What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-04-15 compared with 2021-03-31 · 1025 added, 703 removed, 670 unchanged (72% of the section changed)

27 unchanged sentences

quarter of 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

/s/ Wayne‑Kent A.

/s/ Brenda J.

Wayne‑Kent A.

Chief Executive Officer

(Principal Executive Officer)

Chief Financial Officer

(Principal Financial Officer and

Principal Accounting Officer)

Los Angeles, CA

March 31, 2021

Los Angeles, CA

March 31, 2021

OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICITONS THAT PREVENT INSPECTIONS

Not applicable

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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List of Exhibits

Agreement and Plan of Merger, dated as of August 25, 2020, by and between Broadway Financial Corporation and CFBanc Corporation (Exhibit 2.1 to Form 8-K filed by Registrant on August 26, 2020)

Amendment No.

1 to Agreement and Plan of Merger, dated as of January 14, 2021), by and between Broadway Financial Corporation and CFBanc Corporation (Exhibit 2.1 to Form 8-K filed by Registrant on January 14,

Certificate of Incorporation of Registrant and all amendments thereto (Exhibit 3.1 to Form 10‑Q filed by Registrant on November 13, 2014)

Certificate of Incorporation of Registrant and all amendments thereto (Exhibit 3.1 to Form 10-K filed by Registrant on April 2, 2021)

Bylaws of Registrant (Exhibit 3.2 to Form 8‑K filed by Registrant on August 24, 2020)

23 unchanged sentences

Amendment to Employment Agreement for Ruth McCloud, dated as of January 14, 2021 (Exhibit 10.3 to form 8-K filed by Registrant on January 14, 2021)

Broadway Federal Bank Incentive Compensation Plan (Exhibit 10.14 to Form 10-K filed by Registrant on March 29, 2019)

Broadway Federal Bank Incentive Compensation Plan (Exhibit 10.14 to Form 10-K filed by the Registrant on March 29, 2019)

Employment Agreement, dated and effective as of November 17, 2021, between Registrant and Brian E.

Argrett (Exhibit 10.1 to Form 8-K filed by Registrant on November 18, 2021)

Stock Purchase Agreement, dated as of December 21, 2016, entered between First Republic Bank and Registrant (Exhibit 10.8 to Form 10‑K filed by Registrant on March 27, 2017)

Stock Purchase Agreement, dated as of February 19, 2021, entered between Butterfield Trust (Bermuda) Limited as trustee of each of the following:

The Lorraine Grace Will Trust, The Anne Grace Kelly Trust 99,

The Gwendolyn Grace Trust 99, The Lorraine L.

Grace Trust 99, and The Ruth Grace Jervis Millennium Trust and Registrant (Exhibit 10.30 to Form 10-K filed by Registrant on March 31, 2021)

ESOP Loan Agreement and ESOP Pledge Agreement, each dated as of December 19, 2016, entered into between Registrant and Miguel Paredes, as trustee for the Broadway Federal Bank, f.s.b., Employee Stock Ownership

Plan Trust, and related Promissory Note, dated as of December 19, 2016 (Exhibit 10.12 to Form 10‑K filed by Registrant on March 27, 2017)

Stock Purchase Agreement, dated as of November 23, 2020, entered between Banc of America Strategic Investments Corporation and Registrant (Exhibit 10.15 to Registration Statement on S-4 filed by Registrant on

3 unchanged sentences

and Registrant (Exhibit 10.16 to Registration Statement on S-4 filed by Registrant on January

Stock Purchase Agreement, dated as of February 19, 2021, entered between Ally Ventures, a business unit of Ally Financial Inc., and Registrant

Stock Purchase Agreement, dated as of February 19, 2021, entered between Banner Bank and Registrant

Stock Purchase Agreement, dated as of February 19, 2021, entered between Citicorp Banking Corporation and Registrant

Stock Purchase Agreement, dated as of February 19, 2021, entered between First Republic Bank and Registrant

Stock Purchase Agreement, dated as of February 19, 2021, entered between Geral I.

White and Registrant

Stock Purchase Agreement, dated as of February 19, 2021, entered between Ally Ventures, a business unit of Ally Financial Inc., and Registrant (Exhibit 10.24 to Form 10-K filed by Registrant on March 31, 2021)

Stock Purchase Agreement, dated as of February 19, 2021, entered between Banner Bank and Registrant (Exhibit 10.25 to Form 10-K filed by Registrant on March 31, 2021)

Stock Purchase Agreement, dated as of February 19, 2021, entered between Citicorp Banking Corporation and Registrant (Exhibit 10.26 to Form 10-K filed by Registrant on March 31, 2021)

Stock Purchase Agreement, dated as of February 19, 2021, entered between First Republic Bank and Registrant (Exhibit 10.8 to Form 10‑K filed by Registrant on March 27, 2017)

Stock Purchase Agreement, dated as of February 19, 2021, entered between Gerald I.

White and Registrant (Exhibit 10.28 to Form 10-K filed by Registrant on March 31, 2021)

Stock Purchase Agreement, dated as of February 19, 2021, entered between Gerald I.

White, in his capacity as the trustee for the Grace & White, Inc.

Profit Sharing Plan, and Registrant

Profit Sharing Plan, and Registrant (Exhibit 10.28 to

Form 10-K filed by Registrant on March 31, 2021)

Stock Purchase Agreement, dated as of February 19, 2021, entered between Registrant and Butterfield Trust (Bermuda) Limited as trustee of each of the following:

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Kelly Trust 99, The Gwendolyn Grace Trust 99, The Lorraine L.

Grace Trust 99, and The Ruth Grace Jervis Millennium Trust

Stock Purchase Agreement, dated as of February 19, 2021, entered between Texas Capital Community Development Corporation and Registrant

Grace Trust 99, and The Ruth Grace Jervis Millennium Trust (Exhibit 10.30 to Form 10-K filed by Registrant on March 31, 2021)

Stock Purchase Agreement, dated as of February 19, 2021, entered between Texas Capital Community Development Corporation and Registrant (Exhibit 10.31 to Form 10-K filed by Registrant on March 31, 2021)

Stock Purchase Agreement, dated as of February 20, 2021, entered between J.P.

Morgan Chase Community Development Corporation and Registrant

List of Subsidiaries (Exhibit 21.1 to Registration Statement on Form S‑1 filed by Registrant on November 20, 2013)

Morgan Chase Community Development Corporation and Registrant (Exhibit 10.32 to Form 10-K filed by Registrant on March 31, 2021)

List of Subsidiaries

Consent of Moss Adams LLP

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002

Certification of Chief Executive Officer pursuant to Interim Final Rule – TARP Standards for Compensation and Corporate Governance at 31 CFR Part 30

Certification of Chief Financial Officer pursuant to Interim Final Rule – TARP Standards for Compensation and Corporate Governance at 31 CFR Part 30)

XBRL Instance Document

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Management contract or compensatory plan or arrangement.

FORM 10-K SUMMARY

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BROADWAY FINANCIAL CORPORATION

/s/ Wayne‑Kent A.

Wayne‑Kent A.

/s/ Brian Argrett

Brian Argrett

Chief Executive Officer

March 31, 2021

April 14, 2022

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Wayne‑Kent A.

March 31, 2021

Wayne‑Kent A.

/s/ Brian Argrett

April 14, 2022

Brian Argrett

Chief Executive Officer and President

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/s/ Brenda J.

March 31, 2021

April 14, 2022

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

/s/ Virgil P.

March 31, 2021

/s/ WAYNE-KENT A.

April 14, 2022

Wayne-Kent A.

Chairman of the Board

April 14, 2022

Lead Independent Director

/s/ WILLIAM A.

April 14, 2022

Audit Committee Chairman

/s/ ROBERT C.

DAVIDSON, JR.

March 31, 2021

April 14, 2022

Davidson, Jr.

March 31, 2021

/s/ Daniel A.

March 31, 2021

/s/ Erin Selleck

March 31, 2021

/s/ MARY ANN DONOVAN

April 14, 2022

Mary Ann Donovan

April 14, 2022

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

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Years ended December 31, 2021 and 2020

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID # 659 )

Consolidated Statements of Financial Condition

Consolidated Statements of Operations and Comprehensive Income

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Changes in Stockholders’ Equity

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Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial condition of Broadway Financial Corporation and Subsidiary (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of operations and

comprehensive income, changes in stockholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated

financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2020 and 2019, and the consolidated results of its operations and its cash flows for the years then ended, in

conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated statements of financial condition of Broadway Financial Corporation and Subsidiary (the “Company”) as of

December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated

financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial

position of the Company as of December 31, 2021 and 2020, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

Our responsibility is to express an opinion on the

Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting

Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material

misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to

obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Those standards require that we plan and perform the audit to obtain reasonable

assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of

expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates

made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the

amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the

consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts

or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the

consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were

communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate

opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Allowance for Loan Losses

As described in Notes 1 and 5 to the consolidated financial statements, the Company’s allowance for loan losses balance was $3.2 million at December 31, 2020.

The allowance for loan losses is a valuation allowance for probable incurred credit

As described in Note 6 to the consolidated financial statements, the Company’s allowance for loan losses balance was $3.4 million at December 31, 2021.

The allowance for loan losses is a valuation allowance for probable incurred credit losses.

Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed.

Management estimates the allowance balance required using past loan loss experience, the nature and volume of the

portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors.

The allowance consists of general and specific components.

The general component covers loans that are collectively

evaluated for impairment and is based on historical loss experience adjusted for current factors.

The historical loss experience is determined by portfolio segment with the use of a loss migration analysis and is based on the actual loss history

experienced by the Company over the most recent five years.

The Company assigns a risk rating to all loans based on historical loss experience and periodically performs detailed reviews of all such loans over a certain threshold to identify credit

risks and assess overall collectability.

This actual loss experience is supplemented with information about other current economic factors based on the risks present for each portfolio segment.

These current economic factors include consideration

of the following:

Management estimates the

allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors.

The allowance consists

of general and specific components.

The general component covers loans that are collectively evaluated for impairment and is based on historical loss experience adjusted for current factors.

The historical loss experience is determined by

portfolio segment with the use of a loss migration analysis and is based on the actual loss history experienced by the Company over the most recent five years.

The Company assigns a risk rating to all loans based on historical loss experience

and periodically performs detailed reviews of all such loans over a certain threshold to identify credit risks and assess overall collectability.

This actual loss experience is supplemented with information about other current economic factors

based on the risks present for each portfolio segment.

These current economic factors include consideration of the following:

levels of and trends in delinquencies and impaired loans;

levels of and trends in charge‑offs and recoveries;

trends in volume and terms of loans;

in volume and terms of loans;

effects of any changes in risk selection and underwriting standards;

other changes

in lending policies, procedures, and practices;

other changes in lending policies, procedures, and practices;

experience, ability, and depth of lending management and other relevant staff;

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and effects of changes in credit concentrations.

We identified management’s risk ratings of loans and the estimation of current economic factors, both of which are used in the allowance for loan losses calculation, as critical audit matters because these estimates and underlying assumptions

require significant management judgment in the evaluation of the credit quality and the estimation of incurred losses inherent within the loan portfolio as of the balance sheet date and in turn led to a high degree of auditor judgment and

subjectivity in performing the procedures and evaluating the related audit evidence.

The primary procedures we performed to address this critical audit matter included:

Evaluating design and implementation of internal controls relating to management’s calculation of the allowance for loan losses.

Testing the design, implementation, and operating effectiveness of controls over the accuracy of risk ratings of loans.

Testing a risk-based targeted selection of loans to gain substantive evidence that the Company is appropriately rating these loans in accordance with its policies, and that the risk ratings for the loans are reasonable.

Obtaining management’s analysis and supporting documentation related to the economic factors, and testing whether the economic factors used in the calculation of the allowance for loan losses are supported by the analysis provided by

management and are used in a manner consistent with management’s established policies and procedures.

Testing the appropriateness of the methodology and assumptions used in the calculation of the allowance for loan losses, and testing the calculation itself, including completeness and accuracy of the data used in the calculation,

application of the loan risk ratings determined by management and used in the calculation, application of the current economic factors determined by management and used in the calculation, and recalculation of the allowance for loan losses

We identified management’s risk ratings of loans and the estimation of current economic factors, both of which are used in the allowance for loan

losses calculation, as critical audit matters.

These estimates and underlying assumptions require significant management judgment in the evaluation of the credit quality and the estimation of incurred losses inherent within the loan portfolio

as of the balance sheet date and in turn led to a high degree of auditor judgment and subjectivity in performing the procedures and evaluating the related audit evidence.

The following are primary procedures we performed to address the critical audit matters.

We tested management’s process to develop the risk ratings of loans and the estimation of economic factors which involved the following:

Testing a risk-based targeted selection of loans to evaluate the risk ratings.

Performing a loan grade analysis by loan type to determine whether significant changes occurred when compared to the prior year for

reasonableness.

Evaluating the significant assumptions and adjustments made to the economic factors for reasonableness.

Obtaining management’s analysis and supporting documentation related to the economic factors, and testing whether the economic factors used

in the calculation of the allowance for loan losses are supported by the analysis provided by management.

Evaluating the methodology and assumptions used in the calculation of the allowance for loan losses, and testing the calculation itself,

including completeness and accuracy of the data used in the calculation, application of the loan risk ratings determined by management and used in the calculation, application of the current economic factors determined by management

and used in the calculation, and recalculation of the allowance for loan losses balance.

Merger with CFBanc Corporation – Valuation of Acquired Loans

As described in Note 2 to the consolidated financial statements, the Company completed its merger with merger with CFBanc Corporation on April 1,

2021, with the Company continuing as the surviving entity (the “CFBanc Merger”).

Immediately following this merger, Broadway Federal Bank, f.s.b., a subsidiary of Broadway Financial Corporation, merged with and into City First Bank of D.C.,

National Association, with City First Bank of D.C., National Association continuing as the surviving entity (which concurrently changed its name to City First Bank, National Association).

The total value of the consideration transferred to

CFBanc Corporation shareholders was approximately $66.3 million.

The CFBanc merger resulted in $225.9 million of acquired loans held for investment being recorded.

Assets acquired and liabilities assumed have been recorded by management at

their estimated fair values as of the acquisition date.

