Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. Our MD&A should be read in conjunction with the Consolidated Financial Statements and related Notes included in Part I, Item 1 "Financial Statements," of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Form 10-K"). Certain statements herein are forward-looking statements within the meaning of Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and Section 27A of the U.S. Securities Act of 1933, as amended that reflect our current views with respect to future events and financial performance. Forward-looking statements typically include words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," "may," "will," "could," "should," "believes," "potential," "continue," "prospects," "ability," "looking," "forward," "invest," "grow," "improve," "likely" and other similar expressions. These forward-looking statements are subject to risks and uncertainties, which could cause actual future results to differ materially from historical results or from those anticipated or implied by such statements. Readers should not place undue reliance on these forward-looking statements, which speak only as of their dates or, if no date is provided, then as of the date of this Form 10-Q. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law.

General

Broadway Financial Corporation (the "Company") is a Delaware public benefit corporation and the holding company for City First Bank, National Association (the "Bank"). The Company is dedicated to promoting equitable economic development and increasing access to capital in historically underserved communities through its lending, investment, and banking activities. As a public benefit corporation, the Company seeks to align its mission-driven objectives with the achievement of sustainable financial performance.

In April 2021, the Company completed its merger with CFBanc Corporation, forming a combined institution with a shared commitment to serving low-to-moderate-income and historically underserved communities. Following the merger, Broadway Federal merged with and into City First Bank of D.C., National Association, and the surviving institution was subsequently renamed City First Bank, National Association.

The Company's financial performance is driven primarily by net interest income generated from its loan and investment portfolios, the quality and performance of its earning assets, funding and liquidity management activities, and noninterest income and expense trends.

The Company is regulated by the Board of Governors of the Federal Reserve System, while the Bank is regulated by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. Deposits at the Bank are insured by the FDIC up to applicable limits.

Critical Accounting Policies and Estimates

Critical accounting policies are those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations under different assumptions and conditions. This discussion highlights those accounting policies that management considers critical. All accounting policies are important; therefore, you are encouraged to review each of the policies included in Note 1 "Summary of Significant Accounting Policies" of the Notes to Consolidated Financial Statements in our 2025 Form 10-K to gain a better understanding of how our financial performance is measured and reported. Management has identified the Company's critical accounting policies as follows:

Allowance for Credit Losses ("ACL") for Loans

The Company accounts for credit losses on loans in accordance with ASC 326, which requires the Company to record an estimate of expected lifetime credit losses for loans at the time of origination or acquisition. The ACL is maintained at a level deemed appropriate by management to provide for expected credit losses in the portfolio as of the date of the consolidated statements of financial condition. Estimating expected credit losses requires management to use relevant forward-looking information, including the use of reasonable and supportable forecasts. The measurement of the ACL is performed by collectively evaluating loans with similar risk characteristics.

During the quarter ended March 31, 2026, the Company transitioned from using the weighted average remaining maturity ("WARM") method for measuring the ACL to a discounted cash flow ("DCF") method. Concurrently, the Company also changed the way that qualitative factors are applied in the estimation of the ACL. These changes are intended to improve the precision of the expected credit loss calculations. These changes are considered a change in accounting estimate, rather than a change in accounting principle, as they result from an improved estimation methodology rather than a fundamental change in the underlying accounting framework. The changes in estimation techniques and certain related inputs and assumptions used to estimate expected credit losses on the Company's loan portfolio and unfunded commitments did not materially impact the Company's results of operations or financial condition.

The Company's DCF methodology incorporates a probability of default ("PD") and loss given default ("LGD") model, whereby PDs and LGDs are forecasted using economic scenarios over a reasonable and supportable period to generate estimates for cash flows expected to be collected over the estimated life of a loan. Estimates of future expected cash flows ultimately reflect assumptions made concerning net credit losses over the life of a loan. The model also incorporates management's assumptions regarding prepayments and curtailments. The use of reasonable and supportable forecasts, including the determination of the appropriate length of the forecast horizon, requires significant judgment. Management leverages peer data as well as economic projections from an independent third party to inform and provide its reasonable and supportable economic forecasts. Other internal and external indicators of economic forecasts may also be considered by management when developing the forecast metrics.

