BROADWAY FINANCIAL CORP DE 10-K

ITEM 9A. CONTROLS AND PROCEDURES 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 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. Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements. Further, because of changes in conditions, effectiveness of internal controls over financial reporting may vary over time. With the participation of the Company’s PEO and PFO, management has conducted an evaluation of the effectiveness of the Company’s system of internal control over financial reporting. 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 financial reporting. 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. 43 Table of Contents 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 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 Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as specified above. Management does not expect, however, that our disclosure controls and procedures will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions, and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. 44 Table of Contents ITEM 9B. OTHER INFORMATION None . ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 45 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 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”). ITEM 11. EXECUTIVE COMPENSATION 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.” ITEM 12. 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.” ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 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 Directors.” ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 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.” 46 Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) 1. See Index to Consolidated Financial Statements. 2. 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.” (b) List of Exhibits Exhibit Number* 3.1 Amended and Restated Certificate of Incorporation of Registrant (Exhibit 3.1 to Form 8-K filed by Registrant on April 5, 2021) 3.2 Certificate of Amendment to Certificate of Incorporation of Registrant (Exhibit 3.1 to Form 8-K filed by the Registrant on November 1, 2023) 3.3 Bylaws of Registrant (Exhibit 3.2 to Form 8‑K filed by Registrant on August 24, 2020) 3.4 Certificate of Designations for the Series B Junior Participating Preferred Stock (Exhibit 3.1 to Form 8-K filed by Registrant on September 11, 2019) 3.5 Certificate of Designations of Senior Non-Cumulative Perpetual Preferred Stock, Series C (Exhibit 3.1 to Form 8-K filed by Registrant on June 8, 2022) 4.1 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) 4.2 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) 4.3 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, 2020) 4.4 Registration Rights Agreement (Exhibit 10.2 to Form 8-K filed by Registrant on June 8, 2022) 10.1** Broadway Federal Bank Employee Stock Ownership Plan (Exhibit 10.1 to Form 10‑K filed by Registrant on March 28, 2016) 10.2** 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) 10.3** 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) 10.4** 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) 10.5** 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) 10.6** Employment Agreement, dated as of May 1, 2017, for Brenda J. Battey (Exhibit 10.11 to Form 10-K filed by Registrant on March 29, 2019) 10.7** Amendment to Employment Agreement for Brenda J. Battey, dated as of January 14, 2020 (Exhibit 10.1 to form 8-K filed by Registrant on January 14, 2021) 10.8** 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) 10.9** Amendment to Employment Agreement for Ruth McCloud, dated as of January 14, 2020 (Exhibit 10.3 to form 8-K filed by Registrant on January 14, 2021) 10.10** Broadway Federal Bank Incentive Compensation Plan (Exhibit 10.14 to Form 10-K filed by the Registrant on March 31, 2021) 10.11** Employment Agreement, dated and effective as of November 17, 2021, between Registrant and Brian E. Argrett (Exhibit 10.1 to Form 8-K filed by Registrant on November 18, 2021) 10.12 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) 10.13 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) 47 Table of Contents 10.14 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) 10.15 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) 10.16 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) 10.17 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) 10.18 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) 10.19 Stock Purchase Agreement, dated as of February 19, 2021, entered between Citicorp Banking Corporation and Registrant (Exhibit 10.26 to Form 10-K filed by Registrant on March 31, 2021) 10.20 Stock Purchase Agreement, dated as of February 19, 2021, entered between First Republic Bank and Registrant (Exhibit 10.8 to Form 10‑K filed by Registrant on March 31, 2021) 10.21 Stock Purchase Agreement, dated as of February 19, 2021, entered between Gerald I. White and Registrant (Exhibit 10.28 to Form 10-K filed by Registrant on March 31, 2021) 10.22 Stock Purchase Agreement, dated as of February 19, 2021, entered between Gerald I. White, in his capacity as the trustee for the Grace & White, Inc. Profit Sharing Plan, and Registrant (Exhibit 10.29 to Form 10-K filed by Registrant on March 31, 2021) 10.23 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. Grace Trust 99, and The Ruth Grace Jervis Millennium Trust (Exhibit 10.30 to Form 10-K filed by Registrant on March 31, 2021) 10.24 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) 10.25 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) 10.26 Letter Agreement and Securities Purchase Agreement, dated June 7, 2022 (Exhibit 10.1 to Form 8-K filed by Registrant on June 8, 2022) 19.1 Insider Trading Policy 21.1 List of Subsidiaries 23.1 Consent of Moss Adams LLP 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002 32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002 32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002 97.1 Compensation Clawback Policy (Exhibit 97.1 to Form 10-K filed by Registrant on May 20, 2024) 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definitions Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 The cover page from this Annual Report on Form 10-K, formatted in Inline XBRL (included as Exhibit 101). ** Management contract or compensatory plan or arrangement. ITEM 16. FORM 10-K SUMMARY None. 48 Table of Contents SIGNATURES 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 By: /s/ BRIAN ARGRETT Brian Argrett Chief Executive Officer Date: 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 indicated. /s/ BRIAN ARGRETT Date: March 31, 2025 Brian Argrett Chief Executive Officer and President (Principal Executive Officer) Chairman of the Board /s/ ZACK IBRAHIM Date: March 31, 2025 Zack Ibrahim Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) /s/ WAYNE-KENT A. BRADSHAW Date: March 31, 2025 Wayne-Kent A. Bradshaw Vice Chairman of the Board /s/ MARIE C. JOHNS Date: March 31, 2025 Marie C. Johns Lead Independent Director /s/ WILLIAM A. LONGBRAKE Date: March 31, 2025 William A. Longbrake Audit Committee Chairman /s/ ROBERT C. DAVIDSON, JR. Date: March 31, 2025 Robert C. Davidson, Jr. Director /s/ MARY ANN DONOVAN Date: March 31, 2025 Mary Ann Donovan Director /s/ DAVID J. MCGRADY Date: March 31, 2025 David J. McGrady Director /s/ DUTCH C. ROSS III Date: March 31, 2025 Dutch C. Ross III Director /s/ JOHN M. DRIVER Date: March 31, 2025 John M. Driver Director 49 Table of Contents BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY Index to Consolidated Financial Statements Years ended December 31, 2024 and 2023 Report of Independent Registered Public Accounting Firm (PCAOB ID # 659 ) F‑1 Consolidated Statements of Financial Condition F‑4 Consolidated Statements of Operations and Comprehensive Income F‑5 Consolidated Statements of Changes in Stockholders’ Equity F‑6 Consolidated Statements of Cash Flows F‑7 Notes to Consolidated Financial Statements F‑8 Table of Contents Report of Independent Registered Public Accounting Firm 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, 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). In our 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 These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting 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. We believe that our audits provide a reasonable basis for our opinion. 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. F-1 Table of Contents 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 million. 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 conditions; (iii) changes in the nature and volume of the portfolio and terms of loans; (iv) changes in the experience, depth, and ability of lending management; (v) changes in the volume and severity of past due loans and other similar conditions; (vi) changes in the quality of the organization’s loan review system; (vii) changes in the value of underlying collateral for collateral dependent loans; (viii) the existence and effect of any concentrations of credit and changes in the levels of such concentrations; and (ix) the effect of other external factors (i.e., competition, legal and regulatory requirements) on the level of estimated credit losses. 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 statements. 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 31, 2024. F-2 Table of Contents 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 statements. 