-----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, D22hzh70O6uLaXhMOH99+8Z8PGFqCEVYjkKP1og3cJhVC8D8PkjZtkNzyx6+eSQO CKu3D39aLNOarAyTgO1OkA== 0001047469-98-031512.txt : 19980817 0001047469-98-031512.hdr.sgml : 19980817 ACCESSION NUMBER: 0001047469-98-031512 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 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: 98688951 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 SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 [ ] 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.) 4800 WILSHIRE BOULEVARD, LOS ANGELES, CALIFORNIA 90010 ------------------------------------------------------------- (Address of Principal Executive Offices) (213) 634-1700 -------------- (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: 863,447 shares of the Company's Common Stock, par value $.01 per share, were issued and outstanding as of July 31, 1998. 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, 1998 (unaudited) and December 31, 1997 3 Consolidated Statements of Operations (unaudited) for the three months and six month ended June 30, 1998 and June 30, 1997 4 Consolidated Statement of Cash Flows (unaudited) for the six months ended June 30, 1998 and June 30, 1997 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 15 Item 2. Changes in Securities 15 Item 3. Defaults Upon Senior Securities 15 Item 4. Submission of Matters to a Vote Of Security Holders 15 Item 5. Other Information 15 Item 6. Exhibits and Reports on Form 8-K 15
2 BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY Consolidated Balance Sheets (Dollars in thousands)
June 30, 1998 December 31, (Unaudited) 1997 ------------ ------------ Assets: Cash and Federal funds sold............... $ 3,624 $ 4,831 Investment securities, held to maturity... 15,278 9,207 Loans receivable, net..................... 109,600 103,689 Loans receivable held for sale............ 1,702 222 Accrued interest receivable............... 996 834 Real estate acquired through foreclosure.. 682 1,144 Investments in capital stock of Federal Home Loan Bank, at cost................. 958 931 Office properties & equipment, net........ 4,485 3,995 Other assets.............................. 317 263 ------------ ------------ Total Assets......................... $ 137,642 $ 125,116 ------------ ------------ ------------ ------------ Liabilities and stockholders' equity Savings deposits ......................... $ 117,351 $ 109,867 Advance from Federal Home Loan Bank....... 5,500 - Advance payments by borrowers for taxes and insurance............................ 153 199 Deferred income taxes..................... 428 463 Other liabilities......................... 587 1,148 ------------ ------------ Total Liabilities.................... 124,019 111,677 Stockholders' equity: Preferred nonconvertible, non-cumulative, and non-voting stock, $.01 par value, authorized 1,000,000 shares; issued and outstanding 55,199 shares at June 30, 1998....................... 1 1 Common Stock, $.01 par value, authorized 3,000,000 shares; issued and outstanding 863,447 shares at June 30, 1998....................... 9 9 Additional paid-in capital............. 8,845 8,820 Retained Earnings-substantially restricted.......................... 5,555 5,427 Treasury Stock, at cost................ (318) (318) Unearned Employee Stock Ownership Plan shares......................... (469) (500) ------------ ------------ Total stockholders' equity........... 13,623 13,439 ------------ ------------ Total liabilities and stockholders' equity............................... $ 137,642 $ 125,116 ------------ ------------ ------------ ------------
See Notes to Consolidated 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, ------------------------ ------------------------- 1998 1997 1998 1997 ---------- ---------- ----------- ---------- Interest Income: Interest on loans receivable...................................... $ 2,251 $ 2,088 $ 4,423 $ 4,127 Interest on investment securities................................. 187 160 278 317 Interest on mortgage backed securities............................ 58 26 107 32 Other interest income............................................. 15 15 30 29 ---------- ---------- ----------- ---------- Total interest income.......................................... 2,511 2,289 4,838 4,505 Interest expense: Interest on savings deposits...................................... 1,083 981 2,125 1,916 Interest on borrowings............................................ 10 - 13 - ---------- ---------- ----------- ---------- Total interest expense......................................... 1,093 981 2,138 1,916 Net interest income before provision for loan losses........... 1,418 1,308 2,700 2,589 Provision for loan losses.............................................. 75 47 150 77 ---------- ---------- ----------- ---------- Net interest income after provision for loan losses............ 1,343 1,261 2,550 2,512 Noninterest income: Service charges................................................... 