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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 jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

4601 Wilshire Boulevard, Suite 150 Los Angeles, California |  | 90010
(Address of principal executive offices) |  | (Zip Code)

(323) 634-1700
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☐ | Accelerated filer | ☐
Non-accelerated filer | ☒ | Smaller reporting company | ☒
|  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of May 9, 2022, 46,837,695 shares of the Registrant’s Class A voting common stock, 11,404,618 shares of the Registrant’s Class B non-voting common stock and 15,261,872 shares of the Registrant’s Class C non-voting common stock were outstanding.

TABLE OF CONTENTS
|  | Page
PART I. | FINANCIAL STATEMENTS |
| Item 1. | Consolidated Financial Statements (Unaudited) |
|  | Consolidated Statements of Financial Condition as of March 31, 2022 and December 31, 2021 | 1
|  | Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2022 and 2021 | 2
|  | Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021 | 3
|  | Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2022 and 2021 | 4
|  | Notes to Consolidated Financial Statements | 5
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 20
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 29
| Item 4. | Controls and Procedures | 29
PART II. | OTHER INFORMATION |
| Item 1. | Legal Proceedings | 30
| Item 1A. | Risk Factors | 30
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 30
| Item 3. | Defaults Upon Senior Securities | 30
| Item 4. | Mine Safety Disclosures | 30
| Item 5. | Other Information | 30
| Item 6. | Exhibits | 30
| Signatures | 31

Table of Contents
BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Financial Condition
(In thousands, except share and per share amounts)

|  | March 31, 2022 |  |  | December 31, 2021 |
|  | (Unaudited) |  |  |  |
Assets: |  |  |  |  |  |
Cash and due from banks |  | $ | 37,925 |  |  | $ | 38,418 |
Interest-bearing deposits in other banks |  |  | 208,181 |  |  |  | 193,102 |
Cash and cash equivalents |  |  | 246,106 |  |  |  | 231,520 |
Securities available-for-sale, at fair value |  |  | 170,308 |  |  |  | 156,396 |
Loans receivable held for investment, net of allowance of $3,539 and $3,391 |  |  | 653,375 |  |  |  | 648,513 |
Accrued interest receivable |  |  | 2,449 |  |  |  | 3,372 |
Federal Home Loan Bank (“FHLB”) stock |  |  | 2,222 |  |  |  | 2,573 |
Federal Reserve Bank (FRB) stock |  |  | 693 |  |  |  | 693 |
Office properties and equipment, net |  |  | 10,380 |  |  |  | 10,344 |
Bank owned life insurance |  |  | 3,200 |  |  |  | 3,190 |
Deferred tax assets, net |  |  | 8,312 |  |  |  | 6,101 |
Core deposit intangible, net |  |  | 2,827 |  |  |  | 2,936 |
Goodwill |  |  | 25,858 |  |  |  | 25,996 |
Other assets |  |  | 5,395 |  |  |  | 1,871 |
Total assets |  | $ | 1,131,125 |  |  | $ | 1,093,505 |
Liabilities and stockholders’ equity |  |  |  |  |  |  |  |
Liabilities: |  |  |  |  |  |  |  |
Deposits |  | $ | 839,714 |  |  | $ | 788,052 |
Securities sold under agreements to repurchase |  |  | 56,003 |  |  |  | 51,960 |
FHLB advances |  |  | 73,001 |  |  |  | 85,952 |
Notes payable |  |  | 14,000 |  |  |  | 14,000 |
Accrued expenses and other liabilities |  |  | 12,070 |  |  |  | 12,441 |
Total liabilities |  |  | 994,788 |  |  |  | 952,405 |
Cumulative Redeemable Perpetual Preferred stock, Series A, authorized 3,000 shares at March 31, 2022 and December 31, 2021; issued and outstanding none at March 31, 2022 and 3,000 shares at December 31, 2021, liquidation value $1,000 per share |  |  | - |  |  |  | 3,000 |
Common stock, Class A, $0.01 par value, voting, authorized 75,000,000 shares at March 31, 2022 and December 31, 2021; issued 48,949,221 at March 31, 2022 and 46,291,852 shares at December 31, 2021; outstanding 46,194,148 shares at March 31, 2022 and 43,674,026 shares at December 31, 2021 |  |  | 489 |  |  |  | 463 |
Common stock, Class B, $0.01 par value, non-voting, authorized 15,000,000 shares at March 31, 2022 and December 31, 2021; issued and outstanding 11,404,618 shares at March 31, 2022 and December 31, 2021 |  |  | 114 |  |  |  | 114 |
Common stock, Class C, $0.01 par value, non-voting, authorized 25,000,000 shares at March 31, 2022 and December 31, 2021; issued 15,768,172 shares at March 31, 2022 and 16,689,775 shares at December 31, 2021; outstanding 15,768,172 shares at March 31, 2022 and 16,689,775 shares at December 31, 2021 |  |  | 158 |  |  |  | 167 |
Additional paid-in capital |  |  | 143,373 |  |  |  | 140,289 |
Retained earnings |  |  | 4,616 |  |  |  | 3,673 |
Unearned Employee Stock Ownership Plan (ESOP) shares |  |  | (813 | ) |  |  | (829 | )
Accumulated other comprehensive loss, net of tax |  |  | (6,398 | ) |  |  | (551 | )
Treasury stock-at cost, 2,617,826 shares at March 31, 2022 and at December 31, 2021 |  |  | (5,326 | ) |  |  | (5,326 | )
Total Broadway Financial Corporation and Subsidiary stockholders’ equity |  |  | 136,213 |  |  |  | 141,000 |
Non-controlling interest |  |  | 124 |  |  |  | 100 |
Total liabilities and stockholders’ equity |  | $ | 1,131,125 |  |  | $ | 1,093,505 |

See accompanying notes to unaudited consolidated financial statements.
1

Table of Contents
BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)

|  | Three Months Ended March 31, |
|  | 2022 |  |  | 2021 |
|  | (In thousands, except per share) |
Interest income: |  |  |  |  |  |
Interest and fees on loans receivable |  | $ | 7,336 |  |  | $ | 3,644 |
Interest on investment securities |  |  | 591 |  |  |  | 56 |
Other interest income |  |  | 84 |  |  |  | 77 |
Total interest income |  |  | 8,011 |  |  |  | 3,777 |
Interest expense: |  |  |  |  |  |  |  |
Interest on deposits |  |  | 350 |  |  |  | 383 |
Interest on borrowings |  |  | 489 |  |  |  | 549 |
Total interest expense |  |  | 839 |  |  |  | 932 |
Net interest income |  |  | 7,172 |  |  |  | 2,845 |
Loan loss provision |  |  | 148 |  |  |  | - |
Net interest income after loan loss provision |  |  | 7,024 |  |  |  | 2,845 |
Non-interest income: |  |  |  |  |  |  |  |
Service charges |  |  | 64 |  |  |  | 93 |
Other |  |  | 217 |  |  |  | 30 |
Total non-interest income |  |  | 281 |  |  |  | 123 |
Non-interest expense: |  |  |  |  |  |  |  |
Compensation and benefits |  |  | 3,619 |  |  |  | 5,390 |
Occupancy expense |  |  | 442 |  |  |  | 308 |
Information services |  |  | 865 |  |  |  | 241 |
Professional services |  |  | 364 |  |  |  | 1,939 |
Office services and supplies |  |  | 157 |  |  |  | 95 |
Corporate insurance |  |  | 61 |  |  |  | 246 |
Amortization of investment in affordable housing limited partnership |  |  | 53 |  |  |  | 26 |
Amortization of core deposit intangible |  |  | 109 |  |  |  | - |
Other |  |  | 290 |  |  |  | 382 |
Total non-interest expense |  |  | 5,960 |  |  |  | 8,627 |
Income (loss) before income taxes |  |  | 1,345 |  |  |  | (5,659 | )
Income tax expense (benefit) |  |  | 363 |  |  |  | (2,172 | )
Net income (loss) |  | $ | 982 |  |  | $ | (3,487 | )
Less: Net income attributable to non-controlling interest |  |  | 24 |  |  |  | - |
Net income (loss) attributable to Broadway Financial Corporation |  | $ | 958 |  |  | $ | (3,487 | )
Other comprehensive loss, net of tax: |  |  |  |  |  |  |  |
Unrealized loss on securities available-for-sale arising during the period |  | $ | (8,154 | ) |  | $ | (158 | )
Income tax benefit |  |  | (2,307 | ) |  |  | (47 | )
Other comprehensive loss, net of tax |  |  | (5,847 | ) |  |  | (111 | )
Comprehensive loss |  | $ | (4,889 | ) |  | $ | (3,598 | )
Income (loss) per common share-basic |  | $ | 0.01 |  |  | $ | (0.13 | )
Income (loss) per common share-diluted |  | $ | 0.01 |  |  | $ | (0.13 | )

See accompanying notes to unaudited consolidated financial statements.
2

Table of Contents
BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)

|  | Three Months Ended March 31, |
|  | 2022 |  |  | 2021 |
|  | (In thousands) |
Cash flows from operating activities: |  |  |  |  |  |
Net income (loss) |  | $ | 982 |  |  | $ | (3,487 | )
Adjustments to reconcile net income (loss) to net cash used in operating activities: |  |  |  |  |  |  |  |
Loan loss provision |  |  | 148 |  |  |  | - |
Depreciation |  |  | 30 |  |  |  | 53 |
Net change in amortization of deferred loan origination costs |  |  | (148 | ) |  |  | (21 | )
Net amortization of premiums on available for sale securities |  |  | 118 |  |  |  | 10 |
Amortization of core deposit intangible |  |  | 109 |  |  |  | - |
Amortization of purchase accounting marks on loans |  |  | (465 | ) |  |  | - |
Director compensation expense-common stock |  |  | 84 |  |  |  | 45 |
Accretion of premium on FHLB advances |  |  | (11 | ) |  |  | - |
Stock-based compensation expense |  |  | 15 |  |  |  | 168 |
ESOP compensation expense |  |  | 18 |  |  |  | 23 |
Change in deferred taxes on goodwill |  |  | 138 |  |  |  | - |
Earnings on bank owned life insurance |  |  | (10 | ) |  |  | (10 | )
Change in assets and liabilities: |  |  |  |  |  |  |  |
Net change in deferred taxes |  |  | 96 |  |  |  | (1,413 | )
Net change in accrued interest receivable |  |  | 923 |  |  |  | 45 |
Net change in other assets |  |  | (3,524 | ) |  |  | (1,176 | )
Net change in other liabilities |  |  | (311 | ) |  |  | 3,705 |
Net cash used in operating activities |  |  | (1,808 | ) |  |  | (2,058 | )
Cash flows from investing activities: |  |  |  |  |  |  |  |
Net change in loans receivable held for investment |  |  | (4,396 | ) |  |  | (2,370 | )
Principal payments on available-for-sale securities |  |  | 4,724 |  |  |  | 507 |
Purchase of available-for-sale securities |  |  | (26,908 | ) |  |  | - |
Proceeds from redemption of FHLB stock |  |  | 351 |  |  |  | - |
Purchase of office properties and equipment |  |  | (67 | ) |  |  | (15 | )
Net cash used in investing activities |  |  | (26,296 | ) |  |  | (1,878 | )
Cash flows from financing activities: |  |  |  |  |  |  |  |
Net change in deposits |  |  | 51,662 |  |  |  | (3,315 | )
Net increase in securities sold under agreements to repurchase |  |  | 4,043 |  |  |  | - |
Dividends paid on preferred stock |  |  | (15 | ) |  |  | - |
Repayments of FHLB advances |  |  | (13,000 | ) |  |  | - |
Stock cancelled for income tax withholding |  |  | - |  |  |  | (447 | )
Repayments of junior subordinated debentures |  |  | - |  |  |  | (255 | )
Net cash provided by (used in) financing activities |  |  | 42,690 |  |  |  | (4,017 | )
Net change in cash and cash equivalents |  |  | 14,586 |  |  |  | (7,953 | )
Cash and cash equivalents at beginning of the period |  |  | 231,520 |  |  |  | 96,109 |
Cash and cash equivalents at end of the period |  | $ | 246,106 |  |  | $ | 88,156 |
Supplemental disclosures of cash flow information: |  |  |  |  |  |  |  |
Cash paid for interest |  | $ | 822 |  |  | $ | 809 |
Cash paid for income taxes |  |  | - |  |  |  | 39 |
Supplemental disclosures of non-cash investing and financing activities: |  |  |  |  |  |  |  |
Conversion of preferred shares into Class A common shares |  |  | 3,000 |  |  |  | - |

