[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20STATEMENTS) This section presents the unaudited consolidated financial statements and management's discussion and analysis for Broadway Financial Corporation [Item 1. Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents Broadway Financial Corporation's unaudited consolidated financial statements for Q1 2023, including balance sheets, income statements, cash flows, and notes [Consolidated Statements of Financial Condition](index=3&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) Total assets increased to **$1.205 billion** as of March 31, 2023, from **$1.184 billion** at December 31, 2022, driven by growth in cash and loans Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$1,205,061** | **$1,184,293** | | Cash and cash equivalents | $29,648 | $16,105 | | Loans receivable, net | $776,053 | $768,046 | | **Total Liabilities** | **$925,193** | **$904,641** | | Deposits | $657,542 | $686,916 | | FHLB advances | $168,810 | $128,344 | | **Total Stockholders' Equity** | **$279,868** | **$279,652** | [Consolidated Statements of Operations and Comprehensive Income (Loss)](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20income%20(loss)) For the three months ended March 31, 2023, the company reported a significant increase in net income to **$1.6 million** from **$982 thousand** in the prior-year period Q1 2023 vs Q1 2022 Performance (in thousands, except EPS) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Total Interest Income | $11,174 | $8,011 | | Total Interest Expense | $2,900 | $839 | | **Net Interest Income** | **$8,274** | **$7,172** | | Provision for credit losses | $88 | $148 | | **Net Income** | **$1,595** | **$982** | | Comprehensive Income (Loss) | $4,018 | $(4,889) | | **EPS (Basic & Diluted)** | **$0.02** | **$0.01** | [Consolidated Statements of Cash Flows](index=5&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the first three months of 2023, cash and cash equivalents increased by **$13.5 million**, driven by financing activities offsetting investing and operating uses Net Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $3,801 | $(1,808) | | Net Cash from Investing Activities | $(6,319) | $(26,296) | | Net Cash from Financing Activities | $16,061 | $42,690 | | **Net Change in Cash** | **$13,543** | **$14,586** | [Notes to Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on accounting policies and balances, including CECL adoption, loan portfolio composition, regulatory capital, and credit risk concentrations - Effective January 1, 2023, the Company adopted ASC 326 (CECL), which replaces the incurred loss model with an expected loss model for financial instruments, resulting in a cumulative effect adjustment, recording a net decrease of **$1.3 million** to the beginning balance of retained earnings[50](index=50&type=chunk)[52](index=52&type=chunk) - The loan portfolio is segmented by real estate (multi-family, single family, commercial, church, construction), commercial, SBA, and consumer loans to assess credit risk and determine the Allowance for Credit Losses (ACL)[45](index=45&type=chunk)[46](index=46&type=chunk)[74](index=74&type=chunk) - The Company and its subsidiary bank met all capital adequacy requirements as of March 31, 2023, and the bank was classified as **"well capitalized"** under regulatory frameworks[144](index=144&type=chunk) - A significant concentration of credit risk exists, with one customer accounting for approximately **10%** of total deposits and another for **75%** of securities sold under agreements to repurchase as of March 31, 2023[179](index=179&type=chunk)[198](index=198&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's Q1 2023 financial performance, highlighting increased net interest income and net income, balance sheet changes, and strong liquidity and capital [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Net income for Q1 2023 significantly increased to **$1.6 million**, driven by a **15.4%** rise in net interest income and an improved net interest margin of **2.96%** Q1 2023 vs Q1 2022 Performance Summary (in thousands) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net Interest Income | $8,274 | $7,172 | | Provision for credit losses | $88 | $148 | | Non-interest Income | $289 | $281 | | Non-interest Expense | $6,206 | $5,960 | | **Net Income** | **$1,595** | **$982** | - Net interest margin increased to **2.96%** for Q1 2023 from **2.76%** for Q1 2022, mainly due to higher yields on interest-earning assets in the rising rate environment and the investment of proceeds from the Series C Preferred Stock which has no associated interest cost[217](index=217&type=chunk)[223](index=223&type=chunk) [Financial Condition](index=31&type=section&id=Financial%20Condition) Total assets grew to **$1.2 billion** due to increased cash and loans, while deposits decreased, leading to higher FHLB borrowings and a lower uninsured deposit ratio - Total assets increased by **$20.8 million** during Q1 2023, primarily due to growth in cash and cash equivalents (**$13.5 million**) and net loans receivable (**$8.0 million**)[216](index=216&type=chunk)[230](index=230&type=chunk) - Deposits decreased by **$29.4 million**, while borrowings (FHLB advances and repurchase agreements) increased by **$47.9 million** to fund operations and loan growth[193](index=193&type=chunk)[271](index=271&type=chunk) - The ratio of uninsured deposits to total deposits decreased from approximately **31%** at December 31, 2022, to **25%** at March 31, 2023[193](index=193&type=chunk) [Allowance for Credit Losses](index=31&type=section&id=Allowance%20for%20Credit%20Losses) The Allowance for Credit Losses (ACL) increased to **$6.3 million** (0.80% of gross loans) primarily due to CECL adoption, with no non-performing loans or charge-offs - The adoption of the CECL methodology on January 1, 2023, was the primary driver for the increase in the ACL, adding **$1.8 million** to the allowance[226](index=226&type=chunk)[93](index=93&type=chunk) Allowance for Credit Losses (ACL) Comparison | Metric | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | ACL Balance (in thousands) | $6,285 | $4,388 | | ACL as % of Gross Loans | 0.80% | 0.57% | - Credit quality remained strong, with no non-performing loans (NPLs) at March 31, 2023, down from **$144 thousand** at year-end 2022, and no charge-offs in Q1 2023[269](index=269&type=chunk)[268](index=268&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with significant FHLB borrowing capacity and remains **"well capitalized"** with a CBLR of **15.69%** - The Bank has significant available liquidity, including **$157.2 million** in additional FHLB borrowing capacity and **$10.0 million** in other lines of credit as of March 31, 2023[258](index=258&type=chunk) - The Bank's Community Bank Leverage Ratio (CBLR) was **15.69%** at March 31, 2023, significantly exceeding the **9.00%** minimum required to be considered well capitalized[256](index=256&type=chunk)[177](index=177&type=chunk) Tangible Book Value Per Share (Non-GAAP) | Metric | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Book Value Per Share | $1.76 | $1.76 | | Tangible Book Value Per Share | $1.38 | $1.38 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section provides disclosures about the company's exposure to market risk, such as interest rate risk [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - Based on an evaluation as of March 31, 2023, the CEO and CFO concluded that the Company's disclosure controls and procedures were effective[279](index=279&type=chunk) - No changes occurred during the quarter ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[202](index=202&type=chunk) [PART II. OTHER INFORMATION](index=36&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section includes other required disclosures, with no material updates regarding legal proceedings, risk factors, or equity sales [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no material legal proceedings - This item is marked as 'Not Applicable'[204](index=204&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) There are no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K - This item is marked as 'None'[264](index=264&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents and certifications by the CEO and CFO - Lists exhibits filed with the report, such as the Certificate of Incorporation, Bylaws, and CEO/CFO certifications[281](index=281&type=chunk)

PART I [Business Overview](index=5&type=section&id=Item%201.%20Business) Broadway Financial Corporation, a Black-led Minority Depository Institution, focuses on attracting deposits and originating real estate loans, serving historically excluded communities - The company completed its merger with CFBanc Corporation on April 1, 2021, forming City First Bank, National Association[15](index=15&type=chunk) - The company operates as a Delaware public benefit corporation, focusing on equitable economic development in historically excluded communities[21](index=21&type=chunk) - The principal business involves attracting deposits and originating loans, primarily for multi-family properties and commercial real estate[25](index=25&type=chunk) - In June 2022, the company received a **$150.0 million** investment from the U.S. Treasury's Emergency Capital Investment Program through Series C Preferred Stock issuance[22](index=22&type=chunk)[49](index=49&type=chunk) [Lending Activities](index=6&type=section&id=Lending%20Activities) Lending focuses on mortgage loans, primarily multi-family residential properties, with gross loans increasing to **$771.7 million** in 2022 Gross Loan Portfolio Composition (2022 vs. 2021) | Loan Type | 2022 Amount ($ thousands) | 2022 Percent of Total | 2021 Amount ($ thousands) | 2021 Percent of Total | | :--- | :--- | :--- | :--- | :--- | | Multi-family | 502,141 | 65.08% | 393,704 | 60.36% | | Commercial real estate | 114,574 | 14.85% | 93,193 | 14.29% | | Commercial | 64,841 | 8.40% | 46,539 | 7.13% | | Construction | 40,703 | 5.27% | 32,072 | 4.92% | | Single family | 30,038 | 3.89% | 45,372 | 6.96% | | Church | 15,780 | 2.04% | 22,503 | 3.45% | | SBA Loans | 3,601 | 0.47% | 18,837 | 2.89% | | **Gross Loans Total** | **771,689** | **100.00%** | **652,220** | **100.00%** | Loan Origination Summary (2022 vs. 2021) | Origination Type | 2022 ($ thousands) | 2021 ($ thousands) | | :--- | :--- | :--- | | Multi-family | 141,625 | 167,097 | | Commercial real estate | 75,302 | 43,567 | | Construction | 29,628 | 24,884 | | Commercial | 26,877 | 4,942 | | **Total Loans Originated** | **273,432** | **266,987** | - The net loan portfolio totaled **$768.0 million**, representing **64.9%** of total assets at December 31, 2022[31](index=31&type=chunk) [Asset Quality](index=11&type=section&id=Asset%20Quality) Asset quality improved in 2022, with non-performing assets decreasing to **$144 thousand** and the allowance for loan losses increasing Non-Performing Assets (NPAs) | Metric | Dec 31, 2022 ($ thousands) | Dec 31, 2021 ($ thousands) | | :--- | :--- | :--- | | Total non-accrual loans | 144 | 684 | | Real estate owned | 0 | 0 | | **Total NPAs** | **144** | **684** | | NPAs as % of total assets | 0.01% | 0.06% | Allowance for Loan Losses (ALLL) Activity | Metric | 2022 ($ thousands) | 2021 ($ thousands) | | :--- | :--- | :--- | | Beginning