quarter of 2017, the average balance of loans
receivable increased by $78.3 million, which increased interest
income by $799 thousand. However, average yield on loans decreased
by 32 basis points compared to the first quarter of 2016, which
reduced interest income by $264 thousand. The decrease in the
average yield on loans primarily resulted from the payoff of loans
with higher rates than those originated during the first quarter of
2017.
The increased interest income on loans was partially offset by
higher interest expense on deposits and borrowings for the first
quarter of 2017 compared to the first quarter of 2016. Interest
expense on deposits increased by $57 thousand, primarily due to an
increase of $29.5 million in the average balance of deposits
compared to the first quarter of 2016. The average cost of deposits
remained unchanged at 0.79%. Interest expense on borrowings
increased by $57 thousand, primarily due to an increase of $19.7
million in the average balance of FHLB advances, which increased
interest expense by $99 thousand, offset in part by a decrease in
average cost of FHLB advances, which reduced interest expense by
$48 thousand. Additionally, the interest rate on junior
subordinated debentures increased during the first quarter of 2017,
resulting in additional interest expense of $6 thousand.
During the first quarter of 2017, the net interest margin was
2.88%, as compared to 2.79% during the first quarter of 2016. The
increase in margin primarily reflects higher rates earned on
interest-earning deposits and FHLB stock, and the lower cost of
FHLB advances.
Loan Loss Provision Recapture
The Company recorded a loan loss provision recapture of $350
thousand for the first quarter of 2017, compared to $300 thousand
for the first quarter of 2016. The loan loss provision recaptures
during the first quarters of 2017 and 2016 were primarily due to
payoffs and recoveries of problem loans, as well as continued
improvement in the overall quality of its loan portfolio. At March
31, 2017, the allowance for loan losses (“ALLL”) was $4.4 million,
or 1.20% of our gross loans receivable held for investment, which
is the same percentage that the Bank’s ALLL represented at December
31, 2016.
Non-interest Income
Non-interest income for the first quarter of 2017 totaled $1.4
million, compared to $543 thousand for the first quarter of 2016.
Non-interest income increased by $816 thousand primarily because
the Bank recorded a $1.2 million litigation settlement during the
first quarter of 2017, which the Bank received in April 2017. This
increase was partially offset by a decrease in grants received from
the U.S. Department of the Treasury’s Community Development
Financial Institutions (CDFI) Fund. During the first quarter of
2017, the Bank did not receive any grants from the CDFI Fund, as
the year 2016 grants have not been determined and awarded yet,
whereas in the first quarter of 2016 the Bank received a grant of
$265 thousand. Additionally, 2016 results included an unusually
large early withdrawal fee income of $80 thousand.
Non-interest Expense
Non-interest expense for the first quarter of 2017 totaled $3.0
million, compared to $2.9 million for the first quarter of 2016.
The increase of $164 thousand in non-interest expense during the
first quarter of 2017 was primarily due to an increase of $84
thousand in compensation and benefits expense and an increase of
$47 thousand in professional services expense, primarily caused by
higher legal expenses.
Income Taxes
Income taxes are computed by applying the statutory federal
income tax rate of 34% and the California income tax rate of 10.84%
to taxable income. The Company recorded income tax expense of $513
thousand and $2 thousand for the first quarter of 2017 and 2016,
respectively. The Company’s effective income tax rate was 29.3% for
the first quarter of 2017 compared to less than 1% for the first
quarter of 2016. The effective tax rate for the first quarter of
2017 was lower than the statutory rate due to the application of a
low-income housing tax credit. The tax expense for the first
quarter of 2016 primarily reflected the statutory minimum taxes
payable to the State of California and the existence of and
adjustment to the valuation allowance on deferred tax assets. The
Company had no valuation allowance on its deferred tax assets,
which totaled $6.4 million and $6.9 million at March 31, 2017 and
December 31, 2016, respectively.
Balance Sheet Summary
Total assets increased by $25.0 million to $454.1 million at
March 31, 2017 from $429.1 million at December 31, 2016. The growth
in assets included an increase of $33.8 million in loans receivable
held for sale and an increase of $8.8 million in cash and cash
equivalents, which were partially offset by a decrease of $17.9
million in loans receivable held for investment and a decrease of
$648 thousand in securities available-for-sale. The net growth in
assets was funded by an increase in deposits, borrowings, and
retained earnings.
The Bank originated multi-family loans for sale rather than
investment during the first quarter of 2017 in order to maintain
market share and comply with the loan concentration guidelines
established by its primary regulator. During the first quarter of
2017, loans originated for sale totaled $48.7 million, loans sold
totaled $14.8 million of those loans and loan repayments totaled
$89 thousand. The Bank had no loans receivable held for sale during
2016.
Loans receivable held for investment, net of the allowance for
loan losses, totaled $361.7 million at March 31, 2017, compared to
$379.5 million at December 31, 2016. During the first quarter of
2017, the Bank originated for portfolio $1.9 million in
multi-family loans, compared to $27.8 million during the first
quarter of 2016. Loan repayments during the first quarter of 2017
totaled $19.8 million, compared to $12.6 million during the first
quarter of 2016.
Deposits increased to $296.6 million at March 31, 2017 from
$287.4 million at December 31, 2016, which consisted of an increase
of $7.2 million in certificates of deposit and an increase of $2.0
million in core deposits (NOW, demand, money market and passbook
accounts). FHLB advances increased to $101.0 million at March 31,
2017 from $85.0 million at December 31, 2016, as the Bank borrowed
$16.0 million from the FHLB to fund loan originations.
