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Item 9A. Controls and Procedures

2026-03-31 compared with 2025-03-31 · 620 added, 493 removed, 1160 unchanged (49% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

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

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

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

procedures were effective as of December 31, 2024.

As of December 31, 2025, an evaluation was performed under the supervision of the Company’s Principal Executive Officer (“PEO”) and Principal Financial Officer (“PFO”)

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

Based on that evaluation, the Company’s PEO and PFO concluded that the Company’s disclosure controls and procedures were not effective as of

December 31, 2025 due to material weaknesses in the Company’s internal control over financial reporting, as further described below.

Management’s Annual Report on Internal Control Over Financial Reporting

The management of Broadway Financial Corporation is responsible for establishing

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

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

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

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

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

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

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

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

and (3) provide

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

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

prevent or detect misstatements.

The management of Broadway Financial Corporation is responsible for establishing and

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

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

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

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

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

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

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

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

and (3) provide reasonable assurance

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

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

detect misstatements.

Further, because of changes in conditions, effectiveness of internal controls over financial reporting may vary over time.

With the participation of the Company’s PEO and PFO, management has conducted an evaluation of the effectiveness of the Company’s system of

internal control over financial reporting.

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

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

financial reporting.

With the participation of the Company’s PEO and PFO, management has conducted an evaluation of the effectiveness of the Company’s system of internal

control over financial reporting.

Based on this evaluation, management determined that the Company’s system of internal control over financial reporting was not effective as of December 31, 2025, due to the material weaknesses described below.

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

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

The following material weaknesses were identified:

The Company did not maintain effective components of the COSO framework in the areas of control activities, information and communication process and

monitoring activities that contributed to the following material weaknesses:

The Company did not have controls in place to identify unusual or infrequent equity-related contracts entered into which could have a

material impact on accounting and financial reporting.

The Company did not maintain controls to consider subsequent appraisals for collateral dependent loans.

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

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

Remediation Plan for Material Weaknesses

In response to the identified material weaknesses, our management, with the oversight of the Audit Committee of our Board of Directors, has begun to

dedicate significant resources, including additional employee training, toward efforts to improve our internal control over financial reporting.

Management is actively engaged in the planning for, and implementation of, remediation efforts to

address the material weaknesses.

Thorough discussion and review of all new unusual or infrequent equity-related contracts each quarter with documentation of accounting

treatment and disclosure with respect to such transactions that could have a potential impact on the Company’s financial statements, and

An enhancement of the controls over the allowance for credit losses at each quarter end to evaluate that all appraisals for collateral

dependent loans that are received prior to the date that the financial statements are issued have been evaluated by management and considered in the estimate of the allowance for credit losses.

Additional time is required to complete the design and test the operating effectiveness of the applicable controls to demonstrate the effectiveness of

the remediation efforts.

The material weaknesses cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating

Remediation of Previously Identified Material Weakness

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

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

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

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

Management has

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

Management has concluded that the material weakness in internal control over financial reporting related to the accounting for loan participations

initially described in Part II, Item 9A “Controls and Procedures,” of our Annual Report on Form 10-K/A for the Year Ended December 31, 2024 (the “2024 Form 10-K/A”) has been remediated as of December 31, 2025.

The Company has implemented additional

control procedures, including redesigning and enhancing control activities related to preparation and review of existing and new loan participation agreements.

Management has evaluated these enhanced controls and has concluded they were designed

and implemented and are operating effectively.

Changes in Internal Control Over Financial Reporting

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

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

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

that occurred during the fourth quarter of 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as specified above.

does not expect, however, that our disclosure controls and procedures will prevent or detect all error and fraud.

Any control system, no matter how well designed and operated, is based upon certain assumptions, and can provide only

reasonable, not absolute, assurance that its objectives will be met.

Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud,

if any, within the Company have been detected.

Management does

not expect, however, that our disclosure controls and procedures will prevent or detect all error and fraud.

Any control system, no matter how well designed and operated, is based upon certain assumptions, and can provide only reasonable, not

absolute, assurance that its objectives will be met.

Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the

Company have been detected.

OTHER INFORMATION

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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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

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

The information required by this Item 10 is incorporated herein by reference to the definitive Proxy Statement, under the captions “Election of Directors,”

“Executive Officers,” “Code of Ethics,” “Insider Trading Policy” and, if applicable, “Delinquent Section 16(a) Reports,” that will be filed with the SEC in connection with the Company’s 2026 Annual Meeting of Stockholders (the “Company’s Proxy

EXECUTIVE COMPENSATION

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

The information required by this Item 11 is incorporated herein by reference to the Company’s Proxy Statement, under the captions “Executive Compensation”

and “Director Compensation.”

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

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

The information required by this Item 12 is incorporated herein by reference to the Company’s Proxy Statement, under the caption “Security Ownership of

Certain Beneficial Owners and Management.”

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

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

The information required by this Item 13 is incorporated herein by reference to the Company’s Proxy Statement, under the captions “Certain Relationships and

Related Transactions” and “Election of Directors.”

PRINCIPAL ACCOUNTANT FEES AND SERVICES

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

of Independent Registered Public Accounting Firm.”

The information required by this Item 14 is incorporated herein by reference to the Company’s Proxy Statement, under the caption “Ratification on An Advisory

(Non-Binding) Basis of the Appointment of Independent Registered Public Accounting Firm.”

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

See Index to Consolidated Financial Statements.

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

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

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

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

List of Exhibits

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Certificate of Designations of Senior Non-Cumulative Perpetual Preferred Stock, Series C (Exhibit 3.1 to Form 8-K filed by Registrant on June 8, 2022)

ECIP Securities Purchase Option Agreement, dated January 14, 2025, by and between Broadway Financial Corporation and the United States Department of the Treasury (Exhibit 3.6 to Form 10-K/A filed by

Registrant on December 23, 2025)

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

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

Registrant on September 11, 2019)

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

September 11, 2019)

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

(Exhibit 4.1 to Form 8-K file by

Registrant on August 26, 2020)

(Exhibit 4.1 to Form 8-K file by Registrant on August 26, 2020)

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

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

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

by Registrant on August 12, 2016)

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

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

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

Registrant on May 20, 2024)

Form of Award Agreement for restricted stock granted pursuant to Broadway Financial Corporation Amended and Restated 2018 Long‑Term Incentive Plan (Exhibit 10.5 to Form 10-K filed by Registrant on May 20,

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

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

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

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

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

filed by Registrant on January 19, 2021)

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

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

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

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

January 19, 2021)

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

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

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

by Registrant on January 19, 2021)

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

Registrant on March 31, 2021)

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

January 19, 2021)

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

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

5 unchanged sentences

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

Profit Sharing Plan, and

Registrant (Exhibit 10.29 to Form 10-K filed by Registrant on March 31, 2021)

Profit Sharing Plan, and Registrant (Exhibit 10.29 to

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

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

The Lorraine Grace Will

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

The Lorraine Grace Will Trust, The Anne Grace

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

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

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

March 31, 2021)

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

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

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

Registrant on March 31, 2021)

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

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

Insider Trading Policy

Insider Trading Policy (Exhibit 19.1 to Form 10-K filed by Registrant on March 31, 2025)

List of Subsidiaries

Consent of Moss Adams LLP

Consent of Crowe LLP

Consent of Baker Tilly US, LLP

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002

4 unchanged sentences

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

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

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

Inline XBRL Instance Document

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FORM 10-K SUMMARY

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

duly authorized.

