Equibles

10-Q

BROADWAY FINANCIAL CORP DE (BYFC)

10-Q 2025-12-31 For: 2025-06-30
View Original
Added on April 06, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE<br> SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES<br> EXCHANGE ACT OF 1934

For transition period from__________ to___________

Commission file number      001-39043

BROADWAY FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware 95-4547287
(State or other jurisdiction of<br><br> <br>incorporation or organization) (I.R.S. Employer<br><br> <br>Identification No.)
4601 Wilshire Boulevard, Suite 150<br><br> <br>Los Angeles, California 90010
--- ---
(Address of principal executive offices) (Zip Code)

(323) 634-1700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act

Title of each class: Trading Symbol(s) Name of each exchange on which registered:
Common Stock, par value $0.01 per share<br><br> <br>(including attached preferred stock purchase rights) BYFC Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☐   No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☐   No ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐   No ☒

As of December 18, 2025, 6,082,794 shares of the registrant’s Class A voting common stock, 1,425,404 shares of the registrant’s Class B non-voting common stock and 1,672,562 shares of the registrant’s Class C non-voting common stock were outstanding.

TABLE OF CONTENTS

Page
PART I. FINANCIAL STATEMENTS
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Statements of Financial Condition as of June 30, 2025 and December 31, 2024 2
Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2025 and 2024 3
Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 4
Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2025 and 2024 5
Notes to Unaudited Consolidated Financial Statements 7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28
Item 3. Quantitative and Qualitative Disclosures About Market Risk 39
Item 4. Controls and Procedures 39
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 39
Item 1A. Risk Factors 40
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 40
Item 3. Defaults Upon Senior Securities 40
Item 4. Mine Safety Disclosures 40
Item 5. Other Information 40
Item 6. Exhibits 40
Signatures 41

EXPLANATORY NOTE

Broadway Financial Corporation (the “Company”) is restating certain information

    included in the Company’s Quarterly Report on  Form 10-Q for the quarter ended June 30, 2024, filed with the Securities and Exchange Commission \(“SEC”\) on August 14, 2024. As disclosed in the Company’s Current Report on Form 8-K filed with the SEC
    on October 17, 2025, the Audit Committee of the Board of Directors of the Company, the holding company of City First Bank, National Association \(“City First Bank”\), based on consultations with the Company’s management, concluded that the Company’s
    audited consolidated financial statements for the fiscal years ended December 31, 2024 and 2023, and the unaudited interim consolidated financial statements for the quarters ended March 31, 2025, March 31, 2024, June 30, 2024, and September 30,
    2024 \(collectively, the “Restated Periods”\), each as previously filed with the SEC, should no longer be relied upon because of an error related to certain loan participation agreements and should therefore be restated. Specifically, the Company
    determined that several loan participation agreements originated by City First Bank and sold to other financial institutions did not meet the requirements in Accounting Standards Codification Topic 860 - Transfers
      and Servicing to be treated as sales for accounting purposes, and therefore should have been recorded as secured borrowing arrangements.

The related adjustments to the consolidated statements of operations and comprehensive income for treating such transferred interests as secured borrowing arrangements for the six months ended June 30, 2024, is to increase both interest and fees on loans receivable and interest on borrowings by $849 thousand. Net income for the six months ended June 30, 2024 is also impacted by a $7 thousand increase in the ACL and a $4 thousand decrease in income tax expense. The related consolidated statements of cash flows adjustments for treating such transferred interests as secured borrowing arrangements for the six months ended June 30, 2024, is to decrease “Net change in loans receivable held for investment” by $235 thousand, to increase the “Proceeds from secured borrowings” by $1.9 million and decrease the “Repayments of secured borrowings” by $1.6 million, respectively, for these adjustments. Net cash provided by operating activities was not impacted by the adjustments for the six months ended June 30, 2024.

For more information regarding the restatement and its impact on our consolidated financial statements, refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section included within Part I, Item 7 of the Form 10-K/A Amendment No. 2 and Note 2, Restatement of Previously Issued Consolidated Financial Statements and Note 21, Quarterly Financial Information (Unaudited) of the Notes to Consolidated Financial Statements included within the Form 10-K/A Amendment No. 2.

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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated

                                  Statements of
                                  Financial Condition

(In thousands, except share and per share amounts)

December 31, 2024
Assets:
Cash and due from banks 1,955 $ 2,255
Interest-bearing deposits in other banks 27,559 59,110
Cash and cash equivalents 29,514 61,365
Securities available-for-sale, at fair value (amortized cost of 190,030 and 219,658) 177,977 203,862
Loans receivable held for investment, net of allowance of 9,880 and 8,364 977,064 999,956
Accrued interest receivable 5,109 5,001
Federal Home Loan Bank (“FHLB”) stock 3,761 9,637
Federal Reserve Bank (“FRB”) stock 3,543 3,543
Office properties and equipment, net 8,721 8,899
Bank owned life insurance 3,343 3,321
Deferred tax assets, net 8,641 8,880
Core deposit intangible, net 1,617 1,775
Goodwill 25,858 25,858
Other assets 2,369 2,786
Total assets 1,247,517 $ 1,334,883
Liabilities and equity
Liabilities:
Deposits 798,922 $ 745,399
Securities sold under agreements to repurchase 63,786 66,610
FHLB borrowings 60,000 195,532
Secured borrowings 30,287 31,356
Accrued expenses and other liabilities 9,633 10,794
Total liabilities 962,628 1,049,691
Non-Cumulative Redeemable Perpetual Preferred stock, Series C; authorized 150,000 shares at June 30, 2025 and December 31, 2024; issued and outstanding 150,000<br> shares at June 30, 2025 and December 31, 2024; liquidation value 1,000 per share 150,000 150,000
Common stock, Class A, 0.01<br> par value, voting; authorized 75,000,000 shares at June 30, 2025 and December 31, 2024; issued 6,425,001 shares at June 30, 2025 and 6,349,455 shares at December 31, 2024; outstanding 6,097,773 shares at June 30, 2025 and 6,022,227<br> shares at December 31, 2024 64 63
Common stock, Class B, 0.01 par value, non-voting; authorized 15,000,000 shares<br> at June 30, 2025 and December 31, 2024; issued and outstanding 1,425,574<br> shares at June 30, 2025 and December 31, 2024 14 14
Common stock, Class C, 0.01 par value, non-voting; authorized 25,000,000 shares at June 30, 2025 and December 31, 2024; issued and outstanding 1,672,562 at June 30, 2025 and December 31, 2024 17 17
Additional paid-in capital 143,266 142,902
Retained earnings 9,290 12,727
Unearned Employee Stock Ownership Plan (“ESOP”) shares (4,089 ) (4,201 )
Accumulated other comprehensive loss, net of tax (8,557 ) (11,223 )
Treasury stock-at cost, 327,228 shares at June 30, 2025 and at December 31, 2024 (5,326 ) (5,326 )
Total Broadway Financial Corporation and Subsidiary equity 284,679 284,973
Non-controlling interest 210 219
Total liabilities and equity 1,247,517 $ 1,334,883

All values are in US Dollars.

See accompanying notes to unaudited consolidated financial statements.

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BROADWAY FINANCIAL

    CORPORATION AND SUBSIDIARY

Consolidated

        Statements of Operations and Comprehensive Income \(Loss\)

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended<br><br> <br>June 30, Six<br> Months Ended<br><br> <br>June 30,
2025 2024 2025 2024<br><br> <br>(As Restated)
Interest income:
Interest and fees on loans receivable $ 12,825 $ 12,613 $ 25,942 $ 24,157
Interest on available-for-sale securities 1,171 1,876 2,379 3,951
Other interest income 401 1,433 877 3,022
Total interest income 14,397 15,922 29,198 31,130
Interest expense:
Interest on deposits 4,879 3,086 9,078 5,885
Interest on borrowings 1,763 4,918 4,320 9,803
Total interest expense 6,642 8,004 13,398 15,688
Net interest income 7,755 7,918 15,800 15,442
(Recapture of) provision for credit losses (454 ) 514 1,460 761
Net interest income after (recapture of) provision for<br> credit losses 8,209 7,404 14,340 14,681
Non-interest income:
Service charges 41 38 84 78
Grants 105 – 130 –
Other 209 235 429 501
Total non-interest income 355 273 643 579
Non-interest expense:
Compensation and benefits 4,412 4,469 9,696 8,866
Occupancy expense 485 432 1,025 867
Information services 774 663 1,480 1,370
Professional services 788 563 1,488 1,973
Advertising and promotional expense 61 63 107 91
Supervisory costs 156 216 349 393
Corporate insurance 66 64 133 125
Amortization of core deposit intangible 79 84 158 168
Operational loss – – 1,943 –
Other 701 726 1,340 1,237
Total non-interest expense 7,522 7,280 17,719 15,090
Income (loss) before income taxes 1,042 397 (2,736 ) 170
Income tax expense (benefit) 296 139 (790 ) 85
Net income (loss) $ 746 $ 258 $ (1,946 ) $ 85
Less: Net (loss) income attributable to non-controlling interest (6 ) 2 (9 ) (17 )
Net income (loss) attributable to Broadway Financial Corporation $ 752 $ 256 $ (1,937 ) $ 102
Less: Preferred stock dividends 750 67 1,500 67
Net income (loss) attributable to common stockholders $ 2 $ 189 $ (3,437 ) $ 35
Other comprehensive income, net of tax:
Unrealized gains on securities available-for-sale arising during the period $ 1,327 $ 874 $ 3,743 $ 71
Income tax impact 376 253 1,077 21
Other comprehensive income, net of tax 951 621 2,666 50
Comprehensive income (loss) $ 953 $ 810 $ (771 ) $ 85
Earnings (loss) per common share-basic $ – $ 0.02 $ (0.39 ) $ -
Earnings (loss) per common share-diluted $ – $ 0.02 $ (0.39 ) $ -

See accompanying notes to unaudited consolidated financial statements.

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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated

                                    Statements of
                                    Cash Flows

(Unaudited)

Six Months Ended<br><br> <br>June 30,
2025 2024<br><br> <br>(As Restated)
(In thousands)
Cash flows from operating activities:
Net (loss) income $ (1,946 ) $ 85
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Provision for credit losses 1,460 761
Depreciation and amortization 206 327
Net change of deferred loan origination costs 229 238
Net accretion of premiums and discounts on available-for-sale securities (114 ) (483 )
Accretion of purchase accounting marks on loans (151 ) (177 )
Amortization of core deposit intangible 158 168
Director stock compensation expense 168 96
Accretion of premium on FHLB advances – (7 )
Stock-based compensation expense 210 115
ESOP compensation expense 99 91
Earnings on bank owned life insurance (22 ) (22 )
Change in assets and liabilities:
Net change in deferred taxes (838 ) (332 )
Net change in accrued interest receivable (108 ) (290 )
Net change in other assets 417 (4,124 )
Net change in accrued expenses and other liabilities (1,105 ) 1,673
Net cash used in operating activities (1,337 ) (1,881 )
Cash flows from investing activities:
Net change in loans receivable held for investment 21,298 (59,329 )
Principal payments on available-for-sale securities 51,390 56,049
Purchases of available-for-sale securities (21,648 ) –
Purchase of FHLB stock (6,484 ) (136 )
Proceeds from redemption of FHLB stock 12,360 –
Purchase of office properties and equipment (28 ) (100 )
Net cash provided by (used in) investing activities 56,888 (3,516 )
Cash flows from financing activities:
Net change in deposits 53,523 4,734
Net change in securities sold under agreements to repurchase (2,824 ) (817 )
Repayment of notes payable – (14,000 )
Cash dividends paid - preferred (1,500 ) (67 )
Proceeds from secured borrowings 2,288 1,851
Repayments of secured borrowings (3,357 ) (1,616 )
Proceeds from FHLB borrowings 376,500 –
Repayments of FHLB borrowings (512,032 ) (70 )
Net cash used in financing activities (87,402 ) (9,985 )
Net change in cash and cash equivalents (31,851 ) (15,382 )
Cash and cash equivalents at beginning of the period 61,365 105,195
Cash and cash equivalents at end of the period $ 29,514 $ 89,813
Supplemental disclosures of cash flow information:
Cash paid for interest $ 12,729 $ 12,466
Cash paid for income taxes – –

See accompanying notes to unaudited consolidated financial statements.

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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Changes in

        Equity

(Unaudited)

(As Restated)

Three Months Ended June 30, 2025 and 2024
Preferred<br><br> <br>Stock<br><br> <br>Non-<br><br> <br>Voting Common<br><br> Stock<br><br> Voting Common<br><br> <br>Stock<br><br> <br>Non-<br><br> <br>Voting Additional<br><br> Paid-in<br><br> Capital Accumulated<br><br> <br>Other<br><br> <br>Comprehensive<br><br> <br>Loss, Net Retained<br><br> <br>Earnings Unearned<br><br> <br>ESOP<br><br> <br>Shares Treasury<br><br> Stock Non-<br><br> <br>Controlling<br><br> <br>Interest Total<br><br> Equity
(In thousands)
Balance at March 31, 2025 $ 150,000 $ 64 $ 31 $ 143,169 $ (9,508 ) $ 9,288 $ (4,152 ) $ (5,326 ) $ 216 $ 283,782
Net income (loss) – – – – – 752 – – (6 ) 746
Release of unearned ESOP shares – – – (14 ) – – 63 – – 49
Stock-based compensation expense – – – 111 – – – – – 111
Director stock compensation expense – – – – – – – – – –
Dividends declared and paid - preferred – – – – – (750 ) – – – (750 )
Other comprehensive income, net of tax – – – – 951 – – – – 951
Balance at June 30, 2025 $ 150,000 $ 64 $ 31 $ 143,266 $ (8,557 ) $ 9,290 $ (4,089 ) $ (5,326 ) $ 210 $ 284,889
Balance at March 31, 2024 $ 150,000 $ 62 $ 31 $ 142,653 $ (14,096 ) $ 12,211 $ (4,420 ) $ (5,326 ) $ 175 $ 281,290
Net income – – – – – 256 – – 2 258
Release of unearned ESOP shares – 2 – (30 ) – – 72 – – 44
Stock-based compensation expense – – – 38 – – – – – 38
Director stock compensation expense – – – 96 – – – – – 96
Dividends declared and paid - preferred – – – (67 ) – – – – – (67 )
Other comprehensive income, net of tax – – – – 621 – – – – 621
Balance at June 30, 2024 $ 150,000 $ 64 $ 31 $ 142,690 $ (13,475 ) $ 12,467 $ (4,348 ) $ (5,326 ) $ 177 $ 282,280

See accompanying notes to unaudited consolidated financial statements.