The estimated fair value of acquired loans held for investment was determined using an income approach based on the discounted cash flow method.

We identified the valuation of acquired loans as a critical audit matter.

The process for estimating the fair value of acquired loans requires the

use of significant estimates and assumptions made by management, including principal default and loss rates, prepayment rates, discount rates considering the cost of funds rate, capital charge, servicing costs, and liquidity premium and

projected future cash flows.

Auditing management’s judgements regarding these assumptions require a high degree of subjectivity.

The following are primary procedures we performed to address this critical audit matter.

We evaluated the design effectiveness of certain internal

controls related to management’s estimate of the fair value of acquired loans, including:

Testing the design and implementation of internal controls related to the completeness and accuracy of acquired loan level data

Evaluating the internal controls implemented over management’s estimate of the fair value of acquired loans, including the method and

assumptions used to estimate fair value

We also tested management’s process to determine the reasonableness of assumptions used in the estimation of the fair value of acquired loans which

involved the following:

Testing the completeness and accuracy of acquired loan level data used in the fair value estimate calculation

Utilizing an internal firm specialist to evaluate the reasonableness of significant assumptions and methods used by management, by

preparing an independent fair value calculation, as well as an assessment of the overall reasonableness of the fair value estimates of all the acquired loans

/s/ Moss Adams LLP

Los Angeles, California

March 31, 2021

Sacramento, California

April 14, 2022

We have served as the Company’s auditor since 2014.

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Federal Home Loan Bank (FHLB) stock

Federal Reserve Bank (FRB) stock

Office properties and equipment, net

1 unchanged sentence

Deferred tax assets, net

Investment in affordable housing limited partnership

Core deposit intangible, net

Liabilities and stockholders’ equity

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Junior subordinated debentures

Advance payments by borrowers for taxes and insurance

Accrued expenses and other liabilities

Securities sold under agreements to repurchase

Notes payable

Other liabilities

Total liabilities

Commitments and Contingencies (Note 16)

Commitments and Contingencies

Stockholders’ Equity:

Preferred stock, $.01 par value, authorized 1,000,000 shares;

none issued or outstanding

Common stock, $.01 par value, voting, authorized 50,000,000 shares at December 31, 2020 and December 31, 2019;

issued 21,899,584 shares at December 31, 2020 and

Cumulative Redeemable Perpetual Preferred stock, Series A, authorized 3,000 shares at December 31, 2021 and none at

December 31, 2020;

issued and outstanding 3,000 shares at December 31, 2021 and none at December 31, 2020, liquidation value $ 1,000 per share

Common stock, Class A, $ 0.01

par value, voting, authorized 75,000,000 shares at December 31, 2021 and 50,000,000 shares at December 31, 2020;

issued 46,291,852

shares at December 31, 2021 and 21,899,584 shares at December 31, 2020;

outstanding 43,674,026 shares at December 31, 2021 and 19,281,758

shares at December 31, 2020

outstanding 19,281,758 shares at December 31, 2020 and 19,111,423 shares at December 31, 2019

Common stock, $.01 par value, non‑voting, authorized 25,000,000 shares at December 31, 2020 and December 31, 2019;

issued and outstanding 8,756,396 shares at

December 31, 2020 and December 31, 2019

Common stock, Class B, $ 0.01

par value, non-voting, authorized 15,000,000 shares at December 31, 2021 and none at December 31, 2020;

issued and outstanding 11,404,618

shares at December 31, 2021 and none at December 31, 2020

Common stock, Class C, $ 0.01

par value, non-voting, authorized 25,000,000 shares at December 31, 2021 and 2020;

issued and outstanding 16,689,775 at December 31, 2021 and 8,756,396

shares at December 31, 2020

Additional paid‑in capital

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Unearned Employee Stock Ownership Plan (ESOP) shares

Accumulated other comprehensive income (loss), net of tax

Treasury stock‑at cost, 2,617,826 shares at December 31, 2020 and at December 31, 2019

Accumulated other comprehensive (loss) income, net of tax

Treasury stock‑at cost, 2,617,826

shares at December 31, 2021 and at December 31, 2020

Total stockholders’ equity

Non-controlling interest

Total liabilities and stockholders’ equity

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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Operations and Comprehensive (Loss) Income

Consolidated Statements of Operations and Comprehensive Loss

Year Ended December 31,

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Total interest expense

Net interest income before loan loss provision recapture

Loan loss (provision) recapture

Net interest income after loan loss (provision) recapture

Net interest income before loan loss provision

Loan loss provision

Net interest income after loan loss provision

Non‑Interest Income:

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Professional services

Office services and supplies

Loan related expenses

Corporate insurance

Amortization of investment in affordable housing limited partnership

Supervisory costs (OCC and FDIC)

Office services and supplies

Amortization of core deposit intangible

Total non‑interest expense

Loss before income tax benefits

Loss before tax benefits

Income tax benefits

Other comprehensive income, net of tax:

Unrealized gains on securities available‑for‑sale arising during the period

Income tax expense

Other comprehensive income, net of tax

Comprehensive (loss) income

Net income attributable to non-controlling interest

Net loss attributable to Broadway Financial Corporation

Other comprehensive loss, net of tax:

Unrealized (loss) gains on securities available‑for‑sale arising during the period

Income tax (benefit) expense

Other comprehensive (loss) income, net of tax

Comprehensive loss

Loss per common share‑basic

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(In thousands, except share and per share)

Comprehensive

Preferred Stock Non-Voting

Common Stock Voting

Common Stock Non-Voting

Additional Paid in Capital

Accmulated Other Comprehensive Loss

Retained Earnings (Substantially Restricted)

Unearned ESOP Shares

Treasury Stock

Controlling Interest

Stockholders’

Balance at December 31, 2020

Common stock issued for services

Common stock repurchased for tax withholdings

Net income for twelve months ended December 31, 2021

Preferred shares issued in business combination

Dividends paid on preferred stock

Common shares issued in business combination

Shares transferred from voting to non-voting after business combination

Common shares issued in private placement

Release of unearned ESOP shares

Change in unrealized gain on securities available‑for‑sale, net of tax

Restricted stock compensation expense

Stock‑based compensation expense

Balance at December 31, 2019

Common stock issued for services

Release of unearned ESOP shares

Change in unrealized gain on securities available‑for‑sale, net of tax

Restricted stock compensation expense, net of forfeitures

Stock‑based compensation expense

Stock awarded to directors

Stock option compensation expense

Common stock cancelled for payment of tax withholding

Payment to non-controlling interest

Other comprehensive loss, net of tax

Balance at December 31, 2021

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Adjustments to reconcile net loss to net cash provided by operating activities:

Loan loss provision (recaptures)

Provision for losses on REO

Reversal of valuation allowance on loan held for sale

Net amortization of deferred loan origination costs

Loan loss provision

Net (accretion) amortization of deferred loan origination costs

Net amortization of premiums on mortgage‑backed securities

Amortization of investment in affordable housing limited partnership

Amortization of core deposit intangible

Amortization of premium on FHLB advances

Stock‑based compensation expense

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Earnings on bank owned life insurance

Valuation allowance on deferred tax asset

Originations of loans receivable held for sale

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Net change in other assets

Net change in advance payments by borrowers for taxes and insurance

Net change in accrued expenses and other liabilities

Net cash (used in) provided by operating activities

cash provided by (used in) operating activities

Cash flows from investing activities:

Cash acquired in business combination

Net change in loans receivable held for investment

Principal payments on available‑for‑sale securities

Purchases of available-for-sale municipal bonds

Proceeds from sales of REO

Purchases of available-for-sale securities

Purchase of FHLB stock

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Repayments on FHLB advances

Net change in securities sold under agreements to repurchase

Repayment of junior subordinated debentures

Proceeds from issuance of common stock, net of issuance costs

Payment for tax withholding for vesting of restricted stock

Repayments of junior subordinated debentures

Cash dividends paid on preferred stock

Payment to non-controlling interest

Net cash provided by financing activities

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Cash paid for income taxes

Supplemental disclosures of non‑cash investing and financing activities:

Transfers of loans receivable held for sale to loans receivable held for investment

Transfers of loans receivable held for investment to loans receivable held for sale

Common stock exchanged for payment of tax withholding

Initial recognition of operating lease right-to-use assets

Supplemental disclosures of cash flow information:

Transfers of loans receivable held for

sale to loans receivable held for investment

Initial recognition of right of use asset

Initial recognition of operating lease liabilities

Assets acquired (liabilities assumed) in acquisition:

Securities available for sale, at fair value

Loans receivable

Accrued interest receivable

FHLB and FRB stock

Office property and equipment

Core deposit intangible

FHLB advances

Securities sold under agreements to repurchase

Other borrowings

Deferred taxes

Accrued expenses and other liabilities

Preferred stock

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

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Nature of Operations and Principles of Consolidation

Broadway Financial Corporation (the “Company”) is a Delaware corporation primarily engaged in the savings and loan business through its wholly owned subsidiary, Broadway Federal Bank, f.s.b.

(the “Bank”).

business is that of a financial intermediary and consists primarily of attracting deposits from the general public and using such deposits, together with borrowings and other funds, to make mortgage loans secured by residential and commercial real

estate located in Southern California.

At December 31, 2020, the Bank operated two retail‑banking offices in Los Angeles, California and one in the nearby city of Inglewood, California.

The Bank is subject to significant competition from other

financial institutions and is also subject to regulation by certain federal agencies and undergoes periodic examinations by those regulatory authorities.

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Broadway Federal Bank, f.s.b.

All significant inter‑company transactions and balances have been eliminated in

consolidation.

Broadway Financial Corporation (the “Company”) was incorporated under Delaware law in 1995 for the purpose of acquiring

and holding all of the outstanding capital stock of Broadway Federal Savings and Loan Association (“Broadway Federal”) as part of the Bank’s conversion from a federally chartered mutual savings association to a federally chartered stock savings

In connection with the conversion, the Bank’s name was changed to Broadway Federal Bank, f.s.b.

The conversion was completed, and the Bank became a wholly‑owned subsidiary of the Company, in January 1996.

On April 1, 2021, the Company completed its merger with CFBanc Corporation (“CFBanc”), with the Company continuing as the

surviving entity.

Immediately following the CFBanc Merger, Broadway Federal Bank, f.s.b.

merged with and into City First Bank of D.C, National Association with City First Bank of D.C., National Association continuing as the surviving entity

(combined with Broadway Federal, “City First” or the “Bank”).

Concurrently with the Merger, the Bank changed its name to City First Bank, National Association.

The Bank’s business is that of a financial intermediary and consists primarily of attracting deposits from the general

public and using such deposits, together with borrowings and other funds, to make mortgage loans secured by residential and commercial real estate located in the Bank’s market areas.

At December 31, 2021, the Bank operated three retail‑banking offices:

Los Angeles and in the nearby city of Inglewood in California, and another in Washington, D.C.

The Bank is subject to

significant competition from other financial institutions and is also subject to regulation by certain federal agencies and undergoes periodic examinations by those regulatory authorities.

The accompanying consolidated financial statements include Broadway Financial Corporation and its wholly owned subsidiary,

City First Bank, National Association (together with the Company, “City First Broadway”).

Also included in the 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.

The results of Broadway Service Corporation, a wholly owned subsidiary of the Bank, are also included in the consolidated

financial statements.

All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

To prepare consolidated financial statements in conformity with U.S.

To prepare consolidated financial statements in conformity

generally accepted accounting principles (“GAAP”), management makes estimates and assumptions based on available information.

These estimates and

assumptions affect the amounts reported in the consolidated financial statements and the disclosures provided, and actual results could differ from these estimates.

The allowance and provision for loan losses, specific reserves for impaired loans,

fair value of real estate owned, deferred tax asset valuation allowance, and fair values of investment securities and other financial instruments are particularly subject to change.

These estimates and assumptions affect the amounts reported in the consolidated financial statements and the

disclosures provided, and actual results could differ from these estimates.

The allowance and provision for loan losses, specific reserves for impaired loans, fair value of acquired assets and

liabilities in business combinations, fair value of real estate owned, deferred tax asset valuation allowance, and fair values of investment securities and other financial instruments are particularly subject to change.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, cash items in the process of collection, amounts due from correspondent banks and the Federal Reserve Bank of San Francisco (the “Federal Reserve Bank”), and

interest‑bearing deposits in other banks with initial terms of ninety days or less.

The Company may be required to maintain reserve and clearing balances with the Federal Reserve Bank under the Federal Reserve Act of 1913, as amended.

March 26, 2020, as a part of Federal Reserve Bank’s tools to promote maximum employment, Federal Reserve Bank Board reduced reserve requirement ratios to zero.

The reserve and clearing requirement balance was no longer required at December 31,

Cash and cash equivalents include cash on hand, cash items in the process of collection, amounts due from correspondent banks and the Federal Reserve Bank of San

Francisco (the “Federal Reserve Bank”), and interest‑bearing deposits in other banks with initial terms of ninety days or less.

The Company may be required to maintain reserve and clearing balances with the Federal Reserve Bank under the Federal

Reserve Act of 1913, as amended.

Effective on March 26, 2020, as a part of Federal Reserve Bank’s tools to promote maximum employment, Federal Reserve Bank Board reduced reserve requirement ratios to zero.

The reserve and clearing requirement

balance were no longer required at December 31, 2021.

Net cash flows are reported for customer loan and deposit transactions, interest‑bearing deposits in other banks, deferred income taxes and other assets and liabilities.

Investment Securities

Debt securities are classified as held‑to‑maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity.

Debt securities are classified as available‑for‑sale when

they might be sold before maturity.

Securities are classified as held‑to‑maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity.

are classified as available‑for‑sale when they might be sold before maturity.

Securities available‑for‑sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income (loss), net of tax.

Interest income includes amortization of purchase premium or discount.

Premiums and discounts on securities are amortized on the level‑yield method without anticipating prepayments.

Gains and losses on sales are

recorded on the trade date and determined using the specific identification method.

Management evaluates securities for other‑than‑temporary impairment (“OTTI”) on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.

Consideration is given to

the financial condition and near‑term prospects of the issuer, the length of time and the extent to which the fair value has been less than the cost, and the intent and ability of management to retain its investment in the issuer for a period of

time sufficient to allow for any anticipated recovery in fair value.