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

behalf by the undersigned, thereunto duly authorized.

BROADWAY FINANCIAL CORPORATION

3 unchanged sentences

March 31, 2026

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

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant

and in the capacities and on the dates indicated.

/s/ BRIAN ARGRETT

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Lead Independent Director

/s/ WILLIAM A.

March 31, 2026

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Report of Independent Registered Public Accounting Firm (PCAOB ID # 173 )

Report of Independent Registered Public Accounting Firm (PCAOB ID #23)

Consolidated Statements of Financial Condition

Consolidated Statements of Operations and Comprehensive Income

Consolidated Statements of Changes in Stockholders’ Equity

Consolidated Statements of Changes in Equity

Consolidated Statements of Cash Flows

1 unchanged sentence

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors

Stockholders and the Board of Directors of Broadway Financial Corporation

Los Angeles, California

Opinion on the Financial Statements

We have audited the accompanying consolidated statement of financial condition of Broadway Financial Corporation (the "Company") as of December 31, 2025, the

related consolidated statements of operations and comprehensive income, changes in stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements").

In our opinion,

the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year then ended, in conformity with accounting

principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements

based on our audit.

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

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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

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

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

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

of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

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

procedures that respond to those risks.

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

Our audit also included evaluating the accounting principles used and

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

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to

be communicated to the audit committee and that:

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

The communication of the

critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the

accounts or disclosures to which it relates.

Allowance for Credit Losses – Qualitative Adjustments

As described in Notes 1 and 4 to the consolidated financial statements, the Company’s accounting for the allowance for credit losses on loans requires the

Company to recognize estimates for lifetime losses on loans 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.

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

As of December 31, 2025, the balance of the allowance for credit losses (“ACL”) was $9.4 million.

The Company uses the weighted-average remaining maturity method when determining estimates for the ACL for each of its portfolio segments.

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.

Since historical information may not always, by itself, provide a sufficient basis for determining

future expected credit losses, the Company considers the need for qualitative adjustments.

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 on the level of estimated

credit losses.

We identified the auditing of the qualitative adjustments used in the allowance for credit losses-loans as a critical audit matter due the significant judgment

required by management to develop the qualitative adjustments, which required significant audit effort and a high degree of auditor judgment to evaluate the qualitative adjustments given the volume and nature of inputs.

To address the matter, we performed the following substantive audit procedures related to the qualitative adjustments including:

Evaluated the methodology used for the qualitative adjustments;

Tested the completeness and accuracy of data used in the calculation of qualitative adjustments;

Evaluated the reasonableness of management’s application of qualitative adjustments and resulting allocation to the ACL;

Evaluated the relevance and reliability of external data sources used in the assessment of qualitative adjustments.

/s/ Crowe LLP

We have served as the Company's auditor since 2025.

Washington, District of Columbia

March 31, 2026

Report of Independent Registered Public Accounting Firm

The Shareholders and the Board of Directors

Broadway Financial Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial condition of Broadway Financial Corporation and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive income , changes in

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

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

and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America .

We have audited the accompanying consolidated statements of financial condition of Broadway Financial Corporation and subsidiary (the “Company”) as of December 31, 2024, the related consolidated statements of operations and comprehensive income , changes in stockholders’ equity , and cash flows for the year ended December 31, 2024, and the related notes (collectively, referred to as the consolidated financial statements).

opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of

December 31, 2024, and the consolidated results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America .

Basis for Opinion

1 unchanged sentence

Our responsibility is to express an opinion on the Company’s

consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)

and are required to be independent with respect to the Company in accordance with the U.S.

consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United

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

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

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

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

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

1 unchanged sentence

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

reporting in accordance with the standards of the PCAOB.

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

for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting in accordance with the standards of the PCAOB.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial

Accordingly, we express no such opinion.

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

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

the consolidated financial statements.

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

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

Critical Audit Matters

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

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

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

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

Allowance for Credit Losses – Qualitative Factors

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

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

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

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

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

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

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

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

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

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

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

in the levels of such concentrations;

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

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

The qualitative

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

external data.

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

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

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

Evaluating the methodology used.

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

recalculation of the allowance for credit losses balance.

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

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

Valuation of Goodwill

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

frequently if events or circumstances indicate there may be impairment.

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

An impairment charge is recorded for the amount by

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

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

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

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

The performance of audit procedures related to

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

Additionally, the evaluation of audit evidence of more sensitive

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

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

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

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

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

Evaluating the appropriateness of the methods used.

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

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

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

/s/ Moss Adams LLP

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

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

disclosures in the consolidated financial statements.

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

We believe that our audit provides a reasonable basis for our opinion.

/s/ Baker Tilly US, LLP

Spokane, Washington

March 31, 2025

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

March 31, 2025, except for the previously disclosed restatement

to the 2024 consolidated financial statements, as to which

the date is December 23, 2025.

We served as the Company’s auditor from 2014 to 2025.

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

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Core deposit intangible, net

Liabilities and stockholders’ equity

Liabilities and equity

Securities sold under agreements to repurchase

FHLB advances

Bank Term Funding Program borrowing

Notes payable

Accrued expenses and other liabilities

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Stockholders’ equity:

Non-Cumulative Redeemable Perpetual Preferred stock,

Non-Cumulative Redeemable Perpetual Preferred stock, Series C;

authorized 150,000 shares at December 31, 2025 and December 31, 2024;

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

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

issued and outstanding 1,425,574

authorized 15,000,000

shares at December 31, 2025 and December 31, 2024;

Common stock, Class C, $ 0.01

par value, non-voting;

issued and outstanding 1,425,404 shares at December 31, 2025 and

issued and outstanding 1,425,574 shares at December 31, 2024

Common stock, Class C, $ 0.01 par value,

authorized 25,000,000 shares at December 31, 2025 and December 31, 2024;

issued and outstanding

1,672,562 at December 31, 2024 and December 31, 2023

issued and outstanding 1,672,562 at December 31, 2025 and December 31, 2024

Additional paid-in capital

Retained earnings

(Accumulated deficit) retained earnings

Unearned Employee Stock Ownership Plan (ESOP) shares

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Non-controlling interest

Total liabilities and stockholders’ equity

Total liabilities and equity

See accompanying notes to consolidated financial statements.

