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Broadway Financial Corporation Announces Results for Second Quarter 2024

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Broadway Financial (NASDAQ: BYFC) reported second-quarter 2024 net earnings of $269K, or $0.03 per diluted share, up from $243K in Q2 2023. Net interest income rose by 8.9% to $7.9M, driven by a $3.8M increase in interest income, primarily due to higher loan interest, offset by a $3.2M rise in interest expenses. Non-interest expenses increased by 13.4% to $7.3M, mainly due to higher compensation and benefits.

For the first six months of 2024, net earnings were $105K, down from $1.8M in the same period in 2023, owing to a $2.4M increase in non-interest expenses and a slight decline in net interest income by $100K. The loan portfolio grew by $59M to $946.8M, and deposits increased by $4.7M to $687.4M. CEO Brian Argrett noted the continuation of interest income growth despite challenges from higher cost of funds.

Net interest margin decreased to 2.41% in Q2 2024 from 2.52% in Q2 2023. The provision for credit losses dropped to $494K from $768K. Stockholders' equity stood at $282.3M, with a book value per share of $14.49.

Broadway Financial (NASDAQ: BYFC) ha riportato un utile netto per il secondo trimestre del 2024 di $269K, pari a $0,03 per azione diluita, in crescita rispetto ai $243K del Q2 2023. Il reddito netto da interessi è aumentato dell'8,9% a $7,9M, spinto da un incremento di $3,8M nel reddito da interessi, principalmente a causa dell'aumento dei tassi sui prestiti, compensato da un aumento di $3,2M delle spese per interessi. Le spese non legate agli interessi sono aumentate del 13,4% a $7,3M, principalmente a causa di maggiori compensi e benefici.

Nei primi sei mesi del 2024, l'utile netto è stato di $105K, in calo rispetto a $1,8M nello stesso periodo del 2023, a causa di un aumento di $2,4M delle spese non legate agli interessi e di un leggero calo del reddito netto da interessi di $100K. Il portafoglio prestiti è cresciuto di $59M arrivando a $946,8M, e i depositi sono aumentati di $4,7M a $687,4M. Il CEO Brian Argrett ha sottolineato la continuità della crescita del reddito da interessi nonostante le sfide dovute all'aumento del costo dei fondi.

Il margine di interesse netto è diminuito dal 2,52% del Q2 2023 al 2,41% del Q2 2024. Il fondo per perdite su crediti è sceso a $494K da $768K. Il patrimonio netto degli azionisti ammontava a $282,3M, con un valore contabile per azione di $14,49.

Broadway Financial (NASDAQ: BYFC) reportó una ganancia neta del segundo trimestre de 2024 de $269K, o $0.03 por acción diluida, un aumento desde los $243K en el Q2 2023. Los ingresos netos por intereses aumentaron un 8.9% a $7.9M, impulsados por un aumento de $3.8M en los ingresos por intereses, principalmente debido a tasas de interés más altas en los préstamos, compensado por un aumento de $3.2M en los gastos por intereses. Los gastos no relacionados con intereses aumentaron un 13.4% a $7.3M, principalmente a causa de mayores compensaciones y beneficios.

Durante los primeros seis meses de 2024, la ganancia neta fue de $105K, en comparación con $1.8M en el mismo período de 2023, debido a un aumento de $2.4M en los gastos no relacionados con intereses y una leve disminución en los ingresos netos por intereses de $100K. La cartera de préstamos creció en $59M hasta $946.8M, y los depósitos aumentaron en $4.7M hasta $687.4M. El CEO Brian Argrett destacó la continuidad del crecimiento de los ingresos por intereses a pesar de los desafíos por el aumento de los costos de financiamiento.

El margen de interés neto disminuyó al 2.41% en el Q2 2024 desde el 2.52% en el Q2 2023. La provisión para pérdidas crediticias cayó a $494K desde $768K. El patrimonio de los accionistas se situó en $282.3M, con un valor contable por acción de $14.49.

브로드웨이 파이낸셜 (NASDAQ: BYFC)는 2024년 2분기 순이익이 $269K, 즉 희석 주당 $0.03으로, 2023년 2분기 $243K에서 증가했다고 발표했습니다. 순이자 수익은 이자 수익 $3.8M 증가에 힘입어 8.9% 증가하여 $7.9M에 이르렀으나, 이자로 인한 비용이 $3.2M 증가하여 상쇄되었습니다. 비이자 비용은 주로 보상 및 급여 증가로 인해 13.4% 증가하여 $7.3M에 달했습니다.

2024년 처음 6개월 동안 순이익은 $105K로, 2023년 같은 기간에 비해 $1.8M 감소했으며, 이는 비이자 비용이 $2.4M 증가하고 순이자 수익이 $100K 감소했기 때문입니다. 대출 포트폴리오는 $59M 성장하여 $946.8M에 도달했으며, 예금도 $4.7M 증가하여 $687.4M이 되었습니다. CEO 브라이언 아그레트는 자금 조달 비용 증가로 인한 도전 과제에도 불구하고 이자 수익 증가가 지속되고 있음을 강조했습니다.