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 used. /s/ Moss Adams LLP Spokane, Washington March 31, 2025 We have served as the Company’s auditor since 2014. F-3 Table of Contents BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY Consolidated Statements of Financial Condition December 31, 2024 December 31, 2023 (In thousands, except share and per share) Assets: Cash and due from banks $ 2,255 $ 5,460 Interest-bearing deposits in other banks 59,110 99,735 Cash and cash equivalents 61,365 105,195 Securities available-for-sale, at fair value (amortized cost of $ 219,658 and $ 335,978 ) 203,862 316,950 Loans receivable held for investment, net of allowance of $ 8,103 and $ 7,348 968,861 880,457 Accrued interest receivable 5,001 4,938 Federal Home Loan Bank (FHLB) stock 9,637 10,156 Federal Reserve Bank (FRB) stock 3,543 3,543 Office properties and equipment, net 8,899 9,185 Bank owned life insurance 3,321 3,275 Deferred tax assets, net 8,803 9,538 Core deposit intangible, net 1,775 2,111 Goodwill 25,858 25,858 Other assets 2,786 4,198 Total assets $ 1,303,711 $ 1,375,404 Liabilities and stockholders’ equity Liabilities: Deposits $ 745,399 $ 682,635 Securities sold under agreements to repurchase 66,610 73,475 FHLB advances 195,532 209,319 Bank Term Funding Program borrowing – 100,000 Notes payable – 14,000 Accrued expenses and other liabilities 10,794 13,878 Total liabilities 1,018,335 1,093,307 Stockholders’ equity: Non-Cumulative Redeemable Perpetual Preferred stock, Series C; authorized 150,000 shares at December 31, 2024 and December 31, 2023; issued and outstanding 150,000 shares at December 31, 2024 and December 31, 2023; liquidation value $ 1,000 per share 150,000 150,000 Common stock, Class A, $ 0.01 par value, voting; authorized 75,000,000 shares at December 31, 2024 and December 31, 2023; issued 6,349,455 shares at December 31, 2024 and 6,242,089 shares at December 31, 2023; outstanding 6,022,227 shares at December 31, 2024 and 5,914,861 shares at December 31, 2023 63 62 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 shares at December 31, 2024 and December 31, 2023 14 14 Common stock, Class C, $ 0.01 par value, non-voting; authorized 25,000,000 shares at December 31, 2024 and December 31, 2023; issued and outstanding 1,672,562 at December 31, 2024 and December 31, 2023 17 17 Additional paid-in capital 142,902 142,601 Retained earnings 12,911 12,552 Unearned Employee Stock Ownership Plan (ESOP) shares ( 4,201 ) ( 4,492 ) Accumulated other comprehensive loss, net of tax ( 11,223 ) ( 13,525 ) Treasury stock-at cost, 327,228 shares at December 31, 2024 and at December 31, 2023 ( 5,326 ) ( 5,326 ) Total Broadway Financial Corporation and Subsidiary stockholders’ equity 285,157 281,903 Non-controlling interest 219 194 Total liabilities and stockholders’ equity $ 1,303,711 $ 1,375,404 See accompanying notes to consolidated financial statements. F-4 Table of Contents BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY Consolidated Statements of Operations and Comprehensive Income Years Ended December 31, 2024 2023 (In thousands, except per share) Interest income: Interest and fees on loans receivable $ 48,807 $ 37,143 Interest on available-for-sale securities 7,034 8,697 Other interest income 6,368 1,388 Total interest income 62,209 47,228 Interest expense: Interest on deposits 13,183 7,512 Interest on borrowings 17,257 10,254 Total interest expense 30,440 17,766 Net interest income 31,769 29,462 Provision for credit losses 664 933 Net interest income after provision for credit losses 31,105 28,529 Non-interest income: Service charges 155 179 Grants 280 4,156 Other 1,119 1,022 Total non-interest income 1,554 5,357 Non-interest expense: Compensation and benefits 17,562 15,653 Occupancy expense 1,858 1,870 Information services 2,763 2,777 Professional services 3,449 3,126 Supervisory costs 785 613 Corporate insurance 234 245 Amortization of core deposit intangible 336 390 Other 2,907 2,689 Total non-interest expense 29,894 27,363 Income before income taxes 2,765 6,523 Income tax expense 814 1,985 Net income $ 1,951 $ 4,538 Less: Net income attributable to non-controlling interest 25 24 Net income attributable to Broadway Financial Corporation $ 1,926 $ 4,514 Less: Preferred stock dividends 1,567 - Net income attributable to common stockholders $ 359 $ 4,514 Other comprehensive income, net of tax: Unrealized gains on securities available-for-sale arising during the period $ 3,232 $ 5,552 Income tax expense 930 1,604 Other comprehensive income, net of tax 2,302 3,948 Comprehensive income $ 2,661 $ 8,462 Earnings per common share-basic $ 0.04 $ 0.52 Earnings per common share-diluted $ 0.04 $ 0.51 See accompanying notes to consolidated financial statements F-5 Table of Contents BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY Consolidated Statements of Changes in Stockholders’ Equity (In thousands, except share and per share) Preferred Stock Non-Voting Common Stock Voting Common Stock Non-Voting Additional Paid-in Capital Accumulated Other Comprehensive Loss Retained Earnings Unearned ESOP Shares Treasury Stock Non- Controlling Interest Total Stockholders’ Equity Balance at December 31, 2022 $ 150,000 $ 64 $ 31 $ 144,157 $ ( 17,473 ) $ 9,294 $ ( 1,265 ) $ ( 5,326 ) $ 170 $ 279,652 Cumulative effect of change related to adoption of ASU 2016-13 – – – – – ( 1,256 ) – – – ( 1,256 ) Adjusted balance, January 1, 2023 150,000 64 31 144,157 ( 17,473 ) 8,038 ( 1,265 ) ( 5,326 ) 170 278,396 Net income – – – – – 4,514 – – 24 4,538 Increase in unreleased shares – – – – – – ( 3,400 ) – – ( 3,400 ) Release of unearned ESOP shares – – – ( 80 ) – – 173 – – 93 Stock-based compensation expense – ( 2 ) – 210 – – – – – 208 Director stock compensation expense – – – 95 – – – – – 95 Share repurchase - FDIC – – – ( 1,781 ) – – – – – ( 1,781 ) Other comprehensive income, net of tax – – – – 3,948 – – – – 3,948 Balance at December 31, 2023 150,000 62 31 142,601 ( 13,525 ) 12,552 ( 4,492 ) ( 5,326 ) 194 282,097 Net income – – – – – 1,926 – – 25 1,951 Release of unearned ESOP shares – 1 – ( 104 ) – – 291 – – 188 Stock-based compensation expense – – – 309 – – – – – 309 Director stock compensation expense – – – 96 – – – – – 96 Dividends declared and paid - Emergency Capital Investment Program (“ECIP”) – – – – – ( 1,567 ) – – – ( 1,567 ) Other comprehensive income, net of tax – – – – 2,302 – – – – 2,302 Balance at December 31, 2024 $ 150,000 $ 63 $ 31 $ 142,902 $ ( 11,223 ) $ 12,911 $ ( 4,201 ) $ ( 5,326 ) $ 219 $ 285,376 See accompanying notes to consolidated financial statements. F-6 Table of Contents BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY Consolidated Statements of Cash Flows Years Ended December 31 2024 2023 (In thousands) Cash flows from operating activities: Net income $ 1,951 $ 4,538 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 664 933 Depreciation and amortization 424 385 Net change of deferred loan origination costs 641 413 Net accretion of premiums and discounts on available-for-sale securities ( 807 ) ( 1,044 ) Accretion of purchase accounting marks on loans ( 424 ) ( 235 ) Amortization of core deposit intangible 336 390 Director compensation expense-common stock 96 95 Accretion of premium on FHLB advances ( 9 ) ( 23 ) Stock-based compensation expense 309 208 ESOP compensation expense 188 93 Earnings on bank owned life insurance ( 46 ) ( 42 ) Net change in assets and liabilities: Deferred tax assets ( 195 ) 1,238 Accrued interest receivable ( 63 ) ( 965 ) Other assets 1,412 ( 677 ) Accrued expenses and other liabilities ( 3,084 ) 2,287 Net cash provided by operating activities 1,393 7,594 Cash flows from investing activities: Net change in loans receivable held for investment ( 89,285 ) ( 115,331 ) Principal payments and maturities on available-for-sale securities 117,127 18,395 Purchase of FHLB stock ( 13,654 ) ( 13,287 ) Proceeds from redemption of FHLB stock 14,173 8,667 Proceeds from redemption of FRB stock – 1,720 Purchase of office properties and equipment ( 138 ) ( 208 ) Net cash provided by (used in) investing activities 28,223 ( 100,044 ) Cash flows from financing activities: Net change in deposits 62,764 ( 4,281 ) Net change in securities sold under agreements to repurchase ( 6,865 ) 10,004 Increase in unreleased ESOP shares – ( 3,400 ) Repayments of Bank Term Funding Program ( 100,000 ) – Proceeds from Bank Term Funding Program – 100,000 Repayment of notes payable ( 14,000 ) – Dividends paid on ECIP preferred stock ( 1,567 ) – Share repurchase - FDIC – ( 1,781 ) Proceeds from FHLB advances 339,000 456,138 Repayments of FHLB advances ( 352,778 ) ( 375,140 ) Net cash (used in) provided by financing activities ( 73,446 ) 181,540 Net change in cash and cash equivalents ( 43,830 ) 89,090 Cash and cash equivalents at beginning of the period 105,195 16,105 Cash and cash equivalents at end of the period $ 61,365 $ 105,195 Supplemental disclosures of cash flow information: Cash paid for interest $ 30,628 $ 16,921 Cash paid for income taxes 416 2,036 See accompanying notes to consolidated financial statements. F-7 Table of Contents BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY Notes to Consolidated Financial Statements December 31, 2024 and 2023 Note 1 – Summary of Significant Accounting Policies Nature of Operations and Principles of Consolidation Broadway Financial Corporation (the “Company”) was incorporated under Delaware law in 1995 for the purpose of acquiring and holding all of the outstanding capital stock of Broadway Federal Savings and Loan Association as part of the bank’s conversion from a federally chartered mutual savings association to a federally chartered stock savings bank. In connection with the conversion, the bank’s name was changed to Broadway Federal Bank, f.s.b. (“Broadway Federal”). The conversion was completed, and Broadway Federal became a wholly‑owned subsidiary of the Company, in January 1996. On April 1, 2021, the Company completed its merger with CFBanc Corporation, with the Company continuing as the surviving entity. Immediately following the CFBanc Merger, Broadway Federal merged with and into City First Bank of D.C, National Association with City First Bank of D.C., National Association (the“Bank”) continuing as the surviving entity (combined with Broadway Federal). Concurrently with the Merger, the Bank changed its name to City First Bank, National Association. The Bank’s business is that of a financial intermediary and consists primarily of attracting deposits from the general public and using such deposits, together with borrowings and other funds, to make mortgage loans secured by residential and commercial real estate located in the Bank’s market areas. At December 31, 2024, the Bank operated three retail‑banking offices: Los Angeles and in the nearby city of Inglewood in California, and another in Washington, D.C. The Bank is subject to significant competition from other financial institutions and is also subject to regulation by certain federal agencies and undergoes periodic examinations by those regulatory authorities. The accompanying consolidated financial statements include Broadway Financial Corporation and its wholly owned subsidiary, City First Bank, National Association (together with the Company, “City First Broadway”). Also included in the consolidated financial statements are the following subsidiaries of City First Bank: 1432 U Street LLC, Broadway Service Corporation, City First Real Estate LLC, City First Real Estate II LLC, City First Real Estate III LLC, City First Real Estate IV LLC, and CF New Markets Advisors, LLC (“CFNMA”). In addition, CFNMA also consolidates CFC Fund Manager II, LLC; City First New Markets Fund II, LLC; 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. In accordance with SEC Staff Accounting Bulletin Nos. 99 and 108, 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. These adjustments are included in the Other Expense line item on the consolidated statements of operations and comprehensive income. Use of Estimates To prepare consolidated financial statements in conformity with U.S. generally accepted accounting principles, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the consolidated financial statements and the disclosures provided, and actual results could differ from these estimates. The allowance and provision for credit losses, deferred tax asset valuation allowance, and fair values of investment securities and other financial instruments are particularly subject to change. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, cash items in the process of collection, amounts due from correspondent banks and the Federal Reserve Bank of San Francisco (the “Federal Reserve Bank”), and interest‑bearing deposits in other banks with initial terms of ninety days or less. The Company may be required to maintain reserve and clearing balances with the Federal Reserve Bank under the Federal Reserve Act of 1913, as amended. Effective on March 26, 2020, as a part of Federal Reserve Bank’s tools to promote maximum employment, Federal Reserve Bank Board reduced reserve requirement ratios to zero. The reserve and clearing requirement balance were no longer required at December 31, 2024. 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 Debt securities are classified as held‑to‑maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity. Debt securities are classified as available‑for‑sale when they might be sold before maturity. Securities available‑for‑sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income (loss), net of tax. F-8 Table of Contents Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level‑yield method without anticipating prepayments. Gains and losses on sales are recorded on the trade date and determined using the specific identification method. 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 determine if the decline in fair value is credit related or non-credit related. In determining whether a security’s decline in fair value is credit related, the Company considers a number of factors including, but not limited to: (i) the extent to which the fair value of the investment is less than its amortized cost; (ii) the financial condition and near-term prospects of the issuer; (iii) any downgrades in credit ratings; (iv) the payment structure of the security; (v) the ability of the issuer of the security to make scheduled principal and interest payments; and (vi) general market conditions which reflect prospects for the economy as a whole, including interest rates and sector credit spreads. For investment securities where the Company has reason to believe the credit loss exposure is remote, a zero credit loss assumption is applied. Such investment securities typically consist of those guaranteed by the U.S. government or other government enterprises, where there is an explicit or implicit guarantee by the U.S. government, that are highly rated by rating agencies, and historically have had no credit loss experience. If it is determined that the unrealized loss, or a portion thereof, is credit related, the Company records the amount of credit loss through a charge to the provision for credit losses in current period earnings. However, the amount of credit loss recorded in current period earnings is limited to the amount of the total unrealized loss on the security, which is measured as the amount by which the security’s fair value is below its amortized cost. If the Company intends to sell a security that is in an unrealized loss position, or if it is more likely than not the Company will be required to sell a security in an unrealized loss position, the total amount of the unrealized loss is recognized in current period earnings through the provision for credit losses. Unrealized losses deemed non-credit related are recorded, net of tax, in accumulated other comprehensive income (loss). 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 Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of allowance for credit losses, deferred loan fees and costs and unamortized premiums and discounts. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct loan origination costs, premiums and discounts are deferred, and recognized in income using the level‑yield method without anticipating prepayments. Interest income on all loans is discontinued at the time the loan is 90 days delinquent unless the loan is well‑secured and in process of collection. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on non‑accrual or charged‑off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not received for loans placed on non‑accrual is reversed against interest income. Interest received on such loans is accounted for on the cash‑basis or cost recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Concentration of Credit Risk Concentrations of credit risk arise when several customers are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. The Company’s lending activities are predominantly in real estate loans that are secured by properties located in Southern California and in Washington, D.C. and many of the borrowers reside in those areas. Therefore, the Company’s exposure to credit risk is significantly affected by changes in the economy and real estate market in the markets in which the Company operates. F-9 Table of Contents Purchased Credit Deteriorated Loans Prior to the adoption of ASC 326, loans that were purchased in a business combination that showed evidence of credit deterioration since their origination and for which it was probable, at acquisition, that not all contractually required payments would be collected were classified as purchased-credit impaired (“PCI”). The Company accounted for PCI loans and associated income recognition in accordance with 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. The accretable yield on PCI loans was recognized in interest income using the interest method. Following the adoption of ASC 326 on January 1, 2023, the Company analyzes all acquired loans at the time of acquisition for more-than-insignificant deterioration in credit quality since their origination date. Such loans are classified as purchased credit deteriorated (“PCD”) loans. Acquired loans classified as PCD are recorded at an initial amortized cost, which is comprised of the purchase price of the loans and the initial ACL determined for the loans, which is added to the purchase price, and any resulting discount or premium related to factors other than credit. PCI loans were considered to be PCD loans at the date of adoption of ASC 326. The Company accounts for interest income on PCD loans using the interest method, whereby any purchase discounts or premiums are accreted or amortized into interest income as an adjustment of the loan’s yield. An accretable yield is not determined for PCD loans. Allowance for Credit Losses - Loans The Company accounts for credit losses on loans in accordance with ASC 326, which requires the Company to record an estimate of expected lifetime credit losses for loans at the time of origination or acquisition. The ACL is maintained at a level deemed appropriate by management to provide for expected credit losses in the portfolio as of the date of the consolidated statements of financial condition. Estimating expected credit losses requires management to use relevant forward-looking information, including the use of reasonable and supportable forecasts. The measurement of the ACL is performed by collectively evaluating loans with similar risk characteristics. The Company measures the ACL for each of its loan segments using the weighted-average remaining maturity (“WARM”) method. The weighted average remaining life, including the effect of estimated prepayments, is calculated for each loan pool on a quarterly basis. The Company then estimates a loss rate for each pool using both its own historical loss experience and the historical losses of a group of peer institutions during the period from 2004 through the most recent quarter. The Company’s ACL model also includes adjustments for qualitative factors, where appropriate. Since historical information (such as historical net losses) may not always, by itself, provide a sufficient basis for determining future expected credit losses, the Company periodically considers the need for qualitative adjustments to the ACL. Qualitative adjustments may include, but are not limited to factors such as: (i) changes in lending policies and procedures, including changes in underwriting standards and collections, charge offs, and recovery practices; (ii) changes in international, national, regional, and local conditions; (iii) changes in the nature and volume of the portfolio and terms of loans; (iv) changes in the experience, depth, and ability of lending management; (v) changes in the volume and severity of past due loans and other similar conditions; (vi) changes in the quality of the organization’s loan review system; (vii) changes in the value of underlying collateral for collateral dependent loans; (viii) the existence and effect of any concentrations of credit and changes in the levels of such concentrations; and (ix) the effect of other external factors (i.e., competition, legal and regulatory requirements) on the level of estimated credit losses. The Company has a credit portfolio review process designed to detect problem loans. Problem loans are typically those of a substandard or worse internal risk grade, and may consist of loans on nonaccrual status, loans that have recently been modified in response to a borrower’s deteriorating financial condition, loans where the likelihood of foreclosure on underlying collateral has increased, collateral dependent loans, and other loans where concern or doubt over the ultimate collectability of all contractual amounts due has become elevated. Such loans may, in the opinion of management, be deemed to no longer possess risk characteristics similar to other loans in the loan portfolio, because the specific attributes and risks associated with the loan have likely become unique as the credit quality of the loan deteriorates. As such, these loans may require individual evaluation to determine an appropriate ACL for the loan. When a loan is individually evaluated, the Company typically measures the expected credit loss for the loan based on a discounted cash flow approach, unless the loan has been deemed collateral dependent. Collateral dependent loans are loans where the repayment of the loan is expected to come from the operation of and/or eventual liquidation of the underlying collateral. The ACL for collateral dependent loans is determined using estimates of the fair value of the underlying collateral, less estimated selling costs. F-10 Table of Contents The estimation of the appropriate level of the ACL requires significant judgment by management. Although management uses the best information available to make these estimates, future adjustments to the ACL may be necessary due to economic, operating, regulatory, and other conditions that may extend beyond the Company’s control. Changes in management’s estimates of forecasted net losses could materially change the level of the ACL. Additionally, various regulatory agencies, as an integral