SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BROADWAY FINANCIAL CORPORATION
(Name of Registrant as Specified in its Charter)
---------------------------------------------
(Name of Person(s) filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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.
As described in the accompanying Notice of Annual Meeting of Stockholders and
Proxy Statement, stockholders will be asked to vote on the election of three
directors, to ratify the appointment of the independent auditors for Broadway
Financial Corporation and to transact such other business as may properly
come before the Annual Meeting or any adjournment thereof.
Your vote is very important, regardless of the number of shares you own. I
urge you to mark, sign and date each proxy card you receive and return it as
soon as possible in the postage-paid envelope provided, even if you currently
plan to attend the Annual Meeting. Returning your proxy card will not prevent
you from voting in person, but will assure that your vote is counted if you
are unable to attend.
Sincerely,
Paul C. Hudson
President and Chief Executive Officer
IMPORTANT: IF YOUR BROADWAY FINANCIAL CORPORATION SHARES ARE HELD IN THE NAME
OF A BROKERAGE FIRM OR NOMINEE, ONLY THAT BROKERAGE FIRM OR NOMINEE CAN
EXECUTE A PROXY ON YOUR BEHALF. TO ENSURE THAT YOUR SHARES ARE VOTED, WE URGE
YOU TO TELEPHONE THE INDIVIDUAL RESPONSIBLE FOR YOUR ACCOUNT TODAY AND OBTAIN
INSTRUCTIONS ON HOW TO DIRECT HIM OR HER TO EXECUTE A PROXY.
IF YOU HAVE ANY QUESTIONS OR NEED ANY ASSISTANCE IN VOTING YOUR SHARES,
PLEASE TELEPHONE THE COMPANY'S INVESTOR RELATIONS REPRESENTATIVE, BEVERLY A.
DYCK, AT (323) 634-1700, EXT 231.
BROADWAY FINANCIAL CORPORATION
4800 Wilshire Boulevard
Los Angeles, California 90010
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on June 20, 2001
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, for the following purposes:
1) To elect three directors of the Company to serve until the
Annual Meeting to be held in the year 2004 or until their
successors are elected and have been qualified. The Board of
Directors has nominated Mr. Elbert T. Hudson, Dr. Willis K.
Duffy and Ms. Rosa M. Hill.
2) To ratify the appointment of KPMG LLP as the Company's
independent auditing firm for 2001.
3) To consider such other business as may properly come before
the Annual Meeting or any postponement or adjournment thereof.
The Board of Directors has selected April 23, 2001 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's principal
executive offices during the ten days prior to the meeting. Such list will
also be available for inspection at the time and place of the Annual Meeting.
By Order of the Board of Directors
Beverly A. Dyck
Secretary
Los Angeles, California
May 11, 2001
BROADWAY FINANCIAL CORPORATION
4800 Wilshire Boulevard
Los Angeles, California 90010
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
June 20, 2001
INFORMATION RELATING TO VOTING AT THE ANNUAL MEETING
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Broadway Financial Corporation (the
"Company"), a Delaware corporation, for use at the Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held at the
Company's principal executive offices, 4800 Wilshire Boulevard, Los Angeles,
California, 90010, at 2:00 p.m., on June 20, 2001, 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.
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, 2001 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, a total of 901,333
shares of the Company's common stock, par value $.01 per share (the "Common
Stock"), were outstanding at the close of business on that date. A majority
of the shares entitled to vote, represented in person or by proxy, will
constitute a quorum for the transaction of business at the Annual Meeting.
Stockholders will be entitled to cast one vote for each share of Common Stock
held by them of record at the close of business on the record date on any
matter that may be presented at the Annual Meeting for consideration and
action by the stockholders. Abstentions will be treated as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum, but as unvoted for purposes of determining the approval of any matter
submitted for a vote of the stockholders. If a broker indicates on its proxy
that the broker does not have discretionary authority to vote on a particular
matter as to certain shares, those shares will be counted for general quorum
purposes but will not be considered as present and entitled to vote with
respect to that matter.
All valid proxies received in response to this solicitation will be voted in
accordance with the instructions indicated thereon by the stockholders giving
such proxies. If no contrary instructions are given, such proxies will be
voted FOR the election of the directors named in this Proxy Statement and FOR
approval of the appointment of KPMG LLP as the Company's independent auditors
for the fiscal year ending December 31, 2001. Although the Board of Directors
currently knows of no other matter to be brought before the Annual Meeting,
if other matters properly come before the Annual Meeting and may properly be
acted upon, including voting on a substitute nominee for director in the
event that one of the nominees named in this Proxy Statement becomes
unwilling or unable to serve before the Annual Meeting, the proxy will be
voted in accordance with the best judgement of the persons named in the proxy.
