QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class:
|
Trading Symbol(s)
|
Name of each exchange on which registered:
|
||
(including attached preferred stock purchase rights)
|
|
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
|
☒
|
Smaller reporting company
|
|
Emerging growth company
|
|
TABLE OF CONTENTS
|
|||
Page
|
|||
PART I.
|
FINANCIAL STATEMENTS
|
||
Item 1.
|
Consolidated Financial Statements (Unaudited)
|
||
1
|
|||
2
|
|||
3
|
|||
4
|
|||
5
|
|||
Item 2.
|
25
|
||
Item 3.
|
33 | ||
Item 4.
|
33 | ||
PART II.
|
OTHER INFORMATION
|
||
Item 1.
|
34 | ||
Item 1A.
|
34 | ||
Item 2.
|
34 | ||
Item 3.
|
34 | ||
Item 4.
|
34 | ||
Item 5.
|
34 | ||
Item 6.
|
34 | ||
35 |
March 31, 2023
|
December 31, 2022
|
|||||||
(Unaudited)
|
||||||||
Assets:
|
||||||||
Cash and due from banks
|
$
|
|
$
|
|
||||
Interest-bearing deposits in other banks
|
|
|
||||||
Cash and cash equivalents
|
|
|
||||||
Securities available-for-sale, at fair value
|
|
|
||||||
Loans receivable held for investment, net of allowance of $
|
|
|
||||||
Accrued interest receivable
|
|
|
||||||
Federal Home Loan Bank (FHLB) stock
|
|
|
||||||
Federal Reserve Bank (FRB) stock
|
||||||||
Office properties and equipment, net
|
|
|
||||||
Bank owned life insurance
|
|
|
||||||
Deferred tax assets, net
|
|
|
||||||
Core deposit intangible, net
|
||||||||
Goodwill
|
||||||||
Other assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
Liabilities and stockholders’ equity
|
||||||||
Liabilities:
|
||||||||
Deposits
|
$
|
|
$
|
|
||||
Securities sold under agreements to repurchase
|
||||||||
FHLB advances
|
|
|
||||||
Notes payable
|
||||||||
Accrued expenses and other liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
Non-Cumulative Redeemable Perpetual Preferred stock, Series C;
authorized
|
||||||||
Common stock, Class A, $
|
|
|
||||||
Common stock, Class B, $
|
||||||||
Common stock, Class C, $
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Retained earnings
|
|
|
||||||
Unearned Employee Stock Ownership Plan (ESOP) shares
|
(
|
)
|
(
|
)
|
||||
Accumulated other comprehensive loss, net of tax
|
(
|
)
|
(
|
)
|
||||
Treasury stock-at cost,
|
(
|
)
|
(
|
)
|
||||
Total Broadway Financial Corporation and Subsidiary stockholders’ equity
|
|
|
||||||
Non-controlling interest
|
||||||||
Total liabilities and stockholders’ equity
|
$
|
|
$
|
|
|
Three Months Ended
March 31,
|
|||||||
|
2023
|
2022
|
||||||
Interest income:
|
||||||||
Interest and fees on loans receivable
|
$
|
|
$
|
|
||||
Interest on available-for-sale securities
|
|
|
||||||
Other interest income
|
|
|
||||||
Total interest income
|
|
|
||||||
|
||||||||
Interest expense:
|
||||||||
Interest on deposits
|
|
|
||||||
Interest on borrowings
|
|
|
||||||
Total interest expense
|
|
|
||||||
|
||||||||
Net interest income
|
|
|
||||||
Provision for credit losses
|
|
|
||||||
Net interest income after provision for credit losses
|
|
|
||||||
|
||||||||
Non-interest income:
|
||||||||
Service charges
|
|
|
||||||
Other
|
|
|
||||||
Total non-interest income
|
|
|
||||||
|
||||||||
Non-interest expense:
|
||||||||
Compensation and benefits
|
|
|
||||||
Occupancy expense
|
|
|
||||||
Information services
|
|
|
||||||
Professional services
|
|
|
||||||
Supervisory costs
|
|
|
||||||
Office services and supplies
|
|
|
||||||
Advertising and promotional expense | ||||||||
Corporate insurance
|
|
|
||||||
Appraisal and other loan expense |
||||||||
Amortization of core deposit intangible
|
|
|
||||||
Travel expense |
||||||||
Other
|
|
|
||||||
Total non-interest expense
|
|
|
||||||
|
||||||||
Income before income taxes
|
|
|
||||||
Income tax expense
|
|
|
||||||
Net income
|
$
|
|
$
|
|
||||
Less: Net income attributable to non-controlling interest
|
|
|
||||||
Net income attributable to Broadway Financial Corporation
|
$
|
|
$
|
|
||||
|
||||||||
Other comprehensive income, net of tax:
|
||||||||
Unrealized gains (losses) on securities available-for-sale arising during the period
|
