It took Broadway Financial Corp. nearly three years to pull off its recent recapitalization, but it looks like it was worth the wait.

Since announcing the close of the deal Aug. 22, Broadway’s foundering stock has risen sharply, closing at more than $1 a share for the first time since February.

Shares of the bank holding company rose 30 percent for the week ended Sept. 4 to $1.05, making Broadway by far the biggest gainer on the LABJ Stock Index. (See page 26.) The company’s stock jumped even higher Sept. 5 to $1.45, a single-day gain of 38 percent.

The recent bump could show that investors are more interested in Broadway, parent of South L.A. lender Broadway Federal Bank, now that it has cleaned up a byzantine balance sheet, reduced debt and scored new capital through a recapitalization.

Wayne-Kent Bradshaw, Broadway’s chief executive, told the Business Journal that company’s capital structure was not attractive to investors. Its equity was tied up mostly in five series of preferred shares – some held by the U.S. Treasury – along with some common shares. In the recap, all preferred shares were exchanged for common stock.

That makes it easier for investors to see what they’re getting, said Jack Thompson, head of financial institution investment for New York investment manager Gapstow Capital Partners, which invested $1.9 million in Broadway as part of the recap.

“Following the recapitalization, there’s a lot more clarity in the capital structure,” Thompson said. “When you look at Broadway now, you don’t have to do a lot of financial gymnastics to figure out how much your common shares will be worth if X, Y or Z happens.”

Broadway lost millions during the recession as its portfolio of church loans soured. Regulators in 2010 slapped the bank with a cease-and-desist order, requiring it to raise additional capital and stop making church loans.

The bank is still under that order and Bradshaw said he intends to seek additional capital to meet regulators’ demands. Broadway’s higher stock price should help in that effort, as it will keep the company listed on the Nasdaq exchange. Many investors can’t or don’t buy stocks that aren’t listed on a major exchange.

Nasdaq requires stocks to trade at $1 or more, and officials there said Broadway would be delisted if the company’s shares didn’t reach that threshold by the end of the year.

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