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][ 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][X ] No fee required.
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(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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[ ] 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:
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(4) Date Filed:
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 20, 2001.18, 2003.
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 Companys independent auditors for
Broadway
Financial Corporation2003 and to transact such other business as may properly come before the Annual
Meeting or any postponement or adjournment thereof.
Your vote is very important, regardless of the number of shares you own. Even if
you currently plan to attend the Annual Meeting, I urge you to mark, sign and
date each proxy card you receive and to return it to the Company as soon as
possible in the postage-paid envelope that has been 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, BEVERLYIf your Broadway Financial Corporation shares are held in the name of
a brokerage firm or nominee, only that brokerage firm or nominee may 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 Beverly A. DYCK, ATDyck, the Company's Investor Relations Representative, at
(323) 634-1700, EXTExt 231.
BROADWAY FINANCIAL CORPORATION
4800 Wilshire Boulevard
Los Angeles, California 90010
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on June 20, 200118, 2003
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 20, 2001,18, 2003, for the following purposes:
1) To elect three directors of the Company to serve until the Annual Meeting
of Stockholders to be held in the year 2004 or2006 and until their successors are
elected and have been qualified. The Board of Directors has nominated Mr.
Elbert T.Paul C. Hudson, Dr. Willis K.
DuffyMr. Kellogg Chan and Ms. RosaMr. David M. Hill.W. Harvey;
2) To ratify the appointment of KPMG LLP as the Company's independent auditingaudit
firm for 2001.2003; and
3) To consider such other business as may properly come before and be voted
upon at the Annual Meeting of Stockholders or any postponement or
adjournment thereof.
The Board of Directors has selected April 23, 200121, 2003 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 Company'sCompanys principal executive
offices during the ten days prior to the meeting. SuchThe list will also be
available for inspection at the time and placeAnnual Meeting of the Annual Meeting.Stockholders.
By Order of the Board of Directors
Beverly A. Dyck
Secretary
Los Angeles, California
May 11, 20012, 2003
BROADWAY FINANCIAL CORPORATION
4800 Wilshire Boulevard
Los Angeles, California 90010
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERSAnnual Meeting of Stockholders
June 20, 200118, 2003
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, a Delaware
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 20, 2001,18, 2003, 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 11, 2001.2, 2003.
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 April 23, 200121, 2003 as the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting. As of April 30, 2000, aA total of 901,3331,818,934, 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. A plurality of votes cast is required
for election of directors and the affirmative vote of the majority of shares
represented and voting will be required to ratify the appointment of KPMG LLP as
the Company's independent audit firm. If a broker indicates on its proxy that
the broker does not have 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 directorsnominees named in this Proxy Statement as directors and
FOR approval of the appointment of KPMG LLP as the Company's independent auditorsaudit
firm for the fiscal year ending December 31, 2001.2003. 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 nomineesany director nominee 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 judgementjudgment of the persons named in the proxy.proxies.
Any stockholder has the power tomay 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 Beverly A. Dyck, Secretary of the Company, at 4800
Wilshire Boulevard, Los Angeles, California 90010. A proxy maywill also be
considered revoked if the personstockholder 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 U. S. Stock Transfer Corporation, the Company's transfer agent, to
assist in the solicitation of proxies for an estimated fee of $1,600 plus
reimbursement forof certain expenses. To the extent necessary, proxies may be
solicited by certain officers, directors and employees of the Company, or its wholly-ownedwholly
owned subsidiaries, none of whom will receive additional compensation therefor,
and may also be solicited by telegram, telephone, personal contact or personal
contact.other means. 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.election at the Annual Meeting. If
elected, Mr. Elbert T.Messrs. Paul C. Hudson, Dr. Willis K. DuffyKellogg Chan and Ms. RosaDavid M. Hill,W. Harvey will each
serve for a term of three years orand until their respective successors are
elected and qualified. The three nominees haveEach has consented to be named in this Proxy Statement
and havehas indicated theirhis intention to serve if elected. Each director listed below,
except as noted, 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 formation of the Company, except as noted. 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.Board of Directors.
Mr. Larkin Teasley, who has been a director since 1977 and whose term expires on
June 18, 2003, will not stand for re-election. The Board of Directors extends
its deepest appreciation to Mr. Teasley for his many years of dedicated service
as a director of the Company and the Bank.
AGE AT
DECEMBERAge at Positions Currently
December 31, DIRECTOR TERM POSITIONS CURRENTLY HELD WITH
NAME 2000 SINCE EXPIRES THE COMPANY AND THE BANKDirector Term Held with The
Name 2002 Since Expires Company and the Bank
- --------------------------------------- ---------------- ---------- --------- --------------------------------------------------------- ------------- -------- ------- ---------------------
NOMINEES:
NOMINEES:Paul C. Hudson (1) 54 1985 2003 Director, President
the Chief Executive
Officer
Kellogg Chan 63 1993 2003 Director
David M. W. Harvey 45
CONTINUING DIRECTORS:
Elbert T. Hudson(1) 80Hudson (1) 82 1959 2004 Director and Chairman
of the Board
of Company and Bank
Willis K. Duffy 73 1974Robert C. Davidson, Jr. 57 2003 2004 Director of Company and Bank
Rosa M. Hill 7173 1977 2004 Director
of Company and Bank
SIX CONTINUING DIRECTORS:
Lyle A. Marshall 75 1976 2002 Director of Company and Bank
A. Odell Maddox 5456 1986 20022005 Director of Company and Bank
Daniel A. Medina (2) 4345 1997 2005 Director
Virgil Roberts 55 2002 2005 Director of Company and Bank
Paul C. Hudson (1) 52 1985 2003 Director, President and Chief
Executive Officer of Company
and Bank
Kellogg Chan 61 1993 2003 Director of Company and Bank
Larkin Teasley 64 1977 2003 Director of Company and Bank
- --------------
(1) Elbert T. Hudson and Paul C. Hudson are father and son.
(2) Served as an advisor to the Board prior to the Bank's reorganization into
a holding company structure.
2
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR THE ABOVE NOMINEES.
2
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.Nominees:
Paul C. Hudson is currently Chairman of the Executive Committee of
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 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 and is a member of the
Audit/Compliance Committee of the Bank. 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, formerly an elementary school teacher, Los Angeles City
Schools, and the Fisk University Children's School, Nashville, Tennessee. Ms.
Hill was also employed as a social worker with the Los Angeles County Bureau
of Public Assistance. She served as the Vice Chair of the Board of Trustees,
Bennett College, Greensboro, North Carolina, and on the Board of Family
Services of Los Angeles. Ms. Hill has been an active member of the Holman
United Methodist Church in Los Angeles for 48 years where she has served in
many leading roles within the church. Ms. Hill served as Chairperson of the
Compliance/Community Reinvestment Act ("CRA") Public Relations Committee,
which was merged into the Audit/Compliance Committee. Ms. Hill is currently a
member of the Audit/Compliance Committee of the Bank.
CONTINUING DIRECTORS:
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, the United States District
Court, United States Tax Court and the New York State Bar. Mr. Marshall is
Chairman of the Audit/Compliance and the Internal Asset Review Committees of
the Board. Mr. Marshall is also a member of the Executive Committee of the
Board. Mr. Marshall also chairs the Board of the Watts/Willowbrook Boys and
Girls Club.
A. ODELL MADDOX is Manager of Maddox Co., a real estate property management
and sales company. Mr. Maddox served as a real estate appraiser for the Los
Angeles County Assessor's Office from 1969 to 1972 and as a consultant to
Citizens Savings and Loan Association from 1978 to 1979. Mr. Maddox served as
President of Maddox & Stabler Construction Company Inc. (a public works
construction company) from 1984 to 1999. Mr. Maddox is Chairman of the Loan
Committee of the Board.
DANIEL A. MEDINA is a private investor. Until March 2, 2000 he was Managing
Director in the Global Corporate Finance Practice for Arthur Andersen, LLP.
Mr. Medina joined Arthur Andersen in February 1999. Prior to joining Arthur
Andersen, Mr. Medina had been Vice President-Acquisitions for Avco Financial
Services, Inc., since October 1996. Before 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.