95 118 197 201 Gain (loss) on sale of mortgage loans............................. (5) - 14 - Gain on sale of office properties and equipment................... - - 6 - Other noninterest income......................................... 10 34 191 39 ---------- ---------- ----------- ---------- 100 152 408 240 ---------- ---------- ----------- ---------- Noninterest expense: Compensation and benefits......................................... 648 624 1,341 1,199 Occupancy expense, net............................................ 302 226 582 448 Advertising and promotional expense............................... 42 24 79 69 Professional services............................................. 12 13 34 36 Federal insurance premiums........................................ 25 24 50 36 Insurance bond premiums........................................... 24 27 50 56 Real estate operations, net....................................... (1) 40 5 55 Contracted security services...................................... 41 31 77 58 Net operational losses............................................ 14 14 24 152 Other noninterest expense......................................... 193 141 323 283 ---------- ---------- ----------- ---------- 1,300 1,164 2,565 2,392 ---------- ---------- ----------- ---------- Earnings before income taxes ..................................... 143 249 393 360 Income taxes........................................................... 59 104 164 152 Net earnings ..................................................... $ 84 $ 145 $ 229 $ 208 ---------- ---------- ----------- ---------- ---------- ---------- ----------- ---------- Per share information Number of shares.................................................. 863,477 849,996 863,477 871,224 Earnings per share................................................ $0.09 $0.16 $0.25 $0.21 Earnings per share -assuming dilution............................. 0.09 0.16 0.24 0.21
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, 1998 1997 ----------- --------- OPERATING ACTIVITIES Net earnings $ 229 $ 208 --------- -------- Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation 87 82 Amortization of net deferred loan origination fees (43) 40 Amortization of discounts and premium on securities 3 6 Federal Home Loan Bank stock dividends (27) (27) Loss (Gain) on sale of real estate owned (25) 2 Gain on sale of loans receivable held for sale (14) - Changes in operating assets and liabilities: Provision for loan losses 150 77 Provision for write-downs and losses on real estate 17 13 Loans originated for sale, net of refinances (3,171) - Proceeds from sale of loans receivable 1,705 229 Accrued interest receivable (162) (35) Income tax receivable - 243 Other assets (54) 1 Deferred income taxes (35) (43) Other liabilities (594) 121 --------- -------- Total adjustments (2,163) 709 --------- -------- Net cash (used in) provided by operating activities (1,934) 917 --------- -------- INVESTING ACTIVITIES Loans originated, net of refinances (3,018) (6,828) Loans purchased (14,687) (1,833) Premium on loans purchased (253) - Principal repayment on loans 11,495 5,839 Increase in investment in real estate - (113) Proceeds from sale of office properties and equipment 132 - Gain on sale of office properties and equipment (6) - Purchases of investment securities held to maturity (10,065) (4,004) Proceeds from maturities of investment securities held to maturity 3,991 2,499 Capital expenditures for office properties and equipment (703) (389) Proceeds from sale of real estate acquired through foreclosure 948 337 --------- -------- Net cash used in investing activities (12,166) (4,492) --------- -------- (Continued) 5
Six Months Ended June 30, June 30, 1998 1997 -------- -------- FINANCING ACTIVITIES Net increase in savings deposits 7,484 5,556 Increase in advance from Federal Home Loan Bank 5,500 - Additional paid-in capital 24 14 Dividends declared (101) (112) Unearned Employee Stock Ownership Plan 32 16 Treasury stock - (626) Increase in advances by borrowers for taxes and insurance (46) (14) -------- ------ Net cash provided by financing activities 12,893 4,834 -------- ------ Net (decrease) increase in cash and cash equivalents (1,207) 1,259 Cash and cash equivalents at beginning of period 4,831 5,180 -------- ------ Cash and cash equivalents at end of period $ 3,624 $6,439 -------- ------ -------- ------ Supplemental disclosure of cash flow information: Cash paid for interest expense $ 2,144 $1,912 Cash paid for income taxes 312 - -------- ------ -------- ------ Supplemental disclosure of noncash investing and financing activities: Additions to real estate acquired through foreclosure 561 1,036 Loans to facilitate the sale of real estate acquired through foreclosure - - See Notes to Consolidated Financial Statements
