10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

(Mark One)

[X]QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

[  ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from__________ to___________

Commission file number      000-27464

BROADWAY FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	95-4547287
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

5055 Wilshire Boulevard, Suite 500 Los Angeles, California	90036
(Address of principal executive offices)	(Zip Code)

(323) 634-1700

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [ X ]   No [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [ X ]  No [   ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated, or a smaller reporting company.  See the definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large Accelerated Filer [   ]   Accelerated Filer [   ]   Non-Accelerated Filer [   ]   Smaller Reporting Company [ X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes [   ]   No [ X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:  As of May 2, 2016, 21,405,188 shares of the Registrant’s voting common stock and 7,671,520 shares of the Registrant’s non-voting common stock were outstanding.

TABLE OF CONTENTS

			Page
PART I.	FINANCIAL INFORMATION
	Item 1.	Consolidated Financial Statements (Unaudited)
		Consolidated Statements of Financial Condition as of March 31, 2016 and December 31, 2015	1
		Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2016 and 2015	2
		Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015	3
		Notes to Consolidated Financial Statements	4
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
	Item 4.	Controls and Procedures	27
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	28
	Item 1A.	Risk Factors	28
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
	Item 3.	Defaults Upon Senior Securities	28
	Item 4.	Mine Safety Disclosures	28
	Item 5.	Other Information	28
	Item 6.	Exhibits	28
	Signatures		29

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Financial Condition

(In thousands, except share and per share amounts)

(Unaudited)

	March 31, 2016		December 31, 2015
Assets
Cash and due from banks	$	7,656	$	5,104
Federal funds	28,335		62,735
Cash and cash equivalents	35,991		67,839
Securities available-for-sale, at fair value	15,209		14,140
Loans receivable held for investment, net of allowance of $4,534 and $4,828, respectively	319,881		304,171
Accrued interest receivable	1,091		1,077
Federal Home Loan Bank (FHLB) stock	2,573		2,573
Office properties and equipment, net	2,522		2,570
Real estate owned (REO)	-		360
Bank owned life insurance	2,897		2,882
Investment in affordable housing limited partnership	877		925
Deferred tax assets, net	4,565		4,594
Other assets	1,674		1,781
Total assets	$	387,280	$	402,912
Liabilities and stockholders’ equity
Liabilities:
Deposits	$	257,409	$	272,614
FHLB advances	72,000		72,000
Junior subordinated debentures	5,100		5,100
Advance payments by borrowers for taxes and insurance	297		663
Accrued expenses and other liabilities	5,584		6,372
Total liabilities	340,390		356,749
Stockholders’ Equity:
Preferred stock, $.01 par value, authorized 1,000,000 shares; none issued or outstanding	-		-
Common stock, $.01 par value, voting, authorized 50,000,000 shares at March 31, 2016 and December 31, 2015; issued 21,509,179 shares at March 31, 2016 and December 31, 2015; outstanding 21,405,188 shares at March 31, 2016 and December 31, 2015	215		215
Common stock, $.01 par value, non-voting, authorized 25,000,000 shares at March 31, 2016 and December 31, 2015; issued and outstanding 7,671,520 shares at March 31, 2016 and December 31, 2015	77		77
Additional paid-in capital	44,672		44,669
Retained earnings	3,166		2,533
Accumulated other comprehensive income (loss)	89		(2)
Treasury stock-at cost, 103,991 shares	(1,329)		(1,329)
Total stockholders’ equity	46,890		46,163
Total liabilities and stockholders’ equity	$	387,280	$	402,912

See accompanying notes to unaudited consolidated financial statements.

1

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Income and Comprehensive Income

(Unaudited)

	Three Months Ended March 31,
	2016		2015
	(In thousands, except per share)
Interest income:
Interest and fees on loans receivable	$	3,429	$	3,724
Interest on mortgage-backed and other securities	83		94
Other interest income	103		87
Total interest income	3,615		3,905
Interest expense:
Interest on deposits	517		415
Interest on borrowings	427		531
Total interest expense	944		946
Net interest income before loan loss provision recapture	2,671		2,959
Loan loss provision recapture	300		750
Net interest income after loan loss provision recapture	2,971		3,709
Non-interest income:
Service charges	126		106
Net gain on sale of loans	-		134
CDFI grant	265		355
Other	152		34
Total non-interest income	543		629
Non-interest expense:
Compensation and benefits	1,903		1,768
Occupancy expense	293		299
Information services	206		217
Professional services	127		270
Office services and supplies	70		81
FDIC assessments	25		80
Corporate insurance	71		94
Other	184		229
Total non-interest expense	2,879		3,038
Income before income taxes	635		1,300
Income tax expense	2		2
Net income	$	633	$	1,298
Other comprehensive income, net of tax:
Unrealized gains on securities available-for-sale arising during the period	$	120	$	57
Income tax	29		-
Other comprehensive income, net of tax	91		57
Comprehensive income	$	724	$	1,355
Earnings per common share-basic	$	0.02	$	0.04
Earnings per common share-diluted	$	0.02	$	0.04

See accompanying notes to unaudited consolidated financial statements.

2

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Cash Flows

(Unaudited)

	Three Months Ended March 31,
	2016		2015
	(In thousands)
Cash flows from operating activities:
Net income	$	633	$	1,298
Adjustments to reconcile net income to net cash used in operating activities:
Loan loss provision recapture	(300)		(750)
Provision for losses on REOs	-		6
Depreciation	61		59
Net amortization of deferred loan origination costs	61		91
Net amortization of premiums on mortgage-backed securities	9		16
Amortization of investment in affordable housing limited partnership	48		48
Stock-based compensation expense	3		-
Earnings on bank owned life insurance	(15)		(15)
Originations of for-sale loans receivable	-		(12,562)
Net gain on sale of loans	-		(134)
Net gain on sale of REOs	(22)		(14)
Net change in accrued interest receivable	(14)		44
Net change in other assets	107		190
Net change in advance payments by borrowers for taxes and insurance	(366)		(421)
Net change in accrued expenses and other liabilities	(788)		(483)
Net cash used in operating activities	(583)		(12,627)
Cash flows from investing activities:
Net change in loans receivable held for investment	(15,471)		3,945
Proceeds from sales of loans receivable transferred to held-for-sale	-		12,292
Principal repayments on loans receivable transferred to held-for-sale	-		72
Purchase of available-for-sale securities	(1,484)		-
Prepayments and amortizations on available-for-sale securities	526		630
Proceeds from sales of REO	382		454
Redemption of FHLB stock	-		470
Purchase of FHLB stock	-		(188)
Additions to office properties and equipment	(13)		(14)
Net cash (used in) provided by investing activities	(16,060)		17,661
Cash flows from financing activities:
Net change in deposits	(15,205)		4,225
Repayments of FHLB advances	-		(1,500)
Net cash (used in) provided by financing activities	(15,205)		2,725
Net change in cash and cash equivalents	(31,848)		7,759
Cash and cash equivalents at beginning of the period	67,839		20,790
Cash and cash equivalents at end of the period	$	35,991	$	28,549
Supplemental disclosures of cash flow information:
Cash paid for interest	$	941	$	972
Cash paid for income taxes	-		-
Supplemental disclosures of non-cash investing and financing activities:
Transfers of loans receivable held for investment to REO	$	-	$	843

See accompanying notes to unaudited consolidated financial statements.

3

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

March 31, 2016

NOTE (1) – Basis of Financial Statement Presentation

The accompanying unaudited consolidated financial statements include Broadway Financial Corporation (the “Company”) and its wholly owned subsidiary, Broadway Federal Bank, f.s.b. (the “Bank”).  Also included in the unaudited consolidated financial statements is Broadway Service Corporation, a wholly owned subsidiary of the Bank.  All significant intercompany balances and transactions have been eliminated in consolidation.

The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for quarterly reports on Form 10-Q.  These unaudited consolidated financial statements do not include all disclosures associated with the Company’s consolidated annual financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2015 and, accordingly, should be read in conjunction with such audited consolidated financial statements.  In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included.  Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

Some items in the consolidated financial statements for the prior period were reclassified to conform to the current presentation.  Reclassifications had no effect on prior period consolidated net income or stockholders’ equity.

Recent Accounting Pronouncements

In January 2016, the FASB issued ASU 2016-1, “Financial Instruments — Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities”.  ASU 2016-1 (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income; (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (iii) eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (iv) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (v) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; and (vii) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale.  For public business entities, the amendments in ASU 2016-01 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.  Early application by public business entities to financial statements of fiscal years or interim periods that have not yet been issued are permitted as of the beginning of the fiscal year of adoption.  Adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”.  Under ASU 2016-02, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.  Under the new guidance, lessor accounting is largely unchanged.  Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  Early application is permitted for all public business entities upon issuance.  Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements.  The Company is currently evaluating the impact of the pending adoption of the new standard on its consolidated financial statements.

4

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

In March 2016, the FASB issued ASU 2016-09, “Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”.  ASU 2016-09 includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements.  The areas for simplification include income tax consequences, forfeitures, classification of awards as either equity or liabilities and classification on the statement of cash flows.  ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods.  Early adoption is permitted.  The Company is currently evaluating the impact of the pending adoption of the new standard on its consolidated financial statements.

NOTE (2) – Earnings Per Share of Common Stock

Basic earnings per share of common stock is computed by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding for the period.  Diluted earnings per share of common stock is computed by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding for the period, increased for the dilutive effect of common stock equivalents.

The following table shows how the Company computed basic and diluted earnings per share of common stock for the periods indicated:

	Three Months Ended March 31,
	2016		2015
	(Dollars in thousands, except share and per share)
Basic
Net income	$	633	$	1,298
Weighted average common shares outstanding	29,076,708		29,076,708
Earnings per common share - basic	$	0.02	$	0.04
Diluted
Net income	$	633	$	1,298
Weighted average common shares outstanding	29,076,708		29,076,708
Add: dilutive effects of assumed exercises of stock options	-		-
Weighted average common shares - fully dilutive	29,076,708		29,076,708
Earnings per common share - diluted	$	0.02	$	0.04

Stock options for 540,625 and 90,625 shares of common stock were not considered in computing diluted earnings per common share for the three months ended March 31, 2016 and 2015, respectively, because they were anti-dilutive.

5

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

NOTE (3) – Securities

The following table summarizes the amortized cost and fair value of the available-for-sale investment securities portfolios as of the periods indicated and the corresponding amounts of unrealized gains and losses which are recognized in accumulated other comprehensive income (loss):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
March 31, 2016:
Residential mortgage-backed	$	12,742	$	459	$	-	$	13,201
U.S. Government and federal agency		1,949		59		-		2,008
Total available-for-sale securities	$	14,691	$	518	$	-	$	15,209
December 31, 2015:
Residential mortgage-backed	$	11,796	$	371	$	-	$	12,167
U.S. Government and federal agency	1,946		27		-		1,973
Total available-for-sale securities	$	13,742	$	398	$	-	$	14,140

At March 31, 2016, the Bank’s investment portfolio had an estimated remaining life of 4.1 years.  The amortized cost and fair value of the investment securities portfolio are shown by contractual maturity at March 31, 2016.  Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.  Securities not due at a single maturity date, primarily residential mortgage-backed securities, are shown separately.

	Available-for-Sale
Maturity	Amortized Cost		Fair Value
	(In thousands)
Within one year	$	-	$	-
One to five years	1,949		2,008
Five to ten years	-		-
Beyond ten years	-		-
Residential mortgage-backed	12,742		13,201
Total	$	14,691	$	15,209

At March 31, 2016 and December 31, 2015, securities pledged to secure public deposits had a carrying amount of $708 thousand and $731 thousand, respectively.  At March 31, 2016 and December 31, 2015, there were no holdings of securities by any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity.

There were no sales of securities during the three months ended March 31, 2016 and 2015.

6

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

NOTE (4) – Loans Receivable Held for Investment

Loans receivable held for investment were as follows as of the periods indicated:

	March 31, 2016		December 31, 2015
	(In thousands)
Real estate:
Single family (1)	$	124,025	$	130,891
Multi-family	142,773		118,616
Commercial real estate	11,073		11,442
Church	44,710		46,390
Construction	332		343
Commercial – other	289		270
Consumer	6		4
Gross loans receivable before deferred loan costs and premiums	323,208		307,956
Unamortized net deferred loan costs and premiums	1,207		1,043
Gross loans receivable	324,415		308,999
Allowance for loan losses	(4,534)		(4,828)
Loans receivable, net	$	319,881	$	304,171

______

(1)Includes $94.4 million and $99.5 million of non-impaired purchased loans at March 31, 2016 and December 31, 2015, respectively, which are accounted for under ASC 310-20.

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

	Three Months Ended March 31, 2016
	Real Estate
	Single family							Multi- family				Commercial real estate						Church						Construction				Commercial - other				Consumer				Total
	(In thousands)
Beginning balance	$	597						$	1,658			$	469					$	2,083					$	3			$	18			$	-			$	4,828
Provision for (recapture of) loan losses	(69					)		208				(25				)		(413				)		-				(1			)	-				(300			)
Recoveries	-							-				-						6						-				-				-				6
Loans charged off	-							-				-						-						-				-				-				-
Ending balance	$		528					$	1,866			$	444					$	1,676					$	3			$	17			$	-			$	4,534
	Three Months Ended March 31, 2015
	Real Estate
	Single family						Multi- family				Commercial real estate						Church						Construction					Commercial - other				Consumer				Total
	(In thousands)
Beginning balance	$			1,174			$			2,726	$			496			$			4,047			$			7		$		12		$		3		$		8,465
Provision for (recapture of) loan losses	(10				)		15				(60				)		(689				)		(3				)	(1			)	(2			)	(750			)
Recoveries	-						-				-						6						-					-				-				6
Loans charged off	-						-				-						(50				)		-					-				-				(50			)
Ending balance	$			1,164			$			2,741	$			436			$			3,314			$			4		$		11		$		1		$		7,671

7

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

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

	March 31, 2016
	Real Estate
	Single family		Multi- family		Commercial real estate		Church		Construction		Commercial - other		Consumer		Total
	(In thousands)
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	131	$	2	$	91	$	570	$	-	$	15	$	-	$	809
Collectively evaluated for impairment	397		1,864		353		1,106		3		2		-		3,725
Total ending allowance balance	$	528	$	1,866	$	444	$	1,676	$	3	$	17	$	-	$	4,534
Loans:
Loans individually evaluated for impairment	$	939	$	972	$	1,939	$	10,995	$	-	$	67	$	-	$	14,912
Loans collectively evaluated for impairment	123,726		142,995		9,141		33,081		332		222		6		309,503
Total ending loans balance	$	124,665	$	143,967	$	11,080	$	44,076	$	332	$	289	$	6	$	324,415

	December 31, 2015
	Real Estate
	Single family		Multi- family		Commercial real estate		Church		Construction		Commercial - other		Consumer		Total
	(In thousands)
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	134	$	1	$	88	$	756	$	-	$	16	$	-	$	995
Collectively evaluated for impairment	463		1,657		381		1,327		3		2		-		3,833
Total ending allowance balance	$	597	$	1,658	$	469	$	2,083	$	3	$	18	$	-	$	4,828
Loans:
Loans individually evaluated for impairment	$	963	$	1,440	$	1,924	$	11,390	$	-	$	67	$	-	$	15,784
Loans collectively evaluated for impairment	130,632		118,186		9,488		34,359		343		203		4		293,215
Total ending loans balance	$	131,595	$	119,626	$	11,412	$	45,749	$	343	$	270	$	4	$	308,999

8

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

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

	March 31, 2016						December 31, 2015
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
	(In thousands)
With no related allowance recorded:
Single family	$	873	$	282	$	-	$	877	$	302	$	-
Multi-family	385		315		-		912		779		-
Commercial real estate	635		240		-		636		259		-
Church	6,046		3,917		-		5,615		3,542		-
With an allowance recorded:
Single family	657		657		131		662		661		134
Multi-family	657		657		2		661		661		1
Commercial real estate	1,699		1,699		91		1,702		1,665		88
Church	7,470		7,078		570		8,245		7,848		756
Commercial -other	67		67		15		67		67		16
Total	$	18,489	$	14,912	$	809	$	19,377	$	15,784	$	995

The recorded investment in loans excludes accrued interest receivable due to immateriality.  For purposes of this disclosure, the unpaid principal balance is not reduced for net charge-offs.

The following tables present the monthly average of loans individually evaluated for impairment by loan type and the related interest income for the periods indicated.

	Three Months Ended March 31, 2016						Three Months Ended March 31, 2015
	Average Recorded Investment			Cash Basis Interest Income Recognized			Average Recorded Investment			Cash Basis Interest Income Recognized
	(In thousands)
Single family		$	951		$	7		$	1,382		$	7
Multi-family		1,206			41			2,740			16
Commercial real estate		1,933			56			4,264			106
Church		11,191			126			14,603			142
Commercial -other		67			-			95			2
Total		$	15,348		$	230		$	23,084		$	273

Cash-basis interest income recognized represents cash received for interest payments on accruing impaired loans.  Interest payments collected on non-accrual loans are characterized as payments of principal rather than payments of the outstanding accrued interest on the loans until the remaining principal on the non-accrual loans is considered to be fully collectible.  Foregone interest income that would have been recognized had loans performed in accordance with their original terms amounted to $119 thousand and $284 thousand for the three months ended March 31, 2016 and 2015, respectively, and were not included in the consolidated results of operations.