3
PAUL C. HUDSON is the President and Chief Executive Officer of the Company and
the Bank. Mr. Hudson joined Broadway Federalthe Bank in 1981, was elected to the Board of
Directors 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 Chairman of the American League of
Financial Institutions and serves on the board of the Los Angeles
Metropolitan Transit Authority, Pitzer College, Orthopaedic Hospital Foundation,
the Southern California Counseling Center and the California Community
Foundation. Mr. Hudson also chairs the Board of Community Build.
KELLOGG CHANBuild Inc. Mr. Hudson
is a member of the Executive Committees of the Company and the Bank and a member
of the Loan Committee of the Bank.
Kellogg Chan has been President of Asia Capital Group, Ltd., a biotechnology
holding company since 2001. He has been a member of the Board of Directors since
1993. He was Chairman and Chief Executive Officer of Universal Bank, f.s.b. from
1994 to 1995 and a consultant to Seyen Investments from 1993 to 1994. He was
President and Chief Executive Officer of East-West Bank from 1976 to 1992.
Currently, Mr. Chan is President of North American Financing Corporation, an
investment banking firm and Asia Capital Group, Inc., a biotech holding
company. 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
CouncilSan Marino City Club. Mr. Chan is the Chairman of the
American Heart Association.
LARKIN TEASLEYLoan Committee of the Bank, a member of the Audit/CRA/Compliance Committee and
Investment Committee of the Bank and a member of the Executive Committee of the
Company.
David M. W. Harvey is the principal member of Hot Creek Capital, L.L.C., a firm
engaged in investing in very small capitalization financial services companies
that he founded in 1994. Beginning in 1963, he served as a corporate banker at
Security Pacific National Bank and in 1986 jointed Silicon Valley Bank. Mr.
Harvey joined the law firm of Sullivan and Cromwell in 1990 where he served as
an attorney in the banking group. Mr. Harvey served on the Board of Directors of
California Center Bank from 2000 to 2001. He received his B. A. from the
University of California at Davis, an M.B.A. from George Washington University,
and a J. D. from Tulane University.
Continuing Directors:
Elbert T. Hudson is Chairman Presidentof 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
Chairman of the Executive Committee of the Bank, a committee he has served on
continuously since 1972, 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 Bank from 1959 through 1984. Mr.
Hudson, a member of the California Bar since 1953,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. He was elected President in 1980, ChiefCompany and is a member of its Executive Officer in 1990Committee and Chairman in 2001. Heof its
Audit Committee. Mr. Hudson is also a member of the Board of InvestmentLos Angeles Trade
Technical College Foundation and the Los Angeles Community Development Bank. Mr.
Hudson is Chairman of the Executive Committees of the Company and the Bank and a
member of the Asset Review Committee of the Bank.
Robert C. Davidson, Jr. is Chairman/CEO of Surface Protection Industries, one of
the largest African American owned manufacturing companies in California. Prior
to acquiring Surface Protection Industries in 1978, Mr. Davidson held a number
of entrepreneurial and consulting positions in Los Angeles, Boston and New York.
He is a member of the Boards of Directors of Jacobs Engineering Group, Inc.,
Morehouse College, Children's Hospital and the University of Chicago Graduate
School of Business Advisory Council. Mr. Davidson is a member of the
Compensation/Benefits Committee of the Bank.
3
Rosa M. Hill was formerly an elementary school teacher with Los Angeles City
Schools, and the Fisk University Children's School, Nashville, Tennessee. Mrs.
Hill was also employed as a social worker with the Los Angeles County Bureau of
Public Assistance. She served on the Board of Trustees, Bennett College,
Greensboro, North Carolina, for nine years, serving as Vice Chair of the Board
for seven years. She has also served on the Board of Family Services of Los
Angeles. Mrs. Hill has been an active member of the Holman United Methodist
Church in Los Angeles for more than 50 years where she has served and continues
to serve in many leading roles of the church. Mrs. Hill is the Chairperson of
the Compensation/Benefits Committee of the Bank and is a member of the Asset
Review Committee of the Bank.
A. Odell Maddox is Manager of Maddox Co., a real estate property management and
sales company. Mr. Maddox served as a real estate appraiser for the Los Angeles
County Employees Retirement
Association.Assessor's Office from 1969 to 1972 and as a loan consultant for Citizens
Savings and Loan Association from 1978 to 1979. Mr. TeasleyMaddox served as President
of Maddox & Stabler Construction Company Inc. (a public works construction
company) from 1984 to 1999. Mr. Maddox is the Chairman of the Asset Review
Committee of the Bank and a member of the Loan and Executive Committees of the
Bank.
Daniel A. Medina is a private investor. Until March 31, 2000 he was Managing
Director in the Global Corporate Finance Practice for Arthur Andersen, LLP which
he joined in February 1999. Prior to joining Arthur Andersen, Mr. Medina had
been Vice President-Acquisitions for Avco Financial Services, Inc., since
October 1996 and 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 of Directors since
1997. Prior to that time he was an advisor to the Broadway Federal Board of
Directors beginning in 1993, and the Company's Board of Directors beginning in
1996. Mr. Medina is the Chairman of the Investment Committee and the
Audit/CRA/Compliance Committee of the Bank and a member of the Executive
Committee of the Bank and the Compensation/Benefits Committees of the Bank and
the Company.
Virgil Roberts is the managing partner of Bobbitt & Roberts, a law firm
representing clients in the entertainment industry. He previously served as
President of Dick Griffey Productions and Solar Records. Mr. Roberts is the past
Chairman of the National Insurance
AssociationLos Angeles Annenberg Metropolitan Project and a past directorChair of
the California ChamberCommunity Foundation. He also serves on the Board of Commerce.
BOARD MEETINGS AND COMMITTEESDirectors of
Community Build, and is a Trustee of Occidental College and the Marlborough
School. Mr. Roberts is a member of the Audit/CRA/Compliance and
Compensation/Benefits Committees of the Bank.
Board Meetings and Committees
The Board of Directors of the Company and the Board of Directors of the Bank
each held twelveeleven meetings each during 2000.2002. The Company has three committees: Thethe
Executive Committee, the Compensation/Benefits Committee and the Audit
Committee. During 2000, theThe Bank had a total ofhas six committees: the Executive Committee, the
Audit/CRA/Compliance Committee, the Compensation/Benefits Committee, the Loan
Committee, the Internal Asset Review Committee and the
Asset/Liability and Investment Committee. COMPANY COMMITTEESNeither the
Company nor the Bank has a standing Nominating Committee.
Company Committees
The Executive Committee consists of Messrs. Elbert T.E. Hudson (Chairperson)(Chairman), Paul C.P. Hudson and Kellogg
Chan. This Committee, monitors Company financial
matters, such as analysistogether with the corresponding committee of overall earnings performance, focusing on
trends, projections and problem anticipation and resolution. It also monitors
the statusBank's
Board of litigation andDirectors, serves as an interim decision-making body that functions
between Board of Directors meetings, counselingif required, to assist the chief executive
officer by providing input on critical issues and ensuring appropriate Board of
Directors involvement in the strategic planning process. The Executive Committee
hadheld no meetings during 2000.2002.
The AuditAudit/CRA/Compliance Committee consists of Mr. Lyle A. Marshall (Chairperson)Messrs Medina (Chairman), Ms. Rosa
HillChan
and Mr. A. Odell Maddox.Roberts. The AuditAudit/CRA/Compliance Committee, together with the corresponding
committee of the Bank's Board of Directors, is responsible for oversight of the
internal audit function for the Company, assessment of accounting systems, monitoring ofand internal
control deficienciespolicies and monitoring of regulatory compliance. The Committee is also
responsible for oversight of externalthe Company's independent auditors. The
AuditAudit/CRA/Compliance Committee had one meeting during 2000. The Audit Committee charter is included as Appendix A hereto.2002. The members of the
AuditAudit/CRA/Compliance Committee are independent directors as defined under the
National Association of Securities Dealers' listing standards.
4
The Compensation/Benefits Committee consists of Dr. Willis K. Duffy
(Chairperson), Mr. Larkin TeasleyMs. Hill (Chairwoman) and
Mr. Daniel A.Messrs. Davidson, Roberts and Medina. This Committee, together with the
corresponding committee of the Bank's Board of Directors, is responsible for the
oversight of salary and wage administration and various employee benefits,
policies and incentive compensation issues at the Company level. The
Compensation/Benefits Committee had one meetingheld no meetings during 2000.