순이자 마진은 2024년 2분기 2.41%로 2023년 2분기 2.52%에서 감소했습니다. 신용 손실을 위한 준비금은 $494K에서 $768K로 줄었습니다. 주주 자본은 $282.3M으로, 주당 장부 가치는 $14.49입니다.

Broadway Financial (NASDAQ: BYFC) a annoncé un bénéfice net pour le deuxième trimestre 2024 de 269 000 $, soit 0,03 $ par action diluée, en hausse par rapport à 243 000 $ au T2 2023. Le revenu net d'intérêts a augmenté de 8,9 % pour atteindre 7,9 millions $, soutenu par une augmentation de 3,8 millions $ des revenus d'intérêts, principalement en raison de taux d'intérêt plus élevés sur les prêts, compensée par une hausse de 3,2 millions $ des charges d'intérêts. Les charges non liées aux intérêts ont augmenté de 13,4 % pour atteindre 7,3 millions $, en grande partie en raison de l'augmentation des rémunérations et des avantages.

Au cours des six premiers mois de 2024, le bénéfice net s'élevait à 105 000 $, en baisse par rapport à 1,8 million $ au cours de la même période en 2023, en raison d'une augmentation de 2,4 millions $ des charges non liées aux intérêts et d'une légère diminution du revenu net d'intérêts de 100 000 $. Le portefeuille de prêts a augmenté de 59 millions $ pour atteindre 946,8 millions $, et les dépôts ont augmenté de 4,7 millions $ pour atteindre 687,4 millions $. Le PDG Brian Argrett a souligné la poursuite de la croissance des revenus d'intérêts malgré les défis liés à l'augmentation du coût des fonds.

La marge d'intérêts nets a diminué à 2,41 % au T2 2024 contre 2,52 % au T2 2023. La provision pour pertes sur crédits a chuté à 494 000 $ contre 768 000 $. Les capitaux propres des actionnaires s'élevaient à 282,3 millions $, avec une valeur comptable par action de 14,49 $.

Broadway Financial (NASDAQ: BYFC) berichtete von einem Nettogewinn im zweiten Quartal 2024 von 269.000 $, oder 0,03 $ pro verwässerter Aktie, was einem Anstieg von 243.000 $ im Q2 2023 entspricht. Der Nettozinsertrag stieg um 8,9% auf 7,9 Millionen $, was auf einen Anstieg des Zins收入 von 3,8 Millionen $ zurückzuführen ist, bedingt durch höhere Kreditzinsen, die durch einen Anstieg der Zinsaufwendungen um 3,2 Millionen $ ausgeglichen wurden. Die nicht-zinsbezogenen Aufwendungen stiegen um 13,4% auf 7,3 Millionen $, vor allem aufgrund höherer Vergütungen und Sozialleistungen.

In den ersten sechs Monaten des Jahres 2024 betrug der Nettogewinn 105.000 $, im Vergleich zu 1,8 Millionen $ im selben Zeitraum 2023, was auf einen Anstieg der nicht-zinsbezogenen Aufwendungen um 2,4 Millionen $ und einen leichten Rückgang des Nettozinsertrags um 100.000 $ zurückzuführen ist. Das Kreditportfolio wuchs um 59 Millionen $ auf 946,8 Millionen $, und die Einlagen stiegen um 4,7 Millionen $ auf 687,4 Millionen $. CEO Brian Argrett bemerkte die Fortsetzung des Wachstums der Zinseinnahmen trotz der Herausforderungen durch höhere Finanzierungskosten.

Die Nettomarge fiel im Q2 2024 auf 2,41% von 2,52% im Q2 2023. Die Rückstellungen für Kreditverluste gingen auf 494.000 $ von 768.000 $ zurück. Das Eigenkapital der Aktionäre betrug 282,3 Millionen $, mit einem Buchwert pro Aktie von 14,49 $.

Positive
  • Net earnings increased to $269K in Q2 2024.
  • Net interest income rose by 8.9% to $7.9M.
  • Total interest income increased by $3.8M, or 33.1%.
  • Loan portfolio grew by $59M to $946.8M.
  • Deposits increased by $4.7M to $687.4M.
  • Provision for credit losses dropped to $494K from $768K.
Negative
  • Net earnings for the first six months of 2024 declined to $105K from $1.8M.
  • Non-interest expenses increased by 13.4% to $7.3M in Q2 2024.
  • Net interest margin decreased to 2.41% in Q2 2024 from 2.52%.
  • Non-interest expenses rose by $2.4M in the first six months of 2024.
  • Increased interest expenses by $3.2M, affecting profitability.

Insights

Broadway Financial 's Q2 2024 results show a mixed performance with some positive trends but ongoing challenges. The company reported $269,000 in net earnings ($0.03 per diluted share), a slight improvement from Q2 2023. Key highlights include:

  • Net interest income increased by $650,000 (8.9%) to $7.9 million, driven by higher interest income from loans.
  • Total interest income grew by $3.8 million (33.1%), with yield on average interest-earning assets rising 67 basis points to 4.71%.
  • Gross loans receivable increased by $59 million (6.6%) to $946.8 million.
  • Deposits grew by $4.7 million to $687.4 million.

