Broadway Financial Corporation Announces Completion of Recapitalization

  Broadway Financial Corporation Announces Completion of Recapitalization

                              New Capital Raised

   Substantially Increased Common Equity and Reduced Obligations for Senior

Business Wire

LOS ANGELES -- August 22, 2013

Broadway Financial Corporation (the “Company”) (NASDAQ Capital Market: BYFC),
parent of Broadway Federal Bank, f.s.b. (the “Bank”), today reported that it
has completed its previously announced plan to recapitalize (the
“Recapitalization”) its balance sheet, which resulted in an increase of
approximately $27.81 million in the Company’s equity attributable to common

As part of the Recapitalization the Company exchanged common stock equivalents
with an aggregate value of approximately $11.42 million for all of the
Company’s formerly outstanding preferred stock (the “Preferred Stock
Exchanges”), including the Series D and E Fixed Rate Cumulative Perpetual
Preferred Stock held by the United States Department of the Treasury (the
“U.S. Treasury”) and the associated accumulated but unpaid dividends thereon.
The Preferred Stock Exchanges were completed at 50% of the aggregate
liquidation preferences of the preferred stock, totaling $17.55 million, and
100% of the accumulated dividends of approximately $2.65 million.

In addition, the Company raised approximately $4.24 million of new equity
capital through the sale of common stock at a price of $1.00 per share (the
“Private Placement”) to six institutional investors, led by an entity
affiliated with Gapstow Capital Partners. The other investors included both
new and current stockholders. This capital is in addition to the $200,000 of
aggregate common stock sold to directors and officers in July and November

Also as part of the Recapitalization, the Company exchanged common stock
equivalents with a value of approximately $2.57 million for a portion of its
senior bank debt. As a result, the Company’s senior debt was reduced by $2.57
million, from $5.0 million to approximately $2.43 million.

The Company entered into a modified loan agreement for the remaining senior
debt that provides for quarterly payments of interest only for the next 18
months, and monthly payments of principal and interest to final maturity in
February 2019. In addition, the senior lender forgave the accrued but unpaid
interest on the entire amount of the original loan, which will be reported as
a pre-tax gain of approximately $1.75 million in the Company’s third quarter.

The combination of the Preferred Stock Exchanges, the Private Placement, and
the transactions related to the Company’s senior debt exchange increased the
book value of the Company’s common equity by approximately $27.81 million, and
increased the number of shares of common stock and common stock equivalents by
approximately 18.23 million shares, which represents approximately 90.48% of
the total number of pro forma shares of common stock. The Recapitalization
also increased the Company’s pro forma book value to $1.35 per share of common
stock as of June 30, 2013, and based on the assumed uses of proceeds,
increased the Bank’s pro forma Tier 1 Leverage ratio to 9.99%, its pro forma
Tier 1 Risk-Based Capital ratio to 15.86%, and its pro forma Total Risk-Based
Capital ratio to 17.15% as of June 30, 2013.

The common stock equivalents issued in the Recapitalization consist of two new
series of non-cumulative preferred stock, Series F Common Stock Equivalents
and Series G Non-Voting Preferred Stock. The Series F Common Stock Equivalents
are mandatorily convertible into new common stock if the stockholders of the
Company approve the authorization of additional shares of common stock at a
special meeting (the “Special Meeting”) that the Company intends to call in
the near future, and the Series G Non-Voting Preferred Stock will be
mandatorily convertible into new non-voting common stock if the stockholders
of the Company approve the creation of a new series of non-voting common stock
at the Special Meeting. After the mandatory conversions, the Company’s only
outstanding equity securities will be common stock and non-voting common

Chief Executive Officer, Wayne-Kent Bradshaw, stated, “Consummation of the
Recapitalization represents a major milestone in our overall plan to return
the Company to a healthy financial position capable of producing profitable
growth for our investors. We are especially pleased that we were able to
obtain investments from strong, new investors, such as Gapstow Capital
Partners, VEDC, Economic Resources Corporation, and the California Community
Foundation, which support our mission of serving low-to-moderate income
communities in Southern California. In addition, we are thankful for the
support of existing stockholders, such as the National Community Investment
Fund, which participated in the Recapitalization. In the near term we will
accelerate our efforts to improve operations and pursue growth, implement
other steps of our overall capital plan, and continue our efforts to remove
the restrictions under our Cease and Desist Orders.”

