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, 2017

[  ]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 [    ]
		(Do not check if a smaller reporting company)

Smaller reporting company [X] Emerging growth company [   ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Yes [   ]   No [ 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 4, 2017, 18,694,823 shares of the Registrant’s voting common stock and 8,756,396 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, 2017 and December 31, 2016	1
		Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2017 and 2016	2
		Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016	3
		Notes to Consolidated Financial Statements	4
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
	Item 4.	Controls and Procedures	28
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	29
	Item 1A.	Risk Factors	29
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
	Item 3.	Defaults Upon Senior Securities	29
	Item 4.	Mine Safety Disclosures	29
	Item 5.	Other Information	29
	Item 6.	Exhibits	29
	Signatures		30

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Financial Condition

(In thousands, except share and per share amounts)

(Unaudited)

	March 31, 2017			December 31, 2016
Assets
Cash and due from banks	$	2,584		$	1,516
Interest-bearing deposits in other banks	24,625			16,914
Cash and cash equivalents	27,209			18,430
Securities available-for-sale, at fair value	12,554			13,202
Loans receivable held for sale, at lower of cost or fair value	33,756			-
Loans receivable held for investment, net of allowance of $4,392 and $4,603, respectively	361,738			379,454
Accrued interest receivable	1,170			1,178
Federal Home Loan Bank (FHLB) stock	2,835			2,573
Office properties and equipment, net	2,494			2,479
Bank owned life insurance	2,953			2,940
Deferred tax assets, net	6,404			6,907
Other assets	3,022			1,920
Total assets	$	454,135		$	429,083
Liabilities and stockholders’ equity
Liabilities:
Deposits	$	296,564		$	287,427
FHLB advances	101,000			85,000
Junior subordinated debentures	5,100			5,100
Advance payments by borrowers for taxes and insurance	501			828
Accrued expenses and other liabilities	4,079			5,202
Total liabilities	407,244			383,557
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, 2017 and December 31, 2016; issued 21,282,647 shares at March 31, 2017 and December 31, 2016; outstanding 18,664,821 shares at March 31, 2017 and December 31, 2016	213			212
Common stock, $.01 par value, non-voting, authorized 25,000,000 shares at March 31, 2017 and December 31, 2016; issued and outstanding 8,756,396 shares at March 31, 2017 and December 31, 2016	87			87
Additional paid-in capital	45,933			45,819
Retained earnings	7,245			6,013
Unearned Employee Stock Ownership Plan (ESOP) shares	(1,154		)	(1,176		)
Accumulated other comprehensive income (loss)	(107		)	(103		)
Treasury stock-at cost, 2,617,826 shares at March 31, 2017 and December 31, 2016	(5,326		)	(5,326		)
Total stockholders’ equity	46,891			45,526
Total liabilities and stockholders’ equity	$	454,135		$	429,083

See accompanying notes to unaudited consolidated financial statements.

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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Consolidated Statements of Income and Comprehensive Income

(Unaudited)

	Three Months Ended March 31,
	2017			2016
	(In thousands, except per share)
Interest Income:
Interest and fees on loans receivable	$	3,964		$	3,429
Interest on mortgage-backed securities and other securities	75			83
Other interest income	98			103
Total interest income	4,137			3,615
Interest Expense:
Interest on deposits	574			517
Interest on borrowings	484			427
Total interest expense	1,058			944
Net interest income before loan loss provision recapture	3,079			2,671
Loan loss provision recapture	350			300
Net interest income after loan loss provision recapture	3,429			2,971
Non-Interest Income:
Service charges	121			126
Gain on sale of loans	27			-
CDFI grant	-			265
Income from litigation settlement	1,183			-
Other	28			152
Total non-interest income	1,359			543
Non-Interest Expense:
Compensation and benefits	1,987			1,903
Occupancy expense	305			293
Information services	200			206
Professional services	174			127
FDIC assessments	43			25
Office services and supplies	72			70
Other	262			255
Total non-interest expense	3,043			2,879
Income before income taxes	1,745			635
Income taxes	513			2
Net income	$	1,232		$	633
Other comprehensive (loss) income, net of tax:
Unrealized (losses) gains on securities available-for-sale arising during the period	$	(6	)	$	120
Income tax (benefit) expense	(2		)	29
Other comprehensive (loss) income, net of tax	(4		)	91
Comprehensive income	$	1,228		$	724
Earnings per common share-basic	$	0.05		$	0.02
Earnings per common share-diluted	$	0.05		$	0.02

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,
	2017			2016
	(In thousands)
Cash flows from operating activities:
Net income	$	1,232		$	633
Adjustments to reconcile net income to net cash used in operating activities:
Loan loss provision recapture	(350		)	(300		)
Depreciation	65			61
Net amortization of deferred loan origination costs	50			61
Net amortization of premiums on mortgage-backed securities	9			9
Amortization of investment in affordable housing limited partnership	49			48
Stock-based compensation expense	137			3
Earnings on bank owned life insurance	(13		)	(15		)
Originations of for-sale loans receivable	(48,605		)	-
Proceeds from sales of loans receivable held for sale	14,876			-
Gain on sale of loans	(27		)	-
Net gain on sale of REOs	-			(22		)
Net change in deferred taxes	505			-
Net change in accrued interest receivable	8			(14		)
Net change in other assets	(1,151		)	107
Net change in advance payments by borrowers for taxes and insurance	(327		)	(366		)
Net change in accrued expenses and other liabilities	(1,123		)	(788		)
Net cash used in operating activities	(34,665		)	(583		)
Cash flows from investing activities:
Net change in loans receivable held for investment	18,016			(15,471		)
Purchase of available-for-sale securities	-			(1,484		)
Prepayments on available-for-sale securities	633			526
Proceeds from sales of REO	-			382
Purchase of FHLB stock	(262		)	-
Additions to office properties and equipment	(80		)	(13		)
Net cash provided by (used in) investing activities	18,307			(16,060		)
Cash flows from financing activities:
Net change in deposits	9,137			(15,205		)
Proceeds from FHLB advances	26,000			-
Repayments of FHLB advances	(10,000		)	-
Net cash provided by (used in) financing activities	25,137			(15,205		)
Net change in cash and cash equivalents	8,779			(31,848		)
Cash and cash equivalents at beginning of the period	18,430			67,839
Cash and cash equivalents at end of the period	$	27,209		$	35,991
Supplemental disclosures of cash flow information:
Cash paid for interest	$	1,088		$	941
Cash paid for income taxes	-			-

See accompanying notes to unaudited consolidated financial statements.

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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

March 31, 2017

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, 2016 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, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.

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 May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”.  ASU 2014-09 replaced existing revenue recognition guidance for contracts to provide goods or services to customers.  The new guidance clarifies the principles for recognizing revenue and replaces nearly all existing revenue recognition guidance in U.S. GAAP.  Quantitative and qualitative disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers are also required.  ASU 2014-09 as amended by ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, is effective for interim and annual periods beginning after December 15, 2017 and is applied on either a modified retrospective or full retrospective basis.  Early adoption is permitted for interim and annual periods beginning after December 15, 2016.  The Company’s revenue is mainly comprised of net interest income from financial assets and liabilities, which is explicitly excluded from the scope of the new guidance, and to a lesser degree, noninterest income.  Adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

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 securities.  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.

4

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

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, as defined) 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 adoption is permitted.  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 expects a gross-up of its Consolidated Statements of Condition as a result of recognizing lease liabilities and right of use assets.  The Company does not expect a material impact to its recognition of operating lease expense on its Consolidated Statements of Income and Comprehensive Income.

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 fiscal years beginning after December 15, 2016, and interim periods within those fiscal years.  The Company made an election account for forfeitures when they occur.  Adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”.  ASU 2016-13 requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.  Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates.  Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses over the life of the related financial assets.  Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances.  Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. For public business entities, ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.  Early adoption is permitted.  While the Company is still evaluating the impact on its consolidated financial statements, the Company expects that ASU 2016-13 may result in an increase in the allowance for credit losses due to the following factors: 1) the allowance for credit losses will increase to provide for expected credit losses over the remaining expected life of the loan portfolio, and will consider expected future changes in macroeconomic conditions; and 2) an allowance may be established for estimated credit losses on available-for-sale debt securities.  The amount of increase will be impacted by the portfolio composition and quality, as well as the economic conditions and forecasts as of the adoption date.  The Company has begun its implementation efforts by identifying key interpretive issues, and assessing its processes and identifying the system requirements against the new guidance to determine what modifications may be required.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”.  ASU 2016-15 provides guidance on the classification of certain cash receipts and payments on the consolidated statement of cash flows in order to reduce diversity in practice.  ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.  Early adoption is permitted.  Adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”.  ASU 2016-18 requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash

5

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

equivalents in the statement of cash flows.  As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows.  ASU 2016-18 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, where the guidance should be applied using a retrospective transition method to each period presented.  Early adoption is permitted. Adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

NOTE (2) – Earnings Per Share of Common Stock

Basic earnings per share of common stock is computed pursuant to the two-class method by dividing net income available to common stockholders less dividends paid on participating securities (unvested shares of restricted common stock) and any undistributed earnings attributable to participating securities by the weighted average common shares outstanding during the period.  The weighted average common shares outstanding includes the weighted average number of shares of common stock outstanding less the weighted average number of unvested shares of restricted common stock.  ESOP shares are considered outstanding for this calculation unless unearned.  Diluted earnings per share of common stock includes the dilutive effect of unvested stock awards and additional potential common shares issuable under stock options.

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

	For the three months ended March 31,
	2017		2016
	(In thousands, except share and per share)
Net income	$	1,232	$	633
Less net income attributable to participating securities	(2)		-
Income available to common stockholders	$	1,230	$	633
Weighted average common shares outstanding for basic earnings per common share	26,616,704		29,076,708
Add: dilutive effects of assumed exercises of stock options	-		-
Add: dilutive effects of unvested restricted stock awards	70,759		-
Weighted average common shares outstanding for diluted earnings per common share	26,687,463		29,076,708
Earnings per common share – basic	$	0.05	$	0.02
Earnings per common share – diluted	$	0.05	$	0.02

Stock options for 540,625 shares of common stock for the three months ended March 31, 2017 and 2016 were not considered in computing diluted earnings per common share because they were anti-dilutive.

6

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, 2017:
Residential mortgage-backed	$	10,377	$	188	$	-	$	10,565
U.S. Government and federal agency	1,963		26		-		1,989
Total available-for-sale securities	$	12,340	$	214	$	-	$	12,554
December 31, 2016:
Residential mortgage-backed	$	11,022	$	192	$	-	$	11,214
U.S. Government and federal agency	1,960		28		-		1,988
Total available-for-sale securities	$	12,982	$	220	$	-	$	13,202

At March 31, 2017, the Bank had one U.S. Government and federal agency security with an amortized cost and an estimated fair value of $2.0 million and a contractual maturity of October 2, 2019.   At March 31, 2017, the Bank had 24 residential mortgage-backed securities with an amortized cost of $10.4 million, an estimated fair value of $10.6 million and an estimated average remaining life of 4.4 years.  Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

At March 31, 2017 and December 31, 2016, securities pledged to secure public deposits had a carrying amount of $622 thousand and $629 thousand, respectively.  At March 31, 2017 and December 31, 2016, 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, 2017 and 2016.

NOTE (4) – Loans Receivable Held for Sale

Loans receivable held for sale at March 31, 2017 totaled $33.8 million and consisted of multi-family loans.  During the three months ended March 31, 2017, multi-family loans originated for sale totaled $48.7 million and sales of multi-family loans totaled $14.8 million.  There were no loans held for sale at December 31, 2016.

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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

NOTE (5) – Loans Receivable Held for Investment

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

	March 31, 2017		December 31, 2016
	(In thousands)
Real estate:
Single family (1)	$	98,676	$	104,807
Multi-family	220,556		229,566
Commercial real estate	7,766		8,914
Church	36,153		37,826
Construction	862		837
Commercial – other	307		308
Consumer	15		6
Gross loans receivable before deferred loan costs and premiums	364,335		382,264
Unamortized net deferred loan costs and premiums	1,795		1,793
Gross loans receivable	366,130		384,057
Allowance for loan losses	(4,392)		(4,603)
Loans receivable, net	$	361,738	$	379,454

__

(1)Includes $78.5 million and $81.9 million of non-impaired purchased loans at March 31, 2017 and December 31, 2016, respectively, with no allowance for loan losses.

8

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

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

	Three Months Ended March 31, 2017
	Real Estate
	Single family			Multi- family		Commercial real estate			Church			Construction			Commercial - other		Consumer			Total
	(In thousands)
Beginning balance	$	367		$	2,659	$	215		$	1,337		$		8	$	17	$	-		$		4,603
Provision for (recapture of) loan losses	(37)			52		(140)			(226)			1			(1)		1			(350)
Recoveries	-			-		-			139			-			-		-			139
Loans charged off	-			-		-			-			-			-		-			-
Ending balance	$	330		$	2,711	$	75		$	1,250		$		9	$	16	$	1		$		4,392
	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

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 and for the periods indicated:

	March 31, 2017
	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	$	118	$	2	$	-	$	468	$	-	$	14	$	-	$	602
Collectively evaluated for impairment	212		2,709		75		782		9		2		1		3,790
Total ending allowance balance	$	330	$	2,711	$	75	$	1,250	$	9	$	16	$	1	$	4,392
Loans:
Loans individually evaluated for impairment	$	640	$	638	$	1,323	$	9,845	$	-	$	66	$	-	$	12,512
Loans collectively evaluated for impairment	98,539		221,740		6,449		25,779		855		241		15		353,618
Total ending loans balance	$	99,179	$	222,378	$	7,772	$	35,624	$	855	$	307	$	15	$	366,130

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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

	December 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	$	125	$	-	$	-	$	516	$	-	$	15	$	-	$	656
Collectively evaluated for impairment	242		2,659		215		821		8		2		-		3,947
Total ending allowance balance	$	367	$	2,659	$	215	$	1,337	$	8	$	17	$	-	$	4,603
Loans:
Loans individually evaluated for impairment	$	644	$	642	$	-	$	10,545	$	-	$	66	$	-	$	11,897
Loans collectively evaluated for impairment	104,688		230,798		8,921		26,678		827		242		6		372,160
Total ending loans balance	$	105,332	$	231,440	$	8,921	$	37,223	$	827	$	308	$	6	$	384,057

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

	March 31, 2017						December 31, 2016
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
	(In thousands)
With no related allowance recorded:
Multi-family	$	-	$	-	$	-	$	642	$	642	$	-
Commercial real estate	1,323		1,323		-		-		-		-
Church	6,620		4,226		-		5,946		3,589		-
With an allowance recorded:
Single family	640		640		118		644		644		125
Multi-family	638		638		2		-		-		-
Church	5,780		5,619		468		7,330		6,956		516
Commercial - other	66		66		14		66		66		15
Total	$	15,067	$	12,512	$	602	$	14,628	$	11,897	$	656

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.

10

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

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, 2017						Three Months Ended March 31, 2016
	Average Recorded Investment			Cash Basis Interest Income Recognized			Average Recorded Investment			Cash Basis Interest Income Recognized
	(In thousands)
Single family		$	642		$	7		$	951		$	7
Multi-family		640			11			1,206			41
Commercial real estate		331			-			1,933			56
Church		10,471			227			11,191			126
Commercial –other		66			1			67			-
Total		$	12,150		$	246		$	15,348		$	230

Cash-basis interest income recognized represents cash received for interest payments on accruing impaired loans and interest recoveries on non-accrual loans that were paid off.  Interest payments collected on non-accrual loans are characterized as payments of principal rather than payments of the outstanding accrued interest on the loans until the remaining principal on the non-accrual loans is considered to be fully collectible or paid off.  When a loan is returned to accrual status, the total interest payments that were previously applied to principal, is deferred and amortized over the remaining life of the loan. Foregone interest income that would have been recognized had loans performed in accordance with their original terms amounted to $46 thousand and $119 thousand for the three months ended March 31, 2017 and 2016, 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, 2017
	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		$	-		$	60		$	-		$	60		$	99,119
Multi-family		-			-			-			-			222,378
Commercial real estate		-			1,323			-			1,323			6,449
Church		412			-			-			412			35,212
Construction		-			-			-			-			855
Commercial - other		-			-			-			-			307
Consumer		-			-			-			-			15
Total		$	412		$	1,383		$	-		$	1,795		$	364,335
	December 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		$	-		$	64		$	-		$	64		$	105,268
Multi-family		-			-			-			-			231,440
Commercial real estate		1,324			-			-			1,324			7,597
Church		-			-			-			-			37,223
Construction		-			-			-			-			827
Commercial - other		-			-			-			-			308
Consumer		-			-			-			-			6
Total		$	1,324		$	64		$	-		$	1,388		$	382,669

11

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

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

	March 31, 2017			December 31, 2016
	(In thousands)
Loans receivable held for investment:
Commercial real estate		$	1,323		$	-
Church		2,841			2,944
Total non-accrual loans		$	4,164		$	2,944

There were no loans 90 days or more delinquent that were accruing interest as of March 31, 2017 or December 31, 2016.

Troubled Debt Restructurings

At March 31, 2017, loans classified as troubled debt restructurings (“TDRs”) totaled $10.8 million, of which $2.4 million were included in non-accrual loans and $8.4 million were on accrual status.  At December 31, 2016, loans classified as TDRs totaled $11.5 million, of which $2.5 million were included in non-accrual loans and $9.0 million were on accrual status.  The Company has allocated $602 thousand and $656 thousand of specific reserves for accruing TDRs as of March 31, 2017 and December 31, 2016, 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, 2017 and December 31, 2016, 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, 2017 and 2016.

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.

12

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

·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 and/or by the value of the underlying collateral.  Pass rated loans are not more than 59 days past due and are generally performing in accordance with the loan terms.  Based on the most recent analysis performed, the risk categories of loans by loan type as of the periods indicated were as follows:

	March 31, 2017
	Pass		Watch		Special Mention		Substandard		Doubtful		Loss
	(In thousands)
Single family	$	99,179	$	-	$	-	$	-	$	-	$	-
Multi-family	220,746		-		340		1,292		-		-
Commercial real estate	6,449		-		-		1,323		-		-
Church	26,648		1,137		271		7,568		-		-
Construction	855		-		-		-		-		-
Commercial - other	241		-		-		66		-		-
Consumer	15		-		-		-		-		-
Total	$	354,133	$	1,137	$	611	$	10,249	$	-	$	-
	December 31, 2016
	Pass		Watch		Special Mention		Substandard		Doubtful		Loss
	(In thousands)
Single family	$	105,332	$	-	$	-	$	-	$	-	$	-
Multi-family	228,522		1,274		342		1,302		-		-
Commercial real estate	6,965		-		-		1,956		-		-
Church	27,560		1,143		823		7,697		-		-
Construction	827		-		-		-		-		-
Commercial - other	242		-		-		66		-		-
Consumer	6		-		-		-		-		-
Total	$	369,454	$	2,417	$	1,165	$	11,021	$	-	$	-

NOTE (6) – 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 3.69% at March 31, 2017.  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.

13

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

NOTE (7) – 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.

14

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, 2017
	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	$	-	$	10,565	$	-	$	10,565
Securities available-for-sale - U.S. Government and federal agency	1,989		-		-		1,989
	Fair Value Measurements at December 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	$	-	$	11,214	$	-	$	11,214
Securities available-for-sale - U.S. Government and federal agency	1,988		-		-		1,988

There were no transfers between Level 1, Level 2, or Level 3 during the three months ended March 31, 2017 and 2016.

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, 2017		December 31, 2016
	(In thousands)
Impaired loans carried at fair value of collateral	$	1,683	$	1,744

There were no losses recognized on assets measured at fair value on a non-recurring basis for the three months ended March 31, 2017 and 2016.

15

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, 2017 and December 31, 2016:

	March 31, 2017
	Valuation Technique(s)	Unobservable Input(s)	Range	Weighted Average
Impaired loans	Third Party Appraisals	Adjustment for differences between the comparable sales	-2% to 0%	-1%
	December 31, 2016
	Valuation Technique(s)	Unobservable Input(s)	Range	Weighted Average
Impaired loans	Third Party Appraisals	Adjustment for differences between the comparable sales	-2% to 0%	-1%

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, 2017
	Carrying Value		Level 1		Level 2		Level 3		Total
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	27,209	$	27,209	$	-	$	-	$	27,209
Securities available-for-sale	12,554		1,989		10,565		-		12,554
Loans receivable held for sale	33,756		-		34,226		-		34,226
Loans receivable held for investment	361,738		-		-		364,723		364,723
Accrued interest receivable	1,170		71		28		1,071		1,170
Federal Home Loan Bank stock	2,835		2,835		-		-		2,835
Financial Liabilities:
Deposits	$	296,564	$	-	$	286,902	$	-	$	286,902
Federal Home Loan Bank advances	101,000		-		101,507		-		101,507
Junior subordinated debentures	5,100		-		-		4,436		4,436
Accrued interest payable	124		-		117		7		124
			Fair Value Measurements at December 31, 2016
	Carrying Value		Level 1		Level 2		Level 3		Total
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	18,430	$	18,430	$	-	$	-	$	18,430
Securities available-for-sale	13,202		1,988		11,214		-		13,202
Loans receivable held for investment	379,454		-		-		382,717		382,717
Accrued interest receivable	1,178		64		29		1,085		1,178
Federal Home Loan Bank stock	2,573		2,573		-		-		2,573
Financial Liabilities:
Deposits	$	287,427	$	-	$	278,254	$	-	$	278,254
Federal Home Loan Bank advances	85,000		-		85,748		-		85,748
Junior subordinated debentures	5,100		-		-		4,414		4,414
Accrued interest payable	154		-		147		7		154

16

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 Sale

The Company’s loans receivable held for sale are carried at the lower of cost or fair value.  The fair value of loans receivable held for sale is determined by pricing for comparable assets or by outstanding commitments from third party investors, resulting in a Level 2 classification.

