BROADWAY FINANCIAL CORP DE 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. Our MD&A should be read in conjunction with the Consolidated Financial Statements and related Notes included in Part I, Item 1 “Financial Statements,” of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”). Certain statements herein are forward-looking statements within the meaning of Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 27A of the U.S. Securities Act of 1933, as amended that reflect our current views with respect to future events and financial performance. Forward-looking statements typically include words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “potential,” “continue,” “prospects,” “ability,” “looking,” “forward,” “invest,” “grow,” “improve,” “likely” and other similar expressions. These forward-looking statements are subject to risks and uncertainties, which could cause actual future results to differ materially from historical results or from those anticipated or implied by such statements. Readers should not place undue reliance on these forward-looking statements, which speak only as of their dates or, if no date is provided, then as of the date of this Form 10-Q. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law. Critical Accounting Policies and Estimates Critical accounting policies are those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations under different assumptions and conditions. This discussion highlights those accounting policies that management considers critical. All accounting policies are important; therefore, you are encouraged to review each of the policies included in Note 1 “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements in our 2025 Form 10-K to gain a better understanding of how our financial performance is measured and reported. Management has identified the Company’s critical accounting policies as follows: Allowance for Credit Losses ( “ ACL ” ) for Loans The Company accounts for credit losses on loans in accordance with ASC 326, which requires the Company to record an estimate of expected lifetime credit losses for loans at the time of origination or acquisition. The ACL is maintained at a level deemed appropriate by management to provide for expected credit losses in the portfolio as of the date of the consolidated statements of financial condition. Estimating expected credit losses requires management to use relevant forward-looking information, including the use of reasonable and supportable forecasts. The measurement of the ACL is performed by collectively evaluating loans with similar risk characteristics. During the quarter ended March 31, 2026, the Company transitioned from using the weighted average remaining maturity (“WARM”) method for measuring the ACL to a discounted cash flow (“DCF”) method. Concurrently, the Company also changed the way that qualitative factors are applied in the estimation of the ACL. These changes are intended to improve the precision of the expected credit loss calculations. These changes are considered a change in accounting estimate, rather than a change in accounting principle, as they result from an improved estimation methodology rather than a fundamental change in the underlying accounting framework. The changes in estimation techniques and certain related inputs and assumptions used to estimate expected credit losses on the Company’s loan portfolio and unfunded commitments did not materially impact the Company’s results of operations or financial condition. 26 Table of Contents The Company’s DCF methodology incorporates a probability of default (“PD”) and loss given default (“LGD”) model, whereby PDs and LGDs are forecasted using economic scenarios over a reasonable and supportable period to generate estimates for cash flows expected to be collected over the estimated life of a loan. Estimates of future expected cash flows ultimately reflect assumptions made concerning net credit losses over the life of a loan. The model also incorporates management’s assumptions regarding prepayments and curtailments. The use of reasonable and supportable forecasts, including the determination of the appropriate length of the forecast horizon, requires significant judgment. Management leverages peer data as well as economic projections from an independent third party to inform and provide its reasonable and supportable economic forecasts. Other internal and external indicators of economic forecasts may also be considered by management when developing the forecast metrics. The Company’s ACL model forecasts PD and LGD over a one-year time horizon, which the Company believes is a reasonable and supportable period. Beyond the one-year forecast time horizon, the Company’s ACL model reverts to historical long-term average loss rates over the remaining contractual periods. The duration of the forecast horizon, the period over which forecasts revert to long-term averages, the economic forecasts that management utilizes, as well as additional