Stockholders' equity was $46.9 million, or 10.32% of the
Company’s total assets, at March 31, 2017, compared to $45.5
million, or 10.61% of the Company’s total assets, at December 31,
2016. The Company’s book value was $1.71 per share as of March 31,
2017, compared to $1.66 per share as of December 31, 2016.
At March 31, 2017, the Bank’s Total Capital ratio was 16.64% and
its Leverage ratio (Tier 1 Capital to adjusted total assets) was
10.77%, compared to a Total Capital ratio of 16.62% and a Leverage
ratio of 10.60% at December 31, 2016.
About Broadway Financial Corporation
Broadway Financial Corporation conducts its operations through
its wholly-owned subsidiary, Broadway Federal Bank, f.s.b., which
is the leading community-oriented savings bank in Southern
California serving low-to-moderate income communities. We offer a
variety of residential and commercial real estate loan products for
consumers, businesses, and non-profit organizations, other loan
products, and a variety of deposit products, including checking,
savings and money market accounts, certificates of deposits and
retirement accounts. The Bank operates three full service branches,
two in the city of Los Angeles, and one located in the nearby city
of Inglewood, California.
Shareholders, analysts and others seeking information about the
Company are invited to write to: Broadway Financial Corporation,
Investor Relations, 5055 Wilshire Blvd., Suite 500, Los Angeles, CA
90036, or visit our website at www.broadwayfederalbank.com.
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are based upon our
management’s current expectations, and involve risks and
uncertainties. Actual results or performance may differ materially
from those suggested, expressed, or implied by the forward-looking
statements due to a wide range of factors including, but not
limited to, the general business environment, the real estate
market, competitive conditions in the business and geographic areas
in which the Company conducts its business, regulatory actions or
changes, and other risks detailed in the Company’s reports filed
with the Securities and Exchange Commission, including the
Company’s Annual Reports on Form 10-K and Quarterly Reports on Form
10-Q. The Company undertakes no obligation to revise any
forward-looking statement to reflect any future events or
circumstances, except to the extent required by law.
BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY
Selected Financial Data and Ratios (Unaudited) (Dollars
in thousands, except per share data)
March 31, 2017 December 31, 2016
Selected Financial Condition Data and Ratios: Cash
and cash equivalents $ 27,209 $ 18,430 Securities
available-for-sale, at fair value 12,554 13,202 Loans receivable
held for sale 33,756 - Loans receivable held for investment 366,130
384,057 Allowance for loan losses (4,392 ) (4,603 )
Loans receivable held for investment, net of allowance 361,738
379,454 Total assets 454,135 429,083 Deposits 296,564 287,427 FHLB
advances 101,000 85,000 Junior subordinated debentures 5,100 5,100
Total stockholders' equity 46,869 45,526 Book value per
share $ 1.71 $ 1.66 Equity to total assets 10.32 % 10.61 %
Asset Quality Ratios: Non-accrual loans to total loans 1.04
% 0.77 % Non-performing assets to total assets 0.92 % 0.69 %
Allowance for loan losses to total gross loans 1.20 % 1.20 %
Allowance for loan losses to total delinquent loans 244.68 % 331.63
% Allowance for loan losses to non-performing loans 105.48 % 156.35
%
Non-Performing Assets: Non-accrual loans $ 4,164 $
2,944 Loans delinquent 90 days or more and still accruing - - Real
estate acquired through foreclosure - -
Total non-performing assets $ 4,164 $ 2,944
Three Months Ended March 31, Three Months
Ended March 31, Selected Operating Data and Ratios:
2017 2016 2017 2016 Interest income $
4,137 $ 3,615 $ 4,137 $ 3,615 Interest expense 1,058
944 1,058 944 Net
interest income before loan loss provision recapture 3,079 2,671
3,079 2,671 Loan loss provision recapture 350
300 350 300 Net interest income
after loan loss provision recapture 3,429 2,971 3,429 2,971
Non-interest income 1,359 543 1,359 543 Non-interest expense
(3,043 ) (2,879 ) (3,043 ) (2,879 ) Income
before income taxes 1,745 635 1,745 635 Income tax expense
513 2 513 2 Net
income $ 1,232 $ 633 $ 1,232 $ 633
Earnings per common share-basic and diluted $ 0.05 $ 0.02 $
0.05 $ 0.02 Loan originations (1) $ 50,645 $ 27,848 $ 50,645
$ 27,848 Net recoveries to average loans (0.14 )% (2) (0.01
)% (2) (0.14 )% (2) (0.01 )% (2) Return on average assets 1.12 %
(2) 0.65 % (2) 1.12 % (2) 0.65 % (2) Return on average equity 10.81
% (2) 5.45 % (2) 10.81 % (2) 5.45 % (2) Net interest margin 2.88 %
(2) 2.79 % (2) 2.88 % (2) 2.79 % (2) (1)
Does not include net deferred origination
costs and unamortized net premiums. Includes loans held for sale
originations of $48.7 million for the three months ended March 31,
2017.
(2) Annualized
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170501006434/en/
Broadway Financial CorporationBrenda J. Battey, Chief Financial
Officer, (323) 556-3264;
orinvestor.relations@broadwayfederalbank.com
Broadway Financial (NASDAQ:BYFC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Broadway Financial (NASDAQ:BYFC)
Historical Stock Chart
From Sep 2023 to Sep 2024