(c) 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.

(d) FHLB Stock

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

(e) 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.

(f) 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.

(g) 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.

(h) 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.

17

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

NOTE (8) – Stock-based Compensation

The Company issues stock-based compensation awards to its directors and employees under the 2008 Long-Term Incentive Plan (“2008 LTIP”).  The 2008 LTIP permits the grant of non-qualified and incentive stock options, stock appreciation rights, full value awards and cash incentive for up to 2,000,000 shares of common stock.  As of March 31, 2017, there were 1,338,892 shares available for future awards under the 2008 LTIP.

No options were granted during the three months ended March 31, 2017, compared to 450,000 stock options granted to senior executive officers under the 2008 LTIP during the three months ended March 31, 2016.  These options have an exercise price of $1.62 per share, vest over five years and expire in ten years from grant date.  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 following table summarizes stock option activity during the three months ended March 31, 2017 and 2016:

	Shares	Weighted Average Exercise Price	Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Three Months Ended March 31, 2017:
Outstanding at January 1, 2017	540,625	$    2.18
Granted	-	-
Exercised	-	-
Forfeited	-	-
Outstanding at March 31, 2017	540,625	$    2.18	7.74	$  86,000
Exercisable at March 31, 2017	180,625	$    3.29	5.44	$  17,000
Three Months Ended March 31, 2016:
Outstanding at January 1, 2016	90,625	$    4.95
Granted	450,000	1.62
Exercised	-	-
Forfeited	-	-
Outstanding at March 31, 2016	540,625	$    2.18	7.74	$ 140,000
Exercisable at March 31, 2016	90,625	$    4.95	3.00	$             -

The Company recorded $10 thousand and $3 thousand of stock-based compensation expense related to stock options during the three months ended March 31, 2017 and 2016, respectively.  As of March 31, 2017, unrecognized compensation cost related to nonvested stock options granted under the plan was $152 thousand.  The cost is expected to be recognized over a period of 3.90 years.

In March 2016, the Company awarded 120,483 shares of restricted stock to its Chief Executive Officer under the 2008 LTIP.  A restricted stock award is valued at the closing price of the Company’s stock on the date of such award.  Subject to certain performance restrictions, 100,000 shares of restricted stock shall vest over a two-year period and the remaining 20,483 shares shall vest over a three-year period.  Stock-based compensation expense is recognized on a straight-line basis over the vesting period.  The Company recorded $26 thousand of stock-based compensation expense related to this award during the three months ended March 31, 2017.  No stock-based compensation expense was recorded during the three months ended March 31, 2016.  As of March 31, 2017, unrecognized compensation cost related to nonvested restricted stock award was $119 thousand.  The cost is expected to be recognized over a period of 1.17 years.

18

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

NOTE (9) – 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, 2017 and December 31, 2016, 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, 2017:
Tier 1 (Leverage)	$	46,793	10.77%	$	17,379	4.0%	$	21,723	5.0%
Common Equity Tier 1	$	46,793	15.39%	$	13,685	4.5%	$	19,767	6.5%
Tier 1	$	46,793	15.39%	$	18,246	6.0%	$	24,328	8.0%
Total Capital	$	50,602	16.64%	$	24,328	8.0%	$	30,410	10.0%
December 31, 2016:
Tier 1 (Leverage)	$	43,954	10.60%	$	16,594	4.0%	$	20,742	5.0%
Common Equity Tier 1	$	43,954	15.36%	$	12,875	4.5%	$	18,597	6.5%
Tier 1	$	43,954	15.36%	$	17,166	6.0%	$	22,888	8.0%
Total Capital	$	47,544	16.62%	$	22,888	8.0%	$	28,610	10.0%

19

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements (continued)

Effective as of May 15, 2015, the Federal Reserve Board (“FRB”) has adopted a final rule that exempts bank holding companies and savings and loan holding companies with less than $1 billion in consolidated assets, such as the Company, from the FRB’s consolidated regulatory capital requirements.

NOTE (10) – Income Taxes

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

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax asset will not be realized.  In assessing the realization of deferred tax assets, management evaluated both positive and negative evidence, including the existence of cumulative losses in the current year and the prior two years, the amount of taxes paid in available carry-back years, the forecasts of future income and tax planning strategies.  Based on this analysis, the Company determined that as of March 31, 2017, no valuation allowance was required on its deferred tax assets, which totaled $6.4 million.  As of December 31, 2016, the Company recorded no valuation allowance on its deferred tax assets of $6.9 million.

NOTE (11) – Concentration of Credit Risk

The Bank has a significant concentration of deposits with a long-time customer that accounted for approximately 11% of its deposits as of March 31, 2017.  The Bank expects to maintain this relationship with the customer.

NOTE (12) – Subsequent Event

On April 12, 2017, the Bank entered into a Mutual General Release Agreement (“Release Agreement”) with its former executive, Paul Hudson.  As part of the Release Agreement, the Salary Continuation Agreement entered into with Mr. Hudson on October 6, 2006 was terminated.  The amount accrued under this agreement was $1.2 million as of the date of termination.  As consideration for the Release Agreement, the Bank agreed to pay Mr. Hudson an amount of $500 thousand ratably over a period of four years.  Therefore, the Bank has no obligation to pay any future benefits to Mr. Hudson or any of his beneficiaries under the terms of the Salary Continuation Agreement.  The signing of the Release Agreement and the termination of the Salary Continuation Agreement are expected to increase second quarter net earnings by approximately $420 thousand, net of taxes.

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of 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, 2016.  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.

Critical Accounting Policies

Our significant accounting policies, which are essential to understanding Management’s Discussion and Analysis of Financial Condition and Results of Operations, are described in the “Notes to Consolidated Financial Statements” and in the “Critical Accounting Policies” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2016.

Overview

Total assets increased by $25.0 million during the first quarter of 2017, primarily reflecting an increase of $33.8 million in loans receivable held for sale and an increase of $8.8 million in cash and cash equivalents, which were partially offset by a decrease of $17.7 million in loans receivable held for investment.

Consistent with the increase in assets during the first quarter of 2017, we increased our total deposits by $9.1 million and FHLB advances by $16.0 million.

We recorded net income of $1.2 million, or $0.05 per diluted share, for the first quarter of 2017, compared to net income of $633 thousand, or $0.02 per diluted share, for the first quarter of 2016.  The higher earnings during the first quarter of 2017 compared to the same period in 2016 primarily resulted from an increase of $408 thousand in net interest income, an increase of $816 thousand in non-interest income, and an increase of $50 thousand in loan loss provision recaptures.  These increases were partially offset by an increase of $164 thousand in non-interest expense, and an increase in tax expense of $511 thousand, reflecting normalized tax expense after the reversal of the valuation allowance against deferred tax assets in 2016.

Results of Operations

Net Interest Income

Net interest income for the first quarter of 2017 totaled $3.1 million, representing an increase of $408 thousand, or 15%, from the $2.7 million of net interest income reported for the first quarter of 2016.  Our loan interest income increased by $535 thousand to $4.0 million for the first quarter of 2017 from $3.4 million for the first quarter of 2016.  The increase in loan interest income was driven by an increase of $78.3 million, or 25%, in the average balance of loans receivable, which increased to $395.4 million for the first quarter of 2017 from $317.1 million for the first quarter of 2016 and resulted in additional interest income of $799 thousand.  Partially offsetting this increase was the impact of a decrease of 32 basis points in the average yield on loans to 4.01% for the first quarter of 2017 from 4.33% for the first

21

quarter of 2016, which reduced loan interest income by $264 thousand.  The decrease in the average yield on loans primarily resulted from the payoff of loans with higher rates than those originated during the first quarter of 2017.

The increase in loan interest income was also partially offset by higher interest expense on deposits and borrowings for the first quarter of 2017 compared to the first quarter of 2016.  Interest expense on deposits for the first quarter of 2017 totaled $574 thousand, representing an increase of $57 thousand, or 11%, from the $517 thousand of interest expense on deposits for the first quarter of 2016.  The increase in interest expense on deposits was primarily due to an increase of $29.5 million in the average balance of deposits to $290.5 million for the first quarter of 2017 from $261.0 million for the first quarter of 2016.  The increase in the average balance of deposits primarily reflected growth in money market and certificates of deposit accounts. The average cost of deposits remained unchanged at 0.79%.

Interest expense on borrowings for the first quarter of 2017 totaled $484 thousand, representing an increase of $57 thousand, or 13%, from the $427 thousand of interest expense on borrowings for the first quarter of 2016.  The increase in interest expense on borrowings was primarily due to an increase of $19.7 million in the average balance of FHLB advances, which increased interest expense by $99 thousand.  Partially offsetting this increase was the impact of a decrease of 24 basis points in the cost of FHLB advances to 1.91% for the first quarter of 2017 from 2.15% for the first quarter of 2016, which decreased interest expense by $48 thousand.  Additionally, the cost of Debentures increased by 47 basis points to 3.61% for the first quarter of 2017 from 3.14% for the first quarter of 2016, primarily due to increases in LIBOR rates, and resulted in additional interest expense of $6 thousand.

Our net interest margin increased by 9 basis points to 2.88% for the three months ended March 31, 2017 from 2.79% for the same period in 2016 primarily due to higher rates earned on interest-earning deposits and FHLB stock, and the lower cost of FHLB advances.

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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, 2017					March 31, 2016
(Dollars in Thousands)	Average Balance		Interest		Average Yield/ Cost	Average Balance		Interest		Average Yield/ Cost
Assets
Interest-earning assets:
Interest-earning deposits	$	17,034	$	38	0.89%	$	5,856	$	4	0.27%
Federal funds sold	-		-		-	43,033		53		0.49%
Securities	12,954		75		2.32%	14,295		83		2.32%
Loans receivable (1)	395,388		3,964		4.01%	317,058		3,429		4.33%
FHLB stock	2,629		60		9.13%	2,573		46		7.15%
Total interest-earning assets	428,005		$	4137	3.87%	382,815		$	3,615	3.78%
Non-interest-earning assets	10,994					9,466
Total assets	$	438,999				$	392,281
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Money market deposits	$	31,655	$	49	0.62%	$	24,479	$	32	0.52%
Passbook deposits	39,604		31		0.31%	36,109		29		0.32%
NOW and other demand deposits	30,752		4		0.05%	29,804		5		0.07%
Certificate accounts	188,438		490		1.04%	170,574		451		1.06%
Total deposits	290,449		574		0.79%	260,966		517		0.79%
FHLB advances	91,717		438		1.91%	72,000		387		2.15%
Junior subordinated debentures	5,100		46		3.61%	5,100		40		3.14%
Total interest-bearing liabilities	387,266		$	1,058	1.09%	338,066		$	943	1.12%
Non-interest-bearing liabilities	6,146					7,716
Stockholders’ Equity	45,587					46,499
Total liabilities and stockholders’ equity	$	438,999				$	392,281
Net interest rate spread (2)			$	3,079	2.78%			$	2,671	2.66%
Net interest rate margin (3)					2.88%					2.79%
Ratio of interest-earning assets to interest-bearing liabilities					110.52%					111.46%

(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 receivable held for sale during the three months 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 $350 thousand for the first quarter of 2017 primarily due to recoveries and a decrease in ALLL requirements resulting from payoffs, classification upgrades and improvements in overall credit quality.   In comparison, we recorded a loan loss provision recapture of $300 thousand for the first quarter of 2016.  See “Allowance for Loan Losses” below for additional information.

Non-interest Income

Non-interest income for the first quarter of 2017 totaled $1.4 million, representing an increase of $816 thousand, or 150%, from $543 thousand of non-interest income for the first quarter of 2016.  The increase in non-interest income during the first quarter of 2017 was primarily the result of a $1.2 million settlement with Continental Casualty and Company and Columbia Casualty Company in connection with our claims on the Paul Ryan case.  However, we have not received any grants from the U.S. Department of the Treasury’s Community Development Financial Institutions (CDFI) Fund in the first quarter of 2017,as the year 2016 grants have not been determined and awarded, compared to a grant of $265 thousand received in the first quarter of 2016.  Additionally, 2016 results included an unusually large early withdrawal fee income of $80 thousand from a certificate of deposit.

Non-interest Expense

Non-interest expense for the first quarter of 2017 totaled $3.0 million, representing an increase of $164 thousand, or 6%, compared to $2.9 million for the first quarter of 2016.  The increase in non-interest expense during the first quarter of 2017 was primarily due to an increase of $84 thousand in compensation and benefits expense, an increase of $47 thousand in professional services expense, primarily caused by higher legal expenses resulting from legal matters in the normal course of the business, and an increase of $18 thousand in FDIC assessments.

Income Taxes

Income taxes are computed by applying the statutory federal income tax rate of 34% and the California income tax rate of 10.84% to taxable income.  We recorded income tax expense of $513 thousand for the first quarter of 2017, compared to $2 thousand for the first quarter of 2016.  The Company’s effective income tax rate was 29.3% for the first quarter of 2017 compared to less than 1% for the first quarter of 2016.  The effective tax rate for the first quarter of 2017 was lower than the statutory rate due to the application of a low-income housing tax credit.  The tax expense for the first quarter of 2016 primarily reflected the statutory minimum taxes payable to the State of California and the existence of and adjustment to the valuation allowance on deferred tax assets.  We had no valuation allowance on our deferred tax assets, which totaled $6.4 million and $6.9 million at March 31, 2017 and December 31, 2016, respectively.

Financial Condition

Total Assets

Total assets were $454.1 million at March 31, 2017, which represented an increase of $25.0 million, or 6%, from total assets of $429.1 million at December 31, 2016.  The increase in assets during the first quarter of 2017 primarily consisted of an increase of $33.8 million in loans receivable held for sale and an increase of $8.8 million in cash and cash equivalents, which were partially offset by a decrease of $17.7 million in loans receivable held for investment and a decrease of $648 thousand in securities available-for-sale.  The net growth in assets was funded by an increase in deposits, borrowings, and retained earnings.

Loans Receivable Held for Sale

Loans receivable held for sale at March 31, 2017 totaled $33.8 million and consisted of multi-family residential (“MFR”) loans.  During the first quarter of 2017, we allocated $48.7 million, or 94%, of our loan originations to the held-for-sale portfolio to maintain compliance with the loan concentration guidelines established by our primary regulator.  We sold $14.8 million of those loans generating a gain of $27 thousand.    Loan repayments on loans

24

receivable held for sale totaled $89 thousand during the first quarter of 2017.  We had no loans receivable held for sale during 2016.

Loans Receivable Held for Investment

Our gross loan portfolio decreased by $18.0 million to $366.1 million at March 31, 2017, from $384.1 million at December 31, 2016, primarily due to loan repayments.  The decrease in our loan portfolio during the first quarter of 2017 consisted of a decrease of $9.1 million in our multi-family residential real estate loan portfolio, a decrease of $6.2 million in our single family residential real estate loan portfolio, a decrease of $1.6 million in our church loan portfolio and a decrease of $1.1 million in our commercial real estate loan portfolio.

In order to comply with regulatory loan concentration guidelines, we decreased our MFR portfolio during the first quarter of 2017 by originating loans for sale and allowing repayments to exceed originations in our held for investment portfolio.  Loans originated for investment totaled $1.9 million for the first quarter of 2017, compared to loans originated for investment of $27.8 million for the first quarter of 2016.  Loan repayments for the first quarter of 2017 totaled $19.8 million, compared to $12.6 million for the first quarter of 2016.

There were no loan charge-offs or loans transferred to REO during the first quarter of 2017 and 2016.

Allowance for Loan Losses

The 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 $4.4 million, or 1.20% of our gross loans receivable held for investment, at March 31, 2017, from $4.6 million, or 1.20% of our gross loans receivable held for investment, at December 31, 2016, primarily due to loan loss provision recapture of $350 thousand, which was partially offset by recoveries of $139 thousand.  Our loan portfolio as of March 31, 2017 included $78.9 million of single family residential loans that were 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 or incurred any deterioration of credit quality in these loans since purchase.  The reduction in ALLL at March 31, 2017 compared to December 31, 2016, and the loan loss provision recapture during the first quarter of 2017, 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 credit quality metrics and the high quality of our loan originations.

As of March 31, 2017, delinquent loans totaled $1.8 million, compared to total delinquencies of $1.4 million at December 31, 2016.  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, 2017, NPLs totaled $4.2 million, compared to $2.9 million at December 31, 2016.  The increase of $1.3 million in NPLs was primarily due to the placement of a delinquent commercial real estate loan for $1.3 million 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, 2017, $2.4 million, or 58%, of our NPLs were current in their payments, compared to $2.9 million, or 100% of our NPLs, were current at December 31, 2016.  Also, in determining the ALLL, we consider the ratio of the ALLL to NPLs, which was 105.48% at March 31, 2017, compared to 156.35% at December 31, 2016.  The decrease in this ratio was due to a $1.3 million collateral dependent loan that was placed on non-accrual.  The value of the collateral securing the loan minus costs to

25

sell exceeds the loan’s carrying amount, resulting in no impairment and no specific allocation of the ALLL.

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 2017 and 2016.  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 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.  Due to prior charge-offs and increases in collateral values, the average recorded investment in NPLs was only 50% of estimated fair value less estimated selling costs as of March 31, 2017.

Recoveries during the first quarter of 2017 and 2016 totaled $139 thousand and $6 thousand, respectively.  Recoveries during the first quarter of 2017 primarily resulted from the payoff of a TDR which had been previously partially charged off.

Impaired loans at March 31, 2017 were $12.5 million, compared to $11.9 million at December 31, 2016.  The increase of $615 thousand in impaired loans was primarily due to the placement of a $1.3 million commercial real estate loan into non-accrual status which was partially offset by $708 thousand in repayments, including payoffs of $549 thousand.  Specific reserves for impaired loans were $602 thousand, or 4.80% of the aggregate impaired loan amount at March 31, 2017, compared to $656 thousand, or 5.51%, at December 31, 2016.  Excluding specific reserves for impaired loans, our coverage ratio (general allowance as a percentage of total non-impaired loans) was 1.07% at March 31, 2017, compared to 1.06% at December 31, 2016.

We believe that the ALLL is adequate to cover probable incurred losses in the loan portfolio as of March 31, 2017, 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 increased by $9.2 million to $296.6 million at March 31, 2017 from $287.4 million at December 31, 2016.  Core deposits (NOW, demand, money market and passbook accounts) increased by $2.0 million during the first quarter of 2017 and represented 35% of total deposits at March 31, 2017 and December 31, 2016.  During the first quarter of 2017, CDs increased by $7.2 million and represented 65% of total deposits at March 31, 2017 and December 31, 2016.  The increase in CDs during the first quarter of 2017 was primarily due to an increase of $12.4 million in Certificate of Deposit Account Registry Service (“CDARS”) accounts. CDARS is a deposit placement service that allows us to place our customers’ funds in FDIC-insured certificates of deposit at other banks and, at the same time, receive an equal sum of funds from the customers of other banks in the CDARS Network (“CDARS Reciprocal”).  We may also accept deposits from other institutions when we have no reciprocal deposit (“CDARS One-Way Buy”).  At March 31, 2017, we had approximately $7.7 million in CDARS Reciprocal and $33.3 million in CDARS One-Way Buy, compared to $6.9 million in CDARS Reciprocal and $21.7 million in CDARS One-Way Buy at December 31, 2016.  The increase in CDARS was partially offset by a decrease of $5.3 million in QwickRate CDs.

One customer relationship accounted for approximately 11% of our deposits at March 31, 2017.  We expect to maintain this relationship with the customer for the foreseeable future.

Borrowings

Total borrowings at March 31, 2017 consisted of advances to the Bank from the FHLB of $101.0 million, and subordinated debentures issued by the Company of $5.1 million, compared to advances from the FHLB of $85.0 million and subordinated debentures of $5.1 million at December 31, 2016.  During the first quarter of 2017, the Bank borrowed $16.0 million in term and overnight advances from the FHLB to fund loan growth.

The weighted average interest rate on FHLB advances increased 4 basis points from 1.94% at December 31, 2016 to

26

1.98% at March 31, 2017 primarily due to new advances totaling $26.0 million with an average interest rate of 1.57% and payoff of $10.0 million of overnight advances with an average interest rate of 0.55%.