Any stockholder has the power to revoke his or her proxy at any time before
it is voted at the Annual Meeting by delivering a later signed and dated
proxy or other written notice of revocation to Beverly A. Dyck, Secretary of
the Company, at 4800 Wilshire Boulevard, Los Angeles, California 90010. A
proxy may also be revoked if the person executing the proxy is present at the
Annual Meeting and chooses to vote in person.
The principal solicitation of proxies is being made by mail. The Company has
retained 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 for certain expenses. To the extent necessary, proxies may be
solicited by certain officers, directors and employees of the Company, or its
wholly-owned subsidiaries, none of whom will receive additional compensation
therefor, and may also be solicited by telegram, telephone or personal
contact. The Company will bear the cost of the solicitation of proxies,
including postage, printing and handling, and will reimburse brokers and
other nominee holders of shares for their expenses incurred in forwarding
solicitation material to beneficial owners of shares.
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides that the Board of
Directors shall be divided into three classes, with the term of one class of
directors to expire each year. Three directors are to be elected at the
Annual Meeting. The Certificate of Incorporation does not provide for
cumulative voting in the election of directors.
The following table sets forth the names and certain information regarding
the persons who are currently members of the Company's Board of Directors,
including those nominated by the Board of Directors for reelection. If
elected, Mr. Elbert T. Hudson, Dr. Willis K. Duffy and Ms. Rosa M. Hill, will
each serve for a term of three years or until their respective successors are
elected and qualified. The three nominees have consented to be named and have
indicated their intention to serve if elected. Each director listed below,
except 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.
AGE AT
DECEMBER 31, DIRECTOR TERM POSITIONS CURRENTLY HELD WITH
NAME 2000 SINCE EXPIRES THE COMPANY AND THE BANK
- --------------------------------------- ---------------- ---------- --------- -------------------------------
NOMINEES:
Elbert T. Hudson(1) 80 1959 2004 Director and Chairman of the
Board of Company and Bank
Willis K. Duffy 73 1974 2004 Director of Company and Bank
Rosa M. Hill 71 1977 2004 Director of Company and Bank
SIX CONTINUING DIRECTORS:
Lyle A. Marshall 75 1976 2002 Director of Company and Bank
A. Odell Maddox 54 1986 2002 Director of Company and Bank
Daniel A. Medina (2) 43 1997 2002 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.
The business experience of each of the nominees and continuing directors is
as follows:
NOMINEES:
ELBERT T. HUDSON is Chairman of the Board of both the Company and the Bank
and has engaged in the practice of law since his retirement as Chief
Executive Officer of the Bank in 1992. He was elected as President/Chief
Executive Officer of the Bank in 1972, a position he held until his
retirement. Mr. Hudson is currently Chairman of the Executive Committee of
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 Federal in 1981, was elected to the
Board in 1985, and served in various positions prior to becoming President
and Chief Executive Officer in 1992. Mr. Hudson is a member of the California
and District of Columbia Bars. He is Chairman of the American League of
Financial Institutions and serves on the board of Pitzer College, Orthopaedic
Hospital Foundation, and the California Community Foundation. Mr. Hudson also
chairs the Board of Community Build.
KELLOGG CHAN has been a member of the Board of Directors since 1993. 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
Council of the American Heart Association.
LARKIN TEASLEY is Chairman, President and Chief Executive Officer of Golden
State Mutual Life Insurance Company. He was elected President in 1980, Chief
Executive Officer in 1990 and Chairman in 2001. He is also a member of the
Board of Investment for the Los Angeles County Employees Retirement
Association. Mr. Teasley is past Chairman of the National Insurance
Association and past director of the California Chamber of Commerce.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company and the Board of Directors of the Bank
held twelve meetings each during 2000. The Company has three committees: The
Executive Committee, the Compensation/Benefits Committee and the Audit
Committee. During 2000, the Bank had a total of six committees: the Executive
Committee, the Audit/Compliance Committee, the Compensation/Benefits
Committee, the Loan Committee, the Internal Asset Review Committee, the
Asset/Liability and Investment Committee.
