Broadway Financial Corporation Announces Results for Fourth Quarter and Full Year Calendar 2023
The increase in net income during the fourth quarter of 2023, compared to the fourth quarter of 2022, was primarily due to the recognition of two grants from the
For the year ended
Fourth Quarter and Year End 2023 Highlights:
-
During the fourth quarter of 2023,
Broadway generated a profit for the eighth consecutive quarter. -
Total interest income increased for the eleventh consecutive quarter since the merger of
CFBanc Corporation with the Company onApril 1, 2021 (the “Merger”). During the fourth quarter of 2023, interest income increased by$2.0 million , or 18.4%, compared to the fourth quarter of 2022. For the full calendar year, interest income increased by$11 million , or 30.2%, compared to interest income in 2022. -
Total net loans receivable increased to
$880.5 million atDecember 31, 2023 , representing an increase of 5.4% sinceSeptember 30, 2023 , 14.6% sinceDecember 31, 2022 , and 50.1% since the Merger. -
The Company did not have any non-performing loans or assets as of
December 31, 2023 . -
Total assets increased to
$1.4 billion atDecember 31, 2023 , representing an increase of 11.1% sinceSeptember 30, 2023 , 16.1% sinceDecember 31, 2022 , and 44.1% since the Merger.
Delay in Filing the Company’s Form 10-K for 2023 and Form 10-Qs:
While preparing the financial statements for the three and nine months ended
In response to the material weaknesses that were identified, the Company has hired additional senior personnel with experience and training in finance and accounting who will be responsible for assessing the Company’s risks and designing, implementing, and monitoring a system of internal control over financial reporting to address those risks. Furthermore, the Company has implemented changes to its controls over general ledger account reconciliations to now require that a separate member of management review every account reconciliation each month, complementing the use of a checklist for account reconciliations and a requirement that all reconciliations be signed by the preparer and a reviewer. In addition, the Company will request that additional testing be performed on the enhanced controls over general ledger account reconciliations by the service provider that conducts the Company’s internal audits.
Concurrent with the examination of internal controls and processes, the Company engaged an independent third-party to assist with reviewing certain general ledger account reconciliations as of
Chief Executive Officer
“Firstly, I wish to address the delay in reporting our financial results. As discussed above, during the preparation of our quarterly financial statements for the third quarter of 2023, our team identified material weaknesses in internal controls. We aggressively addressed this problem as we understand the paramount importance of providing accurate financial information for our stockholders, depositors, and other stakeholders. I am pleased to report that we have strengthened our controls, and our financial and accounting team, and that the net total adjustments identified during a thorough evaluation of our financial records by a third-party firm resulted in an increase in net income of
“In addition, during 2023, we continued to see our financial results adversely affected by the eleven rate increases implemented by the
“Notwithstanding our optimism, we are cautious in the growth of our loan portfolio and are closely monitoring the economic environment and the performance of our borrowers. I am pleased to report that we expanded our loan portfolio during the third and fourth quarters of 2023, which has now grown over
“On the funding side of our business, we successfully increased deposits during the third and fourth quarters of 2023, reversing a trend of deposit outflows that had occurred since the end of the first quarter of 2022. In a calendar year that saw net outflows of deposits across the banking industry in
“During the fourth quarter, we repurchased almost 245 thousand shares (after adjustment for the 1-for-8 reverse stock split effective
“Going forward, we remain committed to our mission and objectives of growing wisely and improving our profitability. Given the state of the financial markets, we feel fortunate and believe that we have the necessary equity capital and liquidity to execute our plans and continue serving the pressing needs of low-to-moderate income communities.”
“Our Board and senior management team remain thankful for the dedication of our employees and the continuing support of our investors, depositors, and partners, which together allow us to serve our communities, customers, and broader stakeholders.”
