Broadway Financial Corporation Reports Earnings.LOS ANGELES Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. -- Broadway Broadway, famous thoroughfare in New York City. It extends from Bowling Green near the foot of Manhattan island N to 262d St. in the Bronx. Throughout its length Broadway is chiefly a commercial street. Financial Corporation (the "Company") (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :BYFC), parent company of Broadway Federal Bank, f.s.b. (the "Bank"), today reported fourth quarter net earnings of $569,000, or $0.30 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, down $41,000, or 6.72%, when compared with net earnings of $610,000, or $0.37 per diluted share, in the fourth quarter of 2005. The decrease in net earnings was primarily due to a $225,000 increase in the provision for loan losses between the periods as a result of higher loan originations The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. during the fourth quarter of 2006 when compared to fourth quarter 2005. For the year ended December December: see month. 31, 2006, the Company's net earnings amounted to $1.7 million, or $0.90 per diluted share. Compared to 2005, year to date net earnings slightly increased by $1,000, or 0.06%. Chief Executive Officer, Paul Paul, 1901–64, king of the Hellenes (1947–64), brother and successor of George II. He married (1938) Princess Frederika of Brunswick. During Paul's reign Greece followed a pro-Western policy, and the Cyprus question was temporarily resolved. C. Hudson stated, "The fourth quarter results when compared to the same period in the prior year provide further evidence that our retail strategy is working. In the fourth quarter, the Bank benefited from improvement in rate and volume. Net interest spread increased by 12 basis points and loan originations grew by 139%, which resulted in a $56,000 increase in net interest income before provision for loan losses." Mr. Hudson added, "Comparing the year 2006 to 2005, net interest income was up $238,000 or 2.48% and net loans increased by $21.1 million or 9.32%, while deposits grew by $12.0 million or 5.73%." Fourth Quarter Results: * The net interest rate spread increased 12 basis points to 3.47% in the fourth quarter of 2006 from 3.35% in the fourth quarter of 2005; * Net interest income before provision for loan losses of $2.6 million in the fourth quarter of 2006 was up $56,000 from the fourth quarter of 2005, reflecting an improved net interest margin; * Loan originations, including purchases, were $30.4 million for the fourth quarter of 2006, compared with loan originations of $12.7 million for the fourth quarter of 2005; * Provision for loan losses for the fourth quarter of 2006 was up $225,000 from the fourth quarter of 2005; * Non-interest income in the fourth quarter of 2006 was down $39,000 from the fourth quarter of 2005, as the year-ago quarter included $87,000 of income related to ATM surcharge An overcharge or additional cost. A surcharge is an added liability imposed on something that is already due, such as a tax on tax. It also refers to the penalty a court can impose on a fiduciary for breaching a duty. fees that were earned but not previously recognized; * Non-interest expense in the fourth quarter of 2006 was down $62,000 from the fourth quarter of 2005, primarily due to lower compensation and benefits expense and lower other expense, which were partially offset by higher professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. expense. Net Interest Income Net interest income before provision for loan losses of $2.6 million in the fourth quarter of 2006 was up $56,000, or 2.24%, from the fourth quarter a year ago. This increase reflected an improved net interest margin, which more than offset a $6.0 million, or 2.08%, decline in average interest-earning assets. Net interest margin improved 15 basis points to 3.62% in the fourth quarter of 2006 from 3.47% in the fourth quarter of 2005. The net interest rate spread improved 12 basis points to 3.47% in the fourth quarter of 2006 from 3.35% in the fourth quarter of 2005. The increase in the net interest rate spread between fourth quarters was primarily due to the increase in the overall yield of our loan portfolio resulting from origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real of higher yielding loans partially offset by lower loan prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. fees in the fourth quarter of 2006 compared to the same period in 2005. Loan prepayment fees, included as part of the yield on loans, totaled $9,000 during the fourth quarter of 2006 compared to $124,000 during the fourth quarter of 2005. The annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. yield on loans improved 67 basis points to 7.00% in the fourth quarter of 2006 from 6.33% for the same period in 2005. The increase in loan yield was partially offset by the increase in interest rates paid on deposits and borrowings. Higher interest rates paid on deposits and borrowings for the fourth quarter of 2006 compared to the fourth quarter of 2005 primarily reflects the 100 basis point increase in the federal funds rate Federal Funds Rate The interest rate at which a depository institution lends immediately available funds (balances at the Federal Reserve) to another depository institution overnight. between the periods. The annualized weighted average cost of deposits increased 64 basis points to 2.87% in the fourth quarter of 2006 compared to 2.23% for the same period in 2005. The increase was the result of the increase in short-term interest rates Short-term interest rates Interest rates on loan contracts-or debt instruments such as Treasury bills, bank certificates of deposit or commerical paper-having maturities of less than one year. Often called money market rates. during 2006, maturities of lower costing time deposits and the change in the deposit mix toward higher costing time deposits. The primary spread (weighted average interest rate on loans minus weighted average interest rate on deposits) for the fourth quarter of 2006 was 4.13% compared to 4.10% for the fourth quarter of 2005. For the year 2006, net interest income before provision for loan losses totaled $9.8 million, up $238,000, or 2.48%, from a year ago. Provision for Loan Losses During the fourth quarter of 2006, the provision for loan losses amounted to $210,000 compared to $15,000 of recovery a year ago. The $210,000 of loan loss provision was primarily due to increased loan originations/volume. The allowance for loan losses was $1.7 million, or 0.69% of total gross loans receivable at December 31, 2006, compared to $1.5 million, or 0.64% of total gross loans receivable at year-end 2005. Non-Interest Income Non-interest income totaled $293,000 in the fourth quarter of 2006, down $39,000, or 11.75%, from the fourth quarter a year ago. The decrease was primarily