See accompanying notes to unaudited consolidated financial statements.
3

Table of Contents
BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)

|  | Three Months Ended March 31, 2022 and 2021 |
|  | Preferred Stock Non-Voting |  |  | Common Stock Voting |  |  | Common Stock Non-Voting |  |  | Additional Paid‑in Capital |  |  | Accumulated Other Comprehensive Income (Loss) |  |  | Retained Earnings (Substantially Restricted) |  |  | Unearned ESOP Shares |  |  | Treasury Stock |  |  | Non-controlling Interest |  |  | Total Stockholders’ Equity |
|  |  |  |  |  |  |  |  |  |  |  |  |  | (In thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at January 1, 2022 |  | $ | 3,000 |  |  | $ | 463 |  |  | $ | 281 |  |  | $ | 140,289 |  |  | $ | (551 | ) |  | $ | 3,673 |  |  | $ | (829 | ) |  | $ | (5,326 | ) |  | $ | 100 |  |  | $ | 141,100 |
Net income for the three months ended March 31, 2022 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 958 |  |  |  | - |  |  |  | - |  |  |  | 24 |  |  |  | 982 |
Conversion of preferred stock into common stock |  |  | (3,000 | ) |  |  | 12 |  |  |  | - |  |  |  | 2,988 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | - |
Conversion of non-voting common shares into voting common shares |  |  |  |  |  |  | 9 |  |  |  | (9 | ) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | - |
Release of unearned ESOP shares |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2 |  |  |  | - |  |  |  | - |  |  |  | 16 |  |  |  | - |  |  |  | - |  |  |  | 18 |
Dividends paid on preferred stock |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (15 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (15 | )
Stock awarded to directors |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 84 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 84 |
Restricted stock compensation expense |  |  | - |  |  |  | 5 |  |  |  | - |  |  |  | 10 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 15 |
Other comprehensive loss, net of tax |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (5,847 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (5,847 | )
Balance at March 31, 2022 |  | $ | - |  |  | $ | 489 |  |  | $ | 272 |  |  | $ | 143,373 |  |  | $ | (6,398 | ) |  | $ | 4,616 |  |  | $ | (813 | ) |  | $ | (5,326 | ) |  | $ | 124 |  |  | $ | 136,337 |
Balance at January 1, 2021 |  | $ | - |  |  | $ | 219 |  |  | $ | 87 |  |  | $ | 46,851 |  |  | $ | 164 |  |  | $ | 7,783 |  |  | $ | (893 | ) |  | $ | (5,326 | ) |  | $ | - |  |  | $ | 48,885 |
Net loss for the three months ended March 31, 2021 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (3,487 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (3,487 | )
Release of unearned ESOP shares |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 7 |  |  |  | - |  |  |  | - |  |  |  | 16 |  |  |  | - |  |  |  | - |  |  |  | 23 |
Restricted stock compensation expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 162 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 162 |
Common stock cancelled for payment of tax withholding |  |  | - |  |  |  | (1 | ) |  |  | - |  |  |  | (446 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (447 | )
Stock awarded to directors |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 45 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 45 |
Stock option compensation expense |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 6 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 6 |
Other comprehensive loss, net of tax |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (111 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (111 | )
Balance at March 31, 2021 |  | $ | - |  |  | $ | 218 |  |  | $ | 87 |  |  | $ | 46,625 |  |  | $ | 53 |  |  | $ | 4,296 |  |  | $ | (877 | ) |  | $ | (5,326 | ) |  | $ | - |  |  | $ | 45,076 |

See accompanying notes to unaudited consolidated financial statements.
4

Table of Contents
BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements
NOTE (1) – Basis of Financial Statement Presentation
The accompanying unaudited consolidated financial statements include Broadway Financial Corporation (the “Company”) and its wholly owned subsidiary, City First Bank, National Association (the “Bank” and, together with the Company, “City First Broadway”). Also included in the unaudited consolidated financial statements are the following subsidiaries of City First Bank: 1432 U Street LLC, Broadway Service Corporation, City First Real Estate LLC, City First Real Estate II LLC, City First Real Estate III LLC, City First Real Estate IV LLC, and CF New Markets Advisors, LLC (“CFNMA”). In addition, CFNMA also consolidates CFC Fund Manager II, LLC; City First New Markets Fund II, LLC; City First Capital IX, LLC; and City First Capital 45, LLC (“CFC 45”) into its financial results. All significant intercompany balances and transactions have been eliminated in consolidation.
The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for quarterly reports on Form 10-Q. These unaudited consolidated financial statements do not include all disclosures associated with the Company’s consolidated annual financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2021 (“2021 Form 10-K”) and, accordingly, should be read in conjunction with such audited consolidated financial statements. In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.
Subsequent events have been evaluated through May 16, 2022, which is the date these financial statements were issued.
Except as discussed below, our accounting policies are described in Note 1 – Summary of Significant Accounting Policies of our audited consolidated financial statements included in the 2021 Form 10-K.
Newly Adopted Accounting Pronouncements
In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedients and exceptions regarding the accounting related to the modifications of certain contracts, relationships and other transactions that are affected by reference rate reform related to contracts that reference LIBOR or other reference rates that could be discontinued due to reference rate reform. This guidance was adopted by the Company as of January 1, 2022. As of January 1, 2022, the Company modified all of its loan contracts that were benchmarked to the LIBOR index to SOFR, and applied the practical expedients allowed by this ASU regarding treatment of those modifications.
Accounting Pronouncements Yet to Be Adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 replaces the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (“CECL”) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables, held-to-maturity debt securities, and reinsurance receivables. It also applies to off-balance sheet credit exposures not accounted for as insurance (such as loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor. For debt securities with other-than-temporary impairment, the guidance will be applied prospectively. Existing purchase credit impaired (“PCI”) assets will be grandfathered and classified as purchased credit deteriorated (“PCD”) assets at the date of adoption. The asset will be grossed up for the allowance for expected credit losses for all PCD assets at the date of adoption and will continue to recognize the noncredit discount in interest income based on the yield of such assets as of the adoption date. Subsequent changes in expected credit losses will be recorded through the allowance. For all other assets within the scope of CECL, a cumulative-effect adjustment will be recognized in retained earnings as of the beginning of the first reporting period in which the guidance is effective.
On October 16, 2019, the FASB voted to affirm the proposed amended effective date for ASU 2016-13 for smaller reporting companies (“SRCs”) as defined by the SEC. The final ASU, which was issued in November 2019, delays the implementation date for ASU 2016-13 to fiscal years beginning after December 15, 2022. SRCs are defined as companies with less than $250 million of public float or less than $100 million in annual revenues for the previous year and no public float or public float of less than $700 million. The Company qualifies as an SRC, and management will implement ASU 2016-13 in the first quarter of 2023. The estimated financial impact has not yet been determined.
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In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. This ASU clarifies the scope of the credit losses standard and addresses issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayments, among other things. The amendments to Topic 326 have the same effective dates as ASU 2016-13. This guidance is not expected to have a significant impact on the Company’s consolidated financial statements.
In May 2019, the FASB issued ASU No. 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief. This ASU allows entities to irrevocably elect the fair value option on an instrument-by-instrument basis for eligible financial assets measured at amortized cost basis upon adoption of the credit loss standards. The effective date for this ASU is the same as for ASU 2016-13. Management will evaluate this ASU in conjunction with ASU 2016-13 to determine whether the fair value option will be elected for any eligible financial assets.
In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. This new accounting standard pertains to eliminating certain existing accounting guidance for troubled debt restructurings (“TDRs”) by creditors and adding additional disclosures related to the nature and characteristics of modifications of loans to borrowers experiencing financial difficulties and vintage disclosures for gross write-offs. The amendments to Topic 326 have the same effective dates as ASU 2016-13. This guidance is not expected to have a significant impact on the Company’s consolidated financial statements.
NOTE (2) – Business Combination
The Company completed its merger with CFBanc Corporation (“CFBanc”) on April 1, 2021, with the Company continuing as the surviving entity (the “CFBanc Merger”). Immediately following this merger, Broadway Federal Bank, f.s.b., a subsidiary of Broadway Financial Corporation, merged with and into City First Bank of D.C., National Association, with City First Bank of D.C., National Association continuing as the surviving entity (which concurrently changed its name to City First Bank, National Association). As of the acquisition date, CFBanc had $471.0 million in total assets, $227.7 million in gross loans, and $353.7 million of total deposits.
On April 1, 2021, (1) each share of CFBanc’s Class A Common Stock, par value $0.50 per share, and Class B Common Stock, par value $0.50 per share, issued and outstanding immediately prior to the CFBanc Merger was converted into 13.626 validly issued, fully paid and nonassessable shares, respectively, of the voting common stock of the Company, par value $0.01 per share, which were renamed Class A Common Stock, and a new class of non-voting common stock of the Company, par value $0.01 per share, which was named Class B Common Stock, and (2) each share of Fixed Rate Cumulative Redeemable Perpetual Preferred Stock, Series B, par value $0.50 per share, of CFBanc (“CFBanc Corporation Preferred Stock”) issued and outstanding immediately prior to the effective time of the CFBanc Merger was converted into one validly issued, fully paid and non-assessable share of a new series of preferred stock of the Company, which was designated as the Company’s Fixed Rate Cumulative Redeemable Perpetual Preferred Stock, Series A, with such rights, preferences, privileges and voting powers, and limitations and restrictions thereof, which taken as a whole, are not materially less favorable to the holders of CFBanc Corporation Preferred Stock than the rights, preferences, privileges and voting powers, and limitations and restrictions thereof of CFBanc Corporation Preferred Stock. The total value of the consideration transferred to CFBanc shareholders was approximately $66.3 million, which was based on the closing price of the Company’s common stock on March 31, 2021, the last trading day prior to the consummation of the merger.
The Company accounted for the CFBanc Merger under the acquisition method of accounting which requires purchased assets and liabilities assumed to be recorded at their respective fair values at the date of acquisition. The Company determined the fair value of the acquired assets and assumed liabilities with the assistance of third-party valuation firms. Goodwill in the amount of $26.0 million was recognized in the CFBanc Merger. Goodwill represents the future economic benefits arising from net assets acquired that are not individually identified and separately recognized and are attributable to synergies expected to be derived from the combination of the two entities. Goodwill is not amortized for financial reporting purposes; rather, it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, by comparing its carrying value to the reporting unit’s fair value. Goodwill recognized in this transaction is not deductible for income tax purposes.
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The following table represents the assets acquired and liabilities assumed in the CFBanc Merger as of April 1, 2021, and the fair value adjustments and amounts recorded by the Company as of the same date under the acquisition method of accounting:

|  | CFBanc Book Value |  |  | Fair Value Adjustments |  |  | Fair Value |
Assets acquired |  | (In thousands) |
Cash and cash equivalents |  | $ | 84,745 |  |  | $ | - |  |  | $ | 84,745 |
Securities available-for-sale |  |  | 150,052 |  |  |  | (77 | ) |  |  | 149,975 |
Loans receivable held for investment: |  |  |  |  |  |  |  |  |  |  |  |
Gross loans receivable held for investment |  |  | 227,669 |  |  |  | (1,784 | ) |  |  | 225,885 |
Deferred fees and costs |  |  | (315 | ) |  |  | 315 |  |  |  | - |
Allowance for loan losses |  |  | (2,178 | ) |  |  | 2,178 |  |  |  | - |
|  |  | 225,176 |  |  |  | 709 |  |  |  | 225,885 |
Accrued interest receivable |  |  | 1,637 |  |  |  | - |  |  |  | 1,637 |
FHLB and FRB stock |  |  | 1,061 |  |  |  | - |  |  |  | 1,061 |
Office properties and equipment |  |  | 5,152 |  |  |  | 1,801 |  |  |  | 6,953 |
Deferred tax assets, net |  |  | 890 |  |  |  | (1,608 | ) |  |  | (718 | )
Core deposit intangible |  |  | - |  |  |  | 3,329 |  |  |  | 3,329 |
Other assets |  |  | 2,290 |  |  |  | - |  |  |  | 2,290 |
Total assets |  | $ | 471,003 |  |  | $ | 4,154 |  |  | $ | 475,157 |
Liabilities assumed |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  | $ | 353,671 |  |  | $ | 51 |  |  | $ | 353,722 |
Securities sold under agreements to repurchase |  |  | 59,945 |  |  |  | - |  |  |  | 59,945 |
FHLB advances |  |  | 3,057 |  |  |  | 109 |  |  |  | 3,166 |
Notes payable |  |  | 14,000 |  |  |  | - |  |  |  | 14,000 |
Accrued expenses and other liabilities |  |  | 4,063 |  |  |  | - |  |  |  | 4,063 |
Total liabilities |  | $ | 434,736 |  |  | $ | 160 |  |  | $ | 434,896 |
Excess of assets acquired over liabilities assumed |  | $ | 36,267 |  |  | $ | 3,994 |  |  | $ | 40,261 |
Consideration paid |  |  |  |  |  |  |  |  |  | $ | 66,257 |
Goodwill recognized |  |  |  |  |  |  |  |  |  | $ | 25,996 |

The contractual amounts due, expected cash flows to be collected, the interest component, and the fair value of loans acquired from CFBanc as of the acquisition date were as follows:

|  | Acquired Loans |
|  | (In thousands) |
Contractual amounts due |  | $ | 231,432 |
Cash flows not expected to be collected |  |  | (3,666 | )
Expected cash flows |  |  | 227,766 |
Interest component of expected cash flows |  |  | (1,881 | )
Fair value of acquired loans |  | $ | 225,885 |

A component of total loans acquired from CFBanc were loans that were considered to be PCI loans. Refer to Note 5 for additional information regarding PCI loans. The following table presents the amounts that comprise the fair value of PCI loans (in thousands):

Contractual amounts due |  | $ | 1,825 |
Non-accretable difference (cash flows not expected to be collected) |  |  | (634 | )
Expected cash flows |  |  | 1,191 |
Accretable yield |  |  | (346 | )
Fair value of PCI acquired loans |  | $ | 845 |

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In accordance with generally accepted accounting principles, there was no carryover of the allowance for loan losses that had been previously recorded on loans by CFBanc.
The following table presents the net interest income, net income, and earnings per share as if the CFBanc Merger was effective as of January 1, 2021. The unaudited pro forma financial information included in the table below is based on various estimates and is presented for informational purposes only and does not indicate the financial condition or results of operations of the combined Company that would have been achieved for the periods presented had the transactions been completed as of the date indicated or that may be achieved in the future.

|  | Three months Ended |
|  | March 31, 2022 |  |  | March 31, 2021 |
|  | (Dollars in thousands, except per share amounts) |
Net interest income |  | $ | 7,172 |  |  | $ | 5,197 |
Net income (loss) |  |  | 958 |  |  |  | (4,277 | )
Basic earnings per share |  | $ | 0.01 |  |  | $ | (0.08 | )
Diluted earnings per share |  | $ | 0.01 |  |  | $ | (0.08 | )