part of their examination process, periodically review the Company’s ACL and credit review process. Such agencies may require the Company to recognize additions to the ACL based on judgments different from those of management. The Company has segmented the loan portfolio according to loans that share similar attributes and risk characteristics. Each segment possesses varying degrees of risk based on, among other things, the type of loan, the type of collateral, and the sensitivity of the borrower or industry to changes in external factors such as economic conditions. The Company determines the ACL for loans based on this more detailed loan segmentation and classification. These segments, and the risks associated with each segment, are as follows: Real Estate: 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. Real Estate: 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. Real Estate: Commercial Real Estate – Subject to adverse conditions in the local economy which may lead to reduced cash flows due to vacancies and reduced rental rates and decreases in the value of underlying collateral. Real Estate: Church – Subject to adverse economic and employment conditions, which may lead to reduced cash flows from members’ donations and offerings, and the stability, quality, and popularity of church leadership. Real Estate: Construction – Subject to adverse conditions in the local economy, which may lead to reduced demand for new commercial, multi‑family, or single-family buildings or reduced lease or sale opportunities once the building is complete. Commercial and SBA Loans – Subject to industry and economic conditions including decreases in product demand. Consumer – Subject to adverse employment conditions in the local economy, which may lead to higher default rates. Modified Loans to Borrowers Experiencing Financial Difficulty In certain instances, the Company makes modifications to loans in order to alleviate temporary difficulties in the borrower’s financial condition and/or constraints on the borrower’s ability to repay the loan, and to minimize potential losses to the Company. Modifications include: changes in the amortization terms of the loan, reductions in interest rates, acceptance of interest only payments, and reductions to the outstanding loan balance (or any combination of such changes). Such loans are typically placed on nonaccrual status when there is doubt concerning the full repayment of principal and interest or the loan has been in default for a period of 90 days or more. Such loans may be returned to accrual status when all contractual amounts past due have been brought current, and the borrower’s performance under the modified terms of the loan agreement and the ultimate collectability of all contractual amounts due under the modified terms is no longer in doubt. The Company typically measures the ACL on these loans on an individual basis as the loans are deemed to no longer have risk characteristics that are similar to other loans in the portfolio. The determination of the ACL for these loans is based on 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. 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. For goodwill 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. F-11 Table of Contents Core deposit intangible assets arising from mergers and acquisitions are amortized on an accelerated basis reflecting the pattern in which the economic benefits of the intangible asset are consumed or otherwise used up. The estimated life of the core deposit intangible is approximately 10 years. Office Properties and Equipment Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Buildings and related components are depreciated using the straight‑line method with useful lives ranging from 10 to 40 years. Furniture, fixtures, and equipment are depreciated using the straight‑line method with useful lives ranging from 3 to 10 years. Leasehold improvements are amortized over the lease term or the estimated useful life of the asset, whichever is shorter. Federal Home Loan Bank (FHLB) and Federal Reserve Bank (FRB) stock The Bank is a member of the FHLB and FRB systems. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB and FRB stock are carried at cost, classified as restricted securities, and periodically evaluated for impairment based on ultimate recovery of their par value. Both cash and stock dividends are reported as income when declared. Bank‑Owned Life Insurance The Bank has purchased life insurance policies on a former key executive. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. Investment in Affordable Housing Limited Partnership The Bank owns a less than 5 % interest in an affordable housing limited partnership. The investment is recorded using the cost method and is being amortized over the life of the related tax credits. The tax credits are being recognized in income tax expense in the consolidated financial statements to the extent they are utilized on the Company’s income tax returns. The investment is reviewed for impairment on an annual basis or on an interim basis if an event occurs that would trigger potential impairment. Loan Commitments and Related Financial Instruments Financial instruments include off‑balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded. Variable Interest Entities (“VIE”) An entity is considered to be a VIE when it does not have sufficient equity investment at risk, the equity investors as a group lack the characteristics of a controlling financial interest, or the entity is structured with disproportionate voting rights and substantially all of the entity’s activities are conducted on behalf of an investor with disproportionately few voting rights. The Company is required to consolidate a VIE when it holds a variable interest in the VIE and is also the primary beneficiary of the VIE. CFC 45 is a Community Development Entity (“CDE”), and is considered to be a VIE. Noncontrolling Interests For consolidated subsidiaries that are less than wholly-owned, the third-party holdings of equity interests are referred to as noncontrolling interests. The portion of net income attributable to noncontrolling interests for such subsidiaries is presented as net income applicable to noncontrolling interests on the consolidated statements of operations and comprehensive income, and the portion of the stockholders’ equity of such subsidiaries is presented as noncontrolling interests on the consolidated statements of financial condition and consolidated statements of changes in stockholders’ equity. Revenue Recognition 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. F-12 Table of Contents Stock‑Based Compensation Compensation cost is recognized for stock options and restricted stock awards issued to employees and directors, based on the fair value of these awards at the date of grant. A Black‑Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. Compensation cost is recognized on a straight‑line basis over the requisite service period for the entire award. The Company’s accounting policy is to recognize forfeitures as they occur. Income Taxes Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company recognizes interest related to income tax matters in interest expense and penalties related to tax matters in income tax expense. Retirement Plans Employee 401(k) expense is the amount of matching contributions made by the Company. Employee Stock Ownership Plan (ESOP) The cost of shares issued to the ESOP, but not yet allocated to participants, is shown as a reduction of stockholders’ equity. Compensation expense is based on the market price of shares as they are committed to be released to participant accounts. Dividends on allocated ESOP shares reduce retained earnings; dividends on unearned ESOP shares reduce debt and accrued interest. 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. 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 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. F-13 Table of Contents Loss Contingencies Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable, and an amount or range of loss can be reasonably estimated. Management does not believe that any such matters existed as of the balance sheet date that will have a material effect on the consolidated financial statements. L eases The Company determines if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets and operating lease liabilities are included in the Company’s consolidated financial statements. ROU assets represent the Company’s right-of-use of an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments pursuant to the Company’s leases. The ROU assets and liabilities are recognized at commencement of the lease based on the present value of lease payments over the lease term. To determine the present value of lease payments, the Company uses its incremental borrowing rate. The lease term may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. Fair Value Measurements Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Significant observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. 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 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 November 2023, the FASB issued ASU 2023-07 – Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . The 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. 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. F-14 Table of Contents 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. 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 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 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 shares of its Class A (voting) Common Stock (adjusted for the 1-for-8 reverse stock split effective November 1, 2023) from the Federal Deposit Insurance Corporation (“FDIC”), which obtained the shares when it was appointed receiver for First Republic Bank upon its closure earlier in 2023. The purchased shares represented just under 4.0 % of the Company’s total voting shares prior to the purchase, and over 2.6 % of the Company’s total common equity. The Company purchased the shares at a price of $ 7.2760 per share (adjusted for the 1-for-8 reverse stock split effective November 1, 2023), which represented the 20 -day volume weighted average price for the Class A shares over the period ended October 24, 2023. 