due to $87,000 of income related to ATM charges that were earned in prior periods but recognized in the fourth quarter of 2005. Partially offsetting this decrease was higher retail banking fees in the fourth quarter of 2006 as compared to same quarter in 2005. Retail banking fees totaled $216,000 in the fourth quarter of 2006 compared to $180,000 a year ago, an increase of $36,000, which was primarily attributable to rate increases in overdraft A check that is drawn on an account containing less money than the amount stated on the check. The term overdraft is also used in reference to the condition that exists when vouchers , non-sufficient fund, returned item and negative balance fees. For the year 2006, non-interest income totaled $1.1 million, up $48,000, or 4.47%, from a year ago. Non-Interest Expense Non-interest expense totaled $1.9 million in the fourth quarter of 2006, down $62,000, or 3.12%, from the fourth quarter a year ago, primarily due to decreases in compensation and benefits expense and other expense. Compensation and benefits expense decreased $78,000 primarily due to reduced bonus expense, which was partially offset by higher salaries and related costs resulting from staff addition, adoption of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No.123R and the Salary Continuation Plan for our Chief Executive Officer. Other expense decreased $60,000 as the year ago quarter included an $80,000 write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. related to ATM losses. Partially offsetting these decreases was higher professional services expense, as we hired consultants to help us with our deposit gathering initiative and niche marketing A niche market also known as a target market is a focused, targetable portion (subset) of a market sector. By definition, then, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. strategy. For the year 2006, non-interest expense totaled $8.1 million, up $123,000, or 1.53%, from a year ago. Income Taxes The effective tax rate was 20.5% for the fourth quarter 2006 compared to 29.2% for the fourth quarter 2005. The current quarter's income tax expense was reduced by $120,000 due to adjustments related to our deferred tax liabilities. The income tax expense for the year ago quarter was also positively impacted by $80,000 in tax adjustments related to our deferred tax liabilities. The effective tax rate was 34.5% for the year 2006 compared to 36.6% for the year 2005. Assets, Loan Originations and Deposits At December 31, 2006, assets totaled $301.0 million, up $8.7 million, or 2.98%, from year-end 2005. Securities held to maturity decreased $9.6 million, or 21.11%, and cash and cash equivalents decreased $4.5 million, or 45.74%. The funds received from repayments of securities, along with the decrease in cash and cash equivalents, were redeployed into higher yielding loans and to repay $6.5 million of borrowings. During 2006, net loans receivable increased $21.1 million, or 9.32%, as loan originations and loan purchases exceeded loan repayments and loan sales. Loan originations, including purchases, were $30.4 million for the fourth quarter and $76.6 million for the year ended December 31, 2006, compared with loan originations of $12.7 million for the fourth quarter of 2005 and $63.3 million for the prior year. Loan repayments totaled $11.2 million for the fourth quarter and $53.5 million for the year ended December 31, 2006, compared with loan repayments of $20.2 million and $69.0 million for the comparable periods in the prior year. Loan sales totaled $1.7 million for the quarter and year ended December 31, 2006 compared to $-0- and $3.1 million for the same periods in 2005. Deposits totaled $221.5 million at December 31, 2006, up $12.0 million, or 5.73%, from year-end 2005. During 2006, core deposits (NOW, demand, money market and passbook accounts) decreased $1.6 million, while certificates of deposit increased $13.6 million. The deposit flows trend toward certificates of deposit as customers gained greater acceptance of market rates offered on time deposit accounts. At December 31, 2006, core deposits represented 45.11% of total deposits compared to 48.45% at December 31, 2005. Since the end of 2005, FHLB FHLB Federal Home Loan Bank borrowings decreased $6.5 million, or 11.55%, to $50.0 million at December 31, 2006, as a result of increased deposit levels and decreased cash and cash equivalents and maturities of securities held to maturities, which helped fund the growth in net loans receivable during 2006. Asset Quality and Performance Ratios The Company maintained its excellent asset quality with zero non-performing assets at December 31, 2006 compared to $35,000, or 0.02% of total gross loans at December 31, 2005. The return on average equity decreased to 8.96% for the year 2006 from 10.50% in 2005. The issuance of Series C preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. during the second quarter of 2006 and the sale of 145,000 shares of the Company's Common Stock to Cathay General Bancorp negatively impacted this ratio. The return on average assets increased from 0.56% in 2005 to 0.58% in 2006 primarily due to the decline in average assets from $294.7 million in 2005 to $287.5 million in 2006. The efficiency ratio improved slightly from 75.12% in 2005 to 74.28% in 2006, reflecting lower non-interest expenses compared to revenues for the year 2006 as compared to the year 2005. At December 31, 2006, the Bank met the capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. necessary to be deemed "well-capitalized" for regulatory purposes. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Certain matters discussed in this news release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 savings bank, financial institution that, until recently, performed only the following functions: receiving savings deposits of individuals, investing them, and providing a modest return to its depositors in the form of interest. , which primarily originates residential mortgage loans and conducts funds acquisition in the geographic areas known as Mid-City and South Los Angeles South Los Angeles is the official name for a large geographic and cultural area lying to the southwest and southeast of downtown Los Angeles, California. The area was formerly called South Central Los Angeles, and is still sometimes called South Central. . The Bank operates four full service branches, three in the city of Los Angeles
Shareholders, analysts and others seeking information about the Company are invited to write to: Broadway Financial Corporation, Investor Relations Investor relations The process by which the corporation communicates with its investors. , 4800 Wilshire Blvd., Los Angeles, CA 90010, or visit our website at www.broadwayfederalbank.com. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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