Broadway Financial Corp. on Tuesday said that it will close two of its five branches and pursue a recapitalization plan as the struggling savings bank seeks to shore up its capital reserves.
The parent of Broadway Federal Bank, which primarily serves low- to moderate-income communities in South Los Angeles, said it will close the retail branch at its 4800 Wilshire Blvd. corporate headquarters and a second retail branch in Leimart Park on Nov. 7. It will continue to operate its Midtown, Inglewood and Exposition branches.
The Midtown branch at 4835 West Venice Blvd. will become Broadway Federal’s flagship branch, Chief Executive Paul C. Hudson said. Broadway, which opened in 1947, had seen its core client base move away from its Wilshire location, which will continue to operate as an administrative location. The Leimart Park branch suffered from a poor location in a strip mall.
“The bank is not immune from the impact of high unemployment, low consumer confidence and government deficits,” Hudson said.
Broadway Financial earlier this month reported a second-quarter net loss of $1.7 million, compared with year-earlier net income of $846,000, as it saw lower net interest income and took a higher provision for loan losses.
The bank, which has struggled to recover from the recession, plans to raise $10 million to increase its capital reserves, but did not provide details. It received $15 million from the U.S. Treasury Department’s Troubled Asset Relief Program more than two years ago that it has yet to fully pay back.
“With the additional capital, the bank will be better able to participate in the future economic growth of low to moderate markets in South Los Angeles,” Hudson said.
Shares were unchanged at $1.58 in midday trading on the Nasdaq.
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