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Amortization of core deposit intangible

Operational loss

Goodwill impairment

Total non-interest expense

Income before income taxes

(Loss) Income before income taxes

Income tax expense

Net income attributable to non-controlling interest

Net income attributable to Broadway Financial Corporation

Net (loss) income

Net (loss) income attributable to non-controlling interest

Net (loss) income attributable to Broadway Financial Corporation

Preferred stock dividends

Net income attributable to common stockholders

Other comprehensive income, net of tax:

Net (loss) income attributable to common stockholders

Other comprehensive (loss) income, net of tax:

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

Income tax expense

Income tax effect

Other comprehensive income, net of tax

Comprehensive income

Earnings per common share-basic

Earnings per common share-diluted

Comprehensive (loss) income

(Loss) Earnings per common share-basic

(Loss) Earnings per common share-diluted

See accompanying notes to consolidated financial statements

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Statements of

Stockholders’ Equity

(In thousands, except share and per share)

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Accumulated Other Comprehensive Loss

Retained Earnings

(Accumulated Deficit) Retained Earnings

Unearned ESOP Shares

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Controlling Interest

Stockholders’

Balance at December 31, 2023

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

Adjusted balance, January 1, 2023

Increase in unreleased shares

Release of unearned ESOP shares

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Director stock compensation expense

Share repurchase - FDIC

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

Other comprehensive income, net of tax

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Director stock compensation expense

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

Dividends declared and paid - ECIP

City First Bank Fund Manager II Distribution

Other comprehensive income, net of tax

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Cash flows from operating activities:

Net (loss) income

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

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Earnings on bank owned life insurance

Goodwill impairment

Net change in assets and liabilities:

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Net change in loans receivable held for investment

Principal payments and maturities on available-for-sale securities

Principal payments and maturities of available-for-sale securities

Purchases of available-for-sale securities

Purchase of FHLB stock

Proceeds from redemption of FHLB stock

Proceeds from redemption of FRB stock

Purchases of bank owned life insurance

Purchase of office properties and equipment

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

Cash flows from financing activities:

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Net change in securities sold under agreements to repurchase

Increase in unreleased ESOP shares

Repayments of Bank Term Funding Program

Proceeds from Bank Term Funding Program

Repayments of Bank Term Funding Program borrowing

City First Bank Fund Manager II distribution

Repayment of notes payable

Dividends paid on ECIP preferred stock

Share repurchase - FDIC

Proceeds from other borrowings

Repayments of other borrowings

Proceeds from FHLB advances

Repayments of FHLB advances

Net cash (used in) provided by financing activities

Net cash provided by (used in) financing activities

Net change in cash and cash equivalents

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(“Broadway Federal”).

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

On April 1, 2021, the Company completed its merger with CFBanc Corporation, with the Company continuing as the surviving

Immediately following the CFBanc Merger, Broadway Federal merged with and into City First Bank of D.C, National Association with City First Bank of D.C., National Association (the“Bank”) continuing as the surviving entity (combined with

Broadway Federal).

In 1996, the conversion was completed, and Broadway Federal became a wholly‑owned subsidiary of the Company.

In 2021, the Company completed its merger with CFBanc Corporation, with the Company continuing as the surviving entity.

Immediately following the CFBanc Merger, Broadway Federal merged with and into City First Bank of D.C, National Association with City First Bank of D.C., National Association (the “Bank”) continuing as the surviving entity (combined with Broadway

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

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and City First Capital IX, LLC into its financial results.

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

All significant

intercompany balances and transactions have been eliminated in consolidation.

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

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

Such reclassifications had no impact on

total shareholders’ equity or net income for any period.

Out-of-Period Adjustments

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

financial reporting processes.

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

In accordance with SEC Staff Accounting Bulletin Nos.

these adjustments were evaluated both individually and collectively.

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

Consequently, the Company determined that

no amendment to the previously filed reports was warranted.

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

and nine months ended September 30, 2023.

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

total equity or net income for any period.

Use of Estimates

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

$ 103 thousand of cash and cash equivalents was restricted as of December 31, 2025.

Investment Securities

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by properties located in Southern California and in Washington, D.C.

and many of the borrowers reside in those areas.

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

the markets in which the Company operates.

Purchased Credit Deteriorated Loans

Prior to the adoption of ASC 326, loans that were purchased in a business combination that showed evidence of credit deterioration since their origination and for

which it was probable, at acquisition, that not all contractually required payments would be collected were classified as purchased-credit impaired (“PCI”).

The Company accounted for PCI loans and associated income recognition in accordance with

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

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

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

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

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

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

Following the adoption of ASC 326 on January 1, 2023, the Company analyzes all acquired loans at the time of acquisition for more-than-insignificant deterioration

in credit quality since their origination date.

Such loans are classified as purchased credit deteriorated (“PCD”) loans.

Acquired loans classified as PCD are recorded at an initial amortized cost, which is comprised of the purchase price of the

loans and the initial ACL determined for the loans, which is added to the purchase price, and any resulting discount or premium related to factors other than credit.

PCI loans were considered to be PCD loans at the date of adoption of ASC 326.

The Company accounts for interest income on PCD loans using the interest method, whereby any purchase discounts or premiums are accreted or amortized into interest income as an adjustment of the loan’s yield.

An accretable yield is not determined

for PCD loans.

and surrounding areas, and many of the borrowers reside in those areas.

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

and real estate market in the markets in which the Company operates.

Allowance for Credit Losses - Loans

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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.

Commercial – 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.

SBA – Subject to Federal legislation that can affect the funding and availability of the program.

Modified Loans to Borrowers Experiencing Financial Difficulty

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

At the inception of a derivative

contract, the Company designates the derivative as one of three types based on the Company’s intentions and belief as to likely effectiveness as a hedge.

These three types are (1) a hedge of the fair value of a recognized asset or liability

or of an unrecognized firm commitment, (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability, or (3) an instrument with no hedging designation

(“non-designated derivative”).

The Company has designated its derivatives as non-designated derivatives.

Changes in the fair value of derivatives not designated are currently reported in earnings, as non-interest income.

The Company is exposed to losses if a counterparty fails to make its

payments under a contract in which the Company is in the net receiving position.

The Company anticipates that the counterparties will be able to fully satisfy their obligations under the agreements.

All of the contracts to which the

Company is a party settle monthly.

In addition, the Company obtains collateral above certain thresholds of the fair value of its derivatives for each dealer counterparty based upon their credit standing and the Company has netting

agreements with the dealers with which it does business.

Goodwill and Other Intangible Assets

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

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

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

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

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economic environment is considered.

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

2023 did not result in impairment.

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

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

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

Management will continue to monitor events

that could influence this conclusion in the future.

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

The Company engaged a third-party valuation specialist to

perform its annual goodwill impairment test as of September 30, 2025.

Based on the quantitative assessment, the fair value of the reporting unit was less than its carrying amount, resulting in a full impairment of goodwill.

On October 15, 2025,

management, with oversight from the Audit Committee of the Board of Directors, concluded that the Company’s goodwill was fully impaired.

Accordingly, the Company recorded a non-cash goodwill impairment charge of $ 25.9 million for the quarter ended September 30, 2025.

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

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

Leasehold improvements are amortized over the lease term or

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

Leasehold improvements are amortized over the

lease term or the estimated useful life of the asset, whichever is shorter.

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

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Bank‑Owned Life Insurance

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

The Bank has purchased life insurance policies on key executives and officers.

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

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

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

Noncontrolling Interests

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

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

stockholders’ equity.

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

Revenue Recognition

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Employee Stock Ownership Plan (ESOP)

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

Compensation expense is based on the

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

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

Compensation expense is based on the market price of

shares as they are committed to be released to participant accounts.

Dividends on allocated ESOP shares reduce retained earnings;

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operations and comprehensive income.

Accounting Pronouncements Recently Adopted

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

Improvements to Reportable Segment Disclosures .

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

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

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

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

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

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

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

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

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

existing segment disclosures in Topic 280.

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

beginning after December 15, 2024.

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

however, the required

disclosures have been added.

Accounting Pronouncements Yet to Be Adopted

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

Improvements to Income Tax Disclosures .