In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating

agencies have occurred, and the results of reviews of the issuer’s financial condition.

Loans Receivable Held for Sale

The Bank originates loans for sale, and may, from time‑to‑time, decide to retain certain loans for held for investment in order to manage loan concentrations.

When a decision is made to retain loans held-for-sale for

held-for-investment, such loans are transferred from held‑for‑sale portfolio to held‑for‑investment portfolio at the lower of cost or fair value.

If a reduction in value is required at time of the transfer, a charge‑off is recorded against the

allowance for loan and lease losses (“ALLL”).

Any subsequent decline in value of the loans is recorded as a valuation allowance with a corresponding charge to non‑interest expense.

Transfers of loans are accounted for as sales when control over the assets has been surrendered.

Control over transferred assets is deemed to be surrendered when (1) the assets have been legally isolated from the

Bank, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right), to pledge or exchange the transferred assets, and provides no more than a trivial benefit to the Bank, and (3) the Bank does not

maintain effective control over the transferred assets.

Loans receivable held for sale are generally sold with servicing rights released.

Gains and losses on sales of loans are based on the difference between the selling price and the carrying value of the related loan

When loans receivable held for sale are sold, existing deferred loan fees or costs are an adjustment of the gain or loss on sale.

Premiums and discounts on securities are amortized on the level‑yield method without

anticipating prepayments.

Gains and losses on sales are recorded on the trade date and determined using the specific identification method.

Management evaluates securities for other‑than‑temporary impairment (“OTTI”) on at least a quarterly basis, and more frequently when economic or market conditions

warrant such an evaluation.

Consideration is given to the financial condition and near‑term prospects of the issuer, the length of time and the extent to which the fair value has been less than the cost, and the intent and ability of management

to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal

government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition.

Loans Receivable Held for Investment

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of allowance for loan losses, deferred loan fees

and costs and unamortized premiums and discounts.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding,

net of allowance for loan losses, deferred loan fees and costs and unamortized premiums and discounts.

Interest income is accrued on the unpaid principal balance.

Loan origination fees, net of certain direct loan origination costs, premiums and discounts are deferred, and recognized in income using

the level‑yield method without anticipating prepayments.

Interest income on all loans is discontinued at the time the loan is 90 days delinquent unless the loan is well‑secured and in process of collection.

Loan origination fees, net of certain direct loan origination costs, premiums and

discounts are deferred, and recognized in income using the level‑yield method without anticipating prepayments.

Interest income on all loans is discontinued at the time the loan is 90

days delinquent unless the loan is well‑secured and in process of collection.

Past due status is based on the contractual terms of the loan.

all cases, loans are placed on non‑accrual or charged‑off at an earlier date if collection of principal or interest is considered doubtful.

In all cases, loans are placed on non‑accrual or charged‑off at an earlier date if collection of

principal or interest is considered doubtful.

All interest accrued but not received for loans placed on non‑accrual is reversed against interest income.

Interest received on such loans is accounted for on the cash‑basis or cost recovery method, until qualifying

for return to accrual.

Interest received on such loans is accounted for on the

cash‑basis or cost recovery method, until qualifying for return to accrual.

Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Concentration of Credit Risk

Concentrations of credit risk arise when several customers are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to

meet contractual obligations to be similarly affected by changes in economic conditions.

The Company’s lending activities are predominantly in real estate loans that are secured by properties located in Southern California and many of the borrowers

reside in Southern California.

Therefore, the Company’s exposure to credit risk is significantly affected by changes in the economy and real estate market in the Southern California area.

The Company has a significant concentration of deposits with two long‑time customers that accounted for approximately 13% of its deposits as of December 31, 2020.

The Company expects to maintain the relationships

with the customers for the near term.

Concentrations of credit risk arise when several customers are engaged in similar business activities, or activities in the same geographic region, or

have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions.

The Company’s lending activities are predominantly in real estate loans that are secured

by properties located in Southern California and in Washington D.C., and many of the borrowers reside in those areas.

Therefore, the Company’s exposure to credit risk is significantly affected by changes in the economy and real estate market in

the markets in which the Company operates.

Loans Purchased

The Bank purchases or participates in loans originated by other institutions from time to time.

Subject to regulatory restrictions applicable to savings institutions, the Bank’s current loan policies allow all loan

types to be purchased.

The determination to purchase specific loans or pools of loans is based upon the Bank’s investment needs and market opportunities and is subject to the Bank’s underwriting policies, which require consideration of the

financial condition of the borrower and the appraised value of the property, among other factors.

Premiums or discounts incurred upon the purchase of loans are recognized in income using the interest method over the estimated life of the loans,

adjusted for actual prepayments.

Subject to regulatory restrictions applicable to savings

institutions, the Bank’s current loan policies allow all loan types to be purchased.

The determination to purchase specific loans or pools of loans is based upon the Bank’s investment needs and market opportunities and is subject to the Bank’s

underwriting policies, which require consideration of the financial condition of the borrower and the appraised value of the property, among other factors.

Premiums or discounts incurred upon the purchase of loans are recognized in income using

the interest method over the estimated life of the loans, adjusted for actual prepayments.

No loans were purchased during 2021 and

Purchased Credit Impaired Loans

As part the Company’s merger with CFBanc, the Company acquired certain loans that have shown evidence of credit deterioration since origination;

these loans are

referred to as purchased credit impaired loans (“PCI loans”).

These PCI loans are recorded at their fair value at acquisition, such that there is no carryover of the seller’s allowance for loan losses.

Such PCI loans are accounted for

individually.

The Company estimates the amount and timing of expected cash flows for each PCI loan, and the expected cash flows in excess of the allocated fair value is recorded as interest income over the remaining life of the loan (accretable

The excess of the loan’s contractual principal and interest over expected cash flows is not recorded (non-accretable difference).

Over the life of the PCI loan, expected cash flows continue to be estimated each quarter.

If the present

value of expected cash flows decreases from the prior estimate, a provision for loan losses is recorded and an allowance for loan losses is established.

If the present value of expected cash flows increases from the prior estimate, the increase

is recognized as part of future interest income.

If the timing and amount of cash flows is uncertain, then cash payments received will be recognized as a reduction of the recorded investment.

Allowance for Loan Losses

The allowance for loan losses is a valuation allowance for probable incurred credit losses.

Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed.

Loan losses are charged against the allowance when management believes

the uncollectability of a loan balance is confirmed.

Subsequent cash recoveries, if any, are credited to the allowance.

Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and

estimated collateral values, economic conditions, and other factors.

Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, could be charged off.

Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio,

information about specific borrower situations and estimated collateral values, economic conditions, and other factors.

Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in

management’s judgment, could be charged off.

The allowance consists of specific and general components.

The specific component relates to loans that are individually classified as impaired when, based on current information and events, it is probable that the

Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.

Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties,

are considered troubled debt restructurings (“TDR”) and classified as impaired.

Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.

Loans that experience

insignificant payment delays and payment shortfalls generally are not classified as impaired.

Management determines the significance of payment delays and payment shortfalls on case‑by‑case basis, taking into consideration all of the circumstances

surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

If a loan is impaired, either a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or alternatively a

charge‑off is taken to record the loan at the fair value of the collateral, less estimated selling costs, if repayment is expected solely from the collateral.

The specific component relates to loans that are individually classified as impaired when, based on

current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.

Loans for which the terms have been modified resulting in a concession, and for

which the borrower is experiencing financial difficulties, are considered troubled debt restructurings (“TDR”) and classified as impaired.

Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and

interest payments when due.

Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.

Management determines the significance of payment delays and payment shortfalls on case‑by‑case basis,

taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the

principal and interest owed.

If a loan is impaired, either a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using

the loan’s existing rate or alternatively a charge‑off is taken to record the loan at the fair value of the collateral, less estimated selling costs, if repayment is expected solely from the collateral.

TDRs are individually evaluated for impairment and included in the separately identified impairment disclosures.

TDRs are measured at the present value of estimated future cash flows using the loan’s effective rate

at inception.

TDRs are measured at the present value of estimated

future cash flows using the loan’s effective rate at inception.

If a TDR is a collateral dependent loan, the loan is reported, net, at the fair value of the collateral.

For TDRs that subsequently default, the Company determines the amount of any necessary additional charge‑off based on internal

analyses and appraisals of the underlying collateral securing these loans.

For TDRs that subsequently default, the Company determines the amount of any

necessary additional charge‑off based on internal analyses and appraisals of the underlying collateral securing these loans.

The general component covers loans that are collectively evaluated for impairment and is based on historical loss experience adjusted for current factors.

The historical loss experience is determined by portfolio

segment with the use of a loss migration analysis and is based on the actual loss history experienced by the Company over the most recent five years.

This actual loss experience is supplemented with information about other current economic factors

based on the risks present for each portfolio segment.

These current economic factors include consideration of the following:

historical loss experience is determined by portfolio segment with the use of a loss migration analysis and is based on the actual loss history experienced by the Company over the most recent five years .

This actual loss experience is supplemented with information about other current economic factors based on the risks present for each portfolio segment.

current economic factors include consideration of the following:

levels of and trends in delinquencies and impaired loans;

levels of and trends in charge‑offs and recoveries;

volume and terms of loans;

effects of any changes in risk selection and underwriting standards;

trends in volume and terms of loans;

effects of any changes in risk

selection and underwriting standards;

other changes in lending policies, procedures, and practices;

experience, ability, and depth of lending management and other relevant staff;

and local economic trends and conditions;

industry conditions;

national and local economic trends and conditions;

and effects of changes in credit concentrations.

The following portfolio segments have been identified:

one‑to‑four units (“single family”), five or more units (“multi‑family”), commercial real estate, church, construction, commercial loans, and consumer loans.

risks in our various portfolio segments are as follows:

Single Family – Subject to adverse employment conditions in the local economy leading to increased default rate, decreased market values from oversupply in a geographic area

and incremental rate increases on adjustable rate mortgages which may impact the ability of borrowers to maintain payments.

Multi‑Family – Subject to adverse various market conditions that cause a decrease in market value or lease rates, changes in personal funding sources for tenants, oversupply

of units in a specific region, population shifts and reputational risks.

Commercial Real Estate – Subject to adverse conditions in the local economy which may lead to reduced cash flows due to vacancies and reduced rental rates, and decreases in

the value of underlying collateral.

Church – Subject to adverse economic and employment conditions, which may lead to reduced cash flows from members’ donations and offerings, and the stability, quality and

popularity of church leadership.

Construction – Subject to adverse conditions in the local economy, which may lead to reduced demand for new commercial, multi‑family or single family buildings or reduced

lease or sale opportunities once the building is complete.

one‑to‑four units (“single family”), five or more units (“multi‑family”), commercial real estate, church,

construction, commercial loans, and consumer loans.

The risks in our various portfolio segments are as follows:

Single Family – Subject to adverse employment conditions in the local economy leading to increased default rate, decreased

market values from oversupply in a geographic area and incremental rate increases on adjustable rate mortgages which may impact the ability of borrowers to maintain payments.

Multi‑Family – Subject to adverse various market conditions that cause a decrease in market value or lease rates, changes in

personal funding sources for tenants, oversupply of units in a specific region, population shifts and reputational risks.

Commercial Real Estate – Subject to adverse conditions in the local economy which may lead to reduced cash flows due to

vacancies and reduced rental rates, and decreases in the value of underlying collateral.

Church – Subject to adverse economic and employment conditions, which may lead to reduced cash flows from members’ donations

and offerings, and the stability, quality, and popularity of church leadership.

Construction – Subject to adverse conditions in the local economy, which may lead to reduced demand for new commercial,

multi‑family or single family buildings or reduced lease or sale opportunities once the building is complete.

Commercial – Subject to industry and economic conditions including decreases in product demand.

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Real Estate Owned

Assets acquired through, or by deed in lieu of, loan foreclosure are initially recorded at fair value less estimated costs to sell when acquired, establishing a new cost basis.

These assets are subsequently accounted

for at lower of cost or fair value less estimated costs to sell.

If fair value declines subsequent to foreclosure, a valuation allowance is recorded through a provision that is charged to non‑interest expense.

Operating costs after acquisition are

expensed as incurred.

Assets acquired through, or by deed in lieu of, loan

foreclosure are initially recorded at fair value less estimated costs to sell when acquired, establishing a new cost basis.

These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell.

If fair value

declines subsequent to foreclosure, a valuation allowance is recorded through a provision that is charged to non‑interest expense.

Operating costs after acquisition are expensed as incurred.

Company had no REO assets as of December 31, 2021 or December 31, 2020.

Business Combinations

Business combinations are accounted for using the acquisition accounting method.

Under the acquisition method, the Company measures the identifiable

assets acquired, including identifiable intangible assets, and liabilities assumed in a business combination at fair value on the acquisition date.

Goodwill is generally determined as the excess of the fair value of the consideration

transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date.

Goodwill and intangible assets acquired in a purchase business combination and that are determined to have an indefinite useful life are not amortized,

but tested for impairment at least annually or more frequently if events and circumstances exist that indicate the necessity for such impairment tests to be performed.

The Company has selected November 30th as the date to perform the annual

impairment test.

Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values.

Goodwill is the only intangible asset with an indefinite life on the Company’s consolidated

statement of financial condition.

Core deposit intangible assets arising from mergers and acquisitions are amortized on an accelerated basis reflecting the pattern in which the economic

benefits of the intangible asset are consumed or otherwise used up.

The estimated life of the core deposit intangible is approximately 10

Office Properties and Equipment

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Premises and equipment are stated at cost less accumulated depreciation.

Buildings and related components are depreciated using the straight‑line method with useful lives ranging from 10 to

Buildings and related components are depreciated using the

straight‑line method with useful lives ranging from 10 to 40 years.

Furniture, fixtures, and equipment are depreciated using the straight‑line method with useful lives ranging from 3 to 10 years.

Leasehold improvements are amortized over the lease term or the estimated useful life of the asset, whichever

Federal Home Loan Bank (FHLB) stock

The Bank is a member of the FHLB system.

Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts.

FHLB stock is carried at cost,

classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value.

Both cash and stock dividends are reported as income when declared.

Leasehold improvements are amortized over the lease term or

the estimated useful life of the asset, whichever is shorter.

Federal Home Loan Bank (FHLB) and Federal Reserve Bank (FRB) stock

The Bank is a member of the FHLB and FRB systems.

Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may

invest in additional amounts.

FHLB and FRB stock are carried at cost, classified as restricted securities, and periodically evaluated for impairment based on ultimate recovery of their par value.

Both cash and stock dividends are reported as

income when declared.

Bank‑Owned Life Insurance

The Bank has purchased life insurance policies on a former key executive.

Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the

cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

Bank owned life insurance is recorded at the amount that can be realized under the

insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

Investment in Affordable Housing Limited Partnership

The Bank owns a less than 5% interest in an affordable housing limited partnership.

The Bank owns a less than 5 % interest in an

affordable housing limited partnership.

The investment is recorded using the cost method and is being amortized over the life of the related tax credits.

The tax credits

are being recognized in income tax expense in the consolidated financial statements to the extent they are utilized on the Company’s income tax returns.

The investment is reviewed for impairment on an annual basis or on an interim basis if an event

occurs that would trigger potential impairment.

The tax credits are being recognized in income tax expense in the consolidated financial

statements to the extent they are utilized on the Company’s income tax returns.

The investment is reviewed for impairment on an annual basis or on an interim basis if an event occurs that would trigger potential impairment.

Loan Commitments and Related Financial Instruments

Financial instruments include off‑balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs.

The face amount for these items

represents the exposure to loss, before considering customer collateral or ability to repay.

Financial instruments include off‑balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer

financing needs.

The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay.

Such financial instruments are recorded when they are funded.

Variable Interest Entities (“VIE”)

An entity is considered to be a VIE when it does not have sufficient equity investment at risk, the equity investors as a group lack the characteristics

of a controlling financial interest, or the entity is structured with disproportionate voting rights and substantially all of the entity’s activities are conducted on behalf of an investor with disproportionately few voting rights.

is required to consolidate a VIE when it holds a variable interest in the VIE and is also the primary beneficiary of the VIE.

CFC 45 is a Community Development Entity (“CDE”), and is considered to be a VIE.

The Company is the primary

beneficiary because it has the power to direct activities that most significantly affect the economic performance of CFC 45 and has the obligation to absorb the majority of the losses or benefits of its financial performance.

Noncontrolling Interests

For consolidated subsidiaries that are less than wholly-owned, the third-party holdings of equity interests

are referred to as noncontrolling interests.

The portion of net income attributable to noncontrolling interests for such subsidiaries is presented as net income applicable to noncontrolling interests on the consolidated statements of

operations and comprehensive income, and the portion of the stockholders’ equity of such subsidiaries is presented as noncontrolling interests on the consolidated statements of financial condition and consolidated statements of changes in

stockholders’ equity.

Revenue Recognition

Accounting Standard Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash

flows arising from the entity’s contracts to provide goods or services to customers.

The core principle requires the Company to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration

that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

Most of our revenue‑generating transactions are not subject to ASC 606, including revenue generated from

financial instruments, such as our loans and investment securities, as these activities are subject to other GAAP discussed elsewhere within our disclosures.

The Company’s revenue stream that is within the scope of Topic 606 is primarily service

charges on deposit accounts, which consist of monthly service fees, check orders, and other deposit account related fees.

The Company’s performance obligation for monthly service fees is generally satisfied, and the related revenue recognized, over

the period in which the service is provided.

Check orders and other deposit account related fees are largely transaction based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time.

Accounting Standard Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”), establishes principles for reporting information about the nature,

amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers.

The core principle requires the Company to recognize revenue to depict the transfer of goods or services to

customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

Most of our revenue‑generating transactions are not

subject to ASC 606, including revenue generated from financial instruments, such as our loans and investment securities, as these activities are subject to other GAAP discussed elsewhere within our disclosures.

The Company’s revenue stream that

is within the scope of Topic 606 is primarily service charges on deposit accounts, which consist of monthly service fees, check orders, and other deposit account related fees.

The Company’s performance obligation for monthly service fees is

generally satisfied, and the related revenue recognized, over the period in which the service is provided.

Check orders and other deposit account related fees are largely transaction based, and therefore, the Company’s performance obligation is

satisfied, and related revenue recognized, at a point in time.

Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts.

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Compensation cost is recognized for stock options and restricted stock awards issued to employees, based on the fair value of these awards at the date of grant.

A Black‑Scholes model is utilized to estimate the fair

value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards.

Black‑Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards.

Compensation cost is recognized over the required service period, generally defined as the vesting period.

Compensation cost is recognized on a straight‑line basis over the requisite service period for the entire

Compensation cost is recognized on a straight‑line basis

over the requisite service period for the entire award.

The Company’s accounting policy is to recognize forfeitures as they occur.

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 the expected future tax amounts for the

temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates.

A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur.

The amount recognized is

the largest amount of tax benefit that is greater than 50% likely of being realized on examination.

Deferred tax assets and

liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates.

A valuation allowance, if needed, reduces deferred tax assets to the

amount expected to be realized.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination

being presumed to occur.

The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination.

For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

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The cost of shares issued to the ESOP, but not yet allocated to participants, is shown as a reduction of stockholders’ equity.

Compensation expense is based on the market price of shares as they are committed to be

released to participant accounts.

Compensation expense is based on the

market price of shares as they are committed to be released to participant accounts.

Dividends on allocated ESOP shares reduce retained earnings;

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Earnings (Loss) Per Common Share

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.

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 per share of common stock

includes the dilutive effect of unvested stock awards using treasury stock method and additional potential common shares issuable under stock options.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss) and other comprehensive income or loss.

Other comprehensive income or loss includes unrealized gains and losses on securities available‑for‑sale, net of tax,

which are also recognized as separate components of equity.

Diluted earnings per share of common stock includes the dilutive effect of unvested stock awards using treasury stock method and

additional potential common shares issuable under stock options.

Because the Company recorded losses for the years ended December 31, 2021 and 2020, no unvested stock awards or potential common shares issuable under stock options were included in diluted earnings per share in either year.

Comprehensive Loss

Comprehensive loss consists of the net loss from operations and other comprehensive income or loss.

Other comprehensive loss includes unrealized gains and losses on

securities available‑for‑sale, net of tax, which are also recognized as separate components of equity.

Loss Contingencies

Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable, and an amount or range of loss can be reasonably

Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is

probable, and an amount or range of loss can be reasonably estimated.

Management does not believe that any such matters existed as of the balance sheet date that will have a material effect on the consolidated financial statements.

Fair Value Measurements

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 orderly transaction

between market participants on the measurement date.

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 orderly transaction between market participants on the measurement date.

There are three levels of inputs that may be used to measure fair values:

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Significant 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.

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

quoted prices in markets that are not

or other inputs that are observable or can be corroborated by observable market data.

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

Fair values are estimated using relevant market information and other assumptions, as more fully disclosed in Note 10.

Fair value estimates involve uncertainties and matters of significant judgment regarding interest

rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items.

Changes in assumptions or in market conditions could significantly affect the estimates.

Fair value estimates involve uncertainties and

matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items.

Changes in assumptions or in market conditions could significantly affect the

Operating Segments

The Company operates as a single segment.

The operating information used by management to assess performance and make operating decisions about the Company is the consolidated financial data presented in these

financial statements.

For the years ended 2020 and 2019, the Company had one active operating subsidiary, Broadway Federal Bank, f.s.b.

The Company has determined that banking is its one reportable business segment.

The operating information used by management to assess performance and make operating decisions about the Company is the

consolidated financial data presented in these financial statements.

For the years ended 2021 and 2020, the Company has determined that banking is its one reportable business segment.

Reclassifications

Some items in the prior year consolidated financial statements were reclassified to conform to the current presentation.

Reclassifications had no effect on prior year consolidated net income or stockholders’ equity.

Recently Adopted Accounting Pronouncements

In August 2018, the Federal Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework-Changes to the Disclosure Requirements

for Fair Value Measurement.

The ASU was issued to improve the effectiveness of disclosures surrounding fair value measurements.

The ASU removes numerous disclosures from Topic 820 including transfers between level 1 and 2 of the fair value

hierarchy, the policy for timing of transfers between levels, and the valuation process for level 3 fair value measurements.

The ASU also modified and added disclosure requirements regarding changes in unrealized gains and losses included in other

comprehensive income, as well as the range and weighted average of unobservable inputs for level 3 fair value measurements.

The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019,

with early adoption permitted.

The guidance did not have a significant impact on the Company's consolidated financial statements.

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

This ASU provides optional expedients and exceptions

regarding the accounting related to the modifications of certain contracts, relationships and other transactions that are affected by reference rate reform related to contracts that reference LIBOR or other reference rates that could be

discontinued due to reference rate reform.

This guidance was effective immediately and the amendments may be applied prospectively through December 31, 2022.

Reclassifications had no effect on prior

year consolidated net income or stockholders’ equity.

Accounting Pronouncements Yet to Be Adopted

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 replaces the incurred loss model with an expected

loss model, which is referred to as the current expected credit loss (CECL) model.

The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables, held-to-maturity debt

securities, and reinsurance receivables.

It also applies to off-balance sheet credit exposures not accounted for as insurance (such as loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net

investments in leases recognized by a lessor.

Measurement of Credit Losses on Financial Instruments.” ASU

2016-13 replaces the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (CECL) model.

The CECL model is applicable to the measurement of credit losses on financial assets measured at

amortized cost, including loan receivables, held-to-maturity debt securities, and reinsurance receivables.

It also applies to off-balance sheet credit exposures not accounted for as insurance (such as loan commitments, standby letters of credit,

financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor.

For debt securities with other-than-temporary impairment, the guidance will be applied prospectively.

Existing purchased credit impaired (PCI) assets will be grandfathered and classified as purchased

credit deteriorated (PCD) assets at the date of adoption.

The asset will be grossed up for the allowance for expected credit losses for all PCD assets at the date of adoption and will continue to recognize the noncredit discount in interest income

based on the yield of such assets as of the adoption date.

Existing PCI assets will be

grandfathered and classified as purchased credit deteriorated (PCD) assets at the date of adoption.

The asset will be grossed up for the allowance for expected credit losses for all PCD assets at the date of adoption and will continue to

recognize the noncredit discount in interest income based on the yield of such assets as of the adoption date.

Subsequent changes in expected credit losses will be recorded through the allowance.

For all other assets within the scope of CECL, a cumulative-effect adjustment will be recognized in

retained earnings as of the beginning of the first reporting period in which the guidance is effective.

On October 16, 2019, the FASB voted to affirm the proposed amended effective date for ASU 2016-13 for smaller reporting companies (“SRCs”) as defined by the SEC.

The final ASU, which was issued in November 2019,

delays the implementation date for ASU 2016-13 to fiscal years beginning after December 15, 2022.

SRCs are defined as companies with less than $250 million of public float or less than $100 million in annual revenues for the previous year and no

public float or public float of less than $700 million.

The Company qualifies as an SRC, and management will implement ASU 2016-13 in the first quarter of 2023.

For all other assets within the scope of CECL, a

cumulative-effect adjustment will be recognized in retained earnings as of the beginning of the first reporting period in which the guidance is effective.

On October 16, 2019, the FASB voted to affirm the proposed amended effective date for ASU 2016-13 for

smaller reporting companies (“SRCs”) as defined by the SEC.

The final ASU, which was issued in November 2019, delays the implementation date for ASU 2016-13 to fiscal years beginning after December 15, 2022.

SRCs are defined as companies with

less than $250 million of public float or less than $100 million in annual revenues for the previous year and no public float or public float of less than $700 million.

The Company qualifies as an SRC, and management will implement ASU

2016-13 in the first quarter of 2023.

The estimated financial impact has not yet been determined.

In April 2019, the FASB issued ASU No.

2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.

effective January 1, 2020 and clarifies the scope of the credit losses standard and addresses issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayments, among other things.

The amendments to Topic

326 have the same effective dates as ASU 2016-13.

This guidance did not have a significant impact on the Company's consolidated financial statements.

2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses,

Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.

This ASU clarifies the scope of the credit losses standard and addresses issues related to accrued interest receivable balances, recoveries, variable interest rates

and prepayments, among other things.

The amendments to Topic 326 have the same effective dates as ASU 2016-13.

This guidance is not expected to have a significant impact on the Company’s consolidated financial statements.

In March 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2019-04, Reference

Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

This ASU provides optional expedients and exceptions regarding the accounting related to the modifications of certain contracts,

relationships and other transactions that are affected by reference rate reform related to contracts that reference LIBOR or other reference rates that could be discontinued due to reference rate reform.

This guidance was effective

immediately and was adopted by the Company as of January 1, 2022.

As of December 31, 2021, the Company modified all of its loan contracts that were bencmarked to the LIBOR index to SOFR, and applied the practical expedients allowed by this

ASU regarding treatment of those modifications.

In May 2019, the FASB issued ASU No.

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Targeted Transition Relief.

This ASU allows entities to irrevocably elect the fair value option on an

instrument-by-instrument basis for eligible financial assets measured at amortized cost basis upon adoption of the credit loss standards.

This ASU allows entities to

irrevocably elect the fair value option on an instrument-by-instrument basis for eligible financial assets measured at amortized cost basis upon adoption of the credit loss standards.

The effective date for this ASU is the same as for ASU

We will evaluate this ASU in conjunction with

ASU 2016-13 to determine its impact on our financial condition and results of operations.

Management will evaluate this ASU in conjunction with ASU 2016-13 to determine whether the fair value option will be elected for any eligible financial assets.

In December 2020, the FASB issued ASU No.

2020-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes.

This ASU is effective for fiscal years, and interim periods within those fiscal years,

beginning after December 15, 2020.

The amendments in this ASU are intended to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The amendments are also intended to improve consistent

application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

We are currently in the process of evaluating the impact of this ASU on the Company’s consolidated financial statements.

NOTE 2 – Pending Acquisition

On August 25, 2020, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with CFBanc Corporation, a District of Columbia benefit corporation (“City First”).

The Merger Agreement provides

that, among other things and subject to the terms and conditions of the Merger Agreement, City First will merge with and into the Company (the “City First Merger”), with the Company surviving and continuing as the surviving entity.

