Broadway Financial Corp De (NASDAQ: BYFC)

Broadway Financial Corporation, known by its stock symbol BDFC, is a company that operates in the financial services industry. With a headquarters in Los Angeles, California, the company has a presence in California and Washington D.C., providing a range of financial services to individuals, businesses, and non-profit organizations.

City First Bank, a wholly-owned subsidiary of Broadway Financial Corporation, is the primary operating entity of the company. The bank's principal business involves attracting deposits from the general public, loan customers, large non-profit entities, local municipalities, and other mission-driven depositors. These deposits are then invested in loans secured by residential properties with five or more units, commercial real estate, and commercial business assets.

The company's revenue is primarily derived from interest income on loans and investments. The principal costs incurred by the company include interest expenses on deposits and borrowings, as well as general and administrative expenses. The company's earnings are significantly affected by general economic and competitive conditions, particularly monetary trends, and conditions, including changes in market interest rates and the differences in market interest rates for the interest-bearing deposits and borrowings that are the company's principal funding sources and the interest-yielding assets in which it invests.

City First Bank's loan portfolio is diversified across various sectors, including multi-family and commercial real estate, single-family residential, construction, and commercial loans. As of December 31, 2023, the company's net loan portfolio totaled $880.5 million, or 64.0% of total assets. The company's loan portfolio is primarily comprised of adjustable-rate loans, with more than 82% of its loans having adjustable rate features.

City First Bank's multi-family and commercial real estate lending activities are a significant component of its business. The company originates loans for the construction of quality, affordable single-family, multi-family, and commercial real estate projects and for land development. The company's construction loans are generally made at variable interest rates based on the applicable Treasury Index plus a margin. The company requires a loan-to-value ratio not exceeding 75% and a loan-to-cost ratio not exceeding 85% on construction loans.

The company's commercial lending activities include loans to businesses in its market area that are secured by business assets, including inventory, receivables, machinery, and equipment. City First Bank's commercial loans are generally made at variable interest rates based on the applicable Treasury Index plus a margin. The company requires a loan-to-value ratio not exceeding 75% and a loan-to-cost ratio not exceeding 85% on commercial loans.

City First Bank's SBA guaranteed loans are similar to commercial business loans but have additional credit enhancement provided by the U.S. Federal Government with guarantees between 50-85%. The company originates SBA loans in Washington, D.C., Maryland, and Virginia under the SBA's 7(a), SBA Express, International Trade, and 504(a) loan programs, in conformity with SBA underwriting and documentation standards.

In 2023, City First Bank originated $43.3 million of commercial loans, $40.0 million of construction loans, and $15.0 million of SBA loans. The company's loan originations, purchases, and sales are summarized in the following table:

| | 2023 | 2022 | 2021 |
| --- | --- | --- | --- |
| Gross loans: | | | |
| Beginning balance | $771,689 | $652,220 | $362,044 |
| Originations | $143,311 | $129,421 | $124,511 |
| Purchases | $0 | $0 | $0 |
| Sales | ($43,311) | ($29,421) | ($24,511) |
| Principal repayments | ($124,511) | ($129,421) | ($124,511) |
| Ending balance | $880,457 | $768,046 | $648,513 |

City First Bank's revenue generation is primarily from interest income on loans and investments, and its earnings are affected by general economic and competitive conditions. The company's loan portfolio is diversified across various sectors and is primarily comprised of adjustable-rate loans. The company's commercial and multi-family real estate lending activities are significant components of its business, and its SBA guaranteed loans offer additional credit enhancement provided by the U.S. Federal Government. City First Bank's loan originations, purchases, and sales are summarized in a table.