The amendments in

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

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

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

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

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

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

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

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

Transfers and Servicing

To be eligible for sale accounting treatment, an entire financial asset, such as a loan, cannot be divided into components prior to the sale unless all of the components meet the definition of a participating

A participating interest has all of the following characteristics:

(a) it represents a proportionate ownership interest in the entire financial asset;

(b) from the date of transfer, all cash flows received from the entire asset are

divided proportionately among the participating interest holders in an amount equal to their ownership percentage;

(c) the priority of cash flows must be pari passu and no participating interest holder has any recourse to the other holders;

(d) no party can pledge or exchange the entire financial asset unless all participating interest holders agree.

Transfers of financial assets (or

participating interests in financial assets) are accounted for as sales when control over the assets has been relinquished.

Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the

transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an

agreement to repurchase them before their maturity.

The Company evaluates its loan sales and other financial asset transfers for sales treatment.

To the extent the transfer of assets (or

participating interests in those assets) qualifies as a sale for accounting purposes, the Company derecognizes the asset and records the gain or loss on the sale date.

In the event the Company determines that the transfer of assets does not

qualify as a sale (or the portion of the asset sold does not qualify as a participating interest), the transfer is treated as a secured borrowing for accounting purposes until such date that the qualifications for sale accounting treatment are

Accounting Pronouncements Recently Issued

In November of 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-08 – Financial

Instruments-Credit Losses (Topic 326):

Purchased Loans.

The amendments in this ASC expand the population of acquired financial assets subject to the “gross-up” approach in Accounting Standards Codification (“ASC”) Topic

In accordance with this ASC, loans (excluding credit card loans) acquired without evidence of credit deterioration since their origination that are deemed to be “seasoned” (as defined in the Codification) are determined to be

“purchased seasoned loans” and are to be accounted for using the gross-up approach at acquisition.

Prior to this ASU, for loans that were not determined to be purchased credit deteriorated loans, GAAP required that an allowance

for credit losses be established for purchased loans through a provision for credit losses at the acquisition date.

The gross-up approach allows an entity to record the acquisition-date allowance for credit losses for purchased

seasoned loans through an offsetting addition to the amortized cost basis of the loan (rather than through the provision for credit losses).

The ASU does not impact the accounting for loans that were acquired in periods prior to

adoption of the ASU.

The amendments in ASU 2025-08 will become effective for the Company in the first quarter of 2027;

early adoption is permitted.

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

financial condition or consolidated statements of operations and comprehensive income;

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

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

Disaggregation of Income Statement Expenses .

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

each interim and annual reporting period.

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

The adoption of ASU No.

2024-03 is not expected to have a material

impact on the Company’s financial statements.

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

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

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

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

The amendments in the ASU will not affect the Company’s accounting for loans in

its portfolio on the date of adoption;

however, loans acquired after the adoption date will be accounted for in accordance with the provisions of this ASU.

In December of 2025, the FASB issued ASU 2025-10 – Governments Grants (Topic 832):

Accounting for Government Grants Received by Business Entities.

Prior to the issuance of this ASU, GAAP did not provide authoritative guidance about the recognition, measurement, and presentation of a grant received by a business entity from a government.

The amendments in this ASU establish the

accounting for a government grant received by a business entity, including guidance for (1) a grant related to an asset and (2) a grant related to income.

The newly issued guidance requires that a government grant received by a

business entity should not be recognized until:

(1) it is probable that a business entity will comply with the conditions attached to the grant and that the grant will be received;

and (2) a business entity meets the recognition

guidance for a grant related to an asset or a grant related to income.

The ASU also prescribes requirements for the subsequent income recognition, presentation matters, and financial statement disclosures related to government

The guidance in this ASU will be effective for the Company beginning on January 1, 2029.

Early adoption is permitted.

The requirements in this ASU are similar to the guidance that the Company has been applying for accounting

for government grants by analogy to guidance issued by other accounting standard setters and authoritative bodies.

The Company does not expect that the adoption of this guidance will materially impact its financial condition or

results of operations.

In December of 2025, the FASB issued ASU 2025-11 – Interim Reporting (Topic 270):

Narrow-Scope Improvements.

The amendments in this guidance clarify interim disclosure

requirements and the applicability of ASC 270 by providing a comprehensive list of interim period disclosures that are required by GAAP.

The updates in ASU 2025-11 also include a disclosure principal that requires entities to

disclose events since the end of the last annual reporting period that have a material impact on the entity.

The amendments in ASU 2025-11 will become effective for the Company for interim reporting periods beginning in the first

quarter of 2028.

Early adoption is permitted.

The amendments in this ASU are not expected to have a material effect on the Company’s financial position or results of operations;

however, the required disclosures will be added to the

Company’s interim financial statements issued after the effective date.

Note 2 – Capital

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

(the “Reverse Stock Split”).

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

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

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

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

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

adjusted f or the Reverse Stock Split.

On October 31, 2023 the Company purchased 244,771

shares of its Class A (voting) Common Stock (adjusted for the 1-for-8 reverse stock split effective November 1, 2023) from the Federal

Deposit Insurance Corporation (“FDIC”), which obtained the shares when it was appointed receiver for First Republic Bank upon its closure earlier in 2023.

The purchased shares represented just under 4.0 % of the Company’s total voting shares prior to the purchase, and over 2.6 %

of the Company’s total common equity.

The Company purchased the shares at a price of $ 7.2760 per share (adjusted for the 1-for-8 reverse stock split effective November 1, 2023), which represented the 20 -day volume weighted average price for the Class A shares over the period ended October 24, 2023.

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

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

Series C, Senior Non-Cumulative Perpetual Preferred Stock

On June 7, 2022, the Company issued 150,000 shares of Series C Preferred Stock with a liquidation preference of $ 1,000

per share for the capital investment of $ 150 million from the U.S.

Treasury under the Emergency Capital Investment Program

The Series C Preferred Stock accrued no dividend for the first 24 months following the investment date.

Thereafter, the dividend rate will be adjusted based on the qualified lending growth criteria listed in

the terms of the ECIP investment with the annual dividend rate up to 2 %.

After the tenth anniversary of the investment date, the dividend rate will be fixed based on the average annual amount of lending in years 2 through 10 .

Dividends are payable quarterly in arrears

on March 15, June 15, September 15, and December 15.

Established by the Consolidated Appropriations Act, 2021, the ECIP was created to encourage low- and moderate-income community financial

institutions and minority depository institutions to provide loans, grants, and forbearance for small businesses, minority-owned businesses, and consumers, especially low-income and underserved communities, including persistent poverty

counties, that may be disproportionately impacted by the economic effect of the COVID-19 pandemic by providing direct and indirect capital investments in low- and moderate-income community financial institutions.

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

accordance with the federal banking agencies’ regulatory capital regulations.

On January 14, 2025, the Company entered into a Securities

Purchase Option Agreement (the “Option Agreement”) with the U.S.

Treasury, which grants the Company the conditional option to repurchase the Series C Preferred Stock during the first 15 years following the Company’s issuance of the Preferred Stock.

The purchase price for the Series C Preferred Stock under the Option Agreement is based on a formula approximate to the fair value of the Series C Preferred Stock as of the date the Option Agreement is executed ,

calculated as set forth in the Option Agreement, together with any accrued and unpaid dividends thereon and could represent a discount from the Preferred Stock’s liquidation amount.

