8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

July 29, 2004

BROADWAY FINANCIAL CORPORATION

(Exact name of small business issuer as specified in its charter)

Delaware	000-27464	95-4547287
(State of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

4800 Wilshire Boulevard, Los Angeles, California

(Address of Principal Executive Offices)

90010

(Zip Code)

(323) 634-1700

(Issuer’s Telephone Number, Including Area Code)

NOT APPLICABLE

(Former name or former address, if changed since last report)

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits

(c) Exhibits

99.1 Press release dated July 28, 2004, announcing earnings for the quarter ended June 30, 2004

Item 12. Results of Operations and Financial Condition

On July 28, 2004, Broadway Financial Corporation issued a Press Release on earnings for the quarter ended June 30, 2004. A copy of the Press Release is attached as Exhibit 99.1.

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 hereunto duly authorized.

	BROADWAY FINANCIAL CORPORATION
	(Registrant)
Date: July 29, 2004	By:	/s/ Alvin D. Kang
		(Signature)
	Name:	Alvin D. Kang
		Chief Financial Officer

EX-99.1

EXHIBIT 99.1

News Release

FOR IMMEDIATE RELEASE	Contact:	Paul C. Hudson, President/CEO
		Alvin D. Kang, CFO
		(323) 634-1700
		www.broadwayfed.com

Broadway Financial Corporation Reports 23% Increase in Second Quarter

Net Earnings

LOS ANGELES, CA – (BUSINESS WIRE) – July 28, 2004 – Broadway Financial Corporation (the “Company”) (NASDAQ Small-Cap: BYFC), the holding company of Broadway Federal Bank, f.s.b. (the “Bank”), today reported net earnings of $437,000 and $904,000, or $0.27 and $0.51 per diluted share, for the three and six months ended June 30, 2004, compared to $356,000 and $720,000, or $0.18 and $0.36 per diluted share, respectively, for the three and six months ended June 30, 2003. Compared to 2003, second quarter net earnings increased 22.75% and net earnings for the six months increased 25.56%. The increase in earnings per share is the result of the stock buyback transaction in the first quarter of 2004.

President Paul C. Hudson stated, “Management continues to focus on growing loan originations as the primary driver of earnings.” He noted that, “Second quarter originations of $35.5 million exceeded first quarter production by $2.3 million or 6.93%, and net loans receivable, including loan sales of $8.5 million, grew by $17.6 million for the quarter, once again exceeding our targeted growth of $15.0 million.” Hudson went on to state, “We will continue to focus on growing our loan portfolio with adjustable rate assets, and we will closely monitor credit quality as this rising rate environment takes hold.”

Net Earnings

The increase in net earnings, comparing 2004 to 2003, was primarily attributable to the increase in net interest income and non-interest income, offset by an increase in non-interest expense. Net interest income increased $268,000 and $558,000, or 12.78% and 13.44%, respectively, for the three and six months ended June 30, 2004, compared to the same periods in 2003. Non-interest income increased $19,000 and $111,000, or 5.49% and 17.48%, respectively, for the three and six months ended June 30, 2004, compared to the same periods in 2003. Non-interest expense increased $141,000 and $340,000, or 7.58% and 9.42%, respectively, for the three and six months ended June 30, 2004, compared to the same periods in 2003.

Net Interest Income

Net interest income increased to $2.4 million and $4.7 million for the three and six months ended June 30, 2004, from $2.1 million and $4.2 million for the same periods in 2003. A six-month rate/volume analysis indicates that the $558,000 increase in net interest income was primarily attributable to the impact of the growth in average interest-earning assets of $31.0 million, or 15.10%, and interest-bearing liabilities of $32.8 million, or 17.03%, which resulted in an increase in net interest income of $856,000 (volume impact), offset by the impact of a decrease in the net interest rate spread of 2 basis points (rate impact), which resulted in a decrease in net interest income of $298,000.

Gross loan originations were $35.5 million and $68.7 million for the three and six months ended June 30, 2004, compared to $11.3 million and $19.0 million for the same periods in 2003. Loan purchases totaled $1.9 million for the three and six months ended June 30, 2004, compared to $14.2 million for the first quarter of 2003. There were no mortgage-backed securities (“MBS”) purchases for the three and six months ended June 30, 2004, compared to $10.0 million and $12.0 million for the same periods in 2003. Loan prepayments amounted to $10.9 million and $21.4 million for the three and six months ended June 30, 2004, compared to $14.4 million and $23.1 million for the same periods in 2003. The drop in loan prepayments in the second quarter of 2004 reflects the effect of rising interest rates. If rates continue to rise during the remainder of the year, prepayments may be expected to continue to decrease.