Stockholders’ Equity

Stockholders’ equity was $46.9 million, or 10.33% of the Company’s total assets, at March 31, 2017, compared to $45.5 million, or 10.61% of the Company’s total assets, at December 31, 2016.  The Company’s book value was $1.71 per share as of March 31, 2017, compared to $1.66 per share as of December 31, 2016.

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 $25.7 million at March 31, 2017.

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, 2017 consisted of $27.2 million in cash and cash equivalents and $11.9 million in securities available-for-sale that were not pledged, compared to $18.4 million in cash and cash equivalents and $12.6 million in securities available-for-sale that were not pledged at December 31, 2016.

The Company’s liquidity, separate from the Bank, is based primarily on the proceeds from financing transactions, such as the private placements completed in August 2013, October 2014 and December 2016 and dividend received from the Bank in December 2016.  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 $34.7 million and $583 thousand during the quarters ended March 31, 2017 and 2016, respectively.  Net cash outflows from operating activities during the first quarter of 2017 were primarily attributable to originations of multi-family loans for the Bank’s loans held for sale portfolio.

The Company recorded consolidated net cash inflows from investing activities of $18.3 million during the three months ended March 31, 2017, compared to consolidated net cash outflows from investing activities of $16.1 million during the three months ended March 31, 2016.  Net cash inflows from investing activities during the first quarter of 2017 were primarily attributable to repayments on loans held for investment and securities available-for-sale.

The Company recorded consolidated net cash inflows from financing activities of $25.1 million during the three months ended March 31, 2017, compared to consolidated net cash outflows from financing activities of $15.2 million during the three months ended March 31, 2016.  Net cash inflows from financing activities during the first quarter of 2017 were primarily attributable to the increase in deposits and advances from the FHLB.

Capital Resources and Regulatory Capital

Our principal subsidiary, Broadway Federal Bank, 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 9 of the Notes to Consolidated

27

Financial Statements.

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, 2017.  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, 2017.  There were no significant changes during the quarter ended March 31, 2017 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.

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PART II.  OTHER INFORMATION

Item 1.       LEGAL PROCEEDINGS

None

Item 1A.    RISK FACTORS

Not Applicable

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

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 Registrant on November 13, 2014)
3.2	Bylaws of Registrant (Exhibit 3.2 to Form 10-K filed by Registrant on March 28, 2016)
10.1	Amended and Restated Employment Agreement, dated as of March 22, 2017, between Registrant and Wayne-Kent A. Bradshaw
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.

29

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 11, 2017	By:	/s/ Wayne-Kent A. Bradshaw
			Wayne-Kent A. Bradshaw
			Chief Executive Officer
Date:	May 11, 2017	By:	/s/ Brenda J. Battey
			Brenda J. Battey
			Chief Financial Officer

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EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (this “Agreement”), dated and to be effective as of March 22, 2017, is entered into by and among Broadway Financial Corporation, (“BFC”), Broadway Federal Bank, f.s.b. (the “Bank” and, together with BFC, the “Company”), and Wayne-Kent A. Bradshaw (the “Executive”).  This Agreement amends and restates in full the Employment Agreement dated March 22, 2017 previously entered into by the same parties.  As used herein, the term Company shall refer to BFC in respect of Executive’s services to BFC and to the Bank in respect of the Executive’s services to the Bank.

WHEREAS, the Executive has served as a senior executive officer of the Company and the Bank since February, 2009;

WHEREAS, the Company desires to continue to retain the Executive to serve as President and Chief Executive Officer of the Company on the terms and conditions set forth in this Agreement, and the Executive desires to provide such services on such terms and conditions;

NOW, THEREFORE, in consideration of the terms and mutual covenants herein and for other good and valuable consideration, the parties hereto agree as follows:

1.         Services, Duties and Responsibilities.

(a)        The Company hereby agrees to employ the Executive as its President and Chief Executive Officer during the service period fixed by Section 4 hereof (the “Service Period”).  The Executive shall report to the Board of Directors of BFC (the “Board”) and shall have such duties and responsibilities as are consistent with the position of President and Chief Executive Officer of a bank and holding company of similar size and complexity as the Company (the “Services”).  The Executive shall also serve on the Board to the extent he is elected for such service by the BFC stockholders, which election shall be recommended to the BFC stockholders by the appropriate committee of the Board, and the Executive shall serve on the board of directors of the Bank.  The Executive’s principal work location shall be at the Company’s principal executive offices; provided, that the Executive may be required to travel as reasonably necessary in order to perform the Executive’s duties and responsibilities hereunder.

(b)        During the Service Period, excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive shall devote substantially all of the Executive’s working time, energy and attention to the performance of his duties and responsibilities hereunder and shall faithfully and diligently endeavor to promote the business of the Company.  During the Service Period, the Executive may not, without the prior written consent of the Board, directly or indirectly, operate, participate in the management, operations or control of, or act as an executive, officer, consultant, agent or representative of, any type of competitive business or service; provided, that the Executive may, to the extent not otherwise prohibited by this Agreement, devote such amount of time

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as does not interfere with the performance of the Executive’s duties under this Agreement to engaging in community and charitable activities.

2.         Compensation.

(a)        Base Salary.  During the Service Period, the Executive shall be paid an annual base salary of $435,000 for the Executive’s services hereunder, payable in accordance with the normal and customary payroll procedures applicable to the Company’s senior executives.  The Executive’s base salary shall be subject to increase but not decrease, as determined by the Board in its discretion (such base salary, as in effect from time to time, the “Base Salary”).

(b)        Bonus Opportunity.  During the portion of the Service Period that the Company is subject to EESA and the Interim Final Rule (both as defined in Section 11(a) hereof), the Executive shall be eligible for an annual bonus opportunity, payable solely in the form of “long-term restricted stock” (as defined in the Interim Final Rule, which term includes restricted stock units) that will be granted to the Executive, of up to the maximum amount permitted by EESA and the Interim Final Rule, on the terms and conditions to be set by the compensation committee of the Board (or the Board, in the absence of the compensation committee) and set forth in a separate agreement which shall be entered into on or before March 30 of each year of grant.  Any long-term restricted stock shall be subject to the service-based vesting and the vesting limitations required by EESA and the Interim Final Rule.  The payment or accrual of bonuses, and the grant and vesting of any long-term restricted stock, pursuant to this Section 2(b) shall in all events be subject to compliance with Section 11 hereof.  The Executive shall be eligible for an annual bonus opportunity of such other type and on such performance and other conditions as shall be determined by the compensation committee of the Board (or the Board, in the absence of the compensation committee) during any period after the Company ceases to be subject to EESA and the Interim Final Rule.  Any such bonus with respect to a year in which the Service Period terminates shall be payable in full or on a pro-rated basis, depending on the nature of the Company’s bonus policy at that time.

(c)        Equity Incentives.  The Executive shall be entitled to participate in the Bank’s Employee Stock Ownership Plan (the “ESOP”) in accordance with its terms.  In addition, for any period after the Company ceases to be subject to EESA and the Interim Final Rule, the Executive shall be granted equity-based awards pursuant to the Company’s 2008 Long-Term Incentive Plan on or before March 30 each year of such types and in such amounts as shall be determined by the compensation committee of the Board (or the Board, in the absence of the compensation committee) based on the Executive’s performance for the preceding year.  Such awards shall each vest and, in the case of any stock options, become exercisable (i) to the extent of thirty three percent (33%) of the shares covered thereby, on the first anniversary of the date of grant, with the balance of each such award vesting ratably over the succeeding twenty-four (24) months for each grant, and (ii) in full in the event of the death or Disability of the Executive, the termination of the Service Period by the Company without Cause or the termination of the Service Period by the Executive for Good Reason.  Any stock options granted to the Executive pursuant to this Section 2(c) and the 2009 Stock Option Agreement (as defined in Section 14(b) hereof)

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shall be exercisable by the Executive’s estate, legal representative or heirs for a period of one (1) year after termination of the Service Period due to the death, Disability, termination without Cause or termination for Good Reason of the Executive. Unless otherwise prohibited pursuant to Section 11 hereof, all restricted stock granted pursuant to the 2016 Award Agreement (as defined in Section 14(b) hereof), and any subsequent restricted stock granted to the Executive shall vest in full in the event of the death or Disability of the Executive, the termination of the Executive’s employment without Cause, or the termination of the Executive’s employment for Good Reason.

(d)       Other Benefits.  Except as otherwise provided herein, the Executive shall be eligible to participate in all employee benefit plans and arrangements of the Company applicable to other senior executive officers, including, without limitation, the Company’s 401(k) Plan with continuation of the Company’s current employee contribution matching policy, and medical, dental, life and long-term disability insurance programs.

(e)        Vacation.  The Executive shall be entitled paid vacation in accordance with the Company’s vacation policy; provided, that the Executive shall be entitled to not less than twenty (20) days of vacation in each calendar year (or an appropriately pro-rated portion thereof for partial years).  The Executive shall be permitted to accrue permitted vacation days at such rate and carry over a maximum of fifteen (15) days of such accrued unused vacation from year to year.

(f)        Automobile Allowance.  The Company will provide the Executive with an automobile allowance in the amount of $1,500 per month during the Service Period, payable in accordance with the normal and customary practices applicable to the Company’s senior executives.

3.         Reimbursement for Expenses.

(a)        Business Expenses.  The Company shall promptly reimburse the Executive for all reasonable out-of-pocket business expenses, including, without limitation, travel expenses incurred by the Executive in connection with carrying out his responsibilities under this Agreement during the Service Period upon presentation of appropriate vouchers, receipts or other satisfactory evidence thereof and otherwise in accordance with applicable Company policies.

(b)        Memberships.  The Company shall pay or reimburse the Executive for social and trade membership dues and fees during the Service Period in accordance with the Company’s policies and procedures as in effect from time to time, which policies and procedures shall in all events include paying the social club dues of the Executive currently paid by the Company at a rate not exceeding $1,000 per month.

4.         Service Period.

(a)        Term.  The “Service Period” during which the Executive shall perform the Services for the Company pursuant to this Agreement means the period commencing on the date hereof and, subject to extension as set forth below, expiring at the

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close of business on the third (3rd) anniversary of the date hereof in the year 2020.  Prior to December 31 of each calendar year during the Service Period, the Board shall review the Executive’s performance, shall discuss the results of such review with Executive and promptly shall inform the Executive in writing whether the Board proposes to extend the Service Period for an additional year, and the results thereof shall be included in the minutes of the Board’s meeting at which the same has been considered.  If the Board informs the Executive that it proposes to extend the Service Period, and the Executive accepts such proposal, the Service Period shall be extended to end on the anniversary of the date hereof that occurs in the year immediately following the expiration date of the then existing Service Period.  Notwithstanding the foregoing, nothing herein shall bar the parties from (a) extending the Service Period under this Agreement by mutual agreement or (b) continuing the Executive’s employment by the Company without extension of this Agreement.

(b)        Termination.  Notwithstanding the foregoing, the Service Period may be terminated at any time upon the earliest to occur of the following events or any of the events identified in Section 7 hereof:

(i)         Death or Disability.  The Service Period shall terminate upon the Executive’s death or Disability.  For this purpose, “Disability” means that either (A) the Executive is deemed disabled for purposes of any group or individual long-term disability policy maintained by the Company that covers the Executive, or (B) in the good faith judgment of the Board, the Executive is substantially unable to perform the Executive’s duties under this Agreement for more than one hundred twenty (120) days, whether or not consecutive, in any twelve (12) -month period, by reason of a physical or mental illness or injury.

(ii)        Termination for Cause by the Company.  The Company may terminate the Service Period for Cause at any time effective upon written notice to the Executive.  For purposes of this Agreement, the term “Cause” shall mean the termination of the Service Period on account of (A) the Executive’s failure to substantially perform the Executive’s duties hereunder or as reasonably assigned to the Executive by the Board and consistent with the Executive’s obligations hereunder and Executive shall not have cured such failure (as determined in the reasonable judgment of the Board) within thirty (30) days after written notice from the Board; (B) the Executive’s material breach of this Agreement or any material written policy of the Company and failure of the Executive to have cured such breach (as determined in the reasonable judgment of the Board) within thirty (30) days after written notice from the Board; (C) the Executive’s willful violation of any law, rule, or regulation (other than traffic violations or similar offenses) or entry of a final cease-and-desist order against the Executive; (D) conviction of a felony or a plea of nolo contendere to a felony; or (E) conduct by the Executive constituting a misdemeanor involving a Disqualifier (as defined below) by the Executive.  “Disqualifier” means (i) fraud, moral turpitude, dishonesty, breach of fiduciary duty involving personal profit, organized crime or racketeering; (ii) willful violation of securities or commodities laws or regulations; (iii) willful violation of depository institution laws or regulations; (iv) willful violation of housing authority laws or regulations arising from the operations of the Bank; or (v) willful violation of the rules, regulations, codes of conduct or ethics of a

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self-regulatory trade or professional organization. Notwithstanding the foregoing, the Executive shall not be deemed terminated for Cause unless and until there shall have been delivered to the Executive a copy of the resolution duly adopted by the Board at a meeting of the Board called and held for that purpose (after reasonable notice to the Executive) and an opportunity for the Executive , together with counsel, to be heard before the Board), finding that, in the good faith of the Board, the Executive’s conduct justified termination for Cause and specifying the particulars thereof in reasonable detail.

(iii)       Termination without Cause by the Company.  The Company may terminate the Service Period without Cause. For the avoidance of doubt, “termination without Cause” includes, without limitation, the failure by the Company for whatever reason to extend the Service Period pursuant to Section 4(a), except if the Executive refuses in writing to accept the then one (1) year extension of the Service Period.

(iv)       Termination by the Executive for Good Reason.  The Executive may terminate the Service Period for Good Reason within ninety (90) days following the initial existence of the circumstances giving rise to Good Reason, subject to the terms and conditions of this Section 4(b)(iv).  For purposes of this Agreement, the term “Good Reason” shall mean, unless the Executive shall have consented in writing thereto, (i) the Executive’s demotion, loss of title in part or in whole, removal as a director of the Company or the Bank, loss of office, or reduction of authority, the failure by the stockholders to elect the Executive as a director of the Company or the obligation of Executive to report to any senior officer rather than directly to the Board, (ii) a reduction in the Executive’s base salary, (iii) relocation of the Executive’s primary work location more than twenty (20) miles from 5055 Wilshire Boulevard, Los Angeles, California, (iv) a material diminution of the Executive’s responsibilities, or (v) any material breach of this Agreement by the Company, including, without limitation, the failure to pay the Executive any amount when due and payable, pursuant to this Agreement, except in the event of a bona fide dispute regarding reimbursement of business expenses, provided, that the Executive shall have delivered written notice to the Company, within thirty (30) days of the initial existence of the circumstances giving rise to Good Reason, of the Executive’s intention to terminate the Service Period for Good Reason, which notice specifies in reasonable detail the circumstances claimed to give rise to the Executive’s right to terminate the Service Period for Good Reason, and the Company shall not have cured such circumstances within thirty (30) days following the Company’s receipt of such notice; provided, however, that any breach by the Company of a payment obligation hereunder must be cured within five (5) days (rather than the foregoing 30 days) following the Company’s receipt of such notice.  If, following such thirty (30)-day period (or such five (5)-day period, as applicable), the Company has not cured such circumstances and the Executive decides to proceed with the termination of the Service Period for Good Reason, such a termination will be effected by providing the Company with a Notice of Termination, which Notice of Termination shall be effective as of the date given, without any further right to cure by the Company.

(v)        Voluntary Termination by the Executive.  The Executive may voluntarily terminate the Service Period (other than for Good Reason); provided, that

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the Executive provides the Company with notice of the Executive’s intent to terminate the Service Period at least sixty (60) days in advance of the Date of Termination.

5.         Termination Procedure.

(a)        Notice of Termination.  Any termination of the Service Period by the Company or by the Executive (other than a termination on account of the Executive’s death) shall be communicated by written “Notice of Termination” to the other party in accordance with Section 14(a) hereof. The Notice of Termination must indicate the specific termination provision in this Agreement the party giving such notice believes to describe the circumstances applicable to such termination and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under such provision.

(b)        Date of Termination.  “Date of Termination” shall mean (i) if the Service Period expires pursuant to Section 4(a) hereof, the date on which the expiration of the Service Period occurs; (ii) if the Service Period is terminated due to the Executive’s death or Disability, the date of the Executive’s death or the date on which the Notice of Termination is received by the Executive that the Board made its determination of Disability in accordance with Section 4(b)(i) (A) or (B) hereof, (iii) if the Company terminates the Service Period for Cause, the date on which the Notice of Termination is received by the Executive; (iv) if the Executive terminates the Service Period for Good Reason, the date on which the Notice of Termination is given by the Executive (or such earlier date as may be agreed to by the Company); (v) if the Executive voluntarily terminates the Service Period (other than for Good Reason), the date specified in the Notice of Termination, which date shall be no earlier than sixty (60) days after the date such notice is given pursuant to Section 4(b)(v) hereof, unless otherwise agreed to by the parties; and (vi) if the Service Period is terminated for any other reason, the date on which a Notice of Termination is received or any later date (within 30 days, or any alternative time period agreed upon by the parties, after the giving of such notice) as set forth in such Notice of Termination. Notwithstanding the foregoing, if the party receiving a Notice of Termination notifies the other party that a dispute exists concerning the appropriate characterization of the subject termination for purposes of determining the Executive’s entitlement to Accrued Obligations and Severance Payments, and any other benefits hereunder, the Date of Termination shall be the date on which the dispute shall be finally resolved whether by mutual agreement of the parties, by a binding arbitration award, or by a final non-appealable judgment or order by a court of competent jurisdiction, provided that nothing herein modifies the mandatory arbitration provisions set forth in Section 10 hereof.

(c)        Continuation of Payment. The Company shall continue to pay the Executive’s full compensation in effect when the Notice of Termination giving rise to the dispute described in subsection (b) above was given (including, but not limited to, the Executive’s then Base Salary) and continue the Executive as a participant in all employee benefit plans and arrangements of the Company in which the Executive was participating when the notice of dispute was given, until the dispute is finally resolved in accordance with this Agreement. Amounts paid under this Section 5(c) shall not be offset against, or reduce, any other amounts due to the Executive pursuant to this Agreement.

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6.         Rights and Obligations Upon Termination of the Service Period.

(a)        Termination by the Company for Disability or without Cause, or by the Executive for Good Reason.  In the event of the termination of the Service Period by the Company for Disability or without Cause, or termination of the Service Period by the Executive for Good Reason, and to the extent permitted by applicable law and regulations, including, without limitation, those referred to in Section 11 hereof, the Company shall pay the Executive, and the Executive shall be entitled to: (i) any unpaid portion of the Base Salary through the Date of Termination; (ii) any unreimbursed business expenses in accordance with Section 3(a) hereof; (iii) the rights set forth in the Stock Option Agreement, the 2016 Award Agreement and any subsequent restricted stock award granted pursuant to the BFC 2008 Long Term Incentive Plan, as the sane may be amended, or any other similar plan adopted by BFC; and (iv) any vested benefits to which the Executive is entitled under the terms of the Company’s employee benefit plans and programs, including, without limitation, the ESOP, subject to the terms of such plans and programs (collectively the “Accrued Obligations”).  In addition, the Company shall continue to pay the Executive’s monthly Base Salary (i.e., one-twelfth (1/12th) of Executive’s annual Base Salary in effect as of the date immediately preceding the date of termination of employment, or the date immediately prior to the initial existence of circumstances giving rise to Good Reason, as applicable) for (i) thirty-six (36) months (the “Severance Period”) regardless of the then remaining portion of the Service Period (each monthly salary continuation payment shall be deemed to be a separate installment for purposes of Section 409A of the Code) commencing with the first calendar month following the Date of Termination and (ii) the Company shall continue during the Severance Period to pay the automobile allowance and social club dues provided for in Sections 2(f) and 3(b) hereof, and shall continue to pay the Executive for life, long-term disability, medical and dental insurance premiums in manner consistent with the Company’s obligations to make such payments pursuant to Section 2(d) (the payments described in (i) and (ii) being collectively referred to herein as the “Severance Payments”). All Severance Payments shall be payable in accordance with normal and customary payroll procedures applicable to the Company’s senior executives, subject to Section 6(d) hereof. Notwithstanding the foregoing provisions of this Section 6(a): (i) the Executive’s entitlement to the Severance Payments shall be subject to and conditioned upon the Executive delivering to the Company an Irrevocable Release not later than sixty (60) days after the date of the Executive’s termination of employment; (ii) if such 60-day period following the Executive’s termination of employment begins in one calendar year and ends in another, the Severance Payments shall, to the extent required in order to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), commence on the first payroll date following the later of (A) the end of the calendar year in which the Executive’s termination of employment occurs or (B) the date the Executive satisfies the Irrevocable Release requirement; and (iii) the Executive’s entitlement to the Severance Payments shall be subject to and conditioned upon the Executive complying in all material respects with Sections 8 and 9 of this Agreement.  “Irrevocable Release” means a mutual general release of claims in the form affixed hereto marked Exhibit A (except with the date of termination of employment, the date of such Irrevocable Release and other indicated information filled in) that has been executed by the Executive and for which the revocation period under Age Discrimination in Employment Act of 1967, as amended, and the terms of the release have

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expired.  For the avoidance of doubt, this Section 6(a) shall be subject to the limitations of Section 11 of this Agreement.