The purchase option may not be exercised during the first

10 years following the Company’s sale of the Series C Preferred Stock (“ECIP Period”) unless and until the Company meets at least

one of the following three conditions (the “Threshold Conditions”):

(1) an average of at least 60 % of the Company’s loan

originations qualify as “Deep Impact Lending” over any 16 consecutive quarters, (2) an average of at least 85 % of the Company’s “total originations qualify as “Qualified Lending” over any 24 quarters or (3) the Series C Preferred Stock has a dividend rate of no more than 0.5 %

at each of six consecutive “Reset Dates,” in each case as defined in the Option Agreement and the terms of the Series C Preferred

In addition to satisfying a Threshold Condition, the Option Agreement requires that the Company meet certain other eligibility conditions in order to exercise the purchase option in the future, including compliance with the terms of

the original ECIP purchase agreement and the terms of the Series C Preferred Stock, maintaining qualification as either a certified community development financial institution or a minority depository institution and satisfying other legal

and regulatory criteria.

The Company may designate a mission aligned nonprofit affiliate as the purchaser of the Series C Preferred Stock under the terms of the Option

The earliest possible date by which a Threshold Condition may be met is June 30, 2028, which is the end of the sixteenth consecutive quarter following the Original Closing Date.

However, the Company does not currently meet any of the Threshold Conditions to

exercise the purchase option, and there can be no assurance if and when the Threshold Conditions will be met.

In addition to the requirement that a Threshold Condition be met, the Repurchase Agreement requires that the Company meet certain other

eligibility conditions in order to exercise the purchase option in the future, including compliance with the terms of the original ECIP purchase agreement and the terms of the Preferred Stock, maintaining qualification as either a CDFI or an

MDI, and meeting other legal and regulatory criteria.

Although the Company currently meets the general eligibility criteria, other than satisfying one of the Threshold Conditions, there can be no assurance that the Company will meet such

criteria in the future.

The Company was required to begin paying quarterly

dividends on the Series C Preferred Stock in the three month period ended June 30, 2024.

Dividends on the Series C Preferred Stock totaled $ 3.0 million and $ 1.6 million for

the years ended December 31, 2025 and 2024, respectively, with a dividend rate of 2.0 %.

Note 3 – Securities

The following table summarizes the amortized cost and fair value of the available‑for‑sale investment securities portfolios at December 31, 2025 and December 31,

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

2024 and the corresponding amounts of unrealized gains (losses) which are recognized in accumulated other comprehensive income (loss):

(In thousands)

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Municipal bonds

Asset-backed securities

Corporate bonds

Total available-for-sale securities

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The amortized cost and estimated fair value of all investment securities available-for-sale at December 31, 2025, by contractual maturities, are shown below.

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

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

(In thousands)

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Municipal bonds

Asset-backed securities

Corporate bonds

December 31, 2024:

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Municipal bonds

Securities with a market value of $ 83.7 million were pledged as collateral for securities sold under agreements to repurchase as of December 31, 2025 and included $ 67.9 million of federal agency mortgage-backed securities, $ 9.3 million of federal agency debt, $ 5.0 million of U.S.

and $ 1.5 million of SBA pools.

Securities with a market value of $ 7.7 million were pledged as collateral for D.C.

Housing, securities with a market value of $ 4.2 million were pledged as collateral for D.C.

Government, and securities with a market value of $ 157 thousand were pledged as collateral for FRB discount window .

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

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

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

Treasuries, $ 30.2 million of

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

Investment securities with a book

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

December 31, 2025 and 2024, there were no securities pledged to secure public deposits since those public deposits are under

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one issuer, other than the U.S.

Government and its agencies, in an amount greater than 10% of stockholders’ equity.

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

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

Government and its agencies, in an amount greater than 10% of equity.

Accrued interest receivable on securities was $ 745 thousand and $ 796 thousand at December 31, 2025 and 2024, respectively, and is included in

the consolidated statements of financial condition in accrued interest receivable .

At December 31, 2025 and 2024, there were no

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Commercial – other

SBA loans (1)

Gross loans receivable before deferred loan costs and premiums

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Loans receivable, net

Including Paycheck Protection Program (PPP) loans.

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

The recognition

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

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

The Company uses the WARM

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

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

The Company then

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

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

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;

in the experience, depth, and ability of lending management;

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

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

(vii) changes in the

value of underlying collateral for collateral dependent loans;

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

and (ix) the effect of other external factors (i.e.,

competition, legal and regulatory requirements) on the level of estimated credit losses.

These qualitative factors incorporate the concept of reasonable and supportable forecasts, as required by ASC 326.

The following tables summarize the activity in the allowance for credit losses on loans for the periods indicated:

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(In thousands)

Loans receivable held for investment:

Single-family

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(In thousands)

Loans receivable held for investment:

Single-family

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Commercial - other

Company also recorded a recovery of provision for off-balance sheet loan commitments of $ 91 thousand and $ 2 thousand for the years ended December 31, 2024 and 2023, respectively.

The ACL increased to $ 8.1 million as of December 31, 2024, compared to $ 7.3 million as of December 31, 2023, primarily due to growth in the loan portfolio.

The Company evaluates loans collectively for purposes of determining the ACL in accordance with ASC 326.

Collective evaluation is based on aggregating loans deemed to possess similar risk

characteristics.

In certain instances, the Company may identify loans that it believes no longer possess risk characteristics similar to other loans in the loan portfolio.

These loans are typically identified from those that have exhibited

deterioration in credit quality, since the specific attributes and risks associated with such loans tend to become unique as the credit deteriorates.

Such loans are typically nonperforming, downgraded to substandard or worse, and/or are deemed

collateral dependent, where the ultimate repayment of the loan is expected to come from the operation of or eventual sale of the collateral.

Loans that are deemed by management to no longer possess risk characteristics similar to other loans in

the portfolio, or that have been identified as collateral dependent, are evaluated individually for purposes of determining an appropriate lifetime ACL.

The Company uses the remaining life approach, using the loan’s effective interest rate, for

determining the ACL on individually evaluated loans, unless the loan is deemed collateral dependent, which requires evaluation based on the estimated fair value of the underlying collateral, less estimated selling costs.

The Company may

increase or decrease the ACL for collateral dependent loans based on changes in the estimated fair value of the collateral.

The Company also recorded a

recovery of provision for off-balance sheet loan commitments of $ 53 thousand and $ 91 thousand for the years ended December 31, 2025 and 2024, respectively.

The ACL increased to $ 9.4 million as of December 31, 2025, compared to $ 8.4 million as of December 31, 2024, primarily due to an increase in specific reserves on collateral dependent loans.

The Company evaluates loans collectively for purposes of determining the ACL.

Collective evaluation is based on aggregating loans deemed to possess similar risk characteristics.

instances, the Company may identify loans that it believes no longer possess risk characteristics similar to other loans in the loan portfolio.

These loans are typically identified from those that have exhibited deterioration in credit quality,

since the specific attributes and risks associated with such loans tend to become unique as the credit deteriorates.

Such loans are typically nonperforming, downgraded to substandard or worse, and/or are deemed collateral dependent, where the

ultimate repayment of the loan is expected to come from the operation of or eventual sale of the collateral.

Loans that are deemed by management to no longer possess risk characteristics similar to other loans in the portfolio, or that have

been identified as collateral dependent, are evaluated individually for purposes of determining an appropriate lifetime ACL.

The Company uses the remaining life approach, using the loan’s effective interest rate, for determining the ACL on

individually evaluated loans, unless the loan is deemed collateral dependent, which requires evaluation based on the estimated fair value of the underlying collateral, less estimated selling costs.

The Company may increase or decrease the ACL

for collateral dependent loans based on changes in the estimated fair value of the collateral.