COMPANY COMMITTEES
The Executive Committee consists of Messrs. Elbert T. Hudson (Chairperson),
Paul C. Hudson and Kellogg Chan. This Committee monitors Company financial
matters, such as analysis of overall earnings performance, focusing on
trends, projections and problem anticipation and resolution. It also monitors
the status of litigation and serves as an interim decision-making body that
functions between Board meetings, counseling the chief executive officer by
providing input on critical issues and ensuring appropriate Board involvement
in the strategic planning process. The Executive Committee had no meetings
during 2000.
The Audit Committee consists of Mr. Lyle A. Marshall (Chairperson), Ms. Rosa
Hill and Mr. A. Odell Maddox. The Audit Committee is responsible for
oversight of the internal audit function for the Company, assessment of
accounting systems, monitoring of internal control deficiencies and
monitoring of regulatory compliance. The Committee is also responsible for
oversight of external auditors. The Audit Committee had one meeting during
2000. The Audit Committee charter is included as Appendix A hereto. The
members of the Audit 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), Mr. Larkin Teasley and Mr. Daniel A. Medina. This Committee is
responsible for the oversight of salary and wage administration and various
employee benefits, policies and incentive compensation issues at the Company
level. The Compensation/Benefits Committee had one meeting during 2000.
4
BANK COMMITTEES
The Executive Committee consists of Messrs. Elbert T. Hudson (Chairperson),
Paul C. Hudson, Lyle A. Marshall and Larkin Teasley. This Committee monitors
financial matters, including capital adequacy and liquidity, and analyzes
overall earnings performance, focusing on trends, regulations, projections
and problem anticipation and resolution. It also monitors the status of
litigation and serves as an interim decision-making body that functions
between Board meetings, counseling the chief executive officer by providing
input on critical issues and ensuring appropriate Board involvement in the
strategic planning process. The Executive Committee met four times during
2000.
The Audit/Compliance Committee consists of Mr. Lyle A. Marshall
(Chairperson), Ms. Rosa M. Hill, Dr. Willis K. Duffy and Mr. Daniel A.
Medina. The Audit/Compliance Committee is responsible for oversight of the
internal audit function, assessment of accounting systems, monitoring of
internal control deficiencies and monitoring regulatory compliance. The
Committee is also responsible for oversight of external auditors. The
Audit/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. The members of the Audit/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), Messrs. A. Odell Maddox and Larkin Teasley. This Committee is
responsible for the oversight of salary and wage administration and various
employee benefits, policies and incentive compensation issues, as well as the
appraisal of the chief executive officer's performance, determination of his
salary and bonus, and making recommendations regarding such matters for
approval by the Board of Directors. The Committee met five times during 2000.
The Loan Committee consists of Messrs. A. Odell Maddox (Chairperson), Paul C.
Hudson, Kellogg Chan and Gerald W. Parker, 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
twelve times during 2000.
The Internal Asset Review Committee consists of Messrs. Lyle A. Marshall
(Chairperson), Elbert T. Hudson and non-Board members Mr. Bob Adkins, Sr.
Vice President-Chief Financial Officer, and Ms. Alesia Willis, Vice
President-Loan Service Manager. The Internal Asset Review Committee is
responsible for the review and approval of asset classifications, and for
monitoring delinquent loans and foreclosed real estate. In addition, the
Internal Asset Review Committee reviews the adequacy of the Bank's general
loan loss allowance. The Committee met twelve times during 2000.
The Asset/Liability and Investment Committee consists of Messrs. Kellogg Chan
(Chairperson), 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. The Asset/Liability and Investment
Committee is responsible for monitoring Broadway Federal'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 five times during 2000.
5
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following table sets forth certain information with respect to executive
officers of the Company or the Bank who are not directors. Officers of the
Company and the Bank serve at the discretion of and are elected annually by
their respective Boards of Directors.
NAME AGE(1) POSITIONS HELD WITH COMPANY AND BROADWAY FEDERAL
------------------------- --------- ---------------------------------------------------------------
Bob Adkins 50 Chief Financial Officer of the Company and
Senior Vice President/Chief Financial Officer of the Bank
Eric V. Johnson(2) 41 Senior Vice President/Chief Retail Banking Officer of the Bank
Gerald W. Parker(3) 58 Chief Loan Officer of the Bank
- ----------------------------
(1) As of December 31, 2000.
(2) Executive served as Senior Vice President/Chief Loan Officer from May
1999 to April 2000.