internal and external indicators of economic forecasts that management considers, may change over time depending on the nature and composition of the Company’s loan portfolio. Changes in economic forecasts, in conjunction with changes in loan specific attributes, impact a loan’s PD and LGD, which can drive changes in the determination of the ACL. Expectations of future cash flows are discounted at the loan’s effective interest rate. The resulting ACL for a loan represents the amount by which the loan’s amortized cost exceeds the net present value of a loan’s discounted cash flows. The ACL is recorded through a charge to provision for credit losses and is reduced by charge-offs, net of recoveries on loans previously charged-off. It is the Company’s policy to charge-off loan balances at the time they have been deemed uncollectible. Prior to March 31, 2026, the Company measured the ACL for each of its loan segments using the WARM method. The weighted average remaining life, including the effect of estimated prepayments, was calculated for each loan pool on a quarterly basis. The Company then estimated 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. In conjunction with the conversion to DCF methodology, the bank has adopted a new scorecard-based methodology for estimating the qualitative reserve factors. The purpose of the qualitative scorecard is to provide a framework to reliably and consistently determine reasonable and supportable qualitative estimates of the expected credit losses in the current loan portfolio compared to losses expected from the quantitative analysis. The appropriate qualitative reserve is derived by loan segment from incremental risk statuses for each qualitative factor. The risk statuses in the scorecard range from “very low risk” to “critical risk.” A qualitative reserve allocation is made to each portfolio based on the risk assessment. All inputs and assumptions in the qualitative scorecard were individually assessed to determine the proper risk status, and all decisions were made independently of the previous WARM qualitative analysis. The Company’s ACL model also includes adjustments for qualitative factors, where appropriate. Qualitative adjustments may be related to and 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 recapture practices; (ii) changes in international, national, regional, and local conditions; (iii) changes in the nature and volume of the portfolio and terms of loans; (iv) changes in the experience, depth, and ability of lending management; (v) changes in the volume and severity of past due loans and other similar conditions; (vi) changes in the quality of the organization’s loan review system; (vii) changes in the value of underlying collateral for collateral dependent loans; (viii) the existence and effect of any concentrations of credit and changes in the levels of such concentrations; and (ix) the effect of other external factors (i.e., competition, legal and regulatory requirements) on the level of estimated credit losses. These qualitative factors incorporate the concept of reasonable and supportable forecasts, as required by ASC 326. The Company 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 discounted cash flow approach, using the loan’s effective interest rate, for determining the ACL on individually evaluated loans, unless the loan is deemed collateral dependent, which requires evaluation based on the estimated fair value of the underlying collateral, less estimated selling costs. The Company may increase or decrease the ACL for collateral dependent loans based on changes in the estimated fair value of the collateral. 27 Table of Contents Overview Total assets increased by $80.5 million at March 31, 2026, compared to December 31, 2025, reflecting increases in net loans of $42.7 million, securities available-for-sale of $27.3 million and cash and cash equivalents of $16.1 million. The increases in net loans and securities available-for-sale were mainly due to purchases of loans and securities available-for-sale. Loans held for investment, net of the ACL, increased by $42.7 million to $1.1 billion at March 31, 2026, compared to $1.0 billion at December 31, 2025. The increase was primarily due to loan purchases. Deposits increased by $155.5 million, or 16.9%, to $1.1 billion at March 31, 2026, from $917.6 million at December 31, 2025, due to participation in an online financial platform that serves as a marketplace for high-yield savings and CD accounts. The increase in deposits was attributable to increases of $198.1 million in savings deposits and $11.1 million in certificates of deposit accounts, partially offset by decreases of $48.5 million in liquid deposits (demand, interest checking, and money market accounts), $4.8 million in Insured Cash Sweep (“ICS”) deposits (ICS deposits are the Bank’s money market deposit accounts in excess of Federal Deposit Insurance Corporation ( “ FDIC ”) insured limits whereby the Bank makes reciprocal arrangements