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What changed in BROADWAY FINANCIAL CORP DE's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of BROADWAY FINANCIAL CORP DE's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+242 added−249 removedSource: 10-K (2025-03-31) vs 10-K (2024-05-20)

Top changes in BROADWAY FINANCIAL CORP DE's 2024 10-K

242 paragraphs added · 249 removed · 195 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

86 edited+14 added−29 removed168 unchanged
Biggest changeThe following table details our allocation of the ACL/ALLL to the various categories of loans held for investment and the percentage of loans in each category to total loans at the dates indicated: December 31, 2023 2022 2021 2020 2019 Amount Percent of loans in each category to total loans Amount Percent of loans in each category to total loans Amount Percent of loans in each category to total loans Amount Percent of loans in each category to total loans Amount Percent of loans in each category to total loans (Dollars in thousands) Single-family $ 260 2.79 % $ 109 3.89 % $ 145 6.96 % $ 296 13.32 % $ 312 18.23 % Multi‑family 4,413 63.33 % 3,273 65.08 % 2,657 60.36 % 2,433 75.24 % 2,319 71.90 % Commercial real estate 1,094 13.47 % 449 14.85 % 236 14.29 % 222 6.71 % 133 3.68 % Church 72 1.43 % 65 2.04 % 103 3.45 % 237 4.60 % 362 5.33 % Construction 932 10.14 % 313 5.27 % 212 4.92 % 22 0.11 % 48 0.78 % Commercial 529 7.16 % 175 8.87 % 23 10.02 % 4 0.02 % 7 0.07 % SBA loans 48 1.68 % – – % – – % – – % – – % Consumer – – % 4 – % 15 – % 1 – % 1 0.01 % Total allowance for credit losses $ 7,348 100.00 % $ 4,388 100.00 % $ 3,391 100.00 % $ 3,215 100.00 % $ 3,182 100.00 % 10 Table of Contents The following table shows the activity in our ACL/ALLL related to our loans held for investment for the years indicated: 2023 2022 2021 2020 2019 (Dollars in thousands) Allowance balance at beginning of year $ 4,388 $ 3,391 $ 3,215 $ 3,182 $ 2,929 Charge‑offs: Single-family – – – – – Multi-family – – – – – Commercial real estate – – – – – Church – – – – – Construction – – – – – Commercial – – – – – SBA Loans – – – – – Consumer – – – – – Total charge‑offs – – – – – Recoveries: Single-family – – – 4 – Multi-family 109 – – – – Commercial real estate 107 – – – – Church – – – – 260 Construction – – – – – Commercial – – – – – SBA Loans – – – – – Consumer – – – – – Total recoveries 216 – – 4 260 Impact of CECL adoption 1,809 – – – – Loan loss provision (recapture) 935 997 176 29 (7 ) Allowance balance at end of year $ 7,348 $ 4,388 $ 3,391 $ 3,215 $ 3,182 Net charge‑offs (recoveries) to average loans, excluding loans receivable held for sale – % – % – % – % (0.07 %) ACL/ALLL as a percentage of gross loans, excluding loans receivable held for sale (1) 0.83 % 0.57 % 0.52 % 0.88 % 0.79 % ACL/ALLL as a percentage of total non‑accrual loans – % 3,047.22 % 495.76 % 408.51 % 750.47 % ACL/ALLL as a percentage of total non‑performing assets – % 3,047.22 % 495.76 % 408.51 % 750.47 % (1) The ACL/ALLL as of December 31, 2023 and 2022 does not include any ACL/ALLL for the remaining balance of loans acquired in the City First Merger, which totaled $126.8 million and $146.3 million, respectively.
Biggest changeThe following table details our allocation of the ACL/ALLL to the various categories of loans held for investment and the percentage of loans in each category to total loans at the dates indicated: December 31, 2024 2023 2022 2021 2020 Amount Percent of loans in each category to total loans Amount Percent of loans in each category to total loans Amount Percent of loans in each category to total loans Amount Percent of loans in each category to total loans Amount Percent of loans in each category to total loans (Dollars in thousands) Single-family $ 196 2.42 % $ 260 2.79 % $ 109 3.89 % $ 145 6.96 % $ 296 13.32 % Multi‑family 4,568 64.94 % 4,413 63.33 % 3,273 65.08 % 2,657 60.36 % 2,433 75.24 % Commercial real estate 1,129 16.01 % 1,094 13.47 % 449 14.85 % 236 14.29 % 222 6.71 % Church 54 0.97 % 72 1.43 % 65 2.04 % 103 3.45 % 237 4.60 % Construction 1,475 8.30 % 932 10.14 % 313 5.27 % 212 4.92 % 22 0.11 % Commercial 670 7.24 % 529 7.16 % 175 8.87 % 23 10.02 % 4 0.02 % SBA loans 11 0.12 % 48 1.68 % – – % – – % – – % Consumer – – % – – % 4 – % 15 – % 1 – % Total allowance for credit losses $ 8,103 100.00 % $ 7,348 100.00 % $ 4,388 100.00 % $ 3,391 100.00 % $ 3,215 100.00 % 11 Table of Contents The following table shows the activity in our ACL/ALLL related to our loans held for investment for the years indicated: 2024 2023 2022 2021 2020 (Dollars in thousands) Allowance balance at beginning of year $ 7,348 $ 4,388 $ 3,391 $ 3,215 $ 3,182 Charge‑offs: Single-family – – – – – Multi-family – – – – – Commercial real estate – – – – – Church – – – – – Construction – – – – – Commercial – – – – – SBA Loans – – – – – Consumer – – – – – Total charge‑offs – – – – – Recoveries: Single-family – – – – 4 Multi-family - 109 – – – Commercial real estate – 107 – – – Church – – – – – Construction – – – – – Commercial – – – – – SBA Loans – – – – – Consumer – – – – – Total recoveries – 216 – – 4 Impact of CECL adoption – 1,809 – – – Credit/loan loss provision (2) 755 935 997 176 29 Allowance balance at end of year $ 8,103 $ 7,348 $ 4,388 $ 3,391 $ 3,215 Net charge‑offs (recoveries) to average loans, excluding loans receivable held for sale – % – % – % – % (0.00 %) ACL/ALLL as a percentage of gross loans, excluding loans receivable held for sale (1) 0.83 % 0.83 % 0.57 % 0.52 % 0.88 % ACL/ALLL as a percentage of total non‑accrual loans 3,069.32 % - % 3,047.22 % 495.76 % 408.51 % ACL/ALLL as a percentage of total non‑performing assets 3,069.32 % - % 3,047.22 % 495.76 % 408.51 % (1) The ACL/ALLL as of December 31, 2024 and 2023 does not include any ACL/ALLL for the remaining balance of loans acquired in the City First Merger, which totaled $5.3 million and $126.8 million, respectively.
In connection with the conversion, the bank’s name was changed to Broadway Federal Bank, f.s.b. (“Broadway Federal”). The conversion was completed, and the Broadway Federal became a wholly‑owned subsidiary of the Company, in January 1996. On April 1, 2021, the Company completed its merger (the “Merger”) with CFBanc Corporation (“CFBanc”), with the Company continuing as the surviving entity.
In connection with the conversion, the bank’s name was changed to Broadway Federal Bank, f.s.b. (“Broadway Federal”). The conversion was completed, and Broadway Federal became a wholly‑owned subsidiary of the Company, in January 1996. On April 1, 2021, the Company completed its merger (the “Merger”) with CFBanc Corporation (“CFBanc”), with the Company continuing as the surviving entity.
Lending Activities General Our loan portfolio is comprised primarily of mortgage loans which are secured by multi‑family residential properties, single-family residential properties and commercial real estate, including charter schools, community facilities, and churches. The remainder of the loan portfolio consists of commercial business loans, loans guaranteed by the Small Business Administration (the “SBA”) and construction-to-permanent loans.
Lending Activities General Our loan portfolio is comprised primarily of commercial mortgage loans which are secured by multi‑family residential properties, single-family residential properties and commercial real estate, including charter schools, community facilities, and churches. The remainder of the loan portfolio consists of commercial business loans, loans guaranteed by the Small Business Administration (the “SBA”) and construction-to-permanent loans.
We originate loans in Washington, D.C, Maryland, and Virginia under the SBA’s 7(a), SBA Express, International Trade and 504(a) loan programs, in conformity with SBA underwriting and documentation standards. SBA loans are similar to commercial business loans but have additional credit enhancement provided by the U.S. Federal Government with guarantees between 50-85%.
We originate loans in Washington, D.C, Maryland, Virginia and California under the SBA’s 7(a), SBA Express, International Trade and 504(a) loan programs, in conformity with SBA underwriting and documentation standards. SBA loans are similar to commercial business loans but have additional credit enhancement provided by the U.S. Federal Government with guarantees between 50-85%.
Collateral values, particularly real estate values, are also impacted by a variety of factors, including general economic conditions, demographics, property maintenance and collection or foreclosure delays. Delinquencies We perform a weekly review of all delinquent loans and a monthly loan delinquency report is made to the Internal Asset Review Committee of the Board of Directors.
Collateral values, particularly real estate values, are also impacted by a variety of factors, including general economic conditions, demographics, property maintenance and collection or foreclosure delays. Delinquencies We perform a weekly review of all delinquent loans and a monthly loan delinquency report is made to the Internal Asset Review Committee of the Board.
Assets which do not currently expose us to sufficient risk to warrant classification in one of the aforementioned categories, but that are considered to possess some weaknesses, are designated “Special Mention.” Our Internal Asset Review Department reviews and classifies our assets and independently reports the results of its reviews to the Internal Asset Review Committee of our Board of Directors monthly.
Assets which do not currently expose us to sufficient risk to warrant classification in one of the aforementioned categories, but that are considered to possess some weaknesses, are designated “Special Mention.” Our Internal Asset Review Department reviews and classifies our assets and independently reports the results of its reviews to the Internal Asset Review Committee of our Board monthly.
The FRB may also determine, based on the relevant facts and circumstances, that a company has otherwise acquired control of a bank holding company. 19 Table of Contents Restrictions on Dividends and Other Capital Distributions In general, the prompt corrective action regulations prohibit a national bank from declaring any dividends, making any other capital distribution, or paying a management fee to a controlling person, such as its parent holding company, if, following the distribution or payment, the institution would be within any of the three undercapitalized categories set out in the regulations.
The FRB may also determine, based on the relevant facts and circumstances, that a company has otherwise acquired control of a bank holding company. 23 Table of Contents Restrictions on Dividends and Other Capital Distributions In general, the prompt corrective action regulations prohibit a national bank from declaring any dividends, making any other capital distribution, or paying a management fee to a controlling person, such as its parent holding company, if, following the distribution or payment, the institution would be within any of the three undercapitalized categories set out in the regulations.
These failures dramatically increased the resolution costs incurred by the FDIC and substantially reduced the available amount of the DIF. 17 Table of Contents Consistent with the requirements of the Dodd‑Frank Act, the FDIC adopted its most recent DIF restoration plan in September 2020; that plan is designed to enable the FDIC to achieve the statutorily required reserve ratio of 1.35% by September 30, 2028.
These failures dramatically increased the resolution costs incurred by the FDIC and substantially reduced the available amount of the DIF. 20 Table of Contents Consistent with the requirements of the Dodd‑Frank Act, the FDIC adopted its most recent DIF restoration plan in September 2020; that plan is designed to enable the FDIC to achieve the statutorily required reserve ratio of 1.35% by September 30, 2028.
The Company’s assessment of available-for-sale investment securities as of December 31, 2023, indicated that an ACL was not required. The Company analyzed available-for-sale investment securities that were in an unrealized loss position and determined the decline in fair value for those securities was not related to credit, but rather related to changes in interest rates and general market conditions.
The Company’s assessment of available-for-sale investment securities as of December 31, 2024, indicated that an ACL was not required. The Company analyzed available-for-sale investment securities that were in an unrealized loss position and determined the decline in fair value for those securities was not related to credit, but rather related to changes in interest rates and general market conditions.
Our retail banking network includes full-service banking offices, automated teller machines and internet banking capabilities that are available using our website at www.ciytfirstbank.com. We have three banking offices as of December 31, 2023: two in California (in Los Angeles and in the nearby City of Inglewood) and one in Washington, D.C.
Our retail banking network includes full-service banking offices, automated teller machines and internet banking capabilities that are available using our website at www.ciytfirstbank.com. We have three banking offices as of December 31, 2024: two in California (in Los Angeles and in the nearby City of Inglewood) and one in Washington, D.C.
The Company then estimates a loss rate for each pool using both its own historical loss experience and the historical losses of a group of peer institutions during the period from 2004 through the most recent quarter. 8 Table of Contents The Company’s ACL model also includes adjustments for qualitative factors, where appropriate.
The Company then estimates a loss rate for each pool using both its own historical loss experience and the historical losses of a group of peer institutions during the period from 2004 through the most recent quarter. 9 Table of Contents The Company’s ACL model also includes adjustments for qualitative factors, where appropriate.
The determination to purchase specific loans or pools of loans is subject to our underwriting policies, which consider, among other factors, the financial condition of the borrowers, the location of the underlying collateral properties and the appraised value of the collateral properties. We did not purchase any loans during the years ended December 31, 2023, 2022 or 2021.
The determination to purchase specific loans or pools of loans is subject to our underwriting policies, which consider, among other factors, the financial condition of the borrowers, the location of the underlying collateral properties and the appraised value of the collateral properties. We did not purchase any loans during the years ended December 31, 2024, 2023 or 2022.
We had no commitments to lend additional funds to borrowers whose loans were on non‑accrual status at December 31, 2023. We discontinue accruing interest on loans when the loans become 90 days delinquent as to their payment due date (three missed payments).
We had no commitments to lend additional funds to borrowers whose loans were on non‑accrual status at December 31, 2024. We discontinue accruing interest on loans when the loans become 90 days delinquent as to their payment due date (three missed payments).
In addition to deposits, we obtain funds from the amortization and prepayment of loans and investment securities, sales of loans and investment securities, advances from the FHLB, and cash flows generated by operations. 12 Table of Contents Deposits We offer a variety of deposit accounts featuring a range of interest rates and terms.
In addition to deposits, we obtain funds from the amortization and prepayment of loans and investment securities, sales of loans and investment securities, advances from the FHLB, and cash flows generated by operations. 13 Table of Contents Deposits We offer a variety of deposit accounts featuring a range of interest rates and terms.
The financial statements of CFC 45 are consolidated with those of the Bank and the Company. 14 Table of Contents Market Area and Competition The Bank is a Community Development Financial Institution (“CDFI”) and a certified B Corp, offering a variety of financial services to meet the needs of the communities it serves.
The financial statements of CFC 45 are consolidated with those of the Bank and the Company. 16 Table of Contents Market Area and Competition The Bank is a Community Development Financial Institution (“CDFI”) and a certified B Corp, offering a variety of financial services to meet the needs of the communities it serves.
While we believe that the ACL has been established and maintained at adequate levels, future adjustments may be necessary if economic or other conditions differ materially from the conditions on which we based our estimates at December 31, 2023.
While we believe that the ACL has been established and maintained at adequate levels, future adjustments may be necessary if economic or other conditions differ materially from the conditions on which we based our estimates at December 31, 2024.
The Dodd‑Frank Act is intended to address perceived weaknesses in the U.S. financial regulatory system and prevent future economic and financial crises. 16 Table of Contents The Dodd‑Frank Act established increased compliance obligations across a number of areas in the banking business.
The Dodd‑Frank Act is intended to address perceived weaknesses in the U.S. financial regulatory system and prevent future economic and financial crises. 19 Table of Contents The Dodd‑Frank Act established increased compliance obligations across a number of areas in the banking business.
The FDIC has applied the credits each quarter that the reserve ratio was at least 1.38% to offset the regular deposit insurance assessments of institutions with credits. The Bank did not receive any assessment credits during 2023 or 2022.
The FDIC has applied the credits each quarter that the reserve ratio was at least 1.38% to offset the regular deposit insurance assessments of institutions with credits. The Bank did not receive any assessment credits during 2024 or 2023.
