Broadway Financial Corporation Reports an Increase in Net Earnings.Business Editors LOS LOS Length of stay, see there ANGELES--(BUSINESS WIRE)--July 25, 2002 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), the holding company of Broadway Federal Bank, f.s.b. (the "Bank"), today reported net earnings of $322,000 and $648,000, or $0.35 and $0.70 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. common share, respectively, for the three months and six months ended June June: see month. 30, 2002, compared to $156,000 and $337,000, or $0.17 and $0.37 per diluted common share, respectively, for the three months and six months ended June 30, 2001. Compared to 2001, second quarter net earnings increased 106.41% and net earnings for the six months increased 92.28%. The increase in net earnings was primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the significant improvement in net interest income, offset by an increase in non-interest expense. Net interest income after provision for loan losses increased $368,000 and $803,000, or 22.45% and 25.20%, respectively, for the three months and six months ended June 30, 2002, compared to the same periods in 2001. Non-interest income increased $32,000 and $93,000, or 16.16% and 25.00%, respectively, for the three months and six months ended June 30, 2002, compared to the same periods in 2001. Non-interest expense increased by $123,000 and $380,000, or 7.78% and 12.72%, respectively, for the three months and six months ended June 30, 2002, compared to the same periods in 2001. Net interest income after provision for loan losses increased from $1,639,000 and $3,187,000 for the three months and six months ended June 30, 2001, respectively, to $2,007,000 and $3,990,000 for the same periods in 2002. The increase was attributable primarily to increases in average interest-earning assets of $6.9 million and $7.7 million, respectively; increases in the net interest rate spread of 61 basis points and 68 basis points, respectively; and lower provision for loan losses for the three months and six months ended June 30, 2002, compared to the same periods in 2001. The net interest rate spreads for the three months and six months ended June 30, 2002, were 4.52% and 4.51%, respectively, compared to 3.91% and 3.83%, respectively, for the same periods in 2001. The increase in spread was attributable to the rapid decline in deposit cost of funds Cost of Funds The interest rate paid on an outstanding loan. Notes: Money isn't free! Cost of funds is the cost of borrowing money. See also: Interest Rate Cost of funds Interest rate associated with borrowing money. , and a slower decline in yield on the loan portfolio. The primary spread (weighted average interest rate on loans minus weighted average interest rate on deposits) for the six months ended June 30, 2002, was 5.37% compared to 4.77% for the same period in 2001. Total non-interest income increased from $198,000 and $372,000 for the three months and six months ended June 30, 2001, respectively, to $230,000 and $465,000, respectively, for the same periods in 2002. The increase was primarily attributable to an increase in service charges. Total non-interest expense increased from $1,581,000 and $2,988,000 for the three months and six months ended June 30, 2001, respectively, to $1,704,000 and $3,368,000 for the same periods in 2002. The increase was primarily attributable to higher compensation costs of $69,000 during the second quarter 2002 compared to 2001 and $166,000 during the six months ended June 30, 2002, compared to 2001, respectively, as a result of the addition of several management-level personnel, higher incentive bonus accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. and other compensation benefits; increases in occupancy costs Occupancy costs are the whole life costs of buildings and their associated land from occupancy until disposal. These costs may be incurred on a regular or irregular basis. Occupancy costs are those costs related to occupying a space including; rent, real estate taxes, personal of $34,000 and $82,000, respectively; and increases in professional service fees of $34,000 during the second quarter 2002 compared to 2001 and $86,000 during the six months ended June 30, 2002, compared to 2001, respectively. Loans receivable, net increased $149,000, or 0.11%, from $133.9 million at December December: see month. 31, 2001, to $134.1 million at June 30, 2002. Loans held for sale decreased $3.1 million from $7.4 million at December 31, 2001, to $4.3 million at June 30, 2002. The decrease in loans held for sale was primarily due to loan pay-offs. The allowance for loan losses as a percentage of gross loans was 1.11% at June 30, 2002, compared to 1.10% at December 31, 2001, and 1.07% at June 30, 2001. The Bank's non-performing assets to total assets ratio was 0.53% at June 30, 2002, compared to 0.26% at December 31, 2001, and 0.44% at June 30, 2001. At June 30, 2002, the Bank had one foreclosed real estate property with a carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of $107,000. Total deposits decreased $175,000, or 0.12%, from $151.2 million at December 31, 2001, to $151.0 million at June 30, 2002. The Bank has targeted and has been able to increase core deposits (NOW, Demand, Money Market and Passbook accounts) by $6.0 million, while managing rates paid on CD accounts, including Jumbo CDs Jumbo CD A certificate of deposit (CD) with a minimum denomination of $100,000. Notes: Jumbo CDs are typically bought and sold by large institutional investors, such as banks and pension funds, because of the high minimum denomination. , resulting