9

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

The following tables present the aging of the recorded investment in past due loans by loan type as of the periods indicated:

	March 31, 2016
	30-59 Days Past Due			60-89 Days Past Due			Greater than 90 Days Past Due			Total Past Due			Current
	(In thousands)
Loans receivable held for investment:
Single family		$	73		$	5		$	-		$	78		$	124,587
Multi-family		-			-			-			-			143,967
Commercial real estate		-			-			-			-			11,080
Church		578			-			463			1,041			43,035
Construction		-			-			-			-			332
Commercial - other		-			-			-			-			289
Consumer		-			-			-			-			6
Total		$	651		$	5		$	463		$	1,119		$	323,296

	December 31, 2015
	30-59 Days Past Due			60-89 Days Past Due			Greater than 90 Days Past Due			Total Past Due			Current
	(In thousands)
Loans receivable held for investment:
Single family		$	103		$	-		$	-		$	103		$	131,492
Multi-family		291			-			-			291			119,335
Commercial real estate		-			-			-			-			11,412
Church		595			-			456			1,051			44,698
Construction		-			-			-			-			343
Commercial - other		-			-			-			-			270
Consumer		-			-			-			-			4
Total		$	989		$	-		$	456		$	1,445		$	307,554

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

	March 31, 2016			December 31, 2015
	(In thousands)
Loans receivable held for investment:
Single family		$	282		$	302
Multi-family		315			779
Commercial real estate		240			259
Church		3,265			2,887
Total non-accrual loans		$	4,102		$	4,227

There were no loans 90 days or more delinquent that were accruing interest as of March 31, 2016 or December 31, 2015.

10

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

Troubled Debt Restructurings

At March 31, 2016, loans classified as troubled debt restructurings (“TDRs”) totaled $14.4 million, of which $3.6 million were included in non-accrual loans and $10.8 million were on accrual status.  At December 31, 2015, loans classified as TDRs totaled $15.3 million, of which $3.8 million were included in non-accrual loans and $11.5 million were on accrual status.  The Company has allocated $809 thousand and $995 thousand of specific reserves for accruing TDRs as of March 31, 2016 and December 31, 2015, respectively.  TDRs on accrual status are comprised of loans that were accruing at the time of restructuring or loans that have complied with the terms of their restructured agreements for a satisfactory period of time and for which the Bank anticipates full repayment of both principal and interest.  TDRs that are on non-accrual status can be returned to accrual status after a period of sustained performance, generally determined to be six months of timely payments, as modified.  A well-documented credit analysis that supports a return to accrual status based on the borrower’s financial condition and prospects for repayment under the revised terms is also required.  As of March 31, 2016 and December 31, 2015, the Company had no commitment to lend additional amounts to customers with outstanding loans that are classified as TDRs.  No loans were modified during the three months ended March 31, 2016 and 2015.

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as:  current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.  For single family residential, consumer and other smaller balance homogenous loans, a credit grade is established at inception, and generally only adjusted based on performance.  Information about payment status is disclosed elsewhere herein.  The Company analyzes all other loans individually by classifying the loans as to credit risk.  This analysis is performed at least on a quarterly basis.  The Company uses the following definitions for risk ratings:

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

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

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

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

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

11

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

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

	March 31, 2016
	Pass		Watch		Special Mention		Substandard		Doubtful		Loss
	(In thousands)
Single family	$	122,163	$	-	$	2,220	$	282	$	-	$	-
Multi-family	141,922		493		350		1,202		-		-
Commercial real estate	7,170		-		-		3,910		-		-
Church	34,425		725		836		8,090		-		-
Construction	332		-		-		-		-		-
Commercial - other	222		-		-		67		-		-
Consumer	6		-		-		-		-		-
Total	$	306,240	$	1,218	$	3,406	$	13,551	$	-	$	-
	December 31, 2015
	Pass		Watch		Special Mention		Substandard		Doubtful		Loss
	(In thousands)
Single family	$	128,736	$	-	$	2,557	$	302	$	-	$	-
Multi-family	117,602		-		352		1,672		-		-
Commercial real estate	7,509		-		-		3,903		-		-
Church	35,013		776		1,431		8,529		-		-
Construction	343		-		-		-		-		-
Commercial - other	203		-		-		67		-		-
Consumer	4		-		-		-		-		-
Total	$	289,410	$	776	$	4,340	$	14,473	$	-	$	-

NOTE (5) – Junior Subordinated Debentures

On March 17, 2004, the Company issued $6.0 million of Floating Rate Junior Subordinated Debentures (the “Debentures”) in a private placement to a trust that was capitalized to purchase subordinated debt and preferred stock of multiple community banks.  Interest on the Debentures is payable quarterly at a rate per annum equal to the 3-Month LIBOR plus 2.54%.  The interest rate is determined as of each March 17, June 17, September 17, and December 17, and was 3.18% at March 31, 2016.  On October 16, 2014, the Company made payments of $900 thousand of principal on Debentures, executed a Supplemental Indenture for the Debentures that extended the maturity of the Debentures to March 17, 2024, and modified the payment terms of the remaining $5.1 million principal amount thereof.  The modified terms of the Debentures require quarterly payments of interest only through March 2019 at the original rate of 3-Month LIBOR plus 2.54%.  Starting in June 2019, the Company will be required to make quarterly payments of equal amounts of principal, plus interest, until the Debentures are fully amortized on March 17, 2024.  The Debentures may be called for redemption at any time by the Company.

12

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

NOTE (6) – Fair Value

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions to estimate fair value:

The fair values of securities available-for-sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

The fair value of impaired loans that are collateral dependent is generally based upon the fair value of the collateral, which is obtained from recent real estate appraisals.  These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.  Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.  Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.  Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Assets acquired through or by transfer in lieu of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis.  These assets are subsequently accounted for at the lower of cost or fair value less estimated costs to sell.  Fair value is commonly based on recent real estate appraisals which are updated every nine months.  These appraisals may utilize a single valuation approach or a combination of approaches, including comparable sales and the income approach.  Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.  Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.  Real estate owned properties are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Appraisals for collateral-dependent impaired loans and real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company.  Once received, an independent third-party licensed appraiser reviews the appraisals for accuracy and reasonableness, reviewing the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics.

13

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

Assets Measured on a Recurring Basis

Assets measured at fair value on a recurring basis are summarized below:

	Fair Value Measurements at March 31, 2016
	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Total
	(In thousands)
Assets:
Securities available-for-sale - residential mortgage-backed	$		-	$		13,201	$	-	$	13,201
Securities available-for-sale - U.S. Government and federal agency	2,008			-			-		2,008
	Fair Value Measurements at December 31, 2015
	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Total
	(In thousands)
Assets:
Securities available-for-sale - residential mortgage-backed	$	-		$	12,167		$	-	$	12,167
Securities available-for-sale - U.S. Government and federal agency	1,973			-			-		1,973

There were no transfers between Level 1, Level 2, or Level 3 during the three months ended March 31, 2016 and 2015.

Assets Measured on a Non-Recurring Basis

Assets are considered to be reflected at fair value on a non-recurring basis if the fair value measurement of the instrument does not necessarily result in a change in the amount recorded on the balance sheet.  Generally, a non-recurring valuation is the result of the application of other accounting pronouncements that require assets to be assessed for impairment or recorded at the lower of cost or fair value.

The following table provides information regarding the carrying values of our assets measured at fair value on a non-recurring basis as of the periods indicated.  The fair value measurement for all of these assets falls within Level 3 of the fair value hierarchy.

	March 31, 2016	December 31, 2015
	(In thousands)
Impaired loans carried at fair value of collateral	$        2,456	$        2,557
Real estate owned	-	360

There were no losses recognized on assets measured at fair value on a non-recurring basis for the three months ended March 31, 2016 and 2015.

14

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a nonrecurring basis as of March 31, 2016:

	Valuation Technique(s)	Unobservable Input(s)	Range	Weighted Average
Impaired loans	Third Party Appraisals	Adjustment for differences between the comparable sales	-18% to 13%	0%

Fair Values of Financial Instruments

The carrying amounts and estimated fair values of financial instruments as of the periods indicated were as follows:

			Fair Value Measurements at March 31, 2016
	Carrying Value		Level 1		Level 2		Level 3		Total
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	35,991	$	35,991	$	-	$	-	$	35,991
Securities available-for-sale	15,209		2,008		13,201		-		15,209
Loans receivable held for investment	319,881		-		-		327,441		327,441
Accrued interest receivable	1,091		63		34		994		1,091
Federal Home Loan Bank stock	2,573		2,573		-		-		2,573
Financial Liabilities:
Deposits	$	257,409	$	-	$	252,816	$	-	$	252,816
Federal Home Loan Bank advances	72,000		-		73,728		-		73,728
Junior subordinated debentures	5,100		-		-		3,164		3,164
Accrued interest payable	54		-		48		6		54
			Fair Value Measurements at December 31, 2015
	Carrying Value		Level 1		Level 2		Level 3		Total
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	67,839	$	67,839	$	-	$	-	$	67,839
Securities available-for-sale	14,140		1,973		12,167		-		14,140
Loans receivable held for investment	304,171		-		-		306,643		306,643
Accrued interest receivable	1,077		63		31		983		1,077
Federal Home Loan Bank stock	2,573		2,573		-		-		2,573
Financial Liabilities:
Deposits	$	272,614	$	-	$	265,495	$	-	$	265,495
Federal Home Loan Bank advances	72,000		-		73,441		-		73,441
Junior subordinated debentures	5,100		-		-		3,117		3,117
Accrued interest payable	52		-		46		6		52

15

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

The methods and assumptions, not previously presented, used to estimate fair values are described as follows:

(a) Cash and Cash Equivalents

The carrying amounts of cash and cash equivalents approximate fair values and are classified as Level 1.

(b) Loans Receivable Held For investment

Fair values of loans are estimated as follows:  For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification.  Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification.  Impaired loans are valued at the lower of cost or fair value as described previously.  The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

(c) FHLB Stock

The carrying value of FHLB stock approximates its fair value as the shares can only be redeemed by the FHLB at par.

(d) Accrued Interest Receivable/Payable

The carrying amounts of accrued interest receivable/payable approximate their fair value and are classified the same as the related asset.

(e) Deposits

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in Level 2 classification.  Fair values for fixed rate certificates of deposit are estimated using discounted cash flow calculations that apply interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

(f) Federal Home Loan Bank Advances

The fair values of the Federal Home Loan Bank advances are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

(g) Junior Subordinated Debentures

The fair values of the Debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification.

16

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

NOTE (7) – Stock-based Compensation

In 2008, the Company adopted the 2008 Long-Term Incentive Plan (“2008 LTIP”), which was approved by its stockholders.  The 2008 LTIP permits the grant of non-qualified and incentive stock options, stock appreciation rights, full value awards and cash incentive awards to the Company’s non-employee directors and certain officers and employees for up to 2,000,000 shares of common stock.  Option awards are generally granted with an exercise price equal to the market price of the Company’s common stock at the date of grant; the option awards have vesting periods ranging from immediate vesting to five years and have 10-year contractual terms.

In February 2016, the Company granted 450,000 stock options, with an exercise price of $1.62 per share, to senior executive officers.  These options vest over five years and expire in ten years.  The Company estimated the compensation costs and fair value per share of these stock options to be $194 thousand and $0.43 per share, respectively, using the Black-Scholes option pricing model and the following assumptions: (i) expected volatility of 27.36%; (ii) risk free interest rate of 1.21%; (iii) expected option term of five years; and (iv) 0% dividend yield.

The Company recorded $3 thousand of stock-based compensation expense during the three months ended March 31, 2016 compared to $0 during the three months ended March 31, 2015.

NOTE (8) – Regulatory Matters

The Bank’s capital requirements are administered by the Office of the Comptroller of the Currency (“OCC”) and involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices.  Capital amounts and classifications are also subject to qualitative judgments by the OCC.  Failure to meet capital requirements can result in regulatory action.

The federal banking regulators approved final capital rules (“Basel III Capital Rules”) in July 2013 implementing the Basel III framework as well as certain provisions of the Dodd-Frank Act.  The Basel III Capital Rules prescribe a standardized approach for calculating risk-weighted assets and revised the definition and calculation of Tier 1 capital and Total capital, and include a new Common Equity Tier 1 capital (“CET1”) measure.  Under the Basel III Capital Rules, the currently effective minimum capital ratios are:

·4.5% CET1 to risk-weighted assets;

·6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted assets;

·8.0% Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets; and

·4.0% Tier 1 capital to average consolidated assets (known as the “leverage ratio”).

A new capital conservation buffer was also established above the regulatory minimum capital requirements.  This capital conservation buffer was phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and will increase each subsequent year by an additional 0.625% until it reaches its final level of 2.5% on January 1, 2019.

The Basel III Capital rules also contain revisions to the prompt corrective action framework, which is designed to place restrictions on insured depository institutions if their capital levels begin to show signs of weakness.  Under the prompt corrective action requirements, which are designed to complement the capital conservation buffer, insured depository institutions are now required to meet the following increased capital level requirements in order to qualify as “well capitalized”: (i) a CET1 capital ratio of 6.5%; (ii) a Tier 1 capital ratio of 8% (increased from 6%); (iii) a total capital ratio of 10% (unchanged from previous rules); and (iv) a Tier 1 leverage ratio of 5% (unchanged from previous rules).

17

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

The Basel III Capital Rules became effective for the Bank on January 1, 2015 (subject to a phase-in period for certain provisions).  At March 31, 2016 and December 31, 2015, the Bank’s level of capital exceeded all regulatory capital requirements and its regulatory capital ratios were above the minimum levels required to be considered well capitalized for regulatory purposes.  Actual and required capital amounts and ratios as of the periods indicated are presented below.

	Actual			Minimum Capital Requirements			Minimum Required To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio	Amount		Ratio	Amount		Ratio
	(Dollars in thousands)
March 31, 2016:
Tier 1 (Leverage)	$	46,751	12.02%	$	15,560	4.0%	$	19,450	5.0%
Common Equity Tier 1	$	46,751	19.19%	$	10,960	4.5%	$	15,832	6.5%
Tier 1	$	46,751	19.19%	$	14,614	6.0%	$	19,485	8.0%
Total Capital	$	49,814	20.45%	$	19,485	8.0%	$	24,356	10.0%
December 31, 2015:
Tier 1 (Leverage)	$	46,028	11.56%	$	15,923	4.0%	$	19,903	5.0%
Common Equity Tier 1	$	46,028	19.45%	$	10,650	4.5%	$	15,383	6.5%
Tier 1	$	46,028	19.45%	$	14,200	6.0%	$	18,933	8.0%
Total Capital	$	49,010	20.71%	$	18,933	8.0%	$	23,667	10.0%

NOTE (9) – Income Taxes

The Company and its subsidiary are subject to U.S. federal and state income taxes.  Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax asset will not be realized.  In assessing the realization of deferred tax assets, management evaluates both positive and negative evidence, including the existence of cumulative losses in the current year and the prior two years, the amount of taxes paid in available carry-back years, the forecasts of future income and tax planning strategies.  This analysis is updated quarterly.  Based on this analysis, the Company determined that a valuation allowance of $2.4 million was required as of March 31, 2016, resulting in a $4.6 million net deferred tax assets.  The Company recorded a valuation allowance of $2.5 million and reported $4.6 million in net deferred tax assets as of December 31, 2015.

NOTE (10) – Concentration of Credit Risk

The Bank has a significant concentration of deposits with a long-time customer that accounted for approximately 13% of its deposits as of March 31, 2016.  The Bank expects to maintain this relationship with the customer.

18

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results.  Our MD&A should be read in conjunction with the Consolidated Financial Statements and related Notes included in Part I “Item 1, Financial Statements,” of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2015.  Certain statements herein are forward-looking statements within the meaning of Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 27A of the U.S. Securities Act of 1933, as amended, that reflect our current views with respect to future events and financial performance.  Forward-looking statements typically include the words “anticipate,” “believe,” “estimate,” “expect,” “project,” “plan,” “forecast,” “intend,” and other similar expressions.  These forward-looking statements are subject to risks and uncertainties, which could cause actual future results to differ materially from historical results or from those anticipated or implied by such statements.  Readers should not place undue reliance on these forward-looking statements, which speak only as of their dates or, if no date is provided, then as of the date of this Form 10-Q.  We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law.

Overview

We recorded net income of $633 thousand, or $0.02 per diluted share, for the first quarter of 2016, compared to net income of $1.3 million, or $0.04 per diluted share, for the first quarter of 2015.  The decrease of $665 thousand in net income during the first quarter of 2016 was primarily due to a decrease of $288 thousand in net interest income (before loan loss provision recapture), a decrease of $450 thousand in loan loss provision recapture and a decrease of $86 thousand in non-interest income, which were partially offset by a decrease of $159 thousand in non-interest expense.

