Broadway Financial Swings to Profit on Deposit Surge, Zero Debt

LOS ANGELES, CA – April 28, 2026 – Broadway Financial Corporation (NASDAQ: BYFC), the parent company of mission-driven City First Bank, announced a dramatic financial turnaround in its first-quarter 2026 results, swinging to a significant profit after a period of losses. The bank reported a consolidated net income of $1.6 million, a stark contrast to the $2.7 million net loss recorded in the same quarter last year, showcasing a remarkable $4.3 million improvement.

The impressive performance was fueled by a potent combination of robust organic growth and strategic balance sheet management. The institution saw a massive influx of deposits, which grew by $155.5 million, and completely eliminated $72 million in borrowings. This transformation not only boosted profitability but also significantly fortified the bank's financial foundation, positioning it for sustained growth while continuing its focus on serving low-to-moderate income communities.

A Decisive Return to Profitability

The first-quarter results paint a clear picture of renewed financial health for the community development financial institution (CDFI). Net income available to common stockholders reached $810,000, a 123.6% increase from the $3.4 million loss reported in the first quarter of 2025. This translates to diluted earnings per share of $0.09, a welcome reversal from the loss of $0.39 per share a year ago.

A key driver of this turnaround was a substantial improvement in core earnings power. Net interest income—the difference between what the bank earns on loans and pays on deposits—climbed 18.9% to $9.6 million. This was bolstered by an expanding net interest margin (NIM), which rose 28 basis points to 2.91% compared to the prior-year quarter. The improved margin reflects both higher yields on interest-earning assets and, critically, a lower cost of funds.

Further contributing to the positive bottom line was a sharp reduction in non-interest expenses, which fell by $2.2 million, or 21.4%, from the prior year. This decrease was primarily due to the absence of a $1.9 million operational loss that impacted the first quarter of 2025. The bank also saw a significant decrease in its provision for credit losses, booking just $200,000 for the quarter compared to $1.9 million a year ago, reflecting stable and strong credit quality within its loan portfolio.

“We are very pleased with our strong first quarter of 2026 results and continue to build on this positive momentum,” said Chief Executive Officer Brian Argrett in the company's announcement. He noted that net income after preferred dividends surged 193.5% compared to the fourth quarter of 2025, driven largely by a 9.5% quarterly increase in net interest income.

Fortifying the Balance Sheet

Beyond the income statement, Broadway Financial executed a series of strategic moves that dramatically strengthened its balance sheet. The most striking achievement was the complete elimination of its borrowings, which stood at $72 million at the end of 2025. By paying down these advances, primarily from the Federal Home Loan Bank (FHLB), the company reduced its interest expense and enhanced its financial flexibility.

This debt reduction was made possible by an extraordinary surge in customer deposits, which increased by 16.9% to $1.1 billion in just three months. The growth was led by a $198.1 million increase in savings deposits, indicating strong customer confidence and successful deposit-gathering initiatives. This influx of low-cost funding was instrumental in allowing the bank to pay off higher-cost borrowings.

The combination of loan growth and a much larger deposit base significantly improved a key metric of bank health: the loans-to-deposits ratio. This ratio fell from 111.8% at the end of 2025 to a much healthier 99.6% at the end of March 2026, indicating the bank is now funding all of its lending activities with customer deposits rather than relying on wholesale funding.

“During the quarter, we further strengthened the balance sheet by eliminating $72.0 million in borrowings, which reduced our cost of funds and contributed to a 28-basis-point improvement in the net interest margin to 2.91% compared to the prior quarter,” Argrett commented.

Mission-Driven Growth in a Competitive Landscape

Broadway Financial's success is particularly noteworthy given its status as a Minority Depository Institution (MDI) and Certified B Corp, with a stated mission to support investments in affordable housing, small businesses, and community facilities in urban centers. The first-quarter results demonstrate that this mission-driven model can generate robust financial returns.

While the community banking sector has seen fluctuating net interest margins, Broadway’s improvement to 2.91% shows positive traction, even as it trails the broader community bank average from late 2024. The bank's ability to attract over $155 million in new deposits in a single quarter suggests its community-focused mission resonates deeply with its customer base, providing a stable and growing source of funding for its lending activities.

Despite its focus on low-to-moderate income communities, which can sometimes present higher credit risks, the bank has maintained strong asset quality. Non-accrual loans stood at just 1.07% of total loans, and non-performing assets were only 0.80% of total assets, underscoring a disciplined approach to underwriting and risk management. This careful balance allows the bank to deploy capital effectively in its target neighborhoods without compromising its financial stability.

A Strategic Outlook

The strong start to 2026 provides Broadway Financial with a solid platform for the future. With zero borrowings and a fortified capital position, the bank is well-equipped to navigate the economic environment and pursue further growth. The Community Bank Leverage Ratio remained strong and unchanged at 14.09%.

CEO Brian Argrett emphasized a forward-looking strategy centered on deepening customer connections and leveraging the bank's newfound financial flexibility. “We remain focused on building long-term relationships, maintaining a strong and flexible balance sheet while executing our mission-driven objectives,” he stated. “These priorities allow us to support our customers, local businesses, and low‑to‑moderate income communities while working to deliver sustainable, long‑term performance.”

Having shed its reliance on external borrowings and proven its ability to attract significant core deposits, City First Broadway appears poised to accelerate its lending and investment activities within its Southern California and Washington, D.C. markets. The successful quarter serves as a powerful testament to the viability of its model, where disciplined financial management and a deep-seated community mission are not mutually exclusive but are instead mutually reinforcing engines for growth.