However, the company faces ongoing challenges:

  • Net interest margin compressed to 2.41% from 2.52% in Q2 2023, due to higher funding costs.
  • Non-interest expenses increased by $859,000 (13.4%), primarily due to higher compensation and benefits expenses.
  • Year-to-date net earnings decreased significantly to $105,000 from $1.8 million in the first half of 2023.

The company's focus on serving low-to-moderate income communities and its strong capital position (20.6% of total assets) provide a solid foundation. However, investors should monitor the impact of rising interest rates on the company's net interest margin and overall profitability.

Broadway Financial's Q2 2024 results reflect the broader challenges facing the banking industry, particularly for smaller, community-focused institutions. The company's performance highlights several key industry trends:

  • Interest rate sensitivity: The rapid rise in interest rates has led to margin compression, with Broadway's cost of funds increasing faster than asset yields. This is a common issue for banks in the current environment.
  • Loan growth focus: Broadway's 6.6% loan growth demonstrates a strategy to offset margin pressure through volume. This approach is being adopted by many banks but carries potential credit risks if economic conditions deteriorate.
  • Deposit competition: The modest deposit growth of $4.7 million suggests increasing competition for funds. The use of ICS deposits indicates a focus on retaining larger depositors, a important strategy in the post-SVB environment.
  • Regulatory and compliance costs: The significant increase in non-interest expenses, particularly in compensation and professional services, reflects the growing regulatory burden on smaller banks.

Broadway's strong capital position (20.6% of assets) provides a buffer against potential headwinds, but the bank will need to carefully manage its growth and expenses to improve profitability. The focus on low-to-moderate income communities aligns with industry trends towards more inclusive banking but may present unique challenges in the current economic environment.

From a market perspective, Broadway Financial's Q2 2024 results present a nuanced picture for investors:

  • Growth potential: The 33.1% increase in total interest income and 6.6% loan growth demonstrate the company's ability to expand its business, which could be attractive to growth-oriented investors.
  • Profitability concerns: The compression in net interest margin and significant increase in non-interest expenses raise questions about the company's ability to translate growth into bottom-line results.
  • Market positioning: Broadway's focus on low-to-moderate income communities and its participation in the U.S. Treasury's Emergency Capital Investment Program differentiate it from larger, mainstream banks. This niche could be appealing to socially conscious investors.
  • Risk factors: The increase in uninsured deposits to 35% of total deposits, while an improvement from year-end, still represents a potential vulnerability in a volatile banking environment.
  • Valuation considerations: With a book value per share of $14.49, investors will need to weigh the company's growth potential against its current profitability challenges.

For the broader market, Broadway's results highlight the ongoing pressures on smaller banks and the potential for further industry consolidation. The company's ability to navigate the current interest rate environment and regulatory landscape will be important for its future performance and could serve as a bellwether for similar institutions.

LOS ANGELES--(BUSINESS WIRE)-- Broadway Financial Corporation (“Broadway” or the “Company”) (NASDAQ: BYFC), parent company of City First Bank, National Association (the “Bank”, and collectively, with the Company, “we” or “City First Broadway”), reported consolidated net earnings of $269 thousand, or $0.03 per diluted share, for the second quarter of 2024, compared to consolidated net earnings of $243 thousand, or $0.03 per diluted share (adjusted for the 1-for-8 reverse stock split effective November 1, 2023), for the second quarter of 2023.

During the second quarter of 2024, net interest income increased by $650 thousand, or 8.9%, to $7.9 million, compared to the second quarter of 2023. The increase resulted from higher interest income of $3.8 million, primarily due to an increase in interest on loans, partially offset by higher interest expense of $3.2 million, which was primarily due to an increase in the cost of borrowings and deposits. During the second quarter of 2024, non-interest expense increased $859 thousand, or 13.4%, compared to the first quarter of 2024, mainly due to an increase of $735 thousand in compensation and benefits expense.

For the first six months of 2024, the Company reported consolidated net earnings of $105 thousand, or $0.01 per diluted share, compared to consolidated net earnings of $1.8 million, or $0.20 per diluted share (adjusted for the 1-for-8 reverse stock split effective November 1, 2023), for the first six months of 2023. The decrease primarily resulted from an increase in non-interest expense of $2.4 million during the first six months of 2024, compared to the first six months of 2023, primarily due to increases in compensation and benefits expense of $1.4 million and professional services expense of $861 thousand. Additionally, net interest income declined by $100 thousand as interest expense increased by $7.7 million, more than offsetting an increase of $7.6 million in interest income. These decreases were partially offset by a decrease in tax expense of $678 thousand during the first six months of 2024, compared to the first six months of 2023.