The loan loss provision recapture reflects the substantial reduction in delinquencies and non-performing loans over the past three years. As of March 31, 2016, delinquencies and non-performing loans were at their lowest levels since 2009, and represented 0.29% and 1.06% of total assets. There were no loan charge-offs or loans transferred to REO during the first quarter of 2016 and the Bank owned no REO properties as of March 31, 2016.

Total assets decreased by $15.6 million during the first quarter of 2016, primarily because the Bank used cash to redeem $15.0 million of certificates of deposit.  Total cash and cash equivalents decreased $31.8 million, reflecting investments in loans receivable, which increased $15.7 million, and securities, which increased $1.1 million as we invested excess Federal Funds in multi-family residential loans and securities to improve the yield on interest-earning assets.

Results of Operations

Net Income

We recorded net income of $633 thousand for the first quarter of 2016, compared to $1.3 million for the first quarter of 2015.  Results during the first quarter of 2016 included a loan loss provision recapture of $300 thousand and a grant of $265 thousand from the U.S. Treasury Department’s Community Development Financial Institutions (“CDFI”) Fund.  During the first quarter of 2015, we recorded a loan loss provision recapture of $750 thousand, a grant of $355 thousand from the CDFI Fund and a gain on sale of loans of $134 thousand.

Net Interest Income

For the first quarter of 2016, net interest income totaled $2.7 million, representing a decrease of $288 thousand, or 10%, from the $3.0 million of net interest income reported for the first quarter of 2015.  The decrease in net interest income in the first quarter of 2016, compared to the first quarter of 2015 was due to lower interest income on loans.

19

Interest income and fees on loans for the first quarter of 2016 totaled $3.4 million, representing a decrease of $295 thousand, or 8%, from the $3.7 million of interest income and fees on loans for the first quarter of 2015.  The decrease in loan interest income in the first quarter of 2016, compared to the first quarter of 2015 was driven by a decrease of 60 basis points in the average yield on loans to 4.33% for the first quarter of 2016 from 4.93% for the first quarter of 2015, which reduced loan interest income by $469 thousand.  The average yield on loans for the first quarter of 2016 decreased primarily because the yields on the $99.7 million of single family loans that were purchased during the fourth quarter of 2015 and on loans that were originated during the first quarter of 2016 were lower than the average yields earned on the $164.1 million of  multi-family loans that were sold in 2015 and on loans that were paid off during 2015.  Partially offsetting this decrease was the impact of an increase of $14.6 million in the average balance of loans receivable, which increased to $317.0 million for the first quarter of 2016 from $302.4 million for the first quarter of 2015 and resulted in additional interest income of $174 thousand.  The increase in the average balance of loans receivable primarily resulted from loan originations of $27.8 million during the first quarter of 2016.

Interest expense on deposits for the first quarter of 2016 totaled $517 thousand, representing an increase of $102 thousand, or 25%, from the $415 thousand of interest expense on deposits for the first quarter of 2015.  The increase was primarily due to an increase of $41.6 million in the average balance of deposits to $261.0 million in the first quarter of 2016 from $219.4 million in the first quarter of 2015.

Interest expense on borrowings for the first quarter of 2016 totaled $427 thousand, representing a decrease of $104 thousand, or 20%, from the $531 thousand of interest expense on borrowings for the first quarter of 2015.  The decrease was primarily due to a decrease of $13.1 million in the average balance of FHLB advances and a decrease of 18 basis points in the average cost of FHLB advances during the first quarter of 2016.

20

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

	For the three months ended March 31,
			2016					2015
(Dollars in Thousands)	Average Balance		Interest		Average Yield/ Cost	Average Balance		Interest		Average Yield/ Cost
Assets
Interest-earning assets:
Interest-earning deposits	$	5,856	$	4	0.27%	$	2,322	$	2	0.34%
Federal funds sold	43,033		53		0.49%	19,894		11		0.22%
Securities	14,295		83		2.32%	16,291		94		2.31%
Loans receivable (1)	317,058		3,429		4.33%	302,421		3,724		4.93%
FHLB stock	2,573		46		7.15%	4,339		74		6.82%
Total interest-earning assets	382,815		$	3,615	3.78%	345,267		$	3,905	4.52%
Non-interest-earning assets	9,466					6,608
Total assets	$	392,281				$	351,875
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Money market deposits	$	24,479	$	32	0.52%	$	16,578	$	16	0.39%
Passbook deposits	36,109		29		0.32%	36,800		29		0.32%
NOW and other demand deposits	29,804		5		0.07%	29,730		6		0.08%
Certificate accounts	170,574		451		1.06%	136,285		364		1.07%
Total deposits	260,966		517		0.79%	219,393		415		0.76%
FHLB advances	72,000		387		2.15%	85,111		496		2.33%
Junior subordinated debentures	5,100		40		3.14%	5,100		35		2.75%
Total interest-bearing liabilities	338,066		$	943	1.12%	309,604		$	946	1.22%
Non-interest-bearing liabilities	7,716					4,609
Stockholders’ Equity	46,499					37,662
Total liabilities and stockholders’ equity	$	392,281				$	351,875
Net interest rate spread (2)			$	2,671	2.66%			$	2,959	3.30%
Net interest rate margin (3)					2.79%					3.43%
Ratio of interest-earning assets to interest-bearing liabilities					113.24%					111.52%

____

(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. The Company did not have any loans held for sale during the quarter ended March 31, 2016.

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

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

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Loan loss provision recapture

We recorded a loan loss provision recapture of $300 thousand for the first quarter of 2016 primarily due to continued improvement in the Bank’s loan loss experience, as well as improvement in the overall quality of its loan portfolio.  In comparison, we recorded a loan loss provision recapture of $750 thousand for the first quarter of 2015.  See “Allowance for Loan Losses” below for additional information.

Non-interest Income

Non-interest income for the first quarter of 2016 totaled $543 thousand, representing a decrease of $86 thousand, or 14%, from the $629 thousand of non-interest income for the first quarter of 2015.  The decrease in non-interest income was primarily because we did not sell any loans during the first quarter of 2016, whereas we recognized a gain on sale of loans of $134 thousand during the first quarter of 2015.  Additionally, the amount of grant we received from the CDFI Fund during the first quarter of 2016 was $90 thousand lower than the CDFI grant we received during the first quarter of 2015.  These decreases in non-interest income from the first quarter of 2015 were partially offset by an increase of $20 thousand in service charges on deposit accounts and an early withdrawal fee of $80 thousand.

Non-interest Expense

Non-interest expense for the first quarter of 2016 totaled $2.9 million, representing a decrease of $159 thousand, or 5%, from the $3.0 million of non-interest expense for the first quarter of 2015.  The decrease in non-interest expense was primarily due to a decrease of $143 thousand in professional services expense, a decrease of $55 thousand in FDIC assessments, a decrease of $23 thousand in corporate insurance expense and a decrease of $45 thousand in other expenses, primarily REO expenses.  Professional services expense decreased by $143 thousand in the first quarter of 2016 primarily because the annual third party credit review was moved to the second quarter of 2016 whereas in the first quarter of 2015, we incurred $89 thousand of fees related to such review.  During the first quarter of 2016, we also incurred $41 thousand less in legal expenses.  These decreases in non-interest expense were partially offset by an increase of $135 thousand in compensation and benefits expense, primarily reflecting higher bonus payments.

Income Taxes

We recorded income tax expense of $2 thousand for the first quarter of 2016 and 2015.  The tax expense for both periods primarily reflected the statutory minimum taxes payable to the State of California, and the use of net operating loss carryforwards to offset current taxable income in the periods presented.  As of March 31, 2016, the Company had $4.6 million of deferred tax assets, net of a valuation allowance of $2.4 million.

Financial Condition

Total Assets

Total assets were $387.3 million at March 31, 2016, which represented a decrease of $15.6 million, or 4%, from total assets of $402.9 million at December 31, 2015.  The decrease in assets during the first quarter of 2016 was primarily because we used cash to redeem $15.0 million of certificates of deposit.  Total cash and cash equivalents decreased $31.8 million, reflecting investments in net loans receivable, which increased $15.7 million, and securities, which increased $1.1 million, as we invested excess Federal Funds in multi-family residential loans and securities to improve the yield on our interest-earning assets.

Loans Receivable Held for Investment

Our gross loan portfolio increased by $15.4 million to $324.4 million at March 31, 2016, from $309.0 million at December 31, 2015.  The increase in our loan portfolio during the first quarter of 2016 primarily consisted of an increase of $24.3 million in our multi-family residential real estate loan portfolio, a decrease of $6.9 million in our single family residential real estate loan portfolio, a decrease of $332 thousand in our commercial real estate loan portfolio and a decrease of $1.7 million in our church loan portfolio.

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We originated $27.8 million of loans during the first quarter of 2016, all of which were originated as loans held for investment. During the first quarter of 2015, we originated $25.4 million of loans, of which $12.8 million were originated for investment and $12.6 million were originated for sale.  Loan repayments totaled $12.6 million for the first quarter of 2016, compared to $16.8 million for the first quarter of 2015.

There were no loan charge-offs or loans transferred to REO during the first quarter of 2016.  In contrast, loan charge-offs totaled $50 thousand and loans transferred to REO totaled $843 thousand during the first quarter of 2015.

Allowance for Loan Losses

The allowance for loan losses (“ALLL”) is adjusted through provisions for loan losses charged or credited to earnings to increase or decrease the ALLL to a level sufficient, in management’s judgment, to absorb probable incurred losses in the loan portfolio.  At least quarterly, we conduct an assessment of the overall quality of the loan portfolio and general economic trends in the local market.  The determination of the appropriate level for the allowance is based on that review, considering such factors as historical loss experience for each type of loan, the size and composition of our loan portfolio, the levels and composition of our loan delinquencies, non-performing loans and net loan charge-offs, the value of underlying collateral on problem loans, regulatory policies, general economic conditions, and other factors related to the collectability of loans in the portfolio.

Our ALLL decreased to $4.5 million, or 1.40% of our gross loans receivable, at March 31, 2016, from $4.8 million, or 1.56% of our gross loans receivable, at December 31, 2015, primarily reflecting a loan loss provision recapture of $300 thousand.  Our loan portfolio as of March 31, 2016 included $94.9 million of loans that we purchased in November 2015, for which there was no assigned allowance for loan losses.  We purchased these loans at fair value and we have not identified any deterioration of credit quality in these loans since purchase.  The reduction in ALLL at March 31, 2016 compared to December 31, 2015, and the loan loss provision recapture during the first quarter of 2016, reflect the results of our quarterly review of the adequacy of the ALLL.  We continue to maintain our ALLL at a level that we believe is appropriate given the significant reduction in delinquencies and non-performing loans, the continued improvement in our asset quality metrics and the high quality of our loan originations.

Our loan delinquencies and non-performing loans are at the lowest levels since December 2009.  As of March 31, 2016, we had total delinquencies of $1.1 million, compared to total delinquencies of $1.4 million at December 31, 2015.  The decrease of $326 thousand in loan delinquencies during the first quarter of 2016 was primarily due to a loan payoff of $457 thousand and repayments of $20 thousand.  In addition, two delinquent loans totaling $318 thousand were brought current.  These decreases were partially offset by $469 thousand in new delinquent loans.

Non-performing loans (“NPLs”) consist of delinquent loans that are 90 days or more past due and other loans, including troubled debt restructurings that do not qualify for accrual status.  At March 31, 2016, NPLs totaled $4.1 million, compared to $4.2 million at December 31, 2015.  The decrease of $125 thousand in NPLs was primarily due to a loan payoff of $457 thousand and repayments of $132 thousand, which were partially offset by the placement of a church loan for $463 thousand into non-accrual status.

In connection with our review of the adequacy of our ALLL, we track the amount and percentage of our NPLs that are paying currently, but nonetheless must be classified as NPL for reasons unrelated to payments, such as lack of current financial information and an insufficient period of satisfactory performance.  As of March 31, 2016, $3.1 million, or 75%, of our total NPLs of $4.1 million were current in their payments.  Also, in determining the ALLL, we consider the ratio of the ALLL to NPLs, which amounted to 110.53% at March 31, 2016, compared to 114.22% at December 31, 2015.

When reviewing the adequacy of the ALLL, we also consider the impact of charge-offs, including the changes and trends in loan charge-offs.  There were no loan charge-offs during the first quarter of 2016 compared to $50 thousand during the first quarter of 2015.  In determining charge-offs, we update our estimates of collateral values on NPLs by obtaining new appraisals at least every nine months.  If the estimated fair value of the loan collateral less estimated selling costs is less than the recorded investment in the loan, a charge-off for the difference is recorded to reduce the loan

23

to its estimated fair value, less estimated selling costs.  Therefore, certain losses inherent in our total NPLs are recognized periodically through charge-offs.  The impact of updating these estimates of collateral value and recognizing any required charge-offs is to increase charge-offs and reduce the ALLL required on these loans.  As of March 31, 2016, we had written down 71% of our NPLs to estimated fair value less estimated selling costs.  The remaining 29% of our NPLs at March 31, 2016 were reported at cost because the fair value of collateral less estimated selling costs exceeded the recorded investment in the loan.

Recoveries during the first quarter of 2016 and 2015 totaled $6 thousand and were primarily due to repayments on loans that had been fully written off.

Impaired loans at March 31, 2016 were $14.9 million, compared to $15.8 million at December 31, 2015.  Specific reserves for impaired loans were $809 thousand, or 5.43% of the aggregate impaired loan amount at March 31, 2016, compared to $995 thousand, or 6.30%, at December 31, 2015.  Excluding specific reserves for impaired loans, our coverage ratio (general allowance as a percentage of total non-impaired loans) decreased to 1.20% at March 31, 2016, from 1.31% at December 31, 2015.  The decrease in our coverage ratio reflected a decline in our historical charge-offs and the continued improvements in our asset quality.

We believe that the ALLL is adequate to cover probable incurred losses in the loan portfolio as of March 31, 2016, but there can be no assurance that actual losses will not exceed the estimated amounts.  In addition, the OCC and the FDIC periodically review the ALLL as an integral part of their examination process.  These agencies may require an increase in the ALLL based on their judgments of the information available to them at the time of their examinations.

Deposits

Deposits decreased by $15.2 million to $257.4 million at March 31, 2016 from $272.6 million at December 31, 2015.  During the first quarter of 2016, certificates of deposit (“CDs”) decreased by $15.0 million and represented 65% of total deposits at March 31, 2016, compared to 67% of total deposits at December 31, 2015.  Of the $15.0 million decrease in CDs, $10.0 million was from one deposit relationship and $1.2 million was from QwickRate CD maturities.  Core deposits (NOW, demand, money market and passbook accounts) decreased by $171 thousand during the first quarter of 2016 and represented 35% of total deposits at March 31, 2016, compared to 33% of total deposits at December 31, 2015.

One customer relationship accounted for approximately 13% of our deposits at March 31, 2016.  We expect to maintain this relationship with the customer for the foreseeable future.

Borrowings

During the first quarter of 2016, FHLB advances and junior subordinated debentures remained unchanged at $72.0 million and $5.1 million, respectively.

Stockholders’ Equity

Stockholders’ equity was $46.9 million, or 12.11% of the Company’s total assets, at March 31, 2016, compared to $46.2 million, or 11.46% of the Company’s total assets, at December 31, 2015.  The Company’s book value was $1.61 per share as of March 31, 2016, compared to $1.59 per share as of December 31, 2015.

Liquidity

The objective of liquidity management is to ensure that we have the continuing ability to fund operations and meet our obligations on a timely and cost-effective basis.  The Bank’s sources of funds include deposits, advances from the FHLB, other borrowings, proceeds from the sale of loans, REO, and investment securities, and payments of principal and interest on loans and investment securities.  The Bank is currently approved by the FHLB to borrow up to 30% 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 $48.9 million at March 31, 2016.

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The Bank’s primary uses of funds include withdrawals of and interest payments on deposits, originations of loans, purchases of investment securities, and the payment of operating expenses.  Also, when the Bank has more funds than required for reserve requirements or short-term liquidity needs, the Bank sells federal funds to the Federal Reserve Bank or other financial institutions.  The Bank’s liquid assets at March 31, 2016 consisted of $36.0 million in cash and cash equivalents and $14.5 million in securities available-for-sale that were not pledged, compared to $67.8 million in cash and cash equivalents and $13.4 million in securities available-for-sale that were not pledged at December 31, 2015.  Total cash and cash equivalents decreased $31.8 million, as the Bank used cash to redeem $15.0 million of certificates of deposits and invested excess Federal Funds in multi-family residential loans and securities to improve the yield on interest-earning assets.  Currently, we believe that the Bank has sufficient liquidity to support growth over the foreseeable future.

The Company’s liquidity, separate from the Bank, is based primarily on the proceeds from financing transactions, such as the private placements completed in August 2013 and October 2014.  The Company had not been able to obtain funds from the Bank since 2010 because of prohibitions included in regulatory orders that were in effect until November 2015.  The Bank is currently under no prohibition to pay dividends, but is subject to restrictions as to the amount of the dividends based on normal regulatory guidelines.