NOTE (3) – Earnings Per Share of Common Stock
Basic earnings per share of common stock is computed pursuant to the two-class method by dividing net income available to common stockholders less dividends paid on participating securities (unvested shares of restricted common stock) and any undistributed earnings attributable to participating securities by the weighted average common shares outstanding during the period. The weighted average common shares outstanding includes the weighted average number of shares of common stock outstanding less the weighted average number of unvested shares of restricted common stock. Employee Stock Ownership Plan shares are considered outstanding for this calculation unless unearned. Diluted earnings per share of common stock includes the dilutive effect of unvested stock awards and additional potential common shares issuable under stock options.
The following table shows how the Company computed basic and diluted earnings (loss) per share of common stock for the periods indicated:

|  | For the three months ended March 31, |
|  | 2022 |  |  | 2021 |
|  | (In thousands, except share and per share data) |
Net income (loss) attributable to Broadway Financial Corporation |  | $ | 958 |  |  | $ | (3,487 | )
Less net income attributable to participating securities |  |  | 7 |  |  |  | - |
Income (loss) available to common stockholders |  | $ | 951 |  |  | $ | (3,487 | )
Weighted average common shares outstanding for basic earnings (loss) per common share |  |  | 72,039,378 |  |  |  | 27,357,750 |
Add: dilutive effects of stock options |  |  | 50,195 |  |  |  | - |
Add: dilutive effects of unvested restricted stock awards |  |  | 490,372 |  |  |  | - |
Weighted average common shares outstanding for diluted earnings (loss) per common share |  |  | 72,579,945 |  |  |  | 27,357,750 |
Income (loss) per common share - basic |  | $ | 0.01 |  |  | $ | (0.13 | )
Income (loss) per common share - diluted |  | $ | 0.01 |  |  | $ | (0.13 | )

Stock options for 450,000 shares of common stock for the three months ended March 31, 2021 were not considered in computing diluted earnings per common share because they were anti-dilutive due to the net loss. There were no unvested restricted stock awards as of March 31, 2021.
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NOTE (4) – Securities
The following table summarizes the amortized cost and fair value of the available-for-sale investment securities portfolios as of the periods indicated and the corresponding amounts of unrealized gains and losses that were recognized in accumulated other comprehensive income (loss):

|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
|  | (In thousands) |
March 31, 2022: |  |  |
Federal agency mortgage-backed securities |  | $ | 79,222 |  |  | $ | 31 |  |  | $ | (4,368 | ) |  | $ | 74,885 |
Federal agency collateralized mortgage obligations (“CMO”) |  |  | 8,910 |  |  |  | 11 |  |  |  | (373 | ) |  |  | 8,548 |
Federal agency debt |  |  | 42,035 |  |  |  | 58 |  |  |  | (1,826 | ) |  |  | 40,267 |
Municipal bonds |  |  | 4,890 |  |  |  | - |  |  |  | (354 | ) |  |  | 4,536 |
U. S. Treasuries |  |  | 28,168 |  |  |  | - |  |  |  | (1,104 | ) |  |  | 27,064 |
SBA pools |  |  | 15,770 |  |  |  | 18 |  |  |  | (780 | ) |  |  | 15,008 |
Total available-for-sale securities |  | $ | 178,995 |  |  | $ | 118 |  |  | $ | (8,805 | ) |  | $ | 170,308 |
December 31, 2021: |  |  |
Federal agency mortgage-backed securities |  | $ | 70,078 |  |  | $ | 196 |  |  | $ | (244 | ) |  | $ | 70,030 |
Federal agency CMOs |  |  | 9,391 |  |  |  | 11 |  |  |  | (115 | ) |  |  | 9,287 |
Federal agency debt |  |  | 38,152 |  |  |  | 106 |  |  |  | (270 | ) |  |  | 37,988 |
Municipal bonds |  |  | 4,898 |  |  |  | 40 |  |  |  | (23 | ) |  |  | 4,915 |
U.S. Treasuries |  |  | 18,169 |  |  |  | - |  |  |  | (218 | ) |  |  | 17,951 |
SBA pools |  |  | 16,241 |  |  |  | 122 |  |  |  | (138 | ) |  |  | 16,225 |
Total available-for-sale securities |  | $ | 156,929 |  |  | $ | 475 |  |  | $ | (1,008 | ) |  | $ | 156,396 |

The Bank held 129 securities with unrealized losses of $8.8 million at March 31, 2022. None of these securities has been in a loss position for greater than one year. The Bank’s securities were primarily issued by the federal government or its agencies. The unrealized gains or losses on our available-for-sale securities at March 31, 2022 were primarily caused by movements in market interest rates subsequent to the purchase of such securities.
The Bank held 129 securities with unrealized losses of $1.0 million at December 31, 2021. None of these securities has been in a loss position for greater than one year. The Bank’s securities were primarily issued by the federal government or its agencies. The unrealized gains or losses on our available-for-sale securities at December 31, 2021 were primarily caused by movements in market interest rates subsequent to the purchase of such securities.
Securities with a market value of $61.9 million were pledged as collateral for securities sold under agreements to repurchase as of March 31, 2022, and included $22.3 million of U.S. Government Agency securities, $33.5 million of mortgage-backed securities, $4.1 million of federal agency CMO and $2.0 million of Small Business Administration (“SBA”) pool securities. Securities with a market value of $53.2 million were pledged as collateral for securities sold under agreements to repurchase as of December 31, 2021 and included $25.9 million of federal agency mortgage-backed securities, $13.3 million of federal agency debt, $9.8 million of SBA pool, and $4.2 million of federal agency CMO. (See Note 7 – Borrowings). There were no securities pledged to secure public deposits at March 31, 2022 or December 31, 2021.
The amortized cost and estimated fair value of all investment securities available-for-sale at March 31, 2022, by contractual maturities are shown below. Contractual maturities may differ from expected maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
|  | (In thousands) |
Due in one year or less |  | $ | 1,009 |  |  | $ | - |  |  | $ | (5 | ) |  | $ | 1,004 |
Due after one year through five years |  |  | 49,938 |  |  |  | - |  |  |  | (2,086 | ) |  |  | 47,852 |
Due after five years through ten years |  |  | 19,373 |  |  |  | 8 |  |  |  | (1,075 | ) |  |  | 18,306 |
Due after ten years (1) |  |  | 108,675 |  |  |  | 110 |  |  |  | (5,639 | ) |  |  | 103,146 |
|  | $ | 178,995 |  |  | $ | 118 |  |  | $ | (8,805 | ) |  | $ | 170,308 |

(1) | Mortgage-backed securities, collateralized mortgage obligations and SBA pools do not have a single stated maturity date and therefore have been included in the “Due after ten years” category.

At March 31, 2022 and December 31, 2021, there were no holdings of securities by any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity. There were no sales of securities during the three months ended March 31, 2022.
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NOTE (5) – Loans Receivable Held for Investment
Loans receivable held for investment were as follows as of the dates indicated:

|  | March 31, 2022 |  |  | December 31, 2021 |
|  | (In thousands) |
Real estate: |  |  |  |  |  |
Single family |  | $ | 40,145 |  |  | $ | 45,372 |
Multi-family |  |  | 401,252 |  |  |  | 393,704 |
Commercial real estate |  |  | 90,402 |  |  |  | 93,193 |
Church |  |  | 21,365 |  |  |  | 22,503 |
Construction |  |  | 33,938 |  |  |  | 32,072 |
Commercial – other |  |  | 53,880 |  |  |  | 46,539 |
SBA loans |  |  | 15,488 |  |  |  | 18,837 |
Consumer |  |  | 146 |  |  |  | - |
Gross loans receivable before deferred loan costs and premiums |  |  | 656,616 |  |  |  | 652,220 |
Unamortized net deferred loan costs and premiums |  |  | 1,674 |  |  |  | 1,526 |
Gross loans receivable |  |  | 658,290 |  |  |  | 653,746 |
Credit and interest marks on purchased loans, net |  |  | (1,376 | ) |  |  | (1,842 | )
Allowance for loan losses |  |  | (3,539 | ) |  |  | (3,391 | )
Loans receivable, net |  | $ | 653,375 |  |  | $ | 648,513 |

As of March 31, 2022 and December 31, 2021, the commercial loan category above included $14.7 million and $18.0 million, respectively, of loans issued under the SBA’s Paycheck Protection Program (PPP). PPP loans have terms of two to five years and earn interest at 1%. PPP loans are fully guaranteed by the SBA and have virtually no risk of loss. The Bank expects the vast majority of the PPP loans to be fully forgiven by the SBA.
As part of the CFBanc Merger, the Company acquired loans for which there was, at acquisition, evidence of credit deterioration of credit quality since origination and for which it was probable, at acquisition, that all contractually required payments would not be collected. Prior to the CFBanc Merger, there were no such acquired loans. The carrying amount of those loans as of March 31, 2022, and December 31, 2021, was as follows:

|  | March 31, 2022 |  |  | December 31, 2021 |
|  | (In thousands) |
Real estate: |  |  |  |  |  |
Single family |  | $ | 56 |  |  | $ | 558 |
Commercial real estate |  |  | - |  |  |  | 221 |
Commercial – other |  |  | 109 |  |  |  | 104 |
|  | $ | 165 |  |  | $ | 883 |

On the acquisition date, the amount by which the undiscounted expected cash flows of the PCI loans exceeded the estimated fair value of the loan is the accretable yield. The accretable yield is measured at each financial reporting date and represents the difference between the remaining undiscounted cash flows and the current carrying value of the PCI loan. At March 31, 2022, and December 31, 2021, none of the Company’s PCI loans were classified as nonaccrual.
The following table summarizes the accretable yield on the PCI loans for the three months ended March 31, 2022:

|  | March 31, 2022 |
|  | (In thousands) |
Balance at the beginning of the period |  | $ | 883 |
Deduction due to Payoffs |  |  | (707 | )
Accretion |  |  | 11 |
Balance at the end of the period |  | $ | 165 |

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The following tables present the activity in the allowance for loan losses by loan type for the periods indicated:

|  | For the three months ended March 31, 2022 |
|  | Real Estate |  |  |  |  |  |  |  |  |  |
|  | Single family |  |  | Multi- family |  |  | Commercial real estate |  |  | Church |  |  | Construction |  |  | Commercial - other |  |  | Consumer |  |  | Total |
Beginning balance |  | $ | 145 |  |  | $ | 2,657 |  |  | $ | 236 |  |  | $ | 103 |  |  | $ | 212 |  |  | $ | 23 |  |  | $ | 15 |  |  | $ | 3,391 |
Provision for (recapture of) loan losses |  |  | 12 |  |  |  | 114 |  |  |  | (20 | ) |  |  | (40 | ) |  |  | 25 |  |  |  | 57 |  |  |  | - |  |  |  | 148 |
Recoveries |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Loans charged off |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Ending balance |  | $ | 157 |  |  | $ | 2,771 |  |  | $ | 217 |  |  | $ | 63 |  |  | $ | 236 |  |  | $ | 95 |  |  | $ | - |  |  | $ | 3,539 |

|  | For the three months ended March 31, 2021 |
|  | Real Estate |  |  |  |  |  |  |  |  |  |
|  | Single family |  |  | Multi- family |  |  | Commercial real estate |  |  | Church |  |  | Construction |  |  | Commercial - other |  |  | Consumer |  |  | Total |
Beginning balance |  | $ | 296 |  |  | $ | 2,433 |  |  | $ | 222 |  |  | $ | 237 |  |  | $ | 22 |  |  | $ | 4 |  |  | $ | 1 |  |  | $ | 3,215 |
Provision for (recapture of) loan losses |  |  | (21 | ) |  |  | 40 |  |  |  | (3 | ) |  |  | (16 | ) |  |  | - |  |  |  | 1 |  |  |  | (1 | ) |  |  | - |
Recoveries |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Loans charged off |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Ending balance |  | $ | 275 |  |  | $ | 2,473 |  |  | $ | 219 |  |  | $ | 221 |  |  | $ | - |  |  | $ | 5 |  |  | $ | - |  |  | $ | 3,215 |