4
BANK COMMITTEES2002.
Bank Committees
The Executive Committee consists of Messrs. Elbert T.E. Hudson (Chairperson)(Chairman), Paul C.P. Hudson,
Lyle A. MarshallMaddox and Larkin Teasley.Medina. 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, counselingif required, to assist the chief
executive officer by providing input on critical issues and ensuring appropriate
Board involvement in the strategic planning process. The Executive Committee met
fourseven times during 2000.2002.
The Audit/CRA/Compliance Committee consists of Mr. Lyle A. Marshall
(Chairperson)Messrs. Medina (Chairman), Ms. Rosa M. Hill, Dr. Willis K. DuffyChan
and Mr. Daniel A.
Medina.Roberts. The Audit/CRA/Compliance Committee is responsible for oversight of
the internal audit function, assessment of accounting systems, monitoring ofand internal control
deficienciespolicies and monitoring regulatory compliance. The Committee is also responsible
for oversight of externalthe Bank's independent auditors. The Audit/CRA/Compliance
Committee met ten times during 2000. Effective March 22,
2000, this Committee was combined with the CRA Committee. No additional
committee members were added. The Audit/Compliance Committee charter is
included as Appendix A hereto.2002. The members of the Audit/CRA/Compliance
Committee are independent directors as defined under the National Association of
Securities Dealers' listing standards.
The Compensation/Benefits Committee consists of Dr. Willis K. Duffy
(Chairperson),Ms. Hill (Chairwoman) and
Messrs. A. Odell MaddoxDavidson, Medina and Larkin Teasley.Roberts. 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. The Committee met fiveseven times during 2000.2002.
The Loan Committee consists of Messrs. A. OdellChan (Chairman), P. Hudson, Maddox (Chairperson), Paul C.
Hudson, Kellogg Chan and
Gerald W. Parker,Mr. Heywood, Chief Loan Officer as a non-Board member. Mr. Parker assumed this position in April 2000. 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. The Committee met twelvenine times during
2000.2002.
The Internal Asset Review Committee consists of Messrs. Lyle A. Marshall
(Chairperson)Maddox (Chairman), Elbert T.E. Hudson, and
non-Board members Mr. Bob Adkins, Sr.
Vice President-Chief Financial Officer, and Ms. Alesia Willis, Vice
President-Loan Service Manager.Hill. 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 lossvaluation allowance. The Committee met twelvethree times during 2000.2002.
The Asset/Liability and Investment Committee consists of Messrs. Kellogg Chan
(Chairperson)Medina (Chairman), Daniel A. Medina, Paul C. Hudson and non-Board members Messrs.
Bob Adkins, Senior Vice President-Chief Financial Officer, Eric V. Johnson,
Senior Vice President-Chief Retail Banking Officer and Gerald W. Parker,
Senior Vice President-Chief Loan Officer.Chan. The Asset/Liability and
Investment Committee is responsible for monitoring Broadway Federal'sthe Bank's interest rate risk
in order to reduce the Bank's vulnerability to changes in interest rates. The
Committee also monitors and controls the level and type of securities
investments made by the Bank. The Committee met fivethree times during 2000.2002.
5
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORSExecutive Officers Who Are Not Directors
The following table sets forth certain information with respect to executive officers of
the Company orand the Bank who are not directors. Officers of the Company and the
Bank serve at the discretion of, and are elected annually, by theirthe respective
Boards of Directors.
NAME AGE(1) POSITIONS HELD WITH COMPANY AND BROADWAY FEDERALPositions Held With
Name Age(1) the Company and the Bank
- ------------------------- --------- ---------------------------------------------------------------------- -----------------------------------------
Bob Adkins 50Alvin D. Kang 58 Chief Financial Officer of the Company
and SeniorExecutive Vice President/Chief
Financial Officer of the Bank
Eric V. Johnson(2) 41Johnson 43 Senior Vice President/Chief Retail
Banking Officer of the Bank
Gerald W. Parker(3) 58 Johnathan E. Heywood (2) 35 Senior Vice President/Chief Loan Officer
of the Bank
- -----------------------------------------------------
(1) As of December 31, 2000.2002. (2) Executive served as Senior Vice President/Chief Loan Officer fromHired May 1999 to April 2000.
(3) Executive hired in April 200016, 2002
The business experience of each of the executive officers is as follows:
BOB ADKINSAlvin D. Kang joined Broadway Federal in 1994December 2001 as the Chief Financial Officer.
Mr. Adkins became SeniorExecutive Vice
President/Chief Financial Officer in January
1995. Mr. Adkins also serves as Director and Treasurer/Assistant Secretary of
Broadway Service Corporation.Officer. Prior to joining Broadway Federal, Mr. AdkinsKang
was Chief Financial OfficerExecutive Vice President at Takenaka & Company, LLC, a consulting and
investment-banking firm from August 1999 to April 2002, and was the Managing
Member of Westside Bank of Southern California for three
years.Mu & Kang Consultants L.L.C. from November 1995 to August 1999. Prior
to that, Mr. AdkinsKang served as an Audit Partner with KPMG LLP and Ernst & Young LLP
and he has over 2532 years experience serving the Thrift and Banking industries. During
his public accounting career, Mr. Kang was active in the financial servicesFinancial Managers
Society and was a frequent speaker at industry including experience in public accounting. Mr. Adkins is aconferences. He also served on
the Savings and Loan Committee of the American Institute of 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. and Unite L.A.
ERICAccountants.
Eric V. JOHNSONJohnson joined Broadway Federal Bank in May 1999 as Senior Vice
President/Chief Loan Officer and currently serves as Senior Vice President/Chief
Retail Banking Officer and Foreign Asset Control Compliance Officer. Prior to
joining Broadway Federal, Mr. Johnson had over 20 yearswas the Senior Vice President of experience in the banking industry, primarily in retail banking withLoan
Servicing at Home Savings of America, where he served in various management positions.from 1993 to 1999. Mr. Johnson has served on the San Gabriel Valley Boy Scouts of America and is an
active member of Holman United Methodist Church.
GERALD W. PARKER joined Broadway Federal in April 2000 as the Senior Vice
President and Chief Loan Officer. Prior to joining Broadway Federal, Mr.
Parker had over 16 years of experience in the banking industry with Home
Savings of America, where he served in various management positions. Mr.
Parker serves as Vice President and a member
of the Board of Directors of the Los Angeles UrbanHarriet Buhai Center for Family Law. Mr.
Johnson has been an active member of Holman United Methodist Church for over 18
years and holds many leadership roles in the church. Mr. Johnson also served
with the San Gabriel Valley Boy Scouts of America.
Johnathan E. Heywood joined Broadway Federal Bank in May 2002 as Senior Vice
President/Chief Loan Officer. Prior to joining Broadway Federal, from 1999 to
2001, Mr. Heywood was Vice President of Numerata, Inc., a corporation that
provides Internet, web-based technologies to the real estate industry. From 1997
to 1999, Mr. Heywood was a Partner at Irvine City Financial, L.L.C, a real
estate investment company. Mr. Heywood also served as Vice President-Loan
Origination from 1995 to 1997 at First Fidelity Thrift and Loan Association and
Vice President - Major Loans at Irvine City Bank from 1989 to 1995. Mr. Heywood
is a member of the National Association of Realtors, Mortgage Bankers
Association, President of Inglewood Development
Corporation, a non-profit organizationReal Estate Information Professionals Association and the Alliance
for the City of Inglewood, and as a
Board member of Haaf II Project.Advanced Real Estate Transaction Technology.
