Broadway Financial Corporation Announces Results for Second Quarter 2023
- Total interest income increased by 38.5% in Q2 2023.
- Total net loans receivable increased by $56.6 million.
- Total assets increased by $47.0 million.
- Consolidated net earnings decreased from $1.9 million in Q2 2022 to $243 thousand in Q2 2023.
- An increase in interest expense and a provision for credit losses contributed to the decrease in net earnings.
The decrease in net earnings during the second quarter of 2023, compared to the second quarter of 2022, was primarily due to an increase in interest expense before provision for credit losses of
For the first six months of 2023, the Company reported consolidated net earnings of
Second Quarter 2023 Highlights:
-
Total interest income increased by
, or$3.3 million 38.5% for the second quarter of 2023, compared to the second quarter of 2022. -
Total net loans receivable increased by
, or$56.6 million 7.4% , to at June 30, 2023, compared to December 31, 2022.$824.6 million - The Bank did not have any non-accrual loans or non-performing assets at June 30, 2023.
-
Total assets increased by
, or$47.0 million 4.0% , to at June 30, 2023, compared to December 31, 2022.$1.2 billion
Chief Executive Officer, Brian Argrett commented, “The second quarter continued to present significant economic headwinds affecting our operating performance and efforts to continue to expand at pace. Since receiving
“Of course, these investments overlap a shifting banking and economic environment that is increasingly challenged as rising inflation has increased the cost of doing business, both in rising funding costs and higher non-interest expenses, including the cost of retaining and attracting quality personnel. Further, rising uncertainty from the eleven rate increases implemented by the Federal Open Market Committee of the Federal Reserve since March 2022 has made loan originations more challenging as we remain prudent in our underwriting standards and portfolio management amid any early signs of weakness in the broader economy.
“However, I am also pleased to report that we expanded our loan portfolio by over
“Going forward, our dedication to prudent continued growth, greater efficiency, and deeper service to our communities has not abated; we intend to continue growing wisely and improving our profitability. In that regard, we have been implementing new efforts to retain and gather deposits to fund that forward growth, and those efforts have dramatically slowed the deposit migration that primarily occurred in the last three quarters of 2022. Fortunately, the Company has the necessary equity capital and liquidity to execute its plans and continue serving the pressing needs of low-to-moderate income communities.
“As always, we are particularly thankful for the dedication of our employees and the continuing support of our investors and partners. That support remains pivotal to our ability to serve our communities, customers, and broader stakeholders.”
Net Interest Income
Second Quarter of 2023 Compared to Second Quarter of 2022
Net interest income before provision for credit losses for the second quarter of 2023 totaled
First Six Months of 2023 Compared to the First Six Months of 2022
Net interest income before provision for credit losses for the six months ended June 30, 2023 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 June 30, |
||||||||||||||||||
2023 |
|
