Broadway Federal Bank
| Company type | Public |
|---|---|
| Template:NASDAQ | |
| Industry | Banking |
| Founded | 1946 |
| Defunct | 2020 |
| Headquarters | Los Angeles, California, US |
Key people |
|
Number of employees | 65 |
| Website | www |
Broadway Federal Bank was established in 1946 as a community-oriented financial institution headquartered in Los Angeles, California. By 2020, it operated a network consisting of three branches and one loan production office.[1]
It held the distinction of being the last bank primarily serving the Black community west of Dallas with its headquarters located in that region.[2]
On August 26, 2020, Broadway Financial Corporation, its parent entity, declared a merger with City First Bank based in Washington, DC. This union formed the largest Black-led banking institution in the United States, managing assets exceeding one billion dollars.
History
The institution began as Broadway Federal Savings and Loan Association in 1946, with a mission to provide financial services to minority populations in the greater Los Angeles area who were underserved by other banks.
It received its charter on November 26, 1946, backed by an initial capital of $150,000, and commenced operations on January 11, 1947 from a modest office on South Broadway.[3]
H. A. Howard acted as the inaugural president until 1949 when leadership passed to Dr. H. Claude Hudson, an investor and community advocate. During Hudson’s tenure, the bank experienced significant growth. In 1954, it relocated to a larger facility at Broadway and 45th Street, redesigned by architect Paul Williams, who was also among the founding board members.[4][5]
Broadway Federal rose to become the second largest bank owned by African Americans in the nation.[6] The expansion into branch locations started in 1966 with an additional site in Mid-Town Los Angeles, also designed by Williams.[4]
Following Dr. Hudson’s retirement in 1972, his son Elbert T. Hudson assumed the roles of chairman and CEO until 1992 when Paul C. Hudson took over those positions.[4]
Soon after Paul C. Hudson’s appointment, the primary branch suffered destruction amid the 1992 Los Angeles riots. Despite this challenge, leadership reiterated their dedication to serving the community.[4]
In December 1995, Broadway transitioned from a mutual savings and loan association into a stock savings bank through an initial public offering that raised close to $9 million. Consequently, Broadway Financial Corporation became the publicly traded parent holding company under NASDAQ symbol BYFC.[4]
Under the current leadership of Wayne-Kent A. Bradshaw—who has served as President and COO since 2009 and CEO since 2012—the institution emphasizes lending to low- and moderate-income neighborhoods. It particularly prioritizes financing multi-family housing projects aimed at alleviating affordable housing shortages throughout Southern California. Its product offerings include residential and commercial real estate loans for individuals, businesses, and non-profit organizations alongside various deposit accounts such as checking, savings, money market funds, certificates of deposit, and retirement plans.
Loan officer kickback scandal
In 2014, a loan officer at Broadway Federal Bank admitted guilt for accepting kickbacks from brokers in exchange for processing mortgage applications from churches that did not meet qualifications. Typically, Broadway compensated brokers with a discounted rebate for submitting loans; however, between 2007 and 2010, this officer insisted that all or a portion of those rebates be diverted to him. According to the Department of Justice, the scheme generated $350,000 for the officer and inflicted losses of at least $4.2 million on the bank. Following his sentencing in 2016, the CEO disclosed that the officer had originated approximately $90 million in church loans, many of which were fraudulent, potentially resulting in losses up to $30 million.
The bank discontinued processing church loans in 2010 and has since significantly reduced its church mortgage holdings to a minimal fraction of its assets.
Partly as a consequence of these financial setbacks, the bank secured a $15 million loan under the Troubled Asset Relief Program (TARP). In 2013, the Treasury converted this loan into equity, becoming the largest shareholder until 2020.
Attempted hostile takeover
In February 2020, Steven A. Sugarman, former CEO of Banc of California, launched an unsolicited bid attempting a hostile takeover of Broadway Federal. Sugarman acquired the remaining Treasury-held shares through Sugarman Enterprises and transferred them to his subsidiary, The Capital Corps LLC, making him the largest shareholder with 1.8 million shares, representing 9.6% ownership.
On June 19, 2020 (Juneteenth), amid heightened interest and online campaigns supporting Black-owned enterprises, the bank’s stock price surged by over 300%, reaching an all-time high of $7.23 per share. Following this dramatic increase, Sugarman declared he would abandon his takeover efforts after divesting his entire stake at an average price of $2.59 per share.
Merger with City First Bank
On August 26, 2020, Broadway Financial Corp announced a "transformational merger of equals" with Washington, DC-based CFBanc Corporation. This merger created the largest Black-led Minority Depository Institution in the United States, with combined assets exceeding $1 billion. Both banks’ boards unanimously approved the transaction, which was anticipated to finalize during the first quarter of 2021. The merged institution will maintain dual headquarters on both coasts and plans to expand into additional urban markets.
CFBanc’s President and CEO Brian E. Argrett will assume the role of CEO for the new entity, while Broadway’s CEO Wayne-Kent Bradshaw will become Chairman of the Board.
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