for insurance with other banks), and $319 thousand in Certificate of Deposit Registry Service (“CDARS”) deposits (CDARS deposits are similar to ICS deposits, but involve certificates of deposit, instead of money market accounts). Borrowings decreased by $72.0 million from December 31, 2025 to March 31, 2026, due to paying off FHLB advances. Net income attributable to common stockholders increased to $409 thousand, or $0.05 per diluted share, during the first quarter of 2026 after deducting preferred dividends of $750 thousand, compared to net loss attributable to common stockholders of $3.4 million, or ($0.39) per diluted share, for the first quarter of 2025 after deducting preferred dividends of $750 thousand. Diluted income per common share was $0.05 for the first quarter of 2026, compared to ($0.39) of loss per diluted common share for the first quarter of 2025. Diluted income per common share for both the first quarter of 2026 and the first quarter of 2025 reflects preferred dividends of $0.09 per diluted common share. For the three months ended March 31, 2026, the Company reported consolidated net income before preferred dividends of $1.2 million, or $0. 13 per diluted share, compared to consolidated net loss before preferred dividends of $2.7 million, or ($0.31) per diluted share, for the first quarter of 2025, representing an improvement of $3.9 million. “Net income before preferred dividends” and “Earnings per common share – diluted before preferred dividends” are considered to be non-GAAP measures. See “Use of Non-GAAP Financial Measures” section of this Form 10-Q for a reconciliation of these amounts to the associated GAAP financial measure. 28 Table of Contents Results of Operations Net Interest Income Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025 Net interest income totaled $9.1 million, representing an increase of $1.0 million, or 12.5%, from net interest income of $8.0 million for the first quarter of 2025. The increase resulted from a $1.4 million increase in interest income, due to a $1.4 million increase in interest income on available-for-sale securities due to an increase in the average balance of available-for-sale securities and the average rate earned on available-for-sale securities. Further, interest expense on borrowings decreased $1.4 million due to a decrease in the average balance of borrowings. These increases in net interest income were partially offset by a $1.8 million increase in interest expense on deposits due to an increase in the average balance of deposits and the average rate paid on deposits. The net interest margin increased to 2.75% for the first quarter of 2026 from 2.63% for the first quarter of 2025, due to an increase in the average rate earned on interest-earning assets, which increased to 4.93% for the first quarter of 2026 from 4.84% for the first quarter of 2025, and a decrease in the cost of funds, which decreased to 2.91% for the first quarter of 2026 from 3.06% for the first quarter of 2025. The following tables set forth the average balances, average yields and costs, and certain other information for the periods indicated. All average balances are daily average balances. The yields set forth below include the effect of deferred loan fees, deferred origination costs, and discounts and premiums that are amortized or accreted to interest income or expense. We do not accrue interest on loans that are on non-accrual status; however, the balance of these loans is included in the total average balance of loans receivable, which has the effect of reducing average loan yields. For the Three Months Ended March 31, 2026 March 31, 2025 (Dollars in thousands) Average Balance Interest Average Yield/Cost Average Balance Interest Average Yield/Cost Assets Interest-earning assets: Interest-bearing deposits $ 22,560 $ 201 3.61 % $ 28,958 $ 312 4.37 % Securities 265,415 2,613 3.99 % 196,463 1,208 2.49 % Loans receivable, net (1) 1,039,076 13,287 5.19 % 1,003,730 13,117 5.30 % FRB and FHLB stock 6,642 108 6.59 % 11,188 164 5.94 % Total interest-earning assets 1,333,693 $ 16,209 4.93 % 1,240,339 $ 14,801 4.84 % Non-interest-earning assets 42,377 50,173 Total assets $ 1,376,070 $ 1,290,512 Liabilities and Equity Interest-bearing liabilities: Money market deposits $ 191,248 $ 1,047 2.22 % $ 119,101 $ 257 0.88 % Savings deposits 102,463 631 2.50 % 48,712 68 0.57 % Interest checking and other demand deposits 264,446 1,619 2.48 % 255,647 1,911 3.03 % Certificate accounts 313,330 2,693 3.49 % 224,317 1,963 3.55 % Total deposits 871,487 5,990 2.79 % 647,777 4,199 2.63 % FHLB borrowings 44,072 421 3.87 % 149,135 1,529 4.16 % Other borrowings 82,359 745 3.67 % 98,525 1,028 4.23 % Total borrowings 126,431 1,166 3.74 % 247,660 2,557 4.19 % Total interest-bearing liabilities 997,918 $ 7,156 2.91 % 895,437 $ 6,756 3.06 % Non-interest-bearing liabilities 113,688 108,638 Equity 264,464 286,437 Total liabilities and equity $ 1,376,070 $ 1,290,512 Net interest rate spread (2) $ 9,053 2.02 % $ 8,045 1.78 % Net interest rate margin (3) 2.75 % 2.63 % Ratio of interest-earning assets to interest-bearing liabilities 133.65 % 138.52 % (1) Amount is net of deferred loan fees, loan discounts and loans in process, and includes deferred origination costs and loan premiums. (2) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. (3) Net interest rate margin represents net interest income as a percentage of average interest-earning assets. 