(b)        Death.  If the Service Period is terminated as a result of the Executive’s death, the Executive or the Executive’s estate or beneficiaries, as the case may be, shall be entitled to solely the Accrued Obligations.

(c)        Termination by the Company for Cause or by the Executive Voluntarily.  If the Service Period is terminated by the Company for Cause or voluntarily by the Executive (other than for Good Reason), the Executive shall be entitled to solely the Accrued Obligations.

(d)       Change in Control.

(i)         In the event that the employment of the Executive by the Company is terminated by the Company without Cause or by the Executive for Good Reason at any time within two (2) years after a Change in Control (but only if such Change in Control also constitutes a “change in control event” within the meaning of Treas. Reg. Section 1.409A-3(i)(5)) has occurred, the Company shall pay to the Executive, and the Executive shall be entitled to receive, a single lump sum payment of the present value, as determined using a discount rate equal to the Applicable Federal Rate (as defined below) in effect at the time of such determination, of all of the payments provided for in Section 6(a) within ten (10) days after such termination.  As used herein the term “Applicable Federal Rate” means the rate set forth from time to time in Table 1 of the Applicable Federal Rate Rulings of the Internal Revenue Service, or any official successor publication, for debt instruments maturing within three years and having annual compounding.

(ii)        As used herein, the term “Change in Control” shall mean an event with respect to the Company of a nature that (i) would be required to be reported in response to Item 5.01 of a current report filed on Form 8-K pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as in effect on the date of this Agreement; or (ii) results in any person acquiring control of the Bank or the Company within the meaning of the Home Owners’ Loan Act of 1933, as amended, and the rules and regulations Board of Governors of the Federal Reserve System (the “FRB”) thereunder, (provided, that in applying the definition of change in control as set forth under such rules and regulations, the Board shall substitute its judgment for that of the FRB); and, without limitation, such an acquisition of control shall be deemed to have occurred at such time as (A) any “person” (as that term is used in Sections 13(d) and 14(d) of the Exchange Act and the regulations of the Securities and Exchange Commission (the “SEC”) thereunder, including any such persons that may be deemed to be acting in concert with respect to the Bank or the Company, or the acquisition, ownership or voting of Bank or Company securities) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act and the regulations of the SEC thereunder, directly or indirectly, of securities of the Bank or the Company representing fifty percent (50%) or more of the Bank’s or the Company’s outstanding securities except for any securities purchased by any tax qualified employee benefit plan of the Company or the Bank ; or (B) individuals who constitute the Board as of the date of this Agreement (the “Incumbent Board”) cease for

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any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least three-quarters (3/4) of the directors then comprising the Incumbent Board, or whose nomination for election by the Company’s stockholders was approved by a nominating committee serving under an Incumbent Board, shall be, for purposes of this clause (B), considered as though such person were a member of the Incumbent Board; or (C) a plan of liquidation reorganization, merger, consolidation sale of all or substantially all the assets of the Bank or the Company or similar transaction in which the Bank or the Company is not the resulting entity is approved by the Board and the stockholders of the Company or otherwise occurs; or (D) solicitations of stockholders of the Company, by someone other than the Incumbent Board of the Company, seeking stockholder approval of a plan of reorganization, merger or consolidation of the Company or Bank or a similar transaction with one or more corporations as a result of which the outstanding shares of the Company’s voting common stock are exchanged for or converted into cash or property or securities not issued by the Bank or the Company shall be distributed; or (E) a tender offer is made for twenty percent (20%) or more of the voting securities of the Bank or the Company.

7.         Other Termination Provisions.

(a)        If the Executive is suspended and/or temporarily prohibited from participating in the conduct of the Company’s affairs by a notice served under section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(3) or (g)(1)), the Company’s obligations under this Agreement shall be suspended as of the date of service unless stayed by appropriate proceedings.  If the charges in the notice are dismissed or otherwise withdrawn, the Company shall (but subject in all events to the requirements of Section 409A of the Code) (i) pay the Executive all of the compensation withheld while the Company’s obligations under this Agreement were suspended, and (ii) reinstate all of its obligations which were suspended.

(b)        If the Executive is removed and/or permanently prohibited from participating in the conduct of the Company’s affairs by an order issued under section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(4) or (g)(1)), all obligations of the Company under this Agreement shall terminate as of the effective date of the order, but vested rights of the Executive shall not be affected.

(c)        If the Company is in default (as the term “default” is defined in section 3(x)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(x)(1)), all obligations under this Agreement shall terminate as of the date of default, but vested rights of the Executive shall not be affected.

8.         Non-Solicitation.

(a)        During the period of the Executive’s employment by the Company, whether pursuant to this Agreement or otherwise, and for the twelve (12) -month period following the termination of the Executive’s employment with the Company for any reason, the Executive will not, without the written consent of the Company, directly or indirectly:

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(i)         influence or attempt to influence any customer of the Company or any of its affiliates to discontinue its use of the Company’s (or such affiliate’s) services or to divert such business to any other person, firm or corporation; provided; however, that a broad and general advertisement or solicitation not specifically targeting or intending to target customers of the Company or any of its affiliates shall not be deemed a violation of this Section 8; or

(ii)        interfere with, disrupt or attempt to disrupt the relationship, contractual or otherwise, between the Company or any of its affiliates and any of its respective employees, customers, suppliers, principals, distributors, lessors or licensors.  Efforts by the Executive, whether direct or indirect, (A) to solicit or assist any other person or entity in soliciting any employee of the Company or any of its affiliates to perform services for any entity (other than the Company or any of its affiliates) or (B) to encourage any employee of the Company, or any of its affiliates to leave their employment with the Company or any of its affiliates shall be in violation of this Section 8.  A person’s response to a broad and general advertisement or solicitation not specifically targeting or intending to target employees of the Company or any of its affiliates shall not be deemed a violation of this Section 8.

(b)        In the event the Executive materially breaches any of the provisions contained in Section 8(a) hereof and the Company seeks compliance with such provisions by judicial proceedings, the time period during which the Executive is restricted by such provisions shall be extended by the time during which the Executive has been in violation of any such provision and any period of litigation required to enforce the Executive’s obligations under this Agreement.

(c)        The Executive and the Company intend that Section 8 of this Agreement be enforced as written.  However, if one or more of the provisions contained in Section 8 shall for any reason be held to be unenforceable because of the duration or scope of such provision or the area covered thereby, the Executive and the Company agree that the court making such determination shall have the full power to reform, by “blue penciling” or any other means, the duration, scope and/or area of such provision and in its reformed form such provision shall then be enforceable and shall be binding on the parties.

9.         Confidentiality; Non-Disclosure.

(a)        The Executive hereby agrees that, during the Service Period and thereafter, he will hold in strict confidence any proprietary or Confidential Information related to the Company or any of its affiliates.  For purposes of this Agreement, the term “Confidential Information” shall mean all information of the Company or any of its affiliates (in whatever form) that is not generally known to the public, including without limitation any inventions, processes, methods of distribution, customer lists or trade secrets.

(b)        The Executive hereby agrees that upon the termination of the Service Period, the Executive shall not take, without the prior written consent of the Company, any business plans, strategic plans or reports or other document (in whatever

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form) of the Company or any of its affiliates, which is of a confidential nature relating to the Company or any of its affiliates.

10.       Dispute Resolution; Injunctive Relief.

(a)        Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including without limitation the determination of the scope or applicability of this Section 10(a), shall be determined by arbitration in Los Angeles, California before a single arbitrator who is a retired judge on the panel of JAMS.  If the parties are unable to agree upon the selection of one arbitrator, any party may request JAMS to appoint such arbitrator. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures.  The decision of the arbitrator shall be final and binding on the parties. The scope of discovery shall be determined by the arbitrator. The prevailing party shall be entitled to recover reasonable attorneys’ fees and costs in accordance with Section 13(b). Judgment on the arbitration award may be entered in any court having appropriate jurisdiction.  This Section 10(a) shall not preclude parties from seeking provisional remedies in aid of arbitration from a court having appropriate jurisdiction, nor shall it limit the rights of the Company set forth in Section 10(b) hereof.

(b)        The parties hereto agree that it would not be possible to measure in money the damages that would be suffered by the Company and its affiliates in the event that the Executive were to breach any of the restrictive covenants set forth in Sections 8 and 9 hereof (the “Restrictive Covenants”).  In the event that the Executive breaches any of the Restrictive Covenants, the Company shall be entitled to an injunction restraining the Executive from violating such Restrictive Covenants (without posting any bond).  If the Company shall institute any action or proceeding to enforce any such Restrictive Covenant, the Executive hereby waives the claim or defense that the Company or any of its affiliates has an adequate remedy at law and agrees not to assert in any such action or proceeding the claim or defense that the Company or any of its affiliates has an adequate remedy at law.

11.       TARP and Golden Parachute Restrictions.

(a)        Notwithstanding anything herein to the contrary: (i) any payments made to the Executive pursuant to this Agreement or otherwise are subject to and conditioned upon their compliance with 12 U.S.C. 1828(k) and 12 C.F.R. Part 359 regarding golden parachute and indemnification payments; (ii) no annual bonus, incentive compensation, severance pay, or golden parachute payments or benefits shall be paid, provided, or accrued under this Agreement or otherwise to the extent it would violate Section 111 of Emergency Economic Stabilization Act of 2008, as amended (“EESA”), and the Interim Final Rule (as hereinafter defined); (iii) no payment or benefit shall be paid or provided under this Agreement or otherwise to the extent that it would violate any agreement between or among the Company and the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency or any other governmental entity or agency, provided that the Company shall use commercially reasonable efforts to negotiate the authority and right to make all payments and provide all benefits to the

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Executive as and when contemplated by this Agreement; and (iv) subject to, and in accordance with, the interim final rule promulgated pursuant to Sections 101(a), 101(c)(5), and 111 of EESA (the “Interim Final Rule”), the Executive shall be required to repay to the Company the amount of any bonus payment (as defined in the Interim Final Rule) made during the TARP period (as defined in the Interim Final Rule) to the extent that the bonus payment was based on materially inaccurate financial statements (which includes, but is not limited to, statements of earnings, revenues, or gains) or any other materially inaccurate performance metric criteria.

(b)        In the event that the amounts and benefits payable pursuant to this Agreement, when added to other amounts and benefits which may become payable to the Executive by the Company and any affiliated company, are such that the Executive becomes subject to the excise tax provisions of Section 4999 of the Code relating to “excess parachute payments” as defined for purposes of Section 280G of the Code, the Company shall pay the Executive such additional amount or amounts as will result in the Executive’s retention of a net amount, after the payment of all federal, state and local excise, employment and income taxes on such payments and the value of such benefits, equal to the net amount the Executive would have retained had the initially calculated payment and benefits not been subject to such excise tax provisions.  For purposes of the preceding sentence, the Executive shall be deemed to be subject to the highest marginal federal, relevant state and relevant local tax rate applicable to an individual resident in Los Angeles, California.  All calculations required to be made under this subsection shall be made by the Company’s independent public accountants, subject to the right of Executive’s representative to review the same.  All such amounts required to be paid by this Section shall be paid at the time any withholding may be required by the Company, or any taxes may be required to be paid by the Executive, under applicable law, and any additional amounts to which the Executive may be entitled shall be paid or reimbursed no later than fifteen (15) days following confirmation of such amount by the Company’s independent public accountants.  In the event any amounts paid hereunder are subsequently determined to be in error, due to estimates required for calculation of such payments being proving to be inaccurate or otherwise, the parties hereto agree to reimburse each other to correct such error, as appropriate, and to pay interest thereon at the applicable federal rate (as determined pursuant to Code Section 1274) for the period of time such erroneous amount remained outstanding and unreimbursed.  The parties hereto recognize that the actual implementation of the provisions of this Section 8(b) are complex and agree to deal with each other in good faith to resolve any questions or disagreements arising with respect hereto.

12.       Section 409A.

(a)        This Agreement is intended to comply with the requirements of Section 409A of the Code (including the exceptions thereto), to the extent applicable, and the parties’ Agreement shall be interpreted in accordance with such requirements.  If any provision contained in the Agreement conflicts with the requirements of Section 409A of the Code (or the exemptions intended to apply under the Agreement), the Agreement shall be deemed to be reformed to comply with the requirements of Section 409A of the Code (or the applicable exemptions thereto).  Notwithstanding anything to the contrary herein,

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for purposes of determining the Executive’s entitlement to the Severance Payments, (i) the Service Period shall not be deemed to have terminated unless and until the Executive incurs a “separation from service” as defined in Section 409A of the Code, and (ii) the term “Date of Termination” shall mean the effective date of the Executive’s separation from service.  Reimbursement of any expenses provided for in this Agreement shall be made promptly upon presentation of documentation in accordance with the Company’s policies (as applicable) with respect thereto as in effect from time to time (but in no event later than the end of calendar quarter following the year such expenses were incurred); provided, however, that in no event shall the amount of expenses eligible for reimbursement hereunder during a calendar year affect the expenses eligible for reimbursement in any other taxable year.  Notwithstanding anything to the contrary herein, if a payment or benefit under this Agreement is due to a “separation from service” for purposes of the rules under Treas. Reg. § 1.409A-3(i)(2) (payments to specified employees upon a separation from service) and the Executive is determined to be a “specified employee” (as determined under Treas. Reg. § 1.409A-1(i) and related Company procedures), such payment shall, to the extent necessary to comply with the requirements of Section 409A of the Code, be made on the later of (x) the date specified by the foregoing provisions of this Agreement or (y) the date that is six (6) months after the date of the Executive’s separation from service (or, if earlier, the date of the Executive’s death).  Any installment payments that are delayed pursuant to this Section 12 shall be accumulated and paid in a lump sum on the first day of the seventh month following the Date of Termination (or, if earlier, upon the Executive’s death) and the remaining installment payments shall begin on such date in accordance with the schedule provided in this Agreement.  The Severance Payments are intended not to constitute deferred compensation subject to Section 409A of the Code to the extent such Severance Payments are covered by (i) the “short-term deferral exception” set forth in Treas. Reg. § 1.409A-1(b)(4), (ii) the “two times severance exception” set forth in Treas. Reg. § 1.409A-1(b)(9)(iii), or (iii) the “limited payments exception” set forth in Treas. Reg. § 1.409A-1(b)(9)(v)(D).  The short-term deferral exception, the two times severance exception and the limited payments exception shall be applied to the Severance Payments in order of payment in such manner as results in the maximum exclusion of such Severance Payments from treatment as deferred compensation under Section 409A of the Code.  Each installment of the Severance Payments shall be deemed to be a separate payment for purposes of Section 409A of the Code.

13.       Legal Fees.

(a)        The Company shall promptly reimburse the Executive for his reasonable legal fees incurred in connection with the negotiation and preparation of this Agreement.

(b)        In the event of a dispute between the parties hereto arising out of or relating to this Agreement, the prevailing party in any resulting arbitration proceeding or litigation permitted under the terms of this Agreement shall be entitled to recover such party’s reasonable attorneys’ fees and costs in addition to any other relief to which such party shall be entitled.  The determination of which party is the prevailing party shall be made by the arbitrator or court before whom such arbitration or litigation is conducted.

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14.       Miscellaneous.

(a)        Any notice or other communication required or permitted under this Agreement shall be effective only if it is in writing and shall be deemed to be given when delivered personally or one (1) day after it is sent by a reputable overnight courier service (with evidence of delivery) and, in each case, addressed as follows (or if it is sent through any other method agreed upon by the parties):

If to BFC:

Broadway Financial Corporation
Attn: Board of Directors
5055 Wilshire Boulevard, Suite 500
Los Angeles, CA 90036

If to the Bank:

Broadway Federal Bank, f.s.b.
Attn: Board of Directors
5055 Wilshire Boulevard, Suite 500
Los Angeles, CA 90036

If to the Executive:

Wayne-Kent A. Bradshaw
23265 Bluebird Drive

Calabasas, CA 91302

or to such other address as any party hereto may designate by notice to the others.

(b)        This Agreement together with the BFC Non-Statutory Stock Option Agreement dated as of March 18, 2009 (the “2009 Stock Option Agreement”), the 2016 Award Agreement dated as of March 30, 2016 (the “2016 Award Agreement”), and the rights of the Executive pursuant to the ESOP shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof, and supersede and replace any and all prior understandings or agreements with respect to the subject matter hereof.

(c)        Only an instrument in writing signed by the parties hereto may amend this Agreement, and any provision hereof may be waived only by an instrument in writing signed by the party or parties against whom or which enforcement of such waiver is sought.  The failure of any party hereto at any time to require the performance by any other party hereto of any provision hereof shall in no way affect the full right to require such performance at any time thereafter, nor shall the waiver by any party hereto of a breach of any provision hereof be taken or held to be a waiver of any succeeding breach of such provision or a waiver of the provision itself or a waiver of any other provision of this Agreement.

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(d)       This Agreement is binding on and is for the benefit of the parties hereto and their respective successors, assigns, heirs, executors, administrators and other legal representatives.  Neither this Agreement nor any right or obligation hereunder may be assigned by the Executive, except as permitted hereunder.

(e)        The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume this Agreement in the same manner and to the same extent that the Company would have been required to perform it if no such succession had taken place.  As used in this Agreement, the term “Company” shall mean the Company and any such successor (or successors) that assumes this Agreement, by operation of law or otherwise. Notwithstanding the foregoing, no such assignment or assumption shall relieve the Company of any obligations hereunder.

(f)        The parties hereto shall cooperate with each other and take all actions, including obtaining, any governmental or stockholder approval, that any of them may determine in good faith to be required to carry out the terms of this Agreement.

(g)        The Company may withhold from any amounts payable to the Executive hereunder all federal, state, city or other taxes that the Company may reasonably determine are required to be withheld pursuant to any applicable law or regulation (it being understood, that the Executive shall be responsible for payment of all taxes in respect of the payments and benefits provided herein).

(h)        In the event that the Executive shall perform services for the Bank or any other affiliate or subsidiary of BFC, any compensation or benefits provided to the Executive by such other employer shall be applied to offset the obligations of BFC hereunder, it being intended that this Agreement set forth the aggregate compensation and benefits payable to the Executive for all services to the Company and all of its affiliates and subsidiaries.  BFC shall reimburse the Bank for compensation or benefits paid or provided by the Bank to the Executive to the extent attributable to the Executive’s performance of services for BFC in accordance with the applicable reimbursement policies of BFC and the Bank.

(i)         This Agreement shall be governed by and construed in accordance with the laws of the State of California, without reference to its principles of conflicts of law.

(j)         This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.  A facsimile of a signature shall be deemed to be and have the effect of an original signature.

(k)        The headings in this Agreement are for convenience of reference only and shall not be a part of or control or affect the meaning of any provision hereof.

[signature page follows]

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IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the date first written above.

Broadway Financial Corporation
/s/ Virgil Roberts
Name:	Virgil Roberts
Title:	Chairman of the Board
Broadway Federal Bank, f.s.b.
/s/ Virgil Roberts
Name:	Virgil Roberts
Title:	Chairman of the Board
/s/ Wayne-Kent A. Bradshaw
Wayne-Kent A. Bradshaw

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EXHIBIT A

MUTUAL GENERAL RELEASE OF CLAIMS

This Mutual General Release of Claims (“Agreement”) is dated and executed as of ________  ___, ______ (“Execution Date”), by and among Broadway Financial Corporation (“BFC”), Broadway Federal Bank, f.s.b. (the “Bank” and together with BFC, the “Company”), and Wayne-Kent A. Bradshaw (“Executive”).  Each of the parties hereto is referred to individually as a “Party” and collectively as the “Parties”.

RECITALS

A.        The Company and Executive entered into that certain Employment Agreement dated as of March 22, 2017 (“Employment Agreement”).  All capitalized terms herein have the same meaning ascribed to them in the Employment Agreement, unless otherwise defined herein.

B.        This Agreement is the mutual general release contemplated by Section 6 of the Employment Agreement.

C.        Effective as of __________ ___, ________, Executive’s employment by the Company ceased pursuant to Section1 of the Employment Agreement, a copy of which is affixed hereto marked Exhibit A and incorporated by reference herein.

Now, therefore, in consideration of the recitals above, and the mutual covenants and conditions set forth herein, the Parties agree as follows:

1.         Effective Date.  The term “Effective Date” means the date that is eight (8) calendar days after the Execution Date, provided Executive has not revoked his consent to this Agreement within seven (7) calendar days after the Execution Date.  If the Effective Date falls on a weekend or holiday, the Effective Date shall be the business day immediately following such weekend or holiday.  If Executive revokes his consent to this Agreement within seven (7) calendar days after the Execution Date, (i) there shall be no Effective Date, (ii) Executive shall not be entitled to any portion of the Separation Payments, and (iii) no Party shall have any obligations under this Agreement.

2.         Accrued Obligations and Separation Payments.  The Company, jointly and severally, shall pay the Executive, and the Executive shall be entitled to receive payment of the Accrued Obligations pursuant to and in accordance with Section 6 of the Employment Agreement. The Company, jointly and severally, shall pay Executive the Severance Payments pursuant to and in accordance with Section 6 of the Employment Agreement.