At the effective

time of the City First Merger, (1) each share of City First’s Class A Common Stock, par value $0.50 per share, and Class B Common Stock, par value $0.50 per share, issued and outstanding immediately prior to the Effective Time (other than any

shares owned by City First or the Company and any Dissenting Shares (as defined in the Merger Agreement)) will be converted into 13.626 validly issued, fully paid and nonassessable shares, respectively, of the voting common stock of the Company,

par value $0.01 per share, which will be renamed Class A Common Stock, and a new class of non-voting common stock of the Company, par value $0.01 per share, which will be named Class B Common Stock, and (2) each share of Fixed Rate Cumulative

Redeemable Perpetual Preferred Stock, Series B, par value $0.50 per share, of City First (“City First Preferred Stock”) issued and outstanding immediately prior to the effective time of the City First Merger will be converted into one validly

issued, fully paid and non-assessable share of a new series of preferred stock of the Company, which new series will be designated as the Company’s Fixed Rate Cumulative Redeemable Perpetual Preferred Stock, Series A, with such rights, preferences,

privileges and voting powers, and limitations and restrictions thereof, which taken as a whole, are not materially less favorable to the holders of City First Preferred Stock than the rights, preferences, privileges and voting powers, and

limitations and restrictions thereof of City First Preferred Stock.

Immediately following the City First Merger, the Bank will merge with and into City First Bank of D.C., National Association (“CFB”), a wholly owned subsidiary of City First, with

CFB continuing as the surviving entity.

On March 17, 2021, the stockholders of the Company and the stockholders of City First voted to approve the merger as described above.

The Company previously announced on January 4, 2021 that all regulatory approvals

necessary for consummation of the merger had been obtained.

With stockholder approval now obtained, the merger is expected to close on April 1, 2021.

The unaudited pro forma information in the following table is intended for informational purposes only and is not necessarily indicative of future operating results or operating results that would have occurred had

the mergers been completed at the beginning of each respective year.

No assumptions have been applied to the pro forma results of operation regarding possible revenue enhancements, expense efficiencies or asset dispositions.

Period ended,

December 31, 2020

December 31, 2019

(Dollars in thousands, except per share)

This ASU is effective for

fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021.

The amendments in this ASU are intended to simplify the accounting for income taxes by removing certain exceptions to the general principles in

The amendments are also intended to improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

Adoption of this ASU is not expected to have a material effect on the

Company’s financial position or results of operations.

Note 2 – Business Combination

Company completed its merger with CFBanc Corporation on April 1, 2021, with the Company continuing as the surviving entity (the “CFBanc Merger”).

Immediately following this merger, Broadway Federal Bank, f.s.b., a subsidiary of Broadway

Financial Corporation, merged with and into City First Bank of D.C., National Association, with City First Bank of D.C., National Association continuing as the surviving entity (which concurrently changed its name to City First Bank, National

Association).

The Company recorded $ 5.6 million in direct transaction costs in connection with the merger during 2021, which were comprised of $ 3.2 million in compensation costs and $ 2.4 million in

professional services costs.

On April 1, 2021, (1) each share of CFBanc Corporation’s Class A Common Stock, par value $ 0.50 per share, and Class B Common Stock, par value $ 0.50 per share, issued

and outstanding immediately prior to the CFBanc Merger was converted into 13.626 validly issued, fully paid and nonassessable

shares, respectively, of the voting common stock of the Company, par value $ 0.01 per share, which were renamed Class A Common Stock,

and a new class of non-voting common stock of the Company, par value $ 0.01 per share, which was named Class B Common Stock, and (2)

each share of Fixed Rate Cumulative Redeemable Perpetual Preferred Stock, Series B, par value $ 0.50 per share, of CFBanc Corporation

(“CFBanc Corporation Preferred Stock”) issued and outstanding immediately prior to the effective time of the CFBanc Merger was converted into one

validly issued, fully paid and non-assessable share of a new series of preferred stock of the Company, which was designated as the Company’s Fixed Rate Cumulative Redeemable Perpetual Preferred Stock, Series A, with such rights, preferences,

privileges and voting powers, and limitations and restrictions thereof, which taken as a whole, are not materially less favorable to the holders of CFBanc Corporation Preferred Stock than the rights, preferences, privileges and voting powers,

and limitations and restrictions thereof of CFBanc Corporation Preferred Stock.

The total value of the consideration transferred to CFBanc Corporation shareholders was approximately $ 66.3 million, which was based on the closing price of the Company’s common stock on March 31, 2021, the last trading day prior to the consummation of the merger.

The Company accounted for the CFBanc Merger under the acquisition method of accounting which requires purchased assets and liabilities assumed to be recorded at

their respective fair values at the date of acquisition.

The Company determined the fair value of the acquired assets and assumed liabilities with the assistance of third-party valuation firms.

Goodwill in the amount of $ 26.0 million was recognized in the CFBanc Merger.

Goodwill represents the future economic benefits arising from net assets acquired that are not

individually identified and separately recognized and are attributable to synergies expected to be derived from the combination of the two entities.

Goodwill is not amortized for financial reporting purposes;

rather, it is tested for impairment

annually, or more frequently if events or changes in circumstances indicate that it might be impaired, by comparing its carrying value to the reporting unit’s fair value.

Goodwill recognized in this transaction is not deductible for income tax

The following table represents the assets acquired and liabilities assumed in the CFBanc Merger as of April 1, 2021, and the fair value adjustments and amounts

recorded by the Company as of the same date under the acquisition method of accounting:

Assets acquired

(In thousands)

Cash and cash equivalents

Securities available-for-sale

Loans receivable held for investment:

Gross loans receivable held for investment

Deferred fees and costs

Allowance for loan losses

Accrued interest receivable

FHLB and FRB stock

Office properties and equipment

Deferred tax assets, net

Core deposit intangible

Liabilities assumed

Securities sold under agreements to repurchase

FHLB advances

Notes payable

Accrued expenses and other liabilities

Total liabilities

Excess of assets acquired over liabilities assumed

Consideration paid

Goodwill recognized

The contractual amounts due, expected cash flows to be collected, the interest component, and the fair value of loans acquired from CFBanc as of the acquisition date were as follows:

Acquired Loans

(In thousands)

Contractual amounts due

Cash flows not expected to be collected

Expected cash flows

Interest component of expected cash flows

Fair value of acquired loans

A component of total loans acquired from CFBanc were loans that were considered to be PCI loans.

The following table presents the amounts that comprise the

fair value of PCI loans as of the date of acquisition (in thousands):

Contractual amounts due

Non-accretable difference (cash flows not expected to be collected)

Expected cash flows

Accretable yield

Fair value of acquired PCI loans

After the acquisition date, the revenues and earnings of CFBanc are included in the Company’s Consolidated Statement of Operations for the year ended December 31, 2021and standalone financial information for each entity is not

The following table presents the net interest income, net income, and earnings per share as if the CFBanc Merger was effective as of January 1, 2020.

unaudited pro forma financial information included in the table below is based on various estimates and is presented for informational purposes only and does not indicate the financial condition or results of operations of the combined

Company that would have been achieved for the periods presented had the transactions been completed as of the date indicated or that may be achieved in the future.

For the Year Ended December 31

(Dollars in thousands, except per share amounts)

Net interest income

Net income (loss)

Basic earnings per share

Diluted earnings per share

Note 3 – Capital

2021, the Company completed the sale of 18,474,000 shares of Broadway Financial Corporation common stock in private placements to

institutional and accredited investors at a purchase price of $ 1.78 per share for an aggregate purchase price of $ 30.8 million (net of expenses).

The following

table shows the common stock issued on April 1, 2021 as a result of the merger and on April 6, 2021 as a result of the private placements by class:

Common Shares Outstanding

Shares outstanding March 31, 2021:

Shares issued in merger

Shares exchanged post-merger

Shares cancelled

Shares issued in private placements

Fractional shares cancelled

Shares outstanding April 6, 2021:

Note 4 – Securities

The following table summarizes the amortized cost and fair value of the available‑for‑sale investment securities portfolios at December 31, 2020 and December 31, 2019 and the corresponding amounts of unrealized gains

(losses) which are recognized in accumulated other comprehensive income:

The following table summarizes the amortized cost and fair value of the available‑for‑sale investment securities portfolios at December 31, 2021 and December 31,

2020 and the corresponding amounts of unrealized gains (losses) which are recognized in accumulated other comprehensive income:

(In thousands)

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Federal agency mortgage‑backed securities

Federal agency collateralized mortgage obligation (“CMO”)

Federal agency debt

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Federal agency debt

Municipal bonds

Total available‑for‑sale securities

At December 31, 2020, the Bank had two federal agency debt securities with a total amortized cost of $2.7 million and estimated total fair value of $2.9 million and an estimated average remaining life of 5.0 years.

The Bank also had 22 federal agency mortgage‑backed securities with total amortized cost of $5.6 million, estimated total fair value of $5.8 million and an estimated average remaining life of 2.8 years.

Expected maturities may differ from

contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

In 2020, the Bank purchased five municipal bonds with a total amortized cost of $2.0 million, estimated fair value of

At December 31, 2021, the Bank had 97 federal agency

mortgage-backed securities with total amortized cost of $ 70.1 million, estimated total fair value of $ 70.0 million and an estimated average remaining life of 4.7 years;

11 federal agency CMO with a total amortized cost of $ 9.4 million and estimated total fair value of $ 9.3

million and an estimated average remaining life of 5.6 years;

15 federal agency debt with total amortized cost of 38.2 million,

estimated total fair value of $ 38.0 million and an estimated average remaining life of 5.71 years ;

9 municipal bonds with a total amortized cost

of $ 4.9 million and estimated total fair value of $ 4.9 million and an estimated average remaining life of 10.7 years;

treasuries with a total amortized cost of $ 18.2

million, estimated total fair value of $ 18.0 million and an estimated average remaining life of 3.6 years;

and 16 SBA Pools with a

total amortized cost of $ 16.2 million and an estimated average remaining life of 5.5 years.

Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment

In 2021, the Bank purchased 5 federal agency mortgage-backed securities with total amortized cost of $ 9.6 million, estimated fair value of $ 9.6

million at December 31, 2021 and an estimated average remaining life of 5.4 years;

At December 31, 2020 and 2019, there were no securities pledged to secure public deposits since those public deposits are under $250 thousand which are fully insured by FDIC.

At December 31, 2020 and 2019, there were

no holdings of securities by any one issuer, other than the U.S.

2 federal agency debt with total amortized cost of $ 4.9

million, estimated fair value of $ 4.9 million at December 31, 2021 and an estimated average remaining life of 4.7 years;

and 1 federal agency

CMO with total amortized cost of $ 2.0 million, estimated fair value of $ 1.9 million at December 31, 2021 and an estimated average remaining life of 5.1

There were no sales of securities during the

years ended December 31, 2021 and 2020.

The amortized cost and estimated fair value of all investment securities available-for-sale at December 31, 2021, by contractual maturities are shown below.

Contractual maturities may differ from expected maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

(In thousands)

Due in one year or less

Due after one year through five years

Due after five years through ten years

Due after ten years (1)

Mortgage-backed securities, collateralized

mortgage obligations and SBA pools do not have a single stated maturity date and therefore have been included in the “Due after ten years” category.

The Bank held 129 securities with unrealized losses

of $ 1,008 thousand at December 31, 2021.

None of these securities has been in a loss position for greater than one year.

The Bank’s securities were primarily issued by the federal government or its agencies.

The unrealized

gains or losses on our available-for-sale securities at December 31, 2021 were primarily caused by movements in market interest rates subsequent to the purchase of such securities.

Securities with a market value of $ 53.2 million were pledged as collateral for securities sold under agreements to

repurchase as of December 31, 2021 and included $ 25.9 million of federal agency mortgage-backed securities, $ 13.3 million of federal agency debt, $ 9.8

million of SBA pool, and $ 4.2 million of federal agency CMO.

There were no securities pledged as collateral for securities sold under agreements to repurchase as December 31, 2020.

At December 31, 2021 and 2020, there were no

securities pledged to secure public deposits since those public deposits are under $250 thousand which are fully insured by FDIC.

At December 31, 2021 and 2020, 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.

There were no sales of securities during the years ended December 31, 2020 and 2019.

The Bank held 29 and 24 securities with unrealized gains and no securities with unrealized losses at December 31, 2020 and 2019, respectively.

Securities in unrealized gain positions are analyzed as part of our

ongoing assessment of other‑than‑temporary improvement in fair market values primarily caused by movements in market interest rates subsequent to the purchase of such securities.

All of the Bank's securities were issued by the federal government

or federal government agencies, or municipalities.

Note 5 – Loans Receivable Held for Sale

The Bank had no loans held for sale as of December 31, 2020 and 2019.

Multi-family loans held for sale totaling $13.7 million were transferred to the loans held for investment portfolio during 2020 at the lower of

cost or fair value.

Loan sales of $22.8 million in multi‑family loans were completed during 2020 for a total gain of $276 thousand.

Loan sales of $22.8 million were completed during 2019 for a gain of $204 thousand.

Loan repayments totaled $637

thousand during 2020 and $115 thousand during 2019.

The Bank had no loans held for sale as of

December 31, 2021 and 2020.

Multi-family loans held for sale totaling $ 13.7 million were transferred to the loans held for investment

portfolio during 2020 at the lower of cost or fair value.

Loan sales of $ 22.8 million in multi‑family loans were completed during 2020

for a total gain of $ 276 thousand.

Note 6 – Loans Receivable Held for Investment

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Unamortized net deferred loan costs and premiums

Gross loans receivable

Credit and interest marks on purchased loans, net

Allowance for loan losses

Loans receivable, net

As of December 31, 2021, the commercial loan category above included $ 18.0

million of loans issued under the SBA’s Paycheck Protection Program (“PPP”).

PPP loans have terms of two to five years and earn interest at 1 %.

PPP loans are fully guaranteed by the SBA and have virtually no risk of loss.

The Bank expects the vast majority of the PPP loans to be fully forgiven by the SBA.

The following tables present the activity in the allowance for loan losses by loan type for the periods indicated:

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Ending balance (1)

Loans acquirqed in the City First Merger and PPP

loans originated since the merger were not considered in this analysis.

