Broadway Financial (BYFC) - 2024 Q2 - Quarterly Report

Financial Position - Total assets decreased by $8.1 million to$1.4 billion at June 30, 2024, primarily due to decreases in securities available-for-sale of $55.5 million and cash and cash equivalents of$15.4 million[81]. - Total liabilities decreased by $8.5 million to$1.1 billion at June 30, 2024, primarily due to a $14.0 million decrease in notes payable[106]. - Stockholders' equity was$282.3 million, or 20.6% of total assets, at June 30, 2024, compared to $281.9 million, or 20.5$89.8 million in cash and cash equivalents and $85.0 million in securities available-for-sale as of June 30, 2024, compared to$105.2 million and $173.3 million respectively at December 31, 2023[114]. Loans and Credit - Loans held for investment, net of the Allowance for Credit Losses (ACL), increased by$58.3 million to $938.7 million at June 30, 2024, driven by loan originations of$97.0 million[81]. - Multi-family loans accounted for $585.9 million or 62.0$8.1 million as of June 30, 2024, from $7.3 million as of December 31, 2023, due to growth in the loan portfolio[92]. - Non-accrual loans amounted to$328 thousand at June 30, 2024, with loan delinquencies for 30 days or more decreasing to $710 thousand[104]. Income and Expenses - For the three months ended June 30, 2024, net income was$269 thousand, an increase from $243 thousand for the same period in 2023, attributed to a$650 thousand increase in net interest income[83]. - For the six months ended June 30, 2024, net income decreased to $105 thousand from$1.8 million for the same period in 2023, primarily due to a $2.4 million increase in non-interest expense[84]. - Total non-interest expense for Q2 2024 was$7.3 million, an increase of $859 thousand or 13.4$6.4 million in Q2 2023, primarily due to a $735 thousand rise in compensation and benefits[92]. - For the first six months of 2024, non-interest expense totaled$15.1 million, representing a $2.4 million increase or 19.1$12.7 million in the same period last year[93]. Interest Income and Margin - Net interest income before provision for credit losses for the second quarter of 2024 totaled $7.9 million, an increase of 8.9$7.3 million in the second quarter of 2023[86]. - The net interest margin decreased to 2.41% for the second quarter of 2024 from 2.52% for the second quarter of 2023, due to an increase in the average cost of funds[86]. - For the six months ended June 30, 2024, net interest income before provision for credit losses totaled $15.4 million, a decrease of 0.6$15.5 million for the same period in 2023[87]. - The average cost of funds increased to 3.11% for the first six months of 2024 from 1.76% for the same period in 2023, contributing to the decrease in net interest income[87]. Deposits - Deposits increased by $4.7 million to$687.4 million at June 30, 2024, with a notable increase of $19.4 million in Insured Cash Sweep (ICS) deposits[82]. - The total deposits for the three months ended June 30, 2024, were$569,689 thousand, with an average cost of 2.18%[88]. Tax and Regulatory Compliance - The effective tax rate for Q2 2024 was 35.01%, compared to 27.43% in Q2 2023, primarily due to the vesting of stock awards[94]. - The Company is currently under no prohibition from paying dividends, but is subject to restrictions based on regulatory guidelines[116]. - The Bank exceeded all capital adequacy requirements as of June 30, 2024, qualifying as "well capitalized"[119]. Internal Controls and Remediation - The Company has identified material weaknesses in internal control over financial reporting, impacting the reliability of financial statements[123]. - A remediation plan is in place, including hiring additional personnel and engaging a third-party firm to improve internal controls[124]. - Management is actively engaged in planning and implementing remediation efforts, requiring additional time to test the effectiveness of controls[125]. - No other changes in internal control over financial reporting occurred during the three months ended June 30, 2024, that materially affected the Company's internal control[127].