Broadway Financial Corporation was incorporated under Delaware law in 1995 for
the purpose of acquiring and holding all of the outstanding capital stock of Broadway
Federal Savings and Loan Association ("Broadway Federal" or the "Bank")
as part of the Banks conversion from a federally chartered mutual savings association
to a federally chartered stock savings bank. In connection with the conversion,
the Banks name was changed to Broadway Federal Bank, f.s.b. The conversion was
completed, and the Bank became a wholly-owned subsidiary of the Company in January
1996.
The Company is currently regulated by the Board of Governors of the Federal
Reserve System ("FRB"). The Bank is currently regulated by the Office
of the Comptroller of the Currency ("OCC") and the Federal Deposit
Insurance Corporation ("FDIC"). The Banks deposits are insured up
to applicable limits by the FDIC. The Bank is also a member of the Federal Home
Loan Bank ("FHLB") of San Francisco.
We are headquartered in Los Angeles, California and our principal business
is the operation of our wholly-owned subsidiary, Broadway Federal, which has
two offices in Los Angeles and one in the nearby city of Inglewood, California.
Broadway Federals principal business consists of attracting deposits from the
general public in the areas surrounding our branch offices and investing those
deposits, together with funds generated from operations and borrowings, primarily
in mortgage loans secured by (i) residential properties with five or more units
("multi-family"), (ii) commercial real estate and (iii) residential
properties with one-to-four units ("single family"). In addition,
we invest in securities issued by the federal government and federal agencies,
residential mortgage-backed securities and other investments.
Our revenue is derived primarily from interest income on loans and investments.
Our principal costs are interest expenses that we incur on deposits and borrowings,
together with general and administrative expenses. Our earnings are significantly
affected by general economic and competitive conditions, particularly monetary
trends and conditions, including changes in market interest rates and the differences
in market interests rates for the interest bearing deposits and borrowings that
are our principal funding sources and the interest yielding assets in which
we invest, as well as government policies and actions of regulatory authorities.
Our loan portfolio is comprised primarily of mortgage loans which are secured
by single family residential properties, multi-family properties and commercial
real estate, including churches. The remainder of the loan portfolio consists
of commercial business loans, construction loans and consumer loans.
We emphasize the origination of adjustable-rate mortgage loans ("ARMs")
and hybrid ARM loans (ARM loans having an initial fixed rate period) for our
portfolio of loans held for investment. We originate these loans in order to
maintain a high percentage of loans that are subject to more frequent repricing,
thereby reducing our exposure to interest rate risk.
The types of loans that we originate are subject to federal laws and regulations.
The interest rates that we charge on loans are affected by the demand for such
loans, the supply of money available for lending purposes and the rates offered
by competitors. These factors are in turn affected by, among other things, economic
conditions, monetary policies of the federal government, including the FRB,
and legislative tax policies.
Loan originations are derived from various sources including our loan personnel,
local mortgage brokers, advertising and referrals from customers. For all loans
that we originate, upon receipt of a loan application from a prospective borrower,
a credit report is ordered and certain other information is verified by an independent
credit agency and, if necessary, additional financial information is requested.
An appraisal of the real estate intended to secure the proposed loan is required,
which appraisal is performed by an independent licensed or certified appraiser
designated and approved by us. The Board of Directors (the "Board")
annually reviews our appraisal policy. Management reviews annually the qualifications
and performance of independent appraisers that we use.