The Company recorded consolidated net cash outflows from operating activities of $583 thousand and $12.6 million during the quarter ended March 31, 2016 and 2015, respectively.  Net cash outflows from operating activities during the first quarter of 2016 were primarily attributable to payments of accrued expenses and other liabilities and payments of taxes and insurance on behalf of our loan borrowers.

The Company recorded consolidated net cash outflows from investing activities of $16.1 million during the quarter ended March 31, 2016, compared to consolidated net cash inflows from investing activities of $17.7 million during the quarter ended March 31, 2015.  Net cash outflows from investing activities during the first quarter of 2016 were primarily attributable to loan originations and purchase of securities.

The Company recorded consolidated net cash outflows from financing activities of $15.2 million during the quarter ended March 31, 2016, compared to consolidated net cash inflows from financing activities of $2.7 million during the quarter ended March 31, 2015.  Net cash outflows from financing activities during the first quarter of 2016 were attributable to a decrease in deposits.

Capital Resources

Our principal subsidiary, Broadway Federal, must comply with capital standards established by the OCC in the conduct of its business.  Failure to comply with such capital requirements may result in significant limitations on its business or other sanctions.  The Dodd-Frank Act requires the federal banking agencies to establish consolidated risk-based and leverage capital requirements for insured depository institutions, depository institution holding companies and certain non-bank financial companies that are no less than those to which insured depository institutions have been previously subject.  The current regulatory capital requirements are described in Note 8 of the Notes to Consolidated Financial Statements and in “Regulatory Capital” below.

Regulatory Capital

The Federal Reserve and the Federal Deposit Insurance Corporation approved final capital rules in July 2013 that substantially amended the existing capital rules for banks.  These new rules reflect, in part, certain standards initially adopted by the Basel Committee on Banking Supervision in December 2010 (which standards are commonly referred to as “Basel III”), as well as requirements contemplated by the Dodd-Frank Act.

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Beginning in the first quarter of 2015, we became subject to the Basel III capital requirements, including the standardized approach for calculating risk-weighted assets in accordance with subpart D of the final capital rule.  The final rules also revise the definition and calculation of Tier 1 capital, Total capital, and include a new Common Equity Tier 1 capital.

Common Equity Tier 1 capital primarily includes common shareholders’ equity less certain deductions for goodwill and other intangibles, net of related taxes, and deferred tax assets that arise from tax loss and credit carryforwards.  Tier 1 capital is primarily comprised of Common Equity Tier 1 capital, perpetual preferred stock and certain qualifying capital instruments that are subject to phase-out from Tier 1 capital.  Tier 2 capital primarily includes qualifying subordinated debt and qualifying ALLL.

The new capital rules include a new Common Equity Tier 1 capital to risk-weighted assets minimum ratio of 4.5%, raise the minimum ratio of Tier 1 capital to risk-weighted assets from 4.0% to 6.0%, require a minimum ratio of Total capital to risk-weighted assets of 8.0%, and require a minimum Tier 1 Leverage ratio of 4.0%.  A new capital conservation buffer was also established above the regulatory minimum capital requirements.  This capital conservation buffer was phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and will increase each subsequent year by an additional 0.625% until it reaches its final level of 2.5% on January 1, 2019.  An institution that does not meet the conservation buffer will be subject to restrictions on certain activities, including payment of dividends, stock repurchases, and discretionary bonuses to executive officers.

At March 31, 2016 and December 31, 2015, the Bank’s level of capital exceeded all regulatory capital requirements and its regulatory capital ratios were above the minimum levels required to be considered well capitalized for regulatory purposes.  Actual and required capital amounts and ratios as of the periods indicated are presented below.

	Actual		Minimum Capital Requirements		Minimum Required To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount	Ratio	Amount	Ratio	Amount	Ratio
	(Dollars in thousands)
March 31, 2016:
Tier 1 (Leverage)	$     46,751	12.02%	$     15,560	4.0%	$     19,450	5.0%
Common Equity Tier 1	$     46,751	19.19%	$     10,960	4.5%	$     15,832	6.5%
Tier 1	$     46,751	19.19%	$     14,614	6.0%	$     19,485	8.0%
Total Capital	$     49,814	20.45%	$     19,485	8.0%	$     24,356	10.0%
December 31, 2015:
Tier 1 (Leverage)	$     46,028	11.56%	$     15,923	4.0%	$     19,903	5.0%
Common Equity Tier 1	$     46,028	19.45%	$     10,650	4.5%	$     15,383	6.5%
Tier 1	$     46,028	19.45%	$     14,200	6.0%	$     18,933	8.0%
Total Capital	$     49,010	20.71%	$     18,933	8.0%	$     23,667	10.0%

26

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable

ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures was performed under the supervision of the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) as of March 31, 2016.  Based on that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2016.  There were no significant changes during the quarter ended March 31, 2016 in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

27

PART II.  OTHER INFORMATION

Item 1.       LEGAL PROCEEDINGS

None

Item 1A.    RISK FACTORS

Not Applicable

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

None

Item 3.       DEFAULTS UPON SENIOR SECURITIES

None

Item 4.MINE SAFETY DISCLOSURES

Not Applicable

Item 5.       OTHER INFORMATION

None

Item 6.       EXHIBITS

Exhibit Number*
3.1	Certificate of Incorporation of Registrant and amendments thereto (Exhibit 3.1 to Form 10-Q filed by the Registrant on November 13, 2014)
3.2	Bylaws of Registrant (Exhibit 3.2 to Form 10-K filed by the Registrant on March 28, 2016)
10.1**	Form of Stock Option Agreement for options granted under Broadway Financial Corporation’s 2008 Long-Term Incentive Plan
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

______________

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

** Including stock options granted to Brenda Battey, Norman Bellefeuille and Ruth Mc Cloud.

28

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:	May 6, 2016	By:	/s/ Wayne-Kent A. Bradshaw
			Wayne-Kent A. Bradshaw
			Chief Executive Officer
Date:	May 6, 2016	By:	/s/ Brenda J. Battey
			Brenda J. Battey
			Chief Financial Officer

29

EX-10.1

Exhibit 10.1

BROADWAY FINANCIAL CORPORATION

NON-STATUTORY STOCK

OPTION AGREEMENT

Pursuant to this Option Agreement (the “Agreement”), Broadway Financial Corporation, a Delaware corporation (the “Company”), has granted to                     (the “Optionee”), an option (“Option”) to purchase a total of shares of the Company’s Common Stock (the “Optioned Stock” or “Shares”), at the price determined as provided herein, and in all respects subject to the terms, definitions and provisions of the Company’s 2008 Long-Term Incentive Plan (the “Plan”), adopted by the Company which is incorporated herein by reference.  The terms defined in the Plan shall have the same defined meanings herein.  In the case of any conflict between the Plan and this Agreement, the Plan shall govern.

1.         Nature of the Option.  This Option is a non-statutory option that is not intended to be an incentive stock option, within the meaning of the Internal Revenue Code of 1986, as amended, and is not intended to qualify for any special tax benefits to the Optionee.

2.         Exercise Price.  The exercise price is $           for each Share of the Optioned Stock.

3.         Exercise of Option.  This Option shall be exercisable during its term in accordance with the provisions of Section 2 and Section 5 of the Plan as follows:

(i)         Right to Exercise.

(a)       This Option shall become exercisable in installments cumulatively with respect to twenty percent (20%) of the Optioned Stock one year after the date of grant, and as to an additional twenty percent (20%) of the Optioned Stock on each anniversary of the date of grant, so that one hundred percent (100%) of the Optioned Stock shall be exercisable five (5) years after the date of grant; provided, however, that in no event shall any Option be exercisable prior to the date the stockholders of the Company approve the Plan.

(b)       This Option may not be exercised for a fraction of a share.

(c)        In the event of Optionee’s death, disability or other termination of service as an employee, the exercisability of the Option is governed by Section 5 of the Plan.

1

(d)       The exercisability of this Option may be accelerated in certain events as set forth more fully in Section 6 of the Plan.

(ii)        Method of Exercise.  This Option may be exercised by Optionee (or, in the event of his or her death, by the person or persons to whom that right passes by will or by the laws of descent and distribution, or pursuant to a “qualified domestic relations order” within the meaning of the Internal Revenue Code of 1986, as amended), to the extent then vested, by giving written notice of such exercise to the Assistant Corporate Secretary of the Company prior to the Option Expiration Date; provided, however, that an Option may only be exercised with respect to whole shares of the Company’s Common Stock.  Such notice shall specify the number of Shares of Common Stock to be purchased and shall be accompanied by payment of the Option Price for such Shares (and, if required by the Committee, any applicable withholding taxes) in such form and manner as the Committee may from time to time approve.  The written notice form attached hereto as Exhibit A has been approved by the Committee.

4.         Method of Payment.  Payment of the exercise price shall be by any of the following, or any combination thereof, at the election of the Optionee:

(i)         cash;

(ii)        check; or

(iii)       surrender of other shares of Common Stock of the Company which have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised.

5.         Restrictions on Exercise.  This Option may not be exercised if the issuance of such Shares upon such exercise or the method of payment of consideration for such Shares would constitute a violation of any applicable federal or state securities or other law or regulations, or if such issuance would not comply with the requirements of any stock exchange upon which the Shares may then be listed.  As a condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the Company as may be required by any applicable law or regulation.

6.         Non-Transferability of Option.  This Option may not be transferred, pledged or assigned by the holder thereof (except, in the event of the holders’ death, by will or the laws of descent and distribution, or except pursuant to a “qualified domestic relations order” within the meaning of the Internal Revenue Code of 1986, as amended), and the Company shall not be required to recognize any attempted assignment of such rights by any holder.  During an Optionee’s lifetime, this Option may be exercised only by him or her or by his or her guardian or legal representative.  The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

7.         Term of Option.  This Option may not be exercised more than ten (10) years from the date of grant of this Option, and may be exercised during such period only in accordance with the Plan and the terms of this Option.

2

8.         Taxation Upon Exercise of Option.  Optionee understands that, upon exercise of this Option, he or she will recognize income for tax purposes in an amount equal to the excess of the then Fair Market Value of the Shares purchased over the exercise price paid for such Shares.  Optionee acknowledges and agrees that the Company may withhold Shares the Optionee is otherwise entitled to receive on exercise of this Option to satisfy certain tax withholding obligations as provided in Section 5.4 of the Plan.

EFFECTIVE DATE OF GRANT:

BROADWAY FINANCIAL CORPORATION,

a Delaware corporation

By:                                                        

Its:                                                        

Optionee acknowledges receipt of a copy of the Plan, a copy of which is attached hereto, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof.  Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee of the Board of Directors of the Company upon any questions arising under the Plan.

Dated effective as of:
	Optionee

Attachment:	Amended Broadway Financial Corporation
	2008 Long-Term Incentive Plan

3

EXHIBIT A

BROADWAY FINANCIAL CORPORATION

OPTION EXERCISE NOTICE

Broadway Financial Corporation

5055 Wilshire Boulevard Suite 500

Los Angeles, California 90036

Attention:  Assistant Corporate Secretary

1.         Exercise of Option.  The undersigned (“Optionee”) hereby elects to exercise Optionee’s option dated effective as of , to purchase                                 shares of the Common Stock (the “Shares”) of Broadway Financial Corporation, a Delaware corporation (the “Company”) under and pursuant to the Company’s 2008 Long-Term Incentive Plan(the “Plan”), and the Option Agreement dated effective as of (the “Agreement”).

2.         Representations of Optionee.  Optionee acknowledges that Optionee has received, read and understood the Plan and the Agreement.

3.         Federal Restrictions on Transfer.  Optionee understands that the Shares must be held indefinitely unless they are registered under the Securities Act of 1933, as amended (the “1933 Act”), or unless an exemption from the registration requirements of the 1933 Act is available, and that the certificate(s) representing the Shares may bear a legend to that effect.  Optionee understands that the Company is under no obligation to register the Shares and that an exemption may not be available or may not permit Optionee to transfer Shares in the amounts or at the times proposed by Optionee.

4.         Tax Consequences.  Optionee understands that Optionee may recognize taxable income as a result of Optionee’s purchase or disposition of the Shares.  Optionee represents that Optionee has consulted with any tax consultant(s) Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice.

5.         Delivery of Payment.  Optionee herewith delivers to the Company the aggregate purchase price for the Shares that Optionee has elected to purchase and has made provision for the payment of any federal or state withholding taxes required to be paid or withheld by in connection with this exercise of the Option.

6.         Entire Agreement.  The Plan and the Agreement are incorporated herein by reference.  This Exercise Notice, the Plan and the Agreement constitute the

4

entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof.  This Exercise Notice, the Plan and the Agreement are governed by California law except for that body of law pertaining to conflict of laws.

Submitted by:   BROADWAY FINANCIAL CORPORATION,  a Delaware corporation

Accepted by:
OPTIONEE:
By	Dated
Its:
Address:

5

EX-31.1

Exhibit 31.1

SECTION 302 CERTIFICATION

I, Wayne-Kent A. Bradshaw, certify that:

1.      I have reviewed this quarterly report on Form 10-Q of Broadway Financial Corporation;

2.      Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.      Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.      The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.      The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 6, 2016	By: /s/ Wayne-Kent A. Bradshaw
		Wayne-Kent A. Bradshaw
		Chief Executive Officer

EX-31.2

Exhibit 31.2

SECTION 302 CERTIFICATION

I, Brenda J. Battey, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Broadway Financial Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 6, 2016	By: /s/ Brenda J. Battey
		Brenda J. Battey
		Chief Financial Officer

EX-32.1

Exhibit 32.1

SECTION 906 CERTIFICATION

The following statement is provided by the undersigned to accompany the foregoing Report on Form 10-Q pursuant to Title 18, Chapter 63, Section 1350 of the United States Code, as amended by Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed filed pursuant to any provision of the Securities Exchange Act of 1934 or any other securities law.

The undersigned certifies that the foregoing Report on Form 10-Q fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Broadway Financial Corporation at the dates and for the periods indicated.

Date: May 6, 2016	By:	/s/ Wayne-Kent A. Bradshaw
		Wayne-Kent A. Bradshaw
		Chief Executive Officer

EX-32.2

Exhibit 32.2

SECTION 906 CERTIFICATION

The following statement is provided by the undersigned to accompany the foregoing Report on Form 10-Q pursuant to Title 18, Chapter 63, Section 1350 of the United States Code, as amended by Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed filed pursuant to any provision of the Securities Exchange Act of 1934 or any other securities law.

The undersigned certifies that the foregoing Report on Form 10-Q fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Broadway Financial Corporation at the dates and for the periods indicated.

