-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SvebagQnOZ2N5KYwa1RcvN3APNoKcZVqdmnK0jJhIK6QdYGAcJyvkssaa7EcLf0y 7VQpFSw2Tl/mgXzuRVsUiA== 0000912057-97-027718.txt : 19970815 0000912057-97-027718.hdr.sgml : 19970815 ACCESSION NUMBER: 0000912057-97-027718 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BROADWAY FINANCIAL CORP \DE\ CENTRAL INDEX KEY: 0001001171 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 954547287 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-27464 FILM NUMBER: 97660067 BUSINESS ADDRESS: STREET 1: 4835 W VENICE BLVD CITY: LOS ANGELES STATE: CA ZIP: 90019 BUSINESS PHONE: 2139311886 MAIL ADDRESS: STREET 1: 4835 WEST VENICE BLVD CITY: LOS ANGELES STATE: CA ZIP: 90019 10QSB 1 FORM 10-QSB U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT For transition period from__________ to___________ Commission file number 0-27464 BROADWAY FINANCIAL CORPORATION ----------------------------------------------------------------- (Exact Name of Small Business Issuer as Specified in its Charter) Delaware 95-4547287 ------------------------ --------------------------------- (State of Incorporation) (IRS Employer Identification No.) 4835 West Venice Boulevard, Los Angeles, California 90019 ---------------------------------------------------------------- (Address of Principal Executive Offices) (213) 931-1886 ------------------------------------------------ (Issuer's Telephone Number, Including Area Code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 835,188 shares of the Company's Common Stock, par value $.01 per share, were issued and oustanding as of JULY 31, 1997. Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X] 1 INDEX PART I-- FINANCIAL INFORMATION Item 1. Financial Statements Page ---- Consolidated Balance Sheets as of June 30, 1997 (unaudited) and December 31, 1996 3 Consolidated Statements of Operations (unaudited) for the three months and six months ended June 30, 1997 and June 30, 1996 4 Consolidated Statements of Cash Flows (unaudited) for the three months and six months ended June 30, 1997 and June 30, 1996 5 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Operations 9 PART II-- OTHER INFORMATION Item 1. Legal Proceedings 14 Item 2. Changes in Securities 14 Item 3. Defaults Upon Senior Securities 14 Item 4. Submission of Matters to a Vote of Security Holders 14 Item 5. Other Information 14 Item 6. Exhibits and Reports on Form 8-K 14 2 BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY Consolidated Balance Sheets (Dollars in thousands)
June 30, December 31, 1997 1996 -------- ------------ (Unaudited) ASSETS: Cash and Federal funds sold. . . . . . . . . . . . . . . . . . . $ 6,439 $ 5,180 Investment securities, held to maturity. . . . . . . . . . . . . 11,870 10,371 Loans receivable, net. . . . . . . . . . . . . . . . . . . . . . 97,861 96,260 Accrued interest receivable. . . . . . . . . . . . . . . . . . . 768 733 Investment in real estate. . . . . . . . . . . . . . . . . . . . 113 0 Real estate acquired through foreclosure . . . . . . . . . . . . 1,485 933 Investments in capital stock of Federal Home Loan Bank, at cost. 903 876 Office properties & equipment, net . . . . . . . . . . . . . . . 2,359 2,052 Income taxes receivable. . . . . . . . . . . . . . . . . . . . . 183 426 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 264 265 -------- -------- Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . $122,245 $117,096 -------- -------- -------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY Savings deposits . . . . . . . . . . . . . . . . . . . . . . . . $107,550 $101,994 Advance payments by borrowers for taxes and insurance. . . . . . 147 161 Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . 409 452 Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . 995 845 -------- -------- Total Liabilities . . . . . . . . . . . . . . . . . . . . . . $109,101 $103,452 Stockholders' equity: Preferred nonconvertible, non-cumultive, and non-voting stock, $.01 par value, authorized 1,000,000 shares; issued and outstanding 91,073 shares at June 30, 1997. . . . . . . . . . 1 1 Additional paid-in capital . . . . . . . . . . . . . . . . . . 910 910 Common Stock, $.01 par value, authorized 3,000,000 shares; issued and outstanding 835,188 shares at June 30, 1997. . . . 9 9 Additional paid-in capital. . . . . . . . . . . . . . . . . . 8,221 8,207 Retained Earnings-substantially restricted . . . . . . . . . . 5,176 5,080 Treasury Stock, at cost. . . . . . . . . . . . . . . . . . . . (626) 0 Unearned Employee Stock Ownership Plan shares. . . . . . . . . (547) (563) -------- -------- Total stockholders' equity. . . . . . . . . . . . . . . . . . 13,144 13,644 -------- -------- Total liabilities and stockholders' equity. . . . . . . . . $122,245 $117,096 -------- -------- -------- --------
