BYFC filing — read by section

Item 1. Business

ITEM 1. 

 BUSINESS

 General

 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 (the “Merger”) with CFBanc Corporation (“CFBanc”), with the Company continuing as the surviving entity. Immediately following the Merger, Broadway
 Federal merged with and into City First Bank of D.C, National Association with City First Bank of D.C., National Association continuing as the surviving entity (combined with Broadway Federal, “City First” or the “Bank”). Concurrently with the
 Merger, the Bank changed its name to City First Bank, National Association.

 Concurrently with the completion of the Merger, the Company converted to become a public benefit corporation. The Company works to spur equitable economic development with a mission to strengthen
 the overall well-being of historically excluded communities and has deployed loans and investments in the communities we serve that we believe has helped close funding gaps, preserved or increased access to affordable housing, created and
 preserved jobs, and expanded critical social services. We believe our status as a Delaware public benefit corporation aligns our business model of creating social, economic, and environmental value for underserved communities with a stakeholder
 governance model that allows us to give careful consideration to the impact of our decisions on workers, customers, suppliers, community, the environment, and our impact on society; and to align further our mission and values to our
 organizational documents.

 1 

 Table of Contents 

 Reverse Stock Split

 On October 31, 2023, the Company effected a reverse stock split of the Company’s outstanding shares of Class A common stock, Class B common stock, and Class C common stock, par value $0.01 per
 share, at a ratio of 1-for-8 (the “Reverse Stock Split”). The shares of Class A Common Stock listed on The Nasdaq Capital Market commenced trading on The Nasdaq Capital Market on a post-Reverse Stock Split adjusted basis at the open of business
 on November 1, 2023. As a result of the Reverse Stock Split, the number of issued and outstanding shares of common stock immediately prior to the Reverse Stock Split was reduced such that every 8 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. All common stock share amounts and per share numbers discussed herein have been retroactively adjusted, as applicable, for the Reverse
 Stock Split.

 Share Repurchase

 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 - for more information about the reverse stock
 split, see Note 3) 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.

 The Company is currently regulated by the Board of Governors of the Federal Reserve System (the “FRB”). The Bank is currently regulated by the Office of the Comptroller of the Currency (the “OCC”)
 and the Federal Deposit Insurance Corporation (the “FDIC”). The Bank’s deposits are insured up to applicable limits by the FDIC. The Bank is also a member of the Federal Home Loan Bank of Atlanta (the “FHLB”). See “Regulation” for further
 descriptions of the regulatory systems to which the Company and the Bank are subject.

 Available Information

 Our internet website address is www.cityfirstbank.com. Our annual reports on Form 10‑K, quarterly reports on Form 10‑Q, current reports on Form 8‑K and all amendments to those reports
 are available on our website as soon as reasonably practicable after we file such material with, or furnish such material to, the Securities and Exchange Commission (the “SEC”) and can be obtained free of charge by sending a written request to
 Broadway Financial Corporation, 4601 Wilshire Boulevard, Suite 150, Los Angeles, California 90010 Attention: Audrey Phillips. The SEC also maintains an internet site at www.sec.gov that contains reports, proxy and information statements, and other information filed electronically by us with the SEC. 

 Business Overview

 The Company is headquartered in Los Angeles, California and our principal business is the operation of our wholly‑owned subsidiary, City First, which has three offices: two in California (in Los
 Angeles and the nearby city of Inglewood) and one in Washington, D.C. City First’s principal business consists of attracting deposits from the general public in the areas surrounding our branch offices, loan customers, large non-profit entities,
 local municipalities, and depositors who believe in the Bank’s mission-driven focus. These deposits, together with funds generated from operations and borrowings, primarily in loans secured by residential properties with five or more units
 (“multi‑family”) and commercial real estate. Our assets also include loans secured by commercial business assets as well as residential properties with one‑to‑four units (“single-family”). In addition, we invest in securities issued by federal
 government agencies, residential mortgage‑backed securities and other investments.

 Our revenue is derived primarily from interest income on loans and investments. Our principal costs are interest expenses that we incur on deposits and borrowings, together with general and
 administrative expenses. Our earnings are significantly affected by general economic and competitive conditions, particularly monetary trends, and conditions, including changes in market interest rates and the differences in market interest rates
 for the interest-bearing deposits and borrowings that are our principal funding sources and the interest yielding assets in which we invest, as well as government policies and actions of regulatory authorities.

 Lending Activities

 General

 Our loan portfolio is comprised primarily of commercial mortgage loans which are secured by multi‑family residential properties, single-family residential properties and commercial real estate,
 including charter schools, community facilities, and churches. The remainder of the loan portfolio consists of commercial business loans, loans guaranteed by the Small Business Administration (the “SBA”) and construction-to-permanent loans. At
 December 31, 2024, our net loan portfolio totaled $1.0 billion, or 74.9% of total assets.

 2 

 Table of Contents 

 We emphasize the origination of adjustable‑rate loans, most of which are hybrid loans (loans having an initial fixed rate period which are initially five years, followed by an adjustable-rate
 period), for our portfolio of loans held for investment. We originate these loans in order to maintain a high percentage of loans that have provisions for periodic repricing, thereby reducing our exposure to interest rate risk. At December 31,
 2024, more than 84% of our loans had adjustable-rate features. However, most of our adjustable-rate loans behave like fixed rate loans for periods of time because the loans may still be in their initial fixed‑rate period or may be subject to
 interest rate floors.

 The types of loans that we originate are subject to federal laws and regulations. The interest rates that we charge on loans are affected by the demand for such loans, the supply of money available
 for lending purposes and the rates offered by competitors. These factors are in turn affected by, among other things, economic conditions, monetary policies of the federal government, including the FRB, and legislative tax policies. See
 “Regulation” for more information on the government regulations to which we are subject.

 The following table details the composition of our portfolio of loans held for investment by type, dollar amount and percentage of loan portfolio at the dates indicated:

 December 31,

 2024

 (As Restated)

 2023

 (As Restated)

 2022

 2021

 2020

 Amount

 Percent

 of total

 Amount

 Percent

 of total

 Amount

 Percent

 of total

 Amount

 Percent

 of total

 Amount

 Percent

 of total

 (Dollars in thousands)

 Single-family

 $

 24,036

 2.39

 %

 $

 25,184

 2.74

 %

 $

 30,038

 3.89

 %

 $

 45,372

 6.96

 %

 $

 48,217

 13.32

 %

 Multi‑family

 639,156

 63.50

 %

 567,481

 61.81

 %

 502,141

 65.08

 %

 393,704

 60.36

 %

 272,387

 75.24

 %

 Commercial real estate

 163,348

 16.23

 %

 127,684

 13.91

 %

 114,574

 14.85

 %

 93,193

 14.29

 %

 24,289

 6.71

 %

 Church

 9,470

 0.94

 %

 12,717

 1.39

 %

 15,780

 2.04

 %

 22,503

 3.45

 %

 16,658

 4.60

 %

 Construction

 91,600

 9.10

 %

 99,060

 10.79

 %

 40,703

 5.27

 %

 32,072

 4.92

 %

 429

 0.11

 %

 Commercial - other

 77,787

 7.73

 %

 70,950

 7.73

 %

 64,841

 8.40

 %

 46,539

 7.13

 %

 57

 0.02

 %

 SBA Loans

 1,142

 0.11

 %

 14,954

 1.63

 %

 3,601

 0.47

 %

 18,837

 2.89

 %

 –

 –

 %

 Consumer

 13

 –

 %

 13

 –

 %

 11

 –

 %

 – 

 – 

 %

 7

 –

 %

 Gross loans

 1,006,552

 100.00

 %

 918,043

 100.00

 %

 771,689

 100.00

 %

 652,220

 100.00

 %

 362,044

 100.00

 %

 Plus:

 Premiums on loans purchased

 – 

 32

 35

 58

 88

 Deferred loan costs, net

 2,116

 1,940

 1,723

 1,471

 1,218

 Less:

 Credit and interest marks on purchased loans, net

 348

 772

 1,010

 1,842

 –

 Unamortized discounts

 – 

 1

 3

 3

 6

 Allowance for credit/loan losses

 8,364

 7,613

 4,388

 3,391

 3,215

 Total loans held for investment

 $

 999,956

 $

 911,629

 $

 768,046

 $

 648,513

 $

 360,129

 3 

 Table of Contents 

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

 December 31, 2024

 (As Restated)

 One Year or

 Less

 More Than

 One Year to

 Five Years

 More Than 

 Five Years to

 15 Years

 More Than

 15 Years

 Total

 (Dollars in thousands)

 Loans receivable held for investment:

 Single-family

 $

 2,528

 $

 8,660

 $

 5,053

 $

 7,795

 $

 24,036

 Multi-family

 16,402

 18,529

 12,657

 591,568

 639,156

 Commercial real estate

 19,292

 78,584

 43,047

 22,425

 163,348

 Church

 1,343

 2,930

 5,197

 –

 9,470

 Construction

 45,962

 44,082

 1,556

 –

 91,600

 Commercial - other

 12,914

 23,812

 38,997

 2,064

 77,787

 SBA loans

 –

 402

 740

 –

 1,142

 Consumer

 13

 –

 –

 –

 13

 $

 98,454

 $

 176,999

 $

 107,247

 $

 623,852

 $

 1,006,552

 Loans maturities after one year with:

 Fixed rates

 Single-family

 $

 8,332

 $

 2,367

 $

 5,057

 $

 15,756

 Multi-family

 14,514

 8,559

 –

 23,073

 Commercial real estate

 71,802

 31,617

 –

 103,419

 Church

 2,369

 –

 –

 2,369

 Construction

 9,849

 1,556

 –

 11,405

 Commercial - other

 8,812

 37,986

 –

 46,798

 SBA loans

 –

 –

 –

 –

 Consumer

 –

 –

 –

 –

 $

 115,678

 $

 82,085

 $

 5,057

 $

 202,820

 Variable rates

 Single-family

 $

 328

 $

 2,686

 $

 2,738

 $

 5,752

 Multi-family

 4,015

 4,098

 591,568

 599,681

 Commercial real estate

 6,782

 11,430

 22,425

 40,637

 Church

 561

 5,197

 –

 5,758

 Construction

 34,233

 –

 –

 34,233

 Commercial - other

 15,000

 1,011

 2,064

 18,075

 SBA loans

 402

 740

 –

 1,142

 Consumer

 –

 –

 –

 –

 $

 61,321

 $

 25,162

 $

 618,795

 $

 705,278

 Total

 $

 176,999

 $

 107,247

 $

 623,852

 $

 908,098

 Multi‑Family and Commercial Real Estate Lending

 Our primary lending emphasis has been on the origination of loans for multi-family with five or more units. These multi‑family loans amounted to $639.2 million and $567.5 million at December 31,
 2024 and 2023, respectively. Multi‑family loans represented 63.50% of our gross loan portfolio at December 31, 2024 compared to 61.81% of our gross loan portfolio at December 31, 2023. Most of our multi‑family loans amortize over 30 years. As of
 December 31, 2024, our single largest multi‑family credit had an outstanding balance of $11.4 million, was current, and was collateralized by a 53-unit apartment complex in Downey, California. At December 31, 2024, the average balance of a loan
 in our multi‑family portfolio was $1.3 million.

 Our commercial real estate loans amounted to $163.3 million and $127.7 million at December 31, 2024 and 2023, respectively. Commercial real estate loans represented 16.23% and 13.91% of our gross
 loan portfolios at December 31, 2024 and 2023, respectively. Most commercial real estate loans are originated with principal repayments on a 25- to 30-year amortization schedule but are due in 5 years or 10 years. As of December 31, 2024, our
 single largest commercial real estate credit had an outstanding principal balance of $15.0 million, was current, and was collateralized by a charter school located in Washington, D.C. At December 31, 2024, the average balance of a loan in our
 commercial real estate portfolio was $2.9 million.

 The interest rates on multi‑family and commercial adjustable-rate mortgage loans (“ARM Loans”) are based on the Secured Overnight Financing Rate (“SOFR”). The interest rates on
 commercial real estate loans are based on a variety of indices, including two-year Treasury, five-year Treasury, seven-year Treasury and ten-year Treasury and the five-year FHLB.

 All loans previously indexed to LIBOR were converted to SOFR as of December 31, 2022. We currently offer adjustable-rate loans with interest rates that adjust either semi‑annually or semi‑annually
 upon expiration of an initial three‑ or five‑year fixed rate period. Borrowers are required to make monthly payments under the terms of such loans.

 Loans secured by multi‑family and commercial properties are granted based on the income producing potential of the property and the financial strength of the borrower. The primary factors considered
 include, among other things, the net operating income of the mortgaged premises before debt service and depreciation, the debt service coverage ratio (the ratio of net operating income to required principal and interest payments, or debt
 service), and the ratio of the loan amount to the lower of the purchase price or the appraised value of the collateral.

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 Table of Contents 

 We seek to mitigate the risks associated with multi‑family and commercial real estate loans by applying appropriate underwriting requirements, which include limitations on loan‑to‑value ratios and
 debt service coverage ratios. Under our underwriting policies, loan‑to‑value ratios on our multi‑family and commercial real estate loans usually do not exceed 75% of the lower of the purchase price or the appraised value of the underlying
 property. We also generally require minimum debt service coverage ratios of 120% for multi‑family loans and commercial real estate loans. Properties securing multi‑family and commercial real estate loans are appraised by management‑approved
 independent appraisers. Title insurance is required on all loans.

 Multi‑family and commercial real estate loans are generally viewed as exposing the lender to a greater risk of loss than single-family residential loans and typically involve higher loan principal
 amounts than loans secured by single-family residential real estate. Because payments on loans secured by multi‑family and commercial real properties are often dependent on the successful operation or management of the properties, repayment of
 such loans may be subject to adverse conditions in the real estate market or general economy. Adverse economic conditions in our primary lending market area could result in reduced cash flows on multi‑family and commercial real estate loans,
 vacancies and reduced rental rates on such properties. We seek to reduce these risks by originating such loans on a selective basis and generally restrict such loans to our general market area. In 2008, Broadway Federal ceased out‑of‑state
 lending for all types of loans. As a result of the Merger, in 2021 we resumed out-of-state lending on a selective basis; however, we currently do not have any loans outstanding that are outside of our market area, which consists of Southern
 California and the Washington, D.C. area (including parts of Maryland and Virginia).

 Certain multi-family loans have adjustable-rate features based on SOFR but are fixed for the first five years. Depending on interest rate trends, some multi-family loans may pay-off during the first
 five years, while others continue into the adjustable-rate phase. The interest rates on loans that continue into the adjustable-rate phase are adjusted semi-annually subject to interest rate caps.

 Our church loans totaled $9.5 million and $12.7 million at December 31, 2024 and 2023, respectively, which represented 0.94% and 1.39% of our gross loan portfolio at December 31, 2024 and 2023,
 respectively. Broadway Federal ceased originating church loans in 2010 in Southern California; however, City First originates loans to churches in the Washington, D.C. area as part of its community development mission. As of December 31, 2024,
 our single largest church loan had an outstanding balance of $2.2 million, was current, and was collateralized by a church building and parcel of land in Baltimore, Maryland. At December 31, 2024, the average balance of a loan in our church loan
 portfolio was $631 thousand.

 Single-Family Mortgage Lending

 While we have historically been primarily a multi‑family and commercial real estate lender, we also have purchased or originated loans secured by single-family residential properties, including
 investor‑owned properties, with maturities of up to 30 years. Single-family loans totaled $24.0 million and $25.2 million at December 31, 2024 and 2023, respectively. Of the single-family residential mortgage loans outstanding at December 31,
 2024, more than 26% had adjustable-rate features. We did not purchase any single-family loans during 2024 or 2023. Of the $24.0 million of single-family loans at December 31, 2024, $18.0 million are secured by investor‑owned properties.

 The interest rates for our single-family ARM Loans are indexed to COFI, SOFR, 12‑MTA and 1‑Yr. CMT. All loans previously indexed to LIBOR were converted to SOFR as of December 31, 2022. We currently
 offer loans with interest rates that adjust either semi‑annually or semi‑annually upon expiration of an initial three or five‑year fixed rate period. Borrowers are required to make monthly payments under the terms of such loans. Most of our
 single-family adjustable-rate loans behave like fixed rate loans because the loans are still in their initial fixed rate period or are subject to interest rate floors.

 We qualify our ARM Loan borrowers based upon the fully indexed interest rate (SOFR or other index plus an applicable margin) provided by the terms of the loan. However, we may discount the initial
 rate paid by the borrower to adjust for market and other competitive factors. The ARM Loans that we offer have a lifetime adjustment limit that is set at the time that the loan is approved. In addition, because of interest rate caps and floors,
 market rates may exceed or go below the respective maximum or minimum rates payable on our ARM Loans.

 The mortgage loans that we originate generally include due‑on‑sale clauses, which provide us with the contractual right to declare the loan immediately due and payable if the borrower transfers
 ownership of the property.

 Construction Lending

 Construction loans totaled $91.6 million and $99.1 million at December 31, 2024 and 2023, respectively, and represented 9.10% and 10.79% of our gross loan portfolio at December 31, 2024 and 2023,
 respectively. We provide loans for the construction of quality, affordable single-family, multi‑family and commercial real estate projects and for land development. We generally make construction and land loans at variable interest rates based
 upon the applicable Treasury Index plus a margin. Generally, we require a loan‑to‑value ratio not exceeding 75% and a loan‑to‑cost ratio not exceeding 85% on construction loans.

 5 

 Table of Contents 

 Construction loans involve risks that are different from those for completed project lending because we advance loan funds based upon the security and estimated value at completion of the project
 under construction. If the borrower defaults on the loan, we may have to advance additional funds to finance the project’s completion before the project can be sold. Moreover, construction projects are affected by uncertainties inherent in
 estimating construction costs, potential delays in construction schedules due to supply chain or other issues, market demand and the accuracy of estimates of the value of the completed project considered in the loan approval process. In addition,
 construction projects can be risky as they transition to completion and lease‑up. Tenants who may have been interested in leasing a unit or apartment may not be able to afford the space when the building is completed or may fail to lease the
 space for other reasons such as more attractive terms offered by competing lessors, making it difficult for the building to generate enough cash flow for the owner to obtain permanent financing. We specialize in the origination of construction
 loans for affordable housing developments where rents are subsidized by housing authority agencies. During 2024, we originated $7.6 million of construction loans, compared to $40.0 million of construction loan originations during 2023.