6 BROADWAY FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1998 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 normal recurring accruals and standard allowance for loan losses) necessary to present fairly the consolidated financial position of the Company at June 30, 1998 and the results of its operations for the three months and six months ended June 30, 1998 and 1997, and its cash flows for the six months ended June 30, 1998 and 1997. 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, 1997 and, accordingly, should be read in conjunction with such audited statements. 2. The results of operations for the six months ended June 30, 1998 are not necessarily indicative of the results to be expected for the full year. 3. RECENT ACCOUNTING PRONOUNCEMENTS 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. The Company adopted SFAS No. 128 effective December 31, 1997. Adoption had no impact on the basic EPS computation. The EPS-assuming dilution computation was impacted only by stock-based employee compensation. All EPS amounts for all periods have been presented, and where appropriate, restated, to conform to the SFAS No. 128 requirements. 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 7 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. 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 does not believe that such adoption has any adverse impact on its financial condition or results of operations. 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 its 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, 1998 AND JUNE 30, 1997 GENERAL The Company recorded net earnings of $84,000 for the three months ended June 30, 1998, as compared to net earnings of $145,000 for the three months ended June 30, 1997. The second quarter net earnings as of June 30, 1998 resulted from a number of offsetting factors which included higher interest income, higher interest expense on savings deposits and borrowings, higher provision for loan losses, lower noninterest income, higher noninterest expense and lower income taxes. For the six months ended June 30, 1998 the Company recorded net earnings of $229,000 as compared to net earnings of $208,000 for the same period ended June 30, 1997. The year-to-date net earnings as of June 30, 1998 resulted from a number of offsetting factors which included higher interest income, higher interest expense on savings deposits and borrowings, higher provision for loan losses, higher noninterest income, higher noninterest expense and higher income taxes. 9 INTEREST INCOME Interest income increased by $222,000 during the three months ended June 30, 1998 as compared to the same period a year ago. For the six months ended June 30, 1998 interest income increased by $333,000 as compared to the same period in the prior year. These increases were primarily the result of increases in average assets of $12.9 million and $11.1 million for the three months and six months ended June 30, 1998, respectively, as compared to the same periods a year ago. The increases in assets during the three months and six months ended June 30, 1998 were funded by increases in savings deposits and Federal Home Loan Bank advances . The increases in average assets primarily resulted from the Company's continued focus on increasing its loan portfolio, as well as a planned increase in its investment securities. INTEREST ON SAVINGS DEPOSITS Interest on savings deposits and borrowings increased by $112,000 during the three months ended June 30, 1998 as compared to the same period a year ago. For the six months ended June 30, 1998 interest on savings deposits and borrowings increased by $222,000 as compared to the same period in the prior year. The increase in interest on savings deposits and borrowings was due to increases in average deposits and borrowings of $12.7 million and $11.0 million for the three and six months ended June 30, 1998, respectively, as compared to the same periods a year ago. The increase in interest on savings deposits also reflects the more competitive interest rate environment as the average cost of deposits increased 3-basis points, from 3.67% for the six months ended June 30, 1997 to 3.70% for the six months ended June 30, 1998. PROVISION FOR LOAN LOSSES The provision for loan losses increased by $28,000, from $47,000 for the three months ended June 30, 1997 to $75,000 for the three months ended June 30, 1998. For the six months ended June 30, 1998, the provision for loan losses increased by $73,000, from $77,000 to $150,000. Total non-performing assets, consisting of non-accrual loans and real estate acquired through foreclosure ("REO"), decreased by $940,000 , from $2.5 million at June 30, 1997 to $1.6 million at June 30, 1998. The $940,000 decrease resulted from a decrease in non-accrual loans of $137,000 and a decrease in REO of $803,000. As a percentage of total assets, non-performing assets were 1.15% at June 30, 1998, compared to 2.06% and 1.65% at June 30, 1997 and December 31, 1997, respectively. Since December 1997, non-accrual loans have decreased by $19,000, 10 to $902,000, and REO has decreased by $462,000, to $682,000. Non-accrual loans at June 30, 1998 included eight loans