The following tables present the balance in the allowance for loan losses and the recorded investment (unpaid contractual principal balance less charge-offs, less interest applied to principal, plus unamortized deferred costs and premiums) by loan type and based on impairment method as of the dates indicated:

|  | March 31, 2022 |
|  | Real Estate |  |  |  |  |  |  |  |  |  |
|  | Single family |  |  | Multi- family |  |  | Commercial real estate |  |  | Church |  |  | Construction |  |  | Commercial - other |  |  | SBA |  |  | Total |
|  | (In thousands) |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending allowance balance attributable to loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 3 |  |  | $ | - |  |  | $ | - |  |  | $ | 4 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 7 |
Collectively evaluated for impairment |  |  | 154 |  |  |  | 2,771 |  |  |  | 217 |  |  |  | 59 |  |  |  | 236 |  |  |  | 95 |  |  |  | - |  |  |  | 3,532 |
Total ending allowance balance |  | $ | 157 |  |  | $ | 2,771 |  |  | $ | 217 |  |  | $ | 63 |  |  | $ | 236 |  |  | $ | 95 |  |  | $ | - |  |  | $ | 3,539 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans individually evaluated for impairment |  | $ | 64 |  |  | $ | 277 |  |  | $ | - |  |  | $ | 1,907 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 2,248 |
Loans collectively evaluated for impairment |  |  | 31,151 |  |  |  | 368,647 |  |  |  | 24,594 |  |  |  | 8,062 |  |  |  | 26,606 |  |  |  | 17,281 |  |  |  | - |  |  |  | 476,341 |
Subtotal |  |  | 31,215 |  |  |  | 368,924 |  |  |  | 24,594 |  |  |  | 9,969 |  |  |  | 26,606 |  |  |  | 17,281 |  |  |  | - |  |  |  | 478,589 |
Loans acquired in the Merger |  |  | 8,930 |  |  |  | 34,002 |  |  |  | 65,808 |  |  |  | 11,396 |  |  |  | 7,332 |  |  |  | 36,599 |  |  |  | 15,488 |  |  |  | 179,701 |
Total ending loans balance |  | $ | 40,145 |  |  | $ | 402,926 |  |  | $ | 90,402 |  |  | $ | 21,365 |  |  | $ | 33,938 |  |  | $ | 53,880 |  |  | $ | 15,488 |  |  | $ | 658,290 |

|  | December 31, 2021 |
|  | Real Estate |  |  |  |  |  |  |  |  |  |
|  | Single family |  |  | Multi- family |  |  | Commercial real estate |  |  | Church |  |  | Construction |  |  | Commercial - other |  |  | SBA |  |  | Total |
|  | (In thousands) |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending allowance balance attributable to loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 3 |  |  | $ | - |  |  | $ | - |  |  | $ | 4 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 7 |
Collectively evaluated for impairment |  |  | 142 |  |  |  | 2,657 |  |  |  | 236 |  |  |  | 99 |  |  |  | 212 |  |  |  | 23 |  |  |  | 15 |  |  |  | 3,384 |
Total ending allowance balance |  | $ | 145 |  |  | $ | 2,657 |  |  | $ | 236 |  |  | $ | 103 |  |  | $ | 212 |  |  | $ | 23 |  |  | $ | 15 |  |  | $ | 3,391 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans individually evaluated for impairment |  | $ | 65 |  |  | $ | 282 |  |  | $ | - |  |  | $ | 1,954 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 2,301 |
Loans collectively evaluated for impairment |  |  | 32,599 |  |  |  | 353,179 |  |  |  | 25,507 |  |  |  | 9,058 |  |  |  | 24,225 |  |  |  | 3,124 |  |  |  | - |  |  |  | 447,692 |
Subtotal |  |  | 32,664 |  |  |  | 353,461 |  |  |  | 25,507 |  |  |  | 11,012 |  |  |  | 24,225 |  |  |  | 3,124 |  |  |  | - |  |  |  | 449,993 |
Loans acquired in the Merger |  |  | 12,708 |  |  |  | 41,769 |  |  |  | 67,686 |  |  |  | 11,491 |  |  |  | 7,847 |  |  |  | 43,415 |  |  |  | 18,837 |  |  |  | 203,753 |
Total ending loans balance |  | $ | 45,372 |  |  | $ | 395,230 |  |  | $ | 93,193 |  |  | $ | 22,503 |  |  | $ | 32,072 |  |  | $ | 46,539 |  |  | $ | 18,837 |  |  | $ | 653,746 |

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The following table presents information related to loans individually evaluated for impairment by loan type as of the dates indicated:

|  | March 31, 2022 |  |  | December 31, 2021 |
|  | Unpaid Principal Balance |  |  | Recorded Investment |  |  | Allowance for Loan Losses Allocated |  |  | Unpaid Principal Balance |  |  | Recorded Investment |  |  | Allowance for Loan Losses Allocated |
|  | (In thousands) |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Multi-family |  | $ | 277 |  |  | $ | 277 |  |  | $ | - |  |  | $ | 282 |  |  | $ | 282 |  |  | $ | - |
Church |  |  | 1,811 |  |  |  | 1,810 |  |  |  | - |  |  |  | 1,854 |  |  |  | 1,854 |  |  |  | - |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single family |  |  | 64 |  |  |  | 64 |  |  |  | 3 |  |  |  | 65 |  |  |  | 65 |  |  |  | 3 |
Church |  |  | 96 |  |  |  | 96 |  |  |  | 4 |  |  |  | 100 |  |  |  | 100 |  |  |  | 4 |
Total |  | $ | 2,248 |  |  | $ | 2,248 |  |  | $ | 7 |  |  | $ | 2,301 |  |  | $ | 2,301 |  |  | $ | 7 |

The recorded investment in loans excludes accrued interest receivable due to immateriality. For purposes of this disclosure, the unpaid principal balance is not reduced for net charge-offs.
The following table presents the monthly average of loans individually evaluated for impairment by loan type and the related interest income for the periods indicated:

|  | Three Months Ended March 31, 2022 |  |  | Three Months Ended March 31, 2021 |
|  | Average Recorded Investment |  |  | Cash Basis Interest Income Recognized |  |  | Average Recorded Investment |  |  | Cash Basis Interest Income Recognized |
|  | (In thousands) |
Single family |  | $ | 64 |  |  | $ | 1 |  |  | $ | 571 |  |  | $ | 7 |
Multi-family |  |  | 279 |  |  |  | 5 |  |  |  | 296 |  |  |  | 5 |
Church |  |  | 2,535 |  |  |  | 25 |  |  |  | 3,789 |  |  |  | 63 |
Commercial – other |  |  | - |  |  |  | - |  |  |  | 46 |  |  |  | 1 |
Total |  | $ | 2,878 |  |  | $ | 31 |  |  | $ | 4,702 |  |  | $ | 76 |

Cash-basis interest income recognized represents cash received for interest payments on accruing impaired loans and interest recoveries on non-accrual loans that were paid off. Interest payments collected on non-accrual loans are characterized as payments of principal rather than payments of the outstanding accrued interest on the loans until the remaining principal on the non-accrual loans is considered to be fully collectible or paid off. When a loan is returned to accrual status, the interest payments that were previously applied to principal are deferred and amortized over the remaining life of the loan. Foregone interest income that would have been recognized had loans performed in accordance with their original terms amounted to $17 thousand and $19 thousand for the three months ended March 31, 2022 and 2021, respectively and were not included in the consolidated results of operations.
The following tables present the aging of the recorded investment in past due loans by loan type as of the dates indicated:

|  | March 31, 2022 |
|  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | Greater than 90 Days Past Due |  |  | Total Past Due |  |  | Current |  |  | Total |
|  | (In thousands) |
Loans receivable held for investment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single family |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 40,145 |  |  | $ | 40,145 |
Multi-family |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 402,926 |  |  |  | 402,926 |
Commercial real estate |  |  | 2,944 |  |  |  | - |  |  |  | - |  |  |  | 2,944 |  |  |  | 87,458 |  |  |  | 90,402 |
Church |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 21,365 |  |  |  | 21,365 |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 33,938 |  |  |  | 33,938 |
Commercial - other |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 53,880 |  |  |  | 53,880 |
SBA loans |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 15,488 |  |  |  | 15,488 |
Consumer |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 146 |  |  |  | 146 |
Total |  | $ | 2,944 |  |  | $ | - |  |  | $ | - |  |  | $ | 2,944 |  |  | $ | 655,346 |  |  | $ | 658,290 |

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|  | December 31, 2021 |
|  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | Greater than 90 Days Past Due |  |  | Total Past Due |  |  | Current |  |  | Total |
|  | (In thousands) |
Loans receivable held for investment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single family |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 45,372 |  |  | $ | 45,372 |
Multi-family |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 395,230 |  |  |  | 395,230 |
Commercial real estate |  |  | - |  |  |  | 2,423 |  |  |  | - |  |  |  | 2,423 |  |  |  | 90,770 |  |  |  | 93,193 |
Church |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 22,503 |  |  |  | 22,503 |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 32,072 |  |  |  | 32,072 |
Commercial - other |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 46,539 |  |  |  | 46,539 |
SBA |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 18,837 |  |  |  | 18,837 |
Total |  | $ | - |  |  | $ | 2,423 |  |  | $ | - |  |  | $ | 2,423 |  |  | $ | 651,323 |  |  | $ | 653,746 |

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

|  | March 31, 2022 |  |  | December 31, 2021 |
|  | (In thousands) |
Loans receivable held for investment: |  |  |  |  |  |
Church |  |  | 653 |  |  |  | 684 |
Total non-accrual loans |  | $ | 653 |  |  | $ | 684 |

There were no loans 90 days or more delinquent that were accruing interest as of March 31, 2022 or December 31, 2021. None of the church non-accrual loans were delinquent, but none qualified for accrual status as of the periods indicated.
Troubled Debt Restructurings
At March 31, 2022, loans classified as TDRs totaled $1.8 million, of which $177 thousand were included in non-accrual loans and $1.6 million were on accrual status. At December 31, 2021, loans classified as TDRs totaled $1.8 million, of which $188 thousand were included in non-accrual loans and $1.6 million were on accrual status. The Company has allocated $7 thousand of specific reserves for accruing TDRs as of March 31, 2022 and December 31, 2021. TDRs on accrual status are comprised of loans that were accruing at the time of restructuring or loans that have complied with the terms of their restructured agreements for a satisfactory period of time and for which the Bank anticipates full repayment of both principal and interest. TDRs that are on non-accrual status can be returned to accrual status after a period of sustained performance, generally determined to be six months of timely payments, as modified. A well-documented credit analysis that supports a return to accrual status based on the borrower’s financial condition and prospects for repayment under the revised terms is also required. As of March 31, 2022 and December 31, 2021, the Company had no commitment to lend additional amounts to customers with outstanding loans that are classified as TDRs. No loans were modified during the three month periods ended March 31, 2022 and 2021.
Credit Quality Indicators
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. For single family residential, consumer and other smaller balance homogenous loans, a credit grade is established at inception, and generally only adjusted based on performance. Information about payment status is disclosed elsewhere within this footnote. The Company analyzes all other loans individually by classifying the loans as to credit risk. This analysis is performed at least on a quarterly basis. The Company uses the following definitions for risk ratings:

| ● | Watch. Loans classified as watch exhibit weaknesses that could threaten the current net worth and paying capacity of the obligors. Watch graded loans are generally performing and are not more than 59 days past due. A watch rating is used when a material deficiency exists, but correction is anticipated within an acceptable time frame.

| ● | Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

| ● | Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

| ● | Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

| ● | Loss. Loans classified as loss are considered uncollectible and of such little value that to continue to carry the loan as an active asset is no longer warranted.

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Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. Pass rated loans are generally well protected by the current net worth and paying capacity of the obligor and/or by the value of the underlying collateral. Pass rated loans are not more than 59 days past due and are generally performing in accordance with the loan terms. Based on the most recent analysis performed, the risk categories of loans by loan type as of the periods indicated were as follows:

|  | March 31, 2022 |
|  | Pass |  |  | Watch |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Loss |  |  | Total |
|  | (In thousands) |
Single family |  | $ | 38,135 |  |  | $ | 1,328 |  |  | $ | 268 |  |  | $ | 414 |  |  | $ | - |  |  | $ | - |  |  | $ | 40,145 |
Multi-family |  |  | 385,748 |  |  |  | 6,428 |  |  |  | 2,540 |  |  |  | 8,210 |  |  |  | - |  |  |  | - |  |  |  | 402,926 |
Commercial real estate |  |  | 70,078 |  |  |  | 9,589 |  |  |  | 5,970 |  |  |  | 4,765 |  |  |  | - |  |  |  | - |  |  |  | 90,402 |
Church |  |  | 16,795 |  |  |  | 931 |  |  |  | - |  |  |  | 3,639 |  |  |  | - |  |  |  | - |  |  |  | 21,365 |
Construction |  |  | 9,158 |  |  |  | 24,780 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 33,938 |
Commercial - other |  |  | 41,397 |  |  |  | 12,167 |  |  |  | - |  |  |  | 307 |  |  |  | 9 |  |  |  | - |  |  |  | 53,880 |
SBA |  |  | 14,668 |  |  |  | 657 |  |  |  | 163 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 15,488 |
Consumer |  |  | 146 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 146 |
Total |  | $ | 576,125 |  |  | $ | 55,880 |  |  | $ | 8,941 |  |  | $ | 17,335 |  |  | $ | 9 |  |  | $ | - |  |  | $ | 658,290 |

|  | December 31, 2021 |
|  | Pass |  |  | Watch |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Loss |  |  | Total |
|  | (In thousands) |
Single family |  | $ | 42,454 |  |  | $ | 1,343 |  |  | $ | 271 |  |  | $ | 1,304 |  |  | $ | - |  |  | $ | - |  |  | $ | 45,372 |
Multi-family |  |  | 378,141 |  |  |  | 7,987 |  |  |  | 575 |  |  |  | 8,527 |  |  |  | - |  |  |  | - |  |  |  | 395,230 |
Commercial real estate |  |  | 69,257 |  |  |  | 7,034 |  |  |  | 9,847 |  |  |  | 7,055 |  |  |  | - |  |  |  | - |  |  |  | 93,193 |
Church |  |  | 20,021 |  |  |  | - |  |  |  | - |  |  |  | 2,482 |  |  |  | - |  |  |  | - |  |  |  | 22,503 |
Construction |  |  | 10,522 |  |  |  | 21,550 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 32,072 |
Commercial - other |  |  | 33,988 |  |  |  | 12,551 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 46,539 |
SBA |  |  | 18,665 |  |  |  | - |  |  |  | 172 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 18,837 |
Total |  | $ | 573,048 |  |  | $ | 50,465 |  |  | $ | 10,865 |  |  | $ | 19,368 |  |  | $ | - |  |  | $ | - |  |  | $ | 653,746 |

NOTE (6) – Goodwill and Intangible Assets
In connection with the CFBanc Merger completed as of April 1, 2021 (See Note 2 - Business Combination), the Company recognized goodwill of $26.0 million and a core deposit intangible of $3.3 million. The following table presents the changes in the carrying amounts of goodwill and core deposit intangibles for the three months ended March 31, 2022:

|  | Goodwill |  |  | Core Deposit Intangible |
|  | (In thousands) |
Balance at the beginning of the period |  | $ | 25,996 |  |  | $ | 2,936 |
Additions |  |  | - |  |  |  | - |
Change in deferred tax estimate |  |  | (138 | ) |  |  | (109 | )
Impairment |  |  | - |  |  |  | - |
Balance at the end of the period |  | $ | 25,858 |  |  | $ | 2,827 |