 Commercial Lending

 Our commercial lending portfolio consists of loans and lending activities to businesses in our market area that are secured by business assets including inventory, receivables, machinery, and
 equipment. As of December 31, 2024 and 2023, non-real estate commercial loans totaled $77.8 million and $71.0 million, respectively. Commercial loans represented 7.73% of our loan portfolio as of both December 31, 2024 and 2023, respectively. For
 the year ended December 31, 2024, we originated $19.4 million of commercial loans. As of December 31, 2024, our single largest commercial loan had an outstanding balance of $15.0 million. At December 31, 2024, the average balance of a loan in our
 non-real estate commercial loan portfolio was $3.4 million.

 The risks related to commercial loans differ from loans secured by real estate and relate to the ability of borrowers to successfully operate their businesses and the difference between expected and
 actual cash flows of the borrowers. In addition, the recoverability of our investment in these loans is also dependent on other factors primarily dictated by the type of collateral securing these loans. The fair value of the collateral securing
 these loans may fluctuate as market conditions change. In the case of loans secured by accounts receivable, the recovery of our investment is dependent upon the borrower’s ability to collect amounts due from customers.

 SBA Guaranteed Loans

 City First is an approved SBA lender. We originate loans in Washington, D.C, Maryland, Virginia and California under the SBA’s 7(a), SBA Express, International Trade and 504(a) loan programs, in
 conformity with SBA underwriting and documentation standards. SBA loans are similar to commercial business loans but have additional credit enhancement provided by the U.S. Federal Government with guarantees between 50-85%. Certain loans
 classified as SBA are secured by commercial real estate property. All other SBA loans are secured by business assets. As of December 31, 2024 and 2023, SBA loans totaled $1.1 million and $15.0 million, respectively.

 Loan Originations, Purchases and Sales

 The following table summarizes loan originations, purchases, sales, and principal repayments for the periods indicated:

 2024

 (As 

 Restated)

 2023

 (As 

 Restated)

 2022

 (In thousands)

 Gross loans: (1) 

 Beginning balance

 $

 918,043

 $

 771,689

 $

 652,220

 Loans originated:

 Single-Family

 -

 482

 -

 Multi‑family

 80,923

 84,907

 141,625

 Commercial real estate

 50,847

 36,530

 75,302

 SBA Loans

 800

 –

 –

 Construction

 8,914

 49,123

 29,628

 Commercial

 19,410

 22,500

 26,877

 Total loans originated

 160,894

 193,542

 273,432

 Less:

 Principal repayments

 72,385

 47,188

 153,963

 Ending balance

 $

 1,006,552

 $

 918,043

 $

 771,689

 (1) 

 Amount is before deferred origination costs, purchase premiums and discounts, and the allowance for credit losses.

 6 

 Table of Contents 

 Loan originations are derived from various sources including our loan personnel, local mortgage brokers, and referrals from customers. More than 85% of multi-family loan originations during 2024,
 2023 and 2022 were sourced from wholesale loan brokers. All commercial real estate loans, construction loans, commercial loans and SBA loans were derived from our loan personnel, except that we partner with a third-party certified development
 company to originate and underwrite certain SBA 504 loans. No single-family or consumer loans were originated during the last three years.

 For all loans that we originate, upon receipt of a loan application from a prospective borrower, a credit report is ordered, and certain other information is verified by an independent credit
 agency. If necessary, additional financial information is requested. An appraisal of the real estate intended to secure the proposed loan is required to be performed by an independent licensed or certified appraiser designated and approved by us.
 The Bank’s Board of Directors (the “Board”) annually reviews our appraisal policy. Management reviews annually the qualifications and performance of independent appraisers that we use.

 It is our policy to obtain title insurance on real estate secured loans. Borrowers must also obtain hazard insurance naming the Bank as a loss payee prior to loan closing and they have the option to
 escrow for taxes and insurance. If the property is located in a flood zone, the borrower must obtain flood insurance and provide proof of coverage prior to closing.

 Each loan requires at least two signatures for approval. The Board has authorized loan approval limits for various management team members up to $7 million per individual, and up to $12 million for
 the Chief Executive. Loans in excess of $7 million require review and approval by members of the Director’s Loan Committee.

 From time to time, we purchase loans originated by other institutions based upon our investment needs and market opportunities. The determination to purchase specific loans or pools of loans is
 subject to our underwriting policies, which consider, among other factors, the financial condition of the borrowers, the location of the underlying collateral properties and the appraised value of the collateral properties. We did not purchase
 any loans during the years ended December 31, 2024, 2023 or 2022.

 During 2024 and 2023, we did not originate or sell any loans that were classified as held for sale.

 Asset Quality

 General

 The underlying credit quality of our loan portfolio is dependent primarily on each borrower’s ability to continue to make required loan payments and, in the event a borrower is unable to continue to
 do so, the value of the collateral securing the loan, if any. A borrower’s ability to pay, in the case of single-family residential loans and consumer loans, typically is dependent primarily on employment and other sources of income. Multi‑family
 and commercial real estate loan borrowers’ ability to pay is typically dependent on the cash flow generated by the property, which in turn is impacted by general economic conditions. Commercial business and SBA loan borrowers’ ability to pay is
 typically dependent on the successful operation of their businesses or their ability to collect amounts due from their customers. Other factors, such as unanticipated expenditures or changes in the financial markets, may also impact a borrower’s
 ability to make loan payments. Collateral values, particularly real estate values, are also impacted by a variety of factors, including general economic conditions, demographics, property maintenance and collection or foreclosure delays.

 Delinquencies

 We perform a weekly review of all delinquent loans and a monthly loan delinquency report is made to the Internal Asset Review Committee of the Board. When a borrower fails to make a required payment
 on a loan, we take several steps to induce the borrower to cure the delinquency and restore the loan to current status. The procedures we follow with respect to delinquencies vary depending on the type of loan, the type of property securing the
 loan, and the period of delinquency. In the case of residential mortgage loans, we generally send the borrower a written notice of non‑payment promptly after the loan becomes past due. In the event payment is not received promptly thereafter,
 additional letters are sent, and telephone calls are made. If the loan is still not brought current and it becomes necessary for us to take legal action, we generally commence foreclosure proceedings on all real property securing the loan. In the
 case of commercial real estate loans, we generally contact the borrower by telephone and send a written notice of intent to foreclose upon expiration of the applicable grace period. Decisions not to commence foreclosure upon expiration of the
 notice of intent to foreclose for commercial real estate loans are made on a case‑by‑case basis. We may consider loan workout arrangements with commercial real estate borrowers in certain circumstances.

 7 

 Table of Contents 

 The following table shows our loan delinquencies by type and amount at the dates indicated:

 December 31, 2024

 December 31, 2023

 December 31, 2022

 Loans delinquent

 Loans delinquent

 Loans delinquent

 60-89 Days

 90 days or more

 60-89 Days

 90 days or more

 60-89 Days

 90 days or more

 Number

 Amount

 Number

 Amount

 Number

 Amount

 Number

 Amount

 Number

 Amount

 Number

 Amount

 (Dollars in thousands)

 Single-family

 1

 $

 6

 –

 $

 –

 –

 $

 –

 –

 $

 –

 –

 $

 –

 –

 $

 –

 Multi- family

 –

 –

 –

 –

 1

 401

 –

 –

 –

 –

 –

 –

 SBA loans

 1

 264

 –

 –

 –

 –

 –

 –

 –

 –

 –

 –

 Total

 2

 $

 270

 –

 $

 –

 1

 $

 401

 –

 $

 –

 –

 $

 –

 –

 $

 –

 % of Gross Loans

 0.03

 %

 –

 %

 0.04

 %

 –

 %

 –

 %

 –

 %

 Non‑Performing Assets

 Non‑performing assets (“NPAs”) include non‑accrual loans and real estate owned through foreclosure or deed in lieu of foreclosure (“REO”). We had one NPA at December 31, 2024
 and no NPAs at December 31, 2023. Non-accrual loans consist of delinquent loans that are 90 days or more past due and other loans, including loans modified in response to a borrower’s financial difficulty, that do
 not qualify for accrual status. 

 The following table provides information regarding our non‑performing assets at the dates indicated:

 December 31,

 2024

 2023

 2022

 2021

 2020

 (Dollars in thousands)

 Non‑accrual loans:

 Single-family

 $

 –

 $

 –

 $

 –

 $

 –

 $

 1

 Church

 –

 –

 144

 684

 786

 SBA loans

 264

 –

 –

 –

 –

 Total non‑accrual loans

 264

 –

 144

 684

 787

 Loans delinquent 90 days or more and still accruing

 –

 –

 –

 –

 –

 Real estate owned acquired through foreclosure

 –

 –

 –

 –

 –

 Total non‑performing assets

 $

 264

 $

 –

 $

 144

 $

 684

 $

 787

 Non‑accrual loans as a percentage of gross loans, including loans receivable held for sale

 0.03

 %

 –

 %

 0.02

 %

 0.10

 %

 0.22

 %

 Non‑performing assets as a percentage of total assets

 0.02

 %

 –

 %

 0.01

 %

 0.06

 %

 0.16

 %

 There were no accrual loans that were contractually past due by 90 days or more at December 31, 2024 or 2023. We had no commitments to lend additional funds to borrowers whose loans were on
 non‑accrual status at December 31, 2024.

