-----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, AIbhk9N5SaXmtWiPbZuaEe9gPPEGb0NmGXy7uknhhPIvXdPMqMeyqPaHuDAf3zJ+ Qupz75PH9pNStVHT1DtHwA== 0001047469-97-004756.txt : 19971117 0001047469-97-004756.hdr.sgml : 19971117 ACCESSION NUMBER: 0001047469-97-004756 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 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: SEC FILE NUMBER: 000-27464 FILM NUMBER: 97718927 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 10-QSB COVER 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 SEPTEMBER 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: 830,834 shares of the Company's Common Stock, par value $.01 per share, were issued and oustanding as of October 31, 1997. Transitional Small Business Disclosure Format (Check one): Yes / / No /X/ 1 INDEX PART I-- FINANCIAL INFORMATION Item 1. Financial Statements Page Consolidated Statement of Condition as of September 30, 1997 (unaudited) and December 31, 1996 3 Consolidated Statement of Operations (unaudited) for the three months and nine months ended September 30, 1997 and 1996 4 Consolidated Statement of Cash Flows (unaudited) for the three months and nine months ended September 30, 1997 and 1996 5 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Operations 9 2 BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS)
SEPTEMBER 30, 1997 DECEMBER 31, (UNAUDITED) 1996 ------------- ----------- ASSETS: Cash and Federal funds sold. . . . . . . . . . . . . . . . . . . . $ 3,621 $ 5,180 Investment securities, held to maturity. . . . . . . . . . . . . . 10,309 10,371 Loans receivable, net. . . . . . . . . . . . . . . . . . . . . . . 102,303 96,260 Loans receivable held for sale . . . . . . . . . . . . . . . . . . 1,350 - Accrued interest receivable. . . . . . . . . . . . . . . . . . . . 777 733 Real estate acquired through foreclosure . . . . . . . . . . . . . 1,048 933 Investments in capital stock of Federal Home Loan Bank, at cost. . 916 876 Office properties & equipment, net . . . . . . . . . . . . . . . . 4,073 2,052 Income tax receivable. . . . . . . . . . . . . . . . . . . . . . . 66 426 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 277 265 ----------- ----------- Total Assets. . . . . . . . . . . . . . . . . . . . . . . . . $124,740 $117,096 ----------- ----------- ----------- ----------- LIABILITIES AND STOCKHOLDERS' EQUITY Savings deposits . . . . . . . . . . . . . . . . . . . . . . . . . $107,322 $101,994 Advance from Federal Home Loan Bank. . . . . . . . . . . . . . . . 2,500 - Advance payments by borrowers for taxes and insurance. . . . . . . 316 161 Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . 409 452 Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 1,009 845 ----------- ----------- Total Liabilities . . . . . . . . . . . . . . . . . . . . . . 111,556 103,452 Stockholders' equity: Preferred nonconvertible, non-cumulative, and non-voting stock, $.01 par value, authorized 1,000,000 shares; issued and outstanding 91,073 shares at September 30, 1997 . . . . . . . . . . . . . . . . . . . . 1 1 Additional paid-in capital. . . . . . . . . . . . . . . . . . . 910 910 Common Stock, $.01 par value, authorized 3,000,000 shares; . . issued and outstanding 830,834 shares at September 30, 1997. . . . . . . . . . . . . . . . . . . . 9 9 Additional paid-in capital. . . . . . . . . . . . . . . . . . . 8,239 8,207 Retained Earnings-substantially restricted . . . . . . . . . 5,228 5,080 Treasury Stock, at cost . . . . . . . . . . . . . . . . . . . . (672) - Unearned Employee Stock Ownership Plan shares . . . . . . . . . (531) (563) ----------- ----------- Total stockholders' equity. . . . . . . . . . . . . . . . . . 13,184 13,644 ----------- ----------- Total liabilities and stockholders' equity. . . . . . . . $124,740 $117,096 ----------- ----------- ----------- -----------
See Notes to Consolidated Financial Statements 3 BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (DOLLARS IN THOUSANDS)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------- --------------------- 1997 1996 1997 1996 -------- -------- -------- --------- Interest Income: Interest on loans receivable. . . . . . . . . . . . . . . . . $ 2,068 $ 2,018 $ 6,195 $ 5,855 Interest on investment securities . . . . . . . . . . . . . . 142 140 459 514 Interest on mortgage backed securities. . . . . . . . . . . . 56 53 88 127 Other interest income . . . . . . . . . . . . . . . . . . . . 15 14 44 37 -------- -------- -------- --------- Total interest income. . . . . . . . . . . . . . . . . . . 2,281 2,225 6,786 6,533 Interest expense: Interest on savings deposits. . . . . . . . . . . . . . . . . 1,007 864 2,923 2,592 Interest on borrowings. . . . . . . . . . . . . . . . . . . . 2 - 2 - -------- -------- -------- --------- Total interest expense . . . . . . . . . . . . . . . . . . 