29 Table of Contents Provision for Credit Losses For the three months ended March 31, 2026, the Company recorded a provision for credit losses of $200 thousand , compared to $1.9 million for the three months ended March 31, 2025. This decrease was largely attributed to a reduction in required reserves on individually evaluated loans, as a specific reserve was recorded on a non‑accrual loan during the first quarter of 2025. The Company recorded a provision for off-balance sheet loan commitments of $78 thousand and $18 thousand for the three months ended March 31, 2026 and 2025, respectively. The ACL increased from $9.4 million at December 31, 2025 to $9.5 million at March 31, 2026. This increase was primarily due to loan portfolio growth, including an increase in the commercial-other portfolio, and a shift toward higher-risk loans, including an increase in substandard loans within the construction and CRE portfolios and higher past-due levels in construction. These factors were evaluated in the context of current conditions and reasonable and supportable forecasts for the Company’s loan classes (single family, multifamily, CRE, church, construction, SBA, consumer, and commercial-other). The Company had six non-accrual loans at March 31, 2026 with an unpaid principal balance of $11.5 million. Credit quality remains strong with non-accrual loans as a percentage of total loans at 1.07% and non-performing assets to total assets of 0.80%. Non-interest Expense Non-interest expense was $8.0 million for the first quarter of 2026, compared to $10.2 million for the first quarter of 2025, representing a decrease of $2.2 million, or 21.4%. The decrease was primarily due to the $1.9 million operational loss incurred in the first quarter of 2025 as well as a $398 thousand decrease in compensation and benefits expense. Income Taxes The Company recorded income tax expense of $282 thousand for the first quarter of 2026, compared to an income tax benefit of $1.1 million for the first quarter of 2025. The increase in income tax expense reflected an increase in pre-tax income of $5.2 million between the two periods. The effective tax rate was 19.76% for the first quarter of 2026, compared to 28.75% for the first quarter of 2025. Financial Condition Total Assets Total assets increased by $80.5 million at March 31, 2026 compared to December 31, 2025, reflecting increases in net loans of $42.7 million, securities available-for-sale of $27.3 million and cash and cash equivalents of $16.1 million. Securities Available-For-Sale Securities available-for-sale totaled $284.1 million at March 31, 2026, compared to $256.8 million at December 31, 2025. The $27.3 million increase in securities available-for-sale during the three months ended March 31, 2026 was primarily due to securities purchases. The table below presents the carrying amount, weighted average yields and contractual maturities of our securities as of March 31, 2026. The table reflects stated final maturities and does not reflect scheduled principal payments or expected payoffs. March 31, 2026 One Year or Less More Than One Year to Five Years More Than Five Years to Ten Years More Than Ten Years Total Carrying Amount Weighted Average Yield Carrying Amount Weighted Average Yield Carrying Amount Weighted Average Yield Carrying Amount Weighted Average Yield Carrying Amount Weighted Average Yield (Dollars in thousands) Available‑for‑sale: Federal agency mortgage‑backed securities $ 11 3.01 % $ 2,032 1.17 % $ 8,968 1.98 % $ 128,811 4.14 % $ 139,822 3.96 % Federal agency CMOs – – 2,371 4.05 % 6,746 3.76 % 70,946 4.67 % 80,063 4.58 % Federal agency debt 4,912 1.39 % 15,684 1.91 % 3,056 4.14 % – – 23,652 2.09 % Municipal bonds – – 3,054 1.50 % – – 1,456 1.72 % 4,510 1.57 % U.S. Treasuries – – – – – – – – – – SBA pools – – 1,000 2.38 % – – 6,749 2.26 % 7,749 2.27 % Asset-backed securities – – – – – – 8,885 5.12 % 8,885 5.12 % Corporate bonds – – – – 19,422 6.18 % – – 19,422 6.18 % Total $ 4,923 1.39 % $ 24,141 2.03 % $ 38,192 4.60 % $ 216,847 4.28 % $ 284,103 4.08 % 30 Table of Contents Loans Receivable Held for Investment Loans receivable held for investment, net of the ACL , increased by $42.7 million to $1.1 billion at March 31, 2026, compared to $1.0 billion at December 31, 2025. The increase was primarily due to loan purchases. The following table presents loan categories by maturity for the period indicated. Actual repayments historically have, and will likely in the future, differ significantly from contractual maturities because individual borrowers