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Broadway Financial Corporation Reports Net Loss For Second Quarter 2011

Forward-Looking Statements

Certain matters discussed in this news release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, the Company’s plans for Recapitalizing and raising capital, expectations regarding the business environment in which the Company operates, projections of future performance, perceived opportunities in the market, and statements regarding strategic objectives. These forward-looking statements are based upon current management expectations, and involve risks and uncertainties. Actual results or performance may differ materially from those suggested, expressed, or implied by the forward-looking statements due to a wide range of factors including, but not limited to, the general business environment, the real estate market, competitive conditions in the business and geographic areas in which the Company conducts its business, regulatory actions or changes and other risks detailed in the Company’s reports filed with the Securities and Exchange Commission, including the Company’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q.

About Broadway Financial Corporation

Broadway Financial Corporation conducts its operations through its wholly-owned subsidiary, Broadway Federal Bank, f.s.b., which is the leading community-oriented savings bank in Southern California serving low to moderate income communities. We offer a variety of residential and commercial real estate loan products for consumers, businesses, and non-profit organizations, other loan products, and a variety of deposit products, including checking, savings and money market accounts, certificates of deposits and retirement accounts. The Bank operates five full service branches, four in the city of Los Angeles, and one located in the nearby city of Inglewood, California.

Shareholders, analysts and others seeking information about the Company are invited to write to: Broadway Financial Corporation, Investor Relations, 4800 Wilshire Blvd., Los Angeles, CA 90010, or visit our website at www.broadwayfederalbank.com.

       
 
BROADWAY FINANCIAL CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands)
 
June 30, December 31,
2011 2010
(Unaudited)
ASSETS
Cash $ 12,621 $ 8,203
Federal funds sold   5,240     13,775  
Cash and cash equivalents 17,861 21,978
 
Securities available for sale, at fair value 9,172 10,524
Securities held to maturity 11,692 12,737
Loans receivable held for sale, net 16,005 29,411
Loans receivable, net of allowance of $22,245 and $20,458 360,144 382,616
Accrued interest receivable 1,957 2,216
Federal Home Loan Bank (FHLB) stock, at cost 4,089 4,089
Office properties and equipment, net 4,909 5,094
Real estate owned (REO) 6,690 3,036
Bank owned life insurance 2,566 2,522
Deferred tax assets 6,108 5,369
Other assets   5,881     4,338  
Total assets $ 447,074   $ 483,930  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 312,371 $ 348,445
Federal Home Loan Bank advances 87,000 87,000
Junior subordinated debentures 6,000 6,000
Other borrowings 5,000 5,000
Advance payments by borrowers for taxes and insurance 743 272
Other liabilities   5,232     4,353  
Total liabilities   416,346     451,070  
 
Stockholders' Equity:

Senior preferred, cumulative and non-voting stock, $0.01 par value, authorized, issued and outstanding 9,000 shares of Series D at June 30, 2011 and December 31, 2010; liquidation preference of $9,394 at June 30, 2011 and $9,169 at December 31, 2010

8,963 8,963

Senior preferred, cumulative and non-voting stock, $0.01 par value, authorized, issued and outstanding 6,000 shares of Series E at June 30, 2011 and December 31, 2010; liquidation preference of $6,263 at June 30, 2011 and $6,113 at December 31, 2010

5,974 5,974

Preferred, non-cumulative and non-voting stock, $.01 par value, authorized 1,000,000 shares; issued and outstanding 55,199 shares of Series A, 100,000 shares of Series B and 76,950 shares of Series C at June 30, 2011 and December 31, 2010; liquidation preference of $552 for Series A, $1,000 for Series B and $1,000 for Series C at June 30, 2011 and December 31, 2010

2 2
Preferred stock discount (1,188 ) (1,380 )

Common stock, $.01 par value, authorized 8,000,000 shares at June 30, 2011 and December 31, 2010; issued 2,013,942 shares at June 30, 2011 and December 31, 2010; outstanding 1,744,565 shares at June 30, 2011 and 1,743,965 shares at December 31, 2010