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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Changes in Equity

(Unaudited)

Six Months Ended June 30, 2025 and 2024
Preferred<br><br> <br>Stock<br><br> <br>Non-<br><br> <br>Voting Common<br><br> Stock<br><br> Voting Common<br><br> <br>Stock<br><br> <br>Non-<br><br> <br>Voting Additional<br><br> Paid-in<br><br> Capital Accumulated<br><br> <br>Other<br><br> <br>Comprehensive<br><br> <br>Loss, Net Retained<br><br> <br>Earnings Unearned<br><br> <br>ESOP<br><br> <br>Shares Treasury<br><br> Stock Non-<br><br> <br>Controlling<br><br> <br>Interest Total<br><br> Equity
(In thousands)
Balance at December 31, 2024 $ 150,000 $ 63 $ 31 $ 142,902 $ (11,223 ) $ 12,727 $ (4,201 ) $ (5,326 ) $ 219 $ 285,192
Net loss – – – – – (1,937 ) – – (9 ) (1,946 )
Release of unearned ESOP shares – – – (13 ) – – 112 – – 99
Stock-based compensation expense – 1 – 209 – – – – – 210
Director stock compensation expense – – – 168 – – – – – 168
Dividends declared and paid - preferred – – – – – (1,500 ) – – – (1,500 )
Other comprehensive income, net of tax – – – – 2,666 – – – – 2,666
Balance at June 30, 2025 $ 150,000 $ 64 $ 31 $ 143,266 $ (8,557 ) $ 9,290 $ (4,089 ) $ (5,326 ) $ 210 $ 284,889
Balance at December 31, 2023 $ 150,000 $ 62 $ 31 $ 142,601 $ (13,525 ) $ 12,365 $ (4,492 ) $ (5,326 ) $ 194 $ 281,910
Net income (loss) – – – – – 102 – – (17 ) 85
Release of unearned ESOP shares – 2 – (55 ) – – 144 – – 91
Stock-based compensation expense – – – 115 – – – – – 115
Dividends declared and paid - preferred – – – (67 ) – – – – – (67 )
Purchase of unreleased ESOP shares – – – – – – – – – –
Director stock compensation expense – – – 96 – – – – – 96
Other comprehensive income, net of tax – – – – 50 – – – – 50
Balance at June 30, 2024 $ 150,000 $ 64 $ 31 $ 142,690 $ (13,475 ) $ 12,467 $ (4,348 ) $ (5,326 ) $ 177 $ 282,280

See accompanying notes to unaudited consolidated financial statements.

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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to

                                  Unaudited Consolidated Financial Statements

NOTE 1 – Basis of Financial Statement Presentation

The accompanying unaudited consolidated financial statements include Broadway Financial Corporation (the “Company”) and its wholly owned subsidiary, City First Bank, National Association (the “Bank” and, together with the Company, “City First Broadway”). Also included in the unaudited consolidated financial statements are the following subsidiaries of City First Bank: 1432 U Street LLC, Broadway Service Corporation, City First Real Estate LLC, City First Real Estate II LLC, City First Real Estate III LLC, City First Real Estate IV LLC, and CF New Markets Advisors, LLC (“CFNMA”). In addition, CFNMA also consolidates CFC Fund Manager II, LLC; City First New Markets Fund II, LLC; City First Capital IX, LLC; and City First Capital 45, LLC (“CFC 45”) into its financial results. All significant intercompany balances and transactions have been eliminated in consolidation.

The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions for quarterly reports on Form 10-Q. These unaudited consolidated financial statements do not include all disclosures associated with the Company’s consolidated annual financial statements included in its Annual Report on Form 10-K/A for the year ended December 31, 2024 (“2024 Form 10-K/A”) and, accordingly, should be read in conjunction with such audited consolidated financial statements. In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

The Company operates one reportable segment — banking. The Company’s chief executive officer is its chief operating decision maker (“CODM”). The CODM assesses operating performance and manages the allocation of resources primarily based on the Company’s consolidated operating results and financial condition. The factors considered in making this determination include all of the banking products and services offered by the Company are available in each branch of the Company, management does not allocate resources based on the performance of different lending or transaction activities, and how information is reviewed by the chief executive officer and other key decision makers. The CODM uses consolidated net income to benchmark the Company against its competitors and to monitor budget to actual results.  As a result, the Company determined that all services offered relate to banking.  Loans, investments, and deposits provide the revenues in the banking operation.  Interest expense, provisions for credit losses and payroll provide the significant expenses in the banking operation.  See the Company’s operating segment information in the  unaudited consolidated statements of financial condition and the unaudited consolidated statements of operations and comprehensive income.

Our accounting policies are described in Note 1 – Summary of Significant Accounting Policies of our audited consolidated financial statements included in the 2024 Form 10-K/A.

NOTE 2 – Earnings (Loss) Per Share and Equity (as Restated)

Basic earnings (loss) per share of common stock is computed pursuant to the two-class method by dividing net income available to common stockholders less dividends paid on participating securities (unvested shares of restricted common stock) and any undistributed earnings attributable to participating securities by the weighted average common shares outstanding during the period. The weighted average common shares outstanding includes the weighted average number of shares of common stock outstanding less the weighted average number of unvested shares of restricted common stock. ESOP shares are considered outstanding for this calculation unless unearned. Diluted earnings (loss) per share of common stock includes the dilutive effect of unvested stock awards and additional potential common shares issuable under stock options. Unvested restricted awards are considered outstanding for this calculation.

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The following table shows how the Company computed basic and diluted earnings (loss) per share of common stock for the periods indicated:

Three Months Ended<br><br> <br>June 30, Six Months Ended<br><br> <br>June 30,
2025 2024 2025 2024
(In thousands, except share and per share data)
Net income (loss) attributable to Broadway Financial Corporation $ 752 $ 256 $ (1,937 ) $ 102
Less: Net income (loss) attributable to participating securities – (4 ) 82 1
Less: Preferred stock dividends (750 ) (67 ) (1,500 ) (67 )
Net income (loss) available to common stockholders $ 2 $ 185 $ (3,355 ) $ 36
Weighted average common shares outstanding for basic earnings per common share 8,622,891 8,394,367 8,557,745 8,308,359
Add: Effects of unvested restricted stock awards 185,576 202,618 – 204,903
Weighted average common shares outstanding for diluted earnings per common share 8,808,467 8,596,985 8,557,745 8,513,262
Earnings (loss) per common share - basic $ – $ 0.02 $ (0.39 ) $ –
Earnings (loss) per common share - diluted $ – $ 0.02 $ (0.39 ) $ –
Anti-dilutive shares – – 199,117 –

Series C, Senior Non-Cumulative Perpetual Preferred Stock

On June 7, 2022, the Company issued 150,000 shares of Series C Preferred Stock with a liquidation preference of $1,000 per share for the capital investment of $150 million from the U.S. Treasury under the Emergency Capital Investment Program (“ECIP”).

The Series C Preferred Stock accrued no dividend for the first 24 months following the investment date. Thereafter, the dividend rate will be adjusted based on the qualified lending growth criteria listed in the terms of the ECIP investment with the annual dividend rate up to 2%. After the tenth anniversary of the investment date, the dividend rate will be fixed based on the average annual amount of lending in years 2 through 10. Dividends are payable quarterly in arrears on March 15, June 15, September 15, and December 15.

Established by the Consolidated Appropriations Act, 2021, the ECIP was created to encourage low- and moderate-income community financial institutions and minority depository institutions to provide loans, grants, and forbearance for small businesses, minority-owned businesses, and consumers, especially low-income and underserved communities, including persistent poverty counties, that may be disproportionately impacted by the economic effect of the COVID-19 pandemic by providing direct and indirect capital investments in low- and moderate-income community financial institutions.

The Series C Preferred Stock may be redeemed at the option of the Company on or after the fifth anniversary of issuance (or earlier in the event of loss of regulatory capital treatment), subject to the approval of the appropriate federal banking regulator and in accordance with the federal banking agencies’ regulatory capital regulations.

On January 14, 2025, the Company entered into a Securities Purchase Option Agreement (the “Option Agreement”) with the U.S. Treasury, which grants the Company the conditional option to repurchase the Series C Preferred Stock during the first 15 years following the Company’s issuance of the Preferred Stock. The purchase price for the Series C Preferred Stock under the Option Agreement is based on a formula approximate to the fair value of the Series C Preferred Stock as of the date the Option Agreement is executed, calculated as set forth in the Option Agreement, together with any accrued and unpaid dividends thereon and could represent a discount from the Preferred Stock’s liquidation amount.

The purchase option may not be exercised during the first 10 years following the Company’s sale of the Series C Preferred Stock (“ECIP Period”) unless and until the Company meets at least one of the following three conditions (the “Threshold Conditions”): (1) an average of at least 60% of the Company’s loan originations qualify as “Deep Impact Lending” over any 16 consecutive quarters, (2) an average of at least 85% of the Company’s “total originations qualify as “Qualified Lending” over any 24 quarters or (3) the Series C Preferred Stock has a dividend rate of no more than 0.5% at each of six consecutive “Reset Dates,” in each case as defined in the Option Agreement and the terms of the Series C Preferred Stock. In addition to satisfying a Threshold Condition, the Option Agreement requires that the Company meet certain other eligibility conditions in order to exercise the purchase option in the future, including compliance with the terms of the original ECIP purchase agreement and the terms of the Series C Preferred Stock, maintaining qualification as either a certified community development financial institution or a minority depository institution and satisfying other legal and regulatory criteria. The Company may designate a mission aligned nonprofit affiliate as the purchaser of the Series C Preferred Stock under the terms of the Option Agreement.

The earliest possible date by which a Threshold Condition may be met is June 30, 2028, which is the end of the sixteenth consecutive quarter following the Original Closing Date. However, the Company does not currently meet any of the Threshold Conditions to exercise the purchase option, and there can be no assurance if and when the Threshold Conditions will be met.

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In addition to the requirement that a Threshold Condition be met, the Repurchase Agreement requires that the Company meet certain other eligibility conditions in order to exercise the purchase option in the future, including compliance with the terms of the original ECIP purchase agreement and the terms of the Preferred Stock, maintaining qualification as either a CDFI or an MDI, and meeting other legal and regulatory criteria. Although the Company currently meets the general eligibility criteria, other than satisfying one of the Threshold Conditions, there can be no assurance that the Company will meet such criteria in the future.

The Company was required to begin paying quarterly dividends on the Series C Preferred Stock in the three month period ended June 30, 2024. Dividends on the Series C Preferred Stock totaled $750 thousand and $1.5 million for the three and six months ended June 30, 2025, respectively, with a current dividend rate of 2.0%. Dividends on the Series C Preferred Stock totaled $67 thousand  for both the three and six months ended June 30, 2024, with a current dividend rate of 2.0%.

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NOTE 3 – Securities

The

      following table summarizes the amortized cost and fair value of the available-for-sale investment securities portfolios as of the dates indicated and the corresponding amounts of unrealized gains and losses which were recognized in accumulated
      other comprehensive loss:
Amortized <br><br> Cost Gross<br><br> <br>Unrealized<br><br> <br>Gains Gross<br><br> <br>Unrealized<br><br> <br>Losses Fair Value
(In thousands)
June 30, 2025:
Federal agency mortgage-backed securities $ 68,607 $ 92 $ (8,281 ) $ 60,418
Federal agency collateralized mortgage obligations (“CMO”) 31,453 88 (864 ) 30,677
Federal agency debt 42,182 2 (1,304 ) 40,880
Municipal bonds 4,783 – (342 ) 4,441
U. S. Treasuries 32,961 – (145 ) 32,816
U.S. Small Business Administration (“SBA”) pools 10,044 4 (1,303 ) 8,745
Total available-for-sale securities $ 190,030 $ 186 $ (12,239 ) $ 177,977
December 31, 2024:
Federal agency mortgage-backed securities $ 62,853 $ 8 $ (9,832 ) $ 53,029
Federal agency CMOs 21,299 6 (1,247 ) 20,058
Federal agency debt 42,100 2 (2,068 ) 40,034
Municipal bonds 4,800 – (412 ) 4,388
U. S. Treasuries 77,857 – (667 ) 77,190
SBA pools 10,749 2 (1,588 ) 9,163
Total available-for-sale securities $ 219,658 $ 18 $ (15,814 ) $ 203,862

As of June 30, 2025, investment securities with a fair value of $69.9 million were pledged as collateral for securities sold under agreements to repurchase and included $32.8 million of U.S. Treasury securities, $27.6 million of federal agency debt securities, $5.4 million of federal agency mortgage-backed securities and $4.1 million of SBA pool investments. As of December 31, 2024, investment securities with a fair value of $83.3 million were pledged as collateral for securities sold under agreements to repurchase and included $46.5 million of U.S. Treasuries, $27.1 million of federal agency debt, $5.5 million of federal agency mortgage-backed securities, and $4.2 million of SBA pools. Accrued interest receivable on securities was $693 thousand and $796 thousand at June 30, 2025 and December 31, 2024, respectively, and is included in accrued interest receivable on the consolidated statements of financial condition.

At June 30, 2025, and December 31, 2024, there were no holdings of securities by any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity.

The amortized cost and estimated fair value of all investment securities available-for-sale at June 30, 2025, by contractual maturities are shown below. Contractual maturities may differ from expected maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

Amortized<br><br> <br>Cost Gross<br><br> <br>Unrealized<br><br> <br>Gains Gross<br><br> <br>Unrealized<br><br> <br>Losses Fair Value
(In thousands)
Due in one year or less $ 50,776 $ – $ (330 ) $ 50,446
Due after one year through five years 30,338 6 (1,447 ) 28,897
Due after five years through ten years 21,004 7 (879 ) 20,132
Due after ten years 87,912 173 (9,583 ) 78,502
$ 190,030 $ 186 $ (12,239 ) $ 177,977

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                  of Contents

The

        table below indicates the length of time individual securities have been in a continuous unrealized loss position:
Less than 12 Months 12 Months or Longer Total
Fair Value Unrealized<br><br> <br>Losses Fair Value Unrealized<br><br> <br>Losses Fair Value Unrealized<br><br> <br>Losses
(In thousands)
June 30, 2025:
Federal agency mortgage-backed securities $ 2,250 $ (17 ) $ 50,404 $ (8,264 ) $ 52,654 $ (8,281 )
Federal agency CMOs 1,498 (2 ) 16,324 (862 ) 17,822 (864 )
Federal agency debt – – 38,359 (1,304 ) 38,359 (1,304 )
Municipal bonds – – 4,441 (342 ) 4,441 (342 )
U. S. Treasuries – – 32,816 (145 ) 32,816 (145 )
SBA pools 67 – 7,907 (1,303 ) 7,974 (1,303 )
Total unrealized loss position investment securities $ 3,815 $ (19 ) $ 150,251 $ (12,220 ) $ 154,066 $ (12,239 )
December 31, 2024:
Federal agency mortgage-backed securities $ – $ – $ 52,568 $ (9,832 ) $ 52,568 $ (9,832 )
Federal agency CMOs – – 19,303 (1,247 ) 19,303 (1,247 )
Federal agency debt – – 37,508 (2,068 ) 37,508 (2,068 )
Municipal bonds – – 4,388 (412 ) 4,388 (412 )
U. S. Treasuries – – 77,190 (667 ) 77,190 (667 )
SBA pools 629 (1 ) 8,179 (1,587 ) 8,808 (1,588 )
Total unrealized loss position investment securities $ 629 $ (1 ) $ 199,136 $ (15,813 ) $ 199,765 $ (15,814 )

At June 30, 2025, and December 31, 2024, all securities in the portfolio were current with their contractual principal and interest payments. At June 30, 2025, and December 31, 2024, there were no securities purchased with deterioration in credit quality since their origination. At June 30, 2025, and December 31, 2024, there were no collateral dependent securities.

