Broadway Financial (US:BYFC)2023-05-15 16:00PART I. FINANCIAL INFORMATION This section presents the unaudited consolidated financial statements and management's discussion and analysis for Broadway Financial Corporation Item 1. Consolidated Financial Statements (Unaudited) This section presents Broadway Financial Corporation's unaudited consolidated financial statements for Q1 2023, including balance sheets, income statements, cash flows, and notes Consolidated Statements of Financial Condition Total assets increased to $1.205 billion as of March 31, 2023, from $1.184 billion at December 31, 2022, driven by growth in cash and loans Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Assets | $1,205,061 | $1,184,293 | | Cash and cash equivalents | $29,648 | $16,105 | | Loans receivable, net | $776,053 | $768,046 | | Total Liabilities | $925,193 | $904,641 | | Deposits | $657,542 | $686,916 | | FHLB advances | $168,810 | $128,344 | | Total Stockholders' Equity | $279,868 | $279,652 | Consolidated Statements of Operations and Comprehensive Income (Loss) For the three months ended March 31, 2023, the company reported a significant increase in net income to $1.6 million from $982 thousand in the prior-year period Q1 2023 vs Q1 2022 Performance (in thousands, except EPS) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Total Interest Income | $11,174 | $8,011 | | Total Interest Expense | $2,900 | $839 | | Net Interest Income | $8,274 | $7,172 | | Provision for credit losses | $88 | $148 | | Net Income | $1,595 | $982 | | Comprehensive Income (Loss) | $4,018 | $(4,889) | | EPS (Basic & Diluted) | $0.02 | $0.01 | Consolidated Statements of Cash Flows For the first three months of 2023, cash and cash equivalents increased by $13.5 million, driven by financing activities offsetting investing and operating uses Net Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $3,801 | $(1,808) | | Net Cash from Investing Activities | $(6,319) | $(26,296) | | Net Cash from Financing Activities | $16,061 | $42,690 | | Net Change in Cash | $13,543 | $14,586 | Notes to Consolidated Financial Statements This section provides detailed disclosures on accounting policies and balances, including CECL adoption, loan portfolio composition, regulatory capital, and credit risk concentrations - Effective January 1, 2023, the Company adopted ASC 326 (CECL), which replaces the incurred loss model with an expected loss model for financial instruments, resulting in a cumulative effect adjustment, recording a net decrease of $1.3 million to the beginning balance of retained earnings5052 - The loan portfolio is segmented by real estate (multi-family, single family, commercial, church, construction), commercial, SBA, and consumer loans to assess credit risk and determine the Allowance for Credit Losses (ACL)454674 - The Company and its subsidiary bank met all capital adequacy requirements as of March 31, 2023, and the bank was classified as "well capitalized" under regulatory frameworks144 - A significant concentration of credit risk exists, with one customer accounting for approximately 10% of total deposits and another for 75% of securities sold under agreements to repurchase as of March 31, 2023179198 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's Q1 2023 financial performance, highlighting increased net interest income and net income, balance sheet changes, and strong liquidity and capital Results of Operations Net income for Q1 2023 significantly increased to $1.6 million, driven by a 15.4% rise in net interest income and an improved net interest margin of 2.96% Q1 2023 vs Q1 2022 Performance Summary (in thousands) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net Interest Income | $8,274 | $7,172 | | Provision for credit losses | $88 | $148 | | Non-interest Income | $289 | $281 | | Non-interest Expense | $6,206 | $5,960 | | Net Income | $1,595 | $982 | - Net interest margin increased to 2.96% for Q1 2023 from 2.76% for Q1 2022, mainly due to higher yields on interest-earning assets in the rising rate environment and the investment of proceeds from the Series C Preferred Stock which has no associated interest cost217223 Financial Condition Total assets grew to $1.2 billion due to increased cash and loans, while deposits decreased, leading to higher FHLB borrowings and a lower uninsured deposit ratio - Total assets increased by $20.8 million during Q1 2023, primarily due to growth in cash and cash equivalents ($13.5 million) and net loans receivable ($8.0 million)216230 - Deposits decreased by $29.4 million, while borrowings (FHLB advances and repurchase agreements) increased by $47.9 million to fund operations and loan growth193271 - The ratio of uninsured deposits to total deposits decreased from approximately 31% at December 31, 2022, to 25% at March 31, 2023193 Allowance for Credit Losses The Allowance for Credit Losses (ACL) increased to $6.3 million (0.80% of gross loans) primarily due to CECL adoption, with no non-performing loans or charge-offs - The adoption of the CECL methodology on January 1, 2023, was the primary driver for the increase in the ACL, adding $1.8 million to the allowance22693 Allowance for Credit Losses (ACL) Comparison | Metric | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | ACL Balance (in thousands) | $6,285 | $4,388 | | ACL as % of Gross Loans | 0.80% | 0.57% | - Credit quality remained strong, with no non-performing loans (NPLs) at March 31, 2023, down from $144 thousand at year-end 2022, and no charge-offs in Q1 2023269268 Liquidity and Capital Resources The company maintains strong liquidity with significant FHLB borrowing capacity and remains "well capitalized" with a CBLR of 15.69% - The Bank has significant available liquidity, including $157.2 million in additional FHLB borrowing capacity and $10.0 million in other lines of credit as of March 31, 2023258 - The Bank's Community Bank Leverage Ratio (CBLR) was 15.69% at March 31, 2023, significantly exceeding the 9.00% minimum required to be considered well capitalized256177 Tangible Book Value Per Share (Non-GAAP) | Metric | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Book Value Per Share | $1.76 | $1.76 | | Tangible Book Value Per Share | $1.38 | $1.38 | Item 3. Quantitative and Qualitative Disclosures About Market Risk This section provides disclosures about the company's exposure to market risk, such as interest rate risk Item 4. Controls and Procedures Management concluded the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - Based on an evaluation as of March 31, 2023, the CEO and CFO concluded that the Company's disclosure controls and procedures were effective279 - No changes occurred during the quarter ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting202 PART II. OTHER INFORMATION This section includes other required disclosures, with no material updates regarding legal proceedings, risk factors, or equity sales Item 1. Legal Proceedings The company reported no material legal proceedings - This item is marked as 'Not Applicable'204 Item 1A. Risk Factors There are no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K - This item is marked as 'None'264 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate governance documents and certifications by the CEO and CFO - Lists exhibits filed with the report, such as the Certificate of Incorporation, Bylaws, and CEO/CFO certifications281