Broadway Financial Corporation · NASDAQ:BYFC
Broadway Financial — Shareholder Meeting (July 2024)
34 slides from Broadway Financial's shareholder meeting presentation, Jul 17, 2024
Slide 1: Annual Meeting of Stockholders
BROADWAY RATION JULY 17, 2024 Broadway Financial Corporation Annual Meeting of Stockholders
Slide 2: Cautionary Forward-Looking Statements
Ca utiona ry Forwa rd-Looking S ta te me nts Th is p re s e n ta tio n is fo r in fo rm a tio n a l p u rp o s e s o n ly a n d d o e s n o t p u rp o rt to in c lu d e a c o m p le te d is c u s s io n o f th e to p ic s m e n tio n e d a n d s h o u ld n o t b e re lie d u p on a s a b a s is fo r
Slide 3: Overview of Presentation
Who We Are Our Business Strategy OVERVIEW OF PRESENTATION Performance Summary of 2023 Update for Q1 2024 Balance Sheet Update 3
Slide 4: Who We Are
Largest African American-led Minority Depository Institution in the U.S. Our Bank Holding Company is Broadway Financial Corporation (“Broadway”) • A Delaware Public Benefit Corporation striving to improve the economic health of the low-to-moderate (“LMI”)* income communities that we serve WHO WE ARE
Slide 5: Our Differentiated Purpose
OUR DIFFERENTIATED PURPOSE Broadway is one of two publicly traded public To deliver transformative impact in underserved benefit corporations in the financial services urban communities industry • We believe that with the intentional, disciplined, and targeted provision of capital focused on bene
Slide 6: Our Business Strategy
Targeted geographic markets District of Columbia, Baltimore and their surrounding communities, The counties of Los Angeles, Ventura, Riverside, Orange, San Diego, San Bernardino and Santa Barbara, California Leveraging ONE City First partner relationships to OUR BUSINESS STRATEGY deepen and scale ou
Slide 7: Targeted Lending Customer Segments
TARGETED LENDING CUSTOMER SEGMENTS Multi-family affordable housing Focus on financing smaller multi-family properties with loans generally ranging from $500K to $6 million for properties with 5 – 50 units • Large banks have difficulty originating and servicing this segment Demand is extremely high f
Slide 8: Performance Summary of 2023
PERFORMANCE SUMMARY OF 2023 8
Slide 9: 2023 Performance Summary
2023 PERFORMANCE SUMMARY $000s 2021* 2022 2023 Tota l Inte re s t Inc om e $24,272 $36,269 $47,228 % Cha ng e 46.5% 30.2% Tota l Inte re s t Exp e ns e $3,749 $3,409 $17,766 % Cha ng e -9.1% 421.1% Ne t Inte re s t Inc om e Afte r Provis ions $20,827 $31,863 $28,529 % Cha ng e 53.0% -10.5% Ne t Inc
Slide 10: Achievements in 2023
ACHIEVEMENTS IN 2023 Profitable every quarter in 2023 Increased total interest Grew net loan portfolio by Maintained pristine Adopted ASU 326 for income by 30.2% in 2023, 14.6%, or $112.4 million, asset quality estimating credit losses compared to 2022 during 2023 on loans and securities • Total int
Slide 11: Achievements in 2023 (Cont'd)
ACHIEVEMENTS IN 2023 (Cont’d) Repurchased almost 245,000 Completed a reverse stock Rebuilt our deposit base after fallout voting shares from the FDIC on split on November 1, 2023 from higher interest rates October 31, 2023 implemented by the Federal Reserve • Eliminated costs associated with notices