See Notes to Consoldiated Financial Statements 3 BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (DOLLARS IN THOUSANDS)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------ ---------------- 1997 1996 1997 1996 -------- -------- -------- --------- Interest Income: Interest on loans receivable . . . . . . . . . . . . . . . . $ 2,088 $ 1,930 $ 4,127 $ 3,837 Interest on investment securities. . . . . . . . . . . . . . 160 161 317 374 Interest on mortgage backed securities . . . . . . . . . . . 26 58 32 74 Other interest income. . . . . . . . . . . . . . . . . . . . 15 12 29 23 -------- -------- -------- -------- Total interest income . . . . . . . . . . . . . . . . . . 2,289 2,161 4,505 4,308 Interest on savings deposits . . . . . . . . . . . . . . . . . . 981 865 1,916 1,728 -------- -------- -------- -------- Net interest income before provision for loan losses. . . 1,308 1,296 2,589 2,580 Provision for loan losses. . . . . . . . . . . . . . . . . . . . 47 188 77 243 -------- -------- -------- -------- Net interest income after provision for loan losses.. . . 1,261 1,108 2,512 2,337 Noninterest income: Service charges. . . . . . . . . . . . . . . . . . . . . . . 118 73 201 148 Real estate operations, net. . . . . . . . . . . . . . . . .. (40) (112) (55) (152) Recovery (write-down) on valuation of loans held for sale. . - (40) - (56) Other noninterest income . . . . . . . . . . . . . . . . . . 34 23 39 41 -------- -------- -------- -------- 112 (56) 185 (19) -------- -------- -------- -------- Noninterest expense: Compensation and benefits. . . . . . . . . . . . . . . . . . 624 500 1,199 988 Occupancy expense, net . . . . . . . . . . . . . . . . . . . 226 206 448 434 Advertising and promotional expense. . . . . . . . . . . . . 24 31 69 96 Professional services. . . . . . . . . . . . . . . . . . . . 13 30 36 41 Federal insurance premiums.. . . . . . . . . . . . . . . . . 24 68 36 132 Insurance bond premiums. . . . . . . . . . . . . . . . . . . 27 27 56 51 Other noninterest expense. . . . . . . . . . . . . . . . . . 186 257 493 465 -------- -------- -------- -------- 1,124 1,119 2,337 2,207 -------- -------- -------- -------- Earnings before income taxes . . . . . . . . . . . . . . . . 249 (67) 360 111 Income taxes.. . . . . . . . . . . . . . . . . . . . . . . . . . 104 (13) 152 51 -------- -------- -------- -------- Net earnings (Loss). . . . . . . . . . . . . . . . . . . . . $ 145 $ (54) $ 208 $ 60 -------- -------- -------- -------- -------- -------- -------- -------- Per share information Number of shares.. . . . . . . . . . . . . . . . . . . . . . 849,996 892,688 871,224 892,688 Earnings per share.. . . . . . . . . . . . . . . . . . . . . $.16 $(.06) $.21 $.07
See Notes to Consolidated Financial Statements 4 BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (DOLLARS IN THOUSANDS)
Six Months Ended June 30, June 30, ----------------------- 1997 1996 -------- -------- Cash flows from operating activities: Net earnings $ 208 $ 60 ------- ------- Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation 82 86 Amortization of net deferred loan origination fees 40 5 Amortization of discounts and premium on securities 6 (6) Federal Home Loan Bank stock dividends (27) (22) Loss (Gain) on sale of real estate owned 2 (31) Write-down on valuation of loans held for sale -- 56 Provision for loan losses 77 243 Provision for write-downs and losses on real estate 13 97 Proceeds from sale of loans receivable 229 221 Increase in accrued interest receivable (35) (100) Decrease in income tax receivable 243 91 Decrease (Increase) in other assets 1 (95) Decrease in deferred income taxes (43) -- Increase in other liabilities 121 50 Other -- 24 ------- ------- Total adjustments 709 619 ------- ------- Net cash provided by operating activities 917 679 Cash flows provided by (used in) investing activities: Loans originated, net of refinances (7,127) (5,531) Loans purchased (1,833) (541) Principal repayment on loans 5,839 3,060 Increase in loans in process 299 105 Increase in mortgage-backed securities -- (3,590) Increase in loan receivable held for sale -- (485) Increase in investment in real estate (113) -- Purchases of investment securities held to maturity (4,004) (4,982) Proceeds from maturities of investment securities held to maturity 2,499 2,500 Capital expenditures for office properties and equipment (389) (127) Proceeds from sale of real estate acquired through foreclosure 337 946 ------- ------- Net cash used in investing activities (4,492) (8,645) ------- -------
(Continued) 5 BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (DOLLARS IN THOUSANDS)