For the year ended December 31, 2020

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Beginning balance

Recapture of loan losses

Provision for (recapture of) loan losses

Loans charged off

Ending balance

The following tables present the balance in the allowance for loan losses and the recorded investment (unpaid contractual principal balance less charge‑offs, less interest applied to principal, plus unamortized

deferred costs and premiums) by loan type and based on impairment method as of and for the periods indicated:

part of the CFBanc Merger, the Company acquired loans for which there was, at acquisition, evidence of credit deterioration of credit quality since origination and for which it was probable, at acquisition, that all contractually required

payments would not be collected.

Prior to the CFBanc Merger, there were no such acquired loans.

The carrying amount of those loans as of

December 31, 2021, was as follows:

(In thousands)

Single family

Commercial real estate

Commercial – other

On the acquisition

date, the amount by which the undiscounted expected cash flows of the PCI loans exceeded the estimated fair value of the loan is the accretable yield.

The accretable yield is measured at each financial reporting date and represents the

difference between the remaining undiscounted cash flows and the current carrying value of the PCI loan.

At December 31, 2021, none

of the Company’s PCI loans were classified as nonaccrual.

The following table summarizes the accretable yield on

the PCI loans for the year ended December 31, 2021:

(In thousands)

Balance on acquisition date

Balance at the end of the year

The following tables present the balance in the allowance for loan losses and the recorded investment (unpaid contractual principal balance less charge‑offs, less

interest applied to principal, plus unamortized deferred costs and premiums) by loan type and based on impairment method as of and for the periods indicated:

December 31, 2021

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Loans collectively evaluated for impairment

Loans acquired in the Merger

Total ending loans balance

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The recorded investment in loans excludes accrued interest receivable due to immateriality.

For purposes of this disclosure, the unpaid principal balance is not reduced for net charge‑offs.

The following tables present the monthly average of loans individually evaluated for impairment by loan type and the related interest income for the periods indicated:

For purposes of this disclosure, the unpaid principal balance is not

reduced for net charge‑offs.

The following tables present the monthly average of loans individually evaluated for impairment by loan type and the related interest income for the periods

For the year ended December 31, 2021

3 unchanged sentences

Commercial – other

Cash‑basis interest income recognized represents cash received for interest payments on accruing impaired loans and interest recoveries on non‑accrual loans that were paid off.

Interest payments collected on

non‑accrual loans are characterized as payments of principal rather than payments of the outstanding accrued interest on the loans until the remaining principal on the non‑accrual loans is considered to be fully collectible or paid off.

is returned to accrual status, the interest payments that were previously applied to principal are deferred and amortized over the remaining life of the loan.

Foregone interest income that would have been recognized had loans performed in

accordance with their original terms amounted to $89 thousand and $120 thousand for the years ended December 31, 2020 and 2019, respectively, and were not included in the consolidated results of operations.

Cash‑basis interest income recognized represents cash received for interest payments on accruing impaired loans and interest recoveries on non‑accrual loans that

were paid off.

Interest payments collected on non‑accrual loans are characterized as payments of principal rather than payments of the outstanding accrued interest on the loans until the remaining principal on the non‑accrual loans is considered

to be fully collectible or paid off.

When a loan is returned to accrual status, the interest payments that were previously applied to principal are deferred and amortized over the remaining life of the loan.

Foregone interest income that would

have been recognized had loans performed in accordance with their original terms amounted to $ 71 thousand and $ 89 thousand for the years ended December 31, 2021 and 2020, respectively, and were not included in the consolidated results of operations.

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

18 unchanged sentences

Total non-accrual loans

There were no loans 90 days or more delinquent that were accruing interest as of December 31, 2020 or December 31, 2019.

There were no loans 90 days or more delinquent

that were accruing interest as of December 31, 2021 or December 31, 2020.

Troubled Debt Restructurings

At December 31, 2020, loans classified as troubled debt restructurings (“TDRs”) totaled $4.2 million, of which $232 thousand were included in non‑accrual loans and $4.0 million were on accrual status.

At December 31,

2019, loans classified as TDRs totaled $4.7 million, of which $406 thousand were included in non‑accrual loans and $4.3 million were on accrual status.

The Company has allocated $141 thousand and $147 thousand of specific reserves for accruing TDRs

as of December 31, 2020 and 2019, respectively.

TDRs on accrual status are comprised of loans that were accruing at the time of restructuring or loans that have complied with the terms of their restructured agreements for a satisfactory period and

for which the Bank anticipates full repayment of both principal and interest.

TDRs that are on non‑accrual status can be returned to accrual status after a period of sustained performance, generally determined to be six months of timely payments,

A well‑documented credit analysis that supports a return to accrual status based on the borrower’s financial condition and prospects for repayment under the revised terms is also required.

As of December 31, 2020 and 2019, the Company

had no commitment to lend additional amounts to customers with outstanding loans that are classified as TDRs.

At December 31, 2021, loans classified as troubled debt restructurings (“TDRs”) totaled $ 1.8 million, of which $ 188 thousand were included in

non‑accrual loans and $ 1.6 million were on accrual status.

At December 31, 2020, loans classified as TDRs totaled $ 4.5 million, of which $ 232 thousand

were included in non‑accrual loans and $ 4.3 million were on accrual status.

The Company has allocated $ 7 thousand and $ 141 thousand of

specific reserves for accruing TDRs as of December 31, 2021 and 2020, respectively.

TDRs on accrual status are comprised of loans that were accruing at the time of restructuring or loans that have complied with the terms of their restructured

agreements for a satisfactory period and for which the Bank anticipates full repayment of both principal and interest.

TDRs that are on non‑accrual status can be returned to accrual status after a period of sustained performance, generally

determined to be six months of timely payments, as modified.

A well‑documented credit analysis that supports a return to accrual

status based on the borrower’s financial condition and prospects for repayment under the revised terms is also required.

As of December 31, 2021 and 2020, the Company had no commitment to lend additional amounts to customers with outstanding loans that are classified as TDRs.

No loans were modified during the years ended December 31, 2021 and 2020.

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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.

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.

This analysis is performed at least on a quarterly basis.

The Company uses

the following definitions for risk ratings:

analysis is performed at least on a quarterly basis.

The Company uses the following definitions for risk ratings:

Loans classified as watch exhibit weaknesses that could threaten the current net worth and paying capacity of the obligors.

9 unchanged sentences

They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Loans classified as doubtful 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 values, highly questionable and improbable.

Loans classified as doubtful 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 values, highly questionable and improbable.

Loans classified as loss are considered uncollectible and of such little value that to continue to carry the loan as an active asset is no longer warranted.

Loans not meeting the criteria above that are analyzed individually 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.

Based on the most recent analysis performed,

the risk categories of loans by loan type as of the periods indicated were as follows:

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

The following table shows the risk categories of loans by

type excluding loans acquired in the City First Merger as of December 31, 2021:

December 31, 2021

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Commercial – other

The following table

shows the risk categories of loans by type for loans acquired in the City First Merger as of December 31, 2021:

December 31, 2021

4 unchanged sentences

Commercial – other

December 31, 2020

Special Mention

(In thousands)

Single family

Commercial real estate

Commercial – other

Note 7 – Office Properties and Equipment, net

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Note 8 – Leases

The Bank has a combined operating lease for its corporate headquarters and main retail branch and a photocopier lease.

The ROU asset and operating lease liability are recorded in fixed assets and other liabilities,

respectively, in the consolidated statements of financial condition.

Our ROU asset represents our right to use an underlying asset during the lease term.

Effective October 1, 2021, the Bank entered into an operating lease for its administrative offices at 4601 Wilshire Boulevard in

The right of use (“ROU”) asset and operating lease liability are recorded in fixed assets and other liabilities , respectively, in the consolidated statements of financial condition.

The ROU asset represents our right to use the underlying asset during the lease

Operating lease liabilities represent our obligation to make lease payments arising from the lease.

ROU assets and lease

liabilities are recognized based on the present value of the remaining lease payments using a discount rate that represents our incremental borrowing rate at the date of implementation of the new accounting standard.

The operating lease for our corporate headquarters and main retail branch has one 5-year extension option at the then fair market rate.

As this extension option is not reasonably certain of exercise, it is not

included in the lease term.

The Bank recorded a ROU asset of $190 thousand and an operating lease liability of $194 thousand as of December 31, 2020.

ROU assets and lease liabilities are recognized based on the present value of the remaining lease payments using a discount rate that

represents our incremental borrowing rate at the date of implementation of the new accounting standard.

The operating lease has one 5 -year extension option at the then fair market rate.

this extension option is not reasonably certain of exercise, it is not included in the lease term.

The Bank recorded an ROU asset of $ 1.1

million and an operating lease liability of $ 1.1 million as of December 31, 2021.

The Bank has no finance leases.

Rent expense under the operating leases was $598 thousand for 2020 and $600 thousand for 2019.

Additional information regarding our operating leases is summarized below for the periods indicated dollars in thousands):

Rent expense under the operating lease at 4601 Wilshire Boulevard in Los Angeles was $ 61 thousand for 2021.

The Company paid $ 417 thousand in rent

expense in 2021 and $ 598 thousand in rent expense in 2020 for an operating lease on its previous administrative offices and branch

location at 5055 Wilshire Boulevard in Los Angeles.

Additional information regarding our operating leases is summarized below for

the periods indicated dollars in thousands):

December 31, 2021

Cash paid for amounts included in the measurement of lease liabilities for operating leases:

Cash paid for amounts included in the measurement of

lease liabilities for operating leases:

ROU assets obtained in exchange for lease liabilities

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Weighted average discount rate

The future minimum payments for operating leases with remaining terms of one year or more as of December 31, 2020 were as follows (in thousands):

The future minimum payments for operating leases with remaining terms of one

year or more as of December 31, 2021 were as follows (in thousands):

Year ended December 31, 2022

Year ended December 31, 2023

Year ended December 31, 2024

Year ended December 31, 2025

Year ended December 31, 2026

Total future minimum lease payments

1 unchanged sentence

Present value of net future minimum lease payments

Note 9 – Goodwill and Core Deposit Intangible

In connection with the CFBanc Merger, the Company recognized goodwill of $ 26.0 million and a core deposit intangible of $ 3.3 million.

The following

table presents the changes in the carrying amounts of goodwill and core deposit intangibles for the year ended December 31, 2021:

Core Deposit Intangible

(In thousands)

Balance at the beginning of the period

Balance at the end of the period

No impairment charges were recorded during 2021 for goodwill impairment.

Management’s assessment of goodwill is performed in accordance with ASC 350-20 –

Intangibles-Goodwill and Other, which allows the Company to perform a qualitative assessment of goodwill to determine if it is more likely than not the fair value of the Company’s equity is below its carrying value.

The Company performed its

qualitative assessment as of November 30, 2021.

Due to the relatively short amount of time that has passed between the acquisition date, the fact that the combined Company is realizing the intended benefits of the Merger (i.e.

lower cost of funds,

increased ability to lend, etc.), and the Company’s stock price post-acquisition, no impairment charges were recorded during 2021 for goodwill.

The following table outlines the estimated amortization expense related to the core deposit intangible during the next five fiscal years:

(In thousands)

Note 10 – Fair Value

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).

The fair value of impaired loans that are collateral dependent is generally based upon the fair value of the collateral, which is obtained from recent real estate 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.

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

The fair value of impaired loans that are collateral dependent is generally based upon the fair value of the collateral, which is obtained from recent real estate

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.

Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted

Assets acquired through or by transfer in lieu of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis.

These assets are subsequently accounted for at

the lower of cost or fair value less estimated costs to sell.

Impaired loans are evaluated on a

quarterly basis for additional impairment and adjusted accordingly.

Assets acquired through or by transfer in lieu of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost

These assets are subsequently accounted for at the lower of cost or fair value less estimated costs to sell.

Fair value is commonly based on recent real estate appraisals which are updated every nine months.

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.

Such adjustments

are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Real estate owned properties are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Appraisals for collateral‑dependent impaired loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and

licenses have been reviewed and verified by the Company.

Once received, an independent third‑party licensed appraiser reviews the appraisals for accuracy and reasonableness, reviewing the assumptions and approaches utilized in the appraisal as well

as the overall resulting fair value in comparison with independent data sources such as recent market data or industry‑wide statistics.

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.

Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Real estate owned properties are evaluated on a quarterly basis for additional

impairment and adjusted accordingly.

Appraisals for collateral‑dependent impaired loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for

residential properties) whose qualifications and licenses have been reviewed and verified by the Company.

Once received, an independent third‑party licensed appraiser reviews the appraisals for accuracy and reasonableness, reviewing the

assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry‑wide statistics.

Assets Measured on a Recurring Basis

4 unchanged sentences

At December 31, 2021 :

Securities available‑for‑sale – federal agency mortgage‑backed

Securities available for sale:

Federal agency mortgage‑backed securities

Federal agency CMO

Federal agency debt

Municipal bonds

Securities available‑for‑sale – federal agency debt

At December 31, 2020 :

Securities available‑for‑sale – federal agency mortgage‑backed

Securities available‑for‑sale – federal agency debt

Securities available for sale:

Federal agency mortgage‑backed securities

Municipal bonds

Federal agency debt

There were no transfers between Level 1, Level 2, or Level 3 during the years ended December 31, 2021 and 2020.

Assets Measured on a Non‑Recurring Basis

Assets are considered to be reflected at fair value on a non‑recurring basis if the fair value measurement of the instrument does not necessarily result in a change in the amount recorded on the statement of

Generally, a non‑recurring valuation is the result of the application of other accounting pronouncements that require assets to be assessed for impairment or recorded at the lower of cost or fair value.

The following table provides information regarding the carrying values of our assets measured at fair value on a non‑recurring basis as of the periods indicated.

The fair value measurement for all these assets falls

within Level 3 of the fair value hierarchy.

December 31, 2020

December 31, 2019

(In thousands)

Impaired loans carried at fair value of collateral

Fair Values of Financial Instruments

10 unchanged sentences

Federal Home Loan Bank advances

Junior subordinated debentures

Securities sold under agreements to repurchase

Notes payable

Accrued interest payable

4 unchanged sentences

Securities available‑for‑sale

Loans receivable held for sale

Loans receivable held for investment

13 unchanged sentences

The Bank accepts two types of deposits from a deposit placement service called the Certificate of Deposit Account Registry Service (“CDARS”).

Reciprocal deposits are the Bank’s own retail deposits in amounts in

excess of the insured limits.

