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 28, 2005

BROADWAY FINANCIAL CORPORATION

(Exact name of registrant 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	90010
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (323) 634-1700

NOT APPLICABLE

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On July 28, 2005, Broadway Financial Corporation issued a Press Release on earnings for the six months ended June 30, 2005. A copy of the Press Release is attached as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits

99.1 Press release dated July 28, 2005, announcing earnings for the six months ended June 30, 2005.

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 28, 2005	by	/s/ Paul C. Hudson
		Paul C. Hudson
		President/CEO

EX-99.1

Exhibit 99.1

News Release

FOR IMMEDIATE RELEASE	Contact:	Paul C. Hudson, President/CEO
		(323) 634-1700
		www.broadwayfederalbank.com

Broadway Financial Corporation Reports Second Quarter Net Earnings

LOS ANGELES, CA – (BUSINESS WIRE) – July 28, 2005 – 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 $317,000 and $659,000 or $0.19 and $0.39 per diluted share for the three and six months ended June 30, 2005, compared to $437,000 and $904,000, or $0.27 and $0.51 per diluted share, respectively, for the three and six months ended June 30, 2004. Compared to 2004, second quarter 2005 net earnings decreased 27.46%.

President Paul C. Hudson stated, “The reduced quarterly earnings are primarily attributable to margin compression caused by deposit costs rising faster than loan yields and lower loan sale gains. In the past, higher loan volumes offset the rate compression, but in the first half of 2005 we experienced lower lending volumes. We continue to be focused on improving net loan growth and the net interest rate spread by originating retail commercial real estate loans with better yields and fees, and by attracting lower cost core deposits.”

Net Earnings

The change in net earnings, comparing 2005 to 2004, was primarily attributable to decreases in net interest income and non-interest income, and an increase in non-interest expense. Net interest income before provision for loan losses decreased $57,000 and $146,000, or 2.41% and 3.10%, respectively, for the three and six months ended June 30, 2005 compared to the same periods in 2004. Non-interest income decreased $109,000 and $132,000, or 29.86% and 17.69%, for the three months and six months ended June 30, 2005 compared to the same periods in 2004. Non-interest expense increased $45,000 and $131,000, or 2.25% and 3.32%, for the three and six months ended June 30, 2005 compared to the same periods in 2004.

Net Interest Income

Net interest income before provision for loan losses decreased to $2,308,000 for the three months ended June 30, 2005, from $2,365,000 for the same period in 2004. Although average interest earning assets increased $42.0 million for second quarter 2005 compared to 2004, the annualized net interest spread for the quarter decreased by 68 basis points when compared to the second quarter of 2004. A slower rate of loan growth in 2005 has reduced our ability to offset margin compression, as we have in the past.

The annualized net interest rate spread for the three months ended June 30, 2005 was 3.14% compared to 3.82% for the same period in 2004. The 68 basis point decrease in spread was attributable to the decline in the weighted average yield on interest earning assets and the increase in the weighted average cost of funds on interest-bearing liabilities. The annualized yield on interest-earning assets declined by 14 basis points to 5.52% for the three months ended June 30, 2005 from 5.66% for the same period in 2004. The annualized weighted average cost of funds increased 54 basis points, to 2.38% for the three months ended June 30, 2005 compared to 1.84% for the same period in 2004. The primary spread (weighted average

interest rate on loans minus weighted average interest rate on deposits) at June 30, 2005 was 3.66% compared to 4.07% at June 30, 2004, a decline of 41 basis points. Although our loan portfolio is substantially comprised of adjustable rate loans, most of the loans have initial periods of fixed interest rates ranging from two to seven years. As a result, our loan portfolio does not reprice immediately in response to changes in market interest rates. However, as the initial fixed interest rate period expires, the majority of our loan portfolio reprices based on the index (primarily 6 month LIBOR) to which the loans relate. Absent a high level of loan prepayments and falling market interest rates, we anticipate that our loan portfolio will reprice upward over the next several years.

Non-interest Income

Non-interest income totaled $256,000 in the second quarter of 2005, down $109,000 from a year ago. The decrease is primarily related to lower loan sale gains and lower loan prepayment fees in the quarter compared to same quarter in 2004.

Provision for Loan Losses

During the second quarter of 2005, a net provision recovery of $17,000 was recorded due to a change in the mix of the loan portfolio. The allowance for loan losses as a percentage of total loans was 0.60% at both June 30, 2005 and December 31, 2004.

Non-interest Expense

Non-interest expense totaled $2,047,000 in the second quarter of 2005, an increase of $45,000 from a year ago, primarily due to savings bad debt losses of $29,000 related to a terminated relationship with a check cashing business, and specific loss reserves of $22,000 established for certain overdrafted accounts.