generally have the right to prepay loans, with or without prepayment penalties. March 31, 2026 One Year or Less More Than One Year to Five Years More Than Five Years to 15 Years More Than 15 Years Total (Dollars in thousands) Loans receivable held for investment: Single-family $ 4,059 $ 6,012 $ 3,264 $ 6,400 $ 19,735 Multi-family 16,350 24,912 10,965 533,984 586,211 Commercial real estate 11,193 96,960 34,568 25,406 168,127 Church 2,857 2,169 3,896 – 8,922 Construction 53,372 17,914 – – 71,286 Commercial - other 27,938 37,124 21,432 95,794 182,288 SBA loans 57 – 9,248 7,559 16,864 Consumer 17 – – – 17 $ 115,843 $ 185,091 $ 83,373 $ 669,143 $ 1,053,450 Loans maturities after one year with: Fixed rates Single-family $ 5,889 $ 656 $ – $ 6,545 Multi-family 23,255 4,633 – 27,888 Commercial real estate 73,536 23,542 – 97,078 Church – – – – Construction 1,988 – – 1,988 Commercial - other 37,124 16,449 20,620 74,193 SBA loans – 3,359 – 3,359 Consumer – – – – $ 141,792 $ 48,639 $ 20,620 $ 211,051 Variable rates Single-family $ 123 $ 2,608 $ 6,400 $ 9,131 Multi-family 1,657 6,332 533,984 541,973 Commercial real estate 23,424 11,026 25,406 59,856 Church 2,169 3,896 – 6,065 Construction 15,926 – – 15,926 Commercial - other – 4,983 75,174 80,157 SBA loans – 5,889 7,559 13,448 Consumer – – – – $ 43,299 $ 34,734 $ 648,523 $ 726,556 Total $ 185,091 $ 83,373 $ 669,143 $ 937,607 Certain multi-family loans have adjustable-rate features based on the Secured Overnight Financing Rate but are fixed for the first five years. Our experience has shown that these loans typically pay off during the first five years and do not reach the adjustable-rate phase. However, in the current high interest rate environment, we have seen more borrowers maintain their loans instead of paying them off due to interest rate caps which make the adjusted interest rate on their existing loan more desirable than getting a new loan at current interest rates. Multi-family loans in their initial fixed period totaled $408.4 million or 69.7% of our multi-family loan portfolio as of March 31, 2026. 31 Table of Contents Allowance for Credit Losses The Company accounts for credit losses on loans in accordance with ASC 326, which requires the Company to record an estimate of expected lifetime credit losses for loans at the time of origination or acquisition. The ACL is maintained at a level deemed appropriate by management to provide for expected credit losses in the portfolio as of the date of the consolidated statements of financial condition. Estimating expected credit losses requires management to use relevant forward-looking information, including the use of reasonable and supportable forecasts. The measurement of the ACL is performed by collectively evaluating loans with similar risk characteristics. During the quarter ended March 31, 2026, the Company transitioned from using the WARM method for measuring the ACL to a DCF method. Concurrently, the Company also changed the way that qualitative factors are applied in the estimation of the ACL. These changes are intended to improve the precision of the expected credit loss calculations. The Company has a credit portfolio review process designed to detect problem loans. Problem loans are typically those of a substandard or worse internal risk grade, and may consist of loans on non-accrual status, loans that have recently been modified in response to a borrower’s deteriorating financial condition, loans where the likelihood of foreclosure on underlying collateral has increased, collateral dependent loans, and other loans where concern or doubt over the ultimate collectability of all contractual amounts due has become elevated. Such loans may, in the opinion of management, be deemed to no longer possess risk characteristics similar to other loans in the loan portfolio because the specific attributes and risks associated with the loan have likely become unique as the credit quality of the loan deteriorates. As such, these loans may require individual evaluation to determine an appropriate ACL for the loan. When a loan is individually evaluated, the Company typically measures the expected credit loss for the loan based on a discounted cash flow approach, unless the loan has been deemed collateral dependent. The ACL for collateral dependent loans is determined using estimates of the fair value of the underlying collateral, less estimated selling costs. Loans delinquent by 30 days or more, but less than 60 days, increased to $17.5 million at March 31, 2026, from $11.8 million at December 31, 2025, primarily due to one CRE loan and one construction loan, and loan delinquencies for 60 days or more, but less than 90 days, increased to $19.1 million at March 31, 2026, from $367 thousand at December 31, 2025, primarily due to one construction loan. Loans past due greater than 90 days were $11.5 million at March 31, 2026, compared to $3.0 million at December 31, 2025. We believe the ACL is adequate to cover expected losses in the loan