Restatement of Previously Issued Consolidated Financial Statements

3 Months Ended

Mar. 31, 2025

Restatement of Previously Issued Consolidated Financial Statements [Abstract]

Restatement of Previously Issued Consolidated Financial Statements

NOTE 13 – Restatement of Previously Issued Consolidated Financial Statements

The consolidated financial statements for the quarter ended March 31, 2025 have been restated to reflect the correction of misstatements. We have also restated all amounts impacted within the Notes to the consolidated financial statements.

The restatement is related to several loan participation agreements originated by City First Bank and sold to other financial institutions. Upon further review of the agreements, it was determined that the transfers did not meet the requirements in ASC 860 to be treated as sales for accounting purposes, and therefore should have been recorded as secured borrowing arrangements. The related adjustment to the consolidated statements of financial condition for treating such transferred interests as secured borrowing arrangements as of March 31, 2025, is to increase “Loans Receivable Held for Investment” by $20.4 million to reflect the fact that the transfers did not meet the requirements for sale accounting treatment, and to record a “Secured Borrowing” for the same amounts as a liability.

The related adjustments to the consolidated statements of operations and comprehensive income for treating such transferred interests as secured borrowing arrangements for the quarters ended March 31, 2025 and 2024, is to increase both interest and fees on loans receivable and interest on borrowings by $427 thousand and $415 thousand, respectively. Net income for the quarters ended March 31, 2025 and 2024, is also impacted by the related revisions to the ACL and income taxes, as well as an adjustment to the ACL for a collateral dependent loan.

The related consolidated statements of cash flows adjustments for treating such transferred interests as secured borrowing arrangements for the quarters ended March 31, 2025 and 2024, is to adjust “Net change in loans receivable held for investment” and “Proceeds of secured borrowings and “Repayments of secured borrowings” for these amounts.

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Financial Condition

(In thousands, except share and per share amounts)

	March 31, 2025 (Unaudited)
	As Previously Reported			Adjustments			As Restated
Assets:
Cash and due from banks	$	2,040		$			$	2,040
Interest-bearing deposits in other banks		13,754						13,754
Cash and cash equivalents		15,794						15,794
Securities available-for-sale, at fair value		185,938						185,938
Loans receivable held for investment, net of allowance		971,231			20,356			991,587
Accrued interest receivable		5,624						5,624
Federal Home Loan Bank (“FHLB”) stock		4,616						4,616
Federal Reserve Bank (“FRB”) stock		3,543						3,543
Office properties and equipment, net		8,812						8,812
Bank owned life insurance		3,332						3,332
Deferred tax assets, net		8,103			1,189			9,292
Core deposit intangible, net		1,696						1,696
Goodwill		25,858						25,858
Other assets		3,472			(788	)		2,684
Total assets	$	1,238,019		$	20,757		$	1,258,776

Liabilities and equity
Liabilities:
Deposits	$	776,543		$			$	776,543
Securities sold under agreements to repurchase		80,778						80,778
FHLB borrowings		78,000						78,000
Secured borrowings		9,415			21,841			31,256
Accrued expenses and other liabilities		8,486			(69	)		8,417
Total liabilities		953,222			21,772			974,994

Non-Cumulative Redeemable Perpetual Preferred stock, Series C		150,000						150,000
Common stock, Class A		64						64
Common stock, Class B		14						14
Common stock, Class C		17						17
Additional paid-in capital		143,169						143,169
Retained earnings		10,303			(1,015	)		9,288
Unearned Employee Stock Ownership Plan (“ESOP”) shares		(4,152	)					(4,152	)
Accumulated other comprehensive loss, net of tax		(9,508	)					(9,508	)
Treasury stock-at cost		(5,326	)					(5,326	)
Total Broadway Financial Corporation and Subsidiary equity		284,581			(1,015	)		283,566
Non-controlling interest		216						216
Total liabilities and equity	$	1,238,019		$	20,757		$	1,258,776

