Question: As a young adult, you took a different path from the family banking business. Why? And did you face any pressure to come back to the family business?
Answer: No, I didn't face any pressure to go into the banking business. In fact, my family encouraged me to do what I wanted to do. I was a lawyer for nearly a decade, practicing corporate law in (Washington, D.C.). Then an opportunity opened up and I came back out here and practiced law. In the meantime, I helped out managing some of the family properties and started fixing up some of the buildings, mostly painting. Several friends and acquaintances began offering me painting jobs, so I opened up my own paint business.
Q: What made you return to banking?
A: On one particularly hard day, after making only $1.50 an hour, I looked at myself in the mirror and said, "Here I am with a law degree making $1.50 an hour painting. I need to be doing something else with my life." That's when I decided to go back to my roots and get into the banking business. I went to my father (who at the time ran Broadway Federal Bank) and he started me as a teller in the bank.
Q: Did you get any special treatment as the boss' son?
A: No. In fact, my father gave explicit instructions to everyone at the bank that I was to be treated just like any other employee. And, in fact, I rose through the ranks on my own merits. I was a chief teller, than a branch manager and then chief loan officer.
Q: So you got to see how different parts of the bank worked. What did you learn from this?
A: Yes, I did see how all parts of the business operated. I found the hardest part is the loan part: Making prudent loans is very, very difficult, as I think everyone today now realizes. I made some mistakes, making loans that in retrospect probably should not have been made and introducing some loan products that we probably shouldn't have. But I think making those mistakes really helped me understand what it takes to be a good banker.
Q: Can you elaborate on these mistakes?
A: Part of this comes from the bank's founding mission. Remember, Broadway Federal Bank started in the 1940s because African-Americans couldn't get loans elsewhere. Many, many times through the years, we were a lender of last resort for African-Americans. So there's a built-in tension there between wanting to help those who couldn't get loans elsewhere and making sound and prudent loans.
Q: The board named you president in March 1992. Seven weeks later, your offices burned down in the rioting that followed the Rodney King verdicts. How did you learn that the headquarters burned down and what was your reaction?
A: On the first night of the unrest, I went to bed knowing that the city was very volatile. But I really didn't think the bank was in any danger. After all, we had survived the (1965) Watts riots. Then, very early the next morning, I got a phone call and was told that it appeared that our bank headquarters at 45th and Broadway was burning. It wasn't until daybreak, when we went over to look at the damage, that we realized our headquarters and adjoining bank branch had burned to the ground and there essentially was nothing left.
Q: Did you feel any sense of betrayal? Here was a bank that had served the African-American community for nearly 50 years and yet people chose to burn it down.
A: Not really. This was done by people that weren't associated with the history of our bank. Many of them were probably drunk. To them, the bank was just another symbol of authority. But at the time, I really didn't give much thought to this. We had so many other things to deal with.
Q: Such as?
A: Such as how we were going to serve our customers and how we were going to reconstruct the files on customers. Unlike some other banks at the time, many of our files had not yet been computerized, so when they burned down, they were lost forever. More importantly, we had no idea where our customers would bank the next day or even if we could get to our other branches to make sure they stayed open.
Q: So where did you set up your offices?
A: We moved out operations to one of our other branches and let all our vendors and customers know that we were still open for business. It took another seven or eight months to reopen the branch that had burned down that was a temporary building.
Q: You eventually rebuilt the headquarters, but not at the same location in South Central Los Angeles. Why not?
A: By the time we were ready to rebuild the headquarters, about four or five years had passed. And the demographics had changed. Our customers and clients were moving west to the Crenshaw area and to View Park or out of L.A. entirely to the Inland Empire. So we did what any astute business would do and we followed our customers. We looked for space closer to the Crenshaw district and settled on our present location (on Wilshire Boulevard, west of Crenshaw Boulevard). I guess, from a historical perspective, having a bank like ours be headquartered on Wilshire Boulevard is a sign that we have made it.
Q: With the mortgage meltdown hitting hardest in minority communities like those in South L.A., this must be a particularly difficult time to be a banker serving that community.
A: Yes, it certainly is a challenging time to be a banker. But we didn't make the types of loans that have gotten so many banks into trouble. You see, we're a small bank and we just didn't have the volume of loans that we could repackage and sell to Wall Street. So we had to keep our loans in house, which means we had to be much more prudent in the types of loans we made and whom we made the loans to. The idea of making a loan and not verifying the income or making a loan and not requiring any down payment at all just didn't make sense for us. We had to protect our investment.
Q: So you had to cede market share?