in a decline in CD accounts of $6.2 million. Core deposits amounted to 40.01% of total deposits at June 30, 2002, compared to 35.95% at December 31, 2001, and 35.43% at June 30, 2001. For the three months and six months ended June 30, 2002, the Company's returns on average equity were 8.51% and 8.62%, respectively, compared to 4.35% and 4.71%, respectively, for the same periods in 2001. The returns on average assets were 0.72% for the three months and six months ended June 30, 2002, compared to 0.36% and 0.39%, respectively, for the same periods in 2001. The ratios of non-interest expense to average assets were 3.79% and 3.75%, respectively, for the three months and six months ended June 30, 2002, compared to 3.62% and 3.43% for the same periods last year. The efficiency ratios improved from 84.01% and 82.22%, respectively, for the three months and six months ended June 30, 2001, to 76.17% and 75.60% for the same periods in 2002. 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 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 known as Mid-City Mid-City can refer to:
adj. Associated with or offering complete service: full-service gasoline pumps; full-service banks. branches, three in the city of Los Angeles
Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. necessary to be deemed "well capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. " 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. capital purposes. 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, except share amounts)
(Unaudited)
June 30, Dec. 31,
2002 2001
Assets:
Cash $ 4,317 $ 2,639
Fed funds sold 500 2,600
Interest-bearing deposits 3,002 5,028
Investment securities held to maturity 2,000 --
Investment securities available for sale 8,669 4,604
Mortgage-backed securities held to maturity 13,650 13,931
Loans receivable, net 134,086 133,937
Loans receivable held for sale,
at lower of cost or fair value 4,311 7,362
Accrued interest receivable 935 943
Real estate acquired through
foreclosure, net 107 --
Investments in capital stock of Federal Home
Loan Bank, at cost 1,439 1,399
Office properties and equipment, net 5,903 6,001
Other assets 488 457
Total assets $ 179,407 $ 178,901
Liabilities and stockholders' equity
Deposits $ 150,981 $ 151,156
Advances from Federal Home Loan Bank 10,750 11,000
Advance payments by borrowers
for taxes and insurance 262 224
Deferred income taxes 572 556
Other liabilities 1,689 1,337
Total liabilities 164,254 164,273
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 at June 30, 2002,
and December 31, 2001 1 1
Common stock, $.01 par value, authorized
3,000,000 shares; issued and outstanding
904,738 shares at June 30, 2002, and
910,538 shares at December 31, 2001 10 10
Additional paid-in capital 9,494 9,481
Accumulated other comprehensive gain,
net of taxes 24 2
Retained earnings - substantially restricted 6,350 5,804
Treasury stock-at cost, 56,997 shares at
June 30, 2002, and 51,197 shares at
December 31, 2001 (553) (469)
Unearned Employee Stock Ownership Plan shares (173) (201)
Total stockholders' equity 15,153 14,628
Total liabilities and stockholders' equity $ 179,407 $ 178,901
See Notes to Consolidated Financial Statements
BROADWAY FINANCIAL CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months ended Six Months ended
June 30, June 30,
2002 2001 2002 2001
Interest on loans receivable $ 2,753 $ 2,860 $ 5,576 $ 5,595
Interest on investment
securities held to maturity 21 42 26 137
Interest on investment
securities available for sale 56 36 96 36
Interest on mortgage-backed
securities 202 175 404 345
Other interest income 63 192 152 426
Total interest income 3,095 3,305 6,254 6,539
Interest on deposits 966 1,475 2,013 2,965
Interest on borrowings 122 146 251 312
Total interest expense 1,088 1,621 2,264 3,277
Net interest income before
provision for loan losses 2,007 1,684 3,990 3,262
Provision for loan losses -- 45 -- 75
Net interest income after
provision for loan losses 2,007 1,639 3,990 3,187
Non-interest income:
Service charges 211 175 432 320
Gain on loans receivable
held for sale 1 -- -- --
Other 18 23 33 52
Total non-interest income 230 198 465 372
Non-interest expense:
Compensation and benefits 876 807 1,804 1,638
Occupancy expense, net 343 309 645 563
Advertising and
promotional expense 41 37 61 87
Professional services 106 72 199 113
Real estate operations, net (5) -- (5) --
Contracted security services 42 41 82 80
Telephone and postage 32 58 77 114
Stationery, printing
and supplies 28 30 59 54
Other 241 227 446 339
Total non-interest expense 1,704 1,581 3,368 2,988
Earnings before income taxes 533 256 1,087 571
Income taxes 211 100 439 234
Net earnings $ 322 $ 156 $ 648 $ 337
Other comprehensive income (loss):
Unrealized income (loss)
on securities available
for sale $ 42 $ (5) $ 42 $ (5)
Income tax (expenses) benefits (18) 2 (18) 2
Other comprehensive income (loss) 24 (3) 24 (3)
Comprehensive earnings $ 346 $ 153 $ 672 $ 334
Net earnings $ 322 $ 156 $ 648 $ 337
Dividends paid on preferred stock (7) (7) (14) (14)
Earnings available to common
shareholders $ 315 $ 149 $ 634 $ 323
Earnings per share - basic 0.35 0.17 0.71 0.37
Earnings per share - diluted 0.35 0.17 0.70 0.37
Dividend declared per share -
common stock 0.05 0.05 0.10 0.10
Basic weighted average shares
outstanding 890,284 876,349 890,722 875,538
Diluted weighted average shares
outstanding 902,858 876,349 902,077 875,538
See Notes to Consolidated Financial Statements
BROADWAY FINANCIAL CORPORATION
AND SUBSIDIARIES
Selected Ratios and Data
(Dollars in thousands)
Well-
Capitalized
As of As of As of Require-
30-Jun-02 31-Dec-01 30-Jun-01 ment
Broadway Federal Bank, f.s.b.