The Company's ACL model forecasts PD and LGD over a one-year time horizon, which the Company believes is a reasonable and supportable period. Beyond the one-year forecast time horizon, the Company's ACL model reverts to historical long-term average loss rates over the remaining contractual periods. The duration of the forecast horizon, the period over which forecasts revert to long-term averages, the economic forecasts that management utilizes, as well as additional internal and external indicators of economic forecasts that management considers, may change over time depending on the nature and composition of the Company's loan portfolio. Changes in economic forecasts, in conjunction with changes in loan specific attributes, impact a loan's PD and LGD, which can drive changes in the determination of the ACL.

Expectations of future cash flows are discounted at the loan's effective interest rate. The resulting ACL for a loan represents the amount by which the loan's amortized cost exceeds the net present value of a loan's discounted cash flows. The ACL is recorded through a charge to provision for credit losses and is reduced by charge-offs, net of recoveries on loans previously charged-off. It is the Company's policy to charge-off loan balances at the time they have been deemed uncollectible.

Prior to March 31, 2026, the Company measured the ACL for each of its loan segments using the WARM method. The weighted average remaining life, including the effect of estimated prepayments, was calculated for each loan pool on a quarterly basis. The Company then estimated a loss rate for each pool using both its own historical loss experience and the historical losses of a group of peer institutions during the period from 2004 through the most recent quarter.

In conjunction with the conversion to DCF methodology, the bank has adopted a new scorecard-based methodology for estimating the qualitative reserve factors. The purpose of the qualitative scorecard is to provide a framework to reliably and consistently determine reasonable and supportable qualitative estimates of the expected credit losses in the current loan portfolio compared to losses expected from the quantitative analysis. The appropriate qualitative reserve is derived by loan segment from incremental risk statuses for each qualitative factor. The risk statuses in the scorecard range from "very low risk" to "critical risk." A qualitative reserve allocation is made to each portfolio based on the risk assessment. All inputs and assumptions in the qualitative scorecard were individually assessed to determine the proper risk status, and all decisions were made independently of the previous WARM qualitative analysis.

The Company's ACL model also includes adjustments for qualitative factors, where appropriate. Qualitative adjustments may be related to and include, but are not limited to, factors such as: (i) changes in lending policies and procedures, including changes in underwriting standards and collections, charge-offs, and recapture practices; (ii) changes in international, national, regional, and local conditions; (iii) changes in the nature and volume of the portfolio and terms of loans; (iv) changes in the experience, depth, and ability of lending management; (v) changes in the volume and severity of past due loans and other similar conditions; (vi) changes in the quality of the organization's loan review system; (vii) changes in the value of underlying collateral for collateral dependent loans; (viii) the existence and effect of any concentrations of credit and changes in the levels of such concentrations; and (ix) the effect of other external factors (i.e., competition, legal and regulatory requirements) on the level of estimated credit losses. These qualitative factors incorporate the concept of reasonable and supportable forecasts, as required by ASC 326.

The Company evaluates loans collectively for purposes of determining the ACL in accordance with ASC 326. Collective evaluation is based on aggregating loans deemed to possess similar risk characteristics. In certain instances, the Company may identify loans that it believes no longer possess risk characteristics similar to other loans in the loan portfolio. These loans are typically identified from those that have exhibited deterioration in credit quality, since the specific attributes and risks associated with such loans tend to become unique as the credit deteriorates. Such loans are typically nonperforming, downgraded to substandard or worse, and/or are deemed collateral dependent, where the ultimate repayment of the loan is expected to come from the sale of the collateral. Loans that are deemed by management to no longer possess risk characteristics similar to other loans in the portfolio, or that have been identified as collateral dependent, are evaluated individually for purposes of determining an appropriate lifetime ACL. The Company uses the discounted cash flow approach, using the loan's effective interest rate, for determining the ACL on individually evaluated loans, unless the loan is deemed collateral dependent, which requires evaluation based on the estimated fair value of the underlying collateral, less estimated selling costs. The Company may add a specific reserve for collateral dependent loans based on changes in the estimated fair value of the collateral.

