Market Overview

Broadway Financial Corporation Announces Results for 2nd Quarter 2018

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Broadway Financial Corporation (the "Company") (NASDAQ Capital Market:
BYFC), parent company of Broadway Federal Bank, f.s.b. (the "Bank"),
today reported a net loss of $127 thousand, or $0.00 per diluted share,
for the second quarter of 2018, compared to net income of $533 thousand,
or $0.02 per diluted share, for the second quarter of 2017.

During the second quarter of 2018, our results were impacted by a
decline of $430 thousand in net interest income due to lower average
interest-earning assets, and a lower net interest margin compared to the
second quarter of last year. The decrease in average interest-earning
assets, which was the primary contributor to the decrease in net
interest income during the quarter, resulted primarily from the sale of
$101 million of performing multi-family loans over the past 18 months to
maintain compliance with loan concentration guidelines set by the Bank's
primary regulator. During the second quarter, the Bank had available
capacity to add loans to its portfolio and used that capacity to
originate $41.8 million of new loans to replenish interest-earning
assets. As a result, gains on loan sales decreased by $185 thousand in
the second quarter of 2018, compared to the second quarter of 2017. In
addition, results for the second quarter of 2017 included a favorable
adjustment to earnings from the reversal of a liability of $700 thousand
for deferred compensation, as well as recaptures of $300 thousand in
loan loss provisions.

For the six months ended June 30, 2018, the Company reported a net loss
of $211 thousand, or $0.01 per share, compared to net earnings of $1.8
million, or $0.07 per diluted share for the six months ended June 30,
2017.

During the first half of 2018 net interest income decreased by $735
thousand compared to the first half of 2017, primarily because of the
sale of loans mentioned above, $97 million of which occurred in 2017. In
addition, net income during the first six months of 2017 included
recaptures of loan loss provisions of $650 thousand, and gains on loan
sales of $223 thousand, as well as non-recurring income of $1.2 million
from an insurance litigation settlement, and the reversal of the $700
thousand deferred compensation liability mentioned above. The Company
did not have any loan loss provisions or recaptures during the first
half of 2018, and reported total gains on loan sales of $11 thousand.

Chief Executive Officer, Wayne Bradshaw, commented, "I am pleased to
report that Broadway is on plan for 2018, and, I believe, approaching an
inflection point for improved operating performance. As of the end of
June the Bank had a Total Capital ratio of 19.28%, a Tier 1 Leverage
ratio of almost 12% and no delinquencies in the entire loan portfolio.
Moreover, over the past five and one-half years, we have originated over
$550 million of new multi-family loans without experiencing any
delinquencies, demonstrating that Broadway has established, what we
believe are, best in class service and procedures for originating and
administering multi-family loans. Based on our track record, I am
optimistic that our efforts over the past year or so to obtain
authorization to increase our capacity to hold multi-family loans, and
develop platforms to offer other loan products that can leverage our
existing customer base and relationships, will bear fruit in the near
future so that we can increase our base of interest-earning assets,
develop economies of scale, and improve operating efficiency. We are
working diligently to put our capital to work and remain committed to
addressing the unrelenting demand for affordable housing, particularly
within our target market of low to moderate income communities in
Southern California.

"I wish to thank our team for their dedication and tireless efforts to
build value, and Broadway's stockholders for their continuing support of
our mission and business plan."

Net Interest Income

Net interest income for the second quarter of 2018 totaled $2.6 million,
compared to $3.0 million for the second quarter of 2017. The $430
thousand decrease in net interest income primarily resulted from lower
interest income on loans, offset by lower interest expense on FHLB
advances.

During the second quarter of 2018, interest income on loans decreased by
$529 thousand due to a decline of $36.1 million in the average balance
of loans receivable (including loans held for sale), which decreased
interest income by $349 thousand, and a decrease of 19 basis points in
loan yield, which reduced interest income by $180 thousand. The decrease
in the average balance of loans receivable was the result of loan sales
and payoffs over the 18 months. The decrease in loan yield primarily
resulted from payments received on church loans that have higher rates
than the multi-family loans originated over the last year.

