Broadway Financial (US:BYFC)2025-07-31 21:01markdown [Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) [Second Quarter 2025 Results](index=1&type=section&id=Second%20Quarter%202025%20Results) Q2 2025 consolidated net income before preferred dividends significantly increased to **$603 thousand**, though a net loss of **$147 thousand** was attributable to common stockholders Key Financial Metrics - Q2 | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Consolidated Net Income (before preferred dividends) | $603 thousand | $269 thousand | | Net (Loss) Income Attributable to Common Stockholders | ($147 thousand) | $269 thousand | | Diluted (Loss) Earnings Per Common Share | ($0.02) | $0.03 | [First Half 2025 Results](index=1&type=section&id=First%20Half%2025%20Results) H1 2025 saw a consolidated net loss of **$1.3 million** before preferred dividends, resulting in a **$2.8 million** net loss attributable to common stockholders Key Financial Metrics - H1 | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Consolidated Net (Loss) Income (before preferred dividends) | ($1.3 million) | $105 thousand | | Net (Loss) Income Attributable to Common Stockholders | ($2.8 million) | $105 thousand | | Diluted (Loss) Earnings Per Common Share | ($0.32) | $0.01 | [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) Q2 2025 highlights include improved **net interest margin**, significant **deposit growth**, reduced **borrowings**, and lower **non-interest expenses** - **Net interest margin** improved by **22 basis points** to **2.63%** compared to Q2 2024, driven by higher loan yields and lower costs of interest-bearing liabilities[4](index=4&type=chunk)[5](index=5&type=chunk) - **Total deposits** grew by **$53.5 million** (**7.2%**) in the first six months of 2025[5](index=5&type=chunk) - **Borrowings** were significantly reduced by **$126.3 million** (**64.6%**) to **$69.2 million** as of June 30, 2025, compared to December 31, 2024[4](index=4&type=chunk)[5](index=5&type=chunk) - **Non-interest expense** decreased by **$2.7 million** (**26.23%**) from the previous quarter, mainly due to the absence of the **$1.9 million** fraudulent wire loss recorded in Q1 2025[4](index=4&type=chunk) - **Capital ratios** remain strong, with the **Community Bank Leverage Ratio** increasing to **15.69%** at June 30, 2025, from **13.96%** at December 31, 2024[5](index=5&type=chunk) [Detailed Financial Analysis](index=2&type=section&id=Detailed%20Financial%20Analysis) [Income Statement Analysis](index=2&type=section&id=Income%20Statement%20Analysis) Q2 2025 **net interest income** slightly decreased, but **net interest margin** improved, while H1 2025 was impacted by a significant **wire fraud loss** [Net Interest Income](index=2&type=section&id=Net%20Interest%20Income) - Q2 2025 **Net Interest Income (NII)** decreased by **2.1%** YoY to **$7.8 million**, primarily due to lower interest income from deposits and securities, partially offset by a **$1.1 million** decrease in interest expense on borrowings[7](index=7&type=chunk) - The **net interest margin (NIM)** for Q2 2025 increased to **2.63%** from **2.41%** in Q2 2024, benefiting from a higher yield on interest-earning assets (**4.83%** vs **4.71%**) and a lower cost of funds (**3.07%** vs **3.19%**)[7](index=7&type=chunk) - For the first six months of 2025, **NII** increased by **2.3%** YoY to **$15.8 million**, and the **NIM** expanded to **2.67%** from **2.34%** in the prior year period[8](index=8&type=chunk)[9](index=9&type=chunk) [Provision for Credit Losses](index=2&type=section&id=Provision%20for%20Credit%20Losses) - A recapture of **credit losses** of **$266 thousand** was recorded in Q2 2025, compared to a provision of **$494 thousand** in Q2 2024, mainly due to a decrease in the loan portfolio[9](index=9&type=chunk) - The **allowance for credit losses (ACL)** increased to **$8.6 million** as of June 30, 2025, from **$8.1 million** at year-end 2024[10](index=10&type=chunk) - There were