$
|
|
$
|
(
|
)
|
|||
Income tax expense (benefit)
|
|
(
|
)
|
|||||
Other comprehensive income (loss), net of tax
|
|
(
|
)
|
|||||
|
||||||||
Comprehensive income (loss)
|
$
|
|
$
|
(
|
)
|
|||
|
||||||||
Earnings per common share-basic
|
$
|
|
$
|
|
||||
Earnings per common share-diluted
|
$
|
|
$
|
|
Three Months Ended
March 31, |
||||||||
2023
|
2022
|
|||||||
(In thousands)
|
||||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
|
$
|
|
||||
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
|
||||||||
Provision for credit losses
|
|
|
||||||
Depreciation
|
|
|
||||||
Net change of deferred loan origination costs
|
(
|
)
|
(
|
)
|
||||
Net amortization of premiums & discounts on
available-for-sale securities
|
(
|
)
|
|
|||||
Amortization of purchase accounting marks on loans
|
|
(
|
)
|
|||||
Amortization of core deposit intangible
|
|
|
||||||
Director compensation expense-common stock
|
|
|
||||||
Accretion of premium on FHLB advances
|
|
(
|
)
|
|||||
Stock-based compensation expense
|
|
|
||||||
ESOP compensation expense
|
(
|
)
|
|
|||||
Earnings on bank owned life insurance
|
(
|
)
|
(
|
)
|
||||
Change in assets and liabilities:
|
||||||||
Net change in deferred taxes
|
|
|
||||||
Net change in accrued interest receivable
|
( |
) | ||||||
Net change in other assets
|
|
(
|
)
|
|||||
Net change in accrued expenses and other liabilities
|
|
(
|
)
|
|||||
Net cash provided by (used in) operating activities
|
|
(
|
)
|
|||||
Cash flows from investing activities:
|
||||||||
Net change in loans receivable held for investment
|
(
|
)
|
(
|
)
|
||||
Principal payments on available-for-sale securities
|
|
|
||||||
Purchase of available-for-sale securities
|
|
(
|
)
|
|||||
Purchase of FHLB stock
|
(
|
)
|
|
|||||
Proceeds from redemption of FHLB stock
|
|
|
||||||
Proceeds from redemption of FRB stock |
||||||||
Purchase of office properties and equipment
|
(
|
)
|
(
|
)
|
||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Net change in deposits
|
(
|
)
|
|
|||||
Net change in securities sold under agreements to repurchase
|
|
|
||||||
Increase in unreleased ESOP shares
|
(
|
)
|
|
|||||
Dividends paid on preferred stock
|
|
(
|
)
|
|||||
Proceeds from FHLB advances
|
|
|
||||||
Repayments of FHLB advances
|
(
|
)
|
(
|
)
|
||||
Net cash provided by financing activities
|
|
|
||||||
Net change in cash and cash equivalents
|
|
|
||||||
Cash and cash equivalents at beginning of the period
|
|
|
||||||
Cash and cash equivalents at end of the period
|
$
|
|
$
|
|
||||
Supplemental disclosures of cash flow
information:
|
||||||||
Cash paid for interest
|
$
|
|
$
|
|
||||
Cash paid for income taxes
|
|
|
||||||
Supplemental non-cash disclosures: |
||||||||
Common stock issued in exchange for preferred stock |
|
Three-Month Period Ended March 31,
2023 and 2022
|
|||||||||||||||||||||||||||||||||||||||
|
Preferred Stock Non-Voting
|
Common
Stock
Voting
|
Common
Stock Non-Voting
|
Additional
Paid-in
Capital
|
Accumulated Other Comprehensive (Loss)
|
Retained Earnings
|
Unearned
ESOP Shares
|
Treasury
Stock
|
Non-Controlling Interest
|
Total
Stockholders’
Equity
|
||||||||||||||||||||||||||||||
|
(In thousands)
|
|||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2023
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||||||||||
Cumulative effect of change related to adoption of ASU 2016-13
|
( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
Adjusted balance, January 1, 2023
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
Release of unearned ESOP shares
|
|
|
|
(
|
)
|
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||||||||||||
Increase in unreleased shares
|
( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Director stock compensation expense
|
||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
Balance at March 31, 2023
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2022
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
|||||||||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