Balance | 3,391 | 3,215 | | Loan Loss Provision | 997 | 176 | | Charge-offs / Recoveries | 0 | 0 | | **Ending Balance** | **4,388** | **3,391** | | ALLL as % of gross loans | 0.57% | 0.52% | - Criticized loans (Watch and Special Mention) increased to **$47.8 million** from **$16.0 million**, primarily because the bank classifies all newly originated construction loans as 'Watch' until a performance history is established[107](index=107&type=chunk)[137](index=137&type=chunk) [Investment Activities](index=15&type=section&id=Investment%20Activities) The available-for-sale securities portfolio grew to **$328.7 million** in 2022, driven by ECIP program proceeds Available-for-Sale Securities Portfolio (Fair Value) | Security Type | Dec 31, 2022 ($ thousands) | Dec 31, 2021 ($ thousands) | | :--- | :--- | :--- | | U.S. Treasuries | 160,589 | 17,951 | | Federal agency mortgage-backed securities | 74,169 | 70,030 | | Federal agency debt | 51,425 | 37,988 | | Federal agency CMO | 26,100 | 9,287 | | SBA pools | 12,269 | 16,225 | | Municipal bonds | 4,197 | 4,915 | | **Total** | **328,749** | **156,396** | - The securities portfolio totaled **$328.7 million**, representing **27.76%** of total assets at December 31, 2022[144](index=144&type=chunk) - All investment securities are classified as available-for-sale; none are classified as held-to-maturity[116](index=116&type=chunk)[145](index=145&type=chunk) [Sources of Funds](index=18&type=section&id=Sources%20of%20Funds) Deposits are the primary funding source, supplemented by FHLB advances, which increased to **$128.3 million** in 2022 - Uninsured deposits totaled approximately **$212.9 million** at December 31, 2022, down from **$265.8 million** at the end of 2021[124](index=124&type=chunk) FHLB Advances Summary | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Balance outstanding at year-end | $128.3M | $86.0M | | Weighted average interest rate at year-end | 3.74% | 1.85% | - The company utilizes the Certificate of Deposit Account Registry Service (CDARS) for reciprocal deposits, which totaled **$74.6 million** at year-end 2022 and are not considered brokered deposits[148](index=148&type=chunk) [Human Capital](index=20&type=section&id=Human%20Capital) The company employed 83 full-time and one part-time employees, focusing on diversity, talent, and competitive compensation - As of December 31, 2022, the company had 83 full-time and one part-time employees[132](index=132&type=chunk) - The company's workforce is diverse, with over **80%** of employees self-identifying as minority and approximately **64%** as women[186](index=186&type=chunk) - The company provides competitive compensation and benefits, including base salary, incentive plans, restricted stock awards, a 401(k) with employer match, and an employee stock ownership plan (ESOP)[157](index=157&type=chunk) [Regulation](index=21&type=section&id=Regulation) The company and its bank subsidiary are comprehensively regulated, with the bank 'well capitalized' and rated 'outstanding' for CRA Community Bank Leverage Ratio (CBLR) | Date | Actual Ratio | Minimum to be Well Capitalized | | :--- | :--- | :--- | | Dec 31, 2022 | 15.75% | 9.00% | | Dec 31, 2021 | 9.32% | 8.50% | - The company's most recent Community Reinvestment Act (CRA) performance was rated "outstanding" by the OCC in 2022[229](index=229&type=chunk) - The bank's deposits are insured by the FDIC up to the statutory limit, which is currently **$250,000** per depositor[195](index=195&type=chunk) [Item 1A. Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) The company faces macroeconomic, real estate concentration, and operational risks, compounded by challenges from its public benefit corporation status [Risks Relating to Our Business](index=26&type=section&id=Risks%20Relating%20to%20Our%20Business) Business risks include macroeconomic impacts, real estate market downturns, inadequate loan loss allowance, intense competition, and technology system failures - The macroeconomic environment, including inflation and rising interest rates, poses significant challenges to the company and its clients[1](index=1&type=chunk)[213](index=213&type=chunk) - A downturn in the real estate market in Southern California and Washington, D.C. could seriously impair the loan portfolio, as most loans are secured by properties in these areas[216](index=216&type=chunk) - The allowance for loan losses may not be adequate to cover actual losses, and the determination of the allowance is a subjective process subject to regulatory review[241](index=241&type=chunk)[218](index=218&type=chunk) - The company is dependent on its information technology systems and those of third-party providers, making it vulnerable to failures, interruptions, and cybersecurity breaches[222](index=222&type=chunk)[267](index=267&type=chunk) [Risks Relating to the Company Being a Public Benefit Corporation](index=30&type=section&id=Risks%20Relating%20to%20the%20Company%20Being%20a%20Public%20Benefit%20Corporation) As a public benefit corporation, balancing stockholder and public benefit interests may impact short-term value and increase litigation risk - The company's focus on specific public benefit purposes could negatively impact financial performance, as directors must balance stockholder interests with those of other stakeholders[4](index=4&type=chunk)[270](index=270&type=chunk) - Directors have a fiduciary duty to consider the company's public benefit purposes, and in a conflict, there is no guarantee that a resolution would be in favor of stockholders' interests[271](index=271&type=chunk) - Stockholders of a Delaware public benefit corporation have specific rights to file lawsuits claiming directors failed to balance stockholder and public benefit interests, potentially increasing litigation risk[251](index=251&type=chunk) [Item 1B. Unresolved Staff Comments](index=32&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the Securities and Exchange Commission - None[316](index=316&type=chunk) [Item 2. Properties](index=32&type=section&id=Item%202.%20Properties) The company operates through two administrative offices and three branch offices in Washington, D.C. and Southern California, deemed adequate for current needs - The company has three branch offices: one in Washington, D.C., one in Los Angeles, and one in Inglewood, California[255](index=255&type=chunk) Property Details | Location | Type | Status | | :--- | :--- | :--- | | 1432 U Street NW, Washington, D.C. | Admin & Branch | Owned | | 4601 Wilshire Blvd, Los Angeles, CA | Admin/Loan Center | Leased | | 170 N. Market Street, Inglewood, CA | Branch/Loan Service | Owned | | 4001 South Figueroa Street, Los Angeles, CA | Branch Office | Owned | [Item 3. Legal Proceedings](index=33&type=section&id=Item%203.%20Legal%20Proceedings) The company does not believe any currently pending or threatened legal matters would have a material adverse effect on its financial position or operations - In management's opinion, the disposition of any currently pending or threatened litigation would not have a material adverse effect on the company's financial position or results of operations[276](index=276&type=chunk) [Item 4. Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's business - Not Applicable[277](index=277&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=33&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under 'BYFC', with no cash dividends paid since May 2010 or equity repurchases during the period - The company's common stock trades on the Nasdaq Capital Market under the symbol "BYFC"[257](index=257&type=chunk) - The company suspended its regular cash dividend policy in May 2010 and has not paid cash dividends on its common stock since[257](index=257&type=chunk)[325](index=325&type=chunk) - There were no repurchases of equity securities during the period[327](index=327&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company reported **$5.6 million** net income in 2022, a turnaround from a **$4.1 million** loss in 2021, driven by increased net interest income and lower non-interest expenses Key Performance Metrics | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net Income (Loss) | $5.6 million | ($4.1 million) | | Earnings (Loss) Per Share | $0.08 | ($0.07) | | Net Interest Income | $32.9 million | $21.0 million | | Return on Average Assets | 0.52% | (0.54)% | | Return on Average Equity | 2.19% | (4.46)% | [Comparison of Operating Results for the Years Ended December 31, 2022 and 2021](index=35&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Years%20Ended%20December%2031%2C%202022%20and%202021) Operating results improved in 2022, with net interest income increasing by **$11.9 million** to **$32.9 million**, and non-interest expenses decreasing by **$4.0 million** - Net interest income before provision for loan losses increased by **$11.9 million**, or **56.5%**, to **$32.9 million** in 2022[6](index=6&type=chunk) - The net interest margin increased to **3.05%** in 2022 from **2.42%** in 2021, due to higher yields on assets and a lower cost of funds[53](index=53&type=chunk)[306](index=306&type=chunk) - Non-interest expenses decreased by **$4.0 million**, primarily due to decreases in compensation, information services, and professional services, which had included one-time Merger-related costs in 2021[295](index=295&type=chunk) - Non-interest income decreased by **$2.0 million**, mainly due to a non-recurring **$1.8 million** CDFI grant recognized in 2021[294](index=294&type=chunk) [Comparison of Financial Condition at December 31, 2022 and 2021](index=41&type=section&id=Comparison%20of%20Financial%20Condition%20at%20December%2031%2C%202022%20and%202021) Total assets increased by **$90.8 million** to **$1.2 billion**, driven by investments and loans, while deposits decreased and equity rose from preferred stock issuance - Total assets increased by **$90.8 million** to **$1.2 billion**[411](index=411&type=chunk) - Net loans receivable increased by **$119.5 million** to **$768.0 million**, driven by **$273.4 million** in new originations[388](index=388&type=chunk) - Deposits decreased by **$101.1 million** to **$686.9 million**, partly due to a **$73.1 million** withdrawal by a single large customer and depositors seeking higher rates[423](index=423&type=chunk) - Stockholders' equity increased to **$279.5 million** from **$141.0 million**, primarily due to the **$150 million** preferred stock sale to the U.S. Treasury[447](index=447&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity and capital, with substantial cash, unpledged securities, and FHLB borrowing capacity, remaining 'well capitalized' - The bank is approved to borrow up to **25%** of total assets from the FHLB and had an additional borrowing capacity of **$70.6 million** at year-end 2022[430](index=430&type=chunk) - The bank must comply with capital standards established by the OCC and is considered "well capitalized"[403](index=403&type=chunk) Book Value Per Common Share (Dec 31, 2022) | Metric | Per Share Amount | | :--- | :--- | | Common book value | $1.76 | | Tangible book value (non-GAAP) | $1.38 | [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the company is not required to provide the information requested by this item - As a smaller reporting company, the company is not required to