portfolio as of March 31, 2026, but there can be no assurance that actual losses will not exceed the estimated amounts. The OCC and the Federal Deposit Insurance Corporation (“FDIC”) periodically review the ACL as an integral part of their examination process. These agencies may require an increase in the ACL based on their judgments of the information available to them at the time of their examinations. The following table details our allocation of the ACL to the various categories of loans held for investment and the percentage of loans in each category to total loans at the dates indicated: March 31, 2026 December 31, 2025 March 31, 2025 Amount Percent of Loans in Each Category to Total Loans Amount Percent of Loans in Each Category to Total Loans Amount Percent of Loans in Each Category to Total Loans (Dollars in thousands) Single-family $ 132 1.87 % $ 132 2.03 % $ 193 2.34 % Multi‑family 4,383 55.65 % 4,782 58.41 % 6,061 63.12 % Commercial real estate 1,703 15.96 % 1,193 16.01 % 1,285 16.48 % Church 64 0.85 % 36 0.89 % 48 0.93 % Construction 1,686 6.77 % 2,039 7.19 % 1,395 9.26 % Commercial - other 1,458 17.30 % 900 13.79 % 1,200 7.75 % SBA loans 83 1.60 % 342 1.68 % 78 0.12 % Total allowance for credit losses $ 9,509 100.00 % $ 9,424 100.00 % $ 10,260 100.00 % 32 Table of Contents Total Liabilities Total liabilities increased by $80.8 million to $1.2 billion at March 31, 2026 from December 31, 2025, primarily due to an increase of $155.5 million in deposits, partially offset by a $72.0 million decrease in FHLB borrowings. Deposits Deposits increased by $155.5 million, or 16.9%, to $1.1 billion at March 31, 2026, from $917.6 million at December 31, 2025. The increase in deposits was attributable to increases of $198.1 million in savings deposits and $11.1 million in certificates of deposit accounts, partially offset by decreases of $48.5 million in liquid deposits (demand, interest checking, and money market accounts), $4.8 million in ICS deposits , and $319 thousand in CDARS deposits. As of March 31, 2026, our uninsured deposits, including deposits from the Bank and other affiliates, represented 46% of our total deposits, compared to 41% as of December 31, 2025. The following table presents the maturity of time deposits, which includes CDARS, as of the dates indicated: Three Months or Less Three to Six Months Six Months to One Year Over One Year Total (In thousands) March 31, 2026 Time deposits of $250,000 or less $ 61,453 $ 79,402 $ 52,942 $ 34,034 $ 227,831 Time deposits of more than $250,000 41,612 16,290 13,893 10,851 82,646 Total $ 103,065 $ 95,692 $ 66,835 $ 44,885 $ 310,477 Not covered by deposit insurance $ 37,612 $ 6,040 $ 11,893 $ 7,850 $ 63,395 December 31, 2025 Time deposits of $250,000 or less $ 65,681 $ 42,989 $ 83,129 $ 2,849 $ 194,648 Time deposits of more than $250,000 79,939 4,491 18,413 2,243 105,086 Total $ 145,620 $ 47,480 $ 101,542 $ 5,092 $ 299,734 Not covered by deposit insurance $ 74,439 $ 2,491 $ 14,913 $ 1,743 $ 93,586 Borrowings The Bank enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities. Under these arrangements, the Bank may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Bank to repurchase the assets. As a result, these repurchase agreements are accounted for as collateralized financing agreements (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities. The obligation to repurchase the securities is reflected as a liability in the Company’s consolidated statements of financial condition, while the securities underlying the repurchase agreements remain in the respective investment securities asset accounts. In other words, there is no offsetting or netting of the investment securities assets with the repurchase agreement liabilities. These agreements mature on a daily basis. As of March 31, 2026, securities sold under agreements to repurchase totaled $81.2 million at an average rate of 3.67%. The fair value of securities pledged for repurchase agreements totaled $83.0 million as of March 31, 2026. As of December 31, 2025, securities sold under agreements to repurchase totaled $80.8 million at an average rate of 3.66%. The fair value of securities pledged for repurchase agreements totaled $83.7 million as of December 31, 2025. One customer relationship accounted for 92% of our balance of securities sold under agreements to repurchase as of March 31, 2026. We expect to maintain this relationship for the foreseeable future. At December 31, 2025, the Company had outstanding advances from the FHLB totaling $72.0 million. There were no advances from the FHLB outstanding as of March 31, 2026. The weighted average interest rate was 3.79% as of December 31, 2025. The weighted average contractual maturity was less than one month as of December 31, 2025. Loans with unpaid balances of $443.1 million and $448.6 million at March 31, 2026 and December 31, 2025, respectively, were pledged to secure FHLB advances. The Company is currently approved by the FHLB of Atlanta to borrow up to 25% of total assets to the extent the Company provides qualifying collateral and holds sufficient FHLB stock. Based on collateral pledged and FHLB stock held, the Company was eligible to borrow $246.0 million as of March 31, 2026. In addition, the Company had additional lines of credit of $10.0 million with other financial institutions as of March 31, 2026 and December 31, 2025. These lines of credit are unsecured, bear interest at the Federal funds rate as of the date of utilization and mature in 30 days. There were no amounts outstanding under these lines of credit as of March 31, 2026 or December 31, 2025. 