Broadway Federal closing two branches
Broadway Federal Bank, the oldest black-owned thrift institution west of the Mississippi, is closing two of its five branches and trying to raise $10 million in new capital to shore up the company as the economy continues to sputter.
The bank’s parent, Broadway Financial Corp., will close its Wilshire Boulevard and Leimert Park branches, its least busy retail offices, on Nov. 7. The bank, founded in 1946 in South Los Angeles by a group of prominent African Americans, has focused on urban neighborhoods with large minority populations.
“We definitely plan to manage through this period and come out stronger once the economy rebounds,” Paul C. Hudson, the chairman and chief executive of the Los Angeles savings and loan, said in an interview Tuesday.
Its Midtown, Inglewood and Exposition Park offices will stay open for business and its headquarters will remain on Wilshire. All depositors remain insured by the federal government for at least $250,000. The bank’s specialties include loans made to apartment owners, which have held up relatively well despite the economy’s downdrafts, and to inner-city churches, which have not done so well.
Broadway Federal lost $6.5 million in 2009, turned a $1.9-million profit in 2010, but has lost $1.8 million during the first half of this year.
Compounding the church loan problems was a sizable commercial loan that soured in the economic downdraft, Hudson said. Broadway Federal had to set aside $3 million in the second quarter to cover potential losses on the loan, causing a loss for the quarter despite fewer overall delinquencies on loans.
Bank regulators have ordered Broadway Federal to raise its capital by about $5 million, but Hudson said he wants to double that amount. He said he has commitments for about 25% of his $10-million goal so far.