Six Months Ended June 30, June 30, ----------------------- 1997 1996 -------- -------- Net increase (decrease) in savings deposits 5,556 (14,255) Preferred stock subscribed -- 911 Additional paid-in capital 14 -- Common stock subscribed -- 8,163 Dividends declared (112) (112) Unearned Employee Stock Ownership Plan 16 (609) Treasury stock (626) -- Decrease in advances by borrowers for taxes and insurance (14) (49) ------- ------- Net cash provided by (used in) financing activities 4,834 (5,951) ------- ------- Net increase (decrease) in cash and cash equivalents 1,259 (13,917) Cash and cash equivalents at beginning of year 5,180 17,761 ------- ------- Cash and cash equivalents at end of year $6,439 $3,844 ------- ------- ------- ------- Supplemental disclosure of cash flow information: Cash paid for interest expense $1,912 $1,740 Cash paid for income taxes -- 284 ------- ------- ------- ------- Supplemental disclosure of noncash investing and financing activities: Additions to real estate acquired through foreclosure 1,036 678 Loans to facilitate the sale of real estate acquired through foreclosure -- 729
See Notes to Consoldiated Financial Statements 6 BROADWAY FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1997 1. In the opinion of management of Broadway Financial Corporation (the "Company"), the preceding unaudited consolidated financial statements contain all material adjustments (consisting of recurring accruals and standard allowance for loan losses) necessary to present fairly the consolidated financial position of the Company at June 30, 1997 and the results of its operations for the three months and six months ended June 30, 1997 and 1996, and its cash flows for the six months ended June 30, 1997 and 1996. These consolidated financial statements do not include all disclosures associated with the Company's annual financial statements included in its annual report on Form 10-KSB for the year ended December 31, 1996 and, accordingly, should be read in conjunction with such audited statements. 2. The results of operations for the three months and six months ended June 30, 1997 are not necessarily indicative of the results to be expected for the full year. 3. RECENT ACCOUNTING PRONOUNCEMENTS ACCOUNTING FOR STOCK-BASED COMPENSATION -- In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"). SFAS No. 123 provides a choice of accounting methods and requires additional disclosures for stock-based employee compensation plans. SFAS No. 123 defines a fair value-based method of accounting for an employee stock option or similar equity instrument. However, it also allows for the continued use of the intrinsic value-based method of accounting as prescribed by Accounting Principles Board Opinion (APB) No. 25, "Accounting for Stock Issued to Employees." Regardless of the method used to account for stock-based compensation, SFAS No. 123 requires all financial statements to include disclosures of the fair value of such compensation. SFAS No. 123 must be adopted for financial statements for fiscal years beginning after December 15, 1995. In connection with the conversion of the Company's principal subsidiary from mutual to stock form , the Board of Directors of the Company has adopted certain stock-based compensation plans. Stockholder approval of the plans was obtained at the Company's Annual Meeting held on July 3, 1996. The Company will account for such plans under APB Opinion 25 and make the appropriate disclosures required under SFAS No. 123. The Company does not believe that such adoption and accounting has any adverse impact on its financial condition or results of operations. 7 EARNINGS PER SHARE -- In February 1997, the Financial Accounting Standards Board issued Statement No. 128, "Earnings per Share" ("SFAS No. 128"), which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share ("EPS") and, if applicable, restate all prior periods. Under the new requirements for calculating primary EPS, the dilutive effect of common stock equivalents (i.e. options, warrants and convertible securities) will be excluded. Thus, the basic EPS calculation under the guidance of SFAS No. 128 will be to divide net income available to common stockholders by the weighted average common shares outstanding. As the company does not have any outstanding common stock equivalents, there is no impact on the Company's calculation of primary and fully diluted EPS based on the method outlined in SFAS No. 128 for the three months and six months ended June 30, 1997 and 1996. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS GENERAL Broadway Financial Corporation (the "Company") was incorporated under Delaware law on September 25, 1995 for the purpose of acquiring and holding all of the outstanding capital stock of Broadway Federal Bank, f.s.b. ("Broadway Federal" or "Bank") as part of the Bank's conversion from a federally chartered mutual savings association to a federally chartered stock savings bank (the "Conversion"). The Conversion was completed, and the Bank became a wholly owned subsidiary of the Company, on January 8, 1996. The Company's principal business is serving as a holding company for Broadway Federal. The Company's results of operations are dependent primarily on Broadway Federal's net interest income, which is the difference between the interest income earned on its interest-earning assets, such as loans and investments, and the interest expense on interest-bearing liabilities, such as deposits and borrowings. Broadway Federal also generates recurring non-interest income such as transactional fees on its loan and deposit portfolios. The Company's operating results are also affected by the amount of the Bank's general and administrative expenses, which consist principally of employee compensation and benefits, occupancy expense, and federal deposit insurance premiums, and by its periodic provisions for loan losses. More generally, the results of operations of thrift and banking institutions are also affected by prevailing economic conditions, competition, and the monetary and fiscal policies of governmental agencies. COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1997 AND JUNE 30, 1996 GENERAL The Company recorded net earnings of $145,000 for the three months ended June 30, 1997, as compared to a net loss of $(54,000) for the three months ended June 30, 1996. For the six months ended June 30, 1997 the Company recorded net earnings of $208,000, as compared to net earnings of $60,000 for the same period ended June 30, 1996. The second quarter and year-to-date net earnings as of June 30, 1997 resulted from a number of offsetting factors which included higher interest income, higher interest on savings deposits, lower provision for loan losses, higher noninterest income, higher noninterest expense and higher income taxes. INTEREST INCOME Interest income increased by $128,000 during the three months ended June 30, 9 1997 as compared to the same period a year ago. For the six months ended June 30, 1997, interest income increased by $197,000 as compared to the same period a year ago. These increases were primarily the result of increases in average assets of $7.2 million and $6.0 million for the three-month and six-month periods ended June 30, 1997, respectively, as compared to the same periods in the prior year. The increases in assets during the three-month and six-month periods ended June 30, 1997 were funded by increases in savings deposits. The increase in average assets resulted from the Company's focus on increasing its loan portfolio, as well as a planned increase in its investment securities. INTEREST ON SAVINGS DEPOSITS Interest on savings deposits increased by $116,000 during the three months ended June 30, 1997 as compared to the same period a year ago. For the six months ended June 30, 1997, interest on savings deposits increased by $188,000 as compared to the same period in the prior year. The increase in interest on savings deposits was due to increases in average deposits of $8.4 million and $4.9 million for the three and six months ended June 30, 1997, respectively, as compared to the same periods a year ago. The increase in interest on savings deposits also reflects the rising and more competitive interest rate environment as the average cost of deposits increased 12-basis points, from 3.55% for the six months ended June 30, 1996 to 3.67% for the six months ended June 30, 1997. PROVISION FOR LOAN LOSSES The provision for loan losses decreased by $141,000, from $188,000 for the three months ended June 30, 1996 to $47,000 for the three months ended June 30, 1997. For the six months ended June 30, 1997, the provision for loan losses decreased by $166,000, from $243,000 to $77,000. For the three-month and six-month periods ended June 30, 1996, higher general and specific reserves were established for problem loans. The decreases in the provision for loan losses were due primarily to improved asset quality. Total non-performing assets, consisting of non-accrual loans and real estate acquired through foreclosure ("REO"), decreased by $160,000, from $2.7 million at June 30, 1996 to $2.5 million at June 30, 1997. The $160,000 decrease resulted from a decrease in non-accrual loans of $159,000 and a decrease in REO of $1,000. Non-performing assets at December 31, 1996 totalled $2.8 million, consisting of $1.9 million in non-accrual loans and $933,000 in REO properties. As a percentage of total assets, nonperforming assets were 2.06% at June 30, 1997, compared to 2.40% and 2.39% at June 30, 1996 and December 31, 1996, respectively. Since December 1996, non-accrual loans have decreased by $835,000 to $1.0 million and REO has increased by $552,000 to $1.5 million. Non-accrual