1,009 864 2,925 2,592 Net interest income before provision for loan losses . . . 1,272 1,361 3,861 3,941 Provision for loan losses. . . . . . . . . . . . . . . . . . . . . 75 255 152 498 -------- -------- -------- --------- Net interest income after provision for loan losses. . . . 1,197 1,106 3,709 3,443 Noninterest income: Service charges . . . . . . . . . . . . . . . . . . . . . . . 101 77 302 225 Real estate operations, net . . . . . . . . . . . . . . . . . (43) (114) (98) (266) Recovery (write-down) on valuation of loans held for sale . . - 13 - (43) Other noninterest income . . . . . . . . . . . . . . . . . 158 17 197 58 -------- -------- -------- --------- 216 (7) 401 (26) -------- -------- -------- --------- Noninterest expense: Compensation and benefits . . . . . . . . . . . . . . . . . . 605 522 1,804 1,510 Occupancy expense, net. . . . . . . . . . . . . . . . . . . . 256 203 704 637 Advertising and promotional expense . . . . . . . . . . . . . 52 78 121 174 Professional services . . . . . . . . . . . . . . . . . . . . 8 6 44 47 Federal insurance premiums. . . . . . . . . . . . . . . . . . 24 679 60 811 Insurance bond premiums . . . . . . . . . . . . . . . . . . . 29 27 85 78 Other noninterest expense . . . . . . . . . . . . . . . . . . 263 226 756 691 -------- -------- -------- --------- 1,237 1,741 3,574 3,948 -------- -------- -------- --------- Earnings before income taxes. . . . . . . . . . . . . . . . . 176 (642) 536 (531) Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 74 (264) 226 (213) -------- -------- -------- --------- Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . $ 102 $ (378) $ 310 $ (318) -------- -------- -------- --------- -------- -------- -------- --------- Per share information Number of shares. . . . . . . . . . . . . . . . . . . . . . . 833,248 892,688 858,426 892,688 Earnings per share. . . . . . . . . . . . . . . . . . . . . . $ .11 $ (.42) $ .32 $ (.31)
See Notes to Consolidated Financial Statements 4 BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (DOLLARS IN THOUSANDS)
Nine Months Ended September 30, September 30, 1997 1996 ------------ ------------- Cash flows from operating activities: Net earnings (loss) $310 ($318) -------- -------- Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation 120 129 Amortization of net deferred loan origination fees (37) 30 Amortization of discounts and premium on securities 68 10 Federal Home Loan Bank stock dividends (40) (35) Gain on sale of real estate owned (21) (46) Write-down on valuation of loans held for sale - 45 Provision for loan losses 152 498 Provision for write-downs and losses on real estate 41 204 Proceeds from sale of loans receivable 1,083 - Increase in accrued interest receivable (44) (66) Decrease in income tax receivable 360 91 Increase in other assets (12) (418) Decrease in deferred income taxes (43) - Increase in other liabilities 125 706 Other - (7) -------- -------- Total adjustments 1,752 1,141 -------- -------- Net cash provided by operating activities 2,062 823 -------- -------- Cash flows provided by (used in) investing activities: Loans originated, net of refinances (9,101) (10,946) Loans purchased (6,755) (2,510) Principal repayment on loans 7,369 4,673 Increase in loans in process 224 49 Increase in mortgage-backed securities - (3,475) Increase in loan receivable held for sale (1,350) (30) Purchases of investment securities held to maturity (5,004) (4,992) Proceeds from maturities of investment securities held to maturity 4,998 2,500 Proceeds from sale of loans held for sale - 1,186 Capital expenditures for office properties and equipment (2,141) (536) Proceeds from sale of real estate acquired through foreclosure 926 1,410 -------- -------- Net cash used in investing activities (10,834) (12,671) -------- --------
(Continued) 5 BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (DOLLARS IN THOUSANDS)
Nine Months Ended September 30, September 30, 1997 1996 ------------ ------------- Net increase (decrease) in savings deposits 5,328 (9,260) Increase in advance from Federal Home Loan Bank 2,500 - Preferred stock subscribed - 911 Additional paid-in capital 33 - Common stock subscribed - 8,163 Dividends declared (162) (168) Unearned Employee Stock Ownership Plan 31 (609) Treasury stock (672) - Increase in advances by borrowers for taxes and insurance 155 129 -------- -------- Net cash provided by (used in) financing activities 7,213 (834) -------- -------- Net decrease in cash and cash equivalents (1,559) (12,682) Cash and cash equivalents at beginning of year 5,180 17,761 -------- -------- Cash and cash equivalents at end of year $3,621 $5,079 -------- -------- -------- -------- Supplemental disclosure of cash flow information: Cash paid for interest expense $2,923 $2,550 Cash paid for income taxes 1 371 -------- -------- -------- -------- Supplemental disclosure of noncash investing and financing activities: Additions to real estate acquired through foreclosure 1,192 835 Loans to facilitate the sale of real estate acquired through foreclosure - 1,000