 We discontinue accruing interest on loans when the loans become 90 days delinquent as to their payment due date (three missed payments). In addition, we reverse all previously accrued and
 uncollected interest for those loans through a charge to interest income. While loans are in non‑accrual status, interest received on such loans is credited to principal, until the loans qualify for return to accrual status. Loans are returned to
 accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

 Classification of Assets

 Federal regulations and our internal policies require that we utilize an asset classification system as a means of monitoring and reporting problem and potential problem assets. We have incorporated
 asset classifications as a part of our credit monitoring system and thus classify potential problem assets as “Watch” and “Special Mention,” and problem assets as “Substandard,” “Doubtful” or “Loss.” An asset is considered “Watch” if the loan is
 current but temporarily presents higher than average risk and warrants greater than routine attention and monitoring. An asset is considered “Special Mention” if the loan is current but there are some potential weaknesses that deserve
 management’s close attention. An asset is considered “Substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. “Substandard” assets include those characterized by
 the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “Doubtful” have all the weaknesses inherent in those classified “Substandard” with the added
 characteristic that the weaknesses make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “Loss” are those considered “uncollectible”
 and of such little value that their continuance as assets without the establishment of a specific loss allowance is not warranted. Assets which do not currently expose us to sufficient risk to warrant classification in one of the aforementioned
 categories, but that are considered to possess some weaknesses, are designated “Special Mention.” Our Internal Asset Review Department reviews and classifies our assets and independently reports the results of its reviews to the Internal Asset
 Review Committee of our Board monthly.

 8 

 Table of Contents 

 The following table provides information regarding our criticized loans (Watch and Special Mention) and classified assets (Substandard) at the dates indicated:

 December 31, 2024

 (As Restated)

 December 31, 2023

 (As Restated)

 (Dollars in thousands) 

 Watch loans

 $

 149,903

 $

 135,103

 Special mention loans

 9,961

 6,846

 Total criticized loans

 159,864

 141,949

 Substandard loans

 68,492

 25,602

 Total classified assets

 68,492

 25,602

 Total

 $

 228,356

 $

 167,551

 Criticized assets increased to $159.9 million at December 31, 2024, from $141.9 million at December 31, 2023. City First has historically classified all newly originated construction loans as Watch
 loans until a history of loan performance can be established or until the construction project is complete, which is the main driver for the increase in total criticized loans of $17.9 million during 2024. In addition, certain loans were
 downgraded as part of the internal review process, which also caused the increase in substandard loans of $42.9 million.

 Allowance for Credit Losses

 In originating loans, we recognize that losses may be experienced on loans and that the risk of loss may vary as a result of many factors, including the type of loan being made, the
 creditworthiness of the borrower, general economic conditions and, in the case of a secured loan, the quality of the collateral for the loan. Effective January 1, 2023, the Company accounts for the ACL on loans in accordance with Accounting
 Standards Codification Topic 326 (“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 weighted-average remaining
 maturity (“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.

 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 the remaining life 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.

 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.

 9 

 Table of Contents 

 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.

 We determined that an ACL of $8.4 million, or 0.83% of gross loans held for investment, was appropriate at December 31, 2024, compared to the allowance for loan and lease losses (“ALLL”) of $7.6
 million, or 0.83% of gross loans held for investment at December 31, 2023.

 Prior to the Company’s adoption of ASC 326 on January 1, 2023, the Company maintained an ALLL in accordance with ASC 310 and ASC 450 that covered estimated credit losses on individually evaluated
 loans that were determined to be impaired, as well as estimated probable incurred losses inherent in the remainder of the loan portfolio.

 Beginning on January 1, 2023, the Company evaluates loans collectively for purposes of determining the ACL in accordance with ASC 326. Collective evaluation is based on aggregating loans deemed to
 possess similar risk characteristics. In certain instances, the Company may identify loans that it believes no longer possess risk characteristics similar to other loans in the loan portfolio. These loans are typically identified from those
 that have exhibited deterioration in credit quality, since the specific attributes and risks associated with such loans tend to become unique as the credit deteriorates. Such loans are typically nonperforming, downgraded to substandard or
 worse, and/or are deemed collateral dependent, where the ultimate repayment of the loan is expected to come from the operation of or eventual sale of the collateral. Loans that are deemed by management to no longer possess risk characteristics
 similar to other loans in the portfolio, or that have been identified as collateral dependent, are evaluated individually for purposes of determining an appropriate lifetime ACL. The Company uses 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.

 Prior to the adoption of ASC 326 on January 1, 2023, the Company classified loans as impaired when, based on current information and events, it was probable that the Company would be unable to
 collect all amounts due according to the contractual terms of the loan agreement or it was determined that the likelihood of the Company receiving all scheduled payments, including interest, when due was remote. Credit losses on impaired loans
 were determined separately based on the guidance in ASC 310. Beginning January 1, 2023, the Company accounts for credit losses on all loans in accordance with ASC 326, which eliminates the concept of an impaired loan within the context of
 determining credit losses, and requires all loans to be evaluated for credit losses collectively based on similar risk characteristics. Loans are only evaluated individually when they are deemed to no longer possess similar risk characteristics
 with other loans in the loan portfolio.

 A federally chartered bank’s determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the OCC. The OCC, in conjunction with the other
 federal banking agencies, provides guidance for financial institutions on the responsibilities of management for the assessment and establishment of adequate valuation allowances, as well as guidance for banking agency examiners to use in
 determining the adequacy of valuation allowances. It is required that all institutions have effective systems and controls to identify, monitor and address asset quality problems, analyze all significant factors that affect the collectability of
 the portfolio in a reasonable manner and establish acceptable allowance evaluation processes that meet the objectives of the guidelines issued by federal regulatory agencies. While we believe that the ACL has been established and maintained at
 adequate levels, future adjustments may be necessary if economic or other conditions differ materially from the conditions on which we based our estimates at December 31, 2024. In addition, there can be no assurance that the OCC or other
 regulators, as a result of reviewing our loan portfolio and/or allowance, will not require us to materially increase our ACL, thereby affecting our financial condition and earnings.

 10 

 Table of Contents 

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

 December 31,

 2024

 (As Restated)

 2023

 (As Restated)

 2022

 2021

 2020

 Amount

 Percent

 of loans

 in each

 category

 to total

 loans

 Amount

 Percent

 of loans

 in each

 category

 to total

 loans

 Amount

 Percent

 of loans

 in each

 category

 to total

 loans

 Amount

 Percent

 of loans

 in each

 category

 to total

 loans

 Amount

 Percent

 of loans

 in each

 category

 to total

 loans

 (Dollars in thousands)

 Single-family

 $

 200

 2.39

 %

 $

 264

 2.74

 %

 $

 109

 3.89

 %

 $

 145

 6.96

 %

 $

 296

 13.32

 %

 Multi‑family

 4,617

 63.50

 %

 4,464

 61.81

 %

 3,273

 65.08

 %

 2,657

 60.36

 %

 2,433

 75.24

 %

 Commercial real estate

 1,188

 16.23

 %

 1,164

 13.91

 %

 449

 14.85

 %

 236

 14.29

 %

 222

 6.71

 %

 Church

 54

 0.94

 %

 72

 1.39

 %

 65

 2.04

 %

 103

 3.45

 %

 237

 4.60

 %

 Construction

 1,564

 9.10

 %

 1,009

 10.79

 %

 313

 5.27

 %

 212

 4.92

 %

 22

 0.11

 %

 Commercial

 730

 7.73

 %

 592

 7.73

 %

 175

 8.87

 %

 23

 10.02

 %

 4

 0.02

 %

 SBA loans

 11

 0.11

 %

 48

 1.63

 %

 –

 –

 %

 –

 –

 %

 –

 –

 %

 Consumer

 –

 –

 %

 –

 –

 %

 4

 –

 %

 15

 –

 %

 1

 –

 %

 Total allowance for credit losses

 $

 8,364

 100.00

 %

 $

 7,613

 100.00

 %

 $

 4,388

 100.00

 %

 $

 3,391

 100.00

 %

 $

 3,215

 100.00

 %

 The following table shows the activity in our ACL/ALLL related to our loans held for investment for the years indicated:

 2024

 (As Restated)

 2023

 (As Restated)

 2022

 Allowance balance at beginning of year

 $

 7,613

 $

 4,388

 $

 3,391

 Charge‑offs:

 Single-family

 –

 –

 –

 Multi-family

 –

 –

 –

 Commercial real estate

 –

 –

 –

 Church

 –

 –

 –

 Construction

 –

 –

 –

 Commercial

 –

 –

 –

 SBA Loans

 –

 –

 –

 Consumer

 –

 –

 –

 Total charge‑offs

 –

 –

 –

 Recoveries:

 Single-family

 –

 –

 –

 Multi-family

 -

 109

 –

 Commercial real estate

 –

 107

 –

 Church

 –

 –

 –

 Construction

 –

 –

 –

 Commercial

 –

 –

 –

 SBA Loans

 –

 –

 –

 Consumer

 –

 –

 –

 Total recoveries

 –

 216

 –

 Impact of CECL adoption

 –

 1,809

 –

 Credit/loan loss provision (2) 

 751

 1,200

 997

 Allowance balance at end of year

 $

 8,364

 $

 7,613

 $

 4,388

 Net charge‑offs (recoveries) to average loans, excluding loans receivable held for sale

 –

 %

 –

 %

 –

 %

 ACL/ALLL as a percentage of gross loans, excluding loans receivable held for sale (1) 

 0.83

 %

 0.83

 %

 0.57

 %

 ACL/ALLL as a percentage of total non‑accrual loans

 3,168.18

 %

 -

 %

 3,047.22

 %

 ACL/ALLL as a percentage of total non‑performing assets

 3,168.18

 %

 -

 %

 3,047.22

 %

 (1) 

 The ACL/ALLL as of December 31, 2024 and 2023 does not include any ACL/ALLL for the remaining balance of loans acquired in the City First Merger, which totaled $5.3 million and $126.8 million, respectively.

