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Broadway Financial Corporation Reports Net Earnings For Second Quarter 2012

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, as amended by subsequently filed Forms 10-K/A, 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 three full service branches, two 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 except per share amounts)
       
June 30, December 31,
2012 2011
(Unaudited)
ASSETS
Cash $ 14,596 $ 12,127
Federal funds sold   31,540     19,470  
Cash and cash equivalents 46,136 31,597
 
Securities available for sale, at fair value 15,705 18,979
Loans receivable held for sale, net 12,574 12,983
Loans receivable, net of allowance of $17,856 and $17,299 295,363 322,770
Accrued interest receivable 1,476 1,698
Federal Home Loan Bank (FHLB) stock, at cost 3,901 4,089
Office properties and equipment, net 2,772 4,626
Real estate owned (REO) 3,530 6,699
Bank owned life insurance 2,649 2,609
Investment in affordable housing partnership 1,586 1,675
Deferred tax assets - 850
Other assets   5,239     5,162  
Total assets $ 390,931   $ 413,737  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 270,047 $ 294,686
Federal Home Loan Bank advances 83,000 83,000
Junior subordinated debentures 6,000 6,000
Other borrowings 5,000 5,000
Advance payments by borrowers for taxes and insurance 705 813
Other liabilities   6,516     5,962  
Total liabilities   371,268     395,461  
 
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, 2012 and December 31, 2011;
liquidation preference of $9,956 at June 30, 2012 and $9,731 at December 31, 2011 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, 2012 and December 31, 2011;
liquidation preference of $6,638 at June 30, 2012 and $6,488 at December 31, 2011 5,974 5,974
Preferred, non-cumulative and non-voting stock, $.01 par value, authorized 985,000 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, 2012 and December 31, 2011; liquidation preference
of $552 for Series A, $1,000 for Series B and $1,000 for Series C at June 30, 2012 and
December 31, 2011 3,657 3,657
Preferred stock discount (798 ) (994 )
Common stock, $.01 par value, authorized 8,000,000 shares at June 30, 2012 and
December 31, 2011; issued 2,013,942 shares at June 30, 2012 and December 31, 2011;
outstanding 1,744,565 shares at June 30, 2012 and December 31, 2011 20 20
Additional paid-in capital 10,864 10,824
Accumulated deficit (6,015 ) (7,295 )
Accumulated other comprehensive income, net of taxes of $400 at June 30, 2012
and December 31, 2011 442 571
Treasury stock-at cost, 269,377 shares at June 30, 2012 and December 31, 2011   (3,444 )   (3,444 )
Total stockholders' equity   19,663     18,276  
 
Total liabilities and stockholders' equity $ 390,931   $ 413,737  
 
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,

2012 2011 2012 2011
 
Interest and fees on loans receivable $ 5,030 $ 6,284 $ 10,360 $ 12,668
Interest on securities 135 182 283 363
Other interest income   20     10     36     19  
Total interest income   5,185     6,476     10,679     13,050  
 
Interest on deposits 880 1,197 1,855 2,436
Interest on borrowings   815     851     1,648     1,840  
Total interest expense   1,695     2,048     3,503     4,276  
 
Net interest income before provision for loan losses 3,490 4,428 7,176 8,774
Provision for loan losses   102     3,434     1,061     4,674  
Net interest income after provision for loan losses   3,388     994     6,115     4,100  
 
Non-interest income:
Service charges 143 175 296 357
Net gains (losses) on mortgage banking activities 4 32 (162 ) 7
Net gains (losses) on sales of REO (17 ) (34 ) 395 (49 )
Gain on sale of office properties and equipment 2,523 - 2,523 -
Gain on sale of securities 50 - 50 -
Other   21     26     45     65  
Total non-interest income   2,724     199     3,147     380  
 
Non-interest expense:
Compensation and benefits 1,538 1,555 3,127 3,364
Occupancy expense, net 297 334 584 688
Information services 239 220 452 447
Professional services 176 292 284 460
Provision for losses on loans held for sale 188 6 186 26
Provision for losses on REO 331 702 312 782
FDIC insurance 216 354 433 637
Office services and supplies 108 140 217 282
Other   550     514     969     933  
Total non-interest expense   3,643     4,117     6,564     7,619  
 
Earnings (loss) before income taxes 2,469 (2,924 ) 2,698 (3,139 )
Income tax expense (benefit)   772     (1,202 )   847     (1,288 )
Net earnings (loss) $ 1,697   $ (1,722 ) $ 1,851   $ (1,851 )
 
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on securities available for sale $ (86 ) $ 86 $ (79 ) $ 71
Reclassification of realized net gains included in net earnings (50 ) - (50 ) -
Income tax effect   -     (34 )   -     (28 )
Other comprehensive income (loss), net of tax   (136 )   52     (129 )   43  
 
Comprehensive earnings (loss) $ 1,561   $ (1,670 ) $ 1,722   $ (1,808 )
 