provide the information requested by this item pursuant to Item 305(e) of Regulation S-K[438](index=438&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=47&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section refers to the Index to Consolidated Financial Statements of Broadway Financial Corporation and Subsidiaries included later in the report - Refers to the Index to Consolidated Financial Statements of Broadway Financial Corporation and Subsidiaries[439](index=439&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=47&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[440](index=440&type=chunk) [Item 9A. Controls and Procedures](index=47&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2022 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[458](index=458&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2022[442](index=442&type=chunk) [Item 9B. Other Information](index=48&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[464](index=464&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=49&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2023 Proxy Statement - The required information is incorporated by reference from the Company's Proxy Statement[486](index=486&type=chunk) [Item 11. Executive Compensation](index=49&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the 2023 Proxy Statement - The required information is incorporated by reference from the Company's Proxy Statement[444](index=444&type=chunk)[467](index=467&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=49&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership by beneficial owners and management is incorporated by reference from the 2023 Proxy Statement - The required information is incorporated by reference from the Company's Proxy Statement[487](index=487&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=49&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related party transactions, and director independence is incorporated by reference from the 2023 Proxy Statement - The required information is incorporated by reference from the Company's Proxy Statement[444](index=444&type=chunk)[487](index=487&type=chunk) [Item 14. Principal Accountant Fees and Services](index=49&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information concerning principal accountant fees and services is incorporated by reference from the 2023 Proxy Statement - The required information is incorporated by reference from the Company's Proxy Statement[444](index=444&type=chunk)[467](index=467&type=chunk) PART IV [Item 15. Exhibits and Financial Statement Schedules](index=50&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section provides an index to Consolidated Financial Statements and a list of all exhibits filed, with schedules omitted as not applicable - This item lists all exhibits filed with the annual report, including organizational documents, material contracts, and certifications[469](index=469&type=chunk)[446](index=446&type=chunk)[470](index=470&type=chunk) - Financial Statement Schedules have been omitted because they are not applicable or the required information is already present in the Consolidated Financial Statements or Notes[445](index=445&type=chunk) Financial Statements and Supplementary Data [Report of Independent Registered Public Accounting Firm](index=54&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The auditor issued an unqualified opinion on the financial statements, identifying the allowance for loan losses as a critical audit matter - The auditor issued an unqualified opinion, stating the financial statements are presented fairly in accordance with U.S. GAAP[498](index=498&type=chunk) - The allowance for loan losses was identified as a critical audit matter due to the significant management judgment required[513](index=513&type=chunk)[479](index=479&type=chunk) [Consolidated Financial Statements](index=56&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements present the company's financial position, results of operations, and cash flows for 2022 and 2021 Consolidated Balance Sheet Highlights (As of Dec 31, 2022) | Account | Amount ($ thousands) | | :--- | :--- | | Total Assets | 1,184,293 | | Net Loans Receivable | 768,046 | | Total Deposits | 686,916 | | Total Liabilities | 904,641 | | Total Stockholders' Equity | 279,482 | Consolidated Income Statement Highlights (For Year Ended Dec 31, 2022) | Account | Amount ($ thousands) | | :--- | :--- | | Net Interest Income | 32,860 | | Provision for Loan Losses | 997 | | Non-interest Income | 1,195 | | Non-interest Expense | 24,939 | | **Net Income** | **5,706** | [Notes to Consolidated Financial Statements](index=62&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosure of significant accounting policies and further information on financial statement balances and activities [Note 1 – Summary of Significant Accounting Policies](index=62&type=section&id=Note%201%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines principal accounting policies, including consolidation, estimates, and accounting for cash, investment securities, and loans receivable - The company uses the incurred loss methodology for its allowance for loan losses and will adopt the Current Expected Credit Loss (CECL) standard in the first quarter of 2023[575](index=575&type=chunk) - All debt securities are classified as available-for-sale and carried at fair value, with unrealized gains and losses reported in other comprehensive income[372](index=372&type=chunk) [Note 2 – Business Combination](index=68&type=section&id=Note%202%20%E2%80%93%20Business%20Combination) This note details the April 1, 2021 merger with CFBanc Corporation, including total consideration, goodwill, and intangible asset recognition - The merger with CFBanc on April 1, 2021, involved total consideration of approximately **$66.3 million**[588](index=588&type=chunk) - The company recognized **$26.0 million** of goodwill and a **$3.3 million** core deposit intangible asset as a result of the merger[589](index=589&type=chunk)[421](index=421&type=chunk) [Note 5 – Loans Receivable Held for Investment](index=72&type=section&id=Note%205%20%E2%80%93%20Loans%20Receivable%20Held%20for%20Investment) This note provides a detailed breakdown of the loan portfolio and credit quality, including gross loans, allowance for loan losses, and non-accrual loans Loan Portfolio by Type (Dec 31, 2022) | Loan Type | Gross Amount ($ thousands) | | :--- | :--- | | Multi-family | 502,141 | | Commercial real estate | 114,574 | | Commercial – other | 64,841 | | Construction | 40,703 | | Single family | 30,038 | | **Total Gross Loans** | **771,689** | - Total non-accrual loans were **$144 thousand** at December 31, 2022, compared to **$684 thousand** at year-end 2021[630](index=630&type=chunk) - As of December 31, 2022, loans classified as troubled debt restructurings (TDRs) totaled **$1.7 million**[632](index=632&type=chunk) [Note 18 – Regulatory Matters](index=88&type=section&id=Note%2018%20%E2%80%93%20Regulatory%20Matters) This note discusses capital adequacy requirements, with the bank's CBLR at **15.75%** exceeding the **9.00%** minimum to be 'well capitalized' Community Bank Leverage Ratio (CBLR) | Date | Actual Ratio | Minimum to be Well Capitalized | | :--- | :--- | :--- | | Dec 31, 2022 | 15.75% | 9.00% | | Dec 31, 2021 | 9.32% | 8.50% | - The bank was "well capitalized" under the regulatory framework for prompt corrective action as of December 31, 2022[713](index=713&type=chunk)

PART I. FINANCIAL STATEMENTS [Consolidated Statements of Financial Condition](index=3&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) The company's total assets grew to $1.17 billion, driven by securities and loans, while stockholders' equity increased significantly Financial Condition Summary | Metric | Sep 30, 2022 (in thousands) | Dec 31, 2021 (in thousands) | Change (in thousands) | % Change | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :--------- | | Total Assets | $1,169,634 | $1,093,505 | $76,129 | 6.96% | | Cash and cash equivalents | $52,217 | $231,520 | $(179,303) | -77.45% | | Securities available-for-sale | $332,745 | $156,396 | $176,349 | 112.76% | | Loans receivable held for investment, net | $722,685 | $648,513 | $74,172 | 11.44% | | Total Liabilities | $892,052 | $952,405 | $(60,353) | -6.34% | | Deposits | $768,511 | $788,052 | $(19,541) | -2.48% | | FHLB advances | $32,888 | $85,952 | $(53,064) | -61.74% | | Total Stockholders' Equity | $277,431 | $141,000 | $136,431 | 96.76% | | Non-Cumulative Redeemable Perpetual Preferred stock, Series C | $150,000 | $0 | $150,000 | N/A | - **Total assets increased by $76.1 million**, or 6.96%, from December 31, 2021, to September 30, 2022[10](index=10&type=chunk) [Consolidated Statements of Operations and Comprehensive Income (Loss)](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) Net income and net interest income rose for Q3 2022, though comprehensive income suffered from unrealized securities losses Operations for Three Months Ended September 30 | Metric (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Change | % Change | | :------------------------------------ | :------------------------------ | :------------------------------ | :----- | :------- | | Total interest income | $9,228 | $6,909 | $2,319 | 33.57% | | Total interest expense | $620 | $918 | $(298) | -32.46% | | Net interest income | $8,608 | $5,991 | $2,617 | 43.68% | | Loan loss provision | $1,021 | $365 | $656 | 179.73% | | Net interest income after loan loss provision | $7,587 | $5,626 | $1,961 | 34.86% | | Total non-interest income | $365 | $609 | $(244) | -40.07% | | Total non-interest expense | $6,072 | $5,978 | $94 | 1.57% | | Income (loss) before income taxes | $1,880 | $257 | $1,623 | 631.52% | | Income tax expense (benefit) | $534 | $51 | $483 | 947.06% | | Net income (loss) attributable to Broadway Financial Corporation | $1,318 | $182 | $1,136 | 624.18% | | Other comprehensive income (loss), net of tax | $(8,567) | $(460) | $(8,107) | 1762.39% | | Comprehensive income (loss) | $(7,249) | $(278) | $(6,971) | 2507.55% | | Earnings (loss) per common share-basic | $0.02 | $0.00 | $0.02 | N/A | | Earnings (loss) per common share-diluted | $0.02 | $0.00 | $0.02 | N/A | Operations for Nine Months Ended September 30 | Metric (in thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | Change | % Change | | :------------------------------------ | :----------------------------- | :----------------------------- | :----- | :------- | | Total interest income | $25,608 | $17,570 | $8,038 | 45.75% | | Total interest expense | $1,790 | $2,913 | $(1,123) | -38.55% | | Net interest income | $23,818 | $14,657 | $9,161 | 62.50% | | Loan loss provision | $592 | $446 | $146 | 32.74% | | Net interest income after loan loss provision | $23,226 | $14,211 | $9,015 | 63.44% | | Total non-interest income | $907 | $2,924 | $(2,017) | -69.05% | | Total non-interest expense | $18,298 | $19,979 | $(1,681) | -8.41% | | Income (loss) before income taxes | $5,835 | $(2,844) | $8,679 | N/A | | Income tax expense (benefit) | $1,654 | $(297) | $1,951 | N/A | | Net income (loss) attributable to Broadway Financial Corporation | $4,130 | $(2,604) | $6,734 | N/A | | Other comprehensive income (loss), net of tax | $(17,917) | $161 | $(18,078) | N/A | | Comprehensive