6
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth information, as of March 31, 2001,2003, 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).group.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASSName and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Ownership Class
- --------------------------------------------------------- -------------------------- ------------------------------------------------ ---------------------- ------------
Beneficial Owners:
Hot Creek Capital (2)
144 Summit Ridge Way
BENEFICIAL OWNERS:
Gardnervills, Nevada 89410 401,912 (2) 20.92%
Jam Partners LP (3)
One 5th Avenue
New York, New York 10008 141,300 (3) 7.35%
Wellington Management Co. (4)
75 State Street
Boston, Massachusetts 02109 129,280 (4) 6.73%
Broadway Federal Bank Employee
Stock Ownership Plan 104,512 (1) 59,507 6.60%
First Financial Fund, Inc. (3) 89,640 9.95%
Gateway Center Three
100 Mulberry Street, 9th Floor
Newark, New Jersey 07102-7503
DISA Liquidating Company (4) 221,456 24.57%
Deltec House, Lyford Cay
Post Office Box N-3229
Nassau, Bahamas
Golden State Mutual Life Insurance Company (5) 57,894 6.42%
1999 West Adams Boulevard
Los Angeles, California 90018
Salomon Smith Barney Inc. (6) 102,250 11.34%
388 Greenwich Street
New York, New York 10013
DIRECTORS AND EXECUTIVE OFFICERS5.44%
Directors and Executive Officers: (1):
Elbert T. Hudson 9,034 (2)(7) 1.00%25,628 (5)(6) 1.33%
Paul C. Hudson 27,262 (8) 3.02%77,961 (7) 4.06%
Kellogg Chan 11,74425,675 (8) 1.34%
Robert C. Davidson, Jr. - (9) 1.30%
Willis K. Duffy 5,043 (10) 0.56%0.00%
Rosa M. Hill 11,984 (2)27,684 (10) 1.33%(11) 1.44%
A. Odell Maddox 6,703 (9) 0.74%
Lyle A. Marshall 5,043 (2)(10) 0.56%
Larkin Teasley 7,367 (10) 0.82%16,245 (12) 0.85%
Daniel A. Medina 1,518 (9) 0.17%
Bob Adkins 9,952 (11)(12) 1.10%5,225 (8)(13) 0.27%
Virgil Roberts 11,388 (14) 0.59%
Alvin D. Kang 3,000 (15) 0.16%
Eric V. Johnson 8,608 (16) 0.45%
Johnathan E. Heywood - - -
All directors and executive
officers as a group (10 95,650 10.61%(12 persons) 201,414 - 10.49%
- ----------------------------------
- ----------------------------------------------
7
(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.
(3) Information isBased on on information derived from a Schedule 13G13D/A filed with the
Securities and Exchange Commission by First Financial Fund, Inc.Hot Creek Capital, L.L.C on March 21,
2003.
(3) Based on information derived from Schedule 13G/A filed with the Securities
and Exchange Commission by Sy Jacobs, JAM Partners, L.P., a Maryland
corporation,Delaware
limited partnership, and JAM Managers L.L.C, a Delaware limited liability
company on January 12, 200122, 2002. Mr. Jacobs and JAM Managers, L.L.C. have
shared voting power over all 141,300 shares and JAM Partners, L.P. has
shared voting power over 128,900 of the shares
7
(4) Based on information derived from Schedule 13G13G/A filed with the Securities
and Exchange Commission by Wellington Management Company, LLP, a
Massachusetts limited liability partnership ("WMC"), on January 13,
2001.February 12, 2003
and Schedule 13G/A filed by First Financial Fund, Inc., a registered
closed-end investment company, on February 14, 2003. WMC, in its capacity
as investment advisor, may be deemed the beneficial owner of shares of
Common Stock owned by its clients, including 89,640129,280 shares representing 9.95% of the outstanding Common
Stock as of March 31, 2001, owned by First
Financial Fund, Inc. (4) Information derived from Schedule 13D filed with the Securitiesas to which WMC has shared dispositive voting power
and Exchange Commission ("SEC") by DISA Liquidating Co. ("DISA"), a Cayman
Islands company, on January 24, 2001, and Form 3 and Form 4 filings with
the SEC on January 23, 2001. DISA was formed to receive and hold the
remaining assets and liabilities of Deltec International S.A. ("Deltec")which are reported in connection with the plan of complete liquidation and dissolution of
Deltec. DISA owns all of the stock of The Deltec Banking Corporation
Limited ("DBC"), a Bahaman based corporation, a holding company that
holds most of the assets formerly owned by Deltec, including shares of
Broadway Financial Corporation, and accordingly any securities held by
DBC may be deemed, for purposes of Section 13(d) of the Securities
Exchange Act of 1934 (the "Act"), to be beneficially owned by DISA. No
consideration was paid by DISA to acquire the Broadway Financial
Corporation shares. On December 13, 2000, Deltec contributed all of its
remaining assets and liabilities to DISA in exchange for stock in DISA,
which was distributed to Deltec's shareholders, and Deltec filed a
certificate of dissolution. DISA intends to dispose of the Broadway
Financial Corporation shares. At the present time, DISA has no plans or
proposals which relate to or would result in any of the transactions
referred to in paragraphs (a) through (j) of Item 4 of Regulatory Section
240.13d-101 under the Act. DISA filed an application with the Office of
Thrift Supervision (the "OTS:") and the OTS determined that no control
relationship will exist from DISA owning Broadway Financial Corporation
shares.
(5) Information derived from Schedule 13D filed with the Securities and
Exchange Commission by Golden State Mutual Life Insurance Company
("Golden State"), a California corporation, on January 22, 2001. Golden
State is an insurance company that reports that it used its working
capital to purchase the stock for investment purposes. Mr. Larkin
Teasley, Director, President and Chief Executive Officer and Mr. Elbert
T. Hudson, Director of Golden State are also Director and Chairman of the
Board of Broadway Financial Corporation, respectively.
(6) Information derived from Schedule 13G filed with the Securities and
Exchange Commission by Solomon Smith Barney, Inc. ("SSB"), a New York
corporation, Solomon Brothers Holding Company, Inc. ("SBHC"), a Delaware
corporation, Solomon Smith Barney Holdings, Inc. ("SSB Holdings"), a New
York corporation, and Citigroup, Inc. ("Citigroup"), a Delaware
corporation, on February 12, 2000. SBHC is the sole stockholder of SSB;
SSB Holdings is the sole stockholder of SBHC; and Citigroup is the sole
stockholder of SSB Holdings. SSB Holdings and Citigroup disclaimstotal beneficial ownership of the securities referred to in the Schedule 13G.
(7)WMC of 145,480.
(5) Includes 965 vested6,322 shares held jointly with spouse with whom voting and
currently exercisable shares under the
Performance Equity Program For Officers and Employees (the "PEP"); 1,187investment power is shared.
(6) Includes 3,166 allocated shares under the Broadway Federal Savings and Loan
Association Employee Stock Ownership Plan (the "ESOP"); and 3,721, 14,526 shares
subject to options granted under the Long Term Incentive Plan (the "LTIP"),
and 257 shares subject to grants under the Performance Equity Plan, which
options are all currently exercisable.
(7) Includes 12,334 allocated shares under the ESOP, 50,463 shares subject to
options granted under the LTIP, and 364 shares subject to grants under the
Performance Equity Plan, which options are all currently exercisable.
(8) Includes 1,366 vested and currently exercisable3,899 shares subject to options granted under the PEP;
4,434 allocated1996 Stock
Option Plan for Outside Directors (the "Directors Stock Option Plan") and
88 shares subject to grants under the ESOP;Recognition and 13,390Retention Plan.
(9) Mr. Davidson became director in March 2003.
(10) Includes 7,098 shares subject to options granted under the Director's Stock
Option Plan and 128 shares subject to grants under the Recognition and
Retention Plan, which options are all currently exercisable.
(11) Includes 19,282 shares held jointly with spouse with whom voting and
investment power is shared.
(12) Includes 851 shares subject to options granted under the Director's Stock
Option Plan and 148 shares subject to grants under the Recognition and
Retention Plan, which options are all currently exercisable.
(13) Includes 432 shares held jointly with spouse with whom voting and
investment power is shared.
(14) Includes 11,388 shares held jointly with spouse with whom voting and
investment power is shared.
(15) Includes 2,000 shares held jointly with spouse with whom voting and
investment power is shared.
(16) Includes 4,518 shares subject to options granted under the LTIP, which
options are all currently exercisable.
(9) Includes 331 vestedexercisable and currently exercisable shares under the
Recognition and Retention Plan for Outside Directors (the "RRP"); and 972
shares subject to options granted under the 1996 Stock Option Plan For
Outside Directors (the "Stock Option Plan").
(10) Includes 482 vested and currently exercisable shares under the RRP; and
1,861 shares subject to options granted under the Stock Option Plan.
(11) Includes 910 vested and currently exercisable shares under the PEP; 3,4713,130 allocated shares under the
ESOP; and 5,356 shares subject to options
granted under the LTIP, which options are all currently exercisable.