loans at June 30, 1997 10 included four loans totalling $379,000 secured by one- to four-unit properties and three loans totalling $660,000 secured by multi-family properties. As of June 30, 1997 the Company's allowance for loan losses totalled $1.0 million, representing a $172,000 decrease from the balance at December 31, 1996. The allowance for loan losses represents 1.00% of total loans at June 30, 1997, as compared to 1.19% of total loans at December 31, 1996. During the quarter ended June 30, 1997 the allowance for loan losses was decreased by $191,000, including the effects of $238,000 in write-offs and write-downs on loans, as partially offset by the $47,000 loss provision for the quarter. The decrease of $238,000 included write-offs of three fully reserved loans totalling $100,000, secured by second trust deeds, and write-downs totalling $138,000 on loans that were transferred to REO. The allowance for loan losses was 96.51% of non-accrual loans at June 30, 1997, compared to 62.65% at December 31, 1996. As of June 30, 1997 management believes that the allowance for loans losses is adequate to cover inherent losses in its loan portfolio, however, there can be no assurance that such losses will not exceed the estimated amounts. NONINTEREST INCOME Noninterest income increased by $168,000, from a $56,000 expense for the three months ended June 30, 1996 to $112,000 in income for the same period during 1997. For the six months ended June 30, 1997, noninterest income increased by $204,000, from a $19,000 expense during 1996 to $185,000 in income for the same period in 1997. The increases were due to a number of offsetting factors. Service charges increased by $45,000 and $53,000 during the three-month and six-month periods ended June 30, 1997, respectively, as compared to the same periods a year ago. The increase resulted primarily from increased fees charged on various savings products and from a greater number of checking accounts at June 30, 1997 as compared to June 30, 1996, resulting in more fees earned. In addition, write-downs, expenses and write-offs related to the operation and sale of REO decreased by $72,000 and $97,000, respectively, during the three-month and six-month periods ended June 30, 1997, as compared to the same periods a year ago. The higher 1996 loss was the result of a direct write-off to reduce the carrying amount of REO to the fair market value of the real estate. The "Recovery (write-down) on Valuation of Loans Held For Sale" decreased by $40,000 and $56,000, respectively, for the three and six months ended June 30, 1997, as compared to the same periods during 1996, as the Company had no loans classified as held for sale since December 31, 1996. Finally, other noninterest income increased from $23,000 for the three months ended June 30, 1996 to $34,000 for the same period in 1997, primarily as a result of the recognition of a $10,000 gain on the sale of real estate. For the six months ended June 30, 1997, other noninterest income decreased from $41,000 during 1996 to $39,000 for the same period in 1997, primarily as a result of the recognition of nonrecurring income, including recoveries during the first quarter of 1996 offset by gain on sale of real estate investment during the second quarter of 1997. 11 NONINTEREST EXPENSE Noninterest expense increased by $5,000 and $130,000, respectively, during the three-month and six-month periods ended June 30, 1997, as compared to the same periods in 1996. The increase in noninterest expense was due primarily to increases in compensation and benefits, occupancy expense and other noninterest expense, offset by decreases in professional services, advertising and promotional expense, and federal insurance premiums. Compensation and benefits increased by $124,000 and $211,000, respectively, for the three-month and six-month periods ended June 30, 1997 as compared to the same respective periods a year ago. The increases result from general salary increases during the year and an increase in the number of staff. Occupancy expense, including depreciation and repair and maintenance costs on fixed assets, increased by $20,000 and $14,000, respectively, for the three-month and six-month periods ended June 30, 1997, as compared to the same periods during 1996. The increases were primarily due to an increase in computer expenses offset by a decrease in repair and maintenance costs. Other noninterest expense decreased from $257,000 for three months ended June 30, 1996 to $186,000 for three months ended June 30, 1997. The decrease was caused by several offsetting factors, including the 1996 recognition of a loss from an employee defalcation and higher security, telephone and postage expenses incurred in 1997. For the six months ended June 30, 1997, other