income (loss) | $(13,787) | $(2,443) | $(11,344) | 464.35% | | Earnings (loss) per common share-basic | $0.06 | $(0.05) | $0.11 | N/A | | Earnings (loss) per common share-diluted | $0.06 | $(0.05) | $0.11 | N/A | [Consolidated Statements of Cash Flows](index=5&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The company saw positive operating cash flow but significant outflows from investing, offset by inflows from financing activities Cash Flow Summary for Nine Months Ended September 30 | Cash Flow Activity (in thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :---------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $5,328 | $3,969 | | Net cash (used in) provided by investing activities | $(275,522) | $31,141 | | Net cash provided by financing activities | $90,891 | $77,468 | | Net change in cash and cash equivalents | $(179,303) | $112,578 | | Cash and cash equivalents at end of the period | $52,217 | $208,687 | - Cash acquired in merger (April 1, 2021) was **$84,745 thousand**, significantly impacting 2021 investing activities[14](index=14&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity rose substantially due to a $150 million preferred stock issuance, despite comprehensive losses Stockholders' Equity Changes (Q3 2022) | Metric (in thousands) | Balance at July 1, 2022 | Balance at Sep 30, 2022 | Change | | :------------------------------------ | :---------------------- | :---------------------- | :----- | | Preferred Stock NonVoting | $150,000 | $150,000 | $0 | | Common Stock Voting | $504 | $508 | $4 | | Common Stock NonVoting | $257 | $253 | $(4) | | Additional Paid-in Capital | $143,427 | $143,457 | $30 | | Accumulated Other Comprehensive Income (Loss) | $(9,901) | $(18,468) | $(8,567) | | Retained Earnings | $6,470 | $7,788 | $1,318 | | Total Stockholders' Equity | $284,757 | $277,582 | $(7,175) | - For the nine months ended September 30, 2022, the Company issued **$150 million in preferred shares** and converted $3 million of preferred shares to common shares, significantly impacting the equity structure[20](index=20&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on accounting policies, business combinations, securities, loans, and other financial statement items [NOTE (1) – Basis of Financial Statement Presentation](index=9&type=section&id=NOTE%20(1)%20%E2%80%93%20Basis%20of%20Financial%20Statement%20Presentation) The company adheres to GAAP for interim reporting and plans to adopt the CECL model for credit losses in Q1 2023 - The Company qualifies as a Smaller Reporting Company (SRC) and plans to implement **ASU 2016-13 (CECL model) in the first quarter of 2023**[28](index=28&type=chunk) - Other ASUs (2019-04, 2019-05, 2022-02) related to credit losses and troubled debt restructurings are **not expected to have a significant impact** on the consolidated financial statements[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) [NOTE (2) – Business Combination](index=10&type=section&id=NOTE%20(2)%20%E2%80%93%20Business%20Combination) The merger with CFBanc Corporation on April 1, 2021, was accounted for as an acquisition, resulting in $26.0 million of goodwill - **CFBanc Merger completed on April 1, 2021**, with Broadway Financial Corporation as the surviving entity[32](index=32&type=chunk) CFBanc Merger Summary | Metric | CFBanc at Acquisition Date (April 1, 2021) | | :------------------------------------ | :----------------------------------------- | | Total Assets | $471.0 million | | Gross Loans | $227.7 million | | Total Deposits | $353.7 million | | Total Consideration Transferred | ~$66.3 million | | Goodwill Recognized | $26.0 million | [NOTE (3) – Earnings Per Share of Common Stock](index=11&type=section&id=NOTE%20(3)%20%E2%80%93%20Earnings%20Per%20Share%20of%20Common%20Stock) The company computes earnings per share using the two-class method, showing positive EPS for Q3 and YTD 2022 Earnings Per Share (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income (loss) attributable to Broadway Financial Corporation | $1,318 | $182 | $4,130 | $(2,604) | | Basic earnings per share | $0.02 | $0.00 | $0.06 | $(0.05) | | Diluted earnings per share | $0.02 | $0.00 | $0.06 | $(0.05) | | Weighted average common shares outstanding for basic EPS | 72,555,282 | 71,222,869 | 72,386,900 | 56,403,545 | | Weighted average common shares outstanding for diluted EPS | 72,963,834 | 71,450,951 | 72,829,050 | 56,403,545 | - Stock options for **450,000 shares were anti-dilutive** for the nine months ended September 30, 2021, due to a net loss and thus not included in diluted EPS calculation[43](index=43&type=chunk) [NOTE (4) – Securities](index=12&type=section&id=NOTE%20(4)%20%E2%80%93%20Securities) The available-for-sale securities portfolio grew significantly but incurred substantial unrealized losses due to rising interest rates Available-for-Sale Securities Summary | Metric (in thousands) | Sep 30, 2022 | Dec 31, 2021 | Change | % Change | | :------------------------------------ | :----------- | :----------- | :----- | :------- | | Total available-for-sale securities (Fair Value) | $332,745 | $156,396 | $176,349 | 112.76% | | Gross Unrealized Gains | $62 | $475 | $(413) | -86.95% | | Gross Unrealized Losses | $(25,875) | $(1,008) | $(24,867) | 2466.96% | - As of September 30, 2022, investment securities with a market value of **$70.0 million were pledged as collateral** for securities sold under agreements to repurchase[44](index=44&type=chunk) Unrealized Loss Position by Duration | Unrealized Loss Position (Sep 30, 2022, in thousands) | Fair Value | Unrealized Losses | | :---------------------------------------------------- | :--------- | :---------------- | | Less than 12 Months | $272,368 | $(18,606) | | 12 Months or Longer | $51,549 | $(7,269) | | Total | $323,917 | $(25,875) | [NOTE (5) – Loans Receivable Held for Investment](index=13&type=section&id=NOTE%20(5)%20%E2%80%93%20Loans%20Receivable%20Held%20for%20Investment) Gross loans receivable grew to $727.9 million, driven by multi-family and construction loans, with an increased loan loss allowance Loan Portfolio Composition | Loan Type (in thousands) | Sep 30, 2022 | Dec 31, 2021 | Change | % Change | | :------------------------------------ | :----------- | :----------- | :----- | :------- | | Single family | $30,781 | $45,372 | $(14,591) | -32.16% | | Multi-family | $459,234 | $393,704 | $65,530 | 16.65% | | Commercial real estate | $91,576 | $93,193 | $(1,617) | -1.73% | | Church | $16,683 | $22,503 | $(5,820) | -25.86% | | Construction | $57,845 | $32,072 | $25,773 | 80.35% | | Commercial – other | $66,516 | $46,539 | $19,977 | 42.92% | | SBA loans | $3,654 | $18,837 | $(15,183) | -80.60% | | Gross loans receivable | $727,862 | $653,746 | $74,116 | 11.34% | | Allowance for loan losses | $(3,983) | $(3,391) | $(592) | 17.46% | Allowance for Loan Losses Activity | Allowance for Loan Losses Activity (in thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :------------------------------------------------ | :----------------------------- | :----------------------------- | | Beginning balance | $3,391 | $3,215 | | Provision for loan losses | $592 | $446 | | Ending balance | $3,983 | $3,661 | Past Due Loans | Past Due Loans (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------------------------------ | :----------- | :----------- | | 30-59 Days Past Due | $4,357 | $0 | | 60-89 Days Past Due | $5,876 | $0 | | Greater than 90 Days Past Due | $0 | $2,423 | | Total Past Due | $10,233 | $2,423 | Non-Accrual Loans | Non-Accrual Loans (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------------------------------ | :----------- | :----------- | | Church | $608 | $684 | | Total Non-Accrual Loans | $608 | $684 | - Loans classified as Troubled Debt Restructurings (TDRs) totaled **$2.0 million** at September 30, 2022, with $155 thousand in non-accrual status and $1.9 million on accrual status[67](index=67&type=chunk) - As of September 30, 2022, total loans in risk categories (excluding "Pass") amounted to **$56.2 million**[68](index=68&type=chunk)[72](index=72&type=chunk) [NOTE (6) – Goodwill and Intangible Assets](index=19&type=section&id=NOTE%20(6)%20%E2%80%93%20Goodwill%20and%20Intangible%20Assets) Goodwill of $26.0 million and a core deposit intangible were recognized from the CFBanc merger, with no impairment found Goodwill and Intangibles Summary | Metric (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------------------------------ | :----------- | :----------- | | Goodwill | $25,858 | $25,996 | | Core Deposit Intangible, net | $2,610 | $2,936 | Estimated Future Amortization Expense | Estimated Amortization Expense for Core Deposit Intangible (in thousands) | | :---------------------------------------------------------------------- | | 2022 (remaining) | $110 | | 2023 | $390 | | 2024 | $336 | | 2025 | $315 | | 2026 | $304 | | Thereafter | $1,155 | | Total | $2,610 | [NOTE (7) – Borrowings](index=20&type=section&id=NOTE%20(7)%20%E2%80%93%20Borrowings) Total borrowings were reshaped by a significant decrease in FHLB advances and an increase in repurchase agreements Borrowings Summary | Borrowing Type (in thousands) | Sep 30, 2022 | Dec 31, 2021 | Change | % Change | | :------------------------------------ | :----------- | :----------- | :----- | :------- | | Securities sold under agreements to repurchase | $65,407 | $51,960 | $13,447 | 25.88% | | FHLB advances | $32,888 | $85,952 | $(53,064) | -61.74% | | Notes payable (CFC 45) | $14,000 | $14,000 | $0 | 0.00% | - FHLB advances had a weighted average interest rate of **1.34%** at September 30, 2022, down from 1.85% at December 31, 2021, with a weighted average contractual maturity of 29 months[77](index=77&type=chunk) - Securities sold under agreements to repurchase had an average rate of **0.24%** at September 30, 2022, collateralized by $70.0 million in investment securities[76](index=76&type=chunk) [NOTE (8) – Fair Value](index=20&type=section&id=NOTE%20(8)%20%E2%80%93%20Fair%20Value) The company uses a fair value hierarchy for financial instruments, with most securities valued using Level 2 inputs Assets Measured at Fair Value on a Recurring Basis | Assets Measured at Fair Value on a Recurring Basis (Sep 30, 2022, in thousands) | Level 1 | Level 2 | Level 3 | Total | | :------------------------------------------------------------------------------ | :------ | :------ | :------ | :---- | | Securities available-for-sale | $0 | $332,745 | $0 | $332,745 | Fair Value of Financial Instruments Not Recorded at Fair Value | Financial Instruments Not Recorded at Fair Value on a Recurring Basis (Sep 30, 2022, in thousands) | Carrying Value | Fair Value (Level 1) | Fair Value (Level 2) | Fair Value (Level 3) | Total Fair Value | | :----------------------------------------------------------------------------------------------- | :------------- | :------------------- | :------------------- | :------------------- | :--------------- | | Loans receivable held for investment | $722,685 | $0 | $0 | $603,731 | $603,731 | | Deposits | $768,511 | $0 | $682,420 | $0 | $682,420 | | Federal Home Loan Bank advances | $32,888 | $0 | $31,581 | $0 | $31,581 | | Securities sold under agreements to repurchase | $65,407 | $0 | $62,716 | $0 | $62,716 | | Note payable | $14,000 | $0 | $0 | $14,000 | $14,000 | [NOTE (9) – Stock-based