Broadway Financial (US:BYFC)2025-07-24 21:21PART I. FINANCIAL STATEMENTS This section presents the unaudited consolidated financial statements for Broadway Financial Corporation, including detailed notes and management's discussion Consolidated Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements for Broadway Financial Corporation as of March 31, 2025, and for the three-month period then ended Consolidated Statements of Financial Condition The company's total assets decreased to $1.24 billion as of March 31, 2025, mainly due to a $45.6 million reduction in cash and cash equivalents Consolidated Statements of Financial Condition (Unaudited) | (In thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $1,238,019 | $1,303,711 | | Cash and cash equivalents | $15,794 | $61,365 | | Loans receivable, net | $971,231 | $968,861 | | Securities available-for-sale | $185,938 | $203,862 | | Total Liabilities | $953,222 | $1,018,335 | | Deposits | $776,543 | $745,399 | | Borrowings | $87,415 | $195,532 | | Total Equity | $284,797 | $285,376 | Consolidated Statements of Operations and Comprehensive Income (Loss) For Q1 2025, the company reported a net loss attributable to common stockholders of $2.61 million, primarily due to a $1.94 million operational loss and higher expenses Q1 2025 vs. Q1 2024 Operating Results (In thousands, except per share amounts) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Interest Income | $8,045 | $7,524 | | Provision for credit losses | $689 | $260 | | Total Non-interest Expense | $10,197 | $7,810 | | Net Loss | $(1,861) | $(183) | | Net Loss Attributable to Common Stockholders | $(2,608) | $(164) | | Loss per Common Share (basic & diluted) | $(0.30) | $(0.02) | Consolidated Statements of Cash Flows Cash and cash equivalents decreased by $45.6 million in Q1 2025, primarily due to $63.6 million net cash used in financing activities, partially offset by $22.3 million from investing activities Cash Flow Summary for Three Months Ended March 31 (In thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,348) | $(11,664) | | Net cash provided by (used in) investing activities | $22,332 | $(23,439) | | Net cash used in financing activities | $(63,555) | $(2,970) | | Net change in cash and cash equivalents | $(45,571) | $(38,073) | Notes to Unaudited Consolidated Financial Statements The notes detail the $150 million Series C Preferred Stock, an increased Allowance for Credit Losses to $8.8 million, and the Bank's 'well capitalized' status - The company began paying quarterly dividends of $750 thousand on its Series C Preferred Stock in 2024, with a current dividend rate of 2.0%32 - The Allowance for Credit Losses (ACL) for loans increased to $8.77 million at March 31, 2025, from $8.10 million at year-end 2024, with a provision of $671 thousand recorded in Q1 202541 - Non-accrual loans increased to $860 thousand as of March 31, 2025, up from $264 thousand at December 31, 202448 - The Bank's Community Bank Leverage Ratio was 15.24% as of March 31, 2025, significantly exceeding the 9.00% minimum required to be considered 'well capitalized'87 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, highlighting a net loss of $2.6 million for common stockholders in Q1 2025, offset by improved net interest income and margin Results of Operations In Q1 2025, net interest income rose 6.9% to $8.0 million, but non-interest expense surged 30.6% to $10.2 million due to a $1.9 million wire fraud loss and higher compensation costs Key Performance Metrics (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Interest Income | $8.0M | $7.5M | | Net Interest Margin | 2.70% | 2.27% | | Provision for Credit Losses | $689K | $260K | | Non-interest Expense | $10.2M | $7.8M | - The increase in non-interest expense was primarily driven by a $1.9 million loss from wire fraud and a $1.0 million increase in compensation and benefits expense110 Financial Condition Total assets decreased by $65.7 million in Q1 2025, while net loans grew slightly by $2.4 million and deposits increased by $31.1 million, with tangible book value per share at $11.59 - Total assets decreased by $65.7 million, while net loans increased by $2.4 million in Q1 2025112116 - Deposits increased by $31.1 million (4.2%), driven by a $53.4 million increase in certificates of deposit129 - Total liabilities decreased by $65.1 million, mainly due to a $117.5 million decrease in FHLB advances128 Tangible Book Value per Common Share | (In thousands, except per share) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Common book value | $134,581 | $135,157 | | Less: Goodwill & Intangibles | $27,554 | $27,633 | | Tangible book value | $107,027 | $107,524 | | Tangible book value per share | $11.59 | $11.79 | Liquidity and Capital Resources The company maintains a solid liquidity position with $15.8 million in cash and access to an additional $279.5 million in FHLB borrowing capacity, remaining 'well capitalized' - The Bank had access to an additional $279.5 million from the FHLB of Atlanta as of March 31, 2025142 - The Bank is subject to concentration risk, with five customers accounting for 21% of total deposits and one customer accounting for 90% of securities sold under agreements to repurchase145 - The Bank exceeded all capital adequacy requirements and qualifies as 'well capitalized' as of March 31, 2025149 Quantitative and Qualitative Disclosures About Market Risk The company has indicated that this section is not applicable for the current reporting period - Not Applicable150 Controls and Procedures Management concluded that the company's disclosure controls and procedures were ineffective as of March 31, 2025, due to a material weakness in internal control over financial reporting - A material weakness was identified in the Company's internal control over financial reporting151 - The weakness pertains to the lack of controls to identify and account for unusual or infrequent equity-related contracts151 - As a result, management concluded that disclosure controls and procedures were ineffective as of March 31, 2025150 PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, unregistered sales of equity securities, and exhibits Legal Proceedings The company reported that there were no legal proceedings during the period - None155 Risk Factors Management highlights two key risks: a recently identified material weakness in internal controls and uncertainty regarding the repurchase of Series C Preferred Stock - The company has identified a material weakness in its internal control over financial reporting, which could adversely affect its stock price and investor confidence156157 - There is a risk that the company may not meet the lending and other requirements to exercise its option to repurchase the $150 million Series C Preferred Stock from the U.S. Treasury, potentially at a substantial discount158159 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds for this period - None160 Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents and certifications by the CEO and CFO - The filing includes certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act160161