(12) 61 shares are held jointly with spouse with whom voting and investment
power is shared.ESOP.
8
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, the Chief Financial Officer, and the
Chief Retail Banking Officer and the Chief Lending Officer (collectively, the
"Named Executive Officers"), as well as the total compensation paid to each,
during the Company's last three fiscal years:
SUMMARY COMPENSATION TABLESummary Compensation Table
LONG-TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
Long-Term Compensation
---------------------------------------
Annual Compensation Awards Payouts
----------------------------------- ------------------------- ----------
RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS/--------------------------- ---------
Restricted Securities
Name and Other Annual Stock Underlying LTIP COMPENSATION
POSITION YEARAll Other
Principal Salary Bonus Compensation Awards Options/ Payouts Compensation
Position Year ($) ($) ($) ($) SARS (#) PAYOUTS($) ($)
- ----------------------------------------- ------ --------- -------- ------- -------------- ----------- ------------ ---------- ----------------------------- --------- --------------
Paul C. Hudson 2002 159,538 21,375 - 2,448 (b) 29,718 5,010 4,654 (1)
President/Chief 971 (2)
Executive Officer 2001 154,475 21,375 - - 5,648 5,010 5,275 (1)
828 (2)
2000 139,241 6,011 - - 2,824(a) 15,015(b) 4,357(c)
President/CEO 924(d)
1999 138,0595,010 4,357 (c)
4,357 (1)
924 (2)
Alvin D. Kang 2002 143,033 - - 5,500 (b) 50,000 - - 4,142(c)
10,010 924(d)
1998 134,135 16,843 - - - 4,647(c)
5,007 924(d)
Bob Adkins 2000 120,800 5,175 - - 1,412(a) 9,999(b) 3,175(c)
CFO 924(d)
1999 114,760 - - - - 6,677 3,024(c)
924(d)
1998 105,664 8,900 - - - 3,337 3,211(c)
879(d)
Eric V. Johnson 2000 116,250 4,950 - - 5,648(a) 3,448(c)
CRBO (c) - 924(d)
1999 64,167 - - - - - -(c)
308(d)
19982,100 (1)
Chief Financial 1,548 (2)
Officer (3) 2001 8,355 - - - - - - (1)
129 (2)
- - - - -
Eric V. Johnson 2002 127,922 16,477 - 2,400 (b) 28,704 2,086 3,610 (1)
Chief Retail 375 (2)
Banking Officer 2001 123,263 15,950 - - 11,296 2,086 3,996 (1)
360 (2)
2000 116,250 4,950 - - - - 3,448 (1)
924 (2)
Johnathan E. Heywood 2002 66,334 - - 3,000 (b) 40,000 202 (2)
Chief Loan Officer (3) -
(a) The stock options awarded during 2000 have a grant date of November 15,
2000. At December 31, 2000, none were exercisable.
(b) The stock awards represent base grants awarded pursuant to the
Performance Equity Program For Officers and Employees (the "PEP"). Under
the PEP 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 the named executives. The restricted stock awards are calculated by
multiplying the closing market prices of the Company's stock on the grant
dates by the number of shares that vested through December 31, 2000. The
market prices of the Company's stock at the September 17, 1997 and
November 15, 2000 grant dates were $11.00 and $8.69 per share,
respectively. At December 31, 2000, the total remaining shares that have
not yet vested for Paul C. Hudson, Bob Adkins and Eric V. Johnson were
911, 608 and 1,200, respectively. The value of those shares for Paul C.
Hudson, Bob Adkins and Eric Johnson, based upon the market price of the
shares at December 31, 2000 ($7.625 per share) was $6,946, $4,636 and
$9,150, respectively.
(c)(1) Reflects amounts contributed by the Company to the 401(k) Plan on behalf of
each individual. The amounts contributed by the Company each year
represents 100% of each employee's contribution up to 3% of each
individual's salary.
(d)(2) Reflects the dollar value of group term life insurance paid by the Bank
during the periods covered. (e) Eric V. Johnson was(3) Alvin D. Kang and Johnathan E. Heywood were
hired in December 2001 and May 1999.2002, respectively.
(3) Alvin D. Kang and Johnathan E. Heywood were hired in December 2001 and May
2002, respectively.
9
The following table sets forth certain information concerning stocktables summarize options granted during 2000 to the named executives:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
NUMBER OF SECURITIES % OF TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS GRANTED EMPLOYEES IN FISCAL BASE PRICE EXPIRATION
NAME (#)(a)) YEAR (b) ($/SHARE) DATE
- ----------------------- ------------------------ ---------------------- ------------------- --------------
Paul C. Hudson 2,824 11.77% $8.69 11/15/2010
Bob Adkins 1,412 5.88% $8.69 11/15/2010
Eric V. Johnson 5,648 23.53% $8.69 11/15/2010
- -----------------------
(a) The options vest over a five-year period at the rate of 20% per year.
(b) Total stock options granted to directors and to officers and employees
during the year ended December 31, 2000 were 3,500 and 24,003,
respectively. The percentages above represent the percentage of total
stock options granted to officers and employees.
The following table summarizes options exercised during 2000in 2002 and the value of
unexercised options held by the named executivesNamed Executive Officers at fiscal year-end.
AGGREGATED OPTION/December 31, 2002.
Options/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUESGrants in Last Fiscal Year
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/
ON VALUE OPTIONS/Number of Percent of Total
Securities Options/SARs
Underlying Granted to Expiration
Options/SARs Employees in Exercise or Date
Name Granted (#) Fiscal Year Base Price ($/Sh) (1)
- --------------------------- ------------- ----------------- -------------- -----------
Paul C. Hudson
President and Chief
Executive Officer 29,718 16% 6.68 07/25/2013
Alvin D. Kang
Chief Financial Officer 50,000 27% 6.68 07/25/2013
Eric V. Johnson
Chief Retail
Banking Officer 28,704 16% 6.68 07/25/2013
Johnathan E. Heywood
Chief Loan Officer 40,000 22% 6.68 07/25/2013
(1) The stock options were awarded on July 25, 2002 and are exercisable in
installments of 20%, cumulatively, on each anniversary date of the award.
Aggregated Option/SAR Exercises In Last
Fiscal Year And Fiscal Year-End Option/SAR Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/
Shares Value Options/SARs at Fiscal SARS AT FISCAL SARS AT FISCAL YEAR-END
EXERCISE REALIZED YEAR-ENDat Fiscal Year-End
Acquired on Realized Year-End (#) EXERCISABLEExercisable ($) EXERCISABLEExercisable (E)/
NAMEName Exercise (#) ($) (E)/ UNEXERCISABLEExercisable (U) UNEXERCISABLEUnerercisable (U)
- ------------------------------------------------ ------------ ---------- -------------------------------- ------------------------
-----------------------
Paul C. Hudson - - 11,75136,407 (U) -104,713 (U)
13,39047,163 (E) -179,323 (E)
Bob AdkinsAlvin D. Kang - - 4,98350,000 (U) -128,000 (U)
5,356None (E) -None (E)
Eric V. Johnson - - 5,64835,002 (U) 114,806 (U)
4,998 (E) 13,913 (E)
Johnathan E. Heywood - - 40,000 (U) -102,400 (U)
None (E) -None (E)
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 2000:
LONG-TERM INCENTIVE PLANS
AWARDS IN LAST FISCAL YEAR
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE-BASED PLANS
------------------------------------------
NUMBER OF PERFORMANCE OR
SHARES, UNITS OR OTHER PERIOD UNTIL THRESHOLD MAXIMUM
NAME OTHER RIGHTS (#) MATURATION OR PAYOUT (#) TARGET (#) (#)
- ----------------- ------------------ --------------------- ------------ ------------ ----------
- -----------------
Eric V. Johnson 1,200 (a) 5 years 1,200 - 1,200
- -----------------
(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 five year period
commencing one year from the date of grant, which was November 15, 2000 for the
named executive. There were no performance grants awarded during the year.