Compensation](index=22&type=section&id=NOTE%20(9)%20%E2%80%93%20Stock-based%20Compensation) The company issued restricted stock awards under its Long-Term Incentive Plan, resulting in stock-based compensation expense - Under the 2018 LTIP, 901,781 shares have been awarded, with **391,328 shares remaining available** as of September 30, 2022[92](index=92&type=chunk) Stock-based Compensation Expense | Stock-based Compensation Expense (in thousands) | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2021 | | :---------------------------------------------- | :------------------------------ | :----------------------------- | :------------------------------ | :----------------------------- | | Director compensation expense-common stock | $0 | $84 | $0 | $46 | | Restricted stock awards (officers/employees) | $35 | $93 | $200 | $361 | | Stock options | $0 | $0 | $0 | $7 | Stock Option Activity | Stock Option Activity | Sep 30, 2022 | Sep 30, 2021 | | :-------------------------- | :----------- | :----------- | | Outstanding at beginning of period | 450,000 | 450,000 | | Forfeited or expired during period | (200,000) | 0 | | Outstanding at end of period | 250,000 | 450,000 | | Exercisable at end of period | 250,000 | 450,000 | | Weighted Average Exercise Price | $1.62 | $1.62 | [NOTE (10) – ESOP Plan](index=23&type=section&id=NOTE%20(10)%20%E2%80%93%20ESOP%20Plan) The company maintains an Employee Stock Option Plan where shares are held in suspense and released upon loan payments ESOP Share Summary | ESOP Shares | Sep 30, 2022 | Dec 31, 2021 | | :-------------------------- | :----------- | :----------- | | Allocated to participants | 1,102,583 | 1,065,275 | | Suspense shares | 491,425 | 562,391 | | Total ESOP shares | 1,594,008 | 1,637,902 | | Fair value of unearned shares (in thousands) | $555 | $1,040 | - ESOP compensation expense was **$56 thousand** for the nine months ended September 30, 2022, compared to $81 thousand for the same period in 2021[99](index=99&type=chunk) [NOTE (11) – Stockholders' Equity and Regulatory Matters](index=23&type=section&id=NOTE%20(11)%20%E2%80%93%20Stockholders%27%20Equity%20and%20Regulatory%20Matters) A $150 million preferred stock issuance under the ECIP boosted Tier 1 capital, keeping the Bank 'well capitalized' - On June 7, 2022, the Company issued 150,000 shares of Series C Preferred Stock for **$150.0 million** from the U.S. Treasury under the Emergency Capital Investment Program (ECIP), treated as Tier 1 Capital[101](index=101&type=chunk) - The Series C Preferred Stock has a **zero percent dividend rate for the first two years**, then a floor of 0.50% and a ceiling of 2.00%, based on qualified lending[104](index=104&type=chunk) Regulatory Capital Summary | Regulatory Capital (Sep 30, 2022, in thousands) | Actual Amount | Actual Ratio | Minimum Required Ratio | | :---------------------------------------------- | :------------ | :----------- | :--------------------- | | Community Bank Leverage Ratio (CBLR) | $169,909 | 14.70% | 9.00% | - The Bank was **"well capitalized"** as of September 30, 2022, meeting all capital adequacy requirements[109](index=109&type=chunk) [NOTE (12) – Income Taxes](index=24&type=section&id=NOTE%20(12)%20%E2%80%93%20Income%20Taxes) A valuation allowance is maintained on deferred tax assets due to limitations on the use of net operating losses - At September 30, 2022, a **$370 thousand valuation allowance** was maintained on deferred tax assets due to Section 382 limitations on Net Operating Losses (NOLs) from private placements in 2021[112](index=112&type=chunk) [NOTE (13) – Concentration of Credit Risk](index=25&type=section&id=NOTE%20(13)%20%E2%80%93%20Concentration%20of%20Credit%20Risk) The Bank has significant credit risk concentrations in deposits and short-term borrowings with single customers - One customer accounted for approximately **17% of total deposits** as of September 30, 2022[114](index=114&type=chunk) - One customer accounted for **79% of outstanding securities sold under agreements to repurchase** as of September 30, 2022[114](index=114&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=26&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) [Critical Accounting Policies and Estimates](index=26&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Key accounting policies involving significant judgment include Allowance for Loan Losses, Goodwill, and Fair Value Measurements - Key critical accounting policies identified by management include: * Allowance for Loan Losses (ALLL) * Business Combinations * Acquired Loans (PCI and non-PCI) * Goodwill and Intangible Assets * Income Taxes * Fair Value Measurements[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) [Overview](index=27&type=section&id=Overview) A $150.0 million preferred stock issuance under ECIP boosted total assets to $1.2 billion and reshaped the balance sheet - The Company completed a private placement of **$150.0 million in Series C Preferred Stock** under the Emergency Capital Investment Program (ECIP) in June 2022[129](index=129&type=chunk) Balance Sheet Overview | Metric (in millions) | Sep 30, 2022 | Dec 31, 2021 | Change | | :------------------- | :----------- | :----------- | :----- | | Total Assets | $1,170 | $1,094 | $76 | | Total Liabilities | $892 | $952 | $(60) | - The increase in total assets was primarily due to growth in **investment securities available-for-sale ($176.3 million)** and **net loans ($74.2 million)**, partially offset by a decrease in cash and cash equivalents ($179.3 million)[131](index=131&type=chunk) Results of Operations [Net Interest Income](index=28&type=section&id=Net%20Interest%20Income) Net interest income and margin grew significantly due to higher asset yields, despite an increased loan loss provision Net Interest Income for Three Months Ended September 30 | Metric (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Change | % Change | | :------------------------------------ | :------------------------------ | :------------------------------ | :----- | :------- | | Net interest income | $8,608 | $5,991 | $2,617 | 43.68% | | Net interest margin | 3.02% | 2.43% | 0.59% | 24.28% | | Interest income and fees on loans receivable | $6,520 | $6,296 | $224 | 3.56% | | Interest income on available-for-sale securities | $2,069 | $457 | $1,612 | 352.73% | | Other interest income | $639 | $156 | $483 | 309.62% | | Interest expense on deposits | $474 | $446 | $28 | 6.28% | | Interest expense on borrowings | $146 | $472 | $(326) | -69.07% | Net Interest Income for Nine Months Ended September 30 | Metric (in thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | Change | % Change | | :------------------------------------ | :----------------------------- | :----------------------------- | :----- | :------- | | Net interest income | $23,818 | $14,657 | $9,161 | 62.50% | | Net interest margin | 2.93% | 2.26% | 0.67% | 29.65% | | Interest income and fees on loans receivable | $20,603 | $16,240 | $4,363 | 26.87% | | Interest income on available-for-sale securities | $3,416 | $953 | $2,463 | 258.45% | | Other interest income | $1,589 | $377 | $1,212 | 321.49% | | Interest expense on deposits | $1,173 | $1,306 | $(133) | -10.18% | | Interest expense on borrowings | $617 | $1,607 | $(990) | -61.61% | [Loan loss provision](index=32&type=section&id=Loan%20loss%20provision) The loan loss provision increased due to portfolio growth and a rise in special mention and substandard loans Loan Loss Provision Summary | Metric (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Loan loss provision | $1,021 | $365 | $592 | $446 | - The ALLL increased to **$4.0 million** as of September 30, 2022, from $3.4 million as of December 31, 2021[157](index=157&type=chunk) - **No loan charge-offs** were recorded during the three- and nine-month periods ended September 30, 2022 and 2021[157](index=157&type=chunk) [Non-interest Income](index=32&type=section&id=Non-interest%20Income) Non-interest income decreased significantly due to a non-recurring CDFI Fund grant received in the prior year Non-interest Income Summary | Metric (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total non-interest income | $365 | $609 | $907 | $2,924 | - The decrease in non-interest income was mainly due to lower grant income from the U.S. Treasury's CDFI Fund, which included a **non-recurring benefit of $2.0 million** in the nine months ended September 30, 2021[158](index=158&type=chunk)[159](index=159&type=chunk) [Non-interest Expense](index=32&type=section&id=Non-interest%20Expense) Non-interest expense decreased for the nine-month period due to lower merger-related costs compared to 2021 Non-interest Expense Summary | Metric (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total non-interest expense | $6,072 | $5,978 | $18,298 | $19,979 | - For the three months ended September 30, 2022, non-interest expenses increased due to higher **compensation and benefits ($106 thousand)** and **professional services ($245 thousand)**[160](index=160&type=chunk) - For the nine months ended September 30, 2022, non-interest expenses **decreased by $1.7 million**, primarily due to lower compensation and benefits ($1.2 million) and professional services ($885 thousand) compared to 2021, which included merger-related costs[161](index=161&type=chunk) [Income Taxes](index=32&type=section&id=Income%20Taxes) The company recorded income tax expense in 2022, a reversal from the tax benefit recorded in the prior year Income Tax Summary | Metric (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Income tax expense (benefit) | $534 | $51 | $1,654 | $(297) | | Effective tax rate | 28.40% | 19.84% | 28.3% | N/A (loss) | - The effective tax rate for Q3 2022 (**28.40%**) reflects changes in assumptions for estimating annual income tax expense[162](index=162&type=chunk) - Income tax expense for Q3 2021 included a **$370 thousand increase in the valuation allowance** on deferred tax assets due to Section 382 limitations on NOLs[162](index=162&type=chunk) Financial Condition [Total Assets](index=33&type=section&id=Total%20Assets) Total assets grew to $1.2 billion, driven by investments in securities and loans, funded by ECIP proceeds and cash Total Assets Summary | Metric | Sep 30, 2022 (in millions) | Dec 31, 2021 (in millions) | Change (in millions) | % Change | | :----------- | :------------------------- | :------------------------- | :------------------- | :--------- | | Total Assets | $1,169.6 | $1,093.5 | $76.1 | 6.96% | - The increase in total assets was primarily due to growth in **investment securities available-for-sale ($176.3 million)** and **net loans ($74.2 million)**, partially offset by a decrease of $179.3 million in cash and cash equivalents[165](index=165&type=chunk) [Securities Available-For-Sale](index=33&type=section&id=Securities%20Available-For-Sale) The securities portfolio expanded to $332.7 million, primarily funded by ECIP proceeds, but fair value declined Securities Available-For-Sale Summary | Metric | Sep 30, 2022 (in millions) | Dec 31, 2021 (in millions) | Change (in millions) | % Change | | :-------------------------- | :------------------------- | :------------------------- | :------------------- | :--------- | | Securities available-for-sale | $332.7 | $156.4 | $176.3 | 112.76% | - The increase was driven by deploying **$15.0 million