Broadway Financial (BYFC) - 2019 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (Unaudited) This section presents Broadway Financial Corporation's unaudited consolidated financial statements as of June 30, 2019, showing total assets of $429.8 million, net income of $142 thousand, and stockholders' equity of $49.0 million Consolidated Statements of Financial Condition Total assets increased to $429.8 million by June 30, 2019, driven by loans held for sale, with liabilities reaching $380.8 million and equity at $49.0 million Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2019 (Unaudited) | December 31, 2018 | | :--- | :--- | :--- | | Total Assets | $429,844 | $409,397 | | Cash and cash equivalents | $20,146 | $16,651 | | Loans receivable held for sale | $26,085 | $6,231 | | Loans receivable held for investment, net | $353,342 | $355,556 | | Total Liabilities | $380,828 | $360,961 | | Deposits | $295,798 | $281,414 | | FHLB advances | $75,000 | $70,000 | | Total Stockholders' Equity | $49,016 | $48,436 | Consolidated Statements of Operations and Comprehensive (Loss) Income The company reported a net income of $142 thousand for the six months ended June 30, 2019, a significant improvement from a prior-year loss, driven by a loan loss provision recapture and a CDFI grant Consolidated Statement of Operations Summary (in thousands, except per share) | Metric | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $2,462 | $2,572 | $5,275 | $5,346 | | Loan loss provision recapture | $158 | $0 | $348 | $0 | | Net (Loss) Income | ($135) | ($127) | $142 | ($211) | | (Loss) Earnings Per Share - Diluted | ($0.01) | ($0.00) | $0.01 | ($0.01) | Consolidated Statements of Cash Flows Operating activities resulted in a $10.2 million net cash outflow, offset by a $19.1 million inflow from financing, leading to a $3.5 million net increase in cash and cash equivalents Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Category | 2019 | 2018 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($10,230) | $4,779 | | Net cash used in investing activities | ($5,404) | ($12,268) | | Net cash provided by (used in) financing activities | $19,129 | ($1,132) | | Net change in cash and cash equivalents | $3,495 | ($8,621) | Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity increased by $580 thousand to $49.0 million by June 30, 2019, primarily due to net income and other comprehensive income - Total stockholders' equity increased by $580 thousand during the first six months of 2019, from $48.4 million to $49.0 million[25] Notes to Consolidated Financial Statements This section details accounting policies, portfolio composition, allowance for loan losses, fair value measurements, and confirms the Bank's 'well capitalized' status with strong regulatory capital ratios - The company adopted the new lease accounting standard (ASU 2016-02) on January 1, 2019, recognizing an operating lease right-of-use (ROU) asset and liability of $1.2 million[30][31] - Loans receivable held for sale increased significantly to $26.1 million at June 30, 2019, from $6.2 million at December 31, 2018[49] - The Bank's capital levels exceeded all regulatory requirements, with a Tier 1 (Leverage) ratio of 11.83% and a Total Capital ratio of 19.86% as of June 30, 2019, qualifying it as 'well capitalized'[119][120] - A significant credit risk concentration exists, with one customer accounting for approximately 10% of the Bank's total deposits as of June 30, 2019[124] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the $142 thousand net income to a loan loss provision recapture and CDFI grant, highlighting $20.4 million asset growth and improved asset quality with $2.8 million in allowance for loan losses - Total assets grew by $20.4 million to $429.8 million in the first half of 2019, primarily due to a $19.9 million increase in loans held for sale[128][157] - Net income for the first six months of 2019 was $142 thousand, a significant improvement from a net loss of $211 thousand in the prior-year period, mainly due to a loan loss provision recapture and a CDFI grant[129][131] - Net interest margin decreased by 13 basis points to 2.57% for the six months ended June 30, 2019, compared to 2.70% for the same period in 2018, as the cost of funds rose[140] - The Allowance for Loan Losses (ALLL) was $2.8 million, or 0.78% of gross loans held for investment, as of June 30, 2019, with Non-performing loans (NPLs) totaling $728 thousand, representing 0.17% of total assets[161][162] - The company's liquidity remains strong, with an additional borrowing capacity of $50.6 million from the FHLB and an $11.0 million line of credit with another institution as of June 30, 2019[176] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section is not applicable for the current reporting period - Not Applicable[184] Item 4. Controls and Procedures The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2019, with no material changes to internal controls - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of June 30, 2019[184] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reported no legal proceedings during this period - None[186] Item 1A. Risk Factors This section is not applicable for the current reporting period - Not Applicable[186] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds - None[186] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[186] Item 4. Mine Safety Disclosures This section is not applicable for the current reporting period - Not Applicable[186] Item 5. Other Information The company reported no other information - None[186] Item 6. Exhibits This section lists filed exhibits, including the Certificate of Incorporation, Bylaws, CEO/CFO certifications, and XBRL data files - The report includes certifications from the CEO and CFO as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[186]