What changed in this filing

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Item 9A. Controls and Procedures

2025-03-31 compared with 2024-05-20 · 519 added, 1270 removed, 1134 unchanged (61% of the section changed)

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Evaluation of Disclosure Controls and Procedures

As of December 31, 2023, an evaluation was performed under the supervision of the Company’s Principal Executive Officer (“PEO”) and Principal Financial Officer (“PFO”) of the effectiveness of

the design and operation of the Company’s disclosure controls and procedures.

Based on that evaluation, the Company’s PEO and PFO concluded that the Company’s disclosure controls and procedures were not effective as of December 31, 2023 due to a

material weakness in the Company’s internal control over financial reporting, as further described below.

As of December 31, 2023, an evaluation was performed under the supervision of the Company’s Principal Executive Officer (“PEO”) and Principal

Financial Officer (“PFO”) of the effectiveness of the design and operation of the Company’s disclosure controls and procedures.

Based on that evaluation, the Company’s PEO and PFO concluded that the Company’s disclosure controls and

procedures were effective as of December 31, 2024.

Management’s Annual Report on Internal Control Over Financial Reporting

The management of Broadway Financial Corporation is responsible for establishing and maintaining adequate internal control over financial reporting

for the Company as defined in Rule 13a 15(f) under the Exchange Act.

This system, which management has chosen to base on the criteria for effective internal control over financial reporting established in “Internal Control — Integrated

Framework (2013),” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and which is effected by the Company’s Board of Directors, management and other personnel, is designed to provide reasonable assurance

regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

The Company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that,

in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in

accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and the Directors of the Company;

and (3) provide reasonable

assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

The management of Broadway Financial Corporation is responsible for establishing

and maintaining adequate internal control over financial reporting for the Company as defined in Rule 13a 15(f) under the Exchange Act.

This system, which management has chosen to base on the criteria for effective internal control over

financial reporting established in “Internal Control — Integrated Framework (2013),” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and which is effected by the Company’s Board of Directors,

management and other personnel, is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

The Company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records

that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial

statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and the Directors of the Company;

and (3) provide

reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not

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internal control over financial reporting.

Based on this evaluation, management determined that the Company’s system of internal control over financial reporting was not effective as of December 31, 2023.

A material weakness is a control deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a

reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The Company did not maintain a sufficient complement of personnel with appropriate levels of knowledge, experience, and training in internal

control matters to perform assigned responsibilities and have appropriate accountability for the design and operation of internal control over financial reporting.

The lack of sufficient appropriately skilled and trained personnel contributed

to the Company’s failure to:

(i) design and implement certain internal controls;

and (ii) consistently operate its internal controls.

This matter was considered to be a material weakness in the Company’s control environment.

The control environment material weaknesses contributed to other material weaknesses within the Company’s system of internal control over financial

reporting in the following COSO Framework components such that the Company did not design and implement effective controls, including the following:

Risk assessment – The Company did not appropriately identify and analyze risks to achieve its control objectives.

This ineffective risk

assessment process limited the Company’s ability to identify and remediate the weaknesses in the control activities, as described below.

Control activities – The Company did not design and implement effective controls over the consolidation, financial statement reporting,

and the monthly close processes, including the lack of effectively designed and implemented controls related to the preparation and review of account reconciliations with appropriate supporting documentation.

Specifically, several

general ledger account reconciliations were discovered to have unidentified or stale reconciling items.

The investigation and resolution of this matter caused the Company to delay its filing of the required Form 10-K for the fiscal

year ended December 31, 2023, past its due date.

Monitoring activities – The Company’s ongoing evaluation of internal controls failed to detect the issues described above, and as a

result limited management’s ability to correct and remediate the internal control issues in a timely manner.

Based on this evaluation, management determined that the Company’s system of internal control over financial reporting was effective as of December 31, 2024.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over

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Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this annual report.

Remediation Plan

In response to the material weakness that was identified, the Company has hired additional senior personnel with relevant experience and training in finance and accounting that will be able to

assist the Company with appropriately assessing the risks of the Company and designing, implementing, and monitoring a system of internal control over financial reporting to address those risks.

Related to the control over account

reconciliations, the Company engaged a third-party firm to assist with reviewing general ledger account reconciliations to identify the population of account balance differences that were in need of correction.

Such corrections have been made

to the consolidated financial statements.

Going forward, the Company’s controls over general ledger account reconciliations will be strengthened to require the use of a reconciliation checklist, with a formal signoff by the preparer and

reviewer on each reconciliation, as well as by a separate member of management as evidence that every account reconciliation was reviewed each month.

In addition, the Company will also request that its internal audit firm perform additional

testing on the enhanced controls over general ledger account reconciliation during its audits.

Management is actively engaged in the planning for, and implementation of, remediation efforts to address the material weakness.

Additional time

is required to complete the design and test the operating effectiveness of the applicable controls to demonstrate the effectiveness of the remediation efforts.

The material weakness cannot be considered remediated until the applicable

remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Remediation of Previously Identified Material Weakness

Management has concluded that the material weakness in internal control over financial reporting initially described in Part I, Item 4 “Controls

and Procedures,” of our Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2023 (the “Q3 2023 Form 10-Q”) has been remediated as of December 31, 2024.

As described the Q3 2023 Form 10-Q, the Company has hired additional senior

personnel with relevant finance and accounting experience and implemented its strengthened processes relating to (including additional testing by the Company’s internal audit firm of) general ledger account reconciliations.

Management has

evaluated these enhanced controls and has concluded they were designed and implemented and are operating effectively.

Changes in Internal Control Over Financial Reporting

There were no other changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the year ended December 31, 2023, that have materially affected,

or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

However, management did implement changes in internal controls over financial reporting during the fourth quarter of 2023 while preparing

the interim financial information for the third quarter of 2023, designed to remediate the material weakness that was identified.

There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange

Act) that occurred during the fourth quarter of 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The Company’s certificate of incorporation provides that the board of directors of the Company (the “Board”) shall be divided into three classes of directors, with the term of one class of directors to expire

The class whose terms expire in 2024, currently consisting of Mr.

Wayne-Kent A.

Bradshaw, Ms.

Johns and Mr.

McGrady, is to be elected at the Company’s 2024 Annual Meeting of Shareholders.

The membership

of the Board and the membership of the board of directors of the Company’s wholly-owned banking subsidiary, City First Bank, National Association (the “Bank”) are identical.

Information Concerning Directors

The following table sets forth the names and information regarding the persons who are currently members of the

Positions Currently Held with the

Company and the Bank

Wayne-Kent A.

Director, Vice Chair

Lead Independent Director

Chair of the Board, President and Chief

Executive Officer

Mary Ann Donovan

Davidson, Jr.

Including service as a director of CFBanc Corporation prior to the Merger.

Argrett was elected as Chair of the Board, effective April 1, 2023.

Wayne-Kent A.

Bradshaw was President and Chief Executive Officer of the Company and Broadway Federal Bank until the Merger of the Company with CFBanc, whereupon he became Chair of the Board of the Company and City First Bank, National

He relinquished his position as Chair of the Company in March 2023 and became Vice Chair effective April 1, 2023.

Bradshaw joined the Company in February of 2009 as President and Chief Operating Officer and was

appointed Chief Executive Officer in January 2012.

He was elected to serve as a director of both the Company and Broadway Federal Bank in September 2012.

Prior to joining the Company, Mr.

Bradshaw was the Regional President for

Community and External Affairs of Washington Mutual Bank from 2003 to 2009.

He was President and Chief Executive Officer of Los Angeles-based Family Savings Bank from 1989 until 2002 and Chief Deputy Superintendent for the California

State Banking Department from 1981 to 1983.

Bradshaw has served on many community and educational boards.

He most recently served on the boards of directors of California State University Northridge, Northridge Hospital Medical

Center, California Community Reinvestment Corporation, and the Western Bankers Association.

He currently serves on the boards of the Federal Reserve Bank of San Francisco - Los Angeles Branch and Louisville High School.

Bradshaw has over 52 years of experience in financial management and banking.

He has the proven ability to plan and

implement programs that optimize opportunities to accelerate profitable growth in highly competitive environments.

Bradshaw has extensive experience in community banking, commercial banking, and as a bank regulator, and his

knowledge and experience qualify him to serve on the Board and as its Vice Chair.

over 30 years’ experience as a leader in business, civic, and government service.

Johns focuses on community service in the areas of education and economic development.

She served as President of Verizon Washington and was

nominated by President Barack Obama to serve as Deputy Administrator of the U.S.

Small Business Administration, (“SBA”).

In 2011, under Ms.

Johns’ leadership and initiatives, the SBA lent more than $30 billion to more than 60,000

small businesses, a record in the history of the SBA.

Over 10 years ago, Ms.

Johns founded L&L Consulting, LLC (now PPC-Leftwich LLC), a business development, organizational effectiveness and public policy consulting practice,

which is based in Washington, D.C.

and where she continues to serve as CEO.

Johns has served on several boards of directors, including the Federal City Council, the Economic Club of Washington, D.C., the Washington, D.C.

of Commerce, WLR Foods (a poultry producer), Kaiser Permanente of the Mid-Atlantic Region, Hager Sharp (a communications and marketing firm), Document Systems Inc.

(a document imaging and storage firm) and Harvest Bank of Maryland.

Johns is a Trustee of Howard University where she chairs the Student Life Committee and serves as vice chair of the Governance Committee.

Johns is a member of the Greater Washington, D.C.

Business Hall of Fame, one of the

Greater Washington Board of Trade’s “Leaders of the Year” and the recipient of over 100 awards from different organizations for her community service.

Johns received her B.S.

degrees from the O’Neill School of Public

and Environmental Affairs at Indiana University where she currently serves as a member of the Dean’s Council and she formerly served as a Board member for the Tobias Center for Leadership Excellence.

Prior to the Merger, Ms.

served as a Director of CFBanc since 2014 and as Chair of the Board of CFBanc since 2018.

She was appointed to be the Lead Independent Director of the Company in 2021.

Johns has over 30 years executive management experience in the public and corporate sectors.

She has served on a variety of

private company and not-for-profit boards and her expertise in governance, regulatory issues, business development, and the Washington D.C.

market qualify her to serve on the Board as our Lead Independent Director.

is a consultant specializing in community development issues and is a nationally recognized expert on the New Markets Tax Credit program.

He has been a key advisor on more than 30 successful New Markets Tax Credit applications, with

allocations totaling more than $1.7 billion, and has assisted those recipients in developing and implementing capitalization and deployment plans in their respective markets.

He also advises banks, investors, foundations,

municipalities and CDFIs, on a range of issues, including corporate structure and governance, capitalization, market and risk assessment, product development, underwriting loans and investments, portfolio management, and tax credit

McGrady was Director of Commercial Programs for the Center for Community Self-Help in Durham, North Carolina.

Under his leadership, the Center for Community Self-Help originated over 1,300 higher risk business loans

totaling more than $80 million.

He is also a director of City First Enterprises, which is the bank holding company of the Company, chair of City First Enterprises’ Directors Loan Committee and a member of Calvert Impact Capital’s

Investment Committee.

McGrady received his bachelor’s degree from King University and law degree from Harvard University.

Prior to the completion of the Merger, Mr.

McGrady, served as a Director on the Board of CFBanc since 1998,

and was appointed to be a director of the Company upon completion of the Merger.

McGrady’s experience in corporate governance and community development matters and legal expertise, as well as his

background in finance and the real estate, mortgage, and tax credit industries, qualify him to serve as a member of the Board.

was Director, President and Chief Executive Officer of CFBanc and its wholly owned banking subsidiary from 2011 until the completion of the Merger, at which time he became Vice Chair, President and Chief Executive Officer of both the

Company and the Bank.

Effective April 1, 2023, he became Chair of the Company and the Bank.

Formerly, Mr.

Argrett was founder and managing partner of both Fulcrum Capital Group, an investment manager, and Fulcrum

Capital Partners, L.P., an institutionally-backed private equity limited partnership.

He also served as President, Chief Executive Officer, and director of Fulcrum Venture Capital Corporation, a federally licensed and regulated Small

Business Investment Company.

Prior to joining the Fulcrum entities, Mr.

Argrett was an attorney with the real estate law firm of Pircher, Nichols & Meeks in Los Angeles, California.

Argrett has served as chair, been a member,

or held observer rights on numerous Fulcrum portfolio company boards, as well as having served on the boards of directors of other financial industry companies.

Argrett was a presidential appointee to the Community Development

Advisory Board of the U.S.

Treasury Department under the Obama administration.

Argrett has held leadership positions at the National Association of Investment Companies and the National Conference for Community and Justice and has

been an elder at the Knox Presbyterian Church.

Currently, Mr.

Argrett serves as Chairman of the Board of Directors of City First Enterprises, which is a bank holding company

that holds equity in the Company.

Argrett is a recent appointee to the Board of IntraFi Network, and he also serves on the Board of the California Bankers Association.

Argrett is a past Chairman and continues to serve on the

Board of Directors of the Community Development Bankers Association.

He also serves as a member of the Global Alliance on Banking on Values, and is a member of the Board of the Expanding Black Business Credit Initiative.

Argrett served as a director of the Board of Directors of the Federal Home Loan Bank of Atlanta from 2016 through December

of 2021, during which time he served as the Vice Chair of the Board, Chair of its Enterprise Risk and Operations Committee, as well as a member of its Finance Committee and its Audit and Compliance Committee.

Argrett is a member of The Economic Club of Washington, D.C., the Federal City Council, and the Leadership Greater

Washington Class of 2014.

In addition, Mr.

Argrett is a 2014 recipient of the Washington Business Journal Minority Business Leader Award.

Argrett holds J.D.

degrees from the University of California, Berkeley, and a

bachelor’s degree from the McIntire School of Commerce at the University of Virginia.

Argrett’s extensive experience in the financial services and banking industries, public and private company board

experience, knowledge and experience in the Washington D.C.

and Southern California markets, and knowledge of the Bank’s business, history, organization, and mission, and executive management experience qualify him to serve as a

member of the Board.

Mary Ann Donovan

has served as President and Chief Executive Officer of Raza Development Fund, a Latino-led and focused Community Development Financial Institution, since August 1, 2022.

Prior positions held by Ms.

Donovan include Chief Operating

Officer of Local Initiatives Support Corporation, Director of the United States Department of the Treasury’s Community Development Financial Institutions (“CDFI”) Fund, CEO of CoMetrics, Inc.

(a social enterprise that provides

affordable business intelligence tools to small businesses and nonprofit entities), Senior Policy Advisor to the White House from 2012-2013, working collaboratively with the Office of Social Innovation and the Council on Environmental

Quality, and Chief Operating Officer of Capital Impact Partners, a certified CDFI.

Donovan has been a thought leader and a board member of many of the highest performing organizations in the community development sector.

Donovan has been a Senior Fellow at the Center for Community Investment.

She has published papers and articles for the National Academy for Public Administration, the Federal Reserve Bank of San Francisco, the Federal Reserve Bank of

Boston, Forbes, the Skoll World Forum on Social Entrepreneurship, and the Milken Review.