Net Interest Income
Fourth Quarter of 2023 Compared to Fourth Quarter of 2022
Net interest income before provision for credit losses totaled
Twelve Months of 2023 Compared to the Twelve Months of 2022
Net interest income before provision for credit losses totaled
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 |
||||||||||||||||||
2023 |
2022 |
|||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||
Average
|
|
|
Interest |
|
Average
|
|
|
|
Average
|
|
|
Interest |
|
Average
|
||||
Assets |
|
|
|
|
|
|
||||||||||||
Interest-earning assets: |
||||||||||||||||||
Interest-earning deposits |
$ |
13,856 |
$ |
148 |
4.27 |
% |
$ |
32,500 |
$ |
211 |
2.60 |
% |
||||||
Securities |
316,291 |
2,154 |
2.72 |
% |
329,036 |
2,180 |
2.65 |
% |
||||||||||
Loans receivable (1) |
849,516 |
10,104 |
4.76 |
% |
740,155 |
8,129 |
4.39 |
% |
||||||||||
FRB and FHLB stock (2) |
12,769 |
212 |
6.64 |
% |
6,365 |
141 |
8.86 |
% |
||||||||||
Total interest-earning assets |
1,192,432 |
$ |
12,618 |
4.23 |
% |
1,108,056 |
$ |
10,661 |
3.85 |
% |
||||||||
Non-interest-earning assets |
88,255 |
69,174 |
||||||||||||||||
Total assets |
$ |
1,280,687 |
$ |
1,177,230 |
||||||||||||||
Liabilities and Stockholders’ Equity |
||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||
Money market deposits |
$ |
130,400 |
$ |
1,310 |
4.02 |
% |
$ |
188,856 |
$ |
634 |
1.34 |
% |
||||||
Savings deposits |
58,207 |
76 |
0.52 |
% |
64,201 |
14 |
0.09 |
% |
||||||||||
Interest checking and other demand deposits |
230,636 |
103 |
0.18 |
% |
220,867 |
73 |
0.13 |
% |
||||||||||
Certificate accounts |
164,219 |
1,045 |
2.55 |
% |
153,181 |
210 |
0.55 |
% |
||||||||||
Total deposits |
583,462 |
2,534 |
1.74 |
% |
627,105 |
931 |
0.59 |
% |
||||||||||
FHLB advances |
189,748 |
2,296 |
4.84 |
% |
80,742 |
533 |
2.64 |
% |
||||||||||
Bank Term Funding Program borrowing |
3,261 |
40 |
4.91 |
% |
- |
- |
- |
% |
||||||||||
Other borrowings |
77,072 |
601 |
3.12 |
% |
70,569 |
155 |
0.88 |
% |
||||||||||
Total borrowings |
270,081 |
2,937 |
4.35 |
% |
151,311 |
688 |
1.82 |
% |
||||||||||
Total interest-bearing liabilities |
853,543 |
$ |
5,471 |
2.56 |
% |
778,416 |
$ |
1,619 |
0.83 |
% |
||||||||
Non-interest-bearing liabilities |
148,805 |
120,021 |
||||||||||||||||
Stockholders’ equity |
278,339 |
278,794 |
||||||||||||||||
Total liabilities and stockholders’ equity |
$ |
1,280,687 |
$ |
1,177,230 |
||||||||||||||
|
||||||||||||||||||
Net interest rate spread (3) |
$ |
7,147 |
1.67 |
% |
$ |
9,042 |
3.02 |
% |
||||||||||
Net interest rate margin (4) |
2.40 |
% |
3.26 |
% |
||||||||||||||
Ratio of interest-earning assets to interest-bearing liabilities |
139.70 |
% |
142.35 |
% |
(1) |
Amount is net of deferred loan fees, loan discounts and loans in process, and includes deferred origination costs and loan premiums. |
|||||||||||||||||||
(2) |
FHLB is |
|||||||||||||||||||
(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 Year Ended |
||||||||||||||||||
2023 |
2022 |
|||||||||||||||||
|
(Dollars in thousands) |
|||||||||||||||||
Average
|
|
|
Interest |
|
Average
|
|
|
|
Average
|
|
|
Interest |
|
Average
|
||||
Assets |
|
|
|
|
|
|
||||||||||||
Interest-earning assets: |
||||||||||||||||||
Interest-earning deposits |
$ |
14,013 |
$ |
573 |
4.09 |
% |
$ |
147,482 |
$ |
1,677 |
1.14 |
% |
||||||
Securities |
322,764 |
8,697 |
2.69 |
% |
252,285 |
5,596 |
2.22 |
% |
||||||||||
Loans receivable (1) |
808,850 |
37,143 |
4.59 |
% |
674,837 |
28,732 |
4.26 |
% |
||||||||||
FRB and FHLB stock (2) |
11,860 |
815 |
6.87 |
% |
3,732 |
264 |
7.07 |
% |
||||||||||
Total interest-earning assets |
1,157,486 |
$ |
47,228 |
4.08 |
% |
1,078,336 |
$ |
36,269 |
3.36 |
% |
||||||||
Non-interest-earning assets |
74,138 |
65,213 |
||||||||||||||||
Total assets |
$ |
1,231,624 |
$ |
1,143,549 |
||||||||||||||