Overview

Total Assets increased by $218.1 million at June 30, 2026, compared to December 31, 2025, reflecting increases in net loans of $110.0 million, securities available-for-sale of $70.2 million and cash and cash equivalents of $38.4 million. The increase in net loans was due to loan growth and loan purchases and the increase in securities available-for-sale was due to purchases of securities available-for-sale.

Loans Held for Investment, Net of the ACL, increased by $110.0 million to $1.1 billion at June 30, 2026, compared to $1.0 billion at December 31, 2025. The increase was due to loan purchases and growth.

Deposits increased by $197.0 million, or 21.5%, to $1.1 billion at June 30, 2026, from $917.6 million at December 31, 2025. The increase in deposits was attributable to increases of $186.8 million in savings deposits, $50.2 million in certificates of deposit accounts, and $9.2 million in Certificate of Deposit Registry Service ("CDARS") deposits (CDARS deposits are similar to ICS deposits, but involve certificates of deposit, instead of money market accounts), partially offset by decreases of $42.9 million in liquid deposits (demand, interest checking, and money market accounts) and $6.3 million in Insured Cash Sweep ("ICS") deposits (ICS deposits are the Bank's money market deposit accounts in excess of FDIC insured limits whereby the Bank makes reciprocal arrangements for insurance with other banks). As of June 30, 2026, our uninsured deposits represented 47% of our total deposits, compared to 41% as of December 31, 2025. We leverage our long-standing partnership with IntraFi Deposit Solutions to offer deposit insurance for accounts exceeding the FDIC deposit insurance limit of $250,000.

Total Borrowings increased $22.0 million to $94.0 million at June 30, 2026, from $72.0 million at December 31, 2025, due to additional FHLB advances.

Net income attributable to common stockholders was $218 thousand during the second quarter of 2026, compared to net income attributable to common stockholders of $2 thousand for the second quarter of 2025. Diluted income per common share was $0.02 for the second quarter of 2026, compared to $0.00 for the second quarter of 2025.

The Company reported consolidated net income before preferred dividends¹ of $968 thousand, or $0.11 per diluted common share¹, for the second quarter of 2026, compared to $752 thousand, or $0.09 per diluted common share, for the second quarter of 2025.

For the first six months of 2026, the Company reported consolidated net income before preferred dividends of $2.1 million, or $0.24 per diluted common share, compared to consolidated net loss before preferred dividends of $1.9 million, or ($0.23) per diluted common share, for the first six months of 2025.

Net income attributable to common stockholders was $627 thousand during the first six months of 2026 after deducting preferred dividends of $1.5 million, compared to net loss attributable to common stockholders of $3.4 million for the first six months of 2025 after deducting preferred dividends of $1.5 million. Diluted income per common share was $0.07 for the first six months of 2026, compared to ($0.39) of diluted loss per common share for the first six months of 2025. Diluted income per common share for the first six months of 2026 reflects preferred dividends of $0.17 per diluted common share, compared to $0.18 per diluted common share for the first six months of 2025.

¹ "Net income before preferred dividends" and "diluted earnings per common share before preferred dividends" are non-GAAP financial measures. A reconciliation of these non-GAAP financial measures and the nearest GAAP measures is provided in the "Use of Non-GAAP Financial Measures" section.

Results of Operations

Net Interest Income

Three Months Ended June 30, 2026 Compared to the Three Months Ended June 30, 2025

Net interest income totaled $9.5 million, representing an increase of $1.7 million, or 22.4%, from net interest income of $7.8 million for the second quarter of 2025. The increase resulted from a $3.4 million increase in interest income, primarily due to a $2.0 million increase in interest income on available-for-sale securities, due to an increase in the average balance of available-for-sale securities, and a $1.5 million increase in interest income on loans receivable as a result of an increase in the average balance of loans receivable. These increases in net interest income were partially offset by a $2.1 million increase in interest expense on deposits, as a result of an increase in the average deposits balance and an increase in the average cost of deposits.