Assets, Loan Originations and Deposits

At June 30, 2005, assets totaled $297.7 million, up $21.2 million, or 7.66%, from year-end 2004. During the first six months of 2005, slower loan originations resulted in a decrease of $1.0 million in net loans receivable from year-end 2004. In addition, investment securities available for sale decreased $4.0 million, while mortgage-backed securities (“MBS”) held to maturity increased $23.9 million. The build up in liquidity from loan and investment securities repayments, deposit inflows and borrowings was invested in short duration MBS.

Loan originations were $18.1 million for the six months ended June 30, 2005 compared to $68.7 million for the same period in 2004. Loan purchases totaled $10.3 million for the six months ended June 30, 2005 compared to $1.7 million for the same period in 2004. Loan repayments amounted to $31.0 million for the six months ended June 30, 2005 compared to $36.4 million for the same period in 2004. Strong competition for loans and the slower ramp up of retail lending volume has adversely affected growth in our loan portfolio.

Deposits totaled $208.2 million at June 30, 2005, up $12.3 million or 6.3% since the end of 2004. During the first six months of 2005, core deposits (NOW, demand, money market and passbook accounts) did not increase, compared to a $5.9 million increase for the same period in 2004. At June 30, 2005, core deposits represented 48.45% of total deposits compared to 51.13% at December 31, 2004.

Non-Performing Assets

Non-performing assets amounted to $113,000 at June 30, 2005 compared to $114,000 at December 31, 2004. The Bank’s non-performing assets to total assets ratio was 0.04% at both June 30, 2005 and December 31, 2004. At June 30, 2005, and December 31, 2004, the Bank had no loans in foreclosure or REO (real estate owned) properties.

Performance Ratios

For the three months ended June 30, 2005, the Company’s annualized return on average assets was 0.43% compared to 0.69% for the same period in 2004. The decline was primarily attributable to the decrease in net earnings in 2005. The annualized return on average equity also decreased to 8.12% for the three months ended June 30, 2005 compared to 12.79% for the same period in 2004. The annualized ratio of non-interest expense to average assets improved to 2.79% for the three months ended June 30, 2005 compared to 3.18% for the same period in 2004, reflecting the higher growth in average assets compared to the rate of growth in non-interest expense. The efficiency ratio was 79.84% for the three months ended June 30, 2005 compared to 73.33% for the same period in 2004, reflecting lower revenues compared to non-interest expense in 2005 compared to 2004.

About us

Broadway Federal Bank, f.s.b. is a community-oriented savings bank, which primarily originates residential and commercial 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, 2005, 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.broadwayfederalbank.com.

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)

	June 30, 2005			December 31, 2004
Assets
Cash	$	4,295		$	3,998
Federal funds sold		6,100			3,500
Investment securities available for sale		—			3,980
Investment securities held to maturity		2,000			2,000
Mortgage-backed securities held to maturity		41,088			17,172
Loans receivable held for sale, at lower of cost or fair value		—			1,145
Loans receivable, net		233,158			234,196
Accrued interest receivable		1,200			1,056
Federal Home Loan Bank stock, at cost		3,123			2,827
Office properties and equipment, net		5,606			5,725
Other assets		1,155			939
Total assets	$	297,725		$	276,538
Liabilities and stockholders’ equity
Deposits	$	208,248		$	195,912
Advances from Federal Home Loan Bank		63,783			55,317
Junior subordinated debentures		6,000			6,000
Advance payments by borrowers for taxes and insurance		488			472
Deferred income taxes		986			982
Other liabilities		2,591			2,758
Total liabilities		282,096			261,441
Stockholders’ Equity:
Preferred non-convertible, non-cumulative, and non-voting stock, $.01 par 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, 2005 and December 31, 2004		2			2
Common stock, $.01 par value, authorized 3,000,000 shares; issued 1,868,942 shares at June 30, 2005 and December 31, 2004; outstanding 1,520,347 shares at June 30, 2005 and December 31, 2004		19			19
Additional paid-in capital		10,459			10,425
Accumulated other comprehensive loss, net of taxes		—			(7	)
Retained earnings-substantially restricted		10,030			9,561
Treasury stock-at cost, 348,595 shares at June 30, 2005 and December 31, 2004		(4,859	)		(4,859	)
Unearned Employee Stock Ownership Plan shares		(22	)		(44	)
Total stockholders’ equity		15,629			15,097
Total liabilities and stockholders’ equity	$	297,725		$	276,538