Donovan has a B.A.

degree in Economics from Allegheny College and an M.B.A.

degree from the University of Maryland.

Prior to the completion

of the Merger, Ms.

Donovan was a director of CFBanc, and was appointed to be a director of the Company upon completion of the Merger.

Donovan’s operational experience, federal government public service, and community development knowledge and expertise, as

well has her experience with corporate governance, marketing, and business development matters, all qualify her to serve on the Board.

Longbrake has served as an Executive in Residence at the Robert H.

Smith School of Business at the University of Maryland since June 2009 where he participates in the Center for Financial Policy, the Ed Snider Center and the

Smith Enterprise Risk Consortium and writes a monthly economic newsletter for “Brain Trust.” Dr.

Longbrake is active in numerous academic, business, and community service organizations, particularly those involving issues surrounding

affordable housing and education.

He is a current director of City First Enterprises.

Longbrake is a former Chairman of the Board of Trustees of the College of Wooster, a residential four-year liberal arts college, and a former

Chairman of the Board of HOPE LoanPort, a not-for-profit organization that provided a data management and communications web portal to housing counselors and home mortgage servicers.

Longbrake is a director of the Boeing Employees

Credit Union, President of the Seattle First Foundation, and a member of the Mortgage Markets Committee of the American Bankers Association.

Longbrake was a Director of First Financial Northwest, a community bank located in

Renton, Washington, from 2008-2010; a Director of the Federal Home Loan Bank of Seattle from 2002-2010; a Director of the Washington Financial League from 2002-2010 and a Director of the Washington State Investment Board from

He taught courses in business administration and finance at the University of Maryland and Seattle University.

Longbrake received the Distinguished Alumnus of the Year award from the Robert H.

Smith School of

Business of the University of Maryland.

Longbrake began his career in Washington, D.C.

where he served in various government positions, including Acting Senior Deputy Comptroller for Policy and Senior Deputy Comptroller for

Resource Management for the Office of the Comptroller of the Currency and financial economist, chief financial officer, and deputy to the Chairman of the FDIC.

He earned his B.A.

degree in Economics from the College of Wooster and

earned his master’s degree in Monetary Economics and his M.B.A.

degree from the University of Wisconsin.

He received his Ph.D.

degree in finance from the University of Maryland.

Prior to the completion of the Merger, Dr.

Longbrake was

a director of CFBanc, and was appointed to be a director of the Company upon completion of the Merger.

Longbrake has extensive experience in finance and investments, macroeconomics and monetary policy, risk management,

housing, and public policy.

His extensive experience in accounting, banking, community development, and corporate governance experience, along with his regulatory, finance, and capital markets experience with both public and private

companies qualify him to serve as a member of the Board.

Davidson, Jr.

served, until his retirement in 2007, in the position of Chairman and Chief Executive Officer of Surface Protection Industries, a paint and specialty coatings manufacturing company he founded in 1978, that

became one of the leading African American-owned manufacturing companies in the United States and the largest in California.

Previously, from 1972 to 1974, he co-founded and served as Vice President of Urban National Corporation, a

private venture capital corporation that was focused specifically on investing in minority-controlled businesses.

Davidson currently also serves on the boards of directors of Smithsonian American Art Museum (Chairman-Elect),

Diversity Advisory Board at Toyota Motor North America, Morehouse College (Chairman Emeritus), Art Center College of Design (Chairman Emeritus), Cedars-Sinai Medical Center (Lifetime Member), and the University of Chicago Graduate

School of Business Advisory Council.

Davidson has extensive entrepreneurial experience in developing and managing small and medium-sized businesses.

hands-on experience in marketing and sales, human resources and strategic planning and implementation.

He has a long history with, and extensive knowledge of the Company and of the markets and communities in which the Company

We believe that this history, knowledge, and overall experience qualify him to serve on the Board.

is the former President and Chief Executive Officer of Economic Resources Corporation (“ERC”), a non-profit corporation with a mission of promoting economic development and job creation in underserved communities.

Ross served in

that capacity from 1996 until his retirement in August 2020.

Prior to joining ERC, Mr.

Ross held a variety of managerial, financial, and planning positions in the corporate headquarters, divisional, and subsidiary operations of

Atlantic Richfield Company (“ARCO”) from January 1975 to December 1995.

From 1971 to 1975, Mr.

Ross was employed in financial analysis positions with The Wickes Corporation.

Ross has been active in a number of community

organizations in the Los Angeles area that are devoted to building stronger communities and has served on the board of directors of several such organizations, including Genesis L.A.

Economic Growth Corporation, where he currently

serves on the Audit and Finance Committees.

He has served on the Board since 2016.

Ross received his B.S.

degree in Industrial Economics and a Masters in Industrial Management from Purdue University.

Ross is a financial executive with over 45 years of managerial experience with Fortune 500 companies and non-profit

economic development organizations and has extensive knowledge of the Company.

Ross’ knowledge and experience qualifies him to serve on the Board.

is a technology entrepreneur and innovator with leadership experience in large, public and privately-held multinational companies and early-stage startups.

He has a foundation in software marketing & sales and direct experience in

new product launches for first-to-market categories.

Navigating complexity, delivering innovation, and creating new opportunities within the IoT (Internet-of-Things) market are hallmarks of his career.

As CEO, he currently leads Lynx

Technology, a digital media technology company he founded through a management buyout of the multinational Connected

Home operations of PacketVideo, a subsidiary of NTT DoCoMo.

Previously, Mr.

Driver served as Chief Operating Officer and Chief Marketing Officer of PacketVideo, co-founder and Chief Executive Officer of JoynIn and in senior marketing

leadership roles for Serena Software and Sun Microsystems.

Driver is currently an Independent Director at Vital Energy, Inc.

Additionally, he serves as Chair of the

Board of Trustees of the Fleet Science Center in San Diego and is a former Board Member of the San Diego YMCA Overnight Camps.

He is actively involved with Stanford University, serving as former Chair of the Stanford Associates Board

of Governors, a guest lecturer for Stanford’s Department of Management Science and Engineering, is the former President of the Stanford Multicultural Alumni Club of San Diego and a recipient of the Stanford Governor’s Award in

recognition of exemplary and long-standing volunteer service.

He is NACD Directorship Certified TM and earned the NACD Certificate in Cybersecurity Oversight.

Driver earned a Bachelor of Science in Industrial Engineering

from Stanford University and a Master of Business Administration from The Tuck School of Business at Dartmouth College.

Driver has expertise in corporate governance, strategy, finance, acquisitions, international operations;

consumer, and mobile application software;

enterprise computer systems & services, Internet-of-Things, global sales & marketing strategy, developing and patenting award-winning technologies, and corporate governance.

Driver’s knowledge and experience qualifies him to serve on the Board.

EXECUTIVE OFFICERS

The following table sets forth information with respect to current executive officers of the Company and the Bank who are not

Except as noted, all references to the Bank refer to City First Bank, National Association.

Officers of the Company and the Bank serve at the discretion of, and are elected annually by, the respective Boards of Directors.

Principal Occupation during the Past Five Years

Executive Vice President and Chief Financial Officer of the Company since June 2013 and the Bank (2) since April 2013.

Vice President and Senior Controller of the Bank of Manhattan from September 2011 to June 2012.

Executive Vice President and Chief Operating Officer of the Company and Bank since April 2021.

Previously Executive Vice President of

the Company, and Executive Vice President and Chief Retail Banking Officer of the Bank (2) since July 2014.

John Tellenbach

Executive Vice President, West Commercial Regional Executive of the Company since February of 2023.

Senior Vice President and Chief

Credit Officer of Malaga Bank beginning in 2015.

LaShanya Washington

Executive Vice President, Chief Credit Officer of the Company since April 2023 and Senior Vice President, Deputy Chief Credit Officer

since August 2022.

Senior Vice President and Senior Credit Officer of the Bank since April 2022 and Credit Risk Officer since February 2019.

Senior Credit Analyst at United Bank from November 2018 to February 2019, and

Manager for Loan Servicing and Accounting for Capital Impact Partners from November 2015 until August 2018.

Executive Vice President, East Commercial Regional Executive of the Company, and of the Bank since April 2023.

Previously Executive Vice

President and Chief Lending Officer of the Bank since January of 2021.

Senior Vice President and Interim Chief Lending Officer of the Bank from May 2020 to January 2021 and prior to that Senior Vice President and

Relationship Manager of the Bank from July 2015.

As of March 31, 2024.

Refers to Broadway Federal until April 1, 2021, the date on which Broadway Federal merged with and into City First, and to City First from and after that

Code of Ethics

We have adopted a Code of Ethics that applies to all of our directors, officers and employees, including our

principal executive, principal financial and principal accounting officers, or persons performing similar functions.

Our Code of Ethics is posted on our website at www.cityfirstbank.com .

We intend to disclose future amendments to certain provisions of the Code of Ethics, and waivers of the Code of Ethics granted to executive officers and directors, on the website within four business days following the date of the

amendment or waiver.

Audit Committee

The Audit Committee consists of Dr.

Longbrake (Chair), Ms.

Driver, and Ms.

This committee is responsible for the engagement and oversight of the Company’s independent

registered public accounting firm.

The Audit Committee, together with the corresponding committee of the Bank’s Board of Directors, is also responsible for oversight of the internal audit function of the Company, and assessment of

accounting and internal control policies.

All the members of the Audit Committee are independent directors as defined under the Nasdaq listing standards.

In addition, the Board has determined that Dr.

Longbrake’s experience with

accounting principles, financial reporting and evaluation of financial results qualifies him as an “audit committee financial expert,” as defined by the SEC.

The information required by this Item is incorporated herein by reference to the definitive Proxy Statement, under the captions “Election of Directors,” “Executive Officers,” “Code of Ethics,”

and, if applicable, “Security Ownership of Certain Beneficial Owners and Management,” that will be filed with the SEC in connection with the Company’s 2025 Annual Meeting of Stockholders (the “Company’s Proxy Statement”).

EXECUTIVE COMPENSATION

The Summary Compensation Table includes information concerning the compensation paid to or earned by our Chief Executive

Officer (“CEO”) and our two other most highly compensated executive officers.

Each executive is referred to herein as a named executive officer (“NEO”).

Name and Principal Position

Incentive Plan

Compensation (2)

Compensation (3)

Chief Executive Officer

Chief Financial Officer

Chief Operating Officer

This column reports the grant date fair value of restricted stock granted during each year reported.

The amounts reported in this column have been calculated

in accordance with FASB ASC Topic 718.

A description of the methodologies and assumptions we use to value equity awards and the manner in which we recognize the related expense are described in Note 17 to our consolidated

financial statements, Stock-Based Compensation.

The amounts shown represent the cash incentive compensation awards earned by each NEO under the Bank’s Incentive Plan for Management (“Incentive Plan”), based

on the objective criteria established by the Board at the beginning of each year.

The Company’s achievement of such objective criteria is determined by the Board’s compensation and benefits committee (“Compensation

The Compensation Committee evaluates the performance results at the beginning of the following year and approves the amounts of bonuses to be paid.

Includes amounts paid by the Company to the 401(k) account of the NEO and allocations under the City First Bank, National Association Employee Stock Ownership

Also includes perquisites and other benefits consisting of automobile and telephone allowances, health benefits and life insurance premiums.

Employment Agreements

Brian Argrett

The Company and Mr.

Argrett are parties to an employment agreement effective November 17, 2021 (the “Employment Agreement”),

providing for Mr.

Argrett’s continued service as the Company’s President and Chief Executive Officer and a member of the Board and the board of directors of the Bank.

The Employment Agreement has a five-year term beginning on April 1,

2021, subject to annual one-year automatic extensions thereafter unless the Company or Mr.

Argrett provides at least 90-days’ prior written notice.

Under the agreement, Mr.

Argrett was entitled to a base salary of $520,000 per year

for the 2021 calendar year, which increased to $550,000 effective January 1, 2022, and $577,500 effective January 1, 2023, which may be further increased but not decreased (other than in connection with an across-the-board reduction

in salary applicable to other executive officers) in the Board’s discretion.

Argrett’s target bonus is equal to 30% of his base salary based on the degree of achievement of specified business plan objectives as evaluated annually

by the Compensation Committee.

No bonus will be paid if the degree of achievement of the business plan objectives is less than 80%.

The cash bonus will range from 24% of base salary if the degree of achievement of the business plan

objectives is 80% up to a maximum of 37.5% of base salary if the degree of achievement of the business plan objectives is 125% or more.

Argrett is eligible for annual opportunities to receive grants of restricted stock, with the grant date value determined by

the Compensation Committee based on the degree of achievement of specified performance metrics determined by the Company.

The target grant date value of such grants for each year is 40% of base salary.

No equity grants will be made if

the degree of achievement of specified business plan objectives is less than 80%, and the grants will range in grant date value from 32% of base salary if the degree of achievement of the business plan objectives is 80% up to a

maximum of 50% of base salary if the degree of achievement of the business plan objectives is 125% or more.

All such awards will vest as to 33% on the first anniversary of grant, with the remainder vesting in equal monthly

installments over the following 24 months, or in full in the event of Mr.

Argrett’s death, disability, termination for Good Reason, or termination by the Company without Cause.

“Cause” includes Mr.

Argrett’s failure to substantially

perform duties or material breach of the Employment Agreement or Company policy by Mr.

Argrett (each after a permitted cure period);

willful violation of law or regulation;

conviction of a felony and certain other events of a

comparable nature.

“Good Reason” includes the demotion of Mr.

Argrett or reduction of his authority or responsibilities;

reduction of his salary (other than a reduction described above);

failure to reelect him to the Board or the

board of directors of the Bank;

relocation of his current primary work location by more than 20 miles;

or the Company’s material breach of the Employment Agreement (after a permitted cure period).

Under the Employment Agreement, Mr.

Argrett is entitled to:

(i) vacation of 30 days annually, with right to carry over up to 15

days of vacation;

(ii) automobile allowance of $1,500 per month;

(iii) medical, dental, life and long-term disability insurance, and other benefit programs provided to other senior executives of the Company;

(iv) 401(k) plan

participation with current Company matching contribution policy;

and (v) social club dues in accordance with Company policy, including dues currently paid by the Company of $1,500 per month.

Argrett would be entitled to receive the following severance payments upon termination of his employment by the Company

without Cause, by Mr.

Argrett for Good Reason, or due to Disability.

“Disability” under the agreement means that either (A) Mr.

Argrett is deemed disabled for purposes of any group or individual long-term disability policy maintained

by the Company that covers Mr.

Argrett, or (B) in the good faith judgment of the Board, Mr.

Argrett is substantially unable to perform his duties under the Employment Agreement for more than one hundred twenty (120) days, whether or

not consecutive, in any twelve (12) -month period, by reason of a physical or mental illness or injury.

Such payments would include the amount of any earned but unpaid bonus for services rendered by Mr.

Argrett during the previous

calendar year, plus 36 months of the base salary and other benefits summarized above (to the extent permitted under the applicable benefit plans) payable over that period in accordance with the Company’s normal payroll practices.

Argrett’s employment is terminated by the Company upon his death or due to Disability, Mr.

Argrett will also receive any earned but unpaid bonus for services rendered during the calendar year of termination, provided that he was

employed by the Company for at least six months during the calendar year of termination.