Second Quarter 2024 Highlights:

  • During the second quarter of 2024, total interest income increased by $3.8 million, or 33.1%, compared to the second quarter of 2023.
  • The yield on average interest-earning assets increased by 67 basis points to 4.71% for the second quarter of 2024, compared to 4.04% for the second quarter of 2023.
  • Total gross loans receivable increased by $59.0 million, or 6.6%, to $946.8 million at June 30, 2024, compared to $887.8 million at December 31, 2023.
  • Total deposits increased by $4.7 million during the first six months of 2024 to $687.4 million, compared to $682.6 million at December 31, 2023.

Chief Executive Officer, Brian Argrett commented, “During the second quarter we were able to return to profitability, based upon robust growth of over 33% in our total interest income and over 14% in net interest income after provision for credit losses, as compared to the second quarter of 2023. The growth in our top line results continued our record of increasing total interest income, which has increased in each of the thirteen quarters since the merger of Broadway and CFBanc Corporation. The increase in interest income reflects an increase of approximately 60% in our loan portfolio since the merger, and almost 46% since receipt of the equity investment under the U.S. Treasury’s Emergency Capital Investment Program in June 2022. In addition, the growth in interest income reflects improving yields on our interest-earning assets, which have increased by 160 basis points, or almost 52%, since the end of March 2022 when the Federal Open Market Committee of the Federal Reserve began implementing interest rate hikes to curb inflation. I am pleased to report again that we have been able to achieve these increases while maintaining the quality of the Bank’s loan portfolio, as our delinquencies remain modest.”

“Despite these improvements, our bottom-line performance has continued to suffer from the compression in our net interest margin, which reflects the sharp increase in the Bank’s cost of funds resulting from the rate hikes implemented by the Federal Reserve. We are continuing our efforts to reduce our cost of funds and were able to increase our average balance of non-interest-bearing liabilities by $26 million during the second quarter, complementing the reduction in higher cost borrowings during the first quarter of the year.”

“In addition, our performance during the second quarter was impacted by the remediation steps that have been undertaken to address identified weaknesses in our controls over financial disclosures. The results for the second quarter were impacted by the investments in people that we made over the past fifteen months to enhance our operational capabilities to professionally manage our business, improve our efficiency, and promote our continued growth. We are excited to welcome the new members of our team, including the senior executives who joined the Company during the second quarter.”

“We remain focused on serving low-to-moderate income communities within our target markets and are confident in our ability to execute our plans in pursuit of our mission because of the investments in our team and the Company’s strong base of equity capital, which represented over 20.6% of Broadway’s total assets at June 30, 2024.”

“Finally, I wish to thank our team members for their tremendous dedication to our mission and operating performance, and our stockholders and depositors for their continued support of our broader strategy and growth. Your efforts and financial support are fundamental to our ability to expand the service and support that City First Broadway provides to our communities, customers, and broader stakeholders.”

Net Interest Income

Second Quarter of 2024 Compared to Second Quarter of 2023

Net interest income before provision for credit losses for the second quarter of 2024 totaled $7.9 million, representing an increase of $650 thousand, or 8.9%, from net interest income before provision for credit losses of $7.3 million for the second quarter of 2023. The increase resulted from higher interest income, primarily due to an increase in interest on loans, partially offset by an increase in interest expense, due to increases in the cost of borrowings and deposits. The increase in interest income was primarily due to growth of $145.5 million in average loans receivable during the second quarter of 2024, compared to the second quarter of 2023. In addition, the overall rate earned on interest-earning assets increased by 67 basis points as the Bank earned higher rates on the loan portfolio, as well as on interest-earning deposits and securities. Net interest margin decreased to 2.41% for the second quarter of 2024 from 2.52% for the second quarter of 2023, primarily due to an increase in the average cost of funds, which increased to 3.19% for the second quarter of 2024 from 2.12% for the second quarter of 2023, due to higher rates paid on deposits and borrowings after eleven rate increases by the Federal Open Market Committee of the Federal Reserve (the “FRB”) from March 2022 through December 2023.

First Six Months of 2024 Compared to the First Six Months of 2023

Net interest income before provision for credit losses for the six months ended June 30, 2024, totaled $15.4 million, representing a decrease of $100 thousand, or 0.6%, from net interest income before provision for credit losses of $15.5 million for the six months ended June 30, 2023. The decrease resulted from an increase of $7.7 million in interest expense, primarily due to an increase in the average cost of funds, which increased to 3.11% for the first six months of 2024 from 1.76% for the first six months of 2023, due to higher interest rates on both deposits and borrowings. This decrease was partially offset by an increase of $7.6 million in interest income for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily due to an increase of $143.3 million in the average balance of loans receivable. In addition, interest income increased due to an increase of 60 basis points in the overall rate earned on interest-earning assets during the six months ended June 30, 2024, as the Bank earned higher rates on interest-earning deposits, the loan portfolio, and, to a lesser extent, securities. Net interest margin decreased to 2.34% for the six months ended June 30, 2024, compared to 2.74% for the six months ended June 30, 2023.

The following tables set forth the average balances, average yields and costs, and certain other information for the periods indicated. All average balances are daily average balances. The yields set forth below include the effect of deferred loan fees, and discounts and premiums that are amortized or accreted to interest income or expense.