See Notes to Consolidated Financial Statements 6 BROADWAY FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 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 solely of recurring accruals and standard allowance for loan losses) necessary to present fairly the consolidated financial position of the Company at September 30, 1997 and the results of its operations for the three months and nine months ended September 30, 1997 and 1996, and its cash flows for the nine months ended September 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 nine months ended September 30, 1997 are not necessarily indicative of the results to be expected for the full year. 3. RECENT ACCOUNTING PRONOUNCEMENTS 7 EARNINGS PER SHARE - In February 1997, the Financial Accounting Standards Board issued Statement No. 128, "Earnings per Share" ("SFAS No. 128"). SFAS No. 128 establishes standards for computing and presenting earnings per share (EPS) and applies to entities with publicly held common stock. SFAS No. 128 simplifies the standards for computing earnings per share previously found in APB Opinion No. 15 and makes them comparable to international EPS standards. It replaces the presentation of primary EPS with a presentation of basic EPS. It also requires dual presentation of basic and diluted EPS on the face of the statement of earnings for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. SFAS No. 128 is effective for financial statements issued for periods ending after December 15, 1997, earlier application is not permitted. The pro forma basic and diluted EPS calculated under SFAS No. 128 were not materially different from the primary and fully-diluted earnings per share calculated for the periods ended September 30, 1997 and 1996. COMPREHENSIVE INCOME - In June 1997, the Financial Accounting Standards Board issued Statement No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No. 130 establishes new rules for the reporting and display of comprehensive income and its components in a full set of general purpose financial statements. SFAS No. 130 requires companies to (a) display items of other comprehensive income either below the total for net income in the income statement, or in a statement of changes in equity, and (b) disclose the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in-capital in the equity section of the balance sheet. Other comprehensive income includes unrealized gains and losses on available-for-sale securities and foreign currency translation adjustments. SFAS No. 130 is effective for the fiscal years beginning after December 15, 1997, although earlier application is permitted. Reclassification of financial statements for earlier periods provided for comparative purposes is required. Disclosure of total comprehensive income is required in interim period financial statements. The Company believes that such adoption has little or no impact on its financial statement presentation. 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 NINE MONTHS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996 General The Company recorded net earnings of $102,000 for the three months ended September 30, 1997, as compared to a net loss of $378,000 for the three months ended September 30, 1996. For the nine months ended September 30, 1997 the Company recorded net earnings of $310,000, as compared to a net loss of $318,000 for the same period ended September 30, 1996. The third quarter and year-to-date net earnings as of September 30, 1997 resulted from a number of offsetting factors which included higher interest income, higher interest expense on savings deposits, lower provisions for loan losses, higher noninterest income, lower noninterest expense and higher income taxes. 9 INTEREST INCOME Interest income increased by $56,000 during the three months ended September 30, 1997 as compared to the same period a year ago. For the nine months ended September 30, 1997, interest income increased by $253,000 as compared to the same period a year ago. These increases were primarily the result of increases in average assets of $6.8 million and $5.9 million for the three-month and nine-month periods ended September 30, 1997, respectively, as compared to the same respective periods in the prior year. The increases in assets during the three-month and nine-month periods ended September 30, 1997 were funded by increases in savings deposits and Federal Home Loan Bank borrowings. The increase in average assets primarily resulted from the Company's focus on increasing its loan portfolio. INTEREST ON SAVINGS DEPOSITS Interest on savings deposits increased by $145,000 