Broadway Financial Corporation (“Broadway”, “we” or the
“Company”) (NASDAQ Capital Market: BYFC), announced that the
Company completed a private placement of $150 million of Senior
Non-Cumulative Perpetual Preferred Stock, Series C (the “Preferred
Stock”), to the United States Department of the Treasury (the “U.S.
Treasury”) pursuant to the Emergency Capital Investment Program
(“ECIP”).
The ECIP investment by the U.S. Treasury is part of a program to
invest over $8.7 billion into Community Development Financial
Institutions and Minority Depository Institutions to provide
funding for these institutions to increase access to capital for
small and minority-owned businesses and consumers in traditionally
underserved markets, such as low-to-moderate income communities,
that may have been disproportionately impacted by the economic
effects of the COVID-19 pandemic.
Dividends on the Preferred Stock are payable in cash quarterly
at an annual rate that is dependent on Broadway’s investment of the
proceeds within Target Communities in certain types of loans that
are consistent with the types of loans that the Company has
historically originated. The initial dividend rate is zero percent
for the first two years after issuance, and thereafter the floor
dividend rate is 0.50% and the ceiling dividend rate is 2.00%. The
dividend rate after the initial two years will be reset annually
until the tenth anniversary of the issuance of the Preferred Stock
and will be based upon the annual change in actual qualified
lending relative to a baseline level of qualified lending,
expressed as a percentage of the aggregate liquidation amount of
the Preferred Stock. The final reset will be based upon the average
annual increase in qualified lending over the nine-year period
preceding the last reset date, expressed as a percentage of the
aggregate liquidation amount. The Preferred Stock has an aggregate
liquidation amount of $150 million and is redeemable in whole, or
in part, at the option of the Company on any dividend payment date
on or after June 15, 2027, subject to certain limitations and
exceptions as set forth in the Certificate of Designations for the
Preferred Stock.
The investment by the U.S. Treasury is intended to qualify as
Tier 1 Capital. At March 31, 2022, Broadway’s stockholders’ equity
was $136.2 million, or 12.04% of the Company’s assets, and the Tier
1 Capital of its bank subsidiary, City First Bank, National
Association, was $99.9 million. The issuance of the Preferred Stock
will not impact Broadway’s book value per common share.
Chief Executive Officer, Brian Argrett, commented, “We are
excited to report that we have raised $150 million of gross
proceeds from the sale of the Preferred Stock to the U.S. Treasury,
which is more than we originally reported when the U.S. Treasury
announced that Broadway’s application for ECIP capital was
accepted. The investment will more than double our Tier 1 Capital
and allow us to greatly enhance the scale of Broadway’s operations
and improve the economics of the Company’s business. In addition,
this equity capital will significantly improve our ability to
advance our mission and multiply the impact that we can make in the
low-to-moderate income communities that we serve. Over time, the
proceeds from this equity investment should allow us to more than
double the size of Broadway’s loan portfolio.”
Gibson, Dunn & Crutcher LLP served as legal advisor to the
Company.
Additional information regarding the Preferred Stock will be
provided in a Current Report on Form 8-K that the Company will file
within the next few days.
About CityFirstBroadway
Broadway Financial Corporation conducts its operations through
its wholly-owned banking subsidiary, City First Bank, National
Association, which is a leading community-oriented bank in Southern
California and in the Washington, D.C. market 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.
Stockholders, analysts, and others seeking information about the
Company are invited to write to: Broadway Financial Corporation,
Investor Relations, 4601 Wilshire Boulevard, Suite 150, Los
Angeles, CA 90010.
Cautionary Statement Regarding Forward-Looking
Information
This press release includes “forward-looking statements” within
the meaning of the safe harbor provisions of the United States
Private Securities Litigation Reform Act of 1995. Forward-looking
statements often include words such as “expect,” “estimate,”
“project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,”
“may,” “will,” “could,” “should,” “believes,” “predicts,”
“potential,” “continue,” and similar expressions, but the absence
of such words or expressions does not mean a statement is not
forward-looking. These forward-looking statements are based upon
our management’s current expectations and involve known and unknown
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. Such
risk factors include, among others: uncertainty as to the duration,
scope and impacts of the COVID-19 pandemic; political and economic
uncertainty, including the possibility of declines in global
economic conditions or the stability of credit and financial
markets, including as a result of the military conflict between
Russia and Ukraine; changes in the monetary and fiscal policies of
the U.S. Government, including policies of the United States
Department of the Treasury and the Federal Reserve Board; changes
in legislation, regulation, policies or administrative practices,
whether by judicial, governmental, or legislative action, and other
changes pertaining to banking, securities, taxation, financial
accounting and reporting, and environmental protection and our
ability to comply with such changes in a timely manner; the
Company’s future liquidity to service and eventually redeem the
preferred stock; possible effects of changes in real estate markets
and interest rates, which may affect our net income and future cash
flows, or the market value of our assets, including investment
securities; risks related to disruption of management time due to
integration activities related to the merger with CFBanc
Corporation, as described in our public filings with the SEC (the
“Merger”); the risk of possible adverse rulings, judgments,
settlements and other outcomes of litigation; the risk that the
Merger could have an adverse effect on our ability to retain
customers, retain and hire key personnel and on our operating
results and business generally; the risk that problems may arise in
successfully integrating the businesses of the pre-Merger
companies, which may result in the combined company not operating
as effectively and efficiently as expected, or that we may not be
able to successfully integrate the businesses of the pre-Merger
companies; the risk that we may be unable to achieve synergies or
other anticipated benefits of the Merger or that it may take longer
than expected to achieve those synergies or benefits; the risk that
operational issues stemming from, and/or capital spending
necessitated by, the potential need to adapt to industry changes in
information technology systems, on which we are highly dependent,
and other important factors that could cause actual results to
differ materially from those projected. All such factors are
difficult to predict and are beyond our control. Additional factors
that could cause results to differ materially from those described
above can be found in our annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K or other filings
made with the SEC and are available on our website at
http://www.cityfirstbank.com/node/430 and on the SEC’s website at
http://www.sec.gov.
Forward-looking statements in this press release speak only as
of the date they are made, and we undertake no obligation, and do
not intend, to update these forward-looking statements to reflect
events or circumstances occurring after the date of this press
release, except to the extent required by law. You are cautioned
not to place undue reliance on these forward-looking statements,
which speak only as of the date of this press release.
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version on businesswire.com: https://www.businesswire.com/news/home/20220607006284/en/
Investor Relations Brenda J. Battey, Chief Financial Officer,
(323) 556-3264 Investor.relations@broadwayfederalbank.com
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