Date: May 6, 2016	By:	/s/ Brenda J. Battey
		Brenda J. Battey
		Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	May. 02, 2016
Entity Registrant Name	BROADWAY FINANCIAL CORP \DE\
Entity Central Index Key	0001001171
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Voting common stock
Entity Common Stock, Shares Outstanding		21,405,188
Non-voting common stock
Entity Common Stock, Shares Outstanding		7,671,520

XML

Consolidated Statements of Financial Condition - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Assets
Cash and due from banks	$ 7,656	$ 5,104
Federal funds sold	28,335	62,735
Cash and cash equivalents	35,991	67,839
Securities available-for-sale, at fair value	15,209	14,140
Loans receivable held for investment, net of allowance of $4,534 and $4,828, respectively	319,881	304,171
Accrued interest receivable	1,091	1,077
Federal Home Loan Bank (FHLB) stock	2,573	2,573
Office properties and equipment, net	2,522	2,570
Real estate owned (REO)		360
Bank owned life insurance	2,897	2,882
Investment in affordable housing limited partnership	877	925
Deferred tax assets, net	4,565	4,594
Other assets	1,674	1,781
Total assets	387,280	402,912
Liabilities:
Deposits	257,409	272,614
FHLB advances	72,000	72,000
Junior subordinated debentures	5,100	5,100
Advance payments by borrowers for taxes and insurance	297	663
Accrued expenses and other liabilities	5,584	6,372
Total liabilities	$ 340,390	$ 356,749
Stockholders' Equity:
Preferred stock, $.01 par value, authorized 1,000,000 shares; none issued or outstanding
Additional paid-in capital	$ 44,672	$ 44,669
Retained earnings	3,166	2,533
Accumulated other comprehensive income (loss)	89	(2)
Treasury stock-at cost, 103,991 shares	(1,329)	(1,329)
Total stockholders' equity	46,890	46,163
Total liabilities and stockholders' equity	387,280	402,912
Common Stock | Voting common stock
Stockholders' Equity:
Common stock	215	215
Common Stock | Non-voting common stock
Stockholders' Equity:
Common stock	$ 77	$ 77

XML

Consolidated Statements of Financial Condition (Parenthetical) - $ / shares	Mar. 31, 2016	Dec. 31, 2015
Stockholders' Equity:
Treasury stock, shares	103,991	103,991
Common Stock | Voting common stock
Stockholders' Equity:
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	21,509,179	21,509,179
Common stock, shares outstanding	21,405,188	21,405,188
Common Stock | Non-voting common stock
Stockholders' Equity:
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	25,000,000	25,000,000
Common stock, shares issued	7,671,520	7,671,520
Common stock, shares outstanding	7,671,520	7,671,520
Preferred stock
Stockholders' Equity:
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

XML

Consolidated Statements of Income and Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Interest Income:
Interest and fees on loans receivable	$ 3,429	$ 3,724
Interest on mortgage-backed and other securities	83	94
Other interest income	103	87
Total interest income	3,615	3,905
Interest expense:
Interest on deposits	517	415
Interest on borrowings	427	531
Total interest expense	944	946
Net interest income before loan loss provision recapture	2,671	2,959
Loan loss provision recapture	300	750
Net interest income after loan loss provision recapture	2,971	3,709
Non-interest income:
Service charges	126	106
Net gain on sale of loans		134
CDFI grant	265	355
Other	152	34
Total non-interest income	543	629
Non-interest expense:
Compensation and benefits	1,903	1,768
Occupancy expense	293	299
Information services	206	217
Professional services	127	270
Office services and supplies	70	81
FDIC assessments	25	80
Corporate insurance	71	94
Other	184	229
Total non-interest expense	2,879	3,038
Income before income taxes	635	1,300
Income tax expense	2	2
Net income	633	1,298
Other comprehensive income, net of tax:
Unrealized gains on securities available-for-sale arising during the period	120	57
Income tax	29
Other comprehensive income, net of tax	91	57
Comprehensive income	$ 724	$ 1,355
Earnings per common share - basic (in dollars per share)	$ 0.02	$ 0.04
Earnings per common share - diluted (in dollars per share)	$ 0.02	$ 0.04

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Cash flows from operating activities:
Net income	$ 633	$ 1,298
Adjustments to reconcile net income to net cash used in operating activities:
Loan loss provision recapture	(300)	(750)
Provision for losses on REO		6
Depreciation	61	59
Net amortization of deferred loan origination costs	61	91
Net amortization of premiums on mortgage-backed securities	9	16
Amortization of investment in affordable housing limited partnership	48	48
Stock-based compensation expense	3
Earnings on bank owned life insurance	(15)	(15)
Originations of for-sale loans receivable		(12,562)
Net gains on sale of loans		(134)
Net gains on sale of REOs	(22)	(14)
Net change in accrued interest receivable	(14)	44
Net change in other assets	107	190
Net change in advance payments by borrowers for taxes and insurance	(366)	(421)
Net change in accrued expenses and other liabilities	(788)	(483)
Net cash used in operating activities	(583)	(12,627)
Cash flows from investing activities:
Net change in loans receivable held for investment	(15,471)	3,945
Proceeds from sales of loans receivable transferred to held for sale		12,292
Principal repayments on loans receivable transferred to held for sale		72
Purchase of available for sale securities	(1,484)
Prepayments and amortizations on available-for-sale securities	526	630
Proceeds from sales of REO	382	454
Redemption of FHLB stock		470
Purchase of FHLB stock		(188)
Additions to office properties and equipment	(13)	(14)
Net cash (used in) provided by investing activities	(16,060)	17,661
Cash flows from financing activities:
Net change in deposits	(15,205)	4,225
Repayments of FHLB advances		(1,500)
Net cash (used in) provided by financing activities	(15,205)	2,725
Net change in cash and cash equivalents	(31,848)	7,759
Cash and cash equivalents at beginning of the period	67,839	20,790
Cash and cash equivalents at end of the period	35,991	28,549
Supplemental disclosures of cash flow information:
Cash paid for interest	$ 941	972
Supplemental disclosures of non-cash investing and financing activities:
Transfers of loans receivable held for investment to REO		$ 843

XML

Basis of Financial Statement Presentation

3 Months Ended

Mar. 31, 2016

Basis of Financial Statement Presentation

Basis of Financial Statement Presentation

NOTE (1) – Basis of Financial Statement Presentation

The accompanying unaudited consolidated financial statements include Broadway Financial Corporation (the “Company”) and its wholly owned subsidiary, Broadway Federal Bank, f.s.b. (the “Bank”).  Also included in the unaudited consolidated financial statements is Broadway Service Corporation, a wholly owned subsidiary of the Bank.  All significant intercompany balances and transactions have been eliminated in consolidation.

The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for quarterly reports on Form 10-Q.  These unaudited consolidated financial statements do not include all disclosures associated with the Company’s consolidated annual financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2015 and, accordingly, should be read in conjunction with such audited consolidated financial statements.  In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included.  Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

Some items in the consolidated financial statements for the prior period were reclassified to conform to the current presentation.  Reclassifications had no effect on prior period consolidated net income or stockholders’ equity.

Recent Accounting Pronouncements

In January 2016, the FASB issued ASU 2016-1, “Financial Instruments — Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities”.  ASU 2016-1 (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income; (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (iii) eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (iv) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (v) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; and (vii) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale.  For public business entities, the amendments in ASU 2016-01 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.  Early application by public business entities to financial statements of fiscal years or interim periods that have not yet been issued are permitted as of the beginning of the fiscal year of adoption.  Adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”.  Under ASU 2016-02, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.  Under the new guidance, lessor accounting is largely unchanged.  Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  Early application is permitted for all public business entities upon issuance.  Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements.  The Company is currently evaluating the impact of the pending adoption of the new standard on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, “Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”.  ASU 2016-09 includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements.  The areas for simplification include income tax consequences, forfeitures, classification of awards as either equity or liabilities and classification on the statement of cash flows.  ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods.  Early adoption is permitted.  The Company is currently evaluating the impact of the pending adoption of the new standard on its consolidated financial statements.

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Earnings Per Share of Common Stock

3 Months Ended

Mar. 31, 2016

Earnings Per Share of Common Stock

Earnings Per Share of Common Stock

NOTE (2) – Earnings Per Share of Common Stock

Basic earnings per share of common stock is computed by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding for the period.  Diluted earnings per share of common stock is computed by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding for the period, increased for the dilutive effect of common stock equivalents.

The following table shows how the Company computed basic and diluted earnings per share of common stock for the periods indicated:

	Three Months Ended March 31,
	2016		2015
	(Dollars in thousands, except share and per share)
Basic
Net income	$	633	$	1,298
Weighted average common shares outstanding	29,076,708		29,076,708
Earnings per common share - basic	$	0.02	$	0.04
Diluted
Net income	$	633	$	1,298
Weighted average common shares outstanding	29,076,708		29,076,708
Add: dilutive effects of assumed exercises of stock options	-		-
Weighted average common shares - fully dilutive	29,076,708		29,076,708
Earnings per common share - diluted	$	0.02	$	0.04

Stock options for 540,625 and 90,625 shares of common stock were not considered in computing diluted earnings per common share for the three months ended March 31, 2016 and 2015, respectively, because they were anti-dilutive.

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Securities

3 Months Ended

Mar. 31, 2016

Securities

Securities

NOTE (3) – Securities

The following table summarizes the amortized cost and fair value of the available-for-sale investment securities portfolios as of the periods indicated and the corresponding amounts of unrealized gains and losses which are recognized in accumulated other comprehensive income (loss):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
March 31, 2016:
Residential mortgage-backed	$	12,742	$	459	$	-	$	13,201
U.S. Government and federal agency		1,949		59		-		2,008
Total available-for-sale securities	$	14,691	$	518	$	-	$	15,209
December 31, 2015:
Residential mortgage-backed	$	11,796	$	371	$	-	$	12,167
U.S. Government and federal agency	1,946		27		-		1,973
Total available-for-sale securities	$	13,742	$	398	$	-	$	14,140

At March 31, 2016, the Bank’s investment portfolio had an estimated remaining life of 4.1 years.  The amortized cost and fair value of the investment securities portfolio are shown by contractual maturity at March 31, 2016.  Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.  Securities not due at a single maturity date, primarily residential mortgage-backed securities, are shown separately.

	Available-for-Sale
Maturity	Amortized Cost		Fair Value
	(In thousands)
Within one year	$	-	$	-
One to five years	1,949		2,008
Five to ten years	-		-
Beyond ten years	-		-
Residential mortgage-backed	12,742		13,201
Total	$	14,691	$	15,209

At March 31, 2016 and December 31, 2015, securities pledged to secure public deposits had a carrying amount of $708 thousand and $731 thousand, respectively.  At March 31, 2016 and December 31, 2015, there were no holdings of securities by any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity.

There were no sales of securities during the three months ended March 31, 2016 and 2015.

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Loans Receivable Held for Investment

3 Months Ended

Mar. 31, 2016

Loans receivable held for investment

Loans Receivable Held for Investment

Loans Receivable Held for Investment

NOTE (4) – Loans Receivable Held for Investment

Loans receivable held for investment were as follows as of the periods indicated:

	March 31, 2016		December 31, 2015
	(In thousands)
Real estate:
Single family (1)	$	124,025	$	130,891
Multi-family	142,773		118,616
Commercial real estate	11,073		11,442
Church	44,710		46,390
Construction	332		343
Commercial – other	289		270
Consumer	6		4
Gross loans receivable before deferred loan costs and premiums	323,208		307,956
Unamortized net deferred loan costs and premiums	1,207		1,043
Gross loans receivable	324,415		308,999
Allowance for loan losses	(4,534)		(4,828)
Loans receivable, net	$	319,881	$	304,171

______

(1)Includes $94.4 million and $99.5 million of non-impaired purchased loans at March 31, 2016 and December 31, 2015, respectively, which are accounted for under ASC 310-20.

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

	Three Months Ended March 31, 2016
	Real Estate
	Single family				Multi- family			Commercial real estate				Church				Construction				Commercial - other				Consumer				Total
	(In thousands)
Beginning balance	$	597			$	1,658		$	469			$	2,083			$	3			$	18			$	-			$	4,828
Provision for (recapture of) loan losses	(69			)	208			(25			)	(413			)	-				(1			)	-				(300			)
Recoveries	-				-			-				6				-				-				-				6
Loans charged off	-				-			-				-				-				-				-				-
Ending balance	$	528			$	1,866		$	444			$	1,676			$	3			$	17			$	-			$	4,534
	Three Months Ended March 31, 2015
	Real Estate
	Single family				Multi- family			Commercial real estate				Church				Construction				Commercial - other				Consumer				Total
	(In thousands)
Beginning balance	$		1,174		$		2,726	$		496		$		4,047		$		7		$		12		$		3		$		8,465
Provision for (recapture of) loan losses	(10			)	15			(60			)	(689			)	(3			)	(1			)	(2			)	(750			)
Recoveries	-				-			-				6				-				-				-				6
Loans charged off	-				-			-				(50			)	-				-				-				(50			)
Ending balance	$		1,164		$		2,741	$		436		$		3,314		$		4		$		11		$		1		$		7,671

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

	March 31, 2016
	Real Estate
	Single family		Multi- family		Commercial real estate		Church		Construction		Commercial - other		Consumer		Total
	(In thousands)
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	131	$	2	$	91	$	570	$	-	$	15	$	-	$	809
Collectively evaluated for impairment	397		1,864		353		1,106		3		2		-		3,725
Total ending allowance balance	$	528	$	1,866	$	444	$	1,676	$	3	$	17	$	-	$	4,534
Loans:
Loans individually evaluated for impairment	$	939	$	972	$	1,939	$	10,995	$	-	$	67	$	-	$	14,912
Loans collectively evaluated for impairment	123,726		142,995		9,141		33,081		332		222		6		309,503
Total ending loans balance	$	124,665	$	143,967	$	11,080	$	44,076	$	332	$	289	$	6	$	324,415

	December 31, 2015
	Real Estate
	Single family		Multi- family		Commercial real estate		Church		Construction		Commercial - other		Consumer		Total
	(In thousands)
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	134	$	1	$	88	$	756	$	-	$	16	$	-	$	995
Collectively evaluated for impairment	463		1,657		381		1,327		3		2		-		3,833
Total ending allowance balance	$	597	$	1,658	$	469	$	2,083	$	3	$	18	$	-	$	4,828
Loans:
Loans individually evaluated for impairment	$	963	$	1,440	$	1,924	$	11,390	$	-	$	67	$	-	$	15,784
Loans collectively evaluated for impairment	130,632		118,186		9,488		34,359		343		203		4		293,215
Total ending loans balance	$	131,595	$	119,626	$	11,412	$	45,749	$	343	$	270	$	4	$	308,999

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

	March 31, 2016						December 31, 2015
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
	(In thousands)
With no related allowance recorded:
Single family	$	873	$	282	$	-	$	877	$	302	$	-
Multi-family	385		315		-		912		779		-
Commercial real estate	635		240		-		636		259		-
Church	6,046		3,917		-		5,615		3,542		-
With an allowance recorded:
Single family	657		657		131		662		661		134
Multi-family	657		657		2		661		661		1
Commercial real estate	1,699		1,699		91		1,702		1,665		88
Church	7,470		7,078		570		8,245		7,848		756
Commercial -other	67		67		15		67		67		16
Total	$	18,489	$	14,912	$	809	$	19,377	$	15,784	$	995

The recorded investment in loans excludes accrued interest receivable due to immateriality.  For purposes of this disclosure, the unpaid principal balance is not reduced for net charge-offs.

The following tables present the monthly average of loans individually evaluated for impairment by loan type and the related interest income for the periods indicated.

	Three Months Ended March 31, 2016						Three Months Ended March 31, 2015
	Average Recorded Investment			Cash Basis Interest Income Recognized			Average Recorded Investment			Cash Basis Interest Income Recognized
	(In thousands)
Single family		$	951		$	7		$	1,382		$	7
Multi-family		1,206			41			2,740			16
Commercial real estate		1,933			56			4,264			106
Church		11,191			126			14,603			142
Commercial -other		67			-			95			2
Total		$	15,348		$	230		$	23,084		$	273

Cash-basis interest income recognized represents cash received for interest payments on accruing impaired loans.  Interest payments collected on non-accrual loans are characterized as payments of principal rather than payments of the outstanding accrued interest on the loans until the remaining principal on the non-accrual loans is considered to be fully collectible.  Foregone interest income that would have been recognized had loans performed in accordance with their original terms amounted to $119 thousand and $284 thousand for the three months ended March 31, 2016 and 2015, respectively, and were not included in the consolidated results of operations.

The following tables present the aging of the recorded investment in past due loans by loan type as of the periods indicated:

	March 31, 2016
	30-59 Days Past Due			60-89 Days Past Due			Greater than 90 Days Past Due			Total Past Due			Current
	(In thousands)
Loans receivable held for investment:
Single family		$	73		$	5		$	-		$	78		$	124,587
Multi-family		-			-			-			-			143,967
Commercial real estate		-			-			-			-			11,080
Church		578			-			463			1,041			43,035
Construction		-			-			-			-			332
Commercial - other		-			-			-			-			289
Consumer		-			-			-			-			6
Total		$	651		$	5		$	463		$	1,119		$	323,296

	December 31, 2015
	30-59 Days Past Due			60-89 Days Past Due			Greater than 90 Days Past Due			Total Past Due			Current
	(In thousands)
Loans receivable held for investment:
Single family		$	103		$	-		$	-		$	103		$	131,492
Multi-family		291			-			-			291			119,335
Commercial real estate		-			-			-			-			11,412
Church		595			-			456			1,051			44,698
Construction		-			-			-			-			343
Commercial - other		-			-			-			-			270
Consumer		-			-			-			-			4
Total		$	989		$	-		$	456		$	1,445		$	307,554

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

	March 31, 2016			December 31, 2015
	(In thousands)
Loans receivable held for investment:
Single family		$	282		$	302
Multi-family		315			779
Commercial real estate		240			259
Church		3,265			2,887
Total non-accrual loans		$	4,102		$	4,227

There were no loans 90 days or more delinquent that were accruing interest as of March 31, 2016 or December 31, 2015.

Troubled Debt Restructurings

At March 31, 2016, loans classified as troubled debt restructurings (“TDRs”) totaled $14.4 million, of which $3.6 million were included in non-accrual loans and $10.8 million were on accrual status.  At December 31, 2015, loans classified as TDRs totaled $15.3 million, of which $3.8 million were included in non-accrual loans and $11.5 million were on accrual status.  The Company has allocated $809 thousand and $995 thousand of specific reserves for accruing TDRs as of March 31, 2016 and December 31, 2015, respectively.  TDRs on accrual status are comprised of loans that were accruing at the time of restructuring or loans that have complied with the terms of their restructured agreements for a satisfactory period of time and for which the Bank anticipates full repayment of both principal and interest.  TDRs that are on non-accrual status can be returned to accrual status after a period of sustained performance, generally determined to be six months of timely payments, as modified.  A well-documented credit analysis that supports a return to accrual status based on the borrower’s financial condition and prospects for repayment under the revised terms is also required.  As of March 31, 2016 and December 31, 2015, the Company had no commitment to lend additional amounts to customers with outstanding loans that are classified as TDRs.  No loans were modified during the three months ended March 31, 2016 and 2015.