Interest expense on FHLB advances decreased by $174 thousand during the
second quarter of 2018 compared to the second quarter of 2017. The
decrease in interest on FHLB advances was primarily due to a decrease of
$33.3 million in the average balance of FHLB advances, which decreased
interest expense by $157 thousand, and an 8 basis points decrease in the
average cost of FHLB advances, which decreased interest expense by $17
thousand.

Interest on deposits increased by $88 thousand during the second quarter
of 2018 compared to the second quarter of 2017. The increase was
attributable to higher rates paid on all deposit types, which caused
interest expense on deposits to increase by $153 thousand. However, the
average total deposit balance decreased by $15.4 million, which led to a
decrease in interest expense of $65 thousand.

For the six months ended June 30, 2018, net interest income decreased by
$735 thousand to $5.3 million from $6.1 million for the same period a
year ago. Average interest-earning assets decreased by $39.2 million
during the first six months of 2018 compared to the first six months of
2017, which decreased net interest income by $715 thousand. The net
interest margin decreased by 10 basis points to 2.70% for the six months
ended June 30, 2018 from 2.80% for the same period in 2017, primarily
due to a decline in loan yield and an increase in the cost of deposits.

Loan Loss Provision

The Company neither recorded nor recaptured any loan loss provision for
the second quarter or the first six months of 2018, compared to
recaptures of $300 thousand for the second quarter of 2017 and $650
thousand for the first six months of 2017. At June 30, 2018, the
allowance for loan losses ("ALLL") was $4.2 million, or 1.13% of our
gross loans receivable held for investment compared to 1.20% at December
31, 2017. The Company did not have any delinquent loans at June 30, 2018.

Non-interest Income

Non-interest income for the second quarter of 2018 totaled $170
thousand, compared to $322 thousand for the second quarter of 2017.
Non-interest income decreased by $152 thousand primarily because the
Bank recorded $185 thousand less in gain from the sale of loans during
the second quarter of 2018 compared to the same period last year. This
decrease was partially offset by an increase of $20 thousand in
miscellaneous loan fees and an increase of $11 thousand in service
charges on deposits during the second quarter of 2018 compared to the
second quarter of 2017.

For the six months ended June 30, 2018, non-interest income totaled $301
thousand, compared to $1.7 million for the same period a year ago. The
decrease of $1.4 million in non-interest income was primarily due to a
gain of $1.2 million from an insurance litigation settlement recorded in
the first half of 2017 and a decrease of $212 thousand in the amount of
gains on sales of loans during the first half of 2018 due to a decrease
of $42.5 million in loan sales.

Non-interest Expense

Non-interest expense for the second quarter of 2018 totaled $2.9
million, compared to $2.7 million for the second quarter of 2017. The
increase of $255 thousand in non-interest expense during the second
quarter of 2018 was primarily due to an increase of $423 thousand in
compensation and benefits expense and an increase of $24 thousand in REO
expense, offset by a decrease of $147 thousand in other expense and a
decrease of $48 thousand in professional services expense, primarily
legal expenses.

Compensation and benefits expense increased by $423 thousand during the
second quarter of 2018 compared to the second quarter of 2017 primarily
because compensation expense during the 2017 period included a reversal
of $700 thousand of deferred compensation expense related to a former
executive. The following items of compensation expense decreased during
the second quarter of 2018 compared to the second quarter of 2017: bonus
accruals were lower by $90 thousand, compensation allocated as deferred
loan origination costs was higher by $136 thousand, stock award expense
was lower by $31 thousand, and other compensation related expenses were
lower by $20 thousand.

REO expense increased during the quarter due to property taxes of $24
thousand for the Bank's sole REO property. Other expenses decreased by
$147 thousand during the second quarter of 2018 compared to the second
quarter of 2017 primarily because results for the second quarter of 2017
included expenses of $139 thousand associated with the U.S. Treasury's
sale of a portion of its holdings in the Company.

For the six months ended June 30, 2018, non-interest expense totaled
$6.0 million, compared to $5.7 million for the same period a year ago.
The increase of $244 thousand in non-interest expense was primarily due
to an increase of $341 thousand in compensation and benefits expense, an
increase of $88 thousand in REO expense, and an increase of $36 thousand
in marketing expense, which were partially offset by decreases of $34
thousand in professional services expense and $193 thousand in other
expenses, of which $139 thousand related to the U.S. Treasury's 2017
stock sales.