(3) Executive hired in April 2000
The business experience of each of the executive officers is as follows:
BOB ADKINS joined Broadway Federal in 1994 as the Chief Financial Officer.
Mr. Adkins became Senior Vice President/Chief Financial Officer in January
1995. Mr. Adkins also serves as Director and Treasurer/Assistant Secretary of
Broadway Service Corporation. Prior to joining Broadway Federal, Mr. Adkins
was Chief Financial Officer of Westside Bank of Southern California for three
years. Mr. Adkins has over 25 years experience in the financial services
industry, including experience in public accounting. Mr. Adkins is a
Certified Public Accountant and holds an MBA degree and a Bachelors degree in
Accounting. Mr. Adkins is President of the Board of the California State
University at Los Angeles Foundation and is a past member of the Board of
Directors of the Community Housing Assistance Program, Inc. and Unite L.A.
ERIC V. JOHNSON 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 years of
experience in the banking industry, primarily in retail banking with Home
Savings of America, where he served in various management positions. 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 Urban Bankers Association, President of Inglewood Development
Corporation, a non-profit organization for the City of Inglewood, and as a
Board member of Haaf II Project.
6
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth information, as of March 31, 2001, 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).
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- --------------------------------------------------------- -------------------------- --------------
BENEFICIAL OWNERS:
Broadway Federal Bank Employee Stock Ownership Plan (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 OFFICERS (1):
Elbert T. Hudson 9,034 (2)(7) 1.00%
Paul C. Hudson 27,262 (8) 3.02%
Kellogg Chan 11,744 (9) 1.30%
Willis K. Duffy 5,043 (10) 0.56%
Rosa M. Hill 11,984 (2)(10) 1.33%
A. Odell Maddox 6,703 (9) 0.74%
Lyle A. Marshall 5,043 (2)(10) 0.56%
Larkin Teasley 7,367 (10) 0.82%
Daniel A. Medina 1,518 (9) 0.17%
Bob Adkins 9,952 (11)(12) 1.10%
All directors and executive officers as a group (10 95,650 10.61%
persons)
- ----------------------------------------------
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 is derived from a Schedule 13G filed with the Securities and
Exchange Commission by First Financial Fund, Inc., a Maryland
corporation, on January 12, 2001 and from Schedule 13G filed with the
Securities and Exchange Commission by Wellington Management Company, LLP,
a Massachusetts limited liability partnership ("WMC"), on January 13,
2001. WMC, in its capacity as investment advisor, may be deemed the
beneficial owner of shares of Common Stock owned by its clients,
including 89,640 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 Securities 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")
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 disclaims
beneficial ownership of the securities referred to in the Schedule 13G.
(7) Includes 965 vested and currently exercisable shares under the
Performance Equity Program For Officers and Employees (the "PEP"); 1,187
allocated shares under the Broadway Federal Savings and Loan Association
Employee Stock Ownership Plan (the "ESOP"); and 3,721 shares subject to
options granted under the Long Term Incentive Plan (the "LTIP"), which
options are all currently exercisable.
(8) Includes 1,366 vested and currently exercisable shares under the PEP;
4,434 allocated shares under the ESOP; and 13,390 shares subject to
options granted under the LTIP, which options are all currently
exercisable.
(9) Includes 331 vested 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; 3,471
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.
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, as well as the total compensation paid to each,
during the Company's last three fiscal years:
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------- ------------------------- ----------
RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS/ LTIP COMPENSATION
POSITION YEAR ($) ($) ($) ($) SARS (#) PAYOUTS ($)
- ------------------ ------ -------- ------- -------------- ----------- ------------ ---------- ---------------
Paul C. Hudson 2000 139,241 6,011 - - 2,824(a) 15,015(b) 4,357(c)
President/CEO 924(d)
1999 138,059 - - - - 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)
1998 - - - - - - -
(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
$9,150, respectively.
(c) Reflects amounts contributed by the Company to the 401(k) Plan on behalf
of each individual. The amounts contributed by the Company each year
represents 100% of each employee's contribution up to 3% of each
individual's salary.
(d) Reflects the dollar value of group term life insurance paid by the Bank
during the periods covered.
(e) Eric V. Johnson was hired in May 1999.
9
The following table sets forth certain information concerning stock options
granted during 2000 to the named executives:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
NUMBER OF SECURITIES % OF TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS GRANTED EMPLOYEES IN FISCAL BASE PRICE EXPIRATION
NAME (#)(a)) YEAR (b) ($/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% $8.69 11/15/2010
- -----------------------
(a) The options vest over a five-year period at the rate of 20% per year.
(b) Total stock options granted to directors and to officers and employees
during the year ended December 31, 2000 were 3,500 and 24,003,
respectively. The percentages above represent the percentage of total
stock options granted to officers and employees.
The following table summarizes options exercised during 2000 and the value of
unexercised options held by the named executives at fiscal year-end.
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/
ON VALUE OPTIONS/SARS AT FISCAL SARS AT FISCAL YEAR-END
EXERCISE REALIZED YEAR-END (#) EXERCISABLE ($) EXERCISABLE (E)/
NAME (#) ($) (E)/ UNEXERCISABLE (U) UNEXERCISABLE (U)
- --------------------------- ---------- ---------- ------------------------ -----------------------
Paul C. Hudson - - 11,751 (U) - (U)
13,390 (E) - (E)
Bob Adkins - - 4,983 (U) - (U)
5,356 (E) - (E)
Eric V. Johnson - - 5,648 (U) - (U)
- (E) - (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
DIRECTORS COMPENSATION
No remuneration was paid to the directors by the Company in 2000. Currently,
the Chairman of the Board of Broadway Federal receives a monthly retainer fee
of $2,940, and all other directors of Broadway Federal, other than the
President, 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 are also paid to directors of Broadway Federal, other
than the Chairman of the Board and the President.
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 are made on
substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons
and do not involve more than the normal risk of collectibility or present
other unfavorable features.
On September 30, 1999, the Company 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, the outstanding balance of the loan was
$542,594.
On December 29, 2000, the Company made a $130,400 loan to Ms. Rosa M. Hill,
who is a director of the Company and the Bank. The loan is secured by a
single family residential property located in Los Angeles, California. The
loan earns a fixed 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 the loan was $130,108.
SEVERANCE AGREEMENTS
The Company and Broadway Federal have entered into severance agreements with
Messrs. Paul C. Hudson, Bob Adkins 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. Each severance agreement provides that at
any time following a change in control of the Company or Broadway Federal, as
applicable, if the Company or Broadway Federal, as the case may be,
terminates the employee's employment for any reason other than for cause, or
if the employee terminates his or her employment, the employee or, in the
event of death, the employee's beneficiary, would be entitled to receive a
payment equal to up to two years of the employee's then current annual salary
(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. Payments to the employee under Broadway Federal's
severance agreements will be guaranteed by the Company in the event that
payments or benefits are not paid by Broadway Federal. In the event of a
change in control of the Company and Broadway Federal, as applicable, the
total payments due under the severance agreements in the aggregate, based
solely on the cash compensation paid to the three officers covered by the
severance agreements for the last fiscal year and excluding any benefits
under any employee benefit plan that may be payable, are estimated to be up
to approximately $644,000.
11
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG LLP ("KPMG") as the Company's
independent auditors for the fiscal year ending December 31, 2001. It is
anticipated that representatives of KPMG LLP will be present at the Annual
Meeting. KPMG will be given an opportunity to make a statement, if they
desire to do so, and will be available to respond to any appropriate inquires
of the stockholders. KPMG performed the independent audit for the fiscal year
ended December 31, 2000.
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 COMPENSATION
The Company's Compensation/Benefits Committee is composed entirely of
independent outside members of the Company's Board of Directors. The
Committee reviews and approves each of the elements of the executive
compensation program of the Company (including its subsidiaries) and
continually assesses the effectiveness and competitiveness of the program. In
addition, the Committee administers the key provisions of the executive
compensation program and reviews with the Board of Directors all major
aspects of compensation for the Company's chief executive officer. The
Committee's review of the executive compensation program includes analyzing
compensation programs, pay levels, and business results compared to a peer
group of competitor financial institutions of comparable asset size.
COMPENSATION PHILOSOPHY
The goals of the executive compensation program are to support a
performance-oriented environment, to reinforce the Company's performance and
business plans, and to enable the Company to attract and retain the executive
talent it needs to maximize its return to stockholders.
The philosophy of the Company is to provide compensation programs designed to
reward achievement of the Company's annual and long-term strategic goals, to
provide compensation opportunities that are competitive with the peer group
of competitor financial institutions, and to offer appropriate stock
ownership opportunities.