 (2) 

 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.

 11 

 Table of Contents 

 Investment Activities

 The main objectives of our investment strategy are to provide a source of liquidity for deposit outflows, repayment of our borrowings and funding loan commitments, and to generate a favorable return
 on investments without incurring undue interest rate or credit risk. Subject to various restrictions, our investment policy generally permits investments in money market instruments such as federal funds sold, certificates of deposit of insured
 banks and savings institutions, direct obligations of the U.S. Treasury, securities issued by federal and other government agencies and mortgage‑backed securities, mutual funds, municipal obligations, corporate bonds, and marketable equity
 securities. Mortgage‑backed securities consist principally of securities issued by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the Government National Mortgage Association which are backed by 30‑year
 amortizing hybrid ARM Loans, structured with fixed interest rates for periods of three to seven years, after which time the loans convert to one‑year or six‑month adjustable rate mortgage loans. At December 31, 2024, our securities portfolio,
 consisting primarily of federal agency debt, mortgage‑backed securities, bonds issued by the United States Treasury and the SBA, and municipal bonds, totaled $203.9 million, or 15.6% of total assets.

 We classify investments as held‑to‑maturity or available‑for‑sale at the date of purchase based on our assessment of our internal liquidity requirements. Securities purchased to meet
 investment‑related objectives such as liquidity management or mitigating interest rate risk and which may be sold as necessary to implement management strategies, are designated as available‑for‑sale at the time of purchase. Securities in the
 held‑to‑maturity category consist of securities purchased for long‑term investment in order to enhance our ongoing stream of net interest income. Securities deemed held‑to‑maturity are classified as such because we have both the intent and
 ability to hold these securities to maturity. Held‑to‑maturity securities are reported at cost, adjusted for amortization of premium and accretion of discount. Available‑for‑sale securities are reported at fair value. We currently have no
 securities classified as held‑to‑maturity securities.

 The Company’s assessment of available-for-sale investment securities as of December 31, 2024, indicated that an ACL was not required. The Company analyzed available-for-sale investment securities
 that were in an unrealized loss position and determined the decline in fair value for those securities was not related to credit, but rather related to changes in interest rates and general market conditions. As such, no ACL was recorded for
 available-for-sale securities as of December 31, 2024.

 The following table sets forth the amortized cost and fair value of available-for-sale securities by type as of the dates indicated. At December 31, 2024, our securities portfolio did not contain
 securities of any issuer with an aggregate book value in excess of 10% of our equity capital, excluding those issued by the United States Government or its agencies.

 ​

 At December 31,

 ​

 2024

 2023

 2022

 ​

 Amortized

 Cost

 Fair

 Value

 Amortized

 Cost

 Fair

 Value

 Amortized

 Cost

 Fair

 Value

 ​

 (In thousands)

 Federal agency mortgage-backed securities

 $

 62,853

 $

 53,029

 $

 76,091

 $

 66,778

 $

 84,955

 $

 74,169

 Federal agency collateralized mortgage obligations (“CMO”)

 21,299

 20,058

 24,720

 23,339

 27,776

 26,100

 Federal agency debt

 42,100

 40,034

 50,893

 47,836

 55,687

 51,425

 Municipal bonds

 4,800

 4,388

 4,833

 4,373

 4,866

 4,197

 U.S. Treasuries

 77,857

 77,190

 167,055

 163,880

 165,997

 160,589

 SBA pools

 10,749

 9,163

 12,386

 10,744

 14,048

 12,269

 Total

 $

 219,658

 $

 203,862

 $

 335,978

 $

 316,950

 $

 353,329

 $

 328,749

 12 

 Table of Contents 

 The table below presents the carrying amount, weighted average yields and contractual maturities of our securities as of December 31, 2024. The table reflects stated final maturities and does not
 reflect scheduled principal payments or expected payoffs.

 At December 31, 2024

 One year

 or less

 More than one

 year to five years

 More than five

 years to ten years

 More than

 ten years

 Total

 Fair

 Value

 Weighted

 average

 yield

 Fair 

 Value

 Weighted

 average

 yield

 Fair

 Value

 Weighted

 average

 yield

 Fair

 Value

 Weighted

 average

 yield

 Fair

 Value

 Weighted

 average

 yield

 (Dollars in thousands)

 Available‑for‑sale:

 Federal agency mortgage‑backed securities

 $

 –

 –

 %

 $

 1,355

 1.35

 %

 $

 7,683

 1.66

 %

 $

 43,991

 2.63

 %

 $

 53,029

 2.46

 %

 Federal agency CMO

 –

 –

 %

 360

 0.92

 %

 10,004

 4.24

 %

 9,694

 3.33

 %

 20,058

 3.74

 %

 Federal agency debt

 12,625

 0.93

 %

 24,392

 2.18

 %

 3,017

 5.12

 %

 –

 –

 %

 40,034

 2.01

 %

 Municipal bonds

 –

 –

 %

 2,915

 1.57

 %

 –

 –

 %

 1,473

 1.75

 %

 4,388

 1.63

 %

 U.S. Treasuries

 72,333

 2.53

 %

 4,857

 2.76

 %

 –

 –

 %

 –

 –

 %

 77,190

 2.54

 %

 SBA pools

 –

 –

 %

 1,665

 2.70

 %

 –

 –

 %

 7,498

 2.61

 %

 9,163

 2.62

 %

 Total

 $

 84,958

 2.29

 %

 $

 35,544

 2.19

 %

 $

 20,704

 3.41

 %

 $

 62,656

 2.72

 %

 $

 203,862

 2.52

 %

 Sources of Funds

 General

 Deposits are our primary source of funds for supporting our lending and other investment activities and general business purposes. In addition to deposits, we obtain funds from the amortization and
 prepayment of loans and investment securities, sales of loans and investment securities, advances from the FHLB, and cash flows generated by operations.

 Deposits

 We offer a variety of deposit accounts featuring a range of interest rates and terms. Our deposits principally consist of savings accounts, checking accounts, interest checking accounts, money
 market accounts, and fixed‑term certificates of deposit. The maturities of term certificates generally range from one month to five years. We accept deposits from customers within our market area based primarily on posted rates, but from time to
 time we will negotiate the rate based on the amount of the deposit. We primarily rely on customer service and long‑standing customer relationships to attract and retain deposits. We seek to maintain and increase our retail “core” deposit
 relationships, consisting of savings accounts, checking accounts and money market accounts because we believe these deposit accounts tend to be a stable funding source and are available at a lower cost than term deposits. However, market interest
 rates, including rates offered by competing financial institutions, the availability of other investment alternatives, and general economic conditions significantly affect our ability to attract and retain deposits.

 We participate in a deposit program called the Certificate of Deposit Account Registry Service (“CDARS”). CDARS is a deposit placement service that allows us to place our 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 (“CDARS Reciprocal”). 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.

 As of December 31, 2024 and 2023, approximately $268.8 million and $286.4 million, respectively, of our total deposits were not insured by FDIC insurance.

 The following table presents the maturity of time deposits as of the dates indicated:

 Three 

 Months or 

 Less

 Three to Six 

 Months

 Six Months 

 to One Year

 Over One 

 Year

 Total

 (In thousands)

 December 31, 2024

 Time deposits of $250,000 or less

 $

 46,350

 $

 37,239

 $

 92,028

 $

 4,060

 $

 179,677

 Time deposits of more than $250,000

 3,149

 5,712

 16,864

 7,437

 33,162

 Total

 $

 49,499

 $

 42,951

 $

 108,892

 $

 11,497

 $

 212,839

 Not covered by deposit insurance

 $

 1,399

 $

 3,212

 $

 12,363

 $

 6,437

 $

 23,411

 December 31, 2023

 Time deposits of $250,000 or less

 $

 36,931

 $

 26,248

 $

 63,118

 $

 18,202

 $

 144,499

 Time deposits of more than $250,000

 4,609

 3,904

 6,895

 8,128

 23,536

 Total

 $

 41,540

 $

 30,152

 $

 70,013

 $

 26,330

 $

 168,035

 Not covered by deposit insurance

 $

 3,109

 $

 2,154

 $

 4,395

 $

 6,628

 $

 16,286

 13 

 Table of Contents 

 The following table details the maturity periods of our certificates of deposit in amounts of $100 thousand or more at December 31, 2024.

 December 31, 2024

 Amount

 Weighted

 Average Rate

 (Dollars in thousands)

 Certificates maturing:

 Less than three months

 $

 44,010

 3.34

 %

 Three to six months

 39,003

 3.60

 %

 Six to twelve months

 99,471

 3.85

 %

 Over twelve months

 9,301

 1.26

 %

 Total

 $

 191,785

 3.56

 %

 The following table presents the distribution of our average deposits for the years indicated and the weighted average interest rates during the year for each category of deposits presented.

