BROADWAY FINANCIAL CORP \DE\
For the period ended Dec 31, 2024. Filed Mar 31, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 31, 2025
BYFC$11.60+0.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-05-20.
0001140361-24-026827
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-31.
0001140361-25-011258
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 91 previous paragraphs and 93 current paragraphs.
42 unchanged; 42 reworded; 9 added; 7 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 12 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
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. These decreases were partially offset by growth in net loans of $88.4 million during the year ended December 31, 2024.
Current report
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. 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. Diluted earnings per common share was $0.04 for the year ended December 31, 2024 compared to $0.51 of earnings per diluted common share for the year ended December 31, 2023. Diluted earnings per share for the year ended December 31, 2024 reflects preferred dividends of $0.18 per diluted common share.
Current report
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. Treasury’s Community Development Financial Institutions (“CDFI”) Fund in 2023, and an increase in non-interest expense of $2.5 million, partially offset by an increase in net interest income after provision for credit losses of $2.6 million, and a decrease in tax expense of $1.2 million.
Current report
The increase of $1.9 million in compensation and benefits expense during 2024 compared to 2023 reflects the investment in additional executives and staff to support growth and strengthen overall controls and management depth. The increase in professional services expense was primarily due to the costs associated with third-party professionals that were retained in connection with the Company’s remediation efforts of the weaknesses in internal controls that were identified during preparation of the financial statements for the third quarter of 2023.
Current report
Deposits at December 31, 2024 were $745.4 million compared to $682.6 million at December 31, 2023. The increase in deposits of $62.8 million was primarily caused by an increase in Insured Cash Sweep (“ICS”) deposits.
Current report
Goodwill
Current report
The excess of consideration paid over fair value of net assets acquired for acquisitions is recorded as goodwill. Goodwill is not amortized but is tested at least annually for impairment or more frequently if events occur or circumstances change that indicate impairment may exist. A goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying value. An impairment charge is recorded for the amount by which the carrying amount exceeds the reporting unit’s fair value. A weighted average of both the market and income approaches is used in valuing the reporting unit’s fair value. Weightings are assigned to the approaches regarding fair value and the sensitivity of other weighting scenarios is considered. The market approach incorporates comparable public company information, valuation multiples and consideration of a market control premium along with data related to comparable observed purchase transactions in the financial services industry. The income approach consists of discounting projected future cash flows, which are derived from internal forecasts and economic expectations for the reporting unit. The significant inputs and assumptions for the income approach include a discount rate and projected earnings of the Company in future years for which there is inherent uncertainty. The sensitivity of a range of reasonable discount rates based on the current economic environment is considered.
Current report
Our quantitative annual impairment tests as of September 30, 2024 and 2023 did not result in impairment. However, changing economic conditions that may adversely affect the Company’s performance, the fair value of its assets and liabilities, or its stock price could result in future impairment. Any resulting impairment loss could have a material adverse impact on the Company’s financial condition and results of operations. Management will continue to monitor events that could influence this conclusion in the future. See Note 7 to the Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data” for further information.
Current report
The Company’s accounting policies and discussion of recent accounting pronouncements is included in Note 1 to the Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data.”
Removed paragraphs (7)
Previous report
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.
Previous report
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. 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.
Previous report
The increase of $1.4 million in compensation and benefits expense during 2023 compared to 2022 was primarily attributable to additional full-time employees that the Bank hired over the past twelve months in various production and administrative support positions. These hires were part of the Company’s overall efforts to expand its operational capabilities to strategically grow its balance sheet and fulfill the intersecting lending objectives of the Company’s mission and the funding received from the Emergency Capital Investment Program of the United States Department of the Treasury. A portion of the increase in compensation expenses during the year ended December 31, 2023 pertained to recruiting expenses.
Previous report
The effective tax rate for 2023 increased from 2022 primarily due to the effect of certain permanent tax differences and discrete items.
Previous report
Deposits at December 31, 2023 were $682.6 million compared to $686.9 million at December 31, 2022. The decrease in deposits of $4.3 million was primarily caused by some depositors leaving the Bank for higher interest rates available elsewhere, even after management made reasonable attempts to be responsive to the higher interest rate environment.
Previous report
During the first quarter of 2022, the Company completed the exchange of all the Series A Fixed Rate Cumulative Redeemable Preferred Stock, with an aggregate liquidation value of $3.0 million, plus accrued dividends, for 149,164 shares of Class A Common Stock at an exchange price of $2.51 per share of Class A Common Stock.
Previous report
During December of 2022, the Company issued a $5 million line of credit to the ESOP Plan for the purchase of additional shares. As of December 31, 2023, the trustee for the ESOP had purchased 428,327 shares at a total cost of $3.9 million.