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as:  current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.  For single family residential, consumer and other smaller balance homogenous loans, a credit grade is established at inception, and generally only adjusted based on performance.  Information about payment status is disclosed elsewhere herein.  The Company analyzes all other loans individually by classifying the loans as to credit risk.  This analysis is performed at least on a quarterly basis.  The Company uses the following definitions for risk ratings:

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

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

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

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

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

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

	March 31, 2016
	Pass		Watch		Special Mention		Substandard		Doubtful		Loss
	(In thousands)
Single family	$	122,163	$	-	$	2,220	$	282	$	-	$	-
Multi-family	141,922		493		350		1,202		-		-
Commercial real estate	7,170		-		-		3,910		-		-
Church	34,425		725		836		8,090		-		-
Construction	332		-		-		-		-		-
Commercial - other	222		-		-		67		-		-
Consumer	6		-		-		-		-		-
Total	$	306,240	$	1,218	$	3,406	$	13,551	$	-	$	-
	December 31, 2015
	Pass		Watch		Special Mention		Substandard		Doubtful		Loss
	(In thousands)
Single family	$	128,736	$	-	$	2,557	$	302	$	-	$	-
Multi-family	117,602		-		352		1,672		-		-
Commercial real estate	7,509		-		-		3,903		-		-
Church	35,013		776		1,431		8,529		-		-
Construction	343		-		-		-		-		-
Commercial - other	203		-		-		67		-		-
Consumer	4		-		-		-		-		-
Total	$	289,410	$	776	$	4,340	$	14,473	$	-	$	-

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Junior Subordinated Debentures

3 Months Ended

Mar. 31, 2016

Junior Subordinated Debentures:

Junior Subordinated Debentures

NOTE (5) – Junior Subordinated Debentures

On March 17, 2004, the Company issued $6.0 million of Floating Rate Junior Subordinated Debentures (the “Debentures”) in a private placement to a trust that was capitalized to purchase subordinated debt and preferred stock of multiple community banks.  Interest on the Debentures is payable quarterly at a rate per annum equal to the 3-Month LIBOR plus 2.54%.  The interest rate is determined as of each March 17, June 17, September 17, and December 17, and was 3.18% at March 31, 2016.  On October 16, 2014, the Company made payments of $900 thousand of principal on Debentures, executed a Supplemental Indenture for the Debentures that extended the maturity of the Debentures to March 17, 2024, and modified the payment terms of the remaining $5.1 million principal amount thereof.  The modified terms of the Debentures require quarterly payments of interest only through March 2019 at the original rate of 3-Month LIBOR plus 2.54%.  Starting in June 2019, the Company will be required to make quarterly payments of equal amounts of principal, plus interest, until the Debentures are fully amortized on March 17, 2024.  The Debentures may be called for redemption at any time by the Company.

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Fair Value

3 Months Ended

Mar. 31, 2016

Fair Value

Fair Value

NOTE (6) – Fair Value

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions to estimate fair value:

The fair values of securities available-for-sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

The fair value of impaired loans that are collateral dependent is generally based upon the fair value of the collateral, which is obtained from recent real estate appraisals.  These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.  Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.  Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.  Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Assets acquired through or by transfer in lieu of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis.  These assets are subsequently accounted for at the lower of cost or fair value less estimated costs to sell.  Fair value is commonly based on recent real estate appraisals which are updated every nine months.  These appraisals may utilize a single valuation approach or a combination of approaches, including comparable sales and the income approach.  Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.  Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.  Real estate owned properties are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Appraisals for collateral-dependent impaired loans and real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company.  Once received, an independent third-party licensed appraiser reviews the appraisals for accuracy and reasonableness, reviewing the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics.

Assets Measured on a Recurring Basis

Assets measured at fair value on a recurring basis are summarized below:

	Fair Value Measurements at March 31, 2016
	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Total
	(In thousands)
Assets:
Securities available-for-sale - residential mortgage-backed	$		-	$		13,201	$	-	$	13,201
Securities available-for-sale - U.S. Government and federal agency	2,008			-			-		2,008
	Fair Value Measurements at December 31, 2015
	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Total
	(In thousands)
Assets:
Securities available-for-sale - residential mortgage-backed	$	-		$	12,167		$	-	$	12,167
Securities available-for-sale - U.S. Government and federal agency	1,973			-			-		1,973

There were no transfers between Level 1, Level 2, or Level 3 during the three months ended March 31, 2016 and 2015.

Assets Measured on a Non-Recurring Basis

Assets are considered to be reflected at fair value on a non-recurring basis if the fair value measurement of the instrument does not necessarily result in a change in the amount recorded on the balance sheet.  Generally, a non-recurring valuation is the result of the application of other accounting pronouncements that require assets to be assessed for impairment or recorded at the lower of cost or fair value.

The following table provides information regarding the carrying values of our assets measured at fair value on a non-recurring basis as of the periods indicated.  The fair value measurement for all of these assets falls within Level 3 of the fair value hierarchy.

	March 31, 2016	December 31, 2015
	(In thousands)
Impaired loans carried at fair value of collateral	$        2,456	$        2,557
Real estate owned	-	360

There were no losses recognized on assets measured at fair value on a non-recurring basis for the three months ended March 31, 2016 and 2015.

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a nonrecurring basis as of March 31, 2016:

	Valuation Technique(s)	Unobservable Input(s)	Range	Weighted Average
Impaired loans	Third Party Appraisals	Adjustment for differences between the comparable sales	-18% to 13%	0%

Fair Values of Financial Instruments

The carrying amounts and estimated fair values of financial instruments as of the periods indicated were as follows:

			Fair Value Measurements at March 31, 2016
	Carrying Value		Level 1		Level 2		Level 3		Total
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	35,991	$	35,991	$	-	$	-	$	35,991
Securities available-for-sale	15,209		2,008		13,201		-		15,209
Loans receivable held for investment	319,881		-		-		327,441		327,441
Accrued interest receivable	1,091		63		34		994		1,091
Federal Home Loan Bank stock	2,573		2,573		-		-		2,573
Financial Liabilities:
Deposits	$	257,409	$	-	$	252,816	$	-	$	252,816
Federal Home Loan Bank advances	72,000		-		73,728		-		73,728
Junior subordinated debentures	5,100		-		-		3,164		3,164
Accrued interest payable	54		-		48		6		54
			Fair Value Measurements at December 31, 2015
	Carrying Value		Level 1		Level 2		Level 3		Total
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	67,839	$	67,839	$	-	$	-	$	67,839
Securities available-for-sale	14,140		1,973		12,167		-		14,140
Loans receivable held for investment	304,171		-		-		306,643		306,643
Accrued interest receivable	1,077		63		31		983		1,077
Federal Home Loan Bank stock	2,573		2,573		-		-		2,573
Financial Liabilities:
Deposits	$	272,614	$	-	$	265,495	$	-	$	265,495
Federal Home Loan Bank advances	72,000		-		73,441		-		73,441
Junior subordinated debentures	5,100		-		-		3,117		3,117
Accrued interest payable	52		-		46		6		52

The methods and assumptions, not previously presented, used to estimate fair values are described as follows:

(a) Cash and Cash Equivalents

The carrying amounts of cash and cash equivalents approximate fair values and are classified as Level 1.

(b) Loans Receivable Held For investment

Fair values of loans are estimated as follows:  For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification.  Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification.  Impaired loans are valued at the lower of cost or fair value as described previously.  The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

(c) FHLB Stock

The carrying value of FHLB stock approximates its fair value as the shares can only be redeemed by the FHLB at par.

(d) Accrued Interest Receivable/Payable

The carrying amounts of accrued interest receivable/payable approximate their fair value and are classified the same as the related asset.

(e) Deposits

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in Level 2 classification.  Fair values for fixed rate certificates of deposit are estimated using discounted cash flow calculations that apply interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

(f) Federal Home Loan Bank Advances

The fair values of the Federal Home Loan Bank advances are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

(g) Junior Subordinated Debentures

The fair values of the Debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification.

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2016

Stock based Compensation

Stock-Based Compensation

NOTE (7) – Stock-based Compensation

In 2008, the Company adopted the 2008 Long-Term Incentive Plan (“2008 LTIP”), which was approved by its stockholders.  The 2008 LTIP permits the grant of non-qualified and incentive stock options, stock appreciation rights, full value awards and cash incentive awards to the Company’s non-employee directors and certain officers and employees for up to 2,000,000 shares of common stock.  Option awards are generally granted with an exercise price equal to the market price of the Company’s common stock at the date of grant; the option awards have vesting periods ranging from immediate vesting to five years and have 10-year contractual terms.

In February 2016, the Company granted 450,000 stock options, with an exercise price of $1.62 per share, to senior executive officers.  These options vest over five years and expire in ten years.  The Company estimated the compensation costs and fair value per share of these stock options to be $194 thousand and $0.43 per share, respectively, using the Black-Scholes option pricing model and the following assumptions: (i) expected volatility of 27.36%; (ii) risk free interest rate of 1.21%; (iii) expected option term of five years; and (iv) 0% dividend yield.

The Company recorded $3 thousand of stock-based compensation expense during the three months ended March 31, 2016 compared to $0 during the three months ended March 31, 2015.

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Regulatory Matters

3 Months Ended

Mar. 31, 2016

Regulatory Matters

Regulatory Matters

NOTE (8) – Regulatory Matters

The Bank’s capital requirements are administered by the Office of the Comptroller of the Currency (“OCC”) and involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices.  Capital amounts and classifications are also subject to qualitative judgments by the OCC.  Failure to meet capital requirements can result in regulatory action.

The federal banking regulators approved final capital rules (“Basel III Capital Rules”) in July 2013 implementing the Basel III framework as well as certain provisions of the Dodd-Frank Act.  The Basel III Capital Rules prescribe a standardized approach for calculating risk-weighted assets and revised the definition and calculation of Tier 1 capital and Total capital, and include a new Common Equity Tier 1 capital (“CET1”) measure.  Under the Basel III Capital Rules, the currently effective minimum capital ratios are:

· 4.5% CET1 to risk-weighted assets;

· 6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted assets;

· 8.0% Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets; and

· 4.0% Tier 1 capital to average consolidated assets (known as the “leverage ratio”).

A new capital conservation buffer was also established above the regulatory minimum capital requirements.  This capital conservation buffer was phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and will increase each subsequent year by an additional 0.625% until it reaches its final level of 2.5% on January 1, 2019.

The Basel III Capital rules also contain revisions to the prompt corrective action framework, which is designed to place restrictions on insured depository institutions if their capital levels begin to show signs of weakness.  Under the prompt corrective action requirements, which are designed to complement the capital conservation buffer, insured depository institutions are now required to meet the following increased capital level requirements in order to qualify as “well capitalized”: (i) a CET1 capital ratio of 6.5%; (ii) a Tier 1 capital ratio of 8% (increased from 6%); (iii) a total capital ratio of 10% (unchanged from previous rules); and (iv) a Tier 1 leverage ratio of 5% (unchanged from previous rules).

The Basel III Capital Rules became effective for the Bank on January 1, 2015 (subject to a phase-in period for certain provisions).  At March 31, 2016 and December 31, 2015, the Bank’s level of capital exceeded all regulatory capital requirements and its regulatory capital ratios were above the minimum levels required to be considered well capitalized for regulatory purposes.  Actual and required capital amounts and ratios as of the periods indicated are presented below.

	Actual			Minimum Capital Requirements			Minimum Required To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio	Amount		Ratio	Amount		Ratio
	(Dollars in thousands)
March 31, 2016:
Tier 1 (Leverage)	$	46,751	12.02%	$	15,560	4.0%	$	19,450	5.0%
Common Equity Tier 1	$	46,751	19.19%	$	10,960	4.5%	$	15,832	6.5%
Tier 1	$	46,751	19.19%	$	14,614	6.0%	$	19,485	8.0%
Total Capital	$	49,814	20.45%	$	19,485	8.0%	$	24,356	10.0%
December 31, 2015:
Tier 1 (Leverage)	$	46,028	11.56%	$	15,923	4.0%	$	19,903	5.0%
Common Equity Tier 1	$	46,028	19.45%	$	10,650	4.5%	$	15,383	6.5%
Tier 1	$	46,028	19.45%	$	14,200	6.0%	$	18,933	8.0%
Total Capital	$	49,010	20.71%	$	18,933	8.0%	$	23,667	10.0%

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Income Taxes

3 Months Ended

Mar. 31, 2016

Income Taxes

Income Taxes

NOTE (9) – Income Taxes

The Company and its subsidiary are subject to U.S. federal and state income taxes.  Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax asset will not be realized.  In assessing the realization of deferred tax assets, management evaluates both positive and negative evidence, including the existence of cumulative losses in the current year and the prior two years, the amount of taxes paid in available carry-back years, the forecasts of future income and tax planning strategies.  This analysis is updated quarterly.  Based on this analysis, the Company determined that a valuation allowance of $2.4 million was required as of March 31, 2016, resulting in a $4.6 million net deferred tax assets.  The Company recorded a valuation allowance of $2.5 million and reported $4.6 million in net deferred tax assets as of December 31, 2015.

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Concentration of Credit Risk

3 Months Ended

Mar. 31, 2016

Concentration of Credit Risk

Concentration of Credit Risk

NOTE (10) – Concentration of Credit Risk

The Bank has a significant concentration of deposits with a long-time customer that accounted for approximately 13% of its deposits as of March 31, 2016.  The Bank expects to maintain this relationship with the customer.

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Basis of Financial Statement Presentation

3 Months Ended

Mar. 31, 2016

Basis of Financial Statement Presentation

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In January 2016, the FASB issued ASU 2016-1, “Financial Instruments — Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities”.  ASU 2016-1 (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income; (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (iii) eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (iv) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (v) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; and (vii) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale.  For public business entities, the amendments in ASU 2016-01 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.  Early application by public business entities to financial statements of fiscal years or interim periods that have not yet been issued are permitted as of the beginning of the fiscal year of adoption.  Adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”.  Under ASU 2016-02, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.  Under the new guidance, lessor accounting is largely unchanged.  Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  Early application is permitted for all public business entities upon issuance.  Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements.  The Company is currently evaluating the impact of the pending adoption of the new standard on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, “Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”.  ASU 2016-09 includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements.  The areas for simplification include income tax consequences, forfeitures, classification of awards as either equity or liabilities and classification on the statement of cash flows.  ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods.  Early adoption is permitted.  The Company is currently evaluating the impact of the pending adoption of the new standard on its consolidated financial statements.

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Earnings Per Share of Common Stock (Tables)

3 Months Ended

Mar. 31, 2016

Earnings Per Share of Common Stock

Schedule of basic and diluted earnings per share of common stock

	Three Months Ended March 31,
	2016		2015
	(Dollars in thousands, except share and per share)
Basic
Net income	$	633	$	1,298
Weighted average common shares outstanding	29,076,708		29,076,708
Earnings per common share - basic	$	0.02	$	0.04
Diluted
Net income	$	633	$	1,298
Weighted average common shares outstanding	29,076,708		29,076,708
Add: dilutive effects of assumed exercises of stock options	-		-
Weighted average common shares - fully dilutive	29,076,708		29,076,708
Earnings per common share - diluted	$	0.02	$	0.04

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Securities (Tables)

3 Months Ended

Mar. 31, 2016

Securities

Summary of amortized cost and fair value of available-for-sale investment securities and corresponding amounts of unrealized gains

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
March 31, 2016:
Residential mortgage-backed	$	12,742	$	459	$	-	$	13,201
U.S. Government and federal agency		1,949		59		-		2,008
Total available-for-sale securities	$	14,691	$	518	$	-	$	15,209
December 31, 2015:
Residential mortgage-backed	$	11,796	$	371	$	-	$	12,167
U.S. Government and federal agency	1,946		27		-		1,973
Total available-for-sale securities	$	13,742	$	398	$	-	$	14,140

Schedule of amortized cost and fair value of the investment securities portfolios by contractual maturity

	Available-for-Sale
Maturity	Amortized Cost		Fair Value
	(In thousands)
Within one year	$	-	$	-
One to five years	1,949		2,008
Five to ten years	-		-
Beyond ten years	-		-
Residential mortgage-backed	12,742		13,201
Total	$	14,691	$	15,209

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Loans Receivable Held for Investment (Tables)

3 Months Ended

Mar. 31, 2016

Loans Receivable Held for Investment

Schedule of loans receivable

	March 31, 2016		December 31, 2015
	(In thousands)
Real estate:
Single family (1)	$	124,025	$	130,891
Multi-family	142,773		118,616
Commercial real estate	11,073		11,442
Church	44,710		46,390
Construction	332		343
Commercial – other	289		270
Consumer	6		4
Gross loans receivable before deferred loan costs and premiums	323,208		307,956
Unamortized net deferred loan costs and premiums	1,207		1,043
Gross loans receivable	324,415		308,999
Allowance for loan losses	(4,534)		(4,828)
Loans receivable, net	$	319,881	$	304,171

______

(1)Includes $94.4 million and $99.5 million of non-impaired purchased loans at March 31, 2016 and December 31, 2015, respectively, which are accounted for under ASC 310-20.

