Broadway Financial Corporation Reports Second Quarter Net 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 second quarter net earnings of $344,000, or $0.19 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, up 8.52% when compared with net earnings of $317,000, or $0.19 per diluted share, in the second quarter of 2005. 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 Hudson, towns, United States Hudson. 1 Industrial town (1990 pop. 17,233), Middlesex co., E central Mass., on the Assabet River, in an apple-growing region; settled c.1699, inc. 1866. stated, "The primary reason for the increase in second quarter earnings was due to an improvement in net interest margin and growth in non-interest income." Hudson went on to note, "We continue to face competitive challenges with growing the loan portfolio and core deposits, but with the addition of F. Glenn Harvey Harvey, city (1990 pop. 29,771), Cook co., NE Ill., a suburb S of Chicago; inc. 1895. Its manufactures include steel castings, metal products, chemicals, machinery, and electronic equipment. Harvey has an oil research center. The city was founded by Turlington W. , President/COO, we are beginning to supplement our core real estate secured loan production with commercial loans and our retail deposits with corporate and institutional deposits." Mr. Harvey added, "The addition of commercial loans will provide the Bank with product diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. and rate sensitive assets." Mr. Harvey also said, "Over the next several quarters we will begin to see the benefits of the creation of our wealth management team, especially with respect to the acquisition of core deposits." Second Quarter Results: --The net interest rate spread increased 17 basis points to 3.31% in the second quarter of 2006 from 3.14% in the second quarter of 2005, reflecting an improvement from the 6 basis points increase comparing first quarter 2006 to first quarter 2005; --Net interest income before provision for loan losses of $2.4 million in the second quarter of 2006 was up $89,000 from the second quarter of 2005, reflecting an improved net interest margin; --Non-interest income in the second quarter of 2006 was up $84,000 from the second quarter of 2005, primarily reflecting higher loan and deposit related fees in the 2006 period; --Non-interest expense in the second quarter of 2006 was up $69,000 from the second quarter of 2005, primarily reflecting higher compensation and benefits and occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy expenses. Net Interest Income Net interest income before provision for loan losses of $2.4 million in the second quarter of 2006 was up $89,000, or 3.86%, from the second quarter a year ago. Despite a lower level of average interest-earning assets, the increase in net interest margin resulted in higher net interest income during the current quarter. Interest-earning assets averaged $278.2 million in the current quarter, down 2.52% from the same period a year ago. Net interest margin improved 22 basis points to 3.45% in the current quarter from 3.23% a year ago. The net interest rate spread improved 17 basis points to 3.31% in the current quarter from 3.14% a year ago. The increase in the net interest rate spread was primarily due to the increase in the overall yield of our loan portfolio resulting from new and renewing re·new v. re·newed, re·new·ing, re·news v.tr. 1. To make new or as if new again; restore: renewed the antique chair. 2. loans priced at higher rates because of increases in interest rates. The increase in the overall yield on loans was partially offset by the increase in interest rates paid on deposits and borrowings. The market for deposits remained competitive throughout the second quarter resulting in higher rates paid for interest-bearing Adj. 1. interest-bearing - of financial obligations on which interest is paid deposits. The primary spread (weighted average interest rate on loans minus weighted average interest rate on deposits) at June June: see month. 