Broadway Financial Corporation (the “Company”) (NASDAQ Capital Market: BYFC), parent company of Broadway Federal Bank, f.s.b. (the “Bank”), reported that it has filed today an amended Form 10-K for 2011 to restate the consolidated financial statements that the Company had previously issued in its Annual Report on Form 10-K for the year ended December 31, 2011 that was filed with the SEC on March 30, 2012.
The restatement relates to corrections of errors made in determining the appropriate provisions for losses and charge-offs for 2011. As previously announced, the errors resulted from failure to obtain and take into account certain appraisals of the values of properties securing impaired loans that had been ordered and received by the Bank prior to the issuance date of our financial statements and failure to follow the appropriate method for calculating expected future payments on loans in connection with our discounted cash flow analysis for measuring impairment of loans deemed to be troubled debt restructurings. In addition, certain appraisals received after year-end 2011 indicated that impairment losses that had been determined using values based on broker provided opinions of value (BPOs) understated the losses inherent in those loans. We have discontinued our former practice of obtaining and relying upon BPOs in connection with valuing properties securing our loans.
The amended Form 10-K will include a revised discussion of results of operations and financial condition for the year ended December 31, 2011, and revised discussion of and management's report on the Company's internal control over financial reporting.
In connection with the restatement of results for 2011, the results of the first quarter ended March 31, 2012, which we previously announced, will also be revised. Some of the provisions that we had included in our previously announced results for the first quarter of 2012 are now reflected in the results for 2011. In addition, the revision to the results for the first quarter of 2012 reflect conclusions regarding our valuation allowances reached by the Office of the Controller of Currency during its recently completed supervisory examination of the Bank. We expect to file a Form 10-Q containing the revised financial statements for the first quarter 2012 shortly.