Reworded paragraphs (42)
Previous wording
Total liabilities increased by $188.7 million to $1.1 billion at December 31, 2023 from $904.6 million at December 31, 2022. 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.
Current wording
Total liabilities decreased by $75.0 million to $1.0 billion at December 31, 2024 from $1.1 billion at December 31, 2023. 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.
Previous wording
Our most significant source of income is net interest income, which is the difference between our interest income and our interest expense. 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, gains or losses on the sale of loans and REO, non-interest expenses, and income taxes.
Current wording
Our most significant source of income is net interest income, which is the difference between our interest income and our interest expense. 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.
Previous wording
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.
Current wording
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. The increase resulted from higher interest income of $15.0 million, partially offset by an increase in interest expense of $12.7 million.
Previous wording
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. 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.
Current wording
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. 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.
Previous wording
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. 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.
Current wording
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. 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.
Previous wording
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. The Company also recorded $551 thousand in higher interest income on regulatory stock during 2023, primarily due toan $8.1 million increase in average balances of FRB & FHLB stock.
Current wording
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.
Previous wording
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. 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. This increase was offset by a decrease of $104.1 million in the average balance of deposits, which decreased interest expense by $684 thousand.
Current wording
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. 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.
Previous wording
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 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. 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.
Current wording
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. 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. Further, a 102 basis point increase in the average rate paid on securities sold under agreements to repurchase increased interest expense by $803 thousand.
Previous wording
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. This increase was partially offset by an improvement of 72 basis points in the average yield earned on average interest-earning assets.
Current wording
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. This increase was partially offset by an improvement of 61 basis points in the average yield earned on average interest-earning assets.
Previous wording
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. 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.
Current wording
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. No loan charge-offs were recorded during the year ended December 31, 2024 or 2023. The Bank recorded a recovery of $216 thousand during the fourth quarter of 2023. We also recorded a recovery of provision for off-balance sheet loan commitments of $91 thousand and $2 thousand for the years ended December 31, 2024 and 2023, respectively. See “Allowance for Credit Losses” for additional information.
Previous wording
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. The increase of $4.2 million in non-interest income was primarilythe result of non-recurring income of $3.7 million from a special grant from the U.S. Treasury’s Community Development Financial Institutions Fund recognized during 2023 and a $437 thousand recurring Bank Enterprise Award grant.
Current wording
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 decrease of $3.8 million in non-interest income was primarilythe result of non-recurring income of $3.7 million from a grant from the CDFI Fund’s Equitable Recovery Program recognized during 2023.
Previous wording
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 toincreases 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.
Current wording
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 toincreases in compensation and benefits expenses of $1.9 million and professional fees of $323 thousand.
Previous wording
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 Bank’s operations are conducted in both California and the Washington, D.C. area. 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 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.
Current wording
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 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%. 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.
Previous wording
Our deferred tax asset totaled $9.5 million at December 31, 2023 and $11.9 million at December 31, 2022. See Note 1 “Summary of Significant Accounting Policies” and Note 14 “Income Taxes” of the Notes to Consolidated Financial Statements for a further discussion of income taxes and a reconciliation of income tax at the federal statutory tax rate to the actual income tax benefit.
Current wording
Our deferred tax asset totaled $8.8 million at December 31, 2024 and $9.5 million at December 31, 2023. See Note 1 “Summary of Significant Accounting Policies” and Note 14 “Income Taxes” of the Notes to Consolidated Financial Statements for a further discussion of income taxes and a reconciliation of income tax at the federal statutory tax rate to the actual income tax benefit.
Previous wording
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. The decrease during 2023 was primarily due to $18.4 million of principal payments and maturities, partially offset by a $5.6 million increase in the fair value of investment securities available-for-sale during the year ended December 31, 2023.
Current wording
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.
Previous wording
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. 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. Loan repayments during 2023 totaled $47.2 million.
Current wording
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. 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. Loan repayments during 2024 totaled $69.1 million.
Previous wording
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.
Current wording
During 2023, the Bank originated $162.1 million in new loans, $78.9 million of which were multi-family loans, $40.0 million of which were construction loans, $28.3 million of which were commercial real estate loans, and $15.0 million of which were other commercial loans. Loan repayments during 2023 totaled $47.2 million.
Previous wording
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. The increase was primarily due to the implementation of the CECL methodology adopted by the Bank effective January 1, 2023, which increased the ACL by $1.8 million. In addition, the Bank recorded an additional provision for credit losses of $935 thousand for the twelve months ended December 31, 2023. CECL methodology includes estimates of expected loss rates in the future, whereas the former ALLL methodology did not.