The following tables present collateral dependent loans by collateral type as of the date indicated:

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Single-family

Commercial real estate

Commercial – other

December 31, 2024

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(In thousands)

Single-family

Commercial real estate

Commercial – other

At December 31, 2025, $ 10.9 million of individually evaluated loans were evaluated based on the estimated fair value of the underlying collateral.

These loans had an

associated ACL of $ 1.1 million as of December 31, 2025.

All of these collateral dependent loans were on nonaccrual status at

December 31, 2025.

At December 31, 2024, one $ 264 thousand individually

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as of December 31, 2024 and was on nonaccrual status.

At December 31, 2023, $ 6.4 million of individually evaluated loans were evaluated based on the estimated fair value of the underlying collateral.

These loans had an

associated ACL of $ 112 thousand as of December 31, 2023.

None of these collateral dependent loans were on nonaccrual status at December 31, 2023.

At December 31, 2023, no individually evaluated loans were evaluated using a discounted future cash flow approach.

Past Due Loans

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

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

December 31, 2025

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Commercial - other

The following table presents the recorded investment in non‑accrual loans by loan type as of the period indicated:

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

December 31, 2025

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(In thousands)

Single-family

Commercial - other

Total non-accrual loans

There were no non-accrual loans as of December 31, 2023.

There were no loans 90 days or more delinquent

that were accruing interest as of December 31, 2024 or December 31, 2023.

None of the non-accrual loans were delinquent.

December 31, 2024

Allowance for

Credit Losses

Loans receivable held for investment:

(In thousands)

Total non-accrual loans

The Company recognized $ 82 thousand of interest income

on nonaccrual loans during the year ended December 31,2025.

There were no loans 90 days or more delinquent that were accruing

interest as of December 31, 2025 or December 31, 2024.

Modified Loans to Troubled Borrowers

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In those instances, the ACL for such loans is determined through individual evaluation.

The following table presents the amortized costs basis as of December 31, 2024 and the financial effect of loans modified to borrowers experiencing financial

difficulty during the year ended December 31, 2024.

There were no loan modifications to borrowers that were experiencing financial difficulty during the year

ended December 31, 2023.

The following table presents the amortized costs basis as of December 31, 2025 and 2024 and the financial effect of loans modified to borrowers experiencing

financial difficulty during the years ended December 31, 2025 and 2024.

December 31, 2025

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Commercial - other

December 31, 2024

Term Extension

(In Thousands)

Commercial real estate

Commercial - other

Quality Indicators

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Special Mention

YTD gross charge-offs

Commercial real estate:

Special Mention

Construction:

Special Mention

Commercial – other:

Special Mention

YTD gross charge-offs

Special Mention

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Construction:

Special Mention

Commercial – other:

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Special Mention

Allowance for Credit Losses for Off-Balance Sheet Commitments

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Office properties and equipment, net

Depreciation expense was $ 424 thousand and $ 385 thousand for the years 2024 and 2023, respectively.

Depreciation expense was $ 410 thousand and $ 424 thousand for the years ended December 31, 2025 and 2024, respectively.

Note 6 – Leases

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

The operating lease has one 5 -year extension option at the

then fair market rate which was exercised during the year ended December 31, 2025.

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

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ROU assets and lease

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

The ROU asset totaled $ 420 thousand and $ 655 thousand as of

liabilities are recognized based on the present value of the remaining lease payments using a discount rate that represents our incremental borrowing rate at the date of the lease’s inception.

The ROU asset totaled $ 1.5 million and $ 420 thousand as of

December 31, 2025 and 2024, respectively, and was included in other assets on the consolidated statements of financial condition.

The lease liability totaled $ 420 thousand and $ 655 thousand as of December 31, 2024 and 2023, respectively, and was included in accrued expenses and other liabilities on the consolidated statements of financial condition.

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

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

The lease liability totaled $ 1.5 million and $ 420 thousand as of December 31, 2025 and 2024, respectively, and was included in accrued expenses and other liabilities on the consolidated statements of financial condition.

The Bank has no finance leases.

The Company recognized rent expense of $ 242

thousand in 2024 and $ 305 thousand in 2023.

thousand in both 2025 and 2024.

Additional information regarding our operating leases is summarized below for

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Year ended December 31, 2027

Year ended December 31, 2028

Year ended December 31, 2029

Year ended December 31, 2030

Total future minimum lease payments

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Note 7 – Goodwill and Core Deposit Intangible

The following table presents the changes in the carrying amounts of goodwill and core deposit intangibles for the years ended December

The following tables present the changes in the carrying amounts of goodwill and core deposit intangibles for the years ended December

31, 2025 and 2024:

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Balance at the end of the period

No impairment charges were recorded during 2024 or 2023 for goodwill.

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

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

The Company performed its

qualitative and quantitative assessment as of September 30, 2024 due to concerns regarding declines in the Company’s stock price.

No impairment charges were necessary as a result of the qualitative and quantitative assessments.

Management engaged a third-party to complete the goodwill impairment testing as

of September 30, 2025.

The quantitative test indicated that the carrying amount of the goodwill exceeded the fair value of the Company by approximately $ 25.9 million.

On October 15, 2025, the Company’s management, with oversight of the Audit Committee of the Board of Directors of the Company, concluded that, based on its annual impairment

analysis, the Company’s goodwill was impaired in accordance with U.S.

Consequently, the Company recorded a non-cash $ 25.9 million

goodwill impairment charge for the quarter ended September 30, 2025.

The Company does not expect that this charge will result in future cash expenditures.

The carrying value and accumulated amortization related to the Company’s core deposit intangible consisted of the following at December 31, 2025 and 2024:

5 unchanged sentences

(In thousands)

Note 8 – Derivatives

During the year ended

December 31, 2025, the Company began utilizing interest rate swap agreements with commercial banking customers to facilitate their interest rate management strategies.

The Company entered into corresponding offsetting derivatives with third

While these derivatives represent economic hedges, they do not qualify as hedges for accounting purposes.

The Company presents derivative position gross on the consolidated statements of financial condition.

The notional amount of the interest rate swaps does not

represent amounts exchanged by the parties.

The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements.

The following table presents the amounts recorded on the consolidated

statements of financial condition related to the Company’s interest rate swaps.

As of December 31, 2025

Notional Amount

Statements of

(In thousands)

Derivatives in an asset position:

Derivatives not designated as hedging instruments:

Interest rate swaps related to customer loans

Total derivatives in an asset position

Derivatives in a liability position:

Derivatives not designated as hedging instruments:

Interest rate swaps related to customer loans

Total derivatives in a liability position

Accrued Expenses and Other Liabilities

The following table presents the effect of the Company’s derivative financial instruments on the Consolidated Statements of Operations.

For the Year Ended December 31, 2025

Location of Gain/Loss

Recognized on Derivatives on

Consolidated Statement of

Amount of Gain/Loss

Recognized on Derivatives

(In thousands)

Derivatives not designated as hedging instruments:

Interest rate swaps related to customer loans

Unrealized gain/loss

During the year ended December 31, 2025, the Company also recognized $ 194

thousand in swap fees in Other Income on the Consolidated Statement of Operations.

Note 9 – Fair Value

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

The fair values of securities available‑for‑sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix

pricing, which is a mathematical technique to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2

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

These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.

Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for

differences between the comparable sales and income data available.

