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| 8-K - FORM 8-K - BROADWAY FINANCIAL CORP \DE\ | d411924d8k.htm |
Exhibit 99.1
News Release
FOR IMMEDIATE RELEASE
Broadway Financial Corporation Files Restated Results for 2011
LOS ANGELES, CA – (BUSINESS WIRE) – September 14, 2012 – Broadway Financial Corporation (the “Company”) (NASDAQ Capital Market: BYFC), parent company of Broadway Federal Bank, f.s.b. (the “Bank”), reported that it has filed today an amended Form 10-K for 2011 to restate the consolidated financial statements that the Company had previously issued in its Annual Report on Form 10-K for the year ended December 31, 2011 that was filed with the SEC on March 30, 2012.
The restatement relates to corrections of errors made in determining the appropriate provisions for losses and charge-offs for 2011. As previously announced, the errors resulted from failure to obtain and take into account certain appraisals of the values of properties securing impaired loans that had been ordered and received by the Bank prior to the issuance date of our financial statements and failure to follow the appropriate method for calculating expected future payments on loans in connection with our discounted cash flow analysis for measuring impairment of loans deemed to be troubled debt restructurings. In addition, certain appraisals received after year-end 2011 indicated that impairment losses that had been determined using values based on broker provided opinions of value (BPOs) understated the losses inherent in those loans. We have discontinued our former practice of obtaining and relying upon BPOs in connection with valuing properties securing our loans.
The amended Form 10-K will include a revised discussion of results of operations and financial condition for the year ended December 31, 2011, and revised discussion of and management’s report on the Company’s internal control over financial reporting.
In connection with the restatement of results for 2011, the results of the first quarter ended March 31, 2012, which we previously announced, will also be revised. Some of the provisions that we had included in our previously announced results for the first quarter of 2012 are now reflected in the results for 2011. In addition, the revision to the results for the first quarter of 2012 reflect conclusions regarding our valuation allowances reached by the Office of the Controller of Currency during its recently completed supervisory examination of the Bank. We expect to file a Form 10-Q containing the revised financial statements for the first quarter 2012 shortly.
Included in this release is a summary of the effects of these corrections on the Company’s consolidated balance sheet as of December 31, 2011 and consolidated statement of operations for the fiscal year then ended.
About Broadway Financial Corporation
Broadway Financial Corporation conducts its operations through its wholly-owned subsidiary, Broadway Federal Bank, f.s.b., which is the leading community-oriented savings bank in Southern California serving low to moderate income communities. We offer a variety of residential and commercial real estate loan products for consumers, businesses, and non-profit organizations, other loan products, and a variety of deposit products, including checking, savings and money market accounts, certificates of deposits and retirement accounts. The Bank operates three full service branches, two in the city of Los Angeles, and one located in the nearby city of Inglewood, California.
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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.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon our management’s current expectations, and involve risks and uncertainties. Actual results or performance may differ materially from those suggested, expressed, or implied by the forward-looking statements due to a wide range of factors including, but not limited to, the general business environment, the real estate market, competitive conditions in the business and geographic areas in which the Company conducts its business, regulatory actions or changes and other risks detailed in the Company’s reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to publicly revise any forward-looking statement to reflect any future events or circumstances, except to the extent required by law.
