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Sep 30, 2020
Broadway Financial Q3 2020 Earnings Report
Broadway Financial Corporation reported a net loss for Q3 2020 due to increased non-interest expenses, decreased non-interest income, and increased income tax expense, which offset growth in net interest income.
Key Takeaways
Broadway Financial Corporation reported a net loss of $244 thousand, or ($0.01) per diluted share, for the third quarter of 2020. The results were impacted by merger-related expenses and higher income tax expense, offsetting the benefits of loan portfolio growth and decreased cost of funds.
Net loss of $244 thousand, or ($0.01) per diluted share, compared to a net loss of $279 thousand in Q3 2019.
Net interest income after loan loss provision increased by $1 million due to loan portfolio growth and decreased cost of funds.
Non-interest expense increased by $588 thousand, primarily due to merger-related professional services.
Announced a merger with CFBanc Corporation to create the largest Black-led Minority Depository Institution in the U.S.
Forward Guidance
The merger with CFBanc Corporation is expected to create the largest Black-led Minority Depository Institution, lower Broadway’s cost of funds, expand product lines, and reduce loan concentration levels.
Positive Outlook
- Creation of the largest Black-led Minority Depository Institution in the United States.
- Synergies from combining two organizations with a shared mission to serve low-to-moderate income communities.
- Acceleration of Broadway’s plans to achieve profitable economies of scale.
- Lowering of Broadway’s cost of funds.
- Expansion of the Bank’s product lines.
Challenges Ahead
- Merger-related expenses negatively impacted Q3 2020 results.
- Potential delays in completing the merger.
- Failure to obtain necessary regulatory or stockholder approvals.
- Possibility that the merger may be more expensive to complete than anticipated.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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