Liabilities and Stockholders’ Equity |
||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||
Money market deposits |
$ |
126,831 |
$ |
4,269 |
3.37 |
% |
$ |
192,835 |
$ |
1,288 |
0.67 |
% |
||||||
Savings deposits |
59,928 |
147 |
0.25 |
% |
66,033 |
58 |
0.09 |
% |
||||||||||
Interest checking and other demand deposits |
236,244 |
360 |
0.15 |
% |
240,380 |
220 |
0.08 |
% |
||||||||||
Certificate accounts |
154,275 |
2,736 |
1.77 |
% |
182,050 |
538 |
0.30 |
% |
||||||||||
Total deposits |
577,278 |
7,512 |
1.30 |
% |
681,298 |
2,104 |
0.31 |
% |
||||||||||
FHLB advances |
177,261 |
8,331 |
4.70 |
% |
61,593 |
1,071 |
1.74 |
% |
||||||||||
Bank Term Funding Program borrowing |
822 |
40 |
4.87 |
% |
- |
- |
- |
% |
||||||||||
Other borrowings |
72,465 |
1,883 |
2.60 |
% |
61,106 |
234 |
0.38 |
% |
||||||||||
Total borrowings |
250,548 |
10,254 |
4.09 |
% |
122,699 |
1,305 |
1.06 |
% |
||||||||||
Total interest-bearing liabilities |
827,826 |
$ |
17,766 |
2.15 |
% |
803,997 |
$ |
3,409 |
0.42 |
% |
||||||||
Non-interest-bearing liabilities |
125,401 |
115,665 |
||||||||||||||||
Stockholders’ equity |
278,397 |
223,887 |
||||||||||||||||
Total liabilities and stockholders’ equity |
$ |
1,231,624 |
$ |
1,143,549 |
||||||||||||||
Net interest rate spread (3) |
$ |
29,462 |
1.93 |
% |
$ |
32,860 |
2.94 |
% |
||||||||||
Net interest rate margin (4) |
2.55 |
% |
3.05 |
% |
||||||||||||||
Ratio of interest-earning assets to interest-bearing liabilities |
139.82 |
% |
134.12 |
% |
(1) |
Amount is net of deferred loan fees, loan discounts and loans in process, and includes deferred origination costs and loan premiums. |
|||||||||||||||||||||||||
(2) |
FHLB is |
|||||||||||||||||||||||||
(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. |
Credit Loss Provision
For the fourth quarter of 2023, the Company recorded a provision for credit losses under the Current Expected Credit Loss (“CECL”) methodology of
For the year ended
The allowance for credit losses (“ACL”) increased to
The Bank had no non-accrual loans at
Non-interest Income
Non-interest income increased by
For the year ended
Non-interest Expense
Total non-interest expense was
For the year ended
The increase in compensation and benefits expense during 2023, compared to 2022, was primarily attributable to an increase in additional full-time employees that the Bank hired in various production and administrative positions as part of the Company’s efforts to expand its operational capabilities to strategically grow its balance sheet and fulfill the intersecting lending objectives of the Company’s mission and the funding received from the Emergency Capital Investment Program of the
Income Taxes
Income taxes are computed by applying the statutory federal income tax rate of 21% and the combined
For the year ended
Balance Sheet Summary
Total assets increased by
Loans held for investment, net of the ACL, increased by
Deposits decreased by
Total borrowings increased by
Stockholders’ equity was
About
About the City First Branded Family
Stockholders, analysts, and others seeking information about the Company are invited to write to:
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 loan 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
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) | |||||||||||||||||||||||
|
|
||||||||||||||||||||||
Selected Financial Condition Data and Ratios: | |||||||||||||||||||||||
Cash and cash equivalents |
$ |
105,195 |
|
$ |
16,105 |
|
|||||||||||||||||
Securities available-for-sale, at fair value |
|
316,950 |
|
|
328,749 |
|
|||||||||||||||||
Loans receivable held for investment |
|
887,805 |
|
|
772,434 |
|
|||||||||||||||||
Allowance for credit losses |
|
(7,348 |
) |
|
(4,388 |
) |
|||||||||||||||||
Loans receivable held for investment, net of allowance |
|
880,457 |
|
|
768,046 |
