Broadway Financial shares surge 11.48% intraday after restating Q1 2025 financials due to loan accounting error adjustments.

Broadway Financial surged 11.48% intraday following the filing of an amended quarterly report (Form 10-Q/A) to correct errors in accounting for loan participation agreements and an appraisal oversight. The restatement reclassified $21.8 million in previously reported loan sales as secured borrowings, adjusted the allowance for credit losses (ACL) by $1.2 million for the quarter ended March 31, 2025, and revised interest income and borrowing costs. While restatements often signal governance concerns, investors appeared to interpret the disclosure as a proactive step toward transparency, addressing errors identified by the Audit Committee and outlining remediation plans for internal control weaknesses. The market may have viewed the correction of the ACL and improved financial reporting accuracy as a positive development, despite the restatement itself, which typically carries a negative connotation.