ELEMENTS OF THE EXECUTIVE COMPENSATION PROGRAM
BASE SALARIES. The objectives of the base salary program are to offer base
salaries within a salary grade which establishes the value of the position
relative to other positions in the organization and to provide base salary
increases that reward all officers for the ongoing performance of the duties
of their positions and that are consistent with the Company's overall
financial performance. The base salary compensation for executive officers is
established after considering objective criteria which include the review and
evaluation of surveys of compensation paid to the executives of similarly
sized financial institutions.
INCENTIVE COMPENSATION PLAN. The Incentive Compensation Plan (the "Plan") is
intended to provide all employees with the opportunity for incentive
compensation based upon corporate profitability and individual performance.
The Plan has been designed so that 50% of the incentive award results from
corporate returns and 50% derives from individual performance. For the Plan
to be activated, current profits must be sufficient to cover any payments
under the Plan. The Plan establishes various levels of return on assets
("ROA") up to a maximum ROA of 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 Audit 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 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,
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 those audited financial statements
with accounting principles generally accepted in the United States of
America, their judgements as to the quality, not just 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 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 for the year ended December
31, 2000, for filing with the Securities and Exchange Commission. The
Committee has 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 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
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent
of a registered class of the Company's equity securities, to file reports
(Forms 3, 4 and 5) of stock ownership and changes in ownership with the
Securities and Exchange Commission. Officers, directors and beneficial owners
of more than ten percent of the Company's stock are required by Securities
and Exchange Commission regulations to furnish the Company with copies of all
such forms that they file.
Based solely on the Company's review of the copies of Forms 3, 4 and 5 and
the amendments thereto received by it for the year ended December 31, 2000,
or written representations from certain reporting persons that no Form 5's
were required to be filed by those persons, the Company believes that during
the period ended December 31, 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 late Form 4 filing.
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 2001 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. The Board of Directors will review any
stockholder proposals which are filed as required and will determine whether
such proposals meet applicable criteria for inclusion in its proxy
solicitation materials and for consideration at the Annual Meeting. Any
stockholder may make any other proposal at the year 2002 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, 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
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, 2002 and April
23, 2002) to be considered at the Annual Meeting in year 2002. Such notice
must state the nominee's name, age and addresses (business and residence),
the nominee's principal occupation or employment, and the class and number of
shares of Common Stock beneficially owned by the nominee on the date of the
notice. The required notice must also disclose certain information relating
to the nominee which would be required to be disclosed in a proxy statement
and in certain other filings under federal securities laws.
ANNUAL REPORT AND FORM 10-KSB
The 2000 Annual Report to Stockholders containing the consolidated financial
statements of the Company for the year ended December 31, 2000 accompanies
this proxy statement.
STOCKHOLDERS MAY OBTAIN, WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000 AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION, WITHOUT ACCOMPANYING EXHIBITS,
BY WRITING TO BEVERLY A. DYCK, INVESTOR RELATIONS REPRESENTATIVE, BROADWAY
FINANCIAL CORPORATION, 4800 WILSHIRE BOULEVARD, LOS ANGELES, CALIFORNIA
90010. A LIST OF EXHIBITS IS INCLUDED 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.
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
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 20,
2001 The undersigned hereby appoints Paul C. Hudson and Bob Adkins, or either of
them, each with full power of substitution, as the lawful proxies of the
undersigned, and hereby authorizes each of them to represent and to vote as
designated below all shares of the Common Stock of Broadway Financial
Corporation (the "Company") which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders of the Company to be
held on June 20, 2001, or any adjournment thereof.
PLEASE MARK YOUR CHOICE LIKE THIS /X/ IN DARK INK AND SIGN AND DATE ON THE
REVERSE SIDE MARK ONLY ONE BOX FOR EACH ITEM.
1. ELECTION OF THREE DIRECTORS TO SERVE UNTIL THE ANNUAL MEETING TO BE HELD
IN 2003.
ELBERT T. HUDSON / / FOR / / WITHHOLD
WILLIS K. DUFFY / / FOR / / WITHHOLD
ROSA M. HILL / / FOR / / WITHHOLD
2. RATIFY 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.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE DIRECTORS LISTED IN ITEM 1 AND IN THE DISCRETION
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
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(Signature of Stockholder)
Please sign your name EXACTLY as it
appears hereon, date and return
this proxy in the reply envelope
provided. IF YOU RECEIVE MORE THAN
ONE PROXY CARD, PLEASE SIGN AND
RETURN ALL PROXY CARDS RECEIVED.
Please Do Not Fold This Card