2022 |
||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||
Average
|
Interest |
Average
|
|
Average
|
Interest |
Average
|
||||||||||||
Assets |
|
|
|
|
|
|
||||||||||||
Interest-earning assets: |
||||||||||||||||||
Interest-earning deposits |
$ |
16,615 |
$ |
167 |
4.02 |
% |
$ |
210,978 |
$ |
788 |
1.49 |
% |
||||||
Securities |
326,051 |
2,183 |
2.68 |
% |
199,472 |
796 |
1.60 |
% |
||||||||||
Loans receivable (1) |
797,550 |
9,098 |
4.56 |
% |
657,026 |
6,879 |
4.19 |
% |
||||||||||
FRB and FHLB stock (2) |
11,602 |
192 |
6.62 |
% |
2,668 |
38 |
5.70 |
% |
||||||||||
Total interest-earning assets |
1,151,818 |
$ |
11,640 |
4.04 |
% |
1,070,144 |
$ |
8,501 |
3.18 |
% |
||||||||
Non-interest-earning assets |
67,173 |
107,531 |
||||||||||||||||
Total assets |
$ |
1,218,991 |
$ |
1,177,675 |
||||||||||||||
Liabilities and Stockholders’ Equity |
||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||
Money market deposits |
$ |
115,578 |
$ |
932 |
3.23 |
% |
$ |
197,751 |
$ |
194 |
0.39 |
% |
||||||
Savings deposits |
60,826 |
16 |
0.11 |
% |
62,458 |
13 |
0.08 |
% |
||||||||||
Interest checking and other demand deposits |
233,872 |
87 |
0.15 |
% |
292,248 |
42 |
0.06 |
% |
||||||||||
Certificate accounts |
153,972 |
514 |
1.34 |
% |
199,043 |
100 |
0.20 |
% |
||||||||||
Total deposits |
564,248 |
1,549 |
1.10 |
% |
751,500 |
349 |
0.19 |
% |
||||||||||
FHLB advances |
186,664 |
2,141 |
4.59 |
% |
39,628 |
85 |
0.86 |
% |
||||||||||
Other borrowings |
75,821 |
682 |
3.60 |
% |
68,352 |
29 |
0.17 |
% |
||||||||||
Total borrowings |
262,485 |
2,823 |
4.30 |
% |
107,980 |
114 |
0.42 |
% |
||||||||||
Total interest-bearing liabilities |
826,733 |
$ |
4,372 |
2.12 |
% |
859,480 |
$ |
463 |
0.22 |
% |
||||||||
Non-interest-bearing liabilities |
113,803 |
107,771 |
||||||||||||||||
Stockholders’ equity |
278,455 |
210,424 |
||||||||||||||||
Total liabilities and stockholders’ equity |
$ |
1,218,991 |
$ |
1,177,675 |
||||||||||||||
|
||||||||||||||||||
Net interest rate spread (3) |
$ |
7,268 |
1.93 |
% |
$ |
8,038 |
2.96 |
% |
||||||||||
Net interest rate margin (4) |
2.52 |
% |
3.00 |
% |
||||||||||||||
Ratio of interest-earning assets to interest-bearing liabilities |
139.32 |
% |
124.51 |
% |
(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 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, | |||||||||||||||||
2023 |
|
|
2022 |
|||||||||||||||
|
(Dollars in thousands) |
|||||||||||||||||
Average
|
|
Interest |
|
Average
|
|
|
Average
|
|
Interest |
|
Average
|
|||||||
Assets |
|
|
|
|
|
|
||||||||||||
Interest-earning assets: |
||||||||||||||||||
Interest-earning deposits |
$ |
15,187 |
$ |
286 |
3.77 |
% |
$ |
215,622 |
$ |
872 |
0.81 |
% |
||||||
Securities |
327,178 |
4,363 |
2.67 |
% |
180,220 |
1,347 |
1.49 |
% |
||||||||||
Loans receivable (1) |
782,101 |
17,633 |
4.51 |
% |
655,260 |
14,083 |
4.30 |
% |
||||||||||
FRB and FHLB stock |
11,175 |
401 |
7.18 |
% |
2,668 |
78 |
5.85 |
% |
||||||||||
Total interest-earning assets |
1,135,641 |
$ |
22,683 |
3.99 |
% |
1,053,770 |
$ |
16,380 |
3.11 |
% |
||||||||
Non-interest-earning assets |
67,953 |
95,848 |
||||||||||||||||
Total assets |
$ |
1,203,594 |
$ |
1,149,618 |
||||||||||||||
Liabilities and Stockholders’ Equity |
||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||
Money market deposits |
$ |
125,603 |
$ |
1,703 |
2.71 |
% |
$ |
202,414 |
$ |
383 |
0.38 |
% |
||||||
Savings deposits |
61,201 |