Conversion of preferred stock into common stock
|
(
|
)
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Conversion of non-voting common shares into voting common shares
|
( |
) | ||||||||||||||||||||||||||||||||||||||
Release of unearned ESOP shares
|
||||||||||||||||||||||||||||||||||||||||
Dividends paid on preferred stock
|
( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
Director stock compensation expense
|
||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
Other comprehensive loss, net of tax
|
|
|
|
|
(
|
)
|
|
|
|
|
(
|
)
|
||||||||||||||||||||||||||||
Balance at March 31, 2022
|
$ |
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
Pre-CECL Adoption
|
Impact of
CECL Adoption
|
As Reported
Under CECL
|
||||||||||
(In thousands)
|
||||||||||||
Assets:
|
||||||||||||
Allowance for credit losses on available-for-sale securities
|
$
|
|
$
|
|
$
|
|
||||||
Allowance for credit losses on loans
|
|
|
|
|||||||||
Deferred tax assets
|
|
|
|
|||||||||
Liabilities:
|
||||||||||||
Allowance for credit losses on off-balance sheet exposures
|
|
(
|
)
|
|
||||||||
Stockholders’ equity:
|
||||||||||||
Retained earnings
|
|
(
|
)
|
|
Three Months Ended
March 31,
|
||||||||
2023
|
2022
|
|||||||
(Dollars in thousands, except
share and per share data)
|
||||||||
Net income attributable to Broadway Financial Corporation
|
$
|
|
$
|
|
||||
Less net income attributable to participating securities
|
|
|
||||||
Income available to common stockholders
|
$
|
|
$
|
|
||||
Weighted average common shares outstanding for basic earnings per common share
|
|
|
||||||
Add: dilutive effects of unvested restricted stock awards | ||||||||
Add: dilutive effects of assumed exercise of stock options |
||||||||
Weighted average common shares outstanding for diluted earnings per common share
|
|
|
||||||
Earnings per common share - basic
|
$
|
|
$
|
|
||||
Earnings per common share - diluted
|
$
|
|
$
|
|
Amortized
Cost |
Gross
Unrealized Gains
|
Gross
Unrealized Losses
|
Fair
Value
|
|||||||||||||
(In thousands)
|
||||||||||||||||
March 31, 2023:
|
||||||||||||||||
Federal agency mortgage-backed securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
Federal agency collateralized mortgage obligations (“CMO”)
|
( |
) | ||||||||||||||
Federal agency debt
|
|
|
(
|
)
|
|
|||||||||||
Municipal bonds
|
|
|
(
|
)
|
|
|||||||||||
U.S. Treasuries
|
|
|
(
|
)
|
|
|||||||||||
SBA pools
|
|
|
(
|
)
|
|
|||||||||||
Total available-for-sale securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
December 31, 2022:
|
||||||||||||||||
Federal agency mortgage-backed securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
Federal agency CMOs |
( |
) | ||||||||||||||
Federal agency debt
|
|
|
(
|
)
|
|
|||||||||||
Municipal bonds
|
|
|
(
|
)
|
|
|||||||||||
U.S. Treasuries |
( |
) | ||||||||||||||
SBA pools
|
( |
) | ||||||||||||||
Total available-for-sale securities
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
Amortized
Cost
|
Gross
Unrealized Gains
|
Gross
Unrealized Losses
|
Fair
Value
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Due in one year or less
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
Due after one year through five years
|
|
|
(
|
)
|
|
|||||||||||
Due after five years through ten years
|
|
|
(
|
)
|
|
|||||||||||
Due after ten years (1)
|
|
|
(
|
)
|
|
|||||||||||
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
(1)
|
|
Less than 12 Months
|
12 Months or Longer
|
Total
|
||||||||||||||||||||||
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
|||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
March 31, 2023:
|
||||||||||||||||||||||||
Federal agency mortgage-backed securities
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||||||
Federal agency CMOs
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Federal agency debt
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Municipal bonds
|
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||
U. S. Treasuries