The Company’s assessment of available-for-sale investment securities as of June 30, 2025 and December 31, 2024, indicated that an allowance for credit losses (“ACL”) was not required. The Company evaluated available-for-sale investment securities that were in an unrealized loss position and determined the decline in fair value for those securities was not related to credit, but rather related to changes in interest rates and general market conditions. As such, no ACL was recorded for available-for-sale securities as of June 30, 2025 or December 31, 2024. At both June 30, 2025 and December 31, 2024, approximately 98% of the securities held by the Company were issued by U.S. government-sponsored entities and agencies.  Because the decline in fair value is attributable to changes in interest rates and liquidity, and not credit quality, and because the Company does not have the intent to sell these securities, and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company did not record expected credit loss during the three or six months ended June 30, 2025 or 2024.

NOTE 4 – Loans Receivable

      Held for Investment \(as Restated\)

Loans receivable held for investment were as follows as of the periods indicated:

June 30, 2025 December 31, 2024
(In thousands)
Real estate:
Single-family $ 22,925 $ 24,036
Multi-family 623,395 639,156
Commercial real estate 157,783 163,348
Church 9,199 9,470
Construction 80,830 91,600
Commercial – other 84,765 77,787
SBA loans 4,841 1,142
Consumer 19 13
Gross loans receivable before deferred loan costs and premiums 983,757 1,006,552
Unamortized net deferred loan costs and premiums 3,383 2,116
Gross loans receivable 987,140 1,008,668
Credit and interest marks on purchased loans, net (196 ) (348 )
Allowance for credit losses (9,880 ) (8,364 )
Loans receivable, net $ 977,064 $ 999,956

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Accrued interest receivable on loans receivable held for investment was $4.3 million and $4.0 million at June 30, 2025 and December 31, 2024, respectively, and is included in accrued interest receivable on the consolidated statements of financial condition.

The Company accounts for credit losses on loans in accordance with ASC 326 – Financial Instruments-Credit Losses. ASC 326 requires the Company to recognize

                              estimates for lifetime losses on loans and off-balance sheet loan commitments at the time of origination or acquisition. The recognition of losses at origination or acquisition represents the Company’s best estimate of the
                              lifetime expected credit loss associated with a loan given the facts and circumstances associated with the particular loan, and involves the use of significant management judgment and estimates, which are subject to change
                              based on management’s on-going assessment of the credit quality of the loan portfolio and changes in economic forecasts used in the model. The Company uses the WARM method when determining estimates for the ACL for each of
                              its portfolio segments. The weighted average remaining life, including the effect of estimated prepayments, is calculated for each loan pool on a quarterly basis. The Company then estimates a loss rate for each pool using
                              both its own historical loss experience and the historical losses of a group of peer institutions during the period from 2004 through the most recent quarter.

The Company’s ACL model also includes adjustments for qualitative factors, where appropriate. Qualitative adjustments may be related to and include, but are not limited to, factors such as: (i) changes in lending policies and procedures, including changes in underwriting standards and collections, charge offs, and recovery practices; (ii) changes in international, national, regional, and local conditions; (iii) changes in the nature and volume of the portfolio and terms of loans; (iv) changes in the experience, depth, and ability of lending management; (v) changes in the volume and severity of past due loans and other similar conditions; (vi) changes in the quality of the organization’s loan review system; (vii) changes in the value of underlying collateral for collateral dependent loans; (viii) the existence and effect of any concentrations of credit and changes in the levels of such concentrations; and (ix) the effect of other external factors (i.e., competition, legal and regulatory requirements) on the level of estimated credit losses. These qualitative factors incorporate the concept of reasonable and supportable forecasts, as required by ASC 326.

The following tables summarize the activity in the allowance for credit losses on loans for the six months ended:

June 30, 2025
Beginning<br><br> <br>Balance Charge-offs Recoveries Provision<br><br> <br>(recapture) Ending<br><br> <br>Balance
(In thousands)
Single-family $ 200 $ – $ – $ (78 ) $ 122
Multi-family 4,617 – – 1,671 6,288
Commercial real estate 1,188 – – 47 1,235
Church 54 – – 1 55
Construction 1,564 – – (273 ) 1,291
Commercial - other 730 – – 84 814
SBA loans 11 – – 64 75
Total $ 8,364 $ – $ – $ 1,516 $ 9,880
June 30, 2024
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Beginning<br><br> <br>Balance Charge-offs Recoveries Provision<br><br> <br>(recapture) Ending<br><br> <br>Balance
(In thousands)
Single family $ 264 $ – $ – $ 41 $ 305
Multi-family 4,464 – – 277 4,741
Commercial real estate 1,164 – – 77 1,241
Church 72 – – 12 84
Construction 1,009 – – 187 1,196
Commercial - other 592 – – 87 679
SBA loans 48 – – 82 130
Total $ 7,613 $ – $ – $ 763 $ 8,376

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The following tables summarize the activity in the allowance for credit losses on loans for the three months ended:

June 30, 2025
Beginning<br><br> <br>Balance Charge-offs Recoveries Provision<br><br> <br>(recapture) Ending<br><br> <br>Balance
(In thousands)
Single-family $ 193 $ – $ – $ (71 ) $ 122
Multi-family 6,061 – – 227 6,288
Commercial real estate 1,285 – – (50 ) 1,235
Church 48 – – 7 55
Construction 1,395 – – (104 ) 1,291
Commercial - other 1,200 – – (386 ) 814
SBA loans 78 – – (3 ) 75
Total $ 10,260 $ – $ – $ (380 ) $ 9,880
June 30, 2024
--- --- --- --- --- --- --- --- --- --- --- ---
Beginning<br><br> <br>Balance Charge-offs Recoveries Provision<br><br> <br>(recapture) Ending<br><br> <br>Balance
(In thousands)
Single-family $ 303 $ – $ – $ 2 $ 305
Multi-family 4,374 – – 367 4,741
Commercial real estate 1,175 – – 66 1,241
Church 90 – – (6 ) 84
Construction 1,028 – – 168 1,196
Commercial - other 782 – – (103 ) 679
SBA loans 52 – – 78 130
Total $ 7,804 $ – $ – $ 572 $ 8,376

The Company recorded a recapture of provision for off-balance sheet loan commitments of $74 thousand and $58 thousand for the three months ended June 30, 2025 and 2024, respectively.  The Company recorded a recapture of provision for off-balance sheet loan commitments of $56 thousand and $2 thousand for the six months ended June 30, 2025 and 2024, respectively.

The ACL increased from December 31, 2024 to June 30, 2025, primarily due to an increase in specific reserves on individually evaluated loans.

The Company evaluates loans collectively for purposes of determining the ACL in accordance with ASC 326. Collective evaluation is based on aggregating loans deemed to possess similar risk characteristics. In certain instances, the Company may identify loans that it believes no longer possess risk characteristics similar to other loans in the loan portfolio. These loans are typically identified from those that have exhibited deterioration in credit quality, since the specific attributes and risks associated with such loans tend to become unique as the credit deteriorates. Such loans are typically nonperforming, downgraded to substandard or worse, and/or are deemed collateral dependent, where the ultimate repayment of the loan is expected to come from the operation of or eventual sale of the collateral. Loans that are deemed by management to no longer possess risk characteristics similar to other loans in the portfolio, or that have been identified as collateral dependent, are evaluated individually for purposes of determining an appropriate lifetime ACL. The Company uses the remaining life approach, using the loan’s effective interest rate, for determining the ACL on individually evaluated loans, unless the loan is deemed collateral dependent, which requires evaluation based on the estimated fair value of the underlying collateral, less estimated selling costs. The Company may increase or decrease the ACL for collateral dependent loans based on changes in the estimated fair value of the collateral.

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The following table presents collateral dependent loans by collateral type as of the date indicated:

June 30, 2025
Single-Family Multi-Family<br><br> <br>Residential Retail Business<br><br> <br>Assets Total
Real estate: (In thousands)
Multi-family $ – $ 4,218 $ – $ – $ 4,218
SBA Loans – – – 316 316
Total $ – $ 4,218 $ – $ 316 $ 4,534

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Table of Contents

December 31, 2024
Single-Family Multi-Family<br><br> <br>Residential Church Business<br><br> <br>Assets Total
Real estate: (In thousands)
Single-family $ – $ – $ – $ 264 $ 264
Total $ – $ – $ – $ 264 $ 264

At June 30, 2025, $4.5 million of individually evaluated loans were evaluated based on the estimated fair value of the underlying collateral. These loans had an associated ACL of $1.5 million as of June 30, 2025.

At December 31, 2024, one $264 thousand individually evaluated loan was evaluated based on the estimated fair value of the underlying collateral.   This loan had no associated ACL and was on nonaccrual status as of December 31, 2024.

Past Due Loans

The following tables present the aging of the recorded investment in past due loans by loan type as of the dates indicated:

June 30,<br> 2025
30-59 Days<br><br> <br>Past Due 60-89 Days<br><br> <br>Past Due Greater than 90<br><br> <br>Days Past Due Total<br><br> <br>Past Due Current Total
(In thousands)
Loans receivable held for investment:
Single-family $ – $ 10 $ 426 $ 436 $ 22,510 $ 22,946
Multi-family – – 4,218 4,218 622,682 626,900
Commercial real estate 1,189 – – 1,189 156,523 157,712
Church – – – – 9,207 9,207
Construction – – – – 79,810 79,810
Commercial - other – 261 – 261 85,164 85,425
SBA loans – – 316 316 4,805 5,121
Consumer – – – – 19 19
Total $ 1,189 $ 271 $ 4,960 $ 6,420 $ 980,720 $ 987,140
December 31, 2024
--- --- --- --- --- --- --- --- --- --- --- --- ---
30-59 Days<br><br> <br>Past Due 60-89 Days<br><br> <br>Past Due Greater than 90<br><br> <br>Days Past Due Total<br><br> <br>Past Due Current Total
(In thousands)
Loans receivable held for investment:
Single-family $ – $ 6 $ – $ 6 $ 24,042 $ 24,048
Multi-family – – – – 642,109 642,109
Commercial real estate – – – – 163,269 163,269
Church – – – – 9,475 9,475
Construction – – – – 91,140 91,140
Commercial - other – – – – 77,472 77,472
SBA loans – 264 – 264 878 1,142
Consumer – – – – 13 13
Total $ – $ 270 $ – $ 270 $ 1,008,398 $ 1,008,668

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The following tables present the recorded investment in non-accrual loans by loan type as of the dates indicated:

June 30, 2025
Nonaccrual with<br><br> <br>no Allowance for<br><br> <br>Credit Losses Nonaccrual with<br><br> <br>an Allowance for<br><br> <br>Credit Losses Total Nonaccrual<br><br> <br>Loans
(In thousands)
Loans receivable held for investment:
Commercial - other $ 468 $ – $ 468
SBA loans 242 74 316
Single family 426 – 426
Multi-family – 4,218 4,218
Total non-accrual loans $ 1,136 $ 4,292 $ 5,428
December<br> 31, 2024
--- --- --- --- --- --- ---
Nonaccrual with<br><br> <br>no Allowance for<br><br> <br>Credit Losses Nonaccrual with<br><br> <br>an Allowance for<br><br> <br>Credit Losses Total Nonaccrual<br><br> <br>Loans
(In thousands)
Loans receivable held for investment:
SBA loans $ 264 $ – $ 264
Total non-accrual loans $ 264 $ – $ 264

There were no loans 90 days or more delinquent that were accruing interest as of June 30, 2025 or December 31, 2024.

Modified Loans to

                              Troubled Borrowers

GAAP requires that certain types of modifications of loans in response to a borrower’s financial difficulty be reported, which consist of the following: (i) principal forgiveness, (ii) interest rate reduction, (iii) other-than-insignificant payment delay, (iv) term extension, or (v) any combination of the foregoing. The ACL for loans that were modified in response to a borrower’s financial difficulty is measured on a collective basis, as with other loans in the loan portfolio, unless management determines that such loans no longer possess risk characteristics similar to others in the loan portfolio. In those instances, the ACL for such loans is determined through individual evaluation.

The following table presents the amortized costs basis and the financial effect of loans modified to borrowers experiencing financial difficulty during the three and six months ended June 30, 2025.  There were no loan modifications to borrowers that were experiencing financial difficulty during the three or six months ended June 30, 2024.

Six Months Ended June 30, 2025
Term Extension Percentage of Total<br><br> <br>Loan Type Weighted Average Term Extension
(In Thousands)
Real estate:
Commercial real estate $ 1,566 0.99 % 7 months
Construction 2,019 2.50 % 7 months
Commercial - other 468 0.55 % 9 months
Total $ 4,053
Three Months Ended June 30, 2025
--- --- --- --- --- --- ---
Term Extension Percentage of Total<br><br> <br>Loan Type Weighted Average Term Extension
(In Thousands)
Commercial - other $ 522 0.62 % 9 months
Total $ 522

The commercial-other modified loan above is on non-accrual status and the remainder of the modified loans are current.  None of the modified loans have defaulted and the Company has not committed to lend additional amounts to borrowers whose loans were modified.

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Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. For single-family residential, consumer, and other smaller balance homogenous loans, a credit grade is established at inception, and generally only adjusted based on performance. Information about payment status is disclosed elsewhere herein. The Company analyzes all other loans individually by classifying the loans as to credit risk. The Company uses the following definitions for risk ratings:

● Watch. Loans<br><br> classified as watch exhibit weaknesses that could threaten the current net worth and paying capacity of the obligors. Watch graded loans are generally performing and are not more than 59 days past due. A watch<br> rating is used when a material deficiency exists, but correction is anticipated within an acceptable time frame.
● Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention that appears short term in nature. If left uncorrected, these potential weaknesses may result in<br> deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.
--- ---
● Substandard. Loans classified as<br> substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that<br> jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution may sustain some loss if the deficiencies are not corrected.
--- ---
● Doubtful. Loans classified as doubtful<br> have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, based on currently existing facts, conditions, and<br> values, highly questionable and improbable.
--- ---
● Loss. Loans classified as loss are considered uncollectible and of such little value that to continue to carry the loan as an<br> active asset is no longer warranted.
--- ---

Loans that are not individually evaluated as part of the above-described process are considered to be pass rated loans. Pass rated loans are generally well protected by the current net worth and paying capacity of the obligor and/or by the value of the underlying collateral. Pass rated loans are not more than 59 days past due and are generally performing in accordance with the loan terms.

