James D. Goudge

statement of condition

Broadway Bank had another good year in 2015. Deposits ended the year at $2.8 billion, up $98 million (+3.7%) vs. a year earlier. All of that new deposit funding (and more) went into loans, which totaled $1.5 billion at year-end and were up $136 million and nearly 10% vs. 2014. We certainly prefer to invest deposits in loans—for two reasons. First, we earn higher rates on loans (our 2015 average yield was 4.43%) compared to parking funds in our securities portfolio (which had a yield of 2.89% in 2015). Second, making loans enables us to add or expand customer relationships and to do so in a way that also benefits local borrowers in our communities—much more so than if we invest in government bonds!

With deposits and loans up, our 2015 taxable-equivalent net interest income surpassed the $100 million mark for the first time, reaching $106.3 million—up $11 million and 11.7% vs. 2014. Loan quality remains good, with just $1.2 million expensed for losses in 2015. Non-interest income rose 7% in 2015, and operating expense was up 6%. Overall, our reported net income for 2015 was $37 million, up 25% over 2014. With growth from retained earnings, year-end capital of $361 million equated to a strong equity-to-assets ratio of 11%.

As we mark our 75th anniversary in February 2016, the bank continues to maintain good profitability and a solid financial condition. This outcome is proof that founder Col. Charles E. Cheever Sr. was correct when he once said, “If we take good care of our customers, the numbers
will take care of themselves.”

Sincerely,
James D. Goudge
Chairman and CEO

Source: 3Q15