totaling $686,000 secured by one- to four-unit properties, one loan totaling $214,000 secured by a multi-family property and one unsecured loan totaling $2,000. REO at June 30, 1998 included two one- to four-unit properties totaling $181,000, one multi-family property totaling $279,000, one commercial property totaling $93,000 and one parcel of land totaling $265,000. As of June 30, 1998 the Company's allowance for loan losses totaled $1.1 million, representing a $32,000 increase from the balance at December 31, 1997. The allowance for loan losses represents 0.96% of total loans at June 30, 1998, as compared to 1.00% at December 31, 1997. The allowance for loan losses was 120.44% of non-accrual loans at June 30, 1998, compared to 114.44% at December 31, 1997. Net charge-offs as a percentage of the beginning allowance for loan losses in 1998 represented 22.39% annualized, as compared to 32.28% for 1997. As of June 30, 1998 management believes that, given the improved asset quality, the allowance for loan 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 decreased by $52,000, from $152,000 for the three months ended June 30, 1997 to $100,000 for the same period during 1998. For the six months ended June 30, 1988, noninterest income increased by $168,000, from $240,000 during 1997 to $408,000 for the same period in 1998. Service charges decreased by $23,000 and $4,000 during the three-month and six-month periods ended June 30, 1998 as compared to the same periods a year ago. The decrease resulted primarily from lower appraisal fees offset by increased fees charged on various savings products and from a greater number of checking accounts at June 30, 1998 as compared to June 30, 1997. The Company reported a loss on sale of mortgage loans of $5,000 for the three months ended June 30, 1998. For the six months ended June 30, 1998, the Company reported a net gain on sale of mortgage loans of $14,000. At June 30, 1998 loans held for sale totaled $1.7 million, and, which are recorded at the lower of amortized cost or market value; there were no loans held for sale at June 30, 1997. The Company realized a gain on sale of office properties and equipment of $6,000 for the six months ended June 30, 1998 which was attributable to the sale of property located at 8467 South Van Ness Avenue, Inglewood, California. There were no comparable sales in the three months ended June 30, 1998. Finally, other noninterest income decreased by $24,000, from $34,000 for the three months ended June 30, 1997 to $10,000 for the same period in 1998. The decrease principally resulted from the gain on sale of real estate and recognition of nonrecurring income during second quarter of 1997. For the six months ended June 30, 1998, other noninterest income increased by $152,000 from $39,000 during 1997 to 11 $191,000 for the same period in 1998, primarily as a result of the reversal of an accrual that had been set up for interest and penalties on funds escheated to the State of California in 1992. It was determined that interest and penalties are not due. NONINTEREST EXPENSE Noninterest expense increased by $136,000 and $173,000, respectively, during the three-month and six-month periods ended June 30, 1998 as compared to the same periods in 1997. The increase in noninterest expense was due primarily to increases in compensation and benefits, occupancy expense, advertising expense, federal insurance premiums, contracted security services and other noninterest expense, offset by decreases in professional services, insurance bond premiums, real estate operations and operational losses. Compensation and benefits increased by $24,000 and $142,000, respectively, for the three-month and six-month periods ended June 30, 1998 as compared to the same periods a year ago. The increases resulted 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 $76,000 and $134,000, respectively, for the three-month and six-month periods ended June 30, 1998, as compared to the same periods during 1997. The increases were primarily due to increases in computer expenses, rent and utilities, maintenance and repair and property taxes on office buildings. Advertising and promotional expense increased by $18,000 and $10,000, respectively, for the three-month and six-month periods ended June 30, 1998. The increases were primarily attributable to the grand opening of the Wilshire office. Contracted security services increased by $10,000 and $19,000, respectively, for the three-month and six-month periods ended June 30, 1998 as compared to the same periods during 1997. The increases were due to security services provided to the new branch office at 4800 Wilshire Boulevard. Real estate operations decreased by $41,000 and $50,000, respectively, for the three-month and six-month periods ended June 30, 1998 as compared to the same periods a year ago. The decreases were mainly due to gain on sale of REO offset by loss provisions and other carrying costs. Net operational losses decreased by $128,000 for the six-month