In the case of loans secured by accounts receivable, the recovery of our investment is dependent upon the borrower’s ability to collect amounts due from customers. 5 Table of Contents SBA Guaranteed Loans City First is an approved SBA lender.
In the case of loans secured by accounts receivable, the recovery of our investment is dependent upon the borrower’s ability to collect amounts due from customers. 6 Table of Contents SBA Guaranteed Loans City First is an approved SBA lender.
Loan originations are derived from various sources including our loan personnel, local mortgage brokers, and referrals from customers. More than 85% of multi-family loan originations during 2023, 2022 and 2021 were sourced from wholesale loan brokers.
Loan originations are derived from various sources including our loan personnel, local mortgage brokers, and referrals from customers. More than 85% of multi-family loan originations during 2024, 2023 and 2022 were sourced from wholesale loan brokers.
As of December 31, 2023, our single largest church loan had an outstanding balance of $2.2 million, was current, and was collateralized by a church building and parcel of land in Baltimore, Maryland.
As of December 31, 2024, our single largest church loan had an outstanding balance of $2.2 million, was current, and was collateralized by a church building and parcel of land in Baltimore, Maryland.
As such, no ACL was recorded for available-for-sale securities as of December 31, 2023. The following table sets forth the amortized cost and fair value of available-for-sale securities by type as of the dates indicated.
As such, no ACL was recorded for available-for-sale securities as of December 31, 2024. The following table sets forth the amortized cost and fair value of available-for-sale securities by type as of the dates indicated.
During 2023 and 2022, we did not originate or sell any loans that were classified as held for sale. 6 Table of Contents Asset Quality General The underlying credit quality of our loan portfolio is dependent primarily on each borrower’s ability to continue to make required loan payments and, in the event a borrower is unable to continue to do so, the value of the collateral securing the loan, if any.
During 2024 and 2023, we did not originate or sell any loans that were classified as held for sale. 7 Table of Contents Asset Quality General The underlying credit quality of our loan portfolio is dependent primarily on each borrower’s ability to continue to make required loan payments and, in the event a borrower is unable to continue to do so, the value of the collateral securing the loan, if any.
Most commercial real estate loans are originated with principal repayments on a 25- to 30-year amortization schedule but are due in 5 years or 10 years. As of December 31, 2023, our single largest commercial real estate credit had an outstanding principal balance of $10.6 million, was current, and was collateralized by a charter school located in Washington, D.C.
Most commercial real estate loans are originated with principal repayments on a 25- to 30-year amortization schedule but are due in 5 years or 10 years. As of December 31, 2024, our single largest commercial real estate credit had an outstanding principal balance of $15.0 million, was current, and was collateralized by a charter school located in Washington, D.C.
At December 31, 2023, our largest loan to a single borrower was $15.0 million; that loan was performing in accordance with its terms and was otherwise in compliance with regulatory requirements. 18 Table of Contents Community Reinvestment Act and Fair Lending The Community Reinvestment Act, as implemented by OCC regulations (“CRA”), requires each national bank to make efforts to meet the credit needs of the communities it serves, including low‑ and moderate‑income neighborhoods.
At December 31, 2024, our largest loan to a single borrower was $15.7 million; that loan was performing in accordance with its terms and was otherwise in compliance with regulatory requirements. 21 Table of Contents Community Reinvestment Act and Fair Lending The Community Reinvestment Act, as implemented by OCC regulations (“CRA”), requires each national bank to make efforts to meet the credit needs of the communities it serves, including low‑ and moderate‑income neighborhoods.
As of December 31, 2023, our single largest multi‑family credit had an outstanding balance of $11.6 million, was current, and was collateralized by a 53-unit apartment complex in Downey, California . At December 31, 2023, the average balance of a loan in our multi‑family portfolio was $1.3 million.
As of December 31, 2024, our single largest multi‑family credit had an outstanding balance of $11.4 million, was current, and was collateralized by a 53-unit apartment complex in Downey, California. At December 31, 2024, the average balance of a loan in our multi‑family portfolio was $1.3 million.
At December 31, 2023, the average balance of a loan in our commercial real estate portfolio was $2.0 million. The interest rates on multi‑family and commercial adjustable-rate mortgage loans (“ARM Loans”) are based on the Secured Overnight Financing Rate (“SOFR”).
At December 31, 2024, the average balance of a loan in our commercial real estate portfolio was $2.9 million. The interest rates on multi‑family and commercial adjustable-rate mortgage loans (“ARM Loans”) are based on the Secured Overnight Financing Rate (“SOFR”).
The USA Patriot Act, Bank Secrecy Act (“BSA”), and Anti‑Money Laundering (“AML”) Requirements The USA PATRIOT Act was enacted after September 11, 2001 to provide the federal government with powers to prevent, detect, and prosecute terrorism and international money laundering, and has resulted in the promulgation of several regulations that have a direct impact on savings associations.
The USA PATRIOT Act, Bank Secrecy Act ( “ BSA ” ), and Anti‑Money Laundering ( “ AML ” ) Requirements The USA PATRIOT Act was enacted after September 11, 2001 to provide the federal government with powers to prevent, detect, and prosecute terrorism and international money laundering, and has resulted in the promulgation of several regulations that have a direct impact on savings associations.
At December 31, 2023, the average balance of a loan in our church loan portfolio was $636 thousand. 4 Table of Contents Single-Family Mortgage Lending While we have historically been primarily a multi‑family and commercial real estate lender, we also have purchased or originated loans secured by single-family residential properties, including investor‑owned properties, with maturities of up to 30 years.
At December 31, 2024, the average balance of a loan in our church loan portfolio was $631 thousand. 5 Table of Contents Single-Family Mortgage Lending While we have historically been primarily a multi‑family and commercial real estate lender, we also have purchased or originated loans secured by single-family residential properties, including investor‑owned properties, with maturities of up to 30 years.
We originate these loans in order to maintain a high percentage of loans that have provisions for periodic repricing, thereby reducing our exposure to interest rate risk. At December 31, 2023, more than 82% of our loans had adjustable rate features.
We originate these loans in order to maintain a high percentage of loans that have provisions for periodic repricing, thereby reducing our exposure to interest rate risk. At December 31, 2024, more than 84% of our loans had adjustable-rate features.
The FDIC Board has set the designated reserve ratio for each of the years 2023 and 2022 at 2%.
The FDIC Board has set the designated reserve ratio for each of the years 2024 and 2023 at 2%.
Share Repurchase On October 31, 2023 the Company purchased 244,771 shares of its Class A (voting) Common Stock (adjusted for the 1-for-8 reverse stock split effective November 1, 2023) from the Federal Deposit Insurance Corporation (“FDIC”), which obtained the shares when it was appointed receiver for First Republic Bank upon its closure earlier in 2023.
Share Repurchase On October 31, 2023 the Company purchased 244,771 shares of its Class A (voting) Common Stock (adjusted for the 1-for-8 reverse stock split effective November 1, 2023 - for more information about the reverse stock split, see Note 2) from the Federal Deposit Insurance Corporation (“FDIC”), which obtained the shares when it was appointed receiver for First Republic Bank upon its closure earlier in 2023.
We specialize in the origination of construction loans for affordable housing developments where rents are subsidized by housing authority agencies. During 2023, we originated $40.0 million of construction loans, compared to $29.6 million of construction loan originations during 2022.
We specialize in the origination of construction loans for affordable housing developments where rents are subsidized by housing authority agencies. During 2024, we originated $7.6 million of construction loans, compared to $40.0 million of construction loan originations during 2023.
As such, these loans may require individual evaluation to determine an appropriate ACL for the loan. When a loan is individually evaluated, the Company typically measures the expected credit loss for the loan based on a discounted cash flow approach, unless the loan has been deemed collateral dependent.
As such, these loans may require individual evaluation to determine an appropriate ACL for the loan. When a loan is individually evaluated, the Company typically measures the expected credit loss for the loan based on the remaining life approach, unless the loan has been deemed collateral dependent.
Loans to One Borrower The Bank is in compliance with the statutory and regulatory limits applicable to loans to any one borrower. As of December 31, 2023, the lending limit for City First is $30.2 million.
Loans to One Borrower The Bank is in compliance with the statutory and regulatory limits applicable to loans to any one borrower. As of December 31, 2024, the lending limit for City First is $30.9 million.
At December 31, 2023, the average balance of a loan in our non-real estate commercial loan portfolio was $2.0 million. The risks related to commercial loans differ from loans secured by real estate and relate to the ability of borrowers to successfully operate their businesses and the difference between expected and actual cash flows of the borrowers.
At December 31, 2024, the average balance of a loan in our non-real estate commercial loan portfolio was $3.4 million. The risks related to commercial loans differ from loans secured by real estate and relate to the ability of borrowers to successfully operate their businesses and the difference between expected and actual cash flows of the borrowers.
The following table provides information regarding our non‑performing assets at the dates indicated: December 31, 2023 2022 2021 2020 2019 (Dollars in thousands) Non‑accrual loans: Single-family $ – $ – $ – $ 1 $ 18 Church – 144 684 786 406 Total non‑accrual loans – 144 684 787 424 Loans delinquent 90 days or more and still accruing – – – – – Real estate owned acquired through foreclosure – – – – – Total non‑performing assets $ – $ 144 $ 684 $ 787 $ 424 Non‑accrual loans as a percentage of gross loans, including loans receivable held for sale - % 0.02 % 0.10 % 0.22 % 0.11 % Non‑performing assets as a percentage of total assets - % 0.01 % 0.06 % 0.16 % 0.10 % 7 Table of Contents There were no accrual loans that were contractually past due by 90 days or more at December 31, 2023 or 2022.
The following table provides information regarding our non‑performing assets at the dates indicated: December 31, 2024 2023 2022 2021 2020 (Dollars in thousands) Non‑accrual loans: Single-family $ – $ – $ – $ – $ 1 Church – – 144 684 786 SBA loans 264 – – – – Total non‑accrual loans 264 – 144 684 787 Loans delinquent 90 days or more and still accruing – – – – – Real estate owned acquired through foreclosure – – – – – Total non‑performing assets $ 264 $ – $ 144 $ 684 $ 787 Non‑accrual loans as a percentage of gross loans, including loans receivable held for sale 0.03 % – % 0.02 % 0.10 % 0.22 % Non‑performing assets as a percentage of total assets 0.02 % – % 0.01 % 0.06 % 0.16 % 8 Table of Contents There were no accrual loans that were contractually past due by 90 days or more at December 31, 2024 or 2023.
Of the $24.7 million of single-family loans at December 31, 2023, $17.7 million are secured by investor‑owned properties. The interest rates for our single-family ARM Loans are indexed to COFI, SOFR, 12‑MTA and 1‑Yr. CMT. All loans previously indexed to LIBOR were converted to SOFR as of December 31, 2022.
Of the $23.6 million of single-family loans at December 31, 2024, $17.6 million are secured by investor‑owned properties. The interest rates for our single-family ARM Loans are indexed to COFI, SOFR, 12‑MTA and 1‑Yr. CMT. All loans previously indexed to LIBOR were converted to SOFR as of December 31, 2022.
Commercial Lending Our commercial lending portfolio consists of loans and lending activities to businesses in our market area that are secured by business assets including inventory, receivables, machinery, and equipment. As of December 31, 2023 and 2022, non-real estate commercial loans totaled $63.5 million and $64.8 million, respectively.
Commercial Lending Our commercial lending portfolio consists of loans and lending activities to businesses in our market area that are secured by business assets including inventory, receivables, machinery, and equipment. As of December 31, 2024 and 2023, non-real estate commercial loans totaled $70.6 million and $63.5 million, respectively.
City First has historically classified all newly originated construction loans as Watch loans until a history of loan performance can be established or until the construction project is complete, which is the main driver for the increase in total criticized loans of $47.7 million during 2023.
City First has historically classified all newly originated construction loans as Watch loans until a history of loan performance can be established or until the construction project is complete, which is the main driver for the increase in total criticized loans of $20.3 million during 2024.
The interest rates on commercial real estate loans are based on a variety of indices, including two-year Treasury, five-year Treasury, seven-year Treasury and ten-year Treasury and the 5-year FHLB (Federal Home Loan Bank of Atlanta). All loans previously indexed to LIBOR were converted to SOFR as of December 31, 2022.
The interest rates on commercial real estate loans are based on a variety of indices, including two-year Treasury, five-year Treasury, seven-year Treasury and ten-year Treasury and the five-year FHLB. All loans previously indexed to LIBOR were converted to SOFR as of December 31, 2022.
We determined that an ACL of $7.3 million, or 0.84% of net loans held for investment, was appropriate at December 31, 2023, compared to the allowance for loan and lease losses “ALLL”) of $4.4 million, or 0.57% of loans held for investment at December 31, 2022. 9 Table of Contents Prior to the Company’s adoption of ASC 326 on January 1, 2023, the Company maintained an ALLL in accordance with ASC 310 and ASC 450 that covered estimated credit losses on individually evaluated loans that were determined to be impaired, as well as estimated probable incurred losses inherent in the remainder of the loan portfolio.
We determined that an ACL of $8.1 million, or 0.83% of gross loans held for investment, was appropriate at December 31, 2024, compared to the allowance for loan and lease losses (“ALLL”) of $7.3 million, or 0.83% of gross loans held for investment at December 31, 2023. 10 Table of Contents Prior to the Company’s adoption of ASC 326 on January 1, 2023, the Company maintained an ALLL in accordance with ASC 310 and ASC 450 that covered estimated credit losses on individually evaluated loans that were determined to be impaired, as well as estimated probable incurred losses inherent in the remainder of the loan portfolio.
The Company uses a discounted cash flow approach, using the loan’s effective interest rate, for determining the ACL on individually evaluated loans, unless the loan is deemed collateral dependent, which requires evaluation based on the estimated fair value of the underlying collateral, less estimated selling costs.
The Company uses the remaining life approach, using the loan’s effective interest rate, for determining the ACL on individually evaluated loans, unless the loan is deemed collateral dependent, which requires evaluation based on the estimated fair value of the underlying collateral, less estimated selling costs.
The following table shows our loan delinquencies by type and amount at the dates indicated: December 31, 2023 December 31, 2022 December 31, 2021 Loans delinquent Loans delinquent Loans delinquent 60-89 Days 90 days or more 60-89 Days 90 days or more 60-89 Days 90 days or more Number Amount Number Amount Number Amount Number Amount Number Amount Number Amount (Dollars in thousands) Commercial real estate – $ – – $ – – $ – – $ – 1 $ 2,423 – $ – Multi- family 1 401 – – – – – – – – – – Total 1 $ 401 – $ – – $ – – $ – 1 $ 2,423 – $ – % of Gross Loans 0.05 % – % - % – % 0.37 % – % Non‑Performing Assets Non‑performing assets (“NPAs”) include non‑accrual loans and real estate owned through foreclosure or deed in lieu of foreclosure (“REO”).
The following table shows our loan delinquencies by type and amount at the dates indicated: December 31, 2024 December 31, 2023 December 31, 2022 Loans delinquent Loans delinquent Loans delinquent 60-89 Days 90 days or more 60-89 Days 90 days or more 60-89 Days 90 days or more Number Amount Number Amount Number Amount Number Amount Number Amount Number Amount (Dollars in thousands) Single-family 1 $ 6 – $ – – $ – – $ – – $ – – $ – Multi- family – – – – 1 401 – – – – – – SBA loans 1 264 – – – – – – – – – – Total 2 $ 270 – $ – 1 $ 401 – $ – – $ – – $ – % of Gross Loans 0.03 % – % 0.05 % – % – % – % Non‑Performing Assets Non‑performing assets (“NPAs”) include non‑accrual loans and real estate owned through foreclosure or deed in lieu of foreclosure (“REO”).
In addition, certain loans were downgraded as part of the internal review process, which also caused the increase in substandard loans of $15.9 million.
In addition, certain loans were downgraded as part of the internal review process, which also caused the increase in substandard loans of $38.0 million.