30, 2006 was 3.96% compared to 3.66% at June 30, 2005, an increase of 30 basis points. Provision for Loan Losses During the second quarter of 2006, provision for loan losses amounted to $49,000 compared to $17,000 of provision recovery a year ago. The $49,000 loan loss provision was primarily due to the increase in our commercial loan portfolio. The allowance for loan losses was $1.5 million, or 0.66% of total gross loans receivable at June 30, 2006, compared to $1.5 million, or 0.64% of total gross loans receivable at year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2005. Non-Interest Income Non-interest income totaled $340,000 in the second quarter of 2006, up $84,000, or 32.81%, from the second quarter a year ago. The increase is primarily due to higher 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 and higher deposit related fees in the second quarter of 2006 compared to same quarter in 2005. Additionally, service charge income for the three and six months ended June 30, 2005 was negatively impacted by the reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its of $40,000 and $31,000 of loan prepayment penalty Prepayment penalty A fee a borrower pays a lender when the borrower repays a loan before its scheduled time of maturity. fees which were recognized as income in prior periods. Loan prepayment fees totaled $59,000 in the second quarter of 2006 compared to $3,000 a year ago. Deposit related fees totaled $186,000 in the second quarter of 2006 compared to $167,000 a year ago, an increase of $19,000, primarily in NSF NSF - National Science Foundation fees. Non-Interest Expense Non-interest expense totaled $2.1 million in the second quarter of 2006, up $69,000, or 3.37%, from the second quarter a year ago, primarily due to higher compensation and benefits and occupancy expenses. Compensation and benefits expense increased $62,000, with the adoption of FAS123R and the addition of a Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. to our executive management. Occupancy expense increased $27,000 primarily due to office repairs and maintenance work. Partially offsetting these increases was lower bad debt expense, included in other non interest expense. Assets, 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. and Deposits At June 30, 2006, assets totaled $284.0 million, down $8.2 million, or 2.82%, from year-end 2005. During the first half of 2006, loan originations and loan purchases were offset by a high level of loan repayments resulting in a slight increase of $0.8 million in net loans receivable from year-end 2005. In addition, investment in federal funds Federal Funds Funds deposited to regional Federal Reserve Banks by commercial banks, including funds in excess of reserve requirements. Notes: These non-interest bearing deposits are lent out at the Fed funds rate to other banks unable to meet overnight reserve sold decreased $4.4 million and securities held to maturity decreased $5.1 million. The cash was utilized to fund deposit outflows and repay borrowings. Loan originations were $23.7 million for the six months ended June 30, 2006 compared to $18.1 million for the same period in 2005. Loan purchases totaled $9.5 million for the six months ended June 30, 2006 compared to $10.3 million for the same period in 2005. Loan repayments amounted to $32.3 million for the six months ended June 30, 2006 compared to $31.0 million for the same period in 2005. Deposits totaled $207.6 million at June 30, 2006, down $1.8 million, or 0.87%, from year-end 2005. During the first six months of 2006, core deposits (NOW, demand, money market and passbook accounts) decreased $3.7 million, while certificates of deposit increased $1.9 million. At June 30, 2006, core deposits represented 47.08% of total deposits compared to 48.45% at December December: see month. 31, 2005 and June 30, 2005. Since the end of 2005, FHLB FHLB Federal Home Loan Bank borrowings decreased $8.7 million, or 15.36%, to $47.8 million at June 30, 2006, as a result of lower loan growth financing needs. Asset Quality and Performance Ratios Non-performing assets, consisting of non-accrual and delinquent delinquent 1) adj. not paid in full amount or on time. 2) n. short for an underage violator of the law as in juvenile delinquent. DELINQUENT, civil law. He who has been guilty of some crime, offence or failure of duty. loans 90 or more days past due, totaled $111,000 at June 30, 2006 compared to $35,000 at December 31, 2005, or 0.04% and 0.01% of total assets, at those respective dates. For the quarter ended June 30, 2006, the Company's 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. return on average equity decreased to 7.50% compared to 8.12% for the same period in 2005. This was primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the increase in average equity in 2006, resulting from