Safe and Sound

Broadway Federal Bank, f.s.b.

Los Angeles, CA
5
Star Rating
Los Angeles, CA-based Broadway Federal Bank, f.s.b. is an FDIC-insured bank founded in 1947. As of June 30, 2017, the bank had equity of $50.0 million on $432,797,000 in assets.

Thanks to the work of 69 full-time employees in 3 offices in CA, the bank has amassed loans and leases worth $389.3 million, $393.2 million of which are for real estate. U.S. bank customers currently have $277.0 million in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Broadway Federal Bank, f.s.b. exhibited a superior condition, earning a full 5 stars for safety and soundness. Here's an analysis of how the bank faired on the three key criteria Bankrate used to score American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a cushion against losses and provides protection for depositors during periods of economic trouble for the bank. Therefore, a bank's level of capital is an essential measurement of an institution's financial fortitude. When looking at safety and soundness, the higher the capital, the better.
Broadway Federal Bank, f.s.b. achieved a score of 14 out of a possible 30 points on our test to measure capital adequacy, beating the national average of 13.38.

A bank's Tier 1 capital ratio is an important measure of this buffer. Broadway Federal Bank, f.s.b.'s Tier 1 capital ratio was 15.87 percent, higher than the 6 percent level regulators consider adequate, but below the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to stand up to economic headwinds.

Overall, Broadway Federal Bank, f.s.b. held equity amounting to 11.56 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's capitalization and allocated loan loss reserves could be affected by troubled assets, such as past-due mortgages.

A bank with lots of these kinds of assets may eventually have to use capital to absorb losses, decreasing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, decreasing earnings and elevating the risk of a failure in the future.

Broadway Federal Bank, f.s.b. did better than the national average of 37.62 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 0.71 percent of Broadway Federal Bank, f.s.b.'s loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.04 percent.

Banks maintain a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . Comparing the how large that reserve is to the total amount of problematic loans can be a helpful indicator when evaluating a bank's ability to manage problem assets. Unfortunately, the FDIC did not provide information on Broadway Federal Bank, f.s.b.'s loan loss allowance in its most recent filings.

Earnings score

A bank's profitability has an effect on its long-term survivability. Earnings may be retained by the bank, expanding its capital cushion, or be used to deal with problematic loans, potentially making the bank better able to withstand economic trouble. Conversely, losses reduce a bank's ability to do those things.

Broadway Federal Bank, f.s.b. beat the national average on Bankrate's earnings test, achieving a score of 18 out of a possible 30.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one widely used measure of a bank's earnings. Broadway Federal Bank, f.s.b.'s most recent annualized quarterly return on equity was 8.44 percent, below the national average of 9.28 percent.

The bank reported net income of $2.1 million on total equity of $50.0 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.95 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.