SOURCE: Broadway Financial Corporation
| Contact: | Wayne-Kent A. Bradshaw, Chief Executive Officer, (323) 556-3248: or |
Sam Sarpong, Chief Financial Officer, (323) 556-3224; or
investor.relations@broadwayfederalbank.com
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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands)
| December 31, 2010 |
As Originally Filed December 31, 2011 |
Adjustments | As Restated December 31, 2011 |
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| ASSETS |
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| Cash |
$ | 8,203 | $ | 12,127 | $ | — | $ | 12,127 | ||||||||
| Federal funds sold |
13,775 | 19,470 | — | 19,470 | ||||||||||||
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| Cash and cash equivalents |
21,978 | 31,597 | — | 31,597 | ||||||||||||
| Securities available for sale, at fair value |
10,524 | 18,979 | — | 18,979 | ||||||||||||
| Securities held to maturity |
12,737 | — | — | — | ||||||||||||
| Loans receivable held for sale, net |
29,411 | 13,857 | (874 | ) | 12,983 | |||||||||||
| Loans receivable, net of allowance of $17,299 (as restated), $16,194 (originally filed) and $20,458 |
382,616 | 326,323 | (3,553 | ) | 322,770 | |||||||||||
| Accrued interest receivable |
2,216 | 1,698 | — | 1,698 | ||||||||||||
| Federal Home Loan Bank (FHLB) stock, at cost |
4,089 | 4,089 | — | 4,089 | ||||||||||||
| Office properties and equipment, net |
5,094 | 4,626 | — | 4,626 | ||||||||||||
| Real estate owned (REO) |
3,036 | 7,010 | (311 | ) | 6,699 | |||||||||||
| Bank owned life insurance |
2,522 | 2,609 | — | 2,609 | ||||||||||||
| Investment in affordable housing partnership |
2,000 | 1,675 | — | 1,675 | ||||||||||||
| Deferred tax assets |
5,369 | 850 | — | 850 | ||||||||||||
| Other assets |
2,338 | 5,161 | 1 | 5,162 | ||||||||||||
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| Total assets |
$ | 483,930 | $ | 418,474 | $ | (4,737 | ) | $ | 413,737 | |||||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| Deposits |
$ | 348,445 | $ | 294,686 | $ | — | $ | 294,686 | ||||||||
| Federal Home Loan Bank advances |
87,000 | 83,000 | — | 83,000 | ||||||||||||
| Junior subordinated debentures |
6,000 | 6,000 | — | 6,000 | ||||||||||||
| Other borrowings |
5,000 | 5,000 | — | 5,000 | ||||||||||||
| Advance payments by borrowers for taxes and insurance |
272 | 813 | — | 813 | ||||||||||||
| Other liabilities |
4,353 | 5,962 | — | 5,962 | ||||||||||||
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| Total liabilities |
451,070 | 395,461 | — | 395,461 | ||||||||||||
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| Stockholders’ Equity: |
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| Senior preferred, cumulative and non-voting stock, $0.01 par value, authorized, issued and outstanding 9,000 shares of Series D at December 31, 2011 and 2010; liquidation preference of $9,731 at December 31, 2011 and $9,281 at December 31, 2010 |
8,963 | 8,963 | — | 8,963 | ||||||||||||
| Senior preferred, cumulative and non-voting stock, $0.01 par value, authorized, issued and outstanding 6,000 shares of Series E at December 31, 2011 and 2010; liquidation preference of $6,488 at December 31, 2011 and $6,188 at December 31, 2010 |
5,974 | 5,974 | — | 5,974 | ||||||||||||
| Preferred, non-cumulative and non-voting stock, $.01 par value, authorized 985,000 shares; issued and outstanding 55,199 shares of Series A, 100,000 shares of Series B and 76,950 shares of Series C at December 31, 2011 and 2010; liquidation preference of $552 for Series A, $1,000 for Series B and $1,000 for Series C at December 31, 2011 and 2010 |
3,657 | 3,657 | — | 3,657 | ||||||||||||
| Preferred stock discount |
(1,380 | ) | (994 | ) | — | (994 | ) | |||||||||
| Common stock, $.01 par value, authorized 8,000,000 shares at December 31, 2011 and 3,000,000 at December 31, 2010; issued 2,013,942 shares at December 31, 2011 and 2010; outstanding 1,744,565 shares at December 31, 2011 and 1,743,965 shares at December 31, 2010 |
20 | 20 | — | 20 | ||||||||||||
| Additional paid-in capital |
10,740 | 10,824 | — | 10,824 | ||||||||||||
| (Accumulated deficit) / retained earnings |
8,074 | (2,558 | ) | (4,737 | ) | (7,295 | ) | |||||||||
| Accumulated other comprehensive income, net of taxes of $400 at December 31, 2011 and $176 at December 31, 2010 |
263 | 571 | — | 571 | ||||||||||||
| Treasury stock-at cost, 269,377 shares at December 31, 2011 and 269,977 shares at December 31, 2010 |