Cathay Cathay (kăthā`), name for North China used by medieval Europeans, derived from the Khitan (or Khitai), a Manchurian people who conquered S Manchuria and N China and founded the Liao dynasty (937–1125). S China was referred to as Mangi. General Bancorp's investment in the Company's common stock and 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. The annualized return on average assets increased to 0.48% for the quarter ended June 30, 2006 compared to 0.43% for the same period in 2005. The efficiency ratio improved to 77.31% in second quarter 2006 compared to 79.84% in second quarter 2005, reflecting higher revenues for the second quarter of 2006 as compared to the same period in 2005. At June 30, 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 reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. purposes. Certain matters discussed in this news release may constitute 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. 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 per·ceive tr.v. per·ceived, per·ceiv·ing, per·ceives 1. To become aware of directly through any of the senses, especially sight or hearing. 2. To achieve understanding of; apprehend. 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 Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. 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 geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. 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 Mid-City can refer to:
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 Not to be confused with Wiltshire. Wilshire may refer to:
BROADWAY FINANCIAL CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)
June 30, Dec. 31,
2006 2005
--------- ---------
ASSETS
Cash $6,158 $5,386
Federal funds sold - 4,400
--------- ---------
Cash and cash equivalents 6,158 9,786
Securities held to maturity 40,319 45,369
Loans receivable, net of allowance of
$1,504 and $1,455 227,360 226,542
Accrued interest receivable 1,228 1,241
Federal Home Loan Bank (FHLB) stock, at cost 2,839 3,332
Office properties and equipment, net 5,376 5,459
Other assets 768 565
--------- ---------
Total assets $284,048 $292,294
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $207,633 $209,464
Federal Home Loan Bank advances 47,830 56,513
Junior subordinated debentures 6,000 6,000
Advance payments by borrowers for taxes and
insurance 549 559
Deferred income taxes 1,297 1,229
Other liabilities 1,600 1,752
--------- ---------
Total liabilities 264,909 275,517
--------- ---------
Stockholders' Equity:
Preferred non-convertible, 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 June 30, 2006 and
55,199 shares of series A and 100,000
shares of series B at December 31, 2005 2 2
Common stock, $.01 par value, authorized
3,000,000 shares; issued 2,013,942
shares at June 30, 2006 and 1,868,942
shares at December 31, 2005; outstanding
1613,971 shares at June 30, 2006 and
1,554,610 shares at December 31, 2005 20 19
Additional paid-in capital 12,957 10,296
Retained earnings-substantially restricted 11,466 10,842
Treasury stock-at cost, 399,971 shares at
June 30, 2006 and 314,332 shares at
December 31, 2005 (5,306) (4,382)
--------- ---------
Total stockholders' equity 19,139 16,777
--------- ---------
Total liabilities and stockholders' equity $284,048 $292,294
========= =========
BROADWAY FINANCIAL CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Earnings
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months ended Six months ended
June 30, June 30,
--------------------- ---------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Interest on loans
receivable $3,679 $3,381 $7,195 $6,739
Interest on mortgage-
backed securities 430 460 896 703
Interest on investment
securities 18 18 36 53
Other interest income 97 80 191 183
---------- ---------- ---------- ----------
Total interest income 4,224 3,939 8,318 7,678
---------- ---------- ---------- ----------
Interest on deposits 1,285 1,095 2,474 2,107
Interest on borrowings 542 536 1,105 1,007
---------- ---------- ---------- ----------
Total interest
expense 1,827 1,631 3,579 3,114
---------- ---------- ---------- ----------
Net interest income before
provision for (recovery
of) loan losses 2,397 2,308 4,739 4,564
Provision for (recovery
of) loan losses 49 (17) 49 (7)
---------- ---------- ---------- ----------
Net interest income
after provision for
(recovery of) loan
losses 2,348 2,325 4,690 4,571
---------- ---------- ---------- ----------