Current wording
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.
Previous wording
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, 2023, NPLs totaled $0 compared to $144 thousand (or 0.02% of gross loans) at December 31, 2022. The decrease in NPLs was the result of payments received from borrowers that were applied to the outstanding principal balance. The Bank did not have any REO at December 31, 2023 or 2022. There were no loans that were modified in response to a borrower’s financial difficulty during 2023.
Current wording
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. 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.
Previous wording
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. Depreciation expense was $385 thousand and $376 thousand for the years 2023 and 2022, respectively.
Current wording
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. Depreciation expense was $424 thousand and $385 thousand for the years 2024 and 2023, respectively.
Previous wording
As a result of the Merger, the Company recorded $25.9 million of goodwill. 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. During the year ended December 31, 2023, the Company recorded no change in the deferred tax estimate expense related to the goodwill asset.
Current wording
As a result of the Merger, the Company recorded $25.9 million of goodwill. 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.
Previous wording
No impairment charges were recorded during 2023 for goodwill impairment. 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.
Current wording
No impairment charges were recorded during 2024 for goodwill impairment. 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 and quantitative assessment as of September 30, 2024.
Previous wording
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. During the year ended December 31, 2023, the Company recorded $390 thousand of amortization expense related to the core deposit intangible asset.
Current wording
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. During the year ended December 31, 2024, the Company recorded $336 thousand of amortization expense related to the core deposit intangible asset.
Previous wording
Five customer relationships accounted for approximately 28% of our deposit balances at December 31, 2023. We expect to maintain these relationships with these customers for the foreseeable future.
Current wording
Five customer relationships accounted for approximately 18% of our deposit balances at December 31, 2024. We expect to maintain these relationships with these customers for the foreseeable future.
Previous wording
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.
Current wording
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.
Previous wording
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.
Current wording
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.
Previous wording
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. The weighted average rate on FHLB advances was 4.91% at December 31, 2023, compared to 3.74% at December 31, 2022.
Current wording
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.
Previous wording
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. 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.
Current wording
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. 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.
Previous wording
The Bank enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities. Under these arrangements, the Bank may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Bank to repurchase the assets. As a result, these repurchase agreements are accounted for as collateralized financing agreements (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities. The obligation to repurchase the securities is reflected as a liability in the 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 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. 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%. 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.
Current wording
The Bank enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities. Under these arrangements, the Bank may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Bank to repurchase the assets. As a result, these repurchase agreements are accounted for as collateralized financing agreements (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities. The obligation to repurchase the securities is reflected as a liability in the 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 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. 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%. 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.
Previous wording
One customer relationship accounted for 85% of our balance of securities sold under agreements to repurchase. We expect to maintain this relationship for the foreseeable future.
Current wording
One customer relationship accounted for 88% of our balance of securities sold under agreements to repurchase. We expect to maintain this relationship for the foreseeable future.
Previous wording
In connection with the New Market Tax Credit activities of City First Bank, CFC 45 is a partnership whose members include CFNMA and City First New Markets Fund II, LLC. This CDE acts in effect as a pass-through for a Merrill Lynch allocation totaling $14.0 million that needed to be deployed. In December 2015, Merrill Lynch made a $14.0 million non-recourse loan to CFC 45, whereby CFC 45 passed that loan through to a QALICB. The loan to the QALICB is secured by a Leasehold Deed of Trust that, due to the pass-through, non-recourse structure, is operationally and ultimately for the benefit of Merrill Lynch rather than CFC 45. Debt service payments received by CFC 45 from the QALICB are passed through to Merrill Lynch in return for which CFC 45 receives a servicing fee. This note was paid off during January 2024. The financial statements of CFC 45 are consolidated with those of the Bank and the Company.
Current wording
In connection with the New Market Tax Credit activities of City First Bank, CFC 45 is a partnership whose members include CFNMA and City First New Markets Fund II, LLC. This CDE acts in effect as a pass-through for a Merrill Lynch allocation totaling $14.0 million that needed to be deployed. In December 2015, Merrill Lynch made a $14.0 million non-recourse loan to CFC 45, whereby CFC 45 passed that loan through to a QALICB. The loan to the QALICB 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. This note was paid off during January 2024. The financial statements of CFC 45 are consolidated with those of the Bank and the Company.
Previous wording
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. In 2022, the Company sold $150 million in preferred stock to the U.S. Government under the ECIP Program.
Current wording
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.