The

                                following table stratifies the loans held for investment portfolio by the Company’s internal risk grading, and by year of origination as of the date indicated:
Term Loans Amortized Cost Basis by Origination Year - As of June 30, 2025
2025 2024 2023 2022 2021 Prior Revolving<br><br> <br>Loans Total
(In thousands)
Single-family:
Pass $ – $ – $ 538 $ 4,055 $ 2,658 $ 14,167 $ – $ 21,418
Watch – – – – – 1,528 – 1,528
Total $ – $ – $ 538 $ 4,055 $ 2,658 $ 15,695 $ – $ 22,946
Multi-family:
Pass $ – $ 80,979 $ 77,221 $ 153,601 $ 114,461 $ 102,491 $ – $ 528,753
Watch – – 5,600 29,576 18,752 18,750 – 72,678
Special Mention – – – – 1,788 – – 1,788
Substandard – – 1,487 7,112 7,744 3,135 – 19,478
Doubtful – – – 4,203 – – – 4,203
Total $ – $ 80,979 $ 84,308 $ 194,492 $ 142,745 $ 124,376 $ – $ 626,900
Commercial real estate:
Pass $ 629 $ 48,947 $ 8,209 $ 23,561 $ 28,743 $ 29,557 $ – $ 139,646
Watch – – 1,363 – 979 7,477 – 9,819
Special Mention – – 1,573 – – 1,612 – 3,185
Substandard – – 3,245 – 1,817 – – 5,062
Total $ 629 $ 48,947 $ 14,390 $ 23,561 $ 31,539 $ 38,646 $ – $ 157,712
Church:
Pass $ – $ – $ 2,389 $ – $ 2,120 $ 3,164 $ – $ 7,673
Watch – – 367 – – – – 367
Substandard – – – – – 1,167 – 1,167
Total $ – $ – $ 2,756 $ – $ 2,120 $ 4,331 $ – $ 9,207
Construction:
Watch 1,442 10,070 14,037 19,164 – – – 44,713
Special Mention – – 8,897 – – 2,019 – 10,916
Substandard – 2,175 4,329 13,753 3,924 – – 24,181
Total $ 1,442 $ 12,245 $ 27,263 $ 32,917 $ 3,924 $ 2,019 $ – $ 79,810
Commercial – other:
Pass $ 7,559 $ 1,254 $ 3 $ 7,135 $ – $ 12,760 $ – $ 28,711
Watch – 19,272 28,177 – – 5,486 – 52,935
Special Mention – – – 694 – 2,250 – 2,944
Substandard – – – – 104 731 – 835
Total $ 7,559 $ 20,526 $ 28,180 $ 7,829 $ 104 $ 21,227 $ – $ 85,425
SBA:
Pass $ – $ 4,611 $ – $ – $ – $ 44 $ – $ 4,655
Substandard – – – 150 – – – 150
Doubtful – – – – – 316 – 316
Total $ – $ 4,611 $ – $ 150 $ – $ 360 $ – $ 5,121
Consumer:
Pass $ 19 $ – $ – $ – $ – $ – $ – $ 19
Total $ 19 $ – $ – $ – $ – $ – $ – $ 19
Total loans:
Pass $ 8,207 $ 135,791 $ 88,360 $ 188,352 $ 147,982 $ 162,183 $ – $ 730,875
Watch 1,442 29,342 49,544 48,740 19,731 33,241 – 182,040
Special Mention – – 10,470 694 1,788 5,881 – 18,833
Substandard – 2,175 9,061 21,015 13,589 5,033 – 50,873
Doubtful – – – 4,203 – 316 – 4,519
Total loans $ 9,649 $ 167,308 $ 157,435 $ 263,004 $ 183,090 $ 206,654 $ – $ 987,140

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Table of Contents

Term Loans Amortized Cost Basis by Origination Year - As of December 31, 2024
2024 2023 2022 2021 2020 Prior Revolving<br><br> <br>Loans Total
(In thousands)
Single-family:
Pass $ – $ 543 $ 4,098 $ 1,968 $ 1,796 $ 13,687 $ – $ 22,092
Watch – – – 729 1,227 – – 1,956
Total $ – $ 543 $ 4,098 $ 2,697 $ 3,023 $ 13,687 $ – $ 24,048
Multi-family:
Pass $ 81,474 $ 77,739 $ 171,836 $ 126,492 $ 26,771 $ 90,584 $ – $ 574,896
Watch – 5,633 16,244 14,761 – 13,244 – 49,882
Special Mention – – 4,210 3,150 – – – 7,360
Substandard – 1,562 – 4,691 – 3,718 – 9,971
Total $ 81,474 $ 84,934 $ 192,290 $ 149,094 $ 26,771 $ 107,546 $ – $ 642,109
Commercial real estate:
Pass $ 49,143 $ 9,655 $ 23,482 $ 29,021 $ 21,150 $ 22,606 $ – $ 155,057
Watch – 1,584 432 994 – 1,634 – 4,644
Substandard – 3,271 – $ 297 $ – – $ – $ 3,568
Total $ 49,143 $ 14,510 $ 23,914 $ 30,312 $ 21,150 $ 24,240 $ – $ 163,269
Church:
Pass $ – $ 2,442 $ – $ 2,148 $ 1,696 $ 1,002 $ – $ 7,288
Watch – 376 – – – 618 – 994
Substandard – – – – – 1,193 – 1,193
Total $ – $ 2,818 $ – $ 2,148 $ 1,696 $ 2,813 $ – $ 9,475
Construction:
Watch 9,568 31,274 227 – – 2,038 – 43,107
Special Mention – – – – – – – –
Substandard – 4,076 38,494 5,463 – – – 48,033
Total $ 9,568 $ 35,350 $ 38,721 $ 5,463 $ – $ 2,038 $ – $ 91,140
Commercial – other:
Pass $ 1 $ 3 $ 7,575 $ – $ 2,768 $ 9,965 $ – $ 20,312
Watch 19,260 28,157 706 – – 1,197 – 49,320
Special Mention – – 351 – – 2,250 – 2,601
Substandard – – – 106 571 4,562 – 5,239
Total $ 19,261 $ 28,160 $ 8,632 $ 106 $ 3,339 $ 17,974 $ – $ 77,472
SBA:
Pass $ 590 $ – $ – $ – $ – $ 64 $ – $ 654
Substandard – – 150 – 338 – – 488
Total $ 590 $ – $ 150 $ – $ 338 $ 64 $ – $ 1,142
Consumer:
Pass $ 13 $ – $ – $ – $ – $ – $ – $ 13
Total $ 13 $ – $ – $ – $ – $ – $ – $ 13
Total loans:
Pass $ 131,221 $ 90,382 $ 206,991 $ 159,629 $ 54,181 $ 137,908 $ – $ 780,312
Watch 28,828 67,024 17,609 16,484 1,227 18,731 – 149,903
Special Mention – – 4,561 3,150 – 2,250 – 9,961
Substandard – 8,909 38,644 10,557 909 9,473 – 68,492
Total loans $ 160,049 $ 166,315 $ 267,805 $ 189,820 $ 56,317 $ 168,362 $ – $ 1,008,668

Allowance for Credit Losses for Off-Balance Sheet Commitments

The Company maintains an allowance for credit losses on off-balance sheet commitments related to unfunded loans and lines of credit, which is included in accrued expenses and other liabilities of the consolidated statements of financial condition. The Company applies an expected credit loss estimation methodology for off-balance sheet commitments. This methodology is commensurate with the methodology applied to each respective segment of the loan portfolio in determining the ACL for loans held-for-investment. The loss estimation process includes assumptions for the probability that a loan will fund, as well as the expected amount of funding. These assumptions are based on the Company’s own historical internal loan data.

The allowance for off-balance sheet commitments was $221 thousand and $277 thousand at June 30, 2025 and December 31, 2024, respectively.

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NOTE 5 – Goodwill and Core Deposit Intangible

The following tables present the changes in the carrying amounts of goodwill and core deposit intangibles for the six months ended June 30, 2025 and 2024:

June 30, 2025
Goodwill Core Deposit<br><br> <br>Intangible
(In thousands)
Balance at the beginning of the period $ 25,858 $ 1,775
Additions – –
Amortization – (158 )
Balance at the end of the period $ 25,858 $ 1,617
June 30, 2024
--- --- --- --- --- ---
Goodwill Core Deposit<br><br> <br>Intangible
(In thousands)
Balance at the beginning of the period $ 25,858 $ 2,111
Additions – –
Amortization – (168 )
Balance at the end of the period $ 25,858 $ 1,943

The carrying amount of the core deposit intangible consisted of the following (in thousands):

June 30, 2025 December 31,<br><br> <br>2024
Core deposit intangible acquired $ 3,329 $ 3,329
Less: Accumulated amortization (1,712 ) (1,554 )
$ 1,617 $ 1,775

The following table outlines the estimated amortization expense for the core deposit intangible during the next five fiscal years (in thousands):

Remainder of 2025 $ 157
2026 304
2027 291
2028 279
2029 267
Thereafter 319
$ 1,617

See Note 13 - Subsequent Events.

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NOTE 6 – Borrowings

                                        \(as Restated\)

The Company enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities. Under these arrangements, the Company may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Company to repurchase the assets. As a result, these repurchase agreements are accounted for as collateralized financing agreements (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities. The obligation to repurchase the securities is reflected as a liability in the Company’s consolidated statements of financial condition, while the securities underlying the repurchase agreements remain in the respective investment securities asset accounts. In other words, there is no offsetting or netting of the investment securities assets with the repurchase agreement liabilities. These agreements mature on a daily basis. As of June 30, 2025 securities sold under agreements to repurchase totaled $63.8 million at an average rate of 3.66%. The fair value of securities pledged totaled $69.9 million as of June 30

, 2025

. As of December 31, 2024, securities sold under agreements to repurchase totaled $66.6 million at an average rate of 3.62%. The fair value of securities pledged totaled $83.3 million as of December 31, 2024.

At June 30, 2025 and December 31, 2024, the Company had outstanding advances from the FHLB totaling $60.0 million and $195.5 million, respectively. The weighted average interest rate was 4.38% and 4.03% as of June 30, 2025 and December 31, 2024, respectively. The weighted average contractual maturity was less than one month as of both June 30, 2025 and December 31, 2024. The advances were collateralized by loans with an unpaid balance of $509.0 million at June 30, 2025 and $521.7 million at December 31, 2024. The Company is currently approved by the FHLB of Atlanta to borrow up to 25% of total assets to the extent the Company provides qualifying collateral and holds sufficient FHLB stock. Based on collateral pledged and FHLB stock held, the Company was eligible to borrow an additional $298.7 million as of June

30, 2025

.

The Company will, from time to time, sell a portion of a loan or group of loans to third parties. In some cases, the transferred portion of the loans does not meet the requirements to be treated as sales for accounting purposes. When that occurs, the legally transferred portion of the loan balance remains classified in gross loans receivable held for investment and a secured borrowing is recorded for the proceeds received from the third party institution. As the transferred portion of the loan pays down, the secured borrowings are repaid. The Company has no obligation to make principal or interest payments on the secured borrowings unless and until payments are received from the loan borrowers. The Company has secured borrowings associated with these participation loan transactions of $30.3 million and $31.4 million as of June 30, 2025 and December 31, 2024, respectively. The weighted average interest rate on the secured borrowings was 5.51% and 5.54% at June 30, 2025 and December 31, 2024, respectively.

On December 27, 2023, the Company borrowed $100.0 million from the Federal Reserve under the BTFP.  This borrowing was paid off in December 2024.  The interest rate on this borrowing was fixed at 4.84% and the borrowing matured on December 29, 2024.

In addition, the Company had additional lines of credit of $10.0 million with other financial institutions as of June 30, 2025 and December 31, 2024. These lines of credit are unsecured, bear interest at the Federal funds rate as of the date of utilization and mature in 30 days.  There were no amounts outstanding under these lines of credit as of June 30, 2025 or December 31, 2024.

In connection with the New Market Tax Credit activities of the Bank, CFC 45 is a partnership whose members include CFNMA and City First New Markets Fund II, LLC. This community development entity acts in effect as a pass-through for a Merrill Lynch allocation totaling $14.0 million that needed to be deployed. In December 2015, Merrill Lynch made a $14.0 million non-recourse loan to CFC 45, whereby CFC 45 passed that loan through to a Qualified Active Low-Income Business (“QALICB”). The loan to the QALICB was secured by a Leasehold Deed of Trust that, due to the pass-through, non-recourse structure, was operationally and ultimately for the benefit of Merrill Lynch rather than CFC 45. Debt service payments received by CFC 45 from the QALICB were passed through to Merrill Lynch in return for which CFC 45 received a servicing fee. The financial statements of CFC 45 are consolidated with those of the Bank and the Company.

There were two notes for CFC 45. Note A was in the amount of $9.9 million with a fixed interest rate of 5.2% per annum. Note B was in the amount of $4.1 million with a fixed interest rate of 0.24% per annum. Quarterly interest only payments commenced in March 2016 and continued through March 2023 for Notes A and B. These notes were paid off during January 2024.

NOTE 7 – Fair Value

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an ordinary transaction between market participants on the measurement date.  There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

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Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions to estimate fair value:

The fair values of securities available-for-sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

Assets Measured on a Recurring Basis

Assets measured at fair value on a recurring basis are summarized below:

Fair Value Measurement
Quoted Prices<br><br> <br>in Active<br><br> <br>Markets for<br><br> <br>Identical<br><br> <br>Assets (Level 1) Significant<br><br> <br>Other<br><br> <br>Observable<br><br> <br>Inputs (Level 2) Significant<br><br> <br>Unobservable<br><br> <br>Inputs (Level 3) Total
(In thousands)
At June 30, 2025:
Securities available-for-sale:
Federal agency mortgage-backed securities $ – $ 60,418 $ – $ 60,418
Federal agency CMOs – 30,677 – 30,677
Federal agency debt – 40,880 – 40,880
Municipal bonds – 4,441 – 4,441
U.S. Treasuries 32,816 – – 32,816
SBA pools – 8,745 – 8,745
At December 31, 2024:
Securities available-for-sale:
Federal agency mortgage-backed securities $ – $ 53,029 $ – $ 53,029
Federal agency CMOs – 20,058 – 20,058
Federal agency debt – 40,034 – 40,034
Municipal bonds – 4,388 – 4,388
U.S. Treasuries 77,190 – – 77,190
SBA pools – 9,163 – 9,163

There were no transfers between Level 1, Level 2, or Level 3 during the three or six months ended June 30, 2025 and 2024.