Non-interest income:
Service charges 287 189 555 499
Gain on sale of loans
held for sale - 5 - 5
Gain on sale of
securities - 6 12 21
Other 53 56 75 89
---------- ---------- ---------- ----------
Total non-interest
income 340 256 642 614
---------- ---------- ---------- ----------
Non-interest expense:
Compensation and
benefits 1,223 1,161 2,437 2,373
Occupancy expense, net 309 282 619 575
Information services 153 156 304 308
Professional services 146 136 225 277
Office services and
supplies 122 115 226 211
Other 163 197 303 337
---------- ---------- ---------- ----------
Total non-interest
expense 2,116 2,047 4,114 4,081
---------- ---------- ---------- ----------
Earnings before income
taxes 572 534 1,218 1,104
Income taxes 228 217 486 445
---------- ---------- ---------- ----------
Net earnings $344 $317 $732 $659
========== ========== ========== ==========
Other comprehensive
income, net of tax:
Unrealized gain (loss)
on securities available
for sale $- $- $- $(8)
Reclassification of
realized net loss
included in net earnings - - - 20
Income tax effect - - - (5)
---------- ---------- ---------- ----------
Other comprehensive
income, net of tax - - - 7
---------- ---------- ---------- ----------
Comprehensive earnings $344 $317 $732 $666
========== ========== ========== ==========
Net earnings $344 $317 $732 $659
Dividends paid on
preferred stock (29) (19) (49) (38)
---------- ---------- ---------- ----------
Earnings available to
common shareholders $315 $298 $683 $621
========== ========== ========== ==========
Earnings per share-basic $0.20 $0.20 $0.44 $0.41
Earnings per share-diluted $0.19 $0.19 $0.41 $0.39
Dividends declared per
share-common stock $0.05 $0.05 $0.10 $0.10
Basic weighted average
shares outstanding 1,561,213 1,515,575 1,557,946 1,514,389
Diluted weighted average
shares outstanding 1,701,864 1,586,048 1,665,161 1,588,393
BROADWAY FINANCIAL CORPORATION
AND SUBSIDIARIES
Selected Ratios and Data
(Dollars in thousands)
As of June 30,
-------------------
2006 2005
--------- ---------
Regulatory Capital Ratios:
Core Capital 7.99% 6.84%
Tangible Capital 7.99% 6.84%
Tier 1 Risk-Based Ratio 12.02% 10.84%
Total Risk-Based Capital 12.80% 11.58%
Asset Quality Ratios and Data:
Non-performing loans as a percentage
of total gross loans 0.05% 0.05%
Non-performing assets as a percentage
of total assets 0.04% 0.04%
Allowance for loan losses as a percentage
of total gross loans 0.65% 0.60%
Allowance for loan losses as a percentage
of non-performing loans 1,354.95% 1,250.44%
Allowance for losses as a percentage
of non-performing assets 1,354.95% 1,250.44%
Non-performing assets:
Non-accrual loans $111 $113
--------- ---------
Total non-performing assets $111 $113
========= =========
Three Months ended Six Months ended
June 30, June 30,
--------------------- ---------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Performance Ratios:
Return on average
assets 0.48%(A) 0.43%(A) 0.51%(A) 0.45%(A)
Return on average
equity 7.50%(A) 8.12%(A) 8.26%(A) 8.53%(A)
Average equity to
average assets 6.41% 5.31% 6.18% 5.33%
Non-interest
expense to average
assets 2.96%(A) 2.79%(A) 2.87%(A) 2.81%(A)
Efficiency ratio(1) 77.31% 79.84% 76.45% 78.81%
Net interest rate
spread(2) 3.31%(A) 3.14%(A) 3.26%(A) 3.15%(A)
Net interest rate
margin(3) 3.45%(A) 3.23%(A) 3.40%(A) 3.24%(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 the
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 Six Months ended
June 30, June 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Total assets $284,048 $297,725 $284,048 $297,725
Total gross loans, including
loans held for sale $228,864 $234,571 $228,864 $234,571
Total equity $19,139 $15,629 $19,139 $15,629
Average assets $286,110 $293,994 $286,980 $289,980
Average loans $228,304 $231,950 $227,650 $232,850
Average equity $18,342 $15,620 $17,731 $15,450
Average interest-earning
assets $278,233 $285,423 $279,167 $281,470
Average interest-bearing
liabilities $264,324 $274,550 $265,478 $270,494
Net income $344 $317 $732 $659
Total income $2,737 $2,564 $5,381 $5,178
Non-interest expense $2,116 $2,047 $4,114 $4,081
Efficiency ratio 77.31% 79.84% 76.45% 78.81%
Non-accrual loans $111 $113 $111 $113
REO, net $- $- $- $-
ALLL $1,504 $1,413 $1,504 $1,413
REO-Allowance $- $- $- $-
Interest income $4,224 $3,939 $8,318 $7,678
Interest expense $1,827 $1,631 $3,579 $3,114
Net interest income $2,397 $2,308 $4,739 $4,564
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