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
SBA pools
|
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||
Total unrealized loss position investment securities
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||||||
December 31, 2022:
|
||||||||||||||||||||||||
Federal agency mortgage-backed securities
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||||||
Federal agency CMOs |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Federal agency debt
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
Municipal bonds
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
U. S. Treasuries
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||
SBA pools |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Total unrealized loss position investment securities
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
March 31, 2023
|
December 31, 2022
|
|||||||
(In thousands)
|
||||||||
Real estate:
|
||||||||
Single family
|
$
|
|
$
|
|
||||
Multi-family
|
|
|
||||||
Commercial real estate
|
|
|
||||||
Church
|
|
|
||||||
Construction
|
|
|
||||||
Commercial – other
|
|
|
||||||
SBA loans (1) |
||||||||
Consumer
|
|
|
||||||
Gross loans receivable before deferred loan costs and premiums
|
|
|
||||||
Unamortized net deferred loan costs and premiums
|
|
|
||||||
Gross loans receivable
|
|
|
||||||
Credit and interest marks on purchased loans, net |
( |
) | ( |
) | ||||
Allowance for credit losses (2)
|
(
|
)
|
(
|
)
|
||||
Loans receivable, net
|
$
|
|
$
|
|
(1)
|
|
(2) |
|
|
March 31, 2023
|
December 31, 2022
|
||||||
Real estate: |
(In thousands) |
|||||||
Single family
|
$ |
$
|
|
|||||
Commercial – other
|
|
|||||||
$ |
$
|
|
March 31, 2023
|
March 31, 2022
|
|||||||
(In thousands) |
||||||||
Balance at the beginning of the period
|
$ |
$
|
|
|||||
Deduction due to payoffs
|
(
|
)
|
||||||
Accretion
|
(
|
)
|
||||||
Balance at the end of the period
|
$ |
$
|
|
March 31, 2023
|
||||||||||||||||||||||||
Beginning
Balance
|
Impact of
CECL
Adoption
|
Charge-offs
|
Recoveries
|
Provision
(benefit)
|
Ending Balance
|
|||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
Loans receivable held for investment:
|
||||||||||||||||||||||||
Single family
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||
Multi-family
|
|
|
|
|
|
|
||||||||||||||||||
Commercial real estate
|
|
|
|
|
|
|
||||||||||||||||||
Church
|
|
|
|
|
(
|
)
|
|
|||||||||||||||||
Construction
|
|
|
|
|
|
|
||||||||||||||||||
Commercial - other
|
|
|
|
|
(
|
)
|
|
|||||||||||||||||
SBA loans
|
|
|
|
|
|
|
||||||||||||||||||
Consumer
|
|
(
|
)
|
|
|
|
|
|||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
For the Three Months Ended March 31, 2022
|
||||||||||||||||||||||||||||||||
Real Estate
|
||||||||||||||||||||||||||||||||
Single
Family
|
Multi-
Family
|
Commercial
Real Estate
|
Church
|
Construction
|
Commercial - Other
|
Consumer
|
Total
|
|||||||||||||||||||||||||
(In thousands) |
||||||||||||||||||||||||||||||||
Beginning balance
|
$
|
|
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Provision for (recapture of) loan losses
|
|
( |
) | ( |
) | |||||||||||||||||||||||||||
Recoveries
|
|
|||||||||||||||||||||||||||||||
Loans charged off
|
|
|||||||||||||||||||||||||||||||
Ending balance
|
$
|
|
$ | $ | $ | $ | $ |
March 31, 2023
|
||||||||||||||||||||
|
Single Family
|
Condominium
|
Church
|
Business Assets
|
Total
|
|||||||||||||||
Real estate:
|
(In thousands)
|
|||||||||||||||||||
Single family
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Commercial real estate
|
|
|
|
|
|
|||||||||||||||
Church
|
|
|
|
|
|
|||||||||||||||
Commercial – other
|
|
|
|
|
|
|||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2022
|
||||||||||||||||||||||||||||||||
Real Estate
|
||||||||||||||||||||||||||||||||
Single
Family
|
Multi-
Family |
Commercial
Real Estate
|
Church
|
Construction
|
Commercial - Other
|
Consumer |
Total
|
|||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
Allowance for loan losses:
|
||||||||||||||||||||||||||||||||