The increase of $341 thousand in compensation and benefits expense
during the first six months of 2018 compared to the first six months of
2017 primarily resulted from the $700 thousand reversal of deferred
compensation expense in 2017 described above. The following items of
compensation expense decreased during the first six months of 2018
compared to first six months of 2017: bonus accruals were lower by $124
thousand, compensation allocated as deferred loan origination costs was
higher by $176 thousand, commission expense was lower by $48 thousand,
and other compensation related expenses were lower by $11 thousand.

Income Taxes

Income tax expense or benefit are computed by applying the statutory
federal income tax rate of 21% and the California income tax rate of
10.84% to taxable income. The Company recorded income tax benefits of
$54 thousand and $97 thousand for the three and six months ended June
30, 2018, respectively, compared to income tax expense of $423 thousand
and $936 thousand for the three and six months ended June 30, 2017,
respectively. The Company's effective income tax benefits were 29.8% and
31.5% of our pretax losses for the three and six months ended June 30,
2018, respectively, compared to income tax expenses of 44.2% and 34.7%
of our taxable income for the comparable periods in 2017. The Company
had no valuation allowance on its deferred tax assets, which totaled
$5.2 million and $5.1 million at June 30, 2018 and December 31, 2017,
respectively.

Balance Sheet Summary

Total assets decreased by $1.6 million to $412.1 million at June 30,
2018 from $413.7 million at December 31, 2017. The decline in total
assets was comprised of a decrease of $8.6 million decrease in cash and
cash equivalents, a decrease of $1.5 million in securities available for
sale, and a decrease of $21.3 million in loans receivable held for sale,
of which $16.9 million represented a transfer to loans held for
investment in the first quarter of 2018. Offsetting these decreases was
an increase of $29.9 million in loans receivable held for investment.

Loans receivable held for investment, net of the allowance for loan
losses, totaled $364.8 million at June 30, 2018, compared to $334.9
million at December 31, 2017. During the first half of 2018, the Bank
originated for portfolio $56.8 million in loans, compared to $4.2
million originated for the portfolio during the first half of 2017.
Total originations of all loans were $41.8 million for the second
quarter of 2018, compared to $39.5 million for the second quarter of
2017. Loan repayments during the first half of 2018 totaled $43.6
million, compared to $33.9 million during the first half of 2017.

Deposits decreased to $271.3 million at June 30, 2018 from $291.3
million at December 31, 2017, which consisted primarily of a decrease of
$29.1 million in liquid deposits (NOW, demand, money market and passbook
accounts), offset by an increase of $8.8 million in certificates of
deposit. The decrease was primarily caused by one customer with large
deposit balances transferring funds from core deposits to CDARs, offset
in part by the Bank eliminating some higher cost CDs held by other
customers. FHLB advances increased to $84.0 million at June 30, 2018
from $65.0 million at December 31, 2017, as the Bank borrowed multiple
advances across different maturities to fund loans that were originated
during the latter part of the second quarter.

Stockholders' equity was $47.3 million, or 11.48% of the Company's total
assets, at June 30, 2018, compared to $47.7 million, or 11.54% of the
Company's total assets, at December 31, 2017. The Company's book value
was $1.73 per share as of June 30, 2018, compared to $1.74 per share as
of December 31, 2017.

At June 30, 2018, the Bank's Total Capital ratio was 19.28% and its
Leverage ratio (Tier 1 Capital to adjusted total assets) was 11.98%,
compared to a Total Capital ratio of 19.88% and a Leverage ratio of
11.39% at December 31, 2017.

About Broadway Financial Corporation

Broadway Financial Corporation conducts its operations through its
wholly-owned subsidiary, Broadway Federal Bank, f.s.b., which is the
leading community-oriented savings bank in Southern California serving
low-to-moderate income communities. We offer a variety of residential
and commercial real estate loan products for consumers, businesses, and
non-profit organizations, other loan products, and a variety of deposit
products, including checking, savings and money market accounts,
certificates of deposits and retirement accounts. The Bank operates
three full service branches, two in the city of Los Angeles, and one
located in the nearby city of Inglewood, California.