Previous wording
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. The Company uses this non-GAAP financial measure to provide meaningful supplemental information regarding the Company’s financial condition and operational performance, and to enhance comparability with banks that have not recorded goodwill and core deposit intangibles in a merger transaction. 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:
Current wording
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. Tangible book value per common share is a non-GAAP measurement that excludes goodwill and the net unamortized core deposit intangible asset, which were both originally recorded in connection with the Merger. The Company uses this non-GAAP financial measure to provide meaningful supplemental information regarding the Company’s financial condition and operational performance, and to enhance comparability with banks that have not recorded goodwill and core deposit intangibles in a merger transaction. 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:
Previous wording
The objective of liquidity management is to ensure that we have the continuing ability to fund operations and meet our obligations on a timely and cost-effective basis. The Bank’s sources of funds include deposits, advances from the FHLB, other borrowings, proceeds from the sale of loans and investment securities, and payments of principal and interest on loans and investment securities. The Bank is currently approved by the FHLB of Atlanta to borrow up to 25% of total assets to the extent the Bank provides qualifying collateral and holds sufficient FHLB stock. This approved limit and collateral requirement would have permitted the Bank to borrow an additional $117.0 million at December 31, 2023 based on pledged collateral. In addition, the Bank had additional lines of credit of $10.0 million with other financial institutions as of that date.
Current wording
The objective of liquidity management is to ensure that we have the continuing ability to fund operations and meet our obligations on a timely and cost-effective basis. The Bank’s sources of funds include deposits, advances from the FHLB, other borrowings, proceeds from the sale of loans and investment securities, and payments of principal and interest on loans and investment securities. The Bank is currently approved by the FHLB of Atlanta to borrow up to 25% of total assets to the extent the Bank provides qualifying collateral and holds sufficient FHLB stock. This approved limit and collateral requirement would have permitted the Bank to borrow an additional $174.3 million at December 31, 2024 based on pledged collateral. In addition, the Bank had additional lines of credit of $10.0 million with other financial institutions as of that date.
Previous wording
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 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.
Current wording
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. 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.
Previous wording
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.
Current wording
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.
Previous wording
The Bank’s primary uses of funds include withdrawals of and interest payments on deposits, originations of loans, purchases of investment securities, and the payment of operating expenses. Also, when the Bank has more funds than required for reserve requirements or short‑term liquidity needs, the Bank invests excess cash with the Federal Reserve Bank or other financial institutions. 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. We believe that the Bank has sufficient liquidity to support growth over the foreseeable future.
Current wording
The Bank’s primary uses of funds include withdrawals of and interest payments on deposits, originations of loans, purchases of investment securities, and the payment of operating expenses. Also, when the Bank has more funds than required for reserve requirements or short‑term liquidity needs, the Bank invests excess cash with the Federal Reserve Bank or other financial institutions. 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. We believe that the Bank has sufficient liquidity to support growth over the foreseeable future.
Previous wording
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. Net cash inflows from operating activities during 2023 were primarily attributable tonet 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.
Current wording
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. Net cash inflows from operating activities during 2024 were primarily attributable tonet income of $2.0 million, a $1.4 million increase in other assets and a $641 thousand net change in deferred loan origination costs, partially offset by a $3.1 million net decrease in accrued expenses and other liabilities. Net cash inflows from operating activities during 2023 were primarily attributable to net income of $4.5 million anda $2.3 million net increase in accrued expenses and other liabilities.
Previous wording
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. Net cash outflows from investing activities during 2022 were primarily attributableto $215.5 million of purchases of available-for-sale securities and $120.0 of net loan originations.
Current wording
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. Net cash inflows from investing activities during 2024 were primarily attributable to $117.1 of principal payments and maturities on available-for-sale securities, partially offset by $89.3 million of net loan originations. Net cash outflows from investing activities during 2023 were primarily attributableto $115.3 million of net loan originations.
Previous wording
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. Net cash inflows from financing activities during 2023 were primarily attributableto $456.1 million of proceeds from FHLB advances and $100.0 million of proceeds from the BTFP, partially offset by $375.1 million of FHLB repayments. Net cash inflows from financing activities during 2022 were primarily attributableto $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
Current wording
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. Net cash outflows from financing activities during 2024 were primarily attributableto $352.8 million of FHLB repayments, $100.0 million of BTFP repayments, and $14.0 million notes payable repayments, partially offset by $339.0 million of proceeds from FHLB advances and a $62.8 million net increase in deposits. Net cash inflows from financing activities during 2023 were primarily attributableto $456.1 million of proceeds from FHLB advances and $100.0 million of proceeds from the BTFP, partially offset by $375.1 million of FHLB repayments.
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