For the Three Months Ended June 30,

 

2024

 

2023

 

(Dollars in thousands)

 

Average
Balance

Interest

Average
Yield

Average
Balance

Interest

Average
Yield

Assets

 

 

 

 

 

 

Interest-earning assets:

Interest-earning deposits

$

88,294

$

1,189

5.42

%

$

16,615

$

167

4.02

%

Securities

276,457

1,876

2.73

%

326,051

2,183

2.68

%

Loans receivable (1)

943,072

12,179

5.19

%

797,550

9,098

4.56

%

FRB and FHLB stock (2)

13,835

244

7.09

%

11,602

192

6.62

%

Total interest-earning assets

1,321,658

$

15,488

4.71

%

1,151,818

$

11,640

4.04

%

Non-interest-earning assets

53,507

67,173

Total assets

$

1,375,165

$

1,218,991

 

Liabilities and Stockholders’ Equity

Interest-bearing liabilities:

Money market deposits

$

274,915

$

1,623

2.37

%

$

253,110

$

931

1.47

%

Savings deposits

57,684

102

0.71

%

60,826

16

0.11

%

Interest checking and other demand deposits

73,853

166

0.90

%

96,340

88

0.37

%

Certificate accounts

163,237

1,195

2.94

%

153,972

514

1.34

%

Total deposits

569,689

3,086

2.18

%

564,248

1,549

1.10

%

FHLB advances

209,261

2,593

4.98

%

186,664

2,141

4.59

%

Bank Term Funding Program borrowing

 

100,000

 

1,210

4.87

%

-

 

-

-

%

Other borrowings

74,523

681

3.68

%

75,821

682

3.60

%

Total borrowings

383,784

4,484

4.70

%

262,485

2,823

4.30

%

Total interest-bearing liabilities

953,473

$

7,570

3.19

%

826,733

$

4,372

2.12

%

Non-interest-bearing liabilities

139,900

113,803

Stockholders’ equity

281,792

278,455

Total liabilities and stockholders’ equity

$

1,375,165

$

1,218,991

 

Net interest rate spread (3)

$

7,918

1.52

%

$

7,268

1.93

%

Net interest rate margin (4)

2.41

%

2.52

%

Ratio of interest-earning assets to interest-bearing liabilities

138.62

%

139.32

%

(1)

Amount is net of deferred loan fees, loan discounts and loans in process, and includes deferred origination costs and loan premiums.

(2)

FRB is Federal Reserve Board. FHLB is Federal Home Loan Bank.

(3)

Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(4)

Net interest rate margin represents net interest income as a percentage of average interest-earning assets.

For the Six Months Ended June 30,

2024

2023

(Dollars in thousands)

Average
Balance

Interest

Average
Yield

Average
Balance

Interest

Average
Yield

Assets

 

 

 

 

 

 

Interest-earning assets:

Interest-earning deposits

$

97,640

$

2,533

5.22

%

$

15,187

$

286

3.77

%

Securities

290,721

3,951

2.73

%

327,178

4,363

2.67

%

Loans receivable (1)

925,443

23,308

5.06

%

782,101

17,633

4.51

%

FRB and FHLB stock (2)

13,777

489

7.14

%

11,175

401

7.18

%

Total interest-earning assets

1,327,581

$

30,281

4.59

%

1,135,641

$

22,683

3.99

%

Non-interest-earning assets

51,988

67,953

Total assets

$

1,379,569

$

1,203,594

 

Liabilities and Stockholders’ Equity

Interest-bearing liabilities:

Money market deposits

$

272,290

$

3,065

2.26

%

$

263,265

$

1,700

1.29

%

Savings deposits

58,377

204

0.70

%

61,201

29

0.09

%

Interest checking and other demand deposits

78,772

311

0.79

%

100,006

167

0.33

%

Certificate accounts

164,319

2,305

2.82

%

149,550

956

1.28

%

Total deposits

573,758

5,885

2.06

%

574,022

2,852

0.99

%

FHLB advances

209,280

5,191

4.99

%

165,521

3,464

4.19

%

Bank Term Funding Program borrowing

 

100,000

 

2,413

4.85

 

-

 

-

-

%

Other borrowings

76,688

1,350

3.54

%

72,973

825

2.26

%

Total borrowings

385,968

8,954

4.67

%

238,494

4,289

3.60

%

Total interest-bearing liabilities

959,726

$

14,839

3.11

%

812,516

$

7,141

1.76

%

Non-interest-bearing liabilities

138,012

112,281

Stockholders’ equity

281,831

278,797

Total liabilities and stockholders’ equity

$

1,379,569

$

1,203,594

 

Net interest rate spread (3)

$

15,442

1.48

%

15,542

2.24

%

Net interest rate margin (4)

2.34

%

2.74

%

Ratio of interest-earning assets to interest-bearing liabilities

138.33

%

139.77

%

(1)

Amount is net of deferred loan fees, loan discounts and loans in process, and includes deferred origination costs and loan premiums.