The CDARS program allows banks to place their customers’ funds in FDIC‑insured certificates of deposit at other banks and, at the same time, receive an equal sum of funds from the customers of other banks in the CDARS

Reciprocal deposits are

the Bank’s own retail deposits in amounts in excess of the insured limits.

The CDARS program allows banks to place their customers’ funds in FDIC‑insured certificates of deposit at other banks and, at the same time, receive an equal sum of funds

from the customers of other banks in the CDARS Network.

These deposits totaled $ 141.6 million and $ 35.8 million at December 31, 2021 and 2020, respectively and are not considered to be brokered deposits.

One‑way deposits are also available using the CDARS program.

With the one‑way program, the Bank accepts deposits from CDARS even though there is no customer account involved.

These one-way deposits, which are

considered to brokered deposits, totaled $9.6 million and $40.7 million at December 31, 2020 and 2019, respectively.

At December 31, 2020, the Bank had $15.1 million in (non-CDARS) brokered deposits and did not have any (non-CDARS) brokered deposits at December 31, 2019.

With the one‑way program, the Bank accepts deposits from CDARS even though there is no customer account

These one-way deposits, which are considered to brokered deposits, totaled $ 223 thousand and $ 9.6 million at December 31, 2021 and 2020, respectively.

At December 31, 2021 and 2020, the Bank had $ 5.0

million and $ 15.1 million in (non-CDARS) brokered deposits, respectively.

Scheduled maturities of certificates of deposit for the next five years are as follows:

(In thousands)

Certificates of deposit of $250 thousand or more totaled $18.9 million and $25.1 million at December 31, 2020 and 2019, respectively.

Deposits from principal officers, directors, and their affiliates totaled $838 thousand and $1.8 million at December 31, 2020 and 2019, respectively.

Certificates of deposit of $250 thousand or more totaled $ 20.4

million and $ 18.9 million at December 31, 2021 and 2020, respectively.

The Company has a significant concentration of deposits with five long‑time customers that accounted for approximately 22 % of its deposits as of December 31, 2021.

The Company expects to maintain the relationships with the customers for the near term.

Deposits from principal officers, directors, and their affiliates totaled $ 22.7 million and $ 838 thousand at December 31, 2021 and 2020, respectively.

Note 12 – Federal Home Loan Bank Advances

9 unchanged sentences

Weighted average contractual maturity (in months)

Each advance is payable at its maturity date, with a prepayment penalty.

The advances were collateralized by $220.0 million and $156.1 million of first mortgage loans at December 31, 2020 and 2019, respectively,

under a blanket lien arrangement.

Based on this collateral, the Company’s holdings of FHLB stock, and a general borrowing limit of 40% of total assets at December 31, 2020, the Company was eligible to borrow up to an additional $40.3 million at

year‑end 2020.

Required payments over the next five years are as follows:

Each advance is subject to a prepayment penalty if paid before its maturity date.

The advances were collateralized by $ 165.0 million and $ 220.0 million of first mortgage loans at

December 31, 2021 and 2020, respectively, under a blanket lien arrangement.

Based on collateral pledged and the Company’s holdings of FHLB stock as of December 31, 2021, the Company was eligible to borrow up to an additional $ 14.4 million at year‑end 2021.

Scheduled maturities of FHLB advances over the next five years are as follows:

(In thousands)

Note 13 – Junior Subordinated Debentures

On March 17, 2004, the Company issued $6.0 million of Floating Rate Junior Subordinated Debentures (the “Debentures”) in a private placement to a trust that was capitalized to purchase subordinated debt and preferred

stock of multiple community banks.

Interest on the Debentures is payable quarterly at a rate per annum equal to the 3‑Month LIBOR plus 2.54%.

The interest rate is determined as of each March 17, June 17, September 17, and December 17, and was 2.77%

at December 31, 2020.

On October 16, 2014, the Company made payments of $900 thousand of principal on Debentures, executed a Supplemental Indenture for the Debentures that extended the maturity of the Debentures to March 17, 2024, and modified the

payment terms of the remaining $5.1 million principal amount thereof.

The modified terms of the Debentures require quarterly payments of interest only through March 2019 at the original rate of 3‑Month LIBOR plus 2.54%.

Starting in June 2019, the

Company began making quarterly payments of equal amounts of principal, plus interest, and will continue until the Debentures are fully amortized on March 17, 2024.

At December 31, 2020, the Company had repaid a total of $1.8 million of the

scheduled principal.

The Debentures may be called for redemption at any time by the Company.

Scheduled principal repayments of junior subordinated debentures over the next four years are as follows:

(In thousands)

On March 17, 2004, the Company issued $ 6.0 million of

Floating Rate Junior Subordinated Debentures (the “Debentures”) in a private placement to a trust that was capitalized to purchase subordinated debt and preferred stock of multiple community banks.

Interest on the Debentures is payable quarterly

at a rate per annum equal to the 3 ‑Month LIBOR plus 2.54 %.

On October 16, 2014, the Company made payments of $ 900 thousand of

principal on Debentures, executed a Supplemental Indenture for the Debentures that extended the maturity of the Debentures to March 17, 2024 ,

and modified the payment terms of the remaining $ 5.1 million principal amount thereof.

The Company made quarterly payments of interest

only through March 2020 at the original rate of 3 ‑Month LIBOR plus 2.54 %.

Starting in June 2020, the Company began making quarterly payments of equal amounts of principal plus interest at the original rate of 3 -Month LIBOR plus 2.54 %.

On September 17, 2021, the Company fully redeemed its Floating Rate Junior Subordinated Debentures for $ 2.8 million.

Note 14 – Securities Sold Under Agreements to Repurchase

The Bank enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities.

Under these arrangements, the Bank may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Bank 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 Banks’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.

As of December 31, 2021, securities sold under agreements to repurchase totaled $ 52.0 million at an

average rate of 0.10 %.

These agreements mature on a daily basis.

The market value of securities pledged totaled $ 53.2 million as of December 31, 2021 and included $ 13.3

million of U.S.

Government Agency securities and $ 39.9 million of mortgage-backed securities.

There were no securities sold under agreements to repurchase or securities pledged as of December 31, 2020.

Note 15 – Notes Payable

In connection with the New Market Tax Credit

activities of City First Bank, CFC 45 is a partnership whose members include CFNMA and City First New Markets Fund II, LLC.

This CDE 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 Community Business (“QALICB”).

The loan to the QALICB is secured by a Leasehold Deed of Trust that, due to the pass-through, non-recourse

structure, is operationally and ultimately for the benefit of Merrill Lynch rather than CFC 45.

Debt service payments received by CFC 45 from the QALICB are passed through to Merrill Lynch in return for which CFC 45 receives a servicing fee.

financial statements of CFC 45 are consolidated with those of the Bank and the Company.

There are two notes outstanding at CFC 45.

Note A is in the amount of $ 9.9 million with a fixed interest rate of 5.2 % per annum.

Note B is 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 will continue through March 2023 for Notes A and B.

Beginning in September 2023, quarterly principal and

interest payments will be due for Notes A and B.

Both notes will mature on December 1, 2040 .

Note 16 – Employee Benefit Plans

Broadway Federal 401(k) Plan

A 401(k) benefit plan allows employee contributions for substantially all employees up to 15% of their compensation, which are matched at a rate equal to 50% of the first 6% of the compensation contributed.

totaled $146 thousand and $135 thousand for 2020 and 2019.

As of December 31,

2021, the Company was operating under two different 401(k) plans.

Broadway Federal 401(k)

The Broadway Federal Bank 401(k) benefit plan allows employee

contributions for substantially all employees up to 15 % of their compensation, which are matched at a rate equal to 50 % of the first 6 % of the

compensation contributed.

Expense totaled $ 142 thousand and $ 146 thousand for 2021 and 2020.

City First Bank

The City First Bank 401(k) benefit plan allows employee

contributions for substantially all employees us to the IRS limit, 100 % of which is matched by the Bank up to 3 % of each employee’s contribution.

In addition, City First Bank makes a non-elective safe harbor contribution of 3 % of each eligible employee’s compensation.Expense for this plan totaled $ 174 thousand for 2021.

Employees participate in an Employee Stock Option Plan (“ESOP”) after attaining certain age and service requirements.

In December 2016, the ESOP purchased 1,493,679 shares of the Company’s common stock at $1.59 per

share, for a total cost of $2.4 million, of which $1.2 million was funded with a loan from the Company.

In December 2016, the ESOP purchased 1,493,679 shares of the Company’s common stock at $ 1.59

per share, for a total cost of $ 2.4 million, of which $ 1.2 million was funded with a loan 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.

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.

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.

Dividends on allocated shares increase participant accounts.

Dividends on unallocated shares will be used to repay the loan.

Dividends on unallocated shares will be used to repay the

At the end of employment, participants will receive shares for their vested balance.

Compensation expense

related to the ESOP was $68 thousand for 2020 and $65 thousand for 2019.

Compensation expense related to the ESOP was $ 109

thousand for 2021 and $ 68 thousand for 2020.

Shares held by the ESOP were as follows:

6 unchanged sentences

During 2021 and 2020, 40,945 and 41,665 of ESOP shares were released for allocation to participants, respectively.

The outstanding balance of unearned ESOP shares at December 31, 2020 and 2019 were $893 thousand and

$959 thousand, respectively, which is shown as Unearned ESOP shares in the equity section of the consolidated statements of financial condition.

The outstanding balance of unearned ESOP shares at December 31, 2021

and 2020 were $ 829 thousand and $ 893

thousand, respectively, which are shown as Unearned ESOP shares in the equity section of the consolidated statements of financial condition.

Note 17 – Income Taxes

1 unchanged sentence

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

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 carry forwards.

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.

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 carry forwards.

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.

1 unchanged sentence

(In thousands)

Effective tax rates differ from the federal statutory rate of 21% applied to income before income taxes due to the following:

Change in Valuation Allowance

Effective tax rates differ from the federal statutory rate of 21 %

applied to income before income taxes due to the following:

(In thousands)

Federal statutory rate times financial statement net (loss) income

Federal statutory rate times financial statement net loss

State taxes, net of federal benefit

2 unchanged sentences

Low income housing credits

Change in valuation allowance

Tax effect of stock-based compensation

Tax benefit from tax positions taken in prior years

11 unchanged sentences

Alternative minimum tax credit

Net unrealized loss on securities available-for-sale

Right of use liability

Fair value adjustment on acquired loans

Total deferred tax assets

valuation allowance

Total deferred tax assets , net of

valuation allowance

Deferred tax liabilities:

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Prepaid expenses

Right of use assets

Core deposit intangibles

Total deferred tax liabilities

Net deferred tax assets

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, the amount of taxes paid in available carry‑back years, and the forecasts of future income and tax planning strategies.

Based on this analysis, the

Company determined that, as of December 31, 2020 and 2019, no valuation allowance was required on its deferred tax assets, which totaled $5.6 million and $5.2 million, respectively.

On June 29, 2020, the Assembly Bill No.

85 (AB 85) was signed into law by California Governor Gavin Newsom to raise additional income tax revenue to assist in balancing the California budget caused by the COVID-19

The most significant provision of this bill is the suspension of the net operating loss (NOL) deduction for tax years beginning on or after January 1, 2020 and before January 1, 2023.

The existing 20-year carry forward period for NOLs (10

years for losses incurred in the tax years 2000 through 2007) would be extended for up to three years if losses are not used due to the NOL suspension.

This means the Bank cannot take California NOL deductions for 2020-2022 if its California

taxable income is more than $1 million.

The life of the 2011 NOL will be extended for up to three years.

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, the amount of taxes paid in available carry‑back years, and the forecasts of future income and tax planning strategies.

Based on this analysis, the Company determined that, as of December 31, 2021, a

valuation allowance of $ 369 thousand was required on the Company’s deferred tax assets, which totaled $ 6.1 million (net of valuation allowance).

As of December 31, 2020, no valuation allowance required on the Company’s deferred tax assets, which totaled $ 5.6

On June 29, 2020, the

Assembly Bill No.

85 (AB 85) was signed into law by California Governor Gavin Newsom to raise additional income tax revenue to assist in balancing the California budget caused by the COVID-19 pandemic.

The most significant provision of this bill

is the suspension of the net operating loss (NOL) deduction for tax years beginning on or after January 1, 2020 and before January 1, 2023.

The existing 20-year carry forward period for NOLs (10 years for losses incurred in the tax years 2000

through 2007) would be extended for up to three years if losses are not used due to the NOL suspension.

This means the Bank cannot take California NOL deductions for 2020-2022 if its California taxable income is more than $1 million.

the 2011 NOL will be extended for up to three years.

This also means the Bank could have more cash tax liability for 2020-2022.

As of December 31, 2020, the Company had federal net operating loss carryforwards of $5.4 million and California net operating loss carryforwards of $27.0 million, which begin expiring in 2032 through 2037 and 2032

through 2037, respectively.

The Company also has federal general business credits of $2.0 million, expiring beginning in 2030 through 2040.

Prior to 2018, the Company computed its bad debt deduction for income tax purposes under the reserve method.

In 2018, the Company requested, and the IRS consented to a change in accounting method used for computing

its tax bad debt deduction from the reserve method to the charge-off method as defined under Internal Revenue Code Section 166.

As a result, the Company computes its tax bad debt deduction under the new method and recaptures its excess tax bad debt

reserve of $4.3 million into taxable income evenly over a 4 year period starting in 2018.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(In thousands)

Balance at beginning of year

Additions for tax positions of current year

Additions for tax positions of prior year

Reductions for tax positions of prior years

Balance at end of year

At December 31, 2020 and 2019, the Company had zero and $475 thousand in unrecognized tax benefits, respectively.

During the second quarter of 2020, the Company recognized an income tax benefit of $273 thousand as a

result of a favorable settlement of uncertain tax positions with the California Franchise Tax Board (“FTB”).

During 2020 and 2019, zero and $8 thousand were accrued during each period for potential interest related to these unrecognized tax

benefits, respectively.

Federal tax years 2017 through 2020 remain open for the assessment of Federal income tax.

As of December 31,

2021, the Company had federal net operating loss carryforwards of $ 7.4 million.

Approximately $ 2.1 million of the federal net operating loss carryforwards can be carried forward indefinitely.