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The following table outlines the estimated amortization expense for the core deposit intangible during the next five fiscal years:

|  | (In thousands) |
2022 |  | $ | 326 |
2023 |  |  | 390 |
2024 |  |  | 336 |
2025 |  |  | 315 |
2026 |  |  | 304 |
Thereafter |  |  | 1,156 |
|  | $ | 2,827 |

NOTE (7) – Borrowings
The Bank enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities. Under these arrangements, the Bank may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Bank to repurchase the assets. As a result, these repurchase agreements are accounted for as collateralized financing agreements (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities. The obligation to repurchase the securities is reflected as a liability in the Banks’s consolidated statements of financial condition, while the securities underlying the repurchase agreements remain in the respective investment securities asset accounts. In other words, there is no offsetting or netting of the investment securities assets with the repurchase agreement liabilities. These agreements mature on a daily basis. As of March 31, 2022, securities with a market value of $61.9 million were pledged as collateral for securities sold under agreements to repurchase and included $22.3 million of U.S. Government Agency securities, $33.5 million of mortgage-backed securities, $4.1 million of federal agency CMO and $2.0 million of SBA pool securities. As of December 31, 2021, securities sold under agreements to repurchase totaled $52.0 million at an average rate of 0.10%. The market value of securities pledged totaled $53.2 million as of December 31, 2021 and included $13.3 million of U.S. Government Agency securities and $39.9 million of mortgage-backed securities.
At March 31, 2022 and December 31, 2021, the Bank had outstanding advances from the FHLB of San Francisco totaling $73.0 million and $86.0 million, respectively. The weighted interest rate was 1.66% and 1.85% as of March 31, 2022 and December 31, 2021, respectively. The weighted average contractual maturity was 22 months and 22 months as of March 31, 2022 and December 31, 2021, respectively. The advances were collateralized by loans with a market value of $106.5 million at March 31, 2022 and $165.0 million at December 31, 2021. The Bank also had $2.9 million in outstanding borrowings from the FHLB of Atlanta as of March 31, 2022 at an average rate of 2.60%. Principal repayments of $12 thousand per month are required until January 6, 2025 when the advance fully matures. The advances were collateralized by loans with a market value of $22.4 million as of March 31, 2022.
In connection with the New Market Tax Credit activities of the Bank, CFC 45 is a partnership whose members include CFNMA and City First New Markets Fund II, LLC. This community development entity (“CDE”) acts in effect as a pass-through for a Merrill Lynch allocation totaling $14.0 million that needed to be deployed. In December 2015, Merrill Lynch made a $14.0 million non-recourse loan to CFC 45, whereby CFC 45 passed that loan through to a Qualified Active Low-Income Business (“QALICB”). The loan to the QALICB is secured by a Leasehold Deed of Trust that, due to the pass-through, non-recourse structure, is operationally and ultimately for the benefit of Merrill Lynch rather than CFC 45. Debt service payments received by CFC 45 from the QALICB are passed through to Merrill Lynch in return for which CFC 45 receives a servicing fee. The financial statements of CFC 45 are consolidated with those of the Bank and the Company.
There are two notes for CFC 45. Note A is in the amount of $9.9 million with a fixed interest rate of 5.2% per annum. Note B is in the amount of $4.1 million with a fixed interest rate of 0.24% per annum. Quarterly interest only payments commenced in March 2016 and will continue through March 2023 for Notes A and B. Beginning in September 2023, quarterly principal and interest payments will be due for Notes A and B. Both notes will mature on December 1, 2040.
NOTE (8) – Fair Value
The Company used the following methods and significant assumptions to estimate fair value:
The fair values of securities available-for-sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).
The fair value of impaired loans that are collateral dependent is generally based upon the fair value of the collateral, which is obtained from recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.
Assets acquired through or by transfer in lieu of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at the lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which are updated every three months. These appraisals may utilize a single valuation approach or a combination of approaches, including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Real estate owned properties are evaluated on a quarterly basis for additional impairment and adjusted accordingly.
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Appraisals for collateral-dependent impaired loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, an independent third-party licensed appraiser reviews the appraisals for accuracy and reasonableness, reviewing the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics.
Assets Measured on a Recurring Basis
Assets measured at fair value on a recurring basis are summarized below:

|  | Fair Value Measurement |
|  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |  |  | Total |
|  | (In thousands) |
At March 31, 2022: |  |  |  |  |  |  |  |  |  |  |  |
Securities available for sale: |  |  |  |  |  |  |  |  |  |  |  |
Federal agency mortgage-backed |  | $ | - |  |  | $ | 79,222 |  |  | $ | - |  |  | $ | 79,222 |
Federal agency CMO |  |  | - |  |  |  | 8,910 |  |  |  | - |  |  |  | 8,910 |
Federal agency debt |  |  | - |  |  |  | 42,035 |  |  |  | - |  |  |  | 42,035 |
Municipal bonds |  |  | - |  |  |  | 4,890 |  |  |  | - |  |  |  | 4,890 |
U. S. Treasuries |  |  | - |  |  |  | 26,168 |  |  |  | - |  |  |  | 26,168 |
SBA pools |  |  | - |  |  |  | 15,770 |  |  |  | - |  |  |  | 15,770 |
At December 31, 2021: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities available for sale: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal agency mortgage-backed |  | $ | - |  |  | $ | 70,030 |  |  | $ | - |  |  | $ | 70,030 |
Federal agency CMO |  |  | - |  |  |  | 9,287 |  |  |  | - |  |  |  | 9,287 |
Federal agency debt |  |  | - |  |  |  | 37,988 |  |  |  | - |  |  |  | 37,988 |
Municipal bonds |  |  | - |  |  |  | 4,915 |  |  |  | - |  |  |  | 4,915 |
U. S. Treasuries |  |  | - |  |  |  | 17,951 |  |  |  | - |  |  |  | 17,951 |
SBA pools |  |  | - |  |  |  | 16,225 |  |  |  | - |  |  |  | 16,225 |

There were no transfers between Level 1, Level 2, or Level 3 during the three months ended March 31, 2022 and 2021.
Assets Measured on a Non-Recurring Basis
Assets are considered to be reflected at fair value on a non-recurring basis if the fair value measurement of the instrument does not necessarily result in a change in the amount recorded on the statements of financial condition. Generally, a non-recurring valuation is the result of the application of other accounting pronouncements that require assets to be assessed for impairment or recorded at the lower of cost or fair value.
As of March 31, 2022 and December 31, 2021, the Bank did not have any impaired loans carried at fair value of collateral.
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Fair Values of Financial Instruments
The following tables present the carrying amount, fair value, and level within the fair value hierarchy of the Company’s financial instruments as of March 31, 2022 and December 31, 2021.

|  |  |  |  | Fair Value Measurements at March 31, 2022 |
|  | Carrying Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
|  | (In thousands) |
Financial Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 246,106 |  |  | $ | 246,106 |  |  | $ | - |  |  | $ | - |  |  | $ | 246,106 |
Securities available-for-sale |  |  | 170,308 |  |  |  | - |  |  |  | 170,308 |  |  |  | - |  |  |  | 170,308 |
Loans receivable held for investment |  |  | 653,375 |  |  |  | - |  |  |  | - |  |  |  | 598,354 |  |  |  | 598,354 |
Accrued interest receivable |  |  | 2,449 |  |  |  | 1 |  |  |  | 266 |  |  |  | 2,182 |  |  |  | 2,449 |
Bank owned life insurance |  |  | 3,200 |  |  |  | 3,200 |  |  |  | - |  |  |  | - |  |  |  | 3,200 |
Financial Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  | $ | 839,714 |  |  | $ | - |  |  | $ | 784,698 |  |  | $ | - |  |  | $ | 784,698 |
Federal Home Loan Bank advances |  |  | 73,001 |  |  |  | - |  |  |  | 72,037 |  |  |  | - |  |  |  | 72,037 |
Securities sold under agreements to repurchase |  |  | 56,003 |  |  |  | - |  |  |  | 52,873 |  |  |  | - |  |  |  | 52,873 |
Notes payable |  |  | 14,000 |  |  |  | - |  |  |  | 14,000 |  |  |  | - |  |  |  | 14,000 |
Accrued interest payable |  |  | 135 |  |  |  | - |  |  |  | 135 |  |  |  | - |  |  |  | 135 |

|  |  |  |  | Fair Value Measurements at December 31, 2021 |
|  | Carrying Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
|  | (In thousands) |
Financial Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 231,520 |  |  | $ | 231,520 |  |  | $ | - |  |  | $ | - |  |  | $ | 231,520 |
Securities available-for-sale |  |  | 156,396 |  |  |  | - |  |  |  | 156,396 |  |  |  | - |  |  |  | 156,396 |
Loans receivable held for investment |  |  | 648,513 |  |  |  | - |  |  |  | - |  |  |  | 623,778 |  |  |  | 623,778 |
Accrued interest receivable |  |  | 3,372 |  |  |  | 19 |  |  |  | 1,089 |  |  |  | 2,264 |  |  |  | 3,372 |
Bank owned life insurance |  |  | 3,190 |  |  |  | 3,190 |  |  |  | - |  |  |  | - |  |  |  | 3,190 |
Financial Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  | $ | 788,052 |  |  | $ | - |  |  | $ | 754,181 |  |  | $ | - |  |  | $ | 754,181 |
Federal Home Loan Bank advances |  |  | 85,952 |  |  |  | - |  |  |  | 87,082 |  |  |  | - |  |  |  | 87,082 |
Securities sold under agreements to repurchase |  |  | 51,960 |  |  |  | - |  |  |  | 51,960 |  |  |  | - |  |  |  | 51,960 |
Notes payable |  |  | 14,000 |  |  |  | - |  |  |  | 14,000 |  |  |  | - |  |  |  | 14,000 |
Accrued interest payable |  |  | 119 |  |  |  | - |  |  |  | 119 |  |  |  | - |  |  |  | 119 |

In accordance with ASU No. 2016-01, the fair value of financial assets and liabilities was measured using an exit price notion. Although the exit price notion represents the value that would be received to sell an asset or paid to transfer a liability, the actual price received for a sale of assets or paid to transfer liabilities could be different from exit price disclosed.
NOTE (9) – Stock-based Compensation
The Long-Term Incentive Plan, which was adopted by the Company and approved by the stockholders in 2018 (the “LTIP”), permits the grant of non-qualified and incentive stock options, stock appreciation rights, full value awards and cash incentive awards. The plan is in effect for ten years. The maximum number of shares that can be awarded under the plan is 1,293,109 shares of common stock. As of March 31, 2022, there were 1,023,513 shares that had been awarded and 269,596 shares that were available to be issued under the LTIP.
During February of 2022 and 2021, the Company issued 47,187 and 20,736 shares of stock, respectively, to its directors under the 2018 LTIP, which were fully vested. The Company recorded $84 thousand and $45 thousand of compensation expense during the quarters ended March 31, 2022 and March 31, 2021, based on the fair value of the stock, which was determined using the fair value of the stock on the date of the award.
During March of 2022, the Company issued 495,262 shares to its officers and employees under the 2018 LTIP. Each restricted stock award is valued based on the fair value of the stock on the date of the award. These awarded shares of restricted stock fully vest over periods ranging from 36 months to 60 months from their respective dates of grant. Stock based compensation is recognized on a straight-line basis over the vesting period. There were no shares issued to officers and employees during 2021. During the quarter ended March 31, 2021, the company recorded $119 thousand of stock based compensation expense related to awards granted previously to 2021.
No stock options were granted during the three months ended March 31, 2022 and 2021.
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The following table summarizes stock option activity during the three months ended March 31, 2022 and 2021:

|  | Three months Ended March 31, 2022 |  |  | Three months Ended March 31, 2021 |
|  | Number Outstanding |  |  | Weighted Average Exercise Price |  |  | Number Outstanding |  |  | Weighted Average Exercise Price |
Outstanding at beginning of period |  |  | 450,000 |  |  | $ | 1.62 |  |  |  | 450,000 |  |  | $ | 1.62 |
Granted during period |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Exercised during period |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Forfeited or expired during period |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Outstanding at end of period |  |  | 450,000 |  |  | $ | 1.62 |  |  |  | 450,000 |  |  | $ | 1.62 |
Exercisable at end of period |  |  | 450,000 |  |  | $ | 1.62 |  |  |  | 450,000 |  |  | $ | 1.62 |

T he Company did not record any stock-based compensation expense related to stock options during the three months ended March 31, 2022. For the three months ended March 31, 2021, the Company recorded $6 thousand of expense related to stock options.
Options outstanding and exercisable at March 31, 2022 were as follows:

| Outstanding |  |  | Exercisable |
| Number Outstanding |  | Weighted Average Remaining Contractual Life |  | Weighted Average Exercise Price |  |  | Aggregate Intrinsic Value |  |  | Number Outstanding |  |  | Weighted Average Exercise Price |  |  | Aggregate Intrinsic Value |
|  | 450,000 |  |  |  | $ | 1.62 |  |  |  |  |  |  | 450,000 |  |  | $ | 1.62 |  |  |  |
|  | 450,000 |  | 4.40 years |  | $ | 1.62 |  |  | $ | - |  |  |  | 450,000 |  |  | $ | 1.62 |  |  | $ | - |