(2)

FRB is Federal Reserve Board. FHLB is Federal Home Loan Bank.

(3)

Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(4)

Net interest rate margin represents net interest income as a percentage of average interest-earning assets.

Provision for Credit Losses

For the three months ended June 30, 2024, the Company recorded a provision for credit losses of $494 thousand, compared to a provision for credit losses of $768 thousand for the three months ended June 30, 2023. For the six months ended June 30, 2024, the Company recorded a provision for credit losses of $754 thousand, compared to a provision for credit losses of $810 thousand for the six months ended June 30, 2023. The provisions for credit losses during the second quarter and six months ended June 30, 2024 include recoveries of provisions for credit losses for off-balance sheet loan commitments of $57 thousand and $1 thousand, respectively. The decreases in the provisions for credit losses during the second quarter and six months ended June 30, 2024 were primarily due to lower loan originations and declines in the provision for credit losses for off-balance sheet loan commitments.

The allowance for credit losses (“ACL”) increased to $8.1 million as of June 30, 2024, compared to $7.3 million as of December 31, 2023 due to growth in the loan portfolio.

The Bank had two non-accrual loans at June 30, 2024 with total unpaid principal balances of $328 thousand. No loan charge-offs were recorded during the quarters or six months ended June 30, 2024 or 2023.

Non-interest Income

Non-interest income for the second quarter of 2024 totaled $273 thousand, compared to $260 thousand for the second quarter of 2023.

For the first six months of 2024, non-interest income totaled $579 thousand, compared to $549 thousand for the same period in the prior year. The increase was primarily due to an increase in fees from a revenue sharing agreement with another financial institution.

Non-interest Expense

Total non-interest expense was $7.3 million for the second quarter of 2024, compared to $6.4 million for the second quarter of 2023, representing an increase of $859 thousand, or 13.4%. The increase was primarily due to an increase of $735 thousand in compensation and benefits expense, which reflects the investment in additional executives and staff to support growth and strengthen overall controls and management depth. As previously reported, the Company hired a new Chief Financial Officer. The Company also recently hired a new General Counsel and Chief Risk Officer, Chief Accounting Officer, and Treasurer.

For the first six months of 2024, non-interest expense totaled $15.1 million, representing an increase of $2.4 million, or 19.1%, from $12.7 million for the same period in the prior year. The increase of $2.4 million primarily resulted from increases in compensation and benefits expense of $1.4 million and professional services expense of $861 thousand. The increase in compensation and benefits expense was primarily attributable to the addition of full-time employees during 2023 in various production and administrative positions as part of the Bank’s efforts to expand its operational capabilities to grow its balance sheet and fulfill the intersecting lending objectives of the Company’s mission and the ECIP funding received in June 2022. The increase in professional service expense was primarily due to hiring a third-party firm to assist with reviewing certain general ledger account reconciliations, as well as other professionals, in connection with the Company’s investigation of the weaknesses in internal controls that were identified during preparation of the financial statements for the third quarter of 2023.

Income Taxes

Income taxes are computed by applying the statutory federal income tax rate of 21% and the combined California and Washington, D.C. income tax rate of 9.75% to taxable income. The Company recorded an income tax expense of $146 thousand for the second quarter of 2024, compared to $93 thousand for the second quarter of 2023. The increase in tax expense reflected an increase of $78 thousand in pre-tax income between the two periods. The effective tax rate was 35.01% for the second quarter of 2024, compared to 27.43% for the second quarter of 2023. The increase in the effective tax rate was primarily due to the vesting of stock awards, which are non-deductible expenses for taxes.

For the six months ended June 30, 2024, income tax expense was $89 thousand, compared to $767 thousand for the six months ended June 30, 2023. The decrease in tax expense reflected a decrease in pretax earnings of $2.4 million between the two periods. The effective tax rate was 50.28% for the six months ended June 30, 2024, compared to 29.41% for the six months ended June 30, 2023. The increase in the effective tax rate was primarily due to the vesting of stock awards.

Balance Sheet Summary

Total assets decreased by $8.1 million at June 30, 2024, compared to December 31, 2023, reflecting decreases in securities available-for-sale of $55.5 million and cash and cash equivalents of $15.4 million, partially offset by growth in net loans of $58.3 million and other assets of $4.1 million.

Loans held for investment, net of the ACL, increased by $58.3 million to $938.7 million at June 30, 2024, compared to $880.5 million at December 31, 2023. The increase was primarily due to loan originations of $97.0 million during the first six months of 2024, which consisted of $53.8 million in multi-family loans, $21.5 million in commercial real estate loans, $17.5 million in other commercial loans, $3.7 million in construction loans, and $500 thousand in SBA loans, partially offset by loan payoffs and repayments of $38.7 million.

