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 ($1.7) million, or ($1.15) per diluted common share, for the second quarter of 2011, compared to net earnings of $846 thousand, or $0.32 per diluted common share, for the second quarter of 2010. The decrease in net earnings primarily reflected a higher provision for loan losses, which resulted from one commercial real estate loan, and to a lesser extent, lower net interest income, which primarily reflected our lower level of average interest-earning assets, as compared to the second quarter of 2010.
For the six months ended June 30, 2011, the Company reported a net loss of ($1.8) million, or ($1.39) per diluted common share compared to net earnings of $1.8 million, or $0.72 per diluted common share for the same period in 2010.
Chief Executive Officer, Paul C. Hudson, stated, “Excluding the specific loss allocation for one commercial real estate loan, the Bank would have shown positive net earnings for the 2 nd quarter.” He went on to explain that, “Over the past twelve months we have been closely monitoring our entire portfolio to ensure that the Bank is adequately reserved for potential future loan losses. As part of this process, we have been building our allowances during each of the past four quarters. In addition, I am pleased to report that over $20.8 million, or 42.2%, of our non-performing loans were paying currently as of the end of the second quarter.” Mr. Hudson concluded by noting that, “Asset quality trends are continuing to move in a positive direction, as evidenced by reduced levels of both classified assets and delinquencies during each of the last two quarters.”
Second Quarter 2011 Earnings SummaryFor the quarter ended June 30, 2011, our net interest income before provision for loan losses was $4.4 million, which represented a decrease of $903 thousand, or 17%, from the second 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 strategy that we have been implementing since the second quarter of 2010 to reduce and resolve non-performing assets and to slow down asset growth, in our efforts to increase our capital ratios above the required thresholds, and strengthen our liquidity. The decline in our net interest margin primarily reflected elevated levels of non-performing assets compared to the second quarter of 2010.