Ending allowance balance attributable to loans:
|
||||||||||||||||||||||||||||||||
Individually evaluated for impairment
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
$
|
|
$
|
|
|||||||||||||||||
Collectively evaluated for impairment
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total ending allowance balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Loans:
|
||||||||||||||||||||||||||||||||
Loans individually evaluated for impairment
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Loans collectively evaluated for impairment
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Subtotal | ||||||||||||||||||||||||||||||||
Loans acquired in the Merger | ||||||||||||||||||||||||||||||||
Total ending loans balance
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2022
|
||||||||||||
Unpaid
Principal Balance |
Recorded
Investment
|
Allowance for
Loan Losses
Allocated
|
||||||||||
(In thousands)
|
||||||||||||
With no related allowance recorded:
|
||||||||||||
Church
|
$
|
|
$
|
|
$
|
–
|
||||||
With an allowance recorded:
|
||||||||||||
Single family
|
|
|
|
|||||||||
Church
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
Three Months Ended March
31, 2022
|
||||||||
Average
Recorded
Investment
|
Cash Basis
Interest
Income
Recognized
|
|||||||
(In thousands)
|
||||||||
Single family
|
$
|
|
$
|
|
||||
Multi-family
|
|
|
||||||
Church
|
|
|
||||||
Total
|
$
|
|
$
|
|
March 31, 2023
|
||||||||||||||||||||||||
30-59
Days
Past Due
|
60-89
Days
Past Due
|
Greater
than
90 Days
Past Due
|
Total
Past Due
|
Current
|
Total
|
|||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
Loans receivable held for investment:
|
||||||||||||||||||||||||
Single family
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Multi-family
|
|
|
|
|
|
|
||||||||||||||||||
Commercial real estate
|
|
|
|
|
|
|
||||||||||||||||||
Church
|
|
|
|
|
|
|
||||||||||||||||||
Construction
|
|
|
|
|
|
|
||||||||||||||||||
Commercial - other
|
|
|
|
|
|
|
||||||||||||||||||
SBA loans |
||||||||||||||||||||||||
Consumer
|
|
|
|
|
|
|
||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
December 31, 2022
|
||||||||||||||||||||||||
30-59
Days
Past Due
|
60-89
Days
Past Due
|
Greater
than
90 Days
Past Due
|
Total
Past Due
|
Current
|
Total
|
|||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
Loans receivable held for investment:
|
||||||||||||||||||||||||
Single family
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Multi-family
|
|
|
|
|
|
|
||||||||||||||||||
Commercial real estate
|
|
|
|
|
|
|
||||||||||||||||||
Church
|
|
|
|
|
|
|
||||||||||||||||||
Construction
|
|
|
|
|
|
|
||||||||||||||||||
Commercial - other
|
|
|
|
|
|
|
||||||||||||||||||
SBA loans |
||||||||||||||||||||||||
Consumer |
|
|
|
|
|
|
||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
March 31, 2023
|
December 31, 2022
|
|||||||
(In thousands)
|
||||||||
Loans receivable held for investment:
|
||||||||
Church
|
$ |
|
$ |
|
||||
Total non-accrual loans
|
$
|
|
$
|
|
● |
Watch. Loans classified as watch exhibit weaknesses that could
threaten the current net worth and paying capacity of the obligors. Watch graded loans are generally performing and are not more than 59 days past due. A watch rating is used when a material deficiency exists,
but correction is anticipated within an acceptable time frame.
|
● |
Special Mention. Loans classified as special mention have a potential
weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position
at some future date.
|
● |
Substandard. Loans classified as substandard are inadequately
protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the
debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
|
● |
Doubtful. Loans classified as doubtful have all the weaknesses
inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly
questionable and improbable.
|
● |
Loss. Loans classified as loss are considered uncollectible and of such little value that to continue to carry the loan as an active asset is no longer warranted.
