Broadway Financial Corporation (“Broadway”, “we”, or the
“Company”) (NASDAQ Capital Market: BYFC), announced today that the
Board of Directors of the Company (the “Board of Directors”) has
approved extending a series of loans from time to time aggregating
up to $5 million to the City First Bank, National Association
Employee Stock Ownership Trust, which was established by the City
First Bank, National Association Employee Stock Ownership Plan
(collectively, the “ESOP”), for the purpose of purchasing shares of
the Company’s common stock from time to time in open market
purchase or private sales, with the first of such loans to be in
the amount of $0.5 million.
These loans will help increase the ownership of the Company by
its employees in a non-dilutive manner and improve the Company’s
ability to retain and recruit employees. As previously disclosed,
Broadway has plans to use the $150 million of equity capital raised
in June this year to further accelerate its growth, which will
require recruiting more employees over time. Management believes
that direct, long-term equity incentives are a valuable tool in
retaining and recruiting employees and consistent with Broadway’s
policy of increasing the alignment of the interests of its
employees with those of its stockholders.
In addition, these purchases are intended to recoup a
substantial portion, if not all, of the dilution in employee
ownership that occurred in connection with the merger of CFBanc
Corporation with and into Broadway (the “Merger”) and subsequent
private placements of common stock in April 2021, as previously
disclosed. Currently, the ESOP holds approximately 2.2% of the
Company’s total outstanding common stock, representing
approximately 3.3% of its outstanding Class A voting shares. In
contrast, the ESOP held almost 5.9% of Broadway’s total outstanding
common stock, representing approximately 8.6% of Broadway’s
outstanding voting shares, immediately prior to the Merger.
The first loan was funded by Broadway on Monday, December 19,
2022. The timing and amounts of each of the remaining loans will
depend on market conditions, trading volumes, and Company common
stock prices; however, the Board of Directors believes that the
Company’s shares are currently undervalued as the Company’s common
stock is currently trading below tangible and nominal book value,
despite the Company’s improving profitability, growth, and forward
opportunities, as discussed in the Company’s press release for the
results of the three months and nine months ended September 30,
2022. The loans will require equal annual payments by the ESOP to
Broadway, which will be funded from the annual ESOP contributions
that Broadway will make in support of the ESOP and the employee
participants pursuant to the terms of the City First Bank, National
Association Employee Stock Ownership Plan. The initial loan matures
on December 31, 2042, and accrues interest at 4.34%, the Long Term
Annual Applicable Federal Rate published by the United States
Department of the Treasury for December 2022.
Chief Executive Officer, Brian Argrett commented, “Earlier this
quarter, we discussed our exciting plans for continued growth in
our business. I am pleased that the Board of Directors has approved
this ESOP loan, which will facilitate that growth in a manner that
recognizes the foundational importance of the contributions of our
employees to our future success, the importance of long-term
alignment of the interests of our employees and our stockholders,
and the relationship between employee ownership and our ability to
retain and attract qualified new employees. We are excited to see
how increased employee ownership can help drive further value for
all our stakeholders, particularly including our company, our
investors, and our clients.”
About Broadway Financial Corporation
Broadway 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 or contact Investor Relations at the phone number
or email address below.
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. Such statements
include, but are not limited to, statements regarding the loan from
the Company to the ESOP and the anticipated timing for the
completion of the other loans from the Company to the ESOP and
other matters related to the ESOP set forth herein. All statements
other than statements of historical facts contained in this press
release, including statements regarding our future results of
operations or financial condition, business strategy and plans and
objectives of management for future operations and capital
allocation and structure, are forward-looking statements.
Forward-looking statements often include words such as “expect,”
“estimate,” “project,” “budget,” “forecast,” “anticipate,”
“intend,” “plan,” “may,” “will,” “could,” “should,” “believes,”
“predicts,” “potential,” “continue,” “poised,” “can”, “excited,”
“would,” 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 for various reasons
including 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; 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; the risk of possible adverse
rulings, judgments, settlements and other outcomes of litigation;
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/20221219005803/en/
Investor Relations Brenda J. Battey, Chief Financial Officer,
(323) 556-3264 Investor.relations@broadwayfederalbank.com
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