If he is employed by the Company for less than the full calendar year in which the termination occurs, the bonus will be prorated based on the

ratio of the number of days he is employed during the calendar year to 365 days.

Payment of the severance payment is conditioned on the execution of a release of claims against the Company.

Argrett’s employment is terminated by

the Company without Cause or by Mr.

Argrett for Good Reason within two years after a Change in Control (as defined in the Employment Agreement), he will be entitled to receive the discounted present value of the severance in a lump

sum payable within 10 days after a release of claims against the Company becomes effective.

The Employment Agreement also contains customary prohibitions against solicitation of customers and employees and prohibitions against

disclosure of confidential information of the Company.

The Employment Agreement replaced in its entirety the prior employment agreement, dated December 29, 2017, by and among the

Bank, CFBanc Corporation, and Mr.

Argrett that was assumed by the Company in connection with the Merger.

Brenda Battey and Ruth McCloud

Each of Brenda Battey and Ruth McCloud serve in their respective positions pursuant to employment agreements (the “Executive

Employment Agreements”) entered into with the Company and the Bank effective in May 2017 and subsequently amended in certain respects.

The Executive Employment Agreements provided for an initial term of employment of three years,

subject to annual one-year extensions by mutual agreement of the parties.

The Executive Employment Agreements provide for the payment of an annual base salary, which is currently $278,250 for Ms.

Battey, and $270,000 for Ms.

which are subject to annual review and possible increase by the Board.

The Executive Employment Agreements also provide for participation in the Bank’s Employee Stock Ownership Plan, eligibility to receive equity-based awards pursuant

to the Company’s 2018 Long-Term Incentive Plan of such types and in such amounts as are determined by the Board, and eligibility to participate in all employee benefit plans applicable to senior executive officers, including the

Bank’s Incentive Plan, the Company’s 401(k) plan (with continuation of the Company’s employee contribution matching policy as of the effective date of the employment agreements), and medical, dental, life and long-term disability

Each Executive Employment Agreement may be terminated by the Company with or without Cause (including failure by the Company to

request an annual extension of an agreement’s term) and following the Merger may be terminated by the executive for any reason and will also terminate in the event of the death or Disability (as defined in the Executive Employment

Agreement) of the executive.

“Cause” is defined in each Executive Employment Agreement to include the executive’s failure substantially to perform her duties, or material breach by her of her employment agreement or any material

written policy of the Company, in each case if not cured within 30 days after notice from the Board requiring such cure;

willful violation of any law, rule or regulation (excluding traffic violations and similar offenses);

final regulatory cease and desist order against her;

and other offenses involving fraud, moral turpitude, or dishonesty involving personal profit.

In the event of any termination of employment by the Company of the executive’s employment (excluding a termination of

employment for Cause), or any termination by the executive, the executive would be entitled to receive all amounts accrued for payment to her to the date of termination and not previously paid, including base salary, unreimbursed

business expenses, vested amounts under the Company’s 401(k) Plan and other employee benefit plans (collectively, the “Accrued Obligations”).

The executive would also be entitled to continue to receive an amount equal to her monthly

base salary for a specified period (the “Severance Period”) and would continue during the Severance Period to be entitled to receive her automobile allowance and payment by the Company of her life, long-term disability, medical and

dental insurance premiums provided for in her employment agreement (such payments during the Severance Period being collectively referred to as the “Severance Payments”).

The Severance Periods specified in the Executive Employment

Agreements are 24 months for Ms.

Battey, and 18 months for Ms.

In the event of termination of employment for Cause or due to death, the executive’s estate would only be entitled to receive payment of the Accrued Obligations.

Each Executive Employment Agreement provides that if the executive’s employment is terminated by the Company without Cause, or

by the executive for any reason, within two years after a Change in Control of the Company has occurred, she will be entitled to receive a single lump sum payment equal to the present value of the Severance Payments described above,

subject to execution of a general release.

The present value of the Severance Payments would be calculated using the Applicable Federal Rate published by the Internal Revenue Service from time to time.

“Change in Control” is defined

in each Executive Employment Agreement to include:

events that would be required to be reported as such pursuant to the Exchange Act or federal banking laws and regulations;

any person or entity acquiring beneficial ownership of 50%

or more of the Company’s outstanding securities;

and changes in the composition of the Board that result, with certain exceptions, in directors who were members of the board as of the effective date of the employment agreements

ceasing to constitute a majority of the Board.

Each Executive Employment Agreement contains post-employment non-solicitation provisions pursuant to which, for a period of

twelve months following termination the executive is prohibited from (i) attempting to influence any customer of the Company or the Bank to discontinue use of the Company’s or the Bank’s services, or (ii) attempting to disrupt the

relationship between the Company or the Bank and any of their respective employees, customers or other persons having specified relationships with the Company or the Bank.

Incentive Compensation

The Bank’s Incentive Plan is designed to reward management for productivity, high performance, and

implementing the business plan and vision of the Bank.

The Compensation and Benefits Committee establishes performance objectives in advance of each year.

These performance objectives are derived from the Company’s Strategic Plan,

which is reviewed and approved by the Board annually, and typically covers the ensuing three years.

The compensation payable under the Incentive Plan is tied directly to the attainment of the pre-established performance objectives.

The Incentive Plan provides for a minimum, target, and maximum incentive opportunity equal to cash awards of 24%, 30%, and 37.5%, respectively, of base salary for the CEO, and cash awards of 20%, 25%, and 31%, respectively, of base

salary for the other senior executive officers, and lower percentages of base salary for other managers.

In order for the Incentive Plan participants to receive any form of payout, a minimum financial threshold of

80% of the Board approved consolidated net earnings for the Incentive Plan year must be achieved.

For each year, the Board establishes specific objectives in the following areas:

Net Loan Growth

Asset Quality

Core Deposit Growth

For 2023 and 2022, the specific goals related to Net Earnings, Mission Execution, Asset Quality, Net

Portfolio Growth, Operational Efficiency, Net Interest Margin Improvement, Capital Management, and Compliance Risk Management.

At the end of the Incentive Plan year, each goal is assessed, and results calculated.

The Compensation

Committee, pursuant to the terms of the Incentive Plan, determined that the pre-established objectives for 2023 and 2022 were achieved at least in part, and those achievements were used by the Committee to determine the payouts for

the annual incentive awards for the respective year and the restricted stock awards that were granted in 2023 and 2022.

Grants of Plan-Based Awards in 2023 and 2022

During 2023, a restricted stock award totaling 32,126 Class A shares was granted to Mr.

Argrett under the

Amended and Restated 2018 Long Term Incentive Plan.

During 2022, a restricted stock award totaling 17,156 Class A shares was granted to Mr.

Argrett under the 2018 Long Term Incentive Plan.

During 2023, restricted stock awards totaling 8,795 and 8,614 shares were granted to each of Ms.

McCloud, respectively, under the Amended and Restated 2018 Long Term Incentive Plan.

During 2022, restricted stock awards totaling 5,057 and 4,305 shares were granted to each of Ms.

Battey and Ms.

McCloud, respectively, under

the 2018 Long Term Incentive Plan.

There were no grants of restricted stock units or stock options to the NEOs for the years ended December 31,

2023 or 2022.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information concerning outstanding equity awards held by each NEO as of December

Option Awards

Restricted Stock Awards

(Exercisable)

(Unexercisable) (1)

Price ($) (2)

Options became fully vested on February 24, 2021.

Based upon the fair market value of a share of Company common stock on the date of grant.

Terms of outstanding stock options are for a period of ten years from the date the option is granted.

7,149 of these shares vest ratably over the following 15 months after December 31, 2023, and 32,126 of these shares vest 33.3% on the one

year anniversary of the grant date of June 21, 2023, and the remaining 66.6% of these shares vest ratably over the succeeding 24 months after the anniversary date.

4,046 of the shares for Ms.

Battey and 3,444 of the shares for Ms.

McCloud vest on each of March 16, 2024, 2025, 2026, and 2027 and 8,795 of

the shares for Ms.

Battey and 8,614 of the shares for Ms.

McCloud vest in five equal annual installments on each anniversary of June 21, 2023.

Our employees, officers, and directors are prohibited from engaging in any

kind of hedging transaction that could reduce or limit such person’s holdings, ownership, or interest in or to any securities of the Company.

Prohibited transactions include the purchase of financial instruments such as prepaid

variable forward contracts, instruments for short sale or purchase or sale of call or put options, equity swaps, collars, or units of exchangeable funds, that are designed to, or that may reasonably be expected to, have the effect

of hedging or offsetting a decrease in the market value of any securities of the Company.

Clawback Policy

In October of 2023, we adopted a clawback policy intended to comply with the requirements of Nasdaq

Listing Standard 5608 implementing Rule 10D-1 under the Exchange Act.

In the event the Company is required to prepare an accounting restatement of the Company’s financial statements due to material non-compliance with any

financial reporting requirement under the federal securities laws, the Company will seek to recover, on a reasonably prompt basis, the excess incentive-based compensation received by any covered executive, including our named

executive officers, during the prior three fiscal years that exceeds the amount that the executive otherwise would have received had the incentive-based compensation been determined based on the restated financial statements.

DIRECTOR COMPENSATION

Effective January 1, 2022, the non-employee directors of the Company are entitled to a quarterly fee of

$12,500 (“Board Service Retainer”).

In addition, outside directors who serve as Chair of one or more committees receive an additional quarterly fee of $1,500 (“Committee Chair Service Retainer”).

In lieu of the Board Service

Retainer payments, any outside director who serves as Lead Independent Director receives a quarterly fee of $14,000, and any outside director who serves as Chair of the Board receives a quarterly fee of $15,000.

In addition, each

calendar year the Company issues $12,000 in unrestricted stock to each outside director for service during such year.

Members of the Board do not receive separate compensation for their service on the board of directors of the

The following table summarizes the compensation paid to non-employee directors for the year ended December

or Paid in Cash (1)

Wayne-Kent A.

Mary Ann Donovan

Includes payments of annual retainer fees, and retainer fees paid to chairs of Board committees.

The amounts shown reflect the aggregate fair value of stock awards on the grant date, as determined in accordance with

FASB ASC Topic 718.

For each director, the number of shares of Common Stock was determined by dividing the grant date value of the award, $12,000, by $10.40, the closing price of the Company’s Common Stock on February 21,

2023, the date of grant (adjusted for the reverse stock split on October 31, 2023.) As of December 31, 2023, none of the directors held any outstanding equity awards.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS (NOT FULLY UPDATED)

The following table sets forth information as of April 30, 2024 concerning the shares of the Company’s common stock owned

by each person known to the Company to be a beneficial owner of more than 5% of the Company’s Voting Common Stock, each director or director nominee, each Named Executive Officer, and all current directors and executive officers

Except as otherwise indicated, and subject to any interests of the reporting person’s spouse, we believe that the beneficial owners of common stock listed below, based on information furnished by such owners, have sole

voting and investment power with respect to such shares.

As of April 30, 2024, we had 6,033,212 shares of Voting Common Stock outstanding.

Beneficial Owner

Stock, Class B

Stock, Class C

Outstanding (3)

5% Beneficial Owners:

City First Enterprises (4)

City First Bank, National Association Employee Stock Ownership Trust (5)

Cedars-Sinai Medical Center (6)

The Vanguard Group

Directors and Executive Officers (7) :

Wayne-Kent A.

Mary Ann Donovan

Ruth McCloud (11)

Washington (12)

Current directors and executive officers as a group (15 persons)

Less than 1%.

The Class B non-voting common stock may not be converted to Voting Common Stock.

The Class C non-voting common stock may be converted to Voting Common Stock only upon the occurrence of certain prescribed forms of sales

to third parties that are not affiliated with the holders thereof.

The total number of outstanding common shares as of April 30, 2024 was 9,131,348, which includes all outstanding shares of Class A voting

common stock, Class B non-voting common stock, and Class C non-voting common stock.

The address for City First Enterprises is 1 Thomas Circle, NW, Suite 700, Washington, D.C.

The address for the City First Bank, National Association Employee Stock Ownership Trust (“ESOP”) is 1432 U Street, N.W.

Washington, DC 20009-3916.

The address for Cedars-Sinai Medical Center is 8700 Beverly Boulevard, TRES 6500, Los Angeles, CA 90048.

The address for each of the directors and named executive officers is 4601 Wilshire Boulevard, Suite 150, Los Angeles, CA 90010.

Includes 1,798 allocated shares under the ESOP.

Includes [[8,750]] shares that are held by the Robert and Alice Davidson Trust, dated August 11, 1982.

Robert Davidson and Alice Davidson

share investment and voting power with respect to the shares held by the Robert and Alice Davidson Trust in their capacities as trustees of the trust.

Includes 5,488 allocated shares under the ESOP and 18,750 shares subject to options granted under the LTIP, which options are all currently

Includes 4,969 allocated shares under the ESOP and 12,500 shares subject to options granted under the LTIP, which options are all currently

Includes 1,286 allocated shares under the ESOP.

Includes 1,678 allocated shares under the ESOP.

The information required by this Item is incorporated herein by reference to the Company’s Proxy Statement, under the captions “Executive Compensation” and “Director Compensation.”

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item is incorporated herein by reference to the Company’s Proxy Statement, under the caption “Security Ownership of Certain Beneficial Owners and Management.”

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Certain Relationships and Related Transactions

Transactions by us with related persons are subject to formal written policies, as well as regulatory requirements and

restrictions.

These requirements and restrictions include Sections 23A and 23B of the Federal Reserve Act and the Federal Reserve’s Regulation W (which govern certain transactions by us with our affiliates) and the Federal Reserve’s

Regulation O (which governs certain loans by the Bank to its executive officers, directors, and principal stockholders).

We have adopted policies to comply with these regulatory requirements and restrictions.

The Company’s current

loan policy provides that all loans made by the Company or its subsidiary to its directors and executive officers or their associates must be made on substantially the same terms, including interest rates, collateral and repayment

terms, as those prevailing at the time for comparable transactions with other persons of similar creditworthiness who are not related to the Company and must not involve more than the normal risk of collectability or present other

unfavorable features.

As of December 31, 2023, the Company did not have any loans to related parties or affiliates.

Loans to insiders and their related interests require approval by the Board, or a Board designated committee.

apply the same standards to any other transactions with an insider.

Personal loans made to any executive officer or director must comply with Regulation O.

Additionally, loans and other related party transactions are subject to Audit

Committee review and approval requirements.

From time to time, City First Enterprises and the Bank will each make an investment in the same community development project.

These loans by the

Bank are made in the ordinary course of business on substantially the same terms, including interest rate and collateral, as those prevailing at the time for comparable loans with persons not related to the Bank, and do not involve

more than the normal risk of collectability or present other unfavorable features.

All such loans are reviewed, approved, or ratified by the Director’s Loan Committee of the Bank and are made in accordance with the Bank’s lending and

credit policies.

Parents of Smaller Reporting Company

City First Enterprises is the owner of 827,778 shares of our Voting Common Stock, which represents approximately 13.72% of

our Voting Common Stock outstanding.

In addition, four members of our board – Mr.