no loan charge-offs recorded during the first six months of 2025 or 2024[9](index=9&type=chunk) [Non-interest Expense](index=3&type=section&id=Non-interest%20Expense) - Q2 2025 **non-interest expense** increased by **3.3%** YoY to **$7.5 million**, driven by higher professional and information services costs[12](index=12&type=chunk) - For the first six months of 2025, **non-interest expense** rose **17.4%** YoY to **$17.7 million**, primarily due to a **$1.9 million** loss from wire fraud and an **$830 thousand** increase in compensation and benefits from hiring[12](index=12&type=chunk) [Income Tax Expense](index=3&type=section&id=Income%20Tax%20Expense) - Income tax expense for Q2 2025 was **$257 thousand**, up from **$146 thousand** in Q2 2024, reflecting higher pre-tax income. The effective tax rate decreased to **30.09%** from **35.01%**[12](index=12&type=chunk) - For the first six months of 2025, the company recorded an income tax benefit of **$435 thousand**, compared to an expense of **$89 thousand** in the prior year period, due to a pre-tax loss[12](index=12&type=chunk) [Balance Sheet Analysis](index=3&type=section&id=Balance%20Sheet%20Analysis) **Total assets** decreased to **$1.23 billion** by June 30, 2025, driven by reduced **borrowings** and strategic asset reductions, while **deposits** grew [Total Assets](index=3&type=section&id=Total%20Assets) - **Total assets** decreased by **$76.3 million** to **$1.23 billion** at June 30, 2025, compared to December 31, 2024[15](index=15&type=chunk) - The decrease was driven by reductions in cash and cash equivalents (**-$31.9M**), securities available-for-sale (**-$25.9M**), and net loans (**-$11.6M**)[15](index=15&type=chunk) [Loans and Deposits](index=3&type=section&id=Loans%20and%20Deposits) - Net loans held for investment decreased by **$11.6 million** to **$957.3 million** at June 30, 2025, primarily due to loan payoffs and repayments[15](index=15&type=chunk) - **Total deposits** increased by **$53.5 million** (**7.2%**) to **$798.9 million**, driven by a **$67.7 million** increase in certificates of deposit[15](index=15&type=chunk) - Uninsured deposits represented **35%** of **total deposits** as of June 30, 2025, up from **32%** at the end of 2024[15](index=15&type=chunk) [Borrowings](index=4&type=section&id=Borrowings) - **Total borrowings** decreased significantly by **$129.1 million** to **$133.0 million** at June 30, 2025, from **$262.1 million** at year-end 2024[16](index=16&type=chunk) - The reduction was primarily due to a **$135.3 million** decrease in **FHLB advances**[16](index=16&type=chunk) [Asset Quality and Capital](index=4&type=section&id=Asset%20Quality%20and%20Capital) **Asset quality** deteriorated with increased **nonperforming assets**, yet **capital** remains strong with **stockholders' equity** at **23.3%** of **total assets** [Asset Quality](index=4&type=section&id=Asset%20Quality) Asset Quality Metrics | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Allowance for Credit Losses / Total Loans | 0.89% | 0.83% | | Nonperforming Assets | $4.4 million | $264 thousand | [Capital](index=4&type=section&id=Capital) Capital Ratios | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Stockholders' Equity | $285.5 million | $285.2 million | | Stockholders' Equity / Total Assets | 23.3% | 21.9% | | Book Value per Share | $14.74 | $14.82 | | Community Bank Leverage Ratio | 15.69% | 13.96% | [Financial Statements and Data](index=5&type=section&id=Financial%20Statements%20and%20Data) [Consolidated Statements of Financial Condition](index=6&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) The balance sheet as of June 30, 2025, shows **total assets** of **$1.23 billion**, a decrease primarily due to reduced **borrowings** Consolidated Statements of Financial Condition | Balance Sheet Item (in thousands) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $1,227,392 | $1,303,711 | | Loans receivable, net | $957,293 | $968,861 | | Total Deposits | $798,922 | $745,399 | | Total Borrowings | $69,217 | $195,532 | | Total Stockholders' Equity | $285,545 | $285,157 | [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) Q2 2025 **net income** increased to **$597 thousand**, while H1 2025 recorded a **net loss** of **$1.26 million** due to a Q1 **wire fraud** event Consolidated Statements of Operations - Q2 | Income Statement Item (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Interest Income | $7,755 | $7,918 | | (Recapture of) provision for credit losses | ($266) | $494 | | Total Non-interest Expense | $7,522 | $7,280 | | Net Income (Loss) | $597 | $271 | Consolidated Statements of Operations - H1 | Income Statement Item (in thousands) | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net Interest Income | $15,800 | $15,442 | | Provision for credit losses | $423 | $754 | | Total Non-interest Expense | $17,719 | $15,090 | | Net (Loss) Income | ($1,264) | $88 | [Average Balances, Yields, and Costs](index=8&type=section&id=Average%20Balances,%20Yields,%20and%20Costs) **Net interest margin** expanded to **2.63%** in Q2 2025, driven by an improved **net interest rate spread** and lower **cost of funds** Average Balances, Yields, and Costs - Q2 | Metric (Q2) | 2025 | 2024 | | :--- | :--- | :--- | | Average Yield on Interest-Earning Assets | 4.83% | 4.71% | | Average Cost of Interest-Bearing Liabilities | 3.07% | 3.19% | | Net Interest Rate Spread | 1.76% | 1.52% | | Net Interest Margin | 2.63% | 2.41% | Average Balances, Yields, and Costs - H1 | Metric (H1) | 2025 | 2024 | | :--- | :--- | :--- | | Average Yield on Interest-Earning Assets | 4.83% | 4.59% | | Average Cost of Interest-Bearing Liabilities | 3.02% | 3.11% | | Net Interest Rate Spread | 1.80% | 1.48% | | Net Interest Margin | 2.67% | 2.34% | [Selected Financial Data and Ratios](index=10&type=section&id=Selected%20Financial%20Data%20and%20Ratios) Quarterly trends show consistent **deposit growth** and improved **net interest margin**, with Q1 2025 operational loss impacting **profitability ratios** - Quarterly data shows a consistent increase in **total deposits** over the last four quarters, from **$672.2 million** in Q3 2024 to **$798.9 million** in Q2 2025[34](index=34&type=chunk) - The **efficiency ratio** was **92.75%** in Q2 2025, an improvement from **122.37%** in Q1 2025 (which was impacted by the operational loss) and slightly worse than **88.88%** in Q2 2024[34](index=34&type=chunk) - **Non-accrual loans** to total loans increased to **0.42%** in Q2 2025, up from **0.09%** in the prior quarter and **0.03%** in the prior year's quarter[34](index=34&type=chunk) [Company Information and Disclosures](index=4&type=section&id=Company%20Information%20and%20Disclosures) [About Broadway Financial Corporation](index=4&type=section&id=About%20Broadway%20Financial%20Corporation) Broadway Financial Corporation, through City First Bank, is a mission-driven **CDFI**, **MDI**, and **B Corp** serving low-to-moderate income communities - Operates as a leading mission-driven bank serving low-to-moderate income communities in Southern California and the Washington, D.C. market[17](index=17&type=chunk) - The bank is a certified **Community Development Financial Institution (CDFI)**, **Minority Depository Institution (MDI)**, and a **Certified B Corp**[18](index=18&type=chunk) [Cautionary Statement Regarding Forward-Looking Information](index=5&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Information) This section provides a standard safe harbor statement, highlighting risks and uncertainties that may cause actual results to differ from forward-looking statements - The press release includes forward-looking statements subject to risks and uncertainties as defined by the **Private Securities Litigation Reform Act of 1995**[20](index=20&type=chunk) - Key risk factors include demand for loans, interest rate fluctuations, loan losses, regulatory changes, and general economic conditions[20](index=20&type=chunk)