3.         Survival of Employment Agreement Provisions.  Executive and the Company acknowledge and agree that Sections 6(a), 6(d), 8, 9, 10, 11, 12, 13 and 14, together with all subsections thereof, of the Employment Agreement shall remain in full force and effect, and nothing herein terminates, amends or otherwise modifies any provision therein.

__________________________

1  Insert as applicable: “4(b)(i),” “4(b)(iii)” or “4(b)(iv).”

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4.         Executive Release.

4.1       If the Effective Date occurs, Executive for himself and on behalf of his heirs, beneficiaries, successors and assigns, hereby fully releases and discharges (i) the Company and its successors, predecessors and assigns, and (ii) each of the respective past and present shareholders, directors, officers, employees, agents, representatives, attorneys and accountants of the persons and entities described in clause (i) (the persons and entities described in clauses (i) and (ii), collectively, the “Company Releasees”), and each of them of and from, without limitation, any and all rights, claims, liabilities, losses or expenses of any kind whether arising out of, from, or related to Executive’s employment relationship with any of the Company Releasees, termination of Executive’s employment, or arising out of any other matter between Executive and the Company Releasees through and including the Execution Date.  The claims released in this Agreement include, but are not limited to, claims based on tort, contract (express or implied and oral or written), or any federal state, or local law, statute, regulation or ordinance.  By way of example and not in limitation, this release includes any claims arising under federal and state wage and hour laws, the Equal Pay Act; the Family and Medical Leave Act of 1993; Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act and the California Fair Employment and Housing Act, the California Labor Code, the Pregnancy Disability Leave Act, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, all claims under the Employee Retirement Income Security Act, as well as any claims asserting wrongful termination, harassment, discrimination, breach of contract, breach of the implied (and any explicit) covenant of good faith and fair dealing, infliction of emotional distress, misrepresentation, interference with contract or prospective economic advantage, defamation, invasion of privacy, and claims related to disability.  Such released claims also include claims for wages or other compensation due, severance pay, bonuses, sick leave, vacation pay, insurance or any other fringe benefit.  Notwithstanding the foregoing, nothing herein waives (i) any rights or claims Executive may have that cannot lawfully be waived by agreement of the Parties, including, but not limited to, workers’ compensation benefits, unemployment insurance benefits, and his indemnification rights under California Labor Code Sections 2800, et seq., (ii) Executive’s rights to payment of the Accrued Obligations and the Severance Payments in accordance with this Agreement, (iii) Executive’s vested rights pursuant to the 2009 Stock Option Agreement, the 2016 Award Agreement and all subsequent restricted stock awards granted to Executive by the Company, if any, (iv) Executive’s rights under any Company plans that by their terms survive employment termination, including, without limitation, the Bank’s Employee Stock Ownership Plan, (v) Executive’s rights to indemnification pursuant to BFC’s certificate of incorporation and bylaws and the Bank’s charter and bylaws, and (vi) any and all Executive’s rights arising out of, related to, or in connection with this Agreement (collectively, the “Executive Reserved Claims”). In addition, nothing herein shall prevent the Equal Employment Opportunity Commission from investigating or pursuing any matter that it deems appropriate; provided, however, Executive understands and agrees that, except as otherwise arising out of or related to this Agreement, Executive is not and shall not be entitled to seek any further monetary compensation from any Company Releasee and that any remedies that may be available to Executive are entirely superseded by the releases contained in this Agreement.

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4.2       Except for the Executive Reserved Claims, Executive understands and agrees that the claims released are intended to and do include any and all claims of every nature and kind whatsoever, whether known or unknown, suspected or unsuspected, which Executive has or may have against any of the Company Releasees and Executive hereby waives any and all rights Executive has or may have under Section 1542 of the California Civil Code which provides:

“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”

Notwithstanding the provisions of Section 1542, as well as laws of similar effect, and for the purpose of implementing a full and complete release and discharge of the parties and concerns herein released, Executive expressly acknowledges that this Agreement is intended to include in its effect, without limitation, all claims which Executive does not know or suspects to exist in his favor at the time of execution hereof, and that all such claims are included within, and extinguished and discharged by, this Agreement, excluding the Executive Reserved Claims.  Executive acknowledges that this release constitutes an unconditional general release of any and all known or unknown claims that Executive may have against any Company Releasees, excluding the Executive Reserved Claims, despite the fact that Executive may become aware of claims in the future which Executive did not consider prior to signing this Agreement.

5.         Company Release.

5.1       If the Effective Date occurs, each of BFC and the Bank, for itself and on behalf of its respective stockholders, directors, successors and assigns, hereby fully releases and discharges Executive and Executive’s heirs, beneficiaries, successors and assigns (collectively, the “Executive Releasees”), and each of them of and from, without limitation, any and all rights, claims, liabilities, losses or expenses of any kind whether arising out of, from, or related to Executive’s employment relationship with the Company, termination of Executive’s employment or the Employment Agreement through and including the Execution Date.  The claims released in this Agreement include, but are not limited to, claims based on tort, contract (express or implied and oral or written), or any federal state, or local law, statute, regulation or ordinance.  By way of example and not in limitation, this release includes any claims asserting breach of contract, breach of fiduciary duty, the covenant of good faith and fair dealing, misrepresentation, or interference with contract or prospective economic advantage.  Notwithstanding the foregoing, nothing herein waives any claims against Executive for (i) claims arising from or relating to this Agreement, (ii) claims arising from or relating to the 2009 Stock Option Agreement, (iii) claims arising from or relating to the 2016 Award Agreement, and all subsequent restricted stock awards granted to Executive by the Company, if any, (iv) claims arising from or relating to any breach of provisions from the Employment Agreement that survive beyond the Execution Date, or (v) claims arising from or relating to any Company plans that by their terms survive employment termination (collectively, the “Company Reserved Claims”).

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5.2       Except for the Company Reserved Claims, the Company understands and agrees that the claims released are intended to and do include any and all claims of every nature and kind whatsoever, known or unknown, suspected or unsuspected, which the Company has or may have against Executive or any of the other Executive Releasees and the Company hereby waives any and all rights it has or may have under Section 1542 of the California Civil Code which provides:

“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”

Notwithstanding the provisions of Section 1542, as well as laws of similar effect, and for the purpose of implementing a full and complete release and discharge of the parties and concerns herein released, the Company expressly acknowledges that this Agreement is intended to include in its effect, without limitation, all claims which it does not know or suspect to exist in its favor at the time of execution hereof, and that all such claims are included within, and extinguished and discharged by, this Agreement, except for the Company Reserved Claims.  The Company acknowledges that this release constitutes an unconditional general release of any and all known or unknown claims (except for the Company Reserved Claims) that it may have against Executive or any other Executive Releasees, despite the fact that it may become aware of claims in the future which it did not consider prior to signing this Agreement.

6.         Representations and Covenants of Executive.  Executive represents and warrants to, and covenants with, the Company as of the Execution Date as follows:

6.1       No Claims Against Company.  Executive has not filed any charges, complaints, grievances, arbitrations, lawsuits, or claims against the Company, with any local, state or federal agency, union or court from the beginning of time to the Execution Date, and Executive will not do so at any time hereafter, based upon events occurring prior to the Execution Date, excluding any charges, complaints, grievances, arbitrations, lawsuits, or claims against the Company arising out of or relating to any Executive Reserved Claims.  In the event any arbitrator or court ever assumes jurisdiction of any lawsuit, claim, charge, grievance, arbitration, or complaint, or purports to bring any legal proceeding on his behalf, Executive will ask any such arbitrator or court to withdraw from and/or dismiss any such action, grievance, or arbitration, with prejudice, excluding any charges, complaints, grievances, arbitrations, lawsuits, or claims against the Company arising out of or relating to any Executive Reserved Claims.

6.2       Non-Assignment of Claims.  Executive has not assigned or transferred, or purported to assign or transfer, by operation of law or otherwise, to any person, firm, corporation, partnership or other legal entity, any debt, claim, obligation, damage, liability, demand, or cause of action herein released.  Executive, directly or indirectly, shall not prosecute or maintain or institute any action or proceeding at law or in equity, of any kind or nature whatsoever against the Company or any other Company Releasees for any reason related in any way to any claim released in this Agreement, and shall not raise any claim

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against the Company or any other Company Releasees by way of defense, counterclaim or cross-claim or in any other manner, on any alleged claim released in this Agreement.

6.3       Responsible for Taxes.  Executive shall be fully responsible for any and all of his income and other taxes relating to or arising from the payment of the Accrued Obligations and Severance Payments as required by applicable law, provided nothing herein modifies or amends Section 11(b) of the Employment Agreement.  If Executive fails to pay a tax obligation required by applicable law relating to or arising from the payment of the Accrued Obligations and Severance Payments, and if as a result of such failure the Company becomes liable for, or pays such tax obligation, Executive shall indemnify and hold harmless the Company for payments actually made by it to satisfy such obligation.

6.4       Voluntary Signing.  This Agreement is executed voluntarily, without coercion, and with full knowledge of its significance, and with Executive’s full understanding of its terms and conditions.  Executive has received all wages and compensation, as well as reimbursement of expenses, due and owing to him, excluding any unpaid Accrued Obligations or Severance Payments or any other payments or benefits which may be due and owing hereunder.

7.         Representations and Covenants of Company.  Company represents and warrants to, and covenants with, Executive as of the Execution Date as follows:

7.1       No Claims Against Executive.  Company, directly or indirectly, has not filed any charges, complaints, grievances, arbitrations, lawsuits, or claims against Executive, with any local, state or federal agency, union or court from the beginning of time to the Execution Date and that Company will not do so at any time hereafter, based upon events occurring prior to the Execution Date, not including any charges, complaints, grievances, arbitrations, lawsuits, or claims against Executive arising out of or related to any Company Reserved Claims.  In the event any arbitrator or court ever assumes jurisdiction of any lawsuit, claim, charge, grievance, arbitration, or complaint, or purports to bring, directly or indirectly, any legal proceeding on Company’s behalf, Company will ask any such arbitrator or court to withdraw from and/or dismiss any such action, grievance, or arbitration, with prejudice, not including any lawsuit, claim, charge, grievance, arbitration, or complaint arising out of or related to the Company Reserved Claims.

7.2       Non-Assignment of Claims.  Company, directly or indirectly, has not assigned or transferred, or purported to assign or transfer, by operation of law or otherwise, to any person, firm, corporation, partnership or other legal entity, any debt, claim, obligation, damage, liability, demand, or cause of action herein released.  Company, directly or indirectly, shall not prosecute or maintain or institute any action or proceeding at law or in equity, of any kind or nature whatsoever against Executive or any other Executive Releasees for any reason related in any way to any claim released in this Agreement, and shall not raise any claim against Executive or any other Executive Releasees by way of defense, counterclaim or cross-claim or in any other manner, on any alleged claim released in this Agreement.

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7.3       Voluntary Signing.  Company has executed this Agreement voluntarily, without coercion, and with full knowledge of its significance, and with Company’s full understanding of its terms and conditions.  As of the Execution Date, Company has paid all wages and compensation, as well as reimbursement of expenses, due and owing to Executive, not including any unpaid accrued obligations or Severance Payments or other payments or benefits which may be due and owing hereunder.

8.         Representations of Parties.  Each Party represents and warrants to the other Party as follows: (i) this Agreement constitutes the legal, valid, and binding obligation of such Party, enforceable against him or it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, or other similar laws relating to or affecting creditors’ rights generally, or by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law);  (ii) the Party has the absolute and unrestricted right, power, authority, and capacity to execute and deliver this Agreement and to perform his or its obligations under this Agreement; (iii) neither the execution and delivery of this Agreement nor the consummation or performance of any of the transactions contemplated by this Agreement will, directly or indirectly (with or without notice or lapse of time) contravene, conflict with, or result in a violation of (A) any provision of any agreement, contract, obligation, promise or undertaking (whether written or oral and whether express or implied) to which such Party is a party or by which his or its assets are bound or (B) any award, decision, injunction, judgment, order, or ruling, in each case that is binding upon such Party or to which such Party is a party; (iv) the Party will not be required to give any notice to or obtain any approval, consent, ratification, waiver or other authorization from any individual, corporation, general or limited partnership, limited liability company, trust, or other entity in connection with the execution and delivery of this Agreement or the consummation or performance of any of his or its respective covenants set forth in this Agreement, except for such consents, if any, that shall have been obtained on or prior to the Execution Date.

9.         Indemnity.

9.1       If Executive breaches any of Executive’s representations or warranties in Sections 6 (Representations and Covenants of Executive), or 8 (Representations of Parties), Executive shall defend, indemnify, and hold the Company and the other Company Releasees harmless from and against any and all claims, liabilities, losses, judgments, obligations, damages, costs, expenses, and actions, incurred as a result of such breach, including, without limitation, reasonable attorneys’ and accountants’ fees and costs.

9.2       If the Company breaches any of its representations or warranties in Sections 7 (Representations and Covenants of Company), or 8 (Representations of Parties), the Company shall defend, indemnify, and hold Executive and the other Executive Releasees harmless from and against any and all claims, liabilities, losses, judgments, obligations, damages, costs, expenses, and actions, incurred as a result of such breach, including, without limitation, reasonable attorneys’ and accountants’ fees and costs.

10.       Additional Acknowledgments.  By signing this Agreement, Executive further acknowledges and consents that Executive hereby has been advised:

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(a)To consult with an attorney prior to signing this Agreement;

(b)That Executive has up to twenty-one (21) days in which to consider whether he should sign this Agreement, which contains a release of claims under the Age Discrimination and Employment Act of 1967 (“ADEA”), as amended; and

(c)That if Executive signs this Agreement, Executive will have seven (7) days following the Execution Date to revoke the Agreement by delivering a notice regarding same to Virgil Roberts, Chairman of the Board, at the Company’s principal office.  This revocation period cannot be waived, and Executive is not entitled to receive the Separation Payments prior to expiration of this revocation period.

11.       Governing Law; No Presumption From Drafting; Survival of Representations.  This Agreement shall be governed by and interpreted under the laws of the State of California applicable to contracts made and to be performed entirely within such State, without regard to its conflicts of law provisions.  This Agreement has been negotiated by all Parties.  Accordingly, any rule of applicable law, including, without limitation, California Civil Code Section 1654, or any other statute or common law principles of similar effect, which would require interpretation of ambiguities in this Agreement against the Party that has drafted it, has no application and is expressly waived.  All representations and warranties made by any Party herein shall survive the Effective Date.

12.       Dispute Resolution. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including without limitation the determination of the scope or applicability of this Section 12, shall be determined by arbitration in Los Angeles, California before a single arbitrator who is a retired judge on the panel of JAMS.  If the parties are unable to agree upon the selection of one arbitrator, any party may request JAMS to appoint such arbitrator. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures.  The decision of the arbitrator shall be final and binding on the parties. The scope of discovery shall be determined by the arbitrator. The prevailing party shall be entitled to recover reasonable attorneys’ fees and costs in accordance with Section 13. Judgment on the arbitration award may be entered in any court having appropriate jurisdiction.  This Section 12 shall not preclude parties from seeking provisional remedies in aid of arbitration from a court having appropriate jurisdiction.

13.       Recovery of Fees and Costs.  In the event that any legal, equitable, arbitration or other proceeding is brought for the enforcement or interpretation of this Agreement, or because of an alleged dispute, breach, default or invalidity in connection with any provision of this Agreement, the prevailing party shall be entitled to recover reasonable attorneys’ fees and costs incurred, in addition to any other relief to which such Party may be entitled.

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14.       Severability.  The provisions of this Agreement are severable.  If any provision herein, or the application thereof to any person or circumstance shall be held to be invalid or unenforceable, then in each such event the remainder of this Agreement or the application of such provision to any other person or any other circumstance shall not be thereby affected.  In such event, the Parties shall negotiate in good faith to replace the invalid or unenforceable provision with another reflecting the same relative distribution of economic benefits and burdens.

15.       Gender and Section Headings.  As used in this Agreement, the masculine, feminine or neuter gender, and the singular or plural number, shall each be deemed to include the others whenever the context so indicates.  Section headings contained herein are for convenience only and shall not be considered for any purpose in construing this Agreement.

16.       Successors and Assigns.  This Agreement shall bind and inure to the benefit of the successors, assigns, heirs and personal representatives of the Company, each of the other Releasees and Executive, provided no assignment shall relieve the assignor of any obligations hereunder.

17.       Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed an original, and such counterparts shall together constitute one and the same Agreement, binding all Parties, notwithstanding that all of the Parties are not signatory to the original or same counterpart.  A facsimile, or PDF scanned signature page, shall have the same force and effect as an original signature.

18.       Entire Agreement; Amendment; No Admission of Liability.  This Agreement together with the 2009 Stock Option Agreement, the 2016 Award Agreement, the Bank Employee Stock Ownership Plan 2 constitute the entire agreement among the Parties with respect to the subject matter hereof, and supersede any prior or contemporaneous agreements, representations, understandings, policies, or practices among the Parties, whether oral or written, express or implied.  The terms of this Agreement may not be modified, amended, changed, altered or waived, except in a writing signed by Executive and a duly authorized representative of the Company.  This Agreement shall not be construed as an admission of any liability or wrongdoing by Executive or the Company.

____________________________

2  Insert as applicable any other severance and equity incentive agreements between Executive and the Company that are in effect when this Agreement is signed.

8

IN WITNESS WHEREOF, the Parties have entered into this Mutual General Release of Claims as of the date first above written.

BROADWAY FINANCIAL CORPORATION

By:___________________________

Its: ___________________________

BROADWAY FEDERAL BANK, f.s.b.

By: ___________________________

Its: ___________________________

______________________________

Wayne-Kent A. Bradshaw

9

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 11, 2017	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 11, 2017	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 11, 2017	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 11, 2017	By:	/s/ Brenda J. Battey
		Brenda J. Battey
		Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 04, 2017
Entity Registrant Name	BROADWAY FINANCIAL CORP \DE\
Entity Central Index Key	0001001171
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
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	2017
Document Fiscal Period Focus	Q1
Voting common stock
Entity Common Stock, Shares Outstanding		18,694,823
Non-voting common stock
Entity Common Stock, Shares Outstanding		8,756,396

XML

Consolidated Statements of Financial Condition - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Assets
Cash and due from banks	$ 2,584,000	$ 1,516,000
Interest-bearing deposits in other banks	24,625,000	16,914,000
Cash and cash equivalents	27,209,000	18,430,000
Securities available-for-sale, at fair value	12,554,000	13,202,000
Loans receivable held for sale, at lower of cost or fair value	33,756,000	0
Loans receivable held for investment, net of allowance of $4392 and $4,603 respectively	361,738,000	379,454,000
Accrued interest receivable	1,170,000	1,178,000
Federal Home Loan Bank (FHLB) stock	2,835,000	2,573,000
Office properties and equipment, net	2,494,000	2,479,000
Bank owned life insurance	2,953,000	2,940,000
Deferred tax assets, net	6,404,000	6,907,000
Other assets	3,022,000	1,920,000
Total assets	454,135,000	429,083,000
Liabilities:
Deposits	296,564,000	287,427,000
FHLB advances	101,000,000	85,000,000
Junior subordinated debentures	5,100,000	5,100,000
Advance payments by borrowers for taxes and insurance	501,000	828,000
Accrued expenses and other liabilities	4,079,000	5,202,000
Total liabilities	407,244,000	383,557,000
Stockholders' Equity:
Preferred stock, $.01 par value, authorized 1,000,000 shares; none issued or outstanding
Additional paid-in capital	45,933,000	45,819,000
Retained earnings	7,245,000	6,013,000
Unearned Employee Stock Ownership Plan (ESOP) shares	(1,154,000)	(1,176,000)
Accumulated other comprehensive income (loss)	(107,000)	(103,000)
Treasury stock-at cost, 2,617,826 shares at March 31, 2017 and December 31, 2016	(5,326,000)	(5,326,000)
Total stockholders' equity	46,891,000	45,526,000
Total liabilities and stockholders' equity	454,135,000	429,083,000
Common Stock | Voting common stock
Stockholders' Equity:
Common stock	213,000	212,000
Common Stock | Non-voting common stock
Stockholders' Equity:
Common stock	$ 87,000	$ 87,000

XML

Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Allowance for loan losses (in dollars)	$ 4,392	$ 4,603
Stockholders' Equity:
Treasury stock, shares	2,617,826	2,617,826
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
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	21,282,647	21,282,647
Common stock, shares outstanding	18,664,821	18,664,821
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	8,756,396	8,756,396
Common stock, shares outstanding	8,756,396	8,756,396

XML

Consolidated Statements of Income and Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Interest Income:
Interest and fees on loans receivable	$ 3,964	$ 3,429
Interest on mortgage-backed securities and other securities	75	83
Other interest income	98	103
Total interest income	4,137	3,615
Interest Expense:
Interest on deposits	574	517
Interest on borrowings	484	427
Total interest expense	1,058	944
Net interest income before loan loss provision recapture	3,079	2,671
Loan loss provision recapture	350	300
Net interest income after loan loss provision recapture	3,429	2,971
Non-Interest Income:
Service charges	121	126
Gain on sale of loans	27
CDFI grant		265
Income from litigation settlement	1,183
Other	28	152
Total non-interest income	1,359	543
Non-Interest Expense:
Compensation and benefits	1,987	1,903
Occupancy expense	305	293
Information services	200	206
Professional services	174	127
FDIC assessments	43	25
Office services and supplies	72	70
Other	262	255
Total non-interest expense	3,043	2,879
Income before income taxes	1,745	635
Income taxes	513	2
Net income	1,232	633
Other comprehensive (loss) income, net of tax:
Unrealized (losses) gains on securities available-for-sale arising during the period	(6)	120
Income tax (benefit) expense	(2)	29
Other comprehensive (loss) income net of tax	(4)	91
Comprehensive income	$ 1,228	$ 724
Earnings per common share-basic (in dollars per share)	$ 0.05	$ 0.02
Earnings per common share-diluted (in dollars per share)	$ 0.05	$ 0.02

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flows from operating activities:
Net income	$ 1,232	$ 633
Adjustments to reconcile net income to net cash used in operating activities:
Loan loss provision recapture	(350)	(300)
Depreciation	65	61
Net amortization of deferred loan origination costs	50	61
Net amortization of premiums on mortgage-backed securities	9	9
Amortization of investment in affordable housing limited partnership	49	48
Stock-based compensation expense	137	3
Earnings on bank owned life insurance	(13)	(15)
Originations of for-sale loans receivable	(48,605)
Proceeds from sales of loans receivable held for sale	14,876
Gain on sale of loans	(27)
Net gain on sale of REOs		(22)
Net change in deferred taxes	505
Net change in accrued interest receivable	8	(14)
Net change in other assets	(1,151)	107
Net change in advance payments by borrowers for taxes and insurance	(327)	(366)
Net change in accrued expenses and other liabilities	(1,123)	(788)
Net cash used in operating activities	(34,665)	(583)
Cash flows from investing activities:
Net change in loans receivable held for investment	18,016	(15,471)
Purchase of available-for-sale securities		(1,484)
Prepayments on available-for-sale securities	633	526
Proceeds from sales of REO		382
Purchase of FHLB stock	(262)
Additions to office properties and equipment	(80)	(13)
Net cash provided by (used in) investing activities	18,307	(16,060)
Cash flows from financing activities:
Net change in deposits	9,137	(15,205)
Proceeds from FHLB advances	26,000
Repayments of FHLB advances	(10,000)
Net cash provided by (used in) financing activities	25,137	(15,205)
Net change in cash and cash equivalents	8,779	(31,848)
Cash and cash equivalents at beginning of the period	18,430	67,839
Cash and cash equivalents at end of the period	27,209	35,991
Supplemental disclosures of cash flow information:
Cash paid for interest	$ 1,088	$ 941

XML

Basis of Financial Statement Presentation

3 Months Ended

Mar. 31, 2017

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, 2016 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, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.