Argrett, our President and CEO, Dr.

Longbrake, Mr.

McGrady, and Ms.

Donovan – are also members of the Board of Directors of City First Enterprises.

Director Independence

We have adopted standards for director independence pursuant to the Nasdaq listing standards.

The Board has

considered relationships, transactions, and/or arrangements with each of its directors, and has determined that all of the Company’s non-employee directors (Mr.

Bradshaw, Mr.

Davidson, Ms.

Longbrake, Mr.

McGrady, and Mr.

Ross) are “independent” under applicable Nasdaq listing standards and Securities and Exchange Commission (“SEC”) rules.

The information required by this Item is incorporated herein by reference to the Company’s Proxy Statement, under the captions “Certain Relationships and Related Transactions” and “Election of

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The Audit Committee reviews and pre-approves all audit and non-audit services performed by its independent registered public

accounting firm, as well as the fees charged for such services, in accordance with the pre-approval policies and procedures that have been established by the Audit Committee.

All fees incurred in the years ended December 31, 2023 and

2022 for services rendered by Moss Adams were approved by the Audit Committee.

No non-audit services were provided by Moss Adams for the years indicated.

The following table sets forth the aggregate fees billed to us by Moss Adams for the years indicated, inclusive of

out-of-pocket expenses.

(In thousands)

Audit fees (1)

Audit-related fees

All other fees

Aggregate fees billed for professional services rendered for the audit of the Company’s consolidated annual financial statements included

in the Company’s Annual Report on Form 10-K and for the reviews of the Company’s consolidated financial statements included in the Company’s Quarterly Reports on Form 10-Q.

The services provided by the independent accounts are

for SEC-related filings only.

The information required by this Item is incorporated herein by reference to the Company’s Proxy Statement, under the caption “Ratification on An Advisory (Non-Binding) Basis of the Appointment

of Independent Registered Public Accounting Firm.”

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

See Index to Consolidated Financial Statements.

Financial Statement Schedules have been omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or Notes thereto

included under Item 8, “Financial Statements and Supplementary Data.”

Financial Statement Schedules have been omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or Notes

thereto included under Item 8, “Financial Statements and Supplementary Data.”

List of Exhibits

5 unchanged sentences

Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (Exhibit 4.1 to Form 10-K filed by Registrant on April 15, 2022)

Rights Agreement, dated as of September 10, 2019, entered between Broadway Financial Corporation and Computershare Trust Company, N.A., as rights agent (Exhibit 4.1 to Form 8-K filed by Registrant on

September 11, 2019)

Rights Agreement, dated as of September 10, 2019, entered between Broadway Financial Corporation and Computershare Trust Company, N.A., as rights agent (Exhibit 4.1 to Form 8-K filed by

Registrant on September 11, 2019)

Amendment to Rights Agreement, dated as of August 25, 2020, entered between Broadway Financial Corporation and Computershare Trust Company, N.A.

(Exhibit 4.1 to Form 8-K file by Registrant on August 26,

(Exhibit 4.1 to Form 8-K file by

Registrant on August 26, 2020)

Registration Rights Agreement (Exhibit 10.2 to Form 8-K filed by Registrant on June 8, 2022)

1 unchanged sentence

Amended and Restated Broadway Financial Corporation 2008 Long Term Incentive Plan (Exhibit 10.3 to Form 10‑Q filed by Registrant on August 12, 2016)

Amended Form of Award Agreement for stock options granted pursuant to Amended and Restated Broadway Financial Corporation 2008 Long‑Term Incentive Plan (Exhibit 10.1 to Form 10‑Q filed by Registrant on

August 12, 2016)

Broadway Financial Corporation Amended and Restated 2018 Long‑Term Incentive Plan

Form of Award Agreement for restricted stock granted pursuant to Broadway Financial Corporation Amended and Restated 2018 Long‑Term Incentive Plan

Employment Agreement, dated as of March 22, 2017, for Wayne‑Kent A.

Bradshaw (Exhibit 10.7 to Form 10-K filed by Registrant on March 29, 2019)

Award Agreement, dated as of February 27, 2019 for grant of restricted stock to Wayne‑Kent A.

Bradshaw pursuant to Broadway Financial Corporation 2018 Long‑Term Incentive Plan (Exhibit 10.10 to Form 10-K

filed by Registrant on March 29, 2019)

Amended Form of Award Agreement for stock options granted pursuant to Amended and Restated Broadway Financial Corporation 2008 Long‑Term Incentive Plan (Exhibit 10.1 to Form 10‑Q filed

by Registrant on August 12, 2016)

Broadway Financial Corporation Amended and Restated 2018 Long‑Term Incentive Plan (Exhibit 10.4 to Form 10-K filed by Registrant on May 20, 2024)

Form of Award Agreement for restricted stock granted pursuant to Broadway Financial Corporation Amended and Restated 2018 Long‑Term Incentive Plan (Exhibit 10.5 to Form 10-K filed by

Registrant on May 20, 2024)

Employment Agreement, dated as of May 1, 2017, for Brenda J.

2 unchanged sentences

Battey, dated as of January 14, 2020 (Exhibit 10.1 to form 8-K filed by Registrant on January 14, 2021)

Employment Agreement, dated as of May 1, 2017, for Norman Bellefeuille (Exhibit 10.12 to Form 10-K filed by Registrant on March 29, 2019)

Amendment to Employment Agreement for Norman Bellefeuille, dated as of January 14, 2020 (Exhibit 10.2 to form 8-K filed by Registrant on January 14, 2021)

Employment Agreement, dated as of May 1, 2017, for Ruth McCloud (Exhibit 10.13 to Form 10-K filed by Registrant on March 29, 2019)

4 unchanged sentences

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)

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 January 19, 2021)

Stock Purchase Agreement, dated as of November 23, 2020, entered between Cedars-Sinai Medical Center and Registrant (Exhibit 10.14 to Registration Statement on S-4 filed by Registrant on January 19, 2021)

Stock Purchase Agreement, dated as of November 24, 2020, entered between Wells Fargo Central Pacific Holdings, Inc.

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

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 January 19, 2021)

Stock Purchase Agreement, dated as of November 23, 2020, entered between Cedars-Sinai Medical Center and Registrant (Exhibit 10.14 to Registration Statement on S-4 filed by Registrant on

January 19, 2021)

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,

Stock Purchase Agreement, dated as of November 24, 2020, entered between Wells Fargo Central Pacific Holdings, Inc.

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

by Registrant on January 19, 2021)

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)

5 unchanged sentences

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

Profit Sharing Plan, and Registrant (Exhibit 10.29 to

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

Profit Sharing Plan, and

Registrant (Exhibit 10.29 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:

The Lorraine Grace Will Trust, The Anne Grace

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

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 (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 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 (Exhibit 10.32 to Form 10-K filed by Registrant on March 31, 2021)

Morgan Chase Community Development Corporation and Registrant (Exhibit 10.32 to Form 10-K filed by

Registrant on March 31, 2021)

Letter Agreement and Securities Purchase Agreement, dated June 7, 2022 (Exhibit 10.1 to Form 8-K filed by Registrant on June 8, 2022)

Insider Trading Policy

List of Subsidiaries

6 unchanged sentences

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

Compensation Clawback Policy

Compensation Clawback Policy (Exhibit 97.1 to Form 10-K filed by Registrant on May 20, 2024)

Inline XBRL Instance Document

7 unchanged sentences

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

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

2 unchanged sentences

Chief Executive Officer

March 31, 2025

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

/s/ BRIAN ARGRETT

March 31, 2025

Brian Argrett

1 unchanged sentence

(Principal Executive Officer)

/s/ BRENDA J.

Chairman of the Board

/s/ ZACK IBRAHIM

March 31, 2025

Chief Financial Officer

1 unchanged sentence

/s/ WAYNE-KENT A.

March 31, 2025

Wayne-Kent A.

Chairman of the Board

Vice Chairman of the Board

March 31, 2025

Lead Independent Director

/s/ WILLIAM A.

March 31, 2025

Audit Committee Chairman

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DAVIDSON, JR.

March 31, 2025

Davidson, Jr.

/s/ MARY ANN DONOVAN

March 31, 2025

Mary Ann Donovan

March 31, 2025

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

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Consolidated Statements of Financial Condition

Consolidated Statements of Operations and Comprehensive Income (Loss)

Consolidated Statements of Operations and Comprehensive Income

Consolidated Statements of Changes in Stockholders’ Equity

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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of

To the Shareholders and the Board of Directors

Broadway Financial Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial condition of Broadway Financial Corporation and subsidiaries (the “Company”) as of December 31, 2023 and 2022 , the related consolidated statements of operations and comprehensive income (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, 2023 and 2022, 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.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for the allowance for credit losses in the year

ended December 31, 2023 due to the adoption of Accounting Standards Update 2016-13 Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Statements.

The Company adopted the new credit loss standard using

the modified retrospective approach such that prior period amounts are not adjusted and continue to be reported in accordance with previously applicable generally accepted accounting principles.

We have audited the accompanying consolidated statements of financial condition of Broadway Financial Corporation and subsidiaries (the Company) as of December 31, 2024 and 2023, 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).

opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2024 and 2023,

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

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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.

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.

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reporting in accordance with the standards of the PCAOB.

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 in accordance with the standards of the PCAOB.

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 in accordance with the standards of the PCAOB.

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 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.

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

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.

As described in Note 1 and 4 to the consolidated financial statements, the Company’s allowance for credit losses for loans balance was $7.3 million at December 31,

The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of loans held for investment to present the net carrying value at the amount expected to be collected.

The allowance for credit losses

for loans is maintained at a level sufficient to provide for expected credit losses over the lives of the loans based on evaluating historical credit loss experience and making qualitative reserve factor adjustments to historical loss

information for each loan category for differences in the specific risk characteristics in the current loan portfolio based on reasonable and supportable forecasts.

These qualitative reserve factors include (i) changes in lending policies and

procedures, including changes in underwriting standards and collections, charge offs, and recovery practices;

(ii) changes in international, national, regional, and local conditions;

(iii) changes in the nature and volume of the portfolio and

terms of loans;

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) relate 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 matters below, providing a separate opinion on

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

Allowance for Credit Losses – Qualitative Factors

As described in Note 1 and 4 to the consolidated financial statements, as of December 31, 2024, the Company’s allowance for credit losses – loans was $8.1

Estimating expected credit losses requires management to use relevant forward-looking information, including the use of reasonable and supportable forecasts.

The Company’s model also includes adjustments for qualitative factors that

include, but are not limited to, (i) changes in lending policies and procedures, including changes in underwriting standards and collections, charge offs, and recovery practices;

(ii) changes in international, national, regional, and local

(iii) changes in the nature and volume of the portfolio and terms of loans;

(iv) changes in the experience, depth, and ability of lending management;

(v) changes in the volume and severity of past due loans and other similar conditions;

(vi) changes in the quality of the organization’s loan review

(v) changes in the volume and severity of past due loans and other similar

(vi) changes in the quality of the organization’s loan review system;

(vii) changes in the value of underlying collateral for collateral dependent loans;

(viii) the existence and effect of any concentrations of credit and changes in the levels of such concentrations;

and (ix) the effect of other external

factors (i.e., competition, legal and regulatory requirements) on the level of estimated credit losses.

We identified the estimation of the qualitative reserve factors used in the allowance for credit losses for loans receivable held for investment, as a critical

audit matter.

The qualitative reserve factors are used to estimate credit losses related to matters that are not captured in the historical loss component of the allowance for credit losses for loans receivable held for investment and require

significant management judgement based on management’s evaluation of available internal and external data.

Auditing management’s judgements regarding the qualitative reserve factors applied to the allowance for credit losses for loans

receivable held for investment involved challenging and subjective auditor judgement when performing audit procedures and evaluating the results of those procedures.

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

Obtaining management’s analysis and supporting documentation related to the qualitative reserve factors, and testing whether the qualitative reserve

factors used in the calculation of the allowance for credit losses for loans are supported by the analysis provided by management.

Evaluating the reasonableness of the assumptions used for adjustments to the qualitative reserve factors.

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

including completeness and accuracy of the data used in the calculation, application of the qualitative reserve factors determined by management and used in the calculation, and recalculation of the allowance for credit losses balance.

(viii) the existence and effect of any concentrations of credit and changes

in the levels of such concentrations;

and (ix) the effect of other external factors (i.e., competition, legal and regulatory requirements) on the level of estimated credit losses.

We identified the auditing of the adjustments for qualitative factors used in the allowance for credit losses – loans as a critical audit matter.

The qualitative

factors are used to estimate credit losses related to matters that are not captured in the historical loss component of the allowance and requires significant management judgement based on management’s evaluation of available internal and

external data.

Auditing management’s judgements regarding the adjustments for qualitative factors involved significant audit effort, as well as especially challenging and subjective auditor judgement.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial

Our audit procedures related to the adjustments for qualitative factors used in the allowance for credit losses - loans included the following, among others:

Evaluating the methodology used.

Testing the completeness and accuracy of the data used in the calculation, application of the adjustments for qualitative factors determined by management, and

recalculation of the allowance for credit losses balance.

Evaluating whether the adjustments for the qualitative factors used in the calculation are supported by the analysis provided by management.

Evaluating the reasonableness of the significant assumptions used including relevance and reliability of external data sources.

Valuation of Goodwill

As described in note 1 and note 7 to the consolidated financial statements, the Company assesses goodwill for impairment annually as of September 30 or more

frequently if events or circumstances indicate there may be impairment.

A goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying value.

An impairment charge is recorded for the amount by

which the carrying amount exceeds the reporting unit’s fair value.

A weighted average of both the market and income approaches is used in valuing the reporting unit’s fair value.

The Company’s goodwill balance was $25.9 million as of December

We identified auditing the Company’s estimated fair value of the reporting unit as a critical audit matter.

The performance of audit procedures related to

management’s estimate required extensive audit effort, including the use of our valuation specialists with specialized skill and knowledge pertaining to valuation techniques.

Additionally, the evaluation of audit evidence of more sensitive

assumptions required especially challenging and subjective auditor judgement, including those assumptions underlying the projections of future cash flows utilized in the income approach, the selection of peer data utilized in the market

approach, and the relative weight assigned to the different valuation methodologies.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial

Our audit procedures related to the Company’s estimated fair value of the reporting unit included the following, among others:

Testing the Company’s process used to develop the estimate.

Evaluating the appropriateness of the methods used.

Evaluating the reasonableness of the significant assumptions used, including the relative weight assigned to income and market approaches.

Testing the completeness, accuracy, and reliability of underlying data used in the Company’s analysis.

