IntrinsicIntrinsic

BROADWAY FINANCIAL CORP \DE\

BYFC
🏢 Savings Institution, Federally Chartered

Business Operations Summary

Broadway Financial Corporation operates as a public benefit corporation and a bank holding company, with its wholly-owned subsidiary City First Bank, National Association, a Community Development Financial Institution (CDFI) and certified B Corp, serving historically excluded communities through equitable economic development. The company's principal business consists of attracting deposits from the general public and deploying those funds primarily in loans secured by multi-family residential properties with five or more units and commercial real estate, with a mission to strengthen the overall well-being of historically excluded communities. The retail banking network includes three full-service banking offices as of December 31, 2025: two in California (in Los Angeles and the nearby city of Inglewood) and one in Washington, D.C. The company is headquartered in Los Angeles, California.

The company faces significant competition in both the Washington, D.C. and Los Angeles metropolitan areas from mortgage banking companies, commercial banks, and savings and loan associations, most of which are significantly larger and have greater financial resources, with many having a regional, statewide, or national presence. City First's competitive advantages include its status as a CDFI and certified B Corp, its mission-driven focus on underserved communities, and its outstanding Community Reinvestment Act performance rating from the OCC in their most recent CRA examination completed in 2025. The company's primary lending emphasis has been on the origination of loans secured by multi-family residential properties with five or more units, which amounted to $593.2 million at December 31, 2025, representing 58.41% of the gross loan portfolio.

Revenue is derived primarily from interest income on loans and investments, with principal costs being interest expenses on deposits and borrowings together with general and administrative expenses. The company emphasizes the origination of adjustable-rate loans, most of which are hybrid loans having an initial fixed rate period of five years followed by an adjustable-rate period, and at December 31, 2025, more than 82% of loans had adjustable-rate features. Deposits are the primary source of funds for supporting lending and other investment activities, supplemented by amortization and prepayment of loans and investment securities, advances from the FHLB, and cash flows generated by operations.

The loan portfolio is comprised primarily of commercial mortgage loans secured by multi-family residential properties, single-family residential properties, and commercial real estate, including charter schools, community facilities, and churches, with the remainder consisting of commercial business loans, loans guaranteed by the Small Business Administration, and construction-to-permanent loans. At December 31, 2025, the net loan portfolio totaled $1.0 billion , or 75.5% of total assets. Multi-family loans amounted to $593.2 million at December 31, 2025, compared to $639.2 million at December 31, 2024, and represented 58.41% of the gross loan portfolio at December 31, 2025 compared to 63.50% at December 31, 2024. Commercial real estate loans amounted to $162.6 million at December 31, 2025, compared to $163.3 million at December 31, 2024, representing 16.01% and 16.23% of gross loan portfolios, respectively. Church loans totaled $9.0 million at December 31, 2025, representing 0.89% of the gross loan portfolio. Construction loans totaled $73.0 million at December 31, 2025, representing 7.19% of the gross loan portfolio. Non-real estate commercial loans totaled $140.0 million at December 31, 2025, representing 13.79% of the loan portfolio. SBA loans totaled $17.1 million at December 31, 2025. Single-family loans totaled $20.6 million at December 31, 2025.

The securities portfolio, consisting primarily of federal agency debt, mortgage-backed securities, bonds issued by the United States Treasury and the SBA, and municipal bonds, totaled $256.8 million , or 19.1% of total assets at December 31, 2025. The company classifies all securities as available-for-sale and had no securities classified as held-to-maturity. Deposits at December 31, 2025 were $917.6 million compared to $745.4 million at December 31, 2024. Total borrowings at December 31, 2025 consisted of advances from the FHLB of $72.0 million and repurchase agreements of $80.8 million , compared to advances from the FHLB of $195.5 million , repurchase agreements of $66.6 million , and secured borrowings of $31.4 million at December 31, 2024.