|
Term Loans Amortized Cost Basis by Origination Year - As of March 31, 2023
|
||||||||||||||||||||||||||||||||
|
2023
|
2022
|
2021
|
2020
|
2019
|
Prior
|
Revolving Loans
|
Total
|
||||||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||||||||||
Single family:
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Watch
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
||||||||||||||||||||||||||||||||
Multi-family:
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Watch
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
||||||||||||||||||||||||||||||||
Commercial real estate:
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Watch
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
$
|
|
$
|
|
|
$
|
|
$
|
|
||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
||||||||||||||||||||||||||||||||
Church:
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Watch
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
||||||||||||||||||||||||||||||||
Construction:
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Watch
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
||||||||||||||||||||||||||||||||
Commercial – others:
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Watch
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
||||||||||||||||||||||||||||||||
SBA:
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Watch
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
||||||||||||||||||||||||||||||||
Consumer:
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Watch
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
|
||||||||||||||||||||||||||||||||
Total loans:
|
||||||||||||||||||||||||||||||||
Pass
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Watch
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Special Mention
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Substandard
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Total loans
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|
December 31, 2022
|
|||||||||||||||||||||||||||
|
Pass
|
Watch
|
Special Mention
|
Substandard
|
Doubtful
|
Loss
|
Total | |||||||||||||||||||||
Single family
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$ | |||||||||||||||
Multi-family
|
|
|
|
|
|
|
||||||||||||||||||||||
Commercial real estate
|
|
|
|
|
|
|
||||||||||||||||||||||
Church
|
|
|
|
|
|
|
||||||||||||||||||||||
Construction
|
|
|
|
|
|
|
||||||||||||||||||||||
Commercial – others
|
|
|
|
|
|
|
||||||||||||||||||||||
SBA
|
|
|
|
|
|
|||||||||||||||||||||||
Consumer |
||||||||||||||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$ |
Goodwill |
Core Deposit
Intangible
|
|||||||
(In thousands) |
||||||||
Balance at the beginning of the period
|
$
|
|
$
|
|
||||
Additions
|
|
|||||||
Change in deferred tax estimate
|
|
|||||||
Amortization
|
(
|
)
|
||||||
Balance at the end of the period
|
$ |
$
|
|
Core deposit intangible acquired
|
$
|
|
||
Less: accumulated amortization | ( |
) | ||
|
$
|
|
2023
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
Thereafter
|
|
|||
$
|
|
Fair Value Measurement
|
||||||||||||||||
Quoted Prices
in Active Markets
for Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Total
|
|||||||||||||
(In thousands)
|
||||||||||||||||
At March 31, 2023:
|
||||||||||||||||
Securities available-for-sale:
|
||||||||||||||||
Federal agency mortgage-backed
|
$
|
|
$ |
$
|
|
$ | ||||||||||
Federal agency CMO
|
|
|
||||||||||||||
Federal agency debt
|
|
|
||||||||||||||
Municipal bonds
|
|
|
||||||||||||||
U.S. Treasuries
|
|
|
||||||||||||||
SBA pools
|
|
|
||||||||||||||
At December 31, 2022:
|
||||||||||||||||
Securities available-for-sale:
|
||||||||||||||||
Federal agency mortgage-backed
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Federal agency CMO
|
|
|
|
|
||||||||||||
Federal agency debt
|
|
|
|
|
||||||||||||
Municipal bonds
|
|
|
|
|
||||||||||||
U.S. Treasuries