At December 31, 2023, our securities portfolio, consisting primarily of federal agency debt, mortgage‑backed securities, bonds issued by the United States Treasury and the SBA, and municipal bonds, totaled $317.0 million, or 23.0% of total assets. 11 Table of Contents We classify investments as held‑to‑maturity or available‑for‑sale at the date of purchase based on our assessment of our internal liquidity requirements.
At December 31, 2024, our securities portfolio, consisting primarily of federal agency debt, mortgage‑backed securities, bonds issued by the United States Treasury and the SBA, and municipal bonds, totaled $203.9 million, or 15.6% of total assets. 12 Table of Contents We classify investments as held‑to‑maturity or available‑for‑sale at the date of purchase based on our assessment of our internal liquidity requirements.
Single-family loans totaled $24.7 million and $30.0 million at December 31, 2023 and 2022, respectively. Of the single-family residential mortgage loans outstanding at December 31, 2023, more than 23% had adjustable rate features. We did not purchase any single-family loans during 2023 and 2022.
Single-family loans totaled $23.6 million and $24.7 million at December 31, 2024 and 2023, respectively. Of the single-family residential mortgage loans outstanding at December 31, 2024, more than 26% had adjustable-rate features. We did not purchase any single-family loans during 2024 or 2023.
Effective January 1, 2023, the Company accounts for the ACL on loans in accordance with ASC 326. ASC 326 requires the Company to recognize estimates for lifetime losses on loans and off-balance sheet loan commitments at the time of origination or acquisition.
Effective January 1, 2023, the Company accounts for the ACL on loans in accordance with Accounting Standards Codification Topic 326 (“ASC 326”), which requires the Company to recognize estimates for lifetime losses on loans and off-balance sheet loan commitments at the time of origination or acquisition.
See “Regulation” for more information on the government regulations to which we are subject. 2 Table of Contents The following table details the composition of our portfolio of loans held for investment by type, dollar amount and percentage of loan portfolio at the dates indicated: December 31, 2023 2022 2021 2020 2019 Amount Percent of total Amount Percent of total Amount Percent of total Amount Percent of total Amount Percent of total (Dollars in thousands) Single-family $ 24,702 2.79 % $ 30,038 3.89 % $ 45,372 6.96 % $ 48,217 13.32 % $ 72,883 18.23 % Multi‑family 561,447 63.33 % 502,141 65.08 % 393,704 60.36 % 272,387 75.24 % 287,378 71.90 % Commercial real estate 119,436 13.47 % 114,574 14.85 % 93,193 14.29 % 24,289 6.71 % 14,728 3.68 % Church 12,717 1.43 % 15,780 2.04 % 22,503 3.45 % 16,658 4.60 % 21,301 5.33 % Construction 89,887 10.14 % 40,703 5.27 % 32,072 4.92 % 429 0.11 % 3,128 0.78 % Commercial 63,450 7.16 % 64,841 8.40 % 46,539 7.13 % 57 0.02 % 262 0.07 % SBA Loans 14,954 1.68 % 3,601 0.47 % 2.89 2.89 % – – % – – % Consumer 13 – % 11 – % - – % 7 - % 21 0.01 % Gross loans 886,606 100.00 % 771,689 100.00 % 652,220 100.00 % 362,044 100.00 % 399,701 100.00 % Plus: Premiums on loans purchased 32 35 58 88 171 Deferred loan costs, net 1,940 1,723 1,471 1,218 1,211 Less: Credit and interest marks on purchased loans, net 772 1,010 1,842 – – Unamortized discounts 1 3 3 6 54 Allowance for credit/loan losses 7,348 4,388 3,391 3,215 3,182 Total loans held for investment $ 880,457 $ 768,046 $ 648,513 $ 360,129 $ 397,847 The following table presents loan categories by maturity for the period indicated.
See “Regulation” for more information on the government regulations to which we are subject. 2 Table of Contents The following table details the composition of our portfolio of loans held for investment by type, dollar amount and percentage of loan portfolio at the dates indicated: December 31, 2024 2023 2022 2021 2020 Amount Percent of total Amount Percent of total Amount Percent of total Amount Percent of total Amount Percent of total (Dollars in thousands) Single-family $ 23,566 2.42 % $ 24,702 2.79 % $ 30,038 3.89 % $ 45,372 6.96 % $ 48,217 13.32 % Multi‑family 633,306 64.94 % 561,447 63.33 % 502,141 65.08 % 393,704 60.36 % 272,387 75.24 % Commercial real estate 156,155 16.01 % 119,436 13.47 % 114,574 14.85 % 93,193 14.29 % 24,289 6.71 % Church 9,470 0.97 % 12,717 1.43 % 15,780 2.04 % 22,503 3.45 % 16,658 4.60 % Construction 80,948 8.30 % 89,887 10.14 % 40,703 5.27 % 32,072 4.92 % 429 0.11 % Commercial - other 70,596 7.24 % 63,450 7.16 % 64,841 8.40 % 46,539 7.13 % 57 0.02 % SBA Loans 1,142 0.12 % 14,954 1.68 % 0.47 0.47 % 18,837 2.89 % – – % Consumer 13 – % 13 – % 11 – % - - % 7 – % Gross loans 975,196 100.00 % 886,606 100.00 % 771,689 100.00 % 652,220 100.00 % 362,044 100.00 % Plus: Premiums on loans purchased - 32 35 58 88 Deferred loan costs, net 2,116 1,940 1,723 1,471 1,218 Less: Credit and interest marks on purchased loans, net 348 772 1,010 1,842 – Unamortized discounts - 1 3 3 6 Allowance for credit/loan losses 8,103 7,348 4,388 3,391 3,215 Total loans held for investment $ 968,861 $ 880,457 $ 768,046 $ 648,513 $ 360,129 3 Table of Contents The following table presents loan categories by maturity for the period indicated.
Construction Lending Construction loans totaled $89.9 million and $40.7 million at December 31, 2023 and 2022, respectively, and represented 10.14% and 5.27% of our gross loan portfolio at December 31, 2023 and 2022. We provide loans for the construction of quality, affordable single-family, multi‑family and commercial real estate projects and for land development.
Construction Lending Construction loans totaled $80.9 million and $89.9 million at December 31, 2024 and 2023, respectively, and represented 8.30% and 10.14% of our gross loan portfolio at December 31, 2024 and 2023, respectively. We provide loans for the construction of quality, affordable single-family, multi‑family and commercial real estate projects and for land development.
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) December 31, 2023: Community Bank Leverage Ratio $ 185,773 14.97 % $ 111,696 9.00 % December 31, 2022: Community Bank Leverage Ratio $ 181,304 15.75 % $ 103,591 9.00 % At December 31, 2023, the Company and the Bank met all the capital adequacy requirements to which they were subject.
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) December 31, 2024: Community Bank Leverage Ratio $ 189,009 13.96 % $ 121,897 9.00 % December 31, 2023: Community Bank Leverage Ratio $ 185,773 14.97 % $ 111,696 9.00 % At December 31, 2024, the Company and the Bank met all the capital adequacy requirements to which they were subject.
These deposits totaled $114.8 million and $74.6 million at December 31, 2023 and 2022, respectively and are not considered to be brokered deposits. As of December 31, 2023 and 2022, approximately $286.4 million and $212.9 million of our total deposits were not insured by FDIC insurance.
These deposits totaled $145.8 million and $114.8 million at December 31, 2024 and 2023, respectively and are not considered to be brokered deposits. As of December 31, 2024 and 2023, approximately $268.8 million and $286.4 million, respectively, of our total deposits were not insured by FDIC insurance.
The following table summarizes information concerning our FHLB advances at or for the periods indicated: At or For the Years Ended December 31, 2023 2022 2021 (Dollars in thousands) FHLB Advances: Average balance outstanding during the year $ 177,261 $ 61,593 $ 100,471 Maximum amount outstanding at any month‑end during the year $ 210,242 $ 128,823 $ 113,580 Balance outstanding at end of year $ 209,319 $ 128,344 $ 85,952 Weighted average interest rate at end of year 4.91 % 3.74 % 1.85 % Average cost of advances during the year 4.70 % 1.74 % 1.96 % Weighted average maturity (in months) 2 7 22 On December 27, 2023, the Bank borrowed $100 million from the Federal Reserve under the Bank Term Funding Program (“BTFP”), all of which was outstanding as of December 31, 2023.
The following table summarizes information concerning our FHLB advances at or for the periods indicated: At or For the Years Ended December 31, 2024 2023 2022 (Dollars in thousands) FHLB Advances: Average balance outstanding during the year $ 199,893 $ 177,261 $ 61,593 Maximum amount outstanding at any month‑end during the year $ 209,298 $ 210,242 $ 128,823 Balance outstanding at end of year $ 195,532 $ 209,319 $ 128,344 Weighted average interest rate at end of year 4.03 % 4.91 % 3.74 % Average cost of advances during the year 4.79 % 4.70 % 1.74 % Weighted average maturity (in months) - 2 7 On December 27, 2023, the Bank borrowed $100.0 million from the Federal Reserve under the Bank Term Funding Program (“BTFP”), which was paid off in December 2024.
Commercial loans represented 7.16% of our loan portfolio as of December 31, 2023. For the year ended December 31, 2023, we originated $43.3 million of commercial loans. As of December 31, 2023, our single largest commercial loan had an outstanding balance of $15.0 million.
Commercial loans represented 7.24% and 7.16% of our loan portfolio as of December 31, 2024 and 2023, respectively. For the year ended December 31, 2024, we originated $17.6 million of commercial loans. As of December 31, 2024, our single largest commercial loan had an outstanding balance of $15.0 million.
Our founders in Los Angeles and Washington, D.C. were local leaders who saw a need in the community for a bank that addressed the lack of access to capital for historically excluded and disinvested urban majority minority communities.
Our founders in Los Angeles and Washington, D.C. were local leaders who saw a need in the community for a bank that addressed the lack of access to capital for under invested communities.
We had no NPAs at December 31, 2023 compared to $ 144 thousand, or 0.01% of total assets, at December 31, 2022. Non-accrual loans consist of delinquent loans that are 90 days or more past due and other loans, including loans modified in response to a borrower’s financial difficulty, that do not qualify for accrual status.
We had one NPA at December 31, 2024 and no NPAs at December 31, 2023. Non-accrual loans consist of delinquent loans that are 90 days or more past due and other loans, including loans modified in response to a borrower’s financial difficulty, that do not qualify for accrual status.
At December 31, 2023, our net loan portfolio totaled $880.5 million, or 64.0% of total assets. We emphasize the origination of adjustable‑rate loans, most of which are hybrid loans (loans having an initial fixed rate period which are initially 5 years, followed by an adjustable rate period), for our portfolio of loans held for investment.
At December 31, 2024, our net loan portfolio totaled $968.9 million, or 74.3% of total assets. We emphasize the origination of adjustable‑rate loans, most of which are hybrid loans (loans having an initial fixed rate period which are initially five years, followed by an adjustable-rate period), for our portfolio of loans held for investment.
It is our policy to obtain title insurance on collateral for all real estate loans. Borrowers must also obtain hazard insurance naming the Bank as a loss payee prior to loan closing.
It is our policy to obtain title insurance on real estate secured loans. Borrowers must also obtain hazard insurance naming the Bank as a loss payee prior to loan closing and they have the option to escrow for taxes and insurance.
At December 31, 2023, we had $209.3 million in outstanding FHLB advances and had the ability to borrow up to an additional $117.0 million based on available and pledged collateral.
At December 31, 2024, we had $195.5 million in outstanding FHLB advances and had the ability to borrow up to an additional $174.3 million based on available and pledged collateral.
The interest rate on this borrowing is fixed at 4.84% and the borrowing matures on December 29, 2024. Investment securities with a book value of $107.3 million and a fair value of $98.3 million were pledged as collateral for this borrowing as of December 31, 2023. There are no prepayment penalties for early payoff.
The interest rate on this borrowing was fixed at 4.84% and the borrowing matured on December 29, 2024. Investment securities with a book value of $107.3 million and a fair value of $98.3 million were pledged as collateral for this borrowing as of December 31, 2023.
At December 31, 2023, our securities portfolio did not contain securities of any issuer with an aggregate book value in excess of 10% of our equity capital, excluding those issued by the United States Government or its agencies. ​ At December 31, ​ 2023 2022 2021 ​ Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value ​ (In thousands) Federal agency mortgage-backed securities $ 76,091 $ 66,778 $ 84,955 $ 74,169 $ 70,078 $ 70,030 Federal agency collateralized mortgage obligations (“CMO”) 24,720 23,339 27,776 26,100 9,391 9,287 Federal agency debt 50,893 47,836 55,687 51,425 38,152 37,988 Municipal bonds 4,833 4,373 4,866 4,197 4,898 4,915 U.S.
At December 31, 2024, our securities portfolio did not contain securities of any issuer with an aggregate book value in excess of 10% of our equity capital, excluding those issued by the United States Government or its agencies. ​ At December 31, ​ 2024 2023 2022 ​ Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value ​ (In thousands) Federal agency mortgage-backed securities $ 62,853 $ 53,029 $ 76,091 $ 66,778 $ 84,955 $ 74,169 Federal agency collateralized mortgage obligations (“CMO”) 21,299 20,058 24,720 23,339 27,776 26,100 Federal agency debt 42,100 40,034 50,893 47,836 55,687 51,425 Municipal bonds 4,800 4,388 4,833 4,373 4,866 4,197 U.S.
These multi‑family loans amounted to $561.4 million and $502.1 million at December 31, 2023 and 2022, respectively. Multi‑family loans represented 63.33% of our gross loan portfolio at December 31, 2023 compared to 65.08% of our gross loan portfolio at December 31, 2022. Most of our multi‑family loans amortize over 30 years.
These multi‑family loans amounted to $633.3 million and $561.4 million at December 31, 2024 and 2023, respectively. Multi‑family loans represented 64.94% of our gross loan portfolio at December 31, 2024 compared to 63.33% of our gross loan portfolio at December 31, 2023. Most of our multi‑family loans amortize over 30 years.
The Change in Bank Control Act prohibits a person, acting directly or indirectly or in concert with one or more persons, from acquiring control of a bank holding company unless the FRB has been given 60 days prior written notice of such proposed acquisition and within that time period the FRB has not issued a notice disapproving the proposed acquisition or extending for up to another 30 days the period during which a disapproval may be issued.
Among other things, we are generally prohibited, either directly or indirectly, from acquiring more than 5% of the voting shares of any depository or depository holding company that is not a subsidiary of the Company. 22 Table of Contents The Change in Bank Control Act prohibits a person, acting directly or indirectly or in concert with one or more persons, from acquiring control of a bank holding company unless the FRB has been given 60 days prior written notice of such proposed acquisition and within that time period the FRB has not issued a notice disapproving the proposed acquisition or extending for up to another 30 days the period during which a disapproval may be issued.
The fair value of securities pledged totaled $64.4 million as of December 31, 2022 and included $33.3 million of federal agency debt, $19.2 million of U.S. Treasuries and $11.9 million of federal agency mortgage-backed securities We participate in and have previously been an “Allocatee” of the New Markets Tax Credit Program of the U.S.
The fair value of securities pledged totaled $89.0 million as of December 31, 2023 and included $47.8 million of U.S. Treasuries, $30.2 million of federal agency debt, and $11.0 million of federal agency mortgage-backed securities. We participate in and have previously been an “Allocatee” of the New Markets Tax Credit Program of the U.S.
Changes in applicable laws or the regulations of the OCC, the FDIC, the FRB, the CFPB, or other regulatory authorities, or changes in interpretations of such regulations or in agency policies or priorities, could have a material adverse impact on the Bank and our Company, our operations, and the value of our debt and equity securities.
Department of Housing and Urban Development (“HUD”) if the OCC determines violations of the fair lending laws may have occurred. 18 Table of Contents Changes in applicable laws or the regulations of the OCC, the FDIC, the FRB, the CFPB, or other regulatory authorities, or changes in interpretations of such regulations or in agency policies or priorities, could have a material adverse impact on the Bank and our Company, our operations, and the value of our debt and equity securities.