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. F-15 Table of Contents 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, 2023 and the corresponding amounts of unrealized gains (losses) which are recognized in accumulated other comprehensive loss: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (In thousands) December 31, 2024: Federal agency mortgage-backed securities $ 62,853 $ 8 $ ( 9,832 ) $ 53,029 Federal agency Collateralized Mortgage Obligations (CMOs) 21,299 6 ( 1,247 ) 20,058 Federal agency debt 42,100 2 ( 2,068 ) 40,034 Municipal bonds 4,800 – ( 412 ) 4,388 U. S. Treasuries 77,857 – ( 667 ) 77,190 SBA pools 10,749 2 ( 1,588 ) 9,163 Total available-for-sale securities $ 219,658 $ 18 $ ( 15,814 ) $ 203,862 December 31, 2023: Federal agency mortgage-backed securities $ 76,091 $ 3 $ ( 9,316 ) $ 66,778 Federal agency CMOs 24,720 – ( 1,381 ) 23,339 Federal agency debt 50,893 – ( 3,057 ) 47,836 Municipal bonds 4,833 – ( 460 ) 4,373 U. S. Treasuries 167,055 – ( 3,175 ) 163,880 SBA pools 12,386 4 ( 1,646 ) 10,744 Total available-for-sale securities $ 335,978 $ 7 $ ( 19,035 ) $ 316,950 There were no sales of securities during the years ended December 31, 2024 or 2023. The amortized cost and estimated fair value of all investment securities available-for-sale at December 31, 2024, by contractual maturities are shown below. Contractual maturities may differ from expected maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (In thousands) Due in one year or less $ 85,890 $ – $ ( 932 ) $ 84,958 Due after one year through five years 37,790 2 ( 2,248 ) 35,544 Due after five years through ten years 21,691 13 ( 1,000 ) 20,704 Due after ten years 74,287 3 ( 11,634 ) 62,656 $ 219,658 $ 18 $ ( 15,814 ) $ 203,862 F-16 Table of Contents The table below indicates the length of time individual securities have been in a continuous unrealized loss position: Less than 12 Months 12 Months or Longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses December 31, 2024: (In thousands) Federal agency mortgage-backed securities $ – $ – $ 52,568 $ ( 9,832 ) $ 52,568 $ ( 9,832 ) Federal agency CMOs – – 19,303 ( 1,247 ) 19,303 ( 1,247 ) Federal agency debt – – 37,508 ( 2,068 ) 37,508 ( 2,068 ) Municipal bonds – – 4,388 ( 412 ) 4,388 ( 412 ) U. S. Treasuries – – 77,190 ( 667 ) 77,190 ( 667 ) SBA pools 629 ( 1 ) 8,179 ( 1,587 ) 8,808 ( 1,588 ) Total $ 629 $ ( 1 ) $ 199,136 $ ( 15,813 ) $ 199,765 $ ( 15,814 ) December 31, 2023: Federal agency mortgage-backed securities $ – $ – $ 66,575 $ ( 9,316 ) $ 66,575 $ ( 9,316 ) Federal agency CMOs – – 23,339 ( 1,381 ) 23,339 ( 1,381 ) Federal agency debt 3,018 ( 37 ) 44,818 ( 3,020 ) 47,836 ( 3,057 ) Municipal bonds – – 4,373 ( 460 ) 4,373 ( 460 ) U. S. Treasuries – – 163,880 ( 3,175 ) 163,880 ( 3,175 ) SBA pools 286 ( 1 ) 9,439 ( 1,645 ) 9,725 ( 1,646 ) Total $ 3,304 $ ( 38 ) $ 312,424 $ ( 18,997 ) $ 315,728 $ ( 19,035 ) 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. At 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 $ 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. F-17 Table of Contents Note 4 – Loans Receivable Held for Investment Loans receivable held for investment were as follows as of the periods indicated: December 31, 2024 December 31, 2023 (In thousands) Real estate: Single-family $ 23,566 $ 24,702 Multi-family 633,306 561,447 Commercial real estate 156,155 119,436 Church 9,470 12,717 Construction 80,948 89,887 Commercial – other 70,596 63,450 SBA loans (1) 1,142 14,954 Consumer 13 13 Gross loans receivable before deferred loan costs and premiums 975,196 886,606 Unamortized net deferred loan costs and premiums 2,116 1,971 977,312 888,577 Credit and interest marks on purchased loans, net ( 348 ) ( 772 ) Allowance for credit losses ( 8,103 ) ( 7,348 ) Loans receivable, net $ 968,861 $ 880,457 (1) Including Paycheck Protection Program (PPP) loans. The Company 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. The Company’s ACL model also includes adjustments for qualitative factors, where appropriate. Qualitative adjustments may include, but are not limited to factors such as: (i) changes in lending policies and procedures, including changes in underwriting standards and collections, charge offs, and recovery practices; (ii) changes in international, national, regional, and local conditions; (iii) changes in the nature and volume of the portfolio and terms of loans; (iv) changes in the experience, depth, and ability of lending management; (v) changes in the volume and severity of past due loans and other similar conditions; (vi) changes in the quality of the organization’s loan review system; (vii) changes in the value of underlying collateral for collateral dependent loans; (viii) the existence and effect of any concentrations of credit and changes in the levels of such concentrations; and (ix) the effect of other external factors (i.e., competition, legal and regulatory requirements) on the level of estimated credit losses. These qualitative factors incorporate the concept of reasonable and supportable forecasts, as required by ASC 326. F-18 Table of Contents 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 Beginning Balance Charge-offs Recoveries Provision (Recapture) Ending Balance (In thousands) Loans receivable held for investment: Real estate: Single-family $ 260 $ – $ – $ ( 64 ) $ 196 Multi-family 4,413 – – 155 4,568 Commercial real estate 1,094 – – 35 1,129 Church 72 – – ( 18 ) 54 Construction 932 – – 543 1,475 Commercial - other 529 – – 141 670 SBA loans 48 – – ( 37 ) 11 Consumer – – – – – Total $ 7,348 $ – $ – $ 755 $ 8,103 For the Year Ended December 31, 2023 Beginning Balance Impact of CECL Adoption Charge-offs Recoveries Provision (Recapture) Ending Balance (In thousands) Loans receivable held for investment: Real estate: Single-family $ 109 $ 214 $ – $ – $ ( 63 ) $ 260 Multi-family 3,273 603 – 109 428 4,413 Commercial real estate 449 466 – 107 72 1,094 Church 65 37 – – ( 30 ) 72 Construction 313 219 – – 400 932 Commercial - other 175 254 – – 100 529 SBA loans – 20 – – 28 48 Consumer 4 ( 4 ) – – – – Total $ 4,388 $ 1,809 $ – $ 216 $ 935 $ 7,348 The 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. F-19 Table of Contents The following tables present collateral dependent loans by collateral type as of the date indicated: December 31, 2024 Single-Family Multi-Family Residential Church Business Assets Total Real estate: (In thousands) Single-family $ – $ – $ – $ – $ – Multi-family – – – – – Commercial real estate – – – – – Church – – – – – SBA loans 264 – – – 264 Total $ 264 $ – $ – $ – $ 264 December 31, 2023 Single-Family Multi-Family Residential Church Business Assets Total Real estate: (In thousands) Single-family $ 45 $ – $ – $ – $ 45 Multi-family – 5,672 – – 5,672 Commercial real estate – – 65 – 65 Church – – 391 – 391 Commercial – other – – – 268 268 Total $ 45 $ 5,672 $ 456 $ 268 $ 6,441 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. F-20 Table of Contents Past Due Loans The following tables present the aging of the recorded investment in past due loans by loan type as of the periods indicated: December 31, 2024 30‑59 Days Past Due 60‑89 Days Past Due Greater than 90 Days Past Due Total Past Due Current Total (In thousands) Loans receivable held for investment: Real estate: Single-family $ – $ 6 $ – $ 6 $ 23,572 $ 23,578 Multi-family – – – – 636,259 636,259 Commercial real estate – – – – 156,076 156,076 Church – – – – 9,475 9,475 Construction – – – – 80,488 80,488 Commercial - other – – – – 70,281 70,281 SBA loans – 264 – 264 878 1,142 Consumer – – – – 13 13 Total $ – $ 270 $ – $ 270 $ 977,042 $ 977,312 December 31, 2023 30‑59 Days Past Due 60‑89 Days Past Due Greater than 90 Days Past Due Total Past Due Current Total (In thousands) Loans receivable held for investment: Real estate: Single-family $ – $ – $ – $ – $ 24,702 $ 24,702 Multi-family – 401 – 401 563,017 563,418 Commercial real estate – – – – 119,436 119,436 Church – – – – 12,717 12,717 Construction – – – – 89,887 89,887 Commercial - other – – – – 63,450 63,450 SBA loans 379 – – 379 14,575 14,954 Consumer – – – – 13 13 Total $ 379 $ 401 $ – $ 780 $ 887,797 $ 888,577 The following table presents the recorded investment in non‑accrual loans by loan type as of the period indicated: December 31, 2024 Nonaccrual with no Allowance for Credit Losses Nonaccrual with an Allowance for Credit Losses Total Nonaccrual Loans Loans receivable held for investment: (In thousands) SBA loans $ 264 $ – $ 264 Total non-accrual loans $ 264 $ – $ 264 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 non-accrual loans were delinquent. F-21 Table of Contents Modified Loans to Troubled Borrowers GAAP requires that certain types of modifications of loans in response to a borrower’s financial difficulty be reported, which consist of the following: (i) principal forgiveness, (ii) interest rate reduction, (iii) other-than-insignificant payment delay, (iv) term extension, or (v) any combination of the foregoing. The ACL for loans that were modified in response to a borrower’s financial difficulty is measured on a collective basis, as with other loans in the loan portfolio, unless management determines that such loans no longer possess risk characteristics similar to others in the loan portfolio. In those instances, the ACL for such loans is determined through individual evaluation. The following table presents the amortized costs basis 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 Percentage of Total Loan Type Weighted Average Term Extension (In Thousands) Real estate: Commercial real estate $ 792 0.51 % 12 months Construction 4,559 5.66 % 17 months Commercial - other 572 1.28 % 14 months Total $ 5,923 Credit Quality Indicators The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. For single-family residential, consumer and other smaller balance homogenous loans, a credit grade is established at inception, and generally only adjusted based on performance. Information about payment status is disclosed elsewhere herein. The Company analyzes all other loans individually by classifying the loans as to credit risk. This analysis is performed at least on an annual basis. The Company uses the following definitions for risk ratings: ● Watch. Loans classified as watch exhibit weaknesses that could threaten the current net worth and paying capacity of the obligors. Watch graded loans are generally performing and are not more than 59 days past due. A watch rating is used when a material deficiency exists, but correction is anticipated within an acceptable time frame. ● Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention that appears short-term in nature. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. ● Substandard. 