Broadway Financial Corporation's Q1 2025 Operations Overview
Broadway Financial Corporation Sees Shifts in Q1 Performance
Broadway Financial Corporation (NASDAQ: BYFC), the parent company of City First Bank, recently released revised operational results for the first quarter, illuminating changes compared to previous quarters.
Significant Financial Adjustments
In Q1 2025, Broadway Financial reported a consolidated net loss before preferred dividends of $1.9 million, resulting in a loss of $0.21 per diluted share. This marks a noticeable decline compared to the $164 thousand loss, or $0.02 per diluted share, documented in Q1 2024. The net loss attributable to common stockholders reached $2.6 million after accounting for preferred dividends. A stark contrast to the minimal loss of $164 thousand from the same quarter the previous year.
Interest Income Trends
During the same period, net interest income for Broadway Financial increased by $521 thousand, or 6.9%, achieving $8.0 million. This uptick was bolstered by a reduction in borrowing costs and a rise in loan interest rates, albeit partially offset by higher deposit expenses. Overall, the net interest margin improved by 43 basis points, settling at 2.70% for Q1 2025, up from 2.27% in Q1 2024.
Rising Non-Interest Expenses
The organization observed a significant rise in non-interest expenditure, totaling $10.2 million—an increase of 30.6% from the $7.8 million recorded in the same period last year. Key expenses included a considerable $1.9 million loss related to wire fraud, which may contribute positively if recovered. Compensation and benefits also rose, incurring an additional $1.0 million, largely due to an increase in full-time staff.
Executive Insights
In a statement, CEO Brian Argrett highlighted the positive trends with a 4.2% rise in deposits compared to the end of the previous year, amounting to $31.1 million. The CEO also emphasized efforts to reduce costs, which helped decrease the overall cost of funding. He expressed optimism regarding the bank's strategic initiatives aimed at enhancing profitability while remaining committed to serving underserved communities.
Tax Benefits and Credit Provision Increases
Broadway Financial recorded an income tax benefit of $692 thousand in Q1 2025, which showcased a substantial increase over the $57 thousand benefit from the same quarter last year. This shift accounted for a decrease in pre-tax income between the two years. Additionally, the provision for credit losses increased to $689 thousand from $260 thousand in the previous year, driven by the emergence of a new non-accrual loan.
Balance Sheet Highlights
As of March 31, 2025, total assets for Broadway Financial decreased by $65.7 million, attributing the decline to a drop in cash and equivalents. However, loans held for investment slightly increased by $2.4 million compared to the end of 2024. The overall capital ratios remained robust, with the Community Bank Leverage Ratio standing strong at 15.24% as of the period end.
Outlook and Future Initiatives
Looking ahead, the company is working diligently to meet conditions set forth in its ECIP Securities Purchase Option Agreement with the U.S. Treasury. This agreement allows for the potential repurchase of preferred stock at favorable pricing upon fulfilling required conditions.
Frequently Asked Questions
What were the overall financial results for Q1 2025?
Broadway Financial recorded a net loss of $1.9 million before preferred dividends, with losses increasing from the prior year.
How did the net interest income change?
Net interest income increased by $521 thousand to a total of $8.0 million for the quarter.
What contributed to the rise in non-interest expenses?
The rise was largely due to a loss from wire fraud and increased compensation and benefits expenses.
What is the current state of deposits?
Deposits increased by $31.1 million, marking a 4.2% growth from the previous quarter.
What strategic goals does the company aim to achieve?
Broadway Financial aims to enhance profitability while continuing to support low-to-moderate income communities through sustainable banking practices.
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