During the year ended December 31, 2025, the company originated $45.6 million in new loans and purchased $78.0 million of loans, which included $59.1 million of other commercial loans and $18.9 million of SBA loans. During the second half of the year ended December 31, 2025, the company exited the origination of wholesale lending. The company recorded a non-cash goodwill impairment charge of $25.9 million for the quarter ended September 30, 2025, based on a quantitative assessment that the fair value of the reporting unit was less than its carrying amount. The company also recorded $315 thousand of amortization expense related to the core deposit intangible asset during the year ended December 31, 2025.

For the year ended December 31, 2025, the company reported consolidated net loss attributable to common stockholders of $27.8 million after preferred dividends of $3.0 million and goodwill impairment of $25.9 million , compared to net income attributable to common stockholders of $362 thousand for the year ended December 31, 2024 after preferred dividends of $1.6 million . Loss per diluted common share was ($3.23) for the year ended December 31, 2025, compared to $0.04 of earnings per diluted common share for the year ended December 31, 2024. Consolidated net income before preferred dividends and goodwill impairment was $1.1 million , or $0.12 per diluted share, for the year ended December 31, 2025, compared to consolidated net income of $1.9 million , or $0.22 per diluted share, for the year ended December 31, 2024. Net interest income before provision for credit losses increased by $1.4 million , or 4.3% , to $33.1 million , compared to $31.8 million for the year ended December 31, 2024. Total assets increased by $10.7 million to $1.3 billion at December 31, 2025, compared to $1.3 billion at December 31, 2024.

Business Outlook & Future Growth Drivers

A key growth vector is the expansion of the commercial lending portfolio, which increased significantly during the year. Non-real estate commercial loans grew to $140.0 million at December 31, 2025 from $77.8 million at December 31, 2024, representing 13.79% of the loan portfolio compared to 7.73% in the prior year. For the year ended December 31, 2025, the company originated $16.1 million of commercial loans and purchased $59.1 million of commercial loans at a premium of $7.3 million . The company also purchased $18.9 million of SBA loans at a premium of $1.4 million during the year ended December 31, 2025. City First is an approved SBA lender originating loans in Washington, D.C., Maryland, Virginia, and California under the SBA's 7(a), SBA Express, International Trade, and 504(a) loan programs.

Another growth vector is the company's focus on construction lending for affordable housing developments where rents are subsidized by housing authority agencies. During 2025, the company originated $6.8 million of construction loans, compared to $8.9 million of construction loan originations during 2024. The company specializes in the origination of construction loans for affordable housing developments. Additionally, the company's status as a CDFI and its outstanding CRA rating support its mission-driven growth strategy, with the Bank having received over $6.3 million in grants and awards from the CDFI Fund over the last five years, which has been reinvested in the communities served.

The net interest margin increased to 2.64% for the year ended December 31, 2025 from 2.34% for the year ended December 31, 2024, due to an increase in the average yield earned on average interest-earning assets from 4.70% for the year ended December 31, 2024 to 4.88% for the year ended December 31, 2025, while the average cost of funds decreased from 3.23% for the year ended December 31, 2024 to 3.07% for the year ended December 31, 2025. The average cost of deposits increased to 2.77% for 2025, compared to 2.24% for 2024. Interest expense on borrowings decreased by $10.8 million to $8.2 million during the year ended December 31, 2025, compared to $19.0 million during the year ended December 31, 2024.

The company employed 98 full-time employees as of December 31, 2025 across corporate offices, branch locations, and operational facilities, with primary offices in Los Angeles, California, and Washington, D.C., and additional employees working remotely in various locations across the United States. The company's human capital strategy is centered on attracting, selecting, retaining, and developing top-tier talent whose personal values align with the organization's mission and principles. The company provides a comprehensive Total Rewards program including competitive compensation and incentives, comprehensive health and wellness benefits, retirement and financial security programs including a 401(k) with employer matching contributions, paid time off, and employee assistance programs.