Our commercial real estate loans amounted to $119.4 million and $114.6 million at December 31, 2023 and 2022, respectively. Commercial real estate loans represented 13.47% and 14.85% of our gross loan portfolios at December 31, 2023 and 2022, respectively.
Our commercial real estate loans amounted to $156.2 million and $119.4 million at December 31, 2024 and 2023, respectively. Commercial real estate loans represented 16.01% and 13.47% of our gross loan portfolios at December 31, 2024 and 2023, respectively.
Treasuries 167,055 163,880 165,997 160,589 18,169 17,951 SBA pools 12,386 10,744 14,048 12,269 16,241 16,225 Total $ 335,978 $ 316,950 $ 353,329 $ 328,749 $ 156,929 $ 156,396 The table below presents the carrying amount, weighted average yields and contractual maturities of our securities as of December 31, 2023.
Treasuries 77,857 77,190 167,055 163,880 165,997 160,589 SBA pools 10,749 9,163 12,386 10,744 14,048 12,269 Total $ 219,658 $ 203,862 $ 335,978 $ 316,950 $ 353,329 $ 328,749 The table below presents the carrying amount, weighted average yields and contractual maturities of our securities as of December 31, 2024.
Our church loans totaled $12.7 million and $15.8 million at December 31, 2023 and 2022, respectively, which represented 1.43% and 2.04% of our gross loan portfolio at December 31, 2023 and 2022, respectively.
Our church loans totaled $9.5 million and $12.7 million at December 31, 2024 and 2023, respectively, which represented 0.97% and 1.43% of our gross loan portfolio at December 31, 2024 and 2023, respectively.
The following table provides information regarding our criticized loans (Watch and Special Mention) and classified assets (Substandard) at the dates indicated: December 31, 2023 December 31, 2022 (Dollars in thousands) Watch loans $ 124,208 $ 65,717 Special mention loans 5,841 16,590 Total criticized loans 130,049 82,307 Substandard loans 21,684 5,750 Total classified assets 21,684 5,750 Total $ 151,733 $ 88,057 Criticized assets increased to $130.0 million at December 31, 2023, from $82.3 million at December 31, 2022.
The following table provides information regarding our criticized loans (Watch and Special Mention) and classified assets (Substandard) at the dates indicated: December 31, 2024 December 31, 2023 (Dollars in thousands) Watch loans $ 141,350 $ 124,208 Special mention loans 8,978 5,841 Total criticized loans 150,328 130,049 Substandard loans 59,638 21,684 Total classified assets 59,638 21,684 Total $ 209,966 $ 151,733 Criticized assets increased to $150.3 million at December 31, 2024, from $130.0 million at December 31, 2023.
In certain cases, the OCC has the authority to refer matters relating to federal fair lending laws to the U.S. Department of Justice (“DOJ”) or the U.S. Department of Housing and Urban Development (“HUD”) if the OCC determines violations of the fair lending laws may have occurred.
In certain cases, the OCC has the authority to refer matters relating to federal fair lending laws to the U.S. Department of Justice (“DOJ”) or the U.S.
Loan Originations, Purchases and Sales The following table summarizes loan originations, purchases, sales, and principal repayments for the periods indicated: 2023 2022 2021 (In thousands) Gross loans: (1) Beginning balance $ 771,689 $ 652,220 $ 362,044 Loans acquired in the Merger – – 225,885 Loans originated: Multi‑family 78,873 141,625 167,097 Commercial real estate 28,282 75,302 43,567 PPP Loans – – 26,497 Construction 39,950 29,628 24,884 Commercial 15,000 26,877 4,942 Total loans originated 162,105 273,432 266,987 Less: Principal repayments 47,188 153,963 202,696 Sales of loans – – – Ending balance $ 886,606 $ 771,689 $ 652,220 (1) Amount is before deferred origination costs, purchase premiums and discounts, and the allowance for credit losses.
Loan Originations, Purchases and Sales The following table summarizes loan originations, purchases, sales, and principal repayments for the periods indicated: 2024 2023 2022 (In thousands) Gross loans: (1) Beginning balance $ 886,606 $ 771,689 $ 652,220 Loans originated: Multi‑family 80,923 78,873 141,625 Commercial real estate 50,847 28,282 75,302 SBA Loans 800 – – Construction 7,554 39,950 29,628 Commercial 17,594 15,000 26,877 Total loans originated 157,718 162,105 273,432 Less: Principal repayments 69,128 47,188 153,963 Ending balance $ 975,196 $ 886,606 $ 771,689 (1) Amount is before deferred origination costs, purchase premiums and discounts, and the allowance for credit losses.
The following table presents the maturity of time deposits as of the dates indicated: Three Months or Less Three to Six Months Six Months to One Year Over One Year Total (In thousands) December 31, 2023 Time deposits of $250,000 or less $ 36,931 $ 26,248 $ 63,118 $ 18,202 $ 144,499 Time deposits of more than $250,000 4,609 3,904 6,895 8,128 23,536 Total $ 41,540 $ 30,152 $ 70,013 $ 26,330 $ 168,035 Not covered by deposit insurance $ 3,109 $ 2,154 $ 4,395 $ 6,628 $ 16,286 December 31, 2022 Time deposits of $250,000 or less $ 30,244 $ 23,155 $ 49,461 $ 4,281 $ 107,141 Time deposits of more than $250,000 27,912 – – – 27,912 Total $ 58,156 $ 23,155 $ 49,461 $ 4,281 $ 135,053 Not covered by deposit insurance $ 17,913 $ – $ – $ – $ 17,913 The following table details the maturity periods of our certificates of deposit in amounts of $100 thousand or more at December 31, 2023.
The following table presents the maturity of time deposits as of the dates indicated: Three Months or Less Three to Six Months Six Months to One Year Over One Year Total (In thousands) December 31, 2024 Time deposits of $250,000 or less $ 46,350 $ 37,239 $ 92,028 $ 4,060 $ 179,677 Time deposits of more than $250,000 3,149 5,712 16,864 7,437 33,162 Total $ 49,499 $ 42,951 $ 108,892 $ 11,497 $ 212,839 Not covered by deposit insurance $ 1,399 $ 3,212 $ 12,363 $ 6,437 $ 23,411 December 31, 2023 Time deposits of $250,000 or less $ 36,931 $ 26,248 $ 63,118 $ 18,202 $ 144,499 Time deposits of more than $250,000 4,609 3,904 6,895 8,128 23,536 Total $ 41,540 $ 30,152 $ 70,013 $ 26,330 $ 168,035 Not covered by deposit insurance $ 3,109 $ 2,154 $ 4,395 $ 6,628 $ 16,286 The following table details the maturity periods of our certificates of deposit in amounts of $100 thousand or more at December 31, 2024.
Certain loans classified as SBA are secured by commercial real estate property. All other SBA loans are secured by business assets. As of December 31, 2023 and 2022, SBA loans totaled $15.0 million and $3.6 million, respectively. Our December 31, 2023 SBA loans included $2.5 million of loans issued under the Paycheck Protection Program (“PPP”) loans.
Certain loans classified as SBA are secured by commercial real estate property. All other SBA loans are secured by business assets. As of December 31, 2024 and 2023, SBA loans totaled $1.1 million and $15.0 million, respectively.
For the Years Ended December 31, 2023 2022 2021 Average Balance Percent of Total Weighted Average Cost of Funds Average Balance Percent of Total Weighted Average Cost of Funds Average Balance Percent of Total Weighted Average Cost of Funds (Dollars in thousands) Money market deposits $ 126,831 21.97 % 3.37 % $ 192,835 26.34 % 0.67 % $ 159,157 24.77 % 0.41 % Savings deposits 59,928 10.38 % 0.25 % 66,033 9.02 % 0.09 % 67,660 10.53 % 0.30 % Interest checking and other demand deposits 236,244 40.92 % 0.15 % 291,114 39.77 % 0.08 % 223,003 34.70 % 0.05 % Certificates of deposit 154,275 26.73 % 1.77 % 182,050 24.87 % 0.30 % 192,795 30.00 % 0.37 % Total $ 577,278 100.00 % 1.30 % $ 732,032 100.00 % 0.29 % $ 642,615 100.00 % 0.26 % 13 Table of Contents Borrowings We utilize short‑term and long‑term advances from the FHLB as an alternative to retail deposits as a funding source for asset growth.
For the Years Ended December 31, 2024 2023 2022 Average Balance Percent of Total Weighted Average Cost of Funds Average Balance Percent of Total Weighted Average Cost of Funds Average Balance Percent of Total Weighted Average Cost of Funds (Dollars in thousands) Money market deposits $ 284,263 48.22 % 2.44 % $ 262,827 45.53 % 1.62 % $ 192,835 28.30 % 0.67 % Savings deposits 55,715 9.45 % 0.67 % 59,928 10.38 % 0.25 % 66,033 9.69 % 0.09 % Interest checking and other demand deposits 74,302 12.60 % 0.74 % 100,248 17.37 % 0.36 % 240,380 35.28 % 0.08 % Certificates of deposit 175,275 29.73 % 3.04 % 154,275 26.72 % 1.77 % 182,050 26.73 % 0.30 % Total $ 589,555 100.00 % 2.24 % $ 577,278 100.00 % 1.30 % $ 681,298 100.00 % 0.31 % 15 Table of Contents Borrowings We utilize short‑term and long‑term advances from the FHLB as an alternative to retail deposits as a funding source for asset growth.
Each loan requires at least two signatures for approval. The Board has authorized loan approval limits for various management team members up to $7 million per individual, and up to $12 million for the Chief Executive. Loans in excess of $7 million require review and approval by members of the Board’s Loan Committee.
If the property is located in a flood zone, the borrower must obtain flood insurance and provide proof of coverage prior to closing. Each loan requires at least two signatures for approval. The Board has authorized loan approval limits for various management team members up to $7 million per individual, and up to $12 million for the Chief Executive.
As of December 31, 2023, securities sold under agreements to repurchase totaled $73.5 million at an average rate of 2.60%. These agreements mature on a daily basis. The fair value of securities pledged totaled $89.0 million as of December 31, 2023 and included $47.8 million of U.S.
The fair value of securities pledged totaled $83.3 million as of December 31, 2024 and included $46.5 million of U.S. Treasuries, $27.1 million of federal agency debt, $5.5 million of federal agency mortgage-backed securities, and $4.2 million of SBA pools. As of December 31, 2023, securities sold under agreements to repurchase totaled $73.5 million at an average rate of 2.60%.
December 31, 2023 Amount Weighted Average Rate (Dollars in thousands) Certificates maturing: Less than three months $ 36,101 2.81 % Three to six months 25,278 2.97 % Six to twelve months 61,475 3.59 % Over twelve months 21,254 2.33 % Total $ 144,108 3.10 % The following table presents the distribution of our average deposits for the years indicated and the weighted average interest rates during the year for each category of deposits presented.
December 31, 2024 Amount Weighted Average Rate (Dollars in thousands) Certificates maturing: Less than three months $ 44,010 3.34 % Three to six months 39,003 3.60 % Six to twelve months 99,471 3.85 % Over twelve months 9,301 1.26 % Total $ 191,785 3.56 % 14 Table of Contents The following table presents the distribution of our average deposits for the years indicated and the weighted average interest rates during the year for each category of deposits presented.
A federally chartered bank’s determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the OCC.
Loans are only evaluated individually when they are deemed to no longer possess similar risk characteristics with other loans in the loan portfolio. A federally chartered bank’s determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the OCC.
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 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.
The obligation to repurchase the securities is reflected as a liability in the Bank’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.
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 Bank’s consolidated statements of financial condition, while the securities underlying the repurchase agreements remain in the respective investment securities asset accounts.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

15 edited+11 added−4 removed82 unchanged
Biggest changeThe Bank and the Company are certified as CDFIs by the United States Department of the Treasury. CDFI status increases a financial institution’s potential for receiving grants and awards that, in turn, enable the financial institution to increase the level of community development financial services that it provides to communities.
Biggest changeCDFI status increases a financial institution’s potential for receiving grants and awards that, in turn, enable the financial institution to increase the level of community development financial services that it provides to communities. Broadway Federal Bank received over $3 million in Bank Enterprise Awards from the CDFI Fund over the last ten years.
The trading price of our common stock has historically and will likely in the future fluctuate significantly as a result of a number of factors, including the following: ● actual or anticipated changes in our operating results and financial condition; ● actions by our stockholders, including sales of common stock by substantial stockholders and/or directors and executive officers, or perceptions that such actions may occur; ● the limited number of shares of our common stock that are held by the general public, commonly called the “public float,” and our small market capitalization; 22 Table of Contents ● failure to meet stockholder or market expectations regarding loan and deposit volume, revenue, asset quality or earnings; ● failure to meet Nasdaq listing requirements, including failure to satisfy the $1.00 minimum closing bid price requirement; ● speculation in the press or the investment community relating to the Company or the financial services industry generally; ● fluctuations in the stock price and operating results of our competitors; ● proposed or adopted regulatory changes or developments; ● investigations, proceedings, or litigation that involve or affect us; ● the performance of the national, California and Washington, D.C. economies and the real estate markets in Southern California and Washington, D.C.; ● general market conditions and, in particular, developments related to market conditions for the financial services industry; ● additions or departures of key personnel; ● changes in financial estimates or publication of research reports and recommendations by financial analysts with respect to our common stock or those of other financial institutions; and ● actions taken by bank regulatory authorities, including required additions to our loan loss reserves or the issuance of cease and desist orders, based on adverse evaluations of our loans and other assets, operating results, or management practices and procedures or other aspects of our business.
The trading price of our common stock has historically and will likely in the future fluctuate significantly as a result of a number of factors, including the following: ● actual or anticipated changes in our operating results and financial condition; ● actions by our stockholders, including sales of common stock by substantial stockholders and/or directors and executive officers, or perceptions that such actions may occur; ● the limited number of shares of our common stock that are held by the general public, commonly called the “public float,” and our small market capitalization; ● failure to meet stockholder or market expectations regarding loan and deposit volume, revenue, asset quality or earnings; ● failure to meet Nasdaq listing requirements, including failure to satisfy the $1.00 minimum closing bid price requirement; ● speculation in the press or the investment community relating to the Company or the financial services industry generally; ● fluctuations in the stock price and operating results of our competitors; ● proposed or adopted regulatory changes or developments; ● investigations, proceedings, or litigation that involve or affect us; ● the performance of the national, California and Washington, D.C. economies and the real estate markets in Southern California and Washington, D.C.; ● general market conditions and, in particular, developments related to market conditions for the financial services industry; ● additions or departures of key personnel; ● changes in financial estimates or publication of research reports and recommendations by financial analysts with respect to our common stock or those of other financial institutions; and ● actions taken by bank regulatory authorities, including required additions to our loan loss reserves or the issuance of cease and desist orders, based on adverse evaluations of our loans and other assets, operating results, or management practices and procedures or other aspects of our business.
Also, analysts have been monitoring the level of uninsured deposits in banks due to the liquidity risk associated with high levels of uninsured deposits. To the extent such conditions exist or worsen, we could experience adverse effects on our business, financial condition, and results of operations.
Analysts have been monitoring the level of uninsured deposits in banks due to the liquidity risk associated with high levels of uninsured deposits. To the extent such conditions exist or worsen, we could experience adverse effects on our business, financial condition, and results of operations.
In addition, the rates of delinquencies, foreclosures, bankruptcies, and loan losses may increase substantially, as uninsured property losses or sustained job interruption or loss may materially impair the ability of borrowers to repay their loans. 24 Table of Contents Risks Relating to the Company Being a Public Benefit Corporation We cannot provide any assurance that we will achieve our public benefit purposes.
In addition, the rates of delinquencies, foreclosures, bankruptcies, and loan losses may increase substantially, as uninsured property losses or sustained job interruption or loss may materially impair the ability of borrowers to repay their loans. 28 Table of Contents Risks Relating to the Company Being a Public Benefit Corporation We cannot provide any assurance that we will achieve our public benefit purposes.