Slide 12: Achievements in 2023 (Cont'd)
ACHIEVEMENTS IN 2023 (Cont’d) Continued advancing our mission. During 2023, we Officially recertified as a BCorp effective March 31, deployed $202 million in capital, with 68% in mission 2023 lending, including: • City First Bank received a finalized score of 130.3 in • $103 million was lent in LMI
Slide 13: Internal Control Review
INTERNAL CONTROL REVIEW While preparing the financial statements for the 3rd quarter Management responded vigorously to the weaknesses in of 2023, we discovered that certain controls over financial controls and retained an independent third party to review reporting were not performing as expected,
Slide 14: Update for Q1 2024
BROADWAY UPDATE FOR Q1 2024
Slide 15: 2024 Performance Summary
2024 PERFORMANCE SUMMARY $000s Q12023 Q12024 Tota l Inte re s t Inc om e $11,174 $14,793 % Cha ng e 32.4% Tota l Inte re s t Exp e ns e $2,900 $7,269 % Cha ng e 150.7% Ne t Inte re s t Inc om e Afte r Provis ions $8,186 $7,264 % Cha ng e -11.3% Ne t Inc om e (Los s ) Attrib uta b le to BYFC $1,573 $
Slide 16: Achievements in Q1 2024
ACHIEVEMENTS IN Q1 2024 Grew total interest income by 32.4% in Q1 2024, Maintained pristine asset quality Continued advancing our mission. During the compared to Q1 2023 1st quarter of 2024, we deployed $81 million in Conducted an extensive review of internal new loans with 78% in mission lending: I
Slide 17: Growth Since Merger
GROWTH SINCE MERGER* St o c k h o ld e rs ’ Eq u it y In c re a s e d 2 2 9 .6 %, o r o ve r $ 1 9 5 To t a l Qu a rt e rly In t e re s t In c o m e m illio n In c re a s e d 2 9 1 .7 %, o r o ve r $ 1 1 m illio n To t a l As s e t s To t a l Lo a n s In c re a s e d 4 3 .5 %, o r o ve r $ 4 1 5 In
Slide 18: Growing Revenue Stream
GROWING REVENUE STREAM* Quarterly Interest Income $16,000 $14,793 $14,000 $12,487 $11,927 $11,640 $12,000 $11,174 $10,529 $10,000 $9,228 $8,501 $8,011 $000s $8,000 $6,909 $7,182 $6,884 $6,000 $3,777 $4,000 $2,000 $- We ha ve im p rove d our b us ine s s m od e l s inc e the Me rg e r; q ua rte rly i
Slide 19: But Higher Cost of Funds
BUT HIGHER COST OF FUNDS* Annualized Quarterly Cost of Funds 3.50% 3.02% 3.00% 2.47% 2.56% 2.50% 2.12% 2.00% 1.46% 1.50% 0.87% 1.00% 0.83% 0.51% 0.44% 0.39% 0.50% 0.36% 0.31% 0.22% 0.00% The Me rg e r a llowe d us to im p rove our fund ing m ix, whic h lowe re d the Ba nk’s inte re s t e xp e ns e p
Slide 20: Driven by Higher Fed Fund Rates
DRIVEN BY HIGHER FED FUND RATES Cost of Funds vs. Fed Funds Rate 6.00% 5.50% 5.50% 5.50% 5.25% 5.00% 5.00% 4.50% 4.00% 3.25% 3.02% 3.00% 2.47% 2.56% 2.12% 2.00% 1.75% 1.46% 0.87% 0.83% 1.00% 0.51% 0.44% 0.50% 0.36% 0.31% 0.25% 0.22% 0.25% 0.25% 0.39% 0.00% 0.25% 3/31/2021 6/30/2021 9/30/2021 12/31/2
Slide 21: Which Has Squeezed Net Interest Margin
WHICH HAS SQUEEZED NET INTEREST MARGIN* Impact of Rising Rates on NIM 3.50% 6.00% 3.26% 5.50% 5.50% 5.50% 5.25% 3.00% 3.02% 3.00% 2.96% 5.00% 2.76% 5.00% 4.50% 2.52% 2.43% 2.50% 2.50% 2.40% 2.40% 2.33% 2.33% 2.27% 4.00% 2.00% 3.25% 3.00% 1.50% 2.00% 1.75% 1.00% 1.00% 0.50% 0.50% 0.25% 0.25% 0.25% 0.