10
DIRECTORSDIRECTOR COMPENSATION
No remuneration was paid to the directors by the Company in 2000.2002. Currently, the
Chairman of the Board of Broadway Federal receives a monthly retainer fee of
$2,940,$3,224, and all other directors of Broadway Federal, other than the
President,who are not employees,
receive a monthly retainer fee of $1,000 each. A fee of $500 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 $200 per
meeting, except for the Loan Committee, are also paid to directors of Broadway
Federal, other than the Chairman of the Board and the President. Loan Committee
members, other than the President and the Chief Lending Officer, are paid a
monthly fee of $500. On November 20, 2001, Dr. Willis K. Duffy became a Director
Emeritus and, as such, was receiving a monthly retainer fee of $817 until
January 2003 when he passed away. On May 17, 2002, Lyle A. Marshall became a
Director Emeritus and began receiving a monthly retainer fee of $974.
10
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's current loan policy provides that all loans made by the Company or
its subsidiaries to its directors and executive officers aremust be made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and domust
not involve more than the normal risk of collectibility or present other
unfavorable features.
On September 30, 1999, the CompanyBank made a $550,000 loan to Maddox & Stabler LLC.
Mr. A. Odell Maddox is a director of the Company and the Bank. The loan is
secured by a 24-unit multi-family property located in Los Angeles, California.
The terms of the 30-year loan include an initial interest rate of 8% fixed for
the first five years. Thereafter the rate will be 2.50% over the one-year
Treasury Bill rate. Since inception, payments on the loan have been made as
agreed. As of March 31, 2001,2003, the outstanding balance of the loan was $542,594.$530,813.
On December 29, 2000,February 25, 2002, the CompanyBank made a $130,400$300,000 loan to Ms. Rosa M. Hill,Alvin D. Kang, who is
a directorExecutive Vice President and Chief Financial Officer of the CompanyBank and Chief
Financial Officer of the Bank.Company. The loan iswas secured by a single family
residential property located in Los Angeles,Torrance, California. The loan earns a fixedearned an
interest rate of 7.5% and is due in five years. Since
inception, payments on the loan have been made as agreed. As of March 31,
2001, the outstanding balance of the5.75%. The loan was $130,108.paid off on December 3, 2002.
SEVERANCE AGREEMENTS
The Company and Broadway Federalthe Bank have entered into severance agreements with each of
Messrs. Paul C. Hudson, Bob AdkinsKang, Johnson and Eric V. Johnson, having terms of 24
months for Mr. Hudson and 18 months for Messrs. Adkins and Johnson.
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.Heywood. Each severance agreement provides that atif,
within three years of any timeChange in Control (as defined in the agreement), the
officer's employment is terminated, either by the officer following a change in control of the Companydemotion
or Broadway Federal, as
applicable, if the Companyother specified adverse treatment 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
(twenty-four months for Paul C. Hudson and eighteen months for Bob Adkins and
Eric V. Johnson), any 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 agreement to the
extent allowed by the plans or policies maintained by the Company or Broadway
Federal from time to time. Paymentsthe Bank other than
for Cause (as defined in the agreement), then the officer will receive a
severance payment equal to the employee under Broadway Federal's
severance agreements will be guaranteed bysum of (A) the Companyofficer's unpaid salary and bonus
or other incentive compensation for the remainder of the year in which
employment is terminated, and (B) a specified multiple of the highest Annual
Compensation (as defined 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 compensationagreement) paid to the officer in any of the
three officers coveredyears preceding termination of employment. The multiple is 2.5 for Mr.
Hudson, 2 for Mr. Kang and 1.5 for each of Messrs. Johnson and Heywood. In
addition to these payments, any stock options and similar rights held by the
severance agreementsofficer will become fully vested and exercisable, and the health and other
benefits coverage provided to the officer will be continued for the last fiscalone year and excluding any benefits
under any employee benefit plan that may be payable, are estimated to be up
to approximately $644,000.
11
after
termination of employment.
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG LLP ("KPMG") as the Company's independent auditorsaudit
firm for the fiscal year ending December 31, 2001.2003. It is anticipated that
representatives of KPMG LLP will be present at the Annual Meeting. The KPMG LLP
representatives 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 thequestions from
stockholders. KPMG LLP performed the independent audit of the Company's
financial statements for the fiscal year ended December 31, 2000.2002. Audit services
included examination of the consolidated financial statements of the Company and
a review of certain filings with the Securities and Exchange Commission.
11
The following table sets forth information regarding the aggregate fees billed
for services rendered by KPMG LLP for the fiscal year ended December 31, 2002:
2002 2001
------------- -------------
Audit fees $129,500 $115,900
Audit related fees - -
Tax fees (1) 30,450 42,000
All other fees - -
------------- -------------
Total Fees $159,450 $157,900
============= =============
(1) For tax consultation and tax compliance services.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO RATIFY
THE APPOINTMENT OF KPMG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
COMPENSATION/BENEFITS COMMITTEE
REPORT ON EXECUTIVE COMPENSATIONAudit Committee Report
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 120% of annual budgeted ROA. 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 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,
12
while non-exempt employees are rewarded based upon quarterly and 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.
This report of the Compensation/Benefits Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into filings under the Securities Act of 1933, as
amended or the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically incorporates this information by
reference and shall not otherwise be deemed filed under such Acts.
Compensation/Benefits Committee (Company and Bank)
Dr. Willis K. Duffy
Mr. Larkin Teasley
Mr. A. Odell Maddox
Mr. Daniel A. Medina
AUDIT COMMITTEE REPORT
The AuditAudit/CRA/Compliance Committee oversees the Company's financial reporting
process on behalf of the Board of Directors. Management has the primary
responsibility for the financial statements and the reporting process, including
the Company's systems of internal controls. In fulfilling its oversight
responsibilities, the Committee reviewed the audited financial statements in the
Annual Report with management including a discussion of the quality, not just
the acceptability, of the accounting principles, the reasonableness of
significant judgements,judgments, and the clarity of disclosures in the financial
statements.
The Committee reviewed with the independent auditors, who are responsible for
expressing an opinion on the conformity of thosethe audited financial statements with
accounting principles generally accepted in the United States of America, their
judgementsjudgments as to the quality, not justas well as the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the Committee under auditing standards generally accepted in the United
States of America, including SAS 61. In addition, the Committee has discussed
with the independent auditors the auditors' independence from management and the
Company, including the matters in the written disclosures required by
Independence Standards Board Standard No. 1, and considered the compatibility of
non-audit services provided by the auditor with the auditors' independence.
The Committee discussed with the Company's internal and independent auditors the
overall scope and plans for their respective audits. The Committee meets with
the internal and independent auditors, with and without management present, to
discuss the results of their examinations, their evaluations of the Company's
internal controls, and the overall quality of the Company's financial reporting.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors that the audited financial statements be
included in the Annual Report on Form 10-KSB filed with the Securities and
Exchange Commission for the year ended December 31, 2000, for filing with the Securities and Exchange Commission.2002. The Committee has also
recommended to the Board the selection of the Company's independent auditors.
This report of the Audit/Compliance Committee shall not be deemed incorporated
by reference by any general statement incorporating by reference
this Proxy Statement by
reference into filings under the Securities Act of 1933, as
amended, or the Securities
Exchange Act of 1934, as amended, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
13
Audit Committee members (Company and Bank)
Ms. Rosa M. Hill
Dr. Willis K. Duffy
Mr. Lyle A. Marshall
Mr. A. Odell Maddox
Mr. Daniel A. Medina
INDEPENDENT AUDITORS
KPMG LLP performs both audit and non-audit professional services for and on
behalf of the Company and its subsidiaries. The Audit Committee has
considered whether the independent auditors' provision of any financial
information systems design and implementation services or any other non-audit
services is compatible with maintaining the independent auditors'
independence. During 2000, the audit services included examination of the
consolidated financial statements of the Company, examination of the
financial statements of the Company's subsidiaries and a review of certain
filings with the Securities and Exchange Commission.
The following table sets forth information regarding the aggregate fees
billed for services rendered by KPMG LLP for the fiscal year ended December
31, 2000:
Audit Fees $76,500
Financial Information Systems Design and Implementation Fees -
All Other Fees $29,890
Mr. Kellogg Chan
Mr. Virgil Roberts
12
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.