period ended June 30, 1998 as compared to the same period during 1997. The first half of 1997 included losses resulting from a branch burglary in February, 1997. Other noninterest expense increased by $52,000 and $40,000, respectively, for the three-month and six-month periods ended June 30, 1998 as compared to the same periods during 1997. The increases were primarily caused by the increase in legal fees, office supplies and loan expense. Federal deposit insurance premiums increased by $1,000 and $14,000, respectively, for the three-month and six-month periods ended June 30, 1998 as compared to the same periods a year ago, due to an increase in savings deposits. INCOME TAXES 12 Income tax expense decreased by $45,000 for the three-month period ended June 30, 1998, as compared to the same period in 1997. The decrease in income taxes was the result of lower earnings before income taxes during the second quarter of 1998 as compared to the same period during 1997. For the six-month period ended June 30, 1998, income tax expense increased by $12,000 as compared to the same period a year ago. The increase in income taxes was due to higher earnings before income taxes during the first half of 1998 as compared to the same period in 1997. COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 1998 AND DECEMBER 31, 1997 Total assets at June 30, 1998 were $137.6 million compared to $125.1 million at December 31, 1997, representing an increase of $12.5 million. Net loans receivable increased from $103.7 million at December 31, 1997 to $109.6 million at June 30, 1998 as a result of $6.2 million in new loan originations and $15.0 million in loan purchases, including premiums, offset by $11.5 million in principal repayments, $500,000 in loans transferred to foreclosure and $3.2 million in loans transferred to held for sale. Loans held for sale at June 30, 1998 totaled $1.7 million as compared to $200,000 at December 31, 1997. Office properties & equipment increased from $4.0 million at December 31, 1997 to $4.5 million at June 30, 1998, primarily as a result of renovation costs incurred for the Bank's branch and administrative office located in the City of Los Angeles. 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 June 30, 1998 were $124.0 million compared to $111.7 million at December 31, 1997. The $12.3 million increase is primarily attributable to the increase in savings deposits and Federal Home Loan Bank advances offset by the decrease in advance payments by borrowers, deferred income taxes and other liabilities. Total capital at June 30, 1998 was $13.6 million as compared to $13.4 million at December 31, 1997, representing an increase of $184,000. This increase resulted from the net of: 1) dividends declared totaling $101,000; 2) net earnings of $229,000 for six months ended June 30, 1998; 3) additional paid-in-capital totaling $24,000, resulting from interest earned on a loan to the employee stock ownership plan ("ESOP"); and 4) a decrease of $32,000 in the unearned ESOP account resulting from principal payments received on the loan to the ESOP. SUBSEQUENT EVENT 13 The Company will issue an 8% stock dividend to shareholders of record as of August 7, 1998. The distribution date will be August 25, 1998. As a result of this stock dividend, the Company 's outstanding stock will increase from 863,447 shares to 932,523 shares. 14 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 17, 1998 for the following purposes: (a) To elect three directors to serve until the Annual Meeting to be held in the year 2001 or until their successors are elected and have been qualified. The stockholders reelected Mr. Elbert T. Hudson, Mr. Willis K. Duffy and Ms. Rosa M. Hill 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. ELBERT T. HUDSON For 692,177 Withheld 10,927 MR. WILLIS K. DUFFY For 691,372 Withheld 11,732 MS. ROSA M. HILL For 691,372 Withheld 11,732 (b) To ratify the appointment of Ernst & Young LLP as the Company's independent auditing firm for 1998. The stockholders ratified the appointment of independent auditors based upon total votes FOR of 702,999 and total ABSTENTIONS of 105. There were no votes AGAINST. Item 5. OTHER INFORMATION None 15 Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 27.1 - Financial Data Schedule. (b) Reports on Form 8-K None 16 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 7, 1998 By: /S/ PAUL C. HUDSON ------------------- ----------------------- Paul C. Hudson President and Chief Executive Officer By: /S/ BOB ADKINS -------------------- Bob Adkins Secretary and Chief Financial Officer 17 EX-27.1 2 EXHIBIT 27.1
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PRECEDING FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 2,422 2 1,200 0 0 15,278 15,217 112,388 (1,086) 137,642 117,351 5,500 1,168 0 0 552 8,303 (787) 137,642 4,423 385 30 4,838 2,125 2,138 2,700 150 0 0 393 393 0 0 229 0.25 0.24 0.076 902 0 0 0 (1,054) 118 0 (1,086) (1,086) 0 255
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