Utilizing our valuation professionals with specialized skill and knowledge to assist in evaluating the methods and the reasonableness of certain significant assumptions

/s/ Moss Adams LLP

Sacramento, California

Spokane, Washington

March 31, 2025

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

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Consolidated Statements of Financial

(In thousands, except share and per share)

(In thousands, except share

and per share)

Cash and due from banks

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Cash and cash equivalents

Securities available-for-sale, at fair value

Securities available-for-sale, at fair value (amortized cost of $ 219,658 and $ 335,978 )

Loans receivable held for investment, net of allowance of $ 8,103 and $ 7,348

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issued 6,349,455 shares at December 31, 2024 and 6,242,089 shares at December 31, 2023;

outstanding 5,914,861

shares at December 31, 2023 and 6,080,745 (1) shares at December 31, 2022

outstanding 6,022,227 shares at December 31, 2024 and 5,914,861 shares at December 31, 2023

Common stock, Class B, $ 0.01 par value, non-voting;

authorized 15,000,000 shares at December 31, 2024 and December 31, 2023;

issued and outstanding 1,425,574 (1) shares at December 31, 2023 and December 31, 2022

issued and outstanding 1,425,574

shares at December 31, 2024 and December 31, 2023

Common stock, Class C, $ 0.01

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Total liabilities and stockholders’ equity

Retroactively adjusted, as applicable, for the 1-for-8 reverse stock split effective November 1, 2023 - see Note 2

See accompanying notes to consolidated financial statements.

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Consolidated Statements of Operations and

Comprehensive Income (Loss)

Comprehensive Income

Years Ended December 31,

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Provision for credit losses

interest income after provision for credit losses

Net interest income after provision for credit

Non-interest income:

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Supervisory costs

Office services and supplies

Corporate insurance

Amortization of core deposit intangible

Advertising and promotional expense

Travel expense

Total non-interest expense

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Net income attributable to Broadway Financial Corporation

Other comprehensive income (loss), net of tax:

Unrealized gains (losses) on securities available-for-sale arising during the period

Income tax expense (benefit)

Other comprehensive income (loss), net of tax

Comprehensive income (loss)

Preferred stock dividends

Net income attributable to common stockholders

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 income

Earnings per common share-basic

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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of

Statements of

Stockholders’ Equity

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Balance at December 31, 2022

Preferred shares issued

Cumulative effect of change related to adoption of ASU 2016-13

Adjusted balance, January 1, 2023

Increase in unreleased shares

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Director stock compensation expense

Conversion of preferred shares to common shares

Conversion of non-voting shares into voting shares

Dividends paid on preferred stock

Other comprehensive loss, net of tax

Share repurchase - FDIC

Other comprehensive income, net of tax

Balance at December 31, 2023

Cumulative effect of change related to adoption of ASU 2016-13

Adjusted balance, January 1, 2023

Release of unearned ESOP shares

Increase in unreleased shares

Stock-based compensation expense

Director stock compensation expense

Share repurchase - FDIC

Dividends declared and paid - Emergency Capital Investment Program (“ECIP”)

Other comprehensive income, net of tax

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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of

Statements of

Years Ended December 31

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Net change of deferred loan origination costs

Net amortization of premiums & discounts on available-for-sale securities

Net accretion of premiums and discounts on available-for-sale securities

Accretion of purchase accounting marks on loans

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Principal payments and maturities on available-for-sale securities

Purchase of available-for-sale securities

Purchase of FRB stock

Purchase of FHLB stock

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Purchase of office properties and equipment

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities:

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Increase in unreleased ESOP shares

Proceeds from issuance of preferred stock

Repayments of Bank Term Funding Program

Proceeds from Bank Term Funding Program

Dividends paid on preferred stock

Repayment of notes payable

Dividends paid on ECIP preferred stock

Share repurchase - FDIC

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Repayments of FHLB advances

Net cash provided by financing activities

Net cash (used in) provided by financing activities

Net change in cash and cash equivalents

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Cash paid for income taxes

Supplemental non-cash disclosures:

Common stock issued in exchange for preferred stock

Assets acquired (liabilities assumed) in acquisition:

Deferred taxes

See accompanying notes to consolidated financial statements.

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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.

and City First Capital IX, LLC 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.

Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation.

Such reclassifications had no impact on

total shareholders’ equity or net income for any period.

Out-of-Period Adjustments

Following the quarter ended September 30, 2023, the Company performed a review of internal controls over financial reporting, encompassing an examination of financial reporting processes.

During this assessment and while preparing

financial statements for the three and nine months ended September 30, 2023, certain previously unrecorded adjustments totaling $ 8

thousand, net of tax expense, increasing net income were identified pertaining to prior periods.

Following the quarter ended September 30, 2023, the Company performed a review of internal controls over financial reporting, encompassing an examination of

financial reporting processes.

During this assessment and while preparing financial statements for the three and nine months ended September 30, 2023, certain previously unrecorded adjustments totaling $ 8 thousand, net of tax expense, increasing net income were identified pertaining to prior periods.

In accordance with SEC Staff Accounting Bulletin Nos.

99 and 108, these adjustments were evaluated both individually and collectively.

these adjustments were evaluated both individually and collectively.

Following this assessment, management determined these adjustments were immaterial to both historical and current reporting periods.

Consequently, the Company determined that no amendment to the previously filed reports was warranted.

However, recognizing the importance of transparency and accuracy, the Company addressed these prior period adjustments and incorporated them into its financial statements for the three and nine months ended September 30, 2023.

adjustments are included in the Other Expense line item on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Consequently, the Company determined that

no amendment to the previously filed reports was warranted.

However, recognizing the importance of transparency and accuracy, the Company addressed these prior period adjustments and incorporated them into its financial statements for the three

and nine months ended September 30, 2023.

These adjustments are included in the Other Expense line item on the consolidated statements of operations and comprehensive income.

Use of Estimates

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balance were no longer required at December 31, 2024.

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.

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

Investment Securities

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

Effective January 1, 2023, the Company accounts for the allowance for credit losses (“ACL”) on securities in accordance with Accounting Standards Codification Topic

326 (“ASC 326”) – Financial Instruments-Credit Losses.

The ACL on securities is recorded at the time of purchase or acquisition, representing the Company’s best estimate of current expected credit losses (“CECL”) as of the date of the

consolidated statements of financial condition.

The Company accounts for the allowance for credit losses (“ACL”) on securities in accordance with Accounting Standards Codification Topic 326 (“ASC 326”) – Financial Instruments-Credit Losses .

The ACL on securities is recorded at the time of purchase or acquisition, representing the Company’s best estimate of current expected credit losses (“CECL”) as of the date

of the consolidated statements of financial condition.

For available-for-sale investment securities, the Company performs a qualitative evaluation for those securities that are in an unrealized loss position to

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Unrealized losses deemed non-credit related are recorded, net of tax, in accumulated other comprehensive income (loss).

The Company’s assessment of available-for-sale investment securities as of December 31, 2023, indicated that an ACL was not required.

The Company analyzed

available-for-sale investment securities that were in an unrealized loss position and determined the decline in fair value for those securities was not related to credit, but rather related to changes in interest rates and general market

As such, no ACL was recorded for available-for-sale securities as of December 31, 2023.

The Company analyzed available-for-sale investment securities that were in an unrealized loss position and determined the decline in fair value for those securities

was not related to credit, but rather related to changes in interest rates and general market conditions.

As such, no ACL was

recorded for available-for-sale securities as of December 31, 2024 and 2023.

Loans Receivable Held for Investment

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ASC Subtopic 310-30 – Receivables-Loans and Debt Securities Acquired with Deteriorated Credit Quality .

Upon acquisition, the Company measured the amount by which the undiscounted expected future cash flows on PCI loans exceeded the estimated fair

value of the loan as the “accretable yield,” representing the amount of estimated future interest income on the loan.

The amount of accretable yield was re-measured at each financial reporting date, representing the difference between the

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

Upon acquisition, the Company measured the amount by which the undiscounted expected future cash

flows on PCI loans exceeded the estimated fair value of the loan as the “accretable yield,” representing the amount of estimated future interest income on the loan.

The amount of accretable yield was re-measured at each financial reporting date,

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

The accretable yield on PCI loans was recognized in interest income using the interest method.

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Allowance for Credit Losses - Loans

Effective January 1, 2023, the Company accounts for credit losses on loans in accordance with ASC 326, which requires the Company to record an estimate of expected

lifetime credit losses for loans at the time of origination or acquisition.

The ACL is maintained at a level deemed appropriate by management to provide for expected credit losses in the portfolio as of the date of the consolidated statements of

financial condition.

The Company accounts for credit losses on loans in accordance with ASC 326, which requires the Company to record an estimate of expected lifetime credit losses for

loans at the time of origination or acquisition.

The ACL is maintained at a level deemed appropriate by management to provide for expected credit losses in the portfolio as of the date of the consolidated statements of financial condition.

Estimating expected credit losses requires management to use relevant forward-looking information, including the use of reasonable and supportable forecasts.

The measurement of the ACL is performed by collectively evaluating

loans with similar risk characteristics.

The measurement of the ACL is performed by collectively evaluating loans with similar

risk characteristics.

The Company measures the ACL for each of its loan segments using the weighted-average remaining maturity (“WARM”) method.

The weighted average remaining life, including the effect of estimated prepayments,

is calculated for each loan pool on a quarterly basis.

The Company then estimates a loss rate for each pool using both its own historical loss experience and the historical losses of a group of peer institutions during the period from 2004

through the most recent quarter.

The weighted average remaining life, including the effect of estimated prepayments, is calculated for

each loan pool on a quarterly basis.

The Company then estimates a loss rate for each pool using both its own historical loss experience and the historical losses of a group of peer institutions during the period from 2004 through the most recent

The Company’s ACL model also includes adjustments for qualitative factors, where appropriate.

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These segments, and the risks associated with each segment, 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.

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

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The determination of the ACL for these loans is based on

a discounted cash flow approach, unless the loan is deemed collateral dependent, which requires measurement of the ACL based on the estimated expected fair value of the underlying collateral, less selling costs.

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 December 31st 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.

the remaining life approach, unless the loan is deemed collateral dependent, which requires measurement of the ACL based on the estimated expected fair value of the underlying collateral, less selling costs.

Goodwill and Other Intangible Assets

Goodwill is recorded upon completion of a business combination as the difference between the purchase price and the fair value of net identifiable assets acquired.

Subsequent to initial recognition, the Company tests goodwill for impairment annually as of September 30, or more often if events or circumstances, such as adverse changes in the business climate indicate there may be impairment.

impairment test is performed by comparing the fair value of the reporting unit with its carrying value.

An impairment charge is recorded for the amount by which the carrying amount exceeds the reporting unit’s fair value.

considerations the Company is a single reporting unit.

A weighted average of both the market and income approaches is used in valuing the reporting unit’s fair value.

Weightings are assigned to the approaches regarding fair value and the

sensitivity of other weighting scenarios is considered.

The market approach incorporates comparable public company information, valuation multiples and consideration of a market control premium along with data related to comparable observed

purchase transactions in the financial services industry.

The income approach consists of discounting projected future cash flows, which are derived from internal forecasts and economic expectations for the reporting unit.

The significant

inputs and assumptions for the income approach include projected earnings of the Company in future years for which there is inherent uncertainty and the discount rate.

The sensitivity of a range of reasonable discount rates based on the current

economic environment is considered.

Our quantitative annual impairment tests as of September 30 , 2024 and

2023 did not result in impairment.

However, changing economic conditions that may adversely affect the Company’s performance, the fair value of its assets

and liabilities, or its stock price could result in future impairment.

Any resulting impairment loss could have a material adverse impact on the Company’s financial condition and results of operations.

Management will continue to monitor events

that could influence this conclusion in the future.

Goodwill recorded for the merger with CFBanc Corporation during the second quarter of 2021 was $ 25.9 million.

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

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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

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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 (loss), 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.

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.

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

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 of this standard

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.

Stock‑Based Compensation

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Earnings Per Common Share

Basic earnings 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.

Basic earnings 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.

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.

It also includes the

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

Comprehensive Income (Loss)

Comprehensive income (loss) consists of the net income

from operations and other comprehensive income (loss).

Other comprehensive income (loss) includes unrealized gains and losses on securities available‑for‑sale, net of tax, which are also recognized as separate components of equity.

It also includes the dilutive effect of additional potential common shares issuable under stock options using the

treasury method.

Comprehensive Income

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

Other comprehensive income includes unrealized gains and losses on

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

Loss Contingencies

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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 8 “Fair Value”.

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 values are estimated using relevant market information and other assumptions, as more fully disclosed in Note 8 “Fair Value.” 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.

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 2023 and 2022, the Company has determined that banking is its one reportable business segment.

The Company operates one reportable

segment — banking.

The Company’s chief executive officer is its chief operating decision maker (“CODM”).

The CODM assesses operating performance and manages the allocation of resources primarily based on the Company’s consolidated operating

results and financial condition.

The factors considered in making this determination include all of the banking products and services offered by the Company are available in each branch of the Company, management does not allocate resources

based on the performance of different lending or transaction activities, and how information is reviewed by the chief executive officer and other key decision makers.

The CODM uses consolidated net income to benchmark the Company against its

competitors and to monitor budget to actual results.

As a result, the Company determined that all services offered relate to banking.

Loans, investments, and deposits provide the revenues in the banking operation.

Interest expense,

provisions for credit losses and payroll provide the significant expenses in the banking operation.

See the Company’s operating segment information in the consolidated statements of financial condition and the consolidated statements of

operations and comprehensive income.

Accounting Pronouncements Recently Adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13 – Financial Instruments-Credit Losses (Topic

Measurement of Credit Losses on Financial Instruments.

This ASU replaces the incurred loss impairment model in previous GAAP with a model that reflects current expected credit losses.

The CECL model is applicable to the measurement of

credit losses on financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities.

CECL also requires credit losses on available-for-sale debt securities be measured through an allowance for credit

losses when the fair value is less than the amortized cost basis.

The new guidance also applies to off-balance sheet credit exposures.

The ASU requires that all expected credit losses for financial assets held at the reporting date be measured

based on historical experience, current conditions, and reasonable and supportable forecasts.

The ASU also requires enhanced disclosures, including qualitative and quantitative disclosures that provide additional information about significant

estimates and judgments used in estimating credit losses.

The provisions of this ASU became effective for the Company for all annual and interim periods beginning January 1, 2023.

In April 2019, the FASB issued ASU 2019-04 – Codification Improvements to Topic 326, Financial

Instruments-Credit Losses, Topic 815-Derivatives and Hedging, and Topic 825-Financial Instruments.

This ASU was issued as part of an ongoing project on the FASB’s agenda for improving the Codification or correcting for its unintended

The amendments in this ASU became effective for all interim and annual reporting periods for the Company on January 1, 2023.

The Company adopted the provisions within this ASU in conjunction with the implementation of ASC 326,

(i) the election to not measure credit losses on accrued interest receivable when such balances are written-off in a timely manner when deemed uncollectable and (ii) the election to not include the balance of accrued interest

receivable as part of the amortized cost of a loan or security.

In May 2019, the FASB issued ASU 2019-05 - Financial Instruments-Credit Losses (Topic 326):

Targeted Transition Relief.

This ASU was issued to allow entities that have certain financial instruments

within the scope of ASC 326-20 - Financial Instruments-Credit Losses-Measured at Amortized Cost to make an irrevocable election to elect the fair value option for those instruments in accordance with ASC 825 – Financial Instruments upon the

adoption of ASC 326, which for the Company was January 1, 2023.

The fair value option is not applicable to held-to-maturity debt securities.

Entities are required to make this election on an instrument-by-instrument basis.