Activity in the allowance for loan losses by loan type

	Three Months Ended March 31, 2016
	Real Estate
	Single family				Multi- family			Commercial real estate				Church				Construction				Commercial - other				Consumer				Total
	(In thousands)
Beginning balance	$	597			$	1,658		$	469			$	2,083			$	3			$	18			$	-			$	4,828
Provision for (recapture of) loan losses	(69			)	208			(25			)	(413			)	-				(1			)	-				(300			)
Recoveries	-				-			-				6				-				-				-				6
Loans charged off	-				-			-				-				-				-				-				-
Ending balance	$	528			$	1,866		$	444			$	1,676			$	3			$	17			$	-			$	4,534
	Three Months Ended March 31, 2015
	Real Estate
	Single family				Multi- family			Commercial real estate				Church				Construction				Commercial - other				Consumer				Total
	(In thousands)
Beginning balance	$		1,174		$		2,726	$		496		$		4,047		$		7		$		12		$		3		$		8,465
Provision for (recapture of) loan losses	(10			)	15			(60			)	(689			)	(3			)	(1			)	(2			)	(750			)
Recoveries	-				-			-				6				-				-				-				6
Loans charged off	-				-			-				(50			)	-				-				-				(50			)
Ending balance	$		1,164		$		2,741	$		436		$		3,314		$		4		$		11		$		1		$		7,671

Allowance for loan losses and recorded investment in loans by type of loans and based on impairment method

	March 31, 2016
	Real Estate
	Single family		Multi- family		Commercial real estate		Church		Construction		Commercial - other		Consumer		Total
	(In thousands)
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	131	$	2	$	91	$	570	$	-	$	15	$	-	$	809
Collectively evaluated for impairment	397		1,864		353		1,106		3		2		-		3,725
Total ending allowance balance	$	528	$	1,866	$	444	$	1,676	$	3	$	17	$	-	$	4,534
Loans:
Loans individually evaluated for impairment	$	939	$	972	$	1,939	$	10,995	$	-	$	67	$	-	$	14,912
Loans collectively evaluated for impairment	123,726		142,995		9,141		33,081		332		222		6		309,503
Total ending loans balance	$	124,665	$	143,967	$	11,080	$	44,076	$	332	$	289	$	6	$	324,415

	December 31, 2015
	Real Estate
	Single family		Multi- family		Commercial real estate		Church		Construction		Commercial - other		Consumer		Total
	(In thousands)
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	134	$	1	$	88	$	756	$	-	$	16	$	-	$	995
Collectively evaluated for impairment	463		1,657		381		1,327		3		2		-		3,833
Total ending allowance balance	$	597	$	1,658	$	469	$	2,083	$	3	$	18	$	-	$	4,828
Loans:
Loans individually evaluated for impairment	$	963	$	1,440	$	1,924	$	11,390	$	-	$	67	$	-	$	15,784
Loans collectively evaluated for impairment	130,632		118,186		9,488		34,359		343		203		4		293,215
Total ending loans balance	$	131,595	$	119,626	$	11,412	$	45,749	$	343	$	270	$	4	$	308,999

Loans individually evaluated for impairment by loan type

	March 31, 2016						December 31, 2015
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
	(In thousands)
With no related allowance recorded:
Single family	$	873	$	282	$	-	$	877	$	302	$	-
Multi-family	385		315		-		912		779		-
Commercial real estate	635		240		-		636		259		-
Church	6,046		3,917		-		5,615		3,542		-
With an allowance recorded:
Single family	657		657		131		662		661		134
Multi-family	657		657		2		661		661		1
Commercial real estate	1,699		1,699		91		1,702		1,665		88
Church	7,470		7,078		570		8,245		7,848		756
Commercial -other	67		67		15		67		67		16
Total	$	18,489	$	14,912	$	809	$	19,377	$	15,784	$	995

Average of loans individually evaluated for impairment by loan type and related interest income

	Three Months Ended March 31, 2016						Three Months Ended March 31, 2015
	Average Recorded Investment			Cash Basis Interest Income Recognized			Average Recorded Investment			Cash Basis Interest Income Recognized
	(In thousands)
Single family		$	951		$	7		$	1,382		$	7
Multi-family		1,206			41			2,740			16
Commercial real estate		1,933			56			4,264			106
Church		11,191			126			14,603			142
Commercial -other		67			-			95			2
Total		$	15,348		$	230		$	23,084		$	273

Aging of recorded investment in past due loans by loan type

	March 31, 2016
	30-59 Days Past Due			60-89 Days Past Due			Greater than 90 Days Past Due			Total Past Due			Current
	(In thousands)
Loans receivable held for investment:
Single family		$	73		$	5		$	-		$	78		$	124,587
Multi-family		-			-			-			-			143,967
Commercial real estate		-			-			-			-			11,080
Church		578			-			463			1,041			43,035
Construction		-			-			-			-			332
Commercial - other		-			-			-			-			289
Consumer		-			-			-			-			6
Total		$	651		$	5		$	463		$	1,119		$	323,296

	December 31, 2015
	30-59 Days Past Due			60-89 Days Past Due			Greater than 90 Days Past Due			Total Past Due			Current
	(In thousands)
Loans receivable held for investment:
Single family		$	103		$	-		$	-		$	103		$	131,492
Multi-family		291			-			-			291			119,335
Commercial real estate		-			-			-			-			11,412
Church		595			-			456			1,051			44,698
Construction		-			-			-			-			343
Commercial - other		-			-			-			-			270
Consumer		-			-			-			-			4
Total		$	989		$	-		$	456		$	1,445		$	307,554

Recorded investment in nonaccrual loans by loan type

	March 31, 2016			December 31, 2015
	(In thousands)
Loans receivable held for investment:
Single family		$	282		$	302
Multi-family		315			779
Commercial real estate		240			259
Church		3,265			2,887
Total non-accrual loans		$	4,102		$	4,227

Risk category of loans by loan type

	March 31, 2016
	Pass		Watch		Special Mention		Substandard		Doubtful		Loss
	(In thousands)
Single family	$	122,163	$	-	$	2,220	$	282	$	-	$	-
Multi-family	141,922		493		350		1,202		-		-
Commercial real estate	7,170		-		-		3,910		-		-
Church	34,425		725		836		8,090		-		-
Construction	332		-		-		-		-		-
Commercial - other	222		-		-		67		-		-
Consumer	6		-		-		-		-		-
Total	$	306,240	$	1,218	$	3,406	$	13,551	$	-	$	-
	December 31, 2015
	Pass		Watch		Special Mention		Substandard		Doubtful		Loss
	(In thousands)
Single family	$	128,736	$	-	$	2,557	$	302	$	-	$	-
Multi-family	117,602		-		352		1,672		-		-
Commercial real estate	7,509		-		-		3,903		-		-
Church	35,013		776		1,431		8,529		-		-
Construction	343		-		-		-		-		-
Commercial - other	203		-		-		67		-		-
Consumer	4		-		-		-		-		-
Total	$	289,410	$	776	$	4,340	$	14,473	$	-	$	-

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Fair Value (Tables)

3 Months Ended

Mar. 31, 2016

Fair Value

Summary of assets measured at fair value on recurring basis

	Fair Value Measurements at March 31, 2016
	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Total
	(In thousands)
Assets:
Securities available-for-sale - residential mortgage-backed	$		-	$		13,201	$	-	$	13,201
Securities available-for-sale - U.S. Government and federal agency	2,008			-			-		2,008
	Fair Value Measurements at December 31, 2015
	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Total
	(In thousands)
Assets:
Securities available-for-sale - residential mortgage-backed	$	-		$	12,167		$	-	$	12,167
Securities available-for-sale - U.S. Government and federal agency	1,973			-			-		1,973

Schedule of carrying values of assets measured at fair value on non-recurring basis

	March 31, 2016	December 31, 2015
	(In thousands)
Impaired loans carried at fair value of collateral	$        2,456	$        2,557
Real estate owned	-	360

Schedule of valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a nonrecurring basis

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a nonrecurring basis as of March 31, 2016:

	Valuation Technique(s)	Unobservable Input(s)	Range	Weighted Average
Impaired loans	Third Party Appraisals	Adjustment for differences between the comparable sales	-18% to 13%	0%

Schedule of carrying amounts and estimated fair values of financial instruments

			Fair Value Measurements at March 31, 2016
	Carrying Value		Level 1		Level 2		Level 3		Total
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	35,991	$	35,991	$	-	$	-	$	35,991
Securities available-for-sale	15,209		2,008		13,201		-		15,209
Loans receivable held for investment	319,881		-		-		327,441		327,441
Accrued interest receivable	1,091		63		34		994		1,091
Federal Home Loan Bank stock	2,573		2,573		-		-		2,573
Financial Liabilities:
Deposits	$	257,409	$	-	$	252,816	$	-	$	252,816
Federal Home Loan Bank advances	72,000		-		73,728		-		73,728
Junior subordinated debentures	5,100		-		-		3,164		3,164
Accrued interest payable	54		-		48		6		54
			Fair Value Measurements at December 31, 2015
	Carrying Value		Level 1		Level 2		Level 3		Total
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	67,839	$	67,839	$	-	$	-	$	67,839
Securities available-for-sale	14,140		1,973		12,167		-		14,140
Loans receivable held for investment	304,171		-		-		306,643		306,643
Accrued interest receivable	1,077		63		31		983		1,077
Federal Home Loan Bank stock	2,573		2,573		-		-		2,573
Financial Liabilities:
Deposits	$	272,614	$	-	$	265,495	$	-	$	265,495
Federal Home Loan Bank advances	72,000		-		73,441		-		73,441
Junior subordinated debentures	5,100		-		-		3,117		3,117
Accrued interest payable	52		-		46		6		52

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Regulatory Matters (Tables)

3 Months Ended

Mar. 31, 2016

Regulatory Matters

Schedule of actual and required capital amounts and ratios

	Actual			Minimum Capital Requirements			Minimum Required To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio	Amount		Ratio	Amount		Ratio
	(Dollars in thousands)
March 31, 2016:
Tier 1 (Leverage)	$	46,751	12.02%	$	15,560	4.0%	$	19,450	5.0%
Common Equity Tier 1	$	46,751	19.19%	$	10,960	4.5%	$	15,832	6.5%
Tier 1	$	46,751	19.19%	$	14,614	6.0%	$	19,485	8.0%
Total Capital	$	49,814	20.45%	$	19,485	8.0%	$	24,356	10.0%
December 31, 2015:
Tier 1 (Leverage)	$	46,028	11.56%	$	15,923	4.0%	$	19,903	5.0%
Common Equity Tier 1	$	46,028	19.45%	$	10,650	4.5%	$	15,383	6.5%
Tier 1	$	46,028	19.45%	$	14,200	6.0%	$	18,933	8.0%
Total Capital	$	49,010	20.71%	$	18,933	8.0%	$	23,667	10.0%

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Earnings Per Share of Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Basic
Net income	$ 633	$ 1,298
Weighted average common shares outstanding	29,076,708	29,076,708
Earnings per common share - basic (in dollars per share)	$ 0.02	$ 0.04
Diluted
Net income	$ 633	$ 1,298
Weighted average common shares outstanding for basic earnings per common share	29,076,708	29,076,708
Weighted average common shares - fully dilutive	29,076,708	29,076,708
Earnings per common share - diluted (in dollars per share)	$ 0.02	$ 0.04
Anti-dilutive stock options not considered in computing diluting earnings per common share	540,625	90,625

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Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Securities
Amortized Cost	$ 14,691	$ 13,742
Gross Unrealized Gains	518	398
Fair Value	15,209	14,140
Residential mortgage-backed
Securities
Amortized Cost	12,742	11,796
Gross Unrealized Gains	459	371
Fair Value	13,201	12,167
U.S. Government and federal agency
Securities
Amortized Cost	1,949	1,946
Gross Unrealized Gains	59	27
Fair Value	$ 2,008	$ 1,973

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Securities - Schedule of amortized cost and fair value of the investment securities portfolios by contractual maturity (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Securities
Estimated remaining term	4 years 1 month 6 days
Amortized Cost
One to five years	$ 1,949
Residential mortgage-backed	12,742
Total	14,691
Fair Value
One to five years	2,008
Residential mortgage-backed	13,201
Total	15,209
Securities pledged	708		$ 731
Securities of any one issuer, other than U.S. Government, greater than 10% of shareholders equity	$ 0
Shareholders equity representing a concentration risk for any one securities investment (as a percent)	10.00%
Sales of securities	$ 0	$ 0

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Loans Receivable Held for Investment (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Loans Receivable Held for Investment
Gross loans receivable before deferred loan costs and premiums	$ 323,208	$ 307,956
Single family
Loans Receivable Held for Investment
Gross loans receivable before deferred loan costs and premiums	124,025	130,891
Non-Impaired Purchased Loans	94,400	99,500
Multi-family
Loans Receivable Held for Investment
Gross loans receivable before deferred loan costs and premiums	142,773	118,616
Commercial real estate
Loans Receivable Held for Investment
Gross loans receivable before deferred loan costs and premiums	11,073	11,442
Church
Loans Receivable Held for Investment
Gross loans receivable before deferred loan costs and premiums	44,710	46,390
Construction
Loans Receivable Held for Investment
Gross loans receivable before deferred loan costs and premiums	332	343
Commercial - other
Loans Receivable Held for Investment
Gross loans receivable before deferred loan costs and premiums	289	270
Consumer
Loans Receivable Held for Investment
Gross loans receivable before deferred loan costs and premiums	$ 6	$ 4

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Loans Receivable Held for Investment - Schedule of Loans Receivable (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015	Dec. 31, 2014
Loans Receivable Held for Investment
Gross loans receivable before deferred loan costs and premiums	$ 323,208	$ 307,956
Unamortized net deferred loan costs and premium	1,207	1,043
Gross loans receivable	324,415	308,999
Allowance for loan losses	(4,534)	(4,828)	$ (7,671)	$ (8,465)
Loans receivable, net	$ 319,881	$ 304,171

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Loans Receivable Held for Investment - Activity in the allowance for loan losses by loan type (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Allowance for loan losses
Beginning balance	$ 4,828	$ 8,465
Provision for (recapture of) loan losses	(300)	(750)
Recoveries	6	6
Loans charged off		(50)
Ending balance	4,534	7,671
Single family
Allowance for loan losses
Beginning balance	597	1,174
Provision for (recapture of) loan losses	(69)	(10)
Ending balance	528	1,164
Multi-family
Allowance for loan losses
Beginning balance	1,658	2,726
Provision for (recapture of) loan losses	208	15
Ending balance	1,866	2,741
Commercial real estate
Allowance for loan losses
Beginning balance	469	496
Provision for (recapture of) loan losses	(25)	(60)
Ending balance	444	436
Church
Allowance for loan losses
Beginning balance	2,083	4,047
Provision for (recapture of) loan losses	(413)	(689)
Recoveries	6	6
Loans charged off		(50)
Ending balance	1,676	3,314
Construction
Allowance for loan losses
Beginning balance	3	7
Provision for (recapture of) loan losses		(3)
Ending balance	3	4
Commercial - other
Allowance for loan losses
Beginning balance	18	12
Provision for (recapture of) loan losses	(1)	(1)
Ending balance	$ 17	11
Consumer
Allowance for loan losses
Beginning balance		3
Provision for (recapture of) loan losses		(2)
Ending balance		$ 1

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Loans Receivable Held for Investment - Allowance for loan losses and recorded investment in loans by type of loans and based on impairment method (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015	Dec. 31, 2014
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$ 809	$ 995
Collectively evaluated for impairment	3,725	3,833
Total ending allowance balance	4,534	4,828	$ 7,671	$ 8,465
Loans:
Loans individually evaluated for impairment	14,912	15,784
Loans collectively evaluated for impairment	309,503	293,215
Gross loans receivable	324,415	308,999
Single family
Ending allowance balance attributable to loans:
Individually evaluated for impairment	131	134
Collectively evaluated for impairment	397	463
Total ending allowance balance	528	597	1,164	1,174
Loans:
Loans individually evaluated for impairment	939	963
Loans collectively evaluated for impairment	123,726	130,632
Gross loans receivable	124,665	131,595
Multi-family
Ending allowance balance attributable to loans:
Individually evaluated for impairment	2	1
Collectively evaluated for impairment	1,864	1,657
Total ending allowance balance	1,866	1,658	2,741	2,726
Loans:
Loans individually evaluated for impairment	972	1,440
Loans collectively evaluated for impairment	142,995	118,186
Gross loans receivable	143,967	119,626
Commercial real estate
Ending allowance balance attributable to loans:
Individually evaluated for impairment	91	88
Collectively evaluated for impairment	353	381
Total ending allowance balance	444	469	436	496
Loans:
Loans individually evaluated for impairment	1,939	1,924
Loans collectively evaluated for impairment	9,141	9,488
Gross loans receivable	11,080	11,412
Church
Ending allowance balance attributable to loans:
Individually evaluated for impairment	570	756
Collectively evaluated for impairment	1,106	1,327
Total ending allowance balance	1,676	2,083	3,314	4,047
Loans:
Loans individually evaluated for impairment	10,995	11,390
Loans collectively evaluated for impairment	33,081	34,359
Gross loans receivable	44,076	45,749
Construction
Ending allowance balance attributable to loans:
Collectively evaluated for impairment	3	3
Total ending allowance balance	3	3	4	7
Loans:
Loans collectively evaluated for impairment	332	343
Gross loans receivable	332	343
Commercial - other
Ending allowance balance attributable to loans:
Individually evaluated for impairment	15	16
Collectively evaluated for impairment	2	2
Total ending allowance balance	17	18	11	12
Loans:
Loans individually evaluated for impairment	67	67
Loans collectively evaluated for impairment	222	203
Gross loans receivable	289	270
Consumer
Ending allowance balance attributable to loans:
Total ending allowance balance			$ 1	$ 3
Loans:
Loans collectively evaluated for impairment	6	4
Gross loans receivable	$ 6	$ 4