The remaining $ 5.3 million will begin to expire, if not utilized, in 2032 through 2037.

The Company also had California net operating loss carryforwards of $ 27.6 million which will begin to expire in 2032 through 2041 if not utilized, and D.C.

net operating loss carryforwards of $ 0.6 million which can be carried forward indefinitely.

The Company also had federal general business credits of $ 2.0 million, which will begin to expire in 2030 through 2041, if not utilized.

Prior to 2018, the

Company computed its bad debt deduction for income tax purposes under the reserve method.

In 2018, the Company requested, and the IRS consented to a change in accounting method used for computing its tax bad debt deduction from the reserve method

to the charge-off method as defined under Internal Revenue Code Section 166.

As a result, the Company computes its tax bad debt deduction under the new method and recaptures its excess tax bad debt reserve of $ 4.3 million into taxable income evenly over a 4

year period starting in 2018.

The Company did no t have any unrecognized tax benefits as of December 31, 2021 and 2020.

Federal tax years

2018 through 2021 remain open for the assessment of Federal income tax.

California tax years 2017 through 2021 remain open for the assessment of California franchise tax.

The Company was under

examination by California FTB for the 2009, 2010, and 2011 tax years.

On July 15, 2020, the examination closing agreement was executed by the Company and California FTB, which resulted in a favorable settlement.

The Company recognized a tax benefit

of $273 thousand in 2020.

The Company is not currently under examinations by any tax authorities.

Note 18 – Stock‑Based Compensation

Prior to July 25, 2018, the Company issued stock‑based compensation awards to its directors and employees under the 2008 Long‑Term Incentive Plan (“2008 LTIP”).

The 2008 LTIP permitted the grant of non‑qualified and

incentive stock options, stock appreciation rights, full value awards and cash incentive awards for up to 2,000,000 shares of common stock.

2008 LTIP permitted the grant of non‑qualified and incentive stock options, stock appreciation rights, full value awards and cash incentive awards for up to 2,000,000 shares of common stock.

As of July 25, 2018, the Company ceased granting awards under the 2008 LTIP.

On July 25, 2018, the stockholders approved the 2018 Long‑Term Incentive Plan (“2018 LTIP”).

As with the 2008 LTIP, the 2018 LTIP permits the grant of non‑qualified and incentive stock options, stock appreciation

rights, full value awards and cash incentive awards.

As with the 2008 LTIP, the 2018 LTIP permits the grant of non‑qualified

and incentive stock options, stock appreciation rights, full value awards and cash incentive awards.

The plan will be in effect for ten years .

The maximum number of shares that can be awarded under the plan is 1,293,109 shares of common stock.

As of December 31, 2020, 170,335 shares had been

awarded and 663,842 shares are available under the 2018 LTIP.

No stock options were granted during the years ended December 31, 2020 and December 31, 2019.

As of December 31, 2021, 481,064 shares had been awarded and 812,045

shares were available under the 2018 LTIP.

No stock options were granted during the years

ended December 31, 2021 and December 31, 2020.

The following table summarizes stock option activity during the years ended December 31, 2021 and 2020:

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Exercisable at end of year

For each year of 2020 and 2019, the Company recorded $39 thousand and $38 thousand, respectively, of stock‑based compensation expense related to stock options.

As of December 31, 2020, unrecognized compensation cost

related to non-vested stock options granted under the plan was $7 thousand.

The cost is expected to be recognized over a period of two months.

For the years ended December 31, 2021 and 2020, the Company recorded $ 7

thousand and $ 39 thousand, respectively, of stock‑based compensation expense related to stock options.

As of December 31, 2021, there

was no unrecognized compensation cost related to non-vested stock options granted under the plan.

Options outstanding and exercisable at year‑end 2021 were as follows:

February 24, 2016

In February 2020 and January 2019, the Company awarded 30,930 and 42,168 shares of common stock, respectively, to its directors under the 2018 LTIP, which are fully vested.

The Company recorded $45 thousand and $52

thousand of compensation expense for the years ended December 31, 2020 and December 31, 2019, respectively, based on the fair value of the stock, which was determined using the average of the high and the low price of the stock on the date of the

In February 2020 and 2019, the Company awarded 140,218 shares and 428,797 shares, of which $12,846 shares were forfeited, respectively, of restricted stock to its officers and employees under the 2018 LTIP.

restricted stock award is valued based on the fair value of the stock, which was determined using the average of the high and the low price of the stock on the date of the award.

These awarded shares of restricted stock are fully vested over a

two-year period from their respective dates of grants.

Stock based compensation expense is recognized on a straight-line basis over the vesting period.

During 2020 and 2019, the Company recorded $340 thousand and $216 thousand of stock based

compensation expense related to these awards, respectively.

As of December 31, 2020, unrecognized compensation costs related to non-vested restricted stock awarded in February 2020 and 2019 were $110 thousand and $43 thousand, respectively.

unrecognized compensation costs related to non-vested restricted stock awarded in February 2020 and 2019 are expected to be recognized over a period of 14 months and 2 months, respectively.

However, 140,218 shares scheduled to vest in February

2022 will become fully vested upon the closing of the City First Merger, which is expected to occur on April 1, 2021.

In February 2021 and 2020, the Company awarded 20,736

and 30,930 shares of common stock, respectively, to its directors under the 2018 LTIP, which are fully vested.

The Company recorded $ 45 thousand of compensation expense in each of the years ended December 31, 2021 and December 31, 2020, based on the fair value of the stock,

which was determined using the average of the high and the low price of the stock on the date of the award.

In July of 2021, the Company awarded 64,516

shares of common stock to its Chief Executive Officer, which are fully vested.

The company recorded $ 200 thousand of compensation

expense for the year ended December 31, 2021 based on the fair value of the stock, which was determined using the average of the high and the low price of the stock on the date of the award.

In February 2020, the Company awarded 140,218

shares of restricted stock to its officers and employees under the 2018 LTIP.

Each restricted stock award was valued based on the fair value of the stock, which was determined using the average of the high and the low price of the stock on the

date of the award.

These awarded shares of restricted stock became fully vested on April 1, 2021, the date of the Merger, and all unrecognized compensation expense was recognized at that time.

During 2021, and 2020, the Company recorded $ 153 thousand and $ 340 thousand of stock

based compensation expense related to shares awarded to employees.

As all restricted stock awarded to employees were fully vested as of December 31, 2021, there was no remaining unrecognized compensation cost related to non-vested restricted stock awards as of December 31, 2021.

Note 19 – Capital and 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.

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.

amounts and classifications are also subject to qualitative judgments by the OCC.

Failure to meet capital requirements can result in regulatory action.

The federal banking regulators approved final capital rules (“Basel III Capital Rules”) in July 2013 implementing the Basel III framework as well as certain provisions of the Dodd‑Frank Act.

The Basel III Capital

Rules prescribe a standardized approach for calculating risk‑weighted assets and revised the definition and calculation of Tier 1 capital and Total Capital, and include a new Common Equity Tier 1 capital (“CET1”) measure.

Under the Basel III

Capital Rules, the currently effective minimum capital ratios are:

4.5% CET1 to risk‑weighted assets;

6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk‑weighted assets;

8.0% Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk‑weighted assets;

4.0% Tier 1 capital to average consolidated assets (known as the “leverage ratio”).

A capital conservation buffer was also established above the regulatory minimum capital requirements.

This capital conservation buffer was phased in beginning January 1, 2016 at 0.625% of risk‑weighted assets and

increased each subsequent year by an additional 0.625% until it reached its final level of 2.5% on January 1, 2019.

The Basel III Capital rules also contained revisions to the prompt corrective action framework, which are designed to place restrictions on insured depository institutions if their capital levels begin to show signs

Under the prompt corrective action requirements, which are designed to complement the capital conservation buffer, insured depository institutions are now required to meet the following increased capital level requirements in order to

qualify as “well capitalized”:

(i) a CET1 capital ratio of 6.5%;

(ii) a Tier 1 capital ratio of 8% (increased from 6%);

(iii) a total capital ratio of 10% (unchanged from previous rules);

and (iv) a Tier 1 leverage ratio of 5% (unchanged from

previous rules).

The Basel III Capital Rules became effective for the Bank on January 1, 2015.

At December 31, 2020 and 2019, the Bank’s level of capital exceeded all regulatory capital requirements and its regulatory capital ratios

were above the minimum levels required to be considered well capitalized for regulatory purposes.

Actual and required capital amounts and ratios as of the periods indicated are presented below.

As a result of the

Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies have developed a “Community Bank Leverage Ratio” (“CBLR”) (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%.

The CARES Act temporarily lowered this ratio to 8% beginning in the three months ended September 30,

The ratio then rose to 8.5 % for 2021 and reestablished at 9% on January 1, 2022.

City First Bank,

elected to adopt the CBLR option on April 1, 2020 as reflected in its June 30, 2020 Call Report.

Its CBLR as of December 31, 2021 is shown in the table below.

The Company’s former subsidiary, Broadway Federal Bank, f.s.b., did not elect

to adopt the CBLR and reported the December 31, 2020 capital ratios as shown in the table below.

Minimum Capital

Minimum Required

Capitalized Under

Prompt Corrective

Action Provisions

Minimum Required to

Be Well Capitalized

Corrective Action

(Dollars in thousands)

December 31, 2021 :

Tier 1 (Leverage)

Common Equity Tier 1

Total Capital

Community Bank Leverage Ratio (1)

December 31, 2020 :

2 unchanged sentences

Total Capital

At the Merger on April 1, 2021, the Company’s former subsidiary, Broadway Federal

Bank, f.s.b., was merged into City First Bank of D.C, N.

A., with City First Bank of D.C, N.A.

as the surviving entity and the resultant bank being named City First Bank, National Association, which had elected to adopt Community Bank

Leverage Ratio option on April 1, 2020 as reflected in its june 30, 2020 Call Report.

At December 31, 2021, the Company and the Bank met all the capital adequacy requirements to which they were subject.

the Bank was “well capitalized” under the regulatory framework for prompt corrective action.

Management believes that no conditions or events have occurred that would materially adversely change the Bank’s capital classifications.

time, we may need to raise additional capital to support the Bank’s further growth and to maintain the “well capitalized” status.

The Bank’s capital requirements are administered by the 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.

Note 20 – Loan Commitments and Other Related Activities

Some financial instruments, such as loan commitments, credit lines, letters of credit, and overdraft protection, are issued to meet customer financing needs.

These are agreements to provide credit or to support the

credit of others, as long as conditions established in the contract are met, and usually have expiration dates.

are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates.

Commitments may expire without being used.

Off‑balance‑sheet risk for credit loss exists up to the face amount of these instruments,

although material losses are not anticipated.

Off‑balance‑sheet risk for credit loss

exists up to the face amount of these instruments, although material losses are not anticipated.

The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.

2 unchanged sentences

Commitments to make loans

Unfunded construction loans

Unused lines of credit – variable rates

Commitments to make loans are generally made for periods of 60 days or less.

At December 31, 2020, the Bank did not have any commitment outstanding to originate multi-family residential loans.

At December 31, 2019,

loan commitments consisted of two multi‑family residential loans with initial five-year interest rates ranging from 3.50% to 3.75%.

Commitments to make

loans are generally made for periods of 60 days or less.

At December 31, 2021, loan commitments consisted of five ( 5 ) multi‑family residential loans with initial five-year

interest rates ranging from 3.125 % to 3.50 %,

three (3) commercial real estate loans and with interest rates ranging from 3.25 % to 4.05 %, and two commercial loans with interest rates ranging from 4.25 %

Unfunded construction loans and line of credit loans have variable interest rates based on prime.

At December 31, 2020, the Bank did no t have any commitments to

originate loans.

Note 21 – Parent Company Only Condensed Financial Information

17 unchanged sentences

Income tax benefits

Equity in undistributed subsidiary income

Equity in undistributed subsidiary (loss) income

Condensed Statements of Cash Flows

3 unchanged sentences

Adjustments to reconcile net loss to net cash used in operating activities:

Equity in undistributed subsidiary income

Equity in undistributed subsidiary loss (income)

Change in other assets

2 unchanged sentences

Cash flows from investing activities

Capital distribution to bank subsidiary

Dividends from bank subsidiary

Net cash provided by investing activities

Net cash (used in) provided by investing activities

Cash flows from financing activities

Common stock repurchased for tax withholdings

Proceeds from sale of stock

Repayments of borrowings

15 unchanged sentences

Loss per common share – diluted

Stock options for 360,000 shares and 275,000 shares of common stock for the years ended December 31, 2020 and 2019, respectively, were not considered in computing diluted earnings per common share because they were

anti‑dilutive.

Basic loss per share of common stock is computed pursuant to the two-class method by dividing net loss available to common stockholders less dividends paid on participating securities (unvested shares of restricted

common stock) and any undistributed loss 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.

Stock options for 450,000 shares of common stock

for the years ended December 31, 2021 and 2020, respectively, were not considered in computing diluted earnings per common share because they were anti‑dilutive.

Basic loss per share of common stock is computed pursuant to the two-class method by dividing net loss available to common stockholders less dividends paid on

participating securities (unvested shares of restricted common stock) and any undistributed loss 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 net loss per share of common stock includes the dilutive

effect of unvested stock awards and additional potential common shares issuable under stock options.

Note 23 – Subsequent Events

On March 17, 2021, the Company’s stockholders approved the proposed sale of 18,474,000 shares of Broadway common stock in private placements to institutional and accredited investors at a purchase price of $1.78 per

share for an aggregate purchase price of $32.9 million.

The Company currently has subscription agreements for all of these shares.

The private placements of common stock are expected to close a few days after the merger.

Section 382 of the Internal Revenue Code limits the utilization of U.S.

net operating loss (“NOL”) carryforwards following an ownership change, which occurs when one or more 5% shareholders increase their ownership,

in aggregate, by more than 50% over the lowest percentage of stock owned by such shareholders at any time during the testing period, which is generally three years.

Upon the completion of the private placements, there could be a triggering event

which may result in a change of control.

Based on management’s preliminary estimates, there could be limitations on our deferred tax assets that may require an impairment allowance of approximately $2.4 million.

Subsequent events have been evaluated through March 31, 2021, which is the date these financial statements were issued.

Subsequent events have been evaluated through April 14, 2022, which is the date these financial statements were issued.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures