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BROADWAY FINANCIAL CORP \DE\ (BYFC)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 delivered sequential improvement: net interest income rose to $8.3MM (+4.4% vs. Q2) and net interest margin expanded to 2.49%, while net income attributable to Broadway rose to $522K; however, diluted EPS to common was a loss of $0.03 due to $750K preferred dividends .
  • Year-over-year, total interest income grew 35.5% to $16.166MM on higher loan balances and yields; average cost of funds increased to 3.23%, partially offsetting gains; net interest margin improved YoY from 2.33% to 2.49% .
  • Credit quality remains strong: only one non‑accrual loan ($291K; 0.03% of total loans) and no charge‑offs; ACL rose to $8.5MM alongside loan growth .
  • Wall Street consensus estimates via S&P Global were unavailable at the time of analysis; estimate comparisons are omitted.
  • Potential stock reaction catalysts: sustained sequential NII and margin expansion, continued loan growth to $975.3MM, and declining uninsured deposit mix to 34% .

What Went Well and What Went Wrong

What Went Well

  • Strong top-line momentum: total interest income rose 35.5% YoY to $16.166MM, driven by average loans (+$141.8MM) and higher asset yields; NIM ticked up to 2.49% .
  • Robust loan growth and portfolio quality: gross loans reached $975.3MM (+9.9% YTD), with only one non‑accrual loan at $291K (0.03% of loans) and no charge‑offs .
  • CEO emphasis on mission and sequential momentum: “we continued our record of sequentially growing total interest income… and over 35% as compared to the third quarter of 2023” (Brian Argrett) .

What Went Wrong

  • Margin headwinds persist: average cost of funds rose to 3.23% (vs. 2.47% YoY), compressing spread despite higher asset yields; NIM, while up YoY and QoQ, remains constrained .
  • Elevated non‑interest expense: Q3 OpEx increased 8.8% YoY to $7.6MM, largely from professional/accounting fees for internal control remediation; YTD OpEx +15.4% .
  • Deposits declined $10.4MM YTD to $672.2MM, pressuring funding while the bank relies on borrowings; uninsured deposits remain material at 34% (though improved vs. 37% YE23) .

Financial Results

Metric (USD)Q3 2023Q1 2024Q2 2024Q3 2024
Interest Income ($MM)$11.93 $14.79 $15.49 $16.17
Net Interest Income ($MM)$6.77 $7.50 $7.92 $8.33
Net Interest Margin (%)2.33% 2.27% 2.40% 2.49%
Net Income Attributable to Broadway ($K)$91 ($164) $269 $522
Diluted EPS to Common ($)$0.01 ($0.02) $0.03 ($0.03)
Provision for Credit Losses ($K)($2) $260 $494 $399

Notes:

  • EPS reflects preferred dividends (Q3 2024 preferred dividends $750K) .
  • Estimate comparisons omitted due to S&P Global data unavailability.

Segment breakdown: Company operates through City First Bank without reported operating segments in the earnings materials .

KPIs

KPIQ1 2024Q2 2024Q3 2024
Gross Loans End of Period ($MM)$934.8 $946.8 $975.3
Loan Originations ($MM)$71.5 $25.51 $39.20
Deposits End of Period ($MM)$695.5 $687.4 $672.2
Uninsured Deposits (%)38% 35% 34%
Non‑accrual Loans ($K)$401 $328 $291
ACL to Total Gross Loans (%)N/A0.86% 0.87%
Yield on Interest‑Earning Assets (%)4.45% 4.71% 4.82%
Average Cost of Funds (%)3.02% 3.19% 3.23%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal financial guidanceN/AN/ANone provided in Q3 materialsMaintained (no guidance)

Earnings Call Themes & Trends

Note: No Q3 2024 earnings call transcript was located; themes reflect Q1–Q3 press releases.

TopicPrevious Mentions (Q1 and Q2)Current Period (Q3)Trend
Net interest income and marginQ1: NIM 2.27% amid higher funding costs; Q2: NIM 2.40%, NII up 8.9% YoY NIM 2.49%, NII up 23.0% YoY; sequential gains Improving sequentially
Cost of funds and deposit mixQ1 cost of funds 3.02%; deposit growth via ICS; Q2 cost of funds 3.19%; added non‑interest‑bearing liabilities Cost of funds 3.23%; deposits down YTD; uninsured deposits decreased to 34% Funding costs elevated; mix improving
Loan growthQ1 loans +$46.2MM; Q2 loans +$59.0MM; originations $97.0MM YTD Loans $975.3MM; originations $136.2MM YTD Sustained growth
Credit qualityQ1 one NPL ($401K); Q2 two non‑accrual loans ($328K); no charge‑offs One NPL ($291K); no charge‑offs Stable/strong
Controls remediation and OpExQ1: investigation and non‑recurring costs; Q2: remediation steps and hiring Q3: higher professional fees linked to remediation Near‑term OpEx elevated
Rate environment impactQ1–Q2: FRB hikes drove funding costs higher; yield lift on assets Q3: securities AFS appreciated with Fed 50bp benchmark cut; OCI +$4.2MM Shift from hikes to initial easing effects

Management Commentary

  • “We continued our record of sequentially growing total interest income… and over 35% as compared to the third quarter of 2023… yields on our interest‑earning assets… have increased by 173 bps… I am pleased to report again that we only had one non‑performing loan… 0.03% of total loans.” — Brian Argrett, CEO .
  • “Our bottom-line performance has been constrained by compression in our net interest margin… Nonetheless, we increased net interest income… and net income attributable to Broadway during the third quarter…” — Brian Argrett, CEO .
  • Q2 framing: returning to profitability, increasing non‑interest‑bearing liabilities, and ongoing remediation of control weaknesses .
  • Q1 context: elevated professional services tied to internal control investigation; strategic hiring to build capabilities .

Q&A Highlights

  • No Q3 2024 earnings call transcript was found in the document sources reviewed; Q&A highlights not available. References used: Q3 8‑K/press release and prior quarter press releases .

Estimates Context

  • Wall Street consensus estimates (EPS and revenue) via S&P Global were unavailable at the time of analysis; therefore, beat/miss vs. estimates is not included.
  • Directionally, sequential NII/NIM improvement and pristine credit metrics may influence estimates, but without consensus data, we avoid inference .

Key Takeaways for Investors

  • Sequential improvement continues: interest income and NIM expanded again in Q3; watch for sustained margin recovery as funding costs stabilize .
  • Credit quality is a differentiator: one non‑accrual loan (0.03% loans), no charge‑offs; ACL increased with portfolio growth .
  • Funding mix trending better: uninsured deposits down to 34%; however, deposits declined YTD, and borrowings remain substantial—monitor liquidity/funding cost trajectory .
  • Expense normalization is a lever: remediation‑related professional fees elevated; as control issues are addressed, potential OpEx tailwinds could emerge .
  • Loan growth healthy: end‑period loans up to $975.3MM (+9.9% YTD); originations diversified across multifamily, CRE, and other commercial .
  • Securities AFS valuation benefited from a Fed rate cut, adding $4.2MM OCI—rate path could be a P&L and capital driver via NIM and AFS marks .
  • Without consensus estimates, trade setups should focus on sequential NIM momentum, loan growth pace, deposit mix changes, and expense remediation milestones documented in company releases .