In addition, interest rate fluctuations can affect how much money the Bank may be able to lend and its ability to attract and retain customer deposits, which are an important source of funds for making and holding loans. 21 Table of Contents Changes in governmental regulation may impair operations or restrict growth.
In addition, interest rate fluctuations can affect how much money the Bank may be able to lend and its ability to attract and retain customer deposits, which are an important source of funds for making and holding loans. 25 Table of Contents Changes in governmental regulation may impair operations or restrict growth.
All of these inflationary risks for our commercial customer base can be financially detrimental, leading to increased likelihood that the customer may default on a loan. In addition, sustained inflationary pressure led the Federal Reserve to raise interest rates seven times in 2022, and four times in 2023, which increased our interest rate risk.
All of these inflationary risks for our commercial customer base can be financially detrimental, leading to increased likelihood that the customer may default on a loan. For example, sustained inflationary pressure led the Federal Reserve to raise interest rates seven times in 2022, and four times in 2023, which increased our interest rate risk.
Although the risks are organized by headings and each risk is discussed separately, many are interrelated. 20 Table of Contents Risks Relating to Our Business The macroeconomic environment could pose significant challenges for the Company and could adversely affect our financial condition and results of operations.
Although the risks are organized by headings and each risk is discussed separately, many are interrelated. 24 Table of Contents Risks Relating to Our Business The macroeconomic environment could pose significant challenges for the Company and could adversely affect our financial condition and results of operations.
As disclosed in Part I, Item 4 “Controls and Procedures,” of our Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2023, we determined that there is a material weakness in our internal control over financial reporting and as a result, our disclosure controls and procedures and internal control over financial reporting were not effective as of September 30, 2023.
As disclosed in Part I, Item 4 “Controls and Procedures,” of our Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2023, we determined that there were material weaknesses in our internal control over financial reporting.
The material weakness, remediation efforts, and any related litigation, government investigations, or regulatory enforcement actions will require management attention and resources and cause us to incur unanticipated costs, and could negatively affect investor confidence in our financial statements, cause us reputational harm, and raise other risks to our operations. The market price of our common stock is volatile.
Similarly, the control deficiency, remediation efforts, and any related litigation, government investigations, or regulatory enforcement actions will require management attention and resources and cause us to incur unanticipated costs, and could negatively affect investor confidence in our financial statements, cause us reputational harm, and raise other risks to our operations.
These provisions and the stockholder rights plan could be used by our board of directors to prevent a merger or acquisition that would be attractive to stockholders and could limit the price investors would be willing to pay in the future for our common stock.
These provisions and the stockholder rights plan could be used by our board of directors to prevent a merger or acquisition that would be attractive to stockholders and could limit the price investors would be willing to pay in the future for our common stock. 27 Table of Contents Our common stock is not insured and stockholders could lose the value of their entire investment.
Additionally, such derivative litigation may be costly, which may have an adverse impact on our financial condition, results of operations, assets, or business. 25 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
Additionally, such derivative litigation may be costly, which may have an adverse impact on our financial condition, results of operations, assets, or business. 29 Table of Contents
While we believe we will be able to meet the certification criteria required to continue our CDFI status, there is no certainty that we will be able to do so.
We reinvest the proceeds from CDFI-related grants and awards back into the communities we serve. While we believe we will be able to meet the certification criteria required to continue our CDFI status, there is no certainty that we will be able to do so.
General Risk Factors We identified a material weakness in our internal control over financial reporting which, if not remediated appropriately or timely, could affect our ability to record, process, and report financial information accurately, impair our ability to prepare financial statements, negatively affect investor confidence, and cause reputational harm.
General Risk Factors Ineffective internal control over financial reporting could affect our ability to record, process, and report financial information accurately, impair our ability to prepare financial statements, negatively affect investor confidence, and cause reputational harm.
An investment in shares of our common stock is not a deposit and is not insured against loss or guaranteed by the Federal Deposit Insurance Corporation (the “FDIC”) or any other government agency or authority. 23 Table of Contents If we were to lose our status as a CDFI, our ability to obtain grants and awards as a CDFI similar to those received in the past may be lost.
An investment in shares of our common stock is not a deposit and is not insured against loss or guaranteed by the Federal Deposit Insurance Corporation (the “FDIC”) or any other government agency or authority.
If the Company is unable to remediate the material weakness, or is otherwise unable to maintain effective internal control over financial reporting or disclosure controls and procedures, the Company’s ability to record, process, and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected.
If the additional controls and procedures that we have implemented to remediate the material weaknesses prove to be insufficient or we identify other control deficiencies that individually or together constitute significant deficiencies or material weaknesses, the Company’s ability to record, process, and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected.
Removed
The failure of three regional banks in March 2023 and the resultant negative outlook on the banking sector has created concern regarding the exposure of banks to interest rate risk, and the exposure of banks to unrecognized investment losses due to investments classified as “held to maturity” on the balance sheet.
Added
Moreover, some of the factors, events and contingencies discussed below may have occurred in the past, but the disclosures below are not representations as to whether or not the factors, events or contingencies have occurred in the past, and instead reflect our beliefs and opinions as to the factors, events, or contingencies that could materially and adversely affect us in the future.
Removed
While the Company is actively engaged in the planning for, and implementation of, remediation efforts to address the material weakness, there can be no assurance that the efforts will fully remediate the material weakness in a timely manner.
Added
Moreover, as a community bank operating as a Community Development Financial Institution (CDFI), we face a complex and evolving regulatory and political landscape, and changes in laws, regulations, initiatives, or regulatory policies could adversely affect our business, financial condition, and results of operations.
Removed
Our common stock is not insured and stockholders could lose the value of their entire investment.
Added
We have determined that the material weaknesses were remediated and that our internal control over financial reporting was effective as of December 31, 2024.
Removed
Broadway Federal Bank received over $3 million in Bank Enterprise Awards from the CDFI Fund over the last ten years. We reinvest the proceeds from CDFI-related grants and awards back into the communities we serve.
Added
Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock, which would negatively impact the market price and liquidity of our common stock and our ability to access the capital markets.
Added
If we fail to satisfy the continued listing requirements of Nasdaq, such as the $1.00 minimum closing bid price or timely periodic financial reporting requirements, Nasdaq may take steps to delist the Company’s securities.
Added
For example, on May 14, 2024, we received a Staff Delisting Determination letter (the “Staff Determination”) from Nasdaq that it had initiated the delisting process with respect to the Company’s securities.
Added
Following the filing of the Company’s Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2023 and Annual Report on From 10-K for the year ended December 31, 2023, we received a letter from Nasdaq on May 20, 2024, stating that the Company had regained compliance with Nasdaq continued listing requirements and the matter was closed.
Added
Any delisting of the Company’s securities, or threat of such delisting, would have a negative effect on the price of our common stock, impair the ability to sell or purchase our common stock when persons wish to do so, and any delisting materially adversely affect our ability to raise capital or pursue financing or other transactions on acceptable terms, or at all.
Added
Delisting from the Nasdaq Capital Market could also have other negative results, including the potential loss of institutional investor interest and fewer business development opportunities.
Added
In the event of a delisting, we would attempt to take actions to restore our compliance with Nasdaq’s listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq’s listing requirements. 26 Table of Contents The market price of our common stock is volatile.
Added
If we were to lose our status as a CDFI, our ability to obtain grants and awards as a CDFI similar to those received in the past may be lost. The Bank and the Company are certified as CDFIs by the United States Department of the Treasury.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThese processes are managed and monitored by a dedicated information technology team, which is led by our Chief Information Security Officer, and includes mechanisms, controls, technologies, systems, and other processes designed to prevent or mitigate data loss, theft, misuse, or other security incidents or vulnerabilities affecting the data and to maintain a stable information technology environment.
Biggest changeThese processes are informed in part by industry standards, principles and frameworks, such as the National Institute of Standards and Technology Cybersecurity Framework, and are managed and monitored by a dedicated information technology team, which is led by our Director of Information Technology, and includes mechanisms, controls, technologies, systems, and other processes designed to prevent or mitigate data loss, theft, misuse, or other security incidents or vulnerabilities affecting the data and to maintain a stable information technology environment.
Additional information on cybersecurity risks we face is discussed in Part I, Item 1A “Risk Factors.” under the heading “Systems failures, interruptions and cybersecurity breaches in our information technology and telecommunications systems and of third-party service providers could have a material adverse effect on us.” The Board of Directors, as a whole and at the committee level, has oversight for the most significant risks facing us and for our processes to identify, prioritize, assess, manage, and mitigate cybersecurity risks.
Additional information on cybersecurity risks we face is discussed in Part I, Item 1A “Risk Factors.” under the heading “Systems failures, interruptions and cybersecurity breaches in our information technology and telecommunications systems and of third-party service providers could have a material adverse effect on us.” The Board, as a whole and at the committee level, has oversight for the most significant risks facing us and for our processes to identify, prioritize, assess, manage, and mitigate cybersecurity risks.
We consider cybersecurity, along with other significant risks that we face, within our overall enterprise risk management framework. We have not identified risks from known cybersecurity threats, including as a result of prior cybersecurity incidents, that have materially affected us, and we face ongoing cybersecurity risks threats that, if realized, are reasonably likely to materially affect us.
We consider cybersecurity, along with other significant risks that we face, within our overall enterprise risk management framework. We have not identified risks from known cybersecurity threats, including those resulting from prior cybersecurity incidents, that have materially affected us, and we face ongoing cybersecurity risks threats that, if realized, are reasonably likely to materially affect us.
Our Chief Information Security Officer, who reports to the Chief Operating Officer, has over 27 years of experience managing information technology and cybersecurity matters and is experienced in cloud, infrastructure management, business operations, and cybersecurity, and, together with our Information Technology Steering Committee, is responsible for assessing and managing cybersecurity risks.
Our Director of Information Technology, who reports to the Chief Financial Officer, has over 15 years of experience managing information technology and cybersecurity matters and is experienced in cloud, infrastructure management, business operations, and cybersecurity , and, together with our Information Technology Steering Committee, is responsible for assessing and managing cybersecurity risks.
While to date we have not experienced a significant compromise, significant data loss or any material financial losses related to cybersecurity attacks, our systems and those of our customers and third‑party service providers are under constant threat and it is possible that we could experience a significant event in the future.
While to date we have not experienced a significant compromise, significant data loss or any material financial losses related to cybersecurity attacks, our systems and those of our customers and third‑party service providers are under constant threat, creating the possibility of future events.
The full Board of Directors receives an Annual Report from the Chief Information Security Officer on the Bank’s Information Technology Systems, including cybersecurity risk. 26 Table of Contents
The full Board receives an Annual Report from the Director of Information Technology on the Bank’s Information Technology Systems, including cybersecurity risk. 30 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed2 unchanged
Biggest changeLocation Leased or Owned Original Date Leased or Acquired Date of Lease Expiration East Coast Administrative Offices & Branch 1432 U Street NW Washington, D.C. 20009 Owned 2003 – Employee Parking Lot 14 T Street NW Washington, D.C. 20009 Owned 2018 – West Coast Administrative Offices/Loan Origination Center 4601 Wilshire Blvd, Suite 150 Los Angeles, CA 90010 Leased 2021 Oct. 2026 Branch Office/Loan Service Center 170 N.
Biggest changeLocation Leased or Owned Original Date Leased or Acquired Date of Lease Expiration East Coast Administrative Offices & Branch Owned 2003 – 1432 U Street NW Washington, D.C. 20009 Employee Parking Lot Owned 2018 – 14 T Street NW Washington, D.C. 20009 West Coast Administrative Offices/Loan Origination Center Leased 2021 Oct. 2026 4601 Wilshire Blvd, Suite 150 Los Angeles, CA 90010 Branch Office/Loan Service Center Owned 1996 – 170 N.
Market Street Owned 1996 – Inglewood, CA 90301 Exposition Park Branch Office Owned 1996 – 4001 South Figueroa Street Los Angeles, CA 90037
Market Street Inglewood, CA 90301 Exposition Park Branch Office Owned 1996 – 4001 South Figueroa Street Los Angeles, CA 90037

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 4. Mine Safety Disclosure 27 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 27 Item 6. Reserved 28 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 29 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 37 Item 8.
Biggest changeItem 4. Mine Safety Disclosure 31 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 31 Item 6. Reserved 32 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 33 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 42 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+3 added−4 removed6 unchanged
Biggest changeIn March 2022, the Company issued 61,908 shares of restricted stock to its officers and employees under the LTIP, of which 17,012 shares have been forfeited as of December 31, 2023. Each restricted stock award was valued based on the fair value of the stock on the date of the award.
Biggest changeDuring the years ended December 31, 2024 and 2023, the Company recorded $113 thousand and $104 thousand, respectively, of stock-based compensation expense related to these restricted stock awards. In March 2022, the Company issued 61,908 shares of restricted stock to its officers and employees under the LTIP, of which 21,276 shares have been forfeited as of December 31, 2024.
In general, we may pay dividends out of funds legally available for that purpose at such times as our Board of Directors determines that dividend payments are appropriate, after considering our net income, capital requirements, financial condition, alternate investment options, prevailing economic conditions, industry practices and other factors deemed to be relevant at the time.
In general, we may pay dividends out of funds legally available for that purpose at such times as our Board determines that dividend payments are appropriate, after considering our net income, capital requirements, financial condition, alternate investment options, prevailing economic conditions, industry practices and other factors deemed to be relevant at the time.
Equity Compensation Plan Information The following table provides information about the Company’s common stock that may be issued under equity compensation plans as of December 31, 2023.
Equity Compensation Plan Information The following table provides information about the Company’s common stock that may be issued under equity compensation plans as of December 31, 2024.
All common stock share amounts and per share numbers discussed herein have been retroactively adjusted, as applicable, for the Reverse Stock Split. 27 Table of Contents Unregistered Sales of Equity Securities None.
All common stock share amounts and per share numbers discussed herein have been retroactively adjusted, as applicable, for the Reverse Stock Split. 31 Table of Contents Unregistered Sales of Equity Securities None. Repurchases of Equity Securities None.
The Company recorded $95 thousand and $84 thousand of compensation expense in the years ended December 31, 2023 and December 31, 2022, respectively, based on the fair value of the stock on the date of the award.
The Company recorded $96 thousand and $95 thousand of compensation expense in the years ended December 31, 2024 and December 31, 2023, respectively, based on the fair value of the stock on the date of the award.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the Nasdaq Capital Market under the symbol “BYFC.” The closing sale price for our common stock on the Nasdaq Capital Market on April 30, 2024 was $4.96 per share.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the Nasdaq Capital Market under the symbol “BYFC.” The closing sale price for our common stock on the Nasdaq Capital Market on March 21, 2025 was $7.59 per share.
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. During 2023 and 2022, the Company recorded $139 thousand and $133 thousand of stock-based compensation expense related to shares awarded to employees.
Each restricted stock award was 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.
As of April 25, 2024, we had 5,805 stockholders of record. As of April 30, 2024, we had 6,033,212 shares of Class A voting common stock outstanding, 1,425,574 shares of Class B non‑voting common stock outstanding and 1,672,562 shares of Class C non-voting stock outstanding.
As of February 28, 2025, we had 331 registered stockholders. As of February 28, 2025, we had 6,022,227 shares of Class A voting common stock outstanding, 1,425,574 shares of Class B non‑voting common stock outstanding and 1,672,562 shares of Class C non-voting stock outstanding.
Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) Equity compensation plans approved by security holders: 2008 Long Term Incentive Plan – $ – – 2018 Long Term Incentive Plan 31,250 12.96 449,871 Equity compensation plans not approved by security holders: None – – – Total 31,250 $ 12.96 449,871 On June 21, 2023, the Company issued 92,720 shares of restricted stock to its officers and employees under the Amended and Restated 2018 Long-Term Incentive Plan (“LTIP”), of which 11,237 shares have been forfeited as of December 31, 2023.
Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) Equity compensation plans approved by security holders: 2008 Long Term Incentive Plan – $ – – 2018 Long Term Incentive Plan 12,500 12.96 342,093 Equity compensation plans not approved by security holders: None – – – Total 12,500 $ 12.96 342,093 In May 2024 and February 2023, the Company awarded 19,832 and 9,230 shares of common stock, respectively, to its directors under the LTIP, which are fully vested.
During the year ended December 31, 2023, the Company recorded $104 thousand of stock-based compensation expense related to these restricted stock awards. In February 2023 and 2022, the Company awarded 9,230 and 5,898 shares of common stock, respectively, to its directors under the LTIP, which are fully vested.
During the year ended December 31, 2024, the Company recorded $108 thousand of stock-based compensation expense related to these restricted stock awards. On June 21, 2023, the Company issued 92,720 shares of restricted stock to its officers and employees under the LTIP, of which 23,997 shares have been forfeited as of December 31, 2024.
Removed
Repurchases of Equity Securities Period (a) Total number of share purchased (1) (b) Average price paid per share (1) (c) Total number of share purchased as part of publicly announced plans or programs (d) Maximum number (or approximate dollar value) or shares that may yet be purchased under the plans or programs October 2023 244,771 (2) $7.2760 (2) — — November 2023 — — — — December 2023 — — — — Total 244,771 $7.2760 — — (1) Share and per share amounts have been retroactively adjusted, as applicable, for the 1-for-8 reverse stock split effective November 1, 2023.
Added
On March 26, 2024 and April 5, 2024, the Company issued 126,083 shares of restricted stock to its officers and employees under the Amended and Restated 2018 Long-Term Incentive Plan (“LTIP”), of which 13,015 shares have been forfeited as of December 31, 2024.
Removed
(2) On October 31, 2023 the Company purchased 244,771 shares of its Class A (voting) Common Stock (adjusted for the 1-for-8 reverse stock split effective November 1, 2023) from the Federal Deposit Insurance Corporation (“FDIC”), which obtained the shares when it was appointed receiver for First Republic Bank upon its closure earlier in 2023.
Added
Each restricted stock award was 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.
Removed
The purchased shares represented just under 4.0% of the Company’s total voting shares prior to the purchase, and over 2.6% of the Company’s total common equity.
Added
During 2024 and 2023, the Company recorded $88 thousand and $106 thousand of stock-based compensation expense related to shares awarded to employees.
Removed
The Company purchased the shares at a price of $7.2760 per share (adjusted for the 1-for-8 reverse stock split effective November 1, 2023), which represented the 20-day volume weighted average price for the Class A shares over the period ended October 24, 2023. The purchase was financed from cash on hand and the shares were retired.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFor the Years Ended December 31, 2023 2022 2021 (Dollars in thousands) Average Balance Interest Average Yield/ Cost Average Balance Interest Average Yield/ Cost Average Balance Interest Average Yield/ Cost Assets Interest-earning assets: Interest-earning deposits $ 14,013 $ 573 4.09 % $ 147,482 $ 1,677 1.14 % $ 203,493 $ 302 0.15 % Securities 322,764 8,697 2.69 % 252,285 5,596 2.22 % 121,623 1,396 1.15 % Loans receivable (1) 808,850 37,143 4.59 % 674,837 28,732 (2) 4.26 % 537,872 22,831 (3) 4.24 % FRB and FHLB stock 11,860 815 6.87 % 3,732 264 7.07 % 3,862 223 5.77 % Total interest-earning assets 1,157,486 $ 47,228 4.08 % 1,078,336 $ 36,269 3.36 % 866,850 $ 24,752 2.86 % Non-interest-earning assets 74,138 65,213 51,386 Total assets $ 1,231,624 $ 1,143,549 $ 918,236 Liabilities and Stockholders’ Equity Interest-bearing liabilities: Money market deposits $ 126,831 $ 4,269 3.37 % $ 192,835 $ 1,288 0.67 % $ 159,157 $ 660 0.41 % Savings deposits 59,928 147 0.25 % 66,033 58 0.09 % 67,660 204 0.30 % Interest checking and other demand deposits 236,244 360 0.15 % 240,380 220 0.08 % 213,286 105 0.05 % Certificate accounts 154,275 2736 1.77 % 182,050 538 0.30 % 192,795 707 0.37 % Total deposits 577,278 7,512 1.30 % 681,298 2,104 0.31 % 632,898 1,676 0.26 % FHLB advances 177,261 8,331 4.70 % 61,593 1,071 1.74 % 100,471 1,968 1.96 % Junior subordinated debentures – – – % – – – % 2,335 60 2.57 % BTFP borrowing 822 40 4.87 % – – – % – – – % Other borrowings 72,465 1,883 2.60 % 61,106 234 0.38 % 46,836 45 0.10 % Total borrowings 250,548 10,254 4.09 % 122,699 1,305 1.06 % 149,642 2,073 1.39 % Total interest-bearing liabilities 827,826 $ 17,766 2.15 % 803,997 $ 3,409 0.42 % 782,540 $ 3,749 0.48 % Non-interest-bearing liabilities 125,401 115,665 29,767 Stockholders’ equity 278,397 223,887 105,929 Total liabilities and stockholders’ equity $ 1,231,624 $ 1,143,549 $ 918,236 Net interest rate spread (4) $ 29,462 1.93 % $ 32,860 2.94 % $ 21,003 2.38 % Net interest rate margin (5) 2.55 % 3.05 % 2.42 % Ratio of interest-earning assets to interest-bearing liabilities 139.82 % 134.12 % 110.77 % (1) Amount is net of deferred loan fees, loan discounts and loans in process, and includes deferred origination costs, loan premiums and loans receivable held for sale.
Biggest changeFor the Years Ended December 31, 2024 2023 2022 (Dollars in thousands) Average Balance Interest Average Yield/ Cost Average Balance Interest Average Yield/ Cost Average Balance Interest Average Yield/ Cost Assets Interest-earning assets: Interest-earning deposits $ 101,873 $ 5,423 5.32 % $ 14,013 $ 573 4.09 % $ 147,482 $ 1,677 1.14 % Securities 263,227 7,034 2.67 % 322,764 8,697 2.69 % 252,285 5,596 2.22 % Loans receivable, net (1) 947,603 48,807 5.15 % 808,850 37,143 4.59 % 674,837 28,732 (2) 4.26 % FRB and FHLB stock 13,363 945 7.07 % 11,859 815 6.87 % 3,732 264 7.07 % Total interest-earning assets 1,326,066 $ 62,209 4.69 % 1,157,486 $ 47,228 4.08 % 1,078,336 $ 36,269 3.36 % Non-interest-earning assets 51,119 74,138 65,213 Total assets $ 1,377,185 $ 1,231,624 $ 1,143,549 Liabilities and Stockholders’ Equity Interest-bearing liabilities: Money market deposits $ 284,263 $ 6,929 2.44 % $ 262,827 $ 4,269 1.62 % $ 192,835 $ 1,288 0.67 % Savings deposits 55,715 374 0.67 % 59,928 147 0.25 % 66,033 58 0.09 % Interest checking and other demand deposits 74,302 549 0.74 % 100,248 360 0.36 % 240,380 220 0.08 % Certificate accounts 175,275 5,331 3.04 % 154,275 2,736 1.77 % 182,050 538 0.30 % Total deposits 589,555 13,183 2.24 % 577,278 7,512 1.30 % 681,298 2,104 0.31 % FHLB advances 199,893 9,567 4.79 % 177,261 8,331 4.70 % 61,593 1,071 1.74 % BTFP borrowing 92,308 4,787 5.19 % 822 40 4.87 % – – – % Other borrowings 80,181 2,903 3.62 % 72,465 1,883 2.60 % 61,106 234 0.38 % Total borrowings 372,382 17,257 4.63 % 250,548 10,254 4.09 % 122,699 1,305 1.06 % Total interest-bearing liabilities 961,937 $ 30,440 3.16 % 827,826 $ 17,766 2.15 % 803,997 $ 3,409 0.42 % Non-interest-bearing liabilities 131,841 125,401 115,665 Stockholders’ equity 283,407 278,397 223,887 Total liabilities and stockholders’ equity $ 1,377,185 $ 1,231,624 $ 1,143,549 Net interest rate spread (3) $ 31,769 1.53 % $ 29,462 1.93 % $ 32,860 2.94 % Net interest rate margin (4) 2.40 % 2.55 % 3.05 % Ratio of interest-earning assets to interest-bearing liabilities 137.85 % 139.82 % 134.12 % (1) Amount is net of deferred loan fees, loan discounts and loans in process, and includes deferred origination costs, loan premiums and loans receivable held for sale.
Effective January 1, 2023, the Company accounts for the ACL on loans in accordance with ASC 326. ASC 326 requires the Company to recognize estimates for lifetime losses on loans and off-balance sheet loan commitments at the time of origination or acquisition.
Effective January 1, 2023, the Company accounts for the ACL on loans in accordance with ASC 326, which requires the Company to recognize estimates for lifetime losses on loans and off-balance sheet loan commitments at the time of origination or acquisition.
Interest rates do not necessarily move in the same direction or to the same extent as the price of goods and services. 36 Table of Contents As a result, the Bank’s performance is influenced by general macroeconomic conditions, both domestic and foreign, the monetary and fiscal policies of the federal government, and the policies of the regulatory agencies.
Interest rates do not necessarily move in the same direction or to the same extent as the price of goods and services. 41 Table of Contents As a result, the Bank’s performance is influenced by general macroeconomic conditions, both domestic and foreign, the monetary and fiscal policies of the federal government, and the policies of the regulatory agencies.
In addition to our lending commitments, we have contractual obligations related to operating lease commitments. Operating lease commitments are obligations under various non‑cancellable operating leases on buildings and land used for office space and banking purposes. The following table details our contractual obligations at December 31, 2023.
In addition to our lending commitments, we have contractual obligations related to operating lease commitments. Operating lease commitments are obligations under various non‑cancellable operating leases on buildings and land used for office space and banking purposes. The following table details our contractual obligations at December 31, 2024.
We believe the ACL is adequate to cover expected losses in the loan portfolio as of December 31, 2023, but because of uncertainty regarding the future value of the loan portfolio, there can be no assurance that actual losses will not exceed the estimated amounts.
We believe the ACL is adequate to cover expected losses in the loan portfolio as of December 31, 2024, but because of uncertainty regarding the future value of the loan portfolio, there can be no assurance that actual losses will not exceed the estimated amounts.
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 to gain a better understanding of how our financial performance is measured and reported.
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 Policies” of the Notes to Consolidated Financial Statements to gain a better understanding of how our financial performance is measured and reported.
This increase was partially offset by an improvement of 72 basis points in the average yield earned on average interest-earning assets. Analysis of Net Interest Income Net interest income is the difference between income on interest earning assets and the expense on interest-bearing liabilities.
This increase was partially offset by an improvement of 61 basis points in the average yield earned on average interest-earning assets. Analysis of Net Interest Income Net interest income is the difference between income on interest earning assets and the expense on interest-bearing liabilities.
Failure to comply with such capital requirements may result in significant limitations on its business or other sanctions. As a “small bank holding company”, we are not subject to consolidated capital requirements under the new Basel III capital rules.
Failure to comply with such capital requirements may result in significant limitations on its business or other sanctions. As a “small bank holding company,” we are not subject to consolidated capital requirements under the new Basel III capital rules.
In addition, the Bank has a significant concentration of short-term borrowings from one customer that accounted for 85% of out the outstanding balance of securities sold under agreements to repurchase as of December 31, 2023. The Bank expects to maintain these relationships with the customers for the foreseeable future.
In addition, the Bank has a significant concentration of short-term borrowings from one customer that accounted for 88% of out the outstanding balance of securities sold under agreements to repurchase as of December 31, 2024. The Bank expects to maintain these relationships with the customers for the foreseeable future.
The following discussion should be read in conjunction with the Consolidated Financial Statements and related Notes included in Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K.
The following discussion should be read in conjunction with the Consolidated Financial Statements and related Notes included in Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
Management’s assessment of goodwill is performed in accordance with ASC 350-20 – Intangibles-Goodwill and Other , which allows the Company to perform a qualitative assessment of goodwill to determine if it is more likely than not the fair value of the Company’s equity is below its carrying value. The Company performed its qualitative assessment as of December 31, 2023.
Management’s assessment of goodwill is performed in accordance with ASC 350-20 – Intangibles-Goodwill and Other , which allows the Company to perform a qualitative assessment of goodwill to determine if it is more likely than not the fair value of the Company’s equity is below its carrying value.
In addition, the Bank had additional lines of credit of $10.0 million with other financial institutions as of that date. The Bank has a significant concentration of deposits with five long‑time customers that accounted for approximately 28% of its deposits as of December 31, 2023.
In addition, the Bank had additional lines of credit of $10.0 million with other financial institutions as of that date. The Bank has a significant concentration of deposits with five long‑time customers that accounted for approximately 18% of its deposits as of December 31, 2024.
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 loan to the QALICB was secured by a Leasehold Deed of Trust that, due to the pass-through, non-recourse structure, was operationally and ultimately for the benefit of Merrill Lynch rather than CFC 45. Debt service payments received by CFC 45 from the QALICB were passed through to Merrill Lynch in return for which CFC 45 received a servicing fee.
Goodwill acquired in a purchase business combination that is determined to have an indefinite useful life is not amortized, but is 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 acquired in a purchase business combination that is determined to have an indefinite useful life is not amortized, but is 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. No impairment charges were recorded during 2024 for goodwill impairment.
(5) Net interest rate margin represents net interest income as a percentage of average interest‑earning assets. 30 Table of Contents Changes in our net interest income are a function of changes in both rates and volumes of interest earning assets and interest-bearing liabilities.
(4) Net interest rate margin represents net interest income as a percentage of average interest‑earning assets. 35 Table of Contents Changes in our net interest income are a function of changes in both rates and volumes of interest earning assets and interest-bearing liabilities.
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 $117.0 million at December 31, 2023 based on pledged collateral.
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 $174.3 million at December 31, 2024 based on pledged collateral.
Depreciation expense was $385 thousand and $376 thousand for the years 2023 and 2022, respectively. Goodwill and Core Deposit Intangible As a result of the Merger, the Company recorded $25.9 million of goodwill.
Depreciation expense was $424 thousand and $385 thousand for the years 2024 and 2023, respectively. Goodwill and Core Deposit Intangible As a result of the Merger, the Company recorded $25.9 million of goodwill.
Treasury in 2022 and the private placements completed in December 2016, and April 2021 and dividends received from the Bank in 2022 and 2023. 35 Table of Contents The Company recorded consolidated net cash inflows from operating activities of $7.6 million and $6.3 million during the years ended December 31, 2023 and 2022, respectively.
Treasury in 2022 and the private placements completed in December 2016 and April 2021, and dividends received from the Bank in 2023 and 2024. 40 Table of Contents The Company recorded consolidated net cash inflows from operating activities of $1.4 million and $7.6 million during the years ended December 31, 2024 and 2023, respectively.
This note was paid off during January 2024. The financial statements of CFC 45 are consolidated with those of the Bank and the Company. Stockholders’ Equity Stockholders’ equity was $281.9 million, or 20.5% of the Company’s total assets, at December 31, 2023, compared to $279.5 million, or 23.6% of the Company’s total assets, at December 31, 2022.
This note was paid off during January 2024. The financial statements of CFC 45 are consolidated with those of the Bank and the Company. Stockholders’ Equity Stockholders’ equity was $285.2 million, or 21.9% of the Company’s total assets, at December 31, 2024, compared to $281.9 million, or 20.5% of the Company’s total assets, at December 31, 2023.
Net cash inflows from operating activities during 2023 were primarily attributable to net income of $4.5 million and a $2.3 million net increase in accrued expenses and other liabilities . Net cash inflows from operating activities during 2022 were primarily attributable to net income of $5.7 million and a $1.5 million increase in deferred taxes.
