<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BROADWAY FINANCIAL CORPORATION
(Name of Registrant as Specified in its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
BROADWAY FINANCIAL CORPORATION
4800 Wilshire Boulevard
Los Angeles, California 90010
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend the Annual
Meeting of Stockholders of Broadway Financial Corporation (the "Company"), which
will be held at the Company's principal executive offices, 4800 Wilshire
Boulevard, Los Angeles, California 90010, at 2:00 p.m., on June 17, 1998.
As described in the accompanying Notice of Annual Meeting of Stockholders and
Proxy Statement, stockholders will be asked to vote on the election of three
directors, to ratify the appointment of the independent auditors for Broadway
Financial Corporation and to transact such other business as may properly come
before the Annual Meeting or any adjournment thereof.
Your vote is very important, regardless of the number of shares you own. I urge
you to mark, sign and date each proxy card you receive and return it as soon as
possible in the postage-paid envelope provided, even if you currently plan to
attend the Annual Meeting. Returning your proxy card will not prevent you from
voting in person, but will assure that your vote is counted if you are unable to
attend.
Sincerely,
Paul C. Hudson
President and Chief Executive Officer
IMPORTANT: IF YOUR BROADWAY FINANCIAL CORPORATION SHARES ARE HELD IN THE
NAME OF A BROKERAGE FIRM OR NOMINEE, ONLY THAT BROKERAGE FIRM OR NOMINEE CAN
EXECUTE A PROXY ON YOUR BEHALF. TO ENSURE THAT YOUR SHARES ARE VOTED, WE URGE
YOU TO TELEPHONE THE INDIVIDUAL RESPONSIBLE FOR YOUR ACCOUNT TODAY AND OBTAIN
INSTRUCTIONS ON HOW TO DIRECT HIM OR HER TO EXECUTE A PROXY.
IF YOU HAVE ANY QUESTIONS OR NEED ANY ASSISTANCE IN VOTING YOUR SHARES, PLEASE
TELEPHONE THE COMPANY'S INVESTOR RELATIONS REPRESENTATIVE, BOB ADKINS, AT (213)
634-1700, EXT 224.
<PAGE>
BROADWAY FINANCIAL CORPORATION
4800 Wilshire Boulevard
Los Angeles, California 90010
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on June 17, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Broadway
Financial Corporation (the "Company") will be held at the Company's principal
executive offices, 4800 Wilshire Boulevard, Los Angeles, California 90010, at
2:00 p.m., on June 17, 1998, for the following purposes:
1) To elect three directors of the Company to serve until the Annual
Meeting to be held in the year 2001 or until their successors are
elected and have been qualified. The Board of Directors has nominated
Mr. Elbert T. Hudson, Dr. Willis K. Duffy and Mrs. Rosa M. Hill.
2) To ratify the appointment of Ernst & Young LLP as the Company's
independent auditing firm for 1998.
3) To consider such other business as may properly come before the Annual
Meeting or any postponement or adjournment thereof.
The Board of Directors has selected May 8, 1998 as the record date for the
Annual Meeting. Only those stockholders of record at the close of business on
that date will be entitled to notice of and to vote at the Annual Meeting or any
postponement or adjournment thereof. A list of stockholders entitled to vote at
the Annual Meeting will be available at the principal executive offices of
Broadway Financial Corporation during the ten days prior to the meeting. Such
list will also be available for inspection at the time and place of the Annual
Meeting.
By Order of the Board of Directors
Bob Adkins
Secretary
Los Angeles, California
April 30, 1998
<PAGE>
BROADWAY FINANCIAL CORPORATION
4800 Wilshire Boulevard
Los Angeles, California 90010
PROXY STATEMENT
Annual Meeting of Stockholders
June 17, 1998
INFORMATION RELATING TO VOTING AT THE ANNUAL MEETING
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Broadway Financial Corporation (the "Company"), a
Delaware corporation, for use at the Annual Meeting of Stockholders of the
Company (the "Annual Meeting") to be held at the Company's principal executive
offices, 4800 Wilshire Boulevard, Los Angeles, California, 90010, at 2:00 p.m.,
on June 17, 1998, and at any postponement or adjournment thereof. This Proxy
Statement and the accompanying form of proxy were first mailed to stockholders
on or about May 18, 1998.
The Company was incorporated under Delaware law in September 1995 for the
purpose of acquiring and holding all of the outstanding capital stock of
Broadway Federal Bank, f.s.b. ("Broadway Federal" or the "Bank") as part of the
Bank's conversion from a federally chartered mutual savings and loan association
to a federally chartered stock savings bank (the "Conversion"). The Conversion
was completed, and the Bank became a wholly-owned subsidiary of the Company, on
January 8, 1996. Unless otherwise indicated, references in this Proxy Statement
to the Company include the Bank as its predecessor.
The Board of Directors of the Company has selected May 8, 1998 as the record
date for the determination of stockholders entitled to notice of and to vote
at the Annual Meeting. A total of 863,447 shares of the Company's common
stock, par value $.01 per share (the "Common Stock"), were outstanding at the
close of business on that date. A majority of the shares entitled to vote,
represented in person or by proxy, will constitute a quorum for the
transaction of business at the Annual Meeting. Stockholders will be entitled
to cast one vote for each share of Common Stock held by them of record at the
close of business on the record date on any matter that may be presented at
the Annual Meeting for consideration and action by the stockholders.