A: I wouldn't say that. But we did underperform many of the other banks during the last five years or so: Our earnings didn't grow as fast. And we were way behind those high-flying subprime lenders. When we required 20 percent down on a mortgage loan, we just couldn't compete with other institutions that were offering 3 percent down or zero percent down.
Q: So now, are many of the people who took out these loans coming to you in the hopes of getting bailed out?
A: Yes, the victims of these loans are looking for refinancing from us and we're very challenged to refinance many of them. How do you give someone a loan who has negative equity in their home? We're seeing our fair share of these desperate people now. But this really isn't something we can solve. It's something that Congress has to solve and it looks like they are moving in that direction.
Q: But aren't you a lender of last resort?
A: We got started because other banks chose not to make loans to quality credit people. Now, with all these exotic loans in recent years, the banks have created a loan market that didn't exist before and many would argue should never have existed. That's a whole different situation. That being said, we've actually made more loans in the last year than ever before and we see that continuing for quite some time.
Q: How's that possible?
A: Our lending standards have not changed over the last couple years. But the standards have changed at other banks that have all these bad loans on their books. Now, they're not able to make many loans at all. We're now getting business that used to go to these other banks. That's good because the way things were going, community banks like ours were on their way to becoming an endangered species, especially here in Los Angeles.
Q: What do you mean?
A: Well, you don't have many banks left that focus on a specific geographic area. There's no Echo Park bank or Silver Lake bank. The closest we come now are some of the Koreatown banks, since that community is so geographically concentrated. Instead, you have these huge national banks that focus on the consumer market and a whole bunch of business-focused banks that have started up in recent years.
Q: So what's Broadway Federal Bank focusing on now?
A: We're trying to diversify and find new niches. For example, nearly one-fourth of our loans are made to churches.
Q: You're the third generation of Hudsons to lead the bank. Do you see this staying in the family?
A: Probably not. We're now a publicly traded bank. We converted about a decade ago. So I would think that after I retire, professional management would come in.
Q: So your stepdaughter or other relatives are not interested in succeeding you as president?
Q: How do you manage to get time to yourself and for your family when you are running the bank?
A: Actually, it's very difficult. It's not just running the bank that takes my time. As a community bank executive, I do a lot of community and service work. I spend almost every evening and much of the weekends on volunteer or community activities: things like attending a fundraising dinner or a scholarship committee luncheon. I'm also the chairman of the national finance committee for the Tuskegee Airmen (African-American pilots who flew during World War II).
Q: How did that come about?
A: My father was a Tuskegee airman. I actually knew very little about this as I was growing up; it was only later in life that I asked him to tell me about his experiences.
Q: What was it like having such a famous person as architect Paul Williams in your family?
A: Well, in some ways, it made life easier for our family. And not just having Paul Williams in the family; there was also my (paternal) grandfather H. Claude Hudson, who was the first African-American to attend Loyola law school and who was very active in the NAACP. They opened doors of opportunity for us that otherwise might never have been opened.
Q: Have you participated in efforts to preserve Paul Williams-designed buildings around town?
A: Not really. I leave that up to my sister, Karen (Hudson), who has really taken it upon herself to preserve and promote his heritage. She's written books on our grandfather and has been very active on the preservation front. I focus more on the banking side.
Q: With such an impressive family pedigree, how did you live up to that legacy?
A: Well, I don't try to compete with their legacies, since that's not really possible anyway. Instead, I just try not to tarnish their legacies through any actions that I take.
Q: What's the best piece of advice you've received?
A: That came from my grandfather Paul Williams. He told me, "Never stop learning." I thought that was odd coming from someone who I thought knew all there was to know about architecture. But in my life, I have tried to follow that advice.
Q: When you do eventually retire from your post, what do you want your legacy with the bank to be?
A: Banks are supposed to be instruments of change and economic development. So the legacy I would like to leave is to say that I've made a difference and made lives better for people. During my management of the bank, I want to be able to say we were able to improve the quality of life and sustainability of the communities we serve.
Title: Chief Executive
Company: Broadway Financial Corp., parent of Broadway Federal Bank
Born: 1948; Los Angeles
Education: B.S. in political science from University of California, Berkeley; J.D. from Boalt Hall School of Law at Berkeley
Career Turning Point: After deciding not to pursue a career in the painting business, joining Broadway Federal Bank, which at the time was run by his father, Elbert Hudson
Most Influential People: Father, Elbert Hudson; paternal grandfather, H. Claude Hudson; maternal grandfather, famed local architect Paul Williams
Personal: Lives in Brookside neighborhood of Los Angeles with wife Brenda, a writer; one adult stepdaughter
Hobbies: Weight training, reading, spending time with friends and family
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