Assets Measured on a Nonrecurring Basis

The Company measures certain assets at fair value on a nonrecurring basis and the following is a general description of the methods used to value such assets.

Collateral-Dependent Loans - The fair value of collateral-dependent loans with specific allocations of the allowance for loan losses is generally based on recent appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available for similar loans and collateral underlying loans and result in a Level 3 classification.

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The table below presents assets measured at fair value on a nonrecurring basis.  As of December 31, 2024, the Company did not have any assets or liabilities carried at fair value on a nonrecurring basis.

Fair Value Measurement
Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total
(In thousands)
At June 30, 2025:
Collateral dependent loans:<br><br> <br>Real estate:
Multi-family $ – $ – $ 4,218 $ 4,218
SBA loans – – 316 316

The following table represents quantitative information about Level 3 fair value assumptions for assets measured at fair value on a non-recurring basis at June 30, 2025.

Fair Value Valuation<br><br> <br>Technique(s) Unobservable Input(s) Range
(In thousands)
At June 30, 2025:
Individually evaluated loans:<br><br> <br>Real estate:
Multi-family $ 4,218 Market approach Adjustments to market data 5% - 10 %
SBA loans 316 Market approach Adjustments to market data 5% - 10 %

Fair Values of Financial Instruments

The following tables present the carrying amount, fair value, and level within the fair value hierarchy of the Company’s financial instruments as of June 30, 2025 and December 31, 2024.

Fair Value Measurements at June 30,<br> 2025
Carrying Value Level 1 Level 2 Level 3 Total
(In thousands)
Financial Assets:
Cash and cash equivalents $ 29,514 $ 29,514 $ – $ – $ 29,514
Securities available-for-sale 177,977 32,816 145,161 – 177,977
Loans receivable held for investment 977,064 – – 955,962 955,962
Accrued interest receivable 5,109 295 479 4,335 5,109
Financial Liabilities:
Non interest bearing deposits $ 88,635 $ – $ 88,635 $ – $ 88,635
Interest bearing deposits 433,332 – 433,332 – 433,332
Time deposits 276,955 – 276,110 – 276,110
FHLB borrowings 60,000 – 59,999 – 59,999
Secured borrowings 30,287 – 30,287 – 30,287
Securities sold under agreements to repurchase 63,786 – 63,786 – 63,786
Accrued interest payable 2,018 – 2,018 – 2,018

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Fair Value Measurements at December 31, 2024
Carrying Value Level 1 Level 2 Level 3 Total
(In thousands)
Financial Assets:
Cash and cash equivalents $ 61,365 $ 61,365 $ – $ – $ 61,365
Securities available-for-sale 203,862 77,190 126,672 – 203,862
Loans receivable held for investment 999,956 – – 973,183 973,183
Accrued interest receivable 5,001 5,001 – – 5,001
Financial Liabilities:
Deposits $ 745,399 $ – $ 669,695 $ – $ 669,695
Borrowings 195,532 – 227,150 – 227,150
Securities sold under agreements to repurchase 66,610 – 66,070 – 66,070
Accrued interest payable 1,349 – 1,349 – 1,349

In accordance with ASC 820, the fair value of financial assets and liabilities was measured using an exit price notion. Although the exit price notion represents the value that would be received to sell an asset or paid to transfer a liability, the actual price received for a sale of assets or paid to transfer liabilities could be different from exit price disclosed.

NOTE 8 – Stock-based Compensation

Prior to June 21, 2023, the Company issued stock-based compensation awards to its directors and officers under the 2018 Long Term Incentive Plan (“LTIP”) which allowed the grant of non-qualified and incentive stock options, stock appreciation rights, full value awards and cash incentive awards.  The maximum number of shares available to be awarded under the LTIP was 161,639 shares.

On June 21, 2023, stockholders approved an Amendment and Restatement of the 2018 Long Term Incentive Plan (“Amended and Restated LTIP”) which allows the issuance of 487,500 additional shares and brought the number of shares that may be issued under the Amended and Restated LTIP to 649,139 shares.

Stock-based compensation is recognized on a straight-line basis over the vesting period. During the three months ended June 30, 2025 and 2024, the Company recorded $111 thousand and $38 thousand of stock-based compensation expense, respectively.  During the six months ended June 30, 2025 and 2024, the Company recorded $210 thousand and $115 thousand of stock-based compensation expense, respectively. During the three months ended June 30, 2025, the Company did not record any director stock compensation expense and during the three months ended June 30, 2024, the Company recorded $96 thousand of stock-based compensation expense. During the six months ended June 30, 2025 and 2024, the Company recorded $168 thousand and $96 thousand, respectively, of director stock compensation expense, which was determined using the fair value of the stock on the dates of the awards.

As of June 30, 2025, 382,592 shares had been awarded under the Amended and Restated LTIP and 266,547 shares were available to be awarded.  The following tables present stock award activity during the three and six months ended June 30, 2025 and 2024:

Three months ended
June 30, 2025 June 30, 2024
(In thousands)
Outstanding at the beginning of the period 232,864 225,047
Granted during period 8,183 19,832
Forfeited during period (22,477 ) (27,149 )
Vested during period (22,122 ) (40,215 )
Outstanding at the end of the period 196,448 177,515
Six months ended
--- --- --- --- --- --- ---
June 30, 2025 June 30, 2024
(In thousands)
Outstanding at the beginning of the period 184,874 111,723
Granted during period 119,710 145,890
Forfeited during period (23,187 ) (27,149 )
Vested during period (84,949 ) (52,949 )
Outstanding at the end of the period 196,448 177,515

No stock options were granted, exercised or expired during the three and six months ended June 30, 2025. During the three and six months ended June 30, 2024, 18,750 stock options were forfeited.

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Options outstanding and exercisable at June 30, 2025 were as follows:

Outstanding Exercisable
Number<br><br> <br>Outstanding Weighted Average<br><br> <br>Remaining<br><br> <br>Contractual Life Weighted<br><br> <br>Average<br><br> <br>Exercise Price Aggregate<br><br> <br>Intrinsic<br><br> <br>Value Number<br><br> <br>Outstanding Weighted<br><br> <br>Average<br><br> <br>Exercise Price Aggregate<br><br> <br>Intrinsic Value
12,500 0.63 years $ 12.96 $ – 12,500 $ 12.96 $ –

The Company did not record any stock-based compensation expense related to stock options during the three and six months ended June 30, 2025 and 2024.

NOTE 9 – ESOP Plan

Employees

  participate in the ESOP after attaining certain age and service requirements. During 2022, the ESOP purchased 58,369 shares of the
  Company’s common stock at an average cost of $8.57 per share for a total cost of $500 thousand and during 2023, the ESOP purchased 369,958 shares of the Company’s
  common stock at an average cost of $9.19 per share for a total cost of $3.4 million. These purchases were funded with a $5.0 million line of credit from
  the Company. The loan will be repaid from the Bank’s annual discretionary contributions to the ESOP, net of dividends paid, over a period of 20
  years. Shares of the Company’s common stock purchased by the ESOP are held in a suspense account until released for allocation to participants. When loan payments are made, shares are allocated to each eligible participant based on the ratio of each
  such participant’s compensation, as defined in the ESOP, to the total compensation of all eligible plan participants. As the unearned shares are released from the suspense account, the Company recognizes compensation expense equal to the fair value
  of the ESOP shares during the periods in which they become committed to be released. To the extent that the fair value of the ESOP shares released differs from the cost of such shares, the difference is charged or credited to equity as additional
  paid-in capital. Any dividends on allocated shares increase participant accounts. Any dividends on unallocated shares will be used to repay the loan. Participants receive shares for their vested balance at the end of their employment. Compensation
  expense related to the ESOP was $49 thousand and $72 thousand for the three months ended June 30, 2025 and 2024, respectively, and $99
  thousand and $91 thousand for the six months ended June 30, 2025 and 2024, respectively.

Shares held by the ESOP were as follows:

June 30, 2025 December 31, 2024
(Dollars in thousands)
Allocated to participants 157,840 127,804
Committed to be released 14,676 30,036
Suspense shares 414,128 428,804
Total ESOP shares 586,644 586,644
Fair value of unearned shares $ 3,002 $ 2,937

The book value of unearned shares, which are reported as Unearned ESOP shares in the equity section of the consolidated statements of financial condition, were $4.1 million and $4.2 million at June 30, 2025 and December 31, 2024, respectively.

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NOTE 10 – Regulatory Matters

The Bank’s capital requirements are administered by the Office of the Comptroller of the Currency (“OCC”) and involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by the OCC. Failure to meet capital requirements can result in regulatory action.

As a result of the Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies have developed a “Community Bank Leverage Ratio” (the ratio of a bank’s tier 1 capital to average total consolidated assets) for financial institutions with assets of less than $10 billion. A “qualifying community bank” that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The federal banking agencies have set the Community Bank Leverage Ratio at 9%. Actual and required capital amounts and ratios as of the dates indicated are presented below:

Actual Minimum Required to Be<br><br> <br>Well Capitalized Under<br><br> <br>Prompt Corrective Action<br><br> <br>Provisions
Amount Ratio Amount Ratio
(Dollars in thousands)
June 30,<br> 2025:
Community Bank Leverage Ratio $ 187,513 15.34 % $ 110,027 9.00 %
December 31,<br> 2024:
Community Bank Leverage Ratio $ 188,827 13.61 % $ 124,879 9.00 %

At June 30, 2025, the Company and the Bank met all the capital adequacy requirements to which they were subject. In addition, the Bank was “well capitalized” under the regulatory framework for prompt corrective action. Management believes that no conditions or events have occurred since June 30, 2025 that would materially adversely change the Bank’s capital classifications. From time to time, the Bank may need to raise additional capital to support its further growth and to maintain its “well capitalized” status.

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NOTE 11 –

                                Income Taxes \(as Restated\)

The Company and its subsidiary are subject to U.S. federal and state income taxes. Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax asset will not be realized. In assessing the realization of deferred tax assets, management evaluated both positive and negative evidence, including any cumulative losses in the current year and the prior two years, the amount of taxes paid in available carry-back years, the forecasts of future income and tax planning strategies.

At June 30, 2025, the Company maintained a $449 thousand valuation allowance on its deferred tax assets because the number of shares sold in the private placements completed on April 6, 2021 triggered limitations on the use of certain tax attributes under the Section 382 of the federal tax code. The ability to use net operating losses (“NOLs”) to offset future taxable income will be restricted and these NOLs could expire or otherwise be unavailable. In general, under Section 382 of the Code and corresponding provisions of state law, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income. For these purposes, an ownership change generally occurs where the aggregate stock ownership of one or more stockholders or groups of stockholders who owns at least 5% of a corporation’s stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a specified testing period.

The Company recorded an income tax expense of $296 thousand for the second quarter of 2025, compared to an income tax expense of $139 thousand for the second quarter of 2024.  The increase in income tax expense reflected an increase of $645 thousand in pre-tax income between the two periods. The effective tax rate was 28.41% for the second quarter of 2025, compared to 35.01% for the second quarter of 2024.

The Company recorded an income tax benefit of $790 thousand for the first six months of 2025, compared to an income tax expense of $85 thousand for the first six months of 2024.  The decrease in income tax expense reflected a decrease of $2.9 million in pre-tax income between the two periods.  The effective tax rate was 28.87% for the first six months of 2025, compared to 50.00% for the first six months of 2024.

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NOTE 12 – Concentrations

The Bank has a significant concentration of deposits with six customers that accounted for approximately 25% and 18% of its deposits as of June 30, 2025 and December 31, 2024, respectively. The Bank also has a significant concentration of short-term borrowings from one customer that accounted for 90% and 88% of the outstanding balance of securities sold under agreements to repurchase as of June 30, 2025 and December 31, 2024, respectively. The Company expects to maintain the relationships with these customers for the foreseeable future.

NOTE 13 – Subsequent Events

Operational Loss

During the first quarter of 2025, the Company recognized an operational loss of $1.9 million due to a fraudulent wire transfer. In August 2025, the Company recovered $1.6 million of the $1.9 million which will be reflected in the consolidated financial statements of the Company for the quarter ended September 30, 2025.  In October 2025, the Company recovered $240 thousand which will be reflected in the consolidated financial statements of the Company for the quarter ended December 31, 2025.

Goodwill Impairment

On October 15, 2025, the Audit Committee of the Board of Directors of Broadway Financial Corporation concluded that, based on its annual impairment analysis, the Company’s goodwill is impaired in accordance with U.S. GAAP.  Consequently, the Company recorded a non-cash $25.9 million goodwill impairment charge for the quarter ended September 30, 2025. The Company does not expect that this charge will result in future cash expenditures.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. Our MD&A should be read in conjunction with the Consolidated Financial Statements and related Notes included in Part I, Item 1 “Financial Statements,” of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K/A for the year ended December 31, 2024. Certain statements herein are forward-looking statements within the meaning of Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 27A of the U.S. Securities Act of 1933, as amended that reflect our current views with respect to future events and financial performance. Forward-looking statements typically include words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “potential,” “continue,” “prospects,” “ability,” “looking,” “forward,” “invest,” “grow,” “improve,” “likely” and other similar expressions. These forward-looking statements are subject to risks and uncertainties, which could cause actual future results to differ materially from historical results or from those anticipated or implied by such statements. Readers should not place undue reliance on these forward-looking statements, which speak only as of their dates or, if no date is provided, then as of the date of this Form 10-Q. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law.

Critical Accounting Policies and Estimates

Critical accounting policies are those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations under different assumptions and conditions. This discussion highlights those accounting policies that management considers critical. All accounting policies are important; therefore, you are encouraged to review each of the policies included in Note 1 “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements in our 2024 Form 10-K/A to gain a better understanding of how our financial performance is measured and reported. Management has identified the Company’s critical accounting policies as follows:

Allowance for Credit Losses for Loans

The Company accounts for credit losses on loans in accordance with ASC 326, which requires the Company to record an estimate of expected lifetime credit losses for loans at the time of origination or acquisition. The ACL is maintained at a level deemed appropriate by management to provide for expected credit losses in the portfolio as of the date of the consolidated statements of financial condition. Estimating expected credit losses requires management to use relevant forward-looking information, including the use of reasonable and supportable forecasts. The measurement of the ACL is performed by collectively evaluating loans with similar risk characteristics. The Company measures the ACL for each of its loan segments using the weighted-average remaining maturity (“WARM”) method. The weighted average remaining life, including the effect of estimated prepayments, is calculated for each loan pool on a quarterly basis. The Company then estimates a loss rate for each pool using both its own historical loss experience and the historical losses of a group of peer institutions. The Company’s ACL model also includes adjustments for qualitative factors, where appropriate.