33 Table of Contents Stockholders’ Equity Broadway Financial Corporation and subsidiary equity was $262.5 million, or 18.4%, of the Company’s total assets, at March 31, 2026, compared to $262.8 million, or 19.5% of the Company’s total assets, at December 31, 2025. Book value per share was $12.10 at March 31, 2026 and $12.28 at December 31, 2025. Capital ratios remain strong with a Community Bank Leverage Ratio of 14.06% at March 31, 2026 and 14.09% at December 31, 2025. In March 2025, the Company issued 88,295 shares of restricted stock to its officers and employees under the Amended and Restated LTIP. Each restricted stock award was valued based on the fair value of the stock on the date of the award. All the shares issued to officers and employees vest over periods ranging from 36 months to 60 months. In March 2025, the Company awarded 23,232 shares of common stock to its directors under the LTIP, which are fully vested. In May 2025, the Company issued 8,183 shares of restricted stock to an officer under the Amended and Restated LTIP. In February 2026, the Company issued 4,936 shares of restricted stock to an officer under the Amended and Restated LTIP. In March 2026, the Company issued 97,298 shares of restricted stock to its officers and employees under the Amended and Restated LTIP. Each restricted stock award was valued based on the fair value of the stock on the date of the award. All the shares issued to officers and employees vest over periods ranging from 36 months to 48 months. In March 2026, the Company awarded 21,400 shares of common stock to its directors under the LTIP, which are fully vested. Liquidity The objective of liquidity management is to ensure that we have the continuing ability to fund operations and meet our obligations on a timely and cost-effective basis. The Bank’s sources of funds include deposits, advances from the FHLB and other borrowings, proceeds from the sale of loans and investment securities, and payments of principal and interest on loans and investment securities. The Bank is currently approved by the FHLB of Atlanta to borrow up to 25% of total assets to the extent the Bank provides qualifying collateral and holds sufficient FHLB stock. Based on FHLB stock held and collateral pledged as of March 31, 2026, the Bank had the ability to borrow $246.0 million from the FHLB of Atlanta. In addition, the Bank had additional lines of credit of $10.0 million with other financial institutions as of March 31, 2026. The Bank’s primary uses of funds include originations of loans, withdrawals of and interest payments on deposits, purchases of investment securities, and the payment of operating expenses. Also, when the Bank has more funds than required for reserve requirements or short-term liquidity needs, the Bank invests excess cash with the Federal Reserve Bank or other financial institutions. The Bank’s liquid assets at March 31, 2026 consisted of $26.6 million in cash and cash equivalents and $189.4 million in securities available-for-sale that were not pledged, compared to $10.5 million in cash and cash equivalents and $161.1 million in securities available-for-sale that were not pledged at December 31, 2025. Currently, we believe the Bank has sufficient liquidity to support growth over the next twelve months and in the longer term. The Bank had commitments to fund $17.7 million in loans that were approved but unfunded as of March 31, 2026. In addition, the Bank had $3.1 million in unfunded line of credit loans and $22.0 million in unfunded construction loans as of March 31, 2026. The Bank has a significant concentration of deposits with five customers that accounted for approximately 40% of its deposits as of March 31, 2026. The Bank also has a significant concentration of short-term borrowings with one customer that accounted for 92% of the outstanding balance of securities sold under agreements to repurchase as of March 31, 2026. The Bank has long-term relationships with these customers and expects to maintain its relationships with them for the foreseeable future. The Company’s liquidity, separate from the Bank, is based primarily on the proceeds from financing transactions, such as the preferred stock sold to the U.S. Treasury in 2022 and the previous private placements completed in December 2016 and April 2021, and dividends received from the Bank in 2024 and 2025. The Bank