20 20
Additional paid-in capital 14,439 14,395
Retained earnings-substantially restricted 5,656 8,074

Accumulated other comprehensive income, net of taxes of $204 at June 30, 2011 and $176 at December 31, 2010

306 263
Treasury stock-at cost, 269,377 shares at June 30, 2011 and 269,977 shares at December 31, 2010   (3,444 )   (3,451 )
Total stockholders' equity   30,728     32,860  
 
Total liabilities and stockholders' equity $ 447,074   $ 483,930  
 
 
 
 
BROADWAY FINANCIAL CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Earnings (Loss)
(Dollars in thousands, except per share amounts)
(Unaudited)
               
Three Months ended June 30, Six Months ended June 30,
2011 2010 2011 2010
 
Interest and fees on loans receivable $ 6,284 $ 7,478 $ 12,668 $ 14,955
Interest on securities 182 257 363 539
Other interest income   10     15     19     25  
Total interest income   6,476     7,750     13,050     15,519  
 
Interest on deposits 1,197 1,568 2,436 3,071
Interest on borrowings   851     851     1,840     1,646  
Total interest expense   2,048     2,419     4,276     4,717  
 
Net interest income before provision for loan losses 4,428 5,331 8,774 10,802
Provision for loan losses   3,434     309     4,674     883  
Net interest income after provision for loan losses   994     5,022     4,100     9,919  
 
Non-interest income:
Service charges 175 213 357 402
Net gains (losses) on mortgage banking activities 32 (109 ) 7 (85 )
Net losses on sales of REO (34 ) (61 ) (49 ) (35 )
Other   26     141     65     174  
Total non-interest income   199     184     380     456  
 
Non-interest expense:
Compensation and benefits 1,555 1,796 3,364 3,727
Occupancy expense, net 334 348 688 710
Information services 220 186 447 404
Professional services 292 386 460 596
Provision for losses on loans held for sale 6 472 26 547
Provision for losses on REO 702 30 782 111
FDIC insurance 354 215 637 462
Office services and supplies 140 133 282 277
Other   514     280     933     543  
Total non-interest expense   4,117     3,846     7,619     7,377  
 
Earnings (loss) before income taxes (2,924 ) 1,360 (3,139 ) 2,998
Income tax expense (benefit)   (1,202 )   514     (1,288 )   1,164  
Net earnings (loss) $ (1,722 ) $ 846   $ (1,851 ) $ 1,834  
 
Other comprehensive income, net of tax:
Unrealized gain on securities available for sale $ 86 $ 168 $ 71 $ 257
Income tax effect   (34 )   (67 )   (28 )   (103 )
Other comprehensive income, net of tax   52     101     43     154  
 
Comprehensive earnings (loss) $ (1,670 ) $ 947   $ (1,808 ) $ 1,988  
 
Net earnings (loss) $ (1,722 ) $ 846 $ (1,851 ) $ 1,834
Dividends and discount accretion on preferred stock   (283 )   (281 )   (566 )   (581 )
Earnings (loss) available to common shareholders $ (2,005 ) $ 565   $ (2,417 ) $ 1,253  
 
Earnings (loss) per common share-basic $ (1.15 ) $ 0.32 $ (1.39 ) $ 0.72
Earnings (loss) per common share-diluted $ (1.15 ) $ 0.32 $ (1.39 ) $ 0.72
Dividends declared per share-common stock $ - $ - $ - $ 0.01
Basic weighted average shares outstanding 1,744,216 1,743,609 1,744,091 1,743,488
Diluted weighted average shares outstanding 1,744,216 1,744,509 1,744,091 1,746,973
 
 
 
 
BROADWAY FINANCIAL CORPORATION
AND SUBSIDIARIES
Selected Ratios and Data
(Dollars in thousands)
   
As of June 30,
2011 2010
Regulatory Capital Ratios:
 
Core Capital 8.87 % 7.68 %
Tangible Capital 8.87 % 7.68 %
Tier 1 Risk-Based Ratio 11.94 % 10.72 %
Total Risk-Based Capital 13.26 % 12.00 %
 