Certain loans, such as those that are nonperforming or are considered to be collateral dependent, are deemed to no longer possess risk characteristics similar to other loans in the loan portfolio, because the specific attributes and risks associated with the loan have likely become unique as the credit quality of the loan deteriorates. As such, these loans may require individual evaluation to determine an appropriate ACL for the loan. When a loan is individually evaluated, the Company typically measures the expected credit loss for the loan based on a discounted cash flow approach, unless the loan has been deemed collateral dependent in which case the ACL is determined using estimates of the fair value of the underlying collateral, less estimated selling costs.

Goodwill

The excess of consideration paid over fair value of net assets acquired for acquisitions is recorded as goodwill. Goodwill is not amortized but is tested at least annually for impairment or more frequently if events occur or circumstances change that indicate impairment may exist. A goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying value. An impairment charge is recorded for the amount by which the carrying amount exceeds the reporting unit’s fair value. A weighted average of both the market and income approaches is used in valuing the reporting unit’s fair value. Weightings are assigned to the approaches regarding fair value and the sensitivity of other weighting scenarios is considered. The market approach incorporates comparable public company information, valuation multiples and consideration of a market control premium along with data related to comparable observed purchase transactions in the financial services industry. The income approach consists of discounting projected future cash flows, which are derived from internal forecasts and economic expectations for the reporting unit. The significant inputs and assumptions for the income approach include a discount rate and projected earnings of the Company in future years for which there is inherent uncertainty. The sensitivity of a range of reasonable discount rates based on the current economic environment is considered.

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Overview

Total assets decreased by $87.4 million at June 30, 2025 compared to December 31, 2024, reflecting decreases in cash and cash equivalents of $31.9 million, securities available-for-sale of $25.9 million, loans receivable held for investment, net of the ACL, of $22.9 million and FHLB stock of $5.9 million.  The reduction in securities available-for-sale was mainly due to maturities and paydowns, and the cash from the securities in addition to the cash on hand was used to reduce borrowings, leading to the decrease in stock held with FHLB.

Loans receivable held for investment, net of the ACL, decreased by $22.9 million to $977.1 million at June 30, 2025, compared to $1.0 billion at December 31, 2024.  The decrease was primarily due to loan paydowns.

Deposits increased by $53.5 million, or 7.2%, to $798.9 million at June 30, 2025, from $745.4 million at December 31, 2024.  The increase in deposits was attributable to an increase of $67.7 million in certificates of deposit accounts, partially offset by decreases of $4.5 million in savings deposits, $3.5 million in Certificate of Deposit Registry Service (“CDARS”) deposits, $3.3 million in liquid deposits (demand, interest checking, and money market accounts), and $2.9 million in Insured Cash Sweep (“ICS”) deposits.  As of June 30, 2025, our uninsured deposits, including deposits from the Bank and other affiliates, represented 35% of our total deposits, compared to 32% as of December 31, 2024.

Total borrowings decreased by $139.4 million to $154.1 million at June 30, 2025, from $293.5 million at December 31, 2024, primarily due to a $135.5 million decrease in FHLB advances.

Net income attributable to common stockholders was $2 thousand during the second quarter of 2025 after deducting preferred dividends of $750 thousand, compared to net income attributable to common stockholders of $185 thousand for the second quarter of 2024 after deducting preferred dividends of $67 thousand.  Diluted earnings per common share was $0.00 for the second quarter of 2025, compared to $0.02 per diluted common share for the second quarter of 2024.  Diluted earnings per common share for the second quarter of 2025 reflects preferred dividends of $0.09 per diluted common share. For the second quarter of 2025, the Company reported

      consolidated net income before preferred dividends, a non-GAAP measure, of $752 thousand, or $0.09 per diluted share, compared to consolidated net income of $256 thousand, or $0.03 per diluted share, for the
      second quarter of 2024.

Net loss attributable to common stockholders was $3.5 million during the first six months of 2025 after deducting preferred dividends of $1.5 million, compared to net income attributable to

      common stockholders of $34 thousand for the first six months of 2024.  Diluted loss per common share was $0.41 for the first six months of 2025, compared to $0.00 of earnings per diluted common share for the first six months of 2024.  Diluted
      loss per common share for the first six months of 2025 reflects preferred dividends of \($0.18\) per diluted common share. For the first six months of 2025, the Company reported consolidated net loss before preferred dividends of $1.9 million, a
      non-GAAP measure, or \($0.23\) per diluted share, compared to consolidated net income before preferred dividends of $102 thousand, or $0.01 per diluted share, for the first six months of 2024.

Refer to the “Use of Non-GAAP” Financial Measures” section for additional detail and a reconciliation of GAAP to non-GAAP financial measures.

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Results of Operations

Net Interest Income

Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024

Net interest income before provision for credit losses for the second quarter of 2025 totaled $7.8 million, representing a decrease of $163 thousand, or 2.1%, from net interest income before provision for credit losses of $7.9 million for the second quarter of 2024.  The decrease resulted from a $1.5 million decrease in interest income, primarily due to a decrease in interest on interest-bearing deposits, as a result of a decrease in the average balance of interest-bearing deposits, as well as a decline in interest income on available-for-sale securities due to a decrease in the average balance of available-for-sale securities.  These decreases were partially offset by a $1.4 million decrease in interest expense due to a decline in interest on borrowings as a result of a decrease in the average balance of borrowings. The Company used interest-bearing deposits and cash from principal pay downs of available-for-sale securities to reduce borrowings to improve the net interest margin and to support capacity for future loan growth.

The net interest margin increased to 2.58% for the second quarter of 2025 from 2.35% for the second quarter of 2024, due to an increase in the average rate earned on interest-earning assets, which increased to 4.80% for the second quarter of 2025 from 4.73% for the second quarter of 2024, and a decrease in the cost of funds, which decreased to 3.07% for the second quarter of 2025 from 3.26% for the second quarter of 2024.

Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024

Net interest income before provision for credit losses for the first six months of 2025 totaled $15.8 million, representing an increase of $358 thousand, or 2.3%, from net interest income before provision for credit losses of $15.4 million for the first six months of 2024.  The increase resulted from a $2.3 million decrease in interest expense due to a decline in interest on borrowings as a result of a decrease in the average balance of borrowings. The Company reduced borrowings to improve the net interest margin and to support capacity for future loan growth.  This increase was partially offset by a $1.9 million decrease in interest income, primarily due to a decrease in interest on interest-bearing deposits, as a result of a decrease in the average balance of interest-bearing deposits, as well as a decline in interest income on available-for-sale securities due to a decrease in the average balance of available-for-sale securities.

The net interest margin increased to 2.61% for the first six months of 2025 from 2.29% for the first six months of 2024, due to an increase in the average rate earned on interest-earnings assets, which increased to 4.82% for the first six months of 2025 from 4.61% for the first six months of 2024, and a decrease in the cost of funds, which decreased to 3.07% for the first six months of 2025 from 3.19% for the first six months of 2024.

The following tables set forth the average balances, average yields and costs, and certain other information for the periods indicated. All average balances are daily average balances. The yields set forth below include the effect of deferred loan fees, and discounts and premiums that are amortized or accreted to interest income or expense. We do not accrue interest on loans on non-accrual status, but the balance of these loans is included in the total average balance of loans receivable, which has the effect of reducing average loan yields.

For the Three Months Ended
June 30, 2025 June 30, 2024
(Dollars in thousands) Average Balance Interest Average<br><br> <br>Yield/Cost Average Balance Interest Average<br><br>  Yield/Cost
Assets
Interest-earning assets:
Interest-bearing deposits $ 24,132 $ 266 4.42 % $ 88,294 $ 1,189 5.42 %
Securities 182,351 1,171 2.58 % 276,457 1,876 2.73 %
Loans receivable ^(1)^ 989,861 12,825 5.20 % 975,788 12,613 5.20 %
FRB and FHLB stock 7,473 135 7.25 % 13,835 244 7.09 %
Total interest-earning assets 1,203,817 $ 14,397 4.80 % 1,354,374 $ 15,922 4.73 %
Non-interest-earning assets 48,563 53,507
Total assets $ 1,252,380 $ 1,407,881
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Money market deposits $ 133,930 $ 336 1.01 % $ 274,915 $ 1,623 2.37 %
Savings deposits 46,762 61 0.52 % 57,684 102 0.71 %
Interest checking and other demand deposits 251,146 1,975 3.15 % 73,853 166 0.90 %
Certificate accounts 270,424 2,507 3.72 % 163,237 1,195 2.94 %
Total deposits 702,262 4,879 2.79 % 569,689 3,086 2.18 %
Borrowings 94,795 1,126 4.76 % 209,261 2,593 4.98 %
Bank Term Funding Program borrowing – – – % 100,000 1,210 4.87 %
Securities sold under agreements to repurchase 69,721 637 3.66 % 107,238 1,115 4.18 %
Total borrowings 164,516 1,763 4.30 % 416,499 4,918 4.70 %
Total interest-bearing liabilities 866,778 $ 6,642 3.07 % 986,188 $ 8,004 3.26 %
Non-interest-bearing liabilities 101,461 139,900
Stockholders’ equity 284,141 281,793
Total liabilities and stockholders’ equity $ 1,252,380 $ 1,407,881
Net interest rate spread ^(2)^ $ 7,755 1.72 % $ 7,918 1.47 %
Net interest rate margin^(3)^ 2.58 % 2.35 %
Ratio of interest-earning assets to interest-bearing liabilities 138.88 % 137.33 %
(1) Amount includes non-accrual loans.
--- ---
(2) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing<br> liabilities.
--- ---
(3) Net interest rate margin represents net interest income as a percentage of average interest-earning assets.
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For the Six Months Ended
June 30, 2025 June 30, 2024
(Dollars in thousands) Average Balance Interest Average<br><br> <br>Yield/Cost Average Balance Interest Average<br><br> <br>Yield/Cost
Assets
Interest-earning assets:
Interest-bearing deposits $ 26,532 $ 578 4.39 % $ 97,640 $ 2,533 5.22 %
Securities 189,368 2,379 2.53 % 290,721 3,951 2.73 %
Loans receivable ^(1)^ 996,757 25,942 5.25 % 958,761 24,157 5.08 %
FRB and FHLB stock 9,320 299 6.47 % 13,777 489 7.14 %
Total interest-earning assets 1,221,977 $ 29,198 4.82 % 1,360,899 $ 31,130 4.61 %
Non-interest-earning assets 49,364 51,988
Total assets $ 1,271,341 $ 1,412,887
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Money market deposits $ 126,557 $ 593 0.94 % $ 272,290 $ 3,065 2.26 %
Savings deposits 47,732 129 0.54 % 58,377 204 0.70 %
Interest checking and other demand deposits 253,384 3,886 3.09 % 78,772 311 0.79 %
Certificate accounts 247,498 4,470 3.64 % 164,319 2,305 2.82 %
Total deposits 675,171 9,078 2.71 % 573,758 5,885 2.06 %
Borrowings 137,406 3,082 4.52 % 209,280 5,191 5.00 %
Bank Term Funding Program borrowing – – – % 100,000 2,413 4.87 %
Securities sold under agreements to repurchase 68,453 1,238 3.65 % 110,006 2,199 4.03 %
Total borrowings 205,859 4,320 4.23 % 419,286 9,803 4.71 %
Total interest-bearing liabilities 881,030 $ 13,398 3.07 % 993,044 $ 15,688 3.19 %
Non-interest-bearing liabilities 105,028 138,012
Stockholders’ equity 285,283 281,831
Total liabilities and stockholders’ equity $ 1,271,341 $ 1,412,887
Net interest rate spread ^(2)^ $ 15,800 1.75 % $ 15,442 1.42 %
Net interest rate margin ^(3)^ 2.61 % 2.29 %
Ratio of interest-earning assets to interest-<br><br> <br>bearing liabilities 138.70 % 137.04 %
(1) Amount is net of deferred loan fees, loan discounts and loans in process, and includes deferred origination costs and loan premiums.
--- ---
(2) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
--- ---
(3) Net interest rate margin represents net interest income as a percentage of average interest-earning assets.
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Recapture of/Provision for Credit Losses

For the three months ended June 30, 2025, the Company recorded a recapture of credit losses of $454 thousand, compared to a provision for credit losses of $514 thousand for the three months ended June 30, 2024.  This decrease was mainly due to the decrease in loans.

For the six months ended June 30, 2025, the Company recorded a provision for credit losses of $1.5 million, compared to $761 thousand for the six months ended June 30, 2024.  The increase in the provision was the result of changes in the required specific allocations of the allowance for credit losses (“ACL”).

The Company recorded a recapture of provision for off-balance sheet loan commitments of $74 thousand and $58 thousand for the three months ended June 30, 2025 and 2024, respectively.  The Company recorded a recapture of provision for off-balance sheet loan commitments of $56 thousand and $2 thousand for the six months ended June 30, 2025 and 2024, respectively.

The ACL increased to $9.9 million as of June 30, 2025, compared to $8.4 million as of December 31, 2024.

The Bank had four non-accrual loans at June 30, 2025 with an unpaid principal balance of $5.0 million.  Credit quality remains strong with non-accrual loans as a percentage of total loans at 0.51% and non-performing assets to total assets of 0.40% despite the increase in non-accrual loans.

Non-interest Expense

Non-interest expense was $7.5 million for the second quarter of 2025, compared to $7.3 million for the second quarter of 2024, representing an increase of $242 thousand, or 3.3%. The increase was primarily due to increases of $225 thousand in professional services and $111 thousand in information services, partially offset by a $60 thousand decrease in supervisory costs and a $57 thousand decrease in compensation and benefits expense.

Non-interest expense was $17.7 million for the first six months of 2025, compared to $15.1 million for the first six months of 2024, representing an increase of $2.6 million, or 17.4%.  The increase was primarily due to a $1.9 million loss incurred from wire fraud, which resulted in a gain when recovered, as well as an $830 thousand increase in compensation and benefits expense. The increase in compensation and benefits expense was primarily attributable to the addition of full-time employees during 2024 in various production and administrative positions as part of the Bank’s efforts to expand its operational capabilities to grow its balance sheet.  These increases were partially offset by a $485 thousand decrease in professional services expense.

Income Taxes

The Company recorded an income tax expense of $296 thousand for the second quarter of 2025, compared to an income tax expense of $139 thousand for the second quarter of 2024.  The increase in income tax expense reflected an increase of $645 thousand in pre-tax income between the two periods.  The effective tax rate was 28.41% for the second quarter of 2025, compared to 35.01% for the second quarter of 2024.