Interest-bearing liabilities increased $12.5 million during the second quarter and were primarily attributable to the net effect of an increase in Federal Home Loan Bank (“FHLB”) advances of $15.3 million, offset by a decrease in deposits of $2.7 million. The decrease in deposits is primarily due to the withdrawal of $3.0 million by a non-profit organization, which we anticipate will be redeposited in the third quarter. For the six months ended June 30, 2004, interest-bearing liabilities increased $27.7 million comprised of a $4.1 million increase in deposits, a $17.6 million increase in FHLB advances and a $6.0 million issuance of junior subordinated debentures.

The net interest rate spread for the three and six months ended June 30, 2004 was 3.82% and 3.91%, respectively, compared to 3.88% and 3.93%, respectively, for the same periods in 2003. The 6 and 2 basis points decreases in spread were attributable to the larger decline in the weighted average yield on interest-earning assets compared to the decline in the weighted average cost of funds on interest-bearing liabilities. The yield on interest-earning assets declined 15 and 23 basis points to 5.66% and 5.72%, respectively, for the three and six months ended June 30, 2004 from 5.81% and 5.95%, respectively, for the same periods in 2003. The weighted average cost of funds declined 9 and 21 basis points to 1.84% and 1.81%, respectively, for the three and six months ended June 30, 2004 compared to 1.93% and 2.02% for the same periods in 2003. The primary spread (weighted average interest rate on loans minus weighted average interest rate on deposits) at June 30, 2004 was 4.07% compared to 4.73% at June 30, 2003, a decline of 66 basis points.

Non-interest Income

Total non-interest income increased to $365,000 and $746,000 for the three and six months ended June 30, 2004, from $346,000 and $635,000 for the same periods in 2003. The $19,000 increase for the second quarter was primarily attributable to an $86,000 gain on sale of $8.5 million of loans held for sale, offset by an $8,000 loss on sale of securities and a $62,000 decrease in service charges. The $62,000 decrease in service charges was primarily attributable to the Bank exiting its cash delivery services to check cashing businesses as a risk reduction measure.

Non-interest Expense

Total non-interest expense increased to $2.0 million and $4.0 million for the three and six months ended June 30, 2004 from $1.9 million and $3.6 million for the same periods in 2003. The $141,000 increase for the second quarter was primarily attributable to increases in compensation and benefits costs, principally higher performance bonus accruals.

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Allowance for Loan Losses

The allowance for loan losses as a percentage of gross loans was 0.57% at June 30, 2004, compared to 0.67% at December 31, 2003 and 0.92% at June 30, 2003. The Bank’s non-performing assets to total assets ratio was 0.03 % at June 30, 2004, compared to 0.03% at December 31, 2003 and 0.04% at June 30, 2003. At June 30, 2004, the Bank had no loans in foreclosure or REO (real estate owned) properties. Non-performing assets, which also include total loans delinquent 90 or more days, amounted to $79,000 at June 30, 2004, compared to $80,000 at June 30, 2003.

Deposits

Total deposits increased $4.1 million, or 2.30%, to $184.0 million from $179.9 million at December 31, 2003. Core deposits (NOW, demand, money market and passbook accounts) increased by $5.9 million during the first six months of 2004. At June 30, 2004, core deposits represented 45.02% of total deposits, compared to 42.77% at December 31, 2003 and 44.59% at June 30, 2003. Management has focused on increasing core deposit customers, extending deposit maturities on time deposits, and closely managing the Bank’s cost of deposits.

Performance Ratios

For the three months ended June 30, 2004, the Company’s return on average equity increased to 12.79%, compared to 8.03% for the same period in 2003. The return on average assets also increased to 0.69% for the three months ended June 30, 2004, compared to 0.65% for the same period in 2003. The ratio of non-interest expense to average assets improved to 3.18% for the three months ended June 30, 2004, compared to 3.41% for the same period in 2003. The efficiency ratio improved to 73.33% in second quarter 2004, compared to 76.18% in second quarter 2003.