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

Collateral dependent loans are evaluated on a

quarterly basis for additional required calculation adjustments (taken as part of the ACL) and adjusted accordingly.

Appraisals for collateral-dependent loans and assets acquired through or by transfer of in lieu of foreclosure are performed by certified general appraisers (for

commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company.

Once received, an independent third‑party licensed appraiser reviews the

appraisals for accuracy and reasonableness, reviewing the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide

Assets Measured on a Recurring Basis

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

value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an ordinary transaction between market participants on the

measurement date.

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

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

Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities;

quoted prices in markets that are not active;

or other inputs that are observable or can be corroborated by

observable market data.

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

The Company used the following

methods and significant assumptions to estimate fair value:

fair values of securities available-for-sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique to value debt securities without relying

exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

Assets and Liabilities Measured on a Recurring Basis

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

Fair Value Measurement

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Municipal bonds

Asset-backed securities

Corporate bonds

Interest rate swap asset

Interest rate swap liability

At December 31, 2024 :

Securities available-for-sale:

Federal agency mortgage-backed

Federal agency CMO

Federal agency mortgage-backed securities

Federal agency CMOs

Federal agency debt

2 unchanged sentences

Assets Measured on a Nonrecurring Basis

There were no assets or liabilities measured at fair value on a nonrecurring basis at December 31, 2024 or 2023.

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

Collateral-Dependent

Loans - The fair value of collateral-dependent loans with specific allocations of the allowance for loan losses is generally based on recent appraisals.

These appraisals may utilize a single valuation approach or a combination of approaches

including comparable sales and the income approach.

Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available for similar loans and

collateral underlying loans and result in a Level 3 classification.

The table below presents assets measured at fair value on a nonrecurring

basis at December 31, 2025.

At December 31, 2024, the Company did no t have any assets or liabilities carried at fair value on

a nonrecurring basis.

Fair Value Measurement

Quoted Prices in Active Markets for Identical Assets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

(In thousands)

At December 31, 2025 :

Collateral dependent loans:

Single-family

Commercial - other

The following

table represents quantitative information about Level 3 fair value assumptions for assets measured at fair value on a non-recurring basis at December 31, 2025.

Unobservable Input(s)

(In thousands)

At December 31, 2025 :

Collateral dependent loans:

Single-family

Market approach

Adjustments to market data

Market approach

Adjustments to market data

Market approach

Adjustments to market data

Commercial - other

Market approach

Adjustments to market data

Fair Values of Financial Instruments

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Accrued interest receivable

Bank owned life insurance

Interest rate swaps

Financial Liabilities:

Non interest bearing deposits

Interest bearing deposits

Time deposits

FHLB advances

1 unchanged sentence

Accrued interest payable

Interest rate swaps

Fair Value Measurements at December 31, 2024

9 unchanged sentences

Securities sold under agreements to repurchase

Bank Term Funding Program borrowing

Accrued interest payable

fair value of financial assets and liabilities was measured using an exit price notion.

Although the exit price notion represents the value that would be received to sell an asset or paid to transfer a liability, the actual price received for a

sale of assets or paid to transfer liabilities could be different from exit price disclosed.

Note 10 – Deposits

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such deposits.

During the year ended December 31, 2025, the Company purchased $ 70.0 million of nonreciprocal brokered certificates of deposit.

The balance of these certificates of deposit was $ 70.0 million at December 31, 2025.

As of December 31, 2025 and 2024, approximately $ 413.5

7 unchanged sentences

The Company has a significant concentration of deposits with five long‑time customers that accounted for approximately 28 % and 18 % of its deposits as of December 31, 2025 and 2024, respectively.

The Company expects to maintain the relationships with the customers for the

Deposits from principal officers, directors, and their affiliates totaled $ 24.8 million and $ 24.2 million at December 31, 2025 and 2024, respectively.

11 unchanged sentences

The majority of FHLB advances are overnight borrowings

Each advance is

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

Of the $ 72.0 million FHLB advances

outstanding at December 31, 2025, $ 60.0 million is fixed-rate credit and subject to prepayment penalties if paid before its maturity

The advances were collateralized by $ 448.6 million and $ 521.7 million of commercial real estate loans at December 31, 2025 and 2024, respectively, under a blanket lien arrangement.

Based on collateral

pledged and the Company’s holdings of FHLB stock as of December 31, 2024, the Company was eligible to borrow up to an additional $ 174.3

million at year‑end 2024.

Based on collateral pledged and the Company’s holdings of

FHLB stock as of December 31, 2025, the Company was eligible to borrow up to an additional $ 150.7 million at year‑end 2025.

Scheduled maturities of FHLB advances are as follows:

(In thousands)

The Company will, from time to time, sell a portion of a loan or group of loans to third parties.

In some cases, the transferred portion of the loans

does not meet the requirements to be treated as sales for accounting purposes.

When that occurs, the legally transferred portion of the loan balance remains classified in gross loans receivable held for investment and a secured borrowing is

recorded for the proceeds received from the third-party institution.

As the transferred portion of the loan pays down, the secured borrowings are repaid.

The Company has no obligation to make principal or interest payments on the secured

borrowings unless and until payments are received from the loan borrowers.

The terms of these loans were modified during the fourth quarter of 2025, at which point sale accounting treatment was applied and the debt was derecognized.

Company had secured borrowings associated with these participation loan transactions of $ 0 and $ 31.4 million as of December 31, 2025 and 2024, respectively.

The weighted average interest rate on the secured borrowings was 5.54 % at December 31, 2024.

On December 27,

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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.

The interest rate on this borrowing was fixed at 4.84 %.

In addition, the

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foreseeable future.

The fair value of securities pledged totaled $ 83.3 million as of December 31, 2024 and included $ 46.5 million of U.S.

Treasuries, $ 27.1

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

As of December 31, 2023, securities sold under agreements to repurchase totaled $ 73.5 million at an average rate of 2.60 %.

The fair value of

securities pledged totaled $ 89.0 million as of December 31, 2023 and included $ 47.8 million of U.S.

Treasuries, $ 30.2 million of federal agency debt, and $ 11.0 million of federal agency mortgage-backed securities.

Note 12 – Notes Payable

connection with the New Market Tax Credit activities of City First Bank, CFC 45 is a partnership whose members include CFNMA and City First New Markets Fund II, LLC.

This CDE acts in effect as a pass-through for a Merrill Lynch allocation

totaling $ 14.0 million that needed to be deployed.

In December 2015, Merrill Lynch made a $ 14.0 million non-recourse loan to CFC 45, whereby CFC 45 passed that loan through to a Qualified Active Low-Income Community Business.

The loan to the QALICB was secured by

a Leasehold Deed of Trust that, due to the pass-through, non-recourse structure, was operationally and ultimately for the benefit of Merrill Lynch rather than CFC 45.

Debt service payments received by CFC 45 from the QALICB were passed through

to Merrill Lynch in return for which CFC 45 received a servicing fee.

The financial statements of CFC 45 are consolidated with those of the Bank and the Company.

There were two notes outstanding at CFC 45 as of December 31, 2023.

Note A was in the amount of $ 9.9 million with a fixed interest rate of 5.2 %

Note B was in the amount of $ 4.1 million with a fixed interest rate of 0.24 % per annum.

Quarterly interest only payments commenced in March 2016 and continued through March 2023 for Notes A and B.

Beginning in September 2023, quarterly principal

and interest payments were due for Notes A and B.