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Operations and Comprehensive Income (Loss)

(In thousands, except per share amounts)

	Three Months Ended March 31, 2025 (Unaudited)
	As Previously Reported			Adjustments			As Restated
Interest income:
Interest and fees on loans receivable	$	12,690		$	427		$	13,117
Interest on available-for-sale securities		1,208						1,208
Other interest income		476						476
Total interest income		14,374			427			14,801

Interest expense:
Interest on deposits		4,199						4,199
Interest on borrowings		2,130			427			2,557
Total interest expense		6,329			427			6,756

Net interest income		8,045			–			8,045
Provision for credit losses		689			1,225			1,914
Net interest income after provision for credit losses		7,356			(1,225	)		6,131

Non-interest income:
Service charges		43						43
Grants		25						25
Other		220						220
Total non-interest income		288						288

Non-interest expense:
Compensation and benefits		5,284						5,284
Occupancy expense		540						540
Information services		706						706
Professional services		700						700
Advertising and promotional expense		46						46
Supervisory costs		193						193
Corporate insurance		67						67
Amortization of core deposit intangible		79						79
Operational loss		1,943						1,943
Other		639						639
Total non-interest expense		10,197						10,197

Loss before income taxes		(2,553	)		(1,225	)		(3,778	)
Income tax benefit		(692	)		(394	)		(1,086	)
Net loss	$	(1,861	)	$	(831	)	$	(2,692	)
Less: Net loss attributable to non-controlling interest		(3	)					(3	)
Net loss attributable to Broadway Financial Corporation	$	(1,858	)	$	(831	)	$	(2,689	)
Less: Preferred stock dividends		750						750
Net loss attributable to common stockholders	$	(2,608	)	$	(831	)	$	(3,439	)

Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on securities available-for-sale arising during the period	$	2,416		$			$	2,416
Income tax expense (benefit)		701						701
Other comprehensive income (loss), net of tax		1,715						1,715

Comprehensive loss	$	(893	)	$	(831	)	$	(1,724	)

Loss per common share-basic	$	(0.30	)	$	(0.11	)	$	(0.39	)
Loss per common share-diluted	$	(0.30	)	$	(0.11	)	$	(0.39	)

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Cash Flows

(In thousands)

	Three Months Ended March 31, 2025 (Unaudited)									Three Months Ended March 31, 2024 (Unaudited)

	As Previously Reported			Adjustments			As Restated			As Previously Reported			Adjustments			As Restated
Cash flows from operating activities:
Net loss	$	(1,861	)	$	(831	)	$	(2,692	)	$	(183	)	$	10		$	(173	)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for credit losses		689			1,225			1,914			260			(13	)		247
Depreciation		102						102			164						164
Net change of deferred loan origination costs		114						114			137						137
Net accretion of premiums and discounts on available-for-sale securities		(57	)					(57	)		(253	)					(253	)
Accretion of purchase accounting marks on loans		(103	)					(103	)		(32	)					(32	)
Amortization of core deposit intangible		79						79			84						84
Director compensation expense		168						168			–						–
Accretion of premium on FHLB advances		–						0			(4	)					(4	)
Stock-based compensation expense		99						99			77						77
ESOP compensation expense		50						50			47						47
Earnings on bank owned life insurance		(11	)					(11	)		(11	)					(11	)
Change in assets and liabilities:
Net change in deferred taxes		–			(1,113	)		(1,113	)		(57	)		3			(54	)
Net change in accrued interest receivable		(623	)					(623	)		(700	)					(700	)
Net change in other assets		(686	)		788			102			(9,857	)					(9,857	)
Net change in accrued expenses and other liabilities		(2,308	)		(69	)		(2,377	)		(1,336	)					(1,336	)
Net cash used in operating activities		(4,348	)		–			(4,348	)		(11,664	)		–			(11,664	)