|
|||||||||||||||||
Total assets |
|
1,375,404 |
|
|
1,184,293 |
|
|||||||||||||||||
Deposits |
|
682,635 |
|
|
686,916 |
|
|||||||||||||||||
Securities sold under agreements to repurchase |
|
73,475 |
|
|
63,471 |
|
|||||||||||||||||
FHLB advances |
|
209,319 |
|
|
128,344 |
|
|||||||||||||||||
Bank Term Funding Program borrowing |
|
100,000 |
|
|
- |
|
|||||||||||||||||
Notes payable |
|
14,000 |
|
|
14,000 |
|
|||||||||||||||||
Total stockholders' equity |
|
281,903 |
|
|
279,482 |
|
|||||||||||||||||
Book value per share |
$ |
14.65 |
|
$ |
14.11 |
|
|||||||||||||||||
Equity to total assets |
|
20.50 |
% |
|
23.60 |
% |
|||||||||||||||||
Asset Quality Ratios: | |||||||||||||||||||||||
Non-accrual loans to total loans |
|
0.00 |
% |
|
0.02 |
% |
|||||||||||||||||
Non-performing assets to total assets |
|
0.00 |
% |
|
0.01 |
% |
|||||||||||||||||
Allowance for credit losses to total gross loans |
|
0.83 |
% |
|
0.57 |
% |
|||||||||||||||||
Allowance for credit losses to non-performing loans |
|
N/A |
|
|
3047.22 |
% |
|||||||||||||||||
Non-Performing Assets: | |||||||||||||||||||||||
Non-accrual loans |
$ |
- |
|
$ |
144 |
|
|||||||||||||||||
Loans delinquent 90 days or more and still accruing |
|
- |
|
|
- |
|
|||||||||||||||||
Real estate acquired through foreclosure |
|
- |
|
|
- |
|
|||||||||||||||||
Total non-performing assets |
$ |
- |
|
$ |
144 |
|
|||||||||||||||||
Delinquent loans less than 30 days delinquent |
$ |
7,022 |
|
$ |
8,253 |
|
|||||||||||||||||
Delinquent loans 30 to 89 days delinquent |
$ |
780 |
|
$ |
- |
|
|||||||||||||||||
Delinquent loans greater than 90 days delinquent |
$ |
- |
|
$ |
- |
|
|||||||||||||||||
Three Months Ended |
Twelve Months Ended |
||||||||||||||||||||||
Selected Operating Data and Ratios: |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
||||||||
Interest income |
$ |
12,618 |
|
$ |
10,661 |
|
$ |
47,228 |
|
$ |
36,269 |
|
|||||||||||
Interest expense |
|
5,471 |
|
|
1,619 |
|
|
17,766 |
|
|
3,409 |
|
|||||||||||
Net interest income |
|
7,147 |
|
|
9,042 |
|
|
29,462 |
|
|
32,860 |
|
|||||||||||
Credit loss provision |
|
125 |
|
|
404 |
|
|
933 |
|
|
997 |
|
|||||||||||
Net interest income after loan loss provision |
|
7,022 |
|
|
8,638 |
|
|
28,529 |
|
|
31,863 |
|
|||||||||||
Non-interest income |
|
4,477 |
|
|
288 |
|
|
5,357 |
|
|
1,195 |
|
|||||||||||
Non-interest expense |
|
(7,709 |
) |
|
(6,643 |
) |
|
(27,363 |
) |
|
(24,939 |
) |
|||||||||||
Income before income taxes |
|
3,790 |
|
|
2,283 |
|
|
6,523 |
|
|
8,119 |
|
|||||||||||
Income tax expense |
|
1,179 |
|
|
759 |
|
|
1,985 |
|
|
2,413 |
|
|||||||||||
Net income |
$ |
2,611 |
|
$ |
1,524 |
|
$ |
4,538 |
|
$ |
5,706 |
|
|||||||||||
Net income - non-controlling interest |
|
4 |
|
|
19 |
|
|
24 |
|
|
70 |
|
|||||||||||
Net income |
$ |
2,607 |
|
$ |
1,505 |
|
$ |
4,514 |
|
$ |
5,636 |
|
|||||||||||
Earnings per common share-diluted |
$ |
0.31 |
|
$ |
0.16 |
|
(3 |
) |
$ |
0.51 |
|
$ |
0.62 |
|
(3 |
) |
|||||||
Loan originations (1) |
$ |
49,870 |
|
$ |
67,926 |
|
$ |
162,105 |
|
$ |
273,419 |
|
|||||||||||
Net recoveries to average loans |
|
0.10 |
% |
(2 |
) |
|
0.00 |
% |
(2 |
) |
|
0.03 |
% |
(2 |
) |
|
0.00 |
% |
(2 |
) |
|||
Return on average assets |
|
0.82 |
% |
(2 |
) |
|
0.52 |
% |
(2 |
) |
|
0.37 |
% |
(2 |
) |
|
0.50 |
% |
(2 |
) |
|||
Return on average equity |
|
3.75 |
% |
(2 |
) |
|
2.19 |
% |
(2 |
) |
|
1.62 |
% |
(2 |
) |
|
2.55 |
% |
(2 |
) |
|||
Net interest margin |
|
2.40 |
% |
(2 |
) |
|
3.26 |
% |
(2 |
) |
|
2.55 |
% |
(2 |
) |
|
3.05 |
% |
(2 |
) |
(1) |
|
Does not include net deferred origination costs. |
(2) |
|
Annualized |
(3) |
|
Adjusted for a 1-for-8 reverse stock split effective |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240605318664/en/
Investor Relations
Investor.relations@cityfirstbroadway.com
Source: