Broadway Federal Bank Enters into Consent Order
Supersedes Previous Order to Cease and Desist Issued to the Bank
Eliminates Certain Restrictions on Bank Growth and Increases Required Capital
LOS ANGELES -- November 5, 2013
Broadway Financial Corporation (the “Company”) (NASDAQ Capital Market: BYFC),
parent of Broadway Federal Bank, f.s.b. (the “Bank”), today reported that the
Bank entered into a Consent Order with the Office of the Comptroller of the
Currency (the “OCC) on October 30, 2013. The Consent Order supersedes the
Order to Cease and Desist that the Bank entered into with the OCC’s
predecessor regulatory agency, the Office of Thrift Supervision (“OTS”), which
was executed on September 9, 2010, as well as a regulatory directive issued to
the Bank earlier in 2010. The terms of the Consent Order were based on the
results of a full regulatory examination of the Bank conducted by the OCC
during the summer of 2013 and coincided with an upgrade of the Bank’s
regulatory rating by the OCC.
The Order to Cease and Desist issued in September 2010 to the Company by the
OTS remains in effect and is now administered by the Federal Reserve Board,
acting through the Federal Reserve Bank of San Francisco.
As part of the Consent Order, the Bank is required to attain, and thereafter
maintain, a Tier 1 (Core) Capital to Adjusted Total Assets ratio of at least
9% and a Total Risk-Based Capital to Risk-Weighted Assets ratio of at least
13%, both of which ratios are greater than the respective 4% and 8% levels for
such ratios that are generally required under OCC regulations. The Bank’s
regulatory capital exceeded both of these higher capital ratios at the end of
each quarter during 2013.
The Consent Order issued by the OCC imposes certain requirements on the Bank.
These requirements include the following, among others:
*The Bank must create a Compliance Committee consisting of at least three
independent Directors to monitor compliance with the Consent Order, among
*The Board of the Bank must prepare and submit a Strategic Plan and a
Capital Plan that is consistent with the Strategic Plan. The Capital Plan
requirement includes requirements regarding targeted capital ratios, as
described above, and prior approval requirements for the payment of
dividends to the Company.
*The Bank must implement an enhanced set of business operational and
corporate governance processes, as well as create a commercial real estate
concentration risk management program and a written program to reduce the
level of assets considered doubtful, substandard or special mention. This
latter program requirement includes requirements to monitor the levels of
such assets on an ongoing basis and to prepare and implement corrective
actions as deemed necessary.
*The Bank must also implement an independent ongoing loan review system and
adopt new policies with respect to maintaining an adequate allowance for
loan and lease losses (“ALLL”).
Also, the Consent Order does not include certain restrictions on the Bank that
had been imposed by the Order to Cease and Desist that had been issued by the
OTS to the Bank, such as the specific limitation on the Bank’s ability to
increase its assets during any quarter, or certain limitations on employment
agreements and compensation arrangements. Pursuant to the Consent Order,
growth in the Bank’s assets must be achieved in a manner that is consistent
with the Strategic Plan and Capital Plan, which must be submitted to the OCC
and receive written determinations of no supervisory objection before they are
Chief Executive Officer, Wayne-Kent Bradshaw stated, “We are pleased that the
OCC has recognized improvements in the Bank’s financial condition and internal
control processes by upgrading our regulatory rating in conjunction with its
recent full regulatory examination. In addition, the Consent Order removes the
restrictions on growth that were contained in the superseded Order to Cease
and Desist, which removal will assist us in our recently implemented plans to
resume prudent growth in a manner consistent with our strategic and capital
plans. We are continuing to implement changes in our controls and processes to
not only comply with the Consent Order, but also strengthen our organization
so that the Consent Order for the Bank and the Order to Cease and Desist for
the Company are removed.”
About Broadway Financial Corporation
Broadway Financial Corporation conducts its operations through its
wholly-owned subsidiary, Broadway Federal Bank, f.s.b., which is a 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 www.broadwayfederalbank.com.
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, changes in 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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