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BROADWAY FINANCIAL CORP \DE\ (BYFC)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered stronger pre-dividend profitability ($0.603M net income; diluted EPS $0.07 before preferred), but common shareholders saw a diluted loss of $0.02 due to $0.75M preferred dividends; NIM expanded YoY to 2.63% and efficiency improved sequentially as Q1's one-time operational loss rolled off .
  • Balance sheet re-mix continued: deposits rose 7.2% YTD to $798.9M, while total borrowings fell to $133.0M from $262.1M at year-end, lowering funding costs; uninsured deposits increased to 35% from 32% at year-end .
  • Credit quality remained solid (ACL 0.89% of loans), though nonperforming assets rose to $4.4M (0.36% of assets) and non-accruals to 0.42% of loans; Q2 recorded a $266k recapture of credit losses driven by lower loans .
  • No formal guidance was provided; management emphasized margin progression, cost control, and mission-driven growth—potential catalysts include continued deposit growth, further borrowing reductions, and recovery of the $1.9M Q1 fraudulent wire (if recovered, recognized as a gain) .

What Went Well and What Went Wrong

What Went Well

  • Net interest margin expanded to 2.63% (up 22 bps YoY), supported by higher asset yields (4.83%) and lower cost of funds (3.07%); CEO: “We reduced borrowings… resulting in lower cost of funds. The net interest margin was 2.63%… an improvement of 22 basis points” .
  • Deposits grew $53.5M YTD (+7.2%) and $22.4M QoQ (+2.9%), while borrowings were reduced by $126.3M YTD to $69.2M (FHLB advances down $135.3M), strengthening funding and capital metrics (CBLR 15.69%) .
  • Operating discipline improved: non-interest expense fell 26.2% QoQ (-$2.7M) as the Q1 $1.9M wire fraud charge did not recur; provision swung to a $266k recapture, aiding earnings .

What Went Wrong

  • Common shareholders posted a loss ($147k; diluted -$0.02) despite headline net income, as preferred dividends ($750k) offset results; effective tax rate was 30.09% in Q2 (up from 35.01% LY), reducing net after-tax leverage of improvements .
  • Asset quality mix deteriorated modestly: non-accruals rose to 0.42% of loans (four loans, $4.0M unpaid), and nonperforming assets climbed to 0.36% of assets; uninsured deposits increased to 35%, adding potential liquidity sensitivity .
  • Total assets declined $76.3M YTD as AFS maturities/paydowns and cash were used to repay borrowings, shrinking AFS securities by $25.9M and cash equivalents by $31.9M; while positive for funding costs, this reduces liquid balance sheet flexibility .

Financial Results

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Total Interest Income ($USD Millions)$15.488 $15.762 $14.374 $14.230
Net Interest Income ($USD Millions)$7.918 $7.997 $8.045 $7.755
Non-interest Income ($USD Millions)$0.273 $0.560 $0.288 $0.355
Provision (Recapture) for Credit Losses ($USD Millions)$0.494 ($0.489) $0.689 ($0.266)
Non-interest Expense ($USD Millions)$7.280 $7.210 $10.197 $7.522
Net Income Attributable to Common ($USD Millions)$0.269 $0.550 ($1.201) ($0.147)
Diluted EPS ($USD)$0.03 $0.06 ($0.14) ($0.02)
Net Interest Margin %2.41% 2.42% 2.70% 2.63%
Efficiency Ratio %88.88% 86.83% 122.37% 92.75%

Segment breakdown: Not applicable (no segments reported) .

KPIs

KPIQ2 2024Q4 2024Q1 2025Q2 2025
Deposits ($USD Millions)$687.369 $745.399 $776.543 $798.922
Total Borrowings ($USD Millions)N/A$262.1 $168.2 $133.0
Uninsured Deposits (% of Total)N/A32% 34% 35%
Non-accrual Loans / Total Loans (%)0.03% 0.03% 0.09% 0.42%
Nonperforming Assets / Total Assets (%)0.02% 0.02% 0.07% 0.36%
ACL / Total Loans (%)0.86% 0.83% 0.90% 0.89%
Community Bank Leverage Ratio (%)N/A13.96% 15.24% 15.69%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
All metricsFY/Q3/Q4Not providedNot providedMaintained (no formal guidance)

Earnings Call Themes & Trends

Note: No Q2 2025 earnings call transcript was filed; themes reflect management press releases.