Net cash inflows from operating activities during 2023 were primarily attributable to net income of $4.5 million and a $2.3 million net increase in accrued expenses and other liabilities .
The Company recorded an income tax expense of $2.0 million for the year ended December 31, 2023, representing an effective tax rate of 30.4%, compared to an income tax expense of $2.4 million for the year ended December 31, 2022, representing an effective tax rate of 29.7%.
The Company recorded an income tax expense of $814 thousand for the year ended December 31, 2024, representing an effective tax rate of 29.4%, compared to an income tax expense of $2.0 million for the year ended December 31, 2023, representing an effective tax rate of 30.4%.
As of December 31, 2023, approximately $286.4 million of our total deposits (including deposits from affiliates) were not insured by FDIC insurance, which represented 37% of total deposits. 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.
As of December 31, 2024, approximately $268.8 million of our total deposits (including deposits from affiliates) were not insured by FDIC insurance, which represented 32% of total deposits. 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.
See Note 1 “Summary of Significant Accounting Policies” to the Company’s Consolidated Financial Statements for further discussion. Office Properties and Equipment, Net Net office properties and equipment decreased by $451 thousand to $9.8 million at December 31, 2023 from $10.3 million as of December 31, 2022.
See Note 1 “Summary of Significant Accounting Policies” to the Company’s Consolidated Financial Statements for further discussion. Office Properties and Equipment, Net Net office properties and equipment decreased by $286 thousand to $8.9 million at December 31, 2024 from $9.2 million as of December 31, 2023.
The following table summarizes the return on average assets, the return on average equity and the average equity to average assets ratios for the periods indicated: For the Years Ended December 31, 2023 2022 2021 Return on average assets 0.37 % 0.52 % (0.54 )% Return on average equity 1.62 % 2.19 % (4.46 )% Average equity to average assets 22.60 % 23.60 % 11.54 % Comparison of Operating Results for the Years Ended December 31, 2023 and 2022 General Our most significant source of income is net interest income, which is the difference between our interest income and our interest expense.
The following table summarizes the return on average assets, the return on average equity and the average equity to average assets ratios for the periods indicated: For the Years Ended December 31, 2024 2023 2022 Return on average assets 0.14 % 0.37 % 0.52 % Return on average equity 0.69 % 1.62 % 2.19 % Average equity to average assets 20.58 % 22.60 % 23.60 % Comparison of Operating Results for the Years Ended December 31, 2024 and 2023 General Our most significant source of income is net interest income, which is the difference between our interest income and our interest expense.
Loans Receivable Held for Investment Loans receivable held for investment, net of the allowance for credit losses, totaled $880.5 million at December 31, 2023, compared to $768.0 million at December 31, 2022.
Loans Receivable Held for Investment Loans receivable held for investment, net of the allowance for credit losses, totaled $968.9 million at December 31, 2024, compared to $880.5 million at December 31, 2023.
Borrowings Total borrowings at December 31, 2023 consisted of advances to the Bank from the FHLB of $209.3 million, repurchase agreements of $73.5 million, and borrowings associated with the BTFP borrowing activities of $100.0 million, compared to advances from the FHLB of $128.3 million and repurchase agreements of $63.5 million at December 31, 2022.
Borrowings Total borrowings at December 31, 2024 consisted of advances to the Bank from the FHLB of $195.5 million and repurchase agreements of $66.6 million, compared to advances from the FHLB of $209.3 million, repurchase agreements of $73.5 million and borrowings associated with the BTFP of $100.0 million at December 31, 2023.
The net interest margin decreased to 2.55% for the year ended 2023 from 3.05% for the year ended 2022, primarily due to the average cost of funds increasing to 2.15% for the year ended 2023 from 0.42% for the year ended 2022 due to rate increases by the Federal Reserve.
The net interest margin decreased to 2.40% for the year ended December 31, 2024 from 2.55% for the year ended December 31, 2023, primarily due to the average cost of funds increasing to 3.16% for the year ended December 31, 2024 from 2.15% for the year ended December 31, 2023 due to rate increases by the Federal Reserve.
The Bank’s liquid assets at December 31, 2023 consisted of $105.2 million in cash and cash equivalents and $186.0 million in securities available‑for‑sale that were not pledged, compared to $16.1 million in cash and cash equivalents and $250.3 million in securities available‑for‑sale that were not pledged at December 31, 2022.
The Bank’s liquid assets at December 31, 2024 consisted of $61.4 million in cash and cash equivalents and $17.6 million in securities available‑for‑sale that were not pledged, compared to $105.2 million in cash and cash equivalents and $186.0 million in securities available‑for‑sale that were not pledged at December 31, 2023.
The Company’s book value per common share was $14.65 at December 31, 2023, and its tangible book value per common share was $11.55 at December 31, 2023. 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.
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.
As of December 31, 2023, the trustee for the ESOP had purchased 428,327 shares at a total cost of $3.9 million. 34 Table of Contents On October 31, 2023 the Company purchased 244,771 shares of its Class A (voting) Common Stock (adjusted for the 1-for-8 reverse stock split effective November 1, 2023) from the Federal Deposit Insurance Corporation (“FDIC”), which obtained the shares when it was appointed receiver for First Republic Bank upon its closure earlier in 2023.
On October 31, 2023 the Company purchased 244,771 shares of its Class A (voting) Common Stock (adjusted for the 1-for-8 reverse stock split effective November 1, 2023) from the Federal Deposit Insurance Corporation (“FDIC”), which obtained the shares when it was appointed receiver for First Republic Bank upon its closure earlier in 2023.
The following table outlines the estimated amortization expense related to the core deposit intangible asset during the next five fiscal years and thereafter: (In thousands) 2024 $ 336 2025 315 2026 304 2027 291 2028 279 Thereafter 586 $ 2,111 33 Table of Contents Deposits Deposits at December 31, 2023 were $682.6 million compared to $686.9 million at December 31, 2022.
The following table outlines the estimated amortization expense related to the core deposit intangible asset during the next five fiscal years and thereafter: (In thousands) 2025 $ 315 2026 304 2027 291 2028 279 2029 267 Thereafter 319 $ 1,775 38 Table of Contents Deposits Deposits at December 31, 2024 were $745.4 million compared to $682.6 million at December 31, 2023.
A reconciliation between common book value (calculated in accordance with GAAP) and tangible book value per common share December 31, 2023 is shown as follows: Common Equity Capital Shares Outstanding Per Share Amount (Dollars in thousands) Common book value $ 131,903 9,001,613 $ 14.65 Less: Goodwill 25,858 Net unamortized core deposit intangible 2,111 Tangible book value $ 103,934 9,001,613 $ 11.55 Capital Resources Our principal subsidiary, City First, must comply with capital standards established by the OCC in the conduct of its business.
A reconciliation between common book value (calculated in accordance with GAAP) and tangible book value per common share December 31, 2024 is shown as follows: Common Equity Capital Shares Outstanding Per Share Amount (Dollars in thousands) Common book value $ 135,157 9,120,363 $ 14.82 Less: Goodwill 25,858 Net unamortized core deposit intangible 1,775 Tangible book value $ 107,524 9,120,363 $ 11.79 Capital Resources Our principal subsidiary, City First, must comply with capital standards established by the OCC in the conduct of its business.
Interest income on securities increased by $3.1 million to $8.7 million for the year ended December 31, 2023, compared to $5.6 million for the year ended December 31, 2022. The increase in interest income on securities primarily resulted from an increase of $70.5 million in the average balance of securities, which increased interest income by $1.8 million.
Interest income on securities decreased by $1.7 million to $7.0 million for the year ended December 31, 2024, compared to $8.7 million for the year ended December 31, 2023. The decrease in interest income on securities primarily resulted from a decrease of $59.5 million in the average balance of securities, which decreased interest income by $1.6 million.
The fair value of securities pledged totaled $ 64.4 million as of December 31, 2022 and included $33.3 million of federal agency debt, $19.2 million of U.S. Treasuries and $11.9 million of federal agency mortgage-backed securities. One customer relationship accounted for 85% of our balance of securities sold under agreements to repurchase.
The fair value of securities pledged totaled $ 89.0 million as of December 31, 2023 and included $47.8 million of U.S. Treasuries, $30.2 million of federal agency debt, and $11.0 million of federal agency mortgage-backed securities. One customer relationship accounted for 88% of our balance of securities sold under agreements to repurchase.
The Company recorded $3.3 million of core deposit intangible asset as a result of the Merger. 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.
The Company performed its qualitative and quantitative assessment as of September 30, 2024. The Company recorded $3.3 million of core deposit intangible asset as a result of the Merger. 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.
State taxes are recorded at the State of California tax rate and Washington, D.C. tax rate, according to the state apportionment calculation as Bank’s operations are conducted in both California and the Washington, D.C. area.
Income Taxes 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 Washington, D.C. tax rate, according to the state apportionment calculation as the Bank’s operations are conducted in both California and the Washington, D.C. area.
The increase in total liabilities during 2023 resulted primarily from increases in borrowings of $100.0 million from the Bank Fund Term Program, as well as increases of $81.0 million in FHLB advances and $10.0 million in securities sold under agreements to repurchase, offset by a net $4.3 million decrease in total deposits.
The decrease in total liabilities during 2024 resulted primarily from decreases in borrowings of $100.0 million from the Bank Fund Term Program, as well as decreases of $14.0 million in notes payable, $13.8 million in FHLB advances and $6.9 million in securities sold under agreements to repurchase, offset by a net $62.8 million increase in total deposits.
The Company purchased the shares at a price of $7.2760 per share (adjusted for the 1-for-8 reverse stock split effective November 1, 2023), which represented the 20-day volume weighted average price for the Class A shares over the period ended October 24, 2023.
The Company purchased the shares at a price of $7.2760 per share (adjusted for the 1-for-8 reverse stock split effective November 1, 2023), which represented the 20-day volume weighted average price for the Class A shares over the period ended October 24, 2023. 39 Table of Contents The Company’s book value per common share was $14.82 at December 31, 2024, and its tangible book value per common share was $11.79 at December 31, 2024.
We recorded net income of $4.5 million for the year ended December 31, 2023 or $0.51 per share compared to net income of $5.6 million or $0.62 per share for the year ended December 31, 2022.
We recorded net income attributable to Broadway of $1.9 million for the year ended December 31, 2024 or $0.04 per share compared to net income of $4.5 million or $0.52 per share for the year ended December 31, 2023.
The effective tax rate for each year differs from the 21% federal statutory rate due to the impact of state taxes as well as various permanent tax differences, vesting of stock-based compensation and other discrete items. The effective tax rate for 2023 increased from 2022 primarily due to the effect of certain permanent tax differences and discrete items.
The effective tax rate for each year differs from the 21% federal statutory rate due to the impact of state taxes as well as various permanent tax differences, vesting of stock-based compensation and other discrete items. Our deferred tax asset totaled $8.8 million at December 31, 2024 and $9.5 million at December 31, 2023.
Typically, our results of operations are also affected by our provision for credit losses, non-interest income generated from service charges and fees on loan and deposit accounts, gains or losses on the sale of loans and REO, non-interest expenses, and income taxes.
Generally, interest income is generated from our loans and investments (interest earning assets) and interest expense is incurred from deposits and borrowings (interest-bearing liabilities). Typically, our results of operations are also affected by our provision for credit losses, non-interest income generated from service charges and fees on loan and deposit accounts, non-interest expenses, and income taxes.
During the year ended December 31, 2023, the Company recorded $390 thousand of amortization expense related to the core deposit intangible asset.
The estimated life of the core deposit intangible is approximately 10 years. During the year ended December 31, 2024, the Company recorded $336 thousand of amortization expense related to the core deposit intangible asset.
The weighted average rate on FHLB advances was 4.91% at December 31, 2023, compared to 3.74% at December 31, 2022. Borrowings under the BTFP with the Federal Reserve were $100 million as of December 31, 2023. The interest rate was fixed at 4.84% and the borrowing matures on December 29, 2024.
Borrowings under the BTFP with the Federal Reserve were $100.0 million as of December 31, 2023. This borrowing was paid off in December 2024. The interest rate was fixed at 4.84% and the borrowing matured on December 29, 2024.
Our ACL was $7.3 million or 0.83% of our gross loans receivable held for investment at December 31, 2023 compared to $4.4 million, or 0.57% of our gross loans receivable held for investment at December 31, 2022.
Our ACL was $8.1 million or 0.83% of our gross loans receivable held for investment at December 31, 2024 compared to $7.3 million, or 0.83% of our gross loans receivable held for investment at December 31, 2023. The increase was primarily due to growth in the loan portfolio.
The Company recorded consolidated net cash outflows from investing activities of $100.0 million and $324.0 million during the years ended December 31, 2023 and 2022, respectively. Net cash outflows from investing activities during 2023 were primarily attributable to $115.3 million of net loan originations.
The Company recorded consolidated net cash inflows from investing activities of $28.2 million and outflows from investing activities of $100.0 million during the years ended December 31, 2024 and 2023, respectively.
Comparison of Financial Condition at December 31, 2023 and 2022 Securities Available-For-Sale As of December 31, 2023, we had $317.0 million of investment securities classified as available-for-sale, compared to $328.7 million at December 31, 2022.
Comparison of Financial Condition at December 31, 2024 and 2023 Securities Available-For-Sale As of December 31, 2024, we had $203.9 million of investment securities classified as available-for-sale, compared to $317.0 million at December 31, 2023. The decrease during 2024 was primarily due to principal payments and maturities.
(2) Includes non‑accrual interest of $102 thousand, reflecting interest recoveries on non‑accrual loans that were paid off for the year ended December 31, 2022. (3) Includes non‑accrual interest of $162 thousand, reflecting interest recoveries on non‑accrual loans that were paid off for the year ended December 31, 2021.
(2) Includes non‑accrual interest of $102 thousand, reflecting interest recoveries on non‑accrual loans that were paid off for the year ended December 31, 2022. (3) Net interest rate spread represents the difference between the yield on average interest‑earning assets and the cost of average interest‑bearing liabilities.
The increase of $112.4 million in loans receivable held for investment during 2023 was primarily due to originations of $162.1 million in new loans, $78.9 million of which were multi-family loans, $40 million of which were construction loans, $26.8 million of which were commercial loans, and $16.4 million of which were commercial real estate loans.
The increase of $88.4 million in loans receivable held for investment during 2024 was primarily due to originations of $157.7 million in new loans, $80.9 million of which were multi-family loans, $50.8 million in commercial real estate loans, $17.6 million in other commercial loans, $7.6 million in construction loans, and $800 thousand in SBA loans.
Less Than One Year More Than One Year to Three Years More Than Three Years to Five Years More Than Five Years Total (Dollars in thousands) Certificates of deposit $ 141,705 $ 26,002 $ 188 $ 140 $ 168,035 FHLB advances 176,638 32,681 – – 209,319 Commitments to originate loans 7,560 – – – 7,560 Commitments to fund construction loans 42,678 – – – 42,678 Commitments to fund unused lines of credit 3,302 – – – 3,302 Operating lease obligations 242 423 – – 665 Total contractual obligations $ 372,125 $ 59,106 $ 188 $ 140 $ 431,559 Impact of Inflation and Changing Prices Our consolidated financial statements, including accompanying notes, have been prepared in accordance with GAAP which require the measurement of financial position and operating results primarily in terms of historical dollars without considering the changes in the relative purchasing power of money over time due to inflation.
Less Than One Year More Than One Year to Three Years More Than Three Years to Five Years More Than Five Years Total (Dollars in thousands) Certificates of deposit $ 201,342 $ 10,186 $ 1,275 $ 36 $ 212,839 FHLB advances 195,532 – – – 195,532 Commitments to originate loans 6,255 – – – 6,255 Commitments to fund construction loans 40,724 – – – 40,724 Commitments to fund unused lines of credit 3,659 – – – 3,659 Operating lease obligations 242 182 – – 424 Total contractual obligations $ 447,754 $ 10,368 $ 1,275 $ 36 $ 459,433 Impact of Inflation and Changing Prices Our consolidated financial statements, including accompanying notes, have been prepared in accordance with GAAP which require the measurement of financial position and operating results primarily in terms of historical dollars without considering the changes in the relative purchasing power of money over time due to inflation.