 For the Years Ended December 31,

 2024

 2023

 2022

 Average

 Balance

 Percent

 of Total

 Weighted

 Average

 Cost of Funds

 Average

 Balance

 Percent

 of Total

 Weighted

 Average

 Cost of Funds

 Average

 Balance

 Percent

 of Total

 Weighted

 Average

 Cost of Funds

 (Dollars in thousands)

 Money market deposits

 $

 284,263

 48.22

 %

 2.44

 %

 $

 262,827

 45.53

 %

 1.62

 %

 $

 192,835

 28.30

 %

 0.67

 %

 Savings deposits

 55,715

 9.45

 %

 0.67

 %

 59,928

 10.38

 %

 0.25

 %

 66,033

 9.69

 %

 0.09

 %

 Interest checking and other demand deposits

 74,302

 12.60

 %

 0.74

 %

 100,248

 17.37

 %

 0.36

 %

 240,380

 35.28

 %

 0.08

 %

 Certificates of deposit

 175,275

 29.73

 %

 3.04

 %

 154,275

 26.72

 %

 1.77

 %

 182,050

 26.73

 %

 0.30

 %

 Total

 $

 589,555

 100.00

 %

 2.24

 %

 $

 577,278

 100.00

 %

 1.30

 %

 $

 681,298

 100.00

 %

 0.31

 %

 Borrowings

 We utilize short‑term and long‑term advances from the FHLB as an alternative to retail deposits as a funding source for asset growth. FHLB advances are generally secured by mortgage loans and
 mortgage‑backed securities. Such advances are made pursuant to several different credit programs, each of which has its own interest rate and range of maturities. The maximum amount that the FHLB will advance to member institutions fluctuates
 from time to time in accordance with the policies of the FHLB. At December 31, 2024, we had $195.5 million in outstanding FHLB advances and had the ability to borrow up to an additional $174.3 million based on available and pledged collateral.

 The following table summarizes information concerning our FHLB advances at or for the periods indicated:

 At or For the Years Ended December 31,

 2024

 2023

 2022

 (Dollars in thousands)

 FHLB Advances:

 Average balance outstanding during the year

 $

 199,893

 $

 177,261

 $

 61,593

 Maximum amount outstanding at any month‑end during the year

 $

 209,298

 $

 210,242

 $

 128,823

 Balance outstanding at end of year

 $

 195,532

 $

 209,319

 $

 128,344

 Weighted average interest rate at end of year

 4.03

 %

 4.91

 %

 3.74

 %

 Average cost of advances during the year

 4.79

 %

 4.70

 %

 1.74

 %

 Weighted average maturity (in months)

 -

 2

 7

 On December 27, 2023, the Bank borrowed $100.0 million from the Federal Reserve under the Bank Term Funding Program (“BTFP”), which 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.

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 Upon review of loan participation agreements originated by City First Bank and sold to other financial institutions, the Company determined that several of the transfers did not meet the requirements in ASC 860 to
 be treated as sales for accounting purposes, and therefore should have been recorded as secured borrowing arrangements. The related adjustment to the consolidated statements of financial condition for treating such transferred interests as
 secured borrowing arrangements as of December 31, 2024 and December 31, 2023, was to increase “Loans Receivable Held for Investment” to reflect the fact that the transfers did not meet the requirements for sale accounting treatment, and to record
 a “Secured Borrowing” for $31.4 million as a liability.

 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. 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.

 We participate in and have previously been an “Allocatee” of the New Markets Tax Credit Program of the U.S. Department of the Treasury’s Community Development Financial Institutions Fund. In
 connection with the New Market Tax Credit activities of the Bank, CFC 45 is a partnership whose members include CFNMA and City First New Markets Fund II, LLC. In December 2015, a national brokerage firm made a $14.0 million non-recourse loan to
 CFC 45, whereby CFC 45 was the beneficiary of the loan from the brokerage firm and passed the proceeds from that loan through to a Qualified Active Low-Income Community Business (“QALICB”). The loan to the QALICB is secured by a Leasehold Deed of
 Trust from which the funds for repayment of the loan will be derived. Debt service payments received by CFC 45 from the QALICB are passed through to the brokerage firm, less a servicing fee which is retained by CFC 45. This note was paid off
 during January 2024. The financial statements of CFC 45 are consolidated with those of the Bank and the Company.

 Market Area and Competition

 The Bank is a Community Development Financial Institution (“CDFI”) and a certified B Corp, offering a variety of financial services to meet the needs of the communities it serves. Our retail banking
 network includes full-service banking offices, automated teller machines and internet banking capabilities that are available using our website at www.ciytfirstbank.com. We have three banking offices as of December 31, 2024: two in California (in
 Los Angeles and in the nearby City of Inglewood) and one in Washington, D.C.

 Both the Washington, D.C. and the Los Angeles metropolitan areas are highly competitive banking markets for making loans and attracting deposits. Although our offices are primarily located in
 low‑to‑moderate income communities that have historically been under‑served by other financial institutions, we face significant competition for deposits and loans in our immediate market areas, including direct competition from mortgage banking
 companies, commercial banks and savings and loan associations. Most of these financial institutions are significantly larger than we are and have greater financial resources, and many have a regional, statewide, or national presence.

 Human Capital Management

 Human Capital

 At City First Bank, N.A., we are a unified, commercial Community Development Financial Institution (CDFI) with a mission-driven approach that advances economic, social, and environmental solutions. Our work is
 deeply rooted in creating attractive opportunities for the clients and communities we serve, making them stronger, more resilient places to live and work. We recognize that our employees are our greatest asset. To ensure long-term growth and
 sustainability, our human capital strategy is centered on attracting, selecting, retaining, and developing top-tier talent whose personal values align with our organization’s mission and principles.

 Culture & Shared Values

 Our Shared Values serve as the foundation of our corporate culture, guiding our actions, behaviors, and decision-making. As such, these principles of “ Clients and Communities First, ” “ We Think Big, ” “ We Model Excellence, ” and “ ONE City First ” shape how we engage with one another, our customers, and the broader
 community. Through a shared commitment to impact-driven financial services, our employees collaborate with mission-aligned partners to support affordable housing, charter schools, community health centers, nonprofits, and small to medium-sized
 businesses in under invested and low- and moderate-income communities. We are intentional about fostering a purpose-driven workplace, where employees feel empowered, valued, and connected to the greater mission and purpose of the organization.

 15 

 Table of Contents 

 Our legacy and history matter at City First. We are proud of our expanded 75-year history with the merger with Broadway Federal. Our founders in Los Angeles and Washington, D.C. were local leaders who saw a need in
 the community for a bank that addressed the lack of access to capital for under invested communities. Our ownership, responsibility, and commitment to these Shared Values and legacy is reflected in the composition of our workforce, executive
 leadership team, and Board.

 Workforce Learning & Development

 We are dedicated to cultivating a culture of continuous learning and professional growth where employees can learn, grow, and be fulfilled in the work that they do. Our learning & development strategy provides
 employees with the tools, training, and experiences they need to excel in their roles and advance within the organization. Key initiatives include:

 • 

 Structured Onboarding & Role-Specific Training to ensure new hires and internal transitions are set up for success.

 • 

 Leadership Development Programs designed to identify and cultivate future leaders within the organization.

 • 

 Skills-Based Learning through digital learning platforms, workshops, and external partnerships.

 • 

 Mentorship & Career Pathing to support employees in navigating career progression within the company.

 Our commitment to workforce development ensures that our employees not only contribute to the success of the organization but also grow personally and professionally.

 Total Rewards & Employee Well-Being

 We provide a comprehensive Total Rewards program designed to support the well-being and financial security of our employees. Our offerings include:

 • 

 Competitive Compensation & Incentives aligned with market benchmarks and performance outcomes.

 • 

 Comprehensive Health & Wellness Benefits , including medical, dental, and vision coverage, as well as mental health and wellness initiatives.

 • 

 Retirement & Financial Security programs, including a 401(k) with employer matching contributions.

 • 

 Paid Time Off & Work-Life Balance initiatives, including generous PTO, parental leave, and flexible work arrangements.

 • 

 Employee Assistance Programs (EAPs) and wellness initiatives to support physical, mental, and financial well-being.

 Our Total Rewards philosophy ensures that our employees feel valued, supported, and motivated to contribute to the organization’s success while maintaining a strong sense of personal and financial well-being.

 Governance & Workforce Overview

 Our Board provides strategic oversight of our human capital management, ensuring alignment with the organization’s long-term objectives. The Human Resources team leads the execution of our talent strategy,
 workforce planning, employee engagement, and organizational development initiatives. As of December 31, 2024, we employed 106 full-time employees across our corporate offices, branch locations, and operational facilities. Our primary offices are
 located in Los Angeles, California, and Washington, D.C., with additional employees working remotely in various locations across the United States.

 Regulation

 General

 City First and Broadway Financial Corporation are subject to comprehensive regulation and supervision by several different federal agencies. City First is regulated by the OCC as its primary federal
 regulator. The Bank’s deposits generally are insured up to a maximum of $250,000 per account; the Bank also is regulated by the FDIC as its deposit insurer. The Bank is a member of the Federal Reserve System and is subject to certain regulations
 of the FRB, including, for example, regulations concerning reserves required to be maintained against deposits and regulations governing transactions with affiliates, Broadway Financial Corporation is regulated, examined, and supervised by the
 FRB and the Federal Reserve Bank of Richmond (“FRBR”) and is also required to file certain reports and otherwise comply with the rules and regulations of the SEC under the federal securities laws. The Bank also is subject to consumer protection
 regulations promulgated by the Consumer Financial Protection Bureau (“CFPB”).