NOTE (10) – ESOP Plan
Employees participate in an ESOP after attaining certain age and service requirements. In December 2016, the ESOP purchased 1,493,679 shares of the Company’s common stock at $1.59 per share, for a total cost of $2.4 million, of which $1.2 million was funded with a loan from the Company. The loan will be repaid from the Bank’s annual discretionary contributions to the ESOP, net of dividends paid, over a period of 20 years. Shares of the Company’s common stock purchased by the ESOP are held in a suspense account until released for allocation to participants. When loan payments are made, shares are allocated to each eligible participant based on the ratio of each such participant’s compensation, as defined in the ESOP, to the total compensation of all eligible plan participants. As the unearned shares are released from the suspense account, the Company recognizes compensation expense equal to the fair value of the ESOP shares during the periods in which they become committed to be released. To the extent that the fair value of the ESOP shares released differs from the cost of such shares, the difference is charged or credited to equity as additional paid-in capital. Any dividends on allocated shares increase participant accounts. Any dividends on unallocated shares will be used to repay the loan. Participants will receive shares for their vested balance at the end of their employment. Compensation expense related to the ESOP was $18 thousand and $23 thousand for the three months ended March 31, 2022 and 2021.
Shares held by the ESOP were as follows:

|  | March 31, 2022 |  |  | December 31, 2021 |
|  | (Dollars in thousands) |
Allocated to participants |  |  | 1,087,216 |  |  |  | 1,087,216 |
Committed to be released |  |  | 20,128 |  |  |  | 10,064 |
Suspense shares |  |  | 512,554 |  |  |  | 521,618 |
Total ESOP shares |  |  | 1,619,898 |  |  |  | 1,618,898 |
Fair value of unearned shares |  | $ | 933 |  |  | $ | 1,454 |

Unearned shares, which are reported as Unearned ESOP shares in the equity section of the consolidated statements of financial condition, were $813 thousand and $829 thousand at March 31, 2022 and December 31, 2021, respectively.
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NOTE (11) – Regulatory Matters and Stockholders’ Equity
The Bank’s capital requirements are administered by the Office of the Comptroller of the Currency (“OCC”) and involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by the OCC. Failure to meet capital requirements can result in regulatory action.
As a result of the Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies have developed a “Community Bank Leverage Ratio” (“CBLR”) (the ratio of a bank’s tier 1 capital to average total consolidated assets) for financial institutions with assets of less than $10 billion. A “qualifying community bank” that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The federal banking agencies have set the Community Bank Leverage Ratio at 9%. The CARES Act temporarily lowered this ratio to 8% beginning in the three months ended March 31, 2020. The ratio then rose to 8.5% for 2021 and was reestablished at 9% on January 1, 2022. City First Bank, N.A. elected to adopt the CBLR option on April 1, 2020 as reflected in its March 31, 2020 Call Report.
Actual and required capital amounts and ratios as of the dates indicated are presented below.

|  | Actual |  |  |  | Minimum Required to Be Well Capitalized Under Prompt Corrective Action Provisions |
|  | Amount |  |  | Ratio |  |  |  | Amount |  |  | Ratio |
|  | (Dollars in thousands) |
March 31, 2022: |  |  |  |  |  |  |  |  |  |  |  |  |
Community Bank Leverage Ratio |  | $ | 99,993 |  |  |  | 9.45 | % |  |  | $ | 95,129 |  |  |  | 9.00 | %
December 31, 2021: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Community Bank Leverage Ratio |  | $ | 98,590 |  |  |  | 9.32 | % |  |  | $ | 89,871 |  |  |  | 8.50 | %

At March 31, 2022, the Company and the Bank met all the capital adequacy requirements to which they were subject. In addition, the Bank was “well capitalized” under the regulatory framework for prompt corrective action. Management believes that no conditions or events have occurred since March 31, 2022 that would materially adversely change the Bank’s capital classifications. From time to time, we may need to raise additional capital to support the Bank’s further growth and to maintain the “well capitalized” status.
During the first quarter of 2022 the Company completed the exchange of all the Series A Fixed Rate Cumulative Redeemable Preferred Stock, with an aggregate liquidation value of $3 million, plus accrued dividends, for 1,193,317 shares of Class A Common Stock at an exchange price of $2.51 per share of Class A Common Stock.
NOTE (12) – Income Taxes
The Company and its subsidiary are subject to U.S. federal and state income taxes. Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax asset will not be realized. In assessing the realization of deferred tax assets, management evaluated both positive and negative evidence, including the existence of cumulative losses in the current year and the prior two years, the amount of taxes paid in available carry-back years, the forecasts of future income and tax planning strategies.
At March 31, 2022, the Company maintained a $369 thousand valuation allowance on its deferred tax assets because the number of shares sold in the private placements completed on April 6, 2021 triggered limitations on the use of certain tax attributes under the Section 382 of the federal tax code. The ability to use net operating losses (“NOLs”) to offset future taxable income will be restricted and these NOLs could expire or otherwise be unavailable. In general, under Section 382 of the Code and corresponding provisions of state law, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income. For these purposes, an ownership change generally occurs where the aggregate stock ownership of one or more stockholders or groups of stockholders who owns at least 5% of a corporation’s stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a specified testing period.
NOTE (13) – Concentration of Credit Risk
The Bank has a significant concentration of deposits with one customer that accounted for approximately 16% of its deposits as of March 31, 2022. The Bank also has a significant concentration of short term borrowings from one customer that accounted for 74% of the outstanding balance of securities sold under agreements to repurchase as of March 31, 2022. The Bank expects to maintain the relationships with these customers for the foreseeable future.
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ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of the financial statements of Broadway Financial Corporation (the “Company,” “us,” “we,” or “our,”) 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, “Consolidated Financial Statements (Unaudited)” of this Quarterly Report on Form 10-Q and Item 8 of Part II, “Financial Statements and Supplementary Data” of our 2021 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 “anticipate,” “believe,” “estimate,” “expect,” “project,” “plan,” “forecast,” “intend,” and other similar expressions. These forward-looking statements are subject to risks and uncertainties, which could cause actual future results to differ materially from historical results or from those anticipated or implied by such statements. Readers should not place undue reliance on these forward-looking statements, which speak only as of their dates or, if no date is provided, then as of the date of this Form 10-Q. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law.
Critical Accounting Policies and Estimates
Critical accounting policies are those that involve significant judgments and assessments by management, and which could potentially result in materially different results under different assumptions and conditions. This discussion highlights those accounting policies that management considers critical. All accounting policies are important, however, and therefore you are encouraged to review each of the policies included in Note 1 “Summary of Significant Accounting Principles” of the Notes to Consolidated Financial Statements in our 2021 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 Loan Losses
The determination of the allowance for loan losses is considered critical due to the high degree of judgment involved, the subjectivity of the underlying assumptions used, and the potential for changes in the economic environment that could result in material changes in the amount of the allowance for loan losses considered necessary. The allowance is evaluated on a regular basis by management and the Board of Directors and is based on a periodic review of the collectability of the loans in light of historical experience, the nature and size of the loan portfolio, adverse situations that may affect borrowers’ ability to repay, the estimated value of any underlying collateral, prevailing economic conditions, and feedback from regulatory examinations.
Business Combinations
Business combinations are accounted for using the acquisition accounting method. Under the acquisition method, the Company measures the identifiable assets acquired, including identifiable intangible assets, and liabilities assumed in a business combination at fair value on the acquisition date. Goodwill is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Changes to the acquisition date fair values of assets acquired and liabilities assumed may be made as adjustments to goodwill over a 12-month measurement period following the date of acquisition. Such adjustments are attributable to additional information obtained related to fair value estimates of the assets acquired and liabilities assumed.
Acquired Loans
Acquired loans that are not considered to be PCI loans are recognized at fair value at the acquisition date, with the resulting credit and non-credit discount or premium being amortized or accreted into interest income using the level yield method. Acquired loans that in management’s judgement have shown evidence of deterioration in credit quality since origination are classified as PCI loans. Factors that indicate a loan may have shown evidence of credit deterioration include delinquency, downgrades in credit rating, non-accrual status, and other negative factors identified by management at the time of initial assessment. The Company estimates the amount and timing of expected cash flows for each PCI loan, and the expected cash flows in excess of the allocated fair value is recorded as interest income over the remaining life of the loan (accretable yield). The excess of the loan’s contractual principal and interest over expected cash flows is not recorded (non-accretable difference). Over the life of the PCI loan, expected cash flows continue to be estimated each quarter. If the present value of expected cash flows decreases from the prior estimate, a provision for loan losses is recorded and an allowance for loan losses is established. If the present value of expected cash flows increases from the prior estimate, the increase is recognized as part of future interest income.
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The estimates used to determine the fair values of non-PCI and PCI acquired loans can be complex and require significant judgment regarding items such as default rates, timing and amount of future cash flows, prepayment rates and other factors.
Goodwill and Intangible Assets
Goodwill and intangible assets acquired in a purchase business combination and that are determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exist that indicate the necessity for such impairment tests to be performed. The Company has selected November 30th as the date to perform the annual impairment test. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill is the only intangible asset with an indefinite life on the Company’s consolidated statement of financial condition.
Income Taxes
Deferred tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws. A valuation allowance is established against deferred tax assets when, based upon the available evidence including historical and projected taxable income, it is more likely than not that some or all the deferred tax asset will not be realized. In assessing the realization of deferred tax assets, management evaluates both positive and negative evidence, including the existence of any cumulative losses in the current year and the prior two years, the amount of taxes paid in available carry‑back years, forecasts of future income and available tax planning strategies. This analysis is updated quarterly.
Fair Value Measurements
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2: Significant observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
Fair values are estimated using relevant market information and other assumptions, as more fully disclosed in Note 8 of the Notes to Consolidated Financial Statements of this Quarterly Report on Form 10-Q. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for items. Changes in assumptions or in market conditions could significantly affect the estimates.
COVID-19 Pandemic Impact
The Company continues to monitor the impact of the lingering COVID-19 pandemic on its operations. To date, the Bank has not implemented layoffs or furloughs of any employees because of the pandemic.
Although the Bank developed plans and policies for providing financial relief to borrowers that may experience difficulties in meeting the terms of their loans, as of March 31, 2022, none of its borrowers had requested loan modifications and the Bank had no delinquencies related to COVID-19.
The Company participated in the Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”) by way of its merger with CFBanc Corporation. The Bank has originated $26.5 million in PPP since the merger. No PPP loans were originated during the three months ended March 31, 2022 as the program ended in June of 2021.
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Overview
The Company merged with CFBanc on April 1, 2021, with Broadway Financial Corporation continuing as the surviving entity. Immediately following the CFBanc Merger, Broadway Federal Bank, f.s.b. merged with and into City First Bank of D.C, National Association with City First Bank of D.C., National Association continuing as the surviving entity (which concurrently changed its name to City First Bank, National Association). Accordingly, results for the first quarter of 2022 include the operations of Broadway Financial Corporation and its subsidiary, City First Bank, National Association. Results for the three months ended March 31, 2021 include the operations of Broadway Financial Corporation and the results of Broadway Federal Bank, f.s.b., its former subsidiary.
Total assets increased by $37.6 million during the first quarter ended March 31, 2022, primarily due to growth in cash and cash equivalents of $14.6 million, growth in investment securities available-for-sale of $13.9 million, a net increase in loans held for investment of $4.9 million, growth in other assets of $3.5 million, and a net increase in the deferred tax asset of $2.2 million. Total assets increased by $652 million compared to March 31, 2021, primarily because of the assets, totaling $475 million, that were acquired in the Merger.
Total liabilities increased by $42.4 million to $994.8 million at March 31, 2022 from $952.4 million at December 31, 2021. The increase in total liabilities primarily consisted of net increases in deposits of $51.7 million and net increases in securities sold under agreements to repurchase of $4.0 million, which outweighed a $13.0 million decrease in FHLB advances.
Net income for the first quarter of 2022 increased to $958 thousand compared to a net loss of $3.5 million for the first quarter of 2021 primarily due to an increase in net interest income before loan provision of $4.3 million due to interest income from the acquired interest-earning assets of CFB and growth in interest-earning assets since the Merger. Non-interest expense decreased by $2.7 million during the first quarter of 2022 compared to the first quarter of 2021, primarily because the results for the first quarter of 2021 included non-recurring costs of $5.4 million related to the Merger, partially offset by increases from including the operations of CFB in the results for the first quarter of 2022 and higher data processing costs after the merger.
Net Interest Income
First Quarter of 2022 Compared to First Quarter of 2021
Net interest income before loan loss provision for the first quarter of 2022 totaled $7.2 million, representing an increase of $4.3 million over net interest income before loan loss provision of $2.8 million for the first quarter of 2021. The increase resulted from additional interest income, primarily growth of $564.3 million in average interest-earning assets during the first quarter of 2022 compared to the first quarter of 2021 due to the acquisition of loans, securities, and cash equivalents in the Merger on April 1, 2021. Net interest income in the first quarter of 2022 also benefited from a reduction in the overall rates paid on interest-bearing liabilities of 48 basis points.
Interest income and fees on loans receivable increased by $3.7 million to $7.3 million for the first quarter of 2022, from $3.6 million for the first quarter of 2021 due to an increase of $292.0 million in the average balance of loans receivable, which increased interest income by $3.2 million, and an increase of 46 basis points in the average yield on loans, which increased interest income by $455 thousand. The increase in the average balance of loans receivable was primarily the result of the addition of $225.9 million of loans in the Merger, as well as additional organic loan growth of the combined entity after the date of the Merger. In addition, the increase in the average yield on loans receivable in the first quarter of 2022 was primarily the result of higher yields earned on the commercial loan portfolio acquired in the Merger.
Interest income on securities increased by $497 thousand for the first quarter of 2022 to $553 thousand, compared to $56 thousand in the first quarter of 2021. The increase in interest income on securities primarily resulted from growth of $150.6 million in the average balance of securities, which resulted from securities of $150.0 million acquired in the Merger. The higher average balance of securities increased interest income by $524 thousand. This increase was partially offset by the effects of a decrease of 78 basis points in the average interest rate earned on securities, which reduced interest income by $27 thousand.
Other interest income increased by $45 thousand during the first quarter of 2022 compared to the first quarter of 2021 primarily due to an increase of $122.1 million in the average balance of interest-earning deposits and other short-term investments, which increased interest income by $49 thousand. This increase was offset by a decrease of $4 thousand in the dividend income on FHLB and FRB stock between the two periods.
Interest expense for the first quarter of 2022 decreased by $93 thousand compared to the first quarter of 2021 due to a decrease of 48 basis points in the Company’s cost of interest-bearing liabilities. The lower rates paid offset the impact of $421.6 million in average interest-bearing liabilities assumed in the Merger.
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Interest expense on deposits decreased by $33 thousand for the first quarter of 2022 compared to the first quarter of 2021. The decrease was primarily attributable to a decrease of 28 basis points in the average rate paid on deposits, which caused interest expense on deposits to decrease by $316 thousand. This decrease was partially offset by the effects of an increase of $389.5 million in the average balance of deposits, primarily because of the Merger, which increased interest expense by $283 thousand.
Interest expense on borrowings decreased by $60 thousand for the first quarter of 2022, compared to the first quarter of 2021. The decrease was attributable to a decrease of 59 basis points in the average borrowing rate, which decreased interest expense by $192 thousand, offset by an increase in average borrowings of $32.1 million during the period, which increased interest expense by $132 thousand. The increase in the average balance of borrowings was due to an increase of $68.0 million in the average balance of short-term borrowings (primarily, securities sold under agreements to repurchase that were assumed in the Merger), offset by a decrease of $32.7 million in average borrowings from the FHLB and a decrease of $3.3 million in the average balance of the Company’s junior subordinated debentures, which were paid off in the third quarter of 2021.
The net interest margin increased to 2.76% for the first quarter of 2022 from 2.40% for the first quarter of 2021 primarily due to an increase in the volume of interest-earning assets (mainly due to an increase in the average balance of loans receivable), the contribution of higher loan yields earned on the commercial loan portfolio acquired in the Merger and a decrease in the average rate paid on interest-bearing liabilities of 48 basis points.