Abstentions will be treated as shares that are present and entitled to vote
for purposes of determining the presence of a quorum, but as unvoted for
purposes of determining the approval of any matter submitted for a vote of
the stockholders. If a broker indicates on its proxy that the broker does
not have
1
<PAGE>
discretionary authority to vote on a particular matter as to certain shares,
those shares will be counted for general quorum purposes but will not be
considered as present and entitled to vote with respect to that matter.
All valid proxies received in response to this solicitation will be voted in
accordance with the instructions indicated thereon by the stockholders giving
such proxies. If no contrary instructions are given, such proxies will be
voted FOR the election of the directors named in this Proxy Statement and FOR
approval of the appointment of Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending December 31, 1998. Although the Board of
Directors currently knows of no other matter to be brought before the Annual
Meeting, if other matters properly come before the Annual Meeting and may
properly be acted upon, including voting on a substitute nominee for director
in the event that one of the nominees named in this Proxy Statement becomes
unwilling or unable to serve before the Annual Meeting, the proxy will be
voted in accordance with the best judgement of the persons named in the proxy.
Any stockholder has the power to revoke his or her proxy at any time before
it is voted at the Annual Meeting by delivering a later signed and dated
proxy or other written notice of revocation to Bob Adkins, Secretary of the
Company, at 4800 Wilshire Boulevard, Los Angeles, California 90010. A proxy
may also be revoked if the person executing the proxy is present at the
Annual Meeting and chooses to vote in person.
The principal solicitation of proxies is being made by mail. The Company has
retained American Securities Transfer & Trust, Inc., the Company's transfer
agent, to assist in the solicitation of proxies for an estimated fee of $1,619
plus reimbursement for certain expenses. To the extent necessary, proxies may
be solicited by certain officers, directors and employees of the Company, or its
wholly-owned subsidiary, none of whom will receive additional compensation
therefor, and may also be solicited by telegram, telephone or personal contact.
The Company will bear the cost of the solicitation of proxies, including
postage, printing and handling, and will reimburse brokers and other nominee
holders of shares for their expenses incurred in forwarding solicitation
material to beneficial owners of shares.
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides that the Board of Directors
shall be divided into three classes, with the term of one class of directors to
expire each year. Three directors are to be elected at the Annual Meeting. The
Certificate of Incorporation does not provide for cumulative voting in the
election of directors.
The following table sets forth the names and certain information regarding the
persons who are currently members of the Company's Board of Directors, including
those nominated by the Board of Directors for reelection. If elected, Mr.
Elbert T. Hudson, Dr. Willis K. Duffy and Mrs. Rosa M. Hill will each serve for
a term of three years or until their respective successors are elected and
qualified. The three nominees have consented to be named and have indicated
their intention to serve if elected. Each director listed below, except Mr.
Daniel A.Medina,
2
<PAGE>
served as a director of the Bank prior to its reorganization into a holding
company structure. The dates listed below pertaining to length of service as
a director include service as a director of the Bank prior to the Company
formation. If any of the nominees becomes unable to serve as a director for
any reason, the shares represented by the proxies solicited hereby may be
voted for a replacement nominee selected by the Board.
<TABLE>
<CAPTION>
AGE AT
DECEMBER 31, DIRECTOR TERM POSITIONS CURRENTLY HELD WITH
NAME 1997 SINCE EXPIRES THE COMPANY AND THE BANK
- ------------------- ------------ --------- ------- ----------------------------------
<S> <C> <C> <C> <C>
NOMINEES:
Elbert T. Hudson(1) 77 1959 1998 Director and Chairman of the Board
of Company and Bank
Willis K. Duffy 70 1974 1998 Director of Company and Bank
Rosa M. Hill 68 1977 1998 Director of Company and Bank
SIX CONTINUING DIRECTORS:
A. Odell Maddox 51 1986 1999 Director of Company and Bank
Lyle A. Marshall 72 1976 1999 Director of Company and Bank
Daniel A. Medina(2) 40 1997 1999 Director of Company and Bank
Paul C. Hudson(1) 49 1985 2000 Director, President and Chief
Executive Officer of Company and Bank
Kellogg Chan 58 1993 2000 Director of Company and Bank
Larkin Teasley 61 1977 2000 Director of Company and Bank
</TABLE>
- -------------------------------
(1) Elbert T. Hudson and Paul C. Hudson are father and son.
(2) Daniel A. Medina served as an advisor to the Board of Directors of the
Company and Broadway Federal beginning in 1993 and became a director in
1997.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR THE ABOVE NOMINEES.
The business experience of each of the nominees and continuing directors is as
follows:
NOMINEES:
Elbert T. Hudson is Chairman of the Board of both the Company and the Bank and
has engaged in the practice of law since his retirement as Chief Executive
Officer of the Bank in 1992. He was elected as President/Chief Executive
Officer of the Bank in 1972, a position he held until his retirement.
Mr. Hudson is currently Chairman of the Executive Committee of
3
<PAGE>
the Board, a committee he has served on continuously since 1959, and serves
on the Board of Directors of Broadway Service Corporation ("BSC"), a wholly
owned subsidiary of Broadway Federal. He also served on the Loan Committee
of the Board from 1959 through 1984. Mr. Hudson has been a member of the
California Bar since 1953 and was a practicing attorney prior to his election
as President/Chief Executive Officer of Broadway Federal. Mr. Hudson is a
member of the Board of Directors of Golden State Mutual Life Insurance
Company and is a member of its Executive Committee and Chairman of its Audit
Committee. Mr. Hudson is also President of the Board of NAACP "New Careers,"
and is a member of the Board of the Los Angeles Trade Technical College
Foundation.
Willis K. Duffy, D.D.S. is a retired dentist and was a general partner of
Washington Medical Center. Dr. Duffy is the Chairman of the Compensation/
Benefits Committee of the Board. Dr. Duffy also serves as a member of the
Boards of Directors of the Watts/Willowbrook Boys and Girls Club, the
Los Angeles Police Department Historical Society and the Sigma Pi Phi
Foundation.
Rosa M. Hill is the Corporate Secretary of S.J.H Investment Company. She was
formerly an elementary school teacher in the Los Angeles City Schools and Fisk
University Children's School. Mrs. Hill also worked as a social worker with the
Los Angeles County Bureau of Public Assistance. She is the Chairperson of the
Compliance/Community Reinvestment Act ("CRA")/Public Relations Committee of the
Board. She served on the Board of Trustees of Bennett College, Greensboro,
North Carolina. Mrs. Hill has been an active member of Holman United Methodist
Church for over 45 years where she has held many leading roles.
CONTINUING DIRECTORS:
Paul C. Hudson is the as President and Chief Executive Officer of the Company
and the Bank. Mr. Hudson joined Broadway Federal in 1981, was elected to the
Board in 1985, and served in various positions prior to becoming President
and Chief Executive Officer in 1992. Mr. Hudson is a member of the
California and District of Columbia Bars. He is a member of the Boards of
Directors of America's Community Bankers (the national thrift industry
association), the American League of Financial Institutions, Pitzer College,
the Fulfillment Fund, and the California Community Foundation. Mr. Hudson
also chairs the Board of Community Build.
Kellogg Chan has been a member of the Board of Directors since 1993. Now
semi-retired, he previously served as Chairman and Chief Executive Officer of
Universal Bank, f.s.b. from 1994 to 1995, and as a consultant to Seyen
Investments from 1993 to 1994. Currently, Mr. Chan is President of North
American Financing Corporation, a real estate investment banking firm.
Previously, he served as President and Chief Executive Officer of East-West
Bank, Mr. Chan is a past trustee of the Greater Los Angeles Zoo Association,
and past member of the Boards of Directors of the San Marino City Club, the
Southern California Chinese Lawyers Association and the San Gabriel Valley
Council of Boy Scouts. Mr. Chan is a member of the Chinese American Citizens
Alliance, Central City Optimists', and the Chinese Heart Council of the
American Heart Association.
4
<PAGE>
A. Odell Maddox is President and Manager of Maddox & Stabler Construction Co.
Inc. and a real estate broker of Maddox Company, a real estate property
management company. Mr. Maddox is Chairman of the Loan Committee of the
Board.
Lyle A. Marshall is a retired tax attorney. Prior to his retirement in 1993,
he served as President of Lyle A. Marshall & Assoc., Ltd., a consulting firm,
and was co-owner of Drummond Distributing Co. Mr. Marshall was admitted to
practice before the United States Supreme Court, United States District
Court, Eastern District, United States Tax Court and the New York State Bar.
Mr. Marshall is Chairman of the Audit and the Internal Asset Review
Committees of the Board. Mr. Marshall also chairs the Board of the
Watts/Willowbrook Boys & Girls Club.
Larkin Teasley has been President and Chief Executive Officer of Golden State
Mutual Life Insurance Company since 1970 and is a member of its Board of
Directors. Mr. Teasley is a member of the Board of Directors of the Golden
State Minority Foundation, the Greater Los Angeles African American Chamber
of Commerce, the California Chamber of Commerce and the Los Angeles County
Board of Investment for the County Employees Retirement Association. He is
President of the National Insurance Association.
Mr. Daniel A. Medina is Vice President-Acquisitions for Avco Financial
Services, Inc., a subsidiary of Textron, Inc. Mr. Medina joined Avco in
October 1996. Prior to joining Avco, Mr. Medina had been Managing
Director-Corporate Advisory Department for Union Bank of California, N.A., a
subsidiary of the Bank of Tokyo Mitsubishi Bank, since 1992. Mr. Medina has
been a member of the Company's Board since 1997. Prior to that time he was
an advisor to the Broadway Federal Board since 1993 and the Company Board
since 1996.
BOARD MEETINGS AND COMMITTEES:
The Board of Directors of the Company and the Board of Directors of the Bank
held fourteen and fifteen meetings, respectively, during 1997. Until May 1996,
the Company and the Bank together had a total of six joint committees: The
Executive Committee, the Audit Committee, the Compensation/Benefits Committee,
the Loan Committee, the Internal Asset Review Committee and the Compliance
Committee. In May 1996, three separate committees were established by the
Company: the Executive Committee, the Compensation/Benefits Committee and the
Audit Committee.
COMPANY COMMITTEES:
The Executive Committee consists of Messrs. Elbert T. Hudson (Chairperson),
Paul C. Hudson and Kellogg Chan. This committee monitors Company financial
matters, such as analysis of overall earnings performance, focusing on
trends, projections and problem anticipation and resolution. It also
monitors the status of litigation and serves as an interim decision-making
body that functions between Board meetings, counseling the chief executive
officer by providing input on
5
<PAGE>
critical issues and ensuring appropriate Board involvement in the strategic
planning process. During 1997 the Executive Committee had no meetings.
The Audit Committee consists of Mr. Lyle A. Marshall (Chairperson), Mrs. Rosa
Hill and Mr. A. Odell Maddox. The Audit Committee is responsible for
oversight of the internal audit function for the Company, assessment of
accounting systems, monitoring of internal control deficiencies and
monitoring regulatory compliance. The committee is also responsible for
oversight of external auditors. During 1997 the Audit Committee had one
meeting.
The Compensation/Benefits Committee consists of Dr. Willis K. Duffy
(Chairperson), Mr. Larkin Teasley and Mr. Daniel A. Medina. This committee
is responsible for the oversight of salary and wage administration and
various employee benefits, policies and incentive compensation issues at the
Company level. During 1997 the Compensation/Benefits Committee had no
meetings.
BANK COMMITTEES:
The Executive Committee consists of Messrs. Elbert T. Hudson (Chairperson),
Paul C. Hudson, Lyle A. Marshall and Larkin Teasley. This committee monitors
financial matters, including capital adequacy and liquidity, and analyzes
overall earnings performance, focusing on trends, regulations, projections
and problem anticipation and resolution. It also monitors the status of
litigation and serves as an interim decision-making body that functions
between Board meetings, counseling the chief executive officer by providing
input on critical issues and ensuring appropriate Board involvement in the
strategic planning process. The Executive Committee met eight times during
1997.
The Audit Committee consists of Mr. Lyle A. Marshall (Chairperson), Mrs. Rosa M.
Hill, Dr. Willis K. Duffy and Mr. Daniel A. Medina. The Audit Committee
is responsible for oversight of the internal audit function, assessment of
accounting systems, monitoring of internal control deficiencies and
monitoring regulatory compliance. The committee is also responsible for
oversight of external auditors. During 1997 the Audit Committee met eleven
times.
The Compensation/Benefits Committee consists of Dr. Willis K. Duffy
(Chairperson), Messrs, A. Odell Maddox and Larkin Teasley. This committee is
responsible for the oversight of salary and wage administration and various
employee benefits, policies and incentive compensation issues, as well as the
appraisal of the chief executive officer's performance, determination of his
salary and bonus, and making recommendations regarding such matters for
approval by the Board of Directors. During 1997 the committee met seven times.
The Loan Committee consists of Messrs. A. Odell Maddox (Chairperson), Paul C.
Hudson, Kellogg Chan and non-Board member, Mr. Bruce Solomon, Sr. Vice
President-Chief Loan Officer. The Loan Committee is responsible for
developing the lending policies of the Bank, monitoring the loan portfolio
and compliance with established policies, and approving specific loans in
accordance with the Bank's loan policy. During 1997 the committee met twelve
times.
6
<PAGE>
The Internal Asset Review Committee consists of Messrs. Lyle A. Marshall
(Chairperson), Elbert T. Hudson and non-Board members Mr. Bob Adkins, Sr. Vice
President-Chief Financial Officer, and Ms. Alesia Willis, Vice President-Loan
Service Manager. The Internal Asset Review Committee is responsible for the
review and approval of asset classifications, and for monitoring delinquent
loans and foreclosed real estate. In addition, the Internal Asset Review
Committee reviews the adequacy of the Bank's general loan loss allowance.
During 1997 the committee met eleven times.
The Compliance/CRA/Public Relations committee consists of Mrs. Rosa Hill
(Chairperson) and Messrs. Elbert T. Hudson, Kellogg Chan and Daniel A.
Medina. This committee is responsible for reviewing the Bank's compliance
with state and federal regulations, monitoring compliance with the Community
Reinvestment Act and oversight of public relations and community outreach
efforts. During 1997 the committee met six times.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following table sets forth certain information with respect to executive
officers of the Company and/or the Bank who are not directors. Officers of the
Company and the Bank serve at the discretion of and are elected annually by
their respective Boards of Directors.
<TABLE>
<CAPTION>
NAME AGE (1) POSITIONS HELD WITH COMPANY AND BROADWAY FEDERAL
- ---------------- ------- ---------------------------------------------------
<S> <C> <C>
Bob Adkins 47 Chief Financial Officer and Secretary of Company
and Sr. Vice President-Chief Financial Officer
of Broadway Federal
Bruce Solomon 50 Sr. Vice President-Chief Loan Officer of
Broadway Federal
Robert Marrujo 36 Vice President/Chief Savings Officer of Broadway
Federal
</TABLE>
- -------------------------------
(1) As of December 31, 1997.
The business experience of each of the executive officers is as follows:
Bob Adkins joined Broadway Federal in 1994 as the Chief Financial Officer. In
January 1995 Mr. Adkins became Senior Vice President/Chief Financial Officer.
Mr. Adkins also serves as Director and Secretary/Treasurer of BSC. Immediately
prior to joining Broadway Federal, Mr. Adkins was Chief Financial Officer of
Westside Bank of Southern California for three years. Westside Bank was placed
into receivership by regulatory authorities in late 1993. Mr.
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<PAGE>
Adkins has over 20 years experience in the financial services industry,
including experience in public accounting. Mr. Adkins is a Certified Public
Accountant and holds an MBA degree and a Bachelors degree in Accounting. Mr.