 The OCC regulates and examines the Bank’s business activities, including, among other things, capital standards, investment authority and permissible activities, deposit taking and borrowing
 authority, mergers and other business combination transactions, establishment of branch offices, and the structure and permissible activities of any subsidiaries of the Bank. The OCC has primary enforcement responsibility over national banks and
 has substantial discretion to impose enforcement actions on an institution that fails to comply with applicable regulatory requirements, including capital requirements, or that engages in practices that examiners determine to be unsafe or
 unsound. In addition, the FDIC has “back-up” enforcement authority that enables it to recommend enforcement action to the OCC with respect to a national bank and, if the recommended action is not taken by the OCC, to take such action under
 certain circumstances. In certain cases, the OCC has the authority to refer matters relating to federal fair lending laws to the U.S. Department of Justice (“DOJ”) or the U.S. Department of Housing and Urban Development (“HUD”) if the OCC
 determines violations of the fair lending laws may have occurred.

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 Table of Contents 

 Changes in applicable laws or the regulations of the OCC, the FDIC, the FRB, the CFPB, or other regulatory authorities, or changes in interpretations of such regulations or in agency policies or
 priorities, could have a material adverse impact on the Bank and our Company, our operations, and the value of our debt and equity securities. We and our stock are also subject to rules issued by The Nasdaq Stock Market LLC (“Nasdaq”), the stock
 exchange on which our voting common stock is traded. Failure to conform to Nasdaq’s rules could have an adverse impact on us and the value of our equity securities.

 The following paragraphs summarize certain laws and regulations that apply to the Company and the Bank. These descriptions of statutes and regulations and their possible effects do not purport to be
 complete descriptions of all the provisions of those statutes and regulations and their possible effects on us, nor do they purport to identify every statute and regulation that applies to us. In addition, the statutes and regulations that apply
 to the Company and the Bank are subject to change, which can affect the scope and cost of their compliance obligations.

 Dodd‑Frank Wall Street Reform and Consumer Protection Act

 In July 2010, the Dodd‑Frank Wall Street Reform and Consumer Protection Act (the “Dodd‑Frank Act”) was signed into law. The Dodd‑Frank Act is intended to address perceived weaknesses in the U.S.
 financial regulatory system and prevent future economic and financial crises.

 The Dodd‑Frank Act established increased compliance obligations across a number of areas in the banking business. In particular, pursuant to the Dodd-Frank Act, the federal banking agencies
 (comprising the FRB, the OCC, and the FDIC) substantially revised their consolidated and bank-level risk‑based and leverage capital requirements applicable to insured depository institutions, depository institution holding companies and certain
 non‑bank financial companies. Under an existing FRB policy statement, bank holding companies with less than $3 billion in total consolidated assets are not subject to consolidated capital requirements provided they satisfy the conditions in the
 policy statement. The Dodd‑Frank Act requires bank holding companies to serve as a source of financial strength for any subsidiary of the holding company that is a depository institution by providing financial assistance in the event of the
 financial distress of the depository institution.

 The Dodd‑Frank Act also established the CFPB. The CFPB has broad rule‑making authority for a wide range of consumer protection laws that apply to banks and savings institutions of all sizes,
 including the authority to prohibit “unfair, deceptive or abusive” acts and practices. At times during the past several years, the CFPB has been active in bringing enforcement actions against banks and nonbank financial institutions to enforce
 federal consumer financial laws and has developed a number of new enforcement theories and applications of these laws. The CFPB’s supervisory authority does not generally extend to insured depository institutions, such as the Bank, that have less
 than $10 billion in assets. The federal banking agencies, however, have authority to examine for compliance, and bring enforcement action for non-compliance, with respect to the CFPB’s regulations. State attorneys general and state banking
 agencies and other state financial regulators also may have authority to enforce applicable consumer laws with respect to institutions over which they have jurisdiction.

 Capital Requirements

 The Bank’s capital requirements are administered by the OCC and involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under applicable 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

 (As Restated)

 Minimum Required to be

 Well Capitalized Under

 Prompt Corrective

 Action Provisions

 (As Restated)

 Amount

 Ratio

 Amount

 Ratio

 (Dollars in thousands)

 December 31, 2024:

 Community Bank Leverage Ratio

 $

 188,827

 13.61

 %

 $

 124,879

 9.00

 %

 December 31, 2023:

 Community Bank Leverage Ratio

 $

 185,773

 14.61

 %

 $

 114,465

 9.00

 %

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 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.

 Deposit Insurance

 The FDIC is an independent federal agency that insures deposits of federally insured banks, including national banks, up to prescribed statutory limits for each depositor. Pursuant to the Dodd‑Frank
 Act, the maximum deposit insurance amount has been permanently increased to $250,000 per depositor, per ownership category.

 The FDIC charges an annual assessment for the insurance of deposits based on the risk a particular institution poses to the FDIC’s Deposit Insurance Fund (“DIF”). The Bank’s DIF assessment is
 calculated by multiplying its assessment rate by the assessment base, which is defined as the average consolidated total assets less the average tangible equity of the Bank. The initial base assessment rate is based on an institution’s capital
 level, and capital adequacy, asset quality, management, earnings, liquidity, and sensitivity (“CAMELS”) ratings, certain financial measures to assess an institution’s ability to withstand asset related stress and funding related stress, and in
 some cases, additional discretionary adjustments by the FDIC to reflect additional risk factors.

 The FDIC’s overall premium rate structure is subject to change from time to time to reflect its actual and anticipated loss experience. The financial crisis that began in 2008 resulted in
 substantially higher levels of bank failures than had occurred in the immediately preceding years. These failures dramatically increased the resolution costs incurred by the FDIC and substantially reduced the available amount of the DIF.

 Consistent with the requirements of the Dodd‑Frank Act, the FDIC adopted its most recent DIF restoration plan in September 2020; that plan is designed to enable the FDIC to achieve the statutorily
 required reserve ratio of 1.35% by September 30, 2028. The FDIC Board has set the designated reserve ratio for each of the years 2024 and 2023 at 2%. The statute provides that in setting the amount of assessments necessary to meet the designated
 reserve ratio requirement, the FDIC is required to offset the effect of this provision on insured depository institutions with total consolidated assets of less than $10 billion, so that more of the cost of raising the reserve ratio will be borne
 by institutions with more than $10 billion in assets. Accordingly, the FDIC has provided assessment credits to insured depository institutions, like the Bank, with total consolidated assets of less than $10 billion for the portion of their
 regular assessments that contribute to growth in the reserve ratio between 1.15% and 1.35%. The FDIC has applied the credits each quarter that the reserve ratio was at least 1.38% to offset the regular deposit insurance assessments of
 institutions with credits. The Bank did not receive any assessment credits during 2024 or 2023.

 Although it rarely does so, the FDIC has the authority to terminate a depository institution’s deposit insurance upon a finding that the institution’s financial condition is unsafe or unsound or
 that the institution has engaged in unsafe or unsound practices that pose a risk to the DIF or that may prejudice the interest of a bank’s depositors.

 Guidance on Commercial Real Estate Lending

 In December 2015, the federal banking agencies released a statement titled “Statement on Prudent Risk Management for Commercial Real Estate Lending” (the “CRE Statement”). The CRE Statement
 expresses the banking agencies’ concerns with banking institutions that ease their commercial real estate underwriting standards, directs financial institutions to maintain underwriting discipline and exercise risk management practices to
 identify, measure and monitor lending risks, and indicates that the agencies will continue to pay special attention to commercial real estate lending activities and concentrations going forward. The banking agencies previously issued guidance
 titled “Prudent Commercial Real Estate Loan Workouts” which provides guidance for financial institutions that are working with commercial real estate (“CRE”) borrowers who are experiencing diminished operating cash flows, depreciated collateral
 values, or prolonged delays in selling or renting commercial properties and details risk‑management practices for loan workouts that support prudent and pragmatic credit and business decision‑making within the framework of financial accuracy,
 transparency, and timely loss recognition. The banking agencies had also issued previous guidance titled “Interagency Guidance on Concentrations in Commercial Real Estate” stating that a banking institution will be considered to be potentially
 exposed to significant CRE concentration risk, and should employ enhanced risk management practices, if total CRE loans represent 300% or more of its total capital and the outstanding balance of the institution’s CRE loan portfolio has increased
 by 50% or more during the preceding 36 months.

 18 

 Table of Contents 

 In October 2009, the federal banking agencies adopted a policy statement supporting workouts of CRE loans, which is referred to as the “CRE Policy Statement.” The CRE Policy Statement provides
 guidance for examiners, and for financial institutions that are working with CRE borrowers who are experiencing diminished operating cash flows, depreciated collateral values, or prolonged delays in selling or renting commercial properties. The
 CRE Policy Statement details risk‑management practices for loan workouts that support prudent and pragmatic credit and business decision‑making within the framework of financial accuracy, transparency, and timely loss recognition. The CRE Policy
 Statement states that financial institutions that implement prudent loan workout arrangements after performing comprehensive reviews of the financial condition of borrowers will not be subject to criticism for engaging in these efforts, even if
 the restructured loans have weaknesses that result in adverse credit classifications. In addition, performing loans, including those renewed or restructured on reasonable modified terms, made to creditworthy borrowers, will not be subject to
 adverse classification solely because the value of the underlying collateral declined. The CRE Policy Statement reiterates existing guidance that examiners are expected to take a balanced approach in assessing an institution’s risk‑management
 practices for loan workout activities.