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 May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”.  ASU 2014-09 replaced existing revenue recognition guidance for contracts to provide goods or services to customers.  The new guidance clarifies the principles for recognizing revenue and replaces nearly all existing revenue recognition guidance in U.S. GAAP.  Quantitative and qualitative disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers are also required.  ASU 2014-09 as amended by ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, is effective for interim and annual periods beginning after December 15, 2017 and is applied on either a modified retrospective or full retrospective basis.  Early adoption is permitted for interim and annual periods beginning after December 15, 2016.  The Company’s revenue is mainly comprised of net interest income from financial assets and liabilities, which is explicitly excluded from the scope of the new guidance, and to a lesser degree, noninterest income.  Adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

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 securities.  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, as defined) 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 adoption is permitted.  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 expects a gross-up of its Consolidated Statements of Condition as a result of recognizing lease liabilities and right of use assets.  The Company does not expect a material impact to its recognition of operating lease expense on its Consolidated Statements of Income and Comprehensive Income.

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 fiscal years beginning after December 15, 2016, and interim periods within those fiscal years.  The Company made an election account for forfeitures when they occur.  Adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”.  ASU 2016-13 requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.  Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates.  Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses over the life of the related financial assets.  Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances.  Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. For public business entities, ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.  Early adoption is permitted.  While the Company is still evaluating the impact on its consolidated financial statements, the Company expects that ASU 2016-13 may result in an increase in the allowance for credit losses due to the following factors: 1) the allowance for credit losses will increase to provide for expected credit losses over the remaining expected life of the loan portfolio, and will consider expected future changes in macroeconomic conditions; and 2) an allowance may be established for estimated credit losses on available-for-sale debt securities.  The amount of increase will be impacted by the portfolio composition and quality, as well as the economic conditions and forecasts as of the adoption date.  The Company has begun its implementation efforts by identifying key interpretive issues, and assessing its processes and identifying the system requirements against the new guidance to determine what modifications may be required.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”.  ASU 2016-15 provides guidance on the classification of certain cash receipts and payments on the consolidated statement of cash flows in order to reduce diversity in practice.  ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.  Early adoption is permitted.  Adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”.  ASU 2016-18 requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows.  As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows.  ASU 2016-18 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, where the guidance should be applied using a retrospective transition method to each period presented.  Early adoption is permitted. Adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

XML

Earnings Per Share of Common Stock

3 Months Ended

Mar. 31, 2017

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 pursuant to the two-class method by dividing net income available to common stockholders less dividends paid on participating securities (unvested shares of restricted common stock) and any undistributed earnings attributable to participating securities by the weighted average common shares outstanding during the period.  The weighted average common shares outstanding includes the weighted average number of shares of common stock outstanding less the weighted average number of unvested shares of restricted common stock.  ESOP shares are considered outstanding for this calculation unless unearned.  Diluted earnings per share of common stock includes the dilutive effect of unvested stock awards and additional potential common shares issuable under stock options.

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

	For the three months ended March 31,
	2017		2016
	(In thousands, except share and per share)
Net income	$	1,232	$	633
Less net income attributable to participating securities	(2)		-
Income available to common stockholders	$	1,230	$	633
Weighted average common shares outstanding for basic earnings per common share	26,616,704		29,076,708
Add: dilutive effects of assumed exercises of stock options	-		-
Add: dilutive effects of unvested restricted stock awards	70,759		-
Weighted average common shares outstanding for diluted earnings per common share	26,687,463		29,076,708
Earnings per common share – basic	$	0.05	$	0.02
Earnings per common share – diluted	$	0.05	$	0.02

Stock options for 540,625 shares of common stock for the three months ended March 31, 2017 and 2016 were not considered in computing diluted earnings per common share because they were anti-dilutive.

XML

Securities

3 Months Ended

Mar. 31, 2017

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, 2017:
Residential mortgage-backed	$	10,377	$	188	$	-	$	10,565
U.S. Government and federal agency	1,963		26		-		1,989
Total available-for-sale securities	$	12,340	$	214	$	-	$	12,554
December 31, 2016:
Residential mortgage-backed	$	11,022	$	192	$	-	$	11,214
U.S. Government and federal agency	1,960		28		-		1,988
Total available-for-sale securities	$	12,982	$	220	$	-	$	13,202

At March 31, 2017, the Bank had one U.S. Government and federal agency security with an amortized cost and an estimated fair value of $2.0 million and a contractual maturity of October 2, 2019.   At March 31, 2017, the Bank had 24 residential mortgage-backed securities with an amortized cost of $10.4 million, an estimated fair value of $10.6 million and an estimated average remaining life of 4.4 years.  Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

At March 31, 2017 and December 31, 2016, securities pledged to secure public deposits had a carrying amount of $622 thousand and $629 thousand, respectively.  At March 31, 2017 and December 31, 2016, 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, 2017 and 2016.

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Loans Receivable Held for Sale

3 Months Ended

Mar. 31, 2017

Loans Receivable Held For Sale

Loans Receivable Held for Sale

Loans Receivable Held for Sale

NOTE (4) – Loans Receivable Held for Sale

Loans receivable held for sale at March 31, 2017 totaled $33.8 million and consisted of multi-family loans.  During the three months ended March 31, 2017, multi-family loans originated for sale totaled $48.7 million and sales of multi-family loans totaled $14.8 million.  There were no loans held for sale at December 31, 2016.

XML

Loans Receivable Held for Investment

3 Months Ended

Mar. 31, 2017

Loans Receivable Held for Investment

Loans Receivable Held for Investment

Loans Receivable Held for Investment

NOTE (5) – Loans Receivable Held for Investment

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

	March 31, 2017		December 31, 2016
	(In thousands)
Real estate:
Single family (1)	$	98,676	$	104,807
Multi-family	220,556		229,566
Commercial real estate	7,766		8,914
Church	36,153		37,826
Construction	862		837
Commercial – other	307		308
Consumer	15		6
Gross loans receivable before deferred loan costs and premiums	364,335		382,264
Unamortized net deferred loan costs and premiums	1,795		1,793
Gross loans receivable	366,130		384,057
Allowance for loan losses	(4,392)		(4,603)
Loans receivable, net	$	361,738	$	379,454

    __

(1) Includes $78.5 million and $81.9 million of non-impaired purchased loans at March 31, 2017 and December 31, 2016, respectively, with no allowance for loan losses.

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

	Three Months Ended March 31, 2017
	Real Estate
	Single family		Multi- family		Commercial real estate			Church		Construction		Commercial - other		Consumer			Total
	(In thousands)
Beginning balance	$	367	$	2,659	$	215		$	1,337	$	8	$	17	$	-		$	4,603
Provision for (recapture of) loan losses	(37)		52		(140)			(226)		1		(1)		1			(350)
Recoveries	-		-		-			139		-		-		-			139
Loans charged off	-		-		-			-		-		-		-			-
Ending balance	$	330	$	2,711	$	75		$	1,250	$	9	$	16	$	1		$	4,392
	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

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 and for the periods indicated:

	March 31, 2017
	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	$	118	$	2	$	-	$	468	$	-	$	14	$	-	$	602
Collectively evaluated for impairment	212		2,709		75		782		9		2		1		3,790
Total ending allowance balance	$	330	$	2,711	$	75	$	1,250	$	9	$	16	$	1	$	4,392
Loans:
Loans individually evaluated for impairment	$	640	$	638	$	1,323	$	9,845	$	-	$	66	$	-	$	12,512
Loans collectively evaluated for impairment	98,539		221,740		6,449		25,779		855		241		15		353,618
Total ending loans balance	$	99,179	$	222,378	$	7,772	$	35,624	$	855	$	307	$	15	$	366,130

	December 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	$	125	$	-	$	-	$	516	$	-	$	15	$	-	$	656
Collectively evaluated for impairment	242		2,659		215		821		8		2		-		3,947
Total ending allowance balance	$	367	$	2,659	$	215	$	1,337	$	8	$	17	$	-	$	4,603
Loans:
Loans individually evaluated for impairment	$	644	$	642	$	-	$	10,545	$	-	$	66	$	-	$	11,897
Loans collectively evaluated for impairment	104,688		230,798		8,921		26,678		827		242		6		372,160
Total ending loans balance	$	105,332	$	231,440	$	8,921	$	37,223	$	827	$	308	$	6	$	384,057

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

	March 31, 2017						December 31, 2016
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
	(In thousands)
With no related allowance recorded:
Multi-family	$	-	$	-	$	-	$	642	$	642	$	-
Commercial real estate	1,323		1,323		-		-		-		-
Church	6,620		4,226		-		5,946		3,589		-
With an allowance recorded:
Single family	640		640		118		644		644		125
Multi-family	638		638		2		-		-		-
Church	5,780		5,619		468		7,330		6,956		516
Commercial - other	66		66		14		66		66		15
Total	$	15,067	$	12,512	$	602	$	14,628	$	11,897	$	656

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, 2017						Three Months Ended March 31, 2016
	Average Recorded Investment			Cash Basis Interest Income Recognized			Average Recorded Investment			Cash Basis Interest Income Recognized
	(In thousands)
Single family		$	642		$	7		$	951		$	7
Multi-family		640			11			1,206			41
Commercial real estate		331			-			1,933			56
Church		10,471			227			11,191			126
Commercial –other		66			1			67			-
Total		$	12,150		$	246		$	15,348		$	230

Cash-basis interest income recognized represents cash received for interest payments on accruing impaired loans and interest recoveries on non-accrual loans that were paid off.  Interest payments collected on non-accrual loans are characterized as payments of principal rather than payments of the outstanding accrued interest on the loans until the remaining principal on the non-accrual loans is considered to be fully collectible or paid off.  When a loan is returned to accrual status, the total interest payments that were previously applied to principal, is deferred and amortized over the remaining life of the loan. Foregone interest income that would have been recognized had loans performed in accordance with their original terms amounted to $46 thousand and $119 thousand for the three months ended March 31, 2017 and 2016, 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, 2017
	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		$	-		$	60		$	-		$	60		$	99,119
Multi-family		-			-			-			-			222,378
Commercial real estate		-			1,323			-			1,323			6,449
Church		412			-			-			412			35,212
Construction		-			-			-			-			855
Commercial - other		-			-			-			-			307
Consumer		-			-			-			-			15
Total		$	412		$	1,383		$	-		$	1,795		$	364,335
	December 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		$	-		$	64		$	-		$	64		$	105,268
Multi-family		-			-			-			-			231,440
Commercial real estate		1,324			-			-			1,324			7,597
Church		-			-			-			-			37,223
Construction		-			-			-			-			827
Commercial - other		-			-			-			-			308
Consumer		-			-			-			-			6
Total		$	1,324		$	64		$	-		$	1,388		$	382,669

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

	March 31, 2017			December 31, 2016
	(In thousands)
Loans receivable held for investment:
Commercial real estate		$	1,323		$	-
Church		2,841			2,944
Total non-accrual loans		$	4,164		$	2,944

There were no loans 90 days or more delinquent that were accruing interest as of March 31, 2017 or December 31, 2016.

Troubled Debt Restructurings

At March 31, 2017, loans classified as troubled debt restructurings (“TDRs”) totaled $10.8 million, of which $2.4 million were included in non-accrual loans and $8.4 million were on accrual status.  At December 31, 2016, loans classified as TDRs totaled $11.5 million, of which $2.5 million were included in non-accrual loans and $9.0 million were on accrual status.  The Company has allocated $602 thousand and $656 thousand of specific reserves for accruing TDRs as of March 31, 2017 and December 31, 2016, 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, 2017 and December 31, 2016, 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, 2017 and 2016.

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 and/or by the value of the underlying collateral.  Pass rated loans are not more than 59 days past due and are generally performing in accordance with the loan terms.  Based on the most recent analysis performed, the risk categories of loans by loan type as of the periods indicated were as follows:

	March 31, 2017
	Pass		Watch		Special Mention		Substandard		Doubtful		Loss
	(In thousands)
Single family	$	99,179	$	-	$	-	$	-	$	-	$	-
Multi-family	220,746		-		340		1,292		-		-
Commercial real estate	6,449		-		-		1,323		-		-
Church	26,648		1,137		271		7,568		-		-
Construction	855		-		-		-		-		-
Commercial - other	241		-		-		66		-		-
Consumer	15		-		-		-		-		-
Total	$	354,133	$	1,137	$	611	$	10,249	$	-	$	-
	December 31, 2016
	Pass		Watch		Special Mention		Substandard		Doubtful		Loss
	(In thousands)
Single family	$	105,332	$	-	$	-	$	-	$	-	$	-
Multi-family	228,522		1,274		342		1,302		-		-
Commercial real estate	6,965		-		-		1,956		-		-
Church	27,560		1,143		823		7,697		-		-
Construction	827		-		-		-		-		-
Commercial - other	242		-		-		66		-		-
Consumer	6		-		-		-		-		-
Total	$	369,454	$	2,417	$	1,165	$	11,021	$	-	$	-

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Junior Subordinated Debentures

3 Months Ended

Mar. 31, 2017

Junior Subordinated Debentures

Junior Subordinated Debentures

NOTE (6) – 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 3.69% at March 31, 2017.  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, 2017

Fair Value

Fair Value

NOTE (7) – 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, 2017
	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	$	-	$	10,565	$	-	$	10,565
Securities available-for-sale - U.S. Government and federal agency	1,989		-		-		1,989
	Fair Value Measurements at December 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	$	-	$	11,214	$	-	$	11,214
Securities available-for-sale - U.S. Government and federal agency	1,988		-		-		1,988

There were no transfers between Level 1, Level 2, or Level 3 during the three months ended March 31, 2017 and 2016.

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, 2017		December 31, 2016
	(In thousands)
Impaired loans carried at fair value of collateral	$	1,683	$	1,744

There were no losses recognized on assets measured at fair value on a non-recurring basis for the three months ended March 31, 2017 and 2016.

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, 2017 and December 31, 2016:

	March 31, 2017
	Valuation Technique(s)	Unobservable Input(s)	Range	Weighted Average
Impaired loans	Third Party Appraisals	Adjustment for differences between the comparable sales	-2% to 0%	-1%
	December 31, 2016
	Valuation Technique(s)	Unobservable Input(s)	Range	Weighted Average
Impaired loans	Third Party Appraisals	Adjustment for differences between the comparable sales	-2% to 0%	-1%

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, 2017
	Carrying Value		Level 1		Level 2		Level 3		Total
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	27,209	$	27,209	$	-	$	-	$	27,209
Securities available-for-sale	12,554		1,989		10,565		-		12,554
Loans receivable held for sale	33,756		-		34,226		-		34,226
Loans receivable held for investment	361,738		-		-		364,723		364,723
Accrued interest receivable	1,170		71		28		1,071		1,170
Federal Home Loan Bank stock	2,835		2,835		-		-		2,835
Financial Liabilities:
Deposits	$	296,564	$	-	$	286,902	$	-	$	286,902
Federal Home Loan Bank advances	101,000		-		101,507		-		101,507
Junior subordinated debentures	5,100		-		-		4,436		4,436
Accrued interest payable	124		-		117		7		124
			Fair Value Measurements at December 31, 2016
	Carrying Value		Level 1		Level 2		Level 3		Total
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	18,430	$	18,430	$	-	$	-	$	18,430
Securities available-for-sale	13,202		1,988		11,214		-		13,202
Loans receivable held for investment	379,454		-		-		382,717		382,717
Accrued interest receivable	1,178		64		29		1,085		1,178
Federal Home Loan Bank stock	2,573		2,573		-		-		2,573
Financial Liabilities:
Deposits	$	287,427	$	-	$	278,254	$	-	$	278,254
Federal Home Loan Bank advances	85,000		-		85,748		-		85,748
Junior subordinated debentures	5,100		-		-		4,414		4,414
Accrued interest payable	154		-		147		7		154

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 Sale

The Company’s loans receivable held for sale are carried at the lower of cost or fair value.  The fair value of loans receivable held for sale is determined by pricing for comparable assets or by outstanding commitments from third party investors, resulting in a Level 2 classification.

(c) 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.

(d) FHLB Stock

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

(e) 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.

(f) 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.

(g) 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.

(h) 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, 2017

Stock-based Compensation

Stock-based Compensation

NOTE (8) – Stock-based Compensation

The Company issues stock-based compensation awards to its directors and employees under the 2008 Long-Term Incentive Plan (“2008 LTIP”).  The 2008 LTIP permits the grant of non-qualified and incentive stock options, stock appreciation rights, full value awards and cash incentive for up to 2,000,000 shares of common stock.  As of March 31, 2017, there were 1,338,892 shares available for future awards under the 2008 LTIP.

No options were granted during the three months ended March 31, 2017, compared to 450,000 stock options granted to senior executive officers under the 2008 LTIP during the three months ended March 31, 2016.  These options have an exercise price of $1.62 per share, vest over five years and expire in ten years from grant date.  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 following table summarizes stock option activity during the three months ended March 31, 2017 and 2016:

	Shares	Weighted Average Exercise Price	Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Three Months Ended March 31, 2017:
Outstanding at January 1, 2017	540,625	$    2.18
Granted	-	-
Exercised	-	-
Forfeited	-	-
Outstanding at March 31, 2017	540,625	$    2.18	7.74	$  86,000
Exercisable at March 31, 2017	180,625	$    3.29	5.44	$  17,000
Three Months Ended March 31, 2016:
Outstanding at January 1, 2016	90,625	$    4.95
Granted	450,000	1.62
Exercised	-	-
Forfeited	-	-
Outstanding at March 31, 2016	540,625	$    2.18	7.74	$ 140,000
Exercisable at March 31, 2016	90,625	$    4.95	3.00	$             -

The Company recorded $10 thousand and $3 thousand of stock-based compensation expense related to stock options during the three months ended March 31, 2017 and 2016, respectively.  As of March 31, 2017, unrecognized compensation cost related to nonvested stock options granted under the plan was $152 thousand.  The cost is expected to be recognized over a period of 3.90 years.

In March 2016, the Company awarded 120,483 shares of restricted stock to its Chief Executive Officer under the 2008 LTIP.  A restricted stock award is valued at the closing price of the Company’s stock on the date of such award.  Subject to certain performance restrictions, 100,000 shares of restricted stock shall vest over a two-year period and the remaining 20,483 shares shall vest over a three-year period.  Stock-based compensation expense is recognized on a straight-line basis over the vesting period.  The Company recorded $26 thousand of stock-based compensation expense related to this award during the three months ended March 31, 2017.  No stock-based compensation expense was recorded during the three months ended March 31, 2016.  As of March 31, 2017, unrecognized compensation cost related to nonvested restricted stock award was $119 thousand.  The cost is expected to be recognized over a period of 1.17 years.