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,
	2005			2004			2005			2004
Interest on loans receivable	$	3,381		$	3,285		$	6,739		$	6,397
Interest on mortgage-backed securities		460			67			703			193
Interest on investment securities		18			56			53			102
Other interest income		80			35			183			62
Total interest income		3,939			3,443			7,678			6,754
Interest on deposits		1,095			791			2,107			1,574
Interest on borrowings		536			287			1,007			470
Total interest expense		1,631			1,078			3,114			2,044
Net interest income before provision for loan losses		2,308			2,365			4,564			4,710
Provision for (recovery of) loan losses		(17	)		—			(7	)		—
Net interest income after provision for loan losses		2,325			2,365			4,571			4,710
Non-interest income:
Service charges		189			269			499			533
Gain on sale of loans held for sale		5			86			5			195
Gain (loss) on sale of securities		6			(9	)		21			(21	)
Other		56			19			89			39
Total non-interest income		256			365			614			746
Non-interest expense:
Compensation and benefits		1,161			1,160			2,373			2,317
Occupancy expense, net		282			275			575			530
Information services		156			166			308			332
Professional services		136			124			277			246
Office service and supplies		115			94			211			199
Other		197			183			337			326
Total non-interest expense		2,047			2,002			4,081			3,950
Earnings before income taxes		534			728			1,104			1,506
Income taxes		217			291			445			602
Net earnings	$	317		$	437		$	659		$	904
Other comprehensive income, net of tax:
Unrealized gain (loss) on securities available for sale	$	—		$	(12	)	$	(8	)	$	207
Reclassification of realized net loss included in net earnings		—			—			20			(108	)
Income tax effect		—			5			(5	)		(38	)
Other comprehensive income, net of tax		—			(7	)		7			61
Comprehensive earnings	$	317		$	430		$	666		$	965
Net earnings	$	317		$	437		$	659		$	904
Dividends paid on preferred stock		(19	)		(19	)		(38	)		(38	)
Earnings available to common shareholders	$	298		$	418		$	621		$	866
Earnings per share-basic	$	0.20		$	0.28		$	0.41		$	0.54
Earnings per share-diluted	$	0.19		$	0.27		$	0.39		$	0.51
Dividend declared per share-common stock	$	0.05		$	0.05		$	0.10		$	0.09
Basic weighted average shares outstanding		1,515,575			1,470,702			1,514,389			1,611,361
Diluted weighted average shares outstanding		1,586,048			1,563,834			1,588,393			1,708,699

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Selected Ratios and Data

(Dollars in thousands)

	As of June 30,
	2005			2004
Regulatory Capital Ratios:
Tangible capital		6.84	%		7.28	%
Core capital		6.84	%		7.28	%
Total Risk-Based capital		11.58	%		10.64	%
Asset Quality Ratios and Data:
Non-performing loans as a percentage of total gross loans		0.05	%		0.03	%
Non-performing assets as a percentage of total assets		0.04	%		0.03	%
Allowance for loan losses as a percentage of total gross loans		0.60	%		0.57	%
Allowance for loan losses as a percentage of non-performing loans		1250.44	%		1660.76	%
Allowance for losses as a percentage of non-performing assets		1250.44	%		1660.76	%
Non-performing assets:
Non-accrual loans	$	113		$	79
Real estate acquired through foreclosure		—			—
Total non-performing assets	$	113		$	79

	Three Months ended June 30,				Six Months ended June 30,
	2005		2004		2005		2004
Performance Ratios:
Annualized return on average assets	0.43	%	0.69	%	0.45	%	0.74	%
Annualized return on average equity	8.12	%	12.79	%	8.53	%	11.89	%
Average equity to average assets	5.31	%	5.43	%	5.33	%	6.23	%
Annualized non-interest expense to average assets	2.79	%	3.18	%	2.81	%	3.24	%
Efficiency ratio (1)	79.84	%	73.33	%	78.81	%	72.40	%
Annualized net interest rate spread (2)	3.14	%	3.82	%	3.15	%	3.91	%
Annualized net interest margin (3)	3.23	%	3.89	%	3.24	%	3.99	%

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

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

(3) Annualized net interest margin represents the annualized net interest income as a percentage of average interest- earning assets.

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Support for Calculations

(Dollars in thousands)

	Three Months ended June 30,						Six Months ended June 30,
	2005			2004			2005			2004
Total assets	$	297,725		$	253,685		$	297,725		$	253,685
Total gross loans	$	235,034		$	229,736		$	235,034		$	229,736
Total equity	$	15,629		$	14,265		$	15,629		$	14,265
Average assets	$	293,994		$	251,671		$	289,980		$	244,116
Average loans	$	231,950		$	220,928		$	232,850		$	212,509
Average equity	$	15,620		$	13,669		$	15,450		$	15,201
Average interest-earning assets	$	285,423		$	243,465		$	281,470		$	235,970
Average interest-bearing liabilities	$	274,550		$	234,845		$	270,494		$	225,587
Net income	$	317		$	437		$	659		$	904
Total income	$	2,564		$	2,730		$	5,178		$	5,456
Non-interest expense	$	2,047		$	2,002		$	4,081		$	3,950
Efficiency ratio		79.84	%		73.33	%		78.81	%		72.40	%
Non-accrual loans	$	113		$	79		$	113		$	79
ALLL	$	1,413		$	1,312		$	1,413		$	1,312
REO-Allowance	$	—		$	—		$	—		$	—
Interest income	$	3,939		$	3,443		$	7,678		$	6,754
Interest expense	$	1,631		$	1,078		$	3,114		$	2,044
Net interest income	$	2,308		$	2,365		$	4,564		$	4,710