Shareholders, analysts and others seeking information about the Company
are invited to write to: Broadway Financial Corporation, Investor
Relations, 5055 Wilshire Blvd., Suite 500, Los Angeles, CA 90036, or
visit our website at www.broadwayfederalbank.com.

This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are based upon our management's current
expectations, and involve risks and uncertainties. Actual results or
performance may differ materially from those suggested, expressed, or
implied by the forward-looking statements due to a wide range of factors
including, but not limited to, the general business environment, the
real estate market, competitive conditions in the business and
geographic areas in which the Company conducts its business, regulatory
actions or changes, and other risks detailed in the Company's reports
filed with the Securities and Exchange Commission, including the
Company's Annual Reports on Form 10-K and Quarterly Reports on Form
10-Q. The Company undertakes no obligation to revise any forward-looking
statement to reflect any future events or circumstances, except to the
extent required by law.

 
BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY
Selected Financial Data and Ratios (Unaudited)
(Dollars in thousands, except per share data)
         
June 30, 2018 December 31, 2017
Selected Financial Condition Data and Ratios:
Cash and cash equivalents $ 13,598 $ 22,219
Securities available-for-sale, at fair value 15,977 17,494
Loans receivable held for sale 1,079 22,370
Loans receivable held for investment 368,991 338,920
Allowance for loan losses   (4,183 )   (4,069 )
Loans receivable held for investment, net of allowance 364,808 334,851
Total assets 412,060 413,704
Deposits 271,266 291,290
FHLB advances 84,000 65,000
Junior subordinated debentures 5,100 5,100
Total stockholders' equity 47,301 47,731
 
Book value per share $ 1.73 $ 1.74
Equity to total assets 11.48 % 11.54 %
 
Asset Quality Ratios:
Non-accrual loans to total loans 0.34 % 0.49 %
Non-performing assets to total assets 0.50 % 0.64 %
Allowance for loan losses to total gross loans 1.13 % 1.20 %
Allowance for loan losses to total delinquent loans N/A 243.65 %
Allowance for loan losses to non-performing loans 335.45 % 230.41 %
 
Non-Performing Assets:
Non-accrual loans $ 1,247 $ 1,766
Loans delinquent 90 days or more and still accruing - -
Real estate acquired through foreclosure   833     878  
Total non-performing assets $ 2,080   $ 2,644  
 
 
 
Three Months Ended June 30, Six Months Ended June 30,
Selected Operating Data and Ratios: 2018 2017 2018 2017
Interest income $ 3,634 $ 4,136 $ 7,392 $ 8,273
Interest expense   1,062     1,134     2,046     2,192  
Net interest income 2,572 3,002 5,346 6,081
Loan loss provision recapture   -     300     -     650  
Net interest income after loan loss provision recapture 2,572 3,302 5,346 6,731
Non-interest income 170 322 301 1,681
Non-interest expense   (2,923 )   (2,668 )   (5,955 )   (5,711 )
(Loss) income before income taxes (181 ) 956 (308 ) 2,701
Income tax (benefit) expense   (54 )   423     (97 )   936  
Net (loss) income $ (127 ) $ 533   $ (211 ) $ 1,765  
 
(Loss) earnings per common share-basic and diluted $ - $ 0.02 $ (0.01 ) $ 0.07
 
Loan originations (1) $ 41,783 $ 39,498 (2 ) $ 56,795 $ 90,143
 
Net recoveries to average loans (0.00 )% (3 ) (0.16 )% (3 ) (0.06 )% (3 ) (0.15 )%
Return on average assets (0.13 )% (3 ) 0.47 % (3 ) (0.10 )% (3 ) 0.79 %
Return on average equity (1.07 )% (3 ) 4.51 % (3 ) (0.89 )% (3 ) 7.60 %
Net interest margin 2.62 % (3 ) 2.72 % (3 ) 2.70 % (3 ) 2.80 %
 
(1)   Does not include net deferred origination costs.
(2) Includes loans held for sale originations of $37.2 million and $85.9
million for the three and six months ended June 30, 2017,
respectively.
(3) Annualized

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