Adkins is President of the Board of the California State University at
Los Angeles Foundation and is a past member of the Board of Directors of the
Community Housing Assistance Program, Inc.
Bruce Solomon joined Broadway Federal in 1993 as the Chief Loan Officer and
currently serves as Senior Vice President/Chief Loan Officer and CRA Officer.
Prior to joining Broadway Federal, Mr. Solomon had over 19 years of experience
in the banking industry, primarily in real estate lending with Hancock Savings
and Loan Association, National Home Equity Corporation and Valley Federal
Savings and Loan Association. Mr. Solomon serves on the Boards of Directors of
the Home Loan Counseling Center, Inglewood Neighborhood Housing Services and the
Los Angeles Local Development Corporation.
Robert Marrujo joined Broadway Federal Bank in 1995 as Branch Manager of its
main office and currently serves as Vice President/Chief Savings Officer and
Office of Foreign Asset Control ("OFAC") Compliance Officer. Prior to joining
Broadway Federal Bank, Mr. Marrujo had over 16 years of experience in the
banking industry with Glendale Federal Bank and Great American Bank, where he
served in various management positions. Mr. Marrujo has served on the Boards
of Directors of Inglewood Neighborhood Housing Services, the Inglewood Chamber
of Commerce, and the San Gabriel Chamber of Commerce. He currently serves on
the Community Advisory Council for Big Brothers of Greater Los Angeles.
8
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth, as of March 19, 1998, certain information
concerning the shares of the Company's Common Stock owned by each person
known to the Company to be a beneficial owner of more than 5% of the Company's
Common Stock, by each of the directors and executive officers of the Company
and the Bank, and by all directors and executive officers as a group
(including in each case all "associates" of such persons).
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
- ------------------------------------------ ------------ -----------
<S> <C> <C>
BENEFICIAL OWNERS:
Broadway Federal Bank Employee Stock
Ownership Plan (1) 62,488 7.24%
Wellington Management Company LLP (3)
75 State Street
Boston, Massachusetts 02109 83,000 9.61
Deltec Asset Management Corporation (4)
535 Madison Ave.
New York, NY 10022 215,862 25.00
Travelers Group Inc (5)
388 Greenwich Street
New York, NY 10013 102,250 11.84
DIRECTORS AND EXECUTIVE OFFICERS (1):
Elbert T. Hudson 2,927(2) 0.33
Paul C. Hudson 6,000 0.70
Kellogg Chan 8,927 1.03
Willis K. Duffy 2,500 0.29
Rosa M. Hill 8,927(2) 1.03
A. Odell Maddox 5,000 0.58
Lyle A. Marshall 2,500(2) 0.29
Larkin Teasley 2,700 0.31
Daniel A. Medina 200 0.02
Bob Adkins 200(6) 0.02
All directors and executive officers as
a group (10 persons) 39,881 4.62%
</TABLE>
- -------------------------------
(1) The address for each of the directors and executive officers and the
Broadway Federal Bank Employee Stock Ownership Plan is 4800 Wilshire
Boulevard, Los Angeles, California 90010.
(2) Held jointly with spouse with whom voting and investment power is shared.
9
<PAGE>
(3) Information is derived from a Schedule 13G filed with the Securities and
Exchange Commission by Wellington Management Company, LLP, a Massachusetts
limited liability partnership ("WMC"), on January 13, 1998. WMC, in its
capacity as investment advisor, may be deemed the beneficial owner of
shares of Common Stock owned by its clients, including 83,000 shares,
representing 9.61% of the outstanding Common Stock as of March 19, 1998,
owned by Bay Pond Partners, L.P., a Delaware limited partnership ("Bay").
Wellington Hedge Limited Partnership, a Massachusetts limited partnership
("WHMLP"), is the sole general partner of Bay and Wellington Hedge
Management, Inc., a Massachusetts corporation ("WHM"), is the sole general
partner of WHMLP. Robert W. Doran, John R. Ryan, and Duncan M. McFarland
serve as directors and are the sole stockholders. Messrs. Doran and
McFarland serve as Chairman and Vice Chairman, respectively, of WHM.
The information regarding Bay is derived from a Schedule 13D filed by Bay
on September 6, 1996 with the Securities and Exchange Commission.
(4) All such shares of Common Stock are held by Deltec Asset Management
Corporation, a New York corporation ("Deltec"), for the account of its
brokerage or investment advisory clients over whose accounts Deltec
exercises discretionary authority as to voting, disposition and other
matters. The information regarding Deltec is derived from their Schedule
13D and Form 3 filing with the Securities and Exchange Commission on
May 23, 1997 and from their Form 4 filed with the Securities and
Exchange Commission on January 6, 1998.
(5) Information derived from Schedule 13G filed with the Securities and
Exchange Commission by Travelers Group, Inc. ("TRV"), a Delaware
corporation, and certain subsidiaries, on February 6, 1998. TRV is the
parent holding company for Solomon Smith Barney Holdings, Inc.("SSB") and
Smith Barney, Inc. ("SB"), both Delaware corporations. SB has voting and
dispositive powers for the 102,250 shares owned. The Schedule 13G was
filed on February 6, 1998.
(6) Of 200 shares, 57 shares are held jointly with spouse with whom voting and
investment power is shared.