BasedTo our knowledge, based solely on the Company's review of
the copies of Forms 3, 4such reports furnished to us and 5 andwritten representations as to
whether such reports were required during the amendments thereto received by it for thefiscal year ended December 31,
2000,
or written representations from certain reporting persons that no Form 5's
were required to be2002, Johnathan E. Heywood filed by those persons, the Company believes that during
the period ended December 31, 2000, all filing requirements were complied
with by its executive officers, directors and beneficial owners of more than
ten percent of the Company's stock, except that Director Paul C. Hudson had
one latea Form 4 filing.covering one previously unreported
transaction and Eric V. Johnson filed a Form 4 and a Form 5 covering one each
previously unreported transaction. Ms. Hill and Messrs. Chan, Maddox, Medina,
Teasley, E. Hudson and P. Hudson each filed a form 5 covering one previously
unreported transaction.
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 year 20012004 proxy solicitation materials must set forth such
proposal in writing and file it with the Secretary of the Company on or before
January 11, 2002.3, 2004. 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 itsthe proxy solicitation materials and for
consideration at the Annual Meeting. AnyExcept for director nominations, any
stockholder may make any other proposal at the year 20022004 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 25, 2002,19, 2004, such proposal may only be
voted upon at a meeting held at least 30 days after the Annual Meeting at which
it is presented. 14
Stockholder director nominations must be received by the
Company no earlier than March 20, 2004 and no later than April 19, 2004.
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 Annual Meeting (between March 23, 200220, 2004 and April 23, 2002)20,
2004) to be considered at the Annual Meeting in year 2002.2004. Such notice must
state the nominee's name, age and addresses (businessbusiness and residence),residence addresses, 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.
ANNUAL REPORT AND FORM 10-KSB
The 20002002 Annual Report to Stockholders containing the consolidated financial
statements of the Company for the year ended December 31, 20002002 accompanies this
proxy statement.
STOCKHOLDERS MAY OBTAIN, WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORMStockholders may obtain, without charge, a copy of the Company's Annual Report
on Form 10-KSB FOR THE FISCAL YEAR ENDED DECEMBERfor the fiscal year ended December 31, 2000 AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION, WITHOUT ACCOMPANYING EXHIBITS,
BY WRITING TO BEVERLY2002 as filed with the
Securities and Exchange Commission, without accompanying exhibits, by writing to
Beverly A. DYCK, INVESTOR RELATIONS REPRESENTATIVE, BROADWAY
FINANCIAL CORPORATION,Dyck, Investor Relations Representative, Broadway Financial
Corporation, 4800 WILSHIRE BOULEVARD, LOS ANGELES, CALIFORNIAWilshire Boulevard, Los Angeles, California 90010.
A LIST OF EXHIBITS IS INCLUDED IN THE FORMStockholders may obtain any of the exhibits that are referred to in the list of
exhibits in the Form 10-KSB AND EXHIBITS ARE
AVAILABLE FROM THE COMPANY UPON PAYMENT TO THE COMPANY OF THE COST OF
FURNISHING THEM.
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.upon payment to the Company of the cost of
furnishing them.
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
Beverly A. Dyck
Secretary
15
APPENDIX A
BROADWAY FEDERAL BANK, F.S.B.
AUDIT COMMITTEE CHARTER JANUARY 2001
The Board of Directors ("Board") of Broadway Federal Bank, f.s.b. ("Broadway" or
"Bank") has elected a subcommittee of directors to act on their behalf as the
Audit Committee ("Committee"). As the Audit Committee, they have been delegated
certain powers as defined herein.
I. STATEMENT OF AUTHORITY
The Board elected the Committee and empowered the Committee with
oversight responsibility in order to ensure that the Bank is
consistently working to maintain and improve internal controls and
financial reporting, as well as maintain compliance with all applicable
laws and regulations. Through this charter, the Board delegates certain
authority to the Committee to assist in fulfilling its oversight
responsibilities.
To discharge its oversight responsibilities effectively, the Committee
will maintain open lines of communication with the Board, the Bank's
management, the Internal Auditor, the Independent Accountants and any
External Auditors contracted to assist in the monitoring
responsibilities assigned.
The Board recognizes that an informed, vigilant Audit Committee
represents an effective influence for monitoring and evaluating
adherence to internal operating and accounting controls along with fair
and complete financial reporting as established by the Bank's
management and as reported by the Independent Accountants and the
Internal Auditor. The members of the Committee are charged with the
same duty of good faith, diligence, care and skill expected of them as
Directors of the Bank.
II. ORGANIZATION
1. The Committee shall be composed of four members, and not less
than three outside directors who are independent of the Bank's
management. The Board shall elect the members of the Committee
for a one-year term. All vacancies in the Committee are to be
filled by the Board to complete the unexpired term.
2. The Committee shall have a Chair, elected by the Board. The Chair
with the assistance of the Internal Auditor shall call meetings,
determine who shall attend, preside at each meeting of the
Committee and appoint a secretary who shall keep a record of the
Committee's proceedings.
1
BROADWAY FEDERAL BANK, F.S.B.
AUDIT COMMITTEE CHARTER JANUARY 2001
3. The Committee shall meet at least quarterly to review the
financial statements, the activities and reports of the Internal
Auditor, Quality Control and the Independent Accountant and other
matters requiring consideration by the Committee. The Committee
Chair may call other meetings during the year as deemed necessary
and prudent.
4. The Committee shall meet privately with the Internal Auditor at
each Committee meeting and with the Independent Accountants when
they present the audit plan and when they present their audit
findings. The Committee shall meet with Officers and Management
when they are invited by the Committee for reviews and
confirmation of responses.
5. The Committee shall report its significant activities to the full
Board, at least quarterly, to keep the Board informed of
Committee activities, its findings and their respective
resolution.
III. DUTIES AND RESPONSIBILITIES
The Committee shall be responsible for overseeing the Bank's internal
operation and accounting controls. To this end, the Committee has been
charged with the following duties and responsibilities.
1. Provide an open avenue of communication between the Internal
Auditor, the Independent Accountant, the Office of Thrift
Supervision (OTS); and the Board.
2. Review the Committee's charter annually, and update it as changes
are deemed necessary to clarify the duties of the Committee in
order to maintain compliance with all applicable laws and
regulations.
3. Recommend to the Board the employment of all Independent
Accountants to be nominated, approve the compensation of the
Independent Accountant, and review and approve the discharge of
the Independent Accountants.
4. Review and concur in the appointment, replacement, reassignment,
or dismissal of the Internal Auditor.
5. Confirm and assure the independence of the Internal Auditor and
the Independent Accountant, including a review of management
consulting services and related fees provided by the Independent
Accountant.
6. Inquire of management, the Internal auditor, OTS, and the
Independent Accountant in regards to significant risks or
exposures and assess the steps management has taken to minimize
such risk to the company.
2
BROADWAY FEDERAL BANK, F.S.B.
AUDIT COMMITTEE CHARTER JANUARY 2001
7. In consultation with the Independent Accountant and the Internal
Auditor, determine the annual audit scope and annual audit plan
of the Internal Auditor and the Independent Accountant.
8. Consider with management and the Board the rationale for
employing audit firms other than the principal Independent
Accountant.
9. Review with the Internal Auditor and the Independent Accountant
the coordination of audit effort, reduction of redundant efforts
and the effective use of audit resources.
10. Consider and review with the Independent Accountant and the
Internal Auditor:
a. The adequacy of the Company's internal controls including
computerized information system controls and security.
b. Any related significant findings and recommendations of the
Independent Accountant and Internal Auditor together with
management's responses thereto.
11. Review with management and the Independent Accountant those
reports as set forth in the requirements of the Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FIDICIA") in 12
CFR Part 363, Annual Independent Audit and Reporting
Requirements:
a. The Bank's annual financial statements and related
footnotes.
b. The Independent Accountant's audit of the financial
statements and his or her report thereon.
c. Any significant changes required in the Independent
Accountant's audit plan.
d. Any serious difficulties or disputes with management
encountered during the course of the audit.
e. Other matters related to the conduct of the audit
communicated to the Committee under generally accepted
auditing standards.
12. Consider and review with management and the Internal Auditor:
a. Significant findings during the year and management's
responses thereto.
3
BROADWAY FEDERAL BANK, F.S.B.
AUDIT COMMITTEE CHARTER JANUARY 2001
b. Any difficulties encountered in the course of their audits,
including any restrictions on the scope of their work or
access to required information.
c. Any changes required in the planned scope of the internal
audit plan.
d. The internal auditing department staffing.
e. Internal auditing's compliance with The IIA's Standards for
the Professional Practice of Internal Auditing (Standards).