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Regulatory Matters

3 Months Ended

Mar. 31, 2017

Regulatory Matters

Regulatory Matters

NOTE (9) – 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, 2017 and December 31, 2016, 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, 2017:
Tier 1 (Leverage)	$	46,793	10.77%	$	17,379	4.0%	$	21,723	5.0%
Common Equity Tier 1	$	46,793	15.39%	$	13,685	4.5%	$	19,767	6.5%
Tier 1	$	46,793	15.39%	$	18,246	6.0%	$	24,328	8.0%
Total Capital	$	50,602	16.64%	$	24,328	8.0%	$	30,410	10.0%
December 31, 2016:
Tier 1 (Leverage)	$	43,954	10.60%	$	16,594	4.0%	$	20,742	5.0%
Common Equity Tier 1	$	43,954	15.36%	$	12,875	4.5%	$	18,597	6.5%
Tier 1	$	43,954	15.36%	$	17,166	6.0%	$	22,888	8.0%
Total Capital	$	47,544	16.62%	$	22,888	8.0%	$	28,610	10.0%

Effective as of May 15, 2015, the Federal Reserve Board (“FRB”) has adopted a final rule that exempts bank holding companies and savings and loan holding companies with less than $1 billion in consolidated assets, such as the Company, from the FRB’s consolidated regulatory capital requirements.

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Income Taxes

3 Months Ended

Mar. 31, 2017

Income Taxes

Income Taxes

NOTE (10) – Income Taxes

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

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax asset will not be realized.  In assessing the realization of deferred tax assets, management evaluated both positive and negative evidence, including the existence of cumulative losses in the current year and the prior two years, the amount of taxes paid in available carry-back years, the forecasts of future income and tax planning strategies.  Based on this analysis, the Company determined that as of March 31, 2017, no valuation allowance was required on its deferred tax assets, which totaled $6.4 million.  As of December 31, 2016, the Company recorded no valuation allowance on its deferred tax assets of $6.9 million.

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Concentration of Credit Risk

3 Months Ended

Mar. 31, 2017

Concentration of Credit Risk

Concentration of Credit Risk

NOTE (11) – Concentration of Credit Risk

The Bank has a significant concentration of deposits with a long-time customer that accounted for approximately 11% of its deposits as of March 31, 2017.  The Bank expects to maintain this relationship with the customer.

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Subsequent Event

3 Months Ended

Mar. 31, 2017

Subsequent Event

Subsequent Event

NOTE (12) – Subsequent Event

On April 12, 2017, the Bank entered into a Mutual General Release Agreement (“Release Agreement”) with its former executive, Paul Hudson.  As part of the Release Agreement, the Salary Continuation Agreement entered into with Mr. Hudson on October 6, 2006 was terminated.  The amount accrued under this agreement was $1.2 million as of the date of termination.  As consideration for the Release Agreement, the Bank agreed to pay Mr. Hudson an amount of $500 thousand ratably over a period of four years.  Therefore, the Bank has no obligation to pay any future benefits to Mr. Hudson or any of his beneficiaries under the terms of the Salary Continuation Agreement.  The signing of the Release Agreement and the termination of the Salary Continuation Agreement are expected to increase second quarter net earnings by approximately $420 thousand, net of taxes.

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Basis of Financial Statement Presentation (Policies)

3 Months Ended

Mar. 31, 2017

Basis of Financial Statement Presentation

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”.  ASU 2014-09 replaced existing revenue recognition guidance for contracts to provide goods or services to customers.  The new guidance clarifies the principles for recognizing revenue and replaces nearly all existing revenue recognition guidance in U.S. GAAP.  Quantitative and qualitative disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers are also required.  ASU 2014-09 as amended by ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, is effective for interim and annual periods beginning after December 15, 2017 and is applied on either a modified retrospective or full retrospective basis.  Early adoption is permitted for interim and annual periods beginning after December 15, 2016.  The Company’s revenue is mainly comprised of net interest income from financial assets and liabilities, which is explicitly excluded from the scope of the new guidance, and to a lesser degree, noninterest income.  Adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

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 securities.  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, as defined) 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 adoption is permitted.  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 expects a gross-up of its Consolidated Statements of Condition as a result of recognizing lease liabilities and right of use assets.  The Company does not expect a material impact to its recognition of operating lease expense on its Consolidated Statements of Income and Comprehensive Income.

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 fiscal years beginning after December 15, 2016, and interim periods within those fiscal years.  The Company made an election account for forfeitures when they occur.  Adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”.  ASU 2016-13 requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.  Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates.  Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses over the life of the related financial assets.  Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances.  Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. For public business entities, ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.  Early adoption is permitted.  While the Company is still evaluating the impact on its consolidated financial statements, the Company expects that ASU 2016-13 may result in an increase in the allowance for credit losses due to the following factors: 1) the allowance for credit losses will increase to provide for expected credit losses over the remaining expected life of the loan portfolio, and will consider expected future changes in macroeconomic conditions; and 2) an allowance may be established for estimated credit losses on available-for-sale debt securities.  The amount of increase will be impacted by the portfolio composition and quality, as well as the economic conditions and forecasts as of the adoption date.  The Company has begun its implementation efforts by identifying key interpretive issues, and assessing its processes and identifying the system requirements against the new guidance to determine what modifications may be required.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”.  ASU 2016-15 provides guidance on the classification of certain cash receipts and payments on the consolidated statement of cash flows in order to reduce diversity in practice.  ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.  Early adoption is permitted.  Adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”.  ASU 2016-18 requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows.  As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows.  ASU 2016-18 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, where the guidance should be applied using a retrospective transition method to each period presented.  Early adoption is permitted. Adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

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Earnings Per Share of Common Stock (Tables)

3 Months Ended

Mar. 31, 2017

Earnings Per Share of Common Stock

Schedule of basic and diluted earnings per share of common stock

	For the three months ended March 31,
	2017		2016
	(In thousands, except share and per share)
Net income	$	1,232	$	633
Less net income attributable to participating securities	(2)		-
Income available to common stockholders	$	1,230	$	633
Weighted average common shares outstanding for basic earnings per common share	26,616,704		29,076,708
Add: dilutive effects of assumed exercises of stock options	-		-
Add: dilutive effects of unvested restricted stock awards	70,759		-
Weighted average common shares outstanding for diluted earnings per common share	26,687,463		29,076,708
Earnings per common share – basic	$	0.05	$	0.02
Earnings per common share – diluted	$	0.05	$	0.02

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Securities (Tables)

3 Months Ended

Mar. 31, 2017

Securities

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

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
March 31, 2017:
Residential mortgage-backed	$	10,377	$	188	$	-	$	10,565
U.S. Government and federal agency	1,963		26		-		1,989
Total available-for-sale securities	$	12,340	$	214	$	-	$	12,554
December 31, 2016:
Residential mortgage-backed	$	11,022	$	192	$	-	$	11,214
U.S. Government and federal agency	1,960		28		-		1,988
Total available-for-sale securities	$	12,982	$	220	$	-	$	13,202

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Loans Receivable Held for Investment (Tables)

3 Months Ended

Mar. 31, 2017

Loans Receivable Held for Investment

Schedule of loans receivable

	March 31, 2017		December 31, 2016
	(In thousands)
Real estate:
Single family (1)	$	98,676	$	104,807
Multi-family	220,556		229,566
Commercial real estate	7,766		8,914
Church	36,153		37,826
Construction	862		837
Commercial – other	307		308
Consumer	15		6
Gross loans receivable before deferred loan costs and premiums	364,335		382,264
Unamortized net deferred loan costs and premiums	1,795		1,793
Gross loans receivable	366,130		384,057
Allowance for loan losses	(4,392)		(4,603)
Loans receivable, net	$	361,738	$	379,454

__

(1) Includes $78.5 million and $81.9 million of non-impaired purchased loans at March 31, 2017 and December 31, 2016, respectively, with no allowance for loan losses.

Activity in the allowance for loan losses by loan type

	Three Months Ended March 31, 2017
	Real Estate
	Single family		Multi- family		Commercial real estate			Church		Construction		Commercial - other		Consumer			Total
	(In thousands)
Beginning balance	$	367	$	2,659	$	215		$	1,337	$	8	$	17	$	-		$	4,603
Provision for (recapture of) loan losses	(37)		52		(140)			(226)		1		(1)		1			(350)
Recoveries	-		-		-			139		-		-		-			139
Loans charged off	-		-		-			-		-		-		-			-
Ending balance	$	330	$	2,711	$	75		$	1,250	$	9	$	16	$	1		$	4,392
	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

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

	March 31, 2017
	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	$	118	$	2	$	-	$	468	$	-	$	14	$	-	$	602
Collectively evaluated for impairment	212		2,709		75		782		9		2		1		3,790
Total ending allowance balance	$	330	$	2,711	$	75	$	1,250	$	9	$	16	$	1	$	4,392
Loans:
Loans individually evaluated for impairment	$	640	$	638	$	1,323	$	9,845	$	-	$	66	$	-	$	12,512
Loans collectively evaluated for impairment	98,539		221,740		6,449		25,779		855		241		15		353,618
Total ending loans balance	$	99,179	$	222,378	$	7,772	$	35,624	$	855	$	307	$	15	$	366,130

	December 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	$	125	$	-	$	-	$	516	$	-	$	15	$	-	$	656
Collectively evaluated for impairment	242		2,659		215		821		8		2		-		3,947
Total ending allowance balance	$	367	$	2,659	$	215	$	1,337	$	8	$	17	$	-	$	4,603
Loans:
Loans individually evaluated for impairment	$	644	$	642	$	-	$	10,545	$	-	$	66	$	-	$	11,897
Loans collectively evaluated for impairment	104,688		230,798		8,921		26,678		827		242		6		372,160
Total ending loans balance	$	105,332	$	231,440	$	8,921	$	37,223	$	827	$	308	$	6	$	384,057

Loans individually evaluated for impairment by loan type

	March 31, 2017						December 31, 2016
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
	(In thousands)
With no related allowance recorded:
Multi-family	$	-	$	-	$	-	$	642	$	642	$	-
Commercial real estate	1,323		1,323		-		-		-		-
Church	6,620		4,226		-		5,946		3,589		-
With an allowance recorded:
Single family	640		640		118		644		644		125
Multi-family	638		638		2		-		-		-
Church	5,780		5,619		468		7,330		6,956		516
Commercial - other	66		66		14		66		66		15
Total	$	15,067	$	12,512	$	602	$	14,628	$	11,897	$	656

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

	Three Months Ended March 31, 2017						Three Months Ended March 31, 2016
	Average Recorded Investment			Cash Basis Interest Income Recognized			Average Recorded Investment			Cash Basis Interest Income Recognized
	(In thousands)
Single family		$	642		$	7		$	951		$	7
Multi-family		640			11			1,206			41
Commercial real estate		331			-			1,933			56
Church		10,471			227			11,191			126
Commercial –other		66			1			67			-
Total		$	12,150		$	246		$	15,348		$	230

Aging of recorded investment in past due loans by loan type

	March 31, 2017
	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		$	-		$	60		$	-		$	60		$	99,119
Multi-family		-			-			-			-			222,378
Commercial real estate		-			1,323			-			1,323			6,449
Church		412			-			-			412			35,212
Construction		-			-			-			-			855
Commercial - other		-			-			-			-			307
Consumer		-			-			-			-			15
Total		$	412		$	1,383		$	-		$	1,795		$	364,335
	December 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		$	-		$	64		$	-		$	64		$	105,268
Multi-family		-			-			-			-			231,440
Commercial real estate		1,324			-			-			1,324			7,597
Church		-			-			-			-			37,223
Construction		-			-			-			-			827
Commercial - other		-			-			-			-			308
Consumer		-			-			-			-			6
Total		$	1,324		$	64		$	-		$	1,388		$	382,669

Recorded investment in non-accrual loans by loan type

	March 31, 2017			December 31, 2016
	(In thousands)
Loans receivable held for investment:
Commercial real estate		$	1,323		$	-
Church		2,841			2,944
Total non-accrual loans		$	4,164		$	2,944

Risk categories of loans by loan type

	March 31, 2017
	Pass		Watch		Special Mention		Substandard		Doubtful		Loss
	(In thousands)
Single family	$	99,179	$	-	$	-	$	-	$	-	$	-
Multi-family	220,746		-		340		1,292		-		-
Commercial real estate	6,449		-		-		1,323		-		-
Church	26,648		1,137		271		7,568		-		-
Construction	855		-		-		-		-		-
Commercial - other	241		-		-		66		-		-
Consumer	15		-		-		-		-		-
Total	$	354,133	$	1,137	$	611	$	10,249	$	-	$	-
	December 31, 2016
	Pass		Watch		Special Mention		Substandard		Doubtful		Loss
	(In thousands)
Single family	$	105,332	$	-	$	-	$	-	$	-	$	-
Multi-family	228,522		1,274		342		1,302		-		-
Commercial real estate	6,965		-		-		1,956		-		-
Church	27,560		1,143		823		7,697		-		-
Construction	827		-		-		-		-		-
Commercial - other	242		-		-		66		-		-
Consumer	6		-		-		-		-		-
Total	$	369,454	$	2,417	$	1,165	$	11,021	$	-	$	-

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Fair Value (Tables)

3 Months Ended

Mar. 31, 2017

Fair Value

Summary of assets measured at fair value on a recurring basis

	Fair Value Measurements at March 31, 2017
	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	$	-	$	10,565	$	-	$	10,565
Securities available-for-sale - U.S. Government and federal agency	1,989		-		-		1,989
	Fair Value Measurements at December 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	$	-	$	11,214	$	-	$	11,214
Securities available-for-sale - U.S. Government and federal agency	1,988		-		-		1,988

Schedule of fair value measurement for all of these assets falls within Level 3 of the fair value hierarchy

	March 31, 2017		December 31, 2016
	(In thousands)
Impaired loans carried at fair value of collateral	$	1,683	$	1,744

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

	March 31, 2017
	Valuation Technique(s)	Unobservable Input(s)	Range	Weighted Average
Impaired loans	Third Party Appraisals	Adjustment for differences between the comparable sales	-2% to 0%	-1%
	December 31, 2016
	Valuation Technique(s)	Unobservable Input(s)	Range	Weighted Average
Impaired loans	Third Party Appraisals	Adjustment for differences between the comparable sales	-2% to 0%	-1%

Schedule of carrying amounts and estimated fair values of financial instruments

			Fair Value Measurements at March 31, 2017
	Carrying Value		Level 1		Level 2		Level 3		Total
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	27,209	$	27,209	$	-	$	-	$	27,209
Securities available-for-sale	12,554		1,989		10,565		-		12,554
Loans receivable held for sale	33,756		-		34,226		-		34,226
Loans receivable held for investment	361,738		-		-		364,723		364,723
Accrued interest receivable	1,170		71		28		1,071		1,170
Federal Home Loan Bank stock	2,835		2,835		-		-		2,835
Financial Liabilities:
Deposits	$	296,564	$	-	$	286,902	$	-	$	286,902
Federal Home Loan Bank advances	101,000		-		101,507		-		101,507
Junior subordinated debentures	5,100		-		-		4,436		4,436
Accrued interest payable	124		-		117		7		124

			Fair Value Measurements at December 31, 2016
	Carrying Value		Level 1		Level 2		Level 3		Total
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	18,430	$	18,430	$	-	$	-	$	18,430
Securities available-for-sale	13,202		1,988		11,214		-		13,202
Loans receivable held for investment	379,454		-		-		382,717		382,717
Accrued interest receivable	1,178		64		29		1,085		1,178
Federal Home Loan Bank stock	2,573		2,573		-		-		2,573
Financial Liabilities:
Deposits	$	287,427	$	-	$	278,254	$	-	$	278,254
Federal Home Loan Bank advances	85,000		-		85,748		-		85,748
Junior subordinated debentures	5,100		-		-		4,414		4,414
Accrued interest payable	154		-		147		7		154

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Stock-based Compensation (Tables)

3 Months Ended

Mar. 31, 2017

Stock-based Compensation

Summary of stock option activity

	Shares	Weighted Average Exercise Price	Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Three Months Ended March 31, 2017:
Outstanding at January 1, 2017	540,625	$    2.18
Granted	-	-
Exercised	-	-
Forfeited	-	-
Outstanding at March 31, 2017	540,625	$    2.18	7.74	$  86,000
Exercisable at March 31, 2017	180,625	$    3.29	5.44	$  17,000
Three Months Ended March 31, 2016:
Outstanding at January 1, 2016	90,625	$    4.95
Granted	450,000	1.62
Exercised	-	-
Forfeited	-	-
Outstanding at March 31, 2016	540,625	$    2.18	7.74	$ 140,000
Exercisable at March 31, 2016	90,625	$    4.95	3.00	$             -

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Regulatory Matters (Tables)

3 Months Ended

Mar. 31, 2017

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, 2017:
Tier 1 (Leverage)	$	46,793	10.77%	$	17,379	4.0%	$	21,723	5.0%
Common Equity Tier 1	$	46,793	15.39%	$	13,685	4.5%	$	19,767	6.5%
Tier 1	$	46,793	15.39%	$	18,246	6.0%	$	24,328	8.0%
Total Capital	$	50,602	16.64%	$	24,328	8.0%	$	30,410	10.0%
December 31, 2016:
Tier 1 (Leverage)	$	43,954	10.60%	$	16,594	4.0%	$	20,742	5.0%
Common Equity Tier 1	$	43,954	15.36%	$	12,875	4.5%	$	18,597	6.5%
Tier 1	$	43,954	15.36%	$	17,166	6.0%	$	22,888	8.0%
Total Capital	$	47,544	16.62%	$	22,888	8.0%	$	28,610	10.0%

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Earnings Per Share of Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Earnings Per Share of Common Stock
Net income	$ 1,232	$ 633
Less net income attributable to participating securities	(2)
Income available to common stockholders	$ 1,230	$ 633
Weighted average common shares outstanding for basic earnings per common share	26,616,704	29,076,708
Add: dilutive effects of unvested restricted stock awards	70,759
Weighted average common shares outstanding for diluted earnings per common share	26,687,463	29,076,708
Earnings per common share - basic (in dollars per share)	$ 0.05	$ 0.02
Earnings per common share - diluted (in dollars per share)	$ 0.05	$ 0.02
Anti-dilutive stock options not considered in computing diluting earnings per common share	540,625	540,625

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Securities (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($) security	Mar. 31, 2016 USD ($)	Dec. 31, 2016 USD ($)
Securities
Amortized Cost	$ 12,340		$ 12,982
Gross Unrealized Gains	214		220
Securities available-for-sale, at fair value	12,554		13,202
Securities pledged	622		629
Sales of securities	0	$ 0
Residential mortgage-backed
Securities
Amortized Cost	10,377		11,022
Gross Unrealized Gains	188		192
Securities available-for-sale, at fair value	$ 10,565		11,214
Number of securities held | security	24
Estimated remaining term	4 years 4 months 24 days
U.S. Government and federal agency
Securities
Amortized Cost	$ 1,963		1,960
Gross Unrealized Gains	26		28
Securities available-for-sale, at fair value	$ 1,989		1,988
Number of securities held | security	1
Stockholders' Equity
Securities
Securities of any one issuer, other than U.S. Government, greater than 10% of shareholders equity	$ 0		$ 0

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Loans Receivable Held for Sale (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Loans Receivable Held for Sale
Loans receivable held for sale	$ 33,756,000	$ 0
Loans originated	48,605,000
Multi-family
Loans Receivable Held for Sale
Loans receivable held for sale	33,800,000
Loans originated	48,700,000
Loan sales	$ 14,800,000

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Loans Receivable Held for Investment - Summary (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016	Mar. 31, 2016	Dec. 31, 2015
Loans Receivable Held for Investment
Gross loans receivable before deferred loan costs and premiums	$ 364,335,000	$ 382,264,000
Unamortized net deferred loan costs and premiums	1,795,000	1,793,000
Total ending loans balance	366,130,000	384,057,000
Allowance for loan losses	(4,392,000)	(4,603,000)	$ (4,534,000)	$ (4,828,000)
Loans receivable, net	361,738,000	379,454,000
Single family
Loans Receivable Held for Investment
Gross loans receivable before deferred loan costs and premiums	98,676,000	104,807,000
Total ending loans balance	99,179,000	105,332,000
Allowance for loan losses	(330,000)	(367,000)	(528,000)	(597,000)
Non-impaired purchased loans	78,500,000	81,900,000
Allowance for non-impaired purchased loans	0	0
Multi-family
Loans Receivable Held for Investment
Gross loans receivable before deferred loan costs and premiums	220,556,000	229,566,000
Total ending loans balance	222,378,000	231,440,000
Allowance for loan losses	(2,711,000)	(2,659,000)	(1,866,000)	(1,658,000)
Commercial real estate
Loans Receivable Held for Investment
Gross loans receivable before deferred loan costs and premiums	7,766,000	8,914,000
Total ending loans balance	7,772,000	8,921,000
Allowance for loan losses	(75,000)	(215,000)	(444,000)	(469,000)
Church
Loans Receivable Held for Investment
Gross loans receivable before deferred loan costs and premiums	36,153,000	37,826,000
Total ending loans balance	35,624,000	37,223,000
Allowance for loan losses	(1,250,000)	(1,337,000)	(1,676,000)	(2,083,000)
Construction
Loans Receivable Held for Investment
Gross loans receivable before deferred loan costs and premiums	862,000	837,000
Total ending loans balance	855,000	827,000
Allowance for loan losses	(9,000)	(8,000)	(3,000)	(3,000)
Commercial - other
Loans Receivable Held for Investment
Gross loans receivable before deferred loan costs and premiums	307,000	308,000
Total ending loans balance	307,000	308,000
Allowance for loan losses	(16,000)	(17,000)	$ (17,000)	$ (18,000)
Consumer
Loans Receivable Held for Investment
Gross loans receivable before deferred loan costs and premiums	15,000	6,000
Total ending loans balance	15,000	$ 6,000
Allowance for loan losses	$ (1,000)