Deposits increased by $4.7 million to $687.4 million at June 30, 2024, from $682.6 million at December 31, 2023. The increase in deposits was attributable to an increase of $19.4 million in Insured Cash Sweep (“ICS”) deposits (ICS deposits are the Bank’s money market deposit accounts in excess of FDIC insured limits whereby the Bank makes reciprocal arrangements for insurance with other banks), partially offset by decreases of $8.4 million in liquid deposits (demand, interest checking, and money market accounts), $3.2 million in savings deposits, $1.7 million in other certificates of deposit accounts and $1.4 million in Certificate of Deposit Registry Service (“CDARS”) deposits (CDARS deposits are similar to ICS deposits, but involve certificates of deposit, instead of money market accounts). We leverage our long-standing partnership with IntraFi Deposit Solutions to offer deposit insurance for accounts exceeding the FDIC deposit insurance limit of $250,000. As of June 30, 2024, the Bank’s uninsured deposits, including deposits from Broadway and other affiliates, represented 35% of the Bank’s total deposits, compared to 37% as of December 31, 2023.

Total borrowings decreased by $14.9 million to $381.9 million at June 30, 2024, from $396.8 million at December 31, 2023, primarily due to the payoff of two notes payable totaling $14.0 million during January 2024. The notes payable had a blended interest cost of approximately 3.75%.

Stockholders’ equity was $282.3 million, or 20.7% of the Company’s total assets, at June 30, 2024, compared to $281.9 million, or 20.5% of the Company’s total assets, at December 31, 2023. Book value per share was $14.49 at June 30, 2024, compared to $14.65 at December 31, 2023.

About Broadway Financial Corporation

Broadway Financial Corporation operates through its wholly-owned banking subsidiary, City First Bank, National Association, which is a leading mission-driven bank that serves low-to-moderate income communities within urban areas in Southern California and the Washington, D.C. market.

About the City First Branded Family

City First Bank offers a variety of commercial real estate loan products, services, and depository accounts that support investments in affordable housing, small businesses, and nonprofit community facilities located within low-to-moderate income neighborhoods. City First Bank is a Community Development Financial Institution, Minority Depository Institution, Certified B Corp, and a member of the Global Alliance of Banking on Values. The Bank and the City First network of nonprofits, City First Enterprises, Homes By CFE, and City First Foundation, represent the City First branded family of community development financial institutions, which offer a robust lending and deposit platform.

Stockholders, analysts, and others seeking information about the Company are invited to write to: Broadway Financial Corporation, Investor Relations, 4601 Wilshire Boulevard, Suite 150, Los Angeles, CA 90010 or contact Investor Relations at the phone number or email address below.

Cautionary Statement Regarding Forward-Looking Information

This press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this press release, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations and capital allocation and structure, are forward-looking statements. Forward‑looking statements typically include the words “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” “poised,” “optimistic,” “prospects,” “ability,” “looking,” “forward,” “invest,” “grow,” “improve,” “deliver” and similar expressions, but the absence of such words or expressions does not mean a statement is not forward-looking. These forward‑looking statements are subject to risks and uncertainties, including those identified below, which could cause actual future results to differ materially from historical results or from those anticipated or implied by such statements. The following factors, among others, could cause future results to differ materially from historical results or from those indicated by forward‑looking statements included in this press release: (1) the level of demand for mortgage and commercial loans, which is affected by such external factors as general economic conditions, market interest rate levels, tax laws, and the demographics of our lending markets; (2) the direction and magnitude of changes in interest rates and the relationship between market interest rates and the yield on our interest‑earning assets and the cost of our interest‑bearing liabilities; (3) the rate and amount of credit losses incurred and projected to be incurred by us, increases in the amounts of our nonperforming assets, the level of our loss reserves and management’s judgments regarding the collectability of loans; (4) changes in the regulation of lending and deposit operations or other regulatory actions, whether industry-wide or focused on our operations, including increases in capital requirements or directives to increase allowances for credit losses or make other changes in our business operations; (5) legislative or regulatory changes, including those that may be implemented by the current administration in Washington, D.C. and the Federal Reserve Board; (6) possible adverse rulings, judgments, settlements and other outcomes of litigation; (7) actions undertaken by both current and potential new competitors; (8) the possibility of adverse trends in property values or economic trends in the residential and commercial real estate markets in which we compete; (9) the effect of changes in general economic conditions; (10) the effect of geopolitical uncertainties; (11) the impact of health crises on our future financial condition and operations; (12) the impact of any volatility in the banking sector due to the failure of certain banks due to high levels of exposure to liquidity risk, interest rate risk, uninsured deposits and cryptocurrency risk; and (13) other risks and uncertainties. All such factors are difficult to predict and are beyond our control. Additional factors that could cause results to differ materially from those described above can be found in our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K or other filings made with the SEC and are available on our website at http://www.cityfirstbank.com and on the SEC’s website at http://www.sec.gov.