Cash flows from investing activities:
Net change in loans receivable held for investment		(3,070	)		9,515			6,445			(46,405	)		299			(46,106	)
Principal payments on available-for-sale securities		20,396						20,396			23,157						23,157
Purchase of FHLB stock		(2,684	)					(2,684	)		(136	)					(136	)
Proceeds from redemption of FHLB stock		7,705						7,705			–						–
Purchase of office properties and equipment		(15	)					(15	)		(55	)					(55	)
Net cash provided by (used in) investing activities		22,332			9,515			31,847			(23,439	)		299			(23,140	)

Cash flows from financing activities:
Net change in deposits		31,144						31,144			12,859						12,859
Net change in securities sold under agreements to repurchase		14,168						14,168			(1,794	)					(1,794	)
Repayment of notes payable		–						–			(14,000	)					(14,000	)
Cash dividends paid - preferred		(750	)					(750	)		–						–
Proceeds from secured borrowings		9,415			(9,415	)		–			–			1,816			1,816
Repayments of secured borrowings		–			(100	)		(100	)		–			(2,115	)		(2,115	)
Proceeds from FHLB advances		176,500						176,500			–						–
Repayments of FHLB advances		(294,032	)					(294,032	)		(35	)					(35	)
Net cash used in financing activities		(63,555	)		(9,515	)		(73,070	)		(2,970	)		(299	)		(3,269	)
Net change in cash and cash equivalents		(45,571	)					(45,571	)		(38,073	)					(38,073	)
Cash and cash equivalents at beginning of the period		61,365						61,365			105,195						105,195
Cash and cash equivalents at end of the period	$	15,794		$	–		$	15,794		$	67,122		$	–		$	67,122

Supplemental disclosures of cash flow information:
Cash paid for interest	$	5,975		$	427		$	6,402		$	5,913		$			$	5,913
Cash paid for income taxes		–						–			48						48

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Changes in Equity

(Unaudited)

	Three Months Ended March 31, 2025 and 2024
	Preferred Stock Non- Voting		Common Stock Voting		Common Stock Non- Voting		Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Retained Earnings (As Restated)			Unearned ESOP Shares			Treasury Stock			Non- Controlling Interest			Total Equity (As Restated)
	(In thousands)
Balance at December 31, 2024 (As Restated)	$	150,000	$	63	$	31	$	142,902		$	(11,223	)	$	12,727		$	(4,201	)	$	(5,326	)	$	219		$	285,192
Net loss (As Restated)		–		–		–		–			–			(2,689	)		–			–			(3	)		(2,692	)
Release of unearned ESOP shares		–		–		–		1			–			–			49			–			–			50
Stock-based compensation expense		–		1		–		98			–			–			–			–			–			99
Director stock compensation expense		–		–		–		168			–			–			–			–			–			168
Dividends declared and paid - preferred		–		–		–		–			–			(750	)		–			–			–			(750	)
Other comprehensive income, net of tax		–		–		–		–			1,715			–			–			–			–			1,715
Balance at March 31, 2025	$	150,000	$	64	$	31	$	143,169		$	(9,508	)	$	9,288		$	(4,152	)	$	(5,326	)	$	216		$	283,782

Balance at December 31, 2023 (As Restated)	$	150,000	$	62	$	31	$	142,601		$	(13,525	)	$	12,365		$	(4,492	)	$	(5,326	)	$	194		$	281,910
Net loss (As Restated)		–		–		–		–			–			(154	)		–			–			(19	)		(173	)
Release of unearned ESOP shares		–		–		–		(25	)		–			–			72			–			–			47
Stock-based compensation expense		–		–		–		77			–			–			–			–			–			77
Other comprehensive loss, net of tax		–		–		–		–			(571	)		–			–			–			–			(571	)
Balance at March 31, 2024	$	150,000	$	62	$	31	$	142,653		$	(14,096	)	$	12,211		$	(4,420	)	$	(5,326	)	$	175		$	281,290