10
<PAGE>
EXECUTIVE COMPENSATION, BENEFITS AND RELATED MATTERS
The following table sets forth the annual and long-term compensation for the
Company's President/Chief Executive Officer and the Chief Financial
Officer/Secretary, as well as the total compensation paid to each, during the
Company's last three fiscal years:
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------------ ------------------------------ --------
ALL OTHER
NAME AND OTHER ANNUAL RESTRICTED SECURITIES LTIP COMPEN-
PRINCIPAL COMPENSATION STOCK AWARDS UNDERLYING PAYOUTS SATION
POSITION YEAR SALARY ($) BONUS ($) ($) ($) OPTIONS/SARS (#) ($) ($)
- ---------------- ------ ----------- ---------- -------------- -------------- ---------------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul C. Hudson,
President/CEO 1997 125,110 - - 22,317 (a) -
3,619(b)
798(c)
1996 123,484 17,952 - - - - 3,982(b)
798(c)
1995 111,195 15,360 - - - - 1,651(b)
798(c)
Bob Adkins,
CFO/Secretary 1997 102,770 - - 8,927 (a) -
2,924(b)
855(c)
1996 91,725 7,099 - - - - 2,708(b)
756(c)
1995 87,178 6,630 - - - - 1,308(b)
756(c)
</TABLE>
- -------------------------------
(a) The stock options awarded have a grant date of September 17, 1997. At
December 31, 1997 no stock options were exercisable.
(b) Reflects amounts contributed by the Company to the 401(k) Plan on behalf of
each individual. The amounts contributed by the Company each year
represent 100% of each employee's contribution up to 3% of each
individual's salary.
(c) Reflects the dollar value of group term life insurance paid by the Bank
during the periods covered.
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<PAGE>
The following table sets forth certain information concerning stock options
granted during 1997 to the named executives:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES % OF TOTAL OPTIONS
UNDERLYING OPTIONS/SARS GRANTED TO EMPLOYEES IN EXERCISE OR BASE
NAME GRANTED (#)(a) FISCAL YEAR (b) PRICE ($/SHARE) EXPIRATION DATE
- ---------------------- ----------------------- ------------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Paul C. Hudson 22,317 50.83% $11.00 09/17/2007
Bob Adkins 8,927 20.31% $11.00 09/17/2007
</TABLE>
- -------------------------------
(a) The options vest over a 5-year period at the rate of 20% per year.
(b) Total stock options granted to directors, officers and employees during the
year ended December 31, 1997 were 17,264 and 43,909, respectively. The
percentages above represent the percentage of total stock options granted
to officers and employees.
The following table summarizes options exercised during 1997 and the value of
unexercised options held by the named executives at fiscal year-end.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS/SARS
OPTIONS/SARS AT FISCAL AT FISCAL
YEAR-END (#) YEAR-END ($)
SHARES ACQUIRED ON EXERCISABLE (E)/ EXERCISABLE (E)/
NAME EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE (U) UNEXERCISABLE (U)
- ----------------------- ------------------- ------------------ ----------------------- -----------------
<S> <C> <C> <C> <C>
Paul C. Hudson - - 22,317 (U) 50,213 (U)
Bob Adkins - - 8,927 (U) 20,086 (U)
</TABLE>
- -------------------------------
(a) Values are calculated by subtracting the stock option exercise price from
the fair market value of the stock as of December 31, 1997. The fair
market value of the Company's Common Stock at December 31, 1997 was $13.25.
The following table sets forth certain information concerning awards made to
named executives under the Company's Performance Equity Program For Officers
and Employees during 1997.
12
<PAGE>
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK
PRICE-BASED PLANS
--------------------------------------------------
PERFORMANCE OR
OTHER PERIOD
NUMBER OF UNTIL
SHARES, UNITS OR MATURATION OR THRESHOLD TARGET MAXIMUM
NAME OTHER RIGHTS (#) PAYOUT (#) (#) (#)
- --------------------- ----------------- ---------------- ----------- --------- --------
<S> <C> <C> <C> <C> <C>
Paul C. Hudson 6,695 (a) 5 Years 2,276 4,485 6,695
Bob Adkins 4,463 (a) 5 years 1,517 2,990 4,463
</TABLE>
- -------------------------------
(a) Shares shown in this table represent base and performance shares granted
pursuant to the Performance Equity Program For Officers and Employees.
Under this plan, base grants vest in equal installments over a 5 year
period commencing one year from the date of grant, which was September 17,
1997 for both named executives. Performance grants will vest in equal
installments over a 5 year period commencing one year from the date on
which the applicable performance goals are attained. Performance grants
for the named executives are tied to achievement of specified levels of
return on equity for the coming year.
DIRECTORS COMPENSATION
No remuneration was paid to the directors by the Company in 1997. Currently,
the Chairman of the Board of Broadway Federal receives a monthly retainer fee
of $2,800, and all other directors of Broadway Federal, other than the
President, receive a monthly retainer fee of $1,000 each. A fee of $200 is
paid to each director of Broadway Federal, other than the Chairman of the
Board and the President, for special Board meetings. Committee meeting fees
of $150 per meeting are also paid to directors of Broadway Federal, other
than the Chairman of the Board and the President.