Slide 22: And Quarterly Profits
AND QUARTERLY PROFITS* $3,000 $0.40 $2,607 $2,500 $0.30 $2,000 $1,854 $1,506 $1,573 $0.30 $1,500 $1,318 $0.20 $958 $0.24 $1,000 $0.17 $0.16 $701 $0.14 $0.10 $000S $0.08 $0.08 $500 $182 $243 $0.03 $91 $0 $- $0.01 $- $(0.02) $(164) ($500) $(0.10) $(0.16) ($1,000) ($1,500) $(0.20) $(1,446) Net Income E
Slide 23: We Continue to Rebuild Our Deposits
WE CONTINUE TO REBUILD OUR DEPOSITS* Total Deposits ($mms) $900.0 $839.7 $788.1 $816.2 $749.6 $768.5 $800.0 $705.0 $686.9 $671.5 $682.6 $695.5 $700.0 $657.5 $646.1 $600.0 $500.0 $400.0 $312.3 $300.0 $200.0 $100.0 $- The ra te inc re a s e s im p le m e nte d b y the Fe d e ra l Re s e rve im p a c t
Slide 24: And Improve Our Operating Leverage
AND IMPROVE OUR OPERATING LEVERAGE $16,000 $14,793 $14,000 $12,487 $11,640 $11,927 $12,000 $11,174 $10,529 $10,000 $9,228 $8,948 $8,627 $8,501 $ in 000s $8,011 $7,810 $8,000 $7,709 $6,884 $6,909 $7,182 $6,981 $6,641 $6,266 $6,000 $6,252 $6,421 $5,978 $5,960 $6,072 $5,374 $4,000 $3,777 $2,000 $- Quar
Slide 25: Enhanced Senior Management Team
ENHANCED SENIOR MANAGEMENT TEAM Since early 2023 we have been investing in our people and In addition, we have hired managers and staff to fill various recruiting experienced senior officers to expand our positions. capabilities and manage growth. Recent hires include: Recent hires include: • Zach I
Slide 26: Balance Sheet Update
BROADWAY BALANCE SHEET UPDATE
Slide 27: Strong Balance Sheet as of March 31, 2024
STRONG BALANCE SHEET AS OF MARCH 31, 2024 $281 Million in total equity or 20.5% of 77.7% Core* deposits ratio on total total assets of $1.37 billion deposits of $695 million 13.65% Community Bank Leverage ratio $361.7 Millions in total liquidity (including borrowing capacity), representing 26.4% of
Slide 28: Liquidity as of March 31, 2024
LIQUIDITY AS OF MARCH 31, 2024 Total Liquidity Cash and Equivalents $67,122 Securities available for sale $293,243 Less: Pledges (173,835) Available securities for credit at Federal Reserve 119,408 Subtotal 186,530 Available credit at FHLB 165,170 Other bank lines of credit 10,000 Total Liquidity $3
Slide 29: Capitalization as of March 31, 2024
CAPITALIZATION AS OF MARCH 31, 2024 ($000s) Cash and Equivalents, plus securities $ 360,365 Debt Deposits $ 695,494 Securities sold under agreements to repurchase 71,681 FHLB advances 209,280 Bank Term Funding Program borrowing 100,000 Other borrowings-note payable repaid in Q1 2024 - Total Debt 1,0
Slide 30: Deposit Mix Change
DEPOSIT MIX CHANGE At 12/31/2023 - Total $682.6 ($mms) $53.2; 7.8% $107.9; 15.8% $114.8; 16.87 $246.1; 36.1% $160.6; 23.5% |= Non-interest bearing deposits l= MMDA & savings - non ICS = Other CDs - non CDARS lm MMDA & savings - ICS "Certificates of deposit - CDARS BROADWAY At 03/31/2024 - Total $695
Slide 31: Insured Savings for Impact Investors
We offer savings products with insurance beyond the FDIC limit through two programs offered by IntraFi: CDARs (Certificate of Deposit Account Registry Service) in conjunction with our City First Money Market Accounts of $250,000 • Offers competitive rates and provides optimal liquidity • Funds > $25
Slide 32: We Are Intently Focused On:
WE ARE INTENTLY FOCUSED ON: Growing deposits and fee income (non-interest income) Investing in our employees and overall talent pool Enhancing internal controls Expanding revenue through improved offerings Creating economic opportunities to improve the communities that we serve 32
Slide 33: Investment Platform for Impact Investors
INVESTMENT PLATFORM FOR IMPACT INVESTORS We are a leading national investment platform for impact investors and depositors Largest African-American-led MDI in the U.S. Growing with opportunities to further improve margins, ROA, and ROE Demonstrated potential to leverage community development and Bic
Slide 34: Annual Meeting of Stockholders
BROADWAY FINANCIAL RATION JULY 17, 2024 Broadway Financial Corporation Annual Meeting of Stockholders