Note 9 – 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 ordinary 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 other 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).

Assets and Liabilities Measured on a Recurring Basis

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

	Fair Value Measurement
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Total
	(In thousands)
At December 31, 2025:
Securities available-for-sale:
Federal agency mortgage-backed securities	$	–	$	114,430		$	–	$	114,430
Federal agency CMOs		–		69,457			–		69,457
Federal agency debt		–		28,413			–		28,413
Municipal bonds		–		4,522			–		4,522
U.S. Treasuries		4,987		–			–		4,987
SBA pools		–		8,275			–		8,275
Asset-backed securities		–		9,269			–		9,269
Corporate bonds		–		17,482			–		17,482
Interest rate swap asset		–		105			–		105
Interest rate swap liability		–		(105	)		–		(105	)

At December 31, 2024:
Securities available-for-sale:
Federal agency mortgage-backed securities	$	–	$	53,029		$	–	$	53,029
Federal agency CMOs		–		20,058			–		20,058
Federal agency debt		–		40,034			–		40,034
Municipal bonds		–		4,388			–		4,388
U.S. Treasuries		77,190		–			–		77,190
SBA pools		–		9,163			–		9,163

There were no transfers between Level 1, Level 2, or Level 3 during the years ended December 31, 2025 or 2024.

Assets Measured on a Nonrecurring Basis

The Company measures certain assets at fair value on a nonrecurring basis and the following is a general description of the methods used to value such assets.

Collateral-Dependent Loans - The fair value of collateral-dependent loans with specific allocations of the allowance for loan losses is generally based on recent 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 for similar loans and collateral underlying loans and result in a Level 3 classification.

The table below presents assets measured at fair value on a nonrecurring basis at December 31, 2025. At December 31, 2024, the Company did not have any assets or liabilities carried at fair value on a nonrecurring basis.

	Fair Value Measurement
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(In thousands)
At December 31, 2025:
Collateral dependent loans: Real estate:
Single-family	$	-	$	-	$	424	$	424
Multi-family		-		-		2,094		2,094
Construction		-		-		7,435		7,435
Commercial - other		-		-		138		138

The following table represents quantitative information about Level 3 fair value assumptions for assets measured at fair value on a non-recurring basis at December 31, 2025.

	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range
	(In thousands)
At December 31, 2025:
Collateral dependent loans: Real estate:
Single-family	$	424	Market approach	Adjustments to market data		5% - 10	%
Multi-family		2,094	Market approach	Adjustments to market data		5% - 10	%
Construction		7,435	Market approach	Adjustments to market data		5% - 10	%
Commercial - other		138	Market approach	Adjustments to market data		5% - 10	%

Fair Values of Financial Instruments

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

	Carrying		Fair Value Measurements at December 31, 2025
	Value		Level 1		Level 2		Level 3		Total
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	10,507	$	10,507	$	–	$	–	$	10,507
Securities available-for-sale		256,835		4,987		251,848		–		256,835
Loans receivable held for investment		1,016,540		–		–		1,002,049		1,002,049
Accrued interest receivable		5,999		36		800		5,163		5,999
Interest rate swaps		105		–		105		–		105
Financial Liabilities:
Non interest bearing deposits	$	105,835	$	–	$	105,835	$	–	$	105,835
Interest bearing deposits		512,034		–		512,034		–		512,034
Time deposits		299,734		–		299,434		–		299,434
FHLB advances		72,000		–		72,019		–		72,019
Securities sold under agreements to repurchase		80,773		–		80,773		–		80,773
Accrued interest payable		1,633		–		1,633		–		1,633
Interest rate swaps		105		–		105		–		105

	Carrying		Fair Value Measurements at December 31, 2024
	Value		Level 1		Level 2		Level 3		Total
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	61,365	$	61,365	$	–	$	–	$	61,365
Securities available-for-sale		203,862		77,190		126,672		–		203,862
Loans receivable held for investment		999,956		–		–		973,183		973,183
Accrued interest receivable		5,001		5,001		–		–		5,001
Bank owned life insurance		3,321		3,321		–		–		3,321
Financial Liabilities:
Deposits	$	745,399	$	–	$	669,695	$	–	$	669,695
FHLB advances		226,888		–		227,150		–		227,150
Securities sold under agreements to repurchase		66,610		–		66,070		–		66,070
Accrued interest payable		1,349		–		1,349		–		1,349

The fair value of financial assets and liabilities was measured using an exit price notion. Although the exit price notion represents the value that would be received to sell an asset or paid to transfer a liability, the actual price received for a sale of assets or paid to transfer liabilities could be different from exit price disclosed.

Historical Timeline

Fiscal Year	Filed
2025	Mar 31, 2026	Showing above
2024	Mar 31, 2025

2023	May 20, 2024

2022	Apr 11, 2023

2021	Apr 15, 2022

2020	Mar 31, 2021

2019	Mar 27, 2020

2018	Mar 29, 2019

2017	Mar 26, 2018

2016	Mar 27, 2017

2015	Mar 28, 2016

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

BROADWAY FINANCIAL CORP \DE\ Fair Value Disclosure

Historical Timeline

About Fair Value Disclosures

Other Available Disclosures