29 |
0.09 |
% |
64,641 |
21 |
0.06 |
% |
||||||||||
Interest checking and other demand deposits |
237,668 |
164 |
0.14 |
% |
261,354 |
81 |
0.06 |
% |
||||||||||
Certificate accounts |
149,550 |
956 |
1.28 |
% |
200,244 |
214 |
0.21 |
% |
||||||||||
Total deposits |
574,022 |
2,852 |
0.99 |
% |
728,653 |
699 |
0.19 |
% |
||||||||||
FHLB advances |
165,521 |
3,464 |
4.19 |
% |
58,738 |
427 |
1.45 |
% |
||||||||||
Other borrowings |
72,973 |
825 |
2.26 |
% |
68,185 |
44 |
0.13 |
% |
||||||||||
Total borrowings |
238,494 |
4,289 |
3.60 |
% |
126,923 |
471 |
0.74 |
% |
||||||||||
Total interest-bearing liabilities |
812,516 |
$ |
7,141 |
1.76 |
% |
855,576 |
$ |
1,170 |
0.27 |
% |
||||||||
Non-interest-bearing liabilities |
112,281 |
106,760 |
||||||||||||||||
Stockholders’ equity |
278,797 |
187,282 |
||||||||||||||||
Total liabilities and stockholders’ equity |
$ |
1,203,594 |
$ |
1,149,618 |
||||||||||||||
Net interest rate spread (2) |
$ |
15,542 |
2.24 |
% |
15,210 |
2.84 |
% |
|||||||||||
Net interest rate margin (3) |
2.74 |
% |
2.89 |
% |
||||||||||||||
Ratio of interest-earning assets to interest-bearing liabilities |
139.77 |
% |
123.16 |
% |
(1) |
|
Amount is net of deferred loan fees, loan discounts and loans in process, and includes deferred origination costs and loan premiums. |
(2) |
|
Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. |
(3) |
|
Net interest rate margin represents net interest income as a percentage of average interest-earning assets. |
Credit Loss Provision
For the three months ended June 30, 2023, the Company recorded a provision for credit loss under the Current Expected Credit Loss (“CECL”) methodology of
The allowance for credit losses (“ACL”) increased to
The Bank had no non-accrual loans at June 30, 2023 and loan delinquencies declined by over
Non-interest Income
Non-interest income for the second quarter of 2023 totaled
For the first six months of 2023, non-interest income totaled
Non-interest Expense
Total non-interest expense was
For the first six months of 2023, non-interest expense totaled
Income Taxes
Income taxes are computed by applying the statutory federal income tax rate of
For the six months ended June 30, 2023, income tax expense was
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 Broadway Financial Corporation
Broadway Financial Corporation conducts its operations through its wholly-owned banking subsidiary, City First Bank, National Association, which is a leading community-oriented bank in
Stockholders, analysts, and others seeking information about the Company are invited to write to: Broadway Financial Corporation, Investor Relations, 4601 Wilshire Boulevard, Suite 150,
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. Readers should not place undue reliance on these forward-looking statements, which speak only as of their dates or, if no date is provided, then as of the date of this press release. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except to the extent required by law. 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 loan loss allowances 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) | |||||||||||||||||||||||
June 30, 2023 | December 31, 2022 | ||||||||||||||||||||||
Selected Financial Condition Data and Ratios: | |||||||||||||||||||||||
Cash and cash equivalents | $ |
10,742 |
|
$ |
16,105 |
|
|||||||||||||||||
Securities available-for-sale, at fair value |
|
322,516 |
|
|
328,749 |
|
|||||||||||||||||
Loans receivable held for investment |
|
831,591 |
|
|
772,434 |
|
|||||||||||||||||
Allowance for credit losses |
|
(6,970 |
) |
|
(4,388 |
) |
|||||||||||||||||
Loans receivable held for investment, net of allowance |
|
824,621 |
|
|
768,046 |
|
|||||||||||||||||
Total assets |
|
1,231,372 |
|
|
1,184,293 |
|
|||||||||||||||||
Deposits |
|
646,063 |
|
|
686,916 |
|
|||||||||||||||||
Securities sold under agreements to repurchase |
|
71,381 |
|
|
63,471 |
|
|||||||||||||||||
FHLB advances |
|
210,268 |
|
|
128,344 |
|
|||||||||||||||||
Notes payable |
|
14,000 |
|
|
14,000 |
|
|||||||||||||||||
Total stockholders' equity |
|
277,289 |
|
|
279,482 |
|
|||||||||||||||||
Book value per share | $ |
1.71 |
|
$ |
1.76 |
|
|||||||||||||||||
Equity to total assets |
|
22.52 |
% |
|
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 |
|
0.84 |
% |
|
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 | $ |
7,988 |
|
$ |
8,253 |
|
|||||||||||||||||
Delinquent loans 30 to 89 days delinquent | $ |
- |
|
$ |
- |
|
|||||||||||||||||
Delinquent loans greater than 90 days delinquent | $ |
- |
|
$ |
- |
|
|||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
Selected Operating Data and Ratios: |
|
2023 |
|
|
|
2022 |
|
|
|
|
2023 |
|
|
|
2022 |
|
|||||||
Interest income | $ |
11,772 |
|
$ |
8,501 |
|
$ |
22,946 |
|
$ |
16,380 |
|
|||||||||||
Interest expense |
|
4,504 |
|
|
463 |
|
|
7,404 |
|
|
1,170 |
|
|||||||||||
Net interest income |
|
7,268 |
|
|
8,038 |
|
|
15,542 |
|
|
15,210 |
|
|||||||||||
Credit loss provision (recapture) |
|
768 |
|
|
(577 |
) |
|
810 |
|
|
(429 |
) |
|||||||||||
Net interest income after loan loss provision |
|
6,500 |
|
|
8,615 |
|
|
14,732 |
|
|
15,639 |
|
|||||||||||
Non-interest income |
|
260 |
|
|
261 |
|
|
549 |
|
|
542 |
|
|||||||||||
Non-interest expense |
|
(6,421 |
) |
|
(6,266 |
) |
|
(12,673 |
) |
|
(12,226 |
) |
|||||||||||
Income before income taxes |
|
339 |
|
|
2,610 |
|
|
2,608 |
|
|
3,955 |
|
|||||||||||
Income tax expense |
|
93 |
|
|
757 |
|
|
767 |
|
|
1,120 |
|
|||||||||||
Net income | $ |
246 |
|
$ |
1,853 |
|
$ |
1,841 |
|
$ |
2,835 |
|
|||||||||||
Net income (loss) - non-controlling interest |
|
3 |
|
|
(1 |
) |
|
25 |
|
|
23 |
|
|||||||||||
Net income Broadway Financial Corporation | $ |
243 |
|
$ |
1,854 |
|
$ |
1,816 |
|
$ |
2,812 |
|
|||||||||||
Earnings per common share-diluted | $ |
0.00 |
|
$ |
0.03 |
|
$ |
0.03 |
|
$ |
0.04 |
|
|||||||||||
Loan originations (1) | $ |
63,983 |
|
$ |
49,158 |
|
$ |
98,219 |
|
$ |
103,863 |
|
|||||||||||
Net recoveries to average loans |
|
(0.00 |
)% |
(2 |
) |
|
(0.00 |
)% |
(2 |
) |
|
(0.00 |
)% |
(2 |
) |
|
(0.00 |
)% |
|||||
Return on average assets |
|
0.08 |
% |
(2 |
) |
|
0.63 |
% |
(2 |
) |
|
0.31 |
% |
(2 |
) |
|
0.49 |
% |
|||||
Return on average equity |
|
0.35 |
% |
(2 |
) |
|
3.52 |
% |
(2 |
) |
|
1.32 |
% |
(2 |
) |
|
3.03 |
% |
|||||
Net interest margin |
|
2.52 |
% |
(2 |
) |
|
3.00 |
% |
(2 |
) |
|
2.74 |
% |
(2 |
) |
|
2.89 |
% |
(1) |
Does not include net deferred origination costs. |
|
(2) |
Annualized |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230808958230/en/
Investor Relations
Brenda J. Battey, Chief Financial Officer, (323) 556-3264
Investor.relations@cityfirstbroadway.com
Source: Broadway Financial Corporation
FAQ
What were the consolidated net earnings for Q2 2023?
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