The Company recorded an income tax benefit of $790 thousand for the first six months of 2025, compared to an income tax expense of $85 thousand for the first six months of 2024.  The decrease in income tax expense reflected a decrease of $2.9 million in pre-tax income between the two periods.  The effective tax rate was 28.87% for the first six months of 2025, compared to 50.00% for the first six months of 2024.

Financial Condition

Total Assets

Total assets decreased by $87.4 million at June 30, 2025, compared to December 31, 2024, reflecting decreases in cash and cash equivalents of $31.9 million, securities available-for-sale of $25.9 million, loans receivable held for investment, net of the ACL, of $22.9 million and FHLB stock of $5.9 million.

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Securities Available-For-Sale

Securities available-for-sale totaled $178.0 million at June 30, 2025, compared to $203.9 million at December 31, 2024. The $25.9 million decrease in securities available-for-sale during the six months ended June 30, 2025 was primarily due to maturities and principal paydowns.

The table below presents the carrying amount, weighted average yields and contractual maturities of our securities as of June 30, 2025. The table reflects stated final maturities and does not reflect scheduled principal payments or expected payoffs.

June 30, 2025
One Year or Less More Than One Year to Five Years More Than Five<br><br> <br>Years to Ten Years More Than Ten<br><br> <br>Years Total
Carrying Amount Weighted<br><br> <br>Average Yield Carrying Amount Weighted Average Yield Carrying Amount Weighted Average Yield Carrying Amount Weighted Average Yield Carrying Amount Weighted Average Yield
(Dollars in thousands)
Available‑for‑sale:
Federal agency mortgage‑backed securities $ 16 0.33 % $ 1,664 1.23 % $ 9,710 1.93 % $ 49,028 3.09 % $ 60,418 2.85 %
Federal agency CMO – – 2,511 4.50 % 7,406 3.84 % 20,760 4.39 % 30,677 4.26 %
Federal agency debt 17,614 1.46 % 20,250 1.89 % 3,016 4.85 % – – 40,880 1.93 %
Municipal bonds – – 3,000 1.53 % – – 1,441 1.77 % 4,441 1.60 %
U.S. Treasuries 32,816 2.52 % – – – – – – 32,816 2.52 %
SBA pools – – 1,472 2.58 % – – 7,273 2.41 % 8,745 2.44 %
Total $ 50,446 2.15 % $ 28,897 2.08 % $ 20,132 3.07 % $ 78,502 3.35 % $ 177,977 2.77 %

Loans Receivable Held for Investment

Loans receivable held for investment, net of the ACL, decreased by $22.9 million to $977.1 million at June 30, 2025, compared to $1.0 billion at December 31, 2024.  The decrease was primarily due to loan paydowns.

The following table presents loan categories by maturity for the period indicated. Actual repayments historically have, and will likely in the future, differ significantly from contractual maturities because individual borrowers generally have the right to prepay loans, with or without prepayment penalties.

June 30, 2025
One Year or<br><br> <br>Less More Than<br><br> <br>One Year to<br><br> <br>Five Years More Than<br><br> <br>Five Years to<br><br> <br>15 Years More Than<br><br> <br>15 Years Total
(Dollars in thousands)
Loans receivable held for investment:
Single-family $ 3,230 $ 7,785 $ 4,382 $ 7,528 $ 22,925
Multi-family 16,882 21,037 12,587 572,889 623,395
Commercial real estate 15,934 85,092 34,486 22,271 157,783
Church 2,949 550 5,700 – 9,199
Construction 50,940 28,410 1,480 – 80,830
Commercial - other 29,580 22,369 22,914 9,902 84,765
SBA loans 44 316 4,481 – 4,841
Consumer 19 – – – 19
$ 119,578 $ 165,559 $ 86,030 $ 612,590 $ 983,757
Loans maturities after one year with:
Fixed rates
Single-family $ 7,427 $ 1,556 $ – $ 8,983
Multi-family 18,016 8,424 – 26,440
Commercial real estate 75,114 26,682 – 101,796
Church – – – –
Construction 4,190 – – 4,190
Commercial - other 22,369 21,931 2,162 46,462
SBA loans – – – –
Consumer – – – –
$ 127,116 $ 58,593 $ 2,162 $ 187,871
Variable rates
Single-family $ 358 $ 2,826 $ 7,528 $ 10,712
Multi-family 3,021 4,163 572,889 580,073
Commercial real estate 9,978 7,804 22,271 40,053
Church 550 5,700 – 6,250
Construction 24,220 1,480 – 25,700
Commercial - other – 983 7,740 8,723
SBA loans 316 4,481 – 4,797
Consumer – – – –
$ 38,443 $ 27,437 $ 610,428 $ 676,308
Total $ 165,559 $ 86,030 $ 612,590 $ 864,179

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Certain multi-family loans have adjustable-rate features based on the Secured Overnight Financing Rate but are fixed for the first five years. Our experience has shown that these loans typically payoff during the first five years and do not reach the adjustable-rate phase. However, in the current high interest rate environment, we have seen more borrowers maintain their loans instead of paying them off due to interest rate caps which make the adjusted interest rate on their existing loan more desirable than getting a new loan at current interest rates. Multi-family loans in their initial fixed period totaled $439.9 million or 44.7% of our loan portfolio as of June 30, 2025.

Allowance for Credit Losses

The Company accounts for credit losses on loans in accordance with ASC 326 – Financial Instruments-Credit Losses. ASC 326 requires the Company to recognize estimates for lifetime losses on loans and off-balance sheet loan commitments at the time of origination or acquisition. The recognition of losses at origination or acquisition represents the Company’s best estimate of the lifetime expected credit loss associated with a loan given the facts and circumstances associated with the particular loan and involves the use of significant management judgment and estimates, which are subject to change based on management’s on-going assessment of the credit quality of the loan portfolio and changes in economic forecasts used in the model. The Company uses the WARM method when determining estimates for the ACL for each of its portfolio segments. The weighted average remaining life, including the effect of estimated prepayments, is calculated for each loan pool on a quarterly basis. The Company then estimates a loss rate for each pool using both its own historical loss experience and the historical losses of a group of peer institutions during the period from 2004 through the most recent quarter.

Since historical information (such as historical net losses) may not always, by itself, provide a sufficient basis for determining future expected credit losses, the Company periodically considers the need for qualitative adjustments to the ACL.

The Company has a credit portfolio review process designed to detect problem loans. Problem loans are typically those of a substandard or worse internal risk grade, and may consist of loans on nonaccrual status, loans that have recently been modified in response to a borrower’s deteriorating financial condition, loans where the likelihood of foreclosure on underlying collateral has increased, collateral dependent loans, and other loans where concern or doubt over the ultimate collectability of all contractual amounts due has become elevated. Such loans may, in the opinion of management, be deemed to no longer possess risk characteristics similar to other loans in the loan portfolio because the specific attributes and risks associated with the loan have likely become unique as the credit quality of the loan deteriorates. As such, these loans may require individual evaluation to determine an appropriate ACL for the loan. When a loan is individually evaluated, the Company typically measures the expected credit loss for the loan based on a discounted cash flow approach, unless the loan has been deemed collateral dependent. The ACL for collateral dependent loans is determined using estimates of the fair value of the underlying collateral, less estimated selling costs.

The estimation of the appropriate level of the ACL requires significant judgment by management. Although management uses the best information available to make these estimates, future adjustments to the ACL may be necessary due to economic, operating, regulatory, and other conditions that may extend beyond the Company’s control. Changes in management’s estimates of forecasted net losses could materially change the level of the ACL. Additionally, various regulatory agencies, as an integral part of their examination process, periodically review the Company’s ACL and credit review process. Such agencies may require the Company to recognize additions to the ACL based on judgments different from those of management.

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For the three months ended June 30, 2025, the Company recorded a recapture of credit losses of $454 thousand, compared to a provision for credit losses of $514 thousand for the three months ended June 30, 2024.  This decrease was mainly due to the decrease in loans.  For the six months ended June 30, 2025, the Company recorded a provision for credit losses of $1.5 million, compared to $761 thousand for the six months ended June 30, 2024.  The increase in the provision was the result of changes in the required specific allocations of the ACL.  The Bank had four non-accrual loans at June 30, 2025 with an unpaid principal balance of $5.0 million.  Credit quality remains strong with non-accrual loans as a percentage of total loans at 0.51% and non-performing assets to total assets of 0.40% despite the increase in non-accrual loans.

Loan delinquencies for 30 days or more, but less than 59 days, increased to $1.2 million at June 30, 2025, from $0 at December 31, 2024 and loan delinquencies for 60 days or more, but less than 90 days, increased to $271 thousand at June 30, 2025, from $270 thousand at December 31, 2024.  Loans past due greater than 90 days was $4.0 million at June 30, 2025, compared to $0 at December 31, 2024.

We believe that the ACL is adequate to cover currently expected losses in the loan portfolio as of June 30, 2025, but there can be no assurance that actual losses will not exceed the estimated amounts. The OCC and the Federal Deposit Insurance Corporation (“FDIC”) periodically review the ACL as an integral part of their examination process. These agencies may require an increase in the ACL based on their judgments of the information available to them at the time of their examinations.

The following table details our allocation of the ACL to the various categories of loans held for investment and the percentage of loans in each category to total loans at the dates indicated:

June 30, 2025 December 31, 2024 June 30, 2024
Amount Percent of<br><br> <br>Loans in<br><br> <br>Each<br><br> <br>Category to<br><br> <br>Total<br><br> <br>Loans Amount Percent of<br><br> <br>Loans in<br><br> <br>Each<br><br> <br>Category to<br><br> <br>Total<br><br> <br>Loans Amount Percent of<br><br> <br>Loans in<br><br> <br>Each<br><br> <br>Category to<br><br> <br>Total<br><br> <br>Loans
(Dollars in thousands)
Single-family $ 122 2.33 % $ 200 2.39 % $ 305 2.84 %
Multi‑family 6,288 63.36 % 4,617 63.50 % 4,741 63.46 %
Commercial real estate 1,235 16.04 % 1,188 16.23 % 1,241 13.70 %
Church 55 0.94 % 54 0.94 % 84 1.21 %
Construction 1,291 8.22 % 1,564 9.10 % 1,196 10.64 %
Commercial - other 814 8.62 % 730 7.73 % 679 6.83 %
SBA loans 75 0.49 % 11 0.11 % 130 1.32 %
Total allowance for loan losses $ 9,880 100.00 % $ 8,364 100.00 % $ 8,376 100.00 %

Total Liabilities

Total liabilities decreased by $87.1 million to $962.6 million at June 30, 2025 from December 31, 2024, primarily due to a decrease of $136.6 million in borrowings, partially offset by a $53.5 million increase in deposits.

Deposits

Deposits increased by $53.5 million, or 7.2%, to $798.9 million at June 30, 2025, from $745.4 million at December 31, 2024.  The increase in deposits was attributable to an increase of $67.7 million in certificates of deposit accounts, partially offset by decreases of $4.5 million in savings deposits, $3.5 million in Certificate of Deposit Registry Service (“CDARS”) deposits, $3.3 million in liquid deposits (demand, interest checking, and money market accounts), and $2.9 million in Insured Cash Sweep (“ICS”) deposits.  As of June 30, 2025, our uninsured deposits, including deposits from the Bank and other affiliates, represented 35% of our total deposits, compared to 32% as of December 31, 2024.  We leverage our long-standing partnership with IntraFi Deposit Solutions to offer deposit insurance for accounts exceeding the FDIC deposit insurance limit of $250,000.

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The following table presents the maturity of time deposits, which includes CDARS, as of the dates indicated:

Three to Six<br><br> <br>Months Six Months<br><br> <br>to One Year Over One<br><br> <br>Year Total
June 30, 2025
Time deposits of 250,000 or less 56,379 $ 63,626 $ 65,882 $ 3,680 $ 189,567
Time deposits of more than 250,000 47,497 25,703 6,410 7,778 87,388
Total 103,876 $ 89,329 $ 72,292 $ 11,458 $ 276,955
Not covered by deposit insurance 41,246 $ 24,204 $ 3,160 $ 7,778 $ 76,388
December 31, 2024
Time deposits of 250,000 or less 46,350 $ 37,239 $ 92,028 $ 4,060 $ 179,677
Time deposits of more than 250,000 3,149 5,712 16,864 7,437 33,162
Total 49,499 $ 42,951 $ 108,892 $ 11,497 $ 212,839
Not covered by deposit insurance 1,399 $ 3,212 $ 12,363 $ 6,437 $ 23,411

All values are in US Dollars.

Borrowings

The Company enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities. Under these arrangements, the Company may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Company to repurchase the assets. As a result, these repurchase agreements are accounted for as collateralized financing agreements (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities. The obligation to repurchase the securities is reflected as a liability in the Company’s consolidated statements of financial condition, while the securities underlying the repurchase agreements remain in the respective investment securities asset accounts. In other words, there is no offsetting or netting of the investment securities assets with the repurchase agreement liabilities. These agreements mature on a daily basis. As of June 30, 2025 securities sold under agreements to repurchase totaled $63.8 million at an average rate of 5.10%. The fair value of securities pledged for repurchase agreements totaled $69.9 million as of June 30, 2025. As of December 31, 2024, securities sold under agreements to repurchase totaled $66.6 million at an average rate of 3.62%. The fair value of securities pledged for repurchase agreements totaled $83.3 million as of December 31, 2024.  One relationship accounted for 90% of our balance of securities sold under agreements to repurchase as of June 30, 2025. We expect to maintain this relationship for the foreseeable future.

At June 30, 2025 and December 31, 2024, the Company had outstanding advances from the FHLB totaling $60.0 million and $195.5 million, respectively. The weighted average interest rate was 4.38% and 4.03% as of June 30, 2025 and December 31, 2024, respectively. The weighted average contractual maturity was less than one month as of both June 30, 2025 and December 31, 2024. The advances were collateralized by loans with an unpaid balance of $509.0 million at June 30, 2025 and $521.7 million at December 31, 2024. The Company is currently approved by the FHLB of Atlanta to borrow up to 25% of total assets to the extent the Company provides qualifying collateral and holds sufficient FHLB stock. Based on collateral pledged and FHLB stock held, the Company was eligible to borrow an additional $298.7 million as of June 30, 2025.

