Broadway Financial (BYFC) - 2024 Q1 - Quarterly Results

Financial Performance - In Q1 2024, net interest income decreased by $750 thousand, or 9.1$7.5 million compared to Q1 2023, primarily due to higher interest expenses [3]. - The company reported a consolidated net loss of $164 thousand, or ($0.02) per diluted share, for Q1 2024, compared to net earnings of $1.6 thousand, or$0.17 per diluted share, for Q1 2023 [6]. - Total non-interest expense increased by $1.6 million, or 25.8$7.8 million in Q1 2024 compared to Q1 2023, driven by higher professional services and compensation expenses [17]. - Non-interest income for Q1 2024 totaled $306 thousand, compared to$289 thousand for Q1 2023 [16]. - The effective tax rate decreased to 23.75% in Q1 2024 from 29.70% in Q1 2023, with an income tax benefit of $57 thousand in Q1 2024 [19]. Interest and Loans - Total interest income increased by$3.6 million, or 32.4%, compared to Q1 2023, marking the twelfth consecutive quarter of growth since the merger [4]. - The net interest margin decreased to 2.27% for Q1 2024 from 2.96% for Q1 2023, due to an increase in the average cost of funds to 3.02% [10]. - The yield on average interest-earning assets increased by 46 basis points to 4.45% for Q1 2024, driven by growth in the yield on average loan balances [4]. - Loans held for investment increased by $46.0 million to$926.5 million at March 31, 2024, primarily due to loan originations of $71.5 million [21]. - Total gross loans receivable increased by$46.2 million, or 5.2%, to $934.8 million at March 31, 2024, with a growth of 43.7$150 million investment in June 2022 [4]. Deposits and Assets - Total deposits increased by $12.9 million during Q1 2024 to$695.5 million, representing a growth of $38 million, or 5.8$12.9 million to $695.5 million at March 31, 2024, with increases in liquid deposits and Insured Cash Sweep deposits [23]. - Total assets decreased by$4.9 million to $1.37 billion at March 31, 2024, reflecting declines in cash and securities, partially offset by growth in net loans [20]. - Stockholders' equity was$281.3 million, or 20.5% of total assets, at March 31, 2024, down from $281.9 million at December 31, 2023 [25]. Credit and Risk Management - The allowance for credit losses increased to$7.6 million as of March 31, 2024, compared to $7.3 million as of December 31, 2023 [15]. - The company experienced substantial non-recurring costs of almost$700 thousand related to an investigation of internal control weaknesses [9]. - Uninsured deposits represented 38% of total deposits as of March 31, 2024, compared to 37% at December 31, 2023 [23]. Operational Strategy - The increase in compensation and benefits expense was mainly due to the addition of full-time employees to expand operational capabilities [18]. - The company is focused on expanding its operational capabilities to grow its balance sheet and fulfill lending objectives [18]. - Total borrowings decreased by $15.8 million to$380.9 million at March 31, 2024, primarily due to the payoff of two notes payable [24].