TopicPrevious Mentions (Q-2: Q4 2024; Q-1: Q1 2025)Current Period (Q2 2025)Trend
Funding mix (deposits vs. borrowings)Q4: Deposits +$62.8M YoY; borrowings -$134.7M; replaced higher-cost borrowings with deposits . Q1: Deposits +$31.1M QoQ; borrowings down to $168.2M .Deposits +$53.5M YTD; borrowings down to $133.0M .Continued improvement in funding costs.
Margin trajectoryQ4 NIM 2.42% (flat YoY); asset yields +55 bps . Q1 NIM 2.70% (+43 bps YoY) .NIM 2.63% (+22 bps YoY) .Sustained expansion vs. prior year.
Credit qualityQ4 non-accruals minimal (0.03%) . Q1 one new non-accrual; provision $689k .Non-accruals 0.42%; NPA 0.36%; recapture ($266k) .Higher non-accruals but robust ACL coverage.
Operating efficiencyQ4 non-interest expense down; efficiency 86.83% . Q1 spike due to $1.9M wire fraud; efficiency 122.37% .Non-interest expense down 26% QoQ; efficiency 92.75% .Sequential improvement post one-time event.
Regulatory/filing statusQ4: internal control remediation costs noted . Q1: delay in 10-Q; ECIP Preferred repurchase option agreement disclosed .10-Q filed July 24, 2025 per revised results release; ongoing mission focus .Filing overhang reduced; strategic focus reiterated.
Uninsured deposit exposureQ4 32% . Q1 34% .Q2 35% .Gradual increase; mitigated via IntraFi.

Management Commentary

  • “Deposits grew by 2.9%… since March 31, 2025 and 7.18%… this year. We reduced borrowings by $126.3 million… resulting in lower cost of funds. The net interest margin was 2.63%… improvement of 22 basis points compared to… last year.” — Brian Argrett, CEO .
  • “Our results for the second quarter… were positively impacted by a reduction in non-interest expense of 26.23%… mainly due to the operational loss associated with the $1.9 million fraudulent wire during the first quarter, which will result in a corresponding gain if recovered.” — Brian Argrett .
  • “During the first quarter of 2025, deposits grew… We reduced borrowing costs… NIM was 2.70%, an improvement of 43 basis points compared to March of last year.” — Brian Argrett .
  • “We executed an ECIP Securities Purchase Option Agreement… to repurchase the Series C Preferred Stock… at a favorable price… working diligently towards meeting the conditions necessary to repurchase the shares.” — Brian Argrett .

Q&A Highlights

  • No Q2 2025 earnings call transcript was available; therefore, no Q&A highlights or clarifications to report [ListDocuments: earnings-call-transcript found 0].

Estimates Context

  • S&P Global Wall Street consensus was unavailable for Q2 2025 EPS and revenue for BYFC (no consensus values returned; only actual revenue recorded, no estimate counts). Values retrieved from S&P Global*.
  • Implication: With no Street anchors, near-term estimate revisions will likely hinge on observed NIM expansion, deposit growth trajectory, and the path of nonperforming assets and expenses post Q1 one-time loss .

Key Takeaways for Investors

  • Margin expansion story intact: NIM at 2.63% (+22 bps YoY) with improving asset yields and lower funding costs from deposit growth and reduced borrowings .
  • Balance sheet de-risking continues: borrowings down to $133.0M from $262.1M at YE, while deposits rose $53.5M YTD; expect further cost-of-funds tailwind if trend persists .
  • Watch asset quality: non-accruals rose to 0.42% and NPA to 0.36%; ACL coverage remains strong (0.89% of loans). Monitor whether Q2 recapture was a one-off or indicative of stable credit outlook .
  • Earnings to common constrained by preferred dividends: despite $0.603M net income, common shareholders posted a loss due to $0.75M preferred dividend burden—ECIP repurchase option could be a medium-term catalyst if executed .
  • Efficiency normalizing post Q1 fraud: Q2 efficiency ratio improved to 92.75% vs. 122.37% in Q1; potential recovery of the $1.9M fraudulent wire would be a discrete gain and bolster capital .
  • Liquidity optics: uninsured deposits increased to 35% (from 32% YE); mitigated by IntraFi insurance programs, but warrants continued monitoring in volatile rate/liquidity environments .
  • Near-term trading setup: Positive narrative around NIM and funding costs vs. caution on rising nonperformers and uninsured deposit mix; absence of formal guidance and lack of Street estimates suggests stock could react more to reported fundamentals and any updates on preferred share repurchase progress .

Notes and disclosures:

  • Q4 2024 net interest margin was reported as 2.42% in the Q4 press release; selected data in Q2 materials shows 2.49%—we anchor to the period release (2.42%) for Q4 comparability .
  • S&P Global estimates: No consensus values were available for EPS and revenue for Q2 2025; Values retrieved from S&P Global*.