|  | For the three months ended |
|  | March 31, 2022 |  |  | March 31, 2021 |
(Dollars in Thousands) |  | Average Balance |  |  | Interest |  |  | Average Yield/ Cost |  |  | Average Balance |  |  | Interest |  |  | Average Yield/ Cost |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-earning assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-earning deposits |  | $ | 220,266 |  |  | $ | 84 |  |  |  | 0.15 | % |  | $ | 98,183 |  |  | $ | 35 |  |  |  | 0.14 | %
Securities |  |  | 160,968 |  |  |  | 553 |  |  |  | 1.37 | % |  |  | 10,414 |  |  |  | 56 |  |  |  | 2.15 | %
Loans receivable (1) |  |  | 653,493 |  |  |  | 7,336 |  |  |  | 4.49 | % |  |  | 361,487 |  |  |  | 3,644 |  |  |  | 4.03 | %
FRB and FHLB stock |  |  | 3,046 |  |  |  | 38 |  |  |  | 4.99 | % |  |  | 3,431 |  |  |  | 42 |  |  |  | 4.90 | %
Total interest-earning assets |  |  | 1,037,773 |  |  | $ | 8,011 |  |  |  | 3.09 | % |  |  | 473,515 |  |  | $ | 3,777 |  |  |  | 3.19 | %
Non-interest-earning assets |  |  | 74,542 |  |  |  |  |  |  |  |  |  |  |  | 11,064 |  |  |  |  |  |  |  |  |
Total assets |  | $ | 1,112,315 |  |  |  |  |  |  |  |  |  |  | $ | 484,579 |  |  |  |  |  |  |  |  |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market deposits |  | $ | 207,078 |  |  | $ | 189 |  |  |  | 0.37 | % |  | $ | 76,750 |  |  | $ | 81 |  |  |  | 0.42 | %
Passbook deposits |  |  | 66,825 |  |  |  | 8 |  |  |  | 0.05 | % |  |  | 64,044 |  |  |  | 57 |  |  |  | 0.36 | %
NOW and other demand deposits |  |  | 230,461 |  |  |  | 39 |  |  |  | 0.07 | % |  |  | 54,650 |  |  |  | 7 |  |  |  | 0.05 | %
Certificate accounts |  |  | 201,446 |  |  |  | 114 |  |  |  | 0.23 | % |  |  | 120,857 |  |  |  | 238 |  |  |  | 0.79 | %
Total deposits |  |  | 705,810 |  |  |  | 350 |  |  |  | 0.20 | % |  |  | 316,301 |  |  |  | 383 |  |  |  | 0.48 | %
FHLB advances |  |  | 77,849 |  |  |  | 342 |  |  |  | 1.76 | % |  |  | 110,500 |  |  |  | 527 |  |  |  | 1.91 | %
Junior subordinated debentures |  |  | - |  |  |  | - |  |  |  | 0.00 | % |  |  | 3,275 |  |  |  | 22 |  |  |  | 2.69 | %
Other borrowings |  |  | 68,019 |  |  |  | 147 |  |  |  | 0.86 | % |  |  | - |  |  |  | - |  |  |  | 0.00 | %
Total borrowings |  |  | 145,868 |  |  |  | 489 |  |  |  | 1.34 | % |  |  | 113,775 |  |  |  | 549 |  |  |  | 1.93 | %
Total interest-bearing liabilities |  |  | 851,678 |  |  | $ | 839 |  |  |  | 0.39 | % |  |  | 430,076 |  |  | $ | 932 |  |  |  | 0.87 | %
Non-interest-bearing liabilities |  |  | 121,912 |  |  |  |  |  |  |  |  |  |  |  | 5,832 |  |  |  |  |  |  |  |  |
Stockholders’ equity |  |  | 138,725 |  |  |  |  |  |  |  |  |  |  |  | 48,671 |  |  |  |  |  |  |  |  |
Total liabilities and stockholders’ equity |  | $ | 1,112,315 |  |  |  |  |  |  |  |  |  |  | $ | 484,579 |  |  |  |  |  |  |  |  |
Net interest rate spread (2) |  |  |  |  |  | $ | 7,172 |  |  |  | 2.70 | % |  |  |  |  |  | $ | 2,845 |  |  |  | 2.32 | %
Net interest rate margin (3) |  |  |  |  |  |  |  |  |  |  | 2.76 | % |  |  |  |  |  |  |  |  |  |  | 2.40 | %
Ratio of interest-earning assets to interest-bearing liabilities |  |  |  |  |  |  |  |  |  |  | 121.85 | % |  |  |  |  |  |  |  |  |  |  | 110.10 | %

(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.