Dividends

As previously announced, the Company increased its quarterly dividend on common stock to $0.05 per share effective with the July 30, 2004 payment.

About us

Broadway Federal Bank, f.s.b. is a community-oriented savings bank, which primarily originates residential mortgage loans and conducts funds acquisition in the geographic areas known as Mid-City and South Los Angeles. The Bank operates four full service branches, three in the city of Los Angeles, and one located in the nearby city of Inglewood, California. At June 30, 2004, the Bank met the capital requirements necessary to be deemed “well capitalized” for regulatory capital purposes.

Shareholders, analysts and others seeking information about the Company are invited to write to: Broadway Financial Corporation, Investor Relations, 4800 Wilshire Blvd., Los Angeles, CA 90010, or visit our website at www.broadwayfed.com.

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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)

	June 30, 2004			December 31, 2003
Assets
Cash	$	3,327		$	5,029
Federal funds sold		900			2,600
Investment securities available for sale		5,988			—
Investment securities held to maturity		2,000			3,996
Mortgage-backed securities available for sale, at fair value		—			9,122
Mortgage-backed securities held to maturity		4,350			6,317
Loans receivable held for sale, at lower of cost or fair value		—			1,671
Loans receivable, net		227,661			192,116
Accrued interest receivable		917			883
Investments in capital stock of Federal Home Loan Bank, at cost		2,200			1,789
Office properties and equipment, net		5,492			5,603
Other assets		850			689
Total assets	$	253,685		$	229,815
Liabilities and stockholders’ equity
Deposits	$	184,041		$	179,907
Advances from Federal Home Loan Bank		46,065			28,502
Junior subordinated debentures		6,000			—
Advance payments by borrowers for taxes and insurance		418			324
Deferred income taxes		1,058			1,019
Other liabilities		1,838			1,872
Total liabilities		239,420			211,624
Stockholders’ Equity:
Preferred non-convertible, non-cumulative, and non-voting stock, $.01par value, authorized 1,000,000 shares; issued and outstanding 55,199 shares of Series A and 100,000 shares of Series B at June 30, 2004 and December 31, 2003		2			2
Common stock, $.01 par value, authorized 3,000,000 shares; issued and outstanding 1,500,073 shares at June 30, 2004 and 1,832,507 shares at December 31, 2003		10			10
Additional paid-in capital		10,524			10,507
Accumulated other comprehensive loss, net of taxes		(7	)		(68	)
Retained earnings-substantially restricted		8,946			8,207
Treasury stock-at cost, 368,869 shares at June 30, 2004 and 36,435 shares at December 31, 2003		(5,142	)		(375	)
Unearned Employee Stock Ownership Plan shares		(68	)		(92	)
Total stockholders’ equity		14,265			18,191
Total liabilities and stockholders’ equity	$	253,685		$	229,815

4

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations and Comprehensive Earnings

(Dollars in thousands, except per share amounts)

(Unaudited)

	Three Months ended June 30,						Six Months ended June 30,
	2004			2003			2004			2003
Interest on loans receivable	$	3,285		$	2,569		$	6,397		$	5,113
Interest on investment securities		56			37			102			103
Interest on mortgage-backed securities		67			404			193			808
Other interest income		35			37			62			75
Total interest income		3,443			3,047			6,754			6,099
Interest on deposits		791			764			1,574			1,585
Interest on borrowings		287			186			470			362
Total interest expense		1,078			950			2,044			1,947
Net interest income		2,365			2,097			4,710			4,152
Non-interest income:
Service charges		269			331			533			601
Net gains on sale of loans and securities available for sale		77			5			174			18
Other		19			10			39			16
Total non-interest income		365			346			746			635
Non-interest expense:
Compensation and benefits		1,160			1,020			2,317			1,934
Occupancy expense, net		275			251			530			509
Information services		166			126			332			256
Professional services		124			107			246			268
Office services and supplies		94			108			199			210
Other		183			249			326			433
Total non-interest expense		2,002			1,861			3,950			3,610
Earnings before income taxes		728			582			1,506			1,177
Income taxes		291			226			602			457
Net earnings	$	437		$	356		$	904		$	720
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on securities available for sale	$	(12	)	$	387		$	207		$	404
Reclassification of realized net gains (loss) included in net earnings		—			—			(108	)		—
Income tax benefit (expense)		5			(153	)		(38	)		(154	)
Other comprehensive income (loss), net of tax		(7	)		234			61			250
Comprehensive earnings	$	430		$	590		$	965		$	970
Net earnings	$	437		$	356		$	904		$	720
Dividends paid on preferred stock		(19	)		(19	)		(38	)		(38	)
Earnings available to common shareholders	$	418		$	337		$	866		$	682
Earnings per share-basic	$	0.28		$	0.19		$	0.54		$	0.38
Earnings per share-diluted	$	0.27		$	0.18		$	0.51		$	0.36
Dividend declared per share-common stock	$	0.05		$	0.04		$	0.09		$	0.08
Basic weighted average shares outstanding		1,470,702			1,794,153			1,611,361			1,790,925
Diluted weighted average shares outstanding		1,563,834			1,889,532			1,708,699			1,884,063

