Broadway Financial banks on customers in underserved areas of L.A.
The small institution that began in 1946 as the Broadway Federal Savings & Loan Assn. holds a historic place in the Los Angeles banking community.
It was one of just a handful of African American-owned lending institutions that were opened to serve the financial needs of minorities who had largely been shunned by the city’s biggest banks.
Today, a parent company, Broadway Financial Corp., was created to hold what is now called Broadway Federal Bank. The bank has branches in Inglewood, mid-Wilshire and near the Los Angeles Coliseum.
Broadway Federal is a community development bank that puts its loans and other banking efforts to work primarily in underserved communities near their branches. It also strives to expand into more diverse, though still underserved, areas.
“We believe that we are in the right place at the right time,” said Broadway Financial Chief Executive Wayne-Kent A. Bradshaw, 68.
Bradshaw said that the bank’s sweet spot is financing the purchase of small apartment buildings that usually are valued at $500,000 to $2.5 million.
“And in that space,” Bradshaw said, “we are well positioned to serve our historical constituents as well as low- to moderate-income Latinos and Asian-Pacific Islanders.”
The latest
The bank needed $9 million from the Treasury Department’s Troubled Asset Relief Program in 2008 to help it stay afloat. Others helped as well. Koreatown’s Nara Bank, now part of BBCN Bancorp, gave Broadway Federal a loan to shore up finances.
The Treasury and the nonprofit National Community Investment Fund, which had backed Broadway Federal’s 2013 recapitalization, agreed to convert their preferred shares to common stock — giving up half the amount owed them.
The Treasury Department’s shares give the government about a 35% stake in the bank. Gapstow Capital Partners, a private equity fund, holds about 30%.
In its most recent financial report, for the third quarter last year, Broadway Federal posted total revenue of $4 million. Net income rose to $765,000 compared with $584 a year earlier.
Accomplishments
Broadway Federal avoided the fate of the more than 400 banks — 38 of them in California — that failed during the Great Recession and the early years of the recovery.
Now, the 69-year-old financial institution is the sole surviving African American-owned bank holding company in Los Angeles.
“In October, we raised $9.7 million and paid off all of the senior debt,” Bradshaw said. For him, it was the third minority-owned bank he was asked to turn around.
“We used to have five different layers of debt, and we have exchanged all of that for common stock,” he said. “The bank has a clean and pure common stock balance sheet. We spent three years fixing things and now we are ready to take off.”
Challenges
Economic downturns are a constant threat. In 2007, for example, Broadway Federal expanded its loan portfolio to help churches across the country. Many loans went bad as the recession reduced donations from hard-pressed congregations.
Broadway Federal also must compete against larger local and regional financial institutions intent on consolidating their hold in Southern California’s low- to moderate-income communities.
Also, the company’s stock is trading just above $1 a share. If it falls below that threshold for too long, it risks getting delisted from the Nasdaq stock market.
Analysts
Broadway Financial does not receive regular coverage from Wall Street analysts because it is small and because its stock price has languished for years.
Though shares have climbed back above $1, they have traded as low as 66 cents. They have not yet come near their pre-recession highs above $9.