Forward-looking statements in this press release speak only as of the date they are made, and we undertake no obligation, and do not intend, to update these forward-looking statements to reflect events or circumstances occurring after the date of this press release, except to the extent required by law. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY
Selected Financial Data and Ratios (Unaudited)
(Dollars in thousands, except per share data)
 
June 30, 2024 December 31, 2023
Selected Financial Condition Data and Ratios:
Cash and cash equivalents

$

89,813

 

$

105,195

 

Securities available-for-sale, at fair value

 

261,454

 

 

316,950

 

Loans receivable held for investment

 

946,840

 

 

887,805

 

Allowance for credit losses

 

(8,104

)

 

(7,348

)

Loans receivable held for investment, net of allowance

 

938,736

 

 

880,457

 

Total assets

 

1,367,290

 

 

1,375,404

 

Deposits

 

687,369

 

 

682,635

 

Securities sold under agreements to repurchase

 

72,658

 

 

73,475

 

FHLB advances

 

209,242

 

 

209,319

 

Bank Term Funding Program borrowing

 

100,000

 

 

100,000

 

Notes payable

 

-

 

 

14,000

 

Total stockholders' equity

 

282,293

 

 

281,903

 

 
Book value per share

$

14.49

 

$

14.65

 

Equity to total assets

 

20.65

%

 

20.50

%

 
Asset Quality Ratios:
Non-accrual loans to total loans

 

0.03

%

 

0.00

%

Non-performing assets to total assets

 

0.02

%

 

0.00

%

Allowance for credit losses to total gross loans

 

0.86

%

 

0.83

%

Allowance for credit losses to non-performing loans

 

2470.73

%

 

N/A

 

 
Non-Performing Assets:
Non-accrual loans

$

328

 

$

-

 

Loans delinquent 90 days or more and still accruing

 

-

 

 

-

 

Real estate acquired through foreclosure

 

-

 

 

-

 

Total non-performing assets

$

328

 

$

-

 

 
Delinquent loans less than 30 days delinquent

$

5,068

 

$

7,022

 

Delinquent loans 31 to 89 days delinquent

$

710

 

$

780

 

Delinquent loans greater than 90 days delinquent

$

5

 

$

-

 

 
 
Three Months Ended June 30, Six Months Ended June 30,
Selected Operating Data and Ratios:

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Interest income

$

15,488

 

$

11,640

 

$

30,281

 

$

22,683

 

Interest expense

 

7,570

 

 

4,372

 

 

14,839

 

 

7,141

 

Net interest income

 

7,918

 

 

7,268

 

 

15,442

 

 

15,542

 

Provision for credit losses

 

494

 

 

768

 

 

754

 

 

810

 

Net interest income after provision for credit losses

 

7,424

 

 

6,500

 

 

14,688

 

 

14,732

 

Non-interest income

 

273

 

 

260

 

 

579

 

 

549

 

Non-interest expense

 

(7,280

)

 

(6,421

)

 

(15,090

)

 

(12,673

)

Income before income taxes

 

417

 

 

339

 

 

177

 

 

2,608

 

Income tax expense

 

146

 

 

93

 

 

89

 

 

767

 

Net income

$

271

 

$

246

 

$

88

 

$

1,841

 

 
Net income (loss) - non-controlling interest

 

2

 

 

3

 

 

(17

)

 

25

 

Net income Broadway Financial Corporation

$

269

 

$

243

 

$

105

 

$

1,816

 

 
Earnings per common share-diluted

$

0.03

 

$

0.03

 

(3)

$

0.01

 

$

0.20

 

(3)

 
Loan originations (1)

$

25,510

 

$

63,983

 

$

97,026

 

$

98,219

 

 
Net recoveries to average loans

 

(0.00

)%

(2)

 

(0.00

)%

(2)

 

(0.00

)%

(2)

 

(0.00

)%

(2)

Return on average assets

 

0.08

%

(2)

 

0.06

%

(2)

 

0.01

%

(2)

 

0.29

%

(2)

Return on average equity

 

0.38

%

(2)

 

0.24

%

(2)

 

0.06

%

(2)

 

1.26

%

(2)

Net interest margin

 

2.40

%

(2)

 

2.52

%

(2)

 

2.33

%

(2)

 

2.74

%

(2)

(1) Does not include net deferred origination costs.
(2) Annualized
(3) Retroactively adjusted for a 1-for-8 reverse stock split effective November 1, 2023

 

Investor Relations

Zack Ibrahim, Chief Financial Officer, (202) 243-7100

Investor.relations@cityfirstbroadway.com

Source: Broadway Financial Corporation

FAQ

What were Broadway Financial 's net earnings for Q2 2024?

Broadway Financial reported net earnings of $269K, or $0.03 per diluted share, for Q2 2024.

How did Broadway Financial 's net interest income perform in Q2 2024?

Net interest income increased by 8.9% to $7.9M in Q2 2024, compared to the same quarter in 2023.

What was the increase in Broadway Financial 's total interest income in Q2 2024?

Total interest income increased by $3.8M, or 33.1%, compared to Q2 2023.

How much did Broadway Financial 's loan portfolio grow in 2024?

The loan portfolio grew by $59M to $946.8M as of June 30, 2024.

What was the net interest margin for Broadway Financial in Q2 2024?

The net interest margin was 2.41% in Q2 2024, down from 2.52% in Q2 2023.

Broadway Financial Corp/Del

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