TPS Position Update – August 23, 2016
. . . . Broadway Financial Corp. (BYFC) – HOLD
We recommended the stock in February at $1.47. Today it closed at $1.71.
Earlier this month, the Los Angeles bank reported another profitable quarter. Net income came in at $319 thousand. This was down dramatically from last year’s corresponding quarterly net income of $1.2 million.
For the first six months of 2016, net income slumped to $952 thousand from $2.5 million from the first two quarters in 2015.
What’s going on?
Two things… There have been lower recaptures of loan loss provisions. Most of these financial benefits have already been accrued.
Interest income is down. So is non-interest income. Broadway didn’t sell off any loans during the first half of the year.
The fact that no loans have been sold off means short-term pain and long term gain… the bank’s loan portfolio is positioned to generate future income.
The bank focuses on making loans for multi-family residential properties located within low-to-moderate income communities in Southern California.
It is also working on growing lending activities for originations of commercial real estate loans.
The stock price held up well despite the reversal. It has been trading in a narrow range of $1.68 to $1.97 for the past four weeks.
. . . . Ciber Inc. (CBR) – HOLD
We recommended Ciber in May at $1.24. Today the stock closed at $1.21.
We recommended Ciber as a turnaround opportunity and the company is in the midst of revamping operations. The company is spinning off or shutting down some of its businesses. It is trying to cut expenses and focus activity on areas it believes will prove profitable.
Righting the ship has not been easy. On August 4th, the company reported a steep second-quarter loss of $51.4 million. Revenue of $165.9 million fell short of expectations.
We are concerned that the turnaround may take longer than anticipated and that internal uncertainties may impact progress. Earlier this summer, Ciber parted ways with Tina Piermarini who was in charge of the firm’s HR, marketing, and IT.
Action To Take
- HOLD BROADWAY FINANCIAL CORP. (BYFC)
- HOLD CIBER INC. (CBR)
Category: TPS Update