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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Selected Ratios and Data

(Dollars in thousands)

	As of June 30,
	2004			2003
Broadway Federal Bank, f.s.b.
Regulatory Capital Ratios:
Tangible capital		7.28	%		7.52	%
Core capital		7.28	%		7.52	%
Total Risk-Based capital		10.64	%		14.02	%
Asset Quality Ratios and Data:
Non-performing loans as a percentage of total gross loans		0.03	%		0.05	%
Non-performing assets as a percentage of total assets		0.03	%		0.04	%
Allowance for loan losses as a percentage of total gross loans		0.57	%		0.92	%
Allowance for loan losses as a percentage of non-performing loans		1,660.76	%		1,786.25	%
Allowance for losses as a percentage of non-performing assets		1,660.76	%		1,786.25	%
Non-performing assets:
Non-accrual loans	$	79		$	80
Real estate acquired through foreclosure		—			—
Total non-performing assets	$	79		$	80

	Three Months ended June 30,				Six Months ended June 30,
	2004		2003		2004		2003
Performance Ratios:
Return on average assets	0.69	%	0.65	%	0.74	%	0.67	%
Return on average equity	12.79	%	8.03	%	11.89	%	8.31	%
Average equity to average assets	5.43	%	8.12	%	6.23	%	8.12	%
Non-interest expense to average assets	3.18	%	3.41	%	3.24	%	3.38	%
Efficiency ratio (1)	73.33	%	76.18	%	72.40	%	75.41	%
Net interest rate spread (2)	3.82	%	3.88	%	3.91	%	3.93	%
Effective net interest rate spread (3)	3.89	%	4.00	%	3.99	%	4.05	%

(1) Efficiency ratio represents non-interest expense divided by net interest income plus non-interest income.

(2) Net interest rate spread represents the difference between yield on average interest-earning assets and the cost of interest-bearing liabilities.

(3) Effective net interest rate spread represents net interest income as a percentage of average interest-earning assets.

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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Support for Calculations

(Dollars in thousands)

	Three Months ended June 30,						Six Months ended June 30,
	2004			2003			2004			2003
Total assets	$	253,685		$	216,493		$	253,685		$	216,493
Total gross loans	$	229,736		$	155,237		$	229,736		$	155,237
Total equity	$	14,265		$	17,805		$	14,265		$	17,805
Average assets	$	251,671		$	218,376		$	244,116		$	213,434
Average loans	$	220,928		$	154,259		$	212,509		$	150,470
Average equity	$	13,669		$	17,741		$	15,201		$	17,334
Average interest-earning assets	$	243,465		$	209,901		$	235,970		$	205,016
Average interest-bearing liabilities	$	234,845		$	196,910		$	225,587		$	192,763
Net income	$	437		$	356		$	904		$	720
Total income	$	2,730		$	2,443		$	5,456		$	4,787
Non-interest expense	$	2,002		$	1,861		$	3,950		$	3,610
Efficiency ratio		73.33	%		76.18	%		72.40	%		75.41	%
Non-accrual loans	$	79		$	80		$	79		$	80
REO, net	$	—		$	—		$	—		$	—
ALLL	$	1,312		$	1,429		$	1,312		$	1,429
REO-Allowance	$	—		$	—		$	—		$	—
Interest income	$	3,443		$	3,047		$	6,754		$	6,099
Interest expense	$	1,078		$	950		$	2,044		$	1,947
Net interest income	$	2,365		$	2,097		$	4,710		$	4,152

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