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. Loans 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. ● Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, based on currently existing facts, conditions, and values, highly questionable and improbable. ● Loss. Loans classified as loss are considered uncollectible and of such little value that to continue to carry the loan as an active asset is no longer warranted. Loans not meeting the criteria above that are analyzed individually as part of the above-described process are considered to be pass rated loans. Pass rated loans are generally well protected by the current net worth and paying capacity of the obligor and/or by the value of the underlying collateral. Pass rated loans are not more than 59 days past due and are generally performing in accordance with the loan terms. F-22 Table of Contents 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 2024 2023 2022 2021 2020 Prior Revolving Loans Total (In thousands) Single-family: Pass $ – $ 543 $ 4,051 $ 1,809 $ 1,664 $ 13,597 $ – $ 21,664 Watch – – – 729 1,185 – – 1,914 Total $ – $ 543 $ 4,051 $ 2,538 $ 2,849 $ 13,597 $ – $ 23,578 Multi-family: Pass $ 81,474 $ 77,739 $ 171,836 $ 126,386 $ 26,771 $ 89,581 $ – $ 573,787 Watch – 5,633 15,731 14,761 – 10,480 – 46,605 Special Mention – – 3,227 3,150 – – – 6,377 Substandard – 1,446 – 4,457 – 3,587 – 9,490 Total $ 81,474 $ 84,818 $ 190,794 $ 148,754 $ 26,771 $ 103,648 $ – $ 636,259 Commercial real estate: Pass $ 49,143 $ 9,655 $ 20,841 $ 28,653 $ 21,150 $ 19,561 $ – $ 149,003 Watch – 1,584 432 994 – 792 – 3,802 Substandard – 3,271 – – – – – $ 3,271 Total $ 49,143 $ 14,510 $ 21,273 $ 29,647 $ 21,150 $ 20,353 $ – $ 156,076 Church: Pass $ – $ 2,442 $ – $ 2,148 $ 1,696 $ 1,002 $ – $ 7,288 Watch – 376 – – – 618 – 994 Substandard – – – – – 1,193 – 1,193 Total $ – $ 2,818 $ – $ 2,148 $ 1,696 $ 2,813 $ – $ 9,475 Construction: Watch $ 8,876 $ 29,390 $ 227 $ – $ – $ 2,038 $ – $ 40,531 Substandard – 4,076 31,823 4,058 – – – 39,957 Total $ 8,876 $ 33,466 $ 32,050 $ 4,058 $ – $ 2,038 $ – $ 80,488 Commercial – other: Pass $ 1 $ 3 $ 7,575 $ – $ 2,768 $ 4,590 $ – $ 14,937 Watch 17,444 28,157 706 – – 1,197 – 47,504 Special Mention – – 351 – – 2,250 – 2,601 Substandard – – – 106 571 4,562 – 5,239 Total $ 17,445 $ 28,160 $ 8,632 $ 106 $ 3,339 $ 12,599 $ – $ 70,281 SBA: Pass $ 590 $ – $ – $ – $ – $ 64 $ – $ 654 Substandard – – 150 – 338 – – 488 Total $ 590 $ – $ 150 $ – $ 338 $ 64 $ – $ 1,142 Consumer: Pass $ 13 $ – $ – $ – $ – $ – $ – $ 13 Total $ 13 $ – $ – $ – $ – $ – $ – $ 13 Total loans: Pass $ 131,221 $ 90,382 $ 204,303 $ 158,996 $ 54,049 $ 128,395 $ – $ 767,346 Watch 26,320 65,140 17,096 16,484 1,185 15,125 – 141,350 Special Mention – – 3,578 3,150 – 2,250 – 8,978 Substandard – 8,793 31,973 8,621 909 9,342 – 59,638 Total loans $ 157,541 $ 164,315 $ 256,950 $ 187,251 $ 56,143 $ 155,112 $ – $ 977,312 F-23 Table of Contents Term Loans Amortized Cost Basis by Origination Year - As of December 31, 2023 2023 2022 2021 2020 2019 Prior Revolving Loans Total (In thousands) Single-family: Pass $ – $ 2,474 $ 1,862 $ 2,940 $ 1,485 $ 12,374 $ – $ 21,135 Watch – – 750 – – 999 – 1,749 Special Mention – – – – – 116 – 116 Substandard – – – 1,365 – 337 – 1,702 Total $ – $ 2,474 $ 2,612 $ 4,305 $ 1,485 $ 13,826 $ – $ 24,702 Multi-family: Pass $ 81,927 $ 183,295 $ 145,652 $ 27,356 $ 44,511 $ 47,119 $ – $ 529,860 Watch – 4,686 6,203 – 1,186 6,474 – 18,549 Special Mention – – 899 – – 1,344 – 2,243 Substandard – – – – 363 12,403 – 12,766 Total $ 81,927 $ 187,981 $ 152,754 $ 27,356 $ 46,060 $ 67,340 $ – $ 563,418 Commercial real estate: Pass $ 9,881 $ 22,131 $ 26,019 $ 24,684 $ 6,718 $ 15,106 $ – $ 104,539 Watch – 442 – 5,286 – 2,599 – 8,327 Special Mention – – – – 325 – – 325 Substandard – – – – – 6,245 – 6,245 Total $ 9,881 $ 22,573 $ 26,019 $ 29,970 $ 7,043 $ 23,950 $ – $ 119,436 Church: Pass $ 2,923 $ – $ 2,210 $ 1,748 $ – $ 2,704 $ – $ 9,585 Watch – – – – 636 1,525 – 2,161 Substandard – – – – – 971 – 971 Total $ 2,923 $ – $ 2,210 $ 1,748 $ 636 $ 5,200 $ – $ 12,717 Construction: Pass $ – $ 1,109 $ 1,198 $ – $ – $ – $ – $ 2,307 Watch 42,300 35,179 5,484 – – 2,097 – 85,060 Special Mention – – 2,520 – – – – 2,520 Total $ 42,300 $ 36,288 $ 9,202 $ – $ – $ 2,097 $ – $ 89,887 Commercial – other: Pass $ 15,000 $ 9,077 $ 87 $ 5,600 $ – $ 25,154 $ – $ 54,918 Watch – 312 – 1,500 6,550 – – 8,362 Special Mention – – 170 – – – – 170 Total $ 15,000 $ 9,389 $ 257 $ 7,100 $ 6,550 $ 25,154 $ – $ 63,450 SBA: Pass $ 11,809 $ 109 $ 2,453 $ – $ 16 $ 100 $ – $ 14,487 Special Mention – – – 467 – – – 467 Total $ 11,809 $ 109 $ 2,453 $ 467 $ 16 $ 100 $ – $ 14,954 Consumer: Pass $ 13 $ – $ – $ – $ – $ – $ – $ 13 Total $ 13 $ – $ – $ – $ – $ – $ – $ 13 Total loans: Pass $ 121,553 $ 218,195 $ 179,481 $ 62,328 $ 52,730 $ 102,557 $ – $ 736,844 Watch 42,300 40,619 12,437 6,786 8,372 13,694 – 124,208 Special Mention – – 3,589 467 325 1,460 – 5,841 Substandard – – – 1,365 363 19,956 – 21,684 Total loans $ 163,853 $ 258,814 $ 195,507 $ 70,946 $ 61,790 $ 137,667 $ – $ 888,577 F-24 Table of Contents Allowance for Credit Losses for Off-Balance Sheet Commitments The Company maintains an allowance for credit losses on off-balance sheet commitments related to unfunded loans and lines of credit, which is included in accrued expenses and other liabilities of the consolidated statements of financial condition. The Company applies an expected credit loss estimation methodology for off-balance sheet commitments. This methodology is commensurate with the methodology applied to each respective segment of the loan portfolio in determining the ACL for loans held-for-investment. The loss estimation process includes assumptions for the probability that a loan will fund, as well as the expected amount of funding. These assumptions are based on the Company’s own historical internal loan data. The allowance for off-balance sheet commitments was $ 277 thousand and $ 364 thousand at December 31, 2024 and 2023, respectively. 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 Year‑end office properties and equipment were as follows: December 31, 2024 December 31, 2023 (In thousands) Land $ 5,322 $ 5,322 Office buildings and improvements 7,649 6,433 Furniture, fixtures, and equipment 1,214 2,318 14,185 14,073 Less accumulated depreciation ( 5,286 ) ( 4,888 ) Office properties and equipment, net $ 8,899 $ 9,185 Depreciation expense was $ 424 thousand and $ 385 thousand for the years 2024 and 2023, respectively. Note 6 – Leases Effective October 1, 2021, the Bank entered into an operating lease for its administrative offices at 4601 Wilshire Boulevard in Los Angeles. The ROU asset represents our right to use the underlying asset during the lease term. 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 $ 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. As this extension option is not reasonably certain of exercise, it is not included in the lease term. The Bank has no finance leases. The Company recognized rent expense of $ 242 thousand in 2024 and $ 305 thousand in 2023. Additional information regarding our operating leases is summarized below for the periods indicated (dollars in thousands): Year Ended December 31, 2024 Year Ended December 31, 2023 Cash paid for amounts included in the measurement of lease liabilities for operating leases $ 242 $ 242 ROU assets obtained in exchange for lease liabilities – – Weighted average remaining lease term in months 21 33 Weighted average discount rate 5.5 % 5.5 % F-25 Table of Contents The future minimum payments for operating leases with remaining terms of one year or more as of December 31, 2024 were as follows (in thousands): Year ended December 31, 2025 $ 242 Year ended December 31, 2026 182 Total future minimum lease payments 424 Amounts representing interest ( 4 ) Present value of net future minimum lease payments $ 420 Note 7 – Goodwill and Core Deposit Intangible 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 Goodwill Core Deposit Intangible (In thousands) Balance at the beginning of the period $ 25,858 $ 2,111 Amortization – ( 336 ) Balance at the end of the period $ 25,858 $ 1,775 December 31, 2023 Goodwill Core Deposit Intangible (In thousands) Balance at the beginning of the period $ 25,858 $ 2,501 Amortization – ( 390 ) Balance at the end of the period $ 25,858 $ 2,111 No impairment charges were recorded during 2024 or 2023 for goodwill. Management’s assessment of goodwill is performed in accordance with ASC 350-20 – Intangibles-Goodwill and Other, which allows the Company to perform a qualitative assessment of goodwill to determine if it is more likely than not the fair value of the Company’s equity is below its carrying value. The Company performed its qualitative 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, 2024 December 31, 2023 (In thousands) Core deposit intangible acquired $ 3,329 $ 3,329 Less: accumulated amortization ( 1,554 ) ( 1,218 ) $ 1,775 $ 2,111 The following table outlines the estimated amortization expense related to the core deposit intangible during the next five fiscal years: (In thousands) 2025 $ 315 2026 304 2027 291 2028 279 2029 267 Thereafter 319 $ 1,775 F-26 Table of Contents Note 8 – Fair Value The Company used the following methods and significant assumptions to estimate fair value: The fair values of securities available‑for‑sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). The fair value of loans that are collateral dependent is generally based upon the fair value of the collateral, which is obtained from recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Collateral dependent loans are evaluated on a quarterly basis for additional required calculation adjustments (taken as part of the ACL) and adjusted accordingly. Appraisals for collateral-dependent loans and assets acquired through or by transfer of in lieu of foreclosure are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, an independent third‑party licensed appraiser reviews the appraisals for accuracy and reasonableness, reviewing the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. Assets Measured on a Recurring Basis Assets measured at fair value on a recurring basis are summarized below: Fair Value Measurement Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total (In thousands) At December 31, 2024 : Securities available-for-sale: Federal agency mortgage-backed securities $ – $ 53,029 $ – $ 53,029 Federal agency CMOs – 20,058 – 20,058 Federal agency debt – 40,034 – 40,034 Municipal bonds – 4,388 – 4,388 U.S. Treasuries 77,190 – – 77,190 SBA pools – 9,163 – 9,163 At December 31, 2023 : Securities available-for-sale: Federal agency mortgage-backed $ – $ 66,778 $ – $ 66,778 Federal agency CMO – 23,339 – 23,339 Federal agency debt – 47,836 – 47,836 Municipal bonds – 4,373 – 4,373 U.S. Treasuries 163,880 – – 163,880 SBA pools – 10,744 – 10,744 There were no transfers between Level 1, Level 2, or Level 3 during the years ended December 31, 2024 or 2023. F-27 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 The carrying amounts and estimated fair values of financial instruments as of the periods indicated were as follows: Carrying Fair Value Measurements at December 31, 2024 Value Level 1 Level 2 Level 3 Total (In thousands) Financial Assets: Cash and cash equivalents $ 61,365 $ 61,365 $ – $ – $ 61,365 Securities available-for-sale 203,862 77,190 126,672 – 203,862 Loans receivable held for investment 968,861 – – 942,920 942,920 Accrued interest receivable 5,001 5,001 – – 5,001 Bank owned life insurance 3,321 3,321 – – 3,321 Financial Liabilities: Deposits $ 745,399 $ – $ 669,695 $ – $ 669,695 FHLB advances 195,532 – 