of ECIP funds** and investing liquidity into higher-yielding short-term securities[166](index=166&type=chunk) - The increase was partially offset by a **$9.4 million increase in accumulated other comprehensive loss** due to a decline in fair value from rising market interest rates[166](index=166&type=chunk) [Loans Receivable](index=33&type=section&id=Loans%20Receivable) Loans receivable grew by $74.2 million, led by strong originations in multi-family and commercial real estate loans Loans Receivable Summary | Metric | Sep 30, 2022 (in millions) | Dec 31, 2021 (in millions) | Change (in millions) | % Change | | :----------------- | :------------------------- | :------------------------- | :------------------- | :--------- | | Loans receivable | $727.9 | $653.7 | $74.2 | 11.35% | - Loan originations totaled **$141.1 million for multi-family loans** and **$62.3 million for commercial real estate and commercial loans** during the first nine months of 2022[167](index=167&type=chunk) - Loan payoffs and repayments totaled **$132.4 million** during the first nine months of 2022[167](index=167&type=chunk) [Allowance for Loan Losses](index=33&type=section&id=Allowance%20for%20Loan%20Losses) The ALLL increased to $4.0 million, reflecting loan growth, while the ratio of ALLL to non-performing loans improved ALLL and Asset Quality Summary | Metric | Sep 30, 2022 (in millions) | Dec 31, 2021 (in millions) | | :------------------------------------ | :------------------------- | :------------------------- | | ALLL | $4.0 | $3.4 | | ALLL as % of gross loans held for investment | 0.55% | 0.52% | | ALLL to NPLs ratio | 655.1% | 495.8% | | Impaired loans | $2.4 | $2.3 | | Delinquent loans (>30 days) | $10.2 | $2.4 | | Non-performing loans (NPLs) | $0.608 | $0.684 | - **No recoveries or charge-offs** were recorded during the three- or nine-month periods ending September 30, 2022 or 2021[173](index=173&type=chunk) [Goodwill and Intangible Assets](index=34&type=section&id=Goodwill%20and%20Intangible%20Assets) Goodwill and intangible assets from the CFBanc merger remained stable with no impairment identified Goodwill and Intangibles Summary | Metric (in millions) | Sep 30, 2022 | Dec 31, 2021 | | :-------------------------- | :----------- | :----------- | | Goodwill | $25.9 | $26.0 | | Core deposit intangible | $2.6 | $2.9 | - An assessment of goodwill impairment was performed as of June 30, 2022, and **no impairment was determined**[181](index=181&type=chunk) - Amortization expense for the core deposit intangible was **$109 thousand for the three months** and **$326 thousand for the nine months** ended September 30, 2022[180](index=180&type=chunk) [Total Liabilities](index=34&type=section&id=Total%20Liabilities) Total liabilities decreased by $60.4 million, primarily due to reductions in FHLB borrowings and deposits Total Liabilities Summary | Metric | Sep 30, 2022 (in millions) | Dec 31, 2021 (in millions) | Change (in millions) | % Change | | :---------------- | :------------------------- | :------------------------- | :------------------- | :--------- | | Total Liabilities | $892.1 | $952.4 | $(60.3) | -6.33% | - The decrease was largely due to a decrease in **FHLB borrowings and deposits**, partially offset by an increase in securities sold under agreements to repurchase[182](index=182&type=chunk) [Deposits](index=34&type=section&id=Deposits) Deposits decreased by $19.6 million due to shifts in deposit types, with a notable concentration from one customer Deposits Summary | Metric | Sep 30, 2022 (in millions) | Dec 31, 2021 (in millions) | Change (in millions) | % Change | | :----------- | :------------------------- | :------------------------- | :------------------- | :--------- | | Deposits | $768.5 | $788.1 | $(19.6) | -2.49% | - Decreases included **$29.3 million in CDARS deposits**, **$69.1 million in liquid deposits**, and **$9.8 million in other certificates of deposit accounts**, partially offset by an **$88.6 million increase in ICS deposits**[183](index=183&type=chunk) - One customer relationship accounted for approximately **17% of deposits** at September 30, 2022[183](index=183&type=chunk) [Borrowings](index=34&type=section&id=Borrowings) Borrowings shifted from higher-rate FHLB advances to repurchase agreements, lowering the overall cost of funds Borrowings Summary | Borrowing Type (in millions) | Sep 30, 2022 | Dec 31, 2021 | Change (in millions) | % Change | | :------------------------------------ | :----------- | :----------- | :------------------- | :--------- | | FHLB advances | $32.9 | $86.0 | $(53.1) | -61.74% | | Securities sold under agreements to repurchase | $65.4 | $52.0 | $13.4 | 25.77% | | Notes payable | $14.0 | $14.0 | $0.0 | 0.00% | - FHLB advances decreased due to the early payoff of **$40.0 million in higher-rate advances**, reducing the weighted average rate to 1.34% from 1.85%[185](index=185&type=chunk) - One customer relationship accounted for **79% of the outstanding balance** of securities sold under agreements to repurchase as of September 30, 2022[188](index=188&type=chunk) [Stockholders' Equity](index=35&type=section&id=Stockholders%27%20Equity) Stockholders' equity significantly increased to $277.4 million, driven by the $150.0 million preferred stock issuance Stockholders' Equity Summary | Metric | Sep 30, 2022 (in millions) | Dec 31, 2021 (in millions) | Change (in millions) | % Change | | :------------------------------------ | :------------------------- | :------------------------- | :------------------- | :--------- | | Stockholders' Equity | $277.4 | $141.0 | $136.4 | 96.74% | - The increase was primarily due to the **$150.0 million private placement of Series C Preferred Stock**, partially offset by a **$17.9 million decrease in accumulated other comprehensive income (AOCI)** from unrealized losses on available-for-sale securities[190](index=190&type=chunk) Per Share Metrics | Per Share Metric | Sep 30, 2022 | Dec 31, 2021 | Change | | :-------------------------- | :----------- | :----------- | :----- | | Book value per share | $1.74 | $1.92 | $(0.18) | | Tangible book value per share | $1.35 | N/A | N/A | - The Bank's Community Bank Leverage Ratio (CBLR) was **14.70%** at September 30, 2022[191](index=191&type=chunk) [Liquidity](index=36&type=section&id=Liquidity) The company maintains adequate liquidity through cash, unpledged securities, and significant FHLB borrowing capacity Liquid Assets Summary | Liquid Assets (in millions) | Sep 30, 2022 | Dec 31, 2021 | | :------------------------------------ | :----------- | :----------- | | Cash and cash equivalents | $52.2 | $231.5 | | Securities available-for-sale (unpledged) | $153.6 | $52.4 | - The Bank has an additional **$101.7 million in borrowing capacity from the FHLB** of Atlanta and **$11.0 million in lines of credit** with other financial institutions as of September 30, 2022[197](index=197&type=chunk) Cash Flow Summary | Cash Flow Activities (in millions) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash from operating activities | $5.3 | $4.0 | | Net cash from investing activities | $(275.4) | $31.1 | | Net cash from financing activities | $90.9 | $77.5 | [Capital Resources and Regulatory Capital](index=37&type=section&id=Capital%20Resources%20and%20Regulatory%20Capital) The Bank exceeded all minimum capital requirements and is considered 'well capitalized' under regulatory standards - As of September 30, 2022, the Bank exceeded all capital adequacy requirements and was considered **"well capitalized"** under the regulatory framework[205](index=205&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=38&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section is marked as "Not Applicable" as there are no material changes to market risk disclosures [ITEM 4. CONTROLS AND PROCEDURES](index=38&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) [Evaluation of Disclosure Controls and Procedures](index=38&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of the end of the reporting period - The Company's CEO and CFO concluded that **disclosure controls and procedures were effective** as of September 30, 2022[207](index=207&type=chunk) [Changes in Internal Control Over Financial Reporting](index=38&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) No material changes to internal control over financial reporting occurred during the most recent fiscal quarter - **No material changes** in internal control over financial reporting occurred during the three months ended September 30, 2022[208](index=208&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=38&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) Management acknowledges that all control systems have inherent limitations and provide reasonable, not absolute, assurance - Any control system, no matter how well designed and operated, can provide only **reasonable, not absolute, assurance** that its objectives will be met[209](index=209&type=chunk) PART II. OTHER INFORMATION [Item 1. LEGAL PROCEEDINGS](index=39&type=section&id=Item%201.%20LEGAL%20PROCEEDINGS) The company reports no material pending legal proceedings [Item 1A. RISK FACTORS](index=39&type=section&id=Item%201A.%20RISK%20FACTORS) This section is marked as "Not Applicable" as there are no material changes from the previous annual report [Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=39&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company reports no unregistered sales of equity securities during the period [Item 3. DEFAULTS UPON SENIOR SECURITIES](index=39&type=section&id=Item%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The company reports no defaults upon its senior securities [Item 4. MINE SAFETY DISCLOSURES](index=39&type=section&id=Item%204.%20MINE%20SAFETY%20DISCLOSURES) This section is marked as "Not Applicable" to the company's operations [Item 5. OTHER INFORMATION](index=39&type=section&id=Item%205.%20OTHER%20INFORMATION) The company reports no other material information for the period [Item 6. EXHIBITS](index=39&type=section&id=Item%206.%20EXHIBITS) This section lists all exhibits filed with the report, including certifications and corporate governance documents - Key exhibits include Amended and Restated Certificate of Incorporation, Bylaws, Certificate of Designations of Series C Preferred Stock, and **CEO/CFO certifications (Sarbanes-Oxley Act Sections 302 and 906)**[211](index=211&type=chunk) [SIGNATURES](index=40&type=section&id=SIGNATURES) The report is duly signed and certified by the Chief Executive Officer and Chief Financial Officer

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 Title of each class: Trading Symbol(s) Name of each exchange on which registered: Common Stock, par value $0.01 per share (including attached preferred stock purchase rights) BYFC Nasdaq Capital Market FORM 10-Q (Mark One) ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For transition period from__________ to___________ Commission file number 001-39043 BROADWAY FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) Delaware 95-4547287 (State or other ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K (Mark one) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to___________ Commission file number 001-39043 BROADWAY FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) Delaware 95-4547287 (State or other ...