Net earnings (loss) $ 1,697 $ (1,722 ) $ 1,851 $ (1,851 )
Dividends and discount accretion on preferred stock   (285 )   (283 )   (571 )   (566 )
Earnings (loss) available to common shareholders $ 1,412   $ (2,005 ) $ 1,280   $ (2,417 )
 
Earnings (loss) per common share-basic $ 0.81 $ (1.15 ) $ 0.73 $ (1.39 )
Earnings (loss) per common share-diluted $ 0.81 $ (1.15 ) $ 0.73 $ (1.39 )
Dividends declared per share-common stock $ - $ - $ - $ -
Basic weighted average shares outstanding 1,744,565 1,744,216 1,744,565 1,744,091
Diluted weighted average shares outstanding 1,744,565 1,744,216 1,744,565 1,744,091
 
BROADWAY FINANCIAL CORPORATION
AND SUBSIDIARIES
Selected Ratios and Data
(Dollars in thousands)
(Unaudited)
 
        As of June 30,    
2012     2011
Regulatory Capital Ratios:
 
Core Capital Ratio 8.57 % 8.87 %
Tangible Capital Ratio 8.57 % 8.87 %
Tier 1 Risk-Based Capital Ratio 12.02 % 11.94 %
Total Risk-Based Capital Ratio 13.34 % 13.26 %
 
Asset Quality Ratios and Data:
 
Non-performing loans as a percentage
of total gross loans, excluding loans held for sale 12.62 % 11.15 %
 
Non-performing assets as a percentage
of total assets 12.35 % 12.53 %
 
Allowance for loan losses as a percentage
of total gross loans, excluding loans held for sale 5.70 % 5.83 %
 
Allowance for loan losses as a percentage
of non-performing loans, excluding loans held for sale 45.17 % 52.27 %
 
Allowance for losses as a percentage
of non-performing assets 38.71 % 42.46 %
 
Net loan charge-offs (recoveries) as a percentage of
average loans for six months ended June 30 0.47 % (A) 1.38 % (A)
 
Non-performing assets:
Non-accrual loans
Loans receivable, net $ 39,533 $ 41,992
Loans receivable held for sale   5,207     6,764  
Total non-accrual loans 44,740 48,756
Loans delinquent 90 days or more and still accruing - 569
Real estate acquired through foreclosure   3,530     6,690  
Total non-performing assets $ 48,270   $ 56,015  
 
Three Months ended June 30, Six Months ended June 30,
2012 2011 2012 2011
Performance Ratios:
 
Return on average assets 1.69 % (A) -1.48 % (A) 0.91 % (A) -0.78 % (A)
Return on average equity 36.54 % (A) -21.41 % (A) 19.97 % (A) -11.32 % (A)
Average equity to average assets 4.62 % 6.90 % 4.56 % 6.89 %
Non-interest expense to average assets 3.62 % (A) 3.53 % (A) 3.23 % (A) 3.21 % (A)
Efficiency ratio (1) 50.27 % 73.68 % 58.76 % 74.40 %
Net interest rate spread (2) 3.45 % (A) 3.73 % (A) 3.52 % (A) 3.60 % (A)
Net interest rate margin (3) 3.53 % (A) 3.85 % (A) 3.60 % (A) 3.74 % (A)
 
(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)
(Unaudited)
 
        Three Months ended June 30,       Six Months ended June 30,
2012     2011 2012     2011
Total assets $ 390,931 $ 447,074 $ 390,931 $ 447,074
Total gross loans, excluding loans held for sale $ 313,219 $ 381,659 $ 313,219 $ 381,659
Total equity $ 19,663 $ 30,728 $ 19,663 $ 30,728
Average assets $ 402,066 $ 466,260 $ 406,719 $ 474,846
Average loans $ 334,268 $ 407,057 $ 340,035 $ 417,412
Average equity $ 18,578 $ 32,174 $ 18,535 $ 32,706
Average interest-earning assets $ 395,259 $ 459,675 $ 398,452 $ 469,669
Average interest-bearing liabilities $ 376,729 $ 429,273 $ 381,359 $ 436,703
Net earnings (loss) $ 1,697 $ (1,722 ) $ 1,851 $ (1,851 )
Total income $ 6,214 $ 4,627 $ 10,323 $ 9,154
Non-interest expense $ 3,643 $ 4,117 $ 6,564 $ 7,619
Efficiency ratio 50.27 % 73.68 % 58.76 % 74.40 %
Non-accrual loans $ 44,740 $ 48,756 $ 44,740 $ 48,756
REO, net $ 3,530 $ 6,690 $ 3,530 $ 6,690
ALLL $ 17,856 $ 22,245 $ 17,856 $ 22,245
Allowance for loss on loans held for sale $ 628 $ 1,307 $ 628 $ 1,307
REO-Allowance $ 201 $ 230 $ 201 $ 230
Interest income $ 5,185 $ 6,476 $ 10,679 $ 13,050
Interest expense $ 1,695 $ 2,048 $ 3,503 $ 4,276
Net interest income $ 3,490 $ 4,428 $ 7,176 $ 8,774
Net loan charge-offs (recoveries) $ 156 $ 2,180 $ 800 $ 2,887




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