The company's capital allocation strategy is reflected in its regulatory capital position, with the Bank's Community Bank Leverage Ratio at 14.09% at December 31, 2025, compared to 13.61% at December 31, 2024, well above the 9.00% minimum required to be considered well capitalized. The company has not declared or paid cash dividends on its common stock since June 2010 and has not determined to pay cash dividends at any time in the near future. The company recorded $168 thousand and $96 thousand of compensation expense for stock awards to directors in the years ended December 31, 2025 and December 31, 2024, respectively. During the year ended December 31, 2025, the company recorded $114 thousand of stock-based compensation expense related to restricted stock awards to officers and employees.

A significant headwind is the company's exposure to the real estate market in Southern California and Washington, D.C., as most of the loan portfolio consists of loans secured by various types of real estate located in these areas. A downturn in the real estate market could seriously impair the loan portfolio and operating results. The company's non-performing loans totaled $11.2 million at December 31, 2025 compared to $264 thousand at December 31, 2024, and non-performing assets as a percentage of total assets were 0.83% at December 31, 2025 compared to 0.02% at December 31, 2024. The company had five NPAs at December 31, 2025 and one NPA at December 31, 2024.

Another constraint is the company's reliance on a concentrated deposit base and borrowing relationships. Five customer relationships accounted for approximately 28% of deposit balances at December 31, 2025. One customer relationship accounted for 91% of the balance of securities sold under agreements to repurchase. As of December 31, 2025, approximately $413.5 million of total deposits were not insured by FDIC insurance, which represented 41% of total deposits. The company also faces risks related to changes in interest rates, as changes in prevailing interest rates adversely affect the business, and the company's ability to accurately forecast and react to future losses may be impaired by significant uncertainties.

Major Risk Factors & Challenges

The company faces material credit risk from its concentrated real estate loan portfolio, with non-performing loans increasing to $11.2 million at December 31, 2025 from $264 thousand at December 31, 2024, and criticized assets (Watch and Special Mention loans) totaling $170.2 million at December 31, 2025. The allowance for credit losses of $9.4 million may not be adequate to cover actual loan losses, particularly given the company's reliance on historical loss data from peer institutions rather than its own experience. Interest rate risk is significant as changes in prevailing interest rates affect profitability, with the net interest margin at 2.64% for 2025. The company has a material concentration risk with five customer relationships accounting for approximately 28% of deposit balances and one customer accounting for 91% of securities sold under agreements to repurchase, while $413.5 million of total deposits were uninsured as of December 31, 2025. The company identified material weaknesses in internal control over financial reporting related to controls over unusual equity-related contracts and subsequent appraisals for collateral dependent loans, which could result in material misstatements of financial statements.

Management Priorities & Sentiments

Management's message emphasizes the company's mission-driven focus as a public benefit corporation and CDFI, working to spur equitable economic development and strengthen the overall well-being of historically excluded communities. The strategic priorities emphasized include maintaining the Bank's well-capitalized status, with the Community Bank Leverage Ratio at 14.09% at December 31, 2025, and managing through the impact of the $25.9 million goodwill impairment charge recorded in the third quarter of 2025. Management highlights the company's focus on originating adjustable-rate loans to reduce exposure to interest rate risk, with more than 82% of loans having adjustable-rate features at December 31, 2025, and emphasizes the company's outstanding CRA performance rating from the OCC completed in 2025. Management also notes the remediation of the previously identified material weakness related to the accounting for loan participations as of December 31, 2025, while continuing to address newly identified material weaknesses in internal control over financial reporting.