The net interest margin increased to 2.65% for the second quarter of 2026 from 2.58% for the second quarter of 2025, due to an increase in the average rate earned on interest-earning assets, which increased to 4.98% for the second quarter of 2026 from 4.80% for the second quarter of 2025, as well as an decrease in the cost of funds, which decreased to 3.02% for the second quarter of 2026 from 3.07% for the second quarter of 2025.

Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025

Net Interest Income totaled $18.5 million for the first six months of 2026, representing an increase of $2.7 million, or 17.4%, from net interest income of $15.8 million for the first six months of 2025. The increase resulted from a $4.8 million increase in interest income, primarily due to a $3.4 million increase in interest income on available-for-sale securities, due to an increase in the average rate and balance of available-for-sale securities, and a $1.7 million increase in interest income on loans receivable as a result of an increase in the average balance of loans receivable. Further, interest on borrowings decreased $1.8 million due to decreases in the average rate and balance of borrowings. These increases in net interest income were partially offset by a $3.9 million increase in interest expense on deposits due to an increase in the average deposit rate and balance.

The net interest margin increased to 2.70% for the first six months of 2026 from 2.61% for the first six months of 2025, due to an increase in the average rate earned on interest-earning assets, which increased to 4.95% for the first six months of 2026 from 4.82% for the first six months of 2025, and a decrease in the cost of funds, which decreased to 2.97% for the first six months of 2026 from 3.07% for the first six months of 2025.

The following tables set forth the average balances, average yields and costs, and certain other information for the periods indicated. All average balances are daily average balances. The yields set forth below include the effect of deferred loan fees, deferred origination costs, and discounts and premiums that are amortized or accreted to interest income or expense. We do not accrue interest on loans that are on non-accrual status; however, the balance of these loans is included in the total average balance of loans receivable, which has the effect of reducing average loan yields.

(1)	Amount is net of deferred loan fees, loan discounts and loans in process, and includes deferred origination costs and loan premiums.

(2)	Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(3)	Net interest rate margin represents net interest income as a percentage of average interest-earning assets.

(1)	Amount is net of deferred loan fees, loan discounts and loans in process, and includes deferred origination costs and loan premiums.

(2)	Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(3)	Net interest rate margin represents net interest income as a percentage of average interest-earning assets.

Provision for Credit Losses

The Company recorded a provision for credit losses of $1.5 million for the three months ended June 30, 2026, compared to $200 thousand for the three months ended March 31, 2026. This increase was primarily due to the establishment of a specific reserve on a non-accrual loan, in addition to loan growth. Although a specific reserve was established during the quarter, broader portfolio metrics remained relatively stable, with non-performing assets representing 0.71% of total assets and non-accrual loans at 0.98% of total loans.

The Company recorded a provision for credit losses of $1.7 million for the first six months of 2026, compared to $1.5 million for the first six months of 2025.

The Company recorded a recapture of provision for off-balance sheet loan commitments of $99 thousand and $74 thousand for the three months ended June 30, 2026 and 2025, respectively. The Company recorded a recapture of provision for off-balance sheet loan commitments of $21 thousand and $56 thousand for the six months ended June 30, 2026 and 2025, respectively.

The ACL increased from $9.4 million at December 31, 2025 to $10.8 million at June 30, 2026. This increase was primarily due to loan portfolio growth, including an increase in the commercial-other portfolio, and a shift toward higher-risk loans, including an increase in substandard loans within the construction portfolio and higher past-due levels in construction. These factors were evaluated in the context of current conditions and reasonable and supportable forecasts for the Company's loan classes (single family, multifamily, CRE, church, construction, SBA, consumer, and commercial-other).

The Company had six non-accrual loans at June 30, 2026 with an unpaid principal balance of $11.2 million. Credit quality remains stable with non-accrual loans as a percentage of total loans at 0.98% and non-performing assets to total assets of 0.71%.

Non-interest Income

Non-interest income was $950 thousand for the second quarter of 2026, compared to $355 thousand for the second quarter of 2025, representing an increase of $595 thousand, or 167.6%. The increase was primarily due to a $450 thousand loan fee related to the New Market Tax Credit allocation earned in the second quarter of 2026 and a $250 thousand increase in earnings on bank owned life insurance, partially offset by an $82 thousand decrease in grant income.