|
|
|
|
|
||||||||||||
SBA pools
|
|
|
|
|
Fair Value Measurements at March 31, 2023
|
||||||||||||||||||||
Carrying
Value
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Financial Assets:
|
||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | $ | |||||||||||||||
Securities available-for-sale |
||||||||||||||||||||
Loans receivable held for investment
|
|
|
|
|
|
|||||||||||||||
Accrued interest receivables |
||||||||||||||||||||
Bank owned life insurance |
||||||||||||||||||||
Financial Liabilities:
|
||||||||||||||||||||
Deposits
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
FHLB advances
|
||||||||||||||||||||
Securities sold under agreements to repurchase |
|
|
|
|
|
|||||||||||||||
Note payable |
||||||||||||||||||||
Accrued interest payable |
Fair Value Measurements at December 31, 2022
|
||||||||||||||||||||
Carrying
Value
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Financial Assets:
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Securities available-for-sale
|
|
|
|
|
|
|||||||||||||||
Loans receivable held for investment
|
|
|
|
|
|
|||||||||||||||
Accrued interest receivables
|
|
|
|
|
|
|||||||||||||||
Bank owned life insurance
|
|
|
|
|
|
|||||||||||||||
Financial Liabilities:
|
||||||||||||||||||||
Deposits
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
FHLB advances
|
|
|
|
|
|
|||||||||||||||
Securities sold under agreements to repurchase | ||||||||||||||||||||
Note payable
|
|
|
|
|
|
|||||||||||||||
Accrued interest payable |
March 31, 2023
|
||||||||
Number
Outstanding
|
Weighted
Average
Exercise Price
|
|||||||
Outstanding at beginning of period
|
|
$
|
|
|||||
Granted during period
|
|
|
||||||
Exercised during period
|
|
|
||||||
Forfeited or expired during period
|
|
|
||||||
Outstanding at end of period
|
|
$
|
|
|||||
Exercisable at end of period
|
|
$
|
|
Outstanding
|
Exercisable
|
||||||||||||||||||||||
Number
Outstanding
|
Weighted Average
Remaining
Contractual Life
|
Weighted
Average
Exercise Price
|
Aggregate
Intrinsic
Value
|
Number
Outstanding
|
Weighted
Average
Exercise Price
|
Aggregate
Intrinsic
Value
|
|||||||||||||||||
|
|
$
|
|
$
|
|
|
$
|
|
$
|
|
March 31, 2023
|
December 31, 2022
|
|||||||
(Dollars in thousands)
|
||||||||
Allocated to participants
|
|
|
||||||
Committed to be released
|
|
|
||||||
Suspense shares
|
|
|
||||||
Total ESOP shares
|
|
|
||||||
Fair value of unearned shares
|
$
|
|
$
|
|
Actual
|
Minimum Required to
Be Well Capitalized
Under Prompt Corrective
Action Provisions
|
|||||||||||||||
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||
(Dollars in thousands)
|
||||||||||||||||
March 31,
2023:
|
||||||||||||||||
Community Bank Leverage Ratio
|
$
|
|
|
% |
$
|
|
|
% | ||||||||
December 31,
2022:
|
||||||||||||||||
Community Bank Leverage Ratio
|
$
|
|
|
%
|
$
|
|
|
% |
ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
For the Three Months Ended
|
||||||||||||||||||||||||
March 31, 2023
|
March 31, 2022
|
|||||||||||||||||||||||
(Dollars in Thousands)
|
Average Balance
|
Interest
|
Average Yield/Cost
|
Average Balance
|
Interest
|
Average Yield/Cost
|
||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Interest-earning deposits
|
$
|
17,044
|
$
|
119
|
2.79
|
%
|
$
|
220,266
|
$
|
84
|
0.15
|
%
|
||||||||||||
Securities
|
328,767
|
2,180
|
2.65
|
%
|
160,968
|
553
|
1.37
|
%
|
||||||||||||||||
Loans receivable (1)
|
762,669
|
8,535
|
4.48
|
%
|
653,493
|
7,336
|
4.49
|
%
|
||||||||||||||||
FRB and FHLB stock
|
10,665
|
209
|
7.84
|
%
|
3,046
|
38
|
4.99
|
%
|
||||||||||||||||
Total interest-earning assets
|
1,119,145
|
$
|
11,043
|
3.95
|
%
|
1,037,773
|
$
|
8,011
|
3.09
|
%
|
||||||||||||||
Non-interest-earning assets
|
67,947
|
74,542
|
||||||||||||||||||||||
Total assets
|
$
|
1,187,092
|
$
|
1,112,315
|
||||||||||||||||||||
Liabilities and Stockholders’ Equity
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Money market deposits