is currently under no prohibition from paying dividends to the Company but is subject to restrictions as to the amount of the dividends based on normal regulatory guidelines. The Company recorded consolidated net cash outflows from investing activities of $68.2 million during the three months ended March 31, 2026, compared to net cash inflows from investing activities of $31.8 million during the three months ended March 31, 2025. Net cash outflows from investing activities for the three months ended March 31, 2026 were primarily due to purchases of available-for-sale securities of $46.9 million and funding of new loans, net of repayments, of $43.0 million, partially offset by $18.3 million of principal payments on available-for sale-securities. Net cash inflows from investing activities for the three months ended March 31, 2025 were primarily due to principal paydowns on available-for-sale securities of $20.4 million and proceeds from the redemption of FHLB stock of $7.7 million. 34 Table of Contents The Company recorded consolidated net cash inflows from financing activities of $83.2 million during the three months ended March 31, 2026, compared to consolidated net cash outflows from financing activities of $73.1 million during the three months ended March 31, 2025. Net cash inflows from financing activities during the three months ended March 31, 2026 were primarily due to proceeds of FHLB borrowings of $183.3 million and a net increase in deposits of $155.5 million, partially offset by repayments of FHLB borrowings of $255.3 million. Net cash outflows from financing activities during the three months ended March 31, 2025 were primarily due to repayments of FHLB advances of $294.0 million, partially offset by proceeds from FHLB advances of $176.5 million, a net increase in deposits of $31.1 million and a $14.2 million net increase in securities sold under agreements to repurchase. Capital Resources and Regulatory Capital The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary, actions by the regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk-weightings, and other factors. As of March 31, 2026 and December 31, 2025, the Bank exceeded all capital adequacy requirements to which it is subject and meets the qualifications to be considered “well capitalized.” (See Note 11 – Regulatory Matters.) Use of Non-GAAP Financial Measures Management uses non-GAAP measures because they provide information to investors about the underlying operational performance and trends of the Company. These disclosures should not be considered in isolation or as a substitute for results determined in accordance with GAAP and are not necessarily comparable to non-GAAP performance measures which may be presented by other bank holding companies. Management compensates for these limitations by providing detailed reconciliations between GAAP information and the non-GAAP financial measures. The tables below reconcile the GAAP financial measures to the associated non-GAAP financial measures. Tangible book value per common share is a non-GAAP measurement that excludes goodwill and the net unamortized core deposit intangible asset, which were both originally recorded in connection with the CFBanc merger. The Company uses this non-GAAP financial measure to provide supplemental information regarding the Company’s financial condition and operational performance. A reconciliation between common book value and tangible book value per common share is shown as follows: Common Equity Capital Shares Outstanding Per Share Amount (Dollars in thousands) March 31, 2026: Common book value $ 112,480 9,298,949 $ 12.10 Less: Net unamortized core deposit intangible 1,384 Tangible book value $ 111,096 9,298,949 $ 11.95 December 31, 2025: Common book value $ 112,751 9,180,498 $ 12.28 Less: Net unamortized core deposit intangible 1,460 Tangible book value $ 111,291 9,180,498 $ 12.12 The Company calculates net income (loss) before preferred dividends by adding preferred stock dividends to net income (loss) available to common shareholders. Earnings (loss) per common share - diluted before preferred dividends is calculated by dividing net income (loss) before preferred dividends by the weighted average common shares outstanding for diluted earnings (loss) per common share. The Company considers this information important to shareholders because it illustrates net income and earnings per common share - diluted excluding the impact of preferred dividends. For the Three Months Ended March 31, 2026 2025 (Dollars in thousands) Net income (loss) available to common shareholders $ 409 $ (3,439 ) Add: Preferred stock dividends 750 750 Net income (loss) before preferred dividends $ 1,159 $ (2,689 ) Weighted average common shares outstanding for diluted earnings (loss) per common share 8,816,188 8,547,460 Earnings (loss) per common share - diluted before preferred dividends $ 0.13 $ (0.31 ) 35 Table of Contents ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not Applicable