Non-interest income was $1.5 million for the first six months of 2026, compared to $643 thousand for the first six months of 2025, representing an increase of $896 thousand, or 139.3%. The increase was primarily due to $494 thousand of additional earnings on bank owned life insurance and a $450 thousand loan fee related to the New Market Tax Credit allocation earned in the first six months of 2026.

Non-interest Expense

Non-interest expense was flat at $7.5 million for both the second quarter of 2026 and the second quarter of 2025.

Non-interest expense was $15.5 million for the first six months of 2026, compared to $17.7 million for the first six months of 2025, representing a decrease of $2.2 million, or 12.6%. The decrease was primarily due to a $1.9 million operational loss incurred in the first six months of 2025 as well as a $557 thousand decrease in compensation and benefits expense and a $331 thousand decrease in professional services expense. These decreases in non-interest expenses were partially offset by an increase of $264 thousand in information services expenses and a $264 thousand increase in loan expenses.

Income Taxes

Income tax expense was $330 thousand for the second quarter of 2026 compared to $296 thousand for the second quarter of 2025. The increase in tax expense reflected an increase of $441 thousand in pre-tax income between the two periods. The effective tax rate was 22.25% for the second quarter of 2026, compared to 28.41% for the second quarter of 2025.

Income tax expense/benefit was income tax expense of $612 thousand for the first six months of 2026 compared to income tax benefit of $790 thousand for the first six months of 2025. The increase in tax expense reflected an increase of $5.6 million in pre-tax income between the two periods. The effective tax rate was 21.03% for the first six months of 2026, compared to 28.87% for the first six months of 2025.

Financial Condition

Total Assets

Total Assets increased by $218.1 million at June 30, 2026, compared to December 31, 2025, reflecting increases in net loans of $110.0 million, securities available-for-sale of $70.2 million and cash and cash equivalents of $38.4 million. The increase in net loans was due to loan growth and loan purchases and the increase in securities available-for-sale was due to purchases of securities available-for-sale.

Securities Available-For-Sale

Securities available-for-sale totaled $327.0 million at June 30, 2026, compared to $256.8 million at December 31, 2025. The $70.2 million increase in securities available-for-sale during the six months ended June 30, 2026 was primarily due to securities purchases.

The table below presents the carrying amount, weighted average yields and contractual maturities of our securities as of June 30, 2026. The table reflects stated final maturities and does not reflect scheduled principal payments or expected payoffs.

Loans Receivable Held for Investment

Loans Held for Investment, Net of the ACL, increased by $110.0 million to $1.1 billion at June 30, 2026, compared to $1.0 billion at December 31, 2025. The increase was comprised of $84.8 million in purchased loans and $26.6 in organic growth, net of paydowns and an increase in the ACL of $1.4 million.

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

Certain multi-family loans have adjustable-rate features based on the Secured Overnight Financing Rate but are fixed for the first five years. Our experience has shown that these loans typically pay off during the first five years and do not reach the adjustable-rate phase. However, in the current interest rate environment, we have seen more borrowers maintain their loans instead of paying them off due to interest rate caps which make the adjusted interest rate on their existing loan more desirable than getting a new loan at current interest rates. Multi-family loans in their initial fixed period totaled $362.9 million or 63.7% of our multi-family loan portfolio as of June 30, 2026.

Allowance for Credit Losses

The Company accounts for credit losses on loans in accordance with ASC 326, which requires the Company to record an estimate of expected lifetime credit losses for loans at the time of origination or acquisition. The ACL is maintained at a level deemed appropriate by management to provide for expected credit losses in the portfolio as of the date of the consolidated statements of financial condition. Estimating expected credit losses requires management to use relevant forward-looking information, including the use of reasonable and supportable forecasts. The measurement of the ACL is performed by collectively evaluating loans with similar risk characteristics.