Asset Quality Ratios and Data:
 

Non-performing loans as a percentage of total gross loans, excluding loans held for sale

11.15 % 6.65 %
 

Non-performing assets as a percentage of total assets

12.53 % 6.77 %
 

Allowance for loan losses as a percentage of total gross loans, excluding loans held for sale

5.83 % 4.18 %
 

Allowance for loan losses as a percentage of non-performing loans, excluding loans held for sale

52.27 % 62.94 %
 

Allowance for losses as a percentage of non-performing assets

42.46 % 51.95 %
 

Net loan charge-offs (recoveries) as a percentage of average loans for six months ended June 30

1.38 % (A) 1.22 % (A)
 
Non-performing assets:
Non-accrual loans
Loans receivable, net $ 41,992 $ 29,334
Loans receivable held for sale   6,764     3,518  
Total non-accrual loans 48,756 32,852
Loans delinquent 90 days or more and still accruing 569 -
Real estate acquired through foreclosure   6,690     4,487  
Total non-performing assets $ 56,015   $ 37,339  
 
 
Three Months ended June 30, Six Months ended June 30,
  2011     2010   2011   2010  
Performance Ratios:
 
Return on average assets -1.48 % (A) 0.62 % (A) -0.78 % 0.69 %
Return on average equity -21.41 % (A) 10.28 % (A) -11.32 % 11.29 %
Average equity to average assets 6.90 % 6.06 % 6.89 % 6.10 %
Non-interest expense to average assets 3.53 % (A) 2.83 % (A) 3.21 % 2.77 %
Efficiency ratio (1) 73.68 % 60.63 % 74.40 % 59.68 %
Net interest rate spread (2) 3.73 % (A) 3.84 % (A) 3.60 % 3.96 %
Net interest rate margin (3) 3.85 % (A) 3.96 % (A) 3.74 % 4.09 %
 
(1) Efficiency ratio represents non-interest expense divided by net interest income plus non-interest income.

(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.
 
(A) Annualized
 
 
               
 
BROADWAY FINANCIAL CORPORATION
AND SUBSIDIARIES
Support for Calculations
(Dollars in thousands)
 
Three Months ended June 30, Six Months ended June 30,
2011 2010 2011 2010
Total assets $ 447,074 $ 551,569 $ 447,074 $ 551,569
Total gross loans, excluding loans held for sale $ 381,659 $ 441,354 $ 381,659 $ 441,354
Total equity $ 30,728 $ 33,178 $ 30,728 $ 33,178
Average assets $ 466,260 $ 542,814 $ 474,846 $ 532,294
Average loans $ 407,057 $ 469,516 $ 417,412 $ 472,953
Average equity $ 32,174 $ 32,912 $ 32,706 $ 32,487
Average interest-earning assets $ 459,675 $ 538,132 $ 469,669 $ 528,823
Average interest-bearing liabilities $ 429,273 $ 504,956 $ 436,703 $ 494,712
Net income $ (1,722 ) $ 846 $ (1,851 ) $ 1,834
Total income $ 4,627 $ 5,515 $ 9,154 $ 11,258
Non-interest expense $ 4,117 $ 3,846 $ 7,619 $ 7,377
Efficiency ratio 73.68 % 60.63 % 74.40 % 59.68 %
Non-accrual loans $ 48,756 $ 32,852 $ 48,756 $ 32,852
REO, net $ 6,690 $ 4,487 $ 6,690 $ 4,487
ALLL $ 22,245 $ 18,462 $ 22,245 $ 18,462
Allowance for loss on loans held for sale $ 1,307 $ 901 $ 1,307 $ 901
REO-Allowance $ 230 $ 36 $ 230 $ 36
Interest income $ 6,476 $ 7,750 $ 13,050 $ 15,519
Interest expense $ 2,048 $ 2,419 $ 4,276 $ 4,717
Net interest income $ 4,428 $ 5,331 $ 8,774 $ 10,802
Net loan charge-offs (recoveries) $ 2,180 $ 1,957 $ 2,887 $ 2,881
 




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