References

  1. [1] Item 1, Business — Lending Activities
  2. [2] Item 1, Business — Lending Activities
  3. [3] Item 1, Business — Lending Activities
  4. [4] Item 1, Business — Lending Activities
  5. [5] Item 1, Business — Lending Activities
  6. [6] Item 1, Business — Multi-Family and Commercial Real Estate Lending
  7. [7] Item 1, Business — Multi-Family and Commercial Real Estate Lending
  8. [8] Item 1, Business — Multi-Family and Commercial Real Estate Lending
  9. [9] Item 1, Business — Multi-Family and Commercial Real Estate Lending
  10. [10] Item 1, Business — Multi-Family and Commercial Real Estate Lending
  11. [11] Item 1, Business — Multi-Family and Commercial Real Estate Lending
  12. [12] Item 1, Business — Multi-Family and Commercial Real Estate Lending
  13. [13] Item 1, Business — Multi-Family and Commercial Real Estate Lending
  14. [14] Item 1, Business — Multi-Family and Commercial Real Estate Lending
  15. [15] Item 1, Business — Multi-Family and Commercial Real Estate Lending
  16. [16] Item 1, Business — Construction Lending
  17. [17] Item 1, Business — Construction Lending
  18. [18] Item 1, Business — Commercial Lending
  19. [19] Item 1, Business — Commercial Lending
  20. [20] Item 1, Business — SBA Guaranteed Loans
  21. [21] Item 1, Business — Single-Family Mortgage Lending
  22. [22] Item 1, Business — Investment Activities
  23. [23] Item 1, Business — Investment Activities
  24. [24] Item 7, MD&A — Comparison of Financial Condition
  25. [25] Item 7, MD&A — Comparison of Financial Condition
  26. [26] Item 7, MD&A — Borrowings
  27. [27] Item 7, MD&A — Borrowings
  28. [28] Item 7, MD&A — Borrowings
  29. [29] Item 7, MD&A — Borrowings
  30. [30] Item 7, MD&A — Borrowings
  31. [31] Item 1, Business — Loan Originations, Purchases and Sales
  32. [32] Item 1, Business — Loan Originations, Purchases and Sales
  33. [33] Item 1, Business — Commercial Lending
  34. [34] Item 1, Business — SBA Guaranteed Loans
  35. [35] Item 7, MD&A — Goodwill and Core Deposit Intangible
  36. [36] Item 7, MD&A — Goodwill and Core Deposit Intangible
  37. [37] Item 7, MD&A — Overview
  38. [38] Item 7, MD&A — Overview
  39. [39] Item 7, MD&A — Overview
  40. [40] Item 7, MD&A — Overview
  41. [41] Item 7, MD&A — Overview
  42. [42] Item 7, MD&A — Overview
  43. [43] Item 7, MD&A — Overview
  44. [44] Item 7, MD&A — Overview
  45. [45] Item 7, MD&A — Overview
  46. [46] Item 7, MD&A — Overview
  47. [47] Item 7, MD&A — Overview
  48. [48] Item 7, MD&A — Net Interest Income
  49. [49] Item 7, MD&A — Net Interest Income
  50. [50] Item 7, MD&A — Net Interest Income
  51. [51] Item 7, MD&A — Net Interest Income
  52. [52] Item 7, MD&A — Overview
  53. [53] Item 7, MD&A — Overview
  54. [54] Item 7, MD&A — Overview
  55. [55] Item 1, Business — Commercial Lending
  56. [56] Item 1, Business — Commercial Lending
  57. [57] Item 1, Business — Commercial Lending
  58. [58] Item 1, Business — Commercial Lending
  59. [59] Item 1, Business — Commercial Lending
  60. [60] Item 1, Business — Commercial Lending
  61. [61] Item 1, Business — Commercial Lending
  62. [62] Item 1, Business — SBA Guaranteed Loans
  63. [63] Item 1, Business — SBA Guaranteed Loans
  64. [64] Item 1, Business — Construction Lending
  65. [65] Item 1, Business — Construction Lending