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Loans Receivable Held for Investment - Loans individually evaluated for impairment by loan type (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Impaired loans
Unpaid principal balance	$ 18,489	$ 19,377
Recorded investment	14,912	15,784
Allowance for loan losses allocated, with an allowance recorded	809	995
Single family
Impaired loans
Unpaid principal balance, with no related allowance recorded	873	877
Unpaid principal balance, with an allowance recorded	657	662
Recorded investment, with no related allowance recorded	282	302
Recorded investment, with an allowance recorded	657	661
Allowance for loan losses allocated, with an allowance recorded	131	134
Multi-family
Impaired loans
Unpaid principal balance, with no related allowance recorded	385	912
Unpaid principal balance, with an allowance recorded	657	661
Recorded investment, with no related allowance recorded	315	779
Recorded investment, with an allowance recorded	657	661
Allowance for loan losses allocated, with an allowance recorded	2	1
Commercial real estate
Impaired loans
Unpaid principal balance, with no related allowance recorded	635	636
Unpaid principal balance, with an allowance recorded	1,699	1,702
Recorded investment, with no related allowance recorded	240	259
Recorded investment, with an allowance recorded	1,699	1,665
Allowance for loan losses allocated, with an allowance recorded	91	88
Church
Impaired loans
Unpaid principal balance, with no related allowance recorded	6,046	5,615
Unpaid principal balance, with an allowance recorded	7,470	8,245
Recorded investment, with no related allowance recorded	3,917	3,542
Recorded investment, with an allowance recorded	7,078	7,848
Allowance for loan losses allocated, with an allowance recorded	570	756
Commercial - other
Impaired loans
Unpaid principal balance, with an allowance recorded	67	67
Recorded investment, with an allowance recorded	67	67
Allowance for loan losses allocated, with an allowance recorded	$ 15	$ 16

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Loans Receivable Held for Investment - Average of loans individually evaluated for impairment by loan type and related interest income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Impaired loans
Average Recorded Investment	$ 15,348	$ 23,084
Cash Basis Interest Income Recognized	230	273
Foregone interest income if impaired loans had performed according to terms	119	284
Single family
Impaired loans
Average Recorded Investment	951	1,382
Cash Basis Interest Income Recognized	7	7
Multi-family
Impaired loans
Average Recorded Investment	1,206	2,740
Cash Basis Interest Income Recognized	41	16
Commercial real estate
Impaired loans
Average Recorded Investment	1,933	4,264
Cash Basis Interest Income Recognized	56	106
Church
Impaired loans
Average Recorded Investment	11,191	14,603
Cash Basis Interest Income Recognized	126	142
Commercial - other
Impaired loans
Average Recorded Investment	$ 67	95
Cash Basis Interest Income Recognized		$ 2

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Loans Receivable Held for Investment - Aging of recorded investment in past due loans by loan type (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Past due receivable
Total Past Due, Loans receivable	$ 1,119	$ 1,445
Current	323,296	307,554
30 to 59 Days Past Due
Past due receivable
Total Past Due, Loans receivable	651	989
60 to 89 Days Past Due
Past due receivable
Total Past Due, Loans receivable	5
Greater than 90 Days Past Due
Past due receivable
Total Past Due, Loans receivable	463	456
Single family
Past due receivable
Total Past Due, Loans receivable	78	103
Current	124,587	131,492
Single family | 30 to 59 Days Past Due
Past due receivable
Total Past Due, Loans receivable	73	103
Single family | 60 to 89 Days Past Due
Past due receivable
Total Past Due, Loans receivable	5
Multi-family
Past due receivable
Total Past Due, Loans receivable		291
Current	143,967	119,335
Multi-family | 30 to 59 Days Past Due
Past due receivable
Total Past Due, Loans receivable		291
Commercial real estate
Past due receivable
Current	11,080	11,412
Church
Past due receivable
Total Past Due, Loans receivable	1,041	1,051
Current	43,035	44,698
Church | 30 to 59 Days Past Due
Past due receivable
Total Past Due, Loans receivable	578	595
Church | Greater than 90 Days Past Due
Past due receivable
Total Past Due, Loans receivable	463	456
Construction
Past due receivable
Current	332	343
Commercial - other
Past due receivable
Current	289	270
Consumer
Past due receivable
Current	$ 6	$ 4

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Loans Receivable Held for Investment - Recorded investment in nonaccrual loans by loan type (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Investment in non-accrual loans by type of loans
Total non-accrual loans	$ 4,102	$ 4,227
Loans 90 days or more delinquent that were accruing interest	0	0
Single family
Investment in non-accrual loans by type of loans
Total non-accrual loans	282	302
Multi-family
Investment in non-accrual loans by type of loans
Total non-accrual loans	315	779
Commercial real estate
Investment in non-accrual loans by type of loans
Total non-accrual loans	240	259
Church
Investment in non-accrual loans by type of loans
Total non-accrual loans	$ 3,265	$ 2,887

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Loans Receivable Held for Investment - Troubled debt restructuring (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($) loan	Mar. 31, 2015 loan	Dec. 31, 2015 USD ($)
Troubled debt restructuring
Loans classified as Troubled Debt Restructurings	$ 14,400		$ 15,300
Specific reserves allocated to TDRs	$ 809		995
Timely payment period for return to accrual status	6 months
Commitments to lend additional amounts to customers with TDRs	$ 0		0
Number of loans modified | loan	0	0
Non-accrual status
Troubled debt restructuring
Loans classified as Troubled Debt Restructurings	$ 3,600		3,800
Accrual status
Troubled debt restructuring
Loans classified as Troubled Debt Restructurings	$ 10,800		$ 11,500

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Loans Receivable Held for Investment - Risk category of loans by loan type (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Credit Quality Indicators
Loans receivable	$ 324,415	$ 308,999
Single family
Credit Quality Indicators
Loans receivable	124,665	131,595
Multi-family
Credit Quality Indicators
Loans receivable	143,967	119,626
Commercial real estate
Credit Quality Indicators
Loans receivable	11,080	11,412
Church
Credit Quality Indicators
Loans receivable	44,076	45,749
Construction
Credit Quality Indicators
Loans receivable	332	343
Commercial - other
Credit Quality Indicators
Loans receivable	289	270
Consumer
Credit Quality Indicators
Loans receivable	6	4
Pass
Credit Quality Indicators
Loans receivable	306,240	289,410
Pass | Single family
Credit Quality Indicators
Loans receivable	122,163	128,736
Pass | Multi-family
Credit Quality Indicators
Loans receivable	141,922	117,602
Pass | Commercial real estate
Credit Quality Indicators
Loans receivable	7,170	7,509
Pass | Church
Credit Quality Indicators
Loans receivable	34,425	35,013
Pass | Construction
Credit Quality Indicators
Loans receivable	332	343
Pass | Commercial - other
Credit Quality Indicators
Loans receivable	222	203
Pass | Consumer
Credit Quality Indicators
Loans receivable	6	4
Watch
Credit Quality Indicators
Loans receivable	1,218	776
Watch | Multi-family
Credit Quality Indicators
Loans receivable	493
Watch | Church
Credit Quality Indicators
Loans receivable	725	776
Special Mention
Credit Quality Indicators
Loans receivable	3,406	4,340
Special Mention | Single family
Credit Quality Indicators
Loans receivable	2,220	2,557
Special Mention | Multi-family
Credit Quality Indicators
Loans receivable	350	352
Special Mention | Church
Credit Quality Indicators
Loans receivable	836	1,431
Substandard
Credit Quality Indicators
Loans receivable	13,551	14,473
Substandard | Single family
Credit Quality Indicators
Loans receivable	282	302
Substandard | Multi-family
Credit Quality Indicators
Loans receivable	1,202	1,672
Substandard | Commercial real estate
Credit Quality Indicators
Loans receivable	3,910	3,903
Substandard | Church
Credit Quality Indicators
Loans receivable	8,090	8,529
Substandard | Commercial - other
Credit Quality Indicators
Loans receivable	$ 67	$ 67

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Junior Subordinated Debentures (Details) - USD ($) $ in Thousands		3 Months Ended
	Oct. 16, 2014	Mar. 31, 2016	Dec. 31, 2015	Mar. 17, 2004
Junior subordinated debentures
Junior subordinated debentures	$ 5,100	$ 5,100	$ 5,100
Floating Rate Junior Subordinated Debentures
Junior subordinated debentures
Junior subordinated debentures				$ 6,000
Effective interest rate on debentures (as a percent)		3.18%
Payment of principal amount at face value required to extend maturity	$ 900
Floating Rate Junior Subordinated Debentures | 3-month Libor
Junior subordinated debentures
Debt instrument interest rate description		3-Month LIBOR
Basis spread (as a percent)		2.54%

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Fair Value (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Fair Value
Fair Value Assets Transfers between Levels Amount	$ 0
Recurring basis | Residential mortgage-backed
Fair Value
Securities available-for-sale, at fair value	13,201,000	$ 12,167,000
Recurring basis | U.S. Government and federal agency
Fair Value
Securities available-for-sale, at fair value	2,008,000	1,973,000
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Government and federal agency
Fair Value
Securities available-for-sale, at fair value	2,008,000	1,973,000
Recurring basis | Significant Other Observable Unobservable Inputs (Level 2) | Residential mortgage-backed
Fair Value
Securities available-for-sale, at fair value	$ 13,201,000	$ 12,167,000

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Fair Value - Schedule of losses recognized on assets measured at fair value on non-recurring basis (Details) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Fair Value
Losses recognized on loans	$ 0	$ 0
Impaired loans | Significant Unobservable Inputs (Level 3)
Fair Value
Impaired loans carried at fair value of collateral	$ 2,456		$ 2,557
Real estate owned. | Significant Unobservable Inputs (Level 3)
Fair Value
Real estate owned			$ 360

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Fair Value - Schedule of valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a nonrecurring basis (Details) - Fair Value, Measurements, Nonrecurring - Significant Unobservable Inputs (Level 3) - Impaired loans - Third party appraisal	3 Months Ended
	Mar. 31, 2016
Minimum
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)	(18.00%)
Maximum
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)	13.00%
Weighted Average
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)	0.00%

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Fair Value - Carrying Amounts and Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Financial Assets:
Cash and cash equivalents	$ 35,991	$ 67,839
Securities available-for-sale, at fair value	15,209	14,140
Loans receivable held for investment	327,441	306,643
Accrued interest receivable	1,091	1,077
Federal Home Loan Bank stock	2,573	2,573
Financial Liabilities:
Deposits	252,816	265,495
Federal Home Loan Bank advances	73,728	73,441
Junior subordinated debentures	3,164	3,117
Accrued interest payable	54	52
Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial Assets:
Cash and cash equivalents	35,991	67,839
Securities available-for-sale, at fair value	2,008	1,973
Accrued interest receivable	63	63
Federal Home Loan Bank stock	2,573	2,573
Significant Other Observable Unobservable Inputs (Level 2)
Financial Assets:
Securities available-for-sale, at fair value	13,201	12,167
Accrued interest receivable	34	31
Financial Liabilities:
Deposits	252,816	265,495
Federal Home Loan Bank advances	73,728	73,441
Accrued interest payable	48	46
Significant Unobservable Inputs (Level 3)
Financial Assets:
Loans receivable held for investment	327,441	306,643
Accrued interest receivable	994	983
Financial Liabilities:
Junior subordinated debentures	3,164	3,117
Accrued interest payable	6	6
Carrying Value
Financial Assets:
Cash and cash equivalents	35,991	67,839
Securities available-for-sale, at fair value	15,209	14,140
Loans receivable held for investment	319,881	304,171
Accrued interest receivable	1,091	1,077
Federal Home Loan Bank stock	2,573	2,573
Financial Liabilities:
Deposits	257,409	272,614
Federal Home Loan Bank advances	72,000	72,000
Junior subordinated debentures	5,100	5,100
Accrued interest payable	$ 54	$ 52

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Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended
	Feb. 29, 2016	Mar. 31, 2016	Mar. 31, 2015
Stock Options
Stock-based compensation
Stock based compensation expense		$ 3	$ 0
Stock Options | Senior Executive Officers
Stock-based compensation
Vesting period of option awards	5 years
Contractual term of option awards	10 years
Granted stock options (in shares)	450,000
Exercised price (in dollars per share)	$ 1.62
Fair value of stock options	$ 194
Stock option per shares (in dollars per share)	$ 0.43
Volatility	27.36%
Risk free interest rate	1.21%
Expected option term	5 years
Dividend yield	0.00%
2008 LTIP
Stock-based compensation
Shares authorized to be granted under stock compensation plan		2,000,000
2008 LTIP | Stock Options
Stock-based compensation
Contractual term of option awards		10 years
2008 LTIP | Stock Options | Maximum
Stock-based compensation
Vesting period of option awards		5 years

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Regulatory Matters (Details)	Mar. 31, 2016	Dec. 31, 2015
Capital and Regulatory Matters
Common Equity Tier 1 required for capital adequacy purposes, ratio (as a percent)	4.50%	4.50%
Tier 1 required for capital adequacy purposes, ratio (as a percent)	6.00%	6.00%
Total capital required for capital adequacy purposes, ratio (as a percent)	8.00%	8.00%
Leverage required for capital adequacy purposes, ratio (as a percent)	4.00%	4.00%
Conservation Buffer Rule Starting January 2016
Capital and Regulatory Matters
Capital conservation buffer annual increase (as a percent)	0.625%
Conservation Buffer Rule Subsequent to 2016
Capital and Regulatory Matters
Capital conservation buffer annual increase (as a percent)	0.625%
Maximum | Conservation Buffer Rule
Capital and Regulatory Matters
Capital conservation buffer (as a percent)	2.50%

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Regulatory Matters - Schedule of actual and required capital amounts and ratios (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Regulatory Matters
Tier-1 Leverage	$ 46,751	$ 46,028
Tier 1 Leverage, ratio (as a percent)	12.02%	11.56%
Common Equity Tier 1	$ 46,751	$ 46,028
Common Equity Tier 1, ratio (as a percent)	19.19%	19.45%
Tier 1	$ 46,751	$ 46,028
Tier 1, ratio (as a percent)	19.19%	19.45%
Total Capital	$ 49,814	$ 49,010
Total Capital, ratio (as a percent)	20.45%	20.71%
Leverage required for capital adequacy purposes	$ 15,560	$ 15,923
Leverage required for capital adequacy purposes, ratio (as a percent)	4.00%	4.00%
Common Equity Tier 1 required for capital adequacy purposes	$ 10,960	$ 10,650
Common Equity Tier 1 required for capital adequacy purposes, ratio (as a percent)	4.50%	4.50%
Tier 1 required for capital adequacy purposes	$ 14,614	$ 14,200
Tier 1 required for capital adequacy purposes, ratio (as a percent)	6.00%	6.00%
Total capital required for capital adequacy purposes	$ 19,485	$ 18,933
Total capital required for capital adequacy purposes, ratio (as a percent)	8.00%	8.00%

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Regulatory Matters - Schedule of actual and required capital amounts and ratios (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Basel III and Dodd Frank Rules
Tier 1 Leverage required to be Well Capitalized	$ 19,450	$ 19,903
Common Equity Tier I required to be Well Capitalized	15,832	15,383
Tier I Capital required to be Well Capitalized	19,485	18,933
Total Capital required to be Well Capitalized	$ 24,356	$ 23,667
Corrective Action Rules
Basel III and Dodd Frank Rules
Tier 1 Leverage required to be Well Capitalized (as a percent)	5.00%	5.00%
Common Equity Tier I required to be Well Capitalized (as a percent)	6.50%	6.50%
Tier I Capital required to be Well Capitalized (as a percent)	8.00%	8.00%
Total Capital required to be Well Capitalized (as a percent)	10.00%	10.00%

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Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Income Taxes
Period for which prior cumulative losses considered in assessing the realization of deferred tax assets	2 years
Valuation allowance	$ 2.4	$ 2.5
Net deferred tax assets	$ 4.6	$ 4.6

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Concentration of Credit Risk (Details)	3 Months Ended
	Mar. 31, 2016
Long-time Customer | Deposits
Concentration of Credit Risk
Percentage of concentration of risk	13.00%