Regulatory Capital Ratios:
Leverage/Tangible Ratio 7.52% 7.12% 6.95% 5.00%
Tier 1 Risk-Based Ratio 11.47% 10.92% 10.91% 6.00%
Total Risk-Based Ratio 12.68% 12.09% 11.94% 10.00%
Asset Quality Ratios and Data:
Non-performing loans as
a percentage of total
gross loans 0.59% 0.33% 0.55%
Non-performing assets as a
percentage of total assets 0.53% 0.26% 0.44%
Allowance for loan losses as
a percentage of total
gross loans 1.11% 1.10% 1.07%
Allowance for loan losses as
a percentage of
non-performing loans 187.02% 335.68% 194.29%
Allowance for losses as
a percentage of
non-performing assets (a) 165.89% 335.68% 194.29%
Non-performing Assets:
Non-accrual loans $ 840 $ 468 $ 770
Real estate acquired
through foreclosure 107 -- --
Total non-performing
assets $ 947 $ 468 $ 770
Balance Sheet Data:
Total assets 179,407 178,901 176,553
Total gross loans 141,597 143,978 139,659
Total equity 15,153 14,628 14,240
Average assets 180,025 176,508 174,697
Average loans 139,379 133,743 130,216
Average equity 15,139 14,311 14,343
Average interest-earning
assets 171,852 162,346 164,971
Average interest-bearing
liabilities 162,271 154,203 158,324
Net income 322 108 156
Total income 2,237 1,980 1,882
Non-interest expense 1,704 1,797 1,581
Efficiency ratio 76.17% 90.76% 84.01%
Non-accrual loans 840 468 770
REO, net 107 -- --
ALLL 1,571 1,571 1,496
REO-Allowance -- -- --
Interest income 3,095 3,187 3,305
Interest expense 1,088 1,420 1,621
Net interest income
before provision 2,007 1,767 1,684
(a) Allowance for losses includes valuation allowances on loans and
real estate acquired through foreclosure.
BROADWAY FINANCIAL CORPORATION
AND SUBSIDIARIES
Selected Ratios and Data
(Dollars in thousands)
Year
Three Months Ended Six Months Ended Ended
June 30, June 30, Dec. 31,
2002 2001 2002 2001 2001
Performance Ratios:
Return on average assets 0.72% 0.36% 0.72% 0.39% 0.39%
Return on average equity 8.51% 4.35% 8.62% 4.71% 4.79%
Average equity to
average assets 8.41% 8.21% 8.38% 8.21% 8.11%
Non-interest expense to
average assets 3.79% 3.62% 3.75% 3.43% 3.54%
Efficiency ratio 76.17% 84.01% 75.60% 82.22% 84.35%
Net interest
rate spread (a) 4.52% 3.91% 4.51% 3.83% 3.95%
Effective net interest
rate spread (b) 4.67% 4.08% 4.66% 3.99% 4.15%
Income Statement Data:
Net income 322 156 648 337 685
Total income 2,237 1,882 4,455 3,634 7,418
Non-interest expense 1,704 1,581 3,368 2,988 6,257
Interest income 3,095 3,305 6,254 6,539 12,998
Interest expense 1,088 1,621 2,264 3,277 6,253
Net interest income
before provision
for loan losses 2,007 1,684 3,990 3,262 6,745
(a) Net interest rate spread represents the difference between the
yield on average interest-earning assets and the cost of
interest-bearing liabilities before provision for loan losses.
(b) Effective net interest rate spread represents net interest income
before provision for loan losses as a percentage of average
interest-earning assets.
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