SEVERANCE AGREEMENTS
The Company and Broadway Federal have entered into severance agreements with
Messrs. Paul C. Hudson, Bob Adkins, Bruce Solomon and Ms. Ivarene C. Martin,
Vice President/Human Resources for Broadway Federal, having terms ranging
from 12 to 24 months. Commencing on the first anniversary date of such
agreements and continuing on each anniversary date thereafter, the severance
agreements may be extended by the respective Board of Directors of the
Company and Broadway Federal for additional twelve-month periods. Each
severance agreement provides that at any time following a change in control
of the Company or Broadway Federal, as applicable, if the Company or Broadway
Federal, as the case may be, terminates the employee's employment for any
reason other than for cause, or if the employee terminates his or her
employment, the employee or, in the event of death, the employee's
beneficiary, would be entitled to receive a payment equal to up to two years
of the employee's then current annual salary (eighteen months for Mr. Bob
Adkins and Mr. Bruce Solomon, and one year for Ms. Ivarene C. Martin), any
13
<PAGE>
bonuses and any other compensation paid or to be paid to the employee in any
such year, the amount of benefits paid or accrued to the employee pursuant to
any employee benefit plan maintained by Broadway Federal or the Company in any
such year and the amount of any contributions made or to be made on behalf of
the employee to any benefit plan maintained by Broadway Federal or the Company
in any such year. The Company or Broadway Federal would also continue the
employee's life, medical, dental and disability coverage for the remaining
unexpired term of his or her agreement to the extent allowed by the plans or
policies maintained by the Company or Broadway Federal from time to time.
Payments to the employee under Broadway Federal's severance agreements will be
guaranteed by the Company in the event that payments or benefits are not paid by
Broadway Federal. In the event of a change in control of the Company and
Broadway Federal, as applicable, the total payments due under the severance
agreements in the aggregate, based solely on the cash compensation paid to the
four officers covered by the severance agreements for the last fiscal year and
excluding any benefits under any employee benefit plan that may be payable, are
estimated to be up to approximately $555,000.
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP ("Ernst & Young") as the
Company's and the Bank's independent auditors for the fiscal year ending
December 31, 1998. The Company selected Ernst & Young to replace KPMG Peat
Marwick LLP ("KPMG") as its independent auditors on April 18, 1996 based upon
the recommendation of the Company's Audit Committee. KPMG's audit report on the
consolidated financial statements of the Bank as of and for the years ended
December 31, 1995 and 1994 did not contain any adverse opinion or disclaimer of
opinion and was not qualified or modified as to uncertainty, audit scope or
accounting principles. Prior to January 8, 1996, the Company had no assets or
liabilities and did not conduct any business other than that of an
organizational nature and thus did not have any financial statements for the
years ended December 31, 1995 and 1994. It is anticipated that representatives
of Ernst & Young will be present at the Annual Meeting. Ernst & Young will be
given an opportunity to make a statement, if they desire to do so, and will
be available to respond to any appropriate inquires of the stockholders.
In connection with the audits of the two fiscal years ended December 31, 1995,
and the subsequent interim period through April 18, 1996, there were no
disagreements with KPMG on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO RATIFY THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
14
<PAGE>
COMPENSATION/BENEFITS COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's Compensation/Benefits Committee is composed entirely of
independent outside members of the Company's Board of Directors. The Committee
reviews and approves each of the elements of the executive compensation program
of the Company (including its subsidiaries) and continually assesses the
effectiveness and competitiveness of the program. In addition, the Committee
administers the key provisions of the executive compensation program and reviews
with the Board of Directors all major aspects of compensation for the Company's
chief executive officer. The Committee's review of the executive compensation
program includes analyzing compensation programs, pay levels, and business
results compared to a peer group of competitor financial institutions of
comparable asset size.
COMPENSATION PHILOSOPHY
The goals of the executive compensation program are to support a
performance-oriented environment, to reinforce the Company's performance and
business plans, and to enable the Company to attract and retain the executive
talent it needs to maximize its return to stockholders.
The philosophy of the Company is to provide compensation programs designed to
reward achievement of the Company's annual and long-term strategic goals, to
provide compensation opportunities that are competitive with the peer group of
competitor financial institutions, and to offer appropriate stock ownership
opportunities.
ELEMENTS OF THE EXECUTIVE COMPENSATION PROGRAM
BASE SALARIES. The objectives of the base salary program are to offer base
salaries within a salary grade which establishes the value of the position
relative to other positions in the organization and to provide base salary
increases that reward all officers for the ongoing performance of the duties of
their positions and that are consistent with the Company's overall financial
performance. The base salary compensation for executive officers is established
after considering objective criteria which include the review and evaluation of
surveys of compensation paid to the executives of similarly sized financial
institutions.
INCENTIVE COMPENSATION PLAN. The Incentive Compensation Plan (the "Plan") is
intended to provide all employees with the opportunity for incentive
compensation based upon corporate profitability and individual performance. The
Plan has been designed so that 50% of the incentive award results from corporate
returns and 50% derives from individual performance. For the Plan to be
activated, current profits must be sufficient to cover any payments under the
Plan. The Plan establishes various levels of return on assets ("ROA") up to a
maximum ROA of 1.0%. The level of ROA attained determines the incentive awards
to be paid. The Plan has been integrated with the Bank's strategic plan. Thus,
the target ROA is consistent with
15
<PAGE>
management's ROA goal for the year. Half of an employee's total incentive
compensation is based on the Bank's ROA. The balance derives from one of two
factors, depending upon job title and grade level. Management positions are
evaluated based upon achievement of department goals and objectives,
while-non-exempt employees are rewarded based upon semi-annual performance
reviews by their supervisor.