During the quarter ended March 31, 2026, the Company transitioned from using the WARM method for measuring the ACL to a DCF method. Concurrently, the Company also changed the way that qualitative factors are applied in the estimation of the ACL. These changes are intended to improve the precision of the expected credit loss calculations.

The Company has a credit portfolio review process designed to detect problem loans. Problem loans are typically those of a substandard or worse internal risk grade, and may consist of loans on non-accrual status, loans that have recently been modified in response to a borrower's deteriorating financial condition, loans where the likelihood of foreclosure on underlying collateral has increased, collateral dependent loans, and other loans where concern or doubt over the ultimate collectability of all contractual amounts due has become elevated. Such loans may, in the opinion of management, be deemed to no longer possess risk characteristics similar to other loans in the loan portfolio because the specific attributes and risks associated with the loan have likely become unique as the credit quality of the loan deteriorates. As such, these loans may require individual evaluation to determine an appropriate ACL for the loan. When a loan is individually evaluated, the Company typically measures the expected credit loss for the loan based on a discounted cash flow approach, unless the loan has been deemed collateral dependent. The ACL for collateral dependent loans is determined using estimates of the fair value of the underlying collateral, less estimated selling costs.

Loans delinquent by 30 days or more, but less than 60 days, increased to $15.2 million at June 30, 2026, from $11.8 million at December 31, 2025, primarily due to one construction loan, and loan delinquencies for 60 days or more, but less than 90 days, increased to $7.8 million at June 30, 2026, from $367 thousand at December 31, 2025, primarily due to one construction loan and one CRE loan. Loans past due greater than 90 days was $11.1 million at June 30, 2026, compared to $3.0 million at December 31, 2025, primarily due to one construction loan.

We believe the ACL is adequate to cover expected losses in the loan portfolio as of June 30, 2026, but there can be no assurance that actual losses will not exceed the estimated amounts. The OCC and the Federal Deposit Insurance Corporation ("FDIC") periodically review the ACL as an integral part of their examination process. These agencies may require an increase in the ACL based on their judgments of the information available to them at the time of their examinations.

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

Total Liabilities

Total liabilities increased by $218.6 million to $1.3 billion at June 30, 2026 from December 31, 2025, primarily due to an increase of $197.0 million in deposits and a $22.0 million increase in FHLB borrowings.

Deposits

Deposits increased by $197.0 million, or 21.5%, to $1.1 billion at June 30, 2026, from $917.6 million at December 31, 2025. The increase in deposits was attributable to increases of $186.8 million in savings deposits, $50.2 million in certificates of deposit accounts, and $9.2 million in CDARS deposits, partially offset by decreases of $42.9 million in liquid deposits (demand, interest checking, and money market accounts) and $6.3 million in ICS deposits. As of June 30, 2026, our uninsured deposits represented 47% of our total deposits, compared to 41% as of December 31, 2025.

The following table presents the maturity of time deposits, which includes CDARS, as of the dates indicated:

The Bank enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities. Under these arrangements, the Bank may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Bank to repurchase the assets. As a result, these repurchase agreements are accounted for as collateralized financing agreements (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities. The obligation to repurchase the securities is reflected as a liability in the Company's consolidated statements of financial condition, while the securities underlying the repurchase agreements remain in the respective investment securities asset accounts. In other words, there is no offsetting or netting of the investment securities assets with the repurchase agreement liabilities. These agreements mature on a daily basis. As of June 30, 2026 securities sold under agreements to repurchase totaled $81.9 million at an average rate of 3.69%. The fair value of securities pledged totaled $85.7 million as of June 30, 2026. As of December 31, 2025, securities sold under agreements to repurchase totaled $80.8 million at an average rate of 3.66%. The fair value of securities pledged totaled $83.7 million as of December 31, 2025.

At June 30, 2026, the Company had outstanding advances from the FHLB totaling $94.0 million. At December 31, 2025, the Company had outstanding advances from the FHLB totaling $72.0 million. The weighted average interest rate was 3.83% and 3.79% as of June 30, 2026 and December 31, 2025, respectively. The weighted average contractual maturity was less than one month as of both June 30, 2026 and December 31, 2025. Loans with unpaid balances of $437.8 million and $448.6 million at June 30, 2026 and December 31, 2025, respectively, were pledged to secure FHLB advances. The Company is currently approved by the FHLB of Atlanta to borrow up to 25% of total assets to the extent the Company provides qualifying collateral and holds sufficient FHLB stock. Based on collateral pledged and FHLB stock held, the Company was eligible to borrow an additional $148.4 million as of June 30, 2026.