noninterest expense increased by $28,000, from $465,000 for the six months ended June 30, 1996 to $493,000. The increase was primarily attributable to the $135,000 burglary loss incurred in February 1997 and the increase in security, stationary, telephone and postage expenses. Professional service expense decreased by $17,000 and $5,000, respectively, for the three and six months ended June 30, 1997. The decrease was due to a reduction in the use of outside consultants and other professionals. Federal insurance premiums decreased by $44,000 and $96,000, respectively, for the three and six months ended June 30, 1997 as compared to the same periods a year ago due to an insurance rate reduction after the payment of a one-time assessment fee imposed by FDIC in 1996. INCOME TAXES Income tax expense increased by $117,000 and $101,000, respectively, for the three month and six month periods ended June 30, 1997, as compared to the same periods in 1996. The increase in income taxes was the result of higher earnings before income taxes during 1997 as compared to the same periods during 1996. COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 1997 AND DECEMBER 31, 1996 12 Total assets at June 30, 1997 were $122.2 million compared to $117.1 million at December 31, 1996, representing an increase of $5.1 million. The increase in total assets was funded primarily from additional savings deposits made during the period. Net loans receivable increased from $96.3 million at December 31, 1996 to $97.9 million at June 30, 1997 as a result of $7.1 million in new loan originations and a $1.8 million loan purchase, offset by $5.8 million in principal repayments, $900,000 in loans transferred to foreclosure, $200,000 in loans sold, $300,000 in loans in process and $100,000 in allowance for loan losses. Total liabilities at June 30, 1997 were $109.1 million compared to $103.5 million at December 31, 1996. The $5.6 million increase is primarily attributable to the increase in savings deposits. Total capital at June 30, 1997 was $13.1 million as compared to $13.6 million at December 31, 1996, representing a decrease of $500,000. This decrease resulted from: 1) the purchase of outstanding Common stock totalling $626,000; 2) dividends declared totalling $112,000; 3) net earnings of $208,000 for six months ended June 30, 1997; 4) additional paid-in-capital totalling $14,000, resulting from interest earned on a loan to the employee stock ownership plan ("ESOP"); and 5) a decrease of $16,000 in the unearned ESOP account resulting from principal payments received on the loan to the ESOP. During the quarter the Bank entered into an agreement to purchase for $1.6 million an office building located at 4800 Wilshire Boulevard, Los Angeles, California. The new facility contains approximately 11,200 square feet and was formerly operated as a branch office by Bank of America. Broadway Federal is acquiring the site to replace its administrative office lost by fire in 1992 during the civil disturbance in Los Angeles. Since that time Bank administrative operations have been operated from Broadway Federal's branch office sites. 13 PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS None Item 2. CHANGES IN SECURITIES None Item 3. DEFAULTS UPON SENIOR SECURITIES None Item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS The Annual Meeting of the Company was held on June 18, 1997 for the purpose of electing three directors to serve until the Annual Meeting to be held in the year 2000 or until their successors are elected and have been qualified. The stockholders reelected Mr. Paul C. Hudson, Mr. Kellogg Chan and Mr. Larkin Teasley to serve as directors for terms of three years each. The number of votes FOR and those WITHHELD for each of the directors is detailed below: MR. PAUL C. HUDSON For 701,292 Withheld 500 MR. KELLOGG CHAN For 692,021 Withheld 6,801 MR. LARKIN TEASLEY For 701,166 Withheld 626 Item 5. OTHER INFORMATION None Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None (b) Reports on Form 8-K None 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BROADWAY FINANCIAL CORPORATION Date: August 08, 1997 By: /s/ PAUL C. HUDSON ------------------------ Paul C. Hudson President and Chief Executive Officer By: /S/ BOB ADKINS ------------------------ Bob Adkins Secretary and Chief Financial Officer 15 EX-27 2 FINANCIAL DATA SCHEDULE
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PROCEEDING CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1997 JUN-30-1997 2,059 130 4,250 0 0 11,870 11,745 98,864 (1,003) 122,245 107,550 0 1,551 0 0 911 8,230 (1,173) 122,245 4,127 349 29 4,505 1,916 1,916 2,589 77 0 0 360 360 0 0 208 0.21 0 0.82 1,039 0 0 0 1,174 249 1 (1,003) (1,003) 0 208
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