The Company will, from time to time, sell a portion of a loan or group of loans to third parties. In some cases, the transferred portion of the loans does not meet the requirements to be treated as sales for accounting purposes. When that occurs, the legally transferred portion of the loan balance remains classified in gross loans receivable held for investment and a secured borrowing is recorded for the proceeds received from the third party institution. As the transferred portion of the loan pays down, the secured borrowings are repaid. The Company has no obligation to make principal or interest payments on the secured borrowings unless and until payments are received from the loan borrowers. The Company has secured borrowings associated with these participation loan transactions of $30.3 million and $31.4 million as of June 30, 2025 and December 31, 2024, respectively. The weighted average interest rate on the secured borrowings was 5.51% and 5.54% at June 30, 2025 and December 31, 2024, respectively.

In connection with the New Market Tax Credit activities of the Bank, CFC 45 is a partnership whose members include CFNMA and City First New Markets Fund II, LLC. This community development entity acts in effect as a pass-through for a Merrill Lynch allocation totaling $14.0 million that needed to be deployed. In December 2015, Merrill Lynch made a $14.0 million non-recourse loan to CFC 45, whereby CFC 45 passed that loan through to a Qualified Active Low-Income Business (“QALICB”). The loan to the QALICB was secured by a Leasehold Deed of Trust that, due to the pass-through, non-recourse structure, was operationally and ultimately for the benefit of Merrill Lynch rather than CFC 45. Debt service payments received by CFC 45 from the QALICB were passed through to Merrill Lynch in return for which CFC 45 received a servicing fee. The financial statements of CFC 45 are consolidated with those of the Bank and the Company.

Stockholders’ Equity

Broadway Financial Corporation and subsidiary equity was $284.7 million, or 22.8%, of the Company’s total assets, at June 30, 2025, compared to $285.0 million, or 21.4% of the Company’s total assets, at December 31, 2024.  Book value per share was $14.65 at June 30, 2025 and $14.80 at December 31, 2024. Capital ratios remain strong with a Community Bank Leverage Ratio of 15.34% at June 30, 2025 compared to 13.61% at December 31, 2024.

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On March 26, 2024, the Company issued 94,413 shares of restricted stock to its officers and employees under the Amended and Restated LTIP. Each restricted stock award was valued based on the fair value of the stock on the date of the award.  All the shares issued to officers and employees vest over periods ranging from 36 months to 60 months.

On April 5, 2024, the Company issued 31,645 shares of restricted stock to an officer under the Amended and Restated LTIP.

During May of 2024 and March of 2025, the Company issued 19,832 and 23,232 shares of stock, respectively, to its directors under the Amended and Restated LTIP, which were fully vested.

On March 24, 2025, the Company issued 88,295 shares of restricted stock to its officers and employees under the Amended and Restated LTIP. Each restricted stock award was valued based on the fair value of the stock on the date of the award.  All the shares issued to officers and employees vest over periods ranging from 36 months to 60 months.

On May 28, 2025, the Company issued 8,183 shares of restricted stock to an officer under the Amended and Restated LTIP.

Liquidity

The objective of liquidity management is to ensure that we have the continuing ability to fund operations and meet our obligations on a timely and cost-effective basis. The Bank’s sources of funds include deposits, advances from the FHLB and other borrowings, proceeds from the sale of loans and investment securities, and payments of principal and interest on loans and investment securities. The Bank is currently approved by the FHLB of Atlanta to borrow up to 25% of total assets to the extent the Bank provides qualifying collateral and holds sufficient FHLB stock. Based on FHLB stock held and collateral pledged as of June 30, 2025, the Bank had the ability to borrow an additional $298.7 million from the FHLB of Atlanta. In addition, the Bank had additional lines of credit of $10.0 million with other financial institutions as of June 30, 2025.

The Bank’s primary uses of funds include originations of loans, withdrawals of and interest payments on deposits, purchases of investment securities, and the payment of operating expenses. Also, when the Bank has more funds than required for reserve requirements or short-term liquidity needs, the Bank invests in federal funds with the Federal Reserve Bank or in money market accounts with other financial institutions. The Bank’s liquid assets at June 30, 2025 consisted of $29.5 million in cash and cash equivalents and $95.7 million in securities available-for-sale that were not pledged, compared to $61.4 million in cash and cash equivalents and $17.6 million in securities available-for-sale that were not pledged at December 31, 2024. Currently, we believe the Bank has sufficient liquidity to support growth over the next twelve months and in the longer term.

The Bank had commitments to fund $4.9 million in loans that were approved but unfunded as of June 30, 2025.  In addition, the bank had $3.1 million in unfunded line of credit loans and $18.6 million in unfunded construction loans as of June 30, 2025.

The Bank has a significant concentration of deposits with six customers that accounted for approximately 25% of its deposits as of June 30, 2025. The Bank also has a significant concentration of short-term borrowings with one customer that accounted for 90% of the outstanding balance of securities sold under agreements to repurchase as of June 30, 2025. The Bank has long-term relationships with these customers and expects to maintain its relationships with them for the foreseeable future.

The Company’s liquidity, separate from the Bank, is based primarily on the proceeds from financing transactions, such as the private placement completed in June of 2022 and previous private placements. The Bank is currently under no prohibition from paying dividends to the Company but is subject to restrictions as to the amount of the dividends based on normal regulatory guidelines.

The Company recorded consolidated net cash inflows from investing activities of $56.9 million during the six months ended June 30, 2025, compared to net cash outflows from investing activities of $3.5 million during the six months ended June 30, 2024. Net cash inflows from investing activities for the six months ended June 30, 2025 were primarily due to principal paydowns on available-for-sale securities of $51.4 million and net paydowns of loans of $21.4 million, partially offset by purchases of available-for-sale securities of $21.6. Net cash outflows from investing activities during the six months ended June 30, 2024 were primarily due to funding of new loans, net of repayments, of $59.3 million, partially offset by $56.1 million in proceeds from principal paydowns on available-for-sale securities.

The Company recorded consolidated net cash outflows from financing activities of $87.4 million during the six months ended June 30, 2025, compared to consolidated net cash outflows from financing activities of $10.0 during the six months ended June 30, 2024. Net cash outflows from financing activities during the six months ended June 30, 2025 were primarily due to repayments of  FHLB borrowings of $512.0 million, partially offset by proceeds from FHLB borrowings of $376.5 million and a net increase in deposits of $53.5 million. Net cash outflows from financing activities during the six months ended June 30, 2024 were primarily attributable to the repayment of a note of $14.0 million.

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Capital Resources and Regulatory Capital

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary, actions by the regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk-weightings, and other factors. As of June 30, 2025 and December 31, 2024, the Bank exceeded all capital adequacy requirements to which it is subject and meets the qualifications to be considered “well capitalized.” (See Note 10 – Regulatory Matters.)

Use of Non-GAAP Financial Measures

Management uses non-GAAP measures because they provide information to investors about the underlying operational performance and trends of the Company. These disclosures should not be considered in isolation or as a substitute for results determined in accordance with GAAP and are not necessarily comparable to non-GAAP performance measures which may be presented by other bank holding companies. Management compensates for these limitations by providing detailed reconciliations between GAAP information and the non-GAAP financial measures. The tables below reconciles the GAAP financial measures to the associated non-GAAP financial measures.

Tangible book value per common share is a non-GAAP measurement that excludes goodwill and the net unamortized core deposit intangible asset, which were both originally recorded in connection with the CFBanc merger. The Company uses this non-GAAP financial measure to provide supplemental information regarding the Company’s financial condition and operational performance. A reconciliation between common book value and tangible book value per common share is shown as follows:

Common Equity<br><br> <br>Capital Shares<br><br> <br>Outstanding Per Share<br><br> <br>Amount
(Dollars in thousands)
June 30, 2025:
Common book value $ 134,679 9,195,909 $ 14.65
Less:
Goodwill 25,858
Net unamortized core deposit intangible 1,618
Tangible book value $ 107,203 9,195,909 $ 11.66
December 31, 2024:
Common book value $ 134,973 9,120,363 $ 14.80
Less:
Goodwill 25,858
Net unamortized core deposit intangible 1,775
Tangible book value $ 107,340 9,120,363 $ 11.77

The Company calculates net income (loss) before preferred dividends by adding preferred stock dividends and net income (loss) attributable to participating securities to net income (loss) available to common shareholders.  Earnings (loss) per common share - diluted before preferred dividends is calculated by dividing net income (loss) before preferred dividends by the weighted average common shares outstanding for diluted loss per common share. The Company considers this information important to shareholders because it illustrates net income (loss) and earnings (loss) per common share - diluted excluding the impact of preferred dividends.

For the Three Months Ended<br><br> <br>June 30, For the Six Months Ended<br><br> <br>June 30,
2025 2024 2025 2024
(Dollars in thousands)
Net income (loss) available to common shareholders $ 2 $ 185 $ (3,519 ) $ 34
Add: Preferred stock dividends 750 67 1,500 67
Add: Net income (loss) attributable to participating securities - 4 82 1
Net income (loss) before preferred dividends $ 752 $ 256 $ (1,937 ) $ 102
Weighted average common shares outstanding for diluted loss per common share 8,808,467 8,596,985 8,557,745 8,513,262
Earnings (loss) per common share - diluted before preferred dividends $ 0.09 $ 0.03 $ (0.23 ) $ 0.01

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

An evaluation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of June 30, 2025 was carried out under the supervision and with the participation of the Company’s Chief Executive Officer, Chief Financial Officer and other members of the Company’s senior management. Based on the evaluation, management identified material weaknesses related to the Company’s internal control over financial reporting and, as a result, concluded that the Company’s disclosure controls and procedures were ineffective as of June 30, 2025. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements would not be prevented or detected on a timely basis.

Management identified the following material weaknesses in the Company’s internal control over financial reporting:

The Company did not maintain effective components of the COSO framework in the areas of control activities, information and communication process and monitoring activities that contributed to the following material weaknesses:

• The ineffective design of the management review control relating to the evaluation of the accounting for loan participations sold in accordance with generally accepted<br> accounting principles, including the assignment of personnel with appropriate levels of knowledge, experience and training.
• The Company did not have controls in place to identify unusual or infrequent equity-related contracts entered into which could have a material impact on accounting and<br> financial reporting.
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• The Company did not maintain controls to consider subsequent appraisals for collateral dependent loans.
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Remediation Plans

In response to the identified material weaknesses, the Company’s management, with the oversight of the Audit Committee of our Board of Directors, has begun to dedicate significant resources, including additional employee training, toward efforts to improve our internal control over financial reporting. Management is actively engaged in the planning for, and implementation of, remediation efforts to address the material weaknesses.

• Implementation of additional control procedures, including redesigning and enhancing control activities related to preparation and review of existing and new loan participation<br> agreements, and any amendments thereto,
• Thorough discussion and review of all new unusual or infrequent equity-related contracts each quarter with documentation of accounting treatment and disclosure with respect to<br> such transactions that could have a potential impact on the Company’s financial statements, and
--- ---
• An enhancement of the controls over the allowance for credit losses at each quarter end to evaluate that all appraisals for collateral dependent loans that are received prior<br> to the date that the financial statements are issued have been evaluated by management and considered in the estimate of the allowance for credit losses.
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Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the three months ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

None

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Item 1A. RISK FACTORS

Management is not aware of any material changes to the risk factors that appeared under “Part I, Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2024, as amended, and “Part II, Item 1A. Risk Factors” in the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2025, as amended.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

Item 3. DEFAULTS UPON SENIOR SECURITIES

None

Item 4. MINE SAFETY DISCLOSURES

Not Applicable

Item 5. OTHER INFORMATION

None

Item 6. EXHIBITS
Exhibit<br><br> <br>Number*
--- ---
3.1 Amended and Restated Certificate of Incorporation of Registrant effective as of April 1, 2021 (Exhibit 3.1 to Form 8-K filed by Registrant on April 5, 2021)
3.2 Certificate of Amendment to Certificate of Incorporation of Registrant (Exhibit 3.1 to Form 8-K filed by Registrant on November 1, 2023)
3.3 Bylaws of Registrant (Exhibit 3.2 to Form 8-K filed by Registrant on August 24, 2020)
3.4 Certificate of Designations of Senior Non-Cumulative Perpetual Preferred Stock, Series C (Exhibit 3.1 to Form 8-K filed by Registrant on June 8, 2022)
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
* Exhibits followed by a parenthetical reference are incorporated by reference herein from the document filed by the Registrant with the SEC described therein. Except as otherwise indicated, the SEC File No. for<br> each incorporated document is 000-27464.
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** Management contract or compensatory plan or arrangement.
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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: December 31, 2025 By: /s/ Brian Argrett
Brian Argrett
Chief Executive Officer
Date: December 31, 2025 By: /s/ Zack Ibrahim
Zack Ibrahim
Chief Financial Officer

Exhibit 31.1

SECTION 302 CERTIFICATION

I, Brian Argrett, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Broadway Financial Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the<br> statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
--- ---
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the<br> financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
--- ---
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in<br> Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
--- ---
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that<br> material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
--- ---
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,<br> to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
--- ---
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness<br> of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
--- ---
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent<br> fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
--- ---
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to<br> the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
--- ---
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely<br> to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
--- ---
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over<br> financial reporting.
--- ---
Date: December 31, 2025 By: /s/ Brian Argrett
--- --- ---
Brian Argrett
Chief Executive Officer

Exhibit 31.2

SECTION 302 CERTIFICATION

I, Zack Ibrahim, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Broadway Financial Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the<br> statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
--- ---
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the<br> financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
--- ---
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in<br> Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
--- ---
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that<br> material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
--- ---
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,<br> to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
--- ---
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness<br> of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
--- ---
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent<br> fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
--- ---
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to<br> the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
--- ---
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely<br> to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
--- ---
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over<br> financial reporting.
--- ---
Date: December 31, 2025 By: /s/ Zack Ibrahim
--- --- ---
Zack Ibrahim
Chief Financial Officer

Exhibit 32.1

SECTION 906 CERTIFICATION

The following statement is provided by the undersigned to accompany the foregoing Report on Form 10-Q pursuant to Title 18, Chapter 63, Section 1350 of the United States Code, as amended by Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed filed pursuant to any provision of the Securities Exchange Act of 1934 or any other securities law.

The undersigned certifies that the foregoing Report on Form 10-Q fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Broadway Financial Corporation at the dates and for the periods indicated.

Date: December 31, 2025 By: /s/ Brian Argrett
Brian Argrett
Chief Executive Officer

Exhibit 32.2

SECTION 906 CERTIFICATION

The following statement is provided by the undersigned to accompany the foregoing Report on Form 10-Q pursuant to Title 18, Chapter 63, Section 1350 of the United States Code, as amended by Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed filed pursuant to any provision of the Securities Exchange Act of 1934 or any other securities law.

The undersigned certifies that the foregoing Report on Form 10-Q fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Broadway Financial Corporation at the dates and for the periods indicated.

Date: December 31, 2025 By: /s/ Zack Ibrahim
Zack Ibrahim
Chief Financial Officer

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