Interest income and fees on loans receivable increased by $8.4 million during the year ended December 31, 2023, compared to the year ended December 31, 2022. This increase was primarily due to an increase of $134.0 million in the average balance of loans receivable which increased interest income by $6.0 million.
Other interest income increased by $5.0 million in 2024, compared to the same period in 2023, primarily due to an increase of $87.9 million in the average balance of interest-earnings deposits, which increased interest income by $4.6 million during the year ended December 31, 2024, compared to the year ended December 31, 2023.
During 2022, the Bank originated $273.4 million in new loans, $141.6 million of which were multi-family loans, $75.3 million of which were commercial real estate loans, $29.6 million of which construction loans, and $26.6 million of which were commercial loans. 32 Table of Contents Allowance for Credit Losses Effective January 1, 2023, the Company accounts for credit losses on loans in accordance with ASC 326, which requires the Company to record an estimate of expected lifetime credit losses for loans at the time of origination or acquisition.
Loan repayments during 2023 totaled $47.2 million. 37 Table of Contents Allowance for Credit Losses Effective January 1, 2023, the Company accounts for credit losses on loans in accordance with ASC 326, which requires the Company to record an estimate of expected lifetime credit losses for loans at the time of origination or acquisition.
CECL methodology includes estimates of expected loss rates in the future, whereas the former ALLL methodology did not. Our non-performing loans consist of delinquent loans that are 90 days or more past due and other loans, including loans modified in response to a borrower’s financial difficulty, that do not qualify for accrual status.
Our non-performing loans consist of delinquent loans that are 90 days or more past due and other loans, including loans modified in response to a borrower’s financial difficulty, that do not qualify for accrual status. At December 31, 2024, NPLs totaled $264 thousand compared to $0 at December 31, 2023.
Further, an increase in the average rate paid on securities sold under agreements to repurchase of 229 basis points compared to the prior year increased interest expense by $1.7 million.
Further, a 102 basis point increase in the average rate paid on securities sold under agreements to repurchase increased interest expense by $803 thousand.
The increase was primarily due to an increase in the average balance of outstanding FHLB advances of $115.7 million, which increased interest expense by $3.8 million, and a 296 basis point increase in the average rate paid on FHLB advances which increased interest expense by $3.5 million.
The increase was primarily due to an increase in the average balance of outstanding Bank Fund Term Program borrowings of $91.5 million, which increased interest expense by $4.7 million, and a $22.6 million increase in the average balance of FHLB advances, which increased interest expense by $1.1 million.
There were no loans that were modified in response to a borrower’s financial difficulty during 2023.
The Bank did not have any REO at December 31, 2024 or 2023. There were no loans that were modified in response to a borrower’s financial difficulty during 2024 or 2023.
In addition, there was an increase in the average loan yield from 4.26% for the year ended December 31, 2022, to 4.59% for the year ended December 31, 2023, which increased interest income by $2.4 million.
This increase was primarily due to a $138.8 million increase in the average balance of loans receivable which increased interest income by $6.9 million. In addition, the average loan yield increased from 4.59% for the year ended December 31, 2023, to 5.15% for the year ended December 31, 2024, which increased interest income by $4.8 million.
No loan charge-offs were recorded during the year ended December 31, 2023 or 2022. The Bank recorded a recovery of $216 thousand during the fourth quarter of 2023. See “Allowance for Credit Losses” for additional information. Non‑Interest Income For the year ended December 31, 2023, non-interest income totaled $5.4 million, compared to $1.2 million for the year-ended December 31, 2022.
See “Allowance for Credit Losses” for additional information. Non‑Interest Income For the year ended December 31, 2024, non-interest income totaled $1.6 million, compared to $5.4 million for the year-ended December 31, 2023.
The fair value of securities pledged totaled $89.0 million as of December 31, 2023 and included $47.8 million of U.S. Treasuries, $30.2 million of federal agency debt, and $11.0 million of federal agency mortgage-backed securities. As of December 31, 2022, securities sold under agreements to repurchase totaled $63.5 million at an average rate of 0.38%.
Treasuries, $27.1 million of federal agency debt, $5.5 million of federal agency mortgage-backed securities, and $4.2 million of SBA pools. As of December 31, 2023, securities sold under agreements to repurchase totaled $73.5 million at an average rate of 2.60%.
Net cash outflows from investing activities during 2022 were primarily attributable to $215.5 million of purchases of available-for-sale securities and $120.0 of net loan originations . The Company recorded consolidated net cash inflows from financing activities of $181.5 million and $102.2 million during the years ended December 31, 2023 and 2022, respectively.
The Company recorded consolidated net cash outflows from financing activities of $73.4 million and inflows from financing activities of $181.5 million during the years ended December 31, 2024 and 2023, respectively.
We expect to maintain these relationships with these customers for the foreseeable future. As of December 31, 2023 and 2022, approximately $286.4 million and $212.9 million of our total deposits were not insured by FDIC insurance.
As of December 31, 2024 and 2023, approximately $268.8 million and $286.4 million of our total deposits were not insured by FDIC insurance.
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.
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 average cost of deposits increased to 1.30% for 2023, compared to 0.31% for 2022, which increased interest expense by $6.1 million.
The average cost of deposits increased to 2.24% for 2024, compared to 1.30% for 2023, which increased interest expense by $5.0 million. 34 Table of Contents Interest expense on borrowings increased by $7.0 million to $17.3 million during the year ended December 31, 2024, compared to $10.3 million during the year ended December 31, 2023.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Increase (Decrease) in Net Interest Income Increase (Decrease) in Net Interest Income Due to Volume Due to Rate Total Due to Volume Due to Rate Total (In thousands) Interest‑earning assets: Interest‑earning deposits and other short‑term investments $ (2,536 ) $ 1,432 $ (1,104 ) $ (105 ) $ 1,480 $ 1,375 Securities 1,753 1,348 3,101 2,248 1,952 4,200 Loans receivable, net 6,027 2,384 8,411 5,831 70 5,901 FRB and FHLB stock 559 (8 ) 551 (8 ) 49 41 Total interest‑earning assets 5,802 5,157 10,959 7,966 3,551 11,517 Interest‑bearing liabilities: Money market deposits (580 ) 3,561 2,981 162 466 628 Savings deposits (6 ) 95 89 (5 ) (141 ) (146 ) Interest checking and other demand deposits (4 ) 144 140 39 76 115 Certificate accounts (94 ) 2,292 2,198 (38 ) (131 ) (169 ) Total deposits (684 ) 6,092 5,408 158 270 428 FHLB advances 3,807 3,453 7,260 (695 ) (202 ) (897 ) BTFP borrowing 40 - 40 - - - Junior subordinated debentures – – – (60 ) – (60 ) Other borrowings 51 1,598 1,649 18 171 189 Total borrowings 3,898 5,051 8,949 (737 ) (31 ) (768 ) Total interest‑bearing liabilities 3,214 11,143 14,357 (579 ) 239 (340 ) Change in net interest income $ 2,588 $ (5,986 ) $ (3,398 ) $ 8,545 $ 3,312 $ 11,857 Provision for Credit Losses During the year ended December 31, 2023, we recorded a provision for credit losses under the Current Expected Credit Loss (“CECL”) methodology of $933 thousand, compared to a loan loss provision under the previously used incurred loss model of $997 thousand during the same period in 2022.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Increase (Decrease) in Net Interest Income Increase (Decrease) in Net Interest Income Due to Volume Due to Rate Total Due to Volume Due to Rate Total (In thousands) Interest‑earning assets: Interest‑earning deposits $ 4,627 $ 223 $ 4,850 $ (2,536 ) $ 1,432 $ (1,104 ) Securities (1,592 ) (71 ) (1,663 ) 1,753 1,348 3,101 Loans receivable, net 6,825 4,839 11,664 6,027 2,384 8,411 FRB and FHLB stock 106 24 130 559 (8 ) 551 Total interest‑earning assets 9,966 5,015 14,981 5,803 5,156 10,959 Interest‑bearing liabilities: Money market deposits 370 2,290 2,660 (580 ) 3,561 2,981 Savings deposits (11 ) 238 227 (6 ) 95 89 Interest checking and other demand deposits (113 ) 302 189 (4 ) 144 140 Certificate accounts 415 2,180 2,595 (94 ) 2,292 2,198 Total deposits 661 5,010 5,671 (684 ) 6,092 5,408 FHLB advances 1,081 155 1,236 3,807 3,453 7,260 BTFP borrowing 4,744 3 4,747 40 – 40 Other borrowings 217 803 1,020 51 1,598 1,649 Total borrowings 6,042 961 7,003 3,898 5,051 8,949 Total interest‑bearing liabilities 6,703 5,971 12,674 3,214 11,143 14,357 Change in net interest income $ 3,263 $ (956 ) $ 2,307 $ 2,589 $ (5,987 ) $ (3,398 ) Provision for Credit Losses During the year ended December 31, 2024, we recorded a provision for credit losses of $664 thousand, compared to a provision for credit losses of $933 thousand during the same period in 2023.
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 Bank’s consolidated statements of financial condition, while the securities underlying the repurchase agreements remain in the respective investment securities asset accounts.
The obligation to repurchase the securities is reflected as a liability in the Bank’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.
In addition, we had an increase of 47 basis points in the average interest yield earned on investment securities during 2023, which reflected the rising interest rate environment and increased interest income by $1.3 million.
In addition, we had a decrease of 2 basis points in the average interest yield earned on investment securities during 2024, which decreased interest income by $71 thousand.
Treasury’s Community Development Financial Institutions Fund recognized during 2023 and a $437 thousand recurring Bank Enterprise Award grant. 31 Table of Contents Non‑Interest Expense Non-interest expenses totaled $27.4 million for the year ended December 31, 2023, compared to $24.9 million for the year ended December 31, 2022, primarily due to increases in compensation and benefits expenses of $1.4 million, professional fees of $368 thousand, occupancy expense of $255 thousand and supervisory costs of $200 thousand, partially offset by a decrease in information services expense of $156 thousand.
The decrease of $3.8 million in non-interest income was primarily the result of non-recurring income of $3.7 million from a grant from the CDFI Fund’s Equitable Recovery Program recognized during 2023. 36 Table of Contents Non‑Interest Expense Non-interest expenses totaled $29.9 million for the year ended December 31, 2024, compared to $27.4 million for the year ended December 31, 2023, primarily due to increases in compensation and benefits expenses of $1.9 million and professional fees of $323 thousand.
Net cash inflows from financing activities during 2022 were primarily attributable to $150.0 million from the issuance of preferred stock and $95.5 million of proceeds from FHLB advances, offset by $101.1 million of net outflow of deposits and $53.1 million of FHLB repayments We believe that the Company’s existing cash, cash equivalents and marketable securities will be sufficient to meet our liquidity requirements and capital expenditure needs over at least the next 12 months.
We believe that the Company’s existing cash, cash equivalents and marketable securities will be sufficient to meet our liquidity requirements and capital expenditure needs over at least the next 12 months.
The Company also recorded $551 thousand in higher interest income on regulatory stock during 2023, primarily due to an $8.1 million increase in average balances of FRB & FHLB stock. Interest expense on deposits increased by $5.4 million during calendar 2023, compared to calendar 2022, due to an increase of 99 basis points in the average cost of deposits.
Interest expense on deposits increased by $5.7 million during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to an increase of 94 basis points in the average cost of deposits.
Net Interest Income For the year ended December 31, 2023, net interest income before provision for credit losses decreased by $3.4 million, or 10.3%, to $29.5 million, compared to $32.9 million for the year ended December 31, 2022. The decrease resulted from higher interest expense, primarily due to an increase in the cost of borrowings and deposits.
Net Interest Income For the year ended December 31, 2024, net interest income before provision for credit losses increased by $2.3 million, or 7.8%, to $31.8 million, compared to $29.5 million for the year ended December 31, 2023.
Balances of outstanding FHLB advances increased to $209.3 million at December 31, 2023, from $128.3 million at December 31, 2022, primarily due to $456.1 million in advances from the FHLB of Atlanta, offset by repayments of $375.1 million of advances from the FHLB of Atlanta.
Balances of outstanding FHLB advances decreased to $195.5 million at December 31, 2024, from $209.3 million at December 31, 2023, primarily due to repayments of FHLB advances of $352.8 million, partially offset by $339.0 million in advances from the FHLB. The weighted average rate on FHLB advances was 4.03% at December 31, 2024, compared to 4.91% at December 31, 2023.
In other words, there is no offsetting or netting of the investment securities assets with the repurchase agreement liabilities. As of December 31, 2023, securities sold under agreements to repurchase totaled $73.5 million at an average rate of 2.60%. These agreements mature on a daily basis.
As of December 31, 2024, securities sold under agreements to repurchase totaled $66.6 million at an average rate of 3.62%. These agreements mature on a daily basis. The fair value of securities pledged totaled $83.3 million as of December 31, 2024 and included $46.5 million of U.S.
Investment securities with a book value of $107.3 million and a fair value of $98.3 million were pledged as collateral for this borrowing as of December 31, 2023. There are no prepayment penalties for early payoff. As the BTFP ended on March 11, 2024, no additional borrowings can be made under the program.
Investment securities with a book value of $107.3 million and a fair value of $98.3 million were pledged as collateral for this borrowing as of December 31, 2023. The Bank enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities.
The $1.6 million decrease in pretax net income during the year ended December 31, 2023 compared to the prior year was primarily due to a decline in net interest income of $3.4 million and an increase in non-interest expense of $2.4 million, which were primarily offset by an increase in grant income of $4.2 million.
The decrease in net income attributable to the Company during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily resulted from a decrease in non-interest income of $3.8 million, related to grant income received from the Equitable Recovery Program administered by the U.S.
Overview Total assets increased by $191.1 million to $1.4 billion at December 31, 2023, compared to $1.2 billion at December 31, 2022, primarily due to growth in net loans of $112.4 million and growth in interest-bearing deposits in other banks of $91.1 million, partially offset by a decrease of $12.0 million in investment securities available-for-sale.
Overview Total assets decreased by $71.7 million to $1.3 billion at December 31, 2024, compared to $1.4 billion at December 31, 2023, reflecting decreases in securities available-for-sale of $113.1 million, primarily due to maturities and paydowns, and cash and cash equivalents of $43.8 million, primarily due to repayments of borrowings.
This increase was offset by a decrease of $104.1 million in the average balance of deposits, which decreased interest expense by $684 thousand. 29 Table of Contents Interest expense on borrowings increased by $8.9 million to $10.3 million during the year ended December 31, 2023, compared to $1.3 million during the year ended December 31, 2022.
The increase resulted from higher interest income of $15.0 million, partially offset by an increase in interest expense of $12.7 million. 33 Table of Contents Interest income and fees on loans receivable increased by $11.7 million during the year ended December 31, 2024, compared to the year ended December 31, 2023.
Removed
Total liabilities increased by $188.7 million to $1.1 billion at December 31, 2023 from $904.6 million at December 31, 2022.
Added
These decreases were partially offset by growth in net loans of $88.4 million during the year ended December 31, 2024. Total liabilities decreased by $75.0 million to $1.0 billion at December 31, 2024 from $1.1 billion at December 31, 2023.
Removed
Generally, interest income is generated from our loans and investments (interest earning assets) and interest expense is incurred from deposits and borrowings (interest-bearing liabilities).
Added
Net income attributable to common stockholders was $359 thousand for the year ended December 31, 2024 after deducting preferred dividends of $1.6 million, compared to net income attributable to common stockholders of $4.5 million for the year ended December 31, 2023.
Removed
Other interest income decreased by $0.6 million in 2023, compared to the same period in 2022, primarily due to a decrease of $133.5 million in the average balances of interest-earning deposits which was partially offset by a 2.95% increase in the average yield on interest-earning deposits during the year ended December 31, 2023, compared to the year ended December 31, 2022.

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