[PART I. FINANCIAL STATEMENTS](index=3&type=section&id=PART%20I.%20FINANCIAL%20STATEMENTS) [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) The consolidated financial statements reflect significant post-merger growth, with total assets reaching $1.06 billion and stockholders' equity at $143.3 million [Consolidated Statements of Financial Condition](index=3&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) The company's financial condition expanded significantly post-merger, with total assets reaching $1.06 billion and stockholders' equity at $143.3 million | Financial Metric (in thousands) | September 30, 2021 (Unaudited) | December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$1,063,561** | **$483,378** | | Cash and cash equivalents | $208,687 | $96,109 | | Loans receivable, net | $642,198 | $360,129 | | Securities available-for-sale | $157,628 | $10,698 | | Goodwill | $25,996 | $0 | | **Total Liabilities** | **$920,182** | **$434,493** | | Deposits | $749,645 | $315,630 | | FHLB advances | $91,070 | $110,500 | | **Total Stockholders' Equity** | **$143,323** | **$48,885** | [Consolidated Statements of Operations and Comprehensive Income (Loss)](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) The company reported Q3 2021 net income of $206 thousand, a reversal from a prior-year loss, but a nine-month net loss of $2.5 million due to merger expenses | Metric (in thousands) | Q3 2021 | Q3 2020 | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | :--- | :--- | | **Net Interest Income** | **$5,991** | **$3,377** | **$14,657** | **$9,306** | | Loan loss provision | $365 | $0 | $446 | $29 | | Total non-interest income | $609 | $206 | $2,924 | $645 | | Total non-interest expense | $5,978 | $3,732 | $19,979 | $10,283 | | **Net Income (Loss)** | **$206** | **($244)** | **($2,547)** | **($61)** | | Earnings (loss) per share-basic | $0.00 | ($0.01) | ($0.05) | $0.00 | [Consolidated Statements of Cash Flows](index=5&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents increased by $112.6 million for the nine months ended September 30, 2021, driven by positive contributions from operating, investing, and financing activities | Cash Flow Activity (in thousands) | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash from operating activities | $3,913 | ($39,763) | | Net cash from investing activities | $31,197 | $35,566 | | Net cash from financing activities | $77,468 | $58,347 | | **Net change in cash and cash equivalents** | **$112,578** | **$54,150** | | Cash acquired in merger | $84,745 | $0 | [Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity dramatically increased from $48.9 million to $143.4 million, primarily driven by stock issuance for the CFBanc merger and a private placement - Total stockholders' equity grew from **$48.9 million** at the end of 2020 to **$143.4 million** as of September 30, 2021[20](index=20&type=chunk) - Key drivers of the equity increase were the issuance of common stock (**$63.3 million**) and preferred stock (**$3.0 million**) for the business combination, and proceeds from a private placement (**$30.8 million**)[20](index=20&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail significant accounting policies and events, primarily the CFBanc merger, which led to goodwill and intangible asset recognition, a private placement, and the company maintaining a "well capitalized" status - The merger with CFBanc Corporation was completed on April 1, 2021, adding approximately **$471.0 million** in total assets, **$227.7 million** in gross loans, and **$353.7 million** in total deposits[39](index=39&type=chunk) - The merger was accounted for as an acquisition, resulting in the recognition of **$26.0 million** in goodwill and a **$3.3 million** core deposit intangible asset[43](index=43&type=chunk)[99](index=99&type=chunk) - On April 6, 2021, the company completed a private placement, selling **18.47 million** shares of common stock for an aggregate purchase price of **$32.9 million**[52](index=52&type=chunk) - As of September 30, 2021, the Bank was **"well capitalized"** with a Community Bank Leverage Ratio (CBLR) of **9.41%**, exceeding the **8.50%** minimum requirement[130](index=130&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion highlights the transformative CFBanc merger, increasing total assets to over $1 billion, despite a nine-month net loss of $2.6 million due to merger costs, while maintaining a strong capital position [Overview and COVID-19 Impact](index=34&type=section&id=Overview%20and%20COVID-19%20Impact) The CFBanc merger fundamentally altered the company's financial position, increasing total assets to $1.064 billion, with a nine-month net loss of $2.6 million due to merger costs, while COVID-19 had no impact on loan modifications or delinquencies - Total assets increased by **$580.2 million** to **$1.064 billion** at September 30, 2021, primarily due to the CFBanc merger[145](index=145&type=chunk) - The net loss for the first nine months of 2021 was **$2.6 million**, primarily due to **$5.6 million** in merger-related costs[149](index=149&type=chunk) - As of September 30, 2021, the Bank had no loan modification requests or delinquencies related to COVID-19[142](index=142&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Net interest income for Q3 2021 rose to $6.0 million, though net interest margin declined to 2.43%, while non-interest expenses significantly increased to $6.0 million due to merger-related operating costs - Q3 2021 net interest income increased by **$2.6 million** year-over-year to **$6.0 million**, driven by growth in average interest-earning assets from the merger[150](index=150&type=chunk) - The net interest margin for Q3 2021 decreased to **2.43%** from **2.82%** in Q3 2020, primarily due to lower rates earned on significantly higher cash balances[158](index=158&type=chunk) - Non-interest expense for Q3 2021 increased by **$2.3 million** year-over-year to **$6.0 million**, due to the inclusion of the acquired bank's operations and one-time data processing conversion costs[175](index=175&type=chunk) [Financial Condition](index=40&type=section&id=Financial%20Condition) The company's balance sheet expanded significantly post-merger, with loans receivable increasing to $642.2 million, deposits growing to $749.6 million, and stockholders' equity rising to $143.3 million - Loans receivable increased by **$282.1 million** in the first nine months of 2021, mainly due to **$225.9 million** in loans acquired in the merger[181](index=181&type=chunk) - The ALLL was **$3.7 million**, or **0.57%** of gross loans, at September 30, 2021, compared to **$3.2 million**, or **0.88%**, at year-end 2020. The ratio decrease is due to merger accounting for acquired loans[184](index=184&type=chunk) - Deposits increased to **$749.6 million** from **$315.6 million**, driven by **$353.7 million** assumed in the merger and **$83.6 million** in organic growth[201](index=201&type=chunk) - Stockholders' equity increased to **$143.3 million**, with tangible book value per share at **$1.55**, adjusted for goodwill and intangible assets from the merger[208](index=208&type=chunk)[209](index=209&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $208.7 million in cash and $49.7 million in unpledged securities, and robust capital resources, being classified as "well capitalized" with a 9.41% CBLR - Liquid assets at September 30, 2021, consisted of **$208.7 million** in cash and cash equivalents and **$49.7 million** in unpledged securities available-for-sale[213](index=213&type=chunk) - The Bank had additional borrowing capacity of **$16.9 million** from the FHLB and **$11.0 million** in lines of credit with other institutions[212](index=212&type=chunk) - The Bank is considered **"well capitalized,"** with a Community Bank Leverage Ratio (CBLR) of **9.41%** as of September 30, 2021, exceeding all regulatory requirements[218](index=218&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section on market risk disclosures is stated as not applicable for the current quarterly report filing - The company states that Quantitative and Qualitative Disclosures About Market Risk are not applicable to this report[219](index=219&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) As of September 30, 2021, management concluded that disclosure controls and procedures were effective, with ongoing integration of CFBanc's internal controls following the merger - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2021[219](index=219&type=chunk) - The company is in the process of integrating CFBanc's operations and internal controls following the merger, which may be excluded from the scope of the year-end internal control assessment[221](index=221&type=chunk) [PART II. OTHER INFORMATION](index=47&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Items 1-6. Other Information](index=47&type=section&id=Items%201-6.%20Other%20Information) This section reports no material events, including no legal proceedings, unregistered sales of equity securities, or defaults on senior securities, with risk factors and mine safety disclosures noted as not applicable - The company reported no information for the following items: Legal Proceedings, Unregistered Sales of Equity Securities and Use of Proceeds, and Defaults Upon Senior Securities[225](index=225&type=chunk) - Risk Factors and Mine Safety Disclosures were noted as not applicable[225](index=225&type=chunk)

PART I. FINANCIAL INFORMATION This section presents the company's consolidated financial statements and management's analysis of its financial condition and results of operations [Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20(Unaudited)) The unaudited consolidated financial statements for the period ended June 30, 2021, reflect the significant impact of the CFBanc merger, leading to substantial increases in assets, liabilities, and equity, a Q2 2021 net income of $701 thousand, and a six-month net loss of $2.8 million due to merger-related expenses [Consolidated Statements of Financial Condition](index=3&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) As of June 30, 2021, total assets more than doubled to $1.04 billion, primarily due to the CFBanc merger, which significantly increased loans, securities, and cash, and recognized $26.0 million in goodwill, while total liabilities grew to $897.5 million and stockholders' equity nearly tripled to $143.5 million Consolidated Balance Sheet Highlights (in thousands) | Financial Metric | June 30, 2021 | December 31, 2020 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **$1,040,998** | **$483,378** | **+115.4%** | | Cash and cash equivalents | $210,383 | $96,109 | +118.9% | | Loans receivable, net | $614,718 | $360,129 | +70.7% | | Goodwill | $25,996 | $0 | N/A | | **Total Liabilities** | **$897,503** | **$434,493** | **+106.6%** | | Deposits | $705,041 | $315,630 | +123.4% | | **Total Stockholders' Equity** | **$143,463** | **$48,885** | **+193.4%** | [Consolidated Statements of Operations and Comprehensive Income (Loss)](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) For Q2 2021, net income attributable to the corporation was $701 thousand, boosted by higher net interest income and a $1.8 million CDFI grant, but the first six months resulted in a net loss of $2.8 million, primarily due to substantial non-interest expenses including merger-related costs Key Operating Results (in thousands, except per share data) | Metric | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $5,821 | $3,031 | $8,666 | $5,929 | | Non-interest Income | $2,192 | $242 | $2,315 | $439 | | Non-interest Expense | $5,374 | $3,402 | $14,001 | $6,551 | | **Net Income (Loss) Attributable to BFC** | **$701** | **$216** | **($2,786)** | **$183** | | **EPS - Diluted** | **$0.01** | **$0.01** | **($0.06)** | **$0.01** | - Non-interest income in Q2 2021 was significantly boosted by a **$1.826 million** grant from the Community Development Financial Institution (CDFI) Fund[11](index=11&type=chunk) [Consolidated Statements of Cash Flows](index=5&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2021, net cash from financing activities was a strong inflow of $58.5 million, driven by stock sales and deposit increases, while investing activities provided $58.4 million, primarily from cash acquired in the merger, and operating activities used $2.6 million, leading to an overall increase of $114.3 million in cash and cash equivalents Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Category | 2021 | 2020 | | :--- | :--- | :--- | | Net Cash from Operating Activities | ($2,570) | ($49,154) | | Net Cash from Investing Activities | $58,362 | $23,392 | | Net Cash from Financing Activities | $58,482 | $50,044 | | **Net Change in Cash** | **$114,274** | **$24,282** | | Cash at End of Period | $210,383 | $39,848 | - Investing activities were dominated by **$84.7 million** in cash acquired from the merger[13](index=13&type=chunk) - Financing activities were primarily driven by **$30.8 million** in net proceeds from a stock sale and a **$35.7 million** net increase in deposits[13](index=13&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity increased dramatically from $48.9 million to $143.5 million by June 30, 2021, primarily due to stock issuance for the CFBanc merger and a subsequent private placement, partially offset by a $2.8 million net loss - Total stockholders' equity grew from **$48.9 million** on January 1, 2021, to **$143.5 million** on June 30, 2021[19](index=19&type=chunk) - Key drivers of the equity increase were the issuance of **$3.0 million** in preferred stock and **$63.3 million** in common stock for the business combination, and an additional **$30.8 million** from a private placement[17](index=17&type=chunk)[19](index=19&type=chunk) - The growth in equity was partially offset by a net loss of **$2.8 million** for the six-month period[19](index=19&type=chunk) [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail significant accounting events, dominated by the CFBanc merger, including $26.0 million in goodwill, a $32.9 million capital raise, the expanded loan and securities portfolios, the bank's strong CBLR capital position, and a $370 thousand impairment on deferred tax assets due to an ownership change - The company completed its merger with CFBanc Corporation on April 1, 2021, acquiring **$471.0 million** in total assets, **$227.7 million** in gross loans, and **$353.7 million** in total deposits[42](index=42&type=chunk)[43](index=43&type=chunk)[46](index=46&type=chunk) - The transaction was valued at approximately **$66.3 million** and resulted in **$26.0 million** of goodwill[42](index=42&type=chunk)[43](index=43&type=chunk)[46](index=46&type=chunk) - On April 6, 2021, the company raised **$32.9 million** in gross proceeds (**$30.8 million** net) by selling **18.47 million** shares of common stock in private placements at **$1.78 per share**[56](index=56&type=chunk) - Gross loans receivable increased to **$618.0 million** from **$363.3 million** at year-end 2020, primarily due to the merger[71](index=71&type=chunk) - The allowance for loan losses (ALLL) stood at **$3.3 million**, or **0.53%** of gross loans[71](index=71&type=chunk)[196](index=196&type=chunk) - The bank elected to adopt the Community Bank Leverage Ratio (CBLR) and reported a ratio of **10.10%** at June 30, 2021, exceeding the **8.5%** minimum to be considered 'well capitalized'[138](index=138&type=chunk)[140](index=140&type=chunk) - A **$370 thousand** impairment was recorded on deferred tax assets due to limitations on the use of Net Operating Losses (NOLs) under Section 382 of the tax code, triggered by the ownership change from the private placements[143](index=143&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion centers on the transformative CFBanc merger, which more than doubled assets to over $1 billion, highlighting a profitable Q2 driven by expanded net interest income and a CDFI grant, but a H1 net loss due to $5.6 million in merger costs, with a successful $30.8 million post-merger capital raise strengthening the bank's 'well capitalized' position [Overview](index=34&type=section&id=MD%26A%20Overview) The company's financial landscape was fundamentally altered by the CFBanc merger, increasing total assets to $1.041 billion, resulting in a profitable Q2 2021 but a H1 net loss of $2.8 million due to $5.6 million in merger-related expenses, with a successful $30.8 million post-merger private placement bolstering capital - The merger with CFBanc Corporation on April 1, 2021, was the most significant event, increasing total assets from **$483.4 million** to **$1.041 billion**[154](index=154&type=chunk)[156](index=156&type=chunk) - A net loss of **$2.8 million** for the first six months of 2021 was primarily due to **$5.6 million** in merger-related costs[160](index=160&type=chunk) - The company raised **$32.9 million** in gross proceeds (**$30.8 million** net) from private placements immediately following the merger[159](index=159&type=chunk) [Results of Operations](index=35&type=section&id=MD%26A%20Results%20of%20Operations) Net interest income for Q2 2021 nearly doubled to $5.8 million due to the merger, though net interest margin compressed to 2.33%, while non-interest income surged to $2.2 million from a CDFI grant, and H1 non-interest expenses rose to $14.0 million due to $5.6 million in merger costs, resulting in a high 71.3% effective tax rate in Q2 from deferred tax asset impairment Net Interest Income and Margin | Period | Net Interest Income | Net Interest Margin | | :--- | :--- | :--- | | Q2 2021 | $5.8 million | 2.33% | | Q2 2020 | $3.0 million | 2.43% | | H1 2021 | $8.7 million | 2.35% | | H1 2020 | $5.9 million | 2.45% | - Non-interest income for Q2 2021 was **$2.2 million**, primarily due to a **$1.8 million** grant from the CDFI Fund[185](index=185&type=chunk) - Non-interest expense for H1 2021 totaled **$14.0 million**, which included **$5.6 million** in merger-related expenses[188](index=188&type=chunk) - The company recorded a high effective tax rate of **71.3%** in Q2 2021, reflecting a **$370 thousand** valuation allowance on deferred tax assets due to tax code limitations triggered by the recent capital raise[189](index=189&type=chunk) [Financial Condition](index=41&type=section&id=MD%26A%20Financial%20Condition) The company's financial condition strengthened significantly post-merger, with total assets reaching $1.041 billion, an ALLL of $3.3 million (0.53% of gross loans), low NPLs at $735 thousand, deposits growing to $705.0 million, and stockholders' equity increasing to $143.5 million, resulting in a tangible book value of $1.55 per share - The ALLL as a percentage of gross loans decreased to **0.53%** at June 30, 2021, from **0.88%** at December 31, 2020, because no ALLL is associated with the loans acquired in the merger[196](index=196&type=chunk) - Non-performing loans (NPLs) decreased to **$735 thousand** at June 30, 2021, from **$787 thousand** at year-end 2020[198](index=198&type=chunk) - Stockholders' equity increased to **$143.5 million**[218](index=218&type=chunk) - Tangible book value per share was **$1.55** as of June 30, 2021, after adjusting for **$26.0 million** in goodwill and **$3.2 million** in net core deposit intangible[219](index=219&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=MD%26A%20Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with $210.4 million in cash and $24.6 million FHLB borrowing capacity, while capital resources are robust, with the Bank 'well capitalized' and reporting a CBLR of 10.10% at June 30, 2021, exceeding the minimum requirement - The Bank's liquid assets at June 30, 2021 consisted of **$210.4 million** in cash and cash equivalents and **$68.4 million** in unpledged securities available-for-sale[223](index=223&type=chunk) - The Bank is 'well capitalized' and has elected to adopt the Community Bank Leverage Ratio (CBLR), which was **10.10%** at June 30, 2021, exceeding the **8.5%** requirement[220](index=220&type=chunk)[229](index=229&type=chunk) - The Bank has an additional borrowing capacity of **$24.6 million** from the FHLB and **$11 million** in lines of credit with other institutions[222](index=222&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable for the reporting period - The company has indicated that this section is not applicable[230](index=230&type=chunk) [Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2021, and is integrating CFBanc's internal controls, a process expected to be completed within one year of acquisition, with a potential exclusion from the 2021 year-end assessment as permitted by SEC guidance - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2021[230](index=230&type=chunk) - The company is currently integrating the internal controls of the recently acquired CFBanc, a process expected to be completed within one year of the acquisition[232](index=232&type=chunk) PART II. OTHER INFORMATION This section provides information on legal proceedings, risk factors, equity sales, and other corporate disclosures [Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period - There are no legal proceedings to report[236](index=236&type=chunk) [Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) This item is not applicable for the reporting period - The company has indicated that this section is not applicable[236](index=236&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds for this specific item - There are no unregistered sales of equity securities or use of proceeds to report under this item[236](index=236&type=chunk) [Other Information](index=47&type=section&id=Item%205.%20Other%20Information) On August 12, 2020, the Board of Directors amended the company's bylaws to conform the deadlines for stockholder director nominations and new business proposals for annual meetings - The company amended its bylaws to standardize the submission deadlines for stockholder director nominations and new business proposals, requiring them to be submitted between 90 and 120 days before the anniversary of the previous year's annual meeting[236](index=236&type=chunk) [Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the report, including the Amended and Restated Certificate of Incorporation, Bylaws, employment agreements, and various certifications required by the Sarbanes-Oxley Act - A list of exhibits filed with the Form 10-Q is provided, including corporate governance documents and required certifications[237](index=237&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For transition period from__________ to___________ Commission file number 001-39043 BROADWAY FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) Delaware 95-4547287 (State or other ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10‑K (Mark one) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to___________ Commission file number 001‑39043 BROADWAY FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) Delaware 95‑4547287 (State or other ...