 In October 2018, the OCC provided Broadway Federal with a letter of “no supervisory objection” permitting it to increase the non‑multi-family commercial real estate loan concentration limit to 100%
 of Tier 1 Capital plus ALLL, including a sublimit of 50% for land/construction loans, which brought the total CRE loan concentration limit to 600% of Tier 1 Capital plus ALLL.

 Loans to One Borrower

 The Bank is in compliance with the statutory and regulatory limits applicable to loans to any one borrower. As of December 31, 2024, the lending limit for City First is $30.9 million. At December
 31, 2024, our largest loan to a single borrower was $15.7 million; that loan was performing in accordance with its terms and was otherwise in compliance with regulatory requirements.

 Community Reinvestment Act and Fair Lending

 The Community Reinvestment Act, as implemented by OCC regulations (“CRA”), requires each national bank to make efforts to meet the credit needs of the communities it serves, including low‑ and
 moderate‑income neighborhoods. The CRA requires the OCC to assess an institution’s performance in meeting the credit needs of its communities as part of its examination of the institution, and to take such assessments into consideration in
 reviewing applications for mergers, acquisitions, and other transactions. An unsatisfactory CRA rating may be the basis for denying an application. Community groups have successfully protested applications on CRA grounds. In connection with the
 assessment of a savings institution’s CRA performance, the OCC assigns ratings of “outstanding,” “satisfactory,” “needs to improve” or “substantial noncompliance.” The Company’s CRA performance was rated by the OCC as “outstanding” in their most
 recent CRA examination which was completed in 2022.

 The Bank is also subject to federal fair lending laws, including the Equal Credit Opportunity Act (“ECOA”) and the Federal Housing Act (“FHA”), which prohibit discrimination in credit and
 residential real estate transactions on prohibited bases, including race, color, national origin, gender, and religion, among others. A lender may be liable under one or both acts in the event of overt discrimination, disparate treatment, or a
 disparate impact on a prohibited basis. The compliance of national banks with these acts is primarily supervised and enforced by the OCC. If the OCC determines that a lender has engaged in a pattern or practice of discrimination in violation of
 ECOA, the OCC refers the matter to the DOJ. Similarly, HUD is notified of violations of the FHA.

 The USA PATRIOT Act, Bank Secrecy Act ( “ BSA ” ), and Anti‑Money
 Laundering ( “ AML ” ) Requirements 

 The USA PATRIOT Act was enacted after September 11, 2001 to provide the federal government with powers to prevent, detect, and prosecute terrorism and international money laundering, and has
 resulted in the promulgation of several regulations that have a direct impact on savings associations. Financial institutions must have a number of programs in place to comply with this law, including: (i) a program to manage BSA/AML risk; (ii) a
 customer identification program designed to determine the true identity of customers, document and verify the information, and determine whether the customer appears on any federal government list of known or suspected terrorists or terrorist
 organizations; and (iii) a program for monitoring for the timely detection and reporting of suspicious activity and reportable transactions. Failure to comply with these requirements may result in regulatory action, including the issuance of
 cease and desist orders, impositions of civil money penalties and adverse changes in an institution’s regulatory ratings, which could adversely affect its ability to obtain regulatory approvals for business combinations or other desired business
 objectives.

 Privacy Protection

 City First is subject to OCC regulations implementing the privacy protection provisions of federal law. These regulations require the Bank to disclose its privacy policy, including identifying with
 whom it shares “nonpublic personal information,” to customers at the time of establishing the customer relationship and annually thereafter. The regulations also require City First to provide its customers with initial and annual notices that
 accurately reflect its privacy policies and practices. In addition, to the extent its sharing of such information is not covered by an exception, the Bank is required to provide its customers with the ability to “opt‑out” of having City First
 share their nonpublic personal information with unaffiliated third parties.

 City First is also subject to regulatory guidelines establishing standards for safeguarding customer information. The guidelines describe the agencies’ expectations for the creation, implementation,
 and maintenance of an information security program, which would include administrative, technical, and physical safeguards appropriate to the size and complexity of the institution and the nature and scope of its activities. The standards set
 forth in the guidelines are intended to promote the security and confidentiality of customer records and information, protect against any anticipated threats or hazards to the security or integrity of such records and protect against unauthorized
 access to or use of such records or information that could result in substantial harm or inconvenience to any customer.

 19 

 Table of Contents 

 Bank Holding Company Regulation

 As a bank holding company, we are subject to the supervision, regulation, and examination of the FRB and the FRBR. In addition, the FRB has enforcement authority over the Company. Applicable
 statutes and regulations administered by the FRB place certain restrictions on our activities and investments. Among other things, we are generally prohibited, either directly or indirectly, from acquiring more than 5% of the voting shares of any
 depository or depository holding company that is not a subsidiary of the Company.

 The Change in Bank Control Act prohibits a person, acting directly or indirectly or in concert with one or more persons, from acquiring control of a bank holding company unless the FRB has been
 given 60 days prior written notice of such proposed acquisition and within that time period the FRB has not issued a notice disapproving the proposed acquisition or extending for up to another 30 days the period during which a disapproval may be
 issued. The term “control” is defined for this purpose to include ownership or control of, or holding with power to vote, 25% or more of any class of a bank holding company’s voting securities. Under a rebuttable presumption contained in the
 regulations of the FRB, ownership or control of, or holding with power to vote, 10% or more of any class of voting securities of a bank company will be deemed control for purposes of the Change in Bank Control Act if the institution (i) has
 registered securities under Section 12 of the Exchange Act, or (ii) no person will own, control, or have the power to vote a greater percentage of that class of voting securities immediately after the transaction. In addition, any company acting
 directly or indirectly or in concert with one or more persons or through one or more subsidiaries would be required to obtain the approval of the FRB under the Bank Holding Company Act of 1956, as amended, before acquiring control of a bank
 holding company. For this purpose, a company is deemed to have control of a bank holding company if the company (i) owns, controls, holds with power to vote, or holds proxies representing, 25% or more of any class of voting shares of the holding
 company, (ii) contributes more than 25% of the holding company’s capital, (iii) controls in any manner the election of a majority of the holding company’s directors, or (iv) directly or indirectly exercises a controlling influence over the
 management or policies of the national bank or other company. The FRB may also determine, based on the relevant facts and circumstances, that a company has otherwise acquired control of a bank holding company.

 Restrictions on Dividends and Other Capital Distributions

 In general, the prompt corrective action regulations prohibit a national bank from declaring any dividends, making any other capital distribution, or paying a management fee to a controlling person,
 such as its parent holding company, if, following the distribution or payment, the institution would be within any of the three undercapitalized categories set out in the regulations. In addition to the prompt corrective action restriction on
 paying dividends, OCC regulations limit certain “capital distributions” by national banks. Capital distributions are defined to include, among other things, dividends and payments for stock repurchases and payments of cash to stockholders in
 mergers.

 Under the OCC capital distribution regulations, a national bank that is a subsidiary of a bank holding company must notify the OCC at least 30 days prior to the declaration of any capital
 distribution by its national bank subsidiary. The 30‑day period provides the OCC an opportunity to object to the proposed dividend if it believes that the dividend would not be advisable.

 An application to the OCC for approval to pay a dividend is required if: (i) the total of all capital distributions made during that calendar year (including the proposed distribution) exceeds the
 sum of the institution’s year‑to‑date net income and its retained income for the preceding two years; (ii) the institution is not entitled under OCC regulations to “expedited treatment” (which is generally available to institutions the OCC
 regards as well run and adequately capitalized); (iii) the institution would not be at least “adequately capitalized” following the proposed capital distribution; or (iv) the distribution would violate an applicable statute, regulation,
 agreement, or condition imposed on the institution by the OCC.

 The Bank’s ability to pay dividends to the Company is also subject to a restriction if the Bank’s regulatory capital would be reduced below the amount required for the liquidation account
 established in connection with the conversion of the Bank from the mutual to the stock form of organization.

 See Item 5 “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” for a further description of dividend and other capital distribution
 limitations to which the Company and the Bank are subject.

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 Table of Contents 

 Tax Matters

 Federal Income Taxes

 We report our income on a calendar year basis using the accrual method of accounting and are subject to federal income taxation in the same manner as other corporations. See Note 15 “Income Taxes”
 of the Notes to Consolidated Financial Statements for a further description of tax matters applicable to our business.

 California Taxes

 As a bank holding company filing California franchise tax returns on a combined basis with its subsidiaries, the Company is subject to California franchise tax at the rate applicable to “financial
 corporations.” The applicable statutory tax rate is 10.84%.

 Washington, D.C. Taxes

 As a bank holding company filing Washington, D.C. franchise tax returns on a combined basis with its subsidiaries, the Company is subject to Washington, D.C. franchise tax at the rate applicable to
 “financial corporations.” The applicable statutory tax rate is 8.25%.
BROADWAY FINANCIAL CORP DE 10-K/A

Item 1. Business