(3,451 | ) | (3,444 | ) | — | (3,444 | ) | |||||||||
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| Total stockholders’ equity |
32,860 | 23,013 | (4,737 | ) | 18,276 | |||||||||||
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| Total liabilities and stockholders’ equity |
$ | 483,930 | $ | 418,474 | $ | (4,737 | ) | $ | 413,737 | |||||||
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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Earnings (Loss)
(Dollars in thousands, except per share amounts)
| Twelve Months Ended December 31, 2011 | ||||||||||||
| As Originally Filed | Adjustments | As Restated | ||||||||||
| Interest and fees on loans receivable |
$ | 24,376 | $ | — | $ | 24,376 | ||||||
| Interest on securities |
700 | — | 700 | |||||||||
| Other interest income |
39 | — | 39 | |||||||||
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| Total interest income |
25,115 | — | 25,115 | |||||||||
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| Interest on deposits |
4,493 | — | 4,493 | |||||||||
| Interest on borrowings |
3,558 | — | 3,558 | |||||||||
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| Total interest expense |
8,051 | — | 8,051 | |||||||||
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| Net interest income before provision for loan losses |
17,064 | — | 17,064 | |||||||||
| Provision for loan losses |
8,600 | 3,553 | 12,153 | |||||||||
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| Net interest income after provision for loan losses |
8,464 | (3,553 | ) | 4,911 | ||||||||
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| Non-interest income: |
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| Service charges |
709 | — | 709 | |||||||||
| Net losses on mortgage banking activities |
(75 | ) | — | (75 | ) | |||||||
| Net losses on sales of REO |
(35 | ) | — | (35 | ) | |||||||
| Other |
114 | — | 114 | |||||||||
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| Total non-interest income |
713 | — | 713 | |||||||||
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| Non-interest expense: |
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| Compensation and benefits |
6,541 | — | 6,541 | |||||||||
| Occupancy expense, net |
1,436 | — | 1,436 | |||||||||
| Information services |
868 | — | 868 | |||||||||
| Professional services |
962 | — | 962 | |||||||||
| Provision for losses on loans held for sale |
738 | 874 | 1,612 | |||||||||
| Provision for losses on REO |
2,343 | 311 | 2,654 | |||||||||
| FDIC insurance |
1,017 | — | 1,017 | |||||||||
| Office services and supplies |
539 | — | 539 | |||||||||
| Other |
2,408 | — | 2,408 | |||||||||
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| Total non-interest expense |
16,852 | 1,185 | 18,037 | |||||||||
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| Loss before income taxes |
(7,675 | ) | (4,738 | ) | (12,413 | ) | ||||||
| Income tax expense |
1,842 | — | 1,842 | |||||||||
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| Net loss |
$ | (9,517 | ) | $ | (4,738 | ) | $ | (14,255 | ) | |||
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| Other comprehensive income, net of tax: |
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| Unrealized gain on securities available for sale |
$ | 532 | $ | — | $ | 532 | ||||||
| Income tax effect |
(224 | ) | — | (224 | ) | |||||||
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| Other comprehensive income, net of tax |
308 | — | 308 | |||||||||
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| Comprehensive loss |
$ | (9,209 | ) | $ | (4,738 | ) | $ | (13,947 | ) | |||
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| Net loss |
$ | (9,517 | ) | $ | (4,738 | ) | $ | (14,255 | ) | |||
| Dividends and discount accretion on preferred stock |
(1,115 | ) | 1 | (1,114 | ) | |||||||
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| Loss available to common shareholders |
$ | (10,632 | ) | $ | (4,737 | ) | $ | (15,369 | ) | |||
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| Loss per common share-basic |
$ | (6.10 | ) | $ | (2.71 | ) | $ | (8.81 | ) | |||
| Loss per common share-diluted |
$ | (6.10 | ) | $ | (2.71 | ) | $ | (8.81 | ) | |||
| Dividends declared per share-common stock |
$ | — | $ | — | $ | — | ||||||
| Basic weighted average shares outstanding |
1,744,330 | — | 1,744,330 | |||||||||
| Diluted weighted average shares outstanding |
1,744,330 | — | 1,744,330 | |||||||||
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