Broadway issues $150 million of preferred stock to the U.S. Treasury Department under the Emergency Capital Investment Program

LOS ANGELES–(BUSINESS WIRE)–Broadway Financial Corporation (“Broadway”, “we”, or the “Company”) (NASDAQ Capital Market: BYFC), announced that the Company has completed a private placement of $150 million of non-cumulative perpetual preferred stock First Lien Series C (the “Preferred Shares”) to the United States Department of Treasury (the “U.S. Treasury”) pursuant to the Emergency Capital Investment Program (“ECIP”).

The ECIP investment by the U.S. Treasury is part of a program to invest more than $8.7 billion in community development financial institutions and minority depository institutions to provide funding to these institutions to increase access to capital for small businesses and minority consumers in traditionally underserved markets. , such as low-to-moderate income communities, which may have been disproportionately affected by the economic effects of the COVID-19 pandemic.

Preferred stock dividends are payable in cash quarterly at an annual rate that depends on Broadway investing the proceeds within the target communities in certain types of loans that match the types of loans the company has historically issued. The initial dividend rate is zero percent for the first two years after issuance, then the floor dividend rate is 0.50% and the cap dividend rate is 2.00%. The dividend rate after the first two years will be reset each year until the tenth anniversary of the issuance of the preferred shares and will be based on the annual change in actual qualified loans relative to a benchmark level of qualified loans, expressed as a percentage of the total liquidation amount of the preferred shares. The final reset will be based on the average annual increase in eligible loans over the nine-year period preceding the last reset date, expressed as a percentage of the total liquidation amount. The preferred shares have an aggregate liquidation amount of $150 million and are redeemable in whole or in part, at the option of the Company on any dividend payment date beginning June 15, 2027, subject to certain stated limitations and exceptions. in the certificate of designations for the preferred shares.

The US Treasury investment is intended to qualify as Tier 1 capital. As of March 31, 2022, Broadway’s equity was $136.2 million, or 12.04% of company assets, and the Tier 1 capital of its banking subsidiary, City First Bank, National Association, was $99.9 million. The issuance of the preferred shares will have no impact on Broadway’s book value per common share.

Chief Executive Brian Argrett said, “We are delighted to announce that we have raised $150 million in gross proceeds from the sale of the preferred shares to the U.S. Treasury, which is more than we originally had. announced when the US Treasury announced that Broadway’s application for ECIP capital has been accepted. The investment will more than double our Tier 1 capital and allow us to significantly increase the scale of Broadway’s operations and improve the economics of the company’s operations. Additionally, this social capital will greatly enhance our ability to advance our mission and multiply the impact we can have on the low-to-moderate income communities we serve. Over time, the proceeds from this equity investment should allow us to more than double the size of Broadway’s loan portfolio.

Gibson, Dunn & Crutcher LLP acted as legal counsel to the Company.

Additional information regarding the preferred shares will be provided in a current report on Form 8-K that the company will file in the coming days.

About CityFirstBroadway

Broadway Financial Corporation operates through its wholly owned banking subsidiary, City First Bank, National Association, which is a leading community bank in the Southern California and Washington, D.C. market, serving the low to moderate income communities. We offer a variety of residential and commercial real estate loan products for consumers, businesses and not-for-profit organizations, other lending products and a variety of deposit products, including checking accounts, credit and debit accounts. savings and money market, certificates of deposit and retirement accounts. .

Shareholders, analysts and others seeking information about the Company should write to: Broadway Financial Corporation, Investor Relations, 4601 Wilshire Boulevard, Suite 150, Los Angeles, CA 90010.

Caution Regarding Forward-Looking Information

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements often include words such as “expect”, “estimate”, “budget “, “anticipate”, “anticipate”, “intend”, “plan”, “may”, “will”, “could”, “should”, “believe”, “predict”, “potential”, “continue”, and similar expressions, but the absence of such words or expressions does not mean that a statement is not forward-looking. These forward-looking statements are based on the current expectations of our management and involve known and unknown risks and uncertainties. Actual results or performance may differ materially from those suggested, expressed or implied by forward-looking statements due to a wide variety of factors. These risk factors include, among others: uncertainty about the duration, scope and impacts of the COVID-19 pandemic; political and economic uncertainty, including the possibility of deterioration in global economic conditions or the stability of credit and financial markets, including due to the military conflict between Russia and Ukraine; changes in the monetary and fiscal policies of the United States government, including the policies of the United States Treasury Department and the Federal Reserve Board; changes in laws, regulations, policies or administrative practices, whether by judicial, governmental or legislative action, and other changes relating to banking, securities, taxation, accounting and financial reporting, environmental protection and our ability to comply with such changes in a timely manner; the company’s future cash to serve and possibly redeem the preferred stock; the possible effects of changes in real estate markets and interest rates, which could affect our future net income and cash flows, or the market value of our assets, including investment securities; risks relating to disruption of management time due to integration activities related to the merger with CFBanc Corporation, as described in our public filings with the SEC (the “Merger”); the risk of possible adverse decisions, judgments, settlements and other results of litigation; the risk that the Merger will adversely affect our ability to retain customers, retain and hire key personnel and our results of operations and business generally; the risk that problems arise in successfully integrating the businesses of the pre-Merger companies, which could prevent the combined company from operating as effectively and efficiently as expected, or that we may not be able to successfully integrate the businesses of the companies prior to the Merger. Merging companies; the risk that we may not be able to realize the synergies or other benefits anticipated from the Merger or that it may take longer than expected to realize such synergies or benefits; the risk that operational issues arising from, and/or capital expenditures necessitated by, the potential need to adapt to industry changes in the information technology systems, on which we are heavily dependent, and other important factors that could cause actual results to differ materially from those projected. All of these factors are difficult to predict and beyond our control. Other factors that could cause results to differ materially from those described above can be found in our annual reports on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K or other documents filed with the SEC and are available on our website at http://www.cityfirstbank.com/node/430 and on the SEC’s website at http:// www.sec.gov.

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