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Loan Loss Provision
The Company recorded a loan loss provision of $148 thousand for the first quarter of 2022 due to growth in the loan portfolio. There was no loan loss provision during the first quarter of 2021. No loan charge-offs were recorded during the first quarter of 2022 or 2021. The Allowance for Loan and Lease Losses (“ALLL”) increased to $3.5 million as of March 31, 2022 compared to $3.4 million as of December 31, 2021.
Non-interest Income
Non-interest income for the first quarter of 2022 totaled $280 thousand, compared to $123 thousand for the first quarter of 2021. The increase in non-interest income was primarily due to fees earned from the remaining New Market Tax Credit ventures on the books of City First Bank and an increase in ATM exchange fees.
Non-interest Expense
Total non-interest expense was $6.0 million for the first quarter of 2022, compared to $8.6 million for the first quarter of 2021. The decrease in non-interest expense was primarily due to non-recurring compensation costs and professional services fees associated with the CFBanc merger on April 1, 2021, partially offset by higher information services costs. Compensation costs and professional services fees decreased by $1.8 million and $1.6 million, respectively, during the first quarter of 2022 compared to the first quarter of 2021, while information services costs increased by $624 thousand. In addition, during the first quarter of 2022 the Company recorded $109 thousand of expense to amortize the core deposit intangible asset that was recorded in connection with the Merger.
Income Tax Expense or Benefit
Income tax expense or benefit is computed by applying the statutory federal income tax rate of 21%. State taxes are recorded at the State of California tax rate and apportioned based on an allocation schedule to reflect that a portion of the Bank’s operations are conducted in the Washington, D.C. area. The Company recorded income tax expense of $363 thousand during the first quarter of 2022, representing an effective rate of 27.0%, and a tax benefit of $2.2 million during the first quarter of 2021, representing an effective tax rate of 38.4%.
Financial Condition
Total Assets
Total assets increased by $37.6 million to $1131 billion at March 31, 2022 from $1.094 billion million at December 31, 2021, primarily due to growth in cash and cash equivalents of $14.6 million, growth in investment securities available-for-sale of $13.9 million, a net increase in loans held for investment of $4.9 million, growth in other assets of $3.5 million and a net increase in the deferred tax asset of $2.2 million.
Securities Available-For-Sale
Securities available-for-sale totaled $170.3 million at March 31, 2022, compared with $156.4 million at December 31, 2021. The $13.9 million increase in securities available-for-sale during the three months ended March 31, 2022 was primarily due to additional purchases of securities of $26.9 million. These increases were partially offset by net amortizations and paydowns of investment securities of $4.7 million.
Loans Receivable
Loans receivable increased by $4.9 million during the first quarter of 2022 primarily due to loan originations in excess of payoffs. The Bank originated $41.5 million multi-family loans, $2.9 million of commercial real estate loans, $9.5 million of commercial loans and $756 thousand in construction loans. Loan advances on pre-existing construction loans totaled $6.5 million. Loan payoffs and repayments totaled $56.9 million during the first quarter of 2022, of which $33 million were PPP loans.
Allowance for Loan Losses
As a smaller reporting company as defined by the SEC, the Company is not required to adopt the CECL accounting standard until 2023; consequently, the Bank’s ALLL is based on probable incurred losses at the date of the consolidated statement of financial position, rather than projections of future economic conditions over the life of the loans. In determining the adequacy of the ALLL within the context of the current uncertainties posed by the COVID-19 Pandemic, management has considered the historical and current performance of the Company’s portfolio, as well as various measures of the quality and safety of the portfolio, such as debt servicing and loan-to-value ratios. Management is continuing to monitor the loan portfolio and regularly communicating with borrowers to determine the continuing adequacy of the ALLL.
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We record a provision for loan losses as a charge to earnings, when necessary, in order to maintain the ALLL at a level sufficient, in management’s judgment, to absorb probable incurred losses in the loan portfolio. At least quarterly we assess the overall quality of the loan portfolio and general economic trends in the local markets in which we operate. The determination of the appropriate level for the allowance is based on these reviews, considering such factors as historical loss experience for each type of loan, the size and composition of our loan portfolio, the levels and composition of our loan delinquencies, non-performing loans and net loan charge-offs, the value of underlying collateral on problem loans, regulatory policies, general economic conditions, and other factors related to the collectability of loans in the portfolio.
The ALLL was $3.5 million or 0.54% of gross loans held for investment at March 31, 2022, compared to $3.4 million, or 0.52% of gross loans held for investment, at December 31, 2021. The increase in the dollar amount of ALLL during the first quarter of 2022 was the result of additional loan loss provisions due to loan growth during the period.
As of March 31, 2022, loan delinquencies totaled $2.9 million, compared to $2.4 million at December 31, 2021. No loan was greater than 90 days delinquent. There was one commercial real estate loan that was 30 days delinquent as of March 31, 2022 and one commercial real estate loan to a different borrower that was 84 days delinquent as of December 31, 2021.
Non-performing loans (NPLs) consist of delinquent loans that are 90 days or more past due and other loans, including troubled debt restructurings that do not qualify for accrual status. At March 31, 2022, NPLs totaled $653 thousand, compared to $684 thousand at December 31, 2021. The decrease of $78 thousand in NPLs during the three months ended March 31, 2022 was due to loan repayments. The Bank did not have any real estate owned from foreclosures (REO) at March 31, 2022 or December 31, 2021.
In connection with our review of the adequacy of our ALLL, we track the amount and percentage of our NPLs that are paying currently, but nonetheless must be classified as NPL for reasons unrelated to payments, such as lack of current financial information and an insufficient period of satisfactory performance. As of March 31, 2022 and December 31, 2022, all our non-performing loans were current in their payments. Also, in determining the ALLL, we evaluate the ratio of the ALLL to NPLs, which was 541.96% at March 31, 2022 compared to 495.8% at December 31, 2021.
When reviewing the adequacy of the ALLL, we also consider the impact of charge-offs, including the changes and trends in loan charge-offs. There have been no loan charge-offs since 2015. In determining charge-offs, we update our estimates of collateral values on NPLs by obtaining new appraisals at least every twelve months. If the estimated fair value of the loan collateral less estimated selling costs is less than the recorded investment in the loan, a charge-off for the difference is recorded to reduce the loan to its estimated fair value, less estimated selling costs. Therefore, certain losses inherent in our total NPLs are recognized periodically through charge-offs. The impact of updating these estimates of collateral value and recognizing any required charge-offs is to increase charge-offs and reduce the ALLL required on these loans.
There were no recoveries or charge-offs recorded during the first quarter of 2022 or 2021.
Impaired loans at March 31, 2022 were $2.2 million, compared to $2.3 million at December 31, 2021. The decrease of $52 thousand in impaired loans during the first quarter of 2022 was primarily due to loan repayments. Specific reserves for impaired loans were $7 thousand, or 0.31% of the aggregate impaired loan amount at March 31, 2022, compared to $7 thousand, or 0.30% of the aggregate impaired loan amount at December 31, 2021.
On March 27, 2020, the Coronavirus Aid Relief and Economic Security Act (“CARES Act”) was signed into law by Congress. The CARES Act provides financial institutions, under specific circumstances, the opportunity to temporarily suspend certain requirements under generally accepted accounting principles related to Troubled Debt Restructurings (“TDR’s”) for a limited period of time to account for the effects of COVID-19. In March 2020, a joint statement was issued by federal and state regulatory agencies, after consultation with the FASB, to clarify that short-term loan modifications, such as payment deferrals, fee waivers, extensions of repayment terms or other insignificant payment delays, are not TDRs if made on a good-faith basis in response to COVID-19 to borrowers who were current prior to any relief. Under this guidance, three months or less is provided as an example of short-term, and current is defined as less than 30 days past due at the time the modification program is implemented. The guidance also provides that these modified loans generally will not be classified as non-accrual loans during the term of the modification.
The Bank has a loan modification program for the effects of COVID-19 on its borrowers. At the date of this filing, two borrowers have requested applications, but no applications for loan modifications have been formally submitted. Both borrowers were current at the time the modification program was implemented. To date, no modifications have been granted.
We believe that the ALLL is adequate to cover probable incurred losses in the loan portfolio as of March 31, 2022, but because of the uncertainties posed by the COVID-19 Pandemic and other economic uncertainties, there can be no assurance that actual losses will not exceed the estimated amounts. In addition, the OCC and the Federal Deposit Insurance Corporation (“FDIC”) periodically review the ALLL as an integral part of their examination process. These agencies may require an increase in the ALLL based on their judgments of the information available to them at the time of their examinations.
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Goodwill and Intangible Assets
As a result of the Merger, the Company recorded $26.0 million of goodwill and $3.3 million of core deposit intangible assets. Goodwill and intangible assets acquired in a purchase business combination and that are determined to have an indefinite useful life are not amortized, but are tested for impairment at least annually or more frequently if events and circumstances exist that indicate the necessity for such impairment tests to be performed.
Goodwill decreased by $138 thousand from $26.0 million to $25.9 million due to a recalculation of deferred taxes on the assets and liabilities acquired as of the merger date.
The core deposit intangible asset is amortized on an accelerated basis reflecting the pattern in which the economic benefits of the intangible asset are consumed or otherwise used up. The estimated life of the core deposit intangible is approximately 10 years, with 9 years remaining as of March 31, 2022. During the three months ended March 31, 2022, the Company recorded $109 thousand of amortization expense related to the core deposit intangible.
No impairment charges were recorded during the three months ended March 31, 2022 related to goodwill or the core deposit intangible.
Total Liabilities
Total liabilities increased by $42.4 million to $994.8 million at March 31, 2022 from $952.4 million at December 31, 2021, largely due to growth in deposits.
Deposits
Deposits increased by $51.6 million to $839.7 million at March 31, 2022 from $788.1 million at December 31, 2021, which consisted of increases of $76.0 million in ICS deposits (ICS deposits are the Bank’s own money market accounts in excess of FDIC insured limits whereby the Bank makes reciprocal arrangements for insurance with other banks), $6.4 million in CDARS deposits (CDARS deposits are similar to ICS deposits, but involve certificates of deposit instead of money market accounts), and $1.3 million in other certificates of deposit accounts. The above increases in deposits were offset by a decrease of $32.1 million in liquid deposits (NOW, demand, money market, and passbook accounts). Five customer relationships accounted for approximately 26% of our deposits at March 31, 2022. We expect to maintain these relationships for the foreseeable future.
Borrowings
Total borrowings at March 31, 2022 consisted of advances to the Bank from the FHLB of $73.0 million, repurchase agreements of $56.0 million, and borrowings associated with our Qualified Active Low-Income Business lending activities of $14.0 million compared to advances to the Bank from the FHLB of $86.0 million, repurchase agreements of $52.0 million, and borrowings associated with our Qualified Active Low-Income Business lending activities of $14.0 million as of December 31, 2021.
Balances of outstanding FHLB advances decreased to $73.0 million at March 31, 2022, compared to $86.0 million at December 31, 2021 due to the payoff of $13.0 million in advances that matured during the year. The weighted average rate on FHLB advances decreased to 1.66% at March 31, 2022, compared to 1.85% at December 31, 2021 due to the maturity of higher rate advances.
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 Banks’s consolidated balance sheets, while the securities underlying the repurchase agreements remain in the respective investment securities available-for-sale accounts. In other words, there is no offsetting or netting of the investment securities assets with the repurchase agreement liabilities. The outstanding balance of these borrowings totaled $59.0 million and $52.0 million as of March 31, 2022 and December 31, 2021, respectively, and the interest rate was 0.10% during both periods. These agreements mature on a daily basis. As of March 31, 2022, securities with a market value of $61.9 million were pledged as collateral for securities sold under agreements to repurchase and included $22.3 million of U.S. Government Agency securities, $33.5 million of mortgage-backed securities, $4.1 million of federal agency CMO and $2.0 million of SBA Pool securities. The market value of securities pledged totaled $53.2 million as of December 31, 2021 and included $13.3 million of U.S. Government Agency securities and $39.9 million of mortgage-backed securities.
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One relationship accounted for 74% of our balance of securities sold under agreements to repurchase as of March 31, 2022. We expect to maintain this relationship for the foreseeable future.
In connection with the New Market Tax Credit activities of the Bank, CFC 45 is a partnership whose members include CFNMA and City First New Markets Fund II, LLC. This CDE acts in effect as a pass-through for a Merrill Lynch allocation totaling $14.0 million that needed to be deployed. In December 2015, Merrill Lynch made a $14.0 million non-recourse loan to CFC 45, whereby CFC 45 passed that loan through to a QALICB. The loan to the QALICB is secured by a Leasehold Deed of Trust that, due to the pass-through, non-recourse structure, is operationally and ultimately for the benefit of Merrill Lynch rather than CFC 45. Debt service payments received by CFC 45 from the QALICB are passed through to Merrill Lynch in return for which CFC 45 receives a servicing fee. The financial statements of CFC 45 are consolidated with those of the Bank and the Company.
Stockholders’ Equity
Stockholders’ equity was $136.2 million, or 12.04% of Broadway’s total assets, at March 31, 2022, compared to $141.0 million or 12.89% of Broadway’s total assets, at December 31, 2021. The decrease in total stockholders’ equity was primarily due to an increase of $5.7 million in unrealized loss on available-for-sale securities, net of taxes, which resulted from increases in market interest rates that adversely affected the value of the securities portfolio during the first quarter of 2022. There was no deterioration in the credit quality of the investment portfolio during the first quarter of 2022.
At March 31, 2022, CBLR was 9.45% compared to 9.32% as of December 31, 2021. The increase in CBLR was due to growth in the Bank’s net earnings.
During the first quarter of 2022 the Company completed the exchange of all the Series A Fixed Rate Cumulative Redeemable Preferred Stock, with an aggregate liquidation value of $3 million, plus accrued dividends, for 1,193,317 shares of Class A Common Stock at an exchange price of $2.51 per share of Class A Common Stock. In addition, during the quarter the Company issued 542,449 shares of Class A Common Stock to directors, executive officers, and certain employees, including 495,262 shares of restricted stock to executive officers and certain employees, which vest over periods ranging from 36 months to 60 months, and 47,187 shares of unrestricted stock to directors which vested immediately.
The Company’s book value per share was $1.85 per share as of March 31, 2022 compared to $1.92 per share as of December 31, 2021. The decrease in book value per share during the first quarter of 2022 was primarily due to an increase in unrealized losses on available for sale securities.
Tangible book value per common share is a non-GAAP measurement that excludes goodwill and the net unamortized core deposit intangible asset, which were both originally recorded in connection with the 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 book value and tangible book value per common share is shown as follows:

|  | Common Equity Capital |  |  | Shares Outstanding |  |  | Per Share Amount |
|  | (Dollars in thousands) |
March 31, 2022: |  |  |  |  |  |  |  |  |
Common book value |  | $ | 136,213 |  |  |  | 73,504,185 |  |  | $ | 1.85 |
Less: |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  |  | 25,858 |  |  |  |  |  |  |  |  |
Net unamortized core deposit intangible |  |  | 2,827 |  |  |  |  |  |  |  |  |
Tangible book value |  | $ | 107,541 |  |  |  | 73,504,185 |  |  | $ | 1.46 |
December 31, 2021: |  |  |  |  |  |  |  |  |  |  |  |
Common book value |  | $ | 138,000 |  |  |  | 71,768,419 |  |  | $ | 1.92 |
Less: |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  |  | 25,996 |  |  |  |  |  |  |  |  |
Net unamortized core deposit intangible |  |  | 2,936 |  |  |  |  |  |  |  |  |
Tangible book value |  | $ | 109,068 |  |  |  | 71,768,419 |  |  | $ | 1.52 |

Liquidity
The objective of liquidity management is to ensure that we have the continuing ability to fund operations and meet our obligations on a timely and cost-effective basis. The Bank’s sources of funds include deposits, advances from the FHLB, 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. This approved limit and collateral requirement would have permitted the Bank to borrow an additional $13.6 million at March 31, 2022 based on pledged collateral. In addition, the Bank had additional lines of credit of $11.0 million with other financial institutions as of that date.
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The Bank’s primary uses of funds include withdrawals of and interest payments on deposits, originations of loans, 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 in federal funds with the Federal Reserve Bank or in money market accounts with other financial institutions. The Bank’s liquid assets at March 31, 2022 consisted of $246.1 million in cash and cash equivalents and $82.5 million in securities available-for-sale that were not pledged, compared to $231.5 million in cash and cash equivalents and $52.4 million in securities available-for-sale that were not pledged at December 31, 2021. Currently, we believe that the Bank has sufficient liquidity to support growth over the foreseeable future. The increase in liquid assets during the first quarter of 2022 resulted from an increase in deposits.
The Company’s liquidity, separate from the Bank, is based primarily on the proceeds from financing transactions, such as the private placements completed in August 2013, October 2014, December 2016, and April 2021 and dividends received from the Bank in 2021 and 2020. The Bank is currently under no prohibition to pay dividends, but is subject to restrictions as to the amount of the dividends based on normal regulatory guidelines.
On a consolidated basis, the Company recorded net cash outflows from operating activities of $1.8 million during the three months ended March 31, 2022, compared to consolidated net cash outflows from operating activities of $2.1 million during the three months ended March 31, 2021. Net cash inflows from operating activities during the three months ended March 31, 2022 were primarily attributable increases in other assets, whereas net cash outflows from operating activities for the three months ended March 31, 2021 were primarily due to reductions in deferred tax assets and other assets, offset by an increase in accrued expenses and other liabilities.
The Company recorded consolidated net cash outflows from investing activities of $26.3 million during the three months ended March 31, 2022, compared to consolidated net cash outflows from investing activities of $1.9 million during the three months ended March 31, 2021. Net cash inflows from investing activities during the three months ended March 31, 2022 were primarily due to purchases of investment securities of $26.9 million. In comparison, cash outflows from investing activities million during the three months ended March 31, 2021 were primarily due to principal payments on loans receivable held for investment, offset by funds used to originate new loans.
The Company recorded consolidated net cash inflows from financing activities of $42.7 million during the three months ended March 31, 2022, compared to consolidated net cash outflows from financing activities of $4.0 million during the three months ended March 31, 2021. Net cash inflows from financing activities during the three months ended March 31, 2022 were primarily attributable to a net increase in deposits of $51.7 million and a net increase of $4.0 million in securities sold under agreements to repurchase, net of repayments of FHLB advances of $13.0 million. During the three months ended March 31, 2021, net cash outflows from financing activities were primarily due to a $3.3 million decrease in deposit balances.
Capital Resources and Regulatory Capital
The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary, actions by the regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk-weightings, and other factors. As of March 31, 2022 and December 31, 2021, 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.)
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ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable

ITEM 4. | CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives of ensuring that information we are required to disclose in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures, and is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. There is no assurance that our disclosure controls and procedures will operate effectively under all circumstances. An evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures was performed under the supervision of the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) as of March 31, 2022. Based on that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2022.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended March 31, 2022, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as specified above. Management does not expect, however, that our disclosure controls and procedures will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions, and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.
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PART II. OTHER INFORMATION

Item 1. | LEGAL PROCEEDINGS

None

Item 1A. | RISK FACTORS

Not applicable

Item 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On January 3, 2022, pursuant to an Exchange Agreement, the Company issued 1,193,317 shares of the Company’s Class A Common Stock to the holder of the Company’s Series A Fixed Rate Cumulative Redeemable Preferred Stock (the “Series A Preferred”), with an aggregate liquidation value of $3 million, plus accrued dividends, in exchange for all of the outstanding shares of the Series A Preferred, at an exchange price of $2.51 per share of Class A Common Stock, in a private placement transaction that included accredited investor representations and limitations on transfer, and was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.

Item 3. | DEFAULTS UPON SENIOR SECURITIES

None

Item 4. | MINE SAFETY DISCLOSURES

Not applicable

Item 5. | OTHER INFORMATION

None .

Item 6. | EXHIBITS

Exhibit Number* |
3.1 | Amended and Restated Certificate of Incorporation of Broadway Financial Corporation effective as of April 1, 2021 (Exhibit 3.1 to Form 8-K filed by Registrant on April 5, 2021).
3.2 | Bylaws of Registrant (Exhibit 3.2 to Form 8-K filed by Registrant on August 24, 2020)
31.1 | Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 | Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH | XBRL Taxonomy Extension Schema Document
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF | XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB | XBRL Taxonomy Extension Label Linkbase Document
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document
104 | The cover page from this Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted in Inline XBRL (included as Exhibit 101)

* | Exhibits followed by a parenthetical reference are incorporated by reference herein from the document filed by the Registrant with the SEC described therein. Except as otherwise indicated, the SEC File No. for each incorporated document is 000-27464.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| Broadway Financial Corporation
Date: May 16, 2022 | By: | /s/ Brian Argrett
|  | Brian Argrett
|  | Chief Executive Officer
Date: May 16, 2022 | By: | /s/ Brenda J. Battey
|  | Brenda J. Battey
|  | Chief Financial Officer

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