Jack Thompson, Head of Financial Institutions Investments of Gapstow Capital
Partners, commented, “We are proud to help Broadway Financial recapitalize so
they can continue making loans to foster local businesses. Gapstow Capital
Partners has invested in a number of community banks that, like Broadway
Financial, are the lifeblood of their communities. We believe that their
health is a vital component of the overall economic recovery in the U.S.”

Paul Hughes of BlackTorch Capital served as financial advisor to the Company.

Arnold & Porter, LLP served as legal advisor to the Company.

Additional information regarding the transactions comprising the
Recapitalization will be provided in the Form 8-K Current Report that the
Company will file in the next few days.

About Broadway Financial Corporation

Broadway Financial Corporation conducts its operations through its
wholly-owned subsidiary, Broadway Federal Bank, f.s.b., which is the leading
community-oriented savings bank in Southern California serving low to moderate
income communities. We offer a variety of residential and commercial real
estate loan products for consumers, businesses, and non-profit organizations,
other loan products, and a variety of deposit products, including checking,
savings and money market accounts, certificates of deposits and retirement
accounts. The Bank operates three full service branches, two in the city of
Los Angeles, and one located in the nearby city of Inglewood, California.

Information about the Company may be obtained by writing to: Broadway
Financial Corporation, Investor Relations, 5055 Wilshire Blvd., Suite 500, Los
Angeles, CA 90036, or by visiting our website at

About Gapstow Capital Partners

Gapstow Capital Partners (“Gapstow”) is an investment firm, based in New York
City, focused on identifying investment opportunities in the credit markets
and banking industry. Gapstow was founded in 2009 and has over $800 million in
assets. Gapstow manages a number of specialized portfolios, including one that
makes direct equity investments in small community banks across the United
States. Please refer to for more information.

About VEDC

VEDC is the largest non-profit small business lender in California offering
direct micro and small business loans through a number of programs, including
SBA Community Advantage and SBA 504 loans. As a national small business
lender, VEDC lends $25 million annually, while providing direct business
assistance services to more than 4,000 businesses. With eight offices
nationwide VEDC has supported the small business owner for 37 years with the
goal of creating and sustaining jobs and businesses in under-served
communities. For more information please visit

About Economic Resources Corporation

Economic Resources Corporation (“ERC”) is a California nonprofit corporation
formed to bring capital, expertise and opportunity to underserved communities
through business development and investment. Established in 1968, ERC was
created by community, business and professional leaders to address the
widespread disparity in economic opportunity, productivity and wealth creation
in underserved communities, and to pursue activities to help mitigate the
economic barriers for effective local development. ERC promotes economic
growth and increases job opportunities in underserved communities by
supporting business development, investing in commercial and industrial real
estate and stimulating the revitalization of economically disadvantaged

About California Community Foundation

California Community Foundation (the “Foundation”) is a tax-exempt public
non-profit organization focused on strengthening communities within Los
Angeles County through philanthropic activities and civic engagement. The
Foundation supports and encourages charitable giving and manages more than
1,600 charitable funds and foundations that, among other things, enhance
community development, promote health and wellness, preserve the environment,
assist aging adults, fund scholarships and support the arts. The Foundation
was created in 1915 by the former Chief Executive Officer of Security Pacific

About National Community Investment Fund

National Community Investment Fund (“NCIF”) is a non-profit private equity
trust that invests in banks, thrifts and credit unions that generate both
financial and social returns. NCIF's has total assets under management of $195
million including $173 million of New Markets Tax Credits. NCIF is the largest
investor in mission-oriented CDFI banks that are focused on underserved and
particularly on low-to-moderate income communities that may be located in
urban, rural or Native American markets, and may be minority-owned or
minority-focused. Since its inception in 1996, NCIF has invested over $34.4
million in 55 financial institutions nationwide.

This press release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements are based upon our management’s current expectations, and involve
risks and uncertainties. Actual results or performance may differ materially
from those suggested, expressed, or implied by the forward-looking statements
due to a wide range of factors including, but not limited to, the general
business environment, the real estate market, competitive conditions in the
business and geographic areas in which the Company conducts its business,
regulatory actions or changes and other risks detailed in the Company’s
reports filed with the Securities and Exchange Commission, including the
Company’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. The
Company undertakes no obligation to publicly revise any forward-looking
statement to reflect any future events or circumstances, except to the extent
required by law.


Broadway Financial Corporation
Wayne-Kent A. Bradshaw, Chief Executive Officer
(323) 556-3248
Brenda Battey, Chief Financial Officer
(323) 556-3264
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