|
$
|
134,047
|
$
|
771
|
2.30
|
%
|
$
|
207,078
|
$
|
189
|
0.37
|
%
|
||||||||||||
Savings deposits
|
61,317
|
13
|
0.08
|
%
|
66,825
|
8
|
0.05
|
%
|
||||||||||||||||
Interest checking and other demand deposits
|
239,024
|
77
|
0.13
|
%
|
230,461
|
39
|
0.07
|
%
|
||||||||||||||||
Certificate accounts
|
147,260
|
442
|
1.20
|
%
|
201,446
|
114
|
0.23
|
%
|
||||||||||||||||
Total deposits
|
581,648
|
1,303
|
0.90
|
%
|
705,810
|
350
|
0.20
|
%
|
||||||||||||||||
FHLB advances
|
145,201
|
1,323
|
3.64
|
%
|
77,849
|
342
|
1.76
|
%
|
||||||||||||||||
Other borrowings
|
69,618
|
143
|
0.82
|
%
|
68,019
|
147
|
0.86
|
%
|
||||||||||||||||
Total borrowings
|
214,819
|
1,466
|
2.73
|
%
|
145,868
|
489
|
1.34
|
%
|
||||||||||||||||
Total interest-bearing liabilities
|
796,467
|
$
|
2,769
|
1.39
|
%
|
851,678
|
$
|
839
|
0.39
|
%
|
||||||||||||||
Non-interest-bearing liabilities
|
109,955
|
121,912
|
||||||||||||||||||||||
Stockholders’ equity
|
280,670
|
138,725
|
||||||||||||||||||||||
Total liabilities and stockholders’ equity
|
$
|
1,187,092
|
$
|
1,112,315
|
||||||||||||||||||||
Net interest rate spread (2)
|
$
|
8,274
|
2.56
|
%
|
$
|
7,172
|
2.69
|
%
|
||||||||||||||||
Net interest rate margin (3)
|
2.96
|
%
|
2.76
|
%
|
||||||||||||||||||||
Ratio of interest-earning assets to interest-bearing liabilities
|
140.51
|
%
|
121.85
|
%
|
(1) |
Amount is net of deferred loan fees, loan discounts and loans in process, and includes deferred origination costs and loan premiums.
|
(2) |
Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
|
(3) |
Net interest rate margin represents net interest income as a percentage of average interest-earning assets.
|
Common Equity
Capital
|
Shares Outstanding
|
Per Share
Amount
|
||||||||||
(Dollars in thousands)
|
||||||||||||
March 31, 2023:
|
||||||||||||
Common book value
|
$
|
129,385
|
73,503,292
|
$
|
1.76
|
|||||||
Less:
|
||||||||||||
Goodwill
|
25,858
|
|||||||||||
Net unamortized core deposit intangible
|
2,403
|
|||||||||||
Tangible book value
|
$
|
101,124
|
73,503,292
|
$
|
1.38
|
|||||||
December 31, 2022:
|
||||||||||||
Common book value
|
$
|
129,482
|
73,432,517
|
$
|
1.76
|
|||||||
Less:
|
||||||||||||
Goodwill
|
25,858
|
|||||||||||
Net unamortized core deposit intangible
|
2,501
|
|||||||||||
Tangible book value
|
$
|
101,123
|
$
|
73,432,517
|
$
|
1.38
|
ITEM 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4. |
CONTROLS AND PROCEDURES
|
Item 1. |
LEGAL PROCEEDINGS
|
Item 1A. |
RISK FACTORS
|
Item 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Item 3. |
DEFAULTS UPON SENIOR SECURITIES
|
Item 4. |
MINE SAFETY DISCLOSURES
|
Item 5. |
OTHER INFORMATION
|
Item 6. |
EXHIBITS
|
Exhibit
Number*
|
|
Amended and Restated Certificate of Incorporation of Registrant effective as of April 1, 2022 (Exhibit 3.1 to Form 8-K filed by Registrant on April 5, 2021)
|
|
Bylaws of Registrant (Exhibit 3.2 to Form 8-K filed by Registrant on August 24, 2020)
|
|
Certificate of Designations of Senior Non-Cumulative Perpetual Preferred Stock, Series C (Exhibit 3.1 to Form 8-K filed by Registrant on June 8, 2022)
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
101.INS
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
Inline XBRL Taxonomy Extension Definitions Linkbase Document
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
* |
Exhibits followed by a parenthetical reference are incorporated by reference herein from the document filed by the Registrant with the SEC described therein. Except as otherwise indicated, the SEC File No. for each incorporated
document is 000-27464.
|
** |
Management contract or compensatory plan or arrangement.
|
Date: May 16, 2023
|
By:
|
/s/ Brian Argrett
|
Brian Argrett
|
||
Chief Executive Officer
|
||
Date: May 16, 2023
|
By:
|
/s/ Brenda J. Battey
|
Brenda J. Battey
|
||
Chief Financial Officer
|