13. Review filings with OTS and other published documents containing
the company's financial statements and consider whether the
information contained in these documents is consistent with the
information contained in the financial statements.
14. Review with management and the Internal Auditor the interim
financial reports that are filed with the OTS or other
regulators.
15. Review policies and procedures with respect to officers' expense
accounts and perquisites, including their use of corporate
assets, and consider the results of any review of these areas by
the Internal Auditor or the Independent Accountant.
16. Review with the Internal Auditor the results of the review of the
Bank's compliance with the Bank's code of conduct.
17. Review legal and regulatory matters that may have a material
impact on the financial statements, related Bank compliance
policies, and programs and reports received from regulators.
18. Meet with the director of internal auditing, the Independent
Accountant, and management in separate executive sessions to
discuss any matters that the Committee or these groups believe
should be discussed privately with the Committee.
19. Report Committee actions to the Board with such recommendations
as the Committee may deem appropriate.
20. The Committee shall have the power to conduct or authorize
investigations into any matters within the Committee's scope of
responsibilities. The Committee shall be empowered to retain
independent counsel, accountants, or others to assist it in the
conduct of any investigation.
4
BROADWAY FEDERAL BANK, F.S.B.
AUDIT COMMITTEE CHARTER JANUARY 2001
21. The Committee shall meet at least four times per year or more
frequently as circumstances require. The Committee may ask
members of management or others to attend the meeting and provide
pertinent information as necessary.
22. The Committee will perform such other functions as assigned by
law, the company's charter or bylaws, or as assigned by the
Board.
IV. OBJECTIVES AND SCOPE
The objective of the Committee is to assist the members of Management
and the Board in the effective discharge of their responsibilities by
furnishing them with analysis, recommendations, and pertinent comments
concerning the activities reviewed.
The Committee shall accomplish this objective through activities such
as those listed below:
1. Reviewing and evaluating existing accounting, financial, data
processing, and operating controls that is established by the
Board.
2. Determining the extent of compliance with regulations achieved in
Management's plans, policies and procedures.
3 Reviewing operations or systems to determine whether results are
consistent with the objectives and goals of the Board and
Management.
4. Assist Management in the design and implementation of systems,
policies and procedures.
5. Determining the extent, to which Management properly accounts for
and safeguards assets.
6. Conducting special audits or reviews as a result of Board or
Management requests.
7. Evaluating the adequacy and reliability of information and
communication within the Bank for Management's use.
8. Insure that caution was taken and audit activities are performed
in a manner consistent with "The Standards for the Professional
Practice of Internal Auditing," promulgated by the Institute of
Internal Auditors and as directed by the Charter.
9. Coordinating the relationship between internal and external
audits.
BROADWAY FEDERAL BANK, F.S.B.
AUDIT COMMITTEE CHARTER JANUARY 2001
10. Determine if reasonable efforts have been made to clear audit
exceptions by requiring that responses to audits are in writing.
The reply should address corrective action taken or to be taken
to all recommendations or, if not in agreement with the
recommendation, the justification for the difference in opinion.
11. If an audit has been conducted, and the audited entity(ies)
has/have failed to respond timely to the audit inquiry or failed
to take reasonable steps to clearing an audit exception, the
Committee recommends note of the incident be incorporated in
their personnel file.
The Internal Auditor will incorporate these overall objectives
into efficient and comprehensive audit programs, which will be
developed for each area examined. The Internal Auditor will
consider the adequacy of existing internal controls in
determining the nature, timing, and extent of audit procedures.
V. INDEPENDENCE
Independence is essential to the effectiveness of internal auditing.
This independence is obtained primarily through the Audit Charter and
the Board of Directors.
The organizational structure of the internal auditing function and the
supports accorded to it by the Board and Management are major
determinants of effectiveness and value. The Internal Auditor,
therefore, reports to the Audit Committee of the Board whose authority
assures both a broad range of audit coverage and the adequate
consideration of an effective action on the audit findings and
recommendations.
Administratively, the Internal Auditor reports to the Senior Vice
President, Chief Financial Officer, who is also the Bank Protection
Act("BPA") / Security Officer. To this end, the Internal Auditor's
connection to management provides a bridge for the Chief Financial
Officer's oversight and regulatory duties. The Chief Financial Officer
reports to the President /Chief Executive Officer.
The Board of Directors approved and adopted this Charter on January 17, 2001.
6
BROADWAY FINANCIAL CORPORATION
REVOCABLE PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 20,
2001 The undersigned18, 2003
THE BOARD OF DIRECTORS IS SOLICITING THIS PROXY
I/we hereby appointsconstitute and appoint Elbert T. Hudson and Paul C. Hudson, and Bob Adkins, or eithereach
of them, eachmy/our attorneys, agents and proxies, with full power of substitution
to each, to attend and act as the lawfulproxy or 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 2003 Annual Meeting of
Stockholders of the Company toBroadway Financial Corporation, which will be held at its
principal executive offices, 4800 Wilshire Boulevard, Los Angeles, California
90010, on Wednesday, June 20, 2001,18, 2003 at 2:00 p.m., and at any postponement or
any adjournment thereof.thereof, and to vote as I/we have indicated the number of shares
which I/we, if personally present, would be entitled to vote.
TO RETURN YOUR PROXY CARD BY MAIL
o Mark, sign and date your proxy card.
o Detach your proxy card.
o Mail your proxy card in the postage paid envelope provided.
- --------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS
FOR all nominees listed below (except as WITHHOLD AUTHORITY to vote
indicated to the contrary (below). for all nominees listed below.
Nominees: Paul C. Hudson, Kellogg Chan, and David M. W. Harvey.
INSTRUCTION: TO WITHHOLD AUTHORITY to vote for individual nominee(s) write
that nominees(s) name in the space below.
2. RATIFICATION OF APPOINTMENT OF KPMG LLP as the independent
audit firm of Broadway Financial Corporation for the year
ending December 31, 2003
PLEASE MARK YOUR CHOICE LIKE THIS /X/ IN DARK INK AND SIGN AND DATE ONBELOW
I/we hereby ratify and confirm all that said
attorneys and proxies, or any of them, or their
substitutes, shall lawfully do or cause to be
done because of this proxy, and hereby revoke
any and all proxies I/we have given before to
vote at the meeting. I/we acknowledge receipt
FOR of the notice of Annual Meeting and the Proxy
Statements which accompanies the notice.
AGAINST
ABSTAIN
Dated:______________________________________,
2003
________________________________________________
Signature
_______________________________________________
Signature
Please date this Proxy and sign above as your
name(s) appear(s) on this card. Joint owners
should each sign personally. Corporate proxies
should be signed by an authorized officer.
Executors, administrators, trustees, etc.
should give their full titles.
THE REVERSE SIDE MARK ONLY ONE BOXBOARD OF DIRECTORS RECOMMENDS A VOTE FOR
EACH ITEM.
1.THE ELECTION OF THREE DIRECTORS TO SERVE UNTILNOMINATED BY THE
ANNUAL MEETING TO BE HELD
IN 2003.
ELBERT T. HUDSON / /BOARD OF DIRECTORS AND FOR / / WITHHOLD
WILLIS K. DUFFY / / FOR / / WITHHOLD
ROSA M. HILL / / FOR / / WITHHOLD
2. RATIFYRATIFICATION OF
THE APPOINTMENT OF KPMG, LLP AS THE COMPANY'S INDEPENDENT AUDITING
FIRM FOR 2001.
/ / FOR / / AGAINST / / ABSTAIN
3. IN THE DISCRETION OF THE PROXY HOLDER(S) ON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT THEREOF.
IMPORTANT-PLEASE SIGN AND DATE ON REVERSE SIDE AND RETURN PROMPTLY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.LLP. THIS PROXY, WHEN
PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S).AS DIRECTED.
IF NO DIRECTION IS GIVEN, THIS PROXYMADE, IT WILL BE VOTED FOR
THE ELECTION OF DIRECTORS NOMINATED BY THE
BOARD OF DIRECTORS LISTED IN ITEM 1 AND IN THE DISCRETIONFOR RATIFICATION OF
THE PROXY HOLDER(S) ON MATTERS DESCRIBED IN ITEM 3.
When signing as attorney, executor, administrator, trustee, or guardian, please
sign 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: , 2001
-----------------------
-----------------------------------
(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 CardAPPOINTMENT OF KPMG LLP.