during the three months ended September 30, 1997 as compared to the same period a year ago. For the nine months ended September 30, 1997, interest on savings deposits increased by $333,000 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 $7.2 million and $5.2 million for the three and nine months ended September 30, 1997, respectively, as compared to the same respective 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 16-basis points, from 3.53% for the nine months ended September 30, 1996 to 3.69% for the nine months ended September 30, 1997. PROVISION FOR LOAN LOSSES The provision for loan losses decreased by $180,000, from $255,000 for the three months ended September 30, 1996 to $75,000 for the three months ended September 30, 1997. For the nine months ended September 30, 1997, the provision for loan losses decreased by $346,000, from $498,000 to $152,000. For the three-month and nine-month periods ended September 30, 1997, the decreases in the provision for loan losses were due primarily to improved asset quality and the improved Southern California real estate market. Total non-performing assets, consisting of non-accrual loans and real estate acquired through foreclosure ("REO"), decreased by $594,000, from $2.6 million at September 30, 1996 to $2.0 million at September 30, 1997. The $594,000 decrease resulted from a decrease in non-accrual loans of $555,000 and a decrease in REO of $39,000. Non-performing assets at December 31, 1996 totaled $2.8 million, consisting of $1.9 million in non-accrual loans and $933,000 in REO properties. As a percentage of total assets, non-performing assets were 1.66% at September 30, 1997, compared to 10 2.24% and 2.39% at September 30, 1996 and December 31, 1996, respectively. Since December 1996, non-accrual loans have decreased by $895,000, to $1.0 million and REO has increased by $116,000, to $1.0 million. Non-accrual loans at September 30, 1997 included seven loans totaling $679,000 secured by one- to four-unit properties and two loans totaling $300,000 secured by multi-family properties. REO at September 30, 1997 included six one- to four-unit properties totaling $744,000, one multi-family property totaling $166,000 and one parcel of land totaling $265,000. As of September 30, 1997 the Company's allowance for loan losses totaled $1.1 million, representing a $103,000 decrease from the balance at December 31, 1996. The allowance for loan losses represented 1.01% of total loans at September 30, 1997, as compared to 1.19% of total loans at December 31, 1996. The allowance for loan losses was 109.38% of non-accrual loans at September 30, 1997, compared to 62.65% at December 31, 1996. Net charge-offs as a percentage of the beginning allowance for loan losses in 1997 represented 28.96% annualized, as compared to 34.38% for 1996. As of September 30, 1997 management believes that given the improved asset quality the allowance for loans losses is adequate to cover inherent losses in its loan portfolio. There can be no assurance, however, that such losses will not exceed the estimated amounts. NONINTEREST INCOME Noninterest income increased by $223,000, from a $7,000 expense for the three months ended September 30, 1996 to $216,000 in income for the same period during 1997. For the nine months ended September 30, 1997, noninterest income increased by $427,000, from a $26,000 expense during 1996 to $401,000 in income for the same period in 1997. The increase was due to a number of offsetting factors. Service charges increased by $24,000 and $77,000 during the three-month and nine-month periods ended September 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 September 30, 1997 as compared to September 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 $71,000 and $168,000, respectively, during the three-month and nine-month periods ended September 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. At September 30, 1997 loans held for sale totaled $1.3 million, as compared to zero at September 30, 1996, and were recorded at the lower of cost or market value. The Company had a $13,000 recovery and a $43,000 write-down, respectively, on the "Valuation of Loans Held For Sale" for the three-month and nine-month periods ended September 30, 1996. Finally, other noninterest income increased by $141,000, from $17,000 for the three months ended September 30, 1996 to $158,000 for the same period in 1997. For the nine months ended September 30, 1997, other noninterest income increased by $139,000, from $58,000 during 1996 to $197,000 for the same 11 period in 1997. The increases primarily resulted from the recognition of $85,000 in income from insurance proceeds received in settlement of a burglary that occurred at one of the Bank's branches in early 1997, the recognition of income from the sale of mortgage loans totaling $29,000 and the recognition of income resulting from a severance benefit accrual adjustment of $27,000. NONINTEREST EXPENSE Noninterest expense decreased by $504,000 and $374,000, respectively, during the three-month and nine-month periods ended September 30, 1997, as compared to the corresponding periods in 1996. The decrease in noninterest expense was due primarily to increases in compensation and benefits, occupancy expense and other noninterest expense, offset by decreases in advertising expense and federal deposit insurance premiums. Compensation and benefits increased by $83,000 and $294,000, respectively, for the three-month and nine-month periods ended September 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 $53,000 and $67,000, respectively, for the three-month and nine-month periods ended September 30, 1997, as compared to the corresponding periods during 1996. The increases were primarily due to increases in computer expenses and property taxes on office buildings. Other noninterest expense increased by $37,000 and $65,000, respectively, for the three-month and nine-month periods ended September 30, 1997 as compared to the corresponding periods during 1996. The increases were caused by several offsetting factors, including a loss from an employee defalcation, higher legal, security, office supplies, telephone and postage expenses incurred in 1997. Advertising and promotional expense decreased by $26,000 and $53,000, respectively, for the three months and nine months ended September 30, 1997. The decrease was mainly due to higher expenses in 1996 associated with various business activities, including the Conversion. Federal deposit insurance premiums decreased by $655,000 and $751,000, respectively, for the three-month and nine-month periods ended September 30, 1997, as compared to the same periods a year ago, due to an insurance rate reduction and a one-time assessment fee imposed by FDIC in 1996. INCOME TAXES Income tax expense increased by $338,000 and $439,000, respectively, for the three-month and nine-month periods ended September 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. 12 COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 1997 AND DECEMBER 31, 1996 Total assets at September 30, 1997 were $124.7 million compared to $117.1 million at December 31, 1996, representing an increase of $7.6 million. Net loans receivable increased from $96.3 million at December 31, 1996 to $103.7 million at September 30, 1997 as a result of $10.4 million in new loan originations and $6.8 million in loan purchases, offset by $7.4 million in principal repayments, $1.0 million in loans transferred to foreclosure, $1.1 million in loans sold, $200,000 in loans in process and $100,000 in allowance for loan losses. Loans held for sale at September 30, 1997 totaled $1.3 million as compared to zero at December 31, 1996, as no loans were classified as held for sale at December 31, 1996. Office properties and equipment increased from $2.0 million at December 31, 1996 to $4.1 million at September 30, 1997 primarily as a result of the purchase of a $1.6 million office building located at 4800 Wilshire Boulevard, Los Angeles, California and renovation costs incurred at the Bank's branch and loan facility located in the City of Inglewood. The new Wilshire Boulevard facility was acquired to replace the Bank's 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. Total liabilities at September 30, 1997 were $111.6 million compared to $103.5 million at December 31, 1996. The $8.1 million increase is primarily attributable to the increase in savings deposits and an advance from Federal Home Loan Bank which were used to fund the increase in total assets. Total capital at September 30, 1997 was $13.2 million as compared to $13.6 million at December 31, 1996, representing a decrease of $460,000. This decrease resulted from the combination of: 1) the purchase of outstanding Common stock totaling $672,000; 2) dividends declared totaling $162,000; 3) net earnings of $310,000 for nine months ended September 30, 1997; 4) additional paid-in-capital totaling $33,000, resulting from interest earned on a loan to the employee stock ownership plan ("ESOP"); and 5) a decrease of $31,000 in the unearned ESOP account resulting from principal payments received on the loan to the ESOP. 13 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: NOVEMBER 7, 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 14 EX-27 2 EXHIBIT 27
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 9-MOS DEC-31-1997 SEP-30-1997 2,689 32 900 0 0 10,309 10,291 104,724 (1,071) 124,740 107,322 2,500 1,734 0 0 911 8,248 (1,203) 124,740 6,195 547 44 6,786 2,923 2,925 3,861 152 0 0 536 536 0 0 310 0.31 0 .080 979 0 0 0 1,174 249 1 (1,071) (1,071) 0 169
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