In addition, the Company had additional lines of credit of $10.0 million with other financial institutions as of June 30, 2026 and December 31, 2025. These lines of credit are unsecured, bear interest at the Federal funds rate as of the date of utilization and mature in 30 days. There were no amounts outstanding under these lines of credit as of June 30, 2026 or December 31, 2025.

Stockholders' Equity

Broadway Financial Corporation and subsidiary equity was $262.3 million, or 16.8%, of the Company's total assets, at June 30, 2026, compared to $262.8 million, or 19.5% of the Company's total assets, at December 31, 2025. Book value per share was $12.11 at June 30, 2026 and $12.28 at December 31, 2025. Capital ratios remain strong with a Community Bank Leverage Ratio of 13.20% at June 30, 2026 and 14.09% at December 31, 2025.

In February 2026, the Company issued 4,936 shares of restricted stock to an officer under the Amended and Restated LTIP.

In March 2026, the Company issued 97,298 shares of restricted stock to its officers and employees under the Amended and Restated LTIP. Each restricted stock award was valued based on the fair value of the stock on the date of the award. All the shares issued to officers and employees vest over periods ranging from 36 months to 48 months.

In March 2026, the Company awarded 21,400 shares of common stock to its directors under the LTIP, which are fully vested.

Liquidity

The objective of liquidity management is to ensure that we have the continuing ability to fund operations and meet our obligations on a timely and cost-effective basis.

During the first six months of 2026, the Company's balance sheet increased significantly due to growth in both loans and deposits. Loan growth was driven by a combination of organic production, including commercial and construction lending activities, and the purchase of government-guaranteed loans. Deposit growth was driven in part by utilizing the Raisin deposit platform, which provided access to additional funding sources to support loan growth and enhance liquidity. During the six months ended June 30, 2026, the Bank purchased $94.0 million of government-guaranteed loans and obtained approximately $238.3 million of deposits through the Raisin platform.

The Bank's sources of funds include deposits, advances from the FHLB and other borrowings, proceeds from the sale of loans and investment securities, and payments of principal and interest on loans and investment securities. The Bank is currently approved by the FHLB of Atlanta to borrow up to 25% of total assets to the extent the Bank provides qualifying collateral and holds sufficient FHLB stock. Based on FHLB stock held and collateral pledged as of June 30, 2026, the Bank had the ability to borrow an additional $148.4 million from the FHLB of Atlanta. In addition, the Bank had additional lines of credit of $10.0 million with other financial institutions.

The Bank's primary uses of funds include originations of loans, withdrawals of and interest payments on deposits, purchases of investment securities, and the payment of operating expenses. Also, when the Bank has more funds than required for reserve requirements or short-term liquidity needs, the Bank invests excess cash with the Federal Reserve Bank or other financial institutions. The Bank's liquid assets at June 30, 2026 consisted of $48.9 million in cash and cash equivalents and $229.9 million in securities available-for-sale that were not pledged, compared to $10.5 million in cash and cash equivalents and $161.1 million in securities available-for-sale that were not pledged at December 31, 2025. Currently, we believe the Bank has sufficient liquidity to support growth over the next twelve months and in the longer term.

Deposit growth during the first six months of 2026 included funding obtained through the Raisin platform. While deposits obtained through deposit placement platforms generally carry higher funding costs than certain traditional core deposit relationships, management believes they provide an efficient source of funding to support balance sheet growth, diversify funding sources and maintain liquidity. Management continues to monitor deposit pricing, concentrations, retention characteristics and overall funding costs associated with these deposits.