195,794 – 195,794 Securities sold under agreements to repurchase 66,610 – 66,070 – 66,070 Accrued interest payable 1,349 – 1,349 – 1,349 Carrying Fair Value Measurements at December 31, 2023 Value Level 1 Level 2 Level 3 Total (In thousands) Financial Assets: Cash and cash equivalents $ 105,195 $ 105,195 $ – $ – $ 105,195 Securities available-for-sale 316,950 163,880 153,070 – 316,950 Loans receivable held for investment 880,457 – – 746,539 746,539 Accrued interest receivable 4,938 4,938 – – 4,938 Bank owned life insurance 3,275 3,275 – – 3,275 Financial Liabilities: Deposits $ 682,635 $ – $ 536,171 $ – $ 536,171 FHLB advances 209,319 – 208,107 – 208,107 Securities sold under agreements to repurchase 73,475 – 72,597 – 72,597 Bank Term Funding Program borrowing 100,000 – 100,000 – 100,000 Note payable 14,000 – – 14,000 14,000 Accrued interest payable 1,420 – 1,420 – 1,420 F-28 Table of Contents Note 9 – Deposits Deposits are summarized as follows: December 31, 2024 December 31, 2023 (In thousands) Interest checking and other demand deposits $ 251,538 $ 219,138 Non‑interest-bearing demand deposits 105,227 107,891 Money market deposits 125,862 127,590 Savings deposits 49,933 59,981 Certificates of deposit 212,839 168,035 Total $ 745,399 $ 682,635 The Bank accepts two types of deposits from a deposit placement service called the Certificate of Deposit Account Registry Service (“CDARS”). Reciprocal deposits are the Bank’s own retail deposits in amounts in excess of the insured limits. The CDARS program allows banks to place their customers’ funds in FDIC‑insured certificates of deposit at other banks and, at the same time, receive an equal sum of funds from the customers of other banks in the CDARS Network. These deposits totaled $ 145.8 million and $ 114.8 million at December 31, 2024 and 2023, respectively and are not considered to be brokered deposits. The other type of deposit that may be accepted under the CDARS program is nonreciprocal deposits which are considered to be brokered funds. As of December 31, 2024 and 2023, the Bank had no such deposits. As of December 31, 2024 and 2023, approximately $ 268.8 million and $ 286.4 million of our total deposits (including deposits from affiliates) were not insured by FDIC insurance, which represented 32 % and 37 % of total deposits, respectively. Scheduled maturities of certificates of deposit for the next five years are as follows: Maturity Amount (In thousands) 2025 $ 201,342 2026 8,772 2027 1,414 2028 1,228 2029 47 Thereafter 36 $ 212,839 Certificates of deposit of $250 thousand or more totaled $ 33.2 million and $ 23.5 million at December 31, 2024 and 2023, respectively. The Company has a significant concentration of deposits with five long‑time customers that accounted for approximately 18 % and 28 % of its deposits as of December 31, 2024 and 2023, respectively. The Company expects to maintain the relationships with the customers for the near term. Deposits from principal officers, directors, and their affiliates totaled $ 24.2 million and $ 21.3 million at December 31, 2024 and 2023, respectively. Note 10 – Borrowings The following table summarizes information relating to FHLB advances at or for the periods indicated: At or For the Year Ended December 31, 2024 2023 (Dollars in thousands) FHLB Advances: Average balance outstanding during the year $ 199,893 $ 177,261 Maximum amount outstanding at any month‑end during the year $ 209,298 $ 210,242 Balance outstanding at end of year $ 195,532 $ 209,319 Weighted average interest rate at end of year 4.03 % 4.91 % Average cost of advances during the year 4.79 % 4.70 % Weighted average maturity (in months) – (1) 2 (1) The majority of FHLB advances are overnight borrowings Each advance is subject to a prepayment penalty if paid before its maturity date. The advances were collateralized by $ 521.7 million and $ 435.4 million of commercial real estate loans at December 31, 2024 and 2023, respectively, under a blanket lien arrangement. Based on collateral pledged and the Company’s holdings of FHLB stock as of December 31, 2024, the Company was eligible to borrow up to an additional $ 174.3 million at year‑end 2024. Scheduled maturities of FHLB advances are as follows: Amount (In thousands) 2025 $ 195,532 2026 – $ 195,532 On December 27, 2023, the Company borrowed $ 100.0 million from the Federal Reserve under the Bank Term Funding Program (“BTFP”). This borrowing was paid off in December 2024. The interest rate on this borrowing was fixed at 4.84 % and the borrowing matured on December 29, 2024 . 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, 2024 and 2023. No amounts were drawn on the lines of credit at December 31, 2024 or 2023. F-29 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, 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, $ 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 In connection with the New Market Tax Credit activities of City First Bank, CFC 45 is a partnership whose members include CFNMA and City First New Markets Fund II, LLC. This CDE acts in effect as a pass-through for a Merrill Lynch allocation totaling $ 14.0 million that needed to be deployed. In December 2015, Merrill Lynch made a $ 14.0 million non-recourse loan to CFC 45, whereby CFC 45 passed that loan through to a Qualified Active Low-Income Community Business. The loan to the QALICB was secured by a Leasehold Deed of Trust that, due to the pass-through, non-recourse structure, was operationally and ultimately for the benefit of Merrill Lynch rather than CFC 45. Debt service payments received by CFC 45 from the QALICB were passed through to Merrill Lynch in return for which CFC 45 received a servicing fee. The financial statements of CFC 45 are consolidated with those of the Bank and the Company. There were two notes outstanding at CFC 45 as of December 31, 2023. Note A was in the amount of $ 9.9 million with a fixed interest rate of 5.2 % per annum. Note B was in the amount of $ 4.1 million with a fixed interest rate of 0.24 % per annum. Quarterly interest only payments commenced in March 2016 and continued through March 2023 for Notes A and B. Beginning in September 2023, quarterly principal and interest payments were due for Notes A and B. Both notes would have matured on December 1, 2040 , but were paid off during January 2024. Note 13 – Employee Benefit Plans 401(k) Plans In July of 2022, the Broadway Federal Bank 401(k) benefit plan and the City First Bank 401(k) benefit plan were combined into one plan called “the City First Bank 401(k) benefit plan” (the “401(k) Plan”). The 401(k) Plan allows employee contributions for substantially all employees up to 15 % of their compensation, which are matched at a rate equal to 50 % of the first 6 % of compensation contributed. In addition, the 401(k) Plan makes a non-elective safe harbor contribution of 3 % of each eligible employee’s compensation. Expenses related to the 401(k) plans totaled $ 476 thousand in 2024 and $ 447 thousand in 2023. ESOP Plan Employee s participate in an Employee Stock Ownership Plan (“ESOP”) after attaining certain age and service requirements. During 2022, the ESOP purchased 58,369 shares of the Company’s common stock at an average cost of $ 8.57 per share for a total cost of $ 500 thousand which was funded with a $ 5 million line of credit from the Company. During 2023, the ESOP purchased 369,953 additional shares of the Company’s common stock at an average cost of $ 9.19 per share for a total cost of $ 3.4 million which was funded with the line of credit. Any loans or borrowings under the line of credit will be repaid from the Bank’s discretionary contributions to the ESOP, net of dividends paid, over a period of 20 years . Shares of the Company’s common stock purchased by the ESOP are held in a suspense account until released for allocation to participants. When loan payments are made, shares are allocated to each eligible participant based on the ratio of each such participant’s compensation, as defined in the ESOP, to the total compensation of all eligible plan participants. As the unearned shares are released from the suspense account, the Company recognizes compensation expense equal to the fair value of the ESOP shares during the periods in which they become committed to be released. To the extent that the fair value of the ESOP shares released differs from the cost of such shares, the difference is charged or credited to equity as additional paid‑in capital. Dividends on allocated shares increase participant accounts. Dividends on unallocated shares will be used to repay the loan. At the end of employment, participants will receive shares for their vested balance. Compensation expense related to the ESOP was $ 202 thousand for 2024 and $ 307 thousand for 2023 . Shares held by the ESOP were as follows: December 31, 2024 December 31, 2023 (Dollars in thousands) Allocated to participants 127,804 134,444 Committed to be released 30,036 28,669 Suspense shares 428,804 458,829 Total ESOP shares 586,644 621,942 Fair value of unearned shares $ 2,937 $ 4,217 During 2024 and 2023, 30,036 and 28,669 of ESOP shares were released for allocation to participants, respectively. The outstanding book balance of unearned ESOP shares at December 31, 2024 and 2023 was $ 4.2 million and $ 4.5 million, respectively, which is shown as unearned ESOP shares in the equity section of the consolidated statements of financial condition. 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, 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. See Note 2. F-30 Table of Contents Note 14 – Income Taxes The Company and its subsidiary are subject to U.S. federal and state income taxes. Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Income tax expense (benefit) was as follows: 2024 2023 (In thousands) Current Federal $ 505 $ 300 State 504 398 Deferred Federal 11 1,046 State ( 206 ) 241 Total $ 814 $ 1,985 Effective tax rates differ from the federal statutory rate of 21 % applied to income before income taxes due to the following: 2024 2023 (In thousands) Federal statutory rate times pre-tax net income $ 581 $ 1,370 Effect of: State taxes, net of federal benefit 211 512 Earnings from bank owned life insurance ( 10 ) ( 9 ) Low-income housing credits – – Change in valuation allowance – 80 Tax effect of stock-based compensation 38 14 Other, net ( 6 ) 18 Total $ 814 $ 1,985 Year‑end deferred tax assets and liabilities were due to the following: 2024 2023 (In thousands) Deferred tax assets: Allowance for credit losses $ 2,331 $ 2,008 Accrued liabilities 483 580 State income taxes 108 30 Stock compensation 196 196 Net operating loss carryforward 1,880 1,982 Partnership investment 292 340 General business credit 1,544 1,962 Alternative minimum tax credit – 11 Net unrealized loss on securities available-for-sale 4,864 5,815 Right of use liability 127 196 Fair value adjustment on acquired loans 100 223 Other 166 212 Total deferred tax assets 12,091 13,555 Less: valuation allowance ( 449 ) ( 449 ) Total deferred tax assets , net of valuation allowance 11,642 13,106 Deferred tax liabilities: Section 481 adjustments to bad debts – – Deferred loan fees/costs ( 1,273 ) ( 1,743 ) Basis difference on fixed assets ( 708 ) ( 748 ) FHLB stock dividends ( 54 ) ( 98 ) Nonaccrual loan interest – – Prepaid expenses ( 172 ) ( 180 ) Right of use assets ( 121 ) ( 189 ) Core deposit intangibles ( 511 ) ( 610 ) Total deferred tax liabilities ( 2,839 ) ( 3,568 ) Net deferred tax assets $ 8,803 $ 9,538 Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax asset will not be realized. In assessing the realization of deferred tax assets, management evaluated both positive and negative evidence, the amount of taxes paid in available carry‑back years, and the forecasts of future income and tax planning strategies. Based on this analysis, management determined that, as of December 31, 2024, a valuation allowance of $ 449 thousand was required on the Company’s deferred tax assets, which totaled $ 8.8 million (net of valuation allowance). As of December 31, 2023, a valuation allowance of $ 449 thousand was required on the Company’s deferred tax assets, which totaled $ 9.5 million (net of valuation allowance). As of December 31, 2024, the Company had California net operating loss carryforwards of $ 22.0 million which will begin to expire in 2032 if not utilized. 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. 2023 is the most recent tax year for which the Company has filed federal and state income or franchise tax returns. Federal tax years 2021 through 2023 remain open for the assessment of Federal income tax. California tax years 2020 through 2023 remain open for the assessment of California franchise tax. Washington, D.C. tax years 2021 through 2023 remain open for the assessment of D.C. franchise tax. The Company is not currently under examination by any tax authorities . F-31 Table of Contents Note 15 – Stock‑Based Compensation Prior to June 21, 2023, the Company issued stock-based compensation awards to its directors and officers under the 2018 Long Term Incentive Plan (“LTIP”) which allowed the grant of non-qualified and incentive stock options, stock appreciation rights, full value awards and cash incentive awards. The maximum number of shares that could be awarded under that plan was 161,639 shares. On June 21, 2023, stockholders approved the Amended and Restated 2018 Long Term Incentive Plan (“Amended and Restated LTIP”) which allows the issuance of 487,500 additional shares and brought the number of shares that may be issued under the Amended and Restated LTIP to 649,139 shares. The following table summarizes stock option activity during the year ended December 31, 2024: Number Outstanding Weighted Average Exercise Price Outstanding at beginning of year 31,250 $ 12.96 Granted during the year – – Exercised during the year – – Forfeited or expired during the year ( 18,750 ) 12.96 Outstanding at end of year 12,500 $ 12.96 Exercisable at end of year 12,500 $ 12.96 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: Outstanding Exercisable Grant Date Number Outstanding Weighted Average Remaining Contractual Life Weighted Average Exercise Price Aggregate Intrinsic Value Number Outstanding Weighted Average Exercise Price Aggregate Intrinsic Value February 24, 2016 12,500 $ 12.96 12,500 $ 12.96 12,500 1.12 years $ 12.96 $ – 12,500 $ 12.96 $ – Stock Awards to Directors 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. The Company recorded $ 96 thousand and $ 95 thousand of compensation expense in the years ended December 31, 2024 and December 31, 2023, respectively, based on the fair value of the stock on the date of the award. Restricted Stock Awards to Employees 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 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. 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 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. During 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. F-32 Table of Contents A summary of restricted stock unit activity for the year ended December 31, 2024 is as follows: Restricted Stock Units (In thousands) Weighted Average Grant Date Fair Value Remaining Contractual Life (months) Unvested at December 31, 2023 113,568 $ 9.12 39 Granted during period 145,915 5.73 36 Vested during period ( 44,560 ) – – Forfeited or expired during period ( 30,049 ) – – Unvested at December 31, 2024 184,874 $ 8.91 31 As of December 31, 2024, there was $ 1.6 million of total unrecognized equity-based compensation expense that the Company expects to recognize over the remaining contractual life. All common stock share amounts above have been retroactively adjusted, as applicable, for the 1-for-8 reverse stock split effective November 1, 2023. See Note 2. Note 16 – Regulatory Matters The Bank’s capital requirements are administered by the Office of the Comptroller of the Currency (“OCC”) and involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by the OCC. Failure to meet capital requirements can result in regulatory action. As a result of the Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies have developed a “Community Bank Leverage Ratio” (“CBLR”) (the ratio of a bank’s tier 1 capital to average total consolidated assets) for financial institutions with assets of less than $10 billion. A “qualifying community bank” that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The federal banking agencies have set the Community Bank Leverage Ratio at 9%. Actual and required capital amounts and ratios as of the dates indicated are presented below: Actual Minimum Required to be Well Capitalized Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio (Dollars in thousands) December 31, 2024 : Community Bank Leverage Ratio $ 189,009 13.96 % $ 121,897 9.00 % December 31, 2023 : Community Bank Leverage Ratio $ 185,773 14.97 % $ 111,696 9.00 % At December 31, 2024, the Company and the Bank met all the capital adequacy requirements to which they were subject. In addition, the Bank was “well capitalized” under the regulatory framework for prompt corrective action. Management believes that no conditions or events have occurred that would materially adversely change the Bank’s capital classifications. From time to time, we may need to raise additional capital to support the Bank’s further growth and to maintain the “well capitalized” status. Note 17 – Loan Commitments and Other Related Activities Some financial instruments, such as loan commitments, credit lines, letters of credit, and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off‑balance‑sheet risk for credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment. The contractual amounts of financial instruments with off‑balance‑sheet risk at year‑end were as follows: 2024 2023 (In thousands) Commitments to make loans $ 6,201 $ 7,560 Unfunded construction loans 38,486 42,678 Unused lines of credit – variable rates 3,934 3,302 Commitments to make loans are generally made for periods of 60 days or less. F-33 Table of Contents Note 18 – Parent Company Only Condensed Financial Information Condensed financial information of Broadway Financial Corporation follows: Condensed Balance Sheets December 31, 2024 2023 (In thousands) Assets Cash and cash equivalents $ 73,172 $ 77,457 Investment in bank subsidiary 205,928 200,830 Other assets 6,161 4,003 Total assets $ 285,261 $ 282,290 Liabilities and stockholders’ equity Accrued expenses and other liabilities $ 104 $ 387 Stockholders’ equity 285,157 281,903 Total liabilities and stockholders’ equity $ 285,261 $ 282,290 Condensed Statements of Income Years Ended December 31, 2024 2023 (In thousands) Interest income $ 283 $ 268 Interest expense – – Other expense ( 988 ) ( 1,099 ) Loss before income tax and undistributed subsidiary income ( 705 ) ( 831 ) Income tax benefits 209 196 Equity in undistributed subsidiary income 2,422 5,149 Net income $ 1,926 $ 4,514 Condensed Statements of Cash Flows Years Ended December 31, 2024 2023 (In thousands) Cash flows from operating activities Net income $ 1,926 $ 4,514 Adjustments to reconcile net loss to net cash used in operating activities: Equity in undistributed subsidiary income ( 2,422 ) ( 5,149 ) Stock awards expenses 593 396 Change in other assets ( 2,927 ) ( 1,618 ) Change in accrued expenses and other liabilities ( 290 ) 152 Net cash used in operating activities ( 3,120 ) ( 1,705 ) Cash flows from investing activities Capital distribution to bank subsidiary – – Net cash used in investing activities – – Cash flows from financing activities Share repurchase - FDIC – ( 1,781 ) Dividends declared and paid- ECIP ( 1,567 ) – Increase in unreleased ESOP shares – ( 3,400 ) Proceeds from repayment of ESOP loan 402 328 Net cash used in financing activities ( 1,165 ) ( 4,853 ) Net change in cash and cash equivalents ( 4,285 ) ( 6,558 ) Beginning cash and cash equivalents 77,457 84,015 Ending cash and cash equivalents $ 73,172 $ 77,457 F-34 Table of Contents Note 19 – Earnings Per Common Share The factors used in the earnings per common share computation follow: 2024 2023 (In thousands, except share and per share) Net income attributable to Broadway Financial Corporation $ 1,926 $ 4,514 Less: Net income attributable to participating securities 7 59 Less: Preferred stock dividends - ECIP 1,567 – Income available to common stockholders $ 352 $ 4,455 Weighted average common shares outstanding for basic earnings per common share 8,459,460 8,627,071 Add: Effects of unvested restricted stock awards 179,200 114,599 Weighted average common shares outstanding for diluted earnings per common share 8,638,660 8,741,670 Earnings per common share - basic $ 0.04 $ 0.52 Earnings per common share - diluted $ 0.04 $ 0.51 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 available to common stockholders less dividends paid on participating securities (unvested shares of restricted common stock) and any undistributed loss attributable to participating securities by the weighted average common shares outstanding during the period. The weighted average common shares outstanding includes the weighted average number of shares of common stock outstanding less the weighted average number of unvested shares of restricted common stock. ESOP shares are considered outstanding for this calculation unless unearned. Diluted earnings per share of common stock includes the dilutive effect of unvested stock awards and additional potential common shares issuable under stock options. No unvested stock awards or potential common shares issuable under stock options were included in diluted earnings per share in either year. Note 20 – Subsequent Events The Company evaluated its December 31, 2024 consolidated financial statements for subsequent events through the date these financial statements were issued. F-35