  66. [66] Item 1A, Risk Factors — CDFI Certification
  67. [67] Item 7, MD&A — Net Interest Income
  68. [68] Item 7, MD&A — Net Interest Income
  69. [69] Item 7, MD&A — Analysis of Net Interest Income
  70. [70] Item 7, MD&A — Analysis of Net Interest Income
  71. [71] Item 7, MD&A — Analysis of Net Interest Income
  72. [72] Item 7, MD&A — Analysis of Net Interest Income
  73. [73] Item 7, MD&A — Net Interest Income
  74. [74] Item 7, MD&A — Net Interest Income
  75. [75] Item 7, MD&A — Net Interest Income
  76. [76] Item 7, MD&A — Net Interest Income
  77. [77] Item 7, MD&A — Net Interest Income
  78. [78] Item 1, Business — Human Capital Management
  79. [79] Item 1, Business — Capital Requirements
  80. [80] Item 1, Business — Capital Requirements
  81. [81] Item 1, Business — Capital Requirements
  82. [82] Item 5, Market for Registrant's Common Equity
  83. [83] Item 5, Market for Registrant's Common Equity
  84. [84] Item 5, Market for Registrant's Common Equity
  85. [85] Item 1, Business — Non-Performing Assets
  86. [86] Item 1, Business — Non-Performing Assets
  87. [87] Item 1, Business — Non-Performing Assets
  88. [88] Item 1, Business — Non-Performing Assets
  89. [89] Item 7, MD&A — Deposits
  90. [90] Item 7, MD&A — Borrowings
  91. [91] Item 1, Business — Deposits
  92. [92] Item 7, MD&A — Liquidity
  93. [93] Item 1, Business — Non-Performing Assets
  94. [94] Item 1, Business — Non-Performing Assets
  95. [95] Item 1, Business — Classification of Assets
  96. [96] Item 1, Business — Allowance for Credit Losses
  97. [97] Item 7, MD&A — Net Interest Income
  98. [98] Item 7, MD&A — Deposits
  99. [99] Item 7, MD&A — Borrowings
  100. [100] Item 1, Business — Deposits
  101. [101] Item 1, Business — Capital Requirements
  102. [102] Item 7, MD&A — Goodwill and Core Deposit Intangible
  103. [103] Item 1, Business — Lending Activities
  104. [104] Item 7, MD&A — Analysis of Net Interest Income
  105. [105] Item 7, MD&A — Analysis of Net Interest Income
  106. [106] Item 7, MD&A — Net Interest Income
  107. [107] Item 7, MD&A — Net Interest Income
  108. [108] Item 7, MD&A — Provision for Credit Losses
  109. [109] Item 7, MD&A — Provision for Credit Losses
  110. [110] Item 7, MD&A — Non-Interest Income
  111. [111] Item 7, MD&A — Non-Interest Income
  112. [112] Item 7, MD&A — Non-Interest Expense
  113. [113] Item 7, MD&A — Non-Interest Expense
  114. [114] Item 7, MD&A — Non-Interest Expense
  115. [115] Item 7, MD&A — Non-Interest Expense
  116. [116] Item 7, MD&A — Overview
  117. [117] Item 7, MD&A — Overview
  118. [118] Item 7, MD&A — Overview
  119. [119] Item 7, MD&A — Overview
  120. [120] Item 7, MD&A — Income Taxes
  121. [121] Item 7, MD&A — Income Taxes
  122. [122] Item 1, Business — Allowance for Credit Losses
  123. [123] Item 1, Business — Allowance for Credit Losses
  124. [124] Item 1, Business — Allowance for Credit Losses
  125. [125] Item 1, Business — Allowance for Credit Losses
  126. [126] Item 7, MD&A — Overview
  127. [127] Item 7, MD&A — Equity
  128. [128] Item 7, MD&A — Equity
  129. [129] Item 7, MD&A — Equity
  130. [130] Item 7, MD&A — Equity
  131. [131] Item 1, Business — Capital Requirements
  132. [132] Item 1, Business — Capital Requirements

Report on Jun 21, 2026