CEO COMPENSATION. Paul Hudson's base salary is intended to be competitive with
base salaries paid other chief executive officers of institutions of similar
size and scope of operations. His base salary is reviewed annually by the
Compensation/Benefits Committee. In addition, the Committee establishes
criteria, based on performance targets, for the CEO incentive compensation
award. Incentive awards and increases in base salary must be recommended by the
Committee and approved by the Board.
The Compensation/Benefits Committee
Dr. Willis K. Duffy
Mr. Larkin Teasley
Mr. Daniel A. Medina
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent
of a registered class of the Company's equity securities, to file reports
(Forms 3, 4 and 5) of stock ownership and changes in ownership with the
Securities and Exchange Commission. Officers, directors and beneficial
owners of more than ten percent of the Company's stock are required by
Securities and Exchange Commission regulations to furnish the Company with
copies of all such forms that they file.
Based solely on the Company's review of the copies of Forms 3, 4 and 5 and the
amendments thereto received by it for the year ended December 31, 1997, or
written representations from certain reporting persons that no Form 5's were
required to be filed by those persons, the Company believes that during the
period ended December 31, 1997, except for the directors listed below, all
filing requirements were complied with by its executive officers, directors and
beneficial owners of more than ten percent of the Company's stock. Director
Larkin Teasley was late filing one Form 4 report relating to the purchase by
him of 200 shares of Common Stock, and Director Daniel A. Medina was late in
filing his initial report on Form 3, reporting ownership by him of 200 shares
of Common Stock.
16
<PAGE>
DATE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR PRESENTATION AT THE ANNUAL
MEETING
Any stockholder of the Company wishing to have a proposal considered for
inclusion in the Company's 1999 proxy solicitation materials must set forth
such proposal in writing and file it with the Secretary of the Company on or
before February 17, 1999. The Board of Directors will review any stockholder
proposals which are filed as required and will determine whether such
proposals meet applicable criteria for inclusion in its proxy solicitation
materials and for consideration at the Annual Meeting. Any stockholder may
make any other proposal at the 1999 Annual Meeting and the same may be
discussed and considered, but unless stated in writing and filed with the
Secretary of the Company on or before May 18, 1999, such proposal may only be
voted upon at a meeting held at least 30 days after the Annual Meeting at
which it is presented.
Under the Company's Bylaws, stockholder nominations for election of directors
may only be made pursuant to timely notice in writing to the Secretary of the
Company not less than 60 days nor more than 90 days prior to the anniversary
date of the previous year's Meeting (between March 19, 1999 and April 18,
1999) to be considered at the Annual Meeting in 1999. Such notice must state
the nominee's name, age and addresses (business and residence), the nominee's
principal occupation or employment, and the class and number of shares of
Common Stock beneficially owned by the nominee on the date of the notice.
The required notice must also disclose certain information relating to the
nominee which would be required to be disclosed in a proxy statement and in
certain other filings under federal securities laws.
PLEASE MARK, SIGN, DATE, AND RETURN THE ACCOMPANYING PROXY CARD IN THE
ENCLOSED-POSTAGE-PAID ENVELOPE AT YOUR EARLIEST CONVENIENCE, WHETHER OR NOT YOU
CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
Bob Adkins
Secretary
17
<PAGE>
BROADWAY FINANCIAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 17, 1998
The undersigned hereby appoints Paul C. Hudson and Bob Adkins, or either of
them, each with full power of substitution, as the lawful proxies of the
undersigned, and hereby authorizes each of them to represent and to vote as
designated below all shares of the Common Stock of Broadway Financial
Corporation (the "Company") which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders of the Company to be
held on June 17, 1998, or any postponement or adjournment thereof.
PLEASE MARK YOUR CHOICE LIKE THIS /X/ IN DARK INK AND SIGN AND
DATE ON THE REVERSE SIDE--MARK ONLY ONE BOX FOR EACH ITEM.
1. Election of Mr. Elbert T. Hudson as director to serve until the Annual
Meeting to be held in 2001.
/ / FOR / / WITHHOLD
2. Election of Dr. Willis K. Duffy as director to serve until the Annual
Meeting to be held in 2001.
/ / FOR / / WITHHOLD
3. Election of Mrs. Rosa M. Hill as director to serve until the Annual Meeting
to be held in 2001.
/ / FOR / / WITHHOLD
4. Ratify the appointment of Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending December 31, 1998.
/ / FOR / / AGAINST / / ABSTAIN
5. In the discretion of the proxy holder(s) on such other business as may
properly come before the Annual Meeting or any postponement or adjournment
thereof.
IMPORTANT--PLEASE SIGN AND DATE ON REVERSE SIDE AND RETURN PROMPTLY
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDERS(S). IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR ITEMS 1, 2, 3 AND 4.
When signing as attorney, executor, administrator, trustee, or guardian,
please give full title as such. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Whether or not you plan to attend the Annual Meeting, you are urged to SIGN
AND RETURN this proxy promptly. You may revoke this proxy at any time prior to
its use.
Dated: _____________________, 1998
__________________________________
(Signature of Stockholder)
Please sign your name EXACTLY as
it appears hereon, date and return
this proxy in the reply envelope
provided. IF YOU RECEIVE MORE THAN
ONE PROXY CARD, PLEASE SIGN AND
RETURN ALL PROXY CARDS RECEIVED.
Please Do Not Fold This Card