At June 30, 2026, liquid assets consisted of $48.9 million in cash and cash equivalents and $229.9 million of unpledged available-for-sale securities, compared to $10.5 million and $161.1 million, respectively, at December 31, 2025. Including available borrowing capacity from the FHLB and other funding lines, total available liquidity was approximately $437.2 million at June 30, 2026.

The Bank had commitments to fund $1.4 million in loans that were approved but unfunded as of June 30, 2026. In addition, the Bank had $3.4 million in unfunded line of credit loans and $31.6 million in unfunded construction loans as of June 30, 2026.

The Bank has a significant concentration of deposits with five customers that accounted for approximately 41% of its deposits as of June 30, 2026. The Bank also has a significant concentration of short-term borrowings from one customer that accounted for 93% of the outstanding balance of securities sold under agreements to repurchase as of June 30, 2026. The Bank has long-term relationships with these customers and expects to maintain its relationships with them for the foreseeable future.

The Company's liquidity, separate from the Bank, is based primarily on the proceeds from financing transactions, such as the preferred stock sold to the U.S. Treasury in 2022 and the previous private placements completed in December 2016 and April 2021, and dividends received from the Bank in 2024 and 2025. The Bank is currently under no prohibition from paying dividends to the Company but is subject to restrictions as to the amount of the dividends based on normal regulatory guidelines.

The Company recorded consolidated net cash outflows from investing activities of $185.3 million during the six months ended June 30, 2026, compared to net cash inflows from investing activities of $56.9 million during the six months ended June 30, 2025. Net cash outflows from investing activities for the six months ended June 30, 2026 were primarily due to funding of new loans, net of repayments, of $111.9 million and purchases of available-for-sale securities of $100.9 million, partially offset by $28.9 million of principal payments on and maturities of available-for sale-securities. Net cash inflows from investing activities for the six months ended June 30, 2025 were primarily due to principal paydowns on available-for-sale securities of $51.4 million and proceeds from loan repayments of $21.3 million, partially offset by purchases of available-for-securities of $21.6 million.

The Company recorded consolidated net cash inflows from financing activities of $218.5 million during the six months ended June 30, 2026, compared to consolidated net cash outflows from financing activities of $87.4 million during the six months ended June 30, 2025. Net cash inflows from financing activities during the six months ended June 30, 2026 were primarily due to proceeds of FHLB borrowings of $449.3 million and a net increase in deposits of $197.0 million, partially offset by repayments of FHLB borrowings of $427.3 million. Net cash outflows from financing activities during the six months ended June 30, 2025 were primarily due to repayments of FHLB advances of $512.0 million, partially offset by proceeds from FHLB advances of $376.5 million and a net increase in deposits of $53.5 million.

Capital Resources and Regulatory Capital

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary, actions by the regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank's capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk-weightings, and other factors. As of June 30, 2026 and December 31, 2025, the Bank exceeded all capital adequacy requirements to which it is subject and meets the qualifications to be considered "well capitalized." (See Note 11 - Regulatory Matters.)

Use of Non-GAAP Financial Measures

Management uses non-GAAP measures because they provide information to investors about the underlying operational performance and trends of the Company. These disclosures should not be considered in isolation or as a substitute for results determined in accordance with GAAP and are not necessarily comparable to non-GAAP performance measures which may be presented by other bank holding companies. Management compensates for these limitations by providing detailed reconciliations between GAAP information and the non-GAAP financial measures. The tables below reconcile the GAAP financial measures to the associated non-GAAP financial measures.

Tangible book value per common share is a non-GAAP measurement that excludes the net unamortized core deposit intangible asset, which was originally recorded in connection with the CFBanc merger. The Company uses this non-GAAP financial measure to provide supplemental information regarding the Company's financial condition and operational performance. A reconciliation between common book value and tangible book value per common share is shown as follows:

The Company calculates net income (loss) before preferred dividends by adding preferred stock dividends to net income (loss) available to common shareholders. Earnings (loss) per common share - diluted before preferred dividends is calculated by dividing net income (loss) before preferred dividends by the weighted average common shares outstanding for diluted earnings (loss) per common share. The Company considers this information important to shareholders because it illustrates net income and earnings per common share - diluted excluding the impact of preferred dividends.