Both notes would have matured on December 1, 2040 , but were paid off during

January 2024.

The fair value of securities pledged totaled $ 83.7 million as of December 31, 2025.

As of December 31, 2024,

securities sold under agreements to repurchase totaled $ 66.6 million at an average rate of 3.62 %.

The fair value of securities pledged totaled $ 83.3

million as of December 31, 2024.

Note 13 – Employee Benefit Plans

40 unchanged sentences

As of December 31, 2025 and December 31, 2024, the trustee for the ESOP had purchased 428,327 shares at a total cost of $ 3.9 million .

All common stock share amounts and per share amounts above have been retroactively adjusted, as applicable, for the

1-for-8 reverse stock split effective November 1, 2023.

Note 14 – Income Taxes

8 unchanged sentences

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Income tax expense (benefit) was as follows:

The Company adopted the disclosure requirements in ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , on a retrospective basis as of January 1, 2025.

The adoption primarily impacted the presentation and disaggregation of the Company’s

income tax disclosures and did not affect the Company’s consolidated financial condition, results of operations, or cash flows.

The components of income tax expense (benefit) from continuing operations consisted of the following:

(In thousands)

Income taxes paid, net of refunds received was as follows:

(In thousands)

Washington, D.C.

Effective tax rates differ from the federal statutory rate of 21 %

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(In thousands)

Federal statutory rate times pre-tax net income

State taxes, net of federal benefit

(In thousands)

Federal statutory income tax

State and local taxes, net of federal benefit*

Nontaxable or nondeductible items

Earnings from bank owned life insurance

Low-income housing credits

Change in valuation allowance

Tax effect of stock-based compensation

Tax-exempt interest, net of TEFRA disallowance

Goodwill impairment

Stock-based compensation

Effective tax rate

State and local taxes in California

and Washington, D.C.

made up the majority (greater than 50 percent) of the tax effect in this category.

Year‑end deferred tax assets and liabilities were due to the following:

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Stock compensation

Net operating loss carryforward

Tax loss carryforwards

Partnership investment

General business credit

Alternative minimum tax credit

Net unrealized loss on securities available-for-sale

Right of use liability

Lease liability

Fair value adjustment on acquired loans

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Deferred tax liabilities:

Section 481 adjustments to bad debts

Deferred loan fees/costs

1 unchanged sentence

FHLB stock dividends

Nonaccrual loan interest

Prepaid expenses

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Based on this analysis, management determined that, as of December 31, 2025, a

valuation allowance of $ 449 thousand was required on the Company’s deferred tax assets, which totaled $ 8.8 million (net of valuation allowance).

As of December 31, 2023, a valuation allowance of $ 449 thousand was required on the Company’s deferred tax assets, which totaled $ 9.5

million (net of valuation allowance).

valuation allowance of $ 449 thousand was required on the Company’s net deferred tax assets, which totaled $ 6.7 million (net of valuation allowance).

As of December 31, 2024, a valuation allowance of $ 449 thousand was required on the Company’s net deferred tax assets, which totaled $ 8.9 million (net of valuation allowance).

As of December 31,

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The Company did no t have any unrecognized tax benefits as of December 31, 2025 or 2024.

2023 is the most recent tax year for which the Company has filed federal and state income

or franchise tax returns.

Federal tax years 2022 through 2025 remain open for the assessment of Federal income tax.

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Washington, D.C.

2021 through 2023 remain open for the assessment of D.C.

tax years 2022 through 2025 remain open for the assessment of D.C.

franchise tax.

The Company is not currently under examination by any tax authorities .

The Company is not currently under

examination by any tax authorities .

Note 15 – Stock‑Based Compensation

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Stock Awards to Directors

In May 2024 and February 2023, the Company awarded 19,832

In March 2025 and May 2024, the Company awarded 23,232

and 19,832 shares of common stock, respectively, to its directors under the LTIP, which are fully vested.

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On March 25, 2024, and April 5, 2024, the Company

issued 126,083 shares of restricted stock to its officers and employees under the Amended and Restated LTIP, of which 13,015 shares have been forfeited as of December 31, 2024.

issued a total of 126,083 shares of restricted stock to its officers and employees under the Amended and Restated LTIP, of

which 26,356 shares have been forfeited as of December 31, 2025.

Each restricted stock award was valued based on the fair value of

the stock on the date of the award.

These awarded shares of restricted stock fully vest over periods ranging from 36 months to 60 months from their respective dates of grant.

Stock-based compensation is recognized on a straight-line basis over the vesting period.

the years ended December 31, 2025 and 2024, the Company recorded $ 94 thousand and $ 108 thousand, respectively, of stock-based compensation expense related to these restricted stock awards.

On March 26, 2025 and May 28, 2025, the Company issued

a total of 96,478 shares of restricted stock to its officers and employees under the Amended and Restated LTIP, of which 17,048 shares have been forfeited as of December 31, 2025.

Each restricted stock award was valued based on the fair value of the stock on the date

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Stock-based compensation is recognized on a straight-line basis over the vesting period.

the year ended December 31, 2024 the Company recorded $ 108 thousand of stock-based compensation expense related to these restricted

stock awards.

the year ended December 31, 2025, the Company recorded $ 114 thousand of stock-based compensation expense related to these

restricted stock awards.

As of December 31, 2025, 367,181 shares had been awarded under the Amended and Restated LTIP and 281,958 shares were available to be awarded.

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unrecognized equity-based compensation expense that the Company expects to recognize over the remaining contractual life.

All common stock share amounts above have been

retroactively adjusted, as applicable, for the 1-for-8 reverse stock split effective November 1, 2023.

Note 16 – Regulatory Matters

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Income tax benefits

Equity in undistributed subsidiary income

Equity in undistributed subsidiary (loss) income

Net (loss) income

Condensed Statements of Cash Flows

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Cash flows from operating activities

Adjustments to reconcile net loss to net cash used in operating activities:

Equity in undistributed subsidiary income

Net (loss) income

Adjustments to reconcile net (loss) income to net cash used in operating activities:

Equity in undistributed subsidiary loss (income)

Stock awards expenses

2 unchanged sentences

Net cash used in operating activities

Cash flows from investing activities

Capital distribution to bank subsidiary

Net cash used in investing activities

Cash flows from financing activities

Share repurchase - FDIC

Dividends declared and paid- ECIP

Increase in unreleased ESOP shares

City First Bank Fund Manager II distribution

Proceeds from repayment of ESOP loan

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Ending cash and cash equivalents

Note 19 – Earnings Per Common Share

Note 19 – (Loss) Earnings Per Common Share

The factors used in the earnings per common share computation follow:

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Earnings per common share - diluted

Diluted earnings

per share for the year ended December 31, 2024 reflects preferred dividends of $ 0.18 per diluted common share.

Stock options for 12,500 and 31,250 shares of common stock for the years ended December 31, 2024 and 2023, respectively, were not considered in computing diluted earnings per

common share because they were anti‑dilutive.

Stock options for 12,500 shares of common stock

for the years ended December 31, 2025 and 2024, were not considered in computing diluted earnings per common share because they were anti‑dilutive.

Basic earnings per share of common stock is computed pursuant to the two-class method by dividing net loss

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No unvested stock awards or potential common shares issuable under stock options were included in diluted earnings per share in either year.

Note 20 – Subsequent Events

The Company evaluated its December 31, 2024 consolidated financial statements for subsequent events through the date these financial statements were issued.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures