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Broadway Financial Corporation (the “Company”) (NASDAQ Capital Market: BYFC), parent company of Broadway Federal Bank, f.s.b. (the “Bank”), today reported a net loss of ($129) thousand, or ($0.24) per diluted common share, for the first quarter of 2011, compared to net earnings of $988 thousand, or $0.39 per diluted common share, for the first quarter of 2010. The decrease in net earnings reflected lower net interest income before provision for loan losses, higher provision for loan losses, and lower non-interest income compared to the first quarter of 2010.
Chief Executive Officer, Paul C. Hudson, noted that, “First quarter results reflect a more aggressive strategy by management to reduce and resolve nonperforming assets, and the adverse impacts of certain expenses. While the effects of the economic recession continue to impact our borrowers, we did experience a decline in the number and amount of our classified assets during the quarter.” He went on to explain, “We are continuing to execute a more aggressive, proactive approach to resolving problems assets so that we can accelerate our improvement in overall asset quality and strengthen our core business model.”
First Quarter 2011 Earnings Summary
For the quarter ended March 31, 2011, our net interest income before provision for loan losses was $4.3 million, which represented a decrease of $1.1 million, or 21%, from the first quarter of 2010. The decrease in net interest income was primarily attributable to a decrease in average interest-earning assets, combined with a decrease in net interest margin. The decline in interest-earning assets reflected the more aggressive strategy to reduce and resolve non-performing assets that we have been implementing since the second quarter of 2010, and our successful efforts to increase our capital ratios above the required thresholds. The decline in our net interest margin was due to lower yield on our interest-earning assets and higher cost of borrowings.