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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, 2017	Mar. 31, 2016
Allowance for loan losses:
Beginning balance	$ 4,603	$ 4,828
Provision for (recapture of) loan losses	(350)	(300)
Recoveries	139	6
Ending balance	4,392	4,534
Single family
Allowance for loan losses:
Beginning balance	367	597
Provision for (recapture of) loan losses	(37)	(69)
Ending balance	330	528
Multi-family
Allowance for loan losses:
Beginning balance	2,659	1,658
Provision for (recapture of) loan losses	52	208
Ending balance	2,711	1,866
Commercial real estate
Allowance for loan losses:
Beginning balance	215	469
Provision for (recapture of) loan losses	(140)	(25)
Ending balance	75	444
Church
Allowance for loan losses:
Beginning balance	1,337	2,083
Provision for (recapture of) loan losses	(226)	(413)
Recoveries	139	6
Ending balance	1,250	1,676
Construction
Allowance for loan losses:
Beginning balance	8	3
Provision for (recapture of) loan losses	1
Ending balance	9	3
Commercial - other
Allowance for loan losses:
Beginning balance	17	18
Provision for (recapture of) loan losses	(1)	(1)
Ending balance	16	$ 17
Consumer
Allowance for loan losses:
Provision for (recapture of) loan losses	1
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, 2017	Dec. 31, 2016	Mar. 31, 2016	Dec. 31, 2015
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$ 602	$ 656
Collectively evaluated for impairment	3,790	3,947
Total ending allowance balance	4,392	4,603	$ 4,534	$ 4,828
Loans:
Loans individually evaluated for impairment	12,512	11,897
Loans collectively evaluated for impairment	353,618	372,160
Total ending loans balance	366,130	384,057
Single family
Ending allowance balance attributable to loans:
Individually evaluated for impairment	118	125
Collectively evaluated for impairment	212	242
Total ending allowance balance	330	367	528	597
Loans:
Loans individually evaluated for impairment	640	644
Loans collectively evaluated for impairment	98,539	104,688
Total ending loans balance	99,179	105,332
Multi-family
Ending allowance balance attributable to loans:
Individually evaluated for impairment	2
Collectively evaluated for impairment	2,709	2,659
Total ending allowance balance	2,711	2,659	1,866	1,658
Loans:
Loans individually evaluated for impairment	638	642
Loans collectively evaluated for impairment	221,740	230,798
Total ending loans balance	222,378	231,440
Commercial real estate
Ending allowance balance attributable to loans:
Collectively evaluated for impairment	75	215
Total ending allowance balance	75	215	444	469
Loans:
Loans individually evaluated for impairment	1,323
Loans collectively evaluated for impairment	6,449	8,921
Total ending loans balance	7,772	8,921
Church
Ending allowance balance attributable to loans:
Individually evaluated for impairment	468	516
Collectively evaluated for impairment	782	821
Total ending allowance balance	1,250	1,337	1,676	2,083
Loans:
Loans individually evaluated for impairment	9,845	10,545
Loans collectively evaluated for impairment	25,779	26,678
Total ending loans balance	35,624	37,223
Construction
Ending allowance balance attributable to loans:
Collectively evaluated for impairment	9	8
Total ending allowance balance	9	8	3	3
Loans:
Loans collectively evaluated for impairment	855	827
Total ending loans balance	855	827
Commercial - other
Ending allowance balance attributable to loans:
Individually evaluated for impairment	14	15
Collectively evaluated for impairment	2	2
Total ending allowance balance	16	17	$ 17	$ 18
Loans:
Loans individually evaluated for impairment	66	66
Loans collectively evaluated for impairment	241	242
Total ending loans balance	307	308
Consumer
Ending allowance balance attributable to loans:
Collectively evaluated for impairment	1
Total ending allowance balance	1
Loans:
Loans collectively evaluated for impairment	15	6
Total ending loans balance	$ 15	$ 6

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Loans Receivable Held for Investment - Loans Individually Evaluated for Impairment by Loan Type (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Impaired loans
Unpaid Principal Balance	$ 15,067	$ 14,628
Recorded Investment	12,512	11,897
Allowance for Loan Losses Allocated, With an allowance recorded	602	656
Single family
Impaired loans
Unpaid Principal Balance, With an allowance recorded	640	644
Recorded Investment, With an allowance recorded	640	644
Allowance for Loan Losses Allocated, With an allowance recorded	118	125
Multi-family
Impaired loans
Unpaid Principal Balance, With no related allowance recorded		642
Unpaid Principal Balance, With an allowance recorded	638
Recorded Investment, With no related allowance recorded		642
Recorded Investment, With an allowance recorded	638
Allowance for Loan Losses Allocated, With an allowance recorded	2
Commercial real estate
Impaired loans
Unpaid Principal Balance, With no related allowance recorded	1,323
Recorded Investment, With no related allowance recorded	1,323
Church
Impaired loans
Unpaid Principal Balance, With no related allowance recorded	6,620	5,946
Unpaid Principal Balance, With an allowance recorded	5,780	7,330
Recorded Investment, With no related allowance recorded	4,226	3,589
Recorded Investment, With an allowance recorded	5,619	6,956
Allowance for Loan Losses Allocated, With an allowance recorded	468	516
Commercial - other
Impaired loans
Unpaid Principal Balance, With an allowance recorded	66	66
Recorded Investment, With an allowance recorded	66	66
Allowance for Loan Losses Allocated, With an allowance recorded	$ 14	$ 15

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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, 2017	Mar. 31, 2016
Impaired loans
Average Recorded Investment	$ 12,150	$ 15,348
Cash Basis Interest Income Recognized	246	230
Foregone interest income if impaired loans had performed according to terms	46	119
Single family
Impaired loans
Average Recorded Investment	642	951
Cash Basis Interest Income Recognized	7	7
Multi-family
Impaired loans
Average Recorded Investment	640	1,206
Cash Basis Interest Income Recognized	11	41
Commercial real estate
Impaired loans
Average Recorded Investment	331	1,933
Cash Basis Interest Income Recognized		56
Church
Impaired loans
Average Recorded Investment	10,471	11,191
Cash Basis Interest Income Recognized	227	126
Commercial - other
Impaired loans
Average Recorded Investment	66	$ 67
Cash Basis Interest Income Recognized	$ 1

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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, 2017	Dec. 31, 2016
Past due receivable
Total Past Due	$ 1,795	$ 1,388
Current	364,335	382,669
30-59 Days Past Due
Past due receivable
Total Past Due	412	1,324
60-89 Days Past Due
Past due receivable
Total Past Due	1,383	64
Single family
Past due receivable
Total Past Due	60	64
Current	99,119	105,268
Single family | 60-89 Days Past Due
Past due receivable
Total Past Due	60	64
Multi-family
Past due receivable
Current	222,378	231,440
Commercial real estate
Past due receivable
Total Past Due	1,323	1,324
Current	6,449	7,597
Commercial real estate | 30-59 Days Past Due
Past due receivable
Total Past Due		1,324
Commercial real estate | 60-89 Days Past Due
Past due receivable
Total Past Due	1,323
Church
Past due receivable
Total Past Due	412
Current	35,212	37,223
Church | 30-59 Days Past Due
Past due receivable
Total Past Due	412
Construction
Past due receivable
Current	855	827
Commercial - other
Past due receivable
Current	307	308
Consumer
Past due receivable
Current	$ 15	$ 6

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Loans Receivable Held for Investment - Recorded Investment in Non-accrual Loans by Loan Type (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Investment in non-accrual loans by type of loans
Total non-accrual loans	$ 4,164	$ 2,944
Loans 90 days or more delinquent that were accruing interest	0	0
Commercial real estate
Investment in non-accrual loans by type of loans
Total non-accrual loans	1,323
Church
Investment in non-accrual loans by type of loans
Total non-accrual loans	$ 2,841	$ 2,944

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Loans Receivable Held for Investment - Troubled Debt Restructuring (Details) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2017 USD ($) loan	Mar. 31, 2016 loan	Dec. 31, 2016 USD ($)
Troubled debt restructuring
Loans classified as Troubled Debt Restructurings	$ 10,800		$ 11,500
Specific reserves allocated to TDRs	$ 602		$ 656
Timely payment period for return to accrual status	6 months		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	$ 2,400		2,500
Accrual status
Troubled debt restructuring
Loans classified as Troubled Debt Restructurings	$ 8,400		$ 9,000

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Loans Receivable Held for Investment - Risk Category of Loans by Loan Type (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Credit Quality Indicators
Loans receivable	$ 366,130	$ 384,057
Single family
Credit Quality Indicators
Loans receivable	99,179	105,332
Multi-family
Credit Quality Indicators
Loans receivable	222,378	231,440
Commercial real estate
Credit Quality Indicators
Loans receivable	7,772	8,921
Church
Credit Quality Indicators
Loans receivable	35,624	37,223
Construction
Credit Quality Indicators
Loans receivable	855	827
Commercial - other
Credit Quality Indicators
Loans receivable	307	308
Consumer
Credit Quality Indicators
Loans receivable	15	6
Pass
Credit Quality Indicators
Loans receivable	354,133	369,454
Pass | Single family
Credit Quality Indicators
Loans receivable	99,179	105,332
Pass | Multi-family
Credit Quality Indicators
Loans receivable	220,746	228,522
Pass | Commercial real estate
Credit Quality Indicators
Loans receivable	6,449	6,965
Pass | Church
Credit Quality Indicators
Loans receivable	26,648	27,560
Pass | Construction
Credit Quality Indicators
Loans receivable	855	827
Pass | Commercial - other
Credit Quality Indicators
Loans receivable	241	242
Pass | Consumer
Credit Quality Indicators
Loans receivable	15	6
Watch
Credit Quality Indicators
Loans receivable	1,137	2,417
Watch | Multi-family
Credit Quality Indicators
Loans receivable		1,274
Watch | Church
Credit Quality Indicators
Loans receivable	1,137	1,143
Special Mention
Credit Quality Indicators
Loans receivable	611	1,165
Special Mention | Multi-family
Credit Quality Indicators
Loans receivable	340	342
Special Mention | Church
Credit Quality Indicators
Loans receivable	271	823
Substandard
Credit Quality Indicators
Loans receivable	10,249	11,021
Substandard | Multi-family
Credit Quality Indicators
Loans receivable	1,292	1,302
Substandard | Commercial real estate
Credit Quality Indicators
Loans receivable	1,323	1,956
Substandard | Church
Credit Quality Indicators
Loans receivable	7,568	7,697
Substandard | Commercial - other
Credit Quality Indicators
Loans receivable	$ 66	$ 66

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Junior Subordinated Debentures (Details) - USD ($) $ in Thousands		3 Months Ended
	Oct. 16, 2014	Mar. 31, 2017	Dec. 31, 2016	Mar. 17, 2004
Junior Subordinated Debentures
Junior subordinated debentures		$ 5,100	$ 5,100
Floating Rate Junior Subordinated Debentures
Junior Subordinated Debentures
Junior subordinated debentures	$ 5,100
Effective interest rate on debentures (as a percent)		3.69%
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%
Floating Rate Junior Subordinated Debentures | Private Placement
Junior Subordinated Debentures
Junior subordinated debentures				$ 6,000

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Fair Value - Assets Measured at Fair Value on a Recurring Basis (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Fair Value
Transfer between level 1 and level 2	$ 0	$ 0
Transfer between level 2 and level 1	0	0
Transfer into level 3	0	0
Transfer out of level 3	0	$ 0
Recurring Basis | Residential mortgage-backed
Fair Value
Securities available-for-sale, at fair value	10,565,000		$ 11,214,000
Recurring Basis | U.S. Government and federal agency
Fair Value
Securities available-for-sale, at fair value	1,989,000		1,988,000
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	1,989,000		1,988,000
Recurring Basis | Significant Other Observable Unobservable Inputs (Level 2) | Residential mortgage-backed
Fair Value
Securities available-for-sale, at fair value	$ 10,565,000		$ 11,214,000

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Fair Value - Assets Measured at Fair Value on Non-recurring Basis (Details) - Non-Recurring Basis - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Fair Value
Losses recognized on loans	$ 0	$ 0
Impaired loans carried at fair value of collateral | Significant Unobservable Inputs (Level 3)
Fair Value
Impaired loans carried at fair value of collateral	$ 1,683		$ 1,744

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Fair Value - Valuation Methodology and Unobservable Inputs (Details) - Non-Recurring Basis - Significant Unobservable Inputs (Level 3) - Impaired loans carried at fair value of collateral - Third Party Appraisal	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Minimum
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)	(2.00%)	(2.00%)
Maximum
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)	0.00%	0.00%
Weighted Average
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)	(1.00%)	(1.00%)

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Fair Value - Fair Value - Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Financial Assets:
Securities available-for-sale	$ 12,554	$ 13,202
Carrying Value
Financial Assets:
Cash and cash equivalents	27,209	18,430
Securities available-for-sale	12,554	13,202
Loans receivable held for sale	33,756
Loans receivable held for investment	361,738	379,454
Accrued interest receivable	1,170	1,178
Federal Home Loan Bank stock	2,835	2,573
Financial Liabilities:
Deposits	296,564	287,427
Federal Home Loan Bank advances	101,000	85,000
Junior subordinated debentures	5,100	5,100
Accrued interest payable	124	154
Fair Value
Financial Assets:
Cash and cash equivalents	27,209	18,430
Securities available-for-sale	12,554	13,202
Loans receivable held for sale	34,226
Loans receivable held for investment	364,723	382,717
Accrued interest receivable	1,170	1,178
Federal Home Loan Bank stock	2,835	2,573
Financial Liabilities:
Deposits	286,902	278,254
Federal Home Loan Bank advances	101,507	85,748
Junior subordinated debentures	4,436	4,414
Accrued interest payable	124	154
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value
Financial Assets:
Cash and cash equivalents	27,209	18,430
Securities available-for-sale	1,989	1,988
Accrued interest receivable	71	64
Federal Home Loan Bank stock	2,835	2,573
Significant Other Observable Unobservable Inputs (Level 2) | Fair Value
Financial Assets:
Securities available-for-sale	10,565	11,214
Loans receivable held for sale	34,226
Accrued interest receivable	28	29
Financial Liabilities:
Deposits	286,902	278,254
Federal Home Loan Bank advances	101,507	85,748
Accrued interest payable	117	147
Significant Unobservable Inputs (Level 3) | Fair Value
Financial Assets:
Loans receivable held for investment	364,723	382,717
Accrued interest receivable	1,071	1,085
Financial Liabilities:
Junior subordinated debentures	4,436	4,414
Accrued interest payable	$ 7	$ 7

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Stock-based Compensation (Details) - 2008 LTIP - USD ($)	1 Months Ended	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Stock-based compensation
Shares authorized to be granted under stock compensation plan		2,000,000
Shares available for future awards under stock compensation plan		1,338,892
Stock Options
Shares
Outstanding at beginning of year (in shares)		540,625	90,625
Granted (in shares)			450,000
Outstanding at end of year (in shares)	540,625	540,625	540,625
Exercisable at end of year (in shares)	90,625	180,625	90,625
Weighted Average Exercise Price
Outstanding at beginning of the year (in dollars per share)		$ 2.18	$ 4.95
Granted price (in dollars per share)			1.62
Outstanding at end of year (in dollars per share)	$ 2.18	2.18	2.18
Exercisable at end of year (in dollars per share)	$ 4.95	$ 3.29	$ 4.95
Additional disclosures
Weighted Average Remaining Contractual Life		7 years 8 months 27 days	7 years 8 months 27 days
Weighted average remaining contractual term, options exercisable		5 years 5 months 9 days	3 years
Aggregate Intrinsic Value	$ 140,000	$ 86,000	$ 140,000
Aggregate Intrinsic Value (Exercisable)		17,000
Stock Options | Senior Executive Officers
Stock-based compensation
Vesting period of stock award			5 years
Contractual term of option awards			10 years
Fair value of stock options			$ 194,000
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%
Stock based compensation expense		$ 10,000	$ 3,000
Shares
Granted (in shares)		0	450,000
Weighted Average Exercise Price
Exercised price (in dollars per share)			$ 1.62
Additional disclosures
Unrecognized compensation cost		$ 152,000
Period for recognizing unrecognized compensation cost		3 years 10 months 24 days
Restricted stock | Chief Executive Officer
Stock-based compensation
Restricted stock award (in shares)	120,483
Stock based compensation expense		$ 26,000	$ 0
Additional disclosures
Unrecognized compensation cost		$ 119,000
Period for recognizing unrecognized compensation cost		1 year 2 months 1 day
Two-year period | Restricted stock | Chief Executive Officer
Stock-based compensation
Restricted stock award (in shares)	100,000
Vesting period of stock award	2 years
Three-year period | Restricted stock | Chief Executive Officer
Stock-based compensation
Restricted stock award (in shares)	20,483
Vesting period of stock award	3 years

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Regulatory Matters (Details)	Mar. 31, 2017	Dec. 31, 2016
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
Regulatory Matters
Capital conservation buffer annual increase (as a percent)	0.625%
Conservation Buffer Rule Subsequent to 2016
Regulatory Matters
Capital conservation buffer annual increase (as a percent)	0.625%
Maximum | Conservation Buffer Rule
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, 2017	Dec. 31, 2016
Regulatory Matters
Tier-1 Leverage	$ 46,793	$ 43,954
Tier 1 Leverage, ratio (as a percent)	10.77%	10.60%
Common Equity Tier 1	$ 46,793	$ 43,954
Common Equity Tier 1, ratio (as a percent)	15.39%	15.36%
Tier 1	$ 46,793	$ 43,954
Tier 1, ratio (as a percent)	15.39%	15.36%
Total Capital	$ 50,602	$ 47,544
Total Capital, ratio (as a percent)	16.64%	16.62%
Leverage required for capital adequacy purposes	$ 17,379	$ 16,594
Leverage required for capital adequacy purposes, ratio (as a percent)	4.00%	4.00%
Common Equity Tier 1 required for capital adequacy purposes	$ 13,685	$ 12,875
Common Equity Tier 1 required for capital adequacy purposes, ratio (as a percent)	4.50%	4.50%
Tier 1 required for capital adequacy purposes	$ 18,246	$ 17,166
Tier 1 required for capital adequacy purposes, ratio (as a percent)	6.00%	6.00%
Total capital required for capital adequacy purposes	$ 24,328	$ 22,888
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, 2017	Dec. 31, 2016
Basel III and Dodd Frank Rules
Tier 1 Leverage required to be Well Capitalized	$ 21,723	$ 20,742
Tier 1 Leverage required to be Well Capitalized (as a percent)	5.00%	5.00%
Common Equity Tier I required to be Well Capitalized	$ 19,767	$ 18,597
Common Equity Tier I required to be Well Capitalized (as a percent)	6.50%	6.50%
Tier I Capital required to be Well Capitalized	$ 24,328	$ 22,888
Tier I Capital required to be Well Capitalized (as a percent)	8.00%	8.00%
Total Capital required to be Well Capitalized	$ 30,410	$ 28,610
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, 2017	Dec. 31, 2016
Income Taxes
Period for which prior cumulative losses considered in assessing the realization of deferred tax assets	2 years
Valuation allowance	$ 0.0	$ 0.0
Net deferred tax assets	$ 6.4	$ 6.9

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Concentration of Credit Risk (Details)	3 Months Ended
	Mar. 31, 2017
Long-time Customer | Deposits
Concentration of Credit Risk
Percentage of concentration of risk	11.00%

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Subsequent Event (Details) - Subsequent Event - USD ($) $ in Thousands		3 Months Ended
	Apr. 12, 2017	Jun. 30, 2017
Executive | Mutual General Release Agreement & Salary Continuation Agreement
Subsequent Event
Amount accrued as of termination date	$ 1,200
Executive | Mutual General Release Agreement
Subsequent Event
Amount paid under agreement	$ 500
Payment period (in years)	4 years
Forecast | Salary Continuation Agreement
Subsequent Event
Increase in net earnings		$ 420