The Company did not

elect the fair value option for any of its financial assets upon the adoption of ASC 326.

Effective January 1, 2023, the Company adopted the provisions of ASC 326 through the application of the modified retrospective transition approach, and recorded a net decrease of $ 1.3 million to the beginning balance of retained earnings as of January 1, 2023 for the cumulative effect adjustment.

following table illustrates the impact of the adoption of the CECL model under ASC 326 on the Company’s consolidated statements of financial position as of January 1, 2023:

Impact of CECL

(In thousands)

Allowance for credit losses on available-for-sale securities

Allowance for credit losses on loans

Deferred tax assets

Allowance for credit losses on off-balance sheet exposures

Stockholders’ equity:

Retained earnings

The Company’s assessment of

available-for-sale investment securities as of January 1, 2023 indicated that an ACL was not required.

The Company analyzed available-for-sale investment securities that were in an unrealized loss position as of the date of adoption and

determined the decline in fair value for those securities was not related to credit, but rather related to changes in interest rates and general market conditions.

As such, no ACL was recorded for available-for-sale securities as of January

Upon the adoption of ASC 326, the Company did not reassess purchased loans with credit deterioration (previously classified as purchased

credit impaired loans under ASC 310-30).

In February 2019, the U.S.

federal bank regulatory agencies approved a final rule modifying their regulatory capital rules and providing

an option to phase in the adverse regulatory capital effects of the impact of adoption of ASC 326 over a three-year period.

As a result, entities have the option to gradually phase in the full effect of CECL on regulatory capital over a

three-year transition period.

The Company implemented its CECL model commencing January 1, 2023 and elected to phase in the effect of CECL on regulatory capital over the three-year transition period.

In March 2022, the FASB issued ASU 2022-02 –

Financial Instruments-Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures.

The FASB issued this ASU in response to feedback the FASB received from various stakeholders in its post-implementation review process

related to the issuance of ASU 2016-13.

The amendments in this ASU include the elimination of accounting guidance for troubled debt restructurings (“TDRs”) in Subtopic 310-40 – Receivables-Troubled Debt Restructurings by Creditors, and

introduce new disclosures and enhance existing disclosures concerning certain loan refinancings and restructurings when a borrower is experiencing financial difficulty.

Under the provisions of this ASU, an entity must determine whether a

modification results in a new loan or the continuation of an existing loan.

Further, the amendments in this ASU require that an entity disclose current period gross charge-offs on financing receivables within the scope of ASC 326 by year

of origination and class of financing receivable.

The amendments in this ASU became effective for the Company on January 1, 2023, for all interim and annual periods.

The adoption of the provisions in this ASU are applied prospectively and

have resulted in additional disclosures concerning modifications of loans to borrowers experiencing financial difficulty, as well as disaggregated disclosure of charge-offs on loans.

Accounting Pronouncements Yet to Be Adopted

In March 2023, the FASB issued ASU 2023-02 –

Investments-Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, a Consensus of the Emerging Issues Task Force.

The amendments in this ASU allow the

option for an entity to apply the proportional amortization method of accounting to other equity investments that are made for the primary purpose of receiving tax credits or other income tax benefits, if certain conditions are met.

to this ASU, the application of the proportional amortization method of accounting was limited to investments in low-income housing tax credit structures.

The proportional amortization method of accounting results in the amortization of

applicable investments, as well as the related income tax credits or other income tax benefits received, being presented on a single line in the consolidated statements of operations and comprehensive loss (within income tax expense).

Under this ASU, an entity has the option to apply the proportional amortization method of accounting to applicable investments on a tax-credit-program-by-tax-credit-program basis.

In addition, the amendments in this ASU require that all

tax equity investments accounted for using the proportional amortization method use the delayed equity contribution guidance in paragraph 323-740-25-3, requiring a liability be recognized for delayed equity contributions that are

unconditional and legally binding or for equity contributions that are contingent upon a future event when that contingent event becomes probable.

Under this ASU, low-income housing tax credit investments for which the proportional

amortization method is not applied can no longer be accounted for using the delayed equity contribution guidance.

Further, this ASU specifies that impairment of low-income housing tax credit investments not accounted for using the equity

method must apply the impairment guidance in Topic 323 – Investments-Equity Method and Joint Ventures.

This ASU also clarifies that for low-income housing tax credit investments not accounted for under the proportional amortization method

or the equity method, an entity shall account for them under Topic 321 – Investments-Equity Securities.

The amendments in this ASU also require additional disclosures in interim and annual periods concerning investments for which the

proportional amortization method is applied, including the nature of tax equity investments and the effect of tax equity investments and related income tax credits and other income tax benefits on the consolidated statements of financial

position and results of operations.

The provisions of this ASU are effective for the Company for interim and annual periods beginning after December 15, 2023.

Early adoption is permitted.

The Company is currently evaluating the impact of

this ASU on its consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07 – Segment Reporting (Topic 280):

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amendments in this ASU improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The new ASU adds required disclosure of significant segments expenses that are regularly

provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, as well as the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of

segment profit or loss in assessing segment performance.

The ASU also clarifies that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance, an entity may report one or more of those

additional measures of segment profit;

however, at least one of the reported segment profit or loss measures should be the measure that is most consistent with the measurement principals used in measuring the corresponding amounts in the

entity’s consolidated financial statements.

Finally, the new ASU requires that an entity that has only one reportable segment provide all of the disclosures required by this ASU and all existing segment disclosures in Topic 280.

provisions of this ASU are effective, on a prospective basis, for the Company for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

amendments in this ASU will not affect the Company’s consolidated statements of financial condition or consolidated statements of operations and comprehensive loss;

however, the required disclosures will be added to the Company’s

consolidated financial statements after the ASU is adopted.

The new ASU adds required disclosure of significant segments expenses that are

regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, as well as the title and position of the CODM and an explanation of how the CODM uses the

reported measure(s) of segment profit or loss in assessing segment performance.

The ASU also clarifies that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance, an entity may

report one or more of those additional measures of segment profit;

however, at least one of the reported segment profit or loss measures should be the measure that is most consistent with the measurement principals used in

measuring the corresponding amounts in the entity’s consolidated financial statements.

Finally, the new ASU requires that an entity that has only one reportable segment provide all of the disclosures required by this ASU and all

existing segment disclosures in Topic 280.

The p rovisions of this ASU became effective, on a prospective basis, for the Company for fiscal years beginning after December 15, 2023, and interim periods within fiscal years

beginning after December 15, 2024.

The amendments in this ASU did not affect the Company’s consolidated statements of financial condition or consolidated statements of operations and comprehensive loss;

however, the required

disclosures have been added.

Accounting Pronouncements Yet to Be Adopted

In December 2023, the FASB issued ASU 2023-09 – Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The amendments in this

ASU address investor requests for more transparency about income tax information through improvements to income tax disclosures.

The ASU enhances existing requirements that an entity disclose a tabular reconciliation, using both reporting

currency amounts and percentages, of the entity’s reported income tax expense and the amount computed by multiplying income from continuing operations before income taxes by the applicable statutory Federal income tax rate by including

specific categories in the rate reconciliation table and requiring additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5% of the amount

computed by multiplying pretax income or loss by the applicable statutory income tax rate).

The ASU also includes requirements to disclose the amount of income taxes paid (net of refunds received) disaggregated by Federal, state, and

foreign taxes and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid are equal to or greater than 5% of total income taxes paid.

The amendments in this ASU are

effective, on a prospective basis, for annual periods beginning after December 31, 2024.

The amendments in

this ASU address investor requests for more transparency about income tax information through improvements to income tax disclosures.

The ASU enhances existing requirements that an entity disclose a tabular reconciliation, using

both reporting currency amounts and percentages, of the entity’s reported income tax expense and the amount computed by multiplying income from continuing operations before income taxes by the applicable statutory Federal income tax

rate by including specific categories in the rate reconciliation table and requiring additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater

than 5% of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate).

The ASU also includes requirements to disclose the amount of income taxes paid (net of refunds received) disaggregated

by Federal, state, and foreign taxes and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid are equal to or greater than 5% of total income taxes paid.

amendments in this ASU are effective, on a prospective basis, for annual periods beginning after December 31, 2024.

Early adoption is permitted.

The amendments in this ASU will not affect the Company’s consolidated statements of financial condition or consolidated

statements of operations and comprehensive loss;

The amendments in this ASU will not affect the Company’s consolidated statements of

financial condition or consolidated statements of operations and comprehensive income;

however, the required disclosures will be added to the Company’s consolidated financial statements after the ASU is adopted.

In November 2024, the FASB issued ASU 2024-03 – Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) :

Disaggregation of Income Statement Expenses .

The amendments in this update require companies to disclose, in the notes to financial statements, specified information about certain costs and expenses at

each interim and annual reporting period.

The provisions of this ASU become effective for the Company for all annual and interim periods beginning January 1, 2027.

The adoption of ASU No.

2024-03 is not expected to have a material

impact on the Company’s financial statements.

In January 2025, the FASB issued ASU 2025-01 – Income Statement – Reporting Comprehensive

Income – Expense Disaggregation Disclosures (Subtopic 220-40) .

The purpose of this update is to clarify and affirm the initial effective date of adoption of ASU 2024-03 to be annual periods beginning after December 15, 2026,

and interim periods within annual reporting periods beginning after December 15, 2027.

Note 2 – Capital

On June 7, 2022, the Company closed a private placement of shares of the Company’s Senior Non-Cumulative Perpetual

Preferred Stock, Series C, par value $ 0.01 , pursuant to a Letter Agreement, dated as of June 7, 2022, with the United States Department

of the Treasury.

The Purchase Agreement was entered into pursuant to the Purchaser’s Emergency Capital Investment Program.

Pursuant to the Purchase Agreement, the Purchaser acquired an aggregate of 150,000 shares of Series C Preferred Stock, for an aggregate purchase price equal to $ 150.0 million in cash.

The liquidation value of the Series C Preferred Stock is $ 1,000

This is non-cumulative redeemable perpetual preferred stock which does not have any voting rights, with the exception of voting rights on certain matters.

The holders of Series C Preferred Stock will be entitled to a dividend payable in

cash quarterly at an annual rate dependent on certain factors as reported by the Company to the Purchaser in a quarterly supplemental report, as set forth in the Purchase Agreement.

The initial dividend rate is zero percent for the first two years

after issuance, and thereafter the floor dividend rate is 0.50 % and the ceiling dividend rate is 2.00 %.

first quarter of 2022, the Company completed the exchange of all the Series A Fixed Rate Cumulative Redeemable Preferred Stock, with an aggregate liquidation value of $ 3.0 million, plus accrued dividends, for 149,164 shares of Class A Common

Stock at an exchange price of $ 20.08 per share of Class A Common Stock.

On October 31, 2023, the Company effected a reverse stock split of the Company’s outstanding shares of Class A common stock, Class B common stock, and Class C common

stock, par value $ 0.01 per share, at a ratio of 1-for-8 (the “Reverse Stock Split”).

The shares of Class A Common Stock listed on The Nasdaq Capital Market commenced trading on The Nasdaq Capital Market on a post-Reverse Stock Split adjusted basis at the open

of business on November 1, 2023.

As a result of the Reverse Stock Split, the number of issued and outstanding shares of common stock immediately prior to the Reverse Stock Split was reduced, such that every eight shares of common stock held by a

stockholder immediately prior to the Reverse Stock Split were combined and reclassified into one share of common stock.

A ll common stock share amounts and per share numbers

discussed herein have been adjusted f or the Reverse Stock Split.

On October 31, 2023, the Company effected a reverse stock split of the Company’s outstanding shares of Class A common stock, Class B common stock, and Class C common stock, par value $ 0.01 per share, at a ratio of 1-for-8

(the “Reverse Stock Split”).

The shares of Class A Common Stock listed on The Nasdaq Capital Market commenced trading on The Nasdaq Capital Market on a post-Reverse Stock Split

adjusted basis at the open of business on November 1, 2023.

As a result of the Reverse Stock Split, the number of issued and outstanding shares of common stock immediately prior to the Reverse Stock Split was reduced, such that every eight

shares of common stock held by a stockholder immediately prior to the Reverse Stock Split were combined and reclassified into one share of common stock.

A ll common stock share amounts and per share numbers discussed herein have been

adjusted f or the Reverse Stock Split.

On October 31, 2023 the Company purchased 244,771

5 unchanged sentences

The purchase was financed from cash on hand and the shares were retired.

During the year ended December 31, 2024, the Company declared and paid ECIP dividends of $ 1.6 million on its non-cumulative redeemable perpetual preferred stock.

Note 3 – Securities

The following table summarizes the amortized cost and fair value of the available‑for‑sale investment securities portfolios at December 31, 2024 and December 31,

2022 and the corresponding amounts of unrealized gains (losses) which are recognized in accumulated other comprehensive income (loss):

2023 and the corresponding amounts of unrealized gains (losses) which are recognized in accumulated other comprehensive loss:

(In thousands)

20 unchanged sentences

Due after ten years

Mortgage-backed securities, CMOs and SBA pools do

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

The table below indicates the length of time individual securities had been in a continuous unrealized loss position:

The table below indicates the length of time individual securities have been in a continuous unrealized loss position:

Less than 12 Months

11 unchanged sentences

Municipal bonds

Securities with a market value of $ 89.0 million were pledged as collateral for securities sold under agreements to

repurchase as of December 31, 2023 and included $ 47.8 million of U.S.

Treasuries, $ 30.2 million of federal agency debt, and $ 11.0 million of

federal agency mortgage-backed securities.

Securities with a market value of $ 64.4 million were pledged as collateral for

securities sold under agreements to repurchase as of December 31, 2022 and included $ 33.3 million of federal agency debt, $ 19.2 million of U.S.

Treasuries and $ 11.9

million of federal agency mortgage-backed securities.

Investment securities with a book value of $ 107.3 million and a fair

value of $ 98.3 million were pledged as collateral to the Federal Reserve as of December 31, 2023 for borrowings under the Bank Term

Funding Program .

At December 31, 2023 and 2022, 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, 2023 and 2022, there were no holdings of securities by any one issuer, other than the U.S.

Securities with a market value of $ 83.3 million were pledged as collateral for securities sold under agreements to repurchase as of December 31, 2024 and included $ 46.5 million of U.S.

Treasuries, $ 27.1

million of federal agency debt, $ 5.5 million of federal agency mortgage-backed securities, and $ 4.2 million of SBA pools.

Securities with a market value of $ 89.0 million were pledged as collateral for securities sold under agreements to repurchase as of December 31, 2023 and included $ 47.8 million of U.S.

Treasuries, $ 30.2 million of

federal agency debt, and $ 11.0 million of federal agency mortgage-backed securities.

Investment securities with a book

value of $ 107.3 million and a fair value of $ 98.3 million were pledged as collateral to the Federal Reserve as of December 31, 2023 for borrowings under the Bank Term Funding Program.

December 31, 2024 and 2023, 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, 2024 and 2023, 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.

Accrued interest receivable on

securities was $ 1.2 million at December 31, 2023 and 2022, and is included in the consolidated statement of financial condition

in accrued interest receivable .

At December 31,

2023 and 2022, there were no securities in nonaccrual status.

All securities in the portfolio were current with their

contractual principal and interest payments.

At December 31, 2023 and 2022, there were no securities purchased with

deterioration in credit quality since their origination, and there were no collateral dependent securities.

Accrued interest receivable on securities was $ 796 thousand and $ 1.2 million at December 31, 2024 and

2023, respectively, and is included in the consolidated statements of financial condition in accrued interest receivable .

At December 31, 2024 and 2023, there were no

securities in nonaccrual status.

All securities in the portfolio were current with their contractual principal and interest payments.

At December 31, 2024 and 2023, there were no securities purchased with deterioration in credit quality since their origination, and there were no collateral dependent securities.

Note 4 – Loans Receivable Held for Investment

11 unchanged sentences

Including Paycheck Protection Program (PPP) loans.

The allowance for credit losses as of December 31, 2022 was accounted for under ASC 450

and ASC 310, which is reflective of probable incurred losses as of the date of the consolidated statement of financial condition.

Effective January 1, 2023, the allowance for credit losses is accounted for under ASC 326, which is

reflective of estimated expected lifetime credit losses.

As of December 31, 2023 and 2022, the commercial loan category above included $ 2.5 million and $ 2.7 million of loans issued under the SBA’s Paycheck

Protection Program.

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.

Effective January

1, 2023, the Company accounts for credit losses on loans in accordance with ASC 326.

ASC 326 requires the Company to recognize estimates for lifetime losses on loans and off-balance sheet loan commitments at the time of origination or

The recognition of losses at origination or acquisition represents the Company’s best estimate of the lifetime expected credit loss associated with a loan given the facts and circumstances associated with the particular loan, and

involves the use of significant management judgment and estimates, which are subject to change based on management’s on-going assessment of the credit quality of the loan portfolio and changes in economic forecasts used in the model.

Company uses the WARM method when determining estimates for the ACL for each of its portfolio segments.

accounts for credit losses on loans in accordance with ASC 326, which requires the Company to recognize estimates for lifetime losses on loans and off-balance sheet loan commitments at the time of origination or acquisition.

The recognition

of losses at origination or acquisition represents the Company’s best estimate of the lifetime expected credit loss associated with a loan given the facts and circumstances associated with the particular loan, and involves the use of

significant management judgment and estimates, which are subject to change based on management’s on-going assessment of the credit quality of the loan portfolio and changes in economic forecasts used in the model.

The Company uses the WARM

method when determining estimates for the ACL for each of its portfolio segments.

The weighted average remaining life, including the effect of estimated prepayments, is calculated for each loan pool on a quarterly basis.

The Company then

estimates a loss rate for each pool using both its own historical loss experience and the historical losses of a group of peer institutions during the period from 2004 through the most recent quarter.

Company’s ACL model also includes adjustments for qualitative factors, where appropriate.

13 unchanged sentences

These qualitative factors incorporate the concept of reasonable and supportable forecasts, as required by ASC 326.

The following table summarizes the activity in the allowance for credit losses on loans for the period indicated:

The following tables summarize the activity in the allowance for credit losses on loans for the periods indicated:

For the Year Ended December 31, 2024

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Commercial - other

The following table presents the activity in the allowance for loan losses by loan type for the period indicated:

For the Year Ended December 31, 2023

(In thousands)

Beginning balance

Provision for (recapture of) loan losses

Loans charged off

Ending balance

The ACL increased to $ 7.3 million as of December 31, 2023, compared to $ 4.4 million as of December 31, 2022.

The increase was primarily due to the implementation of the CECL methodology adopted by the Bank effective

January 1, 2023, which increased the ACL by $ 1.8 million.

In addition, the Bank recorded an additional provision for credit losses of

$ 935 thousand for the twelve months ended December 31, 2023 due to loan growth of $ 114.9 million.

The CECL methodology includes estimates of expected loss rates in the future, whereas the former ALLL methodology did not.

Prior to the Company’s adoption of ASC 326 on January 1, 2023, the Company maintained ALLL in accordance with ASC 310 and ASC 450 that covered estimated credit losses on individually evaluated loans

that were determined to be impaired, as well as estimated probable incurred losses inherent in the remainder of the loan portfolio.

Beginning on January 1, 2023, the Company evaluates loans collectively for purposes of determining the ACL in accordance with ASC 326.

Collective evaluation is based on aggregating loans deemed to

possess similar risk characteristics.

In certain instances, the Company may identify loans that it believes no longer possess risk characteristics similar to other loans in the loan portfolio.

These loans are typically identified from those

that have exhibited deterioration in credit quality, since the specific attributes and risks associated with such loans tend to become unique as the credit deteriorates.

Such loans are typically nonperforming, downgraded to substandard or

worse, and/or are deemed collateral dependent, where the ultimate repayment of the loan is expected to come from the operation of or eventual sale of the collateral.

Loans that are deemed by management to no longer possess risk characteristics

similar to other loans in the portfolio, or that have been identified as collateral dependent, are evaluated individually for purposes of determining an appropriate lifetime ACL.

The Company uses a discounted cash flow approach, using the

loan’s effective interest rate, for determining the ACL on individually evaluated loans, unless the loan is deemed collateral dependent, which requires evaluation based on the estimated fair value of the underlying collateral, less estimated

selling costs.

The Company may increase or decrease the ACL for collateral dependent loans based on changes in the estimated fair value of the collateral.

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

December 31, 2023

Single-Family

Impact of CECL

(In thousands)

Loans receivable held for investment:

Single-family

1 unchanged sentence

Commercial - other

At December 31, 2023, $ 6.4 million of individually evaluated loans were evaluated based on the underlying value of the collateral and no individually evaluated loans were evaluated using a discounted cash flow approach.

These loans had an associated ACL of $ 112 thousand as of December 31, 2023.

of these collateral dependent loans were on nonaccrual status at December 31, 2023.

part of the CFBanc merger on April 1, 2021, the Company acquired PCD loans.

Prior to the CFBanc merger, there were no such

acquired loans.

The carrying amount of those loans was as follows:

Company also recorded a recovery of provision for off-balance sheet loan commitments of $ 91 thousand and $ 2 thousand for the years ended December 31, 2024 and 2023, respectively.

The ACL increased to $ 8.1 million as of December 31, 2024, compared to $ 7.3 million as of December 31, 2023, primarily due to growth in the loan portfolio.

The Company evaluates loans collectively for purposes of determining the ACL in accordance with ASC 326.

Collective evaluation is based on aggregating loans deemed to possess similar risk

characteristics.

In certain instances, the Company may identify loans that it believes no longer possess risk characteristics similar to other loans in the loan portfolio.

These loans are typically identified from those that have exhibited

deterioration in credit quality, since the specific attributes and risks associated with such loans tend to become unique as the credit deteriorates.

Such loans are typically nonperforming, downgraded to substandard or worse, and/or are deemed

collateral dependent, where the ultimate repayment of the loan is expected to come from the operation of or eventual sale of the collateral.

Loans that are deemed by management to no longer possess risk characteristics similar to other loans in

the portfolio, or that have been identified as collateral dependent, are evaluated individually for purposes of determining an appropriate lifetime ACL.

The Company uses the remaining life approach, using the loan’s effective interest rate, for

determining the ACL on individually evaluated loans, unless the loan is deemed collateral dependent, which requires evaluation based on the estimated fair value of the underlying collateral, less estimated selling costs.

The Company may

increase or decrease the ACL for collateral dependent loans based on changes in the estimated fair value of the collateral.

The following tables present collateral dependent loans by collateral type as of the date indicated:

December 31, 2024

Single-Family

(In thousands)

1 unchanged sentence

Commercial real estate

Commercial – other

The following table summarizes the discount on the PCD

loans for the periods indicated:

(In thousands)

Balance at the beginning of the period

Deductions due to payoffs

Balance at the end of the period

Prior to the adoption of ASC 326 on January 1, 2023, the Company classified loans as impaired when, based on current information and events, it was probable that the Company

would be unable to collect all amounts due according to the contractual terms of the loan agreement or it was determined that the likelihood of the Company receiving all scheduled payments, including interest, when due was remote.

losses on impaired loans were determined separately based on the guidance in ASC 310.

Beginning January 1, 2023, the Company accounts for credit losses on all loans in accordance with ASC 326, which eliminates the concept of an impaired loan

within the context of determining credit losses, and requires all loans to be evaluated for credit losses collectively based on similar risk characteristics.

Loans are only evaluated individually when they are deemed to no longer possess

similar risk characteristics with other loans in the loan portfolio.

The following table presents 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 the impairment method as of the date indicated:

December 31, 2023

(In thousands)

Allowance for loan losses:

Ending allowance balance attributable to loans:

Individually evaluated for impairment

Collectively evaluated for impairment

Total ending allowance balance

Loans individually evaluated for impairment

Loans collectively evaluated for impairment

Loans acquired in the Merger

Total ending loans balance

The following table presents information related to loans individually evaluated for impairment by loan type as of the period indicated:

December 31, 2022

(In thousands)

With no related allowance recorded:

With an allowance recorded:

Single-Family

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 table presents 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, 2022

(In thousands)

Single-family

Commercial real estate

Commercial – other

At December 31, 2024, one $ 264 thousand individually

evaluated loan was evaluated based on the estimated fair value of the underlying collateral.

This loan had no associated ACL

as of December 31, 2024 and was on nonaccrual status.

At December 31, 2023, $ 6.4 million of individually evaluated loans were evaluated based on the estimated fair value of the underlying collateral.

These loans had an

associated ACL of $ 112 thousand as of December 31, 2023.

None of these collateral dependent loans were on nonaccrual status at December 31, 2023.

At December 31, 2023, no individually evaluated loans were evaluated using a discounted future cash flow approach.

Past Due Loans

12 unchanged sentences

Commercial - other

The following table presents the recorded investment in non‑accrual loans by loan type as of the periods indicated:

The following table presents the recorded investment in non‑accrual loans by loan type as of the period indicated:

December 31, 2024

Allowance for

Credit Losses

Loans receivable held for investment:

1 unchanged sentence

Total non-accrual loans

There were no non-accrual loans as of December 31, 2023.

There were no loans 90 days or more delinquent

that were accruing interest as of December 31, 2024 or December 31, 2023.

None of the church non-accrual loans were delinquent,

but none qualified for accrual status as of the dates indicated.

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 $ 31 thousand for the year ended December

31, 2022, and was not included in the consolidated results of operations.

None of the non-accrual loans were delinquent.

Modified Loans to Troubled Borrowers

On January 1, 2023, the Company adopted

ASU 2022-02, which introduces new reporting requirements for modifications of loans to borrowers experiencing financial difficulty.

GAAP requires that certain types of modifications of loans in response to a borrower’s financial difficulty be

reported, which consist of the following:

(i) principal forgiveness, (ii) interest rate reduction, (iii) other-than-insignificant payment delay, (iv) term extension, or (v) any combination of the foregoing.

The ACL for loans that were modified

in response to a borrower’s financial difficulty is measured on a collective basis, as with other loans in the loan portfolio, unless management determines that such loans no longer possess risk characteristics similar to others in the loan

GAAP requires that certain types of

modifications of loans in response to a borrower’s financial difficulty be reported, which consist of the following:

(i) principal forgiveness, (ii) interest rate reduction, (iii) other-than-insignificant payment delay, (iv) term extension, or

(v) any combination of the foregoing.

The ACL for loans that were modified in response to a borrower’s financial difficulty is measured on a collective basis, as with other loans in the loan portfolio, unless management determines that such

loans no longer possess risk characteristics similar to others in the loan portfolio.

In those instances, the ACL for such loans is determined through individual evaluation.

There were no loan

modifications to borrowers that were experiencing financial difficulty during the year-ended December 30, 2023.

Troubled Debt Restructurings (TDRs)

Prior to the adoption of ASU 2022-02 – Financial Instruments-Credit Losses:

Troubled Debt Restructurings and Vintage Disclosures

on January 1, 2023, the Company accounted for TDRs in accordance with ASC 310-40.

When a loan to a borrower that was experiencing financial difficulty was modified in response to that difficulty, the loan was classified as a TDR.

At December 31,

2022, loans classified as TDRs totaled $ 1.7 million, of which $ 144 thousand were included in non-accrual loans and $ 1.6

million were on accrual status.

The Company had allocated $ 7 thousand of specific reserves for accruing TDRs as of December 31, 2022.

TDRs on accrual status were 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 of time and for which the Company anticipates

full repayment of both principal and interest.

TDRs that were on non-accrual status could be returned to accrual status after a period of sustained performance, generally determined to be six months of timely payments, as modified.

ASU 2022-02 eliminated the concept of TDRs in current GAAP, and therefore, beginning January 1, 2023, the Company no longer reports loans modified as TDRs except for those loans modified and reported

as TDRs in prior period financial information under previous GAAP.

The following table presents the amortized costs basis as of December 31, 2024 and the financial effect of loans modified to borrowers experiencing financial

difficulty during the year ended December 31, 2024.

There were no loan modifications to borrowers that were experiencing financial difficulty during the year

ended December 31, 2023.

December 31, 2024

Term Extension

(In Thousands)

Commercial real estate

Commercial - other

Quality Indicators

6 unchanged sentences

The Company analyzes all other loans individually by classifying the loans as to credit risk.

analysis is performed at least on a quarterly basis.

analysis is performed at least on an annual basis.

The Company uses the following definitions for risk ratings:

4 unchanged sentences

Special Mention.

Loans classified as special mention have a potential weakness that deserves management’s close attention.

If left uncorrected, these potential weaknesses may

result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Loans classified as special mention have a potential weakness that deserves management’s close attention that appears short-term in nature.

uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.

so classified have a well‑defined weakness or weaknesses that jeopardize the liquidation of the debt.

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

so classified have a well‑defined weakness or weaknesses that jeopardizes the liquidation of the debt.

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

Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection

5 unchanged sentences

Pass rated loans are not more than 59 days past due and are generally performing in accordance with the

The following table stratifies the loans held for investment portfolio by the Company’s internal risk grading, and by year of origination as of December 31, 2023:

Term Loans Amortized Cost Basis by Origination Year

The following table stratifies the loans held for investment portfolio by the Company’s internal risk grading, and by year of origination as

of the date indicated:

Term Loans Amortized Cost Basis by Origination Year - As of December 31, 2024

(In thousands)

Single-family:

Special Mention

Multi-family:

1 unchanged sentence

Commercial real estate:

Construction:

Commercial – other:

Special Mention

Construction:

Term Loans Amortized Cost Basis by Origination Year - As of December 31, 2023

(In thousands)

Single-family:

Special Mention

Commercial – other:

Multi-family:

Special Mention

Commercial real estate:

Special Mention

Construction:

Special Mention

Commercial – other:

Special Mention

Based on the most recent analysis performed, the risk

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

December 31, 2022

Special Mention

(In thousands)

Single-family

Commercial real estate

Commercial – others

Special Mention

Allowance for Credit Losses for Off-Balance Sheet Commitments

The Company maintains an allowance for credit losses on off-balance sheet commitments related to

unfunded loans and lines of credit, which is included in other liabilities of the consolidated statements of financial condition.

Upon the Company’s adoption of ASC 326 on January 1, 2023, the Company applies an expected credit loss

estimation methodology for off-balance sheet commitments.

unfunded loans and lines of credit, which is included in accrued expenses and other liabilities of the consolidated statements of financial condition.

The Company applies an expected credit loss estimation methodology for off-balance sheet

This methodology is commensurate with the methodology applied to each respective segment of the loan portfolio in determining the ACL for loans held-for-investment.

The loss estimation

process includes assumptions for the probability that a loan will fund, as well as the expected amount of funding.

The loss estimation process includes assumptions for the

probability that a loan will fund, as well as the expected amount of funding.

These assumptions are based on the Company’s own historical internal loan data.

1 unchanged sentence

2023, respectively.

These amounts are included in accrued expenses and other liabilities on the consolidated statements of condition.

The recovery of credit losses for off-balance sheet commitments was $ 2 thousand for the year ended December 31, 2023.

The recovery of credit losses for off-balance sheet commitments was $ 91 thousand and $ 2 thousand for the years ended December 31, 2024 and 2023, respectively.

Note 5 – Office Properties and Equipment, net

2 unchanged sentences

Office buildings and improvements

Right of use assets

Furniture, fixtures, and equipment

6 unchanged sentences

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 ROU asset totaled $ 655

thousand as of December 31, 2023 and was included in office properties and equipment, net , on the consolidated statements of financial

The lease liability totaled $ 655 thousand as of December 31, 2023 and was included in accrued expenses and other liabilities on the consolidated statements of financial condition.

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 ROU asset totaled $ 420 thousand and $ 655 thousand as of

December 31, 2024 and 2023, respectively, and was included in other assets on the consolidated statements of financial condition.

The lease liability totaled $ 420 thousand and $ 655 thousand as of December 31, 2024 and 2023, respectively, and was included in accrued expenses and other liabilities on the consolidated statements of financial condition.

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

16 unchanged sentences

Year ended December 31, 2026

Total future minimum lease payments

2 unchanged sentences

Note 7 – Goodwill and Core Deposit Intangible

The Company recognized goodwill of $ 25.9 million and a

core deposit intangible of $ 2.1 million.

The following table presents the changes in the carrying

amounts of goodwill and core deposit intangibles for the year ended December 31, 2023 and 2022:

The following table presents the changes in the carrying amounts of goodwill and core deposit intangibles for the years ended December

31, 2024 and 2023:

December 31, 2024

1 unchanged sentence

Balance at the beginning of the period

Change in deferred tax estimate

Balance at the end of the period

2 unchanged sentences

Balance at the beginning of the period

Change in deferred tax estimate

Balance at the end of the period

3 unchanged sentences

The Company performed its

qualitative assessment as of December 31, 2023 as well as a quantitative assessment as of December 31, 2023 due to concerns regarding declines in the Company’s stock price.

No impairment charges were necessary as a result of the quantitative

qualitative and quantitative assessment as of September 30, 2024 due to concerns regarding declines in the Company’s stock price.

No impairment charges were necessary as a result of the qualitative and quantitative assessments.

The carrying value and accumulated amortization related to the Company’s core deposit intangible consisted of the following at December 31, 2024 and 2023:

December 31, 2023

December 31, 2022

(In thousands)

37 unchanged sentences

Municipal bonds

There were no transfers between Level 1, Level 2, or Level 3 during the years ended December 31, 2023 and 2022.

There were no transfers between Level 1, Level 2, or Level 3 during the years ended December 31, 2024 or 2023.

Assets Measured on a Nonrecurring Basis

There were no assets or liabilities measured at fair value on a nonrecurring basis at December 31, 2024 or 2023.

Fair Values of Financial Instruments

11 unchanged sentences

Securities sold under agreements to repurchase

Bank Term Funding Program borrowing

Accrued interest payable

10 unchanged sentences

Securities sold under agreements to repurchase

Bank Term Funding Program borrowing

Accrued interest payable

15 unchanged sentences

accepted under the CDARS program is nonreciprocal deposits which are considered to be brokered funds.

As of December 31, 2023, the Bank had no

As of December 31, 2024 and 2023, the Bank had no

such deposits.

At December 31, 2023 and 2022, the Bank had $ 0 and $ 4.3 million in (non-CDARS) brokered deposits, respectively.

As of December 31, 2024 and 2023, approximately $ 268.8

11 unchanged sentences

The following table summarizes information relating to FHLB advances at or for the periods indicated:

At or For the Year Ended December 31,

At or For the Year Ended

(Dollars in thousands)

6 unchanged sentences

Weighted average maturity (in months)

The majority of FHLB advances are overnight borrowings

Each advance is

8 unchanged sentences

2023, the Company borrowed $ 100.0 million from the Federal Reserve under the Bank Term Funding Program (“BTFP”).

As of December 31,

2023, $ 100.0 million was outstanding.

The interest rate on this borrowing is fixed at 4.84 % and the borrowing matures on December 29, 2024 .

Investment securities with a book value of $ 107.3 million and a fair value of $ 98.3 million were pledged as collateral for this borrowing as of December 31, 2023.

There are no prepayment penalties for early payoff.

As the BTFP ended on March 11, 2024, no additional borrowings can be made under the program.

This borrowing was

paid off in December 2024.

The interest rate on this borrowing was fixed at 4.84 % and the borrowing matured on December 29, 2024 .

Investment securities with a book value of $ 107.3 million and a fair value of $ 98.3 million were pledged as collateral for this borrowing as

of December 31, 2023.

In addition, the

Bank had additional lines of credit of $ 10.0 million with other financial institutions as of December 31, 2023.

Bank had additional lines of credit of $ 10.0 million with other financial institutions as of December 31, 2024 and 2023.

No amounts were drawn on the lines of credit at December 31, 2024 or 2023.

Note 11 – 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 Bank’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, 2023, securities sold under agreements to repurchase totaled $ 73.5 million at an average rate

These agreements mature on a daily basis, but management expects the agreements to be available in the foreseeable future.

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 Bank’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, 2024, securities sold under agreements to repurchase totaled $ 66.6 million at an

average rate of 3.62 %.

These agreements mature on a daily basis, but management expects the agreements to be available in the

foreseeable future.

The fair value of securities pledged totaled $ 83.3 million as of December 31, 2024 and included $ 46.5 million of U.S.

Treasuries, $ 27.1

million of federal agency debt, and $ 11.0 million of federal agency mortgage-backed securities.

As of December 31, 2022, securities

sold under agreements to repurchase totaled $ 63.5 million at an average rate of 0.38 %.

The fair value of securities pledged totaled $ 64.4

million as of December 31, 2022 and included $ 33.3 million of federal agency debt, $ 19.2 million of U.S.

Treasuries and $ 11.9 million of federal

agency mortgage-backed securities.

million of federal agency debt, $ 5.5 million of federal agency mortgage-backed securities, and $ 4.2 million of SBA pools.

As of December 31, 2023, securities sold under agreements to repurchase totaled $ 73.5 million at an average rate of 2.60 %.

The fair value of

securities pledged totaled $ 89.0 million as of December 31, 2023 and included $ 47.8 million of U.S.

Treasuries, $ 30.2 million of federal agency debt, and $ 11.0 million of federal agency mortgage-backed securities.

Note 12 – Notes Payable

3 unchanged sentences

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.

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.

The loan to the QALICB was secured by

a Leasehold Deed of Trust that, due to the pass-through, non-recourse structure, was operationally and ultimately for the benefit of Merrill Lynch rather than CFC 45.

Debt service payments received by CFC 45 from the QALICB were passed through

to Merrill Lynch in return for which CFC 45 received a servicing fee.

The financial statements of CFC 45 are consolidated with those of the Bank and the Company.

14 unchanged sentences

Expenses related to the 401(k) plans totaled $ 476

thousand in 2023 and $ 309 thousand for 2022.

thousand in 2024 and $ 447 thousand in 2023.

Employee s participate in an Employee Stock Ownership Plan (“ESOP”) after attaining certain age and service

29 unchanged sentences

million, respectively, which is shown as unearned ESOP shares in the equity section of the consolidated statements of financial condition.

During December of 2022, the Company issued a $ 5 million line of credit to the ESOP Plan

During December 2022, the Company issued a $ 5 million line of credit to the ESOP Plan

for the purchase of additional shares.

As of December 31, 2023, the trustee for the ESOP had purchased 428,327 shares at a total cost of $ 3.9 million.

As of December 31, 2022,

the trustee for the ESOP had purchased 58,369 shares at a total cost of $ 500 thousand .

All common stock share amounts and per share amounts above have been retroactively adjusted, as

applicable, for the 1-for-8 reverse stock split effective November 1, 2023.

As of December 31, 2024 and December 31, 2023, the trustee for the ESOP had purchased 428,327 shares at a total cost of $ 3.9 million .

All common stock share amounts and per share amounts above have been retroactively adjusted, as applicable, for the

1-for-8 reverse stock split effective November 1, 2023.

Note 14 – Income Taxes

8 unchanged sentences

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.

Income tax expense was as follows:

Income tax expense (benefit) was as follows:

(In thousands)

45 unchanged sentences

As of December 31,

2023, the Company had federal net operating loss carryforwards of $ 536 thousand, all of which can be carried forward

indefinitely.

The Company also had California net operating loss carryforwards of $ 21.8 million which will expire in 2031 through

2041, if not utilized.

The Company also had federal general business credits of $ 2.0 million, which will expire in 2030 through 2041,

if not utilized.

2024, the Company had California net operating loss carryforwards of $ 22.0 million which will begin to expire in 2032 if not

The Company also had federal general business credits of $ 1.5 million, which will begin to expire in 2033 if not utilized.

The Company did no t have any unrecognized tax benefits as of December 31, 2024 or 2023.

14 unchanged sentences

shares and brought the number of shares that may be issued under the Amended and Restated LTIP to 649,139 shares.

No stock options were granted during the year ended

December 31, 2023.

The following table summarizes stock option activity during the year ended December 31, 2024:

5 unchanged sentences

Exercisable at end of year

There was no stock-based compensation expense related to stock options during 2022 or 2023 as there was no remaining unrecognized compensation cost related to non-vested options granted under the plan as of December 31, 2021.

There was no stock-based compensation expense related to stock options during 2024 or 2023.

Options outstanding and exercisable at year‑end 2024 were as follows:

1 unchanged sentence

Stock Awards to Directors

In February 2023 and 2022, the Company awarded 9,230

In May 2024 and February 2023, the Company awarded 19,832

and 9,230 shares of common stock, respectively, to its directors under the LTIP, which are fully vested.

3 unchanged sentences

Awards to Employees

In March of 2022, the Company issued 61,908 shares of restricted stock to its officers and

employees under the LTIP, of which 17,012 shares have been forfeited as of December 31, 2023.

Each restricted stock award was

valued based on the fair value of the stock on the date of the award.

In March 2022, the Company issued 61,908 shares of restricted stock to its officers

and employees under the LTIP, of which 21,276 shares have been forfeited as of December 31, 2024.

Each restricted stock award

was valued based on the fair value of the stock on the date of the award.

These awarded shares of restricted stock fully vest over periods ranging from 36 months to 60 months from their respective dates of grant.

Stock-based compensation is

recognized on a straight-line basis over the vesting period.

During 2023 and 2022, the Company recorded $ 106 thousand and $ 133 thousand of stock-based compensation expense related to shares awarded to employees.

Stock-based compensation is recognized on a straight-line basis over the vesting period.

During 2024 and 2023, the Company recorded $ 88

thousand and $ 106 thousand, respectively, of stock-based compensation expense related to shares awarded to employees.

On June 21, 2023, the Company issued 92,720 shares of restricted stock to its officers and employees under the Amended and Restated LTIP, of which 23,997 shares have been forfeited as of December 31, 2024.

3 unchanged sentences

Stock-based compensation is recognized on a straight-line basis over the vesting period.

the year ended December 31, 2023, the Company recorded $ 104 thousand of stock-based compensation expense related to these

restricted stock awards.

the years ended December 31, 2024 and 2023, the Company recorded $ 113 thousand and $ 104 thousand, respectively, of stock-based compensation expense related to these restricted stock awards.

On March 26, 2024, and April 5, 2024, the Company

issued 126,083 shares of restricted stock to its officers and employees under the Amended and Restated LTIP, of which 13,015 shares have been forfeited as of December 31, 2024.

Each restricted stock award was valued based on the fair value of the stock on the date

of the award.

These awarded shares of restricted stock fully vest over periods ranging from 36 months to 60 months from their respective dates of grant.

Stock-based compensation is recognized on a straight-line basis over the vesting period.

the year ended December 31, 2024 the Company recorded $ 108 thousand of stock-based compensation expense related to these restricted

stock awards.

As of December 31, 2024, 307,046 shares had been awarded under the Amended and Restated LTIP and 342,093 shares were available to be awarded.

71 unchanged sentences

Other expense

Income (loss) before income tax and undistributed subsidiary income

Loss before income tax and undistributed subsidiary income

Income tax benefits

6 unchanged sentences

Equity in undistributed subsidiary income

Stock awards expenses

Change in other assets

Change in accrued expenses and other liabilities

Net cash (used in) provided by operating activities

Net cash used in operating activities

Cash flows from investing activities

3 unchanged sentences

Share repurchase - FDIC

Proceeds from issuance of preferred stock

Dividends declared and paid- ECIP

Increase in unreleased ESOP shares

Proceeds from repayment of ESOP loan

Net cash (used in) provided by financing activities

Net cash used in financing activities

Net change in cash and cash equivalents

1 unchanged sentence

Ending cash and cash equivalents

was $ 3.0 million of non-cash financing activities for the exchange of preferred stock for common stock in 2022.

Note 19 – Earnings Per Common Share

The factors used in the earnings per common share computation follow:

(Dollars in thousands,

(In thousands,

except share and per share)

Net income attributable to Broadway Financial Corporation

Less net income attributable to participating securities

Net income attributable to participating securities

Preferred stock dividends - ECIP

Income available to common stockholders

Weighted average common shares outstanding for basic earnings per common share

dilutive effects of unvested restricted stock awards

Effects of unvested restricted stock awards

Weighted average common shares outstanding for diluted earnings per common share

1 unchanged sentence

Earnings per common share - diluted

Stock options for 31,250 shares of common stock for

the year ended December 31, 2023, were not considered in computing diluted earnings per common share because they were anti‑dilutive.

Diluted earnings

per share for the year ended December 31, 2024 reflects preferred dividends of $ 0.18 per diluted common share.

Stock options for 12,500 and 31,250 shares of common stock for the years ended December 31, 2024 and 2023, respectively, were not considered in computing diluted earnings per

common share because they were anti‑dilutive.

Basic earnings per share of common stock is computed pursuant to the two-class method by dividing net loss

6 unchanged sentences

No unvested stock awards or potential common shares issuable under stock options were included in diluted earnings per share in either year.

All common stock share amounts above have been

